NON-EVM concepts to know.

Posted by gisdude on January 6, 2012
Posted in: PMP. Leave a Comment

I’ve read several sources that both concur on what you need to know that is financial in nature, but what won’t be asked on the PMP exam.

Since I have an Economics background, a lot of this stuff was pretty intuitive, but I’ll repost what I’ve made up.

Accounting (Finance) Concepts to know (but aren’t math problems)

PV = Present Value. You can find the present value by

PV=FV/(1+I)t

What you need to know is that the present value should be a positive number.

Don’t confuse this with PLANNED VALUE

NPV= Net Present Value

You don’t need to quantify this, but you do need to know that generally speaking that the bigger the number the better.

IRR = Internal Rate of Return

The larger the percentage, the better.

Payback Period =

You just need to know which project will payback sooner.

Benefit Cost Ratio =

Generally the higher ratio is the better one.

Economic Value Added =

The company needs to know if the project has more value than it costs.

Don’t confuse this with ECONOMIC VALUE ANALYSIS.

Opportunity Costs =

What it costs to give up one of the projects.

Sunk Costs =

Money you’ve already spent. Don’t consider the sunk cost = they’re gone.

Law of diminishing returns =

Do I need to state the obvious?

Working capital =

Current Assets – Current liabilities

Depreciation =

  1. Straight Line depreciation
  2. Accelerated depreciation

Lessons Learned

Posted by gisdude on December 15, 2011
Posted in: PMP. Leave a Comment

I’ve probably read the best lessons learned on the pmp groups on google. One new thing I hadn’t thought of is to be careful of the free exams on the net. These are usually outdated. You may just have to bite the bullet and get some new ones. Also, Praveen notes that you shouldn’t memorize the ITTO’s page. Just learn it!