Present Value = FV / [(1 + r)^n], where r is the rate of return and n is the number of years = $2 million / [(1 + .05)^5].
For project evaluation dealing with internal rate of return (IRR), return on investment (ROI), and net present value (NPV), simply pick the greatest value. Easy!
Cost Reimbursable (a.k.a. Cost Plus) — risk on buyer, for complex/not well-defined projects
Fixed Price — risk on seller, for simple/well-defined projects
Time and Material (a.k.a. Unit Price) — risk similar on both sides, usually for small projects or there is trust between the two parties
Cost Plus Incentive Fee (CPIF) – the buyer would need to pay the actual cost of the work plus an incentive fee if the performance of seller meets mutually agreed pre-defined performance targets (objective evaluation)
Cost Plus Award Fee (CPAF) – the buyer would need to pay the actual cost of the work plus an award based on subjective evaluation on the seller’s performance by the buyer
Activity Types:
- Discrete Effort also called “Measurable Effort”: Discrete Effort is work that can be planned and measured with specific output.
e.g. the coder has already finished 500 lines of code for the component with an estimated length of 1000 lines — 50% completion
- Non-discrete Effort: Opposite of Discrete Effort
1. Apportioned Effort: Apportioned Effort is work which cannot be divided into discrete efforts and is allotted proportionately to other discrete effort(s).
the work is directly associated with a Work Breakdown Structure (WBS) component/deliverable, usually cannot be separated from the discrete efforts.
e.g. inspection, quality assurance, verification, validation activities
2. Level of Effort (LoE): Level of Effort is supportive work that do not produce definitive output but is measured with (passage of) time.
the work is not associated with a Work Breakdown Structure (WBS) component/deliverable
e.g. project management, meetings, administrative work, accounting, maintenance
Quality control: concerned with the activities and measures taken to achieve quality requirements
Quality assurance: a process based approach to ensure the processes and methodology associated with the production of the final deliverables/products are defect free
Product Quality is concerned about the conformance of the deliverables to pre-defined requirements and standards.
Project Quality is about the conformance of the management/execution of the project to pre-approved processes. Project Quality is not to be tested in the PMP® Exam.
https://edward-designer.com/web/free-float-vs-total-float-for-pmp-exam/
Though both Fallback and Workaround are used to deal with risks when they occur, Aspirants would need to remember that:
Fallback is pre-developed risk response strategies for identified risks in order to protect the original project plan (the costs deal with identified risks are included in the contingency reserve)
Workaround is immediate risk response strategies for unidentified risks (or identified risks that have been accepted passively) in order to contain the damages to the project plan (the costs deal with unidentified risks can be obtained from the management reserve upon management approval)
For project evaluation dealing with internal rate of return (IRR), return on investment (ROI), and net present value (NPV), simply pick the greatest value. Easy!
Cost Reimbursable (a.k.a. Cost Plus) — risk on buyer, for complex/not well-defined projects
Fixed Price — risk on seller, for simple/well-defined projects
Time and Material (a.k.a. Unit Price) — risk similar on both sides, usually for small projects or there is trust between the two parties
Cost Plus Incentive Fee (CPIF) – the buyer would need to pay the actual cost of the work plus an incentive fee if the performance of seller meets mutually agreed pre-defined performance targets (objective evaluation)
Cost Plus Award Fee (CPAF) – the buyer would need to pay the actual cost of the work plus an award based on subjective evaluation on the seller’s performance by the buyer
Activity Types:
- Discrete Effort also called “Measurable Effort”: Discrete Effort is work that can be planned and measured with specific output.
e.g. the coder has already finished 500 lines of code for the component with an estimated length of 1000 lines — 50% completion
- Non-discrete Effort: Opposite of Discrete Effort
1. Apportioned Effort: Apportioned Effort is work which cannot be divided into discrete efforts and is allotted proportionately to other discrete effort(s).
the work is directly associated with a Work Breakdown Structure (WBS) component/deliverable, usually cannot be separated from the discrete efforts.
e.g. inspection, quality assurance, verification, validation activities
2. Level of Effort (LoE): Level of Effort is supportive work that do not produce definitive output but is measured with (passage of) time.
the work is not associated with a Work Breakdown Structure (WBS) component/deliverable
e.g. project management, meetings, administrative work, accounting, maintenance
Quality control: concerned with the activities and measures taken to achieve quality requirements
Quality assurance: a process based approach to ensure the processes and methodology associated with the production of the final deliverables/products are defect free
Product Quality is concerned about the conformance of the deliverables to pre-defined requirements and standards.
Project Quality is about the conformance of the management/execution of the project to pre-approved processes. Project Quality is not to be tested in the PMP® Exam.
https://edward-designer.com/web/free-float-vs-total-float-for-pmp-exam/
Though both Fallback and Workaround are used to deal with risks when they occur, Aspirants would need to remember that:
Fallback is pre-developed risk response strategies for identified risks in order to protect the original project plan (the costs deal with identified risks are included in the contingency reserve)
Workaround is immediate risk response strategies for unidentified risks (or identified risks that have been accepted passively) in order to contain the damages to the project plan (the costs deal with unidentified risks can be obtained from the management reserve upon management approval)
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