Tag: PMP

The PMP exam is essential for anyone seeking a career in project management. It determines whether or not you have the competence and expertise required to be an efficient project management professional. The PMP is not an overly complex exam. However, it can get a bit tricky at times with all the formulas you have to remember. There are around 40 formulas that individuals should know and comprehend before giving the PMP test. Sound intimidating, doesn’t it?

The good news is that you don’t have to study (extensively) and remember all forty of them to clear the exam. Just a quick look at most of them will suffice. However, there are five formulas (given below) that you need to understand completely before taking the PMP exam.

1. Return on Investment

The first formula is for calculating the return on investment (ROI). The formula is used to determine the amount of money accumulated or lost with relation to the actual investment. That is why it is commonly referred to as the ‘profit and loss formula’. The ROI facilitates the project manager figure out which project serves as the best investment. For instance, if the first project has an ROI of 25%, the second project’s ROI is 30% and the ROI of the third one is 35%, in this case the third project is the best investment because its ROI is the highest, all other factors remaining constant.

2. Internal Rate of Return

The next one is the internal rate of return (IRR). The formula primarily serves as a capital project budgeting metric to assess whether an investment is worth making. Furthermore, it compares the current value of the cash flow to the original investment which then gives the IRR value. To put it into perspective, imagine a project manager has to compare a couple of different projects and decide which one is best for his company he can do so using IRR. Upon calculating the IRR of those projects, i.e. 20% for project 1 and 25% for project 2, he concludes that the second project is a better option.

3. Cost Performance Index

Another fundamental formula that you need to study is the cost performance index (CPI). The CPI is determined by dividing the original cost with the earned value. As the name implies, the CPI assesses the cost performance of a particular project, i.e. whether the budget has been used as planned.

4. Net Present Value

The net present value (NPV) is used to evaluate the success of a particular investment. In short, it serves as a capital project financial metric. Moreover, it takes into account the current inflow and outflow of cash. So a project manager can judge the profitability of a particular project by looking at its NPV.

5. Schedule Variance

This formula is extremely important as it is used for evaluating the schedule performance of a particular project. In addition, it takes into account whether or not the project in on track with the schedule. It is derived by subtracting the earned value from the planned value of the given project.

These are five important formulas you should study before appearing for the PMP exam.

Are you contemplating a career in project management? If yes, then you need to clear the Project Management Professional (PMP) exam. This exam is absolutely vital for anyone pursuing a career in this field. Not only will it certify that you are a proficient individual, but will also open up a range of top career opportunities in the field of project management for you.

Interestingly, a report indicates that companies with over 35% PMP managers have a considerably better project performance and outcome. So, it’s not surprising to see organizations giving more preference to individuals to who are PMP certified. Clearing the PMP exam is not as easy as you may imagine it to be. It requires sheer dedication and hard work. Given below are five effective tips that help you clear the exam in the first attempt:

1. Practice Tests

This is probably the best tip for clearing the PMP exam (or any exam for that matter). Taking practice tests not only helps you judge your knowledge level in a given subject, but also helps improve your speed. When giving a practice test, ensure that questions included in it are situational, instead of recall-oriented. Furthermore, answer a diversity of questions, especially ones that are likely to be asked in the exam. Next, check the pace at which you are answering the questions. Generally, a single answer should take no more than 50 seconds to complete. So, time yourself when attempting a practice test.

2. Study the PMBOK Well

More often than not, individuals tend to memorize the material of the PMBOK, without adequately comprehending it, which is probably why they don’t fare well in the exam. Instead of memorizing the PMBOK, individuals should focus more on executing every PMBOK process in actual projects. So, if you have thoughts of memorizing the PMBOK, better dispel them if you really want to do well in the exam.

3. Get Additional Study Guides

It is always good to get study guides in addition to your main study course (the one followed in class). This is particularly because it provides practical exercises you can try to understand how these concepts are implemented and also review questions that check if you have really comprehended the questions that are likely to be asked.

4. Take a Class

Attending a PMP class will help you tremendously in preparing for the exam. First of all, you will have access to qualified instructors. You can speak to them personally regarding any query or ambiguity you have. Secondly, you will have the opportunity to interact with your classmates and also get to know about their preparation plan.

5. Plan Your Preparation

Having a proper plan is of paramount importance. Without one, you’ll never be able to prepare well for the PMP exam. So first and foremost, you need to make a study schedule and then stick to it. For example, you can set a start and end date for your preparation, determine the time needed to study specific materials, etc. This way, you can ensure that your preparation is on track.

These are five simple tips that can help you pass the PMP exam the first time.