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PMP Notes

The document discusses project selection and performance measurement. It provides criteria for selecting projects such as having a positive net present value (NPV) and internal rate of return (IRR). Shorter payback periods are also preferable. It notes that performance baselines should be established and any significant deviations from them should trigger a review of the project's risk management process. The document also outlines a process for making changes to a project that involves evaluating impacts, identifying options, getting internal approval, and obtaining customer buy-in.

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Dinesh Shirvaikar
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161 views

PMP Notes

The document discusses project selection and performance measurement. It provides criteria for selecting projects such as having a positive net present value (NPV) and internal rate of return (IRR). Shorter payback periods are also preferable. It notes that performance baselines should be established and any significant deviations from them should trigger a review of the project's risk management process. The document also outlines a process for making changes to a project that involves evaluating impacts, identifying options, getting internal approval, and obtaining customer buy-in.

Uploaded by

Dinesh Shirvaikar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Project Selection

1. If NPV is positive, the project is a good choice, unless a better investment opportunity
exists. Select the project with the highest NPV
2. Higher the IRR, the better.
3. Shorter the payback period, the better.
4. Benefit-cost ration > 1 (benefits greater than costs, else the project is not worth it)
5. Opportunity cost is the cost of the project not selected.
6. Law of Diminishing Returns – After a certain point, adding more input will not produce a
proportional increase in productivity.

Performance Measurement Baseline

1. If NPV is positive, the project is a good choice, unless a better investment opportunity
exists. Select the project with the highest NPV
2. Higher the IRR, the better.
3. Shorter the payback period, the better

Q - What to do when a project deviates significantly from established baselines?


A - Review the project’s risk management process.

If a work activity on a project takes longer than estimated, request corrective action to make
up for the delay.
Work Authorization System – Work is only started when a formal authorization is given.

Process for making changes

1. Evaluate (assess) the impact of the project to all aspects of the project.
2. Identify options
a. Cut other activities
b. Re-estimate
c. Compress the schedule
i. Crashing
ii. Fast tracking
3. Get the CR approved internally
4. Get customer buy-in

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