PMP® EXAM PREP

BOOTCAMP
(2021 UPDATE)
Session 4
Instructor: Barb Waters, MBA, PMP

If you are watching on replay, this slide deck

PMP® Exam Prep
may have been modified to correct typos or This course will assist learners in preparing
to make minor adjustments. If you notice a for PMI’s PMP Exam (2021 Update)
difference it is intentional and not an
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 Terminology

PLAN

The buyer is the Project Manager, The seller is the vendor or provider and
project team, or internal organization is external to the project organization
MAKE OR BUY ANALYSIS

Availability of resources

Cost

Other factors

• Risk
• Competencies
• Ethics
• Assumes equal ability to perform the work
• Assumes no ethical issues with prospective vendor
• Based on pricing

Make = in house Buy = obtain externally

You are analyzing the recruitment of a position in your organization.
Variable = X (How many days?)

EXAMPLE Make (do it yourself)

Cost is $5,000 initial investment, then $25 per day to maintain
5,000 + 25x

Buy (use a third party)

Cost is $2,000 plus $100 per day
2,000 + 100x

Break Even Point

Buy = Make
2,000 + 100x = 5,000 + 25x
Step 1 Bring all x’s to one side
2,000 + 100x -25x = 5,000 + 25x -25x
2,000 + 75x = 5,000

Bring all whole numbers to one side Break Even Point

Step 2 2,000 + 75x = 5,000 Buy = Make
2,000 – 2,000 + 75x = 5,000 – 2,000
75x = 3,000 2,000 + 100x = 5,000 + 25x

Isolate “x”
Step 3 75x/75 = 3,000/75
x = 40
 Make vs. Buy/Lease
$10,000

$9,000 Break even point = 40 days Break Even Point

Before day 40, better to Buy 2,000 + 100x = 5,000 + 25x
$8,000
After day 40, better to Make
Buy/Lease Make
$7,000
Day 1 $2,100 $5,025
$6,000 Day 5 $2,500 $5,125
Day 10 $3,000 $5,250
$5,000 Day 15 $3,500 $5,375
Day 20 $4,000 $5,500
$4,000 Day 25 $4,500 $5,625
Day 30 $5,000 $5,750
$3,000 Day 35 $5,500 $5, 875
Day 40 $6,000 $6,000
$2,000
Day 45 $6,500 $6,125
Day 50 $7,000 $6,250
$1,000

$0
Day 1 Day 10 Day 20 Day 30 Day 40 Day 50
 Fixed-price contracts
• Defined scope
• May incorporate financial incentives
• Seller is obligated to complete the work
• Protects the buyer

Cost-reimbursable contracts
Cost • Flexible scope
• May incorporate financial incentives
Scope
• Risky for the buyer

Time and Materials contracts (T&M)

• Contains aspects of both contract types
• Unit labor or material rates are used
• Not to exceed value may be included
CONTRACT CONSIDERATIONS

Incentive fees Awards Economic price adjustments

14Si

28.09
Oil Gold Silicon

Protects both Buyer and Seller

 CONTRACT

Scope is well-defined
Easily describe the product/service
Define the exact price
 FIRM FIXED PRICE (FFP)

Price and scope are agreed upon in the beginning.

Scope does not change without renegotiating the
contract.

“We need to create social media

accounts and link them to our website.
What type of contract should we use?”

Create specific social media accounts and link

to website
Price: $50,000
 FIXED PRICE INCENTIVE FEE (FPIF)

• Financial incentives are tied to the Seller’s performance and

specific metrics
• Most incentives are tied to meeting performance objectives for
scope, time, cost and quality
• A price ceiling is set and above the ceiling the seller accepts all
cost risk
• Performance targets are written into the contract and reviewed
once all work is completed, setting the final contract price

Create specific social media accounts and link to website

Price: $50,000
Incentive: $10,000 for early delivery
 Seller pays for all cost
overruns
FIXED PRICE
Seller and Buyer share cost
INCENTIVE FEE overruns

SCENARIOS Seller receives all

profit
Fixed Price Incentive Fee (FPIF)
There are 4 possible scenarios
Seller and Buyer share cost
savings

Ratio of share is determined in advance

 Seller pays for all cost

FIXED PRICE overruns

$100k price ceiling

INCENTIVE FEE Seller and Buyer share cost

overruns
SCENARIOS $80k target price

Seller receives all

Fixed Price Incentive Fee (FPIF) profit
There are 4 possible scenarios $50k target cost

Seller and Buyer share cost

savings*

* Ratio of share is determined in advance

 Seller pays for all cost

FIXED PRICE overruns

$100k price ceiling

INCENTIVE FEE ! Seller and Buyer share cost

overruns
SCENARIOS $80k target price

Seller receives all

profit
Risk Trigger $50k target cost
“Point of Total Assumption”
(PTA) Seller and Buyer share cost
savings*

* Ratio of share is determined in advance

• Best for contracts that span a number of years
• Volatile economic conditions outside of the contractor’s control
• Price adjustments due to changes in economic conditions
• Protects buyers and sellers

“We rely on oil quite a bit. If the price changes

much over the next few years we need to be
protected.”
Scope is not well-defined
Easy to describe the desired outcome, but difficult to
describe the “how”
 COST PLUS FIXED FEE (CPFF)

• The seller is reimbursed for all allowable costs and receives a

fixed fee payment calculated as a percentage of the initial
estimated costs.
• Fee is only paid for completed work
• Fee doesn’t change based on seller’s performance
• Fee amounts do not change unless Scope of Work changes

“We need to prepare for the next Cell Phone App

release of this cell phone app while
Seller’s Costs: ($100,000 est.)
customer demand is changing. I can’t
+
give the vendor a defined scope. How Fixed Fee: 10% of the initial
can our contract reflect that?” estimated costs ($10,000)
 COST PLUS INCENTIVE FEE (CPIF)

Cell Phone App

Seller’s Costs:
($100,000 est.)
+
Fixed Fee: 10% of the initial estimated costs
($10,000)
+
“We need to prepare for the next release of Incentive Fee: 5% of the estimated costs
this cell phone app while customer demand is ($5,000)
changing. I can’t give the vendor a defined
scope. Once we have the requirements we
have to move quickly, and this contract is cost
sensitive. How can our contract reflect this?”
 COST PLUS AWARD FEE (CPAF)

• The seller is reimbursed for all allowable costs plus a pre-

determined fee that is only awarded based on satisfying
subjective performance criteria written into the contract.
• The awarding of the fee is based on the determination of the
buyer and generally not subject to appeals

“We can provide additional Target Cost: $100,000

incentive ‘if they do an Base Fee: $20,000
Award (TBD*) $50,000
exceptional job’ – we’ll see
______________________
what the results are and make Target Price $170,000
that determination” * $50,000 maximum
 TIME AND MATERIALS
(T&M)

• Hybrid of fixed price and cost-reimbursable

• Labor or materials rates are agreed upon
• Can be open ended
• Time limits or “not to exceed” may be
specified
 CONTRACT TYPE FLOW CHART
Procurement Scenarios – Which Contract Type Should I Use?

Yes Is the scope well defined? No

Fixed Fee side Cost-reimbursable side

Are there key Are there key

performance performance
objectives, such as time, Yes Yes objectives, such as time,
cost or quality? Fixed Price Cost Plus cost or quality?
Incentive Fee Incentive Fee

No No

Yes Fixed Price with Yes

Is it a long term project Cost Plus Is there an award based
Economic Price
that is vulnerable to Award Fee on subjective criteria?
Adjustment
economic fluctuations?

No No

Firm Fixed Price Time and Materials Cost Plus Fixed Fee
(hybrid of fixed-price and cost reimbursable)
Example: Scope is not defined but hourly rate is set
PROCUREMENT
MANAGEMENT PLAN
• Types of contracts to be used

• Risk management

• Whether independent estimates are needed

• Actions necessary by the team in procurement

• How to manage multiple suppliers

• Coordinating procurement with scheduling and performance reporting

• Constraints/Assumptions

• Lead times for deliveries

• Requirements for performance bonds or insurance

• Contractual WBS needs

• How statements of work will be formatted

• Identifying pre-qualified sellers

• Metrics for performance

Description of the product, service, or
result
PSOW
Selected from scope baseline
Level of detail Time

• Product requirements Cost

• Supply requirements
• Reporting requirements

Scope
• Used to solicit proposals from prospective sellers
• Specific terminology and types may depend on
industry and location
• Bids, quotes, and tenders are based on price
• Proposals are based on additional factors
• Capability Request for Information (RFI)
•
• Technical approach •
Need information about the goods and services
Usually precedes RFQ or RFP

• Procurement terminology varies by industry Request for Quotation (RFQ)

• How vendor will satisfy requirements
• Includes more information about costs
• Also called Invitation for Bid (IFB)

Request for Proposal (RFP)

• The solution is not clear
• Includes how the vendor will approach the work
• Most formal of the requests
SOURCE
SELECTION
CRITERIA Other Criteria:

• Included in the procurement ___ Understanding of need

documents ___ Technical capability
• Criteria used to rate or score seller ___ Risk
proposals ___ Management Approach
___ Warranty
• May be limited to purchase price ___ Past performance
including costs and ancillary expenses ___ References
___ Proprietary right or intellectual property
rights
SELLER SELECTION PROCESS

Invitation Evaluation and Contract Signing

Selection

• Advertising • Independent estimates • Procurement

• Solicit vendor responses • Expert judgment negotiations
• Bidder conferences • Proposal evaluation
techniques
• Analytical techniques
Advertising
Solicit vendor responses
Bidder conferences
EVALUATION
Technical Technical Past Understanding Overall cost Total
capability approach performance of need

AND Weighting
Factors
5 4 4 3 4

SELECTION
(1-5)

STAGE Seller 1

Raw score 5 3 3 2 2

Score 25 12 12 6 8 63

• Independent assessment
• Compare bids Seller 2

Raw score 3 5 4 4 3
• Expert judgment Score 15 20 16 12 12 75

• Evaluation techniques
Seller 3

Raw score 3 3 3 3 4

Score 15 12 12 9 16 64
PROCUREMENT DOCUMENTS
Nondisclosure agreement (NDA)
protects sensitive
information and trade
secrets Service Level Agreement (SLA)
Memorandum of Understanding
outlines performance expectations and
outlines performance criteria when a
metrics
contract cannot be enforced
(government inter-agency agreements)
Purchase Order (PO)
outlines description, quantities,
and price of goods being
purchased

Cease-and-Desist
one party informs the other to
Warranty stop an activity they are doing
a guarantee that a product will and warns them not to do it
Letter of Intent again
perform as stated for a minimum
period of time documents the intent to move forward with
contract negotiations
STAGE
Letter of intent

Memorandum of understanding

Procurement negotiations

Agreements about key items

• procurement statement of work
• authority to make changes
• terms and conditions
• service level agreements
• warrantees
• legal ramifications
• nondisclosures & information privacy
• financing
• property rights
• schedule
• price
 Direct and
Manage
Project
All Project Changes
Work

Control Control Control Integrated Change Control

Risks Procurements Quality

Perform Contract Change Control System

Integrated
Change
Control

Procurement processes interact and overlap with processes being conducted by the project team and other vendors.
These processes should be integrated, including incorporating contract change control with integrated change control.
• Structured review of seller’s progress against the
Procurement Statement of Work (PSOW)
• Identify successes and challenges
• Inspections and audits
• Required by the buyer and supported by the seller
• Inspections evaluate the deliverables
• Audits evaluate the processes
Breach of Contract
Can occur on either the buyer or seller side
Does not mean either work or payment is voided
Litigation is the least desirable result
The project manager has an ethical responsibility to make sure breach doesn’t occur
Material Breach is egregious and may result in damages collected and all work or payments stopped
Claims Administration occurs when a disagreement occurs and an agreement can’t be reached
Process is often pre-determined in the contract
Alternative dispute resolution (ADR) may be necessary
Negotiation is the preferred method
 Close Procurements

Agreement Agreement Agreement

Iterative

Close Project

1
Lessons
Learned Once

All procurements must be closed before a project or phase can be closed.

CONTROL PROCUREMENTS:
DELIVERABLES

Project Documents Updates

Documentation and Lessons Learned

• OPA updates
• Correspondence
• Payment schedule and requests
• Seller performance evaluation documents
• Helps with future procurements and vendor
selection
 MANAGE PROJECT KNOWLEDGE
Purpose
• Leverage knowledge
• Improve project outcomes
• Share knowledge
Types of Knowledge
• Explicit
• easy to share
• obtained through words, pictures, or numbers
• examples: a math formula, or step-by-step instructions for doing something
• Tacit
• difficult to share
• obtained through unique experiences, expertise, thoughts, and insights
• Examples: learning to drive or learning to play an instrument
 LESSONS LEARNED
Knowledge gained during the project which is used during the current project and stored
for use in future projects.

Lessons Learned Register: used to record knowledge during the current project

Lessons Learned Repository: historical information that records knowledge from past
projects and is updated for use in future projects

Lessons Learned Lessons Learned Repository

Lessons Learned Register
Repository (future projects and
(current project)
(past projects) organizational learning)
 MONITORING AND CONTROLLING PROJECT WORK

• Monitoring and Controlling includes:

• Determining whether deliverables meet requirements
and adhere to product acceptance criteria
• Collecting, measuring, and inspecting
• Identifying variance from the three baselines
• Scope
• Schedule
• Budget
• Assessing trends
• Reporting performance information
• Realigning performance to the plan, or adjusting the plan
WORK PERFORMANCE DATA
• Raw observations and measurements identified during activities being performed.

Number of completed activities 8

Actual costs $12,500

Number of defects 3

Stakeholder issues 6
 WORK PERFORMANCE INFORMATION

Actual Plan Variance Requirements

Number of
completed 8 7 +1 Met
activities

Actual costs $12,500 $11,000 +$1,500 Not met

Number of defects 3 5 -2 Met

Stakeholder issues 6 3 +3 Not met

WORK PERFORMANCE REPORTS

Effective performance reporting

• Accurate
• Complete
• Timely
• Easy to understand
 CHANGE REQUESTS
May originate from
New rules and regulations
Organizational changes
Customer request
Project team request
Project needs Time

• May affect Cost

• Project management plan or subsidiary plans
• Resources
• Addition of members
• Replacement of members
• Outsourcing
• Budget, schedule, or scope baselines Scope
• Quality metrics or standards
• Management reserves
CONTROL SCHEDULE
• Compare plan against actual
• Earned value management
• Manage changes to the schedule baseline
• Look for variances
• Determine corrective or preventative actions
• Recognize trends
CONTROL COSTS
Earned Value Management

• Compare actual performance to the

plan (baselines)
• Identify variance
• Make adjustments to realign
performance to the plan
 A technique for measuring project
performance

Project Budget = $100,000

“Budget at Completion (BAC)”

EARNED VALUE Project Schedule = 1 year

MANAGEMENT
(EVM)
Budget at Completion, or BAC, is the total planned
cost for the project. It is the total approved budget
for completing all scheduled activities.
BUDGET AT
COMPLETION
(BAC)
EXAMPLE
Project Schedule = 1 year

Project Budget = $100,000

Planned Value, or PV, is the amount of the
budget allocated to the work that was
planned to be completed by a specific point
in time. It is the Budget at Completion
multiplied by the percentage of time that
has passed in the project schedule.

Planned Value (PV) = Budget at Completion (BAC) * Percent of Time Passed

EXAMPLE 3 months = 25% = $25,000
Project Schedule = 1 year 6 months = 50% = $50,000
Project Budget = $100,000 9 months = 75% = $75,000

Planned Value (PV) = Budget at Completion (BAC) * Percent of Time Passed

The actual value of the work that has
been completed so far, based on the
budgeted funds assigned to that work. It
is the Budget at Completion multiplied
by the percentage of work actually
completed.

Earned Value (EV) = BAC * Percent of Work Completed

 Project Schedule = 1 year
EXAMPLE
Project Budget = $100,000

After 4 months, you have completed 60% of the work.

What is the earned value?

$100,000 x 60% = $60,000

Earned Value (EV) = Budget at Completion (BAC) * Percent of Work Completed
 Project Schedule = 1 year
EXAMPLE
Project Budget = $100,000

After 6 months, you have completed 40% of the work.

What is the earned value?

$100,000 x 40% = $40,000

Earned Value (EV) = Budget at Completion (BAC) * Percent of Work Completed
Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)

Compare Earned Value (EV) to Planned Value (PV)

✓ No variance means “on time”

✓ Positive variance means “early”, or ahead of schedule
× Negative variance means “late”, or behind schedule

LATE
 Project Schedule = 1 year Project Budget = $100,000

Time Passed Earned Value Planned Value Schedule Variance

3 Months $22,500 $25,000 -$2,500 LATE

EXAMPLE 6 Months $55,500 $50,000 $5,500 EARLY
9 Months $73,000 $75,000 -$2,000 LATE

Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)

 Schedule Performance Index (SPI) = Earned Value (EV)/Planned Value (PV)

✓ SPI = 1 means “on time”

✓ SPI > 1 means “early”
× SPI < 1 means “late” 1.2 = $60,000/$50,000

EXAMPLE EV = $60,000 An SPI of 1.2 means “early”

PV = $50,000
Note: An SPI value greater than one indicates that a project is ahead of schedule. A value less than one indicates
the project is behind schedule. For example, an SPI of 1.2 indicates that a project is 20% ahead of schedule.
ACTUAL COST (AC)
Actual cost, or AC, is the total cost incurred up
to a specific time
Cost Variance, or CV, is the difference between what a project has earned
to date and what it has cost. It is the earned value minus the actual cost.
This tells you how well the project is performing in terms of costs.

Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)

✓ No variance means “on budget”
✓ Positive variance means “under budget”
× Negative variance means “over budget”

Note: a negative CV shows that the project has earned less than has been spent. A positive
value means the project's cost performance is better than expected – for each dollar of value
earned, less than a dollar was spent.
 Project Schedule = 1 year Project Budget = $100,000

EXAMPLE

Time Passed Earned Value Actual Cost Cost Variance

3 Months $22,500 $22,500 0 “on budget”

6 Months $55,000 $50,000 $5,000

9 Months $72,500 $77,500 - $5,000

Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)

 COST PERFORMANCE INDEX (CPI)

EV = $75,000
AC = $70,000

Cost Performance Index (CPI) = Earned Value (EV)/Actual Cost (AC)

✓ CPI = 1 means “on budget” 1.07 = $75,000/$70,000

✓ CPI > 1 means “under budget”
× CPI < 1 means “over budget”
A CPI of 1.07 means “under budget”
 DETERMINING PROJECT PERFORMANCE (EXAMPLE 1)

You have a budget of $20,000 to hire and train 10 new employees. Your schedule baseline is eight weeks. Four weeks
have passed and you have completely onboarded 4 employees. You have $13,500 left of your original budget.

BAC = $20,000 Is the project:

EV = $20,000 * .40 = $8,000 a) Ahead of schedule, under budget
PV = $20,000 * .50 = $10,000 b) Ahead of schedule, over budget
c) Behind schedule, under budget
AC = $6,500 d) Behind schedule, over budget
SV = $8,000 - $10,000 = -$2,000
SPI = $8,000
= .80
$10,000
CV = $8,000 - $6,500 = $1,500

$8,000 c) Behind schedule, under budget

CPI = = 1.23
$6,500
 Determining Project Performance (Example 2)
You have $10,000 left of your budget of $14,000 for the creation of a new employee handbook and video. The employee
handbook will be 25 pages. You have completed 25% of the work and 20% of your scheduled time has passed.

BAC = $14,000 Is the project:

EV = $14,000 * .25 = $3,500 a) Ahead of schedule, under budget
PV = b) Ahead of schedule, over budget
$14,000 * .20 = $2,800
c) Behind schedule, under budget
AC = $4,000
d) Behind schedule, over budget
SV = $3,500 - $2,800 = $700
SPI = $3,500
= 1.25
$2,800
CV = $3,500 - $4,000 = - $500

$3,500 b) Ahead schedule, over budget

CPI = = .88
$4,000
SCENARIOS AND SOLUTIONS

ON TIME! Early!

No Change Resource Optimization: Smoothing or Levelling

LATE! LATE!

Schedule Compression: Crashing or Fast Tracking Re-evaluate viability of the project

Possibly reduce the scope
ESTIMATE AT
What if our original BAC was flawed?

COMPLETION (EAC)
What if an EEF change affects many of our work packages?
What if we experience an unexpected risk event?

Budget at Completion (BAC) = The planned project budget

Estimate at Completion (EAC) = The new forecasted budget

Forecasting – As the project progresses, the project team

may develop a forecast for the Estimate at Completion (EAC)
which may differ from the Budget at Completion (BAC) based
on the project performance.
EAC = AC + Estimate to Complete (ETC)
Employee Retention Project
= $5,000 + $6,000 $10,000

= $11,000
+
Surveys Focus Groups
$2,500 $7,500

+ +
Survey Creation Survey Analysis Meetings
$1,000 $1,500 $7,500

SME + Printing + Data Analysis + Facilitator + Venue

Estimated Estimated Actual Actual Estimated
=$500 =$500 =$2,000 =$3,000 =$5,000
We are pretty close to our
cost estimates. Earned Value = $750,000
I think we can assume this Actual Cost = $700,000
CPI = 1.07
will continue.

ESTIMATE AT
COMPLETION
Project Budget $1,000,000
Project Schedule = 1 year
 Scenario: Assumes the same rate of spending will continue.
Budget = $1,000,000
Schedule = 1 year
CPI = 1.07

Budget at Completion (BAC)

Estimate at Completion (EAC) =
Cost Performance Index (CPI)

$1,000,000
$934,579 =
1.07

What if the CPI had been .89 instead?

 Scenario: Assumes the same rate of spending will continue.
Budget = $1,000,000
Schedule = 1 year
CPI = .89

Budget at Completion (BAC)

Estimate at Completion (EAC) =
Cost Performance Index (CPI)

$1,000,000
$1,123,596 =
.89
Earned Value = $625,000
Actual Cost = $700,000 It’s too bad about that hurricane. If it
CPI = 0.89 wasn’t for the extra supply costs we
would be on budget. Good thing we are
back on track now.

ESTIMATE AT
COMPLETION
Project Budget $1,000,000
Project Schedule = 1 year
 Scenario: Assumes we deviated from the budget, but it was an isolated
incident and now we are back to normal spending.
Budget = $1,000,000 Event: Hurricane
Schedule = 1 year Schedule = 1 year
Cost Variance = -$75,000
CPI = .89

Estimate at Completion (EAC) = AC + (BAC – EV)

Estimate at Completion (EAC) = BAC – CV
$1,075,000 = $1,000,000 – (-$75,000)
Uh-Oh CPI = 0.79
It’s a tough situation. We
have no hope of meeting SPI = 0.92
our original budget and AC = $700,000
the deadline is firm. EV = $550,000

ESTIMATE AT
COMPLETION
Project Budget $1,000,000
Project Schedule = 1 year
 Scenario: Assumes poor cost performance and a firm completion deadline

Budget = $1,000,000
Schedule = 1 year
Estimate at Completion (EAC) = AC +
{ (BAC - EV)
(CPI * SPI) }
CPI = .79
SPI = .92
AC = $700,000
$1,319,152 = $700,000 +
{ ($1,000,000 - $550,000)

(0.79 * 0.92)
}
EV = $550,000

BAC – EV can also be described as “Work Left”

EAC FLOW CHART
Was the original BAC flawed? Yes EAC = AC + ETC

No

Do you expect this rate of spending to Yes EAC = BAC/CPI

continue?

No

Was any deviation from baseline an Yes

EAC = AC + (BAC – EV)
isolated incident? EAC = BAC - CV

No

Is your deadline firm? Yes EAC = AC + { (BAC – EV)

(CPI * SPI) }
 ESTIMATE TO COMPLETE (ETC)
Estimate to Complete (ETC) – The expected cost to finish all the remaining project work.
What information can we use to determine the ETC?

1. Project
360
Phase 1.1. 1.2. 1.3.
270

Story 180 Deliverable 1.2.1. 1.2.2. 1.2.3.

Points
90 Sub-Deliverable 1.2.2.1. 1.2.2.2. 1.2.2.3.

0 Work package 1.2.2.2.1. 1.2.2.2.2. 1.2.2.2.3.

0 1 2 3 4 5 6
Sprints

In Agile projects, a burndown chart is used to show the remaining work.

ESTIMATE TO COMPLETE (ETC)

EAC = $934,579
AC = $700,000

Estimate to Complete (ETC) = EAC - AC

$234,579 = $934,579 - $700,000

 BURN RATE

The burn rate is the rate at which you are spending money. This can
help you determine if you will stay within your budget.

Example = You have a 10-month

project with a $25,000 budget. Your
burn rate is $3,000 per month.
What does this mean?
VARIANCE AT COMPLETION (VAC)

BAC = $1,000,000
EAC = $934,579

Variance at Completion (VAC) = BAC - EAC

$65,421 = $1,000,000 - $934,579

A positive variance at completion means the project will come in under budget
TO COMPLETE PERFORMANCE INDEX (TCPI)
Scenario #1 Original budget can be achieved.

BAC = $1,000,000
EV = $750,000
AC = $700,000

(BAC – EV) “work left”

To Complete Performance Index (TCPI) =
(BAC – AC) “money left”

> 1 is bad = 1 is on budget < 1 is good

WORK work work
money money MONEY

Greater than one means you will have to spend more efficiently going forward
TO COMPLETE PERFORMANCE INDEX (TCPI)
Scenario #1 Original budget can be achieved.

BAC = $1,000,000
EV = $750,000
AC = $700,000

(BAC – EV) “work left”

To Complete Performance Index (TCPI) =
(BAC – AC) “money left”
< 1 is good
($1,000,000 – $750,000)

✓
.83 = work
($1,000,000 – $700,000)
MONEY

Greater than one means you will have to spend more efficiently going forward
TO COMPLETE PERFORMANCE INDEX (TCPI)
Scenario #2 Assumes original budget cannot be achieved.
BAC = $1,000,000
EAC = $1,075,000
EV = $700,000
AC = $775,000
(BAC – EV) “work left”
To Complete Performance Index (TCPI) =
(EAC – AC) “money left”

> 1 is bad = 1 is on budget < 1 is good

WORK work work
money money MONEY
TO COMPLETE PERFORMANCE INDEX (TCPI)
Scenario #2 Assumes original budget cannot be achieved.
BAC = $1,000,000
EAC = $1,075,000
EV = $700,000
AC = $775,000
(BAC – EV) “work left”
To Complete Performance Index (TCPI) =
(EAC – AC) “money left”

($1,000,000 – $700,000)
1=
($1,075,000 – $775,000)
 CLOSING THE PROJECT OR PHASE

Close Project or Phase

Hand off completed product and satisfy

completion or exit criteria
Performing Customer
Organization
Delivered
Solicit feedback from the customer

Complete Final performance reporting and

update lessons learned, release resources
 CLOSING THE PROJECT OR PHASE
OPA Updates
• Project documents
• Operational and support documents
• Necessary to maintain or support the deliverable
• Project or phase closure documents
• Confirm completion of the project
• Customer acceptance documentation
• Reasons for termination if project not completed
• Lessons learned repository
• For use by future projects

Contract

@
Contracts Invoices Archived communications Schedules Past project documents
FINAL REPORT
Summary of project or phase
Project objectives
• Criteria used for evaluation
• Verification that criteria were met
• Evaluation of unmet criteria
Confirmation that deliverables achieved the business
needs or will meet needs in the future
Summary of risks encountered during the project
 ETHICS IN CLOSING
• Ensure deliverables have been completed based on documented and agreed-
upon requirements
• Protect the organization from additional costs or charges after completion
• Communicate transparently with stakeholders regarding lessons learned in
final project report
• Contribute to the development and growth of other project professionals
through the capture of comprehensive lessons learned EEF and OPA updates
• Evaluate customer and end-user satisfaction and enhance future relationships
• Formally close the project or phase
 DAILY BOOTCAMP SURVEY

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