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What is the most difficult question you have seen?
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The wage rate of the workers is $19.00, Fringe Benefit costs are 25% of the wages and the overhead costs are 70% of the wages plus benefits. What is the "Loaded" hourly rate for these workers?
Anyone knows how to solve this type of question??
Let's solve it together.
Fringe Benefit = (Wage Rate) * 25% = $4.75
Wage Rate + Fringe Benefit = $19.00 + $4.75 = $23.75
Overhead = (Wage Rate + Fringe Benefit) * 70% = $23.75 * 70% = $16.63
Loaded Hourly Rate = Wage Rate + Fringe Benefit + Overhead = $23.75 + $16.63 = $40.38
So, simply using your calculator, you have to press buttons in the following sequence:
19 + 25 % + 70 % =
The answer 40.375 shall be rounded to the nearest larger cent amount: $40.38
On your exam you will always have multiple choices, and the answers for such question more likely would be as follows:
So, it will be quite easy to judge even without performing precise calculations ;)
Edited Wed, Apr 29, 2009 12:52 AM
- Wed, May 6, 2009 9:56 PM
Correction to the answer above:
The math sentence should be ($19 * (1+0.25)) * (1+0.7) = 40.375
That’s correct. However, the majority of calculators have % button, that would allow to make a shortcut :)
What EPV stands for? and what is the difference between EPV and NPV? What should we know about EPV for choosing a Project?
Not much you need to know for the exam. There will be no calculations, or anything related to these numbers. However, you have to keep in mind, that EPV stands for Expected Present Value, and NPV stands for Net Present Value.
Basically, NPV attempts to answer the question, “What is the equivalent, lump-sum worth of this project?” According to NPV logic, given two projects, the one with the larger NPV should be preferred.
Regarding the EPV, you might see on the exam, slightly different abbreviation,ENPV – expected net present value. Depending on how it is applied, ENPV can produce estimates of uncertainty in the value of the overall project portfolio and adjust project value to account for risk. It can also be coupled with methods for quantifying the non-financial or indirect components of project value. It is, therefore, a useful tool for computing project and project portfolio value. However, the computations necessary to compute ENPV can be difficult. The method is best reserved for very large and risky projects.
With ENPV, rather than calculate a single time-stream of project cashflows and other project impacts, alternative scenarios are defined representing the range of possibilities. Simulation techniques are often used to generate the alternative scenarios, which may be represented in as a decision tree (a graphic structure wherein alternative sequences of choices and outcomes are displayed as branches in the tree and the various paths through the tree represent the alternative scenarios) or event tree (similar to a decision tree, but without nodes and branches representing alternative choices). Probabilities are associated to each scenario in the tree. A project NPV is computed for each scenario, and the ENPV is the probability-weighted sum of the values.
Again, this is definitely a very useful tool for Portfolio Management, however I doubt you need to know anything beyond the above said for the exam.
Great post, I never heard of these questions.
However, I do have a tricky question, I could not solve it.
Your project exceeded costs in the past caused by an underestimation of resource costs in the cost baseline:
PV: $1,200,000, EV = $1,000,000, AC = $1,200,000
You expect the underestimation to influence the future as much as it did in the past.
If the BTC (Budget to Complete) is at $1,000,000, what should be your new EAC (Estimate at Completion)?
The Correct Answer is : D: $2,400,000
Any help is appreciated. I'm little confused about underestimation of resource costs and future ???
For the above problem, I tried the below;
EAC = BAC / CPI = (AC + BTC) / CPI = 2,200,000 / 0.83, this gives a differnt answer. I tried couple of other ways, still couldn't resolve.
Let’s think together:
You know your Actual Cost $1,200,000 and Budget To Complete $1,000,000, and you also know that your baseline has a lapse = PV - EV = $1,200,000 - $1,000,000 = $200,000 (you wouldn't have that if estimated properly, right?). So, Estimate at Completion now would be an amended value of the expected cost of completing project work plus the actual cost.
So, EAC = BTC + lapse + AC = $1,000,000 + $200,000 + $1,200,000 = $2,400,000
Note, they are saying that there is no need to rely on CPI as your baseline incorrect, and they know why…
Hope this helps.
Edited Thu, May 14, 2009 6:26 AM
I’ve noticed email version of the answer has some corrections made by the web site parser. Please don’t trust it. It’s hard to do anyway, since all calculations there looks strange. Thank you!
Wow, great answer, Everytime I see difficult questions on cost, I'm learning new formulae, not mentioed in any books, thanks Vitaly. After seeing your explanation, it seems sensible, but getting there is most difficult thing. Thanks again.
i need help in collecting all the formulas of the PMP exam.
I did the exams and I can tell you that the questions in the exams are very straight forward, you need to memorize as much as as you can the Inputs, Tool n Techniques, Outputs and learn how to read the questions and answers...
Know PMBOK and you have a set of questions, practice them as much as you can - PMBOK + Learning how to understand the questions are key to succeed the exams
All required to remember formulas are well explained here in our forums.
Please inspect the following pages:
If you can manage to understand these topics, and to remember the formulas, you'll be fine on your exam. One advice, during the exam, when you will be allowed to start taking notes, put all these formulas down to keep them handy, instead of trying to recall them each time when you need them.
Thank you M so much, dear vitaliy, is there any change in formulas in the PMBoke fourth edition. another qution to all, can you peasle advice me if the following coukrse provided by PMcampus good or not, have you heard about it.
PMP CERTIFICATION PLATINUM PACKAGE
I just finished 9 weeks of PMP prep classes using Rita's book. So I am a little confused with some of your terminology. I have never heard of Budget to Complete. Rita used the term Estimate to Complete. Is that the same? Also, you refer to a lapse. That equation looks similar to the Schedule Variance equation - is that what you are referring to?
Thanks much for your help. BTW, I am heads down studying for the PMP Cert test.
Yes, you are right, Estimate To Complete would be a proper term to use.