What is Opportunity Cost and Why Do You Need to Understand It

Depositphotos 11632108 xs CopyIf you are in the middle of preparing to take the Project Management Professional (PMP)® Exam you have undoubtedly read through A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition at least once and possibly even more. If you are just starting to prepare to take the PMP Exam, then you should be planning to read through the PMBOK® Guide at least a couple of times. The PMBOK® Guide should be your primary resource when studying for the PMP Exam as it is the globally recognized standard and guide for the project management profession; however as you probably already know, it does not cover every possible topic that the PMP Exam may touch on.

One of those topics not covered by the PMBOK® Guide is Opportunity Cost. There is no guarantee that you will see it during your PMP Exam, but there is also no guarantee that you will not. Here we will explain why as a project manager you need to understand Opportunity Cost, beyond that it may be on the PMP Exam, and what exactly Opportunity Cost is. We will also go through a couple of examples of Opportunity Cost questions.

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Featured PMP Exam Lessons Learned from Jonathan Emmons, PMP

PMP exam lessons learnedHis study habits and lessons learned on becoming a PMP shared to us by PM PrepCast student Jonathan Emmons, PMP.

I should start by saying that my study habits are not something I would recommend to others, especially those that aren't comfortable taking high-stakes exams or have any doubt about whether they are ready. There's a lot of good advice out there regarding study plans, using multiple resources, etc. that I would point you towards instead.

I took a minimalist approach; my contract ended recently and I'm still looking for my next gig, so in my case the emphasis was on speed and expense. I originally purchased the PM Prepcast because I couldn't afford to shell out the $1700+ it was going to take to sit in a classroom for four days, though in hindsight this was a blessing as I found that spreading out the lessons was better for me. I would usually try to knock out 5-6 lessons in a sitting - somewhere around 3 hours or so - which was about as much as I could do at one time without losing my focus.

I didn't use any other resources outside of the Prepcast, the exam simulator, and the PMBOK guide (which I used mostly as a reference, as I found the format too disjointed for sustained reading). I know that Cornelius and his team are likely wagging their fingers at me for admitting to that, but again, do as they say, not as I did. I was taking a gamble, and one that luckily worked out in my favor as I now have three new letters I can put to work in my job search.

That said, here are a few things that I found important along the way:

- I'll vouch for the "don't memorize" advice that was repeated throughout the Prepcast lessons. The ITTOs are important, but the types of questions I saw were focused much more on the way the outputs of one process become inputs to other processes and how the different pieces fit together, not on spitting out a complete list for a specific process. The Prepcast talks about this, but after taking a few practice exams I found that studying the flow of ITTOs between processes was one thing that I needed to focus on on my own using the PMBOK Guide, and this definitely paid off on the real exam. Focus on the relationships, not the lists.

Read more here: https://www.project-management-prepcast.com/kunena/lessons-learned/4120-passed-6-27-first-attempt


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PMP Exam Tip: Expect the Unexpected During Your PMP Exam

PMP exam tipAs the saying goes: “Anything that can go wrong will go wrong”. Keep this in mind when preparing for the PMP Certification. It simply means that you should not solely depend on what others say about their experiences in taking the exams. Everyone's experience is different.

What you must remember at all cost is that you have prepared well for the exam and that you can do this! When you walk through the doors into the exam room, the most important thing for you is to pass the exam. You can partially achieve this by preparing yourself physically and mentally for the event. After the exam everyone has a story to tell of what happened during their exam or what “strange” rules their test center had.

For example, one of my students wasn't allowed to change any clothing during the exam and the other one wasn't allowed to use the bathroom. These examples are of course extreme but they might happen to you.

So what if something similar happens to you? What if they throw an unexpected rule at you when you check in for the exam? Take a deep breath. Listen to this "odd rule" that the testing center staff is informing you of. And then follow it. Don't jeopardize your chances. Play along and do the best you can. Adjust yourself mentally to the situation and work with it.

Remember: What really matters is that you relax, concentrate and pass the PMP exam.


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Free PMP Exam Sample Question

PMP exam sample questionWhat is the best way to finish a formal customer presentation that will promote effective communication?

A. Taking minutes of the meeting
B. Offering the customer a cup of coffee
C. Asking the customer if they have any questions
C. Summarizing and recapping

HINT: Answer the question from the perspective of the best method of communication.

All our questions are updated to the latest PMBOK® Guide standard. Stop by at http://free.pm-exam-simulator.com and try the PMP Exam Simulator free for 3 days. We also offer 110 free questions at http://www.free-pm-exam-questions.com. We are a PMI Registered Education Provider.

Answer and Explanation:
The correct answer is D.

Taking minutes of the meeting is not a good way to wind up a meeting. Minutes of the meeting should be taken during the meeting and not after the meeting. It's nice to offer coffee but here we are talking about effective communication and not being a nice person! Asking the customer if they have any questions is a mandatory requirement of effective communication but you must first wrap up your meeting by giving a summary of what has been discussed.


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PMBOK Guide 5th Edition - Process Groups and Processes - The Complete Guide

PMBOK Guide 5th Edition - Process Groups and Processes - The Complete Guide
Whew! By the time you’ve got through the first page of the PMBOK® Guide you’ll have come across the terms Knowledge Areas and Process Groups. (They are always capitalized because they are really important.) Add to that a ‘normal’ process and you’ve got three very different things that form the backbone of the book.

But here’s the thing. They overlap, interact and depend on each other. It’s so easy to get confused between a PMBOK Knowledge Area and a Process Group, and then don’t get me started on those 47 processes that are supposed to fit in somewhere.

It’s essential to get your head around how everything slots together when you are preparing for the PMP exam.

Let me show you how!


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