To determine the NPI, calculate the present value of cash flows for each year of the project. The present values are summed up and then the initial investment is subtracted from the sum.

Reserve analysis is the process of determining if sufficient reserves/contingencies have been included in the budget estimating and planning.

Successful Projects didn't create this idea. A student told about this tip for the PMP exam dump sheet. She didn't remember exactly where she read it, but after searching a while, we think the idea may have originated from the follks at Global Associates (www.globalassociates.com) because it's listed on their web site - but were not entirely sure. But here's the gist of the tip:

Start writing down your Earned Value formulas by putting these things in a vertical column on your sheet:

SV

SPI

CV

CPI

Then add the equals sign to each row, so it looks like this:

SV=

SPI=

CV=

CPI=

Then add the EV part of the equation to each row, so it looks like this:

SV=EV

SPI=EV

CV=EV

CPI=EV

Then in the last step you have to remember a bit about what each thing is, but the previous steps got the logic all set up for you to complete the formulas based on what the relative information is. There are two divide formulas and two subtraction formulas. The indexes use the divide formulas. That goes as follows:

SV=EV-PV

SPI=EV/PV

CV=EV-AC

CPI=EV/AC

**Mean:** The average.

**Median:** Sort the values from smallest to largest. If there is an even number of values, the median is the average of the two middle numbers. If there is an odd number of values, the median is the one in the middle of the pack.

**Mode:** The value that occurs most often.

And another term that often is used along with these is **standard deviation,** which is represented by the symbol σ and it basically shows how much variation there is from the mean.

Estimates are supposed to be provided at "fully burdened rates" - meaning they include overhead costs. This is also called fully loaded rates.

The minimum return rate for a project that an organzation sets for consideration of new projects.

If your project is the type that doesn't require a budget or it's not expected by the stakeholders?

**Do it anyway!**

Develop a project budget because it helps make sure you're all on the same page, it enables you to recognize project performance issues sooner, and it better prepares you for risk management and the questions are going to pop up later.