Hacking the PMP: Studying Cost Variance - Smartsheet

Cost variance (CV), also known as budget variance, is the difference between the actual cost and the budgeted cost, or what you expected to ... Skiptomaincontent HackingthePMP:StudyingCostVariance SmartsheetContributor KateEby on Apr18,2017 TrySmartsheetforFree GetaFreeSmartsheetDemo Themostcriticalfunctionofaprojectmanager(PM)iskeepingprojectsonbudget.Projectstakeholdersbecomeconcerned,withgoodreason,whenaprojectisrunningeitheroverorunderbudget.Projectsthatareoverbudgetcanaffectthecompany’sprofits,asmoremoneymaybeneeded,orthequalityoftheprojectmaybejeopardizedwithnotenoughfundstocompleteitcorrectly.Projectsthatareunderbudgetruntheriskofhavingtoreturnfundsatcompletion,whichcanthreatenfuturegrants.Thequalityoftheprojectmaybequestionedifthecarefully-scheduledbudgetisnotspentasintended,andstakeholdersmayassumecornerswerecut.RegularvarianceanalysescanhelpPMsdeterminethestatusoftheirprojectbudget,andadjustthingslikestaffing,resources,materials,andpossiblyeventheprojectplan.TheseanalysesallowPMstocommunicateeffectivelywiththeirstakeholderssothattherearenosurprisesattheproject’scompletion-especiallywhenitcomestofinances.EveryPMneedstobeabletoperformvarianceanalyses,whichiswhytheyarepartoftheProjectManagerProfessional(PMP)®certificationexam.  However,theexamischallenging-evenforPMswithmanyyearsofexperience.Itisnotfortheinexperiencedstudent,andconsideringthetimeandeffortrequiredtopass,itisnotfortheuncommittedprofessional,either.Someexpertsestimatethatonlybetween30and50percentofprofessionalspasstheexamonthefirsttry.Thisexplainswhydedicatedstudentsshoulduseeverytipandtricktheycanwhilestudyingtoretainthematerial.FormoreinformationontakingthePMPexam,seeHowCanaPMPStudyPlanHelpYouPasstheExam?ThisarticlecanprepareyouforthataspectofthetestbygivingyouadditionalmethodstorememberyourPMPmaterial.Itwillalsoteachyouaboutcostvarianceinprojectmanagement,varianceanalysisinthedifferentfieldsofaccountingandmanufacturing.Lastly,itwillteachyouaboutbudgetingandstandards. InThisArticle CostVarianceandthePMPExam WhatIsCostVarianceforProjectManagement? ProjectCostManagement VariancesinCostAccounting WhatIsCostVarianceinManufacturingAccounting? VarianceAnalysis WhatIsaBudget? WhatAreStandardsinCostManagement? WhatIsaStandardCostSystem? HowCanYouImproveYourMemoryforTestTaking? LearnMoreAboutCostVarianceandthePMPExam EasilyManageCostVariancewithSmartsheet CostVarianceandthePMPExam ThePMPexam,givenbytheProjectManagementInstitute(PMI),isastandardizedexamthatisconsideredthegoldstandardforPMsworldwide.ThePMIreleasesconcepts,formulas,andprocessesthatPMsindustry-wideusetodesign,implement,andmeasuretheirprojects.HavingthePMPcredentialsignifiesthatyou’vemasteredthePMImaterial,havetheexperiencenecessarytouseitsconcepts,andcanperformyourPMdutiesinthebestwaypossible.Inotherwords,itmeansyouwillcompletethatyourprojectscorrectly,everytime.  ThePMPcertificationexamtestsprofessionalson10differentknowledgeareas: ProjectIntegrationManagement ProjectScopeManagement ProjectTimeManagement ProjectCostManagement ProjectQualityManagement ProjectHumanResourceManagement ProjectCommunicationsManagement ProjectRiskManagement ProjectProcurementManagement ProjectStakeholderManagement Theseknowledgeareasgrouptogetherthetheoriesandtechniquesthatmakeupthebulkofaprojectmanager’swork.The47processesrequiredforthePMPexamarespreadoutamongstthe10knowledgeareas.CostvariancefallsunderProjectCostManagement,buttheinformationrequiredtocalculatecostvariancecomesfrommultipleknowledgeareas.    Simple,powerfulprojectmanagementwithSmartsheet.Seeforyourself. Smartsheetisacloud-basedplatformthatallowsteamsandorganizationstoplan,manage,andreportonprojects,helpingyoumovefasterandachievemore.SeeSmartsheetinaction.   Watchafreedemo WhatIsCostVarianceforProjectManagement? Costvariance(CV),alsoknownasbudgetvariance,isthedifferencebetweentheactualcostandthebudgetedcost,orwhatyouexpectedtospendversuswhatyouactuallyspent.Thisformulahelpsprojectmanagersfigureoutiftheyareoverorunderbudget.ApositiveCVshowsthattheprojectisunderbudget,andanegativeCVshowsthattheprojectisoverbudget.Ifthecalculatedcostvarianceiszero(orveryclosetozero),youareonbudget.Inearnedvaluemanagement,valuealwayscomesdowntomoney,whetherthecommodityistimeoractualdollarsspent.Earnedvaluemanagement(EVM)isaprojectmanagementtechniquethatcombinesscope,time,andcoststoforecastinaproject.DeterminingcostvarianceusesmanyformulasthatmayspreadacrossthePMPknowledgeareasandisaslightlydifferentwayoforganizingtheinformation.TheformulaforCVis:    TheformulastodeterminethecomponentsofCVareasfollows:     Earnedvalue(EV)istheamountofmoneyearnedfromthecompletedworkinaspecifictimeframe.Actualcost(AC)iswhatisspentonaproject.BecauseCVisaboutthemoney,itisoftenbettertoreportittogetherwiththeproject’sbudgetsoyourstakeholderscanseethemagnitudeofvariance.FortheProjectManagementProfessional(PMP)certificationexam,CVisanessentialpartoftheProjectCostManagementknowledgearea’searnedvaluemanagement(EVM).ProfessionalswhohavepassedthePMPexamsaythatthequestionsonEVMaredifficultbecausenotonlydoyouneedtomemorizetheformulas,butyoualsoneedtocompletelyunderstandtheconcepts.  TocalculateCV,considerthefollowingexample:  Avaisadeveloperwhowantstohavehercondodevelopmentprojectcompletedinthenextninemonths.Thecostofherprojectis$500,000.Afterfourmonths,$300,000hasbeenspent,and20percentoftheworkhasbeencompleted.Findtheproject’sCVandfigureoutifyouareoverbudgetorunderbudget.    AconceptsimilartocostvarianceforthePMPexamisschedulevariance(SV).PMSuseSVtodetermineiftheyarebehindscheduleoraheadofschedule.Itisthedifferencebetweenthecostofworkperformedversusthecostofworkscheduled.ItisoftenreportedwithCV.TheformulaforSVis:   PVisplannedvalue,thescheduledcostofworktobeperformedinaspecifictimeframe.Formoreinformationonschedulevariance,seeHackingthePMP:HowtoCalculateScheduleVariance.     ProjectCostManagement Costmanagementisplanningandcontrollingthebudgetforabusiness.Itincludesalloftheprocessesinvolvedinaccountingfortheexpendituresandincomingmoneyincludingresourceplanning,costestimates,budgets,andcontrollingthecosts.Inprojectcostmanagement,thistaskfallsonprojectmanagers,butcostmanagementprocessesinteractwitheachotherandwithprocessesinotherareasaswell.Basedontheneedsoftheproject,therecouldbemorethanonepersonorgroupwhoisinvolvedintheprocess.Theprocessesinvolvedinthisinclude:  ResourcePlanning:Inresourceplanning,thetime,materials,labor,andequipmentaredefined,usinghistoricalinformationforanycomparableprojectsandcurrentstandards.Oncethesearedefined,youcanthencalculatetheassociatedcosts. CostEstimating:Duringcostestimating,theprojectmanagercaneitheruseinformationfromotherprojectsasabasis(ifitisavailable)ormathematicalestimatesthateventuallygetrefinedwithmoreinformationastheprojectprogresses.Thecostofeachactivityisdefined. CostBudgeting:Incostbudgeting,thecostestimateandtheprojectschedulearecombinedtogiveanindicationofthetotalcostsandthecostintervals.Thecostbudgetgivesanoverviewofwhenthecostswillariseandsetsabaseline.Insmallprojects,costestimatingandcostbudgetingmapoverlapsomuchthattheyappeartobeasingleprocess.  CostControl:Incostcontrol,projectmanagersmeasurethevariancesfromthecostbaselineandworktocorrectthem.Projectmanagersmakeacontinuousforecastofthecostsbasedonanychangesandshouldbeabletoexplainwhyvariancesexist.  Inprojectcostmanagement,ifyouarespendingaspecificnumberofdollarsonyourproject,youareearningthosedollarsbackintoyourproject.Hence,everyactivityearnsvaluethat’scontributedtoyourproject.Themainformulasintheprojectcostmanagementknowledgeareaincludecostvariance,schedulevariance,costperformanceindex,andscheduleperformanceindex.Toderivethesevalues,aPMmustalsobeabletocalculateearnedvalue,actualcost,andplannedvalue.  OtherformulastestedonthePMPexamandfallintothecostingcategoryinclude: EstimateatCompletion(EAC):Thisisthetotalcostoftheprojectattheend.Thisisoftenalsocalledlatestrevisedestimate(LRE).EACisaforecastandmaybecalculatedastheprojectprogresses.TherearethreewaystocalculateEAC,dependingonyoursituation:   EstimatetoComplete(ETC):Thisisaforecastofhowmuchmoneywillneedtobespenttocompleteyourproject.TherearetwowaystocalculateETC,basedonyoursituation.     CostBenefitAnalysis(CBA):CBAisoftenalsocalledbenefit-costanalysis(BCA).Thisisaprocessofestimatingthecostsandbenefitsofaproposedsolution.Youanalyzethebenefitsfirst,andthensubtractthecostsofthoseactions.Thisapproachmustbesystematicandtakeintoaccounttangibleandintangiblefactors.Tolearnmoreaboutthisprocess,readAnExpertGuidetoCostBenefitAnalysis.ToperformaCBAyoumust:    Obtaincomprehensivecostestimates Obtaincomprehensivebenefitsestimates ChooseaCBAformula Computeascheduleforapaybackperiod  Determinethebestcourseofaction  CBAsuseratiostodeterminethefeasibilityoftheinvestment,andthenetpresentvalueformula(NPV).   WhereC=theexpectedcashflowperperiod,R=requiredrateofreturn,andT= numberofperiodsoverwhichtheprojectisexpectedtogenerateincome.  Onceyouunderstandthisprocess,youcanalwaysuseacostbenefitanalysistemplatetoaidinthecalculations.    VariancesinCostAccounting Costaccountingintheaccountingfieldusesmanyofthesameconceptsasprojectmanagement,buttheyareaimedatcompaniesintheirentirety,notjustataspecificprojectorgrant.Muchofthetime,therearemoremovingpartsandpiecesinanentirecompany,althoughsomeprojectscanfeelliketheyarecompany-wideandthereforejustascomplicated.Theinformationincostaccountingisinternalandusuallyspecificjusttothatbusinessanddoesn’tcomparewellwithotherbusinesses.Iftheexpectedcostsexceedtheactualcosts,thenthereisafavorablevariance(afavorablevariancewouldincreasetheoperatingincome).Iftheexpectedcostsarelower,thereisanunfavorablevariance(anunfavorablevariancewouldreflectadecreaseinoperatingincome).Varianceanalysisisperformedthesamewayinaccountingasitisinprojectmanagement.Incostaccounting,variancesareexaminedfor: DirectLaborCosts:Thisisthecomparisonoftheexpectedandactualwagesandlabor.Thesenumberscouldbedifferentduetopoorscheduling,newlyskilledworkersbeingputintoexperiencedpositions,ordifficultyinthecreationoftheproductbysub-standardmaterials. DirectProductCosts:Thisisthecomparisonbetweentheexpectedandactualmaterialcosts.Thiscanoccurifthematerialisdamagedorspoiledduringhandlingorstorageorintheeventofanindustryshortage,whichcouldresultinhigherbaseofshippingcharges. OverheadCosts:Thisvarianceisthedeterminationofoverheadsuchasrent,taxes,insurance,andsalaries,andthecomparisonbetweentheexpectedandactualcosts.Thesecostsgenerallydonotchangedramaticallyfromonetimeperiodtoanother,butmustbetracked. Anyofthesecategoriescanaccountforaspendingvariance,whichisanyexpensethatisdifferentthanwasbudgetedforsuchasdirectmaterials,labor,oroverhead.Thismayalsobecalledaratevariance,asitisdependentontherateorassumptionsusedtobudget.  Thetermcontrollablevariancecanalsocomeupwhendiscussingvariance:simplyput,themanagementcankeepacontrollablevarianceincheck.However,someofthevariancesdiscussedinthefollowingsectionsareoutofeveryone’scontrol,ascompaniesareoftenatthemercyofmarketplacepressuresandfluctuations.Withcontrollablevariances,managementisabletoreducethevariancebyputtingpoliciesinplaceorplanningmorecarefully-anexampleiswhenmanagementplansforworkerswithlittleexperienceascomparedtothosewithlotsofexperience.Thismayaffecttheoverheadefficiencyvariancewithoutpriorconsideration.  WhatIsCostVarianceinManufacturingAccounting? Costvarianceinmanufacturingaccountingisslightlydifferentfromtraditionalaccountingcostvariance.Manufacturingcompaniesproduceproductsbytakingrawmaterialsandturningthemintofinishedgoods.Theformulasforvariancestilldeterminethedifferencebetweenexpectedandactualcostsinregardstomaterials,overhead,andlabor.However,theoutputofmanufacturingistangible:theyhaveaccountableinventory,specifiedphysicalproductionsites,andoftenproducegoodsbeforehavingacustomerorder.However,someaccountingconceptsinmanufacturingdon’tapplytoserviceormerchandise-orientedcompanies.Forexample,principleslikethefollowing: AddValue:Determiningcostsbasedonthecostofrawmaterialsandthelaborthatisperformedtoproduceanewgood. WorkinProcess(WIP):Usingaseparatebalancesheetforgoodsbothnotyetcompletedandthosereadyforsale. IncurredManufacturingExpenses:Takingintoaccountyouraddvalueandtheactualcostoflabor. Inmanufacturing,theoverarchingcostvarianceisforproduction.Thefollowingisadiagramoftheflowofrelationshipsofthedifferentcostvariancesandhowtheircalculationfiltersintototalproductioncosts.   VarianceAnalysis Theprojectmanagerorcompanymanagementanalystworkingonvarianceanalysislooksforallthesedifferencesinexpectedandactualcosts.Avarianceanalysiscyclebeginswithanalyzingthevariances,figuringoutyourquestions,gettingclarificationforyourquestions,takingcorrectiveactions,andthenpreparingthestandardcostperformancereport.Basethequestionsyouaskonthevariancesthatyoufind.Forexample,ifyourefficiencyvarianceshowsapositiveresultforyourmanufacturingcompany,youmaywanttoaskhowyourworkersproducedthematerialsfasterthananticipated,andwhetherthiscanbeexpectedinthefuture.Thiscanleadtoothercalculations,suchasqualityvarianceandlaborvariances.It’sbesttoperformvarianceanalysisreportingafteranewcycleofoperationsbegins.Thiscycleisillustratedbelow.   Formulasforvarianceanalysishelpyoucalculatestandardcostvariances.Theseformulasarestandardizedacrossindustriesandshouldserveasexamplesofwhattocalculateforthemajorvariances.    Thispricevarianceisinterestedinallthequantitypurchased.   Thisquantityvarianceisonlyinterestedinthequantityused.Quantityvariancesoccurwhentherearedifferencesintheactualandexpectedusageofmaterials,machinetime,orsquarefootage.Quantityvariancesaredependentprimarilyonthebaselineforsetmaterials,andmaysimplyindicatepoorplanning.  Theformulaforlaborstandardcostvarianceis:   Laborvariancecanoccurbecauseofpoorlysetstandards,variationinstaffing,andchangesinbenefits. Forvariableoverheadefficiencyvariance,theformulais:   Variableoverheadefficiencyvariancemeasureshowwellthecompanyusesitsmaterialsorhumanresources(inthisexample,thehoursworked).Withavarianceinthiscategory,managersthatareresearchingthecauseshouldlookcarefullyattheunderlyingstandard. Theformulaforvariableoverheadspendingvarianceis:    Thisvarianceisthecompilationoftheproductionexpenseinformation.Thecausesofthisvarianceincludeoutsourcing,changesinsupplierpricing,oraccountmisclassificationresultinginaccountsnotappearing. WhatIsaBudget? Inprojectmanagement,abudgetisthemoneyassignedtoaproject.Thismoneyisspecifictothatproject,isdesignatedforadefiniteperiodoftime,andismeanttodeliverthegoalsoftheproject.Projectbudgetingismoreaboutwhentospendthemoney,andnotasmuchaboutwhetherthebudgetisoverorunderspent.However,budgetsarealsoawaytomeasureperformanceduringaplanningperiod.Therearemanyconceptsinvolvedinbudgeting.Theseinclude: MasterBudget: Thisistheoverallsetofbudgetsinaproject,andincludesallthelower-levelbudgetsbrokendownbythedifferentphasesorfunctionalareas.Foracompany’smasterbudget,thetimeperiodisusuallyonefiscalyearanditencompassesallofthedifferentdepartments.Amasterbudgetcontainsabudgetedincomestatementandabudgetedbalancesheet.Abudgetedincomestatementisthepredictedincomeforthebudget’stimeperiod,orthemoneysetasidefortheprojectandwhenitisdue.Abudgetedbalancesheethasallofthelineitemstypicallyfoundinabudgetsheet,butitisaprojectionforfuturebudgetperiods.Thissheetismeanttotestwhethertheprojectfinancesarerealistic.  CostPerformanceIndex(CPI):Inprojectmanagement,CPIgivesyoutheabilitytoanalyzetheefficiencyofthecostperformanceofanyproject,orhowwelltheprojectisstayingonbudget.Specifically,youuseCPItomeasurethevalueoftheworkcompletedascomparedtotheactualmoneyspentontheproject.Thisistheratioofearnedvaluetoactualcostandisexpressedby:   FlexibleBudget:Thisisabudgetthatcanchangeoradjusttochangesincompanyactivity.Itgivesabudget“range”andyoucanmakeadjustmentsbasedonthechangesinoperationsandoutputs.Theyalsoallowprojectmanagerstopredictfinancialresultsatdifferentlevelsofactivity.  FlexibleBudgetPerformanceReport:Thisreportdetailstheflexiblebudget. FixedBudget:Afixedbudget,alsocalledastaticbudget,istheoppositeoftheflexiblebudget.Noflexorwiggle-roomisbuiltintoaccommodatechangesinthecompany’sactivity.Thebenefitofafixedbudgetisthatitkeepsthecompanyfiscallyresponsibleandallowsforaccuratemeasurementofchangessuchasincreasedprofits. FixedBudgetPerformanceReport:Thisreportdetailsthefixedbudget. StandardCostSystem:Usethistooltoplanbudgets,managecosts,andevaluateperformance.Inthissystem,basetheactualcostsontheexpectedcostsandrecordperiodicvariances.Youcancalculatetheaverageofthemostrecentactualcostforacertainamountoftime,suchasthelastthreetosixmonths.Standardcostingisoftenusedinbudgeting,inventorycosting,overheadapplication,andpriceformulation.However,standardcostingisnotalwaysappropriate,especiallyinfast-pacedenvironmentsoroncost-pluscontracts.  ContinuousBudgeting:Thisisaforecastingprocessbasedonthecurrentandpriorbudgetperiods.Theforecastisconstantlyreadjustedbyaddingrollingmonthlyupdatesattheendofthecurrentbudget.Aseachmonthpasses,thebudgetmanagerrevisesthebudgetmodeltoreflectthecurrentassumptions.  IncrementalBudgeting:Aforecastingprocesswherethebudgetmanagermakessmall,incrementalchangestothecurrentbudgetandusesitforthefuturebudget.Thistypeofbudgetingusesinformationfromthepreviousyear’sexpendituresasastartingpoint,andassumesthattherewillbeminimalchanges.  BudgetReport:Thisreportisusedinternallytopresentmanagementwithacomparisonbetweentheestimatedbudgetandtheactualcompanyperformance.Itismeanttoshowhoweachareaofthecompanyisfaringwithrespecttofundsatapointintime,andhowwellthosefundshavebeenusedtosupportthestrategicgoalsofthecompany.Thisreportdoesnotsharethehealthofthecompany,justhowmoneyisbeingspent. BudgetaryControl:Ifthebudgetreportislikeareportcardforthecompany’smoney,budgetarycontrolisthegoalsthattheparents(stakeholders)setfortheirchildren’sgrades.Inotherwords,budgetarycontrolisasetofgoalssetbymanagementthatworkaroundanestablishedbudget. ManagementbyException:Managementonlygetsinvolvedwhentherearenotabledeviationsfromthebudgetorplanandtheyneedtofocusoncertainareas.  WhatAreStandardsinCostManagement? Thebudgetistheexpectedcostforeverything,whereasthestandardisthecostperunitofinput,suchasoverheadormaterialsperunitofoutput.Thisstandardcostinmanufacturingistheexpectedcostofproducingtheproduct,butthebudgetcoversalltheunits.Standardcostsaresetbycarefullyconsideringamountsdeterminedbyexperienceandtheexpectationsofthemanagerialstaff.Usestandardcostsforplanninglabor,materials,andoverhead,ortoplanforthelevelofperformanceofgoodsorservices.Youcanalsousethemtocalculatevariances. Benchmarksareputinplacetomeasureperformance.Benchmarkingiswhenacompanysetsbudgetaryperformancegoals.Youcanjudgetheimprovementovertimeofacompanyusingbenchmarking.It’simperativetodecidewhethertousepracticalstandardsoridealstandards.  Practicalstandardsarethosethathavealreadybeenattained.Theydonotstretchyourcompanyatall.Sometimessettingidealstandardscandiscourageemployeesbecausetheyarethebest-casescenario,andoftenunattainable.Theproductionofastandardcostingincomestatementcanreportthesestandards. However,settingthedifferentstandardsrequiressomeknowledgeaboutwhatfactorsgointoeachcategory.Insettingcertainstandards,thefollowingmustapply: Directmaterialstandardsdependonpriceandquantity.Standardsaresetforpricebythenetofdiscountsandthefinalcostsofthematerials.Whileproductdesignspecificationssetthequantitystandards.  Directlaborstandardsaredependentontherateandtimestandards.Ratestandardsaresetbaseduponthecurrentwagesandcontractsforlabor.Timestandardsusehistoricdataandtimestudies. Overheadstandardsdependonyourratestandardsandactivitystandards.Thisratestandardistheportionoftheoverheadratethatmaybevariable.Theactivitystandardistheactualbaseusedtocalculatetheoverhead.Settingthecostsforstandardoverheadincludereportingtheexpectedfixedoverhead,andanyexpectedvariableoverheadthatyougleanfromhistoricaldata.  WhatIsaStandardCostSystem? Astandardcostsystemisatoolthataccountantsusefortheirstandardcosting.Whetheryouuseasoftwaresystemthatcomesasacompletepackageoraseriesofspreadsheetstocapturethisinformation,theresultsshouldbethesame.Yourstandardcostsystemshouldcaptureallofyourcompany’sstructuralnuancesandreflectallofthedecisionsthatyourcompanymakes.  Thefollowingarethespreadsheetsthatyoushouldcalculateregularlyinyourstandardcostsystem.Theseshouldbecompiledintoastandardcostincomestatementforaspecifictimeperiod(suchasyear-end),andleaveyouwithyouroperatingincome. DirectMaterialsPurchased DirectMaterialsUsage DirectLabor ManufacturingOverhead OverheadAllocated CompletedGoods CostofGoodsSold AdjustedManufacturingOverhead HowCanYouImproveYourMemoryforTestTaking? Everyoneassumesthattheirbrainisastaticorgan,andthatrecallonlygoesdownhillwithage.However,regardlessofyourage,scientistshavefoundthatyourbrainhasanamazingabilitytocontinuallychangeandadapt,formingnewpathways.Thisabilityisreferredtoasneuroplasticity,whichisyourbrain’sabilitytoformnewsynapticconnections,allowingreorganizationornewfunctionalitytoemergethroughoutlife.Someexamplesofneuroplasticityaremoreextremethanothers.However,weregularlyseetheplasticityofourbrainthroughitsabilitytotakeinnewinformationdaily.Ourbrainisconstantlyaddingnewpathwaysfromthethingsweobserveandlearneveryday.Amoreextremeexampleistheembeddingofacochlearimplant,amedicaldevicethatfunctionsbybypassingourmainhearingmechanism-theear.Theimplantedbrainlearnstohearwithouttheearbythenodesthatgodirectlytotheauditorynerve.Useofthisdeviceforcesthebraintodevelopnewneuralpathways,reorganizingthewaythatthepersonhears.  However,neuroplasticityandthequalityofyourmemorydependsonthehealthofyourbrain.WhetheryouarestudyingforthePMPexam,justwanttostaymentallysharp,orwanttostaveoffdecreasesinyourbrainmatterwellintoyourelderlyyears,therearethingsthatyoucandotokeepyourbrainhealthy,including:   Sleep:Expertsagreethatifthereisonlyonethingthatyoucandotopromotememory,thensleepshouldbeit.Thereisadifferenceingettingenoughsleepandtheoptimalamountofsleep.Mostadultscangetbyonsixhoursofsleep.However,forthesameadults,theiroptimalamountofsleepmaybeseventoninehours.Waystoimprovethesleepthatyouaregettingincludestickingtothesamesleepschedule(evenontheweekends),cuttingdownoncaffeineduringtheday,andcuttingoutallblue-lightemittingdevices60minutesbeforebedtime.Lastly,expertsagreethatnapsalsocountinmemoryimprovement,especiallywhenyouaredevelopingnewmotorskills.   Exercise:Itmayseemcounterintuitivetosomepeoplethatworkingoutyourbodywillimpactyourbrain,butresearchersshowthatexercisingincreasesthesizeofyourbrain’shippocampus,theregionthoughttobethecenterofemotionandmemory.Thisleadstomemoryimprovements,eveninlateadulthood.Thesameresearcherswerealsoabletoshowthatexerciseisaprotectivefactorfromvolumelossinthehippocampuslaterinlife.Aerobicexerciseisconsideredthebesttypeforyourbrain.    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Supplements:Therehavebeensomanypop-cultureadvertisementsthelastfewdecadestoutingthebrain-boostingpowerofonesupplementoranother,peopleoftenlosesightofwhatthesupplementistryingtoaddtoorreplace.Supplementsaremeanttoeitherincreasetheamountoforaddinaningredienttoyourdiet.Forsomepeople,thesearedietaryelementstheycannotgetthroughfood.Forothers,itissomethingtheyonlysparinglyreceive.Thebestsupplementalwayscomesinawholefoodform.Thismeansthatitisalwaysbetterifyoucangetyourvitaminsandmineralsinfreshfood.Next,tofood,supplementsinpill,powder,orgummyformpaleincomparisonasyourbodyprocessesthemdifferently.Thatbeingsaid,ifyoumustchoosesupplements,dosointelligently.ResearchersrecommendOmega-3supplementsforimprovementofcognitiveandphysiologicalfunctions.Withanysupplements,however,takeonlywhatisrecommendedonthelabel,asmorethanrecommendedcanleadtotoxicity.   Meditate:Tomostpeople,it’sobviousthatmeditationcandecreasestressbymakingyouslowdownandconcentrateonyourinternalworldforawhile.However,researchonthebenefitsofmeditationhasproliferatedthesedays,andnotonlydoestheresearchpointtoloweredstressandanelevatedmood,butsomeresearchclaimsthatmeditationcanincreaseyourconcentrationandattentionsignificantlyinashorttime.MeditationseemsworththeeffortifyouhaveabigexamlikethePMPcertificationcomingup.   StayMentallyActive:Thewhole“useitorloseit”theoryalwayscomesupinbraindiscussions.Popularwisdomisalwaysthatthebrainisatypeofmuscleandwithoutuse(i.e.exercise)itcanatrophyjustlikethemusclesintherestofourbody.Millionsofdollarshavebeenspentonthedevelopmentanduseofbrain-trainingappsandgames.Researcherssaythatalthoughthereislittleempiricalevidencesupportingtherelativeworthoftheseactivities,thatitisprobablygoodforyouoverall.However,someparametersshouldbenoted.Theseincludethatbraintrainingshouldincludesomethingnew,bechallenging,buildonaskillset,andprovidearewardofsometype-evenpersonalsatisfaction.Overall,theappsonyourphonemaynotbethebestchoicebecausetheydonotpushyououtofyourcomfortzone,regardlessoftheintellectualchallenge. MakeTimeforSocialActivity: Manystudiessaythatgettingoutandbeingsocialimprovesyourmemory,andmayactasaprotectivefactorforyourmemorylaterinlifebydecreasingcognitivedecline.Theexactmechanismofhowthisworksisstillunderstudy,butresearchersassumethatsomesocialpressureisprobablypartofthecause. LearnMoreAboutCostVarianceandthePMPExam ThefollowingarefivebooksrecommendedbypeoplewhohavetakenandpassedthePMPexam.Somecomewithfreetests,andsomearejustconsideredinstitutionalknowledgethatyoushouldn’tignore. PMBOK®GuideFifthEdition,bytheProjectManagementInstitute PMPExamPrep,8thEdition,byRitaMulcahy TheVelociteachAll-In-OnePMPExamPrepKit,byAndyCrowe McGraw-HillPMPProjectManagementProfessionalExam,byHenriqueMoura HeadFirstPMP,byJenniferGreeneandAndrewStellman Lastly,oneofthebestopportunitiesforsolidifyingyourknowledgeistogetastudypartnerorgroup.Therearemanywebsitesthatcanmatchyouwithsomeoneelsewhowantstostudyandisasseriousasyouareabouttakingthetest,whichgivesyouexternalaccountability.Conceptssuchascostvariancecanbeparriedbackandforthuntilyouunderstandthemcompletely.TryGoogleGroupstofindgroupsorpartnersavailableforstudyingforthetest. 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