Agile Certified Practitioner (ACP) Exam Prep Course 4 ... · Agile Certified Practitioner (ACP) Exam Prep Course 4 – Value Driven Delivery ... Solicit customer & user feedback by

Agile Certified Practitioner (ACP) Exam Prep

Course 4 – Value Driven Delivery

Slide 1

Value-Driven Delivery

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Slide 2

Value-Driven DeliveryDomain Tasks – Define Positive Value

1. Define deliverables by identifying units that can be produced incrementally in order to maximize their value to stakeholders while minimizing non-value added work.

2. Refine requirements by gaining consensus on the acceptance criteria for features on a just-in-time basis in order to deliver value.

3. Select & tailor the team’s process based on project & organizational characteristics as well as team experience in order to optimize value delivery.

© Copyright and all rights reserved – Looking Glass Development, LLC.

Domain Tasks – Avoid Potential Downsides4. Plan for small releasable increments by organizing requirements into minimally marketable

features/minimally viable products in order to allow for the early recognition & delivery of value.

5. Limit increment size & increase review frequency with appropriate stakeholders in order to identify & respond to risks early on & at minimal cost.

6. Solicit customer & user feedback by reviewing increments often in order to confirm & enhance business value.

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Slide 3

Value-Driven DeliveryDomain Tasks – Prioritization

7. Prioritize the units of work through collaboration with stakeholders in order to optimize the value of the deliverables.

8. Perform frequent review & maintenance of the work results by prioritizing & maintaining internal quality in order to reduce the overall cost of incremental development.

9. Continuously identify & prioritize the environmental, operational, & infrastructure factors in order to improve the quality & value of the deliverables.


Domain Tasks – Incremental Development10. Conduct operational reviews &/or periodic checkpoints with stakeholders in order to obtain feedback &

corrections to the work in progress & planned work.

11. Balance development of deliverable units & risk reduction efforts by incorporating both value producing & risk reducing work into the backlog in order to maximize the total value proposition over time.

12. Re-prioritize requirements periodically in order to reflect changes in the environment & stakeholder needs or preferences in order to maximize the value.

13. Elicit & prioritize relevant non-functional requirements (such as operations & security) by considering the environment in which the solution will be used in order to minimize the probability of failure.

14. Conduct frequent reviews of work products by performing inspections, reviews, &/or testing in order to identify & incorporate improvements into the overall process & product or service.

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Slide 4

Value-Driven Delivery• Value-Driven Delivery – Focusing on delivering real business value. The

most important features first.• Consider technical dependencies & risks.• Common mantra in Agile.• Let’s start by defining value-driven delivery. The reason projects are

undertaken is to generate business value, be it to produce a benefit or improve a service. Even safety and regulatory compliance projects can be expressed in terms of business value by considering the business risk and impact of not undertaking them. If value then is the reason for doing projects, value driven delivery is the focus of the project throughout the project planning, execution, and control processes.

• It is the big picture view, the wearing of the sponsor’s hat when making decisions. By the project manager and team assuming this viewpoint, there is an opportunity to incorporate unique technical insights, such as technical dependencies or risk reduction steps, into the selection of features for a release that the sponsor may not be aware of. However value driven delivery remains a guiding vision for much local decision making, the selecting of choices that maximize the value delivered to the business or customer. © Copyright and all rights reserved – Looking Glass

Development, LLC.

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Slide 5

Value-Driven DeliveryAssessing Value

• Payback Period • Return on Investment (ROI)• Future Value• Present Value• Net Present Value (NPV) • Internal Rate of Return (IRR) • Benefit / Cost ratio (BCR or BCI)• Focus on when to use these tools


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Slide 6

Value-Drive DeliveryAssessing Value

Discounting or Present Value – Value today of funds available in the future.

PV = FV / (1 + i)n

– If you want $1,000 in three (3) years how much do you have to invest today at 8% to receive your $1,000?

– End of Yr. 1 = $1,000 / (1 + 8%) = $925.93– End of Yr. 2 = $925.93 / (1 + 8%) = $857.34– End of Yr. 3 = $857.34 / (1 + 8%) = $793.83


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Slide 7

Value-Driven DeliveryAssessing Value

• Net Present Value – Present Value minus Present cost.

• Internal Rate of Return - Average rate of return earned over the life of the project. It is where discounted cash flow – up front costs = 0.


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Slide 8


Planning Value• Chartering

– Exists in Agile projects.– Focused on what not how.– Shorter document, typically one page.


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Slide 9

Value-Driven DeliveryValue Stream Mapping

• Lean Manufacturing technique• Uses visual maps of process• 6 Step process:

1. Identify the product or service that you are analyzing.2. Create a value stream map of the current process, identifying

steps, queues, delays, & information flows.3. Review the map to find delays, waste & constraints.4. Create a new value stream map of the desired future state of

the process, optimized to remove or reduce delays, waste & constraints.

5. Develop a roadmap for creating the optimized state.6. Plan to revisit the process in the future to continually improve.


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Slide 10


You You & friend eat cake


Cake selection

Bakery counter Checkout line Unpack &

slice


Cake selection


slice

Bakers Sales


Cake selection


slice

Bakers Sales

Value Add

Nonvalue Add 15 minutes

1 minute

4 minutes 6 minutes

2 minutes 2 minutes 2 minutes 10 minutes

5 minutes© Copyright and all rights reserved – Looking Glass

Development, LLC.

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Slide 11


• Total Cycle Time = Value Added Time + Non-Value Added Time

• TCT = (1+2+2+2+10) + (4+6+15+5) = 47 Minutes

• Process Cycle Efficiency =

• PCE = = 36%

Total Value Added TimeTotal Cycle Time

1747


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Slide 12

Value-Driven Delivery• Poppendieck’s 7 Lean Wastes Manufacturing

to Software.Waste Description Example

Partially Done Work Work started, but not completed; partially done work can entropy

• Code waiting for testing• Specs waiting for development

Extra Processes Extra work that does not add value • Unused documentation• Unnecessary approvals

Extra Features Features that are not required, or are thought of as “nice-to-haves”

• Gold-plating• Technology features

Task Switching Multitasking between several different projects when there are context-switching penalties

• People on multiple projects

Waiting Delays waiting for reviews and approvals • Waiting for prototype reviews• Waiting for document

approvals

Motion The effort required to communicate or move information or deliverables from one group to another; if teams are not co-located, this effort may need to be greater

• Distributed teams• Handoffs

Defects Defective documents or software that needs correction • Requirements defects• Software bugs


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Slide 13

Value-Driven Delivery• Customer-valued prioritization

– Working on the things that yield the greatest return for the customer.

– Scrum = Product Backlog– FDD = Feature list– DSDM = Prioritized Requirements List

• MoSCoW Prioritization Schemes– Must Have– Should Have– Could Have– Would like to have, but not this time


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Slide 14


• Monopoly Money = to total project budget• 100 Point Method – Used with Use Cases from

Leffingwell & Widrig• Kano Analysis – Customer satisfaction &

product development theory developed in the 1984 by Professor Noriaki Kano designed to classify customer preferences into three categories.


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Slide 15

Value-Driven DeliveryKano Analysis

• Performance Needs – These requirements can both satisfy & dissatisfy customers. They are at the top of the customers’ mind. Customers will also talk about them readily when asked what is important. You must choose the correct ones of these.

• Basic Needs – Having these requirements will NOT result in customer satisfaction, but NOT having them will result in dissatisfaction. Customers don’t give these items a thought unless they are absent. They are sometimes referred to as MUST HAVES.

• Excitement Needs – Customers are delighted when these are delivered, but their absence doesn’t cause dissatisfaction. They are often called UNIQUE SELLING or VALUE PROPOSITIONS.


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Slide 16

Value-Driven DeliveryKano Analysis


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Slide 17

Value-Driven Delivery• Requirements Prioritization Model

– By Karl Wiegers– Measures benefit, penalty, cost & risk of each feature.– Scores from 1 to 9

• Relative Prioritization - A simple list removes the categories that people tend to fixate on from the debate and allows the focus of the discussion to be on priorities. It also provides a framework for deciding if and when to incorporate changes. When change is requested, the team can ask the business representatives, "What items are more important than this change?"


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Slide 18


Story

Sequence

TheBackbone

WalkingSkeleton

LessOptional

MoreOptional

Opt

iona

lity

Story

Story StoryStory

StoryStory

StoryStory

StoryStory

StoryStory

Story

Story

Story

Story

StoryStory

Story

Story

Story Story

Story Story

Story Story

Story

Story

Story

Story Story

Story Story

Story Story

Story Story

Story Story

Story Story

Story

Story

Story

Story

Story

Story

Story

Story

Story

Story

Story

Story

Story

Story

A Sample Story Map


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Slide 19

Value-Driven Delivery• Risk – an uncertain event or condition that, if

realized, has a positive or negative impact on at least one project objective (such as time, cost, scope or quality).

• Risks can have one or more causes and one or more impacts.

• Negative risks are anti-value.

Planning Process Group

11. Project Risk Management

11.1Plan Risk

Management

11.3Perform

QualitativeRisk Analysis

11.2Identify Risks

11.4Perform

QuantitativeRisk Analysis

11.5Plan Risk

Responses


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Slide 20

Value-Driven DeliveryMajor Risk Classes

• Known Risks - Can be analyzed, possible to plan. Contingency reserve or other plans.

• Unknown Risks - Cannot be managed proactively. General contingency or management reserve.


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Slide 21

Value-Driven DeliveryAgile Helps Mitigate Risks

• Schedule Risks - In waterfall it can be a long time before a product is ready for release. In Agile this can be shorter, sometimes a few weeks.

• Budget Risks – Agile estimates are no more accurate, but it is easier to manage.

• Cancellation Risk – Waterfall projects tend to be cancelled late. An Agile project produces functionality quickly so the project can be cancelled.


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Slide 22


• Scope Creep – In waterfall projects scope is added without any being removed. The backlog forces hard decisions.

• Requirements Error – Waterfall projects specify requirements long before they are delivered. An incorrect requirement can generate significant effort before the error is discovered.

• Technology Risks – Many projects require unproven technologies. Waterfall extends the time it takes to discover failed tech. Agile allows for rapid discovery.


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Slide 23


• Security Risks – Waterfall projects often take significant time before system security can be tested. Agile projects test security quickly, often and at regular intervals.


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Slide 24


Plan

CheckAct

Do

Successful Agile projects areboth business & risk driven


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Slide 25

Value-Driven DeliveryExpected Monetary Value (EMV)

• Calculates the average outcome when future events are uncertain

Cost Probability ProductOptimistic Outcome $150,000 .20 $30,000Likely Outcome $225,000 .50 $112,500Pessimistic Outcome $300,000 .30 $90,000

$ 232,500


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Slide 26

Value-Driven DeliveryDecision Tree Analysis

ChoiceEvent

ChanceEvent

ChanceEvent

60%

40%

20%

80%

Outcome EMV$250K $150K

-$100K -$40K

-$45K -$9K

$20K $16K

Conservative EMV = $7,000

Aggressive EMV = $110,000


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Slide 27


OTS or Develop

OTS

Develop

Well received

Rejected

Well received

Rejected

$ - 250K

$ - 350K

65%$550K

35%$ -100K

85%$500K

15%-60K

$ 300K

$ - 350K

$ 150K

$ - 410K

$ 195K

$ -123K

$ 128K

$ -61.5K

OTS$ 72.5K

Develop$ 66K

A.Cost ofChoice

B.Probability

&Outcome

C.Outcome

MinusCost

D. C * Probability

E. Final Outcomes


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Slide 28

Value-Driven Delivery• Use EMV to determine risk value• Insert risks into backlog with requirements

sorted by cost.

Prioritized Risk ListRisk 1

$10,000 x 30% = $6,000

Risk 2$7,000 x 50% = $3,500

Risk 3$12,000 x 50% = $3,000

Risk 4$5,000 X 20% = $2,000

Risk 5$6,000 x 33% = $1,000

PrioritizedRequirements

Requirement 1$6,500

Requirement 2$5,000

Requirement 3$4,000

Requirement 4$3,000

Requirement 5$2,500

Requirement 6$1,000

Risk-AdjustedBacklog

Requirement 1 $6,500

Risk 1 $6,000



Risk 2 $3,500


Risk 3 $3,000


Risk 4 $2,000


Risk 5 $1,000

+ =


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Slide 29

Value-Driven DeliveryAgile Contracting

• Traditional contracting attempts to fix scope & cost. This often leads to overruns

• Agile contracting fixes time & costs leaving scope flexible.

• This requires greater communication.Fixed

Variable

Resources Time

FunctionalityCostsTime

Functionality


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Slide 30


• DSDM Contracting – Focuses on work being “fit for business purpose” & passing tests rather than matching specifications.

• Jeff Sutherland – “Money for Nothing & Change for Free” suggests early termination options & flexibility in making changes. Standard fixed price contract + T&M for additional work + a “change for free” clause if they work with the team on every iteration.


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Slide 31


• Graduated Fixed Price Contracts– Thorup & Jensen– Both parties share risk– Hourly rates are defined based on delivery

Completion Graduated Rate Total FeeEarly $200 / Hour $150,000

On Time $180 / Hour $175,000Late $160 / Hour $200,000


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Slide 32


• Fixed Price Work Packages –– Work is estimated at a lower level– Seller is allowed to re-estimate remaining work

packages as project progresses.– Customer allowed to focus on greatest value.


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Slide 33


• Multi-tiered structure – Fixed items placed in master agreement. Items subject to change placed in schedule of services.

• Emphasize value delivered – Relationship governed by fixed milestones or phase gates based on value-driven deliverables.

• Fixed price increments – Decompose the scope into fixed price micro-deliverables such as user stories.

• Not-to-exceed time and materials – Limits the overall budget to a fixed amount. Allows customer to exchange requirements

• Graduated time and materials – Supplier is rewarded with a higher hourly rate when delivery is earlier than the contracted deadline. The contractor suffers a rate reduction for late delivery.


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Slide 34


• Early cancellation option – Customer can cancel the contract with only a limited cancellation fee should they desire.

• Dynamic scope option – Customer has the option to vary project scope at specified points in the project.

• Team augmentation – Suppliers services are embedded directly into the customer’s organization. Customer funds the team not a specific scope.

• Favor full-service suppliers – To diversify risk, customer uses multiple suppliers where each often focuses on a single area. This often creates engagement and communication risks.


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Slide 35


Why not Gantt Charts & other software?

• Data accuracy perception increases.

• Barriers for stakeholder interaction increase.


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Slide 36

Value-Driven DeliveryLittle’s Law

• The cycle time, how long we are going to have to wait for benefits, is proportional to the size of the queue or how much WIP we have.

WIP

Cycle Time

Things we’ve finishedThings we’ve started

Cumulative Flow Chart


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Slide 37


• Demonstrations – Critical to confirming success.– We learn about the differences between what is asked

for and what was interpreted & built.– We learn about new or adjusted functionality.

• IKIWISI – I’ll Know It When I See It.• Agile favors empirical and value-based

measurements instead of predictive measurements.


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Slide 38


PV

AC

EV

EAC

SLIPPAGE

COSTVARIANCE

SCHEDULEVARIANCE

NOW

BAC VALUE

TIME

Cumulative Cost Curve


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Slide 39


Divided By Divided By

Actual Costs

In Alphabetical Order

Earned Value Planned Value

CV =

CPI =

= SV

= SPI

Minus Minus


Completed FeaturesPlanned Features

Earned ValueActual CostsSPI = CPI =

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Slide 40

Value-Driven DeliveryForecasting - ETC

• ETC based on new estimate• ETC based on atypical variances

– ETC = BAC-EV

• ETC based on typical variances– ETC = (BAC-EV)/CPI

• ETC based on both the CPI & SPI– ETC = (BAC-EV)/(CPI*SPI)

BAC = Budget at CompletionBAC-EV = Remaining Work

VAC = Variance at Completion© Copyright and all rights reserved – Looking Glass

Development, LLC.

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Slide 41

Value-Driven DeliveryForecasting - EAC

• Using a new estimate– EAC = AC + ETC

• Using remaining budget– EAC = AC + (BAC-EV)

• Using CPI– EAC = AC + ((BAC-EV)/CPI)

• Using both CPI & SPI– EAC = AC + ((BAC-EV)/(CPI*SPI))


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Slide 42

Value-Driven DeliveryForecasting - TCPI

• The calculated projection of cost performance that must be achieved on the remaining work to meet a specified management goal.

• Using BAC– TCPI = (BAC – EV) / (BAC – AC)

• Using EAC– TCPI = (BAC - EV) / (EAC - AC)

• VAC = BAC - EAC


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Slide 43


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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

Work RemainingBurndown Chart


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Slide 44


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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

Work Remaining

Work Remaining / Rate = Days to CompletionBurndown Chart


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Slide 45

Value-Driven DeliveryTo show when the product will be released use a Burn Up Chart

ForecastForecast showing scope creep

Time

Prod

uctiv

ity


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Slide 46

Value-Driven DeliveryCumulative Flow Diagram


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Review Questions – Part 1:

1. Which of the following variables represents the budgeted cost for the work scheduled to be completed up to a given point?

A. Actual cost B. Planned value C. Earned value D. Estimate at completion

2. Which of the following variables represents the budgeted amount for the work completed on the schedule activity up to a given point?

A. Planned value B. Actual costs C. Estimate to completion D. Earned value

3. Which of the following variables represents the total cost incurred in accomplishing work on the scheduled activity during a specific time period?

A. Actual costs B. Summary costs C. Earned value D. Planned value

4. Which of the following variables represents the amount of additional money that

needs to be spent to complete the project? A. EAC B. ETC C. CPI D. SPI

5. Which of the following variables represents the total amount of money that is

estimated to be spent when the project is completed? A. ETC B. CPI C. EAC D. SPI

6. Which of the following variables represents the formula: Earned Value minus Actual Costs?

A. CV B. CPI C. SV D. SPI

7. Which of the following variables represents the formula: Earned Value minus

Planned Value? A. SPI B. CV C. CPI D. SV

8. Which of the following variables represents the formula: Earned Value divided by

Actual Costs? A. CV B. SPI C. SV D. CPI

9. Which of the following variables is represented by the formula: Earned Value

divided by the Planned Value? A. SPI B. SV C. CPI D. CV

10. Which of the following is used to forecast project costs at completion?

A. CPI B. SPI C. Cumulative CPI D. Cumulative SPI

11. Which of the following is used to display earned value data over time?

A. A Gantt chart B. An S-curve C. An EV table D. A cost and schedule baseline chart

12. Your boss enters your office and asks for the cost variance on your project that has an AC of $225, a PV of $200, and an EV of $180. What value do you provide them?

A. -45 B. -20 C. 0.80 D. 0.90

13. Your boss enters your office and asks for the cost variance on your project that

has an AC of $290, a PV of $300, and an EV of $270. What value do you provide them?

A. -30 B. 0.95 C. 0.92 D. -20

14. Your boss enters your office and asks for the cost variance on your project that

has an AC of $45, a PV of $40, and an EV of $50. What value do you provide them?

A. 10 B. 5 C. 1.11 D. 1.25

15. Your boss enters your office and asks for the schedule variance on your project

that has an AC of $45, a PV of $40, and an EV of $50. What value do you provide them?

A. 10 B. 5 C. 1.11 D. 1.25


1. You have been asked to establish an estimated project cost using Expected Monetary Value (EMV). If the project has a best case estimate of U.S. $10,000 with a probability of 20%, a most likely case estimate of U.S. $12,000 with a probability of 50%, and a worst case estimate of U.S. $14,400 with a probability of 30% what is the EMV for the project?

A. U.S. $12,320 B. U.S. $12,400 C. U.S. $13,010 D. U.S. $13,260


A. U.S. $19.190 B. U.S. $19,515 C. U.S. $20,110 D. U.S. $20,350


A. U.S. $30.190 B. U.S. $31,560 C. U.S. $32,219 D. U.S. $33,350


A. U.S. $55,975 B. U.S. $56,550 C. U.S. $57,125 D. U.S. $57,875

5. You have been asked to establish an estimated project cost using Expected

Monetary Value (EMV). If the project has a best case estimate of U.S. $75,000 with a probability of 30%, a most likely case estimate of U.S. $86,250 with a probability of 40%, and a worst case estimate of U.S. $99,188 with a probability of 30% what is the EMV for the project?

A. U.S. $86.756 B. U.S. $87,247 C. U.S. $87,691 D. U.S. $88,121



A. U.S. $35,121 B. U.S. $35,628 C. U.S. $36,222 D. U.S. $36,921



A. U.S. $41,652 B. U.S. $42,111 C. U.S. $42,984 D. U.S. $43,596


A. U.S. $23,950 B. U.S. $24,220 C. U.S. $24,880 D. U.S. $25,200



A. U.S. $6,161 B. U.S. $6,437 C. U.S. $6,918 D. U.S. $7,020



A. U.S. $8,919 B. U.S. $9,126 C. U.S. $9,415 D. U.S. $9,783

11. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). Project A will cost U.S. $650,000 and B will cost U.S. $467,000. There is a 56% chance that project A will be successful, which will result in a gain of U.S. $1,800,000. If project A fails there will be a loss of U.S. $900,000. There is a 67% chance project B will be successful, and that will result in a U.S. $950,000 gain. If Project B fails there will be a loss of U.S. $670,000. Based on this information, what is the value of the best alternative?

A. U.S. $-38,000 B. U.S. $38,000 C. U.S. $-51,600 D. U.S. $51,600

12. You are asked to choose between two projects, A or B, based on the highest

gain (or the lowest loss). Project A will cost U.S. $300,000 and B will cost U.S. $255,000. There is a 67% chance that project A will be successful, which will result in a gain of U.S. $650,000. If project A fails there will be a loss of U.S. $310,000. There is a 58% chance project B will be successful, and that will result in a U.S. $650,000 gain. If Project B fails there will be a loss of U.S. $225,000. Based on this information, what is the value of the best alternative?

A. U.S. $60,700 B. U.S. $27,500 C. U.S. $33,200 D. U.S. $51,600



A. U.S. $6,480 B. U.S. $-3,050 C. U.S. $3,200 D. U.S. $-3,430

14. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). Project A will cost U.S. $663,500 and B will cost U.S. $589,000. There is a 66% chance that project A will be successful, which will result in a gain of U.S. $1,399,000. If project A fails there will be a loss of U.S. $663,500. There is a 69% chance project B will be successful, and that will result in a U.S. $1,005,000 gain. If Project B fails there will be a loss of U.S. $225,000. Based on this information, what is the value of the best alternative?

A. U.S. $34,250 B. U.S. $34,700 C. U.S. $68,950 D. U.S. $68,525



A. U.S. $320,895 B. U.S. $618,395 C. U.S. $297,500 D. U.S. $648,716



A. U.S. $5,500 B. U.S. $15,600 C. U.S. $10,550 D. U.S. $21,525

17. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). Project A will cost U.S. $77,230 and B will cost U.S. $91,980. There is a 63% chance that project A will be successful, which will result in a gain of U.S. $740,000. If project A fails there will be a loss of U.S. $300,000. There is a 77% chance project B will be successful, and that will result in a U.S. $500,000 gain. If Project B fails there will be a loss of U.S. $225,000. Based on this information, what is the value of the best alternative?

A. U.S. $703,200 B. U.S. $425,230 C. U.S. $277,970 D. U.S. $256,990



A. U.S. $79,788 B. U.S. $29,788 C. U.S. $27,970 D. U.S. $50,000



A. U.S. $14,390 B. U.S. $19,780 C. U.S. $25,620 D. U.S. $40,010

20. You are asked to choose between two projects, A or B, based on the highest gain (or the lowest loss). Project A will cost U.S. $241,250 and B will cost U.S. $225,500. There is a 65% chance that project A will be successful, which will result in a gain of U.S. $550,500. If project A fails there will be a loss of U.S. $310,000. There is a 60% chance project B will be successful, and that will result in a U.S. $568,000 gain. If Project B fails there will be a loss of U.S. $270,000. Based on this information, what is the value of the best alternative?

A. U.S. $7,300 B. U.S. $8,075 C. U.S. $11,650 D. U.S. $15,375


gain (or the lowest loss). Project A will cost U.S. $500 and B will cost U.S. $750. There is a 65% chance that project A will be successful, which will result in a gain of U.S. $2,500. If project A fails there will be a loss of U.S. $1,650. There is a 59% chance project B will be successful, and that will result in a U.S. $3,000 gain. If Project B fails there will be a loss of U.S. $1,750. Based on this information, what is the value of the best alternative?

A. U.S. $303 B. U.S. $548 C. U.S. $641 D. U.S. $850



A. U.S. $115,960 B. U.S. $119,300 C. U.S. $123,930 D. U.S. $243,230


1. After reviewing a series of tasks being completed by the team, you determine they are focusing on defining positive value. Which of the listed tasks does not belong in that determination?

A. Define deliverables by identifying units that can be produced incrementally to maximize stakeholders value & minimize non-value added work.

B. Refine requirements by gaining consensus on the acceptance criteria for features on a just-in-time basis in order to deliver value.

C. Select & tailor the team’s process based on project & organizational characteristics as well as team experience to optimize value delivery

D. Plan for small increments by organizing requirements into MMF/MVP in order to allow for the early recognition & delivery of value.

2. You and a coworker are arguing about the advantages of using Agile

development. Which of the following might you list as a key advantage? A. Small releasable increments that offer early recognition and delivery of

value B. An increased number of increments that ensure the team identifies and

responds to risks early. C. Obtain more frequent customer feedback through retrospective reviews at

the end of each iteration. D. Prioritization of business value through constant delivery of small

increments.

3. Which of the following statements concerning value driven delivery is NOT true? A. Agile's notion of value driven delivery says that every project has at its

center a responsibility to deliver real business value. B. Agile believes it is critical that project deliver the most important features

first while also considering technical dependencies and risks. C. Value-driven delivery represents the big picture view, the wearing of the

sponsor’s hat when making decisions. D. Value driven delivery is the focus of the project once it reaches execution

processes.

4. The team is working to determine the business value for the project all of the following EXCEPT ________________ represent techniques the team might use.

A. Benefit measurement methods B. Constrained optimization methods. C. Both A and B are used to determine business value. D. None of the above are used to determine business value.

5. Linear programming is an example of what type of project selection criteria?

A. Regression analysis B. Benefit cost measurement C. Quantitative scoring D. Constrained optimization

6. Your company is evaluating three different projects, but can do only one. Project

A has an NPV of $120,000 and will take 6 years to complete. Project B will take 3 years and has and NPV of $91,500 and Project C has an NPV of $83,000. Based on this information, which project would you pick?

A. Project A B. Project B C. Project C D. Not enough information to determine

7. What is the Present Value of a project that is forecasted to have a future value of

1,020.87 USD in five years assuming an 8% rate of return? A. $1,750 B. $1,500 C. $1,250 D. $1,000

8. What is the Present Value of a project that is forecasted to have a future value of

18,782.87 USD in three years assuming an 10% rate of return? A. $20,000 B. $22,500 C. $25,000 D. $27,500

9. What is the future value of a project believed to have a present value of 19,000 USD if you assume a four year term and a three percent rate of return?

A. $20,793.41 B. $21,384.67 C. $22,621.83 D. $23,112.14

10. What is the future value of a project believed to have a present value of 16,000

USD if you assume a three year term and a 10.25 percent rate of return? A. $21,441.53 B. $22,375.14 C. $23,648.16 D. $24,110.13

11. Which of the following terms represents the calculation used to determine the

value of a project in today's dollars minus its costs and is used for comparative purposes?

A. Future value B. Present value C. Net present value D. Internal rate of return

12. When determining the business value of a project, which of the following terms

represents the money or value the organization receives back as a measure against its investment?

A. Future value B. Present value C. Net present value D. Internal rate of return

13. You have been asked to choose one of three projects. Project A has an NPV of

U.S. $17,000. Project B has an NPV of U.S. $32,000. And Project C has an NPV of U.S. $39,000. What is the opportunity cost of selecting Project B?

A. U.S. $39,000 B. U.S. $32,000 C. U.S. $17,000 D. U.S. $7,000

14. The team has just finished reviewing your value stream map to find delays, waste and constraints. What should it do next?

A. Develop a roadmap for creating the optimized state. B. Create a new value stream map of the desired future state of the process,

optimized to remove or reduce delays, waste & constraints. C. Identify the product or service that you are analyzing. D. Create a value stream map of the current process, identifying steps,

queues, delays, & information flows.

15. The team has just finished developing a roadmap for the optimized state as part of a value stream mapping exercise. What should you do next?

A. Review the map to find delays, waste & constraints. B. Create a new value stream map of the desired future state of the process,

optimized to remove or reduce delays, waste & constraints. C. Plan to revisit the process in the future to continually improve D. Identify the product or service that you are analyzing.

16. A large part of value stream mapping is calculating something called _______.

A. Mission critical time B. Total cycle time C. Total project time D. Total time

17. Mathematically, Total Cycle Time is defined by which of the following equations?

A. Value Added Time + Non-Value Added Time = TCT B. Overall Cycle Time + Non-Value Added Time = TCT C. Value Added Time - Non-Value Added Time = TCT D. Overall Cycle Time - Non-Value Added Time = TCT

18. Mathematically, the Process Cycle Efficiency is defined by which of the following

equations? A. Total Cycle Time / Value Added Time B. Value Added Time/ Overall Cycle Time C. Overall Cycle Time / Total Cycle Time D. Value Added Time / Total Cycle Time

19. Which of the following are NOT part of Taiichi Ohno's acronym TIMWOOD? A. Transportation B. Waiting C. Income D. Overproduction

20. Which of the following is NOT an Agile prioritization technique?

A. Monopoly Money B. Moscow Mule C. Dot Voting D. CARVER

21. When Professor Noriaki Kano created his customer satisfaction and product

development theory, which of the following was one of his categories of customer preferences?

A. Technical needs B. Sponsor needs C. Excitement needs D. Fundamental needs

22. Which of the following prioritization techniques has each feature rated by benefits

for having, not having, cost of producing, risks, etc., and a score is calculated using a weighting formula predefined by the team?

A. Requirements prioritization model B. Relative prioritization model C. CARVER D. Kano analysis

23. Which of the following terms represents the group of User Stories or package of

features that delivers the fewest number of features that someone would be willing to pay money to obtain?

A. Base feature set B. Baseline feature set C. Minimally marketable features D. Minimum feature set

24. A member of your team suggest the use of a Story Map to improve the team's project understanding. Which of the following best describes the purpose of a Story Map?

A. Story Maps present a visual way of seeing all the features in a project. B. Story Maps present a visual method for understanding the business need. C. Story Maps present a basic chronology of the project. D. Story Maps present a basic understanding of the project justification.

25. Within a Story Map where would you find the product backbone or MMF?

A. The MMF or product backbone is not located on a Story Map. B. The MMF or product backbone is located on the left of the Story Map. C. The MMF or product backbone is located on the bottom of the Story Map. D. The MMF or product backbone is located on the top of the Story Map.

26. When dealing with project risks, which of the following account for up to 90% of

the risks the team might encounter? A. Known unknowns B. Unknown unknowns C. Critical risks D. Unbudgeted risks

27. When dealing with project risk on an Agile project, which of the following

statements is NOT true? A. Agile project typically have shorter timelines before a product is ready for

release. B. Customers receive the most important features first hereby reducing risk. C. At the latter stages of the project the customer often must decide to

continue the project or lose less important features. D. At the end of the project the customer decides whether or not to accept all

the features.

28. If the project has a best case estimate of U.S. $10,000 with a probability of 20%, a most likely case estimate of U.S. $12,000 with a probability of 50%, and a worst case estimate of U.S. $14,400 with a probability of 30% what is the EMV for the project?

A. U.S. $12,320 B. U.S. $12,400 C. U.S. $13,010 D. U.S. $13,260

29. If the project has a best case estimate of U.S. $15,000 with a probability of 30%, a most likely case estimate of U.S. $19,500 with a probability of 50%, and a worst case estimate of U.S. $26,325 with a probability of 20% what is the EMV for the project?

A. U.S. $19.190 B. U.S. $19,515 C. U.S. $20,110 D. U.S. $20,350

30. If the project has a best case estimate of U.S. $25,000 with a probability of 22%,

a most likely case estimate of U.S. $31,250 with a probability of 53%, and a worst case estimate of U.S. $40,625 with a probability of 25% what is the EMV for the project?

A. U.S. $30.190 B. U.S. $31,560 C. U.S. $32,219 D. U.S. $33,350

31. You must choose between A or B. A will cost $650K & B will cost $467K. There

is a 56% chance that A will be successful, with a gain of $1,800K. If A fails there it loses $900K. There is a 67% B will be successful, with a gain of $950K. If B fails it loses $670K. What is the value of the best alternative?

A. U.S. $-38,000 B. U.S. $38,000 C. U.S. $-51,600 D. U.S. $51,600

32. A will cost $54K & B will cost $90K. There is a 54% chance that project A will be

successful, & have a $206,540 gain. If A fails it will have a loss of $90.5K. There is a 61% B will be successful & have a $269K gain. If B fails there will be a loss of $118K. Which do you choose?

A. Project A B. Project B C. The projects offer the same valuation. D. There is not enough information to determine.

33. A will cost U.S. $300K & B will cost $255K. There is a 67% chance A will be successful & result in a $650K gain. If A fails there will be a loss of $310K. There is a 58% B will be successful, & that will result in a $650K gain. If B fails there will be a loss of $225K. What is the value of the best alternative?

A. U.S. $60,700 B. U.S. $27,500 C. U.S. $33,200 D. U.S. $51,600

34. Most Agile methodologies flexes which leg of the project management triangle?

A. Time B. Cost C. Quality D. Scope

35. Which of the following Agile methodologies uses the concept of "money for

nothing and change for free" as a basis for contracting? A. Scrum B. DSDM C. Feature Driven Development D. Extreme Programming

36. Little's Law states that Cycle time is proportional to what?

A. The size of the queue. B. The work in progress. C. The size of the team. D. The length of the schedule.

37. In which area does the acronym IKIWISI MOST apply?

A. Time B. Cost C. Scope D. Quality

Answer Key – Part 1:

1. B LGd course manual p. 129 - The Planned Value is the budgeted cost for the work scheduled to be completed on an activity or WBS component up to a given point. This is sometimes referred to as the BCWS.

2. D LGd course manual p. 129 - The Earned Value is the budgeted amount for the work actually completed on the scheduled activity during a specified time period. This is sometimes referred to as the BCWP.

3. A LGd course manual p. 129 - The Actual Costs are the total costs incurred in accomplishing work on the schedule activity during a specified time period. The actual costs are sometimes referred to as ACWP or actual costs of work performed.

4. B LGd course manual p. 131 - The estimate to complete provides a metric showing how much more money than has already been spent is needed to complete the project. This is in addition to the money that has already been spent. The ETC is correct.

5. C LGd course manual p. 132 - As a project continues it is important that you are constantly revising your estimates of how much money you are going to have to spend. This total number is represented by the Estimate At Completion or EAC.

6. A LGd course manual p. 129 - The Cost Variance or CV, represents an indicator of how far away from the original cost baseline the project actually is. To calculate it take the Earned Value (EV) and subtract the actual costs. A project is on target if the CV is equal to 0.

7. D LGd course manual p. 129 - The Schedule Variance or SV, represents an indicator of how far off of the original schedule baseline the project actually is. To calculate the SV take the Earned Value and subtract the Planned Value. A project is on schedule if the SV is equal to 0.

8. D LGd course manual p. 129 - The Cost Performance Index or CPI, represent how far away from the original cost baseline the project is using a percentage indicator (the number 1). To calculate the CPI take the Earned Value and divide it by the project's actual costs to date.

9. A LGd course manual p. 129 - The Schedule Performance Index or SPI, represents how far off the original schedule baseline the project is using a percentage indicator (the number 1). To calculate the SPI take the Earned Value and divide it by the project's planned value.

10. C LGd course manual p. 129 - The cumulative CPI is used to forecast project costs at completion. Using the CPI gives only the value for that period and would not provide an accurate forecast.

11. B LGd course manual p. 129 - An S-curve that displays the EV, AC and PV over time is the most common visual representation of earned value data.

12. A LGd course manual p. 129 - The Cost Variance or CV, represents an indicator of how far away from the original cost baseline the project actually is. To calculate it take the Earned Value (EV) and subtract the actual costs. A project is on target if the CV is equal to 0.

13. D LGd course manual p. 129 - The Cost Variance or CV, represents an indicator of how far away from the original cost baseline the project actually is. To calculate it take the Earned Value (EV) and subtract the actual costs. A project is on target if the CV is equal to 0.

14. B LGd course manual p. 129 - The Cost Variance or CV, represents an indicator of how far away from the original cost baseline the project actually is. To calculate it take the Earned Value (EV) and subtract the actual costs. A project is on target if the CV is equal to 0.

15. A LGd course manual p. 129 - The Schedule Variance or SV, represents an indicator of how far away from the original schedule baseline the project actually is. To calculate it take the Earned Value (EV) and subtract the Planned Value (PV). A project is on target if the SV is equal to 0.


1. A LGd course manual p. 118 - To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

2. B LGd course manual p. 118 - To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

3. C LGd course manual p. 118 - To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.

4. D LGd course manual p. 118 - To answer this question you must calculate the expected monetary value of each choice using the decision tree model found in your LGd training guide and then compare the options. Whichever option has the greatest value is the one you should choose.




















1. D LGd course manual p. 104 - The tasks found in the Define positive value group include: Define deliverables by identifying units that can be produced incrementally in order to maximize their value to stakeholders while minimizing non-value added work; Refine requirements by gaining consensus on the acceptance criteria for features on a just-in-time basis in order to deliver value; Select and tailor the team’s process based on project and organizational characteristics as well as team experience in order to optimize value delivery.

2. A LGd course manual p. 104 - Be careful here as several items are close to true, but the Value Driven Delivery area lists three specific tasks Agile uses to avoid potential downsides: Plan for small releasable increments by organizing requirements into MMF/MVP in order to allow for the early recognition and delivery of value. Limit increment size and increase review frequency with appropriate stakeholders in order to identify and respond to risks early on and at minimal cost. Solicit customer and user feedback by reviewing increments often in order to confirm and enhance business value.

3. D LGd course manual p. 105 - Agile carries this simple idea one step further by also contending that it is critical that project deliver the most important features first while also considering technical dependencies and risks. Key is remembering why projects are initiated in the first place. Projects are undertaken to generate some type of business value, be it to produce a benefit, product or service. Even safety and regulatory compliance projects can be expressed in terms of business value by considering the business risk and impact of not undertaking them. If value then is the reason for doing projects, value driven delivery is the focus of the project throughout the project planning, execution, and control processes. Value-Driven Delivery represents the big picture view, the wearing of the sponsor’s hat when making decisions.

4. C LGd course manual p. 105 - There are two ways to determine business value. These include: benefit measurement methods and constrained optimization methods.

5. D LGd course manual p. 105 - Constrained optimization methods represent advanced mathematical models used to calculate project value. Methods included in this class are linear, integer, dynamic and multi-objective programming.

6. A LGd course manual p. 106 - The years are irrelevant to this question as the whole point of NPV is to convert the project value into today’s dollars. In this case project A is the correct choice with an NPV of $120,000.

7. B LGd course manual p. 106 - The Present Value, or discounting, refers to a Future Value that has been discounted to express it in today’s currency. For example, imagine you had U.S. $100 buried in a coffee can in your backyard. Twenty-five years later you dig up the coffee can and find the U.S. $100 bill. Does it still have the same purchasing power? Absolutely not! Inflation has made that U.S. $100 worth significantly less. This equation also is not often seen on the exam, but it is necessary to understand the next formula. The equation for the Present Value is: PV = FV / (1 + i)n

8. C LGd course manual p. 106 - The Present Value, or discounting, refers to a Future Value that has been discounted to express it in today’s currency. For example, imagine you had U.S. $100 buried in a coffee can in your backyard. Twenty-five years later you dig up the coffee can and find the U.S. $100 bill. Does it still have the same purchasing power? Absolutely not! Inflation has made that U.S. $100 worth significantly less. This equation also is not often seen on the exam, but it is necessary to understand the next formula. The equation for the Present Value is: PV = FV / (1 + i)n

9. B LGd course manual p. 106 - The Future Value represents the value of an investment at some future point based upon a provided interest rate. Very few, if any, test candidates have to calculate the future value, but understanding it is necessary to answer comparative questions you might see. It is defined by the formula: FV = PV * (1 + i)n

10. A LGd course manual p. 106 - The Future Value represents the value of an investment at some future point based upon a provided interest rate. Very few, if any, test candidates have to calculate the future value, but understanding it is necessary to answer comparative questions you might see. It is defined by the formula: FV = PV * (1 + i)n

11. C LGd course manual p. 106 - The Net Present Value is almost identical to the present value. In the Present Value calculation you discount the value, typically representing a revenue stream, to account for inflation or some other similar rate. Net Present Value does the same thing, but it also takes into consideration the money that must be spent to complete the project over time. To do so it costs the Present Value from the net costs to obtain the NPV.

12. D LGd course manual p. 106 - In an Internal Rate of Return equation, it is the interest rate that must be determined. Unfortunately, there is no simple equation to calculate the internal rate of return. To solve for the IRR you must use the NPV calculation and select the middle most interest rate of the four potential answers. You are looking for an interest rate which produces an NPV of zero. Based upon the result from the first calculation you can determine if you need a larger or smaller value. You should not have to calculate the NPV more than twice to determine the correct IRR.

13. A LGd course manual p. 107 - Opportunity cost is the value of the next highest alternative assuming the alternatives are mutually exclusive. It defines what you are giving up by making the choice. In this case, the correct answer is U.S. $39,000.

14. B LGd course manual p. 108 - Value Stream Mapping is a lean management technique for analyzing the current and future state for the series of events that tracks a specific product or service from beginning to end. It is a visual technique that uses something called a “Visual Map” The process of Value Stream Mapping consists of six steps. These steps include: Identify the product or service that you are analyzing; Create a value stream map of the current process, identifying steps, queues, delays, & information flows; Review the map to find delays, waste & constraints; Create a new value stream map of the

desired future state of the process, optimized to remove or reduce delays, waste & constraints; Develop a roadmap for creating the optimized state; and plan to revisit the process in the future to continually improve.

15. C LGd course manual p. 108 - Value Stream Mapping is a lean management technique for analyzing the current and future state for the series of events that tracks a specific product or service from beginning to end. It is a visual technique that uses something called a “Visual Map” The process of Value Stream Mapping consists of six steps. These steps include: Identify the product or service that you are analyzing; Create a value stream map of the current process, identifying steps, queues, delays, & information flows; Review the map to find delays, waste & constraints; Create a new value stream map of the desired future state of the process, optimized to remove or reduce delays, waste & constraints; Develop a roadmap for creating the optimized state; and plan to revisit the process in the future to continually improve.

16. B LGd course manual p. 109 - A big part of Value Stream Mapping is calculating something called Total Cycle Time. Total Cycle Time represents all the processes, steps, machine work and anything else through which a product must pass before it is considered “finished”. It is often broken into several different types of time including: Manual Cycle Time, Machine Cycle Time, Auto Cycle Time, and Overall Cycle Time.

17. A LGd course manual p. 109 - Mathematically, the Total Cycle Time or TCT is defined as the Value Added Time + Non-Value Added Time.

18. D LGd course manual p. 109 - In addition to the Total Cycle Time, you must be prepared to calculate the Process Cycle Efficiency which represents the Value Added Time divided by the Total Cycle Time. According to Six Sigma, a lean process is one in which the Value Added time in the process is 25% or more of the total time in the process.

19. C LGd course manual p. 109 - Here are the TIMWOOD seven forms of waste translated from Lean Manufacturing to software development: Partially Done

Work; Extra Processes; Extra Features; Task Switching; Waiting; Motion; and Defects.

20. B LGd course manual p. 110 - When the team is focused on Value-Driven Delivery it has a customer valued prioritization. This means working on the things that yield the greatest return for the customer. The primary tool used by the team differs based on the Agile methodology being used. Techniques include MoSCoW Prioritization Scheme; Monopoly Money; 100-Point Method; Dot Voting / Multi-Voting; CARVER; Kano Analysis; Requirements Prioritization Model; and Relative Prioritization or Ranking.

21. C LGd course manual p. 111 - Kano Analysis represents a customer satisfaction and product development theory first developed in 1984 by Professor Noriaki Kano, and was originally designed to classify customer preferences into three categories: Performance Needs; Basic Needs; and Excitement Needs.

22. B LGd course manual p. 112 - In the Requirements prioritization model each feature is rated by benefits for having, not having, cost of producing, risks, etc., and a score is calculated using a weighting formula predefined by the team. This method allows the team to value certain items as having greater importance by increasing their weighting in the formula. Commonly, the scores range from one to nine. This model was originally created by Karl Wiegers.

23. C LGd course manual p. 112 - The Minimally Marketable Features or MMF represents the minimal functionality set, a fancy way of saying a group of User Stories or package of features, that delivers the fewest number of features that someone would be willing to pay money to obtain. These represent distinct, and deliverable features of the system that provide significant value to the customer

24. A LGd course manual p. 113 - Story Maps present a visual way of seeing all the features in a project. It is typically read along two axis. Time is represented along the X-axis with columns often placed for releases or iterations on smaller projects. The Y-axis is used to represent how important the User Story is to the customer. At the top are the most important Stories, referred to as the product

backbone or the MMF. Below that appears the walking skeleton and then more and more optional features.

25. D LGd course manual p. 113 - Story Maps present a visual way of seeing all the features in a project. It is typically read along two axis. Time is represented along the X-axis with columns often placed for releases or iterations on smaller projects. The Y-axis is used to represent how important the User Story is to the customer. At the top are the most important Stories, referred to as the product backbone or the MMF. Below that appears the walking skeleton and then more and more optional features.

26. A LGd course manual p. 114 - Unknown unknowns cannot be planned for and require management reserves or general contingency. Up to 90% of the risks on a project fall into the known unknown category and can be identified.

27. D LGd course manual p. 114 - In waterfall it can be a long time before a product is ready for release. In Agile this can be shorter, sometimes only a few weeks. This serves to reduce project risk because the customer receives the most important features very early on in the process. As the project comes to its deadline the team is typically working to deliver far less important features that in many cases could be excluded if required without impacting business value. This puts the customer in a position to make the decision as to whether or not they want the desired features without of loosing the critical value.

28. A LGd course manual p. 118 - To get the correct answer you must first realize you are dealing with three mutually exclusive options. You cannot simultaneously have the best and worst case scenarios. Therefore, your probabilities must sum to 100%. Use the calculation probability * result for each case and then add the results together to get the EMV.

29. B LGd course manual p. 118 - To get the correct answer you must first realize you are dealing with three mutually exclusive options. You cannot simultaneously have the best and worst case scenarios. Therefore, your probabilities must sum to 100%. Use the calculation probability * result for each case and then add the results together to get the EMV.

30. C LGd course manual p. 118 - To get the correct answer you must first realize you are dealing with three mutually exclusive options. You cannot simultaneously have the best and worst case scenarios. Therefore, your probabilities must sum to 100%. Use the calculation probability * result for each case and then add the results together to get the EMV.




34. D LGd course manual p. 125 - Agile Contracting fixes the time and cost legs of the triangle while leaving the scope leg flexible. Agile Development then requires the prioritization of the features and the customer to make decisions about the scope. This inversion of the triangle priorities ensures the customer has greater control of the product, at least theoretically, but it requires much greater communication between the customer and team to prevent surprises.

35. A LGd course manual p. 125 - Jeff Sutherland, one of the originators of Scrum uses the phase, “money for nothing and change for free” to describe his notion of Agile Contracting. In this notion, the customer is allowed to terminate the project early and has the flexibility to make changes. His idea uses a standard Firm Fixed Price Contract, but adds time and materials for and additional work plus a

change for free clause the customer works with the team on every iteration using the Scrum process. This means daily.

36. A LGd course manual p. 126 - Cycle Time represents how long the customer must wait before receiving any benefit from the features created. Little’s Law states that Cycle Time is proportional to the size of the queue, or how much Work in Progress the team has. This concept is displayed using a Cumulative Flow Chart.

37. C LGd course manual p. 127 - IKIWISI stands for an old truism from many customers. It means I’ll Know It When I See It, and points to the common problem many development teams face. Sometimes the customer doesn’t know or fully understand what they want in terms of the features of the product until they see it. Only by touching and using a product can they understand its characteristics and fully understand how they would use it.

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