pmi dec 13

PMP Notes

• PMP Notes

• Vijay Raj

• [email protected]

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0-Project Management Framework

“I Saw Two Crows Quietly Having Coffee & Reading

Poetic Stories,”Integration, Scope, Time, Cost, Quality, HR, Communication, Risk, Procurement, Stakeholder

• CDC DSEED ED IPPR

• CDC Collect Requirement, Define Scope, Create WBS

• DSEED Define Activities, Sequence Activities, Est Activity Resource,

Est Act Duration, Define Schedule

• ED Estimate Cost., Develop Budget

• IQQR Identify Risk, Perform Qualitative Risk, Perform Quantitative

Risk, Plan Risk Response

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• The Exam included -•

• 1. No ethics question• 2. 10-12 EVM questions - very simple with little calculations but

requires that you know what the terms are• 3. 5-6 network diagram questions which again were simple to crack.

Read the question clearly since they will try to confuse you.• 4. There were few questions on contract types for procurement• 5. Some topics which generated many questions were conflict

resolution techniques and risk response techniques•

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Project Management FrameworkProject Integration Management

Project Scope Management Project Time ManagementProject Cost Management

Project Quality ManagementProject HR Management

Project Communications ManagementProject Risk Management

Project Procurement ManagementProject Stakeholder Management

Knowledge Area

Project Management Framework

IPECaC,

Initiating, Planning, Executing, Controlling & Closing.

“I Saw Two Crows Quietly Having

Coffee and Reading Poetic Stories,”

Integration, Scope, Time, Cost, Quality, Human Resources, Communications,Risk, Procurement, and Stakeholder management.

Project Integration Management

Project Scope Management

Project Time Management

Project Cost Management

Project Quality Management

Project HR Management

Project Communications Management

Project Risk Management

Project Procurement Management

Project Stakeholder Management

Ethics

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Project

Program

Portfolio

Functions of a PMO

Six competing project constraints

Triple constraints of project management

Iron triangle of project management

Diagram showing portfolio, program, project

Operations

Key points about Functional Organizations

Key points about Projectized Organizations

Key points about Matrix Organizations

Key points about Weak Matrix Organizations

Key points about Balanced Matrix Organizations

Key points about Strong Matrix Organizations

Role of a project coordinator

Role of a project expediter

Organizational Process Assets

Enterprise Environmental Factors

Project Life Cycle

Project Phases

Product oriented processes

Project management processes

Work Performance Data examples

Work Performance Information examples

Work Performance Report examples

Process Table (47 processes)

Phase exit, Phase end, Phase gate, Kill point

Product life cycle9

0-Project Management FrameworkWhat is a Project?A project is a temporary endeavor undertaken to create a unique product, service, or result. The temporary nature of projects indicates that a project has a definite beginning and end. The end is reached when the project’s objectives have been achieved or when the project is terminated because its objectives will not or cannot be met, or when the need for the project no longer exists. A project may also be terminated if the client (customer, sponsor, or champion) wishes to terminate the project.

Every project creates a unique product, service, or result. The outcome of the project may be tangible or intangible

A project can create:• A product that can be either a component of another item, an enhancement of an item, or an end item in itself;• A service or a capability to perform a service (e.g., a business function that supports production or distribution);• An improvement in the existing product or service lines (e.g., A Six Sigma project undertaken to reduce defects); or• A result, such as an outcome or document (e.g., a research project that develops knowledge that can be used to determine whether a trend exists or a new process will benefit society).

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0-Project Management FrameworkPortfolio refers to a collection of projects,programs, sub portfolios, and operations managed as a group to achieve strategic objectives.

Managing a project typically includes, but is not limited to:• Identifying requirements;• Addressing the various needs, concerns, and expectations of the stakeholders in planning and executing the project;• Setting up, maintaining, and carrying out communications among stakeholders that are active, effective, and collaborative in nature;• Managing stakeholders towards meeting project requirements and creating project deliverables;• Balancing the competing project constraints, which include, but are not limited to:• Scope,• Quality,• Schedule,• Budget,• Resources, and• Risks.

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0-Project Management Framework1.4.2 Portfolio Management

A portfolio refers to projects, programs, sub portfolios, and operations managed as a group to achieve strategic objectives. The projects or programs of the portfolio may not necessarily be interdependent or directly related. For example, an infrastructure firm that has the strategic objective of “maximizing the return on its investments” may put together a portfolio that includes a mix of projects in oil and gas, power, water, roads, rail, and airports. From this mix, the firm may choose to manage related projects as one program. All of the power projects may be grouped together as a power program. Similarly, all of the water projects may be grouped together as a water program. Thus, the power program and the water program become integral components of the enterprise portfolio of the

infrastructure firm.

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0-Project Management FrameworkProject Management Office; A project management office (PMO) is a management structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques

Supportive. Supportive PMOs provide a consultative role to projects by supplying templates, best practices, training, access to information and lessons learned from other projects. This type of PMO serves as a project repository. The degree of control provided by the PMO is low.

• Controlling. Controlling PMOs provide support and require compliance through various means. Compliance may involve adopting project management frameworks or methodologies, using specific templates, forms and tools, or conformance to governance. The degree of control provided by the PMO is moderate.

• Directive. Directive PMOs take control of the projects by directly managing the projects. The degree of control provided by the PMO is high. The PMO integrates data and information from

A primary function of a PMO is to support project managers in a variety of ways which may include, but are not limited to:

• Managing shared resources across all projects administered by the PMO;

• Identifying and developing project management methodology, best practices, and standards;

• Coaching, mentoring, training, and oversight;

• Monitoring compliance with project management standards, policies, procedures, and templates by means

of project audits;

• Developing and managing project policies, procedures, templates, and other shared documentation

(organizational process assets); and

• Coordinating communication across Projects.

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0-Project Management FrameworkDifferences between the role of project managers and a PMO may include the following:

• The project manager focuses on the specified project objectives, while the PMO manages major program scope changes, which may be seen as potential opportunities to better achieve business objectives.

• The project manager controls the assigned project resources to best meet project objectives, while the PMO optimizes the use of shared organizational resources across all projects.

• The project manager manages the constraints (scope, schedule, cost, quality, etc.) of the individual projects, while the PMO manages the methodologies, standards, overall risks/opportunities, metrics, and interdependencies among projects at the enterprise level.

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0-Project Management FrameworkStakeholder identification is a continuous process throughout the entire project life cycle. Identifying stakeholders, understanding their relative degree of influence on a project, and balancing their demands, needs, and expectations are critical to the success of the project. Failure to do so can lead to delays, cost increases, unexpected issues, and other negative consequences including project cancellation.

Sponsor. A sponsor is the person or group who provides resources and support for the project and is accountable for enabling success. The sponsor may be external or internal to the project manager’s organization. From initial conception through project closure, the sponsor promotes the project

Project Life Cycle;A project life cycle is the series of phases that a project passes through from its initiation to its closure.

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0-Project Management FrameworkContract Project CharterA Contract is a formal document signed between

Buyer and Seller.

A buyer may be called the client or the customer

while a seller may be addressed as supplier,

vendor or the performing organization.

A Project Charter is usually prepared internally and

is issued by Sponsor to the Project Manager.

Sponsor is a person or a group or a department

who is authorized to provide financial resources for

the project.

A Project Manager is a person who is assigned by

performing organization to achieve project

objectives.

Contract is a legally binding to both buyer and

the seller.

A project charter may not be legally binding

especially when it is issued by a Sponsor who is

internal to performing organization.

A Project Charter formally authorizes the start of

the project and gives authority to Project Manager

to utilize organizational resources for completion of

project objectives.

A Contract may be signed for a Project or for

Operational Work.

A Project Charter is prepared for a Project.

A contract may or may not be available for a

Project.

Projects that are done internally without any third

party direction, support or governance will be

without contracts.

As a good practice a Project Charter should be

prepared for every project.

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0-Project Management FrameworkAt project or phase closure, the following may occur:

• Obtain acceptance by the customer or sponsor to formally close the project or phase,

• Conduct post-project or phase-end review,

• Record impacts of tailoring to any process,

• Document lessons learned,

• Apply appropriate updates to organizational process assets,

• Archive all relevant project documents in the project management information system (PMIS) to be used as historical data,

• Close out all procurement activities ensuring termination of all relevant agreements, and Perform team members’ assessments and release project resources.

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1-Project Integration ManagementProject Selection Methods

Benefit Measurement Models/Methods

Constrained Optimization Methods

Present Value/ NPV

Project statement of work - who?

Agreements

Business case

Key elements of a project charter

Purpose of project charter, who signs/approves

Facilitation techniques

Key elements of a project management plan

Scope baseline

Schedule baseline

Cost baseline

Project performance baseline

Subsidiary plans/component plans

PMIS examples

Change control steps (six)

Definition of a deliverable

Analytical techniques

Regression analysis

Trend analysis

Murder boards

Work Authorization System

Who all can give expert judgement?30

1-Project Integration Management

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2-Project Scope Management Interviews

Focus groups

Facilitated workshops

Group creativity techniques

Brainstorming

Affinity diagram

Nominal group technique

Idea mind mapping

Multicriteria decision analysis

Group decision making techniques

Unanimity

Majority

Plurality

Questionnaires and surveys

Observations

Benchmarking

Prototype

Context diagrams

Requirements Traceability Matrix (RTM)

Product analysis

Lateral thinking

Pairwise comparisons

Project scope statement (consists of, details)

Product scopeProject scopeDecompositionScope baseline (consists of)WBSWBS dictionary (contents)

Difference in Control Quality and Validate Scope

Variance analysis8/80 rule

TemplateValidate scopeOpportunity costDirect costs (Examples)Indirect costs (Examples)Variable costs (Examples)Fixed costs (Examples)Work packagePlanning package

Control account

Code of account

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2-Project Scope Management Develop Project Charter

Develop Project Charter is the process of developing a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. The key benefit of this process is a well-defined project start and project boundaries, creation of a formal record of the project, and a direct way for senior management to formally accept and commit to the project

. The approved project charter formally initiates the project. A project manager is identified and assigned as early in the project as is feasible, preferably while the project charter is being developed and always prior to the start of planning. The project charter should be authored by the sponsoring entity. The project charter provides the project manager with the authority to plan and execute the project. It is recommended that the project manager participate in the development of the project charter to obtain a foundational understanding of the project requirements.

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2-Project Scope Management Project Statement of Work

The project statement of work (SOW) is a narrative description of products, services, or results to be delivered by a project. For internal projects, the project initiator or sponsor provides the statement of work based on business needs, product, or service requirements. For external projects, the statement of work can be received from the customer as part of a bid document, (e.g., a request for proposal, request for information, or request for bid) or as part of a contract. The SOW references the following:

• Business need. An organization’s business need may be based on a market demand, technological advance, legal requirement, government regulation, or environmental consideration. Typically, the business need and the cost-benefit analysis are contained in the business case to justify the project.

• Product scope description. The product scope description documents the characteristics of the product, service, or results that the project will be undertaken to create. The description should also document the relationship between the products, services, or results being created and the business need that the project will address.

• Strategic plan. The strategic plan documents the organization’s strategic vision, goals, and objectives and may contain a high-level mission statement. All projects should be aligned with their organization’s strategic plan. Strategic plan alignment ensures that each project contributes to the overall objections of the organization.

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2-Project Scope Management Business Case ; document describes the necessary information from a business standpoint to determine whether or not the project is worth the required investment. The cost-benefit analysis are contained in the business case to justify and establish boundaries for the project.

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2-Project Scope Management Project Charter; The project charter is the document issued by the project initiator or sponsor that formally authorizes then existence of a project and provides the project manager with the authority to apply organizational resources to project activities. It documents the business needs, assumptions, constraints, the understanding of the customer’s needs and high-level requirements, and the new product, service, or result that it is intended to satisfy, such as:

• Project purpose or justification,

• Measurable project objectives and related success criteria,

• High-level requirements,

• Assumptions and constraints,

• High-level project description and boundaries,

• High-level risks,

• Summary milestone schedule,

• Summary budget,

• Stakeholder list,

• Project approval requirements (i.e., what constitutes project success, who decides the project is

successful, and who signs off on the project),

• Assigned project manager, responsibility, and authority level, and

• Name and authority of the sponsor or other person(s) authorizing the project charter.

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2-Project Scope Management Project Management Plan

The project management plan is the document that describes how the project will be executed, monitored, and controlled. It integrates and consolidates all of the subsidiary plans and baselines from the planning processes. Project baselines include, but are not limited to:

• Scope baseline

• Schedule baseline

• Cost baseline

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2-Project Scope Management • Corrective action—An intentional activity that realigns the performance of the project work with the project management plan;

• Preventive action—An intentional activity that ensures the future performance of the project work is aligned with the project management plan; and/or

• Defect repair—An intentional activity to modify a nonconforming product or product component.

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2-Project Scope Management Approved Change Requests

Approved change requests are an output of the Perform Integrated Change Control process, and include those requests reviewed and approved for implementation by the change control board (CCB). The approved change request may be a corrective action, a preventative action, or a defect repair. Approved change requests are

scheduled and implemented by the project team, and can impact any area of the project or project management plan. The approved change requests can also modify the policies, project management plan, procedures, costs, or budgets or revise the schedules. Approved change requests may require implementation of preventive or corrective actions.

Deliverables

A deliverable is any unique and verifiable product, result or capability to perform a service that is required to be produced to complete a process, phase, or project. Deliverables are typically tangible components completed to meet the project objectives and can include elements of the project management plan.

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2-Project Scope Management Analytical Techniques-Analytical techniques are applied in project management to forecast potential outcomes based on possible variations of project or environmental variables and their relationships with other variables. Examples of analytical techniques used in projects are:

• Regression analysis,

• Grouping methods,

• Causal analysis,

• Root cause analysis,

• Forecasting methods (e.g., time series, scenario building, simulation, etc.),

• Failure mode and effect analysis (FMEA),

• Fault tree analysis (FTA),

• Reserve analysis,

• Trend analysis,

• Earned value management, and

• Variance analysis.

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3-Project Time ManagementProgressive elaboration/rolling wave planning

DecompositionActivity listActivity attributes (contents)Milestone, Milestone list, examples

Mandatory dependency

Discretionary dependencyExternal dependencyLeadLagSubnetwork/fragment network

Resource calendarBottom up estimatingAnalogous estimatingParametric estimatingTop down estimating

Three point estimates, PERT formulasDelphi technique

Resource breakdown structure

Reserve analysis

Feeding buffersProject buffer

CPM

CCMResource optimization techniquesResource levellingResource smoothingScheduling toolModelling techniques

What-if scenario analysis

Simulation using Monte Carlo AnalysisSchedule compressionCrashing

Fast trackingProject calendarsSchedule forecastsFloat/Slack/Total float/Total slackFree floatAON, AOA diagramParkinson's lawDummy activity

4 types of relationships (most common, least common)

Hard logic, Soft logic

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3-Project Time ManagementPROJECT INTEGRATION MANAGEMENTeither by rejecting changes or by approving changes, thereby assuring that only approved changes are incorporated into a revised baseline.Changes may be requested by any stakeholder involved with the project. Although changes may be initiated verbally, they should be recorded in written form and entered into the change management and/or configuration management system. Change requests are subject to the process specified in the change control and configuration control systems. Those change request processes may require information on estimated time impacts and estimated cost impacts.Every documented change request needs to be either approved or rejected by a responsible individual, usuallythe project sponsor or project manager. The responsible individual will be identified in the project management plan

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3-Project Time ManagementInterviews --in interview is a formal or informal approach to elicit information from stakeholders by talking to them directly

Focus Groups-Focus groups bring together prequalified stakeholders and subject matter experts to learn about their expectations and attitudes about a proposed product, service, or result. A trained moderator guides the group through an interactive discussion, designed to be more conversational than a one-on-one interview.

Facilitated Workshops-Facilitated workshops are focused sessions that bring key stakeholders together to define product requirements. Workshops are considered a primary technique for quickly defining cross-functional requirements

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3-Project Time ManagementGroup Creativity Techniques-Several group activities can be organized to identify project and product requirements. Some of the group creativity techniques that can be used are:

• Brainstorming. A technique used to generate and collect multiple ideas related to project and product requirements. Although brainstorming by itself does not include voting or prioritization, it is often used with other group creativity techniques that do.

• Nominal group technique. A technique that enhances brainstorming with a voting process used to rank the most useful ideas for further brainstorming or for prioritization.

• Idea/mind mapping. A technique in which ideas created through individual brainstorming sessions are consolidated into a single map to reflect commonality and differences in understanding, and generate new ideas.

• Affinity diagram. A technique that allows large numbers of ideas to be classified into groups for review and analysis.

• Multicriteria decision analysis. A technique that utilizes a decision matrix to provide a systematic analytical approach for establishing criteria, such as risk levels, uncertainty, and valuation, to evaluate and rank many ideas.

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3-Project Time ManagementGroup Decision-Making Techniques- A group decision-making technique is an assessment process having multiple alternatives with an expected outcome in the form of future actions. These techniques can be used to generate, classify, and prioritize product requirements. There are various methods of reaching a group decision, such as:

• Unanimity. A decision that is reached whereby everyone agrees on a single course of action. One way to reach unanimity is the Delphi technique, in which a selected group of experts answers questionnaires and provides feedback regarding the responses from each round of requirements gathering. The responses are only available to the facilitator to maintain anonymity.

• Majority. A decision that is reached with support obtained from more than 50 % of the members of the group. Having a group size with an uneven number of participants can ensure that a decision will be reached, rather than resulting in a tie.

• Plurality. A decision that is reached whereby the largest block in a group decides, even if a majority is not achieved. This method is generally used when the number of options nominated is more than two.

• Dictatorship. In this method, one individual makes the decision for the group.

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3-Project Time ManagementRequirements Traceability Matrix

The requirements traceability matrix is a grid that links product requirements from their origin to the deliverables that satisfy them.

Constraints. A limiting factor

Assumptions. A factor in the planning process that is considered to be true, real, or certain, without proof or demonstration.

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3-Project Time Management

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3-Project Time ManagementCreate WBS- Create WBS is the process of subdividing project deliverables and project work into smaller, more manageable components. The key benefit of this process is that it provides a structured vision of what has to be delivered.WBS Data Flow Diagram- The WBS is a hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables.Decomposition-Decomposition is a technique used for dividing and subdividing the project scope and project deliverables into smaller, more manageable parts. Decomposition of the total project work into work packages generally involves the following activities:• Identifying and analyzing the deliverables and related work;• Structuring and organizing the WBS;• Decomposing the upper WBS levels into lower-level detailed components;• Developing and assigning identification codes to the WBS components; and• Verifying that the degree of decomposition of the deliverables is appropriate.

Decomposition may not be possible for a deliverable or subcomponent that will be accomplished far into the future. The project management team usually waits until the deliverable or subcomponent is agreed on, so the details of the WBS can be developed. This technique is sometimes referred to as rolling wave planning.

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3-Project Time ManagementScope Baseline-The scope baseline is the approved version of a scope statement, work breakdown structure (WBS), and its associated WBS dictionary, that can be changed only through formal change control procedures and is used as a basis for comparison. It is a component of the project management plan. Components of the scope baseline include:

• Project scope statement. The project scope statement includes the description of the project scope, major deliverables, assumptions, and constraints.

• WBS. The WBS is a hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables. Each descending level of the WBS represents an increasingly detailed definition of the project work. The WBS is finalized by assigning each work package to a control account and establishing a unique identifier for that work package from a code of accounts. These identifiers provide a structure for hierarchical summation of costs, schedule, and resource information. A control account is a management control point where scope, budget, actual cost, and schedule are integrated

• WBS dictionary. The WBS dictionary is a document that provides detailed deliverable, activity, and scheduling information about each component in the WBS. The WBS dictionary is a document that supports the WBS. Information in the WBS dictionary may include, but is not limited to:

○○ Code of account identifier,

○○ Description of work,

○○ Assumptions and constraints,

○○ Responsible organization,

○○ Schedule milestones,

○○ Associated schedule activities,

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○○ Resources required,○○ Cost estimates,○○ Quality requirements,○○ Acceptance criteria,○○ Technical references, and○○ Agreement information.

3-Project Time ManagementValidate Scope

Validate Scope is the process of formalizing acceptance of the completed project deliverables. The key benefit of this process is that it brings objectivity to the acceptance process and increases the chance of final product, service, or result acceptance by validating each deliverable.

The verified deliverables obtained from the Control Quality process are reviewed with the customer or sponsor to ensure that they are completed satisfactorily and have received formal acceptance of the deliverables by the customer or sponsor.

Accepted Deliverables-Deliverables that meet the acceptance criteria are formally signed off and approved by the customer or sponsor.

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3-Project Time ManagementPlan Schedule Management is the process of establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule.

6.2.2.1 Decomposition

Decomposition is a technique used for dividing and subdividing the project scope and project deliverables into smaller, more manageable parts.

6.2.2.2 Rolling Wave Planning

Rolling wave planning is an iterative planning technique in which the work to be accomplished in the near term is planned in detail, while the work in the future is planned at a higher level. It is a form of progressive elaboration.

6.2.2.3 Expert Judgment

Project team members or other experts, who are experienced and skilled in developing detailed project scope statements, the WBS, and project schedules, can provide expertise in defining activities

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3-Project Time Management6.6.2.5 Modeling Techniques Examples of modeling techniques include, but are not limited to:• What-If Scenario Analysis. What-if scenario analysis is the process of evaluating scenarios in order to predict their effect, positively or negatively, on project objectives. This is an analysis of the question,“Whatif the situation represented by scenario ‘X’ happens?” A schedule network analysis is performed using the schedule to compute the different scenarios, such as delaying a major component delivery, extending specific engineering durations, or introducing external factors, such as a strike or a change in the permitting process. The outcome of the what-if scenario analysis can be used to assess the feasibility of the project schedule under adverse conditions, and in preparing contingency and response plans to overcome or mitigate the impact of unexpected situations.• Simulation. Simulation involves calculating multiple project durations with different sets of activity assumptions, usually using probability distributions constructed from the three-point estimates (described in Section 6.5.2.4) to account for uncertainty. The most common simulation technique is Monte Carlo analysis (Section 11.4.2.2), in which a distribution of possible activity durations is defined for each activity and used to calculate a distribution of possible outcomes for the total project.

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3-Project Time Management6.3.2.3 Leads and Lags

A lead is the amount of time whereby a successor activity can be advanced with respect to a predecessor activity. For example, on a project to construct a new office building, the landscaping could be scheduled to start two weeks prior to the scheduled punch list completion

A lag is the amount of time whereby a successor activity will be delayed with respect to a predecessor activity. For example, a technical writing team may begin editing the draft of a large document 15 days after they begin writing it.

6.4.1.4 Resource Calendars

Described in Sections 9.2.3.2 and 12.2.3.3. A resource calendar is a calendar that identifies the working days and shifts on which each specific resource is available.

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3-Project Time Management• Resource Smoothing. A technique that adjusts the activities of a schedule model such that the requirements for resources on the project do not exceed certain predefined resource limits. In resource smoothing, as opposed to resource leveling, the project’s critical path is not changed and the completion date may not be delayed. In other words, activities may only be delayed within their free and total float. Thus resource smoothing may not be able to optimize all resources.

• Resource leveling. A technique in which start and finish dates are adjusted based on resource constraints with the goal of balancing demand for resources with the available supply. Resource leveling can be used

when shared or critically required resources are only available at certain times, or in limited quantities, or over-allocated, such as when a resource has been assigned to two or more activities during the same time period, as shown in Figure 6-20, or to keep resource usage at a constant

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3-Project Time Management6.6.2.7 Schedule Compression

Schedule compression techniques are used to shorten the schedule duration without reducing the project scope, in order to meet schedule constraints, imposed dates, or other schedule objectives. Schedule compression techniques include, but are not limited to:

• Crashing. A technique used to shorten the schedule duration for the least incremental cost by adding resources. Examples of crashing include approving overtime, bringing in additional resources, or paying to expedite delivery to activities on the critical path. Crashing works only for activities on the critical path where additional resources will shorten the activity’s duration. Crashing does not always produce a viable alternative and may result in increased risk and/or cost.

• Fast tracking. A schedule compression technique in which activities or phases normally done in sequence are performed in parallel for at least a portion of their duration. An example is constructing the foundation for a building before completing all of the architectural drawings. Fast tracking may result in rework and increased risk. Fast tracking only works if activities can be overlapped to shorten the project duration.

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3-Project Time Management

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4-Project Cost Management Cost control thresholds

Cost (level of precision)

Cost (level of accuracy)

Cost baseline

Contingency reserve

Management reserve

Vendor bid analysis

Cost aggregation

Funding limit reconciliation

Project funding requirements

EVM basic formulas

EVM Forecasting formulas

EVM TCPI formulas

Budget estimate

Definitive estimate

Order of magnitude estimate

Life cycle costing

Learning curve

Law of diminishing returns

Value analysis

S curve

Padding

Parkinson's Law59

4-Project Cost Management Analogous estimating

(Top Down Estimating, Form of Expert Judgement

Least accurate form of estimating, Quick, easy & cheap, Give a Ball Park Number)

Parametric estimating ( Formula Based )

(e.g., square footage in construction) to calculate a cost estimate for project work.

Bottom-up estimating .

Time consuming, Complex,Most Accurate

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4-Project Cost Management Three-Point Estimating-The accuracy of single-point activity cost estimates may be improved by considering estimation uncertainty and risk and using three estimates to define an approximate range for an activity’s cost:

• Most likely (cM).realistic effort assessment for the required work and

any predicted expenses.

• Optimistic (cO). best-case scenario for the activity.

• Pessimistic (cP). worst-case scenario for the activity.

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4-Project Cost Management

Determine Budget- is the process of aggregating the estimated costs of individual activities or work packages to

establish an authorized cost baseline. The key benefit of this process is that it determines the cost baseline against

which project performance can be monitored and controlled.

Funding Limit Reconciliation-To reconcile my activities as per the funding limit imposed by the management.

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4-Project Cost Management • Level of precision. The degree to which activity cost estimates will be rounded up or down (e.g.,US$100.49 to US$100, or US$995.59 to US$1,000) , based on the scope of the activities and magnitude of the project.

• Level of accuracy. The acceptable range (e.g., ―10%) used in determining realistic activity cost estimates is specified, and may include an amount for contingencies;

• Control thresholds. Variance thresholds for monitoring cost performance may be specified to indicate an agreed-upon amount of variation to be allowed before some action needs to be taken. Thresholds are typically expressed as percentage deviations from the baseline plan.

The accuracy of a project estimate will increase as the project progresses through the project life cycle. For example, a project in the initiation phase may have a rough order of magnitude (ROM) estimate in the range of −25% to +75%. Later in the project, as more information is known, definitive estimates could narrow the range of accuracy to -5% to +10%.

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4-Project Cost Management Scope Baseline

• Project scope statement.

• Work breakdown structure.

• WBS dictionary.

Control Costs

Control Costs is the process of monitoring the status of the project to update the project costs and managing changes to the cost baseline. The key benefit of this process is that it provides the means to recognize variance from the plan in order to take corrective action and minimize risk.

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Earned Value Management

S Curve66

4-Project Cost Management Vendor Bid Analysis Cost estimating methods may include analysis of what the project should cost, based on the responsive bids from qualified vendors. When projects are awarded to a vendor under competitive processes, additional cost estimating work may be required of the project team to examine the price of individual deliverables and to derive a cost that supports the final total project cost.

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4-Project Cost Management Planned value. (PV) is the authorized budget planned for the work to be accomplished for an activity or work breakdown structure component, not including management reserve. The total of the PV is sometimes referred to as the performance measurement baseline (PMB). The total planned value for the project is also known as budget at completion (BAC).

• Earned value. EV is a measure of work performed expressed in terms of the budget authorized for that work. It is the budget associated with the authorized work that has been completed. The EV being measured needs to be related to the PMB, and the EV measured cannot be greater than the authorized PV budget for a component. The EV is often used to calculate the percent complete of a project. Progress measurement criteria should be established for each WBS component to measure work in progress. Project managers monitor EV, both incrementally to determine current status and cumulatively to determine the long-term performance trends.

• Actual cost. Actual cost (AC) is the realized cost incurred for the work performed on an activity during a specific time period. It is the total cost incurred in accomplishing the work that the EV measured. The AC needs to correspond in definition to what was budgeted in the PV and measured in the EV (e.g., direct hours only, direct costs only, or all costs including indirect costs). The AC will have no upper limit; whatever is spent to achieve the EV will be measured. Variances from the approved baseline will also be monitored:

• Schedule variance. Schedule variance (SV) is a measure of schedule performance expressed as the difference between the earned value and the planned value. It is the amount by which the project is ahead or behind the planned delivery date, at a given point in time. It is a measure of schedule performance on a project. It is equal to the earned value (EV) minus the planned value (PV). The EVM schedule variance is a useful metric in that it can indicate when a project is falling behind or is ahead of its baseline schedule. The EVM schedule variance will ultimately equal zero when the project is completed because all of the planned values will have been earned. Schedule variance is best used in conjunction with critical path methodology (CPM) scheduling and risk management. Equation: SV = EV – PV

• Cost variance. Cost variance (CV) is the amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost. It is a measure of cost performance on a project. It is equal to the earned value (EV) minus the actual cost (AC). The cost variance at the end of the project will be the difference between the budget at completion (BAC) and the actual amount spent. The CV is particularly critical because it indicates the relationship of physical performance to the costs spent. Negative CV is often difficult for the project to recover. Equation: CV= EV − AC.

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4-Project Cost Management • Schedule performance index. The schedule performance index (SPI) is a measure of schedule efficiency expressed as the ratio of earned value to planned value. It measures how efficiently the project team is using its time. It is sometimes used in conjunction with the cost performance index (CPI) to forecast the final project completion estimates. An SPI value less than 1.0 indicates less work was completed than was planned. An SPI greater than 1.0 indicates that more work was completed than was planned. Since the SPI measures all project work, the performance on the critical path also needs to be analyzed to determine whether the project will finish ahead of or behind its planned finish date. The SPI is equal to the ratio of the EV to the PV. Equation: SPI = EV/PV

• Cost performance index. The cost performance index (CPI) is a measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost. It is considered the most critical EVM metric and measures the cost efficiency for the work completed. A CPI value of less than 1.0 indicates a cost overrun for work completed. A CPI value greater than 1.0 indicates a cost underrun of performance to date. The CPI is equal to the ratio of the EV to the AC. The indices are useful for determining project status and providing a basis for estimating project cost and schedule outcome. Equation: CPI = EV/AC

• Total Cost Performance Index .A measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available.

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4-Project Cost Management BAC- Budget at completion

PV- As of how much work was planned to be done in $

AC- As of today how much does the work cost in $

EV – As of today how much work is actually done

PV= BAC * Planned % complete

AC= BAC * Actual % complete

SV = Scheduled Variance=Earned Value- Planned value= EV-PV

CV=Earned Variance –Actual Cost =EV-AC

SPI =Earned Value/Planned Value = EV/PV

CPI= Cost Performance Index=Earned Value/Actual Cost = EV/AC

EAC= Revised BAC=BAC/CPI= Budget cost completion/Cost Performance Index

TCPI= To Complete performance Index=

TCPI= (VAC-EV) / (BAC-AC) – BAC Base

TCPI= (VAC-EV) / (EAC-AC) – EAC Base

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Accuracy of Estimates• Order of Magnitude Estimate: -25% - 75%; usually made

during Initiation Phase

• Budget Estimate: -10% - 25%; usually made during the Planning phase

• Definitive Estimate: -5% - 10%; usually made during the Planning phase

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Accounting Standards

Present Value (value today of future cash flows):

PV = FV(1 + r) N

FV = Future Value

R = Interest Rate

N = Number of time periods

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Reserve Analysis-Budget reserve analysis

• Contingency reserves (Know unknown)• Project manager is authorized to have it and no management approval is

required.

• Management reserves (unknown unknown)• Project Manager is not authorized to have it, needs to take prior

approval. These are not part of project base line.

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4-Project Cost Management • Life Cycle Costing (Cradle to Grave)

Cost of whole life of the product and not just the cost of the project.

• Cost Risk

Risk that may cause cost of the project go higher than planned.

• Law of Diminishing Returns

Overtime, adding more resources may increase overall output, but eventually will decrease individual productivity.

• Value Analysis

Reducing the cost with out changing scope and possible improving quality and performance.

• Learning Curve

Overtime the total cost will rise, but cost per unit will drop because of repetition increases efficiency

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4-Project Cost Management Analogous Esitmation Parametric Estimation

Analogous Estimation is based on historical

data

Parametric Estimation is also based on historical

data.

How could this be difference?

It uses historical data to determine duration

and/or cost estimates for similar activities or

WBS components or for a whole project

It uses historical data to prepare a mathematical

or statistical model to calculate duration and/or

cost estimates for activities or WBS components

or for a whole project

It is usually done in early phases of project

when detailed information is not available

It can only be done when detailed information is

available

The estimation so produced is usually not very

accurate. The accuracy of estimation is

dependent on expertise of person doing it.

The estimation so produced is usually more

accurate. The accuracy of estimation is

dependent on the sophistication of model used

and details available in historical data

It is usually less costly and time consuming It is usually more costly and time consuming

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4-Project Cost Management Work Package is the smallest level of deliverable in WBS.A Work Package cannot be broken down further (decomposed) into another smaller deliverable. A deliverable (and hence a Work Package) provides some tangible value. A Work Package is recognized, required and valued by a stakeholder(s). A Work Package gives some sense of achievement to project team and satisfies a stakeholder(s).Once a deliverable (and hence a Work Package) is created, it is handed over to the stakeholder(s). The stakeholder(s) derive some benefit from the deliverable (and hence Work Package). They use it for the purpose it was produced.Succinctly, a Work Package is a result of an endeavor.

So what is an Activity?A series of activities produces/creates a result or a deliverable (and hence a Work Package). An activity, in itself, will not produce any result but a series of activities will RESULT into a work package.

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Concept Formula Result Interpretation

To-Complete Performance

Index (TCPI)

Based on BAC: The TCPI is compared to the

cumulative CPI to determine if a

target EAC is reasonable.

The calculated project of cost

performance that must be achieved on

the remaining work to meet a specific

management goal (e.g. BAC or EAC).

TCPI = (BAC - EV) / (BAC - AC) A target EAC is assumed to be

reasonable if the TCPI is within

plus or minus 0.05 of the

cumulative CPI EVM metric.

It is the work remaining divided by the

funds remaining.

Based on EAC:

TCPI = (BAC - EV) / (EAC - AC)


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Variance at Completion (VAC) Result is a monetary value that

estimates how much over or under

budget (the variance) we will be at

the end of the project.

Anticipates the difference between the

originally estimated BAC and a newly

calculated EAC.

<0 = over budget

In other words, the cost we originally

planned minus the cost that we now

expect.

0 = on budget

>0 under budget

VAC = BAC - EAC


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Estimate at Completion (EAC) EAC = BAC / CPI

Original budget modified by the cost performance. The result is a monetary value.

Expected final and total cost of an activity or project based on project performance.

Assumption: use formula if current variances are thought to be typical in the future.

Helps determine an estimate of the total costs of a project based on actual costs to date.

This is the formula most often required on the exam.

There are several ways to calculate EAC depending on the current project situation and how the actual work is progressing as compared to the budget.

EAC = AC + ETCActual Cost plus a new estimate for the remaining work. Result is a monetary value.

Look for certain keywords to determine what assumptions were made.

Assumption: use formula if original estimate was fundamentally flawed or conditions have changed and

invalidated original estimating assumptions.

EAC = AC + BAC - EV Actual cost to date (AC) plus remaining budget (BAC - EV).

Assumption: use formula if current variances are thought to be atypical in the future and the original budget is

more reliable.Result is a monetary value.

EAC = AC + ((BAC - EV) /(CPI * SPI))Actual cost to date (AC) plus remaining budget (BAC - EV)modified by both cost performance and schedule performance.

Assumption: use formula if project is over budget but still needs to meet a schedule deadline.

Result is a monetary value.


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Estimate to Complete (ETC) ETC = EAC - ACExpected total cost minus actual cost to date.

Expected cost needed to complete all the remaining work for a schedule activity, a group of activities or the project.

Inversion of the same formula from the EAC calculations.

Result is a monetary value that will tell us how much more the project will cost.

Helps predict what the final cost of the project will be upon completion.

ETC = BAC - EVThe planned budget minus the earned value.

There are many ways to calculate ETC depending on the assumptions made.

Assumption: use formula if current variances are thought to be atypical

in the future.


ETC = (BAC - EV) / CPIThe planned budget minus the earned value modified by project performance.

Assumption: use formula if current variances are thought to be typical

in the future.


ETC = We create a new estimate when it is thought that the original

estimate was flawed.

This is not the result of a calculation or formula, but simply a new estimate of the remaining cost.

5-Project Quality ManagementQuality vs Grade

Precision vs Accuracy

PDCA cycle - who?

Conformance to requirements - who?

Quality is free - who?

Cost-benefit analysis

Cost of quality

Cost of conformance

Cost of non-conformance

Cost of prevention

Cost of inspection

Cost of internal failures

Cost of external failures

Seven basic QC tools

Cause and effect diagram

Flowcharts

Checksheets

Pareto diagrams

Histograms

Control charts

Scatter diagrams

Benchmarking

Design of experiments

Statistical sampling

Force field analysis

Quality metrics (examples)

Quality checklists

Difference in QA and QC

Quality Audits

Process analysis

Tree diagrams (examples)

Prioritization matrices

Cost of poor quality

Run chart

Rule of seven

Prevention vs Inspection

Standards vs Regulations

Gold plating

Quality is free

Doing it right the first time83

5-Project Quality Management

3 or 6 sigma – represents level of quality

+/- 1 sigma equal to 68.26%



+/- 6 sigma equal to 99.99

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5-Project Quality ManagementPerform Quality Assurnace Control Quality

It is part of Executing Process Group It is part of M&C Process Group

It is performed while the project work is

being done to create the deliverable

It is performed after work is completed and

deliverable is created

It is performed on the process to create

the deliverable

It is performed on the created deliverable

It is performed through Process Analysis

& Process Audit

It is performed through Inspection

It analyzes the defined processes to

recommend corrective or preventive

actions

It checks (tests) the created deliverable to

recommend defect repair

Quality Control Measurements are input

for this process – Quality Control

Measurements are used for Process

analysis

Quality Control Measurements are output

of this process

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6-Project HR Management

RAM

RACI

Organizational theory

Staffing management plan (contents)

Pre-assignment

Negotiation

Acquisition

Virtual teams

Multi-Criteria Decision Analysis (MCDA)

Interpersonal skills (examples)

Ground rules

Co-location

WAR room/Tight Matrix

Maslow's theory of needs

McGregors theory X and Y

Ouchi's theory Z

McCllends achievement theory

Herzberg's hygiene and motivation theory

List of hygiene factors

List of motivators

Vroom's expectancy theory

Conflict Resolution Techniques

Withdrawal/Avoid

Smooth/Accommodate

Compromise/Reconcile

Force/Direct

Collaborate/Problem Solve

Observation and Conversation

Sources of conflict (priority wise)

Halo effect

Types of power

Tuckman model (5 stages)

Collective bargaining agreement constraints106

6-Project HR Management RAM -A responsibility assignment matrix (RAM) is a grid that shows the project resources assigned to each work package. It is used to illustrate the connections between work packages or activities and project team members. On larger projects, RAMs can be developed at various levels.

of responsibility. One example of a RAM is a RACI (responsible, accountable, consult, and inform) chart, project. A RACI chart is a useful

tool to use when the team consists of internal and external resources in order to ensure clear divisions of roles and expectations. RACI

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6-Project HR Management Roles and responsibilities. The following should be addressed when listing the roles and responsibilities needed to complete a project:

Role. The function assumed by or assigned to a person in the project. Examples of project rolesare civil engineer, business analyst, and testing coordinator. Role clarity concerning authority,responsibilities, and boundaries should also be documented.

Authority. The right to apply project resources, make decisions, sign approvals, acceptdeliverables, and influence others to carry out the work of the project. Examples of decisionsthat need clear authority include the selection of a method for completing an activity, qualityacceptance, and how to respond to project variances. Team members operate best when theirindividual levels of authority match their individual responsibilities.

Responsibility. The assigned duties and work that a project team member is expected to perform

in order to complete the project’s activities.\

Competency. The skill and capacity required to complete assigned activities within the projectconstraints. If project team members do not possess required competencies, performance canbe jeopardized. When such mismatches are identified, proactive responses such as training,hiring, schedule changes, or scope changes are initiated.

Resource calendars. Calendars that identify the working days and shifts on which each specificresource is available. This chart illustrates the number of hours a person,department, or entire project team that will be needed each week or month over the course of the project.

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6-Project HR Management 9.2.2.1 Pre-assignment

When project team members are selected in advance, they are considered pre-assigned. This situation can occur if the project is the result of specific people being identified as part of a competitive proposal, if the project is dependent upon the expertise of particular persons, or if some staff assignments are defined within the project charter.

9.2.2.3 Acquisition

When the performing organization is unable to provide the staff needed to complete a project, the required services may be acquired from outside sources. This can involve hiring individual consultants or subcontracting work to another organization.

9.3 Develop Project Team

Develop Project Team is the process of improving competencies, team member interaction, and overall team environment to enhance project performance. The key benefit of this process is that it results in improved teamwork, enhanced people skills and competencies, motivated employees, reduced staff turnover rates, and improved overall project performance.

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One of the models used to describe team development is the Tuckman ladder (Tuckman, 1965; Tuckman & Jensen, 1977), which includes five stages

of development that teams may go through. Although it’s common for these stages to occur in order, it’s not uncommon for a team to get stuck in a particular stage or slip to an earlier stage.

• Forming. Team meets and learns about the project and their formal roles and responsibilities. Team members tend to be independent and not as open in this phase.

• Storming. Team begins to address the project work, technical decisions, and the project management approach. If team members are not collaborative and open to differing ideas and perspectives, the environment can become counterproductive.

• Norming. Team members begin to work together and adjust their work habits and behaviors to support the team. The team learns to trust each other.

• Performing. Teams that reach the performing stage function as a well-organized unit. They are interdependent and work through issues smoothly and effectively.

• Adjourning. Team completes the work and moves on from the project. This typically occurs when staff is released from the project as deliverables are completed or as part of carrying out the Close Project or Phase process (Section 4.6)

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6-Project HR Management 9.3.2.5 Colocation

Colocation, also referred to as “tight matrix,” involves placing many or all of the most active project team members in the same physical location to enhance their ability to perform as a team. Colocation can be temporary, such as at strategically important times during the project, or for the entire project. Colocation strategies can include a team meeting room (sometimes called “war room”), places

9.3.2.6 Recognition and Rewards

People are motivated if they feel they are valued in the organization and this value is demonstrated by the rewards given to them. Generally, money is viewed as a tangible aspect of any reward system, but intangible

rewards could be equally or even more effective. Most project team members are motivated by an opportunity to grow, accomplish, and apply their professional skills to meet new challenges. A good strategy for project managers is to give the team recognition throughout the life cycle of the project rather than waiting until the project is completed.

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6-Project HR Management 9.4 Manage Project Team is the process of tracking team member performance, providing feedback, resolving issues, and managing team changes to optimize project performance. The key benefit of this process is that it influences team behavior, manages conflict, resolves issues, and appraises team member performance.

Human Resource Management Plan. The human resource management plan provides guidance on how project human resources should be defined, staffed, managed, controlled, and eventually released. It includes, but is not limited to:

• Roles and responsibilities,

• Project organization, and

• Staffing management plan.

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6-Project HR Management 9.4.2.3 Conflict Management

Conflict is inevitable in a project environment. Sources of conflict include scarce resources, scheduling priorities, and personal work styles. Team ground rules, group norms, and solid There are five general techniques for resolving conflict. As each one has its place and use, these are not given in any particular order:

• Withdraw/Avoid. Retreating from an actual or potential conflict situation; postponing the issue to be better prepared or to be resolved by others.

• Smooth/Accommodate. Emphasizing areas of agreement rather than areas of difference; conceding one’s position to the needs of others to maintain harmony and relationships.

• Compromise/Reconcile. Searching for solutions that bring some degree of satisfaction to all parties in order to temporarily or partially resolve the conflict.

• Force/Direct. Pushing one’s viewpoint at the expense of others; offering only win-lose solutions, usually enforced through a power position to resolve an emergency.

• Collaborate/Problem Solve. Incorporating multiple viewpoints and insights from differing perspectives; requires a cooperative attitude and open dialogue that typically leads to consensus and commitment.

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Hallo Effect;-

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Ouchi’s Theory Z

1. Long-Term Employment

2. Collective Decision-making

3. Individual Responsibility

4. Slow Evaluation/ Promotion

5. Implicit Informal Control with Explicit, Formalized Control

6. Specialized Career Path

7. Holistic Concern for Employees


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McClelland’s Achievement Motivation Theory

McClelland and colleagues studied the behavioral effects of three needs

Need for Achievement

Need for Power

Need for Affiliation

Emphasized the Need for Achievement, although they investigated all three needs

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Motivational TheoriesMaslow’s Hierarchy of Needs By Abraham Maslow –

• Self-actualization, Self development creativity, realization of potential• Self esteem, Reputation, Respect from others, Recognition & self confidence• Social-Love belonging, togetherness, group member• Safety & Security,-Economic Security• Basic – Food clothing and Shelter

McGregor’s Theory of X and Y• X – Manager who distrust the team-Theory X organizations work on a

‘carrot and stick’ basis• Y – Manager who trust the team

Herzberg’s Theory – poor hygiene factors destroy motivation but improving them will not improve motivation

Motivating Agents• Responsibility• Self-actualization• Professional growth• Recognition

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6-Project HR Management Powers:

• Legitimate Power- formal Power/ Positional Power• Reward Power- Ability to award a Bonus – (Always to be

done in Public)• Expert Power (earned)- Being a subject matter expert• Referent Power – Draws power by association with a higher

Authority • Punishment Power- Ability to demote or with hold rewards

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4- Human Resource

Salience Model – Stakeholder Analysis

Mitchell, Agle and Wood (1997-99) have come up with stakeholder analysis model, that can help a project manager in early phase of planning process to identify stakeholder and classify according to three major attributes -1.Power – to influence the organization or project deliverables (coercive, financial or material, brand or image);2.Legitimacy – of the relationship & actions in terms of desirability, properness or appropriateness;3.Urgency – of the requirements in terms of criticality & time sensitivity for the stakeholder.Based on the combination of these attributes, priority is assigned to the stakeholder.

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3(High Priority)

7 - DefinitivePower, Legitimacy & Urgency

Level 2(Medium Priority)

4 – DominantPower &

Legitimacy

5 - DangerousPower & Urgency

6 – DependentLegitimacy &

UrgencyLevel 1

(Low Priority)1 – Dormant

Power2 –

DiscretionaryLegitimacy

3 – DemandingUrgency

7-Project Communications Management

Interactive communication (Examples)

Push communication (Examples)

Pull communication (Examples)

Sender receiver model diagram

Information Management Systems (Examples)

Paralingual

Body language (Non-verbal)

Communication formula (3 situations)

Formal communication (Examples)

Informal communication (Examples)

Time spent by PM

Active listening

Emphatic listening

Feedback

Formal written (Examples)

Formal verbal (Examples)

informal written (Examples)

Informal verbal (Examples)131


. It’s been said that 90 percent of a project manager’s time is spent communicating.

ProjectCommunications Management processes, which are as follows:

10.1 Plan Communications Management—The process of developing an appropriate approach and plan for project communications based on stakeholder’s information needs and requirements, and available organizational assets.

10.2 Manage Communications—The process of creating, collecting, distributing, storing, retrieving and the ultimate disposition of project information in accordance with the communications management plan.

10.3 Control Communications—The process of monitoring and controlling communications throughout the entire project life cycle to ensure the information needs of the project stakeholders are met.

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Resource leveling Resource Smoothing

It applies the resource constraints to the project and may result in change in project duration.

We apply resource smoothing after doing resource leveling and we make use of slack, and will not result in change of project duration.

Resource Leveling is primarily driven by resource constraints, like you do not have more than 45 hours of the given resource for a week.

Resource smoothing is more to do with desired limits, like we do have 45 hours available for given resource but we wish that we allocate 38 hours per week so we have some breathing space.

The allocation limits identified in resource leveling must be applied.

The desired limit identified in resource smoothing may not be applied in some cases, if we do not have slack.

The resource leveling is done first and then we do the resource smoothing. Since we need to first accommodate the resource constraints before we can optimize it.

We apply resource smoothing after applying resource leveling

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.The communication activities involved in these processes may often have many potential dimensions that needto be considered, including, but not limited to:• Internal (within the project) and external (customer, vendors, other projects, organizations, the public);• Formal (reports, minutes, briefings) and informal (emails, memos, ad-hoc discussions);• Vertical (up and down the organization) and horizontal (with peers);• Official (newsletters, annual report) and unofficial (off the record communications); • Written and oral, and verbal (voice inflections) and nonverbal (body language).

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.Communication ModelsThe communication models used to facilitate communications and the exchange of information may vary from project to project and also within different stages of the same project. A basic communication model, shown in Figure 10-4, consists of two parties, defined as the sender and receiver. Medium is the technology medium and includes the mode of communication while noise includes any interference or barriers that might compromise the delivery of the message. The sequence of steps in a basic communication model is:• Encode. Thoughts or ideas are translated (encoded) into language by the sender.• Transmit Message. This information is then sent by the sender using communication channel (medium).The transmission of this message may be compromised by various factors (e.g., distance, unfamiliartechnology, inadequate infrastructure, cultural difference, and lack of background information). Thesefactors are collectively termed as noise.• Decode. The message is translated by the receiver back into meaningful thoughts or ideas.• Acknowledge. Upon receipt of a message, the receiver may signal (acknowledge) receipt of the messagebut this does not necessarily mean agreement with or comprehension of the message.• Feedback/Response. When the received message has been decoded and understood, the receiverencodes thoughts and ideas into a message and then transmits this message to the original sender.The components of the basic communication model need to be considered when project communicationsare discussed. As part of the communications process, the sender is responsible for the transmissionof the message, ensuring the information being communicated is clear and complete, and confirming the

communication is correctly understood. The receiver is responsible for ensuring that the information is received in its entirety, understood correctly, and acknowledged or responded to appropriately.

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.Communication MethodsThere are several communication methods that are used to share information among project stakeholders.These methods are broadly classified as follows• Interactive communication. Between two or more parties performing a multidirectional exchangeof information. It is the most efficient way to ensure a common understanding by all participants onspecified topics, and includes meetings, phone calls, instant messaging, video conferencing, etc.

• Push communication. Sent to specific recipients who need to receive the information. This ensuresthat the information is distributed but does not ensure that it actually reached or was understood by theintended audience. Push communications include letters, memos, reports, emails, faxes, voice mails,blogs, press releases, etc.

• Pull communication. Used for very large volumes of information, or for very large audiences, andrequires the recipients to access the communication content at their own discretion. These methodsinclude intranet sites, e-learning, lessons learned databases, knowledge repositories, etc.

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8- Project Risk Management Risk definition

Pure risks

Business risks

Known risks

Unknown risks

Difference between risk and issue

Risk threshold

Risk attitude

Documentation reviews (which documents?)

Checklist analysis

Assumptions analysis

Diagramming techniques

Influence diagrams

SWOT analysis

Risk register (when created?)

Purpose of Qualitative Risk analysis

Prb and Impact matrix

Risk data quality assessment

Risk urgency assessment

Risk categorization

Risl Breakdown structure

Risk prioritization number (risk score)

Sensitivity analysis using tornado diagram

Modelling and Simulation using Monte Carlo

Expected Monetary Value (EMV)

Strategies for negative risks or threats

Strategies for positive risks or opportunities

Contingency Response Strategy

Contigency Plans

Fallback Plans

Secondary risks

Residual risks

Risk re-assessment

Risk audits

Risk reserve analysis

Murphy's law

Cardinal scale

Ordinal scale

RAG scale

Watch list

Workaround

Passive acceptance

Active acceptance141

8- Project Risk Management

Risk Identification – which are likely to affect the project

Risk Quantification – evaluation of risk to assess the range of possible outcomes

Sometimes treated as single process; risk analysis/assessment

Risk Response Development – defining enhancement steps for opportunities and response

Sometimes called response planning/mitigationRisk Response Control – responding to changes in risk over course of project

May be combined as risk management

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Defining a Project’s Risk Categories

Technical, quality, or performance risks Technical risks are associated

with new, unproven, or complex technologies being used on the project.

Changes to the technology during the project implementation can also be a risk. Quality risks are the levels set for expectations of impractical quality and performance. Changes to industry standards during the project can also be lumped into this category of risks.

Project management risks These risks deal with faults in the management of the project: the unsuccessful allocation of time, resources, and scheduling; unacceptable work results (low-quality work); and poor project management as a whole.

Organizational risks The performing organization can contribute to the

project’s risks through unreasonable cost, time, and scope expectations; poor project prioritization; inadequate funding or the disruption of funding; and competition with other projects for internal resources.

External risks These risks are outside of the project, but directly affect it—for example, legal issues, labor issues, a shift in project priorities, or weather. “Force majeure” risks can be scary, and usually call for disaster recovery rather than project management. These are risks caused by earthquakes, tornados, floods, civil unrest, and other disasters

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Decision Tree

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Budget

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9-Project Procurement ManagementTypes of contracts

FFP

FPIF

FPEPA

CPFF

CPIF (sharing ratio)

CPAF

T & M

Important procurement documents

Procurement statement of work

Source selection criteria (some examples)

Activites done in Plan Procurements

Activites done in Conduct Procurements

Activites done in Control Procurements

Activites done in Close Procurements

Bidder conferences

Force Majeure Clause

Claims administration

Procurement audits

ADR (Alternative Dispute Resolution)

Letter contract

Letter of intent

Privity

Screening system

Weighting system163

9-Project Procurement ManagementLet us understand plain vanilla contract types:Fixed Price (FP)Cost Reimbursable (CR)Time and Material (T&M)Let us assume that we are undertaking a house renovation. As part of renovation we need to rewire the whole house. There would be 2 broad cost components for the rewiring exerciseLabor or HR costWire or material costLet us assume that we have called an electrical contractor to lay the electricity wiring. Let us also assume that the contractor is going to give us a cost estimate for rewiring work. The contractor would consider aforementioned costs components to give us a cost estimate. There could be three scenarios.

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9-Project Procurement Management

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9-Project Procurement ManagementScenario I - Fixed Price

This scenario would be possible if electrical layout and design has been finalized. The contractor can work with a well defined statement of work.

HR Cost - The contractor would look at the whole house to estimate how much time & effort would be taken by her/him to do the work.

Material Cost - The contractor would also survey the house to make an approximation of how much wire (quantity of wire) would be required for rewiring.

Based on the time/effort estimates & wire quantity estimates and after adding some profit margin, the contractor would provide us with a price estimate for re-wiring the house. This estimate (once finalized and accepted by us) would become part our contract. We will have to pay the fixed price to the contractor for completing the work. Even if the contractor overruns this price, we would not be liable to pay anything extra.

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9-Project Procurement ManagementScenario II - Time & Material

This scenario would be possible if electrical layout and design has not been finalized. The contractor does not have a well defined statement of work.

HR Cost - The contractor would not be able to estimate time & effort for completing the work as the electrical layout and design is yet to be finalized. She/he would, rather, estimate the rate per day (it could be any other unit of time also like hour) for her/his Laborers.

Material Cost - Again the contractor would not be able to estimate the quantity of wire that would be required for completing the work. She/he would estimate the rate per meter (it could be any other unit of quantity like Kg) for different types of wires required.

The contractor would provide us with a labor rate & wire rate (after adding her/his profit margins) for re-wiring the house. These rates (once finalized and accepted by us) would become part our contract. These rates will remain fixed for the duration of the contract - we will have to pay the fixed rate to the contractor for completing the work. For the buyer & the seller rate is fixed but the quantity of labor and wire is not fixed.

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9-Project Procurement ManagementScenario III - Cost Plus or Cost ReimbursableThis scenario would be possible if electrical layout and design has not been finalized. Moreover let us assume there is a constant fluctuation in labor rates and wire rates (this practically happens as copper/aluminum prices fluctuate on a regular basis). The contractor does not have a well defined statement of work.

HR Cost - The contractor would not be able to estimate time & effort for completing the work as the electrical layout and design is yet to be finalized. She/he would also not be able to determine labor rates as they would fluctuate on a regular basis.

Material Cost - Again the contractor would not be able to estimate the quantity of wire that would be required for completing the work.She/he would also not be able to determine wire rates as they will fluctuate on a regular basis. The contractor would propose that (since labor rate & wire rate cannot be fairly estimated) she/he will share the cost incurred by her/him on a periodic basis and these costs should be reimbursed by us. This proposal (once finalized and accepted by us) would become part our contract. Neither the rates nor the quantity is fixed for the duration of the contract - we will have to reimburse the costs incurred by the contractor and also provide additional fee as profit margin for the contractor.

For the buyer & the seller neither the rate nor the quantity of labor and wire is fixed.

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10- Project Stakeholder Management

Definition of stakeholder

Definition of positive stakeholder

Definition of negative stakeholder

Stakeholder analysis

Power Interest/Concern Grid

Salience model

Profile analysis meetings

Stakeholder Engagement Assessment Matrix

Stakeholder Analytical Techniques

Unaware

Resistant

Neutral

Supportive

Leading180

3-point estimation is based on 3 different estimates to improve the estimate (of cost or duration). It takes into consideration uncertainty and risk associate with a project or an activity. We estimate using 3 different values to arrive at a mean estimate. These 3 different values areOptimistic value (O) , Pessimistic value (P), Most Likely value (M)

Now if we have to arrive at an estimate, we can do so by using either of the following two formulas

Simple Average E_SA=(O+P+M)/3

Average using PERT formula PERT (Program Evaluation & Review Technique) is a weighted average formula. It gives a weight of 4 to M.

E_PERT=(O+P+4×M)/6

Refer to PMBOK® pg. 150-151 and 172-173 for further details. Now some other questions arise

Why have we given a weight of 4 to M? Why have we not given any other weight? Why have we not given any weight to either O or P? Can we use any other formula?

We can certainly give different weights and use a different formula. The formulas mentioned in PMBOK have some statistical background and are published after looking at various industries/projects. These formulae (specifically PERT) were published after some statistical and research findings; when project management (as a subject) was still evolving. Since then they have been found useful to provide more accurate results then just a single value.

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Let us consider an example to see how these formulae work. Let us assume that we have to estimate how much time it will take to go from our home to our work place, we can think of 3 different conditions:

Optimistic – Roads would be free of any traffic congestions and we will not encounter and Red signalsPessimistic – There might be serious traffic bottlenecks like a major accident on the road and our vehicle may breakdownMost Likely – There would be regular traffic conditions

Let us assume that our 3 different estimates were 45 minutes, 225 minutes and 90 minutes respectively.

Simple Average E_SA=(45+225+90)/3 , E_SA=120 minutes

PERT Formula E_PERT=(45+225+4×90)/6, E_PERT=105 minutes

The reader will notice that PERT estimates are more close to 'Most Likely' value and they are likely to yield better results.

Concluding Remarks:

3-point estimation is based on 3 different values

Simple average is a form of 3-point estimation technique

PERT is a form of 3-point estimation technique

PERT and Simple Average are 2 more popular ways if arriving at 3-point estimates.

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10- Project Stakeholder Management 'Project Sponsor' - It is a person or a department or an organization who provides financial resources for the project.

'Project Sponsor' as a Role and not as a person or job title. In a particular organization CEO might be the 'Project Sponsor' (role) but he would little role in decision making. In another organization a senior manager is a 'Project Sponsor' (role) as well as the decision maker. In yet another organization 'Project Sponsor' (role) is split between multiple managers.

It is also possible that a person in Project Sponsor's role could also perform other roles like elucidating product requirements (Customer), providing human resources (Functional Manager), providing subject matter expertise (Consultant) etc.

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Click to Enlarge

1. What is the definition of critical path? Critical Path is the "longest path" to complete the project in "shortest

possible duration". Critical Path has least "Total Float" of all the paths. Start-A-D-E-Finish in following figure is the

critical path with "Zero" float.

•2. What is a Critical Activity? All activities on Critical Path are Critical Activities.

3. The name suggests that Critical Path is the most important path of the project. Is it not? Critical Path is the

most important path because it has longest duration with no flexibility (least total float). If project team misses

any date on Critical Path, the project is likely to get delayed. Critical Path is not the most important path

because it would have more important or more complex activities on it.

4. How can Critical Path be longest and shortest at the same time?The path is longest among all the paths on

a network diagram i.e. paths other than the Critical Path would have duration shorter than the Critical Path. In

above figure Start-A-D-E-Finish is longer than Start-B-C-Finish. The duration of Start-A-D-E-Finish is 11 days

while duration of Start-B-C-Finish is 10 days. Critical Path also defines shortest possible duration for the

project. The project cannot be completed unless all the paths on a network diagram (all activities on all the

paths) are complete. The project in above figure will be over only if both the paths (Start-A-D-E-Finish & Start-

B-C-Finish) are completed. The shortest possible duration to do so would be 11 days.

5. Can a project have multiple longest paths?Yes.

6. Why is it said that all activities on Critical Path have "Least" Total Float. Shouldn't it be "Zero" Total Float?A

network diagram can have "Negative" Total Float. This can happen in two circumstances - Fast Tracking to

meet schedule constraint or Delay while Executing. In case the project team is working with "Negative" Total

Float then the path having "Least" Total Float will be Critical Path.

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http://img29.imageshack.us/img29/8835/rbyv.jpg

Knowledge Area

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Click to Enlarge

7.Critical Path is current point forward. Activities that are complete are complete. Critical Path

should be dynamically calculated and can change based on current performance. A PM should

watch (manage) the Critical Path like a hawk.

8. So managing schedule along Critical Path is more important than the other paths. If project

team misses a date on critical path, project will get delayed. Is it a Threat for the project?

•Yes, but at the same time it is an Opportunity. If project team completes a Critical Activity

early then there is a chance of finishing the project early.

9. Can a "Near Critical Path" become Critical Path? Yes. If activities on "Near Critical Path"gets

delayed and it becomes longer than original Critical Path then "Near Critical Path" becomes

the new Critical Path. So a PM should closely manage "Near Critical Path" as well.

10. Would it be useful to add buffer to Non Critical Activities? Usually no but a buffer should be

added to activities on "Critical Path".

11. Should a buffer be added to all activities on the Critical Path? Ideally No. Instead "Critical

Chain Method" should be used. In "Critical Chain Method" a dummy buffer activity is added at

the end of Critical Chain. Critical Chain defines a few other types of buffers which are not

discussed in this article.

12. What is "Critical Chain Method"?It is safe to say that Critical Chain is refined Critical Path.

A complete discourse is out of scope for this article. The reader can also look at following

article to understand the probability of completing the project within schedule constraint.

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clarify

• One can use different methodologies and tools (e.g., agile, waterfall, PRINCE2) to implement the project management framework.

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Conditions for Configuration Management:Market competition forces new features to be added to the product.The project took so long that product is nearing to obsoletion; therefore, a few modifications will be applied to the product to keep it current.The client dreamed about a new feature to be added to the product.I hope now you don’t have any problems in cracking the questions on the PMP Certification exam reagarding this topic.

The difference between the Change Management System and the Configuration Management System:•Change Management manages the changes in project baseline or process.•An example of Change Management system can be a change in budget, schedule, etc.•Configuration Management deals with changes in product specifications.•An example of Configuration Management can be an extra feature added to the product.Conditions for Change Management:•Delay in schedule: if your schedule is delayed, you will develop a new schedule reflecting the current situation and try to get it approved.•Cost overrun: If you run out of money, you will need to re-estimate your cost to complete the project and get it approved.


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1. PERT (P + 4M + O )/ 6 Pessimistic, Most Likely, Optimistic

2. Standard Deviation (P - O) / 6

3. Variance [(P - O)/6 ]squared

4. Float or Slack LS-ES and LF-EF

5. Cost Variance EV - AC

6. Schedule Variance EV - PV

7. Cost Perf. Index EV / AC

8. Sched. Perf. Index EV / PV

9. Est. At Completion (EAC)

BAC / CPI,AC + ETC -- Initial Estimates are flawedAC + BAC - EV -- Future variance are AtypicalAC + (BAC - EV) / CPI --Future Variance would be typical

10. Est. To CompletePercentage complete

EAC - ACEV/ BAC

11. Var. At Completion BAC - EAC12. To Complete Performance Index TCPI

Values for the TCPI index of less then 1.0 is good because it indicates the efficiency to complete is less than planned. How efficient must the project team be to complete the remaining work with the remaining money?( BAC - EV ) / ( BAC - AC )

13. Net Present Value Bigger is better (NPV)14. Present Value PV FV / (1 + r)^n15. Internal Rate of ReturnBigger is better (IRR)

16. Benefit Cost Ratio Bigger is better ((BCR or Benefit / Cost) revenue or payback VS. cost)Or PV or Revenue / PV of Cost

17. Payback Period Less is betterNet Investment / Avg. Annual cash flow.

18. BCWS PV19. BCWP EV20. ACWP AC

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21. Order of Magnitude Estimate -25% - +75% (-50 to +100% PMBOK)

22. Budget Estimate -10% - +25%23. Definitive Estimate -5% - +10%24. Comm. Channels N(N -1)/225. Expected Monetary Value Probability * Impact

26. Point of Total Assumption (PTA) ((Ceiling Price - Target Price)/buyer's Share Ratio) + Target Cost

Sigma σ

•1σ = 68.27%•2σ = 95.45%•3σ = 99.73%•6σ = 99.99985%

Return on Sales ( ROS ) Net Income Before Taxes (NEBT) / Total Sales ORNet Income After Taxes ( NEAT ) / Total Sales

Return on Assets( ROA ) NEBT / Total Assets ORNEAT / Total Assets

Return on Investment ( ROI )NEBT / Total Investment ORNEAT / Total Investment

Working Capital Current Assets - Current Liabilities

Discounted Cash Flow Cash Flow X Discount Factor

Contract related formulas

Savings = Target Cost – Actual Cost

Bonus = Savings x Percentage

Contract Cost = Bonus + Fees

Total Cost = Actual Cost + Contract Cost

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Some interesting sites/readings worth visiting as follows:http://www.pmi.org (PMI website)http://www.pmzilla.com (PMZilla)http://pmzilla.com/comprehensive-pmp-notes (PM Zilla - Summary Notes)http://pmzilla.com/memorizing-inputs-tools-and-outputs-pmp (PM Zilla - Memorizing Inputs, Tools and Techniques, Outputs – ITTO’s)http://www.oliverlehmann.com (Oliver F. Lehmann)http://www.oliverlehmann.com/pmp-self-test/75-free-questions.htm#providers_ (OFL - free PMP Exam Self-Assessment Test and link to tons of Providers of Free PMP + CAPM Preparation Questions) http://www.velociteach.com (Andy Crowe)http://www.rmcproject.com (Rita Mulcahy – RMC Project Management)http://www.cornelius-fichtner.com (Cornelius Fichtner)http://www.project-management-prepcast.com (Cornelius Fichtner)http://www.project-management-flash-cards.com (PM PrepCast free flash cards)http://www.kimheldman.com (Kim Heldman)http://www.simplilearn.com (Simplilearn)http://www.pmstudy.com (many saying sample exams close to real one) http://www.deepfriedbrainproject.com (cool site – PMP Exam Prep Blog)http://www.brainbok.com (cool site – various topics)http://quizlet.com/subject/pmp/#http://quizlet.com/subject/pmp (cool site - various subjects)Lots, lots more . . (google it!)

0- General Sites

http://www.linkedin.com/redirect?url=http://www.pmi.org&urlhash=EJMP&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.pmzilla.com&urlhash=nzpQ&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://pmzilla.com/comprehensive-pmp-notes&urlhash=gGxG&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://pmzilla.com/memorizing-inputs-tools-and-outputs-pmp&urlhash=vlu-&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.oliverlehmann.com&urlhash=EF6U&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.oliverlehmann.com/pmp-self-test/75-free-questions.htm

http://www.linkedin.com/redirect?url=http://www.velociteach.com&urlhash=PrdW&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.rmcproject.com&urlhash=eDz9&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.cornelius-fichtner.com&urlhash=lplf&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.project-management-prepcast.com&urlhash=U9sZ&_t=tracking_anet

http://www.project-management-flash-cards.com/

http://www.linkedin.com/redirect?url=http://www.kimheldman.com&urlhash=CCs5&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.simplilearn.com&urlhash=jGEe&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.pmstudy.com&urlhash=Vc8k&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.deepfriedbrainproject.com&urlhash=FATR&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://www.brainbok.com&urlhash=8mkP&_t=tracking_anet

http://www.linkedin.com/redirect?url=http://quizlet.com/subject/pmp/


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1. Which of the following people's expectations should be closely managed as per salience model?

2.

Preferential logic

(B) Soft logic

(C) Discretionary dependency

(D) Hard logic


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Qualitative Risk AnalysisA qualitative risk analysis prioritizes the identified project risks using a pre-defined rating scale. Risks will be scored based on their probability or likelihood of occurring and the impact on project objectives should they occur.Probability/likelihood is commonly ranked on a zero to one scale (for example, .3 equating to a 30% probability of the risk event occurring).The impact scale is organizationally defined (for example, a one to five scale, with five being the highest impact on project objectives - such as budget, schedule, or quality).A qualitative risk analysis will also include the appropriate categorization of the risks, either source-based or effect-based.Quantitative Risk AnalysisA quantitative risk analysis is a further analysis of the highest priority risks during a which a numerical or quantitative rating is assigned in order to develop a probabilistic analysis of the project.A quantitative analysis:- quantifies the possible outcomes for the project and assesses the probability of achieving specific project objectives- provides a quantitative approach to making decisions when there is uncertainty- creates realistic and achievable cost, schedule or scope targetsIn order to conduct a quantitative risk analysis, you will need high-quality data, a well-developed project model, and a prioritized lists of project risks (usually from performing a qualitative risk analysis)SummaryQualitative: risk-level , Quantitative: project-levelQualitative: subjective evaluation of probability & impact, Quantitative: probabilistic estimates of time & costQualitative: quick and easy to perform , Quantitative: time consumingQualitative: no special software or tools required ,Quantitative: may require specialized tools


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Quality AssuranceQuality assurance is an audit function that evaluates the actual project quality results against the planned or intended results to ensure that the appropriate processes are being employed by the project team.“Assuring” quality implies ensuring the project quality requirements are being achievedQuality ControlQuality control is the implementation of quality processes in order to achieve the project and product quality requirements. “Controlling” quality implies implementing the appropriate quality steps and actionsQC versus QA ExampleWhen your team members submit their status reports to you as project manager, you evaluate the information and verify that it is accurate before including it in your overall project performance report. The act of validating the information would be considered quality control. You are determining the quality of a project deliverable.Upon compiling all of the project information into the project performance report, you evaluate the current results of the project against the project management plan, baselines, and objectives. The evaluation of the variances between the plan and the actuals would be considered quality assurance. You are determining the need for any process or procedural changes based on differences between the documented requirements and the actual project results.

SummaryWhile often confused, quality assurance and quality control are two distinct processes. QC: controlling / validating the quality of the project outputsQA: assuring the appropriate processes are being employed on the project based on the quality control results

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SummarySimilarities between analogous and parametric estimating:Can be used for both duration and cost estimatingEssentially a combination of historical information (leveraging past projects/activities) and expert judgment

Differences between analogous and parametric estimating:Analogous is considered top-down and is less accurate than parametric. Analogous estimating uses an “analogy” – comparing a past similar project to your current project.Parametric is more accurate, specifically when the underlying data is scalable. Parametric uses a relationship between variables (a unit cost/duration and the number of units) to develop the estimate.

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PrecisionTo state that the results are precise implies that the measurements are consistent with very little variation.AccuracyTo state that the results are accurate means that they are correct. This may be in terms of achieving the desired result or being able to be measured correctly.

ExampleLast year we decided to get a Wii game console. One of our favorite games is Wii Sports Resort.When I first started playing the archery game my arrows were flying everywhere and there was no consistency to my results - I was neither precise nor accurate.As I started to get the feel for the controller and the movements, I was able to cluster my arrows within a small area - unfortunately on the upper right side of the target. I was precise, but not accurate.My husband, who is just slightly competitive and is also very coordinated, managed to get all of his arrows directly on the bulls-eye right from the start. He is both precise and accurate.SummaryThe difference between precision and accuracy will potentially feed questions on both the PMP and the CAPM exams. Remember that precision does not imply accuracy, nor does accuracy imply precision

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Project Life CycleThe project life cycle consists of the defined project phases which are usually identified and documented within the organization’s project management methodology. Dividing the project into phases allows for increased control by the organization. These phases are sequential and usually overlapping. Project life cycles will vary based on the industry, the organization, or even the type of project that is being conducted. There are usually transitions between the phases that require some type of handoff or information or component transfer. Generally speaking, staffing levels and costs are low at the beginning of the project life cycle and then peak during the middle. Risk, or uncertainty, however, is greater at the beginning of the project life cycle and decreases as the project becomes increasingly defined.Each project life cycle produces only one project.Product Life CycleThe product life cycle reflects the phases involved in any type of product: a cell phone, a laptop, a TV, a children’s toy, an appliance. Regardless of the product, the product life cycle has the same sequential, but non-overlapping phases:

Ideation,Creation,Introduction,Growth,Maturity,Decline.,retirementThe product life cycle can include multiple project life cycles.SummaryThe project life cycle differs by industry, organization, project type and encompasses sequential and overlapping phases.The product life cycle does not differ regardless of the type of product, has sequential but non-overlapping phases, and may include multiple project life cycles.

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Project Statement of Work The project statement of work (SOW) is a narrative description of products or services to be delivered by the project and is provided by the project initiator or customer for external projects or the sponsor or requesting organization for internal projects. If the project is being done for an external customer, the SOW may be received from the customer as part of a bid document. The SOW details the business need for the project, the product scope description, the strategic plan, and the characteristics of the product the project will create. Business Case The business case will confirm the business need and drivers for the project and will most likely include information on a cost benefit analysis, so as to justify the funding of the project, such as: net present value (NPV), internal rate of return (IRR), and/or return on investment (ROI).The business case should also reference the driver behind the project, such as: market demand, organizational need, customer request, technological advance, legal requirement, or social need.The business case is generally completed by the sponsor of the project.ExampleThe Excelsior Corp requested that Passionate Project Management provide a customized onsite PMP exam preparation course. Excelsior provided PPM with a statement of work detailing the specifics of the course: number of attendees, industry-specific information to be included, target date, location, etc. The PPM contract administrator evaluated the SOW and conducted a financial analysis to determine the feasibility of the project based on the projected revenue. The results of the financial analysis were documented in the project business case provided to the president of the company for contract authorization.SummaryBoth the project SOW and the business case are critical inputs to the development of the project charter (the authorization to commence the project). The SOW is generated by the requesting party, detailing what they are requesting, whereas the business case is developed internally, usually by the project sponsor, to provide a financial and feasibility analysis of the project.

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Enterprise Environmental Factors Enterprise environmental factors are internal and external environmental factors that can influence a project’s success, including:Organizational cultureOrganizational structureInternal and external political climateExisting human resourcesAvailable capital resourcesRegulatory environmentFinancial and market conditionsEnterprise environmental factors are an input to 18 of the 42 processes. Organizational Process Assets Organizational process assets include any of the organization’s process assets that may be used to ensure project success. They generally fall into two categories: Processes, guidelines, and procedures, such as: organizational standard processes, standardized guidelines, templatesThe corporate knowledge base, such as, lessons learned, historical information, past project files (I call this: The Repository of Goodness)Organizational process assets are an input to 34 of the 42 processes. SummaryEnterprise environmental factors are the internal and external influences on our project, such as the corporate culture or the financial environment.Organizational process assets are the procedures, guidelines, templates that we can use on our project as well as the corporate knowledge base, such as past project reports and lessons learned.

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BrainstormingBrainstorming is a group creativity technique that can be used for multiple aspects of project management. Brainstorming involves facilitating a group of individuals in generating as many ideas on a topic as possible. To be most effective, participants are challenged to think creatively and consider all ideas and options and are ensured of a “safe space” to share their ideas.

Nominal Group Technique Nominal group technique takes brainstorming a step further by adding a voting process to rank the ideas that are generated. However, versus using simple voting, each participant must provide their input and there is discussion regarding the relative ranking that result. This allows participants to be more engaged in the discussion and in the solutions.

ExampleAs standard practice, I will conduct a brainstorming session early on in my projects to have team members identify the risks of the project – both threats and opportunities. This allows the group to interact together (preferably in-person, but can also be done virtually with some limitations) and the team begins to form their identity and embrace the challenge of the project as united group. I will then leverage a nominal group technique approach when it comes to evaluating and ranking the risks. Everyone will write down their votes, all votes are then shared, and then we discuss the results in order to validate our final risk ranking.

SummaryBoth brainstorming and nominal group technique are group creativity techniques that can be extremely beneficial in the planning and analysis of project management. These techniques allow team members or groups of stakeholders to work as a team on identifying problems and solutions.

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Work Package The work package level is the lowest level of a work breakdown structure (WBS). The WBS is developed during the “Create WBS” planning / scope process. The WBS level is achieved when the work can be accurately estimated (both cost and duration) and can be managed by one individual: the work package owner. Although the work package can be managed by one person, the actual work within the work package (the activities) may be completed by multiple individuals.It may be helpful to correlate “work package” to “scope”.Activity The work packages are decomposed into activities (or “schedule activities) to create the activity list. The activity list will then be used to develop the project schedule. An activity has an expected duration. If the event has no duration, it is considered a milestone. Activities also consume budget and/or resources and are generally named in a verb-noun format. You will notice that four of the five time planning processes have the word “activity” in their name (define activities, sequence activities, estimate activity resources, and estimate activity durations). It may helpful to correlate “activity” to “time”. ExampleI recently managed my daughter’s wedding. Given that she and her fiancée were both deployed with the military, it definitely required a lot of project management! One of the work packages identified was catering management. Within that work package, my activities identified were: interview caterers, check references, execute contract, determine final headcount, select linen package, issue payment, and provide feedback. SummaryA work package is the lowest level of a WBS. You know you have arrived at the work package level when the work involved can be accurately estimated and managed by one person. The work package can then be decomposed into activities for inclusion on the project schedule. Activities may also be called “schedule activities” or “tasks

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Lead Lead is the acceleration of a successor activity. In other words, the second activity can begin (and be conducted in parallel) as the first activity. Lead is only found activities with finish-to-start relationships: A must finish before B can start. In order to leverage a lead, which will compress the total combined duration of both activities, the dependency must be discretionary, meaning that there is no physical limitation on completing A before B begins.Lag Lag is the delay of a successor activity and represents time that must pass before the second activity can begin. There are no resources associated with a lag. Lag may be found in activities with all relationship types: finish-to-start, start-to-start, finish-to-finish, and start-to-finish.ExampleThe photo shoot will take four days and the photo editing will take six days. Instead of waiting until the end of the 4-day photo shoot to begin editing the pictures, we start editing after the first day of shooting. This brings the total duration from ten days down to seven days by leveraging the lead. The photo proofs are sent to the customer upon completion of the shoot, however, there is a 15-day lag associated with the customer review before the printing of the photos can begin. SummaryLead and lag are both used in the development of the project schedule.

Lead is an acceleration of the successor activity and can be used only on finish-to-start activity relationships. Lag is a delay in the successor activity and can be found on all activity relationship types.

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Effort-Effort is the number of work units required to complete the activity. Effort may also be referred to as staff-hours, days, or weeks. In order to determine the activity duration, the effort required to complete the activity must be determined first.Duration -Duration is the total time to complete the activities based on the resources available to the project. Duration does not include holidays or non-working days and may be referred to work days or weeks.Elapsed Time -Elapsed time is the calendar time or span required to complete the activities based on the resources available. Elapsed time does include holidays and non-working days. ExampleInstalling the new drip system for the landscaping is estimated to take 80 hours of effort.If there is one worker committed to 40 hours per week, the duration would be 10 workdays.(Effort = 80 hours, Duration = 10 workdays, Elapsed time = 2 weeks)However, if there are two workers each committed to 40 hours per week, the duration would be 5 workdays.(Effort = 80 hours, Duration = 5 workdays, Elapsed time = 1 week)Or if there are two workers committed to 10 hours per week each, the duration would be 20 workdays.(Effort = 80 hours, Duration = 20 workdays, Elapsed time = 4 weeks)SummaryTo determine the project activity durations, the PM must consider the amount of effort required and the project resources that are available and will be used.Effort is the number of work units.Duration is the total time required based on the effort and the resources available (minus holidays and non-work days).Elapsed time is the calendar time (includes all dates, such as holidays and non-work days).

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Critical Path The critical path method calculates the early start and finish dates and late start and finish dates for all schedule activities. The critical path method involves performing a forward pass analysis and a backward pass analysis through the project schedule network paths. The forward pass determines the early start (ES) and early finish (EF) dates (ES + duration (DU) = EF). The backward pass determines the late start (LS) and late finish (LF): (LF – DU = LS)The critical path is the longest path through the schedule with either zero or negative total float. Critical activities are those schedule activities on the critical path. Near-critical activities are those schedule activities with very little total float.Critical Chain The critical chain method is a technique that modifies the project schedule to account for limited resources by adding duration buffers that are non-work schedule activities to maintain focus on the planned activity durations. Critical chain is completed after determining critical path by entering resource availability and the resulting schedule produces a resource-constrained critical path, which is usually altered from the original. Critical chain focuses on managing remaining buffer durations against the remaining durations of task chainsSummaryThe critical path method (CPM) is a popular approach to project scheduling that considers the amount of float on project activities. Critical chain takes CPM a step further by adding time buffers to account for limited resources.

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Total Float Total float is measured as the difference between the early and late start dates (LS - ES) or the early and late finish dates (LF – EF). Total float is shared between the activities in a sequence. A sequence is defined as the activities between a point of path divergence and path convergence.Total float represents the amount of time an activity can be delayed without delaying the overall project duration and is also called “float” or “slack”.Free Float Free float is measured by subtracting the early finish (EF) of the activity from the early start (ES) of the successor activity. Free float represents the amount of time that a schedule activity can be delayed without delaying the early start date of any immediate successor activity within the network path.Free float is only calculated on the last activity in an activity sequence.ExampleIf activity 1.4 has a duration of 6 days and is occurring concurrently with activity 1.5 which has a duration of 9 days, activity 1.4 has 3 days of total float. Meaning, it can be delayed up to three days without any effect on the project. However, if activity 1.4 is delayed by 5 days, there is now a negative float situation: -2 days. This reflects the fact that the project will now take two days longer than anticipated. SummaryTotal float, also called float or slack, is the amount of time an activity can be delayed without delaying the overall project duration. Total float is shared between activities in a sequence.Free float is the amount of time an activity can be delayed without delaying the early start of any immediate successor activity.

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Fast-Tracking Fast-tracking is a technique in which phases or activities that normally would be done sequentially are performed in parallel. Fast-tracking does not result in increased cost but it does increase the risk, as activities that were originally intended to be performed sequentially are now performed in parallel.The ability to fast-track implies that the finish-to-start relationship between the activities was discretionary.Crashing Crashing is used if fast-tracking did not save enough time on the schedule. Crashing is a technique in which cost and schedule tradeoffs are analyzed to determine how to obtain the greatest amount of compression for the least incremental cost.Crashing analyzes critical activities based on the lowest crash cost per time unit allowing the team to identify those candidate activities that would produce the greatest value at the least incremental cost.The results of a crashing analysis can be plotted in a crash graph, where activities with the flattest slope would be considered first, meaning that they gain the most time savings but have a smaller increase in cost (rise).

SummaryThe reality of project management is that there is usually a need to compress the project schedule and deliver the project’s product, service, or result sooner than estimated. Fast-tracking is always considered first as there are no increased costs. However, there is increased risk.Crashing would be the next option. Crashing analyzes the incremental crash costs of activities to determine and prioritize the candidates for crashing. Both fast-tracking and crashing should be used on critical activities (those on the critical path) in order to have an effect on the actual project schedule. If used on non-critical activities, you have just given yourself more float

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Budgetary Estimate Budgetary estimates are used when funds are being allocated on some type of a periodic basis. The range of variance on a budgetary estimate can be from -10% to +25%. Phased Estimate Phased estimates are frequently used when the project is large or lengthy or is developing something new or untried for the organization.In phased estimates, the near-term work is estimated with a high level of accuracy ±5 - 15% whereas future work is estimated at a high level with ±35% accuracy. Phased estimates are considered “rolling wave” or “moving window” estimates and reflect the fact that “we don’t know what we don’t know”.ExampleI have a small client that uses budgetary estimates for some of their projects. If the project is estimated to cost $100,000 and take four months, they will estimate $25,000 per month. Depending on the work actually completed during that month, the actual cost may be slightly higher or lower.I have a larger client that is conducting a large, multi-year, infrastructure project. The analysis work has been estimated at $500,000, but the future work has a place holder estimate of $3M.SummaryThe organizational structure and type of project will dictate the approach to estimating. Budgetary estimates are used to allocate funds on a periodic basis whereas phased estimates are useful when the project is very large or the scope is not clearly defined.

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Cost Estimate The cost estimates are simply the costs associated with the work packages or activities within the project schedule. Depending on the work package or activity, the cost estimate may be determined using parametric, three-point, or analogous estimating techniques.It is important for all cost estimates to include any assumptions that were made, where did the estimate originate, who provided the information, level of confidence, etc. Budget The budget is built using the cost estimates and the project schedule. The budget provides a view of how much the project is estimated to cost both from a total and a periodic perspective. This budget feeds the cost performance baseline which is then used as critical ingredient in performing earned value analysis and other cost management variance analysis techniques. The project budget must be in alignment with the organization’s funding limits in order to ensure the funding is available and has been appropriated. SummaryBoth cost estimates and budget are needed in order to determine the cost performance baseline and the project funding requirements. Cost estimates are the estimated costs for each work package or activity, whereas the budget allocates the costs over the life of the project to determine the periodic and total funding requirements

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Quality Quality is the degree to which the product or result meets the customer or end-user requirements. Their requirements may or may not be in alignment with the documented project requirements, however. It is simply their assessment on how well the output aligns with their needs and expectations. It can be said that quality is “in the eye of the beholder”. Even if I feel that my product is high quality, I cannot assume that my customer or end-user will agree with my assessment.Grade Grade is a category assigned to products that have the same functional use but different technical characteristics. Grade is usually determined through some set of pre-determined measurements and demonstration of compliance to those measurements.ExampleEggs are graded based on their technical characteristics. Regardless of their grade, they all can be used for the same functions: cooking, eating, etc. (Same functional use but different characteristics)I may purchase high grade eggs, however, if one of the eggs is broken, I would consider it low quality because I can’t use it. (Did not meet my requirements)SummaryQuality is the degree to which the product meets the customer or end-user requirements whereas grade is a category assigned to products that have the same functional use but different technical characteristics.High grade does not imply high quality.

0- Common ConceptsAvoid When you avoid the risk it means you change your plan to completely eliminate the probability of the risk occurring or the effect of the risk if it does occur. Transfer Risk transference occurs when the negative impact is shifted to a third party, such as through an insurance policy or penalty clause in a contract. The risk may still occur however the financial impact will be somewhat displaced. Risk transference usually involves some type of contractual agreement.Mitigate Risk mitigation occurs when you proactively change the plan to minimize the impact or probability of the risk occurring. Risk mitigation does not eliminate the risk and as such there will be some residual risk remaining. ExampleWe have identified a negative risk that a visitor to the model home could fall down the stairs. To avoid the risk, the stairs are removed and an elevator is installed. To transfer the risk, you purchase an insurance policy that would cover any injuries sustained from a guest falling down the stairs.To mitigate the risk, you install lighting, signs, and handrails to decrease the probability that a visitor will fall down the stairs.SummaryThere are three proactive approaches to handling a negative risk, also called a threat:Avoid – eliminate the riskTransfer – shift the impact to a 3rd partyMitigate – decrease the probability or impact

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0- Common ConceptsEnhance versus Share versus Exploit

There are three proactive strategies for positive risks (opportunities). This risk may be enhanced, shared, or exploited.

Enhance -Enhancing the opportunity implies changing the plan or approach to improve the probability of the opportunity occurring or increasing the benefit of the opportunity should it occur.

Share -Sharing the opportunity occurs when you partner with another company or organization to enable achieving the benefits of the opportunity. Sharing usually involves some type of a contractual relationship.

Exploit -Exploiting the risk is taking action to ensure that the opportunity will be realized.

Example

There is an opportunity to be first-to-market with a new product resulting in significantly increased profits from the original business case.

To enhance the opportunity, you offer your team incentives to keep them motivated and focused on the work.To share the opportunity, you enter into a contractual agreement with another company that can provide a key component required to get to market faster.

To exploit the opportunity, you fast-track and crash your schedule to ensure you will launch prior to your competitor.

Summary

There are three proactive approaches to handling a positive risk, also called an opportunity:

Enhance – increase the probability or benefit

Share – partner with a 3rd party

Exploit – ensure the opportunity will be realized

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0- Common ConceptsSensitivity Analysis -A sensitivity analysis determines which risks have the most potential impact on the project. Sensitivity charts are used to visualize impacts (best and worst outcome values) of different uncertain variables over their individual ranges.

A tornado diagram is a type of sensitivity chart where the variable with the highest impact is placed at the top of the chart followed by other variables in descending impact order.

Expected Monetary Value (EMV) -Expected monetary value (EMV) analysis is a statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen. An EMV analysis is usually mapped out using a decision tree to represent the different options or scenarios.

EMV for a project is calculated by multiplying the value of each possible outcome by its probability of occurrence and adding the products together.

Example-For a sensitivity analysis, the project risks are evaluated based on the potential financial impact of each individual risk and then placed in rank order.

For an EMV analysis, you are evaluating two vendors:

Vendor A has a 50% probability of being on-time, a 30% probability of being late at an additional cost of $40,000 and a 20% probability of delivering early at a savings of $20,000.

EMV: (30% x $40,000) + (20% x -$20,000) = $12,000 + ($4,000) = $8,000

Vendor B has a 30% probability of being on-time, a 40% probability of being late at an additional cost of $40,000 and a 30% probability of delivering early at a savings of $20,000.

EMV: (40% x $40,000) + (30% x -$20,000) = $16,000 + ($6,000) = $10,000

Based on the EMV, Vendor A would be a better choice as the potential cost is lower.

Summary-Two common quantitative risk analysis techniques are sensitivity and expected monetary value (EMV) analyses.A sensitivity analysis ranks risks based on their impact (usually in a tornado diagram) and an EMV analysis quantifies the potential outcomes of risk scenarios (usually using a decision tree). 246

0- Common ConceptsDeming versus Juran versus Crosby

Three commonly cited quality management theorists quoted on the exam are: W. Edwards Deming, Joseph Juran, and Philip Crosby.

Deming -Deming was an American statistician, professor, author, lecturer, and consultant. He believed that organizations can increase quality and reduce costs by practicing continuous process improvement and by thinking of manufacturing as a system, not as bits and pieces.

Juran -Juran was a 20th century management consultant and evangelist for quality and quality management. He applied the Pareto principle to quality issues (80% of the problems are caused by 20% of the causes) and also developed “Juran’sTrilogy”: quality planning, quality control, and quality improvement.

Crosby -Crosby was an American businessman and author. Crosby’s response to the quality crisis was the principle of Doing It Right the First Time (DIRFT). He applied four major principles:

The definition of quality is conformance to requirements

The system of quality is prevention

The performance standard is zero defects

The measurement of quality is the price of non-conformance 247

0- Common ConceptsControl Chart -Control charts are used to determine whether or not a process is stable or has predictable performance. Typically, control charts identify upper and lower control limits to determine the acceptable range of test results. Control charts commonly have three types of lines:

• Upper and lower specification limits

• Upper and lower control limits

• Planned or goal value

Control charts illustrate how a process behaves over time and defines the acceptable range of results. When a process is outside the acceptable limits, the process is adjusted.

Control charts can be used for both project and product life cycle processes. For example, for project processes a control chart can be used to determine whether cost variances or schedule variances are outside of acceptable limits.

Run Chart -A run chart is a line graph that shows data points over time. Run charts are helpful in identifying trends and predicting future performance. Run charts are similar to control charts, plotting data results over time, however there are no defined control limits.

Example-A control chart may be used for a pharmaceutical company that is testing a new pain medication. The drug must stay effective in the system for a minimum of three hours but last no more than five hours, to prevent accidental overdose. The mean time or goal efficacy duration would be four hours, with three hours the lower control limit and five hours the upper control limit.

A run chart may be used to plot the temperature within the manufacturing plan every day for a month to determine a trend.

Summary

While both a run chart and a control chart plot data points over time or batches, the control chart is enhanced with defined control limits and a target or goal delineation.

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0- Common ConceptsHistogram

A histogram is a type of bar chart showing a distribution of variables. A histogram represents each attribute or characteristic as a column and the frequency of each attribute or characteristic occurring as the height of the column.

Pareto Chart

A Pareto chart is a specific type of histogram that ranks causes or issues by their overall influence. A Pareto chart assists in prioritizing corrective actions as the issues with the greatest impact are displayed in order. In addition, the Pareto chart includes an arc representing the cumulative percentage of the causes.

A Pareto chart is named after Pareto’s Law that states that a relatively small number of causes will typically produce a large majority of the problems or defects. This is commonly known as the 80/20 rule, where 80% of the problems are due to 20% of the causes.

Example

A histogram may be used to represent the number of students who scored between a certain score range, such as 0 to 20%, 20 to 40%, etc.

A Pareto chart may be used to analyze the causes of customer dissatisfaction. The causes would be ordered by frequency of occurring, allowing the team to focus on those issues with the biggest impact on customer satisfaction.

Summary

A histogram is a bar graph that illustrates the frequency of an event occurring using the height of the bar as an indicator.

A Pareto chart is a special type of histogram that represents the Pareto philosophy (the 80/20 rule) through displaying the events by order of impact.

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0- Common ConceptsResponsibility Assignment Matrix (RAM)

A RAM is a matrix-based chart that is used to illustrate the connections between the work that needs to be done and project team members. A RAM can be developed at varying levels of detail, commonly at the activity or deliverable level.

Typically, the list of deliverables or activities are on the left-hand column with the team member names across the top. Each deliverable or activity will be assigned to the appropriate individuals. This will aid in communication amongst the team members and help expose any gaps that may exist.

A common RAM is a RACI (responsible, accountable, consult, inform) RAM format.

Organization Chart

A project organization chart is a hierarchical chart used to show positions and relationships in a graphic, top-down format.

Project org charts display the project team members and their reporting lines within the project and to the overall organization. This ensures that team members and stakeholders are aware of who is participating in the project and what the reporting structure looks like.

Summary

Both org charts and RAMs are helpful in most project team settings. The RAM clarifies roles and responsibilities while the org chart communicates the team members participating in the project and the reporting structure both within the project and to the broader organization.

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0- Common ConceptsInteractive Communication-Interactive communication is the most efficient method of communication to ensure a

common understanding as it is real time. Interactive communication should be used when an immediate response

is required and when the communication is sensitive or likely to be misinterpreted.

Push Communication-Push communication is communication that is delivered by the sender to the recipients.

While the communication can be confirmed that it was sent, it does not necessarily mean it was received and

understood.

Push communication should be used when the recipients need the information but it does not require an

immediate response and the communication is non-urgent or sensitive in nature.

Pull Communication -Pull communication is a communication method that provides access to the information

however the receiver must proactively retrieve the information.

Pull communication should be used when the communication is informational only. If the recipients don’t read it, it

will not affect the project.

Example

Interactive communication methods include:

Meetings ,Phone calls, Video conferences,

Push communication methods include:

Email ,Voicemail, Postal mail,

Pull communication methods include posting information to:

A website ,A knowledge repository, A bulletin board

Summary

Although there are an unlimited number of methods for communicating information on the project, all

communication generally falls into one of three categories: interactive, push, and pull.

The project manager must balance the amount of information with the needs of the project and the recipients to

determine the most appropriate method to utilize.

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0- Common ConceptsResidual Risk -Residual risk is the risk that remains after a risk response has been

taken. The degree of risk tolerance should be considered to ensure that the amount of

residual risk is acceptable. If not, additional risk actions may need to be taken to try

and further reduce the risk.

Secondary Risk -A secondary risk is a risk that arises as the result of implementing a

risk response. If the risk response was not taken, the secondary risk would not exist.

Secondary risks should be evaluated for appropriate action. The severity of the

secondary risk or risks may eliminate the risk response as an option if the secondary

risk falls outside of the project risk tolerance.

Example-You are planning the annual employee recognition event. It will be an

outdoor luau-themed event. Because there is a chance of rain, you decide to mitigate

the risk of the employees getting wet and not having fun by putting up a tent.

There is still some residual risk that the employees will get wet walking from the

parking lot to the tent.

There is also a secondary risk that someone will trip over the tent poles and get

injured.

Summary

Risk identification and analysis should also include residual risks (those risks that

remain after an action has been taken) and secondary risks (those risks that arise as

a result of implementing a risk response).

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0- Common ConceptsFallback Plan -A fallback plan is developed in advance of a risk event occurring and is designed

to be used when the primary risk response proves not to be effective.

Think of the fallback plan as the “Plan B”.

Having it documented in advance will ensure that the project team is able to react to the risk in an

expedient manner while hopefully minimizing any type of negative impact.

Contingent Response Strategy -A contingent response strategy is developed in advance and

designed to be used only if the risk event occurs. As with a fallback plan, the contingent response

strategy is a critical communication tool to ensure that all team members know what actions to

take when the specified risk event occurs.

Example-You are managing the annual employee recognition event: an outdoor luau. There is a

risk of rain on the day of the event but it’s a low probability. As such, you decide not to take

proactive action on the risk but rather develop a contingent response strategy should it be raining

on the day of the event.The park where the event will be held has a gymnasium. Your contingency

response strategy will be to move the event into the gymnasium should it start raining. For the

fallback plan you have the park office designated as a secondary location, should the gymnasium

be unavailable.

Summary

Risk management may not always involve taking proactive action. Certain risks may be more

appropriate for a contingent response strategy, designed to only be implemented if the risk event

occurs. If the primary response is ineffective, a fallback plan, also developed in advance, may be

implemented.

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0- Common ConceptsFixed Price Contracts-Fixed price contracts involve a fixed total price for the product and may also include incentives for meeting or exceeding selected project objectives. The simplest form of a fixed price contract is a purchase order.Fixed price contracts place more risk on the seller, as if there is any type of price increase, the seller would be responsible for the increased costs and cannot pass them on to the buyer.

There are three common types of fixed price contracts: firm fixed price (FFP), fixed price incentive fee (FPIF), and fixed price with economic price adjustment (FP-EPA)

Firm Fixed Price (FFP) -The FFP is the most commonly used contract type and is favored by most organizations because the price is set and is not subject to change unless the scope of work changes. Any cost increases due to adverse performance would be the responsibility of the seller.

Fixed Price Incentive Fee (FPIF) -A FPIF contract gives the buyer and seller some flexibility in that it allows for deviation from performance, with a financial incentive for achieving certain metrics. Generally the incentives are related to cost, schedule, or the technical performance of the seller. A price ceiling is set and any costs above that ceiling are the responsibility of the seller.

Fixed Price with Economic Price Adjustment (FP–EPA) -FP-EPA contracts are used for long-term contracts and they allow for pre-defined adjustments to the contract price due to changed conditions. This could include inflation changes or increased or decreased costs for specific commodities. The contract is intended to protect both the buyer and seller from external conditions over which they have no control.

Examples -You purchase 10 books from the publisher for $19.99 each. The PO is a firm fixed-price contract.

You hire an instructor to come onsite and deliver a PMP exam prep course using a fixed-price incentive fee contract. The contract states that the instructor will receive $2,000 to facilitate the course. In addition, the company will pay the instructor an extra $500 for each student that successfully completes their PMP exam.

You are in a long-term contract with a trucking company using a fixed-price with economic price adjustment contract. The contract states that the trucking company will be paid $1,000 per week. If the price of fuel increases or decreases by more than 10%, the weekly pay will increase or decrease by 5% accordingly

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0- Common ConceptsDevelop the Project Team -The develop project team process is the second HR process in the executing process group and the intent is to improve the competencies of team members through training and enhances the interactions of team members through team-building. (The “fun” stuff!)

There are a number of techniques used to develop the project team:

Interpersonal or “soft” skills, such as empathy, influence, creativity, group facilitation

Training team members to enhance their competencies

Team-building activities to progress them through the stages of team development (forming, storming, norming, and performing)

Establishing ground rules, set by the team members

Co-locating the team into one physical location

Incenting the team through the use of recognition and rewards

Manage the Project Team-The manage project team process tracks team member performance, provides feedback to the team members, resolves issues, manages changes to optimize project performance, and may also involve disciplinary escalations to the functional manager. (The “un-fun” stuff!)

The tools and techniques used to manage the project team include:

Observing and conversing with your team members (yep. Actually looking at and talking to the people on your team. Step away from the computer!)

Providing project performance appraisals on the team members

Utilizing the appropriate conflict management approach: confronting/problem-solving, compromising, forcing, smoothing, withdrawing, and collaborating

Leveraging an issue log to manage the open issues within the project

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0- Common ConceptsQuality Control -The perform quality control (QC) process evaluates the project results (outputs, deliverables) to ensure they comply with quality standards that were defined in the quality management plan. The QC process also identifies ways to eliminate causes of unsatisfactory results and validates that approved change requests have been implemented as approved.

QC must be conducted prior to the verify scope process and the perform quality assurance (QA) process (where the project processes and results will be audited and evaluated for continuous process improvement actions).

Think of QC as the internal quality check of the products or deliverables prior to giving them to the customer or end-user. The key outputs from QC are the “validated deliverables”

Verify Scope -The verify scope process secures formal acceptance of the completed project deliverables from the customer, end-user, or requesting party. Verifying scope includes reviewing the deliverables with the customer to ensure that they are completed satisfactorily in order to receive formal acceptance of the deliverables.

Think of verify scope as the quality check / user acceptance testing.

The key outputs from verify scope are the “accepted deliverables”.

Example-As part of my project management requirements, I need to produce a weekly project performance report. When I check the data and figures within my performance report to ensure they are correct, I am performing quality control. When I provide the performance report to my sponsor for her approval, I am performing verify scope.

Summary-While both QC and verify scope are monitoring and controlling processes associated with the review and approval of the deliverables, QC is the “internal” check that results in “validated deliverables”, followed by verify scope, the “external” check that results in “accepted deliverables”.

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0- Common ConceptsCorrective Actions-Corrective actions are taken when the project has deviated from the planned scope, schedule, cost, or quality requirements. Corrective actions are reactive in nature and are intended to bring the project’s performance back into alignment with the agreed-upon project baselines.

Preventive Actions -Preventive actions are taken when the project is trending away from the planned scope, schedule, cost, or quality requirements. Preventive actions are proactive in nature, based on a variance and trend analysis. Preventive actions are intended to ensure the project is delivered in alignment with the agreed-upon project baselines.

Defect Repairs -Defect repairs are implemented when the product or deliverable does not meet the documented quality requirements.

Summary -Change requests can include scope changes, corrective actions, preventive actions, and defect repairs.Corrective actions are reactive in nature and are intended to bring the project back into alignment with the baselines.

Preventive actions are proactive in nature to ensure the project doesn’t deviate from the baselines.Defect repairs are used to correct products or deliverables that do not meet the documented quality requirements

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0- Common ConceptsEstimate at Completion (EAC)

Estimate at completion is the forecasted cost of the project, as the project progresses. There are a number of different ways to determine the EAC.

The most common way to determine EAC is a “bottoms-up” formula where the actual costs (AC) are added to the forecasted remaining spending – the estimate to complete (ETC).

EAC = actual costs (AC) + estimate to complete (ETC)

If the project has encountered a one-time (atypical) variance, the following formula may be used:

EAC = actual costs (AC) + budget at completion (BAC) – earned value (EV)

If the project has encountered a variance that is expected to recur and continue to affect the project (typical), the following formula may be used:

EAC = budget at completion (BAC) ÷ cost performance index (CPI)

Estimate to Complete (ETC)

Estimate to complete (ETC) is a forecast of how much more money will need to be spent to complete the project.

ETC can either be determined by building a bottom-up estimate, usually by asking your work package owners, team members, or vendors for revised estimates or by deducting the actual costs (AC) from the estimate at completion (EAC).

ETC = new estimates

ETC = estimate at completion (EAC) – actual costs (AC)

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0- Common ConceptsExample-You are three months into the five month bathroom remodeling project. The original budget (BAC) was $1,500 and you have completed approximately 40% of the work. You currently are running over-budget, as indicated by a cost performance index (CPI) of 0.67. Actual costs to-date have been $900.

If you learn that the contractor found some mold in the sheetrock and needed to replace it, causing a one-time variance, you could use the atypical formula to forecast the EAC and the ETC:

EAC = AC + BAC – EV = $900 + $1,500 - $600 = $1,800 (how much we will spend at the end of the project)

ETC = EAC – AC = $1,800 - $900 = $900 (how much more we will spend from this point forward)

If, however, you learn that the workers that are being used are actually much more expensive than you originally estimated, this would be a typical variance as it’s going to continue to affect the project.

EAC = BAC ÷ CPI = $1,500 ÷ 0.67 = $2,239

ETC = EAC – AC = $2,239 - $900 = $1,339

Notice that for the “typical” scenario, the EAC and ETC forecasts are much higher than the “atypical” results. This is due to the fact that the variance is going to continue to affect the project.

Of course, the other option to forecast your project costs would be to simply ask your team / vendors for a new estimate to complete the remaining work. This ETC would then be added to the actual costs (the money already spent) to determine the EAC.

EAC = ETC + AC

Summary-As the project progresses, it will be necessary to forecast out the total anticipated funding required. The two forecasts utilized are the

Estimate at completion (EAC) – how much the project is forecasted to cost overall – and the

Estimate to complete (ETC) – how much funding is required to complete the remaining work

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0- Common ConceptsBudget at Completion

Budget at completion (BAC) is the total anticipated and budgeted spending for the project based on the project estimates and assumptions.

Variance at Completion

The variance at completion is determined by subtracting the BAC from the EAC:

VAC = BAC – EAC

A negative VAC indicates that the project is forecasted to not complete with the approved budget. A negative VAC may require either an additional funding allocation or the elimination of some of the project scope.

A positive VAC indicates the project will not utilize the allocated budget. This may allow for additional components to be added to the scope of the project.

Example

The bathroom remodeling project has an approved budget (BAC) of $1,500. Based on your analysis, the forecast (EAC) is $1,885.

VAC = $1,500 - $1,885 = ($385) <-- Indicates the project will exceed the budget by $385.

Summary

Variance at completion (VAC) is a comparison of the original budget at completion (BAC) and the revised forecast (EAC). A negative VAC is an indicator that the project may exceed the BAC.

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PM Leadership style and Situations

Interpersonal Conflict Resolution TechniquesAs a project manager you have choice of a conflict management strategy which would depend on the intensity of the conflict, your leadership style, importance on maintaining

good relationships versus achieving goals.

The best approach will be the one that minimizes the obstacles to project completion.

When to use:

•When you do not have time

•To gain time

•To discourage your opponent

•To maintain neutrality or reputation

•When you think the problem will go away by itself

What this technique would imply:

•You move away from situation

•You say that you do not have time for it

The conflict would remain!! You buy time to deal with conflict later.

When to use:•To maintain harmony, peace,and goodwill


•You do not hurt people sentiments

•You make people happy about certain aspects on situation

•You buy time

The make people happy on things which would ease on situation!! conflict reduces by some %.

When:

•To maintain your relationship with your opponent

•When goals are moderately high


•You reach a decision by having aspect from all people in conflict.

•None of the party have full solution implemented/accepted

Conflict reduces to ZERO i.e. decision is taken but both parties may not be satisfied.

http://4.bp.blogspot.com/-VAfJd5WhKa0/UCGOfFVeBqI/AAAAAAAABVk/CYLI8qmk-Qc/s1600/Conflict+mgmt.png

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0- Common ConceptsForcing -When:

When you are sure that you are right.

When an emergency situation exists (Do or die)

When stakes are high and issues are important

When the acceptance is unimportant


You take decision for all.

People may feel displeased

Conflict reduces to ZERO i.e. decision is taken but opponent may feel down or lost.

Collaborating/Confronting/ problem solving

When

To gain commitment and create a common power base

When there is enough time and skills are complementary

To maintain future relationships


A mutual decision is taken

Everyone participates

Conflict reduces to ZERO i.e. decision is taken and everyone is excited for new decison.

272

0- Common Concepts

273

0- Common Concepts

274

0- Common Concepts

275

pmi dec 13

Leadership & Management

project coordinatorrole

quantitative risk

qualitative risk

risk response techniques

plan risk response

projectoperationskey

phase end

evm questions