00 IGTR CIPM Handouts April 2014

Organised by
Centre
for Excellence in Project Management (P) Ltd.
A-48, Sector 5, Noida 201301
Tel: (0120) 242-0444, 242-0463 M: +91 9999 684 632
Email: rjain@cepm.com & info@cepm.com
for
Three Day Workshop
on
leading to the Certificate In Project Management (CIPM)
Totality of Project Management
7 - 9 April 2014
Indo German Tool Room
Aurangabad
Three day Workshop on
Leading to the
Certification in Project Management (CIPM)
Workshop Agenda
Centre for Excellence in Project Management (P) Ltd. (CEPM) 2014
A - 48, Sector - 5, Noida - 201 301, India Tel.: (120) 242 0444, 242 0463 Fax: (120) 242 1482
Email: rjain@cepm.com Website: http://www.cepm.com
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Day 1
0930 - 0945 Inauguration
- Saraswati Invocation
- Introduction
0950 - 1100 Project Management Knowledge (PMKQ) Test
Project, Programme, Operations
Project Management
1100 - 1120 Tea Break
1120 - 1315 Project Life Cycle
Need Analysis
Project Stakeholders
Business Case
- Payback Period, NPV, IRR
Project Charter
Project Management Plan
Practice Q&As
1315 - 1400 Lunch
1400 - 1510 Success Criteria for project
Scope & Deliverables Management
- Work Breakdown Structures
1510 - 1530 Tea Break
1530 - 1745 Time Management
Network Diagrams
- Critical Path analysis (CPM)
- Bar charts
- Resource Histograms
- PERT, Standard Deviation
Duration Compression
- Crashing
- Fast Tracking
Practice Q&As
Leading to the
Workshop Agenda
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Day 2
0930 - 1100 Cost Management
Cost Estimation
Cost Budgeting
Earned Value Management System
Practice Q&As
1100 - 1120 Tea Break
1120 - 1315 Quality Management
Quality Planning, Assurance, Control
- Quality tools
Practice Q&As
1315 - 1400 Lunch
1400 - 1510 Risk Management
- Risk identification
- Qualitative andQuantitative Risk analysis
- Risk Response Strategies
Practice Q&As
1510 - 1530 Tea Break

1530 - 1745 HR Management
Organization Structures
Roles & Responsibilities
Responsibility Assignment Matrix
Teamwork
Conflict Management
Leadership
Motivating Team Members
Practice Q&As
Leading to the
Workshop Agenda
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Day 3
0930 - 1100 Communication Management
Information & Reports
Procurement & Contract Management
Practice Q&As
1100 - 1120 Tea Break
1120 - 1215 Procurement & Contract Management (Contd.)
1215 - 1315 Negotiation
Change Control processes
Configuration Management
Integration
Problem Solving
Deliver & Closeout
Lessons Learned
Practice Q&As
1315 - 1400 Lunch
1400 - 1500 Mock Test (60 Minutes)
1500 - 1520 Mock Test Discussion
1520 - 1540 Tea Break
1545 - 1745 CIPM final Examination (2 hrs)
- CIPM exam is administered by the Institute of Project
Management Certification ( IPMC), the national PM Certification
Body of PMA, India
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The CIPM examination The CIPM examination
Is Administered Is Administered
by by
PMA PMA
The Indian National Certification body of The Indian National Certification body of
International Project Management Association International Project Management Association
(IPMA), Switzerland (IPMA), Switzerland
IPMA membership across 56+ IPMA membership across 56+ countries countries
Some Leading companies that have opted for CIPM
NTPC
NHPC
Coal Indi a
Adani Power
Avera
Bharat Hotels
Forti s Heal thcare
GAIL
HCL Technologies
Indi an Oil
IL&FS Property Mgmt
Lanco
Idea Cel lular
Jindal Steel & Power
Mazagon Dock Ltd.
Max Healthcare
GENPACT
MECON
North Del hi Power Ltd
Numaligarh Refi nery
Neyvel i Li gnite
Nuclear Power
Oil Indi a Ltd
Phi li ps Carbon Bl ack
Rai l Vikas Ni gam Ltd
RITES Ltd.
Power Gri d Corp.
SAIL
Tehri Hydro
Xansa (Indi a) Ltd
CIPM Exam consists of 1 Paper CIPM Exam consists of 1 Paper
Total Time: 2 Hours
Total Questions: 125 multiple choice
questions in 4 sections
Total Marks: Total Marks: 175 175
Passing Score: Overall 60%
50% in each section Must
CIPM Exam CIPM Exam has 3 Types of Questions has 3 Types of Questions
Type 1: Type 1: Has 1 answer from Has 1 answer from 44 opti ons. opti ons.
Carri es Carri es 11 mark mark
Type 2: Type 2: Has 1 answer from Has 1 answer from 5 5 opti ons. opti ons.
Carri es Carri es 22 marks marks
Type 3: Type 3: Sel ect 1 answer from Sel ect 1 answer from 44 opti ons. opti ons.
Needs cal cul ati ons. Carri es Needs cal cul ati ons. Carri es 55 marks marks
Negati ve Marki ng: 25% of the marks for the questi on Negati ve Marki ng: 25% of the marks for the questi on
CIPM Exam CIPM Exam Break Break- -up of Questions up of Questions
Section
Type 3
Questi ons
5 marks
per Qstn
Type 2
Questi ons
2 marks per
Qstn
Type 1
Questi ons
1 mark per
Qstn
Total
marks
in
Paper
Pass
marks
Sections
50%
Paper
60%
1 2 (10 mks) 5 (10 mks) 15 (15 mks) 35 17
2 4 (20 mks) 11 (22 mks) 28 (28 mks) 70 35
3 - 5 (10 mks) 25 (25 mks) 35 17
4 - 5 (10 mks) 25 (25 mks) 35 17
Total no.
of Qstns
in Paper
6 out of
125 Qstns
26 out of
125 Qstns
93 out of
125 Qstns
175 105
Centre for Excellence in Project Management (P) Ltd, 2014
2014 CEPM
Cer t i f i c at i on I n Pr oj ec t Cer t i f i c at i on I n Pr oj ec t
Management
(CI PM)
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Tot al i t y of Pr oj ec t Management Tot al i t y of Pr oj ec t Management
Leadi ng t o
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What is a Project?
Means of converting Vision to Reality
A set of activities undertaken to meet
specific objectives for changes
A temporary endeavor undertaken to create
a unique product, service or result
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Newproducts / services / Business
processes / Infrastructure
Changes in existing products and services
Projects can be undertaken for:
Projects are undertaken for diverse reasons:
Business
Industry
Government
Social sector
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What is a Project?
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What is a Project?
Project has following Characteristics:
Temporary have a definite beginning and an end
Unique no two projects are identical
Predefined goals & objectives financial/ social /economic
Budgets & schedules prefixed budget and timeframe
Uses Resources & Manpower both are limited
Quality / Performance determined at beginning
Face Risks known and unknown risks
Have a Project Life cycle many phases from start to end
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What is a Programme?
Management of a coherent group or a
collection of projects that are related to a
common objective to deliver additional
benefits to the organization.
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What is a Programme?
A group of projects related to a common
objectives e.g. business aim
An interdependency between number of projects
Creating more benefit for the organization
Resource allocation amongst a portfolio of projects
Achieve overall benefits for the business not just
for a project
An organizations business strategy required to
be implemented through projects
Programme management can cover:
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What is Operation
Operations are used for:
Routine, Ongoing, Repetitive work
Production / Manufacturing of Standard Product
Sustaining existing business
Operations NOT used for Change
Management
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Operations Vs Projects
Projects Operations
Unique Repetitive
Temporary Ongoing
Aim is to achieve the
objectives of the project
& then close the project
Objective of operation is
to sustain the business
Future orientation Present Orientation
Create new things Maintain existing things
Differences between Projects & Operations
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Project Life Cycle
Project Life Cycle (PLC):
Length of each phase will vary
Each phase associated with major processes and
deliverables
Names used to describe each phase wil l vary
A PLC is a sequence of phases from project start to project
end
Generically there are 4 phases :Start or Concept phase,
Planni ng phase , Execution Phase & Delivery/Closeout
Phase
However, Number of Phases in PLC wil l vary dependi ng on
the industry or sector
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Project Life Cycle
5. Requirements
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What is a Project?
Project Life Cycle:
Conceptualize
Plan
Organize
Implement
Control
Integrate
Deliver & Closeout
Knowl edge Leverage
In CIPM, the PLC is divided into these 8 generic phases
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Project Life Cycle
Work can be broken up into manageable
blocks or phases
Each phase has specific deliverables
More efficient allocation of all kinds of
resources requirements vary with phase
Better cost control funds needed for next phase,
procurement can be planned & released as needed
Allows better planning, scheduling, estimating
& control
Some Advantages of a Project Life Cycle:
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Characteristics Of A Life Cycle
High
Low
Opportunity to add Value
Cost to make change
Life Cycle of Project (Time)
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Characteristics Of A Life Cycle
High
Low
Uncertainty of Success
Amount at Stake
Life Cycle of Project (Time)
Low
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Project Management
What is Project Management (PM)?
Project Management is the
application of processes, knowledge,
skills, tools and techniques to meet
project requirements and to produce
deliverables within specified goals &
objectives.
Project Management is the most
efficient way for implementing
unique changes
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Project Management
Project Management manages and controls the
project work by:
Planning the work in detail : Why, What, Who,
When, Where, How and How Much
Understanding specific requirements of all
Stakeholders that may be conflicting
Identifying the Scope, Time, Cost and
Quality/performance criteria and potential risks
Making one person, generally the project manager
accountable for the project
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Project Management
Project Management manages and controls the
project work by:
PM combines Hard and Soft skills
Hard skills Technology, Tools & Techniques,
Processes
Soft skills Leadership, Team Building,
Communication, Decision Making, Trust Building,
Conflict Management, Coaching, Political and
Cultural Awareness
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Who is a Stakeholder?
All individuals, groups and organizati ons
directly involved in the project or that may
be affected by the project activities and the
project outcome
Understanding and Managing stakeholder
needs and requirements is critical for project
success
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A stakeholder could be:
Passively involved in the project
Actively involved in the project work and proj ect
outcome
Positive about the project and help the Project to
succeed
Negative about the project and be opposed to it
A Stakeholder
can help or hinder the project
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Key Stakeholders are:
Project Manager - is overall responsible to ensure project
meets it's goals and objectives
Project Sponsor represents top management. Is
responsible to ensure funds availabl e and to provide
overall, high level gui dance to project
Team Members perform the work. At core of success
Customer / Client individual /group /organi zation that
wil l use the deliverables. Can have one or many
Performing organization employs the people engaged
in project work. Internal project or external project
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Stakeholder Analysis:
Stakeholders are classified according to their interest, influence
and involvement in project.
Project manager should follow below steps while doing stakeholder
analysis :
Step 1 : Stakeholder Identification
Identify all potential project stakeholders and relevant information
such as their roles, departments, interest, knowledge levels,
expectations and influence levels .
Key stakeholders are easy to identify. Other stakeholders usually
identified by interviewing identified stakeholders and expanding the
list until all potential stakeholders included.
Stakeholder Analysis
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Step 2 : Analyze Stakeholder Authority , Interest and Influence
Identify potential impact or support each stakeholder could generate
and classify them so as to define an approach strategy .
Multiple classification models available e.g.
Power / interest grid ( Authority / Concern)
Power / influence grid (Authority / involvement )
Influence / impact grid (Involvement / ability to effect changes)
Stakeholder Analysis
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Keep Satisfied
Manage
Closely
Monitor
(Minimum
effort)
Keep
Informed
Low High
High
Low
Power
Interest
Power/Interest grid for mapping stakeholders
Manage closely High interest & high power in project
High interest, less power keep informed
Monitor Low interest, low power
Low interest, high power keep satisfied
Step 3 : Develop strategies to manage stakehol ders expectations
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Need Analysis goes through three phases
Need Emergence, Need Recognition & Need
Articulation
Needs Recognition
The Need is recognized by the organizati on
- its validity and urgency is studied and rated
against other needs
Needs Emergence
A Need Emerges in organization from any level
for a new requirement
Need Analysis Cycle
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Need for Change
Needs Articulation
The Need is evaluated
Need Analysis
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Business Case
A Key document in the project that shows the
justification for undertaking the proj ect
i.e. the why of the project
Used to make a decision of whether to
invest in the project or not - justifies the
investment
Business Case is owned by the Sponsor &
Sponsor is responsible for its development
Is developed from the Need statement
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To identify the stakeholders and their needs
Link the project to the business/corporate
strategy and show the priority of the project
in the overall business plan of organization
Show key project requirements to achieve the
stated business goals
Document the financial and non-financial feasibi lity
of the project
Document high level scope of the project, the
assumptions made and constraints
Role of Business Case
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Contents of Business Case
The projects success criteria and Key
Performance Indicators (KPIs)
Investment appraisal data
The business Need for taking up the project
Objectives of the project
Product / service to be delivered by the project
Rough Cost of implementing the project and the
income expected from project after it is completed
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Contents of Business Case
Projects overall time, cost and quality obj ectives
Assumptions and constraints
Major risks perceived and opportunities
PESTLE Analysis Political, Economic,
Social, Technological, Legal and
Environmental
Organizations strategy for implementing project
Key resource requirements
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Payback Period
Discounted cash flow (DCF) method
Net Present Value (NPV) which uses DCF
method
Internal Rate of Return (IRR) which uses
DCF method
Investment appraisal techniques widely
used to appraise projects are:
Investment Appraisal
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Is the time expected to be taken by the proposed
project to get a financial return equal to the original
investment made
Payback Period is achieved when the cumulative
cash flow becomes equal to the initial investment
Does not consider the whole life span of the project -
calculation stops once the original investment has
been recovered
Payback Period
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Payback Period
Initial Investment (year 0) =100K
Payback period for Project A is 4 years 2.57 months
Cash Flow up to year 4 =85K
Shortfall of 15K (100K - 85K)
Cash Flow in year 5 =70K
Per month cash Flow in year 5
=70K / 12 = 5,833
15K / 5833 =2.57 months
Cash Flow =100,000 in 4 years
2.57 months
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Is simple to use
Good as an initial filter
Standard technique used worldwide
Favours projects with faster returns, better for liquidity
Effective for high risk situations
Payback Period - Advantages
Ignores the Time Value of money
Does not consider project cash flows after Payback
Period has been reached
Not good for long term projects
Payback Period - Disadvantages
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Discounted Cash Flow (DCF) method
Relates future cash flows over the projects
life to a common base value
DCF based on fact that the value of money
depreciates with time
Expected Cash flows are adj usted for
money over ti me
Discounting Cash Flow gives more realistic
picture of potential projects feasibili ty
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Net Present Value (NPV)
Internal Rate of Return (IRR)
Used by two key Investment appraisal
techniques:
Discounted Cash Flow (DCF) method
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Differ in Time spans, Initial Investments, and
Cash Flows
Higher the NPV, better the project
NPV helps to compare viabili ty of projects that:
Expected Cash flows adjusted for money over time
Reject any project having Negative NPV
Quantifies expected profit in absol ute terms
Shows projects net value in today's monetary terms
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Step 1:Calculate Cash Flowfor each year (Income -
Expenses)
Step 2:Calculate the PV for each year - discount annual
cash flow by the given Discount Rate
Step 3:Sum up the Present Values calculated for each
year
Step 4:Subtract project's Initial Investment from
cumulative Present Values to obtain the projects NPV
Present Value (PV) =FV / (1 +r)
n
FV =Future Value; r =Discount rate; n =No. of years
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Calculating NPV
Year 0=Initial Investment
Discount (Interest) Rate is 10%
Discount Factor @ 10% is given
Year 1=25 x .91 or 25 / 1.10
=22.7
Year 2=25 x .83 or 25 / 1.210
(1.10 x 1.10) =20.75
Year 3 =20 x .75 or 20 / 1.331
(1.10 x 1.10 x 1.10) =15.00
Year 4=15 x .68 or 15 / 1.464
(1.10 x 1.10 x 1.10 x 1.10) =10.20
Cumulative PV =112,100
NPV =112.100 less 100,000 =12,100
Year 5=70 x .62 or 70 / 1.610
(1.10 x 1.10 x 1.10 x 1.10 x 1.10)
=43.40
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Investment Appraisal - NPV
Disadvantages
Accuracy depends on
how well future cash
flows and discount rate
is predicted
Does not consider non-
financial data
Has bias towards short
termprojects
Advantages
NPV is more realistic
considers time value of
money
Considers whole life
span of product / service
from project beginning
to product termination
Higher the Discount rate, Lower the NPV
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IRR is the Discount Rate at which
NPV for project = 0
Shows the Discount Rate at which
project will break even
IRR expresses profitability as a
percentage while NPV expressed
profitability in absolute terms
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Higher the IRR, better the project
IRR arrived at by trial and error
Higher the Discount rate (Interest
rate) lower the NPV
Calculated to nullify impact of time
value of money on proposed project
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How Project Comes into Existence ?
Need
Analysis
Project
Management
Plan
Business
Case
Project
Charter
Business Case Approval
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Project Charter
The Project Charter
formally authorizes the project to go ahead
Once Business Case is approved it can
act as the Project Charter or a separate
Charter is documented
A contract can also act as the Charter
Charter forms link between project and
the on-going work of the organization
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Project Charter
Can also be issued by another person /
organization associated with funding
e.g. government dept., funding agency
Project Charter gives the project manager
authority to use organization's resources
for the project
The Sponsor is responsible to issue the
Project Charter
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Name of Project Manager
Expected project budget
Assumptions / constraints
High level description of product/service
to be delivered by the project
Milestone schedule showing summary of
required completion dates
Organizations/departments to be involved
Contents of Project Charter
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Why Managements statement of success criteria
What What are we going to accompl ish
Who Who will do the work
When Schedules to do work
How PMs vision of doing the work: Resources,
Tools & techniques, IT needs, Technical issues,
Quality, validation & testing, Risk management,
Procurement, Change management etc.
How much project costs and budget
Answers to the following:
Project Management Plan (PMP)
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Detailed planning done for different aspects of
project & integrated into a single plan known as the
PMP is key document of the project
Is owned by the Project Manager
Is used to control the project
Forms the baseline of project
Developed by Project Manager with project team
Approved by the Sponsor / client
Should be accepted by Sponsor & project team
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The Project Management Plan contains :
1. Scope Management Plan
2. Schedule Management Plan
3. Cost Management Plan
4. Staffing (HR) Management Plan
5. Communication Management Plan
6. Procurement Management Plan
7. Risk Management Plan
8. Quality Management Plan
9. Process Improvement Plan
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10. Scope Baseline
11. Schedule Baseline
12. Cost Baseline
13. Quality baseline
14. Risk Register
15. Milestone List
16. Resource Calendar
17. Change Management Plan
18. Configurati on Management Plan
The Project Management Plan contains:
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Success Criteria
What is Success Criteria?
Criteria by which project success will be
judged by stakeholders
Success criteria should be clearly defined
with stakeholders at project beginning
Includes Internal & External parameters
Traditional view - a project is successful if
completed on time, within budget and
meet's required quality/performance criteria
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Success Criteria
Different stakeholders have different
success criteria for same project which
may conflict e.g.
Business obj ectives for undertaking project
Key deli verables
Key parameters li ke Time , Cost
Customer Satisfaction
Quali ty requirements
KPIs meeting stakeholder specifications
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Success Criteria
Key Performance Indicators (KPIs)
The measurable values of success criteria
are known as Key Performance Indicators
KPIs help to achieve the success criteria
by allowi ng PM to take corrective actions
timely
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Project Success Factors
Goals and Objectives are clear and agreed with
stakeholder
Support from senior management
Clear Scope from client / sponsor / users
Timely communication with all stakeholders
Motivated team / Positive attitude of team members
Subject matter expertise
Realistic Schedule and Cost Estimates
Continuous Risk assessment and management
Factors required for success more within control of
the Client ,PM, Sponsor, team, top management etc.
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Triple Constraints of Project Management
Conventionally, projects focus on three major
aspects of Scope, Time and Cost
Maintaining Quality is implied in the project
Challenge is to manage all 3 sides
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Scope, which lies at base of the
Triple Constraints
defines the total work required to
execute a project and is the
constraining factor within which
the project has to perform
Scope Management
Scope Definition
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Scope Definition
Project Manager and project team must
have clear understanding of the scope
The product or service to be delivered by
project
Scope covers two aspects:
The project work that will have to be done
to successfully deliver the product or
service
Scope Management
Uncontrolled changes in scope, without getting a
corresponding increase in the time and budget
allowances are called Scope Creep .
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Scope Management Plan
How total scope will be managed & controlled
How scope will be identified, defi ned, classified,
documented, managed and integrated into the
project
How WBS will be developed
How scope changes made after WBS is finalized
will be managed & integrated into project
Scope Management Plan describes the various
steps needed to manage projects scope and the
scope changes
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Scope Planning
Develops the Scope Statement
Scope statement acts as agreement for
understanding between project team & customer
Scope Statement is a detailed, description of the
work required to be done to deliver the projects
product or service or result.
First a broad, macro level planning done then the
micro level detailed planning done
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Product Scope Description - Characteristics of the
Product, Services or Result
Product acceptance Criteria
Project Objectives - Measurable success criteria e.g.
Cost, schedule, quality or Business objectives
Project Deliverables - Product, Services or Results of
the project including ancillary results (Reports and
Documentation)
Project Requirements - Conditions or capabilities that
must be satisfied by the Deliverables as specified in the
contract, specification or Stakeholder analyses
Scope Statement
Project Scope Statement should include:
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Project Constraints - Pre-defined budget , imposed
schedule end date
Project assumptions
Project Boundaries (What is not included in the scope)
Initial Project Organization
Initial Identified Risk
Schedule Milestone
Preliminary Cost estimate
Approval Requirement
Scope Statement
Project Scope Statement should include:
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Scope Management - WBS
Work Breakdown Structure (WBS)
The WBS is a task oriented hierarchical
decomposition showing all the work to be
done by project team to deliver the
projects product / service and achieve the
project objectives
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After scope statement is made, entire scope is
reviewed and all deliverables are decomposed
into smaller more manageable components
giving rise to what is known as the Work
Breakdown Structure
Each descending level shows greater detail
WBS developed by project team based on
collective experience and by brainstorming with
other stakeholders to list out all possible tasks to
be performed
Work Breakdown Structure (WBS)
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Decomposition
Decompose higher level elements to lower level
Decompose to level where work can be scheduled
cost estimated, assigned and controlled
Verify that the level of decomposition of work is
correct and adequate
Identifying the deliverables and related work
Breaking-up the entire project into smaller,
more manageable elements of work
Different deliverables will be decomposed to
different levels
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Sample WBS
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Work Breakdown Structure
Residential
Construction
Build Foundation Build Structure Internal services External Services
Earth Work Base Preparation Blinding
Layout Excavation Leveling
Anti-termite Polythene Work
Shuttering Concreting
Compound Wall
Driveway
Water Supply lines
Sewage Lines
Electric Connection
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A SW Project
1.0
Prepare
SRS
Prepare
Design
Documents
Code
Software
SW
Testing
SW
Documentation
Deployment
Gather
Requirement
Analyze
requirements
Document
SRS
Prepare HLD
Prepare LLD
Code
Module1
Code
Module 2
Test module 1
Test Module 2
Integration
Test
User
Acceptance
SW
Training
LLD Module 1
LLD Module 2
SW
Transition
1.1
1.2
1.3 1.4 1.5 1.6
1.1.1
1.1.2
1.1.3
1.2.1
1.2.2
1.3.1
1.3.2
1.4.1
1.4.2
1.4.3
1.6.1
1.6.2
1.6.3
1.2.2.1
1.2.2.2
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WBS Levels : The Top most Level is the Name of the Project
Level 1 Can be Phase or Deliverable or Sub-Projects
Lowest Level known as Work Package
Decomposition done till level where possible to
allocate the work, estimate the time and cost and
manage and control the work
WBS developed using Top-down approach,
Bottom-up approach or both
Work not reflected in WBS NOT part of project
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Work Packages
Work package is further broken down into smaller
activities for the projects network schedule
Lowest level in the WBS work assigned and
controlled at this level
A single owner responsible to see work is
completed. Can own many work packages
Should have scheduled start & finish dates
A time phased budget assigned to it
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Some key advantages of using a WBS
WBS Key tool to PLAN and CONTROL the
project
Helps to assign work and track project progress
Basis for making network schedule and bar charts
Basis for budget, schedule and resources data
required for determining the earned value
criteria for the project
Provides common understanding and clarity of
work and the total project among all the team
members and other stakeholders
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Some key advantages of using a WBS
Identifies project's key milestones & deliverables
Basis for developing the Organizational, Risk,
Communication, Cost Breakdown structures and
Work package assignment to the right
person/team members
Risk identification and management can
be done more effectively
Using lowest level of WBS an accurate bottom-
up cost estimation can be done
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Each WBS dictionary entry generally includes
following details about the Work Package :
Code of account identifier
Description of work
Responsible organization /department/Unit
Quality requirements
Technical information relevant to task performance
A list of related schedule activities
Resource requirements
Cost estimate
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Scope Baseline
The scope baseline consists of the:
The project scope undergoes progressive elaboration
1. Scope Statement
2. WBS
3. WBS Dictionary
Build Foundation
Earth Work Base
Preparation
Scope
Statement
WBS
Dictionary
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Time Management
To complete the
project on time a
schedule of the
project work
must be fully
planned in detail
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2014 CEPM
A project schedule developed of total work
required to be done to plan and control the
time
The PM uses a formal change control
process to control any changes in the
schedule
Time Buffers/Reserve/Contingency kept in
schedule to meet unanticipated delay
Work packages are further broken down to
activities that are used to estimate, schedule,
assign, implement and control project work
Time Management
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Decompose the work packages into lists of activities
to be performed
Sequence the activities based on logical
relationships
Identify & estimate all resource requirements for
each activity type & quantity
Estimate activity durations using appropriate
estimating technique. Consider resource constraints
Develop and analyze the projects network schedule
Network Schedule
To develop the project network schedule:
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2014 CEPM
Order
Cable
Deliver
Cable
at site Lay
Cable
Dig
Trench
at site
Start
Test
Conne
ctivity
Laying underground Cable Work Package consists of
5 activities
2d
1d 5d
7d
7d
Finish
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Critical Path Method (CPM)
CPM is a project scheduling method that
helps to determine the Early Start, Early
Finish, Late Start, Late Finish for individual
tasks.
The Critical Path determines the earliest
possible completion date of the project
Time Management
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2014 CEPM
Activity Logical Relationships
3 types of logical relationships possible:
Discretionary or soft logic based
on experience or best practices
External based on outside factors
e.g. political, govt. rules, other
projects
Mandatory or hard logic work
requires a specific sequence
Activity Relationships
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The Four Types of activity Interrelationships are:
B
A
B
B
Finish Start (FS) Start Finish (SF)
Start Start (SS) Finish Finish (FF)
A
A
A
B
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2014 CEPM
LEAD: A modification of the logical relationship that
accelerates the successor task.
LAG: A modification in the logical relationship that
causes the successor task to be delayed.
A
B
Days
B
A
Days
In a FS
relationship B
has a Lead of
1 day
There are Two Modifiers:
In a FS
relationship B
has Lag of 1
day
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ARROW DIAGRAMMING METHOD (ADM)
also called ACTIVITY On ARROW (AOA)
Start
C
D
E
F
Finish
1
2
4
6
7
B
A
5
3
8
Dummy
Project Networks
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2014 CEPM
ARROW DIAGRAMMING METHOD (ADM)
Arrows represent the Activity
Nodes (Event) represent the activity
completion
ADM allows only Finish-to-Start
dependencies
Dummy activities i.e. dotted arrows used to
show logical dependency
Dummy activities consume NO Time or
Resources
Project Networks
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PRECEDENCE DIAGRAMMING METHOD (PDM)
also called ACTIVITY ON NODE (AON)
Start
A B
D E
C
F
Finish
Project Networks
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2014 CEPM
PRECEDENCE DIAGRAMMING METHOD (PDM)
also called ACTIVITY ON NODE (AON)
Node represents the Activity
Arrow used to show logical
dependency
Allows use of all 4 logical
dependencies
Project Networks
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Early Start
The earliest time a task
can start based on the
network logic and
schedule constraints.
Early Finish
The earliest time a task
can finish based on the
network logic and
schedule constraints.
Project Networks
Forward Pass
Late Start
The latest time by which a
task can begin without
violating a schedule
constraint / project end date.
Late Finish
The latest time a task can be
completed without violating a
schedule constraint or the
project end date.
Backward Pass
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2014 CEPM
FLOAT / TOTAL FLOAT
Length of time a non-critical task can be
delayed or extended without affecting the
project end date. Is measure of time flexibility
available in performance of an Activity
For an activity:
FLOAT =LF - EF or LS - ES
Project Networks
ES
EF
LS LF
A
6 9
16 13
Activity A has a
Float of 7 days
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FREE FLOAT
Length of time a non-critical task can be
delayed or extended without affecting earliest
start date of any subsequent activity and the
project end date.
Project Networks
ES
EF
LS
LF
A
ES
EF
LS
LF
B
ES
EF
LS
LF
C
3 6 6 9
16 13 13 10
13 11
3 5
Activity C has
a Free Float
of 1 day
FREE FLOAT of Activity
=ES
J
- EF
I
J =Succeeding Activity
I=Preceding Activity
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Exercise: Critical Path Method
BB
CC
Start Start Finish Finish
EE
AA
DD
FF
ES ES EF EF
LS LS LF LF
AA
33
77 44
55
22 88
88
D
F
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2014 CEPM
Exercise: Critical Path Method(CPM)
ES ES EF EF
AA
ES ES EF EF
BB
ES ES EF EF
ES ES
EE
EF EF ES ES EF EF
33
77 44
55
22
88
ES ES
CC
DD
FF
EF EF
Backward Pass
LF LF LS LS
EF EF
LF LF LS LS LF LF LS LS
ES ES
EF EF
ES ES
LF LF LS LS
Please find out all the ES,EF,LS,LF=?
Forward Pass
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00 33
AA
33 10 10
BB
10 10 14 14
33
EE
55 55 13 13
33
77 44
55
22
88
14 14
CC
DD
FF
19 19
Forward Pass
??
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2014 CEPM
00 33
AA
33 10 10
BB
10 10 14 14
33
EE
55 55 13 13
33
77
44
55
22
88
14 14
CC
DD
FF
19 19
Backward Pass
19 19 14 14
14 14
14 14 10 10 10 10 33
66
66
?? 44
33 00
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2014 CEPM
00 33
AA
33 10 10
BB
10 10 14 14
33
EE
55 55 13 13
33
77 44
55
22
88
14 14
CC
DD
FF
19 19
19 19 14 14
14 14
14 14 10 10 10 10 33
66
66
44
33 00
TF=0
TF=0 TF=0
TF=0
TF=1 TF=1 Critical Path is:
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THE CRITICAL PATH Is:
The Longest path in the network
Has zero float
Can have more than one Critical Path
Critical path can change through
project
Negative float in critical path shows
project is behind schedule
Critical Path
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2014 CEPM
Show summary level /activity level activities
against time, drawn to a common time scale
Drawback Bar charts do not show activity
dependencies
Gantt / Bar Charts
Bar / Gantt Charts
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Linked Bar / Gantt Charts
The dependencies between activities is shown
by arrows and the floats are depicted by single
lines drawn after the bar
Time Management
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2014 CEPM
Gantt/ Bar charts commonly used as:
Easy to draw, read and understand
Provide a clear picture of the project status
Summary of ten's of activities can be depicted
by one bar
Easily view the planned time schedule versus
the progress at a glance (% Completion)
Excellent tool for management reporting of
project progress
Gantt / Bar Charts
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Mapping Resources - Histogram
Vertical bars used to display total resource allocation time wise
Helps to plan and allocate resources
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Fast Tracking:
Overlap work normally done sequentially
e.g. order equipment before design
finalized
Critical Path activities are carried out in
parallel to accelerate the project end date
Fast tracking requires much more
management control and co-ordination
Fast Tracking increases RISK
Fast Tracking increases Communication
Fast Tracking
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Crashing:
Extra resources added to Critical Path
activities to reduce their duration
Activities that will cost minimum to crash
should be selected first
Use more overtime / faster worked
materials
Costs likely to increase
Crashing possible only up to a point law
of Diminishing Returns
Crashing
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2014 CEPM
PERT
Program Evaluation and Review technique
(PERT)
Also known as 3 Time estimates
Used for time and cost estimating when it is
difficult to arrive at an estimate due to lack of
knowledge or experience
Arrives at an estimate using a weighted average
to reduce the risk
Formula for PERT is:
{Optimistic + (4 x Most likely) + Pessimistic} / 6
Standard deviation SD = (P-O)/6
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Standard Deviation
Step 1 Calculate PERT duration and SD for each activity
Step 2 - Calculate Variance of each activity separately. Variance is
{(P - O) / 6}
2
i.e. the Variance is the standard deviation
squared.
Step 3 - Add the Variances for all activities in critical path
Step 4 - Take the square root of the total of the variances
(calculated in step 3)
Steps to calculate SD for the critical path
Standard Deviation is a statistical tool used to
measure variability in the data. Closer the data
examples are to the mean, the smaller is the SD
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Application of PERT
102
The PERT duration is the Mean. In above example, the PERT
duration (Mean) for Activity 1 is 30 days, for Activity 2 it is 116
days and for Activity 3 it is 52 days.
There are 3 activities in the critical path with following data
Activity Optimistic Most Likely Pessimistic PERT Duration SD Variance
1 20 30 40 30 3.3 10.9
2 70 120 146 116 12.6 158.8
3 40 50 72 52 5.3 28.1
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Standard Normal Distribution
Mean +/- 1 SD =68.2 %
Mean +/- 2 SD =95.4 %
Mean +/- 3 SD =99.7 %
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Cost is the third leg of the Triple
Constraints, and is a key aspect
in planning, managing and
controlling the project
Cost Management
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Type of Costs
Costs can be looked at in different ways:
Direct costs
Costs directly attributable to a project , product and
job
e.g. labour, material, plant & equipment, contractor
Indirect costs
Costs associated with the enterprise as a whole
e.g. taxes, licenses, administrative salaries,
Overhead & administration, training, utilities
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Estimating Techniques
Analogous estimating technique
Generally used in Initial / Conceptual
phase of PLC when minimum
information available
Estimate arrived at by comparing
proposed project with a similar project
that was done in past
Type of estimate prepared is known as
Rough Order of Magnitude (ROM)
Is also called top-down estimate
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Parametric estimating technique
Uses project characteristics in a mathematical
model (e.g. Unit Rate) to calculate an estimate
for activity parameters
Used for top down and bottom up estimates
Common for construction, software
Parametric models are used to estimate how
much the product (or project) will cost based
on physical attributes e.g. weight, volume,
power, lines of code, price per sq. foot
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Bottom up estimating technique
A detailed estimate built up from the
knowledge of the design of the system
Uses the WBS work packages details.
Performed in the Planning Phase of the PLC.
Most time consuming method but also most
accurate estimate
Resources needed first estimated and are
then converted into monetary terms.
Type of estimate prepared is known as
Definitive Estimate.
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6. Cost baseline
4. Project
3. Control account
2. Work package
1. Activities
137000
7000
130000
10000
120000
50000
30000
70000
20000
10000 10000 10000
8. Cost budget
7. Management reserve
5. Contingency reserve
Bottom-up estimating
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Type of Estimates
Rough Order of Magnitude (ROM) is in a range of -30% to
+50% from the expected or actual value;
Budget estimate is in a range of -15% to +30% from the
expected or actual value;
Definitive estimate is in a range of -5% to +15% from the
expected or actual value.
(Range of accuracy is as per American Association of Cost Engineers (AACE))
Definitive estimates are provided at the end of the planning phase, or
early in the execution phase, when the level of detail in the plan
allows for greater accuracy in estimating costs.
ROM estimate might be used during Project Inception when only
high level information is available
Budget Estimates are used for Bid, Proposal, Contract Change
orders and not for Project Control
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Cost Budgeting
Budgeting Costs
Costs are allocated to schedule acti vities or
work packages
A time phased budget created for costs by
aligning costs with the project schedule
A cost baseline is established to measure
the projects performance
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Cost Baseline
Cost Baseline is the time phased budget for the
project.
Is used to measure, monitor and control projects
overall cost performance
Is the total estimated cost for project
Shown as an S curve
Large projects can have different cost
baselines for the project e.g. internal labour
costs, contractor labour costs, material
costs
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Cost Reserves
A monetary provision kept for mitigating
cost and/or schedule risks
Contingency Reserve
Management Reserves
Budget kept for unpredictable parts of project -
"unknown unknowns." Use of the management
reserve generally requires a baseline change.
Estimated costs used at PMs discretion to deal
with anticipated, but not certain, events. These
events are "known unknowns" and are part of
the project scope and cost baselines."
Reserves
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Control Account and Chart of Account
Control Account Are selected components of the
WBS that are used for management control. The Scope,
budget, schedule and actual cost are integrated at this
level to measure work performance using Earned Value
methods. Are kept above the Work Package level. Each
Control account can contain more than one WP but each
work package should be included only in one CA.
Chart of Account - Any numbering System used to
Monitor Project Cost by category (e.g. Material,
Equipment, Labor ). It is based organizations Chart of
Accounts.
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EVMS measures project performance by
integrating project scope, cost and schedule measures
concurrently enabling a holistic view of project
performance and progress
Earned Value represents the value of work accomplished
in terms of financial worth and is used to measure the
performance of the project.
Work is represented in terms of a cost based structure.
Costs can be in Money or Man-Hours
Anintegrated baseline is formed against which
performance is measured.
EARNED VALUE MANAGEMENT SYSTEM
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EVMS
Key parameters used to represent physical progress
achieved on the project in monetary units are:
Planned Value (PV): formerly known as Budgeted Cost
of Work Scheduled (BCWS). PV = BAC X % of
Planned Work
Earned Value (EV): formerly known as Budgeted Cost
of Work Performed (BCWP). EV = PV x % of Actual
Work done
Actual Cost (AC) formerly known as Actual Cost of
Work Performed (ACWP)
Budget At Completi on (BAC) = total Budget for work
planned (sum of all PV)
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EVMS
Variances
Schedule Variance ( SV) = EV PV
Cost Variance ( CV) = EV - AC
+ve is good performance
0 is on target
-ve is poor performance
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EVMS
Performance Indices
CPI (Cost Performance Index i.e. cost efficiency)
= EV / AC
SPI (Schedule Performance Index i.e.
schedule efficiency)
= EV / PV
CPI > 1 shows project is under budget
SPI > 1 shows project is ahead of schedule
>1 is good performance
=1 is on target
<1 is poor performance
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EVMS
EAC =BAC/CPI to-date
or
=AC +(BAC EV)
CPI New
or
=AC +ETC New
EAC (Estimate at Completion)
EAC forecasts the revised budget for the total project or an
activity based on the projects current performance or a new
assumed performance in future.
VAC (Variance at Completion) = BAC EAC
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EVMS
To forecast new completion time if future performance
expected to be different:
New Duration
=Current month +[(Delay +Remaining months) / SPI
Assumed
]
To forecast new completion time based on current
performance:
New Duration =Original Duration / SPI to-date
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Cost
EARNED VALUE MANAGEMENT THROUGH S-CURVE
EV or
BCWP
PV or
BCWS
AC or
ACWP
SV
CV
Cost
Progress Review
BAC
Slippage
Time
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CPI
SPI
2
1.0
.5
0
1.5
1.0 .5
1.5 2
Under Budget
& Behind
Schedule
Under Budget
& Ahead of
Schedule
Over Budget
& Ahead of
schedule
Over Budget
& Behind
Schedule
Project Status Determination
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Scope, Time, Cost and
Quality
SCOPE SCOPE
QUALITY QUALITY
Quality Management
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Quality is the totality of characteristics
of an entity that bear on its
ability to satisfy stated or implied needs
- ISO
Degree to which a set of inherent
characteristics fulfill requirements
- American Society for Quality
Project Quality
What is Quality?
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Quality
Planning
Quality
Assurance
Quality
Control
Quality
Management
QUALITY
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Quality Management has following three processes :
2014 CEPM
Define Quality
Standard
Are we following the right processes ?
Quality
Policy
Quality
Requirement
Statutory
Requirement
What
Actions/Process/
Procedures ?
Do we need to modify processes ?
NO YES
Defect
Repair/Rework
Quality Planning
Quality Assurance
Feedback to QP and QA
End Results
complying with
Standards ?
Quality Control
Quality Management
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Quality Planning:
Identifies & Determines which quality
standards are applicable to project
Quality Planning
Preparation, checking and recording of
actions necessary to achieve the
standard of the product or service that
is required by the customer and law
Is driven by companys quality poli cy
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The set of processes
and procedures that demonstrate that
the work is being done according to the
quality plan and will satisfy
the relevant quality standards
Quality Assurance
Quality Assurance is:
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Pre planned Audits and Reviews used to
check compliance that all procedures
are being met as planned
Quality Assurance
QA ensures compliance of the process not the product
result
Performed by QA department or line organization
personnel or separate 3
rd
party organization
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Processes for planning & monitoring
specific project results
to verify if they comply
with relevant quality standards, and
identifying ways to eliminate causes
of unsatisfactory results
Quality Control
Quality Control
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Broken into three main categories:
1. Prevention costs e.g. training, equipment,
maintenance
2. Appraisal costs e.g. inspections, audits, testing
Cost of Quality
3. Failure costs
Internal failure costs before leaving
organization e.g. rework, scrap
External failure costs customer determines
their requirements not satisfied e.g. liabilities,
warranty work
Cost of conformance
Cost of nonconformance
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Total Quality Management
(TQM)
Total Quality Management TQM)
TQM is an approach used to implement
quality improvement programme
involving everyone across the organization
Get ideas from employees
Environment of participative leadership
Improve the customer service
Benchmark major activities to improve
Reduce cycle time
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Quality Gurus
Deming
Juran
Crosby
Key Quality Gurus who have shaped the
Quality movement are:
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Quality Gurus W. Edwards Deming
Demings Plan-Do-Check-Act (PDCA) cycle
for continuous improvement
Plan - see how to improve present practices
Do - implement improvement plan on small scale
Check - test to check got desired results or not
Act - implement corrective actions needed in plan
Management commitment essential
85%of meeting quality is management
responsibility
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J uran advocated Three key concepts
1. Fitness for Use :
Availability: reliability (i.e., frequency of repairs) and
maintainability (i.e. speed or ease of repair).
Safety: The potential hazards of product use
Field use: This refers to the way the product will be used
by the customer
2. J uran Trilogy : Quality Improvement , Quality Planning
and Quality Control
3. Cost of Quality
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Quality Gurus J oseph M J uran
2014 CEPM
Crosby developed his Four Absolutes of Quality:
Quality means conformance to requirements.
Quality comes from prevention, not from inspection.
Quality means that the performance standard is "zero
defects."
Quality is measured by the cost of nonconformance.
Crosby found that the cost of not doing things right the first
time could be appreciable.
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Quality Gurus Philip B. Crosby
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2014 CEPM
Meet customer needs through evaluation,
defining and managing of their expectations
More Quality Concepts
Customer Satisfaction
Quality & Grade
Grade is the level or functionality of the
product or service
Quality is achieved by meeting the stated
requirements
Project aims to satisfy customers quality
expectations
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Goal is to improve processes to avoid all
defects
Management to establish a defect free
environment
Quality Concepts
Zero Defects
Prevention vs. Inspection
Cheaper to do things correctly at the first
time.
Rework after removing defects after
inspection more costly
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Cause and Effect Diagrams
Pareto Diagram
Control Chart
Histogram
Sampling
Benchmarking
Checklist
Flowchart
139
Key Quality Control Tools
Quality Tools & Techniques
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Cause & Effect Diagram (Fishbone/Ishikawa Diagram)
Breaks problems down for analysis
Graphical technique that helps team group ideas
and identify the causes of a problem
Shows the relationships among different
variables and the effect (problem)
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Example of Cause and Effect Diagram
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Example of Cause and Effect Diagram
142
Fish Bone Diagram for Hotel Industry
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Pareto
Chart
Histogram ranking no. of defects in order of frequency or
importance
80% problems are due to 20% reasons 80/20 rule
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Pareto Chart Late for office
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
168.0
152.2
134.4
117.6
100.8
84.0
67.2
50.4
33.6
16.8
0.0
Traffic
Children
Transpor
tation
Parents
Overslept Emergency
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Left hand vertical axis representing the unit of
comparison selected e.g. frequency, cost, time
Horizontal axis representing different categories
of data from max (L) to min. (R)
Right hand axis represents the cumulative
percent from 0% to 100%
Pareto Chart
The chart drawn using 3 axis:
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Used to decide whether the product or service is in
controli.e. within a specified, acceptable range
Graphically displays results of a process
Does not provide causes for deviations or solutions
Control Chart
0
4
Mean
8
Rule of Seven
UCL
LCL
Out of Control
1
A Control Chart Process
USL
LSL
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Rule of Seven: When several successive points line
up on one side of the central line, this pattern is called a
RUN
As a rule of thumb, if the RUN has a length of seven
points, there is an abnormality in the process.
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Common causes:
This source of random variation is always present in
any process.
It is that part of the variability inherent in the process
itself. The cause of this variation can be corrected only
by a management decision to change the system.
Special causes:
This variation can be controlled at the local or
operational level.
Special causes are indicated by a point on the control
chart that is beyond the control limit or by a persistent
trend approaching the control limit.
Control Chart
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Histogram
Histogram is a chart with columns. This represents the distribution by mean. If the histogram is
normal, the graph takes the shape of a bell curve.
If it is not normal, it may take different shapes based on the condition of the distribution.
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Sampling
Inspection done to a sample rather than entire
populationdetermine the level of performance as per a
predetermined standard.
Includes measuring, examining and testing
Benchmarking
Used for process and product improvement
Can be done within organization or with other
organizations which have similar processes
Checklists
Structured list of actions. Simple but very useful
Show relation between different components of a
system. Are excellent visual tools
Flow charts
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Risk Management
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Risks
effect on
A risk is any uncertain event that may
have a positive or a negative effect on
the goals and objectives of the
project if it occurs
Risk can also be described as
the product of the probability of an event
occurring times its impact if it did.
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Risk Categories
Internal risks controlled to some extent by
project manager e.g.
Project schedule
Manpower
Technology used
Accuracy of estimates
External risks can not be controlled by PM e.g.
Gov. rules
Inflati on
Natural calamities
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Risk Categories
Organizational risks
Fund availability
Resource utilization
Schedule expectations
Project priority
Project Management risks
Poor use of PM techniques
Manpower allocation inexperienced
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Risk Management Processes
Most of these processes are updated throughout the project
life cycle
Develop a Risk Management Plan
Prepare a Risk Register
Prioritize the Risks
Probabilistic Treatment of Risks
Develop Risk Responses
Assess Risks Continuously
Identify all possible Risks
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Risk Identification Tools
Documentation Reviews
Brainstorming
Interviews
Delphi technique
SWOT analysis
Root cause identi fication
Information
gathering techniques
Other techniques
Checklists
Assumption analysis
Flowcharts
Cause-and-effect diagram
Influence diagram
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Documentation Review
Contract Document
Work Breakdown Structure (WBS) key tool
Product description
Scope statement
Project management plan, Network schedule
Risk management plan
Industry data
Historical information
Review project documents e.g.
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Brainstorming
Use a experienced facilitator
List all ideas all are good
Use WBS and risk categories for identification
Involve team members, other stakeholders
What is said important be non critical
Brainstorming a popular technique
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Delphi Technique
Facilitator sends participants a questionnaire
Response collated and circulated few times
Less bias of other participants
Can be done remotely e.g. through E-mail
Similar to brainstorming but participants
are anonymous
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SWOT Analysis
Looks at the projects:
Strengths Experienced project team
Weaknesses Lack of Processes
Opportunities Will prove credibility if done
successfully
Threats New Technology
Strengths and Weaknesses are internal
Opportunities and Threats are external
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Assumption Analysis
Assumptions about future events like availability of
equipment, resources etc. should be formally recorded in
a log.
Likelihood of risks in the project increases when the
assumptions turn out to be erroneous or false.
It is important to properly review the assumptions made
by analyzing following two aspects:
The sensitivity (Impact) of the assumption is
assessed qualitatively on a scale such as crucial, vital,
important and unimportant.
The stability (Probability) of the assumption
checks how likely it is that the assumption will prove to
be wrong or false.
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Risk Register
Records the identified risks
The risk owners for each risk and responsibility
Results of Qualitative and Quantitative
assessment
Risk responses selected
Contingencies and Fall back plans
Is a structured log that maintains summary of all
identifi ed risks that can affect the project along
with relevant information to manage the risks
Microsoft Office
Excel Worksheet
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Risk Analysis
Qualitative
Risk analysis
Quantitative
Risk analysis
A qualitative risk
assessment is carried
out to prioritize risks
A risks Probability (P)
of occurrence and
Impact (I) is combined
and assessed
Should always be done
for all projects
Risk probabi lity
assessed using
speci fic values
Numerically analyses
effect of identified risks
on project objectives
More rigorous
Optional analysis
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Risk Probability Impact Matrix
Subj ective assessment done separately of a Risks
Probabil ity and its Impact on project obj ectives
Risk score then assigned to each risk based on both
Probabil ity & Impact (Probabil ity x Impact)
Risks rated and ranked in order of importance
Overall risk ratings prioriti ze the risks for project
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Probability Impact Matrix
2014 CEPM
Quantitative Risk Analysis Tools
Decision Trees
Expected Monetary Value (EMV)
Monte Carlo simulation
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Quantitative Risk Analysis
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Decision Trees
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Quantitative Risk Analysis
Expected Monetary Value Analysis (EMV)
To calculate the average outcome in
Monetary Units of scenarios that may
or may not occur .
Looks at probability and impact.
Formula: EMV = Probability x Impact
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Exampl e : There is 40 % chance of getti ng a purchase order worth
$ 100,000 . The EMV = 0.4 x $100,000 = $ 40,000
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Perform Quantitative Risk Analysis
Typically used to make decisions on risks that are uncertain. Takes multiple scenarios and
calculates the level of impact.
Structured using a decision tree diagram.
Solving the diagram will result in an EMV for each alternative.
Software
Package
25% Probability
$90,000 -ve Impact
No impact
55% Probability
$110,000 ve Impact
No impact
Not Fit
Fit
$197,500=(0.25 x 90000+0.75 x 0+$175,000)
Not Fit
Fit
$210,500=(0.55x110000+0.45x0+$150,000)
$22,500
$60,500
BUY
$175,000
MAKE
$ 150,000
Exampl e
Application of EMV in Decision Tree Analysis
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Monte Carlo Simulation
Monte Carlo simulation used to show a large number
of possible project outcomes. Gives a complete
picture and what-if scenarios
Project performed many times using di fferent
durations for activities
Provides a statisti cal distribution of the results
Correlation between different activities and activities
very crucial for the projects duration are highlighted
Two important outputs are histograms and
Cumulative probability charts or S curves
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Monte Carlo Simulation
Project Simulation
50
160
275
300
120
70
25
0
50
100
150
200
250
300
350
55 65 75 85 95 105 115
Project Duration
N
o
.

C
o
m
p
l
e
t
e
d
Frequency
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Probability of Completing on Time
0
0.2
0.4
0.6
0.8
1
1.2
60 70 80 90 100 110 120
P
r
o
b
a
b
i
l
i
t
y
Days to Complete
Project Simulation
Probility to complete
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Risk Response Planning
Identify a responsible owner for the risk
Select most appropriate response method
for the risk cost effective, timely, realistic
Keep track and record in a Risk Register
Develop proactive action plans to deal with risks
reduce threats, enhance opportunities
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Risk Response Strategies
Risk Response Strategy Effect of Response
Threats or Negative
risks
Avoid
Remove root cause.
Eliminate from project
Transfer
Third party financially
responsible
Mitigate
Reduce Probability or
Impact or Both
Opportunities or
positive risks
Exploit
Remove uncertainty to use
opportunity
Share
Make third party owner-
better equipped
Enhance
Increase positive Impact or
Probability or both
Threats &
Opportunities
Accept
Accept the risk. Keep a
contingency reserve
Unclear but threat
more likely
Contingent
Response
Execute if required
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Other Risk Response Strategies
A Fall Back Plan is developed by the team, if response strategy is
found to be not effective. (Plan B if Plan A fails)
Secondary Risk is the risk arises due to implementation of original
risk response plan. Team shall review any possibility of secondary
risk while finalizing risk response strategy.
Residual Risk is the risk that will remain even after implementation
of risk response strategy (No 100% Solution) (Insurance will cover
hospital charges for an accident but what about the disability?)
Risk Trigger is an indication that risk is imminent and risk owner will
Initiate response plan (Contingency). EVM calculations shows low
SPI indicating possible project delay.
Workaround Finding a way out of a situation when an unidentified
risk has already occurred. Too many workarounds (fire fighting)
shows lack of Risk Management.
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HR Management
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2014 CEPM
Organization Structures
Three main types of organization structures:
Function or Line most common. Is
traditi onal hierarchical structure.
Matrix weak matrix, balanced matrix and
strong matrix. PMs authority increases
from Weak to Strong matrix
Project or Task Force geared for projects
Projects organizational structure will impact
the roles and responsibilities as well as the
availability of project resources
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Functional Organization
Grouped by function
or department
Each employee has
clear boss
Interdepartmental
communication via
Functional head
Staff & Project lead
assigned part time to
project
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Research
Employee 1
Production
Employee
Marketing
Employee
Finance
Employee
CEO
Research &
Development
Production Marketing Accounts & Accounts &
Finance
Research
Employee 2
Research
Employee 3
Production
Employee
Production
Employee
Marketing
Employee
Marketing
Employee
Finance
Employee
Finance
Employee
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Advantages
Best for routine operations, occasional projects
Better technical control
Broad manpower base, flexibility
Communication channels good
Easier budget, cost control
Better functional support / technical base
Functional Structures
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Disadvantages
No direct responsibi lity for project
Cumbersome coordination between
departments
Slow customer response / focus
Stronger group wins
Less innovation
Functional Structures
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Matrix Organization
Staff assigned to
project report to both
Functional and Project
Manager
PM assigned full time
to project
PM and Functional
Managers share
decision making and
authority
Research
Employee 1
Production
Employee 1
Marketing
Employee 1
Project
Manager
CEO
Research &
Development
Production Marketing PMO
Research
Employee 2
Research
Employee 3
Production
Employee 2
Production
Employee 3
Marketing
Employee 2
Marketing
Employee 3
Project
Manager
Project
Manager
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Advantages
PM has good control and authority
Better utilization of resources
Project staff have a home so their career
path secure after project completed
Good for doing both projects & operations
Matrix Structures
PM can commit companys resources
Strong technical base available to projects
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Disadvantages
Matrix Structures
Dual reporting system two bosses PM and
Functional manager
Conflicting / changing priorities between PM
and Functional manager
Multidi mensional work & information flow
Structure more difficult to implement
Needs more top management involvement
initially
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Projectized Organization
Projects main work of
organization and
structure geared for
projects
All staff report to PM
PM has complete
authority and
independence
Project work given
maximum importance
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Team
Member
Team
Member
Team
Member
CEO
Project
Manager 1
Project
Manager 2
Project
Manager 3
Team
Member
Team
Member
Team
Member
Team
Member
Team
Member
Team
Member
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Advantages
PM has complete functional authority over
project
All resources available to PM as and when
needed
Good communication channels
Fast reaction time
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Duplication of effort, resources, facil ities
People retained unnecessarily after project as
they may not have another project
Technical base less strong as no line
department looking out to maintain skills
Slower career growth
Disadvantages
Technical skill and knowledge
remains in same group
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Roles and Responsibilities
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Responsibility Assignment Matrix (RAM)
To show project Roles & Responsibilities
Who will do what work
Level of responsibility
Rows indicate the activities
Columns identify the positions, or names
WBS & OBS( Organization Breakdown Structure)
combined to develop the RAM. WBS shown down left
hand side and resources from OBS across the top of
the matrix.
Weakness - Responsibil ity Matrix does NOT show when work will
be done, how much time wil l be taken nor how peopl e wil l interact
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Responsibility Assignment Matrix (RAM)
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Responsibility Assignment Matrix using a RACI chart
Persons
Activity
Define
Ayan
Develop
Test
Design
R = Responsible A = Accountable C = Consult I = Inform
Druv Mira Krish Sara
A
A
A
A
R
R
R
R
I
I
I
I I I
I
I
C
C C
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2014 CEPM
Developingthe Project Management Plan
Delivering the project on time, within budget
and meeting required specifications
Managing stakeholder expectations
Integrating, controlling & coordinating the project
Developing and motivating team, resolving conflicts
Monitoring & controlling all aspects of project
PM - Role & Responsibilities
PM is overall responsibl e for the project and its
day-to-day management such as:
Communicating with all stakeholders
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Responsible for defining the investment aims of
the project and achievingthe business benefits
Arranges funding for the project
Sponsor - Role & Responsibilities
Sponsor Authorizes the Project.
Authorizes PM to use resources.
Is the primary risk taker in the project
Links the project with the on going business
Provides top management commitment to project
Appoints the Project Manager
Determine the priority between time, cost, quality
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Maintain the harmony and unity of the team
Perform the work they are assi gned
responsibly
Be open and forthright
Be innovative in getti ng the work done
Discuss any problems before they get out of
control
Team members
Actually perform the work. They should:
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Team Performance
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Group of individuals that share common:
What is a team?
Objective and identity
Values
Norms
Standard of behavior
Commitment
Loyalty
Diversity
Team Performance
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Forming
Storming
Team Formation Stages
Team members only moderately effective as they lack
a common aim, are hesitant and unsure of each other
PMs role (Directing) - give direction, build common
grounds, help members to understand each other
better . (high direction , low support)
Differences and hostilities surface between team
members leading to arguments, different opinions,
personality conflicts, formation of groups /sub groups
PMs role (Coaching) - motivate and educate team
members, clarify project goals and manage team
conflicts .(high Direction ,high Support)
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Norming
Team members start developing an identity and
set of norms and values.
Better understanding and communication among
team.
Issues become more important than individuals
PMs role (Supporting) - resolve issues that came up,
define and assigning team roles and responsibilities
(Low Direction but high Support to bolster confidence
and motivation)
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Mourning / Adjourning
Performing
Team becomes high performing team - members
understand and appreciate each other.
Team works effectively as a resourceful, focused,
cohesive force with a united aim. Problems tackled
more confidently and innovatively
PMs role (Delegating) - maintain performance by co-
coordinating and controlling the work, appraise
performance, delegate work, acknowledge good work.
(Low Direction & Low Support )
Team disbanded - some persons happy some sad
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Good Team Attributes
Imaginative
Trust
Respect
Innovative
Clear roles
Supportive
Adaptive
Result oriented
Committed
Team Performance
Hiding facts
Personal agendas
No clear direction
Lot of rework
Blame culture
Self centred
Unresolved
conflicts
Poor team attributes
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For effective team PM should:
Clarify individual role and responsibilities
Delegate to appropriate person
Expect and resolve conflicts at the earliest
Encourage diversity
Build a team identity
Team Formation
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Managing team conflicts
Five main methods to resolve conflicts:
Withdrawal
Smoothing
Compromising
Forcing
Confrontation
Conflict Resolution Techniques
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2014 CEPM
Withdrawal / Avoiding
Retreating or withdrawing from an actual or
potential disagreement/conflict
No action is taken by the disagreeing parties.
Does not solve the problem
PM can use this method for conflicts over
trivial issues, to lessen tension or when
resolving the conflict could increase other
problems
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Smoothing
Emphasize areas of agreement and play down
areas of disagreement
Keeps the atmosphere friendly and less stressful
in teambut does not solve problem
PM can use this method to encourage a team
member and help him/her to grow by learning from
own experience
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Compromising
This method uses a give and take attitude
Both parties need to make some trade offs so
neither party can win (Lose-Lose)
Gives some satisfaction to each concerned party
but not ideal solution
PM can use to resolve a conflict in team
temporarily to avoid delays in work, or in making
concessions when negotiating for contracts
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Forcing
Uses authority to exert ones viewpoint at the
potential expense of another
PM uses his power and authority to force a solution
Should be used as a last resort as ill feelings are
likely to return as a problem
PM can use forcing to make quick decisions in
crucial or urgent situations or when he wants a
specific solution to be used
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Confrontation / Problem Solving
The issue kept as focus not the individuals.
Affected parties try to resolve their disagreements
by directly facing the conflict
Most direct and objective approach that pinpoints
the problem
It provides a final solution to the conflict
PM can use confrontation method when team is
mature
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Leadership
And
Motivation systems
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Effective characteristics of Project Manager
Leader
Committed
Goal oriented
Communicator
Supportiveto team Creative
Integrator
Budget conscious
Sees overall picture
Independentthinker
Decisionmaker Flexible
Leadership
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Leadership styles that a PM can foll ow are:
Autocratic - Keeps tight control over staff and dictates what should
be done (like a king)
Laissez faire - A form of non-management. No one is in charge.
Democratic - The project manager consults team members but
decides on the best course of action.
Bureaucratic - Lots of rules, regulations and procedures.
Directive - Specifies what to do and how to do the work and
supervises the work closely.
Supportive - Encouragement, praise and positive feedback to
motivate.
Leadership
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Some key Motivation Theories are:
Maslow's Hierarchy of Needs Theory
Herzbergs Two Factor Theory
Motivation
McGregor's Theory X and Y
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Developed by Abraham
Maslow in 1943
There are five basic human
needs that must be fulfilled
to motivate peopl e
Behaviour of all persons
including project team members
governed by their personal needs
Needs have to be met from
lowest level to highest level
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Physiological needs - air, water,
food, shelter, clothing
Safety/security needs Job security,
Stability, Freedom from Physical Harm
Social needs Love, Affectionate
relationships, Friends, Social status
Esteem/recognition needs Accomplishment,
Respect,, Attention, Appreciation, Self worth,
Self Actualization Self-fulfil lment, Growth,
Creativity, Learning, Developing potential
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Hygiene factors and Motivators
Both are independent and affect persons
differently
In 1960 Frederick Herzberg identified two
separate categories of need and motivation
Hygiene factors necessary for persons to
avoid becoming dissatisfi ed and de-motivated
with their job
Motivators necessary for persons to be
motivated
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Hygiene factors
Motivators
Company policies
Peer, subordinate,
superior relationships
Working conditions
Salary
Personal life
Status
Security
Achievement
Recognition
Work content
Responsibility
Professional growth
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Theory X - average workers are lazy, lack motivation
and ambition, will avoid work unless supervised.
Managers who believe in this tend to be authoritarian and
suspicious. They impose tight organizational structures, rigid
rules/policies, and strict supervisory controls because they
believe that subordinates lack a sense of responsibility.
Theory Y Workers are self-motivated, creative,
imaginative, committed.
Managers provide more freedom and the opportunity to participate
in planning and decision making. They emphasize opportunities for
development and growth.
McGregors Theory X and Y
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Communication Management
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Communication can be:
Oral
Written
Non Verbal (Body language)
Communication
Effective communication requires:
talking
writing
listening
Message Impact on the receiver:
7% words +38% vocal tone +55% non Verbal. Besides vocal
tones and facial expressions, gestures, gender, and dress can also
infl uence the impact of a verbal message.
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Communication Requirement Analysis
Complexity of communication channels - A project with N number of
stakeholders has N(N-1)/2 possible channels of communications
A key component is communication planning is to determine who will
communicate with whom and who will receive what information.
Communication Technology
As part of communications planning, the project manager should
identify all of the required and approved methods of communicating.
Communication modalities include meetings, reports, memos, e-mails
etc.
Communication
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Communication Models :
Encode - Translate thoughts or ideas into a language that understood
by others
Message and feedback message - The output of encoding Medium -
The method used to convey the message
Noise - Anything that interfaces with the transmission and
understanding of message (Distance, unfamiliar technology etc)
Decode - To translate message back into meaningful thoughts or
ideas
Communication
Medium
Sender Receiver
Encode
Decode
Decode
Encode
Message Noise
Feedback-Message
Noise
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Communication Methods :
Interactive communication - Between two or more parties in
multidirectional (phone calls, meetings, interviews). Most effective
way.
Push communication - Sending specific information to specific
recipients. Examples are letters, memos, e-mails, faxes etc. This
ensures that message is sent but will no certainty that it is actually
received or understood. (Push the message to recipient)
Pull communication - Used for large volume of information and large
audiences. Examples are internet sites, company data bases, e-
learning etc. Recipient has to access the communication content (Pull
out information) at their own discretion.
Communication
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Project Manager communicates with:
Upper management, Sponsor
client to ensure conti nued
support
Team members to solve their
confli cts, motivate, train,
supervise them, co- ordinate
activities
Other departments, co-workers,
users
Direction of Communication
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Amount of information. Provide sufficient information but avoid
overload. Follow the principle of KISS (keep it simple and short).
Lack of subject knowledge. Acquire a thorough knowledge of your
subject matter, and ascertain what your audience's knowledge level
of the subject might be.
Cultural differences.
Organizational hierarchy. Minimize difficulties associated with
status and ego in the organization. Create an atmosphere of
openness and trust by talking with, rather than down to, people.
Number of links. Reduce the number of transmission links. The
more links there are in the chain, the more opportunities there are
for distortion to creep into the message.
Communication Barriers
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Perceptions. Both the sender and the receiver may have their own
perceptions about each other's knowledge and skills.
Message competition. Communicate only when you have the total
attention of the recipient, otherwise your message will be competing
with whatever the other party is preoccupied with at that time, either
mentally or physically. Try to minimize noise or other factors
contributing to message interference.
Project jargon and terminology. Define the project terminology
used in messages. Project team members (collectively) should try to
use words in the way the receivers use them.
Selective Listening and Hidden Agenda
Communication Barriers
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Project budget information
Schedule Action items
Earned Value performance
Change requests that are made/accepted
Performance reports variances from EVM
Status reports - current standing of the project
Reports
Some Project Reports
Progress reports - accompl ishments of team
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Procurement
Procurement is
acquiring of goods and services
required for the project from outside the
performing organization
$
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A Contract must have following 5 elements :
Offer proposal is an offer made by Seller.
Acceptance agreement by the buyer to the terms . It must be
communicated and be mirror image of the Offer. If buyer changes
the offer and sends back to seller it is called Counter-offer.
Competent Parties The contract must be between 2 competent
parties who represent separate legal entities. Competency may
mean having authority .Internal contracts are not legally enforceable
but may be used to mitigate risk.
Mutual Consideration Something of value that will be exchanged
between the parties.
Legality of Purpose the intent for which the contract is made
must be legal.
What is a Contract?
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Procurement Planning
1. Planning for the procurement
2. Identifying prospective sellers
3. Prepare and send Procurement documents e.g.
RFP,RFQ to prospective sellers
4. Reviewing the seller responses
5. Selecting the sellers
6. Administering the contract
7. Closing the contract
Procurement involves following steps:
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Procurement Steps
Determining what to procure and when to procure
The scope of work required in each contract
1. Planning for the procurement
A Make-or-Buy analysis to assess if required
goods or services can be made in-house or will
have to be procured from outside the organization
Detailing out the work required to be done by
seller - contract statement of work
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Procurement Steps
Identify all the potential sellers of the required
procurement
Determine and finalize an evaluation criteria
for selecting appropriate sellers
2. Identifying Prospective Sellers
Compile relevant documents for sellers
- bids, offers, proposals (RFP ,RFQ)
- work details,
- seller evaluation criteria,
- response forms, procedures
- proposed contract terms and conditi ons
3. Send Procurement Documents
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Procurement Steps
Responses from prospective sellers are
evaluated against the pre-determined criteria
An evaluation criteria is finalized for selecting
sellers
4. Reviewing the seller responses
Seller is selected to fulfill procurement needs
after negotiation between buyer and seller
5. Award process i.e. selecting the sellers
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Procurement Steps
Contract is administered by the buyer for:
- changes
- project progress
- check contractor meeting cost, schedule and
quality requirements
Buyer uses EVM , reports, meetings, quality
checks, performance reviews and audits for contract
administration
6. Administering the Contract
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Procurement Performance Reviews: A structured review
of sellers progress with respect to procurement
statement of work. Identify performance success/failure
Inspections & Audits: Conducted during project
execution to verify compliance in sellers process and
deliverables.
Performance Reporting: Get Information about how
effectively the seller is achieving contractual objectives.
System to Manage Records: Used to manage contract
and procurement documentation and records.
Procurement Steps
6.Tools and Techniques for Contract Administration
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Payment Systems for contractor:
- Payments processed by buyers account payable
system as per contract terms
- Payment should be done after certification of
satisfactory work delivered by the seller
Procurement Steps
Administering claims:
Contested Changes (also called claims, disputes or
appeals) where buyer and seller cannot reach an
agreement on compensation for changes made
Settlement of all claims and disputes through
negotiation is preferred method
Otherwise handled as alternative dispute resolution
(ADR) procedures established in contract
6.Tools and Techniques for Contract Administration
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6. Tools and Techniques for Contract Administration
A Contract Change Control System: Is the process
by which contracts can be modified
This includes:
Paper work
Tacking systems
Dispute resolution procedures
Mutual Consent
Approval level
Procurement Steps
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Procurement Steps
Get a formal acceptance from buyer
Deal with any pending contract issues/claims
Update each contract file
Record the lessons learned from each contract
for future use and learning
7. Closing the Contract
Formal contract closeout is necessary to verify that
all the work and the contract deliverables are
acceptabl e to the buyer
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Procurement audits
Using records management system
Negotiated Settlements: In all procurements the final
settlement of all outstanding issues, claims, and disputes by
negotiations is a primary goal.
Whenever settlement cannot be achieved by direct
negotiation , some form of alternative dispute resolution
(ADR) including mediation or arbitration may be explored .
When all else fails, litigation in the courts used - is the least
desirable option
Procurement Steps
7. Closing the Contract is carried out using:
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Procurement Audits
A structured review done to assess whether
procurement processes followed were suitable
Audit should cover the entire procurement
process including contract administration
Procurement areas that can be improved are
identifi ed and the process can be improved with
lessons learned in future projects.
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Choosing The Type of Contract
Selecting appropriate contract is essential for
successful contract performance
Type of contract chosen will determine the cost
and performance risks placed on the contractor
and will impact his performance
The amount of monitoring required by buyer wi ll
depend on type of contract selected
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Type of Contracts
Fixed Price contracts
Cost Reimbursable contracts
Time and Material contracts
Three broad categories of contracts
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Type of Contracts
Fixed Price (FP) or Lump sum contracts
Can have a Fixed Price contract known as
Fixed Price Incentive Fee (FPIF) where seller
is given an incentive by Buyer for exceeding
required performance
Seller understands total work required and
quotes a price inclusive of his profit margin
Maximum risk faced by seller
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Fixed Price Contracts
Fixed Price Incentive Fee (FPIF)
Buyer agrees to pay seller a Fixed fee PLUS an incentive /
penalty based on performance. Very similar to Cost Plus
Incentive Fee except that FPIF has a Ceiling Price or
Maximum Payout
Fixed Price with Economic Price Adjustment (FP-EPA)
Used whenever the sellers performance period spans a
considerable period of years.
Has special provision allowing for predefined final adjustments
to the contract price due to inflation, changes, or cost increases
/ decreases) for specific commodities.
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Type of Contracts
Buyer cannot give a detailed CSOW
Required when project is uncertain and
difficult for contractor to estimate a fixed
fair price with sufficient accuracy
End result to be achieved is clear but
work required to be done not very clear
Contractor faces minimum risk is
only required to use his best effort
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Type of Contracts
Cost Plus Percentage of cost contracts (CPPC)
- Actual costs incurred are reimbursed to contractor
- Contractor fee is paid based on a percentage of the
costs that were actually incurred
Cost Plus Fixed Fee contracts (CPFF)
- All allowable cost actually incurred for performing the
work is reimbursed to the contractor
- Contractors fee is given based on a previously fixed
amount
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Cost Plus Incentive Fee CPIF contracts
The buyer reimburses the seller or contractor their actual
cost incurred plus a fee plus an incentive / penalty for
good / bad performance.
Both buyer and seller share the cost savings by the
contractor.
If cost exceeds, contractor is penalized.
A sharing formula between the Buyer and Seller is
decided in contract for awarding of incentive and
penalty.
Contractors fee is limited by a Maximum Fee and a
Minimum Fee
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Target Cost: Costs likely to be incurred by contractor in
providing the contracted product or service. Basis to measure
the final costs incurred by the contractor.
Target Fee: The value of profit contractor expects from the
contract. Is generally included in the contract.
Target Price: This is the Target Cost + the Target Fee
Share ratio: A prefixed ratio for sharing the cost savings /
penalty between the buyer and contractor
Maximum & Minimum Fees: The maximum & minimum fee
that can be made by contractor used only in CPIF contracts.
Ceiling Price/Price Ceiling: FPIF contracts only. Maximum
payout by owner for all actual costs + contractor fee. Contractor
to meet all costs above this limit
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Terminologies in CPIF & FPIF Contracts
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FPIF and CPIF Contracts
Final Price of contract = Actual Cost + Contractor Fee
Contractor Fee = Target Fee + Incentive
Incentive = (Target Cost - Actual Cost) X Sellers Ratio
If Actual Cost is less than the Target Cost then Contractors
Fee is increased by the Share Ratio
If Actual cost is more than the Target Cost then contractors
Fee is reduced by the share ratio
CPIF: Contractor fee governed by Maximum & Mini mum fee.
Actual costs full y reimbursed
FPIF: Contractor fee + Actual costs governed by Ceiling Price
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FPIF and CPIF Contract
Final Price = Actual Cost + Target Profit (Fee) +
Incentive
Incentive = ( Target Cost Actual Cost) X Sellers
Ratio
Contractors Fee= Target Profit + Incentive
In FPIF : Final price =< Ceiling Price
In CPIF : Min Fee =< Contractors Fee =<Max Fee
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Type of Contracts
Time & Material contracts
Fixed rate pai d for services rendered
Based on completing a fixed amount of
work earlier agreed to by seller and buyer
Cost of materials reimbursed to
contractor by buyer
Seller paid depending on time taken to
complete this fixed work
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Stages of Negotiation
Protocol - Get acquainted, create a collaborative atmosphere.
Probing - Negotiation starts through verbal communication. Non-
verbal components such as eye contact, gestures, vocal tones,
postures, etc., also become meaningful. Both the parties start to feel
each other out. They try to identify weaknesses and areas of shared
interest.
Rough bargaining - Know your points and issues and go after them
with confidence and assertiveness.
Closure - The issues of cost, schedule and performance are settled
during this stage.
Agreement - Reaching an agreement is the final goal of negotiation.
During this stage, discussions take place about when and where
work will start and how performances will be measured etc.
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Negotiation
Cooperation, common interests, reliable behaviour and
satisfaction of needs are some common factors in any
negotiation.
Effective Negotiation relies on Trusting Collaboration
between the parties.
Mutual Trust and an atmosphere of Collaboration ensures
both relationship is maintained and substantive
outcomes are achieved.
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250
Integration Management
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Change Control Process
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Change Control Board (CCB)
The board is given the authority to approve or deny change
requests as defined by the organization.
The CCB may meet only once a week, once every other
week, or even once a month, depending on the project.
When emergencies arise, pre-established procedures allow
the project manager to implement the change on the spot.
CCB members may include stakeholders, managers,
project team members, and others who may not have any
connection to the project at hand.
Some other names for CCB are technical assessment
board (TAB), technical review board (TRB) and engineering
review board (ERB)
Change Control Process
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Some of the common reasons for Changes :
Customer requests
Events external to the project e.g. a new regulation
Error or omission in defining the scope of the product
Engineering design changes due to omission, redesign,
improvements etc. that may/may not alter project deliverables
Changes that add value to the project e.g. taking advantage
of latest technical innovation that was not available earlier
Scope of the project not defined fully
Lack of due diligence / proper planning
Change Control
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Configuration management should be applied throughout the project
life cycle.
To manage the configuration management the relevant process can
be broadly classified into four key steps:
Configuration Identification
This step uniquely identifies all the items in the configuration. The
rules for numbering the items and sub-items are also set.
Configuration Change Control
A system is developed to manage changes in the configuration
items identified earlier.
( The approval or rejection of the proposed change is part of change
control )
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Configuration status accounting
This is done to maintain full traceability of the changes made. A
history is kept of all changes made in the configuration item as
well as of the current status.
Configuration auditing
This is done to ensure what is delivered is same as requested.
Auditing ensures conformity is maintained between the
specifications and the items in the configuration.
Audit is done on two fronts - to ensure that the designs are same
as the as built as well as to ensure that the function and
performance criteria are met.
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Integration
Ensuring Conformance: During integration phase completed
work packages must be checked to ensure their conformance to
quality considerations and performance specifications
Integration has two components - Project integration and Product
integration.
Project integration - outlines the different project
management activities to be performed to integrate the
project deliverables.
Product integration - discusses the integration of the
different components and subcomponents to have a
complete product or service.
Integration ensures different elements of the
project are properly coordinated
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Balancing projects competing constraints: Scope, time, cost,
quality , resources and risks.
Change Management through proper Integrated Change Control
Process
Updating Project Management Plan , Project Documents and
Baselines
Manage Variances and Issues through Corrective and Preventive
Actions
Manage Stakehol ders through proper reporting and communications
Properly Close Contract and Project
Project Integration
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Sequence for Product Integration
The product integration sequence provides support in incremental
assembly and evaluation of the product components.
Sequencing of components integration can be decided on the basis
of some of the following factors:
Functionality of the components.
Customers need or priority
Components dependencies
Resource availability
Technical complexity
Sequence of integration is considered while developing the project
management plan and incorporated in project network diagram and
consequently into the project schedule.
Product Integration
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Issue Log/Register
An Issue Log/Register is an effective communications
tool for formally tracking the status and resolution of
issues as they arise.
Issues arise from interactions among stakeholders
Actively managing issues is an effective way of managing
stakeholders in a controlled environment.
The use of this communication tool encourages constructive
discussion, assigns ownership, and demonstrates to
stakeholders and team members that issue management is
important to the project.
An unresolved issue may cause conflict and
disagreement that will undermine project performance.
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S.
No
Issues Id Issues Descriptions
Complexity
Scale
1-10
Severity
Scale
1-5
Pending
Issues
(in days)
T
CSPI
1 Issue 10
Requirement for Graphic User
Interface not fully identified & frozen
9 5 23 1035
2 Issue 8
Team member responsible for
design left job, new hire not done
6 4 30 720
3 Issue 18
Test equipments being shared with
other projects
5 4 15 300
4 Issue 30
Performance issue on graphics
display is reported by customer
6 4 4 96
5 Issue 29
Meeting with stakeholders to define
quality requirements still open
7 3 4 84
6 Issue 23
Quality audit carried out
3 4 6 72
Issue Register
Where T
CSPI
is the Total Complexity, Severity, Pending Index
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Problem Solving
Problem Solving essential in projects. Steps for
Problem Solving includes:
Identifying / Defining the probl em
Analyzing the probl em
Looking at Alternatives Find all possible solutions
Selecting a possibl e solution Select the one which
best suits your goal
Implementing selected solution Take action
Evaluating Find out the effectiveness of the solution
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Health, Safety, Security & Environment
It is important in projects to:
Ensure the health, safety and welfare of the work force
Control use and storage of dangerous substances
Control emissions of offensive substances in the
atmosphere
Protect other people from danger arising out of
activities of persons at work
A Health, Safety & Environment Plan should be made all
projects and enclosed in the Project Management Plan
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Some important laws are the:
Factories Act, 1948
Environment (Protection) Act, 2007 for the protection
and improvement of the environment.
Indian Boilers Act, 1923, which regulates working of
boilers and ensures the safety of the plant and workers
from the danger of explosions of these vessels.
Dock workers (Safety, Health and Welfare) Act, 1986
Mines Act, 1952
Building & Other Construction Workers Act, 1996
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Occupati onal Health and Safety Administration (OSHA)
Bureau of Indian Standards has formulated an Indian
Standard on OH&S management systems. It is called as
the IS 18001:2000 Occupational Health and Safety
Management Systems. (OHSMS)
Environment Management System (EMS)
ISO 14001 is the internationally recognized standard for
the environmental management of businesses. It
prescribes controls for those activities that have an effect
on the environment. These include the use of natural
resources, handling and treatment of waste, and energy
consumption.
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All three - contractors, suppliers and client work closely
to accomplish a successful hand-over and close-out.
The projects final product, service, or result has to
be accepted and the handed over to the
organization.
This usually requires a formal sign-off and, in the
case of a project performed on contract, definitely
requires a formal sign-off or receipt indicating
acceptance of the project.
PM must keep handing over requirements through the
project to ensure they are all met
Deliver and Closeout
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Scope Verification before Delivery
Deliverables to be verified by customer for acceptance
Step 1: To verify completed deliverables properly
completed and are correct use:
Project. Management Plan as it contains the scope
baseline (Scope Statement + WBS + WBS Dictionary)
Requirements Documentation
Step 2: Customer should conduct Inspection, Testing,
Measurement and Audits to check deliverables
Step 3: Deliverables not accepted to be corrected through
actions like Rework, Defect Repair, Preventive &
Corrective actions.
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Project closeout activities covers:
Formal Acceptance Documentation of the accepted
deliverables
Final Project Files , Documents & Records updated
All Contract files to be updated and closed
Historical Information & Lessons Learned recorded for
future learning
Releasing Resources
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Project Files , Documents and Records at closeout
may include:
As-built designs/drawings details
Technical /user Manuals for O & M activities
Comparison of final costs/benefits for future projects
Record of technical achievements for future projects
Schedule and cost variance reports
Comparison of resource estimates made and used
Quality reports
Contract/owner complete correspondence
Material reconciliation
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Lessons Learned
Lessons learned captures all the things that have been
learned by the project manager and the project team
members during the life cycle of the project.
Lessons learned become important assets of the
organization. They form a bank of information for use by
future projects.
Making use of lessons learned has always been
recommended in almost all the different areas of
modern project management.
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Thanks for being a great audience!!!
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135
Organised by
Centre
CL A SS EXERCI SES
136
for
Three Day Workshop
on
7 - 9 April 2014
Aurangabad
for
CIPM Class Exercise - Set 1
(Project/program/Operations/PLC)
Centre for Excellence in Project Management (P) Ltd, 2014 137
1 Which of the following is not a project characteristic?
a. A temporary endeavour
b. Limited availability of resources
c. Fixed end date
d. Managing repetitive work
2 The term Programme, in the context of project management refers to:
a. A large number of projects being executed simultaneously
b. A large number of people involved in projects
c. A group of projects related to a common objective
d. Projects implemented across many locations
3 Which is not an advantage in using project management to manage your project?
a. Better risk management
b. Improved estimates
c. Pro-active monitoring of the project
d. More flexibility in the projects end date
4 What is NOT a common feature between projects and operations?
a. Are performed by people
b. Have limited resources
c. Sustain the existing business
d. Need to be properly planned
5 All of the following statements are true except:
a. Cost to make changes in the project will increase with time
b. Cost to make changes in the project will decrease with time
c. Project management uses hard and soft skills
d. Project management skills are ideal for managing change
6 A Programme Manager is responsible for:
a. Interaction between team members in a project
b. Writing the lessons learned report for the project
c. Establishing the interdependencies among a number of projects
d. Developing the Project Management Plan
7 A project is characterized by:
a. Repetitive ongoing work
b. A unique and temporary endeavour
c. Having a definite beginning and end
d. b and c
8 When will uncertainty be highest in the project?
a. Depends on the project
b. At the end of the project
c. At the beginning of the project
d. Throughout the project
CIPM Class Exercise - Set 1
(Project/program/Operations/PLC)
9 The sequence of phases through which the project progresses is known as:
a. The Project Life Cycle
b. Project Gates
c. Milestone charts
d. Critical path of the project network
10 What is NOT true of project phasing?
a. It allows for most efficient use of resources
b. It splits projects into stages
c. The duration of each phase is fixed for all projects
d. An end of phase review acts as an evaluation and approval point
11 Project phasing is done to:
a. Overlap project work to save time
b. For better access of project by team members
c. Break down project into more manageable blocks
d. Break down the project finances
12 Each project phase will have:
a. Some specific deliverables
b. Key activities requiring specific type of resources
c. Related sequences and types of activities
d. All of the above
13 Operations are related with all the following except:
a. Repetitive work
b. Maintaining the plant
c. Regular manufacturing in a car company
d. Introducing a new product range
14 The programme manager will normally do all except:
a. Focus on long term goals
b. Focused on company strategies
c. Focused on the project work
d. Prioritize use of resources across projects
15 Fill in the blanks from the following:
Project; Programme; Project Management..; Operations.
a. Routine
b. Temporary
c. Common objective
d. Structured processes
CIPM Class Exercises - Set 2
(Stakeholder/Need Analysis/Business Case/Charter)
1 Which statement best fits a stakeholder definition?
a. The contractor, sponsor and project manager
b. Anyone who is a part of the project, has interest in it, or is impacted by it
c. The customer
d. The project team
2 Stakeholders can exert a ___________ or ____________ influence on project.
a. Good, bad
b. Negative, positive
c. Strong, hard
d. None of the above
3 A stakeholder analysis should be carried out to do all except:
a. Identify the different needs of the stakeholders
b. Understand which needs must be met
c. Find requirements that can be avoided
d. Analyze stakeholder interests and their impact
4 The Business Case addresses all of the following except:
a. Business justification for taking up the project
b. The network schedule
c. Key performance indicators
d. Projects success criteria
5 The Business Case would not consider:
a. Social and environmental impacts of the project
b. The key deliverables
c. Details of investment appraisal
d. Detailed analysis of risks facing the project
6 Developing the Business Case is the normally the responsibility of the projects:
a. Sponsor
b. CEO
c. Project manager
d. Project manager & the project team
7 The projects requirements will be driven by the:
a. Bankers
b. Customer
c. CEO
d. Project Manager
8 The Need for a new project can arise to meet:
a. New opportunities
b. Need for survival
c. Threats
d. All of the above
(Stakeholder/Need Analysis/Business Case/Charter)
9 The primary role of the Project Charter is to:
a. Authorize the project manager to use resources for project work
b. Analyse all the investment options
c. Develop the projects need statement
d. All of the above
10 Success criteria:
a. Are only the qualitative measures used to measure project success
b. Are qualitative and quantitative measures used to measure
project success
c. Form the baseline of the project
d. Are set by the Project Manager
11 Which of the following is a method used for investment appraisal?
a. Net Present Value
b. Unit rates
c. Negotiation
d. Parametric estimating
12 Arranging finance for the project forms a part of the:
a. Contract
b. Business case
c. Project Management Plan
d. Project strategy
13 Internal Rate of Return for a project will be achieved when the:
a. Projects IRR is higher than the cost of borrowing capital
b. The profitability is positive
c. Projects cash flow equals the investment made
d. Discount rate applied makes the NPV zero
14 An investment appraisal method that checks when cumulative cash flow becomes
equal to the initial investment is known as:
a. IRR
b. Discounted cash flow
c. Payback period
d. Financial closure
15 Some of the most important documents used in Project Management are 1) Project
Charter 2) Business Case 3) Project Management Plan. The correct order in which
they are generated over a period of time is:
a. 1,2,3
b. 3,2,1
c. 2,1,3
d. 2,3,1
(Scope Management)
1 The WBS:
a. Breaks down the project in a structured manner
b. Is a task oriented detailed breakdown or family tree for a project
c. Should include the total scope of the project
d. All of the above
2 Who will be involved in preparing the scope baseline?
a. The functional managers
b. The key stakeholders
c. The project team members
d. Customer
3 The scope statement should include all except the:
a. Project deliverables
b. Work Breakdown Structure
c. Details of the work to be done
d. Acceptance criteria
4 Uncontrolled changes in the scope is known as:
a. Change management
b. Scope baseline
c. Scope creep
d. Cost creep
5 A new project manager has come on board and wants to get a better understanding of
the different work packages in the project. To do this the project manager should look
at the:
a. Project charter
b. Project network
c. WBS dictionary
d. Scope statement
6 The top level of the WBS is:
a. A work package
b. an activity
c. The project
d. The product
7 Decomposition of project deliverables involves:
a. Identifying the elements of each deliverable
b. Breaking down the major elements into lower levels
c. Verifying the decomposition is correct
d. All of above
8 A work package should have all of the following characteristics except:
a. More than one parent
b. A single owner
c. Start date and end date
d. Some deliverable
(Scope Management)
9 When planning the project, which of the following should be done first?
a. Finalizing the size of the team required for each phase of the project
b. Scheduling of the network activities
c. Developing the Work Breakdown Structure
d. Detailing out the attributes that will be used for inspection
10 A WBS dictionary contains:
a. Work package descriptions
b. Staff requirements
c. Schedule dates
d. All of the above
11 Which document will show to the project team that the project has beenofficially
sanctioned:
a. Project management plan
b. Investment appraisal
c. Need analysis
d. Project charter
12 A significant scope change has been approved in the project. Which document should
you first update?
a. Scope baseline
b. Network schedule
c. Cost baseline
d. WBS
13 The WBS is an effective tool which:
a. Shows the network schedule
b. Subdivides the whole project into small manageable parts
c. Ensures all the project work is identified
d. b and c
14 The Scope statement is not helpful in:
a. Improving communication among stakeholders
b. Earned value calculations
c. Establishing better understanding among team members
d. Detailed planning of the project's WBS
15 The Unique numbers that identifyeach element of the WBS is called
a. Chart of Account
b. Code of Accounts
c. Control Account
d. Work Package
CIPM Class Exercises Set 4
(Time)
1 A network is:
a. A schematic representation of sequential activities in project
b. A sequence of events in the project
c. The critical path for the project
d. Is normally drawn from right to left
2 Your project end date is not acceptable to management. You cannot change the
network but have extra resources. What is your best action to reduce the schedule?
a. Crash the project
b. Fast track the project
c. Perform resource leveling
d. All of the above
3 The total float of an activity is equal to its:
a. Early Finish date plus Early Start
b. Early Finish date minus Early Start
c. Late Start date minus Early Start
d. Late Start date plus it Late Finish
4 Dependencies and precedence relationships are shown using:
a. Milestone charts
b. WBS
c. Responsibility matrix
d. Network diagrams
5 What would you not use to display the project schedule?
a. Bar chart
b. Histogram
c. Milestone chart
d. Gantt chart
6 The critical path is the:
a. Shortest path in the network
b. Longest path in the network
c. Path in which some activities contain floats
d. Path which has the maximum float
7 A Free Float is the:
a. Difference between an activities late start and early start
b. Amount of time an activity can be delayed without affecting Early Start of
any succeeding activity
c. Amount of time an activity can be delayed without affecting Late Start of
succeeding activities
d. All of the above
8 The most commonly used logical relationship is:
a. Start - start
b. Finish - finish
c. Finish - start
d. Lead
(Time)
9 The critical path is the path where activities have:
a. Zero float
b. Maximum float
c. Early Start dates earlier than Late Start dates
d. Lead activities
10 Gantt charts are primarily used to:
a. Show interdependencies between tasks
b. Give an overview of a project tasks against a time scale
c. Show a network of activities
d. Provide guidelines to manage resources
11 You need to complete your project four days earlier. What should you do?
a. Announce a prize if the team meets the new deadline
b. Brainstorm with team members to crash and fast track activities with floats
c. Brainstorm with team members for crashing and fast tracking critical activities
d. All of the above
12 In your project you are using weighted average duration estimates for activity
durations. This means you are using:
a. Critical Chain
b. PERT
c. Leads and lags
d. Late start and late finish floats
13 You need to rearrange the resources in your project so that the cumulative resource
usage in the project does not exceed 25resources /week. What do you need to do?
a. Decrease the float time
b. Reschedule the network
c. Use concurrent engineering
d. Level the resources
14 All of the following are true about a mandatory dependency except:
a. Is also known as hard logic
b. Is inherent in the nature of the work
c. Is dependent on another project
d. Work has to be performed in a specific sequence
15 Crashing the project duration will result in:
a. Increased costs
b. Need for more manpower
c. Decreased costs
d. a and b
(Cost & Finance / EVM)
1 An estimate that gives very preliminary indication of likely costs is called:
a. Definitive estimates
b. Rough Order of Magnitude
c. Parametric estimate
d. Budget estimates
2 The most detailed and accurate cost estimate is made using the:
a. Parametric estimate
b. Analogous estimate
c. Bottom-up estimate
d. Rough Order of Magnitude estimate
3 In a new website to be developed you expect to need about 50 screens. You know that
the cost of developing one screen is $200 so you estimate that the 50 screens will cost
$10,000. To arrive at this figure you used:
a. Parametric estimate
b. Analogous estimate
c. Bottom-up estimate
d. Rough Order of Magnitude estimate
4 A project is running ahead of schedule. In Earned Value reporting this will be reflected
as:
a. Projects BAC =CPI
b. Projects SPI <1
c. Projects SPI >1
d. None of the above
5 All of the following are true of standard deviation except:
a. It is a statistical tool that is used to show dispersion of data from the mean
b. It measures the variability in the data
c. Closer the data examples are to the mean the smaller is the standard
deviation
d. Closer the data examples are to the mean the larger is the standard
deviation
6 The projects schedule and budget together form:
a. The projects detailed budget over the current year
b. The time phased budget or the cost baseline
c. The Earned Value
d. The life cycle cost of the project
7 The cost of electricity in the office where your project team members are sitting along
with other office staff is an example of:
a. Fixed Cost
b. Sunk Cost
c. Direct Cost
d. Indirect Cost
8 If Cost variance is negative then Cost Performance Index will be :
a. Less than 1
b. Greater than 1
c. Equal to 1
d. Less than Zero
9 Schedule variance is:
a. BCWS-BCWP
b. BCWP-BCWS
c. ACWP-BCWS
d. BCWP-ACWP
10 The project duration is 12 months. After 6 months it is found that the projects CPI is
1.5 and the SPI is 0.85. If you are the project manager what action should you take?
a. Concentrate on improving the cost efficiency
b. Concentrate on improving the projects progress
c. Ask management for more money
d. Relax as all is going well
11 At the project review meeting your team member tells you the projects EV is 800, PV
is 850 and the AC is 800.
What would best describe the health of your project?
a. Behind schedule and over budget
b. Behind schedule and on budget
c. Ahead of schedule and under budget
d. Behind schedule and under budget
12 If Estimate at completion is more than Budget at completion at some point in time, then
CPI at that time must be
a. Greater than 1
b. Equal to 1
c. Less than 1
d. Less than zero
13 Project ABC has a total budget of $9 Million and was planned to be completed in 8
months. While reviewing the progress at the end of 3 months, the following data was
presented: PV =$3 Million; EV =$2.5 Million and AC =$3 Million. What is the EAC if
the efficiency will change to 100% from now onwards?
a. $9 Million
b. $8.5 Million
c. $9.5 Million
d. $10.8 Million
14 A project is scheduled to be completed in 18 months. At project review it is found that
the CPI is 1.2. This shows the project will be completed in:
a. 15 months
b. 21 months
c. 18 months
d. Not possible to determine
15 At project completion, the projects Earned Value will be same as the:
a. Budget at Completion
b. Percent complete
c. Actual Cost
d. Estimate to complete
(Quality)
1 Name a Quality tool that lists out defects in the order of the frequency of occurrence is:
a. Crawford slip
b. Pareto chart
c. Histogram
d. Cause-and-effect analysis
2. An indication of excellent quality is:
a. Zero conformance cost incurred
b. Zero quality training cost incurred
c. Lot of field engineers recruited for warranty support
d. Zero non-conformance cost incurred
3 Quality Control refers to process of:
a. Demonstrating that work is being done according to quality plan
b. Monitoring of project results to ensure specified quality is being achieved
c. Preparing, checking and recording actions required to achieve required
quality
d. None of above
4 Prevention over Inspection means:
a. Prevention costs exceeds inspection costs
b. Cost of appraisal, failure and prevention
c. Use correct processes so as to prevent occurrence of defects
d. Prevention is performed after the quality inspection
5 A control chart is used to:
a. Check if process readings are within a specified range
b. Detect the reasons for deviations
c. Help prevent a problem to occur through early warning
d. A and C
6. Pareto analysis is related to the?
a. 80/20 rule
b. 20/80 rule
c. 50/50 rule
d. 85/15 rule
7. In a control chart the upper and lower control limits are generally set:
a Two standard deviations from the mean
b. Three standard deviations from the mean
c. At same level as the specification limits
d. It is changed every time
8. Quality planning involves:
a. Identifying the most relevant quality standards that should be followed
b. Determining actions required to comply with relevant quality standards
c. Monitoring of project results to ensure deliverable meets required quality
d. a and b
(Quality)
9 The Quality Assurance process:
a. Monitors specific results to ensure that they comply with relevant
standards
b. Provides confidence that the work is being performed as per the plan
c. Records actions required to achieve the necessary standard
d. Record all the quality metrics using a checklist
10 A Pareto diagram:
a. Is an S curve based on the cumulative frequency of occurrence
b. Is a histogram depicting the magnitude of frequencies
c. Is a histogram based on the order of frequency of occurrence
d. Shows that 80 percent of the causes produce 20 percent of the problems
11 Which of the following is not a part of quality assurance?
a. Conducting of quality audits
b. Identifying improvements in the process
c. Ensuring defective products are rejected
d. Checking that the process is being correctly followed
12 What best describes the Rule of seven?
a Seven consecutive data points are outside the control limits
b. Seven consecutive date points are outside the specification limits
c. Seven consecutive data points on same side of mean should be investigated
d. Seven consecutive data points within control limits but on same side of the
mean should be investigated
13 Which of the following is not a cost of internal failure?
a Scrap
b. Rework
c. Warranties
d. Repairs
14 Providing required quality in the project can be defined as:
a Conformance to requirements
b Gold plating
c Achieving Six sigma
d Having Zero defects
15 The cost of quality is made up of:
a. Cost of failure and prevention
b. Cost of appraisal, failure and prevention
c. Cost of assessment, appraisal, failure and prevention
d. Cost of prevention
(Risk Management)
1 A Secondary risk is:
a. An unimportant risk
b. A new risk created when responding to a risk
c. A risk with two chances of occurrence
d. A risk a second line of response strategy
2 When brainstormingfor risk identification, it is important to:
a. List out the right and wrong options
b. List out all the unlikely options
c. List out the most likely options
d. List out all possible options
3 Risk probability can be described as:
a. The likelihood and effect of a risk occurring in the project
b. The chances that a similar risk will occur more than once
c. The likelihood of a risk occurring
d. Likelihood that the project will be completed on time, within budget
4 A Risk Score can be defined as:
a. The sum total of the probability times the impact of all the identified risks
b. The total number of identified risks in the project
c. Probability of successful completion of the project
d. The product of the probability of a risk event times its impact
5 When a risk is transferred to another party it reduces:
a. Its likelihood of occurrence
b. Its impact as well as likelihood of occurrence
c. Its impact on the transferor of the risk
d. It has no impact on either party
6 Monte Carlo simulation is used for:
a. Critical path analysis
b. Risk analysis
c. Responding to a risk
d. Risk identification
7 Risk assessment should be done:
a. For all high value projects
b. For all projects throughout the project cycle
c. For all projects at project initiation and close out
d. For projects having contracts
8 Who should be made responsible for implementing agreed risk responses?
a. Whoever is best placed to manage the risk effectively
b. The person who identified the risk
c. The project manager
d. The sponsor
(Risk Management)
9 Assumption analysis:
a. Undertakes a stability analysis
b. Is done to identify risks
c. Undertakes a sensitivity analysis
d. All of the above
10 Risk mitigation is carried out after:
a. Risk identification process
b. Quantitative risk analysis
c. Risk response planning
d. Qualitative risk assessment
CIPM Exercises - Set 8
(Communication/Org Struct /Team/Leadership/Conflict/Motivation)
1 For effective team building, the team members should avoid:
a Common identity
b Shared vision
c Self orientation
d Delegation
2 In order to motivate the project team members, the project manager can:
a. Provide more challenging work
b. Give recognition for good work done
c. Properly delegate work
d. All of the above
3 To manage the project team it is not necessary for the project manager to be a:
a. Problem solver
b. Communicator
c. Technical expert
d. Passionate
4 The project manager believes in keeping tight control over the team working and
dictating what should be done by the team members. This style of management is
. and more suitable for . projects:
a. Bureaucratic, government
b. Directive, low level
c. Autocratic, low risk
d. Laissez Faire, R&D
5 Which of the following conflict resolution method results in a long lasting solution?
a. Forcing
b. Confrontation
c. Withdrawal
d. Smoothing
6 In case of a conflict, who will decide the importance between the projects cost,
schedule and quality?
a. Project manager
b. Sponsor
c. Both the project manager and sponsor
d. None of above
7 When a conflict arises in the project team between two team members the project
managers preferred approach should be:
a. Let the persons involved be responsible to resolve their conflict
b. Try to resolve the conflict as soon as possible
c. Try to resolve it when he has some spare time
d. Avoid getting involved
8 If your boss supervises your work throughout the day to see what you are doing, then
your boss believes in:
a. Theory X management
b. Theory Y management
c. Kaizen
d. Quality circles
9 The lowest level need in Maslows Hierarchy of Needs is:
a. Security
b. Social needs
c. Physiological needs
d. Security needs
10 Herzbergs Two Factor theory looks at the two aspects of and .:
a. Motivators, de-motivators
b. Motivators, hygiene factors
c. Salary, recognition
d. Hygiene factors, social needs
11 Self Actualization is:
a. A Herzbergs Motivation Factor
b. A Management philosophy
c. Maslows second level need
d. Maslows highest level need
12 Which of the following is not true of a projectized organization?
a. The company is organized by projects
b. The functional manager is jointly responsible for the project
c. The project manager has full control of the project
d. Team members report to the project manager
13 An organizational structure that is best suited for doing repetitive jobs is:
a. Projectized
b. Matrix
c. Functional / Line
d. a and c
14 Project staffs have to report to more than one boss in a:
a. Functional Organization
b. Balanced Matrix structure
c. International projects
d. Government projects
15 All of the following are true about the Responsibility Matrix except:
a. Shows when the tasks will be performed
b. Is made using the WBS and the OBS
c. Rows generally indicate the activities
d. Shows the responsibilities or functions
16 Which one of the following communication methods has more message impact on the
receiver:
a. Verbal
b. Written
c. Non-verbal
d. Diagram
17. In your Project Management Training session, the majority of the communication will
be taking place through:
a. Push Communication
b. Pull Communication
c. One way Communication
d. Interactive Communication
18. You are the Project Manager having a teamof 25 Software engineers distributed in 3
geographic locations. Each location is headed by a Assistant PM . No. of
communication channels possible in your project are:
a. 406
b. 378
c. 392
d. 350
19 A Document Distribution Schedule:
a. Lists all documents required for project and who is responsible for producing
them
b. Shows who will receive what document and at what frequency
c. Is included in the Project Management Plan
d. All of above
20 A notification issued by your HRD about flexible working hours is an example of
a. Horizontal Communication
b. Push Communication
c. Informal Communication
d. Pull Communication
CIPM Class Exercise Set 9
(Procurement/Change /Configuration/Integration/Closeout)
1 At contract closeout, a product verification is done to:
a. Verify the product's design
b. To document the seller's work
c. Verify the work completed for making seller payments
d. Ensure that the seller's work is complete and satisfactorily meets all the contract
requirement
2 Configuration management is concerned with:
a. Hiring manpower to perform changes in the project
b. Scheduling when the changes will be required in the project
c. Ensuring the deliverables are according to latest projects requirements
d. B and c
3 You want to outsource some of the work packages, but are not very sure of the exact
nature of the work involved. The most suitable contract in this case is a:
a. Fixed plus incentive fee contract
b. Cost reimbursable contract
c. Time & Material contract
d. Any type is equally suitable
4 What item should be considered when selecting a supplier?
a. Dependability
b. Product quality
c. Location
d. All of above
5 Contract Closeout involves all of the following except:
a. Relocating the team members
b. Formal acceptance of the work by the buyer
c. Updating the contract file
d. Product verification
6 Contract closure should be done:
a. If there is enough time
b. If a contract is terminated before completion
c. At the end of the contract
d. b and c
7 The amount of monitoring of contractor's cost by the PM will vary based on:
a. The value of the contract
b. The type of contract being used
c. The reputation of the contractor
d. The nature of the work being done
CIPM Class Exercise Set 9
(Procurement/Change /Configuration/Integration/Closeout)
8 What is not true of a Fixed Price contract:
a. Is the most commonly used contract
b. Buyer requires to monitor cost incurred by seller
c. Should have clear work specifications
d. Contractor faces more risk than buyer
9 Managing issues in projects is important because:
a. It helps to pinpoint the unresolved issues
b. It helps to understand some of the root causes of poor project performance
c. It helps to build team cohesion
d. All of the above
10 The project is progressing on schedule when the client asks for a change that is likely to
upset the schedule. As the project manager what should you do first?
a. Tell the client the change cannot be implemented and the time is too short
b. Agree to the change and start the working on it with the team.
c. Inform the sponsor of the change request
d. Analyze the impact of the change and follow the change management process
11 A change log is:
a. A record of all authorized project changes
b. A record of all proposed changes, rejected or authorized
c. A record of the people who are creating issues in the project
d. A record of rejected changes with reason for rejection
12 What is true of project closeout?
a. It is the done in the implementation phase
b. Uses the Business case to ensure that all benefits got materialized
c. It does not involve the project manager
d. Check is done to see all work is completed
13 For proper integration within a project:
a. Relationships between sub-projects in the project should be clear
b. Team members must meet daily
c. The sponsor should be actively involved
d. All of above
14 Project integration involves:
a. Efficient use of network schedules
b. Effective coordination and control
c. Making the responsibility matrix
d. Meetings of all the stakeholders regularly
15 Lessons learned documentation is important as they:
a. Help to pinpoint fraudulent activities
b. Hel to conduct a project audit
c. Are most useful in future projects to be performed by the organization
d. All of the above
CIPM Workshop
Class Exercises
Centre for Excellence in Project Management (P) Ltd. 2014 157
NPV - 1
Q. NPV1 Two projects project A and project B are being appraised for investment. The
cash flows for each project are as follows:
Project A in (Rs.) Investment is 20,000
Cash in or Revenue for 5 years is:
10,000; 20,000; 40,000; 45,000 and 60,000 respectively.
Expenses or cash out for 5 years is:
7,000; 15,000; 30,000; 35,000 and 50,000 respectively.
Project B in (Rs.) Investment is 40,000
Cash in or Revenue for first five years is:
20,000; 30,000; 50,000; 60,000 and 70,000.
Expenses or cash out for first five years is:
17,000; 20,000; 35,000; 40,000 and 60,000.
Discount factors for the project appraisal are:
Year Factor
0 1.0
1 .90
2 .80
3 .70
4 .60
5 .50
Determine which project should you opt for?
NPV 2
Q. NPV2 A project is planned in which the capital cost to be incurred is 5,000, the
interest rate expected is 8% per annum and the anticipated annual return or
revenue expected is 1500 each year for a period of 4 years.
2.1 Calculate what the Net Present Value (NPV) will be for this project.
2.2 Will this project be viable or not?
CIPM Workshop
Class Exercises
Network - 1
Q. N1 Shown below are activities with their durations, precedent activities and resources per
day.
Q. N1.1 Draw the Network
Q. N1.2 Determine the Critical Path
Q. N1.3 Determine the project duration
Q. N1.4 List out all activities with total float and give their values
Q. N1.5 List out all activities with free float and give their values
Network 3
Q.N3 Draw the Network using PDM
Activities
Duration
in weeks Dependencies Resources/week
A 4 - 3
B 6 A 2
C 4 A 1
D 8 A 5
E 9 B&D 4
F 12 E 9
G 14 C&D 3
H 3 G 5
J 7 F&H 3
Q. N3.1 Find out the Critical Path
Q. N3.2 List out the Floats
Q. N3.3 List out the Free Floats
Q. N3.4 Draw a Bar chart
Activity Duration (Days) Precedent
Activity/Activities
Resources/day
A 4 - 4
B 2 A 3
C 3 A 2
D 8 C 5
E 3 B 2
F 5 E 3
G 5 C 3
H 1 D, F, G 1
CIPM Workshop
Class Exercises
Network 4
Q. N4.1 Draw the Network using PDM and determine the Critical Path.
Q. N4.2 List out the Floats and Free floats.
Standard deviation
Q 1) There are three activities A, B and C in a network having the values:
Q1.1 Find the Pert duration and standard deviation for A, B and C
Q1.2 Find the standard deviation and duration of the entire Network assuming activities are
in sequence.
Q1.3 What is the time range for the completing the activities and the project at 68%
confidence level.
Activity Duration
(days)
Precedent
activities
(finish-start)
Resources
per Day
A 2 - 2
B 4 - 3
C 8 A, B 5
D 9 C with 5 days lead 5
E 5 C 4
F 3 D, E 6
G 3 D 3
H 1 F, G 2
Activity Optimistic (O) Most Likely (ML) Pessimistic (P)
A 15 20 30
B 10 20 30
C 12 20 29
CIPM Workshop
Class Exercises
Crashing
Activity Predecessor
Normal
time
required
in weeks
Crash
time in
weeks
Normal
cost
Crash
cost
A - 5 3 8,000 12,000
B A 5 4 24,000 34,000
C A 3 2 8,000 9,500
D B 2 1 11,000 16,000
E B,C 6 4 34,000 48,000
F D,E 8 4 30,000 36,000
Q1) If you have to crash the project by 2 weeks, which activity will you choose?
Q2) What will be the cost for crashing the project by 2 Weeks?
CIPM Workshop
Class Exercises
Q. EV1 A project has 4 activities A, B, C and D. At review point (originally planned
completion point) this was the position.
Activity Budgeted % Complete Actual
Man-hours of activity Man-hours
A 160 90 150
B 200 50 140
C 100 60 50
D 300 75 225
------------ --------
760 565
EV1.1 What is the earned value for each activity and the project at review point?
EV1.2 What is the overall % complete of the project?
EV1.3 What is the current CPI?
EV1.4 What are the man-hours the project is likely to take to be completed based on the
current cost efficiency.
Earned Value 2
Q EV2 A project has a budget of Rs.1,00,000. and is planned to be completed in 12
months. The following table shows the cumulative values for each at the end of 4
months.
Month Planned Cost EV Actual Cost
1 7000 2000 2500
2 14000 6000 9000
3 22000 10000 15000
4 30000 14000 21000
EV2.1 Calculate the cost variance and the schedule variance at the end of 4 months.
EV2.2 At the end of the 4
th
month what would you estimate the cost at completion to be?
EV2.3 Estimate the likely time of completion of project if efficiency remains the same.
EV2.4 Estimate likely time for completion of project if efficiency becomes 100% from month 5.
CIPM Workshop
Class Exercises
Earned Value 4
Following are details of a project that is planned to be completed in 12 months at a total cost
of Rs.1000. The project is being reviewed at the end of month 4.
Month PV in Rs AC in Rs EV
1 100 100 50
2 200 250 150
3 300 400 201
4 400 550 300
1 Calculate the schedule variance at month 4.
2 Calculate the cost variance at month 4.
3 What is the cost efficiency of the project?
4 What is the status of the project?
5 Forecast the time when project can be expected to be completed based on the current
performance.
6 Forecast the expected cost of the project based on current performance.
7 Forecast expected project cost if efficiency becomes 50% from 5
th
month.
8 Forecast expected cost of project if the efficiency improves to 100% from the
5
th
month.
9 Forecast the time when the project can be expected to be completed assuming100%
efficiency from month 5 onwards.
CIPM Workshop
Class Exercises
Cost Plus Incentive Fee
Q. What is the contractor fee and total price for the following CPIF contract details:
Contract details are:
Target Cost 2,10,000
Target Fee 25,000
Target Price 2,35,000
Share Ratio 80/20 (Buyer/Seller)
Minimum Fee 20,000
Actual Cost 2,00,000
Option 1: Actual Cost 2,00,000
Fixed Price Incentive Fee
Q. What is the contractor fee and total price for the following FPIF contract details:
Target Fee 10,000
Share Ratio 75/25
Price Ceiling 1,20,000 (Max. payout)
Actual Cost 90,000
Q. What is the contractor fee and total for the following FPIF contract details:
Target Fee 10,000
Share Ratio 80/20
Ceiling Price 1,75,000
Organised by
Centre
164
MOCK TEST A ND A NSWERS
for
Three Day Workshop
on
7 - 9 April 2014
Aurangabad
for
PRACTICE TEST : 50 QUESTIONS (Time : 50 minutes)
1 Match the following:
Money originally budgeted for project.. ; How much money spent so far .; Physical
work accomplished so far ; Revised estimate for the final cost of project .
A EAC
B BAC
C ACWP
D EV
2 A Pareto diagram will be used bythe project manager to:
A Focus on the most critical issues to improve quality
B Focus on stimulating thinking
C Explore a desired future outcome
D Determine if a process is out of control
3 In the beginning of a project, the probability of successfully completing the project is ______ , risk
is _____ and uncertainty is _______:
A Lowest, lowest, lowest
B Highest, highest, highest
C Lowest, highest, highest
D Highest, lowest, lowest
4 A work package is all except:
A The lowest level of a work breakdown structure
B The level where work will be controlled
C Can have different owners for better control
D Used as input for developing the network
5 The final scope baseline is the original:
A Project schedule and budget
B Description in the project charter
C Original scope plus or minus approved changes
D Performance measure
6 In the context of projects, temporary means that:
A Projects have a finite time duration with start and end dates
B Every project has a definite beginning
C The project results are temporary
D Projects have no significance to the permanent sustainability of a corporation
7 A work breakdown structure is considered a key tool in project management as it:
A Identifies different work elements
B Displays the overall project schedule
C Provides the basis for cost estimates
D A and C
8 Project stakeholders are defined as those who are _________:
A Involved in the project and /or have positive or negative influence on project execution
B Are only involved in project execution
C Have influence only in investment decisions
D Are a member of the Board of the corporation
9 What is not true of standard deviation?
A A larger standard deviation means the spread of uncertainty is greater
B A larger standard deviation means the spread of uncertainty is smaller
C Standard deviation of an activity is calculated using the formula (Pessimistic -
Optimistic) / 6
D PERT is used for estimating costs and time duration
10 In a three time estimate using PERT, if the optimistic estimate for a task is 6 days and pessimistic
estimate is 18days, what is the most likely estimate if the mean is 10days:
A 7 days
B 8 days
C 9days
D 12 days
11 How will a negative float be shown in a network?
A The late start date is earlier than the early start date
B The critical path supports the imposed end date
C The early finish date is equal to the late finish date
D The late start date is later than early start date
12 Task B cannot begin until 10 days after task A begins is best described as a:
A Finish to start relationship
B Start to start relationship
C Start to start with a 10 days lag
D Start to start with a 5 day lead
13 Which of the following is most important to plan and control the project?
A Project charter
B Project schedule
C Work breakdown structure
D Work assignments
14 Your project manager has asked you to show the relationships between the different activities. To
do this you should use a:
A Bar chart
B Network diagram
C Histogram
D Work breakdown structure
15 ROMcost estimates are meaningful during the _______ phase of the project:
A Conceptual
B Planning
C Control
D Execution
16 Your project work requires that you must wait for 3 days before you can begin the successor
activity. What is this relationship called?
A Lead
B External dependency
C Lag
D Discretionary dependency
17 If you are a project team member how could you make use of floats?
A Use the floats to crash the project
B Utilize the floats to optimize use of resources
C Fast track the activities that have floats
D All of the above
18 When can a non-critical activity become a critical activity?
A Not possible
B If the activity is not completed by its Late Finish date
C When the project progress shows the activity has a negative float
D B and C
19 Project Integration involves balancing between:
A Risk, cost and schedule
B Direct cost, indirect cost and resource availability
C Cost, Scope and Schedule
D Quality, procurement and time
20 A Bar chart is best used to:
A Show the activity dependencies
B Show the completion date of key events
C Review the projects progress at a summary level
D Assign responsibility to team members
21 A start to start logical relationship is used to show:
A The predecessor activity can start once its successor has started
B The successor activity can start once its predecessor has started
C The successor activity can finish once its predecessor has started
D A lead in the successor activity
22 When developing the WBS at which level will you place the work package?
A The highest level of the WBS
B The middle level of the WBS
C The lowest level of the WBS
D Will depend on the industry
23 You notice that your client has made a calculation mistake and made an excess payment to you.
What should you do?
A It is not your problem. Client should have used computers
B Bring it to the clients attention
C Do not worry as any way you were loosing money on this contract, extra money will
help you to recover some losses
D Ignore it until matter comes into notice
24 Activity C is part of an on-going project. The activity has a total duration of 15 days, the early start
is day 25 and the late start is day 30. Two activities D and F both have a finish to start
dependency with activity C. Activity D is the critical activity. This implies that activity C:
A Is a critical activity as activities D and F are dependent on it
B Will delay the project end date if it does not begin on day 25 of the project
C Does not lie on the critical path
D Has a float of 15 days
25 Complex projects that require a multi disciplinary approach will be most suited to which of the
following structures:
A A inverted matrix organization
B A functional organization
C A strong matrix organization
D A weak matrix organization
26 You are required to examine the consequences of a scope change. To do this you should view its
impact on the projects:
A Schedule
B Cost
C Quality
D All of the above
27 When you are contemplating how to recover a delay in the project schedule, the last thing you
should consider is to _______:
A Look at the critical path carefully
B Apply more resources
C Fast track the project
D Adjust the project end date to adjust the time delay
28 One should have an attitude of ____________ in order to be successful in negotiating across
global cultures:
A Forcing your position
B Distrust
C Mutual trust and cooperation
D Showing your company is the best
29 If the project manager does not allow the team members to provide extra items as an add-on to
please the customer during the execution phase, is she/he following the principles of good scope
management to complete the requiredwork?
A May be yes or no
B No
C Yes
D It depends
30 Configuration management is closely related to:
A Change control
B Project control
C Time control
D Scope control
31 You are involved in identifying risks using the Delphi technique. Which statement is not true about
this technique?
A Participants must be known to each other
B Participants can be in different locations
C Participants are anonymous
D Subject matter experts are used to provide expert opinion
32 All of the following consider time value of money except:
A Payback period
B Discounted cash flow
C Net present value
D Internal rate of return
33 A very common pitfall in effective communication is:
A Not selecting the correct medium
B Not considering the position of the receiver
C Assuming that because a message is sent, it has been received
D Not selecting the correct audience to receive the message
34 The project manager of a large multidisciplinary engineering project is evolving a RAM
(Responsibility Assignment Matrix) to assign the different roles and responsibilities for her team
members. She must use:
A The projects WBS and the organizational chart
B The WBS
C The network schedule
D The staff productivity
35 When communicating, project managers spend most of their time _______:
A Reporting
B Exchanging information
C On the phone
D Solving problems
36 During the execution of a project two team members disagree about how to proceed with a task
that they are working on. This disagreement is seriously affecting the work on the project. The
project manager holds a meeting with both of them to discuss the root cause of the problemand
decide on the best approach. This method of settling differences can be described as:
A Compromising
B Forcing
C Smoothing
D Confronting/problem solving
37 Which of the following is NOT the responsibility of the project manager?
A Monitoring project progress
B Project Integration
C Budgeting project costs
D Developing the Project charter
38 The detailed project plans are developed by the:
A CEO
B Functional managers
C Project manager with involvement of the project team
D Project team alone
Type 2 Questions
39 The project is likely to be delayed if:
A There are too many changes
B If proper planning is carried out in the beginning
C There is a no shortage of cash
D Quality assurance is neglected
E A and D
40 The Project Management Plan should be accepted by the:
A Project Manager
B Project Manager and sponsor
C Project Manager and customer
D Sponsor and customer
E Project manager, sponsor and the project team
41 You are evaluating five projects. Project A has an NPV of 10,000, Project B has an NPV of Zero,
Project C has an NPV of 11,000, Project D has a NPV of 9,000 and Project E has a NPV of
-11,000. You should select:
A Project A
B Project B
C Project C
D Project D
E Project E
42 During the projects implementation phase an unidentified risk arises. What should you do first?
A Alert the client
B Inform the Sponsor
C Analyze the risk
D Revise the network schedule
E Mitigate the risk
43 What would you not include in the Project Charter?
A Projects justification
B Customer requirements and expectations
C Network schedule
D Milestone schedule
E Summary budget
44 An S curve:
A Shows cumulative values
B Describes allocation of resources
C An output of cost estimating
D Shows interrelationships between projects
E Shows interrelationships between direct and indirect costs
45 I cannot test the software until I write the softwareprogram. This expression describes which of
the following dependencies?
A Discretionary
B Soft
C Mandatory or hard
D Regulated
E External
46 The IRR of a project shows:
A Helps to measure the projects breakeven point
B The projects expected profit
C The Payback period in NPV terms
D The projects adjusted total investment
E B and C
Type 3 Questions
47 The activities of a small project are given below with the activity duration and activity
interrelationships.
Select the critical path and the activity/ies that have free float.
Activity Duration in weeks Predecessor
Activities
Type of
Dependency
A 1 - FS
B 3 A FS
C 6 B FS
D 5 A FS
E 2 D FS
F 1 C & E FS
G 6 E FS
H 4 F & G FS
A Critical path: A-B-C-F-H. Activities with free float: E
B Critical path: A-D-E-G-H. Activities with free float: F
C Critical path: A-D-E-G-H. Activities with free float: F and E
D Critical path: A-D-E-F-H. Activities with free float: D and C
48 The following table shows the initial investment, cash flows and Discount Factor associated with a
particular project option.
Calculate the Payback period and the Net Present Value for this project.
Year Cash Flow (Rs.) Discount Factor (8%)
0 1,40,000 1.000
1 40,000 .926
2 60,000 .857
3 80,000 .794
4 1,00,000 .735
5 1,00,000 .681
A 3.0 years and Rs.2,93,580
B 2.2 years and Rs.2,93,580
C 2.5 years and Rs.1,53,580
D 2.5 years and Rs.2,40,000
49 A project has a budget of Rs.1,50,000 and a planned duration of 24 months. The following table
shows progress information for the first four months. Figures are cumulative:
What is the cost variance and schedule variance at the end of the third month and
the Estimate at completion based on the latest progress information?
Month
1 2 3 4
Planned (Rs)
10,000 20,000 30,000 45,000
Actual Spend (Rs)
6000 14,000 25,000 38,000
Earned Value (Rs)
5000 12,000 21,000
32,000
A -9000; -4000; 112,000
B 4000; 9000; 188,000
C -4000; -9000; 178,147
D -6000; -13,000; 211,267
50 The probability and impact grid shown below depicts the relative positions of different risks
to the project following a risk assessment. The risk identification numbers are entered in
the grid.
Select the top 5 risks in the order of their priority.
A 4, 6, 12, 9, 1
B 6, 12, 4, 9, 3
C 11, 5, 2, 7, 3
D 6, 12, 9, 10, 4
7 3 4 6
12
8 9
2 1
11 5 10
P
r
o
b
a
b
i
l
i
t
y
Very High(.9)
High (.75)
Medium (.5)
Low (.35)
Very low (.2)
Very low Low Med High Very High
.10 .25 .4 .6 .9
Impact
CIPM Preparation Workshop
Class Exercises - Answers
Ans NPV - 1
------------------------------------------------------------------------------------------------------------------------------------
Year Discount Cash Flow A PV A Cash Flow B PV B
Factor (Rev.-Exp.) (Cash Flow x DCF) (Rev.-Exp.) (Cash Flow x DCF)
(RS) (Rs) (Rs) (Rs)
------------------------------------------------------------------------------------------------------------------------------------
1 .90 3000 2700 3000 2700
2 .80 5000 4000 10000 8000
3 .70 10000 7000 15000 10500
4 .60 10000 6000 20000 12000
5 .50 10000 5000 10000 5000
-------- ---------- --------- ---------
24,700 38,200
---------- ----------
Less Initial investment 20,000 40,000
NPV for option A =24,700 - 20,000 =Rs. 4,700
NPV for option B =38,200 - 40,000 =Rs. -1,800
Option A is the better option.
The NPV of option B is negative so one should go for option A.
Note: (A higher NPV is better. If NPV negative then one should not go ahead with project.)
NPV 2
Q. NPV2 A proj ect is planned in which the capital cost to be incurred is 5,000, the interest
rate expected i s 8% per annum and the anticipated annual return or revenue
expected is 1500 each year for a period of 4 years.
2.1 Calculate what the Net Present Value (NPV) will be for this project.
2.2 Will this project be viable or not?
Discount Factor @ 8% is calculated below:
Year Discount Factor
1 .925
2 .857
3 .793
4 .735
Ans. 2.1
-------------------------------------------------------------------------------------------------
Year Discount Cash Flow in PV
Factor (Anticipated annual return) (Cash Flow x Discount Factor)
or cash flow
-------------------------------------------------------------------------------------------------
1 .925 1500 1387.5
2 .857 1500 1285.5
3 .793 1500 1189.5
4 .735 1500 1102.5
--------- -------
4965
Less Initial investment 5000
--------
- 35
NPV = - 35
Ans. 2.2 Project is not viable as the NPV is negative.
Standard Deviation

Q1 A path has 3 activities A, B and C.
Activity Optimistic Most Likely Pessimistic
A 15 20 30
B 10 20 30
C 12 20 29
Q1.1) What is the PERT durations and the Standard Deviationfor each activity?
Q1.2) Find the Pert duration and SD for the path.
Q1.3) What is the time range for the completing the activities and the project at 68%
confidence level.
Activity O ML P
PERT Dur.
(Mean)
O+(4xML) + P
6
Activity
S.D.
(P-O)/6
Activity
Variance

{(P-O)/6}
2
Range of
Duration
Estimate
A 15 20
30
20.83
15+80+30
6
2.50
6.250
2.50 x 2.50)
20.83 +/- 2.50
18.33 to 23.33
B 10 20 30 20.0 3.33 11.088
20.00+/- 3.33
16.67 to 23.33
C 12 20 29 20.16 2.83 8.008
20.16 +/- 2.83
17.33 to 22.99
For the
Path
A+B+C
60.99
5.034
(Sq. Rt of
25.346
which is
Variances
of A+B+C
25.346
(Total
Activity
Variance for
A+B+C)
60.99 +/-5.034
55.965 to
66.024
Q. EV1 A project has 4 activities A, B, C and D. At review point, (originally planned
completion point), this was the position in man-hours.
Activity Budgeted % Complete Actual
Man-hours of activity Man-hours
A 160 90 150
B 200 50 140
C 100 60 50
D 300 75 225
------- -------
760 565
EV1.1 What is the earned value for each activity and the project at review point?
EV1.2 What is the overall % complete of the project?
EV1.3 What is the current CPI?
EV1.4 What are the man-hours the project is likely to take to be completed based on the
current cost efficiency.
1.1 EV for A =144 (PV x % complete)
EV for B =100
EV for C =60
EV for D =225
EV for the project =529 Man-hours
1.2 Overall % complete of the project is: 69.6% (Total EV / Total PV) =(529/760) =69.6%
1.3 Current cost efficiency of the project is: 93.6% (Total EV/Total AC) =529/565 =0.936
1.4 Expected man-hours (EAC) based on current performance =812 Man-hours (BAC/CPI)
Earned Value 2
Q The Project budget is Rs. 1,00,000 and i s planned to be completed in 12 months.
Month PV (BCWS) EV (BCWP)
Actual Cost
(ACWP)
1 7000 2000 2500
2 14000 6000 9000
3 22000 10000 15000
4 30000 14000 21000
Q. What is the schedule variance at month 4?
Ans. Schedule variance =EV PV (BCWP BCWS)
=14000 30000
=-16000
Cost variance =EV AC (BCWP ACWP)
=14000 21000
=-7000
Q. Cost of completion at end of 4
th
month is?
Ans. EAC =BAC / CPI
=100,000 (14000/21000)
=100,000 / .666
=Rs.1,50,000
Q. Estimate likely time of completion of project if efficiency remains same.
Ans. =Planned time to complete / SPI
=12 months / (BCWP/BCWS)
=12 (14,000/30,000)
=12 / .4666
=25.71 months
Q. Estimate likely time for completion of project if efficiency becomes 100% from month 5.
Ans. =Current month +Behind Schedule months +Remaining months
(for backlog months compare BCWP with BCWS)
=4 +2 +8
=14 months at 100% efficiency
Earned Value - 4
Following are details of a project that is planned to be completed in 12 months at a total cost
of Rs.1000. The project is being reviewed at the end of month 4.
Month PV in Rs AC in Rs EV
1 100 100 50
2 200 250 150
3 300 400 201
4 400 550 300
1 Calculate the schedule variance at month 4.
Schedule Variance =EV - PV = 300 - 400 = -Rs. 100
2 Calculate the cost variance at month 4.
Cost Variance =EV - AC = 300 - 550= -Rs. 250
3 What is the cost efficiency of the project?
Efficiency is 54.5% (CPI i.e. EV/AC)
4 What is the status of the project?
The project is over budget by Rs. 250 and behind schedule by 25%
5 Forecast the time when the project can be expected to be completed
based on the current performance.
Forecasted completion date = OD/SPI = 12 / .75 = 16 months
6 Forecast the expected cost of the project based on the current performance.
Expected cost of project as per current performance is Rs. 1833.
BAC / CPI =1000/.545
7 Forecast the expected cost of the project if the efficiency becomes 50% from 5
th
month.
Expected cost of project if efficiency is 50% from month 5 is Rs. 1950
AC +BAC-EV = 550+(700 /.5) =1950
.5
8 Forecast the expected cost of project if efficiency becomes 100% from 5
th
month.
Expected cost of project if efficiency is 100% from month 5 is Rs. 1250
AC +BAC-EV =550 +700 =1250
1
9 Forecast the time when the project can be expected to be completed assuming 100%
efficiency from month 5 onwards.
Project can be expected to be completed in 13 months.
(current month +Behind schedule months +remaining months) =4 +1 +8 =13 months
Cost Plus Incentive Fee
Q. What is the contractor fee and total price for the following CPIF contract details:
Contract details are:
Target Fee 25,000
Share Ratio 80/20 (Buyer/Seller)
Minimum Fee 20,000
Option 2:
Option 1 : Actual cost =2,00,000
Contractors Fee =
2,10,000 2,00,000 (Target Cost minus Actual cost)
10,000 x 20% =2000 (20% of cost saving)
25,000 +2000 =27,000
Final Price of contract =Actual cost +Contractors fee
=2,00,000 +27,000 =2,27,000/-
---------------------------------------------------------
Option 2 : Actual Cost 2,50,000
Contractors Fee =
2,10,000 2,50,000 (Target cost minus Actual cost)
-40,000 x 20% =-8000 (20% of extra cost)
25,000 - 8000 =17,000 (Target fee less share of cost overrun)
Contractor fee =20,000/- (Minimum Fee assured is 20,000)
Final Price of contract =Actual cost +Contractors fee
=2,50,000 +20,000 =2,70,000/-
Fixed Price Incentive Fee
Q. What is the contractor fee and total price for the following FPIF contract details:
Target Fee 10,000
Share Ratio 75/25
Price Ceiling 1,20,000 (Max. payout)
Actual Cost 90,000
Contractor Fee
=10,000 x .25 (share ratio of cost savings -Target cost less Actual cost)
=2,500 +10,000 (cost saving share +Target fee)
=12,500
Final Price
=90,000 +12,500 (Actual cost +contractor Fee)
=1,02,500
---------------------------------------------------------------------------
Q. What is the contractor fee and total for the following FPIF contract details:
Target Fee 10,000
Share Ratio 80/20
Ceiling Price 1,75,000
Contractors Fee
[(150,000 170,000) (.20) =-4000 Fee reduction
=10,000 - 4000 (10,000 less 4000) Target fee after adjusting for 20% excess cost
=6000 less any excess cost above Ceiling price
Final Price
1,70,000 +5000 (6000 less excess cost)
=1,75,000 (Limited to ceiling)
6 9
7 10
E
4 6
5 7
B
4 7
4 7
C
7 15
7 15
D
0 4
0 4
A
9 14
10 15
F
7 12
10 15
G
15 16
15 16
H
4d
2d
3d
3d
8d
5d
5d
1d
0
3
0 0
1 1 1
0
ES EF
LS LF
Activity
DUR
F
(d, w, m)
2. The Critical Path is : A-C-D-H
3. The project duration is : 16 days
4. The Total Float : B = 1 day, E = 1 day, F = 1 day, G = 3 day
5. Free Float : F = 1 day, G = 3 day
NETWORK-1 (Answer)
Legend:
Note: .Figures in a box are in the same time units as the unit of the duration i.e. in days (d), week (w) or month (m).
ES - Early Start EF - Early Finish
DUR - Duration of an activity (d = days, w = weeks, m = months)
A - Name of an activity
LS - Late start LF - Late Finish
F - Total Float
Centre for Excellence in Project Management
182
Centre for Excellence in Project Management (P) Ltd. 183
Network 1
Resource Histogram & S Curve
0 4
0 4
A
4w
0
4 8
12 16
C
4w
8
4 12
4 12
D
8w
0
12 26
16 30
G
14w
4
4 10
6 12
B
6w
2
12 21
12 21
E
9w
0
21 33
21 33
F
12w
0
26 29
30 33
H
3w
4
33 40
33 40
J
7w
0
ES EF
LS LF
Activity
DUR
F
(d, w, m)
A. The Critical Path is : A-D-E-F-J
B. Total float is : B = 2 Weeks, C = 8 Weeks, G = 4 Weeks, H = 4 Weeks
C. Free Float is : B = 2 Weeks, C = 4 Weeks, H = 4 Weeks
NETWORK-3
Legend:
Note: .Figures in a box are in the same time units as the unit of the duration i.e. in days (d), week (w) or month (m).
ES - Early Start EF - Early Finish
DUR - Duration of an activity (d = days, w = weeks, m = months)
A - Name of an activity
LS - Late start LF - Late Finish
F - Total Float
Centre for Excellence in Project Management
184
ABCDEFGHJ
3
3
8
8
7
5
7
7
7
7
7
9
9
1
2
3
4
5
6
7
8
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1
0
1
1
1
2
1
3
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4
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5
1
6
1
7
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8
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M e n R e s . E n g .
185
Activity Duration
(days)
Precedent
activities
(finish start)
Resources
per Day
A
B
C
D
E
F
G
H
2
4
8
9
5
3
3
1
-
-
A, B
C with 5 days lead
C
D, E
D
F, G
2
3
5
5
4
6
3
2
0 2 2
2 2 4
A
16 3 19
17 1 20
G
0 4 4
0 4
B
4 8 12
4 0 12
C
17 3 20
17 0 20
F
20 1 21
20 0 21
H
12 5 17
12 0 17
E
7 9 16
8 1 17
D
In Lead: In Forward Pass the Lead amount of 5 days is subtracted from ES of D
In Backward Pass the lead amount of 5 days is added to LS of D for C - the procceding activity
In Lag:
In Forward Pass the lag amount is added to the ES of activity having the Lag
NOTE:
The Critical Path is B- C- E- F- H
Total Float: A= 2 days; D= 1 Day; G=1 day
Free Floats: A=2 days; G=1 day
Network 4
(Subt. 5 from
ES of D)
(Add 5 to 8 for C)
In Backward Pass the lag amount is subtracted from the LS of the activity with lag to calculate the
LF date for previous activity.
186
Answers
QuestionNo Answers QuestionNo Answers QuestionNo Answers QuestionNo Answers QuestionNo Answers
1 D 1 B 1 D 1 A 1 B
2 C 2 B 2 C 2 A 2 C
3 D 3 C 3 B 3 C 3 A
4 C 4 B 4 C 4 D 4 C
5 B 5 D 5 C 5 B 5 D
6 C 6 A 6 C 6 B 6 B
7 D 7 B 7 D 7 B 7 D
8 C 8 D 8 A 8 C 8 A
9 A 9 A 9 C 9 A 9 B
10 C 10 B 10 D 10 B 10 B
11 C 11 A 11 D 11 C 11 B
12 D 12 B 12 A 12 B 12 C
13 D 13 D 13 D 13 D 13 C
14 C 14 C 14 B 14 C 14 D
15 B, C, D, A 15 C 15 B 15 D 15 A
Set 5 Set 1 Set 2 Set 3 Set 4
187
Answers
QuestionNo Answers QuestionNo Answers QuestionNo Answers QuestionNo Answers
1 B 1 B 1 C 1 D
2 D 2 D 2 D 2 C
3 B 3 C 3 C 3 B
4 C 4 D 4 C 4 D
5 D 5 C 5 B 5 A
6 A 6 B 6 B 6 D
7 B 7 B 7 B 7 B
8 D 8 A 8 A 8 B
9 B 9 D 9 C 9 D
10 C 10 C 10 B 10 D
11 C 11 D 11 B
12 D 12 B 12 D
13 C 13 C 13 A
14 A 14 B 14 B
15 B 15 A 15 C
16
C
17
D
18
A
19
D
20
B
Set 9 Set 7 Set 6 Set 8
188

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