PMP Exam Notes May 08

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PMP Exam Notes ( May 08th):

PMP Exam Notes ( May 08th): Chapter 02: Project Management Framework
What is a Project? Temporary, Unique, Progressive Elaborative What is a program?
A program is a group of projects. Their management is coordinated because they
may use the same resources, the results of one project feed into another, or the
y are parts of a larger project that has been broken down to smaller projects. Wha
t is the Project Management Office? Performs one of the three roles: Providing p
olicies, methodologies and templates for managing projects within the organizati
on Providing support and guidance to others in the organization on how to manage
projects, training others in project management Providing project managers for
different projects and being responsible for the results of those projects. The
PMO is an organizational structure, not a person Triple Constraints (TCS): Time,
Cost, Scope. The latest addition is Quality PMIs organization maturity model for
project management is called OPM3 Project Expediter: acts as a staff assistant,
and communications coordinator. The expeditor cannot personally make or enforce
decisions. Project Coordinator: Similar to project expediter except the coordin
ator has some power to make decisions, some authority , and reports to a higher
level manager. Understand the difference between Product Life Cycle and Project
Life Cycle. Functional Organization Advantages Easier Management of specialists
Team members report to only one supervisor Similar resources are centralized, th
e company is grouped by specialties Clearly defined paths in areas of work speci
alization Projectized Organization Advantages Efficient Project Organization Loy
alty to the project More effective communication than functional Matrix Organiza
tion Advantages Highly visible project processes Improved project manager contro
l over resources More support from functional organizations Maximum Utilization
of scarce resources Better coordination Better Horizontal and vertical dissemina
tion of information than functional Team members maintain a home
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Disadvantages People place more emphasis on their functional speciality to the d
etriment of the project No career path in project management Project Manager has
little or no authority
Disadvantages No home when project is completed Lack of professionalism in discipl
ines Duplication of facilities and job functions Less Efficient use of resources
Disadvantages Extra administration required More than one boss for project teams
More complex to monitor and control Tougher problems with resource allocation N
eed extensive policies and procedures Functional Managers may have different pri
orities than project managers Higher potential for conflict
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You need 2 methodologies to complete a project: Project Life Cycle: What you nee
d to do to do, Project Management Methodology: Managing the project. The Product
Life Cycle differs from the product life cycle in that the project life cycle i
s different for each industry
Chapter 03: Project Management Processes
Project Management is the application of knowledge, skills, tools and techniques
to project activities to meet project requirements. Project Management Processe
s: Initiation, Planning, Execution, Monitor and Control, Closing Projects are ch
artered by someone external to the project (Sponsor) Outputs: Initiation: Projec
t Charter, Preliminary Project Scope Statement Planning Process Group: Project M
anagement Plan Executing: Deliverables, requested changes, implemented change re
quests, Monitoring and Control Process: Approved change requests, rejected chang
e requestes , pPMP Closing:
Rita s Process Chart
Initiating Select a Project Manager Determine Company Culture and Existing Syste
ms Collect processes, procedures and historical info Divide large projects into
phases Identify Stakeholders
Planning
Executing
Determine how you will do planning - part of Acquire Final Team management plans
Create Project Scope Statement(S) Execute the PM plan
Monitoring and Closing Controlling Measure against Develop closure performance m
easurment procedures baselines Measure according to the Complete contract manage
ment plans closure Determine variances and if Confirm work is done to they warra
nt corrective requirements action or a change Scope Verfication Configuration Ma
nagement Gain formal acceptance of the product Final performance reporting Index
and Archive records Update lessons learned knowledge base Hand off completed pr
oduct Release resources
Determine Team(T)
Complete Product Scope
Create WBS and WBS Recommended Changes dictionary (W) and corrective actions Sen
d and receive Create activity list (A) information
Document Business Create network Need diagram (N)
Determine Product Estimate Resource Objectives Requirements (R) Document Estimat
e Time and assumptions and Cost (T) constraints Develop Project Determine Critic
al Path Team Building Charter (C) Develop Preliminary Give Recognition and Devel
op Schedule (S) Project Scope and rewards
Implement approved Recommend changes, changes, defect repair, defect repair, pre
ventive preventive and corrective and corrective actions actions Integrarted cha
nge Continuous Improvements control Aprrove Changes, defect Follow Processes rep
air , preventive and corrective actions Risk audits
Manage Reserves
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Statement
Develop Budget (B) Determine Quality Standards, Processes and Metrics (Q) Determ
ine Roles and Resp Determine Communication requirements (C) Risk Identification
(R) Iterations-Go back (I) Determine what to purchase Prepare procurement docume
nts Finalize "how to execute and control" Create process improvement plan Develo
p final PM plan
Hold Progress meetings Uses work authorization system Request Seller Responses S
elect Sellers
Use issue logs Facilitate conflict resolution Measure team member performance Re
port on performance Create Forecasts Administer Contracts
Memory Tools for the Planning Phase : TWAN-RTC-SBQC TWAN Determine Team WBS Acti
vity List Network Diagram RTC Resources Time and Cost Critical Path SBQCRI Sched
ule Budget Quality Communication Requirements Risk Identifcation
Chapter 04: Integration Management ( Expect up to 14 questions on the exam) What

is a Project Charter? Formally recognizes the existence of the project, or e
blishes the project. This means that a project does not exist without a project
charter Gives the project manager authority to spend money and commit corporate
resources . Provides high level requirements for the project Links the project t
o the ongoing work of the organization Issued by a project sponsor, not the proj
ect manager Created in the Initiating process group Broad enough so it does not
NEED to change as the project changes Any change to the project charter should c
all into question whether or not the project should continue
What is Project Statement of Work?
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Created by customer/sponsor and describes their needs, product scope and how the
project fits into their strategic plan
Project Selection Methods are of two types: Comparative Approach ( Benefit Measu
rement Approach) Murder Board ( A panel of people who try to shoot down a new pr
oject idea) Peer review Scoring Models Economic Models Benefit compared to cost
Mathematical Approach ( Constrained Optimization Methods) Linear Programming Int
eger Programming Dynamic Programming Multi Objective Programming
Management Plans are your strategy for managing the project. Someone needs to pu
t the whole thing together. Management Plans when completed become part of the p
roject management plan. A Project Management Plan should be BARF Bought into App
roved Realistic Formal
Work Authorization System: A system for authorizing work. ( 1 question in exam f
or sure) Baselines: are used during project executing to measure performance and
to help control the project. Forecasts of final cost and schedule should be com
pared to the baselines. Corrective Action: It is any action taken to bring expec
ted future project performance in line with the project management plan. Prevent
ive Action: Whereas corrective action involves implementing actions to deal with
actual deviations from the performance baselines, preventive action deals with
anticipated or possible deviations from the performance baselines
All changes are evaluated first. Closing Project: There are two procedures for c
losing projects Administrative Closure procedure Contract closure procedure
The difference between the procedures is focus, frequency and formality. Adminis
trative closure focuses on closing the project or project phase. Contract closur
e focuses on closing a contract that is part of a project. Be sure to remember t
hat you always close out a project no matter the circumstances under which it st
ops, is terminated or completed. Chapter 05: Scope Management Prevention: Planni
ng Stakeholder involvement early: Less problems in the future Scope Planning Sco
pe Definition Create WBS Scope Verification
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Scope Control Product Scope: Requirements that related to the product of the proj
ect Project Scope: Work you need to do to deliver the product of the project. Thi
s includes the meetings, reports, analysis and all the other parts of the projec
t management that become part of the project scope management plan Work Break Do
wn Structure (WBS) The WBS is a deliverable oriented hierarchical decomposition
of the work to be executed by the project team, to accomplish the project object
ives and create the required deliverables. A WBS is deliverable oriented. The WB
S breaks the project into smaller and more manageable pieces. This is a top-down
effort to decompose the work into smaller pieces called work packages ( PMI doe
s not use the word tasks. This is replaced by the work package) Continue breaking do
wn the project until you reach what are called Work Packages; pieces that Can be
realistically and confidently estimated Cannot be logically subdivided Can be c
ompleted quickly Have meaningful conclusion and deliverable Can be completed wit
hout interruption Will be outsourced or contracted out. WBS from one project may
be used as the basis for the next. Therefore, the project management office sho
uld collect WBS examples and encourage the creation of templates. WBS is created
with the inputs from the team. It helps prevent work from slipping through the
cracks. It provides the project team with an understanding of where their pieces
fit into the overall project management plan and gives them an indication of th
e impact of their work on the project as a whole. The WBS is the foundation of t
he project. This means that almost everything that occurs in the planning proces
s group after the creation of the WBS is directly related to WBS. Thinks that ar
e directly related to the WBS are: Activity List, Network Diagram, Staffing, Est
imating, Scheduling, Budgeting, Risk Management, Project Control Remember that W
BS is a Graphical picture of the hierarchy of the project Identifies all the wor
k to be performed if it is not in the WBS, it is not part of the project Is the
foundation upon which the project is built Is VERY important Should exist for ev
ery project Forces you to think through all aspects of the project Can be reused
for other projects Shows hierarchy or is the foundation of the project Does not
show dependencies WBS CONTROL ACCONUNTS
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WORK PACKAGES ACTIVITIES WBS DICTIONARY WBS Dictionary: The detailed content of
the components contained in a WBS, including work packages and control accounts
can be found in a WBS Dictionary. For each WBS of work, the dictionary includes
a code of account identifier, a statement of work, responsible organization, and
a list of scheduled milestones. Other information for a WBS component includes
contract information, quality requirements, and technical references to facilita
te performance of the work. Other information for a control account would be a c
harge number. Other information for a work package can include a list of associa
te scheduled activities, resources required, and an estimate of cost. Tricky asp
ects of Scope Verification: 1. Scope Verification can be done at the end of each
project phase in the project cycle ( to verify the phase deliverables along the
way) and during the monitoring and controlling process group in the project man
agement process. 2.Scope verification relates to Quality Control. Although quali
ty control is generally done first( to make sure that the work meets the quality
requirements before meeting with the customer), scope verification and quality
control can overlap. The difference is focus .Primary focus of scope verificatio
n is customer acceptance of the deliverables while quality control involves meet
ing the quality requirements specified for the deliverables and analysis of the
correctness of the work.
Chapter 08: Quality Management
What is Quality? Quality is defined as the degree to which the project fulfils
he requirements Degree to which a set of inherent characteristics fulfill requir
ements International Organization for Standardization (ISO):The totality of char
acteristics of an entity that bear on its ability to satisfy stated or implied n
eeds. Conformance to requirements Projects processes and products meet written sp
ecifications Fitness for Use Product can be used as it was intended
What is Quality Management? Quality Management includes creating and following p
olicies and procedures in order to ensure that a project meets the defined needs
it was intended to meet. This can also mean the same thing as completing the pr
oject with no deviations from the project requirements. Quality Management inclu
des Quality Planning, perform Quality assurance and perform Quality Control. Qua
lity Approaches: Deming: Quality is increased productivity at decreased cost. Ju
ran: Create quality culture through top management commitment Crosby: Strive for z
ero defects. Constant improvement and low tolerance Ishikawa: Quality circles th
at encourage participation and involvement Taguchi: Quality should be designed i
nto the project and not inspected into it.
What is Gold Plating? Gold Plating refers to giving the customer extras ( e.g.:
extra functionality, higher quality components). This practice is not recommende
d, as gold plating adds no value to the project. Some Approaches Action over Dir
ection Prevention over inspection ( Quality must be planned in, not inspected in
)

Continuous Improvements (or Kaizen) ,Just in Time (JIT),Total Quality Management
(TQM) The Project Manager has the ultimate responsibility for the quality of th
e product of the project, but each team member
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must check his or her work self inspection. Senior management has the ultimate r
esponsibility for quality in the organization as a whole. Impact of Poor Quality
Increased Costs Low Morale Low Customer Sat Increased Risk Rework Schedule Dela
ys
Increase in quality can result in increased productivity and cost effectiveness
and decreased cost risk Cost of Non Conformance Rework Scrap Inventory Costs War
ranty Costs There are costs in both areas, but the cost of non conformance must
be greater Quality Planning Identify which quality standards are relevant to the
project and how to satisfy them. Quality Assurance Applying the planned and sys
tematic quality activities to ensure that the project employs all processes need
ed to meet requirements. Quality Control Monitoring specific project results to
ensure that they comply with the relevant quality standards while identifying wa
ys to improve quality. Is everything all right in the project? Repair defects Ide
ntify quality improvements Measure Mostly done during project monitoring and con
trolling Cost of Conformance Quality Training Studies Surveys

Find quality standards Prepare quality management plan
Mostly done during project planning Quality Planning
Quality audits Correct deficiencies Recommend changes and corrective actions Mos
tly done during project executing
Quality Planning Tools and Techniques: Cost-Benefit Analysis: Trade off between
cost of rework and stakeholder satisfaction. Design of Experiments: Helps identi
fy which variables have the most influence on the overall outcome of a process.
E.g., Which combination of materials and equipment produce the most reliable com
puter chips? Cost of Quality: Total costs incurred by investment in preventing n
on-conformance to requirements, appraising the product, and failing to meet requ
irements (rework). Benchmarking: Comparison of actual or planned project practic
es to those of other projects to generate ideas for improvement.
Outputs Quality Management Plan Checklist Process Improvement Plan Quality Basel
ine Quality Metrics
Quality Assurance
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Tools and Techniques: Outputs Changes to policies and processes to increase eff
ctiveness & efficiency Recommended Corrective Actions Recommending actions to in
crease organizational performance. Organizational Process Assets Updated quality
standards Quality Audits: Structured reviews of specific quality management act
ivities to help identify lessons learned Process Analysis: Follows steps outline
d in the process improvement plan to identify needed improvements.
Quality Control Sigma is taken on both sides of the mean. Half the curve is to t
he right of the mean, and half the curve is to the left of the mean. +/-1 sigma
is equal to 68.26% which is the percentage of occurrences to fall between the tw
o control limits +/-2 sigma equals 95.46% +/-3 sigma equals to 99.73% +/-6 sigma
equals 99.99985% Seven Basic Tools of Quality 1 Cause and Effect Diagram(Fishbo
ne/Ishikawa Diagram): How various factors might be linked to potential problems.
2 Control Charts: Graphic display of data that illustrates the results of a pro
cess over time. Allow you to determine whether a process is in control or out of
control. Six-sigma quality will identify process concerns.7-run rule if seven d
ata points in a row are all below the mean or above and are all increasing or de
creasing, then process needs to be examined for non-random problems. 3 Flowchart
ing: Helps to analyze how problems occur based on a graphical representation of
a process .Can help anticipate what and where quality problems might occur and t
hus, develop approaches to deal with them. 4. Histogram: Bar chart showing a dis
tribution of variables. Each column represents an attribute or characteristic of
a problem/situation. 5.Pareto Diagram: Specific type of histogram that shows ho
w many defects were generated by type or category of identified case 6. Run Char
t: Line graph shows trends in a process over time, variation over time, and decl
ines or improvements over time. Trend analysis is performed using run charts to
monitor: Technical performance, Cost and schedule performance. 7. Scatter Diagra
m: Shows pattern of relationships between two variables allows for study of poss
ible relationship changes. What is Quality Policy? The intended direction of the
organization with regard to quality. Must be approved by top management. Projec
t stakeholders must be fully aware of Sample Quality Policy It is the policy of
ABC company to manufacture and deliver products which conform to the specificati
ons laid down in this manual to our customers. This includes not only manufactur
e to specification, but price, delivery, reliability and all interfaces between
us and our customers from enquiry to delivered goods. To achieve this policy a q
uality assurance system is in place of which management gives full support
Chapter 09: Human Resource Management
HR Planning Responsibility Management Matrix does not show when people will do t
heir jobs (time) Organization Charts and Position Descriptions Resource Histogra
m: Is a graph that shows the number of resources used per time period and is dis
played in a bar chart format. The chart shows where there is a spike in the need
for resources. Remember that acquiring team occurs during the executing process
group
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Halo Effect Ground Rules A project manager must exercise -Honesty, Integrity, Lo
yalty (HIL) with his/her team, counterparts and customers Powers of Project Mana
ger Formal or legitimate: getting people to do things based on position of autho
rity. Reward Power using incentives to induce people to do things. Penalty or Co
ercive Power punishment, threats, or other negative approaches to get people to
do things they don not want to do. Expert Power using ones personal knowledge and
expertise to get people to change their behavior. Referent Power using individu
als personal charisma Best Forms of Power are : EXPERT and Reward Penalty is the
worst choice Formal, Reward and Penalty are powers derived from the project mana
ger s position in the company Expert power is earned on you own. Conflict Resolu
tion Confronting (Problem Solving): Win-Win Compromising :Lose-Lose situation (
Second best) Withdrawal: ( Avoidance) Smoothing: Emphasizing agreement rather th
an differences of opinion. Forcing: Pushing one view point at the expense of ano
ther.
HR Planning Responsibility Management Matrix does not show when people will do t
heir jobs (time) Organization Charts and Position Descriptions Resource Histogra
m: Is a graph that shows the number of resources used per time period and is dis
played in a bar chart format. The chart shows where there is a spike in the need
for resources. Remember that acquiring team occurs during the executing process
group Halo Effect Ground Rules A project manager must exercise -Honesty, Integr
ity, Loyalty (HIL) with his/her team, counterparts and customers Powers of Proje
ct Manager Formal or legitimate: getting people to do things based on position o
f authority. Reward Power using incentives to induce people to do things. Penalt
y or Coercive Power punishment, threats, or other negative approaches to get peo
ple to do things they don not want to do.
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Expert Power using ones personal knowledge and expertise to get people to change
their behavior. Referent Power using individuals personal charisma Best Forms of
Power are : EXPERT and Reward Penalty is the worst choice Formal, Reward and Pen
alty are powers derived from the project manager s position in the company Exper
t power is earned on you own. Conflict Resolution Confronting (Problem Solving):
Win-Win Compromising :Lose-Lose situation ( Second best) Withdrawal: ( Avoidanc
e) Smoothing: Emphasizing agreement rather than differences of opinion. Forcing:
Pushing one view point at the expense of another.
Chapter 10: Communications Management
WBS is a communication tool Non Verbal: About 55% of all communications are non
verbal Para lingual : Pitch and Tone Feedback: Saying things like Do you understa
nd what I have explained? Communication Methods: Formal Written, Formal Verbal, I
nformal Written, Informal Verbal Channels can be calculated using the formula: N
(N-1)/2 Performance Reporting Status Report: Describing where the project now s
tands regarding performance measurement baselines in cost, schedule, scope and q
uality Progress Report: Describing what has been accomplished Trend Report: Exam
ining project results over time to see if performance is improving or deteriorat
ing Forecasting: Predicting future project status and performance Variance Repor
t: Comparing actual results to baselines Earned Value: Integrating scope, cost a
nd schedule measures to asses project performance . This report makes use of the
terms described in the cost chapter Lessons Learnt
Chapter 12: Procurement Management
Procurement Management Contract management and change control required to admini
ster contracts or purchase orders. Processes include: (
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PCRSCC)
( Plan
Plan Purchases and Acquisitions Determining what to purchase, when, and how.
Plan Contracting Documenting project requirements and identifying potential sell
ers
Request Seller Responses Obtaining quotations, bids, offers, or proposals
Select Sellers Review offers, choose sellers, and negotiate contracts
Contract administration Managing the contract and relationship with the seller
Contract Closure Completion and settlement of the contract, including resolution
of any open items.
Role of a PM in Procurement Management The negotiation of contracts between comp
anies and/or individuals The fulfillment of the terms and conditions of the cont
racts that have been entered into between these parties The process of obtaining
goods and/or services from vendors, suppliers, and/or subcontractors to assist
in fulfilling a contract
Centralized Contracting vs. Decentralized Contracting:
Plan Purchases and Acquisitions
Identifies which project needs can be best met by purchasing or acquiring produc
ts, services, or results outside the organization. The Plan Purchases & Acquisit
ion process can significantly influence the project plan and schedule should be
integrated with Schedule Development and estimating Tools and Techniques Make-or
-Buy Analysis Expert Judgment Contract Types Analysis of costs, competency fit,
and strategic opportunity. To define requirements and evaluate offers and propos
als made by sellers. There are generally three types of contracts Cost Reimbursa
ble ( CR) Time and Material ( T&M) Fixed Price (FP) What is it ? Reimbursement f
or sellers actual costs + fee for profit. Buyer has most cost risk Simple Contrac
t SOW Requires auditing sellers invoice Requires more work for the buyer to manag
e Seller writes detailed contract statement of work
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Contract Type Cost Reimbursable

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Time and Material ( T&M)
Fixed-Price or LumpSum Contracts:
Cost-Reimbursable Contracts: Reimbursement for sellers actual costs + fee for pro
fit. Cost-Plus-Fee: Fee varies with the actual costs. Cost-Plus-Fixed Fee: Fee d
oes not vary with actual costs unless the scope changes. Cost-Plus-Incentive Fee
: IF final costs are less than expected costs, both buyer and seller benefit fro
m the saving. Usually used for small dollar accounts Buyer has a medium amount o
f risk Hybrid. Full value of agreement and exact quantity of items are not defin
ed, but unit rates can be pre Good Choice when you are hiring bodies or people to
augment your staff Fixed total price for a well-defined product. Buyer has least
risk, borne by the seller Seller is most concerned about SOW
Exercises You need work to begin right away You want to buy expertise in determi
ning what needs to be done You know exactly what needs to be done You are buying
the services of a programmer to augment your staff You need work done but dont h
ave time to audit invoices on this work T&M CR FP T&M FP
Who has the highest risk in a cost reimbursable contract, buyer or seller? Buyer
Who has the cost risk in a fixed price contract ? Seller Contract statement nee
ds to be Clear Complete Concise as possible Describe all the work and activities
the seller is required to complete ( All because the key is to prevent contract
problems)
Plan Contracting This process consists primarily of putting together the procure
ment documents that will be sent to prospective sellers describing the buyers nee
d , how to respond and the criteria by which the buyer will select a seller. Pro
curement Documents Request for proposal (RFP): Requests a price , but also a det
ailed proposal on how the work will be accomplished , who will do it, resumes, c
ompany, experiences etc Invitation for BID: Requests one price to do all the wor
k Request for Quotation: Requests a price quote per item, hour or foot Contract
Type CR FP T&M Contract Statement of Work Performance or Functional Design Any
Procurement Documents Request for Proposal Invitation for BID Request for Quotat
ion Non Disclosure Agreement
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Standard Contract Special Provisions Terms and Conditions Evaluation Criteria
Letter of Intent: You should understand this is normally NOT a contract but simp
ly a letter, without legal binding, that says the buyer intends to hire the sell
er Privity: Means a contractual relationship. You should understand the followin
g because it explains privity and shows you how questions on this topic are aske
d. Request Seller Responses This process consists of getting the procurement int
o the hands of sellers, answering the sellers questions and the sellers preparin
g the proposals Tools and Techniques Bidder Conferences: Buyer invites the selle
rs to attend a meeting where they can tour the buyers facilities and ask question
s about the procurement. The questions and answers are written down and sent to
all prospective bidders to make sure that all prospective sellers have the same
information. This meeting is also an opportunity for the buyer to discover anyth
ing that is missing Advertising Qualified Sellers List

Select Sellers Tools and Techniques Weighting System Independent Estimate Scree
ing System Contract Negotiation Seller Rating System Expert Judgment Proposal Ev
aluation Techniques
What is a Contract? A contract is
ms and conditions in the contract
r to not do something required in
formally in writing What needs to
eration ( Something of value, not
a legally binding document. Therefore, all ter

must be met. One cannot chose to not conform o
the contract. Change to the contract are made
be in the contract? An offer Acceptance Consid
necessarily money) Legal Parties Legal Purpose
A contract , offer of acceptance may be oral or written, though written is prefe

rred. Contract Administration ( Important) Contract administration consists of a
ssuring that the performance of both parties to the contract meets contractual r
equirements. This is an important are on the exam. Contract Change Control Syste
m: Defines the process by which the contract can be modified. Buyer-Conducted Pe
rformance Reviews: Structured review of sellers progress according to time, scope
, cost, and quality.
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Inspections and Audits: Contractual agreement to identify weaknesses in the sell
ers processes and deliverables. Performance Reporting: Seller-reported statement
of achievement according to contractual objectives. Claims Administration: Conte
sted changes (claims or disputes) that are documented and managed through arbitr
ation or litigation if necessary. Records Management System: Used by project man
ager to manage contract documentation and records (e.g., a spreadsheet that stat
es what each sponsor has contractual rights to for each football game).
Contract Closure Contract Closure is done: When a contract ends When a contract
is terminated before work is completed
All contracts must be closed out no matter the circumstances under which they st
op, are terminated or completed. Closure provides value to the performing organi
zation and the customer and should be eliminated under any circumstances. Contra
ct Closure occurs first. All contracts must be closed out before the project is
closed out. Therefore, at the end of the contract, the project manager performs
a procurement audit for each contract, administratively closes out the contract
and then administratively closes the project and the whole project is completed.
Administrative Closure may be done at the end of each project phase and at the
end of the project as a whole. Contract closure is done only once , at the end o
f each project. Administrative Closure uses the word Lessons learned and contract
closure uses the world procurement audit
Project Cost and Schedule cannot be finalized without completing risk The term G
antt Chart is not used, only bar chart Percent complete is an almost meaningless
number The project manager should be assigned during project initiation. Work o
n prevention than on correction You are required to understand that people must
be compensated for their work. A project manager creates a reward system during
the planning process group The exam makes a habit of not telling you what form o
f organization you are in. When it does not say, assume matrix. Stake Holders ca
n be identified throughout the project management process groups. However, the e
arlier the stakeholders are identified, the better for the project. MBO works if
management believes in it. WAN RTC SB QCR WBS Activity List Network Diagram Res
ource Requirements Time and Cost Critical Path Schedule Budget Quality Communica
tions Risk Iteration Keep the phrases Work to the project management plan, Be Proac
tie, Adjust and Guide in mind as you take the exam to make sure you are thinking li
ke PMI The Project Manager is making sure that the product of the project has be
en completed according to the project management
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plan. What part of the project management process is he in ? CLOSING Company Cul
ture is called the enterprise environmental factors Work authorization system ca
n be used to manage what time and in what sequences work is done The Work Beakdown
structure can be BEST be thought as an effective aid for stakeholder communicat
ions The WBS Dictionary describes each element in the WBS. Therefore, descriptio
ns of the work package are in the WBS dictionary Marginal Analysis: The concept
of optimal quality level is reached at the point where the incremental revenue f
rom product improvement equals the incremental cost to secure it. A Control char
t shows seven data points in a row on one side of the mean. What should be done
? Find an assignable cause. Even if the customer was happy, the project is unsuc
cessful if it has been gold plated. The most common causes of conflict on a proj
ect are schedules, project priorities and resources Resource histogram and Respo
nsibility Matrix do not show time The primary objective of contract negotiation
is to protect the relationship. Contract Closure is different from administrativ
e closure in that contract closure occurs before administrative closure.
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Centralized Structure Advantages Increased expertise in contracting A contractin
g department will provide is employees with continuous improvement , training an
d lessons learned Contracting professionals have a clearly defined career path i
n the contracting profession Decentralized Advantages Easier access to contracti
ng expertise because contract experts are on the team More loyalty to the projec
t More focussed contracting experience
Disadvantages One contract person may work on many projects. May be more difficu
lt to obtain contracting help when needed
Disadvantages No home department for the contracts person to return to after the
project is complete Difficult to maintain a high level of contracting resources
across projects Little standardization of contracting practices from one projec
t to the next Tendency to have a lack of defined career path in the contracting
profession
CHAPTER 13: Professional and Social Responsibility
o o o o o o o o o Do the right thing Follow the right process Act ethically, fai
rly and professionally towards team and resource owners Watch for conflicts of i
nterest Report Violations Deal with problems Put the projects needs before your o
wn Share lessons learned Enhance your competence. A large project might be where
costs might be more practical to estimate and control at a higher level. This i
s called a control account and is one of the level higher than the work package
in the WBS. Estimating should be done by the person doing the work whenever poss
ible. Padding is not an acceptable project management practice The Steps o Cost
Management Plan o Cost Estimating
CHAPTER 07: Cost Management
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o Cost Budgeting o Cost Control COST Management Plan: Life Cycle Costing: Look a
t the concept of the whole life of the product and not just the cost of the proj
ect. Value analysis: Finding a less costly way to do the same work. Variable Cos
ts Fixed Costs Eg: Supplies, Cost of material, Wages Set up, rental Direct Costs
Indirect Costs Team travel, team wages, recognition, cost of Taxes, Fringe bene
fits, janitorial services materials Cost Estimates: Analogous Testing ( Less acc
urate but quick) Bottom Up Testing ( More accurate but time consuming) Rough Ord
er of Magnitude Estimate ( ROM) Definitive This type of estimate is usually made
during the Later during the project, the estimate could initiating process ad i
n the range of -50 percent become more refined to a range of -5 percent to to +1
00 percent from actual +10 percent from actual COST BUDGETING There are two type
s of reserves added: Contingency Reserve: is for risks reserved remaining after
risk response planning Management Reserve: is any extra amount of funds to be se
t aside to cover unforeseen risks or changes in the project. The COST Baseline w
ill contain the contingency reserve and the COST BUDGET will include the managem
ent reserve. Check the diagram below: Cost Budget Management Reserve Cost Baseli
ne Contingency Reserve Project Control Account Work Packages Activities Cost Con
trol Use Earned Value Technique is a better method because it integrates cost, t
ime and the work done ( scope) and can be used to forecast future performance an
d project completion dates and costs Name Formula Interpretation ( as of today)
Cost Variance EV AC Negative is over budget Schedule Variance EV-PV Negative is b
ehind schedule CPI EV/AC We are getting ---- worth for every $1 spent. SPI EV/PV
We are progressing at --percent of the rate originally planned Estimate at Comp
letion (EAC) As of now, how much do we BAC/CPI expect the total project to cost
AC + ETC AC + (BAC-EV) Estimate to complete How much more will the project EAC-A
C cost? Variation at Completion ( VAC) BAC-EAC How much over or under budget wil
l we be at the end of the project Project Selection Methods
13/03/2011
Project A Project Which do you go for? Net Present Value $95000 $75000B A IRR 13
% 17% B Payback Period 16 months 21 months B Benefit Cost Ratio 2.79 1.3 A Prese
nt Value = FV/( 1+R)**n The number of years is not relevant as it would have tak
en into account in the calculation of your NPV. Understand the following = st1 n
s = "urn:schemas-microsoft-com:office:smarttags" />Opportunity Cost Sunk Costs L
aw of Diminishing Returns Working Capital Depreciation: Straight Line OR Acceler
ated Depreciation ( Double declining balance and sum of the years digits) Analog
ous Estimating uses TOP-DOWN approach Main focus of life costing is to consider
operations and maintenance costs in making project decisions. CHAPTER 11: Risk M
anagement Risk Management includes risk management planning, identification, ana
lysis, response planning and monitoring and control. The purpose of risk managem
ent is to increase the probability and impact of the positive events, and decrea
se the probability ad ompace of negative events on the project. Uncertaininty: L
ack of knowledge about an event that reduces confidence in conclusion drawn from
the data. When looking at risk, one should determine: Probability that it will
occur ( what) The range of possible outcomes ( impact or amount at stake) Expect
ed timing ( when) in the project life cycle Anticipated frequency of risk events
from that source ( how often) Remember the following: Risk Management Planning
Risk Identification Qualitative Risk Analysis Quantitative Risk Analysis Risk Re
sponse Planning Risk Monitoring and control Risk Identification: Who should be i
nvolved in risk identification, the best answer is everyone. Everyone has a diff
erent perspective of the project. What are the different types of Risk Identific
ation techniques? Brain Storming: one idea helps generate another Delphi Techniq
ue: used to build consensus of experts who participate anonymously. The techniqu
e can also be used for estimating time and cost Interviewing : Root Cause Analys
is SWOT Risk Register: The risk register is the place where most of the risk inf
ormation is kept. Think of it as one document for the whole risk management proc
ess that will be constantly updated with information as risk identification and
later risk management processes are completed. The risk register becomes part of
the project management plan and is also included in historical records which wi
ll be used for future projects. Risk register in the only output of the risk man
agement process. At this point, risk register would include a) List of risks b)
List of potential responses c) Root causes of risks d) Updated Risk Categories W
hen in the risk management process are responses documented? o The answer is ris
k identification and risk response planning Qualitative Risk Analysis o Probabil
ity and Impact Matrix
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o Risk Data Quality Assessment o Risk Categorization o Risk Urgency assessment Q
uantitative Risk Includes Further investigation into the highest risks on the pr
oject Determination of the type of probability distribution that will be used e.
g triangular , normal, beta, uniform or log normal distribution Sensitivity anal
ysis: Determining which risks have the most impact on the project. Determining h
ow much quantified risk the project has through expected monetary value or Monte
Carlo analysis Quantitative Risk Analysis Tools: Monte Carlo Analysis Interview
ing Cost and time estimating Delphi Technique Use of historical records from pre
vious projects Expert Judgement Expected Monetary Value analysis Monte Carlo Ana
lysis Monte Carlo Analysis: Simulation is all about. It uses the network diagram
and estimates to perform the project many times and to stimulate the cost or sche
dule results of the project. Remember the following about Monte Carlo Technique:
Evaluates the overall risk of the project Provides the probability of completin
g the project on any specific day , or for any specific amount of cost Provides
the probability of any activity actually being on the critical path Takes into a
ccount path convergence ( places in the network diagram where many paths converg
e into one activity) Translates uncertainties into impacts to the total project
Can be used to asses cost and schedule impacts Is usually done with a computer b
ased Monte Carlo program because of the intricacies of the calculations Results
in a probability distribution Risk Response Planning Contingency Plans Do someth
ing if the risk happens Fall back plans Do something if contingency plans are no
t effective Risk Response Strategies for Threats Avoid Eliminate the threat by e
liminating the cause (e.g Remove the work package or person) Mitigate Reduce the
probability or the impact of a threat , thereby making it a smaller risk and re
moving it from the list of top risks on the project Transfer Make another party
responsible for the risk through purchasing of insurance, performance bonds, war
ranties, guarantees or outsourcing the work. Risk Response Strategies for Opport
unities Exploit ( Reverse of avoid) Add work or change the project to make sure
the opportunity occurs Enhance Increase the likelihood , probability and positiv
e impacts o the risk event Share Allocate ownership of the opportunity to a thir
d party ( forming a partnership, team or joint venture) that is best able to ach
ieve the opportunity Response strategy for both threat and opportunities:
13/03/2011
Accept : Do nothing. Residual Risks: It is these risks which remain after risk r
esponse planning, and those that have been accepted for which contingency plans
and fallback plans can be created. Description of Strategy Name of Risk Response
Strategy Remove a work package or activity from the AVOID project Assign a team
member to visit the sellers MITIGATE manufacturing facilities frequently to lear
n about a problem with delivery as possible Move a work package to a date when a
more EXPLOIT experienced resource is available to assigned to the project Begin
negotiations for the equipment earlier than ENHANCE planned so as to secure a l
ower price Outsource a work package so as to gain an SHARE opportunity Notify ma
nagement that there could be a cost ACCEPT increase if a risk occurs because no
action is being taken to prevent the risk. Remove a troublesome resource from th
e AVOID project Provide a team member who is less experienced MITIGATE with addi
tional training Train the team on conflict resolution strategies MITIGATE Outsou
rce difficult work o a more experienced TRANSFER company Ask the client to handl
e some of the work TRANSFER Prototype a risky piece of equipment MITIGATE Contin
gency Reserves: Known Unknown Management Reserves: Unknown Unknown What do you do wi
th the non critical tasks ? Document in a watch list and revisit periodically Wh
at risk management activities are done during the execution of the project? Watc
hing out for watchlisted ( non-critical) risks that become more important Risk s
hould be a major topic in Status Meetings Work around: Whereas contingency respo
nses are developed in advance, work around are unplanned responses developed to
deal with the occurrence of unanticipated risk events Risks will be identified d
uring which risk management process: Risk identification and risk monitoring and
control An output of risk response planning is RESIDUAL RISKS Before you do any
thing on the risk, you have to analyze it and see how much of an impact happens
( How well does it qualify) ANALYZE THE RISK
CHAPTER 06: TIME MANAGEMENT
Estimating should be based on a WBS to improve accuracy Activity Definition Ther
e are two ways to draw Network diagram: -Precedence Diagramming Method (PDM) or
Activity on Node (AON) Finish to Start An activity must finish before the succes
sor can start ( Most common) Start to Start An activity must start before the su
ccessor can start Finish to Finish An activity must finish before the successor
can finish Start to Finish An activity must start before the successor can finis
h Finish to Start: You must finish digging a hole before you can start the next
activity, planting a tree
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Start to Start: You must start design and wait for two weeks lag before you can
start coding Finish to Finsh: You must finish testing before you can finish docu
mentation Start to Finish: Rarely used - Arrow diagramming method ( ADM) Types o
f dependencies: Mandatory: Discre Types Of Estimate One Time Estimate: Analogous
Estimate: Analogous Estimating is a one time top down estimate. Form of expert
judgement Parametric Estimating: Mathematical Model Heuristics is a rule of thum
b P= Pessimistic, O= Optimistic, M= Most Likely Formula Standard Deviation of an
activity Variance of an activity (P+4M+O)/6 (P-O)/6 SD **2 CRITICAL PATH: The l
ongest duration path through a network diagram and determines the shortest time
to complete the project Helps prove how long he project will take Helps the proj
ect manager determine where best focus her project management efforts Helps dete
rmine if an issue needs immediate attention Provides a vehicle to compress the s
chedule during project panning and whoever there are changes. Provides a vehicle
to determine which activities have float and therefore can be delayed without d
elaying the project. More critical paths increase risk Would you leave the proje
ct with a negative schedule? No, you would compress the schedule Activities on t
he critical path always have zero float. Critical path activities that are delay
ed or have dictated dates can result in negative float. ES EF Float (Slack) Tota
l Float: The amount of time an activity can be delayed without delaying the proj
ect ed date or an intermediary milestone. This is the key type of float, but the
re are others. Free Float: The amount of an activity that can be delayed without
delaying the early start date of its successor Project Float: The amount of tim
e a project can be delayed without delaying the externally imposed project compl
etion date required by the customer, management or previously committed to by th
e project manager Schedule Compression Fast Tracking: Doing critical path activi
ties in parallel that were originally planned in series. Fast Tracking often res
ults in rework, usually increases risk and requires more attention t communicati
on Crashing: Making cost and schedule tradeoffs to determine how to obtain the g
reatest amount of schedule compression for the latest incremental cost wile main
taining the project scope. Crashing, by definition, almost always results in inc
reased costs. Option General Impacts of the Project Fast Track Adds Risk May add
management time for the project manager Crash Almost always adds cost May add m
anagement time for the project manager Reduce Scope Could save cost and time May
negatively impact customer satisfaction Cut Quality Could save cost and resourc
es May increase risk Requires good metrics Monte Carlo Analysis: relates to What
if Analysis This method of estimating uses a computer to stimulate the outcome of
a project making use of the three time estimates ( optimistic,
13/03/2011
pessimistic, most likely) for each activity and the network diagram. The simulat
ion can tell you The probability of completing the project on any specific day T
he probability of completing the project for any specific amount of cost The pro
bability of any activity actually being on the critical path The over all projec
t tisk Under what circumstances would you use a network diagram instead To show
of a bar chart interdependencies between activities Under what circumstances wou
ld you use a milestone chart instead of To report to senior a bar chart manageme
nt Under what circumstances would you use a bar chart instead of a To track prog
ress an d network diagram report to the team
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PMP Exam Notes ( May 08th):

Chapter 04: Integration Management ( Expect up to 14 questions on the exam) What

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A contract , offer of acceptance may be oral or written, though written is prefe

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