Professional Documents
Culture Documents
Definition of Project
1. Temporary in nature with a well defined beginning and end
known before you start doing the project (i.e. has limited life), and
Provide one time training to improve the efficiency of our sales force
Project • A specific work with a beginning and an end. Done only once.
Program • A set of closely related projects (Loss of one would impact others)
To initiate a project you need a sponsor (someone who can provide project funding)
A Project Charter is
The license to manage a project (Just like how driving license is required for driving)
Projec t Ti tle : Roo t C au se Ana lysis fo r TDX Cus tome r Q ua lity Aud it NC s
Resources assigned Impa ct : Achie vin g t he pr oje ct ob jec tive s will re sult in the cu sto mer aw ar din g t he migr at ion
p ro ject an d imp ro ve th e e xist ing pr oc ess d elive rie s t o c ust omer e xpe cta tio n.
Stakeholders, Their Requirements Probl em s ta te ment : 8 Majo r an d 4 Mino r no n con fo rman ce s id en tifie d in th e cu sto me r
Q ua lity a ud it.
Cus tomer
3 0th may , 2 01 2
TDX
a ct ion pla n for cu sto mer
r ev iew
Type –I and II are more common than type-III (AT&T and some other Telecom companies)
Sometimes combinations exist (PMI suggests it is better to have one role)
Constraints are
1. Time
2. Cost Iron Triangle
3. Risk
4. Scope
5. Quality
6. Resources
1. Law of constraints: If you change one constraint- you will have to change at-least
one of the other constraints
2. There could be other specific factors (Customer satisfaction etc)
3. Constraints help evaluate competing demands (help us see the trade offs to make)
a) Top Management directly or indirectly sets the priority for each constraint
b) PM uses this prioritization to plan the project and evaluate impact of changes
c) PM is responsible for analyzing the changes requested to the project and
identifying its impact on all constraints through change control (we will see this
later)
Copyri ght: Nucleus Group
Sponsor (Of a project)
Sponsor
1. Outside the project team
2. Inside the organization
3. Provides funding to the team
4. Sometimes sponsor is customer (NOT always)
Customer
Sponsor
PM
E.G. The person you will have to talk to in your company, to increase allocated budget by
50% is the sponsor
Copyri ght: Nucleus Group
Organizational Structures
Type of Organization Comments
Most people (> 60%) grouped by specialty (marketing,
Functional manufacturing, accounting, HR etc). Very few people are on
projects at any point in time.
Most people (>60%) are organized by projects (e.g. Dam
Projectized construction, TCS, Infosys etc)
Combination of Functional and Projectized. Everyone belongs to a
Matrix department and most people are on projects at any point in time.
In a strong matrix, power rests with the project manager while in a weak matrix power
rests with the functional manager. In a balanced matrix, both are equally powerful.
Project manager’s role in a weak matrix could be
Expediter: Acting as a staff assistant and communications coordinator. He cannot
personally make or enforce decisions. He reports to functional manager.
Coordinator: Similar to expeditor, except he has some power to make decisions and
reports to higher level manager
The project manager will have a part time role in both weak matrix and functional
organizations
A “tight matrix” refers to locating the entire project team in the same room “ War
location”. It has NOTHING to do withCopyriMatrix Organization
ght: Nucleus Group structure.
Organizational Structures: How it Impacts Projects
Advantages Disadvantages
Easier management of specialists, Easy People place more importance to functions
coordination of members, group learning and projects suffer
Clearly defined career paths No career path in project management
Only one supervisor PM has no authority
Advantages Disadvantages
Efficient projects Lack of professionalization in disciplines
Loyalty to projects No “Home” (i.e. Home department)
Effective communication Less efficient use of resources
Advantages Disadvantages
Visible project objective Extra project administration
Better PM control on resources More than one boss
Better support from functions More difficult resource allocation
Design
Version-1
Develop
Life cycle of car
Upgrade: Version-2
I P
Ini tiation Pl a nning
Business changes
C
Cl osi ng
M&C E
Moni tor &
Executi ng
Control
Design Develop Deploy
Large projects have several phases and each phase has all the above five processes.
Breaking down projects into phases and working is called as life cycle approach. It helps to control the
project by providing a flow and structure to Copyri
work ght: Nucleus Group
(People understand when to do work etc).
Project Management Process Groups
Planning
Analysis
Design
Initiation Prototyping Closure
Requirements Documentation
Pre-analysis Archival
Scope Resource Release
Execution
Integration
Testing, Deployment
Training
Processes (47)
47 Total processes across all the process groups and knowledge areas
Project Manager
He is assigned early during a project and is hence involved in project initiation
1. Planning involves walking through the project and getting organized before it is
actually done
3. Time spent on planning must be appropriate to the project needs (Not all projects
require same level of effort for planning)
Meetings are most important part of executing. Number of meetings can be reduced by better
planning.
The meetings are way too important to discuss status of a project. These must be used to
review risks and upcoming contingency plans.
Planning
1) Tasks
2) Roles (Who will do what)
3) Inputs
4) Outputs
5) Formats
6) Locations
7) Shared, Centrally located Project
Management Plan Copyri ght: Nucleus Group
Monitoring and controlling process group
3. This group runs in parallel to Executing group (and NOT after its completion). We
choose to categorize some activities to be belonging to this group- does not mean
they happen after execution.
4. Usually customers make decisions to purchase based on metrics and these are
measured in this group.
1. Project is not completed even if all the activities are completed. It gets completed
in the closing process group.
Monitoring &
Initiation Planning Executing Closing
Controlling
Integration Management Monitor & control
project work
Direct and manage
Develop charter Develop PM Plan Perform integrated Close project/phase
project execution
change control
Collect
Requirements Verify scope
Create WBS
Define activities
Distribute
Identify Plan Information Report
Stakeholders Communications Manage stakeholder Performance
expectation
4. Sponsor is required to sign the charter and provide the final approval for
project management plan. Project manager is responsible for getting these
approvals. Copyri ght: Nucleus Group
Integration Management
PV = FV/ (1+r)n, “FV” stands for Future Value, “r” is rate of interest (Decimal form), “n” is number of years
If rate is 10% then 100$ next year is worth only 91$ today
Exercise-1: If project A gets 10,000$ in year 1 and 20,000$ in year 2. What is its PV.
Assume the interest cost is 10%.
Exercise-2: For project B, you have to spend 2,000$ at the end of one year and 4,000$
at the end of year 2. The revenue at the end of year 1 is 10,000$ and revenue at end
of year 2 is 20,000$. What is the NPV? (r = 10%)
IRR is the equivalent interest rate of the future cash flows. Higher IRR is better
(exceptions)
Exercise-1: Project A requires you spend 10,000$ today but will result in a total
money of 12,000$ at the end of one year. What is IRR for project A?
Exercise-2: For project B, you have to spend 12,000$ at the end of one year and
4,000$ at the end of year 2. The revenue at end of year 2 is 20,000$. What is the IRR?
Exercise-1: Exercise-2:
10,000*(1+r) = 12,000 12,000*(1+r)+4,000 = 20,000
=> r = 0.2 = 20% ⇒1+r = 16,000/12,000 = 1.33
⇒r = 33%
Exercise-2: For project B, you have to spend 10,000$ now and 10,000$ at the end of
one year. You will receive 5,000 at the end of one year and 20,000 at the end of
second year. What is BCR? r = 10%
Exercise-1: Exercise-2:
Cost = 3,000. PV of revenues = (5,000/1.1)+(20,000/1.12) = 21,000
Benefit for n years = 1,000*n PV of costs = 10,000+(10,000/1.1) = 19,100
3,000 = 1,000*n => n = 3 BCR = 21,000/19,100 = 1.1
(BCR > 1 is good project)
Copyri ght: Nucleus Group
Economic value added (EVA)
Additional value generated after covering for the financing cost (Like interest cost etc)
This is one of the best methods to determine the value of an internal project.
Exercise-1: Project A requires you to spend 10,000$ today. It will generate 13,000$ at
the end of one year. You have an option to invest in a partner company which will
give you 20% returns. What is the economic value of undertaking project A?
Exercise-1:
Revenue generated = 13,000
Cash to invest = 10,000
FV @ 20% = 10,000 * 1.2 = 12,000
EV of project A = 13,000-12,000 = 1,000 (10%)
Exercise-1:
Returns generated = 150,000-100,000 = 50,000
ROI = 100% * (50,000/100,000) = 50%
Choose the project which will generate highest marginal benefits (Marginal revenue
is the revenue generated for the last unit of output)
Exercise-1:
Marginal revenue = 150-200 = -50$.
Hence must NOT pursue.
Opportunity cost
Opportunity given up by choosing one project over another (It is value of lost opportunities). Remember
the key is the money lost (and no comparison to what is gained).
Minimize opportunity cost.
Sales Department Customer-1 (Flexible): Will buy 50 units
each at a cost of 5$. He is in a position to
Make 100 wait and can buy later if needed
widgets/month
EVERY month Customer-2 (Rigid): Will ONLY buy 100
units each at a cost of 2$ (or none). The
Cost = 0 need is urgent and cannot wait
Exercise-1: Project A requires you to spend 100$ today and will complete after a year with
profit of 50. Project B requires you to spend 50$ and will complete after year one with a
profit of 35. What is the opportunity cost of project A.
Exercise-1 Solution:
You will lose project B with profit of 35
=> Opportunity cost of ACopyri
= 35ght: Nucleus Group
Sunk cost and Sunk cost fallacy
Sunk cost
Money already expended and hence lost. This should not make an impact for any
future decisions and should be ignored for future decisions. Making a mistake here
and considering past for making future decisions is called “Sunk Cost Fallacy”.
Exercise-1: You have a project to replace all the CRT monitors in your office with LCD
monitors. There are 100 monitors and you have already replaced 50 of them, each at
a cost of 100 $. A new technology based monitor (OLED) is available in the market.
This monitor costs only 50 $ and has better quality than LCD. What should you
pursue? LCD or OLED? (For reasons of compatibility there must be only one kind of
monitors in office. Also remember there is no Resale value for these kind of
equipment)
Exercise-1:
Total cost of LCD = 100*100 = 10,000 $
Money to spend now = 100*50 = 5,000 $
Money with OLED = 50*100=5,000 $
Copyri ght: Nucleus Group
OLED is better
Depreciation
Exercise-1: Project A requires you to buy an equipment with 1000$ which is useful for
10 years. What is the straight line depreciation in first year.
Exercise-2: Project A requires you to buy an equipment with 1000$ which is useful for
5 years. What is the sum of years depreciation for first year.
Exercise-1: Exercise-2:
Depreciation = 1000/10 Digits are 5, 4, 3, 2, 1
= 100$ Sum of digits = 5+4+3+2+1 = 15
First year depreciation = (5/15)*1000
Second year depreciation = (4/15)*1000
(Corporate tax rate = 33%, Depreciation rules are set by government, On any investment on
R&D, Manufacturing equipment etc you can claim Tax rebate on depreciated value)
Created by the
sponsor/customer and
describes the needs, product
scope and how project fits
their strategic needs
Existing systems and company “culture”. Even the best project managers can’t control everything that
affects their projects. The way your company is set up, the way people are managed, the processes
your team needs to follow to do their jobs... they all can have a big impact on how you manage your
project.. A few examples
There is a strategy for managing the project and the processes in each knowledge
area. One has to consider how to plan the project based on the needs, how to
manage and control the project and formally document them. This is what is
accomplished with the help of various management plans.
Baselines once fixed should be difficult to change and changes must be asked for in
the monitoring & controlling process group (Even if the change is obviously beneficial
for the project, you want to follow a protocol).
Controlling a project to the baselines and the rest of the project management plan is
so important that the PM needs to think twice in advance about where there might
be changes and what to do to limit the negative effects of changes
Changes are much more costly than if work was included from the beginning
PMIS
CMS
Change
Control
Copyri ght: Nucleus Group
Configuration management
Configuration management system contains organization’s standard configuration
management tools, processes and procedures. It will include the change control
system and is part of the PMIS
Example: Project team has to fill the time sheet each day on time spent for various
tasks. The PM decides to invest in purchasing a software which automates the time
sheet filling each day, thereby saving time for all the team members to spend more
productively.
Before you can complete the “develop project management plan” process and
project execution starts a kickoff meeting should be held. It is like sounding bell
before a war starts.
It is a control function (process) done from initiation to closing of the project. This
results in change requests and updates to PM plan and project documents.
It makes sure work is properly sequenced and starts only when authorized.
Any action to bring expected future project performance in line with the project
management plan. It is not about rectifying something which went wrong.
10 Days 20 Days
During monitoring and controlling processes, changes may be requested that affect
any part of the project. These can be accepted or rejected in the integrated change
control process. This looks at the impact of change on all knowledge areas like
quality, risk, time, cost, HR etc
Changes are usually controlled by the change control board which comprises of
PM, customers, experts, sponsors etc
Do not take any actions in haste (as you have a large team which may
face severe impact if the decision is incorrect).
Monitoring &
Initiation Planning Executing Closing
Controlling
2.Estimate attitude
Mark degree of confidence in estimate
3.Estimate Influence
Mark degree of confidence in estimate
1. Instead of just saying “no” when your project sponsor asks for
something unreasonable, it is better to explain what is wrong with
the request and then present a realistic way to solve the problem
at hand
2. For example, Christa Ferguson, an independent program manager
in San Francisco, described how she handled a request from a
project sponsor to deliver a new tablet device in two months when
she knew she would need more time. Based on her
experience, she knew the RFQ for the effort alone would take
almost a month. Christa quickly researched the facts to propose a
realistic delivery schedule.
3. The project sponsor reset expectations once he learned what it
took to produce the tablets
Monitoring &
Initiation Planning Executing Closing
Controlling
Monitor & control
project work
Direct and manage
Develop charter Develop PM Plan Perform integrated Close project/phase
project execution
change control
Plan Scope
Management Validate Scope
Collect
Requirements Control Scope
Define Scope
Scope Management
Create WBS
Distribute
Identify Plan Information Report
Stakeholders Communications Manage stakeholder Performance
expectation
2. “Define scope” is a process which is concerned with what is a part of project and what
is not a part of project.
3. You must plan in advance how you will determine the scope, manage it and control it
5. Requirements are gathered from all stakeholders and not just the person who
assigned the project
7. Gold plating (Doing extra) is not allowed (Why do gold plating?). Related to step-5.
Product scope refers to the outcome; the specifics of the product or service that the
project is expected to deliver.
Project scope refers everything that has to happen to get the product created and
delivered. It also refers to the things that can't happen, to get the product delivered
(i.e. scope "exclusions")
Project Scope focuses on the Project Management aspect for delivering the
product/service. The Project Management aspect comprises the budget, the
schedule, the quality. On the other hand, product scope focuses on the end
product, for example, cost to own, services/benefits that this product will offer to the
end user.
Scope management will involve both project scope and product scope
Product Scope (Aircraft) Project Scope (Aircraft)
1) Price of Aircraft 1) Development cost
2) Cost of Aircraft 2) Development Schedule
3) Capacity of Aircraft 3) Engine in-source or out-
4) Benefits of Aircraft to source
consumer
Copyri ght: Nucleus Group
Collection of requirements
1. Interviewing: Talking to stakeholders
2. Focus groups: A grouping of SMEs or Experts
3. Facilitated workshops: Potential customers guided by an Expert
4. Brainstorming: Team members sitting and giving out lots of ideas
5. Delphi technique: A way to anonymously generate consensus
6. Mind maps: A nice and hierarchical way to show data
7. Affinity diagrams: A way to categorize data and information
8. Questionnaires and surveys
9. Observation
10. Prototypes
Design of a TV Remote
Material of remote
Shape of remote
Color of remote
Size of buttons
Want easy to hold x
Want to easy to find x
Want it light weight
x
Want big buttons x
Copyri ght: Nucleus Group
Resolving competing requirements
Some issues are very complex and require management intervention. Broad guidelines
exist however which prefer this order
For example, a company XYZ decides to develop mobile applications and want to learn
new technology related to mobile applications. As requirements are being gathered, a
requirement was found which will increase the cost of project marginally but will
provide a lot of learning which may be used on future projects. Should you take it?
1. Requirements traceability matrix helps track the requirements over the life of the
project (Initiation to closure) to ensure they are accomplished
3. The project scope statement along with the WBS and WBS dictionary
comprise the scope baseline which is part of project management plan
WBS breaks the project into smaller and more manageable tasks
3. Quality control and Validate scope are similar in that both involve checking for the
correctness of work. The difference is the focus on effort and who is doing the
checking.
4. In QC, the QC department checks to see if the quality requirements specified for
the deliverables are met, In validate scope it is the customer who checks before
accepting the deliverables.
1. Control scope involves measuring project and product scope performance and
managing scope baseline changes and preventing scope creep (changes made
without the formal change approval process).
2. Need to measure scope performance against the baseline to see magnitude of any
variances. Next see if any updates to scope baselines or other parts of project
management plan are needed
Plan Schedule
Management
Define Activities
Sequence Activities
1. Remember that unrealistic schedule is a project manager’s fault and not that of
senior management (This assumes that the PM is the one who created the
schedule)
2. It is PM’s job to see if the needed end date can be met and create options to make
it happen, all BEFORE project execution even starts
The process involves taking the work package in WBS and breaking down further
to reach activity level (also called tasks which are usually done by one person for a
few days). In order to do this you need the scope baseline and the team so that
activities can be defined more accurately and make estimates better.
Execution Execution
• When in hurry • Working on new tasks
• Work is known • Learning is involved
Planning • Not familiar with work
Planning
Execution
Rolling wave Progressive Elaboration
Start the
project
Complete
Project
Take the activities and milestones and start to sequence them into how work is performed.
This will create a network diagram as shown below.
A B C
P: 12 P: 9 P: 14
M: 9 M: 6 M: 6
O: 6 O: 3 O: 4
Project must have reserves to accommodate for risks that remain after the completion of
risk management activities. You deal with certain risks on a one-one basis, but for all other
remaining risks, you allocate some lump some money (Called as reserves).
Two types of reserves for risks- Contingency reserves and Management reserves
Contingency reserves- For risks which remain after plan risk response process
Management reserves- For unknown risks (Usually less than 10% of contingency cost)
Contingency reserves are under the control of project manager while management
reserves are under the control of top management.
Near critical path is a path close in duration to critical path. The closer it is to critical
path, the more risk project has
Total Float/Total Slack: Time an activity can be delayed without delaying the project end
date or an intermediary milestone
Free Float/Free Slack: Time an activity can be delayed without delaying the early start date
of its successor
Project Float: Project float is the amount of time a project can be delayed without delaying
the externally imposed project completion date required by the customer or management.
Critical path is the path of longest duration in the network diagram and determines the
shortest time to complete the project
Near critical path is a path close in duration to critical path. The closer it is to critical path,
the more risk project has
Total Float/Total Slack: Time an activity can be delayed without delaying the project end
date or an intermediary milestone
Free Float/Free Slack: Time an activity can be delayed without delaying the early start date
of its successor
Project Float: Project float is the amount of time a project can be delayed without delaying
the externally imposed project completion date required by the customer or management.
10
5 2
8
10 8
6
5 2
6
8 6
X
5 2
12
8 6
5 2
6 Copyri ght: Nucleus Group
Network Analysis Techniques
2. Schedule Compression
Fast tracking- Doing critical path activities in parallel that were originally in series.
Increases risk and needs more communication. This involve a time vs. risk tradeoff.
(Remember nothing comes for FREE)
Crashing- Making cost and schedule tradeoffs to determine how to compress the
schedule. Always involves increased cost. This involve a time vs. cost tradeoff.
3. Resource Leveling
Resource leveling: Produce a resource limited schedule. The schedule from this is almost
always longer than the project schedule.
Day 0:
X, 10d X, 10d X, 10d X, 10d
T1 T2 T3 T4
X, 10d
Critical Chain
T5
Y, 10d Y, 10d
T6 T7
Day 0:
X, 10d X, 10d X, 10d X, 10d 25d
T1 T2 T3 T4 PB
X, 10d
T5
-10 0 10
% Chain Complete
Only Milestones
Nothing Else
3. When to use Gantt/Bar and not Network diagram: To track progress and to report to
team
Cost Management
Plan Cost
Control Costs
Management
Estimate Costs
Determine budget
Control accounts are placed at selected management points of the Work Breakdown
Structure (WBS) to monitor cost and schedule performance of significant elements of
work.
Cost management plan is created during project management plan creation and includes
1. Specifications on how estimates should be stated (In $, or millions, or Crores etc)
2. Level of accuracy needed for estimates (Want 10% accuracy of 20% accuracy)
3. Reporting formats to be used (Want bar charts or pie charts etc)
4. Rules for measuring cost performance (Is 5% above budget, bad or very bad?). How
do we determine that the project is in Red, Green or Yellow status will be agreed
5. Whether costs will include both direct and indirect costs
6. Control thresholds (More than 15% cost increase will trigger alert to CEO)
Types of costs
Fixed costs: Rent paid for the Office space (Does not change)
Variable costs: Electricity paid (Changes with working hours)
A fixed cost or variable cost will be either direct cost or indirect cost
Bottom Up Estimation
Advantages
1. Most accurate
2. Gains buy-in from team
3. Provides basis for monitoring and control
Disadvantages
1. Time intensive
2. Encourages padding
Estimates made during early project phase are less accurate than the ones which
are made later
Estimating Accuracy
Range of estimates
ROM (Rough order of magnitude): - 50% to 100%
Budget estimate: -10 to 25%
Definite estimate: +/- 10%
1. Learning Curve: Over time the cost per unit (or cost
of similar work) will drop because repetition
increases efficiency. This is a correction for time
factor.
50/50 Rule
20/80 Rule
0/100 Rule
Milestone Rule
PV, EV, AC
It is the ratio of work remaining to budget remaining for the project. TCPI is the calculated
projection of cost performance that a project must achieve on the remainder of the
project work to reach a specified end result.
If TCPI is one (1.0), then the remaining project work must be executed at the same
cost performance level as the completed project work. If TCPI is less than one
(<1.0), then the remaining project work can be executed at a lower cost
performance level than the project completed work. If TCPI is greater than one (>
1.0), then the remaining project work must be executed at a better cost
performance level than the project completed work till date.
BAC = $115,000
CPI = EV/AC = $55,000/$75,000 = 0.733
EV = $55,000
AC = $75,000.
New budget approved is $125,000. Calculate TCPI
TCPI allows you to calculate the amount of cost performance improvement that must be
Copyri ght: Nucleus Group
made on the remaining work to reach a set goal.
TCPI (To complete cost performance Index)
TCPI is like “Asking Rate/Required run rate” in a cricket match, CPI is like “run rate”
999 days
Develop Schedule
Esti ma te Costs
Control Costs
Determine budget
Acqui re Project
Tea m Quality Management
Manage
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NucleusTeam
Group
Quality management
Lack of attention results in more rework and defects and costs time and money
What is quality?
Degree to which project fulfills requirements
Implies you need to have all the stated and unstated requirements and
project scope statement
Quality management
Includes creating and following policies and procedures to ensure that a project
meets the defined needs it was intended to meet from the customer’s
perspective. Quality plan includes the procedures, ways of making plots etc.
Responsibility for Quality
1. Senior management is responsible for organizational quality
2. PM has ultimate responsibility for quality of product of project
3. Each team member is responsible for self inspection
Benefits or revenues to improving quality are equal to cost of achieving this quality.
This tells when to stop trying to improve quality.
5
3
Cost ($)
2 Benefits
1 Costs
0
1 2 3 4 5 6 7 8 9
Quality (Increasing)
1. Bench marking: Comparing actual results to those of best practices (of the industry,
strategic targets, competitors etc) to generate ideas for improvement and provide
the basis for measuring performance.
2. Cost –benefit analysis (Marginal Analysis): Analyzing benefits gained with cost to
see if quality improvement is worth the effort.
For a set of numbers {1, 3, 4, 5, 6}, calculate the Mean, Median, Range and
standard Deviation
x x
x x x x x x Average x x Average
x x
SD is low SD is High
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Understanding Quality with Standard Deviation
x x
x x x x x x Average x x Average
x x
SD is low SD is High
High standard deviation indicates lack of predictability in the outcome of the process and
is an undesirable property in a process
State Govt – A: Has a power cut policy: 2 hours anytime during the day
State Govt – B: Has a power cut policy: 2 hours from 9AM to 11AM fixed
1. Fish bone (Cause and effect or Ishikawa Diagram) – Root cause analysis
2. Flow chart – To understand where errors might creep in
3. Histogram – To understand the number and type of problems
4. Pareto chart- Prioritize potential causes of the problem to be solved
5. Check Sheets – Organize data and facts about defects and errors
6. Scatter diagram – To see if there are any variables dependent on each other
7. Control chart – To control a process
Impl ement
Ha nd off
Used to monitor things like project performance figures such as cost and schedule
variance. It is also useful for monitoring the quality of technical process parameters.
Some examples: How long does it take to answer a customers query in a BPO. How long
does it take for us to fix a bug reported by a customer. etc
Out of control
1. A data point falls out of upper or lower control limit
2. There are non-random data points like rule of 7
Rule of 7
7 data points grouped on one side of mean (even though within control limits)
If a process is out of
control, you stop the process.
Investigate the root cause and
fix it before going forward.
1) A Pharma company makes many tablets. If you pick tablets and see whether it is
square or oval in shape it is attribute sampling.
2) If you measure the weight or diameter of the tablet it will be continuous sampling.
Auditing Expediting
Controlling External Warranty
(post customer) Service
Recalls
Total Cost
Develop Schedule
Esti ma te Costs
Control Costs
Determine budget
Acqui re Project
Tea m
Pl a n HR Develop Project Team
Ma na gement
HR Management
Manage
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NucleusTeam
Group
HR Functions
In PMBOK Terminology
1. Sponsor
2. Team
3. Stakeholders
4. Functional Manager
5. Project Manager
4. Identifying constraints
5. Identifying requirements
6. Risk management
Copyri ght: Nucleus Group
Role of Functional manager
1. Assign specific individuals to team and negotiate with project manager regarding
resource
2. Let project manager know of other projects that may impact the project
3. provide subject matter expertise
4. Approve the final schedule during schedule development
5. Recommend changes to project
6. Improve staff utilization
RESPONSIBILITY DEFINITION
Creating a team directory Lists all project team members and other
stakeholders
Negotiating with resource managers for best Functional managers and other project teams have
resources resources; dealing with politics
Creating project job (position) descriptions for Written outlines of job competencies,
team members and other stakeholders responsibilities, authority, physical environment and
other characteristics involved in performing a job
Understanding team/stakeholder training needs Competencies to be developed as part of the project
and making sure they get it
Creating staffing management plan Formal plan for team, management, other
stakeholders, how they will be involved in project
and what roles they will perform
Copyri ght: Nucleus Group
Problem Solving Process
A Who is Accountable Person who makes the final decision and is the Ultimate owner
C Who is Consulted A person who must be consulted before a decision or action is taken
I Who is Informed A person who must be informed after a decision or action is taken
Central Pool31
Cost: 30m$
Budget: 30m$
HR Plan includes
1. Roles and responsibilities
2. Project organizational charts
3. Staffing management plan
To create a rewards and recognition system ask how will you motivate and reward not just
the team but every individual member
Shows the number of resources used per time period and where there is a spike in the
need for resources
Halo Effect
Tendency to rate high or low on all factors due to impression of a high or low rating on
some specific factor.
Refers to the tendency to promote someone to become a project manager due to their
technical competence and not project management abilities
3. Withdrawal-Give up. Anyway you will not listen to me, I will do what you tell me
5. Collaborating-I will listen to you now, but next time you will have to listen to me
CONCEPT DEFINITION
Management Theories
Mc Gregor’s theory
X Type- People need to be watched every time.
Y Type- People are willing to work without supervision
Every person is of one type (only) and each type can be equally successful.
Maslow Theory
(Theory of Hierarchy)
Ouchi’s Theory - Z
Create employee loyalty for life time through job (Japanese theory)
Management and workers need to involve and trust each other
Contingency Theory
Contingency theory puts forth that the effectiveness of a leader is dependent on the
characteristics of that leader, the situation they find themselves in, and the group in
which they are a part. There is no one ideal leader, so your management style and your
methods to motivate your team should be appropriate to the situation that is at hand.
Herzberg’s theory
Hygiene factors – working conditions, salary, personal life, relationships at work, security
status.
Motivating factors- Responsibility, Self-actualization, professional growth, recognition
Poor hygiene factors may destroy motivation but improving them in most circumstances
will not improve motivation
Pl a n Communications Ma na ge Control
Ma na gement Communications Communications
Communications Management
Ri sk Pl an
Ma na gement
Identify Risks
Moni tor & Control
Qua l itative Risk Ri sks
Ana l ysis
Qua ntitative Risk
a na lysis
Pl a n Risk Responses
1. Communications can be informal & formal, written and verbal but it is always
2. An effective manager spends about 90% of his time in communications and roughly
about 50% of that time is spent in communicating with the project team.
etc. In addition, best project managers ask stakeholders what they need
Classification tools such as power/interest grids and salience models can be used
to group stakeholders by qualifications like authority level, impact or influence or
requirements
1 2 1-2
1-3
1-4
2-3
3 4 2-4
3-4
Active management of stakeholder expectations makes them feel their concerns and
needs are at least considered even if they are not agreed to.
Ri sk Pl an
Ma na gement
Identify Risks
Moni tor & Control
Qua l itative Risk Ri sks
Ana l ysis
Qua ntitative Risk
a na lysis
Pl a n Risk Responses
Risk Management
Although risk processes are done in a sequence they are done often during the
course of project, starting in initiation all the way to the end of the project
Process of risk management will help prevent many problems on projects and
make others less likely. This reduction in uncertainty means saving in terms of cost
and time
Risk aversion- Someone who does not want to take risks (For equal choices)
Casino-1: A casino offers 5,000$ to every entrant who walks in.
Casino-2: A coin is flipped, if its heads 10,000$ is given and if tails nothing
Choosing Casino-1, indicates risk aversion, Casino-2 choice indicates risk seeking behavior
“Utility theory” allows one to calculate the riskght:
Copyri taking ability
Nucleus Groupof a person/group using a questionnaire
Plan Risk Management
Plan risk management answers the question of how much time to be spent on risk
management based on the needs of the project. Who will be involved and how
you will go about performing risk management
1. Brainstorming
2. Delphi
3. Interviewing
6. Checklist analysis
7. Assumption analysis
Risk register is the place where most risk information is kept. It is updated as the
risk related procedures are carried out
Risks generated by
1. Customer
2. Lack of PM Effort
3. Lack of knowledge of project management
4. Suppliers
5. Resistance to change
6. Cultural differences
This involves creating a short list of the previously identified risks and is a subjective
technique. To perform this you need
1. Probability of each risk occurring, using a standard scale
2. Impact of each risk occurring using a standard scale
3. It is CRITICAL to give a standard risk rating matrix along with this information. This is
considered a separate and distinct activity
R1
R6
R2 R3
R4
R5
Note that quantitative risk analysis is a more objective evaluation but also requires more
time and cost to evaluate
Fare 1150$
Airline A
Late 4,000$
On time 70%
Airline B
Fare 300$
Late 4,000$
Updated risk
Residual Risks
Register/Watch List
Do not have a
Have a Plan Work around
Plan
Not in risk register
Secondary Risks
Contingency Plan
[New risks]
1. Document non critical risks in a watch list and revisit them periodically
(What is a watch list?)
1. You can choose a combination of risk response strategies
2. During the execution of project you frequently watch out the list of risks to see if any
has increased in importance
3. The most important item to discuss in team meetings is risk
Risk reassessments: Team needs to periodically review risk management plan and risk
register and adjust them as required
Risk Audits: Have a team verify that all risk related procedures like identification, planning
and responses are being done
Reserve analysis: Checking to see how much reserve remains and how much might be
needed
Plan
Distribute Manage Stakeholder
Communications
Information Expectation
Risk Plan
Management
Identify Risks
Monitor & Control
Qualitative Risk Risks
Analysis
Quantitative Risk
analysis
Plan Risk
Responses
1. Request for proposal (RFP)- Will trigger a detailed proposal on how work will be
finished, previous projects, a few sample work profiles etc.
2. Invitation for Bid (IFB)- Will trigger a Bid (total price to do the complete work).
3. Request for quotation (RFQ) – Will trigger a quote (price quote item, hour or other unit of
measure- partial details).
Seller selection
Organizations use different means to select sellers and these methods are dictated by law or
internal policies. If there are competing submissions the buyer might ask for presentations
from the sellers to help select a seller.
Copyri ght: Nucleus Group
Procurement management notes
Procurement process does not end when the contract is entered into. Once the
contract is signed, the procurement must be administered and this involves
making sure all the requirements of the contract, even ones that seem
unimportant are met.
Seller can be sometimes internal to an organization but for PMP Exam, assume
seller is an external party. For all PMP questions assume that you are the BUYER.
1. First it is the project manager’s project and he is ultimately responsible for it.
2. Secondly project manager is the best person to understand the risks in the
project and hence can help in choosing the best contract.
Type of
Advantages Disadvantages
organization
There is higher levels of expertise
Attention of a procurement manager
due to functionalized nature, scale
divided across multiple projects
advantage due to bulk ordering
Department will provide with Difficult for the project manage to
Centralized continuous training, support etc get help when needed
Standardized practices help with Project manager not in control of the
efficiency and understanding process
Individuals have a clear career path
There is no “home department” for
Project manager has easier access
the procurement manager after the
to contracting expertise
project
Difficult to maintain high level of
Procurement manager is more
De-centralized contracting expertise within
loyal to the project
company
There may be very little
standardization, high duplication and
Copyri ght: Nucleus Group inefficiencies in the process
Inputs to procurement process
4. Scope baseline
5. Risk register
8. Project schedule
9. Initial cost estimates for work to be
procured
10. Cost baseline for the project
Make or buy analysis (To Decide whether to outsource or do work inside the company)
One of the main reasons to buy (outsource) is to decrease risk to project’s constraints. It is
better to outsource when it will decrease risk to the project’s constraints (cost, time etc).
1. Performance: This type conveys what the final product should be able to
accomplish, rather than how it should be built or what its design characteristics
should be (e.g. I want a racing car that can reach 100miles/hour in 20 seconds).
2. Functional: Conveys the end purpose or result, rather than specific procedure
(e.g. The car must be able to hold two cup holders and a small refrigerator. Not
worried about the location of refrigerator).
3. Design: Conveys what precisely needs to be done, e.g. Building construction
The choice of type procurement statement of work depends on the nature of work
and the type of industry
Created by the
sponsor/customer and
describes the needs, product
scope and how project fits
their strategic needs
Cost Reimbursable
• When exact scope of work is uncertain and therefore costs cannot be estimated
accurately enough to effectively use a fixed price contract we use cost reimbursable.
• This allows the buyer to pay seller allowable incurred costs (based on bills submitted
which are audited) to the extent prescribed in contract based on the type of cost
contract.
1. Cost contract
• Seller receives no fee (e.g. NGO organization)
• Contract = cost
Seller
Buyer
Risk
Cost is estimated at 210,000$ and the fee at 25,000$. The project is over and the
buyer/seller have agreed that the costs were in fact 200,000$. Because the sellers
costs came in lower than estimated costs the seller shares the savings – 80% to
buyer and 20% to seller. Compute final price and fee
Point of total assumption is the cost of contract after which seller bears the COMPLETE
risk of an over-run
@ 1,125,000
Teaming agreement
1. Sellers joining hands (To form Teams or Alliances) to win the contract. e.g. oil
field bidding, government contracts etc.
Liquidated damage: If the prototype is not developed in 6 months, contractor X agrees to pay a
penalty of US $ 3.0 million. (Alternate: The prototype has to be developed in 6 months- Here
the damage is not known ahead of time- Has to be determined after a legal battle).
Material breach and Time is of essence helps buyer to get higher compensation in times of
Copyri ght: Nucleus Group
dispute, but also increase the cost of contract
Noncompetitive procurement process
1. Single source: Directly deal with preferred seller without procurement
process. You may have worked with them before.
2. Sole source: There is only one source, e.g. patented product
Conducting procurements
Advertizing
Qualified seller’s list
Bidder conferences
Seller proposal
Weighting system
Independent estimates
Screening system
Objectives of a negotiation
1. Obtain a fair and reasonable price
2. Develop good relationship with seller
Claims administration
A claim is the assertion that the buyer did something that has hurt the seller and
the seller is asking for compensation
Termination
A contract can be terminated before it is completed. Contract usually has
provisions for termination
Closure
A contract can be closed either by
1. Completing the work in contract
2. Terminating the contract
Examples of claims
1. Buyer providing LOI, but not providing a contract
2. Taking the vendor’s IP and supplying to another vendor etc
Professional and social responsibility is broken down into the following categories in the
code of ethics and professional conduct:
1. Responsibility
2. Respect
3. Fairness
4. Honesty
Sample Question-1]
If you discover project is suffering because you have not created a project management
plan. If you tell management about it you may lose your job. What will you do?
a) Tell the management
b) Fix the plan and show it
c) Do not tell
d) Do work as usual Copyri ght: Nucleus Group
Respect
• Have high regard for self and others as well.
• It is good to value and encourage diverse perspectives.
• Learn about other’s norms, customs (education, marriage and social) and respect them.
• Do not use your position or power to benefit personally at their expense.
• Listen and understand other’s point of view even if you do not agree.
• Approach those with whom we have a conflict or disagreement directly and immediately
rather than through intermediaries or at a later time.
• Engage in good faith negotiations and respect the property/rights of others.
• Conduct professionally (even when it is not reciprocated).
Sample Question-2]
You are responsible for a new construction project. Your Brother in law is bidding for the
project. What should you do?
a) Tell the management about it
b) Follow the process like everybody else with no partiality
c) Ask your BIL to not bid
d) Resign from this project
Egalitarian Society: A society which favors social equality where there are no classes or
work segregation and there is a equal distribution of power.
Monochronic work: Focusing on single objectives at a time (Doing one task at a time).
PMI expects the professionals to stay engaged and further the profession. Any time PM
has an opportunity to share lessons learned, mentoring, teaching there is a good chance
it is the right answer
You may encounter situation that poses a situation where the project would benefit but
society would suffer. The project manager should avoid all such situations. If the
situation is not untenable then the project manager should disclose the situation and as
a last resort resign the project.