Professional Documents
Culture Documents
Forms of Power
Coercive Punishment - Is based on the idea in the mind of the person being
influenced that the person having the influence has the ability to
inflict punishment or pain.
Reward Reward - Is based on the idea in the mind of the person being
influenced that the person having the influence has the ability to
administer some sort of reward.
Legitimate By Position - Is based on the idea in the mind of the person being
influenced that the person having the influence has this influence
because of the values of the person being influenced. In other
words, the influenced person believes that the person influencing
has the right to do this through formal authority in the organization.
Referent By Personality - Is based on the idea in the mind of the person
being influenced that the person having the influence has this
influence based on the person being influenced having a strong
desire to identify with the person influencing. A person who leads
others by virtue of his or her charisma has this type of power.
Expert Special Knowledge & Ability - Is based on the idea in the mind of
the person being influenced that the person having the influence has
this influence based on special knowledge or ability. This special
knowledge or ability is believed to help the influenced achieve their
goals.
Representative
Formal / Position The project manager has been assigned by senior management and
is in charge of the project. Also known as positional power.
Conflict Styles
Avoiding The person seeks to avoid or postpone having to deal with conflict
(often until more facts can be gathered, or one party has had time to
think it through)
Accommodating The person seeks to maintain the relationship with others by
subordinating his own position
Competing The person seeks to impose his will or solution on others, despite
their misgivings or differing opinions
Compromising The persons seeks to find a solution to the conflict by having each
of the parties make concessions
Collaborating The person seeks to find a solution by involving all parties affected
by the conflict.
Resolving Conflicts
Forcing Win-Lose -- One way to resolve a conflict is for one party to force
the other to agree. This is the kind of conflict resolution that
happens when one person has power over another and exercises it.
Smoothing Loss – Loss -- Temporary – Smoothing minimizes the disagreement
by making differences seem less important. This kind of resolution
occurs when either one of the persons disagreeing or another person
in the group attempts to make the differences smaller than they
seem.
Compromise Loss – Loss -- Compromise is similar to smoothing. Using this type
of conflict resolution, each of the parties gives up something to
reach a common ground. In this resolution the parties themselves
agree to give up on some points but not others. In doing this they
reach a common agreement that has relatively few points of
disagreement.
Problem Solving / Best Solution – Win-Win
Confronting
Withdrawal Yield – Lose -- Temporary
Team Decisions
Individual Very Low Team Involvement – One person actually makes the
decision
Minority Low Team Involvement – A few of those involved in a situation
meet to consider the matter and make a decision, and this decision
is binding for all concerned
Majority Low Team Involvement - More than half of those involved in the
situation make a decision, and it is binding for all concerned.
Consensus Very high Team involvement - Consensus is needed for most
important decisions.
Concordance Complete and absolute - Concordance (100% commitment) is
needed for decisions of critical importance.
Motivation Models
MASLOW
CLAYTON ALDERFER
Negotiations
Murder Boards Murder boards are committees full of folks that ask every
conceivable negative question about the proposed project. Their
goal is to expose strengths and weakness of the project—and kill
the project if it’s deemed worthless for the organization to commit
to. Not a pleasant decision-making process.
Scoring Models Scoring models (sometimes called weighted scoring models) are
(Weighted scoring models that use a common set of values for all of the projects up for
models) selection. For example, values can be profitability, complexity,
customer demand, and so on. Each of these values has a weight
assigned to them—values of high importance have a high weight,
while values of lesser importance have a lesser weight. The projects
are measured against these values and assigned scores by how well
they match to the predefined values. The projects with high scores
take priority over projects will lesser scores.
Benefit/Cost Just like they sound, benefit/cost ratio (BCR) models examine the
Ratios cost-to-benefit ratio. For example, a typical measure is the cost to
complete the project, the cost of ongoing operations of the project
product, compared against the expected benefits of the project. For
example, consider a project that will cost $575,000 to create a new
product, market the product, and provide ongoing support for the
product for one year. The expected gross return on the product,
however, is $980,000 in year one. The benefit of completing the
project is greater than the cost to create the product.
Payback Period How long does it take the project to “pay back” the costs of the
project? For example, the AXZ Project will cost the organization
$500,000 to create over five years. The expected cash inflow
(income) on the project deliverable, however, is $40,000 per
quarter. From here it’s simple math: 500,000 divided by $40,000 is
12.5 quarters, or a little over three years to recoup the expenses.
Discounted Cash Discounted cash flow accounts for the time value of money. If you
Flow were to borrow $100,000 for five years from your uncle you’d be
paying interest on the money, yes? (If not, you’ve got a great
uncle.) If the $100,000 were invested for five years and managed to
earn a whopping six percent interest per year, compounded annually
it’d be worth $133,822.60 at the end of five years. This is the future
value of the money in today’s terms.
Net Present Value The net present value (NPV) is a somewhat complicated formula,
but allows a more precise prediction of project value than the lump
sum approach found with the PV formula. NPV evaluates the
monies returned on a project for each time period the project lasts.
In other words, a project may last five years, but there may be a
return of investment in each of the five years the project is in
existence, not just at the end of the project.
1 15,000.00 14,150.94
2 25,000.00 22,249.91
3 17,000.00 14,273.53
4 25,000.00 19,802.34
5 18,000.00 13,450.65
Investment 78,000.00
NPV $5,927.37
Internal Rate of The last benefit measurement method is the internal rate of return
Return (IRR). The IRR is a complex formula to calculate when the present
value of the cash inflow equals the original investment. Don’t get
too lost in this formula—it’s a tricky business and you won’t need
to know how to calculate the IRR for the exam. You will need to
know, however, that when comparing multiple projects’ IRRs,
projects with high IRRs are better choices than projects with low
IRRs. This makes sense. Would you like an investment with a high
rate of return or a lower rate of return?
Linear Programming
Nonlinear Programming
Integer Algorithms
Dynamic Programming
Multi objective Programming
EAC Formulas
Sources of Power
Legitimate Formal, position
Coercive Punishment
Reward Reward
Expert Expert
Referent Well Respected Person
1 Schedules
2 Priorities
3 Resources
4 Technical Beliefs
5 Administrative Policies & Procedures
6 Project Costs
7 Personalities
Project Endings
Quality Gurus
• Learning Curve – Average unit cost decreases as much units are produced
• Mores – Different standards of conduct in cultures
• Frederick Taylor – believed that work should be broken down into smaller pieces, and
procedures written to perform it.
• Halo effect – Assuming that a person can do other things well because he or she is
currently exhibiting excellent performance
• Referent – Well respected person
• Process – A series of actions that brings about a result
• Project Management process map – A diagram that shows the usual location of
knowledge areas with in the processes
• Privity – Describes contractual relationships (Contractual, confidential information
between customer and vendor)
• Liquidated damages – An agreed-to penalty for missing a project milestone
• Constructive change – One party assumes that the other has the authority to make
changes
• Types of dispute resolutions – Negotiation, Mediation, Arbitration, Litigation
• Variance – Square of Standard Deviation
• Gold Plating – Including enhancements that are not necessary to accomplish the
objective of the project.
• Constrained Optimization – Linear Programming
• MBO – Management by objectives
• Attribute Sampling – Determining if a product conforms to a specification or does not
(GO NO-GO).
• Force Majeure – External risks like Earthquakes, Floods etc.,
• SWOT – Strengths, Weaknesses, Opportunities, Threats.
• Ordinal Scales – Low, High, Very high etc.,
• Cardinal Scales – 0.1, 0.3, 0.5, 0.9 etc.,
• Distribution Types – Uniform, Normal, Triangular, beta and log normal
• Triangular Distribution – Optimistic, Most Likely and Pessimistic.
• Normal & Log Distribution – Mean and Standard deviation
• Sensitivity Analysis – Which risks have the most potential impact on the project?
• Risk Response Strategies – Avoidance, Transfer, Mitigation, Acceptance
• Risk Premium – Company pays to third party for transferring the risk
• Active acceptance – Developing a Contingency plan to execute, should a risk occur
• Passive acceptance – no action, leaving the project team to deal with the risk as they
occur
• Fallback plan – if the risk has a high impact, or if the selected strategy may not fully
effective (or is an additional contingency plan to use in the event that the first
contingency plan fails).
• Contingency allowances – Amounts of time, money, or resources to account for know
risks.
• Risk response Plan – Also called Risk Register
• Reports used to monitor and control the risks – Issue Logs, Action-Item Lists,
Jeopardy Warnings and Escalation Notices.
• Project Closing – Project postmortem
• Project Portfolio management – Is the process of choosing and prioritizing projects
within an organization
• Business Risk – The risk of financial gain or loss
• Pure Risk – Risks that could threaten the safety of the individuals on the project
• JIT – Just in Time – Decreases the inventory investments
• Kaizen Technologies – Small process and product improvements that are carried out
on a continuous basis
• Optimal quality – when revenue from improvements equals the incremental costs to
achieve the quality
• Parkinson’s Law – Work expands so as to fill the time available for its completion.
• Resource Leveling – Smoothes out the project schedule so resources are not over-
allocated. A result of this is that project’s are often scheduled to last longer than
initial estimates.
• Sapir-Whorf Hypothesis – An understanding of the local language, its implied
meaning, and colloquialisms allow individuals to have a deeper understanding of the
people, their values and actions.
• Culture Shock – Initial disorientation a person first experiences when visiting a
country other than his own.
• Ethnocentrism – Happens when individuals measure and compare a foreigner’s
actions against their own local culture. The locals typically believe their own culture
is superior to the foreigner’s culture.
• Sixth domain (Professional Responsibilities) – Ensure Integrity, Contribute to the
knowledge base, Apply professional knowledge, Balance stakeholder interests,
Respect differences.
• Personal Literacy – Understanding and valuing yourself
• Social Literacy – Engaging and challenging others
• Business Literacy – Focusing and Mobilizing your organization
• Cultural Literacy – Valuing and leveraging cultural difference
• Paralingual – Used to describe the pitch and tone on one’s voice
• Exception Report – When variance exceed a given limit
• Bull’s eye – Used to trigger communication needs to management when EVM results
fall with in the identified ranges
• Unilateral Contract – Purchase Order.
• Single source seller – Only one seller the company wants to do the business with.
• Letter of intent – An organization intended to buy from a seller
• Proposal – Does not list the price to complete the work, but instead offers solutions to
the buyer for completing the project needs.
• IFB – Invitation for Bid – Typically a request for sealed document that lists the
seller’s firm price to complete the detailed work.
• RFP – Request for Proposal – Documents from Buyer to seller requesting information
on completing the work
• RFI – Request for Information – Documents from Buyer to seller requesting
information on completing the work
• Letter Contract – Use this for immediate work
• NPV – Net Present Value – NPV assumes reinvestment at the cost of capital – (Sum
of Discounted – Initial Investment)
• IRR – Internal Rate of return – Discounted rate when NPV = 0 – Reinvestment at the
IRR rate
• Common source of conflict during early phases of the project – Priorities
• Common source of conflict during Execution phase of the project – Schedule
• Time and Material (T & M) – Unit price contracts
• Depreciation Types – Straight Line depreciation, Accelerated Depreciation (Sum of
Year’s digit and Double declining balances)
• Sunk Costs – These are all costs incurred prior to a decision point / Monies that have
been spent on the project.
• Opportunity Costs - Based on net present value, this is what you give up because you
did not select an alternate use for the money you are going to spend. Suppose you
have your money invested at 6 percent in a money market fund. If an alternate
opportunity comes along that promises a higher yield, then the opportunity cost of the
new investment is 6 percent. After all of the calculations to justify the project, it still
has to beat 6 percent to be viable. If it seems a little simplistic, that's because it is!
• PERT – Program Evaluation and Review Technique – Used where uncertainty in the
duration of the activities.
• SD – (Pessimistic – Optimistic) / 6
• EV – Expected Value = (O + 4M + P) / 6
• Variance – (SD)2
• 1 SD – 68.26
• 2 SD – 95.44
• 3 SD – 99.73
• 6 SD – 99.99
• Free Float - This is the total time a single activity can be delayed without delaying the
early start of any successor activities.
• Total Float - This is the total time an activity can be delayed without delaying project
completion.
• Project Float - This is the total time the project can be delayed without passing the
customer-expected completion date.
• Steps to find the SD for a total project
o Find EV for each activity and Sum all
o Find the SD by (P – O) 6 formula
o Square the SD calculated in the previous step - Variance
o Sum all the SD squared
o Find Square root of the previous step’s value – This is the SD for the Project
• CPM & PERT – Not considers the resource availability, that is why resource leveling
heuristics will come into picture
• Risk Mitigation – Is an effort to reduce the probability or impact of the risk to a point
where the risk can be accepted.
• Contingency Budget – This money is not assigned to specific project tasks and is set
aside and available to fund the work that must be done if and when a risk occurs –
Required the Project manager approval
• Management reserve – Is similar to the contingency budget in that it is made available
to fund unknown risks when they occur. In order to prevent the inappropriate use of
this budget, a person at a level above the project manager level must approve the use
of these funds.
• Risk Analogy – If rain is the risk
o Avoidance – Don’t go outside, so that we never become wet
o Transfer – Hire another party, so that he will go wet instead of you
o Mitigation – Take an Umbrella
o Acceptance – Go wet
• Expected Value = Risk Probability x Risk Impact
• Least conflict in Implementation Phase – Conflict over personality Issues
• Chart of Accounts – Any numbering system that is used to monitor project costs by
category such as labor, supplies, or materials etc.,
• Net Cash Flow = Cash Flow In – Cash Flow Out
• Blanket Order – The price is based on the goods or services that will be sold over the
period of the blanket order. The seller has a long-term order from the buyer and can
invest in the means of production. The buyer has a stable price for the period of the
blanket order. If the buyer does not buy all the goods or services that were promised,
the price per unit is adjusted at the end of the contract. Since the inventory is
delivered as needed, the inventory carrying cost is of no consequence to the buyer.
• Forward Buying – The amount of goods required for a long period of time is
purchased and delivered at one time. There is a quantity discount for this type of
purchase, but it has no effect on capital investment unless it would be to build a place
to store the goods. It will decrease transportation cost, increase inventory, prevent the
risk of future price increases, and increase the cost associated with obsolescence.
• RFB – Request for Bid – used when source selection will be price driven
• RFP – Request for Proposal – Solution Driven
• Staffing Plan – The functional manager must have a staffing plan that allows him or
her to know where the people in the functional organization are committed.
• Theory X – Type X managers think that all people are basically lazy and that unless
they are threatened or in some way forced to do work, they will not do any work.
These managers direct work to be done and do not allow very much participation in
any decision making, because they feel that the participation by the workers would
only lead to less work being done. Useful for Extremely difficult project like in
military etc.,
• Theory Y – Type Y managers believe that people will do a good job for the sake of
doing it. They believe in participative management and sharing information with the
workers. These managers will also listen to problems that are brought up by their
staff.
• Ouchi’s Theory Z – Stats that workers need to be involved with the management
process.
• General Management Skill – Leading, Communicating, Negotiating, Problem
Solving, Influencing
• Marginal Analysis – Marginal analysis studies the cost of the incremental
improvements to a process or product and compares it against the increase in revenue
made from the improvements. For example, the price of the added feature may cost
the company $7.50 per unit, but the amount of gained sales per year because of the
improvement will meet or exceed the cost of the improvement.
• Attribute Sampling – Measure conformance to quality on a per unit basis
• Variable Sampling – Measure conformance to quality as a whole
• Random Causes – Determine expected variances of quality
• Special Causes – Determine anomalies to quality
• Goldratt’s Critical Chain Theory – Add buffer to the critical chains
• Product scope measured against the Requirements
• Project scope measured against the Project Plan
• Law of diminishing returns – At some point in the work, the “duration to effort ratio”
becomes saturated, and adding additional laborers will actually become
counterproductive.
• Informal Communication – Ad hoc conversations, Memos
• Bulls eye – Communication between PM to Management when variance crosses
some level
• Code of Accounts – Any numbering system to uniquely identify each component of
the WBS
• Claim – A request, demand, or assertion of rights by a seller against a buyer, or vice
versa, for consideration, compensation, or payment under the terms of a legally
binding contract, such as for a disputed change.
• Process Groups – Initiation, Planning, Executing, Controlling and Closing
• Knowledge Areas –
• Common Cause – Random Cause – A source of variation that is inherent in the
system and predictable. On the control chart, it appears as part of the random process
variation (i.e., variation from a process that would be considered normal or not
unusual), and is indicated by a random pattern of points within the control limits.
• Special Cause – A source of variation that is not inherent in the system, is nor
predictable, and is intermittent. It can be assigned to a defect in the system. On a
control chart, points beyond the control limits, or non-random patterns within the
control limits, indicate it.
• Control – Comparing actual performance with planned performance, analyze
variance, assessing trends to effect process improvements, evaluating possible
alternatives, and recommending appropriate corrective action as needed.
• Control Account – Where scope, budget, actual cost, schedule are integrated and
compared to earned value for performance measurement.
• CAP – Cost Account Plan – All the work to be done for Control Account.
• COQ – Cost of Quality
o Prevention & Appraisal
Quality Planning
Quality Control
Quality Assurance (Training etc.,)
o Failure costs
Rework
Components
Cost of warranty
Wastage
Loss of reputation etc.,
• CPI = EV / AC
• CPF / CPPC – Cost-plus-Fee / Cost-plus-percentage-cost – Cost and a fee (% of
costs), which varies from With respect to Actual Cost.
• CPFF – Cost-plus-fixed-fee – Cost and a Fixed fee
• CPIF – Cost-plus-incentive-fee – Cost and a incentive fee (seller earns profit, if it
meets the performance)
• Direct Costs – Costs incurred for exclusive benefit of the project
o Salaries of full time project staff
• Indirect Costs – Generally calculated as % of direct costs
o Overhead costs
o General and administrative costs
o Cost of doing business
Salaries of mgmt indirectly involved in the project
Utilities
• CV = EV – AC
• Critical Activity – Any activity on the Critical Path
• Critical Chain Method – A schedule network analysis technique that modifies the
project schedule to account for limited resources
• Data Date – As-of date or time-now date
• Develop Project Team – The process of improving the competencies and interactions
of team members to enhance project performance.
• EVM – Earned Value Management – Integrate the Scope, Schedule and Resources
for performance measurement
• Effort – Number of labor units required to complete a schedule activity or WBS
component.
• Duration – Number of work periods required to complete a scheduled activity or
WBS component.
• Exception Report – Document that includes only major variations from the plan.
• FMEA – Failure Mode and Effect Analysis – An analytical procedure in which each
potential failure mode in every component of a product is analyzed to determine its
effects on the reliability of that component and, by itself or in combination with other
possible failure modes, on the reliability of the product for all ways that a failure may
occur. For each potential failure, an estimate is made of its effects on the total system
and of its impact. In addition, a review is undertaken of the action planned to
minimize the probability of failure and to minimize its effects.
• FFP – Firm-fixed-price – Firm Fixed amount
• FPIF – Fixed-price-incentive-fee – Fixed price + Fee (if seller meets the project
objectives)
• Fixed Price or Lump-Sum Contract – Fixed Fee. It may also include incentives for
meeting or exceeding the project objectives
• Ground Rules – A list of acceptable and unacceptable behaviors adopted by a project
team to improve working relationships, effectiveness, and communication.
• Imposed Dates
o Start no earlier than
o Finish no later than
• Lag – Plus (+)
• Lead – Minus (-)
• Lowest Qualified Bidder – A contracting process in which the lowest bid is accepted
after meeting the minimum qualifications
• Management by Exception – A management technique that emphasizes attention to
performance behavior that falls outside of some predetermined range of normal or
expected outcomes. This technique is characterized by containment and conservatism.
• Master Schedule – A summary-level project schedule that identifies the major
deliverables and WBS components and key schedule milestones.
• Methodology – A system of practices, techniques, procedures, and rules used by
those work in a discipline.
• Milestone Schedule – A summary level schedule that identifies the major schedule
milestones.
• Near Critical Activity – A schedule activity with low total float.
• Network Open end – A schedule activity with out any predecessor or successor
activities.
• Objective
o A strategic position to be attained
o Purpose to be achieved
o A result to be obtained
o A product to be produced
o A service to be performed
• Path Convergence – Merging of parallel schedule network paths into the same node
in the project schedule network diagram. Many predecessors for an Activity
• Path Divergence – Many successors for an activity. Opposite to Path convergence
• PMB – Performance Measurement Baseline – An approved integrated scope-
schedule-cost plan for the project work against which project execution is compared
to measure and manage performance. Technical and Quality may also be included
• Performance Reporting
o Status Reporting
o Progress Measurement
o Forecasting
• Plan Contracting – The process of documenting the products, services, and results
requirements and identifying potential sellers.
• Planning Package – A WBS component below the Control account with known work
content but without detailed schedule activities.
• Portfolio – Collection of Projects/Programs grouped together to facilitate effective
mgmt of that work to meet the strategic business objectives.
• Mitigation – Preventive Action
• Procedure – A series of steps followed in a regular definitive order to accomplish
something
• Process – A set of interrelated actions and activities performed to achieve a specified
set of products, results or services
• Procurement Documents
o IFB
o Invitation for negotiations
o RFI – Request for various pieces of information related project
o RFQ – Price quotations for standard products/items
o RFP
o Seller responses
• Project life cycle is a subset of Product life cycle
• Product scope – The features and functions that characterize a product, service or
result
• Project – A temporary endeavor undertaken to create a unique product, service, or
result
• Project Life Cycle – Sequence of Phases
• Project Phases – Collection of logically related project activities
o Generally Completed in sequence, may overlap
o Project phase is not a Project management Process group
• Project Scope
o Major deliverables
o Project objectives
o Project assumptions
o Project Constraints
o Statement of Work
o Justification
• Punchlist – The items remaining to be completed after a final inspection
• Quantitative Risk Analysis – The process of numerically analyzing the effect on
overall project objectives of identified risks
• Total Float in Resource-Limited Schedule – Late Finish Date of CPM – Resource-
limited finish date
• Retainage – A portion of contract payment that is withheld until contract completion
to ensure full performance of the contract terms
• Rolling Wave Planning – A form of progressive elaboration planning where work to
be accomplished in the near term is planned in detail at a low level of the work
breakdown structure, while the work far in the future is planned at a relatively high
level of WBS
• Schedule compression – Shortening the project schedule duration without reducing
the scope
• SPI = EV/PV
• Scope changes – A scope change almost always requires an adjustment to Project
Cost or schedule.
• Scope Creep – Adding features and functionality without addressing the effects on
time, costs and resources, or without customer approval
• Sensitivity Analysis – Used to help determine which risks have the most potential
impact on the project by keeping all other uncertain elements at their baseline value.
• Should-Cost Estimate – An estimate of the cost of a product or service used to
provide an assessment of the reasonableness of a prospective seller’s proposed cost.
• SMCI – Standardize, Measure, Control, and Improve
• Solo source – A type of procurement where only one supplier is asked to bid.
• Specification Limits – These are on either side of the mean, of the data plotted on a
control chart meets the customer’s requirements for a product or service. This area
may be greater than or less than the area defined by the control limits
================================ Mean