Project Management Professional (PMP) Study Guide

Certification Study Guide
PMI Certification Materials

To assist PMI candidates for completing the PMI
certification exam administered by the Project Management Institute Content is from A Guide To The Project Management Body Of Knowledge (PMBOK) www.pmi.org
Recurring Themes
Historical Records need to collect and use for planning,

estimating and risk Kickoff meetings are important Work Breakdown Structures Do not introduce benefits that are not stated in requirements Needs of all stakeholders should be taken into account during all projects Team Members must be involved in project planning Project Mangers must be pro-active
Chapter 1 Introduction
Project temporary endeavor undertaken to create a unique product or service
Has a definite beginning and end and interrelated
activities Programs adopt new set of objectives and continue to work; projects cease when declared objectives have been attained
Chapter 1 Introduction
Projects are unique characteristics are progressively
elaborated
Progressively: proceeding in steps Elaborated: worked with care and detail
Scope of project should remain constant even as
characteristics are progressively elaborated
Chapter 1 - Introduction
Project Management: the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a defined project balancing the following:
Scope, time, cost, and quality Stakeholders expectations
Requirements (needs) vs. unidentified requirements
(expectations)
Chapter 1 - Introduction
Programs are groups of projects managed in a coordinated way to obtain benefits not available from managing the projects individually Most programs have elements of ongoing operations
Series of repetitive or cyclical undertakings
Projects are often divided into subprojects for
more manageability
Often contracted out to external organizations
Chapter 2 Project Management Context

Project Phases are marked by the completion of a
deliverable
Tangible, verifiable work product Review of deliverables and approval/denial are phase
exits, stage gates, or kill points
Phases are collected into the Project Life Cycle Set of defined work procedures to establish management control

Project Life Cycle defines:
Technical work performed in each phase Who is involved in each phase
Project Phases can overlap Fast Tracking Common Characteristics of Project Life Cycles:
Cost and Staffing levels are low at start and move higher towards
the end Probability of successfully completing project is low at beginning, higher towards the end as project continues Stakeholder influence is high at the beginning and progressively lowers as project continues

Stakeholders: individuals and organizations who are actively involved in the project
Often have conflicting expectations and objectives In general, differences should be resolved in favor of the
customer individual(s) or organization(s) that will use the outcome of the project Stakeholder management is a proactive task
Project Mangers must determine all stakeholders and incorporate their needs into the project

Stakeholders are:
Project Managers Customers Performing Organizations, owners
Sponsor
Team Internal/External End User Society, citizens Others: owner, funders, supplier, contractor

Organizational Systems: Project based vs. Non-Project
Based
Project Based derive revenues from performing
projects for others (consultants, contractors),management by projects Non-Project Based seldom have management systems designed to support project needs (manufacturing, financial services)

Organizational Cultures and Styles: Entrepreneurial firms more likely to adopt highly participative Project Manager accept higher risk/reward Hierarchical firms less likely to adopt participative Project Manager take fewer risks

Organizational Structures Functional (classical) marked by identifiable superiors. Staff grouped by specialty . Perceived scope of project limited by function (Engineering, HR). Typically have part-time Project Manager Projectized Organization blend functional and projectized characteristics. Mix cross-department personnel with full-time Project Manger

Project Management Skills
General Business Management (consistently producing results
expected by stakeholders) Leading (establishing direction, aligning resources, motivating) Communicating (clear, unambiguous, and complete) Negotiating (conferring with others to reach an agreement) Problem Solving (definition and decision making) Distinguish causes and symptoms Identify viable solutions Influencing Organization (understanding power and politics)

Socioeconomic Influences
Standards document approved that provides common,
repeated use, rules and guidelines
Compliance is not mandatory
Regulations document that identifies products,
services or characteristics
Compliance is mandatory
Standards often become de facto regulations
Internationalization
Cultural Influences

Organization Structure Pros and Cons
Projectized Efficient Organization No home Loyalty Lack of Professionalism Effective Communication Duplication of functions, less efficient resource usage Matrix Visible Objectives not cost effective PM Control More than 1 boss More support More complex to control Utilize scarce resources Tough resource allocation Information distribution Competition of priorities Coordination Policies & Procedures Home based Potential for conflict

Functional Organization
Specialists More emphasis on functions 1 supervisor No career path in PM
Chapter 3 Project Management Processes

Project Management requires active management of
Project Processes
Series of actions that achieve a result Project Management Processes
Describing and organizing the work Specifying and creating the product
Product-Oriented Processes

Process Groups:
Initiating processes: recognizing a project or phase
should begin Planning processes: devising and maintaining a workable plan Executing processes: coordinating resources to execute the plan Controlling processes: ensuring project objectives are met; monitoring, correcting and measuring progress Closing processes: formalized acceptance

Process Groups are linked by the results each produces Process Groups are overlapping activities with various levels of intensity Process Group interactions cross phases rolling wave planning
Provides details of work to complete current phase and
provide preliminary description of work for subsequent phases
Individual processes have inputs, tools and techniques, and outputs (deliverables)

Initiating and Planning Processes Committing the organization to begin
Initiation, High-level planning, Charter
Amount of planning proportional to the scope of
the project Core Planning
Scope Planning written statement Scope Definition subdividing major deliverables into
more manageable units Activity Definition determine specific tasks needed to produce project deliverables Activity Sequencing plotting dependencies

Core Planning (continued)
Activity Duration Estimating determine amount of work needed
to complete the activities Schedule Development analyze activity sequences, duration, and resource requirements Resource Planning identify what and how many resources are needed to perform the activities Cost Estimating develop resource and total project costs Cost Budgeting allocating project estimates to individual work items Project Plan Development taking results from other planning processes into a collective document

Planning/Facilitating Processes manage the interaction among the planning processes
Quality Planning standards that are relevant to the
project and determining how to meet standards Organizational Planning identify, document, and assigning project roles and responsibilities Staff Acquisition obtaining the human resources Communications Planning determining rules and reporting methods to stakeholders

Planning/Facilitating Processes (continued)
Risk Identification determining what is likely to affect the
project and documenting these risks Risk Quantification evaluating risks and interactions to access the possible project outcomes Risk Response Development defining enhancement steps and change control measures Procurement Planning determining what to buy and when Solicitation Planning documenting product requirements and identifying possible sources

Planning/Facilitating Processes (continued)
Order of events:

Scope Statement Create Project Team Work Breakdown Structure WBS dictionary Finalize the team Network Diagram Estimate Time and Cost Critical Path Schedule Budget Procurement Plan Quality Plan Risk Identification, quantification and response development Change Control Plan Communication Plan Management Plan Final Project Plan Project Plan Approval Kick off

Executing Processes
Project Plan Execution performing the activities Complete Tasks/Work Packages Information Distribution Scope Verification acceptance of project scope Quality Assurance evaluating overall project performance on a regular basis; meeting standards Team Development developing team and individual skill sets to enhance the project Progress Meetings


Executing Processes (continued) Information Distribution making project information available in a timely manner Solicitation obtaining quotes, bids, proposals as appropriate Source Selection deciding on appropriate suppliers Contract Administration managing vendor relationships

Controlling Processes needed to regularly measure project performance and to adjust project plan Take preventive actions in anticipation of possible problems
Change Control coordinating changes across the entire
project plan Scope Change Control controlling scope creep Schedule Control adjusting time and project schedule of activities

Controlling Processes (continued) Cost Control managing project budget Quality Control monitoring standards and specific project results; eliminating causes of unsatisfactory performance Performance Reporting status, forecasting, and progress reporting schedule Risk Response Control responding to changes in risk during the duration of the project

Closing Processes
Administrative Closure generating necessary
information to formally recognize phase or project completion Contract Close-out completion and delivery of project deliverables and resolving open issues

Procurement Audits Product Verification Formal Acceptance Lessons Learned Update Records Archive Records Release Team

Overall Processes Influencing the organization Leading Problem Solving Negotiating Communicating Meetings

Project Selection Techniques Comparative Approach (similar projects)
Benefit measurement method
Constrained Optimization (mathematical approach)
Key aspect of scope verification is customer acceptance Only 26 % of projects succeed
Chapter 4 Project Integration Management

Project Integration Management
Ensures that the project processes are properly coordinated Tradeoffs between competing objectives and alternatives in order to meet
stakeholder approval

Project Plan Development Project Plan Execution Overall Change Control
These processes may occur repeatedly over the project duration Historical Records are needed to perform project management well, they are inputs
to continuous improvement

Files Lessons Learned Actual Costs Time Estimates WBS Benchmarks Risks

Project Plan Development
Uses outputs from other planning processes to create
consistent document to guide project execution and control Iterated several times Documents planning assumptions Documents planning decisions that are chosen Facilitates communication Defines key management reviews Provides a baseline to track progress measurement and project control

Project Plan Development Inputs
Other planning outputs: primarily the planning process
outputs (WBS, base documents, application area inputs) Historical information verify assumptions, records of past project performance Organizational policies quality management, personnel administration, Financial controls Constraints factors that limit performance, contractual provisions, budget Assumptions risk factors

Tools & Techniques for Plan Development
Project Planning Methodology any structured
approach (software, templates, forms, start-up meetings Stakeholder Skills & Knowledge tap into plan development; use expertise for reasonableness PMIS Out of the box approach to support all project aspects through closure

Project Plan Development Outputs
Project Plan is a collection that changes over time as more
information about the project becomes available Baseline will change only in response to approved scope change Project Plan includes some or all of the following:

Project Charter Project Management approach or strategy Scope statement Work Breakdown Structure (WBS) Budget, schedule, risks Key Staff, Major Milestones Change Control Plan, Management and Communications Plan

Project Plan Components (continued)

Cost Estimates, scheduled start dates and responsibility assignments Performance measurement baselines Major milestones and target dates Required Staff Risks, constraints and assumptions Subsidiary management plans (scope, schedule) Open Issues Pending Decisions

Supporting Details to the Project Plan Outputs from planning processes Technical documentation Business requirements, specifications, and designs Relevant standards Additional information not previously known

Project Plan Execution Primary process for carrying out the project plan Most costly aspect of project management Direction of organizational resources and interfaces

Project Plan Execution Inputs: Project Plan Supporting Detail Organizational Policies Corrective Action anything to bring expected performance in line with the project plan

Tools & Techniques for Plan Execution
General Management Skills Product Skills and Knowledge defined as part of
planning, provided by staffing Work Authorization System formal procedure for sanctioning work to ensure completion written or verbal authorization Status review meetings regular exchanges of information Project Management Information System Organizational Procedures

Project Plan Execution Outputs Work results the outcome of activities performed is fed into the performance reporting process Change Requests expand/shrink project scope, modify costs and schedule estimates

Overall Change Control
Influencing factors that create change to ensure beneficial results;
ensure that change is beneficial Determining that change has occurred Managing actual changes as they occur
Evaluate impact of change Meet with team to discuss alternatives Meet with management to present decision
Change control requires

Maintaining integrity of performance measurement baselines
(project plan) Ensuring changes to scope are accurately recorded Coordinating changes across knowledge areas (scheduling, risk, cost, quality, etc.) Determine all factors that control change and pro-actively preventing the occurrence; evaluate the impact of change

Inputs to Change Control Project Plan baseline performance Performance Reports issue tracking, risk management Change Requests orally or written, externally or internally initiates, legally mandated or optional

Change Control Tools & Techniques
All Changes must be evaluated before a decision can be
reached Change Control System collection of formal procedures, paperwork, tracking systems, approval levels Change Control Board decision making authority Configuration Management documented procedure to apply technical and administrative direction

ID and document functional and physical characteristics Control changes to these characteristics Record and report change and implementation status Audit items and system to verify requirements

Change Control Tools & Techniques
Performance Measurement earned value, plan variance
analysis Additional Planning revised cost estimates, modify activity sequences, plan adjustments Project Management Information System Change Control System may have

Change Control Plan Change Control Board Change Control Procedures, Corrective Action plans Performance Statistics, Reports, Change forms Specification reviews, Demonstrations, Testing, Meetings
Configuration Management

Change Control Outputs Project Plan Updates Corrective Actions Lessons Learned variance causes and reasoning documented for historical purposes

Configuration Management
Rigorous Change Management as it relates to scope Subset of the change control system
Work Authorization System

Controls gold plating; defines what task is/is not
Meetings
Most are inefficient; keep minutes Status can be determined without meeting

Lessons Learned
Project is not complete until a Lessons Learned is
completed What have we done, how can we do it better

Technical Aspects of the project Project Management (WBS, plans, etc.) Overall Management (communications, leadership) Best to have whole team complete and made available Also called Post Mortem

Integration is a result of need for communication
within a project Primary responsibility to decide what changes are necessary is Management Project Managers must pro-actively define and solve problems before reporting to superiors
Chapter 5 Project Scope Management

Project Scope Management
Processes required to ensure that the project includes
all, and only, work required Defining what is/is not included in the project Project scope work that must be done measured against project plan Product scope features and functions included in the product or service measured against requirements

Initiation process of formally recognizing that a new project exists, or an existing project continue to next phase Involves feasibility study, preliminary plan, or equivalent analysis Authorized as a result of:
Market Demand Business Need Customer Request Technological Advance Legal Requirement

Initiation Inputs:
Product Description characteristics of the
product/service that the project was to create
Less detail in early phases, more comprehensive in latter Relationship between product/service and business need Should support later project planning Initial product description is usually provided by the buyer
Strategic Plan supportive of the organization's goals

Initiation Inputs (continued) Project Selection Criteria defined in terms of the product and covers range of management concerns (finance, market) Historical Information results of previous project decisions and performance should be considered

Tools & Techniques for Initiation
Project Selection Methods: Benefit measurement models comparative approaches, scoring models, economic models

Murder Boards Peer Review Scoring Models Economic Models Benefits compared to costs Linear Programming Integer Programming Dynamic Programming Multi-objective programming
Constrained operation models programming mathematical


Tools & Techniques for Initiation
Project Selection Methods: Decision models generalized and sophisticated techniques Expert judgment Business Units with specialized skills Consultant Professional and Technical Associations Industry Groups Delphi Technique obtain expert opinions on technical issues, scope of work and risks

Keep experts identities anonymous Build consensus

Outputs from Initiation:
Project Charter formally recognizes project, created by
senior manager, includes:

Business need/Business Case Product description & title Signed contract Project Manager Identification & Authority level Senior Management approval Projects Goals and Objectives Constraints factors that limit project management teams options Assumptions factors that are considered true for planning purposes. Involve a degree of risk

Scope Planning process of developing a written statement as basis for future decisions
Criteria to determine if the project or phase is successful
Scope Planning Inputs:

Product description Project Charter Constraints Assumptions

Scope Planning Tools & Techniques
Product Analysis - - developing a better understanding
of the product of the project Cost/Benefit Analysis estimating tangible/intangible costs and returns of various project alternatives and using financial measures (R.O.I.) to assess desirability Alternatives Identification generate different approaches to the project; brainstorming Expert Judgment

Scope Planning Outputs
Scope Statement documented basis for making project
decisions and confirming understanding among stakeholders. Includes:

Project justification business need, evaluating future trade-offs Project Product summary of project description Project Deliverables list of summary of delivery items marking completion of the project Project Objectives quantifiable criteria met for success. Addresses cost, schedule and metrics unqualified objectives indicate high risk (customer satisfaction)

Scope Planning Outputs (continued) Supporting detail includes documentation of all assumptions and constraints Scope Management Plan how project scope is managed, change control procedure, expected stability, change identification and classification
Control what is/is not in the project; prevents delivering extra benefits to the customer that were not specified/required

Scope Definition subdividing major deliverables into smaller, manageable components
Improve accuracy of cost, time, and resource estimates Define a baseline for performance measurement Clear responsibility assignments Critical to project success reduces risk of higher cost, redundancy, time delays, and poor productivity Defines what you are doing; WBS is the tool


Scope Definition Inputs: Scope Statement Constraints consider contractual provisions Assumptions Other Planning Outputs Historical Information

Scope Definition Tools & Techniques
Work Breakdown Structure templates from previous
projects Decomposition subdividing major deliverables into manageable components:

Major elements project deliverables and project management approach Decide cost and duration estimates are appropriate at level of detail Constituent elements tangible verifiable results to enable performance management, how the work will be accomplished Verify correctness of decomposition

All items necessary and sufficient? Clearly and completely defined? Appropriately scheduled, budgeted, assigned?

Scope Definition Outputs
Work Breakdown Structure (WBS) a deliverable-
oriented grouping of project assignments that organizes and defines the scope of the project

Each descending level represents further detail; smaller and more manageable pieces Each item is assigned a unique identifier collectively known as code of accounts Work element descriptions included in a WBS dictionary (work, schedule and planning information) Other formats:

Contractual WBS seller provides the buyer Organizational (OBS) work elements to specific org. units Resource (RBS) work elements to individuals Bill of Materials (BOM) hierarchical view of physical resources

Work Breakdown Structure (WBS)

First Level is commonly the same at the Project Life Cycle (requirements, design, coding, testing, conversion and operation) First level is completed before the project is broken down further Each level of the WBS is a smaller segment of level above Work toward the project deliverables Break down project into tasks that

Are realistically and confidently estimable Cannot be logically divided further Can be completed quickly (under 80 hours rule of thumb) Have a meaningful conclusion and deliverable Can be completed without interruption
Provides foundation for all project planning and control

Work Breakdown Structure (WBS) - Benefits

Prevent work slippage Project team understands how their tasks fit into the overall project and their impact upon the project Facilitates communication and cooperation between project team and stakeholders Helps prevent changes Focuses team experience into what needs to be done results in higher quality Basis and proof for estimating staff, cost and time Gets team buy-in, role identification Graphical picture of the project hierarchy Identifies all tasks, project foundation

WBS phrases
Graphical hierarchy of the project Identifies all tasks Foundation of the project Very important Forces thought of all aspects of the project Can be re-used for other projects

Work Breakdown Structure (WBS) Dictionary

Designed to control what work is done and when Also known as a task description Puts boundary on what is included in a task and what is not included

Scope Verification Inputs
Work results partially/completed deliverables, costs to
date Product documentation description available for review (requirements)
Scope Verification Tools & Techniques

Inspection measuring, examining, testing to
determine if results conform to requirements
Scope Verification Outputs

Formal acceptance documentation identifying client
and stakeholder approval, customer acceptance of efforts

Scope Change Control: Influencing factors to ensure that changes are beneficial Determining scope change has occurred Managing changes when they occur Thoroughly integrated with other control processes

Scope Change Control Inputs: Work Breakdown Structure Performance Reports- issues reported Change Requests expansion/shrink of scope derived from :

External events (government regulations) Scope definition errors of product or project Value adding change new technology
Scope Management Plan

Scope Change Control Tools & Techniques
Scope Change Control System defines procedures how
scope change can occur
All paperwork, tracking systems, approval levels Integrated with overall change control procedures
Performance Measurement determine what is causing
variances and corrective actions Additional Planning

Scope Change Control Outputs: Scope Changes fed back through planning processes, revised WBS Corrective Actions Lessons Learned cause and reasoning for variances documented for historical purposes

Management By Objectives (MBO) Philosophy that has 3 steps:

Establish unambiguous and realistic objectives Periodically evaluate if objectives are being met Take corrective action Project Manager must know that if project is not aligned or support corporate objectives, the project is likely to lose resources, assistance and attention. MBO only works if management supports it
Chapter 6 Project Time Management

Project Time Management Processes required to ensure timely completion of the project No consensus concerning differences between activities and tasks Activities seen as composed of tasks most common usage Other disciplines have tasks composed of activities

Activity Definition: identifying and documenting
specific activities to produce project deliverables identified in the WBS

Must be defined to meet the project objectives

Activity Definition Inputs WBS primary input Scope Statement project justification & project objectives Historical Information Constraints Assumptions

Activity Definition Tools & Techniques Decomposition outputs are expressed as activities rather than deliverables Templates reuse from previous projects

Activity Definition Outputs
Activity List all to be performed; extension to the WBS
and includes description to ensure team members understand work to be performed Supporting Detail organized as needed and include all assumptions and constraints WBS Updates identify missing deliverables and clarify deliverable descriptions. WBS updates often called refinements; more likely using new technologies in project

Activity Sequencing identifying and documenting
interactive dependencies among activities. Support later development of a realistic schedule

Project Management software often used

Activity Sequencing Inputs:
Activity List Product Description product characteristics often affect activity
sequencing Mandatory Sequencing physical limitations, hard logic, prototypes needed; inherent in nature of work being done Discretionary Dependencies defined by project management team; best practices or unusual aspects of project soft logic, preferred logic, preferential logic External Dependencies relationship between project activities and non-project activities (company policies, procurement, etc.) Constraints Assumptions

Network Diagrams
Shows how the project tasks will flow from beginning to end Proves how long the project will take to complete Takes project tasks from low levels of WBS and placing them into
their order of completion (beginning to end)

Activity Sequencing Tools & Techniques
Precedence Diagramming Method (PDM)
constructing network diagram using nodes to represent activities and arrows to indicate dependencies; also called Activity On Node (AON) Most project management software uses Includes 4 types of dependencies:

Finish to Start from activity must finish before to activity can begin; most commonly used Finish to Finish from activity must finish before the next may finish Start to Start from activity must start before next to activity can start Start to Finish task must start before next activity can finish
Use caution with last 3 techniques - logical relationships often not
consistently implemented with project management software

Activity Sequencing Tools & Techniques (continued) Arrow Diagramming Method (ADM) uses arrows to represent activities and connecting at nodes to illustrate dependencies
Also called Activity On Arrow (AOA) Only uses finish to start dependencies PERT and CPM only can be drawn using AOA

Activity Sequencing Tools & Techniques (continued) Conditional diagramming methods

GERT (Graphical Evaluation and Review Technique) System Dynamic Models Allow for non-sequential activities (loops) or conditional branches not provided by PDM or ADM methods

Activity Sequencing Tools & Techniques (continued) Network Templates standardized networks can be used. Composed of subnets, or fragnets

Subnets are several nearly identical portions of a network (floors on a building, clinical trials, program modules) Useful for several identical processes (clinical trials, programming modules).

Activity Sequencing Outputs: Project Network Diagram schematic display of project activities and relationships (dependencies). Should be accompanied by a summary narrative that describes the diagram approach Activity List Updates

Activity Duration Estimating Involves assessing number of work periods needed to complete identified activities Requires consideration of elapsed time, calendars, weekends, and day of week work starts

Activity Duration Estimating Inputs:
Activity Lists Constraints Assumptions
Resource Requirements amount of labor assigned to
activity Resource Capabilities human and material resources, expertise Historical Information

Project Files, or records of previous project results Commercial Duration Estimates useful when durations are not driven by actual work (approval periods, material resources) Project Team Knowledge

Activity Duration Estimating Tools & Techniques
Expert Judgment guided by historical information
should be used whenever possible; high risk without expertise avail. Simulation using different sets of assumptions (Monte Carlo Analysis) to drive multiple durations Analogous Estimating top down estimating use actual, similar, previous known durations as basis for future activity duration. Used when limited knowledge is available. Form of expert judgment

Activity Duration Outputs: Activity Duration Estimates quantitative assessments of work periods to complete an activity. Should indicate a range +/- of possible results Basis of Estimates all assumptions should be documented Activity List Updates

Schedule Development Determining start and finish dates for project activities Without realistic dates, project unlikely to be finished as scheduled Schedule development process often iterates as more information becomes available (process inputs)

Schedule Development Inputs:
Project Network Diagram Activity Duration Estimates Resource Requirements Resource Pool Description availability patterns; shared
resources are highly variable Calendars define eligible work periods
Project Calendars affect all resources Resource Calendars affect specific resource pools or individuals

Schedule Development Inputs (continued):
Constraints Imposed Dates may be required Key events or milestones are initially requested and become expected during project Assumptions Lead and Lag Time dependencies may specify time in
order to satisfy relationship (example 2 weeks to receive order)

Schedule Development Tools & Techniques
Mathematical Analysis calculating theoretical
early/late finish and start dates without regard for resource pool limitations; indicate time periods which activity should be scheduled given resource limits and other constraints:
Critical Path Method (CPM) single early/late start and finish date for all activities. Based on specified, sequential network and single duration estimate. Calculates float to determine flexibility Graphical Evaluation and Review Technique (GERT) probabilistic treatment of network and activity duration estimates Program Evaluation and Review Technique (PERT)- sequential network and weighted average duration to calculate project duration differs from CPM by using mean (expected value) instead of most-likely estimate in CPM

Critical Path Method: refers to estimating based on one time
estimate per activity

One time estimate per task (Most Likely) Emphasis on controlling cost and leaving schedule flexible Drawn using AOA diagrams Can have dummy task 3 Time estimates per activity

PERT (Program Review and Estimating Technique)
Optimistic Pessimistic Most Likely
Emphasis on meeting schedule, flexibility with costs Drawn on AOA diagrams Can have dummy tasks

Monte Carlo Analysis Uses a computer with PERT values and network diagram Tells

Probability of completing a project on any specific day Probability of completing a project for any specific amount of cost Probability of any task actually being on the critical path Overall Project Risk
Suggests that Monte Carlo simulation will create a project duration that is closer to reality than CPM or PERT

Schedule Development Tools & Techniques (continued)
Duration Compression look to shorten project
schedule without affecting scope
Crashing cost and schedule trade-offs to determine greatest amount of compression for least incremental cost often results in higher costs Fast Tracking performing activities in parallel that normally would be sequenced often results in re-work and usually increases risk
Simulation

Resource Leveling Heuristics leveling resources that
apply to critical path activities a.k.a. resource constrained scheduling when limitation on quantity of available resources; sometimes called Resource Based Method often increases project duration Project Management Software

Project Mangers role

Provide the team with the necessary information to properly estimate the task Complete a sanity check of the estimate Formulate a reserve Historical Records Guesses Actual Costs Benchmarks CPM and PERT
Project Team should be involved; determine task estimates


Schedule Development Tools & Techniques Critical Path Method: longest path through a network diagram and determines the earliest completion of the project Proves how long the project will take Indicates tasks that need most monitoring Almost always have no slack

Schedule Development Outputs:
Project Schedule includes planned start and finish
dates for each activity; remains preliminary until resources assignments are approved. Usually in following formats:
Project Network Diagrams (with date information added) show logical and critical path activities Bar or Gantt charts activity start and end dates, expected durations Milestone Charts identifies key deliverables and interfaces Time-scaled network diagrams blend of project network and bar charts

Schedule Development Outputs (continued):
Supporting Detail all assumptions and constraints.
May also include:

Resource requirement by time period (resource histogram) Alternative schedules (best/worst case) Schedule reserve/risk assessments
Schedule Management Plan how updates are managed Resource requirement updates leveling and activity
impact

Schedule Control:
Influencing factors which create schedule changes to
ensure changes are beneficial Determining that schedule has changed Managing actual changes as they occur
Inputs to Schedule Control

Project Schedule baseline approved, measure against
project performance Performance Reports planned dates met, issues Change Requests Schedule Management Plan

Schedule Control Tools & Techniques Schedule Change Control System defines procedures for schedule changes, paperwork, approval, tracking systems Performance Measurement assess magnitude of variations to baseline; determine if corrective action is needed Additional Planning Project Management Software

Schedule Control Outputs: Schedule Updates any modifications, stakeholder notification
Revisions change scheduled start and finish dates generally in response to scope changes. Re-baselining may be needed in drastic situations
Corrective Action re-align performance with project
plan Lessons Learned

Key knowledge points not in PMBOK Need to know manual calculations of network diagrams
Created after project charter and WBS (task estimates and dependencies are determined) Mandatory dependencies (Hard Logic) inherent in nature of work Discretionary dependencies (Soft Logic) based on experience, desire or results External dependencies based on needs and desires of organizations outside the project

Methods to draw network diagrams
Activity on Node (AON) or Precedence Diagramming
Method (PDM)
Boxes represent tasks Arrows show task dependencies 4 types of task relationships

Finish to Start (task must finish before next can start) Finish to Finish (task must finish before next can finish) Start to Start (task must start before next can start) Start to Finish (task must start before the next can finish)
No dummy tasks used

Activity on Arrow (AOA or Arrow Diagramming Method
(ADM)

Arrows used to represent tasks Only Finish to Start relationships are used May use dummy tasks (show dependencies) PERT and CPM estimating techniques can only be drawn using AOA
CPM (Critical Path Method) estimating based on one time estimate per activity (the most likely time estimate) Emphasizes controlling cost and allowing schedule flexibility Can have dummy tasks

Methods to draw network diagrams Activity on Arrow (AOA or Arrow Diagramming Method (ADM) continued:
PERT (Program Evaluation and Review technique) 3 time estimates per activity: Optimistic (O), Most Likely (M), Pessimistic (P) Emphasizes meeting schedule, flexibility with cost Can have dummy tasks

PERT (Program Evaluation and Review technique) Estimating based on 3 formulas:

PERT Duration: (P + 4M + O)/6 Standard Task Deviation: (P O)/6 Task Variance: PO 2
Total project estimate:
Add up all Optimistic, Most Likely and Pessimistic values of the critical path tasks and apply P + 4M + O/6 Add up the individual task variances and take the square root of the value. Use the value as a +/- figure to compute the Optimistic and Pessimistic values. The total project estimate will serve as the basis.
Total project variance (+/-):

Monte Carlo Simulation:
Uses a computer with PERT values (P, M, O) and a
network diagram but does not use the PERT formula Indicates

Probability of completing project on a specific day Probability of completing project for any specific amount of cost Probability of any task actually being on critical path Overall project risk

Estimating techniques in general:
Should be performed by entire project team Project manager needs to provide information to allow team to create estimates; sanity check; formulate reserve
Estimates are: Guesses, Historical Records, Actual Costs, Benchmarks, CPM, PERT
Critical paths determines the earliest completion date and identifies tasks that need monitoring Can be obtained by CPM, PERT and Monte Carlo estimating techniques

Key Definitions:
Slack (Float): the amount of time a task can be delayed
without delaying the entire project. Tasks on critical path have no slack.
Slack is calculated by the difference between Early Start and Late Start of a task
Free Slack (Float): the amount of time a task can be delayed without delaying the early start date of its successor Total Slack (Float): the amount of time a task can be delayed without delaying the project completion date
Lag: inserted waiting time between tasks

General Comments:
Projects can have more than 1 critical path (increases risk) and can
involve dummy tasks Negative float indicates that you are behind Resource Leveling involves possibly letting schedule and cost slip Heuristics just means rule of thumb e.g. 80/20 rule Schedules are calendar based makes this different than a time estimate

Bar Chart a.k.a. Gantt chart (track progress, report to entire team including stakeholders, control tool) Network Diagram (to show task inter-dependencies, show project organization, basis for project control) Milestone chart (report to Senior management, shows major events)

General Comments: To shorten project schedule examine the critical path

Crashing add more resources to the critical path tasks Usually results in increased cost Fast Tracking performing tasks in parallel Can result in re-work and increased risk
Best to select method that has least impact on the
project (is the importance on cost, risk or schedule?)

General Comments:
Bar (Gantt) Charts Weak Planning Tool, effective progress and reporting tool Does not show interdependencies of tasks Does not help organize the project more effectively Network Diagrams (PERT, CPM, PDM) Shows task interdependencies Aids in effectively planning and organizing work Provides a basis for project control Milestone Charts Only shows major events Good for reporting to management and customer Flow Charts Depicts workflow and not commonly used for project management

General Comments:
Free Slack (Float) amount of time a task can be delayed without delaying the early
start date of its successor Total Slack (Float) amount of time a task can be delayed without delaying the project completion date
Lag inserted waiting time between tasks Resource Leveling level peaks of resource usage; stable number of resources allows schedule and cost slip in favor of leveling resources Heuristic rule of thumb (80/20 rule)
Chapter 7 Project Cost Management

Project Cost Management
Ensure that the project is completed within budget Concerned with cost of resources needed to complete
activities; consider effect of project decisions on cost of using product life-cycle costing Most prospective financial impact of using the product is outside the project scope Consider information needs of stakeholders, controllable and uncontrollable costs (budget separately for reward and recognition systems)

Project Cost Management
Estimating should be based on WBS to improve accuracy Estimating should be done by the person performing the work Having historical records is key to improving estimates Costs (schedule, scope, resources) should be managed to estimates A cost (schedule, scope, baseline) should be kept and not changed Plans should be revised as necessary during completion of work Corrective action should be taken when cost problems (schedule,
scope and resources) occur.

Resource Planning:
Determining what physical resources and quantities are
needed to perform work
Inputs to Resource Planning:

Work Breakdown Structure
Historical Information Scope Statement justification & objectives Resource Pool Description what resources are
potentially available for resource planning Organizational Policies staffing, procurement

Inputs to Resource Planning:
Work Breakdown Structure Network Diagram Schedule
Risks
Historical Information Scope Statement justification & objectives Resource Pool Description what resources are
potentially available for resource planning Organizational Policies staffing, procurement

Resource Planning Tools & Techniques Expert Judgment Alternatives Identification Resource Planning Outputs: Resource Requirements what type & how many resources are needed for each activity in the Work Breakdown Structure

Cost Estimating: Develop approximate costs of resources Distinguish estimating from pricing

Estimating likely amount Pricing business decision
Identify alternatives and consider realigning costs in
phases to their expected savings

Cost Estimating Inputs:
Work Breakdown Structure Resource Requirements Resource Rates (if known) Activity Duration Estimates Historical Information (project files, commercial cost
databases, team knowledge Chart Of Accounts coding structure for accounting; general ledger reporting

Cost Estimating Tools & Techniques
Analogous Estimating top down; using actual costs
from previous project as basis for estimate
Reliable when previous projects are similar and individuals have expertise form of expert judgment
Parametric Modeling uses project characteristics in
mathematical models to predict costs (e.g.building houses)
Reliable when historical information is accurate, parameters are quantifiable, and model is scalable
2 types: Regression analysis, Learning Curve
Bottom Up Estimating rolling up individual activities
into project total smaller work activities have more accuracy -

Pros and Cons Analogous Estimating Quick - Less Accurate Tasks dont need to be identified Estimates prepared with little detail and understanding of project Less costly Requires considerable experience to do well Gives PM idea of management expectations Infighting at high levels of organization Overall project costs are capped Difficult for projects with uncertainty

Pros and Cons Bottom Up Estimating More Accurate Takes time and expense Gains buy-in from the team Tendency for team to pad estimates Based on detailed analysis of project Requires that project be defined and understood Provides a basis for monitoring and control Team infighting to get biggest piece of pie

Outputs from Cost Estimating
Cost estimates quantitative assessments of likely costs of resources
required to complete tasks

For all resources of the project (labor, materials, supplies, inflation allowance, reserve) Expressed in units of currency
Supporting Detail Description of scope (reference to the WBS) Documentation how estimate was developed Indication of range of possible results Assumptions Cost Management Plan how cost variances will be managed Cost Risk: associated to seller for Fixed Price; associated to buyer for Time
and Materials budget

Cost Budgeting
Involves allocation of total estimate to individual work
to establish a cost baseline to measure performance
Cost Budgeting Inputs

Cost Estimate
Work Breakdown Structure Project Schedule includes planned start and finish
dates for items costs are allocated to
Needed to assign costs during the time period when the actual cost will be incurred

Cost Budgeting Tools & Techniques
same as Cost Estimating Tools and Techniques
Outputs from Cost Budgeting

Cost Baseline time phased budget to measure and
monitor cost performance
Developed by summing estimated costs by period (S curve of values vs. time) Larger projects have multiple baselines to measure different aspects of cost performance

Cost Control
Concerned with influencing factors that create changes to the cost
baseline that are beneficial Determining that the cost baseline has changed Managing actual changes as they occur

Monitor cost performance to detect variances Record all appropriate changes accurately in the cost baseline Preventing incorrect, unauthorized changes being included in the cost baseline Informing stakeholders of authorized changes

Determine the whys of positive and negative variances Integrated will all other control processes (scope, change, schedule, quality)

Inputs to Cost Control
Cost Baseline Performance Reports meet, exceed budget 50/50 Rule task is considered 50% complete when it begins and gets credit for remainder 50% only when completed 20/80 Rule - task is considered 20% complete when it begins and gets credit for remainder 80% only when completed 0/100 Rule task only credited when fully completed Change Requests Cost Management Plan
Tools & Techniques of Cost Control

Cost Change Control System defines the procedures by which the cost baseline may
be changed Performance Measurement assess magnitude of cost variations (Earned Value Analysis) and what is causing the variance Additional Planning examine alternatives Computerized Tools forecast planned costs, track actual costs, forecast effect of cost changes

Cost Control Outputs
Revised Cost Estimate Modifications to cost information; require stakeholder approval and adjustments to other project areas Budget Updates changes to approved cost baseline; revised in response to
scope changes Corrective Action Estimate at completion (EAC) forecast of total expenditures
Actual to date plus remaining budget modified by a factor (cost performance index)
Current variances are seen to apply to future variances Original estimates are flawed, or no longer relevant Current variances are typical and similar variances will not occur in the future
Actual to date plus new estimate for remaining work
Actual to date plus remaining budget
Lessons Learned

Earned Value Analysis
Integrates cost, schedule and scope Better that comparing projected vs. actual because time
and cost are analyzed separately Terms:

BCWS Budgeted Cost of Work Scheduled (how much work should be done) BCWP Budgeted Cost of Work Performed a.k.a. Earned Value (how much work is budgeted, how much did we budget) ACWP Actual Cost of Work Performed (how much did the completed work cost)

Earned Value Analysis Terms:

BAC Budget at Completion (how much did you budget for the total job) EAC Estimate at Completion (what do we expect the total project to cost) ETC Estimate to Completion (how much more do we expect to spend to finish the job) VAC Variance at Completion (how much over/under budget do we expect to be)

Earned Value Analysis Formulas

Variance (Plan Actual) Cost Variance (CV): BCWP ACWP; negative is over budget Schedule Variance (SV): BCWP BCWS; negative is behind schedule Cost Performance Index (CPI): BCWP
ACWP
I am only getting x out of every $
BCWP ACWP

Formulas BCWS Schedule Performance Index (SPI): BCWP BCWS
BCWP
BAC Estimate at Completion (EAC): BAC CPI
I am only progressing x % of the planned rate
CPI
As of now we expect the total project to cost x$
Estimate to Complete (ETC): EAC ACWP; how much will it cost from now to completion Variance at Completion: BAC EAC; when the project is over how much more or less did we spend (most common way of calculating EVA

BCWP comes first in most formulas If it is a variance, BCWP comes first If it is an index, BCWP is divided by If the formula relates to cost, use AWCP If the formula related to schedule, use BWCP Negative is bad; positive results are good ETC refers to this point on; EAC refers to when job is
completed

Accuracy of Estimates Order of Magnitude Estimate: -25% - 75%; usually made during Initiation Phase Budget Estimate: -10% - 25%; usually made during the Planning phase Definitive Estimate: -5% - 10%; usually made during the Planning phase

Accounting Standards Not usually part of the exam Present Value (value today of future cash flows):
PV = FV (1 + r) N FV = Future Value R = Interest Rate N = Number of time periods

Accounting Standards
Net Present Value: total benefits (income or revenue) less the costs.
NPV is the sum of each present value of each income/revenue item Internal Rate of Return (IRR): company may select project based on highest IRR Payback Period: number of time periods it takes to recover the investment in the project before generating revenues Benefit Cost Ratio (BCR): compares costs to the benefits of different projects

Greater than 1 means benefits are greater than costs Less than 1 means costs are greater than benefits
Opportunity Cost: opportunity given up by selecting one project
over another

Sunk Costs: expended costs. Sunk costs should not be considered
when determining to continue with a troubled project Law of Diminishing Returns: the more that is put in the less of an outcome is received Working Capital: current assets current liabilities Variable Cost: costs that change with the amount of production or the amount of work (materials, wages) Fixed Cost: non-recurring costs that do not change Direct Cost: directly attributable to project work (travel, wages, materials) Indirect Cost: overhead items or costs for the benefit of more than one project (taxes, fringe benefits)

Depreciation: assets lose value over time Straight Line depreciation: same amount is taken each year Accelerated Depreciation: 2 forms

Double Declining Balance Sum of the Years Digits
Life Cycle Costing: includes operations and
maintenance phases Value Analysis: find a less costly way to do same work

Make or Buy decisions at Development (Planning)
phase, not conceptual phase Project Objectives are not necessarily needed to fund project Project Definition focus on end product initially; costs and benefits will be evaluated later 25% of project lifecycle expended at end of planning No guarantees; only most likely results

Accounting Standards Line of Balance charts are used for manufacturing Negative Float the late start date is earlier than the early start date Value Engineering/analysis does not trade performance for cost Prospectus profitability and technical feasibility used to solicit funding

Definitive Estimate most precise/accurate estimate for
determining project costs Management Reserve over time PM wants no change to reserve; customers wants $ back Cost and Schedule Data predicts future performance ROI, Nest Present Value and Discounted Cash Flow all can be used to measure total income vs. total $ expended Undistributed budget budget that contains approved scope changes but are not planned yet Depreciation is not a measurement of profitability Pay Back Period - # of periods required to recover the initial investment
Chapter 8 Project Quality Management

Project Quality Management Processes required to ensure that the project will satisfy the needs for which it was designed Includes all activities of the overall management function that determine the quality policy, objectives, and responsibilities. These are implemented by quality planning, quality control, quality assurance, and quality improvement

3 major processes:
Quality Planning identifying quality standards that are relevant to
the project (Plan); Project Manager, Project Owner Quality Assurance evaluating overall project performance to provide confidence that project will satisfy relevant quality standards (Implement or Execution); Project Team Quality Control monitoring specific results to comply with quality standards and eliminating unsatisfactory performance causes (Check or Control); Project Manager, Project Team

Compatible with ISO 9000 and 10000 series Proprietary and non-proprietary approaches (total quality management Must address the management of the project and the product of the project

Quality the totality of characteristics of an entity that bear on its
ability to satisfy stated or implied needs
Critical aspect is to turn implied needs into stated needs through project
scope management Do not confuse with grade category or rank given to entities having the same functional use but different requirements for quality Customer satisfaction conformance to specifications (must produce what is stated) and fitness for use (must satisfy real needs) Prevention avoid mistakes vs. cost of correction Management responsibility requires participation of team; responsibility of management to provide resources Processes within phases plan-do-check-act cycle
Recognize that the investment in product quality improvements may be borne by the performing organization since the project may not last long enough to reap reward
Chapter 8 Project Quality

Management
Quality Planning
Identify quality standards are relevant and how to satisfy
Inputs to Quality Planning

Quality Policy the overall intentions and direction of an
organization with regard to quality as expressed by management Scope Statement Product Description Standards and Regulations Other Process Outputs processes from other knowledge areas (procurement planning)

Management
Tools &Techniques for Quality Planning
Benefit/Cost Analysis consider trade-offs, benefit is less rework;
cost is expense of project management activities Benchmarking comparing actual or planned practices to those of other projects Flowcharting

Cause and effect diagramming (Ishikawa or fishbone diagrams) illustrate how causes relate to potential problems or effects System or Process flowcharts show how various elements of the system interrelate
Helps anticipation of what and where quality problems may occur
Design of Experiments analytical technique which defines what
variables have most influence of the overall outcome
Cost and schedule tradeoffs

Management
Outputs from Quality Planning
Quality Management Plan describes how team will implement its
quality policy; describes the project quality system organizational structures, responsibilities, procedures, processes and resources needed to implement quality management Operational Definitions defines how an item is measured by the quality control process. Also known as Metrics. Checklists structured tool used to verify that a set of required steps has been performed Inputs to other processes may identify a need for further activity in another area

Management
Quality Assurance
All planned and systematic activities implemented
within the quality system to provide confidence that the project will satisfy quality standards
Inputs to Quality Assurance

Quality Management Plan Results of quality control measurements (testing)
Operational definitions

Management
Tools & Techniques for Quality Assurance
Quality planning tools & techniques Quality Audits structured review of quality
management activities to identify lessons learned
Outputs from Quality Assurance

Quality improvements taking action to increase the
effectiveness and efficiency of the project to provide added benefits to the stakeholders
Most likely will involve change control

Management
Quality Control monitoring specific results to determine
if they comply with quality standards and identifying ways to eliminate causes of unsatisfactory results
Includes project (deliverables) and management (cost and schedule
performance) results Awareness of statistical quality control

Prevention (keep errors out of process) and inspection (keep errors from customers) Attribute sampling (result conforms) and variable sampling Special Causes (unusual events) and random causes Tolerances (acceptable range) and control limits (result falls within range)

Management
Inputs to Quality Control Work results include process and product results Quality Management Plan Operational Definitions Checklists

Management
Tools & Techniques for Quality Control
Inspection activities such as testing to determine if results comply with
requirements Control Charts plot results over time Pareto diagrams frequency of occurrence that identifies type or category of result (80/20 rule) guides corrective action Statistical sampling select population of interest for inspection Flowcharting Trend Analysis forecast future outcomes based on historical results

Technical performance (# of errors identified; # of errors that remain) Cost and Schedule performance (activities per period with significant variances)

Management
Outputs from Quality Control
Quality Improvement Acceptance Decisions (accept/reject) Rework action to bring defective item into compliance Frequent cause of project overruns Completed checklists Process Adjustments immediate corrective/preventive
actions
Most likely involves change control

Management
Tips from the Review Guide
Philosophy: definition of quality, avoidance of gold plating
giving customer extras, prevention over inspection Conformance to requirements, specifications and fitness of use Quality Management processes required to ensure that the project will satisfy the needs for which it was undertaken Continuous Improvement - small improvements to reduce costs and ensure consistency Marginal Analysis optimal quality is reached at the point when revenue from improvement equals the costs to secure it
Just in Time
- decrease amount of inventory/decrease investment

Management
ISO 9000 or 10000 standards to ensure that
corporations follow their own quality procedures Total Quality Management continuous improvement in business practices Normal Distribution most common probability used to measure variations Standard deviation (sigma) measure how far away from the mean (dotted vertical line) 3 or 6 sigma represents level of quality

+/- 1 sigma equal to 68.26% +/- 2 sigma equal to 95.46% +/- 3 sigma equal to 99.73%

Management
Tips from the Review Guide Responsibility to quality entire organization

Ultimate employee Overall or Primary Project Manager Design and Test Specifications engineer
Prevention over inspection quality must be planned in
not inspected in

Management
Cost of conformance vs. non-conformance Quality Training vs. rework Studies vs. Scrap Surveys vs. Inventory Costs and warranty costs Quality Planning (Plan) determine what will be
quality on project and how quality will be measured done during Planning Phases

Identifying which standards are relevant to project how to satisfy them Benchmarking look at past projects to determine ideas for improvement Cost Benefit Analysis Flowcharts (fishbone)

Management
Tips from the Review Guide Quality Assurance (Implement) determine if your measurement of quality is appropriate done during Execution phases
Process of evaluating overall performance on a regular basis Quality Audits structured review of quality activities that identify lessons learned

Management
Tips from the Review Guide Quality Control (Check) perform the measurement and compare to the quality plan done during Control phases
Process of monitoring specific project results to determine if they comply with relevant quality standards and identify ways of eliminating unsatisfactory performance Performance of the measurement or process, using quality control tools checking work

Management
Quality Control Tools Pareto Diagrams 80/20 rule the chart presents the information being examined in its order of priority and helps focus attention on the most critical issues Fishbone diagram (Cause and Effect) A creative way to look at the causes or potential causes of a problem Helps stimulate thinking, organizes thoughts and generates discussion Can be used to explore a desired future outcome and the factors to which it relates

Management
Quality Control Tools

Checklists list of items to inspect Control Charts graphic displays of the results over time used to determine if a process is in control Upper and Lower Control Limits two dashed lines show the acceptable range of a variation range determined by companys quality standard (sigma) Mean line in the middle shows middle of the range of acceptable results Specification Limits 2 solid lines outside the upper and lower control limits represent the customer's expectations/requirements of quality

Management
Quality Control Tools Out of Control process is out of control when: A data point falls outside of the upper or lower control limit Non-random data points are within the upper control and lower control limits Rule of 7 non-random points outside the mean - process should be investigated Assignable Cause data point the requires investigation to determine the cause of the variation

Management
PMI and Deming Cost of conformance 85% of costs of quality are responsibility of Management
Quality Training Rework Studies Scrap Surveys Inventory and Warranty costs
Crosby absolutes of quality Performance standard is zero defects; measurement system is cost of non-conformance Continuous Improvement Japanese (Kaizen)

Management
Marginal Analysis optimal quality is reached when
incremental revenue from improvement equals incremental cost to secure Variable characteristic to be measured Attribute measurement (objective or subjective) Increase quality = increased productivity, increased cost effectiveness, decreased cost risk

Review Guide Tips
Primary responsibility for quality management is the
PM Results of increase in quality
Increased productivity Increased cost effectiveness Decreased cost risk
Quality attributes can be subjective, objective and are
specific characteristics for which a project is designed and tested Quality assurance example is team training Cost of Conformance = team training

Review Guide Tips
Marginal Analysis: optimal quality is reached when
incremental revenue from improvement equals the incremental cost to secure Standard Deviation: how far away from mean Variable: characteristic you want to measure Attribute: measurement (subjective or objective) Ultimate Responsibility Employee Overall Responsibility PM Design/Test Specifications - Engineer

Review Guide Tips
If quality sample size increases, the quality control band
decreases Product Cost plus Operations and Maintenance costs increase perceived value when balanced Cost of Conformance = training Crosby Absolutes of Quality performance of standard is zero defects and the measurement system is the cost of non-conformance Deming & Japanese are associated with Quality Improvement programs Quality Control performed by operating personnel

Review Guide Tips
Quality objectives are approved in conceptual stage by
project owner QA auditing function that provides feedback to team and client about quality of output being produced If sample size is a constant and acceptance numbers increase, the producers risk decreases and consumer risk increases 85% of costs of quality are direct responsibility of management
Chapter 9 Human Resource Management

Project Human Resource Management
Processes required to make the most efficient use of
people 3 major processes:

Organizational Planning Staff Acquisitions Team Development
Keep in mind of transient nature of projects Apply techniques that apply to current project needs Ensure HR compliance with project management
activities

1,9 manager = good relationship with team Project Organization

Conflict between PM and Functional Managers Dual allegiance of team members Complex prioritization of resources Loss of developed procedures on project dissolution
Compromise = both sides will lose Delegation

Defer the decision Interpreted as passive Emphasize task vs. personnel Can be frequently used

If there is a team of experts, PM decisions will promote
high satisfaction Functional/Project Managers likely to exercise:

Power Authority Influence
Traditional organization forms have no single point of
contact for client/sponsor
Chapter 9 Human Resource

Management
Organizational Planning Identifying, documenting and assigning project roles, responsibilities, and reporting relationships
Individual and group assignments Internal and external employees Linked with communication planning

Management
Inputs to Organizational Planning
Project Interfaces Organizational interfaces formal and informal reporting relationships among organizational units Technical interfaces - formal and informal reporting relationships among technical disciplines
Engineers, manufacturers, electrical, etc.
Interpersonal interfaces formal and informal reporting relationships among individuals
Staffing Requirements define skill sets from
individual/group in particular time frames

Management
Inputs to Organizational Planning Constraints factors that limit project teams options

Organizational structure (strong vs. weak matrix) Collective bargaining agreements contractual arrangements Preferences of project management team Expected staff assignments

Management
Tools & Techniques for Organizational Planning
Templates reuse a similar projects role and
responsibility definitions Human Resource Practices corporate policies, guidelines, and practices Organizational Theory how organizations are structured Stakeholder Analysis needs of stakeholders are ensured

Management
Outputs from Organizational Planning
Role and Responsibility Assignments can vary over time, closely
linked to scope definition. Utilizes a Responsibility Assignment Matrix (RAM) to define responsibility for each item in the Work Breakdown Structure/task list Staffing Management Plan when and how personnel are included and removed from the project team
Resource leveling, reduce transition periods, eliminate dead time between assignments, sensitivity to morale
Organizational Chart display reporting relationships Supporting Detail
Organizational impact Job descriptions Training needs

Management
Staff Acquisition
Ensure resources are available for project work
Inputs to Staff Acquisition

Staffing Management Plan Staffing Pool Description Previous experience Personal interests Personal characteristics Availability Recruitment Practices

Management
Tools & Techniques for Staff Acquisition
Negotiations with functional managers and other teams Staff utilization and corporate politics Pre-assignment result of a competitive proposal, or an
internal initiative Procurement outside services are needed (lacking internal skills or availability can not be met)
Outputs from Staff Acquisition

Project staff assigned Project Team Directory contact list

Management
Team Development enhancing stakeholders to
contribute along with maintaining the project teams functionality

Personal development is the foundation
Team members often balance responsibilities to a
functional manager and project manager
Critical to success of project

Management
Inputs to Team Development Project Staff Project Plan Staffing Management Plan Performance Reports External Feedback
Periodic measurements of performance

Management
Tools & Techniques for Team Development
Team-building activities General Management Skills Reward and recognition systems Promote desired behavior Must be achievable; apply to the project Cultural differences recognition Co-location place members in physical location
Training enhance skills, knowledge, and capabilities of
project team
Must be factored in cost analysis of project

Management
Outputs from Team Development Performance Improvements

Individual skills Team Behavior Identify more efficient methods of work
Input for performance appraisals

Management
Review Guide Tips
Roles and responsibilities Project Manger plan, estimate and schedule of project Team help prepare the WBS, Network Diagrams, and estimate time for tasks, complete tasks Senior Management approve Overall project plan, budget and schedule and to approve any changes that are made to those figures The person experiencing the problem must try to solve it themselves as long as means are in their control

Management
Review Guide Tips
Powers: Formal (legitimate) Reward Penalty (coercive) Expert (earned) Referent authority of a higher position Best are Expert and Reward; Penalty is the worst Formal, Reward and Penalty derived from PMs position within the company

Management
Review Guide Tips
Conflict Inevitable consequence of organizational interactions Can be beneficial Resolved by identifying the causes and problem solving by people that are involved & their immediate manager Nature of project Limited power of the project manager Necessity for obtaining resources from functional managers

Management
Review Guide Tips
Avoid conflict Informing the team Clearly assigning tasks without ambiguity Challenging and interesting work assignments Conflict Sources (in order of frequency) Schedules Project Priorities Resources Technical opinions Administrative Procedures Cost Personality

Management
Review Guide Tips
Motivational Theories Maslows Hierarchy of Needs people work to get a chance to contribute and use their skills
self-actualization X people need to be watched every minute Y people willing to work without supervision
McGregors Theory of X and Y

Herzbergs Theory poor hygiene factors destroy motivation but improving them will not improve motivation
Motivating Agents Responsibility Self-actualization Professional growth Recognition

Management
Review Guide Tips
Responsibility Charts Matrix cross references team members with tasks (does not show time when job is done) Histogram months vs. number of resources Gantt Chart shows when staff allocated to tasks Leadership Skills Directive Facilitating Coaching Supportive Team Building Skills

Review Guide Tips
Projectized Organization Conflict between PM and Functional Managers Dual Allegiance of team members Complex prioritization of resources Loss of developed procedures on project dissolution Compromise both sides will lose Delegation Defer the decision Interpreted as passive Emphasize task vs. personnel Can be frequently utilized
Chapter 10 Project Communications Management

Project Communications Management
Processes to ensure timely and proper generation,
collection, dissemination and disposition of project information General communications management
Communications Planning determining informational needs, who needs what and when; 90% of PMs time is spent communicating Information Distribution making information available Performance Reporting collecting and disseminating project information Administrative Closure formalize project/phase completion

Communications Planning
Determining information requirements of stakeholders Tightly linked with organizational planning
Inputs to Communications Planning

Communication requirements sum of the information
requirements of the stakeholders

Define type and format of information with analysis of value of information Project organization and stakeholder responsibility relationships Disciplines, departments and specialties involved in project Logistics of number of individuals at location External communication needs (media)

Communication Technology used to transfer
information

Immediacy of need for information Availability of technology Expected project staffing compatible with personnel experience Length of project will technology change during duration?
Constraints factors that limit project teams options Assumptions

Tools & Techniques for Communication Planning
Stakeholder analysis informational needs should be analyzed to
develop methodology suited for the project; eliminate unnecessary information or technologies
Outputs from Communications Planning

Communication Management Plan

Collection and filing structure to detail the gathering and storage of information; updating and dissemination Distribution structure who gets info in certain format; compatible with project organization chart Description of information included format, level of detail, conventions Production schedules of each type of communication Methods for accessing information Method for updating and refining communications plan

Information Distribution making information available in a timely manner by implementing the communications plan; responding to requests for information
Inputs to Information Distribution
Work Results Communication Management Plan Project Plan

Tools & Techniques for Information Distribution
Communication Skills used to exchange information. Sender is
responsible for clarity; receiver is responsible for receipt and understanding Information retrieval systems filing systems, software Information distribution systems meetings, correspondence, networked databases, video/audio conferencing
Outputs from Information Distribution

Project Records maintained in an organized fashion

Performance Reporting Collecting and disseminating performance indicators to provide stakeholders information how resources are achieving project objectives

Status reporting Progress reporting Forecasting Project scope, schedule, cost and quality, risk and procurement

Inputs to Performance Reporting Project Plan Work Results deliverables completed, % completed, costs incurred Other Project records

Tools & Techniques for Performance Reporting
Performance reviews meetings to assess status Variance Analysis comparing actual results to planned or expected results
(baseline); cost and schedule most frequent Trend Analysis examining results over time to determine performance Earned Value Analysis integrates scope, cost and schedule measures calculate 3 keys:
Budgeted Cost of Work (BCWS) portion of approved cost estimate planned to be spent on activity during a given period Actual Cost of Work Performed (ACWP) total of direct and indirect cost incurred in accomplishing work on activity in a given period Earned Value (Budgeted Cost of Work Performed BCWP) percentage of total budget equal to percentage of work actually completed

Cost Variance (CV) = BCWP ACWP Schedule Variance (SV) = BCWP BCWS Cost Performance Index (CPI) = BCWP/ACWP
Information Distribution Tools & Techniques

Outputs from Performance Reporting Performance Reports organize and summarize information gathered and present results
Bar charts, Gantt charts, S-curves, etc.
Change Requests handled as part of change control

Administrative Closure Projects/phases after achieving results or terminated require closure Verifying and documenting project results to formalize acceptance Collection of project records, analysis of effectiveness, reflect final specifications and archiving of material

Inputs to Administrative Closure
Performance Measurement Documentation includes planning
docs; all information that records and analyzes performance Documentation of product and project Other project records
Tools & Techniques of Administrative Closure

Performance Reporting tools & techniques
Outputs from Administrative Closure

Product Archives complete index of all records, database updates Formal Acceptance signoffs from client or sponsor Lessons Learned

Tips from Review Guide
Understand all concepts and major points Memorize the communications model Understand the inputs/outputs of Administrative
Closure Understand how administrative closure differs from contract closeout
Contract closeout has product verification and administrative closeout but the contract terms may have special provisions/procedures for closeout

Communication Model
Messages are encoded by sender and decoded by
receiver based on receivers education, experience, language and culture
Sender should encode message carefully

Nonverbal Paralingual (pitch and tone) Active Listening receiver confirms they are listening, confirms agreement and ask for clarification Effective Listening watching speaker, think before speaking, ask questions, repeating and providing feedback

Communication Methods Pick the form of communication that is best for the situation

Formal Written complex problems, All Plans, communicating over long distances Formal Verbal Presentations, speeches Informal Written memos, e-mail, notes Informal Verbal Meetings, conversations

Communication Blockers
Noise, Distance, Improper en-coding, bad idea, Hostility, Language,
Culture
Performance Reporting

Status Reports (where project stands) Progress Reports (what has been accomplished) Trend Report (project results over time) Forecasting Report (projecting future status) Variance Report (actual results vs. planned) Earned Value
Communication Channels communications grow at a
linear rate
N (N-1)/2 where N = the number of people Example 4 people equals 6 communication channels

To determine if someone understands message feedback must be
obtained Unanimous Agreement

All members committed Decisions reached slowly Integrity is developed Future decision making is enhanced
Clearly defined group goals

Motivate team behavior Cause tension until completed Encourage member identification
Complex messages need oral, written and non verbal methods There are 5 directions of communication Faade when an individual processed needed information but
withholds the information

Least effective form of communication for complex situations is verbal
and formal If there are a team of experts, PM decisions will likely promote high satisfaction Functional/Project Mangers likely to exercise
Power Authority Influence
Traditional organization forms have no single point of contact for
clients/sponsors To determine if someone understands message, must obtain feedback Unanimous Agreement all members committed, decisions reached slowly, integrity is developed, future decision making is enhanced Clearly defined group goals: motivate team behavior, cause tension until completed, encourage member interaction

Complex messages need oral, written and non verbal methods Least effective form of communication for complex issues: verbal and
formal
Chapter 11 Project Risk Management

Project Risk Management
Includes identifying, analyzing, and responding to risk areas;
maximizing results of positive events and minimizing consequences of adverse events

Risk Identification which are likely to affect the project Risk Quantification evaluation of risk to assess the range of possible outcomes
Sometimes treated as single process; risk analysis/assessment
Risk Response Development defining enhancement steps for opportunities and response
Sometimes called response planning/mitigation
Risk Response Control responding to changes in risk over course of project
May be combined as risk management

Risk Identification
Determining which risks are likely to affect the project
and documenting them Performed on a regular basis; address internal and external risks

Internal project team has control/influence over External beyond project teams control
Identify cause and effect and effects and causes; what
could happen vs. what outcomes should be avoided

Inputs to Risk Identification
Product Description more risk associated with unproven
technologies (innovation/invention). Often described in terms of cost and schedule impact Other Planning Reports

WBS (any non-traditional approaches) Cost/Duration Estimates aggressive schedules; limited amount of information Staffing Plan hard to replace/source skill sets Procurement Management Plan market conditions
Historical Information previous projects
Project Files Commercial Databases Project Team Knowledge member experiences

Tools & Techniques for Risk Identification
Checklists organized by source of risk, included
project context, process outputs, product and technology issues, internal sources Flowcharting understand cause and effect relationships Interviewing conversations with stakeholders

Outputs from Risk Identification
Sources of Risk categories of possible risk events, all-inclusive Changes in requirements Design errors, omissions, misunderstanding Poorly defined roles and responsibilities Insufficiently skilled staff
Include estimate of probability, range of possible outcomes, expected timing, anticipated frequency
Potential Risk Events discrete occurrences that may affect project Identified when probability/magnitude of loss is high (e.g. turnover)

New technologies obsolete need of product Socio, Political and Economic events Include estimate of probability, range of possible outcomes, expected timing, anticipated frequency
Risk Symptoms triggers that are indirect manifestations of actual risk events (e.g.
poor morale) Inputs to other processes identify need in another area; constraints and assumptions

Risk Quantification
Evaluation of possible project outcomes and
determining which events warrant response
Opportunities and threats can provide unanticipated results (e.g. schedule delay considers a new strategy) Multiple effects from a single event Singular Stakeholder opportunities may force suffering in other areas Reliance on statistics and forecasting (mathematical errors)

Inputs to Risk Quantification Stakeholder risk tolerance
More capital to expend; perceptions of severity
Sources of Risk Potential Risk Events Cost Estimates Activity Duration Estimates

Tools & Techniques for Risk Quantification
Expected Monetary Value product of 2 numbers Risk Event Probability estimate that event will occur Risk Event Value estimate of gain or loss Statistical Sums calculate range of total costs from cost
estimates for individual work items Simulation representation or model; provide statistical distribution of calculated results.
Monte Carlo, Critical Path, PERT techniques
Decision Trees depicts key interactions among
decisions and possible outcomes Expert Judgment

Outputs from Risk Quantification Opportunities to pursue; threats to respond Opportunities to ignore; threats to accept

Risk Response Development Defining enhancement steps for opportunities and responses to threats
Avoidance eliminating threat by eliminating the cause Mitigation reducing expected monetary value of event by reducing the probability of occurrence Acceptance accept the consequences (active - contingency plan - or passive response)

Inputs to Risk Response Development
Opportunities to pursue, threats to respond Opportunities to ignore, threats to accept
Tools & Techniques for Risk Response
Development
Procurement acquire resources (exchange 1 risk for
another) Contingency Planning defining action steps should a risk event occur Alternative Strategies change planned approach Insurance

Outputs from Risk Response Development
Risk Management Plan document procedures to manage risk events.
Addresses risk identification and quantification processes, personnel responsible for managing areas of risk, maintenance of identification and quantification process, implementation of contingency plans and allocation of reserve Inputs to other processes alternative strategies, contingency plans, anticipated procurements Contingency Plans Reserves provision in project plan to mitigate costs and schedule risks. Used with a modifier (management, schedule, budget) to provide further detail when type of reserve can be used Contractual Agreements insurance, services and other functions to avoid and mitigate threats.

Risk Response Control
Involves executing the risk management plan in order to
respond to risk events during the project
Control and iteration are required; not all risks can be identified
Inputs to Risk Response Control

Risk Management Plan Actual Risk Events recognize occurrence
Additional Risk Identification surfacing of potential or
actual risk sources

Tools & Techniques for Risk Response Control
Workarounds unplanned responses to negative risk
events (response was not defined in advance) Additional Risk Response Development planned response may not be adequate
Outputs from Risk Response Control

Corrective Action performing the planned risk
response Updates to Risk Management Plan

Definition of risk: a discrete occurrence that may affect
the project for good or bad Definition of uncertainty: an uncommon state of nature, characterized by the absence of any information related to a desired outcome Definition of risk management: The processed involved with identifying, analyzing, and responding to risk. Maximize results of positive events; minimizing consequences of negative events

Inputs to Risk Management: All project background information Historical records Past Lessons Learned Project Charter Scope Statement Scope of work WBS Network Diagram Cost and Time estimates Staffing Plan

Risk Management Process Risk Identification majority during Planning; onset of project to close of project
2 Types Business: Risk of a gain or loss Pure (insurable): only a risk of loss Sources: External: Regulatory, environmental, government Internal: Schedule, cost, scope change, inexperience, planning, people, staffing, materials, equipment Technical: Changes in technology Unforeseeable: small (only about 10%)

Risk Management Process Risk Factors determine:
Probability that it will occur (what) Range of possible outcomes (impact, amount at stake) Expected Timing (when) Anticipated frequency (how often)
Symptoms early warning signs determined by PM Risk Tolerances amount of risk that is acceptable

Common Stumbling Blocks Risk identification is completed without knowing enough about the project Project Risk evaluated only by questionnaire, interview or Monte Carlo; does not provided a per task analysis of risk Risk identification ends too soon Project Risk identification and Evaluation are combined results in risks that are evaluated when they appear; decreased total number of risks and stops identification process Risks are identified too generally Categories of risks are forgotten (technology, culture) Only 1 identification method is used First risk response strategy is used without other consideration Risks are not devoted enough attention during the Execution phase

Risk Management Process Risk Quantification assess risks to determine range of possible outcomes; which risk events warrant a response
Probability Amount at stake (impact) Develop a ranking (priority) of risks Qualitative take an educated guess Quantitative estimation by calculation
Risk Assessment = Risk Identification + Risk Quantification

Risk Management Process Risk Quantification assess risks to determine range of possible outcomes; which risk events warrant a response
Probability Amount at stake (impact) Develop a ranking (priority) of risks Qualitative take an educated guess Quantitative estimation by calculation
Risk Assessment = Risk Identification + Risk Quantification

Risk Management Process
Monte Carlo simulation simulates cost and schedule results of project

Indicates risk of a project and each task by providing a percent probability that each task will be on the critical path Accounts for path convergence (where tasks in a Network diagram converge into 1 task more risk) Helps define and prove what the project reserve should be Takes into account future events when making a decision today Makes use of expected value calculations and mutual exclusivity Be able to draw one; boxes are decisions, circles are what can happen as a result of the decision
Expected Monetary Value multiply probability by impact
Decision Trees


Tips from Review Guide Risk Management Process
Outputs from Risk Quantification Determination of top risks Opportunities to pursue Opportunities to ignore Threats to respond to Threats to ignore

Risk Response Development (what will be done, how to make risk smaller or eliminate) Not all risks can be eliminated Alternative Strategies (risk mitigation) Avoidance eliminate the cause Mitigation effect the probability or impact of risk Acceptance do nothing Deflection (transfer, allocate) make another party responsible, insurance, outsourcing

Risk Management Process Outputs from Risk Response Development
Insurance exchange an unknown risk for a known risk (response to pure risks) Contracting hire experience to perform work Contingency Planning specific actions to take if risk event occurs Reserves (contingency) recommended total of 10% to account for known and unknown risks
Risk Management Plan documents risks identified and how they are addressed; non-critical risks should be recorded to revisit during the execution phase

Risk Response Control executing and updating the Risk Management Plan Workarounds Unplanned responses to risks; addressing risks that were unanticipated Contingency Plans planned responses to risks; risk response development actions

Risk Mitigation does not involve ID of risks (they are
already known) Self Insurance can lead to failure to ensure funds for low probability events and confuse business risks with pure risks Risk mitigation can purchase insurance Schedule Risk critical path adjusted by High Risk activity float Sensitivity Analysis estimate the effect of change of one project variable on overall project

Tips from Review Guide Standard Deviation of project completion relationship of uncertainty of critical path activities; indicator of project end target confidence
Chapter 12 Project Procurement Management

Project Procurement Management
Processes required to acquire goods and services from
outside the organization Discussed from the perspective of the buyer
Terms and conditions of the contract is a key input to many processes Buyer is the customer, thus a key stakeholder Sellers project management team must be concerned with all processes of project management, not just their knowledge area

Procurement Planning Identify project needs that can best be met by acquiring resources Consideration whether to procure, how to, how much, when to purchase Subcontractor decisions may provide flexibility
Internal procurement does not involve formal solicitation and contract

Inputs to Procurement Planning
Scope Statement boundary for needs and strategies Product Description broad technical issues, not to be confused
with a statement of work Procurement Resources formal contracting group (RFP) Market Conditions supply and demand, what services are available Other Planning Outputs preliminary cost and schedule, quality management plans, cash flow, WBS, risks, staffing Constraints factors that limit buying options Assumptions

Tools & Techniques for Procurement Planning
Make or Buy analysis determine if the service can be
provided from within

Include direct and indirect costs Factor ongoing need for items vs. 1-time usage
Expert Judgment assess input Contract type selection Fixed Price (lump sum) incentives for meeting targets Cost Reimbursable Contracts Time and Materials basis Unit Price preset amount per unit of service

Outputs from Procurement Planning
Procurement Management Plan describes how procurement
process will be managed

Type of contract Independent estimates needed? Autonomy of project team Standardized documents Multiple provider management? Incorporate with other project aspects (scheduling and performance reporting)
Statement of Work (SOW) describes the procurement in detail
clear, concise description of services
Can also be a Statement of Requirements for problem-solving activities

Solicitation Planning
Preparing documents needed
Inputs to Solicitation Planning

Procurement Management Plan Statement of Work Other Planning Outputs
Tools & Techniques for Solicitation Planning

Standard Forms and Procedures Expert Judgment

Outputs from Solicitation Planning
Procurement Documents used to solicit proposals from prospective sellers Bids, Request for Proposal, Request for Quotation, Contractor Initial Response, etc. Structure to receive complete and accurate responses

Description of desired form of response and any required contractual provisions (e.g. non-disclosure statements) May be defined by regulation Flexible to allow seller suggestions
Evaluation Criteria rate proposals; objective or subjective (previous experience) Price Understanding of need by seller Overall/Life Cycle cost (purchase plus operating cost) Technical Capability Management Approach Financial Capacity Statement of Work Updates

Solicitation
Obtaining information from prospective sellers
Inputs to Solicitation
Procurement Documents Qualified Seller Lists preferred vendors
Tools & Techniques for Solicitation

Bidder Conferences mutual understanding meetings Advertising primarily with Government projects
Outputs from Solicitation

Proposals seller prepared documents describing willingness and
ability to provide the service

Source Selection
Apply evaluation criteria (seldom straight-forward) Price (lowest price may not always result in lowest project cost) Technical (approach) vs. commercial (price) Multiple sourcing may be needed for same service
Inputs to Source Selection

Proposals
Evaluation Criteria
Organizational Policies

Tools & Techniques for Source Selection
Contract Negotiation clarification and mutual agreement on structure
and requirements of contract prior to signature

Responsibilities and authorities Applicable terms and law Financing Price Technical and business management
Weighting quantifying data to minimize personal prejudice of source
selection

Assign numerical weight to evaluation criteria Rating sellers Multiply weight by rating and totaling overall score
Screening System establish minimum performance criteria Independent Estimates should cost estimates

Outputs from Source Selection Contract mutually binding agreement obligates seller provide goods and services and buyer to make payment.
Legal relationship Legal review is most often necessary

Contract Administration
Ensuring that the sellers performance meets contractual
requirements

Project Team must be aware of legal ramifications of all actions taken Apply project management processes to contractual relationships and integrate outputs within the project

Project Plan Execution (authorize work) Performance Reporting (monitor cost, schedule) Quality Control (verify contractors output) Change Control Financial Management

Inputs to Contract Administration Contract Work Results sellers deliverables, quality standards, actual costs Change Requests modify contract, or description of product/service
May result in disputes, claims, appeals
Seller Invoices

Tools & Techniques for Contract Administration Contract Change Control System defines how a contract may be modified
Includes paperwork, tracking system, dispute resolution procedures and approval levels
Performance Reporting Payment System Accounts Payable

Contract Close Out
Similar to administrative closure; involves product
verification and administrative paperwork
Early termination is a special case Contract terms and conditions may prescribe procedures
Inputs to Contract Close Out

Contract Documentation supporting schedules,
documentation

Tools & Techniques for Contract Close Out
Procurement Audits structured review of entire
procurement process; identify successes and failures that warrant transfer to other procurement items
Outputs from Contract Close Out

Contract File complete index of records Formal Acceptance and Closure contract
administration responsibility to provide a formal notice that contract has been completed

Most questions are process oriented Most questions are from the buyers perspective Contracts are formal agreements
All requirements should be specifically stated in the
contract All contract requirements must be met Changes must be in writing and formally controlled US Govt backs all contracts by providing a court system

Tips from Review Guide What forms a contract

An offer An acceptance Consideration - something of value Legal Capacity separate legal parties, competent parties Legal Purpose can not perform illegal goods or services

Project Managers role for procurement Risk identification and evaluation Work within the procurement process
Procurement Process Procurement Planning = Make or buy Solicitation Planning = Request for Proposal Solicitation = Questions and Answers Source Selection = Pick vendor Contract Administration = Admin Contract Closeout = Finish

Make or Buy: consider out of pocket costs and indirect
cost of managing procurement Buy to decrease risk (cost, schedule, performance, scope of work) Make

Idle plant or workforce Retain control Proprietary information/procedures Buy vs. lease questions (use X = number of days when purchase and lease costs are equal)

Contract Type Selection reasonable risk between the
buyer and seller and greatest initiative for sellers efficient and economic performance
Scope well defined? Amount or frequency of changes expected after start date Amount of effort and expertise the buyer can devote to manage the seller Industry standards

Cost Reimbursable (CR); sellers cost are reimbursed;
buyer bears highest risk (cost increases)
CPFF cost plus fixed fee, buyer pays all costs fee (profit) established CPPC cost plus percentage of costs; bad for buyers (seller not motivated to control costs) CPIF cost plus Incentive Fee; seller costs + fee + bonus for meeting/exceeding target (incentive clause)

Time and Materials; priced on per hour basis, elements
of fixed price contract and cost reimbursable contracts buyer has medium risk Fixed Price (lump sum, or firm fixed price) - most common (1 price for all work), risk of costs is upon seller

FPIF Fixed Price Incentive Fee FPEPA Fixed Price Economic Price Adjustment long duration projects
Incentives help bring sellers objectives in line with
buyers

Incentive Fee and Final Price Calculations Must Have:
Target Cost Target Fee Target Price Sharing Ratio (buyer/seller) Actual Cost
Fee = (Target Cost Actual Cost) x Seller Ratio (%) Total Fee = Fee + Target Fee Final Price = Actual Cost + Total Fee

Tips from Review Guide Procurement Documents, Contract Type and Scope of Work

Request for Proposal Cost Reimbursable Performance or Functional Scope (can be somewhat loosely defined) Invitation for Bid Time & Materials Design Scope (moderately defined) Request for Quotation Fixed Price Any Scope (must be detailed)

Terminology (Terms and Conditions)

Force majeure act of God Indemnification who is liable Liquidated damages estimated damages as a result of contract breach Material breach a breach so large the project may not continue Special Provisions provided by the Project Manager to contracts so that particular needs are addressed Privity contractual relationship Single Source contract directly with preferred seller Sole Source only one supplier available in market

Evaluation Criteria Understanding of need Overall or life-cycle cost Technical ability Management Approach Financial Capacity Project Management Ability
Invitation for Bids are usually not evaluated with entire criteria (lowest rate is chosen)

Solicitation Bidders Conference
Benefit both buyer and seller Watch out for Collusion Sellers not asking questions in front of their competition Make sure all questions and answers are in writing and issued to all sellers (respond to same scope in work)

Source Selection
Negotiation Objectives

Obtain a fair and reasonable price Development a good relationship with seller Project manager must be involved Main Terms to negotiate Responsibilities Authority Applicable Law Technical and Business Management approaches Contract Financing Price

Contract Administration assure that sellers performance meets
contractual requirements
Project Managers must understand the contract and manage its completion
Sometimes contract is in conflict with Scope of Work Only the contracting officer (CO) can change contract language Often a source of conflict Need to deal with a different companys set of procedures It is not as easy to see problems Greater reliance on reports to determine if a problem exists Greater reliance on relationships between buyer and sellers project managers

Tips from Review Guide Contract Closeout more attention to documentation and completion of files
All documentation must be preserved and filed Centralized vs. decentralized contracting Based on analysis of intent
Contract Interpretation

Fee = Target Cost Actual Cost X Seller Ratio ($) Total Fee = Fee plus Target Fee Final Price = Actual Cost plus Total Fee Contractor = seller Purchasing Cycle define need, prepare and issue purchase order Functional Spec delineates specific end-use capabilities that are tested in acceptance procedure Measurable Capabilities = Performance Specifications Requisition Cycle review of specification completeness Requirements Cycle develops the statement of work

Supplement Professional Responsibility

6th Process area added

Insuring Integrity and professionalism Contributing to the project management knowledge base Enhancing individual competence Balancing Stakeholders interests Interacting with team and stakeholders in a professional and cooperative manner
Could be approx. 30 questions in this area Understand Project Management Professional Code of Conduct

Ethics Legal Issues Cultural Sensitivity Managing conflicts of interest

Integrity and Professionalism
Understand the legal requirements surrounding the
practice of projects Know ethical standards that should govern the behavior of project managers Comprehend the values of the community and the various project stakeholders Practice proper judgment in the pursuit of successful project work Compliance with all organizational rules and policies

Upon a reasonable and clear factual basis report violations Responsibility to disclose circumstances that could be construed as a conflict of interest or appearance of impropriety

Integrity and Professionalism
Provide accurate and truthful representation to the
public Maintain and satisfy the scope and objectives of professional services Maintain the confidentiality of sensitive information Ensure a conflict of interest does not compromise legitimate interests of client/customer or interfere with professional judgment Refrain from accepting gifts, inappropriate payments, compensation for personal gain unless in conformity with applicable laws or customs

Contribute to advancing the project management profession
Overall understanding of project management
principles Understand the community and media surrounding projects Knowledge of research strategies available and proper communication techniques Learn to communicate and transfer knowledge effectively as a coach and mentor and to use available research strategies Respect and recognize intellectual property

Enhance Individual Competence
Understand the project managers strengths and
weaknesses and learning style become aware of instructional processes and tools Know the useful competencies for project managers and possible training Be able to perform self-assessment and competencies development plan Ability to apply lessons learned

Balance Stakeholders Objectives Understand the various competing stakeholders interests and needs Comprehend the conflict resolution techniques useful in handling differing objectives Be able to resolve conflicts in a fair manner Exercise negotiation skills based on proper information

Interact with team and stakeholders in a professional
and cooperative manner

Understand cultural diversity, norms and stakeholders
communication styles Show flexibility towards diversity, tolerance and self control Becoming empathetic to differences

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Scope of project should remain constant even as

characteristics are progressively elaborated

Requirements (needs) vs. unidentified requirements

Projects are often divided into subprojects for

Chapter 2 Project Management Context

exits, stage gates, or kill points

Chapter 2 Project Management Context

Chapter 2 Project Management Context

Chapter 2 Project Management Context

Chapter 2 Project Management Context

Chapter 2 Project Management Context

Chapter 2 Project Management Context

Chapter 2 Project Management Context

Chapter 2 Project Management Context

repeated use, rules and guidelines

Compliance is not mandatory

Regulations document that identifies products,

Standards often become de facto regulations

Chapter 2 Project Management Context

Chapter 2 Project Management Context

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

provide preliminary description of work for subsequent phases

Chapter 3 Project Management Processes

Amount of planning proportional to the scope of

the project Core Planning

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Chapter 3 Project Management Processes

Benefit measurement method

Constrained Optimization (mathematical approach)

Key aspect of scope verification is customer acceptance Only 26 % of projects succeed

Chapter 4 Project Integration Management

Project Plan Development Project Plan Execution Overall Change Control

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Change control requires

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Chapter 4 Project Integration Management

Work Authorization System