PMP Exam Notes May 08

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PMP Exam Notes ( May 08th):

PMP Exam Notes ( May 08th): Chapter 02: Project Management Framework

What is a Project? Temporary, Unique, Progressive Elaborative What is a program? A program is a group of projects. Their management is coordinated because theymay use the same resources, the results of one project feed into another, or they are parts of a larger ªprojectº that has been broken down to smaller projects. What is the Project Management Office? Performs one of the three roles: Providing policies, methodologies and templates for managing projects within the organization Providing support and guidance to others in the organization on how to manage projects, training others in project management Providing project managers fordifferent projects and being responsible for the results of those projects. ThePMO is an organizational structure, not a person Triple Constraints (TCS): Time, Cost, Scope. The latest addition is Quality PMI's organization maturity model for project management is called OPM3 Project Expediter: acts as a staff assistant, and communications coordinator. The expeditor cannot personally make or enforce decisions. Project Coordinator: Similar to project expediter except the coordinator has some power to make decisions, some authority , and reports to a higherlevel manager. Understand the difference between Product Life Cycle and ProjectLife Cycle. Functional Organization Advantages Easier Management of specialistsTeam members report to only one supervisor Similar resources are centralized, th

e company is grouped by specialties Clearly defined paths in areas of work specialization Projectized Organization Advantages Efficient Project Organization Loyalty to the project More effective communication than functional Matrix Organization Advantages Highly visible project processes Improved project manager control over resources More support from functional organizations Maximum Utilizationof scarce resources Better coordination Better Horizontal and vertical dissemination of information than functional Team members maintain a ªhomeºhttps://docs.google.com/Doc?id=dfrh3n¼

Disadvantages People place more emphasis on their functional speciality to the detriment of the project No career path in project management Project Manager has little or no authority

Disadvantages No ªhomeº when project is completed Lack of professionalism in disciplines Duplication of facilities and job functions Less Efficient use of resources

Disadvantages Extra administration required More than one boss for project teams More complex to monitor and control Tougher problems with resource allocation Need extensive policies and procedures Functional Managers may have different priorities than project managers Higher potential for conflict1/21


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You need 2 methodologies to complete a project: Project Life Cycle: What you need to do to do, Project Management Methodology: Managing the project. The Product Life Cycle differs from the product life cycle in that the project life cycle is different for each industryChapter 03: Project Management Processes

Project Management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements. Project Management Processes: Initiation, Planning, Execution, Monitor and Control, Closing Projects are chartered by someone external to the project (Sponsor) Outputs: Initiation: Project Charter, Preliminary Project Scope Statement Planning Process Group: Project Management Plan Executing: Deliverables, requested changes, implemented change requests, Monitoring and Control Process: Approved change requests, rejected change requestes , pPMP Closing:Rita

s Process Chart

Initiating Select a Project Manager Determine Company Culture and Existing Systems Collect processes, procedures and historical info Divide large projects intophases Identify Stakeholders

Planning

Executing

Determine how you will do planning - part of Acquire Final Team management plans Create Project Scope Statement(S) Execute the PM plan

Monitoring and Closing Controlling Measure against Develop closure performance measurment procedures baselines Measure according to the Complete contract management plans closure Determine variances and if Confirm work is done to they warrant corrective requirements action or a change Scope Verfication Configuration Management Gain formal acceptance of the product Final performance reporting Index and Archive records Update lessons learned knowledge base Hand off completed pr

oduct Release resources

Determine Team(T)

Complete Product Scope

Create WBS and WBS Recommended Changes dictionary (W) and corrective actions Send and receive Create activity list (A) information

Document Business Create network Need diagram (N)

Determine Product Estimate Resource Objectives Requirements (R) Document Estimate Time and assumptions and Cost (T) constraints Develop Project Determine Critic

al Path Team Building Charter (C) Develop Preliminary Give Recognition and Develop Schedule (S) Project Scope and rewardshttps://docs.google.com/Doc?id=dfrh3n¼

Implement approved Recommend changes, changes, defect repair, defect repair, preventive preventive and corrective and corrective actions actions Integrarted change Continuous Improvements control Aprrove Changes, defect Follow Processes repair , preventive and corrective actions Risk audits

Manage Reserves


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Statement

Develop Budget (B) Determine Quality Standards, Processes and Metrics (Q) Determine Roles and Resp Determine Communication requirements (C) Risk Identification(R) Iterations-Go back (I) Determine what to purchase Prepare procurement documents Finalize "how to execute and control" Create process improvement plan Develop final PM plan

Hold Progress meetings Uses work authorization system Request Seller Responses Select Sellers

Use issue logs Facilitate conflict resolution Measure team member performance Report on performance Create Forecasts Administer Contracts

Memory Tools for the Planning Phase : TWAN-RTC-SBQC TWAN Determine Team WBS Activity List Network Diagram RTC Resources Time and Cost Critical Path SBQCRI Schedule Budget Quality Communication Requirements Risk Identifcation

Chapter 04: Integration Management ( Expect up to 14 questions on the exam) What is a Project Charter? · · · · · · · · Formally recognizes the existence of the project

blishes the project. This means that a project does not exist without a projectcharter Gives the project manager authority to spend money and commit corporateresources . Provides high level requirements for the project Links the project to the ongoing work of the organization Issued by a project sponsor, not the project manager Created in the Initiating process group Broad enough so it does notNEED to change as the project changes Any change to the project charter should call into question whether or not the project should continue

What is Project Statement of Work?https://docs.google.com/Doc?id=dfrh3n¼ 3/21


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·

Created by customer/sponsor and describes their needs, product scope and how the project fits into their strategic plan

Project Selection Methods are of two types: Comparative Approach ( Benefit Measurement Approach) Murder Board ( A panel of people who try to shoot down a new project idea) Peer review Scoring Models Economic Models Benefit compared to costMathematical Approach ( Constrained Optimization Methods) Linear Programming Integer Programming Dynamic Programming Multi Objective Programming

Management Plans are your strategy for managing the project. Someone needs to put the whole thing together. Management Plans when completed become part of the project management plan. A Project Management Plan should be BARF · · · · Bought into Aproved Realistic Formal

Work Authorization System: A system for authorizing work. ( 1 question in exam for sure) Baselines: are used during project executing to measure performance and to help control the project. Forecasts of final cost and schedule should be compared to the baselines. Corrective Action: It is any action taken to bring expec

ted future project performance in line with the project management plan. Preventive Action: Whereas corrective action involves implementing actions to deal with actual deviations from the performance baselines, preventive action deals withanticipated or possible deviations from the performance baselines

All changes are evaluated first. Closing Project: There are two procedures for closing projects · · Administrative Closure procedure Contract closure procedure

The difference between the procedures is focus, frequency and formality. Administrative closure focuses on closing the project or project phase. Contract closure focuses on closing a contract that is part of a project. Be sure to remember that you always close out a project no matter the circumstances under which it stops, is terminated or completed. Chapter 05: Scope Management Prevention: Planni

ng Stakeholder involvement early: Less problems in the future Scope Planning Scope Definition Create WBS Scope Verificationhttps://docs.google.com/Doc?id=dfrh3n¼ 4/21


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Scope Control Product Scope: ªRequirements that related to the product of the projectº Project Scope: Work you need to do to deliver the product of the project. This includes the meetings, reports, analysis and all the other parts of the project management that become part of the project scope management plan Work Break Down Structure (WBS) The WBS is a deliverable oriented hierarchical decompositionof the work to be executed by the project team, to accomplish the project objectives and create the required deliverables. A WBS is deliverable oriented. The WBS breaks the project into smaller and more manageable pieces. This is a top-down effort to decompose the work into smaller pieces called work packages ( PMI does not use the word ªtasksº. This is replaced by the ªwork packageº) Continue breaking dwn the project until you reach what are called Work Packages; pieces that Can be realistically and confidently estimated Cannot be logically subdivided Can be completed quickly Have meaningful conclusion and deliverable Can be completed without interruption Will be outsourced or contracted out. WBS from one project may be used as the basis for the next. Therefore, the project management office should collect WBS examples and encourage the creation of templates. WBS is created with the inputs from the team. It helps prevent work from slipping through thecracks. It provides the project team with an understanding of where their pieces fit into the overall project management plan and gives them an indication of the impact of their work on the project as a whole. The WBS is the foundation of t

he project. This means that almost everything that occurs in the planning process group after the creation of the WBS is directly related to WBS. Thinks that are directly related to the WBS are: Activity List, Network Diagram, Staffing, Estimating, Scheduling, Budgeting, Risk Management, Project Control Remember that WBS is a Graphical picture of the hierarchy of the project Identifies all the work to be performed ± if it is not in the WBS, it is not part of the project Is thefoundation upon which the project is built Is VERY important Should exist for every project Forces you to think through all aspects of the project Can be reused for other projects Shows hierarchy or is the foundation of the project Does not show dependencies WBS CONTROL ACCONUNTShttps://docs.google.com/Doc?id=dfrh3n¼ 5/21


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WORK PACKAGES ACTIVITIES WBS DICTIONARY WBS Dictionary: The detailed content ofthe components contained in a WBS, including work packages and control accountscan be found in a WBS Dictionary. For each WBS of work, the dictionary includesa code of account identifier, a statement of work, responsible organization, and a list of scheduled milestones. Other information for a WBS component includescontract information, quality requirements, and technical references to facilitate performance of the work. Other information for a control account would be a charge number. Other information for a work package can include a list of associate scheduled activities, resources required, and an estimate of cost. Tricky aspects of Scope Verification: 1. Scope Verification can be done at the end of each project phase in the project cycle ( to verify the phase deliverables along the way) and during the monitoring and controlling process group in the project management process. 2.Scope verification relates to Quality Control. Although quality control is generally done first( to make sure that the work meets the quality requirements before meeting with the customer), scope verification and qualitycontrol can overlap. The difference is focus .Primary focus of scope verification is customer acceptance of the deliverables while quality control involves meeting the quality requirements specified for the deliverables and analysis of thecorrectness of the work.Chapter 08: Quality Management

What is Quality? · · · · · · · Quality is defined as the degree to which the project fuhe requirements Degree to which a set of inherent characteristics fulfill requirements International Organization for Standardization (ISO):The totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs. Conformance to requirements Project's processes and products meet written specifications Fitness for Use Product can be used as it was intended

What is Quality Management? Quality Management includes creating and following policies and procedures in order to ensure that a project meets the defined needs it was intended to meet. This can also mean the same thing as completing the project with no deviations from the project requirements. Quality Management includes Quality Planning, perform Quality assurance and perform Quality Control. Qua

lity Approaches: · · · · · Deming: Quality is increased productivity at decreased cost.ran: Create ªquality cultureº through top management commitment Crosby: Strive for zero defects. Constant improvement and low tolerance Ishikawa: Quality circles that encourage participation and involvement Taguchi: Quality should be designed into the project and not inspected into it.

What is Gold Plating? Gold Plating refers to giving the customer extras ( e.g.:extra functionality, higher quality components). This practice is not recommended, as gold plating adds no value to the project. Some Approaches Action over Direction Prevention over inspection ( Quality must be planned in, not inspected in)

· ·

Continuous Improvements (or Kaizen) ,Just in Time (JIT),Total Quality Management (TQM) The Project Manager has the ultimate responsibility for the quality of the product of the project, but each team memberhttps://docs.google.com/Doc?id=dfrh3n¼ 6/21


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must check his or her work ± self inspection. Senior management has the ultimate responsibility for quality in the organization as a whole. Impact of Poor Quality · · · · · · Increased Costs Low Morale Low Customer Sat Increased Risk Rework Scheduleys

Increase in quality can result in increased productivity and cost effectivenessand decreased cost risk Cost of Non Conformance Rework Scrap Inventory Costs Warranty Costs There are costs in both areas, but the cost of non conformance mustbe greater Quality Planning Identify which quality standards are relevant to the project and how to satisfy them. Quality Assurance Applying the planned and systematic quality activities to ensure that the project employs all processes needed to meet requirements. Quality Control Monitoring specific project results toensure that they comply with the relevant quality standards while identifying ways to improve quality. ªIs everything all right in the project? · Repair defects · Identify quality improvements · Measure Mostly done during project monitoring and controlling Cost of Conformance Quality Training Studies Surveys

· ·

Find quality standards Prepare quality management plan

Mostly done during project planning Quality Planning

Quality audits Correct deficiencies Recommend changes and corrective actions Mostly done during project executing · · ·

Quality Planning Tools and Techniques: · · · · Cost-Benefit Analysis: Trade off betweencost of rework and stakeholder satisfaction. Design of Experiments: Helps identify which variables have the most influence on the overall outcome of a process.E.g., Which combination of materials and equipment produce the most reliable computer chips? Cost of Quality: Total costs incurred by investment in preventing non-conformance to requirements, appraising the product, and failing to meet requirements (rework). Benchmarking: Comparison of actual or planned project practic

es to those of other projects to generate ideas for improvement.

Outputs · · · · · Quality Management Plan Checklist Process Improvement Plan Quality Baine Quality Metrics

Quality Assurancehttps://docs.google.com/Doc?id=dfrh3n¼ 7/21


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Tools and Techniques: · · Outputs · · · · · Changes to policies and processes to increactiveness & efficiency Recommended Corrective Actions Recommending actions to increase organizational performance. Organizational Process Assets Updated quality standards Quality Audits: Structured reviews of specific quality management activities to help identify lessons learned Process Analysis: Follows steps outlined in the process improvement plan to identify needed improvements.

Quality Control Sigma is taken on both sides of the mean. Half the curve is to the right of the mean, and half the curve is to the left of the mean. · +/-1 sigmais equal to 68.26% which is the percentage of occurrences to fall between the two control limits +/-2 sigma equals 95.46% · · +/-3 sigma equals to 99.73% · +/-6 sigma equals 99.99985% Seven Basic Tools of Quality 1 Cause and Effect Diagram(Fishbone/Ishikawa Diagram): How various factors might be linked to potential problems. 2 Control Charts: Graphic display of data that illustrates the results of a process over time. Allow you to determine whether a process is in control or out of control. Six-sigma quality will identify process concerns.7-run rule ± if seven data points in a row are all below the mean or above and are all increasing or decreasing, then process needs to be examined for non-random problems. 3 Flowcharting: Helps to analyze how problems occur based on a graphical representation ofa process .Can help anticipate what and where quality problems might occur and t

hus, develop approaches to deal with them. 4. Histogram: Bar chart showing a distribution of variables. Each column represents an attribute or characteristic of a problem/situation. 5.Pareto Diagram: Specific type of histogram that shows how many defects were generated by type or category of identified case 6. Run Chart: Line graph shows trends in a process over time, variation over time, and declines or improvements over time. Trend analysis is performed using run charts tomonitor: Technical performance, Cost and schedule performance. 7. Scatter Diagram: Shows pattern of relationships between two variables ± allows for study of possible relationship changes. What is Quality Policy? The intended direction of the organization with regard to quality. Must be approved by top management. Project stakeholders must be fully aware of Sample Quality Policy It is the policy ofABC company to manufacture and deliver products which conform to the specifications laid down in this manual to our customers. This includes not only manufactur

e to specification, but price, delivery, reliability and all interfaces betweenus and our customers from enquiry to delivered goods. To achieve this policy a quality assurance system is in place of which management gives full support

Chapter 09: Human Resource ManagementHR Planning Responsibility Management Matrix does not show when people will do their jobs (time) Organization Charts and Position Descriptions Resource Histogram: Is a graph that shows the number of resources used per time period and is displayed in a bar chart format. The chart shows where there is a spike in the need for resources. Remember that acquiring team occurs during the executing process grouphttps://docs.google.com/Doc?id=dfrh3n¼ 8/21


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Halo Effect Ground Rules A project manager must exercise -Honesty, Integrity, Loyalty (HIL) with his/her team, counterparts and customers Powers of Project Manager Formal or legitimate: getting people to do things based on position of authority. Reward Power ± using incentives to induce people to do things. Penalty or Coercive Power ± punishment, threats, or other negative approaches to get people todo things they don not want to do. Expert Power ± using one's personal knowledge and expertise to get people to change their behavior. Referent Power ± using individual's personal charisma Best Forms of Power are : EXPERT and Reward Penalty is theworst choice Formal, Reward and Penalty are powers derived from the project manager

s position in the company Expert power is earned on you own. Conflict Resolution Confronting (Problem Solving): Win-Win Compromising :Lose-Lose situation (Second best) Withdrawal: ( Avoidance) Smoothing: Emphasizing agreement rather than differences of opinion. Forcing: Pushing one view point at the expense of another.

HR Planning Responsibility Management Matrix does not show when people will do their jobs (time) Organization Charts and Position Descriptions Resource Histogram: Is a graph that shows the number of resources used per time period and is displayed in a bar chart format. The chart shows where there is a spike in the need for resources. Remember that acquiring team occurs during the executing process

group Halo Effect Ground Rules A project manager must exercise -Honesty, Integrity, Loyalty (HIL) with his/her team, counterparts and customers Powers of Project Manager Formal or legitimate: getting people to do things based on position of authority. Reward Power ± using incentives to induce people to do things. Penalty or Coercive Power ± punishment, threats, or other negative approaches to get people to do things they don not want to do.https://docs.google.com/Doc?id=dfrh3n¼ 9/21


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Expert Power ± using one's personal knowledge and expertise to get people to changetheir behavior. Referent Power ± using individual's personal charisma Best Forms ofPower are : EXPERT and Reward Penalty is the worst choice Formal, Reward and Penalty are powers derived from the project manager

s position in the company Expert power is earned on you own. Conflict Resolution Confronting (Problem Solving): Win-Win Compromising :Lose-Lose situation ( Second best) Withdrawal: ( Avoidance) Smoothing: Emphasizing agreement rather than differences of opinion. Forcing: Pushing one view point at the expense of another.

Chapter 10: Communications ManagementWBS is a communication tool Non Verbal: About 55% of all communications are nonverbal Para lingual : Pitch and Tone Feedback: Saying things like ªDo you understand what I have explainedº? Communication Methods: Formal Written, Formal Verbal, Informal Written, Informal Verbal Channels can be calculated using the formula: N (N-1)/2 Performance Reporting Status Report: Describing where the project now stands regarding performance measurement baselines in cost, schedule, scope and quality Progress Report: Describing what has been accomplished Trend Report: Examining project results over time to see if performance is improving or deteriorating Forecasting: Predicting future project status and performance Variance Report: Comparing actual results to baselines Earned Value: Integrating scope, cost a

nd schedule measures to asses project performance . This report makes use of the terms described in the cost chapter Lessons Learnt

Chapter 12: Procurement ManagementProcurement Management Contract management and change control required to administer contracts or purchase orders. Processes include: (https://docs.google.com/Doc?id=dfrh3n¼ 10/21


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PCRSCC)( Plan

Plan Purchases and Acquisitions · Determining what to purchase, when, and how.

Plan Contracting · Documenting project requirements and identifying potential sellers

Request Seller Responses · Obtaining quotations, bids, offers, or proposals

Select Sellers · Review offers, choose sellers, and negotiate contracts

Contract administration · Managing the contract and relationship with the seller

Contract Closure · Completion and settlement of the contract, including resolution of any open items.

Role of a PM in Procurement Management · · · The negotiation of contracts between companies and/or individuals The fulfillment of the terms and conditions of the contracts that have been entered into between these parties The process of obtaining

goods and/or services from vendors, suppliers, and/or subcontractors to assistin fulfilling a contract

Centralized Contracting vs. Decentralized Contracting:

Plan Purchases and Acquisitions

Identifies which project needs can be best met by purchasing or acquiring products, services, or results outside the organization. The Plan Purchases & Acquisition process can significantly influence the project plan and schedule ± should beintegrated with Schedule Development and estimating Tools and Techniques Make-or-Buy Analysis Expert Judgment Contract Types Analysis of costs, competency fit,and strategic opportunity. To define requirements and evaluate offers and propos

als made by sellers. There are generally three types of contracts · Cost Reimbursable ( CR) Time and Material ( T&M) · · Fixed Price (FP) What is it ? Reimbursement for seller's actual costs + fee for profit. Buyer has most cost risk Simple Contract SOW Requires auditing seller's invoice Requires more work for the buyer to manage Seller writes detailed contract statement of work11/21

Contract Type Cost Reimbursable

· · · · · ·

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Time and Material ( T&M)

Fixed-Price or LumpSum Contracts:

Cost-Reimbursable Contracts: Reimbursement for seller's actual costs + fee for profit. Cost-Plus-Fee: Fee varies with the actual costs. Cost-Plus-Fixed Fee: Fee does not vary with actual costs unless the scope changes. Cost-Plus-Incentive Fee: IF final costs are less than expected costs, both buyer and seller benefit from the saving. · Usually used for small dollar accounts · Buyer has a medium amount of risk · Hybrid. Full value of agreement and exact quantity of items are not defined, but unit rates can be pre · Good Choice when you are hiring ªbodiesº or people toaugment your staff · Fixed total price for a well-defined product. · Buyer has least risk, borne by the seller · Seller is most concerned about SOW

Exercises You need work to begin right away You want to buy expertise in determining what needs to be done You know exactly what needs to be done You are buying the services of a programmer to augment your staff You need work done but don't have time to audit invoices on this work T&M CR FP T&M FP

Who has the highest risk in a cost reimbursable contract, buyer or seller? Buyer

Who has the cost risk in a fixed price contract ? Seller Contract statement needs to be · · · · Clear Complete Concise as possible Describe all the work and activitie the seller is required to complete ( All because the key is to prevent contract problems)

Plan Contracting This process consists primarily of putting together the procurement documents that will be sent to prospective sellers describing the buyer's need , how to respond and the criteria by which the buyer will select a seller. Procurement Documents · · · Request for proposal (RFP): Requests a price , but also a detailed proposal on how the work will be accomplished , who will do it, resumes, company, experiences etc Invitation for BID: Requests one price to do all the work Request for Quotation: Requests a price quote per item, hour or foot ContractType CR FP T&M Contract Statement of Work Performance or Functional Design Any

Procurement Documents Request for Proposal Invitation for BID Request for Quotation · Non Disclosure Agreement


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· · · ·

Standard Contract Special Provisions Terms and Conditions Evaluation Criteria

Letter of Intent: You should understand this is normally NOT a contract but simply a letter, without legal binding, that says the buyer intends to hire the seller Privity: Means a contractual relationship. You should understand the following because it explains privity and shows you how questions on this topic are asked. Request Seller Responses This process consists of getting the procurement into the hands of sellers, answering the sellers questions and the sellers preparing the proposals Tools and Techniques · Bidder Conferences: Buyer invites the sellers to attend a meeting where they can tour the buyer's facilities and ask questions about the procurement. The questions and answers are written down and sent toall prospective bidders to make sure that all prospective sellers have the sameinformation. This meeting is also an opportunity for the buyer to discover anything that is missing Advertising Qualified Sellers List

· ·

Select Sellers Tools and Techniques · · · · · · · Weighting System Independent Estimate

ing System Contract Negotiation Seller Rating System Expert Judgment Proposal Evaluation Techniques

What is a Contract? A contract is a legally binding document. Therefore, all terms and conditions in the contract must be met. One cannot chose to not conform or to not do something required in the contract. Change to the contract are madeformally in writing What needs to be in the contract? · · · · · An offer Acceptance Coneration ( Something of value, not necessarily money) Legal Parties Legal Purpose

A contract , offer of acceptance may be oral or written, though written is preferred. Contract Administration ( Important) Contract administration consists of assuring that the performance of both parties to the contract meets contractual requirements. This is an important are on the exam. · · Contract Change Control Syste

m: Defines the process by which the contract can be modified. Buyer-Conducted Performance Reviews: Structured review of seller's progress according to time, scope, cost, and quality.13/21



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· · · ·

Inspections and Audits: Contractual agreement to identify weaknesses in the seller's processes and deliverables. Performance Reporting: Seller-reported statementof achievement according to contractual objectives. Claims Administration: Contested changes (claims or disputes) that are documented and managed through arbitration or litigation if necessary. Records Management System: Used by project manager to manage contract documentation and records (e.g., a spreadsheet that states what each sponsor has contractual rights to for each football game).

Contract Closure Contract Closure is done: · · When a contract ends When a contractis terminated before work is completed

All contracts must be closed out no matter the circumstances under which they stop, are terminated or completed. Closure provides value to the performing organization and the customer and should be eliminated under any circumstances. Contract Closure occurs first. All contracts must be closed out before the project isclosed out. Therefore, at the end of the contract, the project manager performsa procurement audit for each contract, administratively closes out the contractand then administratively closes the project and the whole project is completed.

Administrative Closure may be done at the end of each project phase and at theend of the project as a whole. Contract closure is done only once , at the end of each project. Administrative Closure uses the word ªLessons learnedº and contractclosure uses the world ªprocurement auditº

Project Cost and Schedule cannot be finalized without completing risk The term Gantt Chart is not used, only bar chart Percent complete is an almost meaningless number The project manager should be assigned during project initiation. Work on prevention than on correction You are required to understand that people mustbe compensated for their work. A project manager creates a reward system duringthe planning process group The exam makes a habit of not telling you what form of organization you are in. When it does not say, assume matrix. Stake Holders can be identified throughout the project management process groups. However, the e

arlier the stakeholders are identified, the better for the project. MBO works if management believes in it. WAN RTC SB QCR WBS Activity List Network Diagram Resource Requirements Time and Cost Critical Path Schedule Budget Quality Communications Risk Iteration Keep the phrases ªWork to the project management planº, ªBe Proactieº, ªAdjust and Guideº in mind as you take the exam to make sure you are thinking like PMI The Project Manager is making sure that the product of the project has been completed according to the project managementhttps://docs.google.com/Doc?id=dfrh3n¼ 14/21


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plan. What part of the project management process is he in ? CLOSING Company Culture is called the enterprise environmental factors Work authorization system can be used to ªmanage what time and in what sequences work is doneº The Work Beakdown structure can be BEST be thought as an effective aid for stakeholder communications The WBS Dictionary describes each element in the WBS. Therefore, descriptions of the work package are in the WBS dictionary Marginal Analysis: The conceptof optimal quality level is reached at the point where the incremental revenue from product improvement equals the incremental cost to secure it. A Control chart shows seven data points in a row on one side of the mean. What should be done? Find an assignable cause. Even if the customer was happy, the project is unsuccessful if it has been gold plated. The most common causes of conflict on a project are schedules, project priorities and resources Resource histogram and Responsibility Matrix do not show time The primary objective of contract negotiationis to protect the relationship. Contract Closure is different from administrative closure in that contract closure occurs before administrative closure.= o ns = "urn:schemas-microsoft-com:office:office" />

Centralized Structure Advantages Increased expertise in contracting A contracting department will provide is employees with continuous improvement , training and lessons learned Contracting professionals have a clearly defined career path i

n the contracting profession Decentralized Advantages Easier access to contracting expertise because contract experts are on the team More loyalty to the project More focussed contracting experience

Disadvantages One contract person may work on many projects. May be more difficult to obtain contracting help when needed

Disadvantages No home department for the contracts person to return to after the project is complete Difficult to maintain a high level of contracting resources across projects Little standardization of contracting practices from one project to the next Tendency to have a lack of defined career path in the contractingprofession

CHAPTER 13: Professional and Social Responsibilityo o o o o o o o o Do the right thing Follow the right process Act ethically, fairly and professionally towards team and resource owners Watch for conflicts of interest Report Violations Deal with problems Put the project's needs before your own Share lessons learned Enhance your competence. A large project might be where costs might be more practical to estimate and control at a higher level. This is called a control account and is one of the level higher than the work packagein the WBS. Estimating should be done by the person doing the work whenever possible. Padding is not an acceptable project management practice The Steps o CostManagement Plan o Cost Estimatinghttps://docs.google.com/Doc?id=dfrh3n¼ 15/21

CHAPTER 07: Cost Management


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o Cost Budgeting o Cost Control COST Management Plan: Life Cycle Costing: Look at the concept of the whole life of the product and not just the cost of the project. Value analysis: Finding a less costly way to do the same work. Variable Costs Fixed Costs Eg: Supplies, Cost of material, Wages Set up, rental Direct Costs Indirect Costs Team travel, team wages, recognition, cost of Taxes, Fringe benefits, janitorial services materials Cost Estimates: Analogous Testing ( Less accurate but quick) Bottom Up Testing ( More accurate but time consuming) Rough Order of Magnitude Estimate ( ROM) Definitive This type of estimate is usually made during the Later during the project, the estimate could initiating process ad in the range of -50 percent become more refined to a range of -5 percent to to +100 percent from actual +10 percent from actual COST BUDGETING There are two types of reserves added: Contingency Reserve: is for risks reserved remaining afterrisk response planning Management Reserve: is any extra amount of funds to be set aside to cover unforeseen risks or changes in the project. The COST Baseline will contain the contingency reserve and the COST BUDGET will include the management reserve. Check the diagram below: Cost Budget Management Reserve Cost Baseline Contingency Reserve Project Control Account Work Packages Activities Cost Control Use Earned Value Technique is a better method because it integrates cost, time and the work done ( scope) and can be used to forecast future performance and project completion dates and costs Name Formula Interpretation ( as of today)

Cost Variance EV ±AC Negative is over budget Schedule Variance EV-PV Negative is behind schedule CPI EV/AC We are getting ---- worth for every $1 spent. SPI EV/PV We are progressing at --percent of the rate originally planned Estimate at Completion (EAC) As of now, how much do we BAC/CPI expect the total project to costAC + ETC AC + (BAC-EV) Estimate to complete How much more will the project EAC-AC cost? Variation at Completion ( VAC) BAC-EAC How much over or under budget will we be at the end of the project Project Selection Methodshttps://docs.google.com/Doc?id=dfrh3n¼ 16/21


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Project A Project Which do you go for? Net Present Value $95000 $75000B A IRR 13% 17% B Payback Period 16 months 21 months B Benefit Cost Ratio 2.79 1.3 A Present Value = FV/( 1+R)**n The number of years is not relevant as it would have taken into account in the calculation of your NPV. Understand the following = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Opportunity Cost Sunk Costs Law of Diminishing Returns Working Capital Depreciation: Straight Line OR Accelerated Depreciation ( Double declining balance and sum of the years digits) Analogous Estimating uses TOP-DOWN approach Main focus of life costing is to consideroperations and maintenance costs in making project decisions. CHAPTER 11: Risk Management Risk Management includes risk management planning, identification, analysis, response planning and monitoring and control. The purpose of risk management is to increase the probability and impact of the positive events, and decrease the probability ad ompace of negative events on the project. Uncertaininty: Lack of knowledge about an event that reduces confidence in conclusion drawn from the data. When looking at risk, one should determine: Probability that it willoccur ( what) The range of possible outcomes ( impact or amount at stake) Expected timing ( when) in the project life cycle Anticipated frequency of risk events from that source ( how often) Remember the following: Risk Management PlanningRisk Identification Qualitative Risk Analysis Quantitative Risk Analysis Risk Response Planning Risk Monitoring and control Risk Identification: Who should be i

nvolved in risk identification, the best answer is everyone. Everyone has a different perspective of the project. What are the different types of Risk Identification techniques? Brain Storming: one idea helps generate another Delphi Technique: used to build consensus of experts who participate anonymously. The technique can also be used for estimating time and cost Interviewing : Root Cause Analysis SWOT Risk Register: The risk register is the place where most of the risk information is kept. Think of it as one document for the whole risk management process that will be constantly updated with information as risk identification andlater risk management processes are completed. The risk register becomes part of the project management plan and is also included in historical records which will be used for future projects. Risk register in the only output of the risk management process. At this point, risk register would include a) List of risks b)List of potential responses c) Root causes of risks d) Updated Risk Categories W

hen in the risk management process are responses documented? o The answer is risk identification and risk response planning Qualitative Risk Analysis o Probability and Impact Matrixhttps://docs.google.com/Doc?id=dfrh3n¼ 17/21


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o Risk Data Quality Assessment o Risk Categorization o Risk Urgency assessment Quantitative Risk Includes Further investigation into the highest risks on the project Determination of the type of probability distribution that will be used e.g triangular , normal, beta, uniform or log normal distribution Sensitivity analysis: Determining which risks have the most impact on the project. Determining how much quantified risk the project has through expected monetary value or Monte Carlo analysis Quantitative Risk Analysis Tools: Monte Carlo Analysis Interviewing Cost and time estimating Delphi Technique Use of historical records from previous projects Expert Judgement Expected Monetary Value analysis Monte Carlo Analysis Monte Carlo Analysis: Simulation is all about. It uses the network diagram and estimates to ªperformº the project many times and to stimulate the cost or schedule results of the project. Remember the following about Monte Carlo Technique: Evaluates the overall risk of the project Provides the probability of completing the project on any specific day , or for any specific amount of cost Providesthe probability of any activity actually being on the critical path Takes into account path convergence ( places in the network diagram where many paths converge into one activity) Translates uncertainties into impacts to the total projectCan be used to asses cost and schedule impacts Is usually done with a computer based Monte Carlo program because of the intricacies of the calculations Resultsin a probability distribution Risk Response Planning Contingency Plans Do someth

ing if the risk happens Fall back plans Do something if contingency plans are not effective Risk Response Strategies for Threats Avoid Eliminate the threat by eliminating the cause (e.g Remove the work package or person) Mitigate Reduce the probability or the impact of a threat , thereby making it a smaller risk and removing it from the list of top risks on the project Transfer Make another partyresponsible for the risk through purchasing of insurance, performance bonds, warranties, guarantees or outsourcing the work. Risk Response Strategies for Opportunities Exploit ( Reverse of avoid) Add work or change the project to make surethe opportunity occurs Enhance Increase the likelihood , probability and positive impacts o the risk event Share Allocate ownership of the opportunity to a third party ( forming a partnership, team or joint venture) that is best able to achieve the opportunity Response strategy for both threat and opportunities:https://docs.google.com/Doc?id=dfrh3n¼ 18/21


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Accept : Do nothing. Residual Risks: It is these risks which remain after risk response planning, and those that have been accepted for which contingency plansand fallback plans can be created. Description of Strategy Name of Risk Response Strategy Remove a work package or activity from the AVOID project Assign a team member to visit the seller's MITIGATE manufacturing facilities frequently to learn about a problem with delivery as possible Move a work package to a date when a more EXPLOIT experienced resource is available to assigned to the project Begin negotiations for the equipment earlier than ENHANCE planned so as to secure a lower price Outsource a work package so as to gain an SHARE opportunity Notify management that there could be a cost ACCEPT increase if a risk occurs because noaction is being taken to prevent the risk. Remove a troublesome resource from the AVOID project Provide a team member who is less experienced MITIGATE with additional training Train the team on conflict resolution strategies MITIGATE Outsource difficult work o a more experienced TRANSFER company Ask the client to handle some of the work TRANSFER Prototype a risky piece of equipment MITIGATE Contingency Reserves: ªKnown Unknownº Management Reserves: ªUnknown Unknownº What do you do wth the non critical tasks ? Document in a watch list and revisit periodically What risk management activities are done during the execution of the project? Watching out for watchlisted ( non-critical) risks that become more important Risk should be a major topic in Status Meetings Work around: Whereas contingency respo

nses are developed in advance, work around are unplanned responses developed todeal with the occurrence of unanticipated risk events Risks will be identified during which risk management process: Risk identification and risk monitoring and control An output of risk response planning is RESIDUAL RISKS Before you do anything on the risk, you have to analyze it and see how much of an impact happens( How well does it qualify) ANALYZE THE RISK

CHAPTER 06: TIME MANAGEMENTEstimating should be based on a WBS to improve accuracy Activity Definition There are two ways to draw Network diagram: -Precedence Diagramming Method (PDM) orActivity on Node (AON) Finish to Start An activity must finish before the successor can start ( Most common) Start to Start An activity must start before the successor can start Finish to Finish An activity must finish before the successor

can finish Start to Finish An activity must start before the successor can finish Finish to Start: You must finish digging a hole before you can start the nextactivity, planting a treehttps://docs.google.com/Doc?id=dfrh3n¼ 19/21


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Start to Start: You must start design and wait for two weeks lag before you canstart coding Finish to Finsh: You must finish testing before you can finish documentation Start to Finish: Rarely used - Arrow diagramming method ( ADM) Types of dependencies: Mandatory: Discre Types Of Estimate One Time Estimate: Analogous Estimate: Analogous Estimating is a one time ± top down estimate. Form of expertjudgement Parametric Estimating: Mathematical Model Heuristics is a rule of thumb P= Pessimistic, O= Optimistic, M= Most Likely Formula Standard Deviation of an activity Variance of an activity (P+4M+O)/6 (P-O)/6 SD **2 CRITICAL PATH: The longest duration path through a network diagram and determines the shortest timeto complete the project Helps prove how long he project will take Helps the project manager determine where best focus her project management efforts Helps determine if an issue needs immediate attention Provides a vehicle to compress the schedule during project panning and whoever there are changes. Provides a vehicle to determine which activities have float and therefore can be delayed without delaying the project. More critical paths increase risk Would you leave the project with a negative schedule? No, you would compress the schedule Activities on the critical path always have zero float. Critical path activities that are delayed or have dictated dates can result in negative float. ES EF Float (Slack) Total Float: The amount of time an activity can be delayed without delaying the project ed date or an intermediary milestone. This is the key type of float, but the

re are others. Free Float: The amount of an activity that can be delayed without delaying the early start date of its successor Project Float: The amount of time a project can be delayed without delaying the externally imposed project completion date required by the customer, management or previously committed to by the project manager Schedule Compression Fast Tracking: Doing critical path activities in parallel that were originally planned in series. Fast Tracking often results in rework, usually increases risk and requires more attention t communication Crashing: Making cost and schedule tradeoffs to determine how to obtain the greatest amount of schedule compression for the latest incremental cost wile maintaining the project scope. Crashing, by definition, almost always results in increased costs. Option General Impacts of the Project Fast Track Adds Risk May add management time for the project manager Crash Almost always adds cost May add management time for the project manager Reduce Scope Could save cost and time May

negatively impact customer satisfaction Cut Quality Could save cost and resources May increase risk Requires good metrics Monte Carlo Analysis: relates to ªWhatif Analysisº This method of estimating uses a computer to stimulate the outcome of a project making use of the three time estimates ( optimistic,https://docs.google.com/Doc?id=dfrh3n¼ 20/21


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pessimistic, most likely) for each activity and the network diagram. The simulation can tell you The probability of completing the project on any specific day The probability of completing the project for any specific amount of cost The probability of any activity actually being on the critical path The over all project tisk Under what circumstances would you use a network diagram instead To showof a bar chart interdependencies between activities Under what circumstances would you use a milestone chart instead of To report to senior a bar chart management Under what circumstances would you use a bar chart instead of a To track progress an d network diagram report to the team


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