PMP Exam Notes ( May 08th)

PMP Exam Notes ( May 08th):

Chapter 02: Project Management Framework

What is a Project? Temporary, Unique, Progressive Elaborative

What is a program? A program is a group of projects. Their management is coordinated because they may use the same

resources, the results of one project feed into another, or they are parts of a larger “project” 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 for different projects and being

responsible for the results of those projects.

The PMO is an organizational structure, not a person

Triple Constraints (TCS): Time, Cost, Scope. The latest addition is Quality

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 higher level manager.

Understand the difference between Product Life Cycle and Project Life Cycle.

Functional Organization

Advantages Disadvantages

Easier Management of specialists People place more emphasis on their functional

speciality to the detriment of the project

Team members report to only one supervisor No career path in project management

Similar resources are centralized, the company is

grouped by specialties

Project Manager has little or no authority

Clearly defined paths in areas of work

specialization

Projectized Organization


Efficient Project Organization No “home” when project is completed

Loyalty to the project Lack of professionalism in disciplines

More effective communication than functional Duplication of facilities and job functions

Less Efficient use of resources

Matrix Organization


Highly visible project processes Extra administration required

Improved project manager control over resources More than one boss for project teams

More support from functional organizations More complex to monitor and control

Maximum Utilization of scarce resources Tougher problems with resource allocation

Better coordination Need extensive policies and procedures

Better Horizontal and vertical dissemination of

information than functional

Functional Managers may have different

priorities than project managers

Team members maintain a “home” Higher potential for conflict

13/03/2011 PMP Exam Notes ( May 08th):

https://docs.google.com/Doc?id=dfrh3n… 1/21

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 industry

Chapter 03: Project Management Processes

Project Management is the application of knowledge, skills, tools and techniques to project activities to meet project

requirements.

Project Management 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 Planning ExecutingMonitoring and

ControllingClosing

Select a Project

Manager

Determine how you will

do planning - part of

management plans

Acquire Final Team

Measure against

performance measurment

baselines

Develop closure

procedures

Determine

Company Culture

and Existing

Systems

Create Project Scope

Statement(S)Execute the PM plan

Measure according to the

management plans

Complete contract

closure

Collect processes,

procedures and

historical info

Determine Team(T) Complete Product Scope

Determine variances and if

they warrant corrective

action or a change

Confirm work is done to

requirements

Divide large

projects into

phases

Create WBS and WBS

dictionary (W)

Recommended Changes

and corrective actionsScope Verfication

Gain formal acceptance

of the product

Identify

Stakeholders Create activity list (A)Send and receive

information

Configuration

Management

Final performance

reporting

Document Business

Need

Create network

diagram (N)

Implement approved

changes, defect repair,

preventive and corrective

actions

Recommend changes,

defect repair, preventive

and corrective actions

Index and Archive

records

Determine Product

Objectives

Estimate Resource

Requirements (R)Continuous Improvements

Integrarted change

control

Update lessons learned

knowledge base

Document

assumptions and

constraints

Estimate Time and

Cost (T)Follow Processes

Aprrove Changes, defect

repair , preventive and

corrective actions

Hand off completed

product

Develop Project

Charter

Determine Critical Path

(C) Team Building Risk audits Release resources

Develop

Preliminary

Project Scope andDevelop Schedule (S)

Give Recognition and

rewardsManage Reserves



Statement Develop Budget (B) Hold Progress meetings Use issue logs

Determine Quality

Standards, Processes

and Metrics (Q)

Uses work authorization

system

Facilitate conflict

resolution

Determine Roles and

RespRequest Seller Responses

Measure team member

performance

Determine

Communication

requirements (C)

Select Sellers Report on performance

Risk Identification (R) Create Forecasts

Iterations-Go back (I) Administer Contracts

Determine what to

purchase

Prepare procurement

documents

Finalize "how to

execute and control"

Create process

improvement plan

Develop final PM plan

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, or establishes the project. This means that a project does not

exist without a project charter

• Gives the project manager authority to spend money and commit corporate resources .

• Provides high level requirements for the project

• Links the project 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 not NEED 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?



• 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)

Mathematical Approach ( Constrained

Optimization Methods)

Murder Board ( A panel of people who try to

shoot down a new project idea)

Linear Programming

Peer review Integer Programming

Scoring Models Dynamic Programming

Economic Models Multi Objective Programming

Benefit compared to cost

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

• Approved

• 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 expected 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 with anticipated 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: Planning

Stakeholder involvement early: Less problems in the future

Scope Planning

Scope Definition

Create WBS

Scope Verification



Scope Control

Product Scope: “Requirements that related to the product of the project”

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 decomposition of 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 “tasks”. This is replaced by the “work package”)

Continue breaking down 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 the cracks. It provides the

project team with an understanding of where their pieces fit into the overall project management plan and gives them an

indication of the impact of their work on the project as a whole.

The WBS is the foundation of the 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 the foundation 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 ACCONUNTS



WORK PACKAGES

ACTIVITIES WBS DICTIONARY

WBS Dictionary: The detailed content of the components contained in a WBS, including work packages and control

accounts can be found in a WBS Dictionary. For each WBS of work, the dictionary includes a code of account identifier, a

statement of work, responsible organization, and a list of scheduled milestones. Other information for a WBS component

includes contract information, quality requirements, and technical references to 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 quality control 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 the correctness of the work.

Chapter 08: Quality Management

What is Quality?

• Quality is defined as the degree to which the project fulfils the 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.

Quality Approaches:

• Deming: Quality is increased productivity at decreased cost.

• Juran: Create “quality culture” 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 member



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

• Schedule Delays

Increase in quality can result in increased productivity and cost effectiveness and decreased cost risk

Cost of Conformance Cost of Non Conformance

Quality Training Rework

Studies Scrap

Surveys Inventory Costs

Warranty Costs

There are costs in both areas, but the cost of non conformance must be greater

Quality Planning Quality Assurance Quality Control

Identify which quality standards

are relevant to the project and

how to satisfy them.

Applying the planned and

systematic quality activities to

ensure that the project employs

all processes needed to meet

requirements.

Monitoring specific project

results to ensure that they

comply with the relevant quality

standards while identifying

ways to improve quality.

“Is everything all right in the

project?

• Find quality standards

• Prepare quality

management plan

• Quality audits

• Correct deficiencies

• Recommend changes

and corrective actions

• Repair defects

• Identify quality

improvements

• Measure

Mostly done during project

planning


executing


monitoring and controlling

Quality Planning

Quality Planning Tools and Techniques:

• Cost-Benefit Analysis: Trade off between cost 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 practices to those of other projects to generate ideas for

improvement.

Outputs

• Quality Management Plan

• Checklist

• Process Improvement Plan

• Quality Baseline

• Quality Metrics

Quality Assurance



Tools and Techniques:

• 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.

Outputs

• Changes to policies and processes to increase effectiveness & efficiency

• Recommended Corrective Actions

• Recommending actions to increase organizational performance.

• Organizational Process Assets

• Updated quality standards

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 sigma is 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 of a process .Can help

anticipate what and where quality problems might occur and thus, 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 to monitor: 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 of ABC company to manufacture and deliver products which conform to the specifications laid down in this

manual to our customers. This includes not only manufacture to specification, but price, delivery, reliability and all

interfaces between us 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 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.

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 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.

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.



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 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 Management

WBS is a communication tool

Non Verbal: About 55% of all communications are non verbal

Para lingual : Pitch and Tone

Feedback: Saying things like “Do you understand what I have explained”?

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 and schedule measures to asses project performance . This

report makes use of the terms described in the cost chapter

Lessons Learnt

Chapter 12: Procurement Management

Procurement Management

Contract management and change control required to administer contracts or purchase orders. Processes include: (



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 assist in

fulfilling a contract

Centralized Contracting vs. Decentralized Contracting:

Plan Purchases and Acquisitions

Identifies which project needs can be best met by purchasing or acquiring products, services, or results outside the

organization. The Plan Purchases & Acquisition process can significantly influence the project plan and schedule – should

be integrated with Schedule Development and estimating

Tools and Techniques

Make-or-Buy Analysis Analysis of costs, competency fit, and strategic opportunity.

Expert Judgment To define requirements and evaluate offers and proposals made by

sellers.

Contract Types There are generally three types of contracts

• Cost Reimbursable ( CR)

• Time and Material ( T&M)

• Fixed Price (FP)

Contract Type What is it ?

Cost Reimbursable • 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 work



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.Time and Material (

T&M)

• 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 “bodies” or people to

augment your staff

Fixed-Price or Lump-

Sum Contracts:

• 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 T&M

You want to buy expertise in determining what

needs to be done

CR

You know exactly what needs to be done FP

You are buying the services of a programmer to

augment your staff

T&M

You need work done but don’t have time to audit

invoices on this work

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 activities the seller is required to complete

( All because the key is to prevent contract problems)

Plan Contracting

This process consists primarily of putting together the 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

Procurement Documents Contract Type Contract Statement of Work

Request for Proposal CR Performance or Functional

Invitation for BID FP Design

Request for Quotation T&M Any

• Non Disclosure Agreement



• 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


• 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 to all prospective

bidders to make sure that all prospective sellers have the same information. This meeting is also an opportunity for

the buyer to discover anything that is missing

• Advertising

• Qualified Sellers List

Select Sellers


• Weighting System

• Independent Estimate

• Screening 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 made formally in writing

What needs to be in the contract?

• An offer

• Acceptance

• Consideration ( 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 System: 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.



• Inspections and Audits: Contractual agreement to identify weaknesses in the seller’s processes and deliverables.

• Performance Reporting: Seller-reported statement of 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 contract is 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 is closed out.

Therefore, at the end of the contract, the project manager performs a procurement audit for each

contract, administratively closes out the contract and then administratively closes the project and

the whole project is completed.

Administrative Closure may be done at the end of each project phase and at the end of the project

as a whole. Contract closure is done only once , at the end of each project.

Administrative Closure uses the word “Lessons learned” and contract closure uses the world

“procurement audit”

Project Cost and Schedule cannot be finalized without completing risk

The term 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 must be compensated for their work.

A project manager creates a reward system during the planning process group

The exam makes a habit of not telling you what form 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 earlier 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 “Work to the project management plan”, “Be Proactie”, “Adjust and Guide” 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 management



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 “manage what time and in what sequences work is done”

The Work Beakdown structure can be BEST be thought as an effective aid for stakeholder communications

The WBS Dictionary describes each element in the WBS. Therefore, descriptions of the work package are in the WBS

dictionary

Marginal Analysis: The concept of optimal quality level is reached at the point where the incremental revenue 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 negotiation is 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


Increased expertise in contracting One contract person may work on many

projects.

A contracting department will provide is

employees with continuous improvement ,

training and lessons learned

May be more difficult to obtain contracting help

when needed

Contracting professionals have a clearly defined

career path in the contracting profession

Decentralized


Easier access to contracting expertise because

contract experts are on the team

No home department for the contracts person to

return to after the project is complete

More loyalty to the project Difficult to maintain a high level of contracting

resources across projects

More focussed contracting experience Little standardization of contracting practices

from one project to the next

Tendency to have a lack of defined career path

in the contracting profession

CHAPTER 13: Professional and Social Responsibility o Do the right thing

o Follow the right process

o Act ethically, fairly and professionally towards team and resource owners

o Watch for conflicts of interest

o Report Violations

o Deal with problems

o Put the project’s needs before your own

o Share lessons learned

o Enhance your competence.

CHAPTER 07: Cost Management 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 package in 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 Cost Management Plan

o Cost Estimating



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

materials

Taxes, Fringe benefits, janitorial services

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

initiating process ad in the range of -50 percent

to +100 percent from actual

Later during the project, the estimate could

become more refined to a range of -5 percent to

+10 percent from actual

COST BUDGETING

There are two types of reserves added:

Contingency Reserve: is for risks reserved remaining after risk 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) BAC/CPI

AC + ETC

AC + (BAC-EV)

As of now, how much do we

expect the total project to cost

-

Estimate to complete EAC-AC How much more will the project

cost?

Variation at Completion ( VAC) BAC-EAC How much over or under

budget will we be at the end of

the project

Project Selection Methods



Project A Project B Which do you go for?Net Present Value $95000 $75000 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 consider operations 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 will occur ( 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 Planning

Risk Identification

Qualitative Risk Analysis

Quantitative Risk Analysis

Risk Response Planning

Risk Monitoring and control

Risk Identification:

Who should be involved 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 and later risk management processes are

completed. The risk register becomes part of the project management plan and is also included in historical records which 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

When 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 Matrix



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 “perform” 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

- Provides the 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 project

- Can 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

- Results in a probability distribution

-

Risk Response Planning

Contingency Plans Do something 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 party responsible 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 sure

the 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:



Accept : Do nothing.

Residual Risks: It is these risks which remain after risk response planning, and those that have been accepted for which contingency

plans and fallback plans can be created.

Description of Strategy Name of Risk Response Strategy

Remove a work package or activity from the

project

AVOID

Assign a team member to visit the seller’s

manufacturing facilities frequently to learn about a

problem with delivery as possible

MITIGATE

Move a work package to a date when a more

experienced resource is available to assigned to

the project

EXPLOIT

Begin negotiations for the equipment earlier than

planned so as to secure a lower price

ENHANCE

Outsource a work package so as to gain an

opportunity

SHARE

Notify management that there could be a cost

increase if a risk occurs because no action is

being taken to prevent the risk.

ACCEPT

Remove a troublesome resource from the

project

AVOID

Provide a team member who is less experienced

with additional training

MITIGATE

Train the team on conflict resolution strategies MITIGATE

Outsource difficult work o a more experienced

company

TRANSFER

Ask the client to handle some of the work TRANSFER

Prototype a risky piece of equipment MITIGATE

Contingency Reserves: “Known Unknown”

Management Reserves: “Unknown Unknown”

What do you do with 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 responses are developed in advance, work around are unplanned responses developed to deal

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 MANAGEMENT- Estimating should be based on a WBS to improve accuracy

- Activity Definition

There are two ways to draw Network diagram:

-Precedence Diagramming Method (PDM) or Activity on Node (AON)

Finish to Start An activity must finish before the 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 next activity, planting a tree



Start to Start: You must start design and wait for two weeks lag before you can start coding

Finish to Finsh: You must finish testing before you can finish 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 expert judgement

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 time to 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 there 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 “What if Analysis”

This method of estimating uses a computer to stimulate the outcome of a project making use of the three time estimates ( optimistic,



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

of a bar chart

To show

interdependencies

between activities

Under what circumstances would you use a milestone chart instead of

a bar chart

To report to senior

management

Under what circumstances would you use a bar chart instead of a

network diagram

To track progress an d

report to the team

