Pmp presentations pmbok4

PMP SLIDES PMBOK 4

PM Preparatory Course

Professional Responsibility

• The PMP Code of Professional Conduct is theauthoritative guide on how the PMP should act as a professional, and how the PMP should behave with customers and the public in general.

• The PMP exam candidate will be tested on their knowledge of the PMP Code of Professional Conduct.

Professional Responsibility

The five areas of professional responsibilityconsist of the following:

• Ensuring integrity• Contributing to the knowledge base• Applying professional knowledge• Balancing stakeholder interests• Respecting differences

Responsibilities to the profession

• The PMP/ CAPM must adhere to a high set of principles, rules, and policies.

• This includes the organizational rules and policies, the certification process, and the advancement of the profession.

• On the exam, always choose the answer which best supports the PMP profession and the higher set of principles the candidate is expected to adhere to.

Balancing Stakeholders needs

• Balance Stakeholder’s Objectives– Understand the various competing stakeholders’

interests and needs– Comprehend the conflict resolution techniques

useful in handling differing objectives– Be able to resolve conflicts in a fair manner– Exercise negotiation skills based on proper

information

Complying with Rules and Policies

Honesty is expected in all areas regarding the PMPexamination process including:• Exam applications must be honest and reflect actual

education and work experience.• Test items, questions, answers, and scenarios are not to be

shared with other PMP/ CAPM candidates.• PMP renewal information must reflect an honest • assessment of education and experience.• Continuing education information must be honest and

accurate; continuing education reporting must reflect actual courses completed

Applying Honesty to the Profession

• The candidate is expected, at all times, to provide honesty in experience documentation, the advertisement of skills, and the performance of services.

• The PMP must, of course, adhere to and abide by all applicable laws governing the project work. In addition, the ethical standards within the trade or industry should also be adhered to.

Advancing the Profession

• The PMP/ CAPM must respect and recognize the intellectual work and property of others.

• The PMP/ CAPM can’t claim others’ work as their own.

• He/ She must give credit where credit is due. • Work, research, and development sources

must be documented and acknowledged by the PMP when relying on others’ work.

Responsibilities to the Customer and to the Public

• The candidate also has a responsibility to the customer of the project and the public.

• Projects that affect internal customers are expected to meet requirements and standards, and fulfill the business need of the performing organization.

• Essentially, the candidate is working for the customer.

Enforcing Project Management Truth & Honesty

• The candidate must represent themselves and their projects truthfully to the general public.

• This includes statements made in advertising, press • releases, and in public forums. • When project managers are involved in the creation of

estimates, truth is also expected.

• The candidate must provide accurate estimates on time, cost, services to be provided—and realistic outcomes of the project work.

Eliminating InappropriateActions

• A PMP/ CAPM must avoid conflicts of interest and scenarios where conflicts of interest could seem apparent, opportunistic, or questionable to the customer or other stakeholders.

• In addition, the candidate must not accept any inappropriate gifts, inappropriate payments, or any other compensation for favors, project management work, or influence of a project.

Respecting Differences

• Interact with team and stakeholders in a professional and cooperative manner– Understand cultural diversity, norms and

stakeholders’ communication styles– Show flexibility towards diversity, tolerance and

self control– Becoming empathetic to differences

Project Management Framework

Introduction to Project Management

What is the PMBOK Guide

The Project Management Book of Knowledge (pmbok) is a recognised standard for the project management profession.

• A standard is a formal document, it describes norms, methods, processes and practices.

What is a project

According to PMBOK a project ''is a temporary endeavor undertaken to create a unique product, service or result.’’

Project Characteristics You’ve just learned that a project has several

characteristics:• Projects are unique.• Projects are temporary in nature and have a definite

beginning and ending date.• Projects are completed when the project goals are achieved

or it’s determined the project is no longer viable.• A successful project is one that meets or exceeds the

expectations of your stakeholders

Operational WorkOperational Works are quite opposite in nature to Projects. Operations are ongoing and repetitive. They involve work that is continuous without an ending date, and you often repeat the same processes and produce the same results.

Project Management vs. OperationsThe purpose of operations is to keep the organization functioning, while the purpose of a project is to meet its goals and to conclude.

At the completion of a project, the end product (or result) may get turned over to the organization’s operational areas for ongoing care and maintenance.

What is Project Management

Project Management is the application of knowledge, skills, tools and techniques to meet the project requirements. It is the responsibility of the project manager to ensure that project management techniques are applied and followed.

What is a Portfolio

Portfolios are a collections of programs and projects grouped together to support a strategic business goal or objective. The programs may not be related other than the fact that they are helping to achieve that common goal.

What is a Program

• Programs are groups of related projects that are managed using the same techniques in a coordinated fashion. When projects are managed collectively as programs, it’s possible to capitalize on benefits that wouldn’t be achievable if the projects were managed separately.

• A project may or may not be part of a program but a program will always have projects.

SUBPROJECT

Projects are frequently divided into more manageable components or subprojects.Subproject are often contracted to an external enterprise or to another functional unit in the performing organization.Subprojects can be referred to as projects and managed as such

What is a Project Management Office

The project management office (PMO) is an organisational body or entity assigned to oversee the management of projects and programs throughout the organization.

Primary Function of PMO

A Primary function of PMO is to support project managers in avariety of ways which may include, but are not limited to:• Managing shared resources across all the projects administered by the

PMO.• Identifying and developing project management methodology, practices &

standards.• Coaching, mentoring , training and oversight.• Monitoring compliance with project management standard policies,

procedures , and templates via project audits.• Developing and managing project policies, procedures, templates, and

other shared documentation ( organizational process assets);• Co coordinating communication across projects

Role of a Project Manager

• The Project Manager is the person responsible for accomplishing the project objectives.

• Project managers strive to meet the triple constraint by balancing project scope, time, and cost goals.

• Depending on the organization structure , a project manager may report to functional manager.

• In other cases project manager may be one of the several project managers who report to a portfolio or program manager that is ultimately responsible for enterprise wide projects . In this type of structure, the project manager works closely with the portfolio or program manager to achieve the project objectives

Project Manager Skills

Skills every good project manager should have:

• Integration Skills• Communication skills• Planning and Organizational skills• Leadership Skills• Team Building and Motivational Skills• Budgeting Skills• Conflict Management Skills• Negotiation and Planning Skills

Organisational Structure

Just as projects are unique, so are the organizations in which they’re carried out. Organizations have their own styles and cultures that influence how project work is performed. .

One of the keys to determining the type of organization you work in is measuring how much authority senior management is willing to delegate to project managers

Types of Organisational Structure

Although uniqueness abounds in businesscultures, all organizations are structured in one ofthree ways:

• Functional• Projectized • Matrix

Functional OrganisationOne common type of organization is the functional organization. Chances are you have worked in this type of organization. This is probably the oldest style of organization and is therefore known as the traditional approach to organizing businesses.

Functional organizations are centered on specialties and grouped by function, which is why it’s called functional organization. As an example, the organization might have a human resources department, finance department, marketing department, and so on.

Functional Organisation Structure

Projectized Organisations

In this type structure, organisational resources are dedicated toprojects and project work in purely projectized organizations. Projectmanagers almost always have ultimate authority over the project inthis structure and report directly to the CEO.

In a purely projectized organization, supporting functions such ashuman resources and accounting might report directly to the projectmanager as well. Project managers are responsible for makingdecisions regarding the project and acquiring and assigningresources. They have the authority to choose and assign resourcesfrom other areas in the organization or to hire them from outside ifneeded.

Projectized Organisational Structure

Matrix Organisations

This form is an attempt to maximize the strengths of both thefunctional and projectised forms. Team members report to twobosses, the project manager and functional manager (i.e., VPEngineering). Communication goes from team member to bothbosses. Team member do project work in addition to normaldepartmental work.

• In a strong matrix, power rests with the project manager, in a weak matrix power rests with the functional manager and the power is comparable to that of a coordinator or expediter.

• In a balanced matrix, the power is shared between the functional manager and the project manager.

Project Expediter and Coordinator

• Project Expediter- The project expediter acts primarily as a staff assistant and communications coordinator. The expediter cannot personally make or enforce decisions.

• Project Coordinator- This position is similar to the project expediter except the coordinator has some power to make decisions, have some amount of authority and reports to a higher- level manager.

Who are project Stakeholders• Stakeholders are persons or organizations who are actively involved in

the project or whose interests may positively or negatively be affected by the performance or completion of the project.

• Stakeholders have varying levels of responsibility and authority and can change over the project life cycle.

• Project management team must continuously identify both external and internal stakeholders.

• Project manager must manage the influence of various stakeholders in relation to the requirements and balance stakeholders’ interest.

Stakeholders• Some examples of project stakeholders

Enterprise Environmental Factors• Refer to both internal & external environmental factors that surround or

influence a project’s success. • As an input in almost all project management process.• May enhance or constrain project management options.• May have positive or negative influence on the outcome.• Examples:

Organizational culture, structure, and processes Government or industry standards Infrastructure Existing human resources Personnel administration Company work authorization systems Marketplace conditions Stakeholder risk tolerances Political climate Organization’s established communications channels Commercial databases Project management information

Organizational Process Assets

• Processes & Procedures Organizational standard processes such as standards, policies Standardized guidelines, work instruction, proposal evaluation criteria, and

performance measurement criteria Templates Financial control procedures Procedures for prioritizing, approving, and issuing work authorization, etc.

• Corporate Knowledge Base Process measurement databases Project files Historical information & lesson learned knowledge bases Issue and defect management databases Configuration management knowledge bases Financial databases, etc.

Project Management Process Groups

Project management processes organize and describe the work of the project. The PMBOK®Guide describes five process groups used to accomplish this end. These processes are performed by people and, much like project phases, are interrelated and dependent on one another.

The five process groups are:

• Initiating• Planning• Executing• Monitoring and Controlling• Closing

Project Management Processes

All these process groups have individual processes that collectivelymake up the group. For example, the Initiating process group hastwo processes called Develop Project Charter and IdentifyStakeholders.

Collectively, these process groups—including all their individualprocesses—make up the project management process. Projects start with the Initiating process and progress through all theprocesses in the Planning process group, the Executing processgroup, and so on, until the project is successfully completed or it’scanceled. All projects must complete the Closing processes, even ifa project is killed.

Knowledge Areas

There are nine knowledge areas and they are:• Integration Management• Scope Management• Time Management• Cost Management• Quality Management• Human Resource Management• Communication Management• Risk Management • Procurement Management

Knowledge Areas

• Each Knowledge area has further Processes. There are a total of 42 processes. Each process has inputs, outputs and "tools and techniques" (ITTO’s). The PMBOK primarily covers each of the processes and it's ITTO’s in detail. You need to understand the concepts related to each of the input, output and "tools and techniques".

Project Life cycle

The project life cycle is the agglomeration ofall phases in the project. All projects are divided into phases, and allprojects, large or small, have a similar life cyclestructure: These are:• Starting the project • Organizing and preparing • Carrying out the project work • Closing the project

Characteristics of the Project Life Cycle

The project life cycle serves to define the beginning and the end of a project.

Phases are generally sequential and are usually defined by some form of technical information or technical component handoff.

Deliverables from the preceding phase are usually approved before work starts on the next phase.

Characteristics of the Project Life Cycle Most project life-cycles share a number of common characteristics:

Cost and staffing levels are low at the start, higher toward the end, and drop rapidly as the project draws to a conclusion.

The ability of the stakeholders to influence the final characteristics of the project’s product and the final cost of the project is highest at the start and gets progressively lower as the project continues.

The probability of successful completion generally gets progressively higher as the project continues.

Characteristics of the Project Life Cycle

The probability of successfully completing the project is lowest, and hence risk and uncertainty are highest, at the start of the project.

Project Phases and the Project Life Cycle

A project life cycle is a collection of projectphases that defines: What work will be performed in each phase. What deliverables will be produced and when. Who is involved in each phase. How management will control and approve work produced in

each phase. A deliverable is a product or service produced or provided as

part of a project

Identification

Formulation

Financing

Implementation

Evaluation

Programming

European Commission

Project Cycle

Handoffs

Project phases evolve through the life cycle in a series of phase sequences called handoffs, or technical transfers. The end of one phase sequence typically marks the beginning of the next.

Phase-to-Phase Relationships There are three basic types of phase–to Phaserelationships:• A Sequential relationship : where a phase can only start

once the previous phase is complete.• An Overlapping relationship : where the phase starts prior

to completion of the previous one (Fast tracking). Overlapping phase may increase risk and can result in rework.

• An Iterative relationship : where only one phase is planned at any given time and the planning for the next is carried out as work progresses on the current phase and deliverables

PROJECT INTEGRATION MANAGEMENT

Project Management Training

Project IntegrationManagement

Integration managementis an element of project management that coordinates all aspects ofa project.

The Key to Overall Project Success: Good Project Integration Management

• Project managers must coordinate all of the other knowledge areas throughout a project’s life cycle.

• Many new project managers have trouble looking at the “big picture” and want to focus on too many details.

Project Integration Management

Integration

Project Integration Management Processes:

• Develop the project charter: Work with stakeholders to create the document that formally authorizes a project—the charter.

• Develop the project management plan: Coordinate all planning efforts to create a consistent, coherent document—the project management plan.

• Direct and manage project execution: Carry out the project management plan by performing the activities included in it.

Project Integration Management Processes (cont’d)

• Monitor and control the project work: Oversee project work to meet the performance objectives of the project.

• Perform integrated change control: Coordinate changes that affect the project’s deliverables and organizational process assets.

• Close the project: Finalize all project activities to formally close the project.

How do Projects come about:

• As a result of Needs and Demands, namely:

Market needCustomer RequestStrategic opportunity/business needTechnological advanceLegal requirementEcological impactsSocial need

Strategic Planning and Project Selection

• Strategic planning involves determining long-term objectives, predicting future trends, and projecting the need for new products and services.

• Organizations often perform a SWOT analysis:

– Strengths, Weaknesses, Opportunities, and Threats

• As part of strategic planning, organizations should:

– Identify potential projects.

– Use realistic methods to select which projects to work on.

– Formalize project initiation by issuing a project charter.

Project Selection Methods

There are many ways to select a project to be initiated from among many possible projects.

Project selection methods measure the value of what the product, service, or result of the project will produce and how it will benefit the organization.

Methods for Selecting Projects

• There is usually not enough time or resources to implement all projects.

• Methods for selecting projects include:– Focusing on broad organizational needs.– Categorizing projects.– Performing net present value or other financial

analyses.– Using a weighted scoring model.– Implementing a balanced scorecard.

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Project Selection Methods

There are generally two categories of selection methods:

• Benefit Measurement Methods (Comparative approach).

• Constrained Optimization Methods (Mathematical models).

Benefit Measurement Method

• Murder Board A panel of people who try to shoot down a new project idea.

• Peer Review

• Economic Models

• Benefit Compared to Cost

Constrained Optimization Method

• Linear Programming

• Integer Programming

• Dynamic Programming

• Multi-objective Programming

Economic Models for Project Selection

• Present Value• Net Present Value• Internal Rate of Return• Payback Period• Benefit Cost Ratio

Net Present Value

• Net present value (NPV) analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time.

Note:

• Projects with a positive NPV should be considered if financial value is a key criterion.

• The higher the NPV, the better.

Internal Rate of Return

• The internal rate of return (IRR) is the most difficult equation to calculate of all the cash flow techniques.

• It is a complicated formula and should be performed on a financial calculator or computer.

• Technically speaking, IRR is the discount rate when the present value of the cash inflows equals the original investment.

Internal Rate of Return cont’d

Note:

When choosing between projects or when choosing alternative methods of doing the project, projects with higher IRR values are generally considered better than projects with low IRR values.

Payback Period• The payback analysis/payback period is another important

financial consideration.

• The payback period is the amount of time (number of time periods) it will take to recoup your investment in the project before you start accumulating profit.

• Many organizations want IT projects to have a fairly short payback period.

Project Selection – Economic ModelsConcepts you should know:

• Present value (PV): The value today of future cash flows.

• Net present value (NPV): Project with positive & greater NPV value is better.

• Internal rate of return (IRR): Project with greater IRR value is better.

• Payback period: The shorter the payback period the better.

• Benefit-cost ratio: compares the benefits to the costs of different options relates to costing projects and to determining what work should be done. Project with greater benefit-cost ratio value is better.

Project Selection – Economic ModelsMethod MAIN POINT

Present value (PV): value today of future cash flows

Net present value (NPV):

greater NPV value is better

Internal rate of return (IRR):

greater IRR value is better

Payback Period time periods it takes to recover your investmentSHORTER Payback Period THE BETTER

Benefit-cost ratio ABOVE 1; greater benefit-cost ratio value is better.

Weighted Scoring Model• A weighted scoring model is a tool that provides a systematic

process for selecting projects based on many criteria. • Steps in identifying a weighted scoring model:

1. Identify criteria important to the project selection process.

2. Assign weights (percentages) to each criterion so they add up to 100 percent.

3. Assign scores to each criterion for each project.4. Multiply the scores by the weights to get the total

weighted scores.• The higher the weighted score, the better.

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Sample Weighted Scoring Model for Project Selection

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Weighted Scoring Model

Implementing a Balanced Scorecard• Drs. Robert Kaplan and David Norton developed this

approach to help select and manage projects that align with business strategy.

• A balanced scorecard is a methodology that converts an organization’s value drivers, such as customer service, innovation, operational efficiency, and financial performance, to a series of defined metrics.

• See www.balancedscorecard.org for more.

Project Selection – Key Terms• Economic Value Added (EVA): concerned with whether the

project returns to the company more value than it costs.

• Opportunity Cost: the opportunity given up by selecting one project over another.

• Sunk Costs: Are expended costs, should not be considered when deciding whether to continue with a troubled project.

• Law of Diminishing Returns: after a certain point, adding more input/resource will not produce a proportional increase in productivity.

Why have a Project Charter

• It formally recognises (authorise) the existence of the project, without it a project does not exist.

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

• It provides high level requirements for the project. The project charter is broad enough so it does not need to change as the project changes.

Why have a Project Charter

• It provides direction on the project’s objectives and management.

• Key project stakeholders should sign a project charter to acknowledge agreement on the need and intent of the project; a signed charter is a key output of project integration management.

Develop Project CharterThe process of developing a document that formally authorizes a project or phase, and documenting initial requirements that satisfy the stakeholders’ needs and expectations.

Develop Project Charter

• Projects are authorized by someone external to the project such as sponsor, PMO, portfolio steering committee.

• The project charter can be created by them or delegated to Project Manager.

Develop Project Charter: Inputs

• Statement of Work (SOW)A narrative description of products or services to be delivered by the project. The SOW references: Business need Product scope description Strategic plan

• Business caseProvide the necessary information from business standpoint to determine whether or not the project is worth the required investment.

Develop Project Charter: Inputs cont’d

• ContractApplicable when the project is being done for an external customer.

• Enterprise Environmental Factors Government or industry standards Organization infrastructure Marketplace conditions

• Organizational Process Assets Organizational standard processes, policies Templates Historical information and lessons learned

Develop Project Charter: Tools & Techniques

• Expert Judgment

The expertise of individuals or groups with specialized knowledge or training to assist with the technical or management details.

They include: Internal customers – people within the organization Consultants Stakeholders Professional & technical associations Industry groups PMO

Develop Project Charter: Outputs

• The Project Charter

The project charter documents the business needs, current understanding of the customer’s needs, and the new product, service, or result that it is intended to satisfy.

Develop Project Charter: Outputs cont’d

The project charter documents :

– Project purpose or justification– Measurable project objectives and related success criteria – High-level requirements – High-level project description – High-level risks – Summary milestone schedule – Summary budget – Project approval requirements – Assigned project manager, responsibility and authority level– Name and authority of the sponsor or other person(s) authorizing

the project charter

Develop Project Management Plan• The Develop Project Management Plan process includes

the actions necessary to define, integrate, and coordinate all subsidiary plans into a project management plan.

• The Develop Project Management Plan process brings all these subsidiary plans together, along with the outputs of the Planning group processes, into one document called the project management plan.

• The project management plan defines how the project is executed, monitored and controlled, and closed.

Develop Project Management PlanThe process of documenting the actions necessary to define, prepare, integrate and coordinate all subsidiary plans.

Develop Project Management Plan: Inputs

• Project Charter

• Outputs from Planning Processes

Outputs from many of the planning processes described in chapter 5 through 12 are integrated to create the project management plan.

Any baselines and subsidiary management plans that are an output from the other planning processes are inputs to this process.

In addition, updates to these documents can necessitate updates to the project management plan.

Subsidiary Management Plans

These subsidiary plans include, but are not limited to:• Project scope management plan• Schedule management plan • Cost management plan • Quality management plan• Process improvement plan • Staffing management plan • Communication management plan • Risk management plan • Procurement management plan

Develop Project Management Plan: Inputs

• EEF Government or industry standards PMIS Organizational structure and culture Infrastructure Personnel administration

• OPA Standardized guidelines, work instructions, evaluation criteria, etc. Project management plan template Change control procedures Project files re: past projects

Project Management Plan (Output)

• The strategy for managing the project and the processes in each knowledge area.

• Covers how you will define, plan, manage, and control the project.

• How to handle a problem on a project?look at your management plan to see how you planned to handle such a problem.

• The project management plan can be either summary level or detailed, and can be composed of one or more subsidiary plans and other components. Each of the subsidiary plans and components is detailed to the extent required by the specific project.

The Project Management Plan

A Project Management Plan includes:

• Project Charter• Budget• Schedule• Resources• Scope Statement• Responsibility charts/assignments• Subsidiary Management Plans

Develop Project Management Plan (cont…)

Those other components include, but are notlimited to:

Milestone list Resource calendar Schedule baseline Cost baseline Quality baseline Risk register

Project Baseline

Project baseline refers to the original version of the project management plan. Once the project management plan is base-lined, it may only be changed by raising a change request.

Baseline (Performance measurement baseline)• The project management plan contains scope, schedule, and cost baselines,

against which the project manager will need to report project performance.

• Baseline created during planning. Scope baseline

The project scope statement, work breakdown structure (WBS), and WBS dictionary.

Schedule baseline The agreed-upon schedule, including the start and stop times.

Cost baseline The time-phased cost budget.

• Deviations from baselines are often due to incomplete risk identification and risk management.

Configuration Management Plan

This plan describes how configuration management will be performed on the project.

The configuration management system defines configurable items, such as product specifications, and the change control procedures on those items.

Configuration Management• Ensures that the descriptions of the project’s products

are correct and complete.

• Involves identifying and controlling the functional and physical design characteristics of products and their support documentation.

• Configuration management specialists identify and document configuration requirements, control changes, record and report changes, and audit the products to verify conformance to requirements.

Change Management Plan

• Describes how changes will be managed and controlled.• Covers for the project as whole.• May include:

- Change control procedures (how and who) - The approval levels for authorizing changes - The creation of a change control board to approve changes.- A plan outlining how changes will be managed and controlled.- Who should attend meetings regarding changes. - Tools to use to track and control changes

Each knowledge area are described in the individual management plans

Requirements Management Plan

Describes how the requirements will be elicited, analyzed, documented, prioritized, and managed throughout the project.

Requirements drive the features and characteristics of the project’s deliverables. This plan is created in the Collect Requirements process.

Stakeholder Analysis

• A stakeholder analysis documents important (often sensitive) information about stakeholders such as:

– Stakeholders’ names and organizations.

– Their roles on the project.

– Unique facts about each stakeholder.

– Their level of influence on and interest in the project.

– Suggestions for managing relationships with each stakeholder.

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Progressive Elaboration

Progressive Elaboration involves the process of taking a project from concept to detailed design.

Kickoff Meeting

Kick-off meeting happens after the planning phase and before the project execution. It is typically used to communicate responsibilities of key stakeholders.

Project Execution

• During project execution the project team focuses on completing the tasks assigned.

• The Sponsor protects the project from changes and loss of resources.

• The Project Manager integrates all the pieces into the project as a whole.

Project Execution (Cont…)

• Project execution involves managing and performing the work described in the project management plan.

• The majority of time and money is usually spent on execution.

• The products of the project are produced during project execution.

Coordinating Planning and Execution

• Project planning and execution are intertwined and inseparable activities.

• Those who will do the work should help to plan the work.

• Project managers must solicit input from the team to develop realistic plans.

Important Skills for Project Execution

• General management skills such as leadership, communication, and political skills.

• Product, business, and application area skills and knowledge.

• Use of specialized tools and techniques.

Direct and Manage Project Execution

This process requires implementation of approved changes covering:

• Corrective action• Preventive action• Defect repair

Direct & Manage Project ExecutionThis is the process for performing the work defined in the project management plan to achieve the project’s objectives

Using Software to Assist in Project Integration Management

• Several types of software can be used to assist in project integration management:

– Word processing software creates documents.

– Presentation software creates presentations.

– Spreadsheets or databases perform tracking.

– Communication software such as e-mail and Web authoring tools facilitate communications.

• Project management software can pull everything together and show detailed and summarized information. The exam does not focus on any specific system (for example Microsoft Project ).

Project Execution: Tools and Techniques

• Project Management Information Systems: Hundreds of project management software products are available on the market today, and many organizations are moving toward powerful enterprise project management systems that are accessible via the Internet.

Project Management Information System (PMIS)

Project Management Information System (PMIS) is a system that keeps track of status of all the project tasks. It is used to track the status of the project.

Change Requests

• When a change request is received, the following steps must be taken (in this order):

• Evaluate (assess) the impact of change to the project• Create alternatives including cutting other tasks,

crashing, fast-tracking etc.• Meet with management, sponsors etc.• Meet with the customer if necessary

Monitoring and Controlling Project Work

• Changes are inevitable on most projects, so it’s important to develop and follow a process to monitor and control changes.

• Monitoring project work includes collecting, measuring, and disseminating performance information.

• Outputs of monitoring and controlling project work include Change Requests, Project management plan updates and project document updates.

Monitor & Control Project Work•This process includes tracking, reviewing and regulating the progress to meet the performance objectives defined in the project management plan.

Monitor & Control Project Work: Input

• Performance Reports : Reports should be prepared by the project team detailing activities , accomplishments ,milestones ,identified issues and problems . Performance reports can be used to report the key information , but not limited to :– Current status – Significant accomplishments for the period– Scheduled activities – Forecasts – Issues

Perform Integrated Change Control

The process of reviewing all change requests, approving changes, and managing changes to the deliverables, organisational process assets, project documents and the project management plan.


• The integrated change control process is a control function that is done from project initiating through project closing.

• This is where all the recommendations for changes, corrective actions, preventive actions and defect repairs are evaluated across all the knowledge areas and either approved or rejected.

• Changes to any part of the project management plan or the product of the project are handled in the integrated change control process.

Integrated Change Control

• Three main objectives are:

– Influence the factors that create changes to ensure that changes are beneficial.

– Determine that a change has occurred.

– Manage actual changes as they occur.

• A baseline is the approved project management plan plus approved changes.


Change Control System

A formal, documented process that describes when and how official project documents and work may be changed.

Describes who is authorized to make changes and how to make them.

Change Control Board

Change Control Board is formed to review change requests. It is used to approve or reject change requests. After the project scope has been baselined, each requested change must go through a change control review process.

Change Control Boards (CCBs)

• A formal group of people responsible for approving or rejecting changes on a project.

• CCBs provide guidelines for preparing change requests, evaluate change requests, and manage the implementation of approved changes.

• CCBs include stakeholders from the entire organization.

Configuration Management

• Ensures that the descriptions of the project’s products are correct and complete.

• Involves identifying and controlling the functional and physical design characteristics of products and their support documentation.

• Configuration management specialists identify and document configuration requirements, control changes, record and report changes, and audit the products to verify conformance to requirements.

Defines how you will manage changes to the deliverables and the resulting documentation, including which organizational tools you will use.

PMIS

Configuration Management System

Change Control System

Closing Projects

• To close a project, you must finalize all activities and transfer the completed or cancelled work to the appropriate people.

• Main outputs include:– Administrative closure procedures.

– Contract closure procedures.

– Final products, services, or results.

– Organizational process asset updates.

Close Project or Phase Projects come to an end for several reasons:• They’re completed successfully.• They’re canceled or killed prior to completion.• They evolve into ongoing operations and no longer exist as

projects.

There are four formal types of project endings you mightneed to know for the exam:• Addition• Starvation• Integration• Extinction

Close Project or Phase• Addition- Projects that evolve into ongoing

operations are considered projects that end due to addition; in other words, they become their own ongoing business unit.

• Starvation- When resources are cut off from the project or are no longer provided to the project, it’s starved prior to completing all the requirements and you’re left with an unfinished project on your hands.

Close Project or Phase• Integration- Integration occurs when the resources of the

project—people, equipment, property, and supplies— are distributed to other areas in the organization or are assigned to other projects.

• Extinction- This is the best kind of project end because extinction means the project has been completed and accepted by the stakeholders. As such, it no longer exists because it had a definite ending date, the goals of the project were achieved, and the project was closed out.

Close ProjectThe Close Project or Phase is the process of formal completion of all project related activities.

Lessons LearnedAt the end of each phase of a project, a lessonslearned document must be prepared. The lessonslearned document defines what was done right,wrong etc. It is required to be completed in orderfor the project to be completed.

Also called “Post – Mortem”

Assumptions

Assumptions are beliefs held to be true for the purposes of the project – you don’t have to prove them, but they must be documented in the Project Plan. As they are assumptions then be aware that they have an element of risk attached to them. If assumptions later turn out to be false during the execution of the project then this may lead to changes in project scope.

Project Constraints

Every project has to manage at least three basic constraints; time, cost and scope. The success of a project depends on the skills and knowledge of a project manager to take into consideration these constraints and develop the plans and processes to keep them in balance.

Scope Management


Project Scope Management

• Processes required to ensure that project includes all the work required, and only the work required, to complete the project.

• Managing a project scope is primarily concerned with defining and controlling what is and is not included in the project.

• Scope management defines how the deliverables of project will be verified and accepted.

• Develop project management plan, under integration produces the scope management plan which will define how the scope shall be defined, verified and controlled.

Scope management means:• Not letting people randomly add to the scope without

a structured change control system.

• Making sure all changes fit within the project charter.

• Preventing extra work or “gold plating”.

• Uncontrolled scope is called scope creep.

In the project context the term scope may refer to:

• Product scope : the features and functions that are to be included in a product or service. Completion of product scope is measured against requirements.

• Project scope : The work that must be done in order to deliver

a product with the specified features and functions. Completion of project scope is measured against the project management plan.

Both types of scope management must be well integrated to ensure the work of the project will result in the delivery of the specified product.

project scope, product scope & requirementsExample: Lets say you have a plot of land and you want to build a houseon it.Product: The house

Product Scope: The house should have 3 storey's, 1000 sq. m ofbuilt up area, 4 bedrooms with attached baths, 2 living room, akitchen, basement and a garage. The exteriors should be white.

Project Scope: Hiring a building contractor, an architect and aninterior designer, acquiring legal permits, estimating the cost, takingbank loan, planning for risks such as rains and storms, designing thehouse, buying building materials,

Example: project scope, product scope & requirementsconstructing the house, conducting inspections, conductingregular site visits to track the progress, resolving disputes,Making payments and compensations, closing contracts andmoving in.

Requirements: In addition to product scope, there could beother requirements for the house. Using a particular grade ofcement could be your quality requirements. Making the houseearthquake- proof could be a performance requirement. Gettinga weekly progress update from your contractor, and makingmonthly payments could be your project managementrequirements.

Documenting the Scope Management Plan

The scope management plan describes how theproject team will go about defining project scope, verifying the work of the project, and managing and controlling scope. The PMBOK Guide does not go into detail regarding this plan, but there are some things you may need to know about this plan for the exam.

Project Scope Management Plan

The project scope management plan should contain the following:

• The process you’ll use to prepare the project scope statement.

• A process for creating the work breakdown structure (WBS).

• A definition of how the deliverables will be verified for accuracy and the process used for accepting deliverables.

• A description of the process for controlling scope change requests, including the procedure for requesting changes and how to obtain a change request form.

Project Scope Management

Project Scope Management Processes:• Collect Requirements : the process of defining and

documenting stakeholder’s needs to meet the project objectives.

• Define Scope : the process of developing a detailed description of the project and the product.

• Create WBS: the process of subdividing the project deliverables and the project work into smaller, more manageable components

• Verify Scope : the process of formalizing acceptance of the completed project deliverables

• Control Scope : the process of monitoring the status of the project and product scope and managing changes to the scope baseline.

Requirements

• Requirements describe the characteristics of the deliverables. They might also describe functionality that a deliverable must have or specific conditions a deliverable must meet in order to satisfy the objective of the project.

• Requirements are typically conditions that must be met or criteria that the product or service of the project must possess in order to satisfy the objectives of the project.

Collect Requirements • Collect requirements is the process of defining and

documenting stakeholders’ needs to meet the project objectives .

• Requirements include the quantified and documented needs and expectations of the sponsor, customer, and other stakeholders.

• These requirements need to be elicited , analyzed, and recorded in enough detail to be measured once project execution begins .

• Collecting requirements is defining and managing customer expectations . Requirements become the foundation of the WBS. Cost , Schedule, and quality planning are all built upon these requirements

Collect Requirements• The development of requirements begins with an

analysis of the information contained in the project charter and the stakeholder register .

• Many organizations categorize requirements into project requirements and product requirements

• Project requirements : business requirements, project management requirements ,delivery requirements etc

• Product requirements: technical, security, performance , etc

Collect RequirementsCollect Requirements is the process of defining and documenting stakeholders needs to meet the project objectives.

Collect Requirements: Tools & Techniques

Interviews :• Is a formal or informal approach to discover information

from stakeholders by talking to them directly • It is typically performed by asking prepared and

spontaneous questions and recording the responses .• Interviewing experienced project participants,

stakeholders and subject matter experts can aid in identifying and the defining the features and the functions of the desired project deliverables .

Collect Requirements – Tools & Techniques

Focus Groups :• Focus groups bring together prequalified

stakeholders and subject matter experts to learn about their expectations and attitudes about a proposed product, service, or result .

• A trained moderator guides the group through an interactive discussion , designed to be more conversational than a one-on-one interview


Facilitated workshops: Cross-functional stakeholders come together in a facilitated workshop to discuss and define requirements that affect more than one department. For example, if you’re implementing a software package that impacts several business units, you’ll need representatives from each unit together in a workshop so that each of their needs are represented and prioritized. This way, all the participants understand the various needs and have a facilitated forum to discuss and resolve their issues.


Group Creativity Techniques : Group creativity involves several techniques, like brainstorming, nominal group technique, the delphi technique, and affinity diagrams.

• Brainstorming : a technique used to generate and collect multiple ideas related to the project and product requirements .


Group Creativity Techniques : • Nominal Group Technique : enhances

brainstorming with a voting process used to rank the most useful ideas for further brainstorming or prioritization (Brainstorming + Voting)


Group Creativity Techniques : • The Delphi Technique is an anonymous

method to query experts. Delphi technique uses an experienced Facilitator.

• The responses are only available to the facilitator.

• Participants can express ideas or opinions without fear or being intimidated.


Group Creativity Techniques :

• Idea/mind mapping : ideas created through individual brainstorming are consolidated into a single map to reflect commonality and differences in understanding , generate new ideas (Brainstorming +Map).

• Affinity Diagram : this technique allows large number of ideas to be sorted into groups for review and analysis


Group Decision Making Techniques : there are multiple

methods of reaching a group decision :• Unanimity :everyone agrees on a single course of

action• Majority : support from more than 50% of the

members of the group.• Plurality : the largest block in a group decides even

if a majority is not achieved.• Dictatorship : one individual makes the decision for

the group


Questionnaires and Surveys: This technique involves querying a large group of participants via questionnaires or surveys. These tools allow you to gather information quickly and apply statistical analysis, if needed, to the results.

Collect Requirement : Tools & Techniques

Observation: This technique is typically a one-on-one experience where an observer sits side by side with the participant to observe how the participant interacts with the product or service. This technique is also known as job shadowing. For example, you may use this technique to determine requirements for an upgrade to a software product. Sitting with the user and watching their interactions with the product enables the observer to uncover requirements they would not have ordinarily discovered.


Prototypes : Prototyping is a technique involving constructing a working model or mock-up of the final product for participants to experiment with. The prototype does not usually contain all the functionality the end product does, but it gives participants enough information that they can provide feedback regarding the mock-up. This is an iterative process where participants experiment and provide feedback and the prototype is revised and the cycle starts again

Balance Stakeholder’s Requirement• There is a need to balance stakeholder’s requirement.• Some issue are so complex they cannot be resolved by PM alone.• Facilitate the resolution of competing requirement, consider:1. business case, 2. project charter, 3. project scope statement, 4. project constraints

What you can do:Conflict resolution, team building, meeting, problem solving skills, escalation, approval from stakeholder.

• Stakeholder request to do or add something that is not related to the reason of project created should be rejected!

Collect Requirements: Outputs

Requirements DocumentationAs mentioned earlier, requirements quantify and prioritize the wants, needs, and expectations of the project sponsor and stakeholders. Requirements typically start out high-level and are progressively elaborated as the project progresses. You must be able to track, measure, test, and trace the requirements of the project. If you can’t measure or test whether the requirement satisfies the business need of the project, the definition of success is left to the subjective opinions of the stakeholders and team members.

Requirements Documentation

The requirements document may include the following elements:• Business need for the project and why it was undertaken • Objectives of the project and the business objectives the

project hopes to fulfill • Functional requirements and Nonfunctional requirements • Quality requirements • Acceptance criteria • Business rules • Organizational areas and outside entities impacted • Support and training requirements • Assumptions and constraints

Collect Requirements- Outputs

Requirements Management Plan :

• Documents how requirements will be analyzed , documented and managed throughout the project.

• The type of phase relationship you choose to manage the project will determine how requirements are managed throughout the project. For example, in a sequentially phased project, it’s possible to define requirements in later phases of the project after some work has been completed. In an overlapping phased relationship, you’ll need to define and document most all the requirements early in the life cycle.

• Configuration management is often used to manage and track changes to deliverable (product, service or result) requirements.

Requirements Management Plan

The Requirements Management Plan should include the following:• How planning, tracking, and reporting of requirements activities will

occur • How changes to the requirements will be requested, tracked, and

analyzed along with other configuration management activities• How requirements will be prioritized • What metrics will be used to trace product requirements • What requirements attributes will be documented in the

traceability matrix• Remember that the requirements management plan can be

considered a subsidiary management plan and be included in the project management plan.

Requirements Traceability Matrix

It is a matrix that links requirements to their origin and tracesthem throughout the project life cycle .It helps to ensure thatrequirements approved in the requirements documentation aredelivered at the end of the project. It can include:

• Unique identifier• Textual description• Rationale• Owner source• Status• Date Completed

Requirements Traceability Matrix

Define Scope

Scope is collectively the product, service, or result of the project. Now that you’ve documented the project requirements, you’re ready to further define the needs of the project in the Define Scope process. The project scope statement (an output of this process) is what you’ll use to develop and document a detailed description of the deliverables of the project and the work needed to produce them. This process is progressively elaborated as more detail becomes known.

Define ScopeThis is the process of developing a detailed description of the project and product

Define Scope – Tools and Techniques

1. Product Analysis• The purpose of product analysis is to analyze the objectives stated

by the customer or sponsor and turn them into real requirements. (Product breakdown, systems analysis, value engineering, requirements analysis and value analysis).

2.Alternative Identification• Identifying alternatives is a technique used to generate different

approaches to execute and perform the work of the project. Brainstorming Lateral Thinking Pair wise comparison

Lateral Thinking

Lateral thinking is a form of alternatives identification that can be used to help define scope. Edward de Bono created this term and has done extensive research and writing on this topic. The simplest definition is that it’s thinking outside the box. Lateral thinking is a process of separating the problem, or in our case the components of project scope (the deliverables and requirements), looking at them from angles other than their obvious presentation and encouraging team members to come up with ways to solve problems or look at scope that are not apparently or obvious.

Lateral Thinking Example

Question: How could your pet Yorkie fall from the window of an 18-story building and live?

Answer: The question asks how your pet could fall from an 18-story building and live; however, the question doesn’t state that your pet fell from the 18th floor. So, your pet Yorkie fell from the basement-level window.

Define Scope - Outputs

Project Scope Statement• Project scope statements describes, in detail

(remember SOW), project deliverables and work required to create these deliverables.

• It helps to create a common understanding among stakeholders (avoid scope creep)

• Project team can perform detailed planning now

Project Scope Statement

The project scope statement contains thefollowing:• Project objectives• Project scope descriptions• Project requirements• Project exclusions• Project deliverables• Project acceptance criteria• Project constraints & assumptions

What is Work Breakdown Structure (WBS)?

The PMBOK Guide describes a WBS as “a deliverable-orientedhierarchical decomposition of the work to be executed by the projectteam, to accomplish the project objectives and create the requireddeliverables…the WBS defines the total scope of the project.” Like theScope statement, the WBS serves as a foundational agreement amongThe stakeholders and project team members regarding project scope.

Work that doesn’t fit into the WBS does not fit within the project.

• Projects are normally too big to manage and WBS breaks the project works into smaller more manageable components arranged according to deliverables.

• This is a top down effort, break works down from top to bottom.

Create WBS

• Each level of WBS is a smaller piece of the level above.

• The top most level of each WBS is the total project itself.

• Work is broken down to the lowest level possible till further division is logically not possible or the work can be confidently estimated and scheduled.

• WBS represents total work specified in the current approved scope statement and shall be revised if a major scope change occurs.

Create WBS Cont’• Work package: lowest level WBS component which can

be scheduled, cost estimated, monitored and controlled.

• WBS Structure can be organized by- Phases- Major deliverables- Subprojects e.g. contracted work.

• Beware of excessive decomposition. It can lead to non-productive management effort, inefficient use of resources (performing work)

Control Accounts

• Unique identifiers are normally taken from the organization’s code of accounts to track cost by category.

• Each item in WBS need to be estimated, resourced, budgeted and controlled. If management need to measuresPerformance (budget & time), WBS shall be linked toaccounting system.

• Normally control account is placed in WBS for this purpose.• Control account is placed above work package level in WBS• Each control account may have more than one work

package but one work package shall only be linked to one control account.

100% Rule

• Each WBS levels represents a breakdown of WBS level above.

• Lowest level in the WBS is called work package• If the lowest levels are rolled up to the higher levels,

the total must represents the total work of the project. This is called 100% rule.

• This ensures that no work is left out or no extra work is added.

Develop WBS

100% rule: WBS includes 100% of the work defined by project scope and capture ALL deliverables (external, internal, interim) in term of work to be completed including project management.

Develop WBS: Tool & Technique

Decomposition• This technique involves breaking down the

deliverables into smaller, more manageable components of work.

• The idea here is to break down the deliverables to a point where you can easily plan, execute, monitor and control, and close out the project deliverables.

• Each level of WBS is a more detailed definition of the level above it.

WBS for a Bicycle

WBS DictionaryIn order to more clearly define the work necessary for project completion the WBS Dictionary isused. The WBS Dictionary includes but not limited to the following: level, WBS element, elementname, description of work, deliverable.

WBS DictionaryWBS dictionary should include the following elements for eachcomponent of the WBS:• Code of accounts identifier • Description of the work of the component • Organization responsible for completing the component • List of schedule milestones• Required resources • Cost estimates • Quality requirements • Criteria for acceptance • Technical references • Contract information

Scope BaselineThe Scope Baseline is a component of theproject management plan and include thefollowing:

• Project scope statement• Work Breakdown Structure (WBS)• WBS Dictionary

Verify Scope• It is the process of obtaining formal

acceptance of the project scope by the stakeholders.

• It requires reviewing deliverables and work results to ensure that all were completed correctly and satisfactorily

• If the project is terminated early, the scope verification process should establish and document the level and extent of completion

Verify Scope Cont’d.

• Scope verification is concerned with acceptance of deliverables but Quality control is concerned with meeting the quality requirements specified.

• Quality control is normally performed prior to scope verification but both may be performed in parallel.

Verify Scope

Verify Scope : Tools & TechniquesInspection

• To complete scope verification, the work must be inspected. • This may require measuring, examining, and testing the

product to prove it meets customer requirements.• Inspection usually involves the project manager and customer

inspecting the project work for verification, which in turn results in acceptance.

• Depending on the industry, inspection may also be known as: Reviews, Product Reviews, Audits & Walkthroughs.

Verify Scope : Outputs

• Accepted Deliverables: This is a formal process that requires signed documentation of the acceptance by the sponsor or customer.

• Change Requests : those completed deliverables that have not been accepted are documented , along with the reasons for non-acceptance . Those deliverables may require a change request for defect repair .

• Project Document Updates : Project documents that may be updated include any documents that define the product or report status on product completion

Control Scope

• Monitor the status of project and product scope and manages any changes to scope baseline.

• Is part of integrative change control.

• Uncontrolled scope changes result in scope creep.

Control ScopeThe process of monitoring the status of the project and product scope and managing changes to the scope baseline.

Control Scope – Tools & Techniques

1. Variance Analysis :• Project performance measurements are used to assess

the magnitude of variation from the original scope baseline .

• Important aspects of the project scope control include determining the cause and the degree of variance relative to the scope baseline and deciding whether corrective or preventive action is required

Control Scope - Outputs1.Work Performance Measurements: Measurements can include planned vs. actual technical performance or other scope performance measurements. This information is documented and communicated to the stakeholders.

2. Change Requests : change requests to the scope baseline or other components of the project management plan. Change requests can include preventive or corrective actions or defect repairs .

3. Project Management Plan Updates : • Scope Baseline Updates• Other Baseline Updates

4. Project Document Updates : requirements documentation update, requirements traceability matrix updates , etc

Scope Change

Changes to scope will likely require that you repeat some of the project planning processes and make any needed adjustments, including updating the project documents. Scope changes require an update to the project scope statement. This may require an update to the WBS and WBS dictionary as well. Scope baseline updates are part of the project management plan updates.

Scope Change Cont’d

Scope changes include any changes to the project scope as defined by the agreed upon WBS. This in turn might require changes or updates to project objectives, costs, quality measures or controls, performance measurements baselines, or time in the form of schedule revisions. Scope changes almost always affect project costs and/or require schedule revisions

You are the project manager of a project. You have just completed the Collect Requirements and Define Scope. What should you do next?

A. Control ScopeB. Create WBSC. Value analysisD. Verify Scope

QUESTION NO: 1

QUESTION NO: 2

A summary WBS is usually developed in the:A. close-out phaseB. Conceptual phaseC. implementation phaseD. planning phase

QUESTION NO: 3

The work that must be done in order to deliver a product with the specified features and functions is:

A. Project verificationB. Project scopeC. Project controlD. Product scope

QUESTION NO: 4

The project manager is assigned in the?

A. Management PlanB. SOWC. Charter (contract)D. Planning Stage

QUESTION NO: 5You are a project manager for Dutch Harbor Consulting. Your latest project involves the upgrade of an organization's operating system on 236 servers. You performed this project under contract. You are in the closing process and know that product verification is for what purpose?A. To verify that all the work was completed correctly and satisfactorilyB. To evaluate project goals and ensure that the product of the project meets the requirementsC. To verify the goals of the project and ensure that the product of the project is completeD. To evaluate all the work of the project and compare the results to project scope

Time Management

TIME MANAGEMENT

The PMBOK states that Project Time Management is the Knowledge Area that “includes the processes required to accomplish timely completion of the project.

TIME MANAGEMENT

Project Time Management Processes: • Activity Definition• Activity Sequencing• Activity Resource Estimating• Activity Duration Estimating• Schedule Development• Schedule Control

Process Groups & Time Management Process Groups & Time Management ActivitiesActivities

Initiating PlanningPlanning Executing ControllingControlling Closing

Activity DefinitionActivity Definition

Activity SequencingActivity Sequencing

Resource EstimatingResource Estimating

Duration EstimatingDuration Estimating

Schedule Schedule DevelopmentDevelopment

Schedule ControlSchedule Control

Project Time Management Processes

• Activity definition: Identifying the specific activities that the project team members and stakeholders must perform to produce the project deliverables.

• Activity sequencing: Identifying and documenting the relationships between project activities.

• Activity resource estimating: Estimating how many resources a project team should use to perform project activities.

• Activity duration estimating: Estimating the number of work periods that are needed to complete individual activities.

• Schedule development: Analyzing activity sequences, activity resource estimates, and activity duration estimates to create the project schedule.

• Schedule control: Controlling and managing changes to the project schedule.

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Define Activity

• Involves identifying and documenting the work that is planned to be performed

• This process identifies the deliverables at the lowest level of the work breakdown structure (WBS), called the work package

• The work package is then broken down into smaller components called schedule activities

*These provide a basis for estimating, scheduling, executing, and monitoring and controlling the project work

1.Define Activity1.Define Activity

Inputs

01. Scope

Baseline

02. OPA

03. EEF

04. Constraints

05. Assumptions

Outputs

01. Activity list

02. Activity

Attributes03. Milestones list

Tools & Techniques

01. Decompositions

02. Templates

03. Rolling Wave

Planning

04. Expert Judgment

Identifying the specific activities that must be performed to produce the various project deliverables.

– The Project Management Plan contains the schedule management plan, which provides guidance on the development and planning of schedule activities.

– Decomposition: The process of subdividing the project work packages into smaller, more manageable components called schedule activities.

Define Activity ( Tools & Techniques)

Templates• A standard activity list or a portion of an activity list

from a previous project can often be used as a template.

Rolling Wave Planning• A form of progressive elaboration planning where

the work to be accomplished at the near term is planned in detail at a low level of the WBS, while the work far in the future is planned at relatively high levels of the WBS.

Rolling Wave Plan

• Detailed decomposition of work may not be possible for works that will be completed in the future since project team is not fully aware of details of work. Team waits for the more details and only work in the near future is decomposed. This is called Rolling Wave Planning

• Work in the near term is elaborated in more detail than work to performed in the future.

Expert judgment, in the form of project team members with prior experience developing project scope statement

Milestone list (Output) are typically major accomplishments of the project and mark the completion of major deliverables or some other key event in the project. For example, approval and sign-off on project deliverables might be considered milestones.

Define Activity (Outputs)

• An activity list is a tabulation of activities to be included on a project schedule. The list should include:

– The activity name

– An activity identifier or number

– A brief description of the activity

• Activity attributes provide more information about each activity, such as predecessors, successors, logical relationships, leads and lags, resource requirements, constraints, imposed dates, and assumptions related to the activity.

2. Sequence Activity2. Sequence Activity

Inputs

01. Activity list

02. Activity Attributes

03. Milestone List

04. Project Scope Statement

05. Organizational Process

Assets (OPA)

Outputs

Project Schedule

Network diagrams

Project document updates

Tools & Techniques

01. Precedence diagramming method (PDM)

02. Arrow diagramming method (ADM)

03. Dependency Determination

04. Applying leads and lags

05.Schedule network templates

- Involves reviewing activities and determining dependencies.

Sequence Activities• Activity list prepared are now logically sequenced. • A dependency or relationship between activities established.

• Dependencies shall be determined in order to use critical path analysis.

• Can be performed by using manual or automated techniques or project management software

Dependency Determination

Three types of dependencies:

• Mandatory dependencies

• Discretionary dependencies

• External dependencies

Dependency Determination

• Mandatory dependencies: Also referred to as hard logic Required as per contract or inherent in the nature of the work. Usually involve physical limitations (e.g., you cannot build the ceiling until walls are constructed) Are determined by the project management team during the activity sequencing process.

• Discretionary dependencies: Also referred to as preferred logic, preferential logic, or soft logic Are determined by the project management team during the activity sequencing process Should be used with care and well documented, since they may limit later scheduling options.

External Dependency

• External dependencies: Are determined by the project management team during the activity sequencing process. Involve a relationship between project and non-project activities such as activities outside the project team’s control (e.g., dependence on external sources for deliveries, environmental factors governed by statutes, etc

Network Diagrams

• Network diagrams are the preferred technique for showing activity sequencing.

• A network diagram is a schematic display of the logical relationships among, or sequencing of, project activities.

• Two main formats are the Arrow and Precedence diagramming methods.

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Precedence Diagramming Method Precedence Diagramming Method (PDM)(PDM)

• Activities are represented by boxes• Arrows show relationships between activities• More popular than ADM method as used by PM software• Better at showing different types of dependencies• In PDM, finish-to-start is the most common relationship

Precedence Diagramming Method(PDM)

Includes four types of dependencies or logical relationships:

– Finish-to-start (FS) – Finish-to-finish (FF) – Start-to-start (SS) – Start-to-finish (SF)

The PDM is also called Activity–On-Node (AON) and it does not use dummy activities nor does it allow for loops or conditional branches.

Arrow Diagramming Method (ADM)Arrow Diagramming Method (ADM)

• Uses arrows to represent activities• Connects activities with nodes• Uses only finish-to-start dependencies• May require dummy activities to define relationships

PERT( Program Evaluation and Review Technique)

• Program Evaluation and Review Technique (PERT) has the following characteristics.– It uses three estimates per activity - optimistic, pessimistic and most

likely– It can be drawn only using AOA diagrams– It can have dummy events

• PERT utilizes more information than CPM as it considers the "Pessimistic" and "Optimistic" values in addition to the "Most Likely" value in its calculations. The following are formula used by PERT - Mean = (P + 4M + O)/6 Standard Deviation = (P-O)/6 Variance = ((P-O)/6)2

• GERT is another type of network diagram. It can support looping.

Applying Leads and Lags

• A Lead may be added to start an activity before the predecessor activity is finished. Ex: Furniture may be installed 2 weeks prior to completion of painting (Finish to start relationship with 2 weeks lead)

• Lag introduces waiting period between activities. Lag introduces a delay in the successor activity.

Sequence Activities : Outputs

1. Project Schedule Network Diagrams :• It can be produced manually or by using a project

management software• Project Schedule Network Diagrams are not final

schedule For the exam, know that, in its pure form, the network diagram shows just dependencies.

2. Project Document Updates

Estimate Activity Resources

• All projects, from the smallest to the largest, require resources. Before estimating activity durations, you must have a good idea of the quantity and type of resources that will be assigned to each activity

• The term resources in this case does not mean just people; it means all the physical resources required to complete the project.

• People• Equipment• Materials

3. Estimate Activity Resources 3. Estimate Activity Resources

Inputs

01. Activity list

02. Activity Attribute

03. Resource calendars

04. EEF

05. O.P.A

Outputs

01. Activity Resource

Requirements

02. Resource Breakdown

Structure (R.B.S)

03. Project Document Updates

Tools & Techniques

01. Expert judgment

02. Alternative Analysis

03. Published Estimating Data

04. Bottom Up Estimating

05. Project Management Software

-this process is concerned with determining the types of resources needed and in what quantities for each schedule activity.

Resource Calendars( Input)- is a calendar that is usedTo reflect specific working hours, vacations, leaves ofabsence, and planned personal time for individualresources. Resource calendars can be used for humanresources as well as equipment.

Alternative Analysis (Tool & Technique)-is usedWhen thinking about the methods you might use toaccomplish the activities your resources have beenassigned. Many times, you can accomplish an activity inmore than one way, and alternatives analysis helpsdecide among the possibilities.

Estimate Activity ResourcesEstimate Activity Resources(Tools & Techniques)

Published Estimating data- Estimating data mayinclude organizational guidelines, industry rates orestimates, production rates, and so on.

Bottom Up Estimating-Bottom-up estimating isA process of estimating individual scheduleactivities or costs and then adding thesetogether to come up with a total estimate for thework package.

Activity Resource EstimatingActivity Resource Estimating(Outputs)(Outputs)

Activity Resource Requirements – Activity resourcerequirements provide an estimate of the type and quantityof resources needed to complete activities. The ScheduleDevelopment process considers when the requiredResources will be used.

Resource Breakdown Structure (RBS) - The ResourceBreakdown Structure (RBS) displays the hierarchicalstructure of the categories and types of resources needed.

Estimate Activity Durations• Here the network diagram is updated by estimating duration

for each activities.• The Activity Duration Estimating process attempts to estimate

the work effort and number of work periods needed to complete each schedule activity.

• A person or team most familiar with work of the project shall estimate duration to make it more accurate.

• All data and assumptions used for estimation shall be documented for future analysis (remember this, we need this information during the risk management process)

4. 4. Estimate Activity Durations

Inputs

01. Activity list

02. Activity Attribute


Requirements

04. Resource calendars


06. O.P.A

07. E.E.F

Outputs

01. Activity duration

estimates

02. Project Document updates

Tools & Techniques

01. Expert judgment

02. Analogous estimating

03. Parametric Estimating

04. Three Point Estimates

04. Reserve Analysis

(contingency)

- estimating the number of work periods that will be needed to complete individual activities.

Analogous Estimating

Analogous Estimating, is a form of expert judgment and is also known as Top-down Estimating. Analogous estimates are typically less time consuming and less costly than other estimating techniques, but it’s also less accurate.

Estimate Activity Durations : Tools & Techniques

Parametric Estimating• Parametric estimate uses a statistical relationship between

historical data and other variables.• More accurate than analogous estimate• Example : A resource will take 20hrs per module and hence

1000 modules will take 50hrs (50X20 = 1000hrs)• Estimation is done by multiplying quantity of work by labor

hours per unit of work.

Three-Point Estimates

Three-point estimates, as you can probably guess, use three estimates that when averaged come up with a final estimate. The three estimates you’ll use in this technique are the most likely estimate, an optimistic estimate, and a pessimistic estimate.

Three-point estimates are needed for PERT estimates and Monte Carlo simulations

Three-Point Estimates

PERT analysis calculates An Expected t(E)activity duration using a weighted average ofthree estimates : t(E) = [to+4tm+tp]/6

• PERT analysis consider estimationuncertainties and risks and hence accuracy of estimate is improved.

Reserve Analysis

Reserve time, also called buffers, time reserves, or contingency reserve in the PMBOK Guide, means a portion of time that is added to the activity to account for schedule risk or uncertainty. You might choose to add a percentage of time or a set number of work periods to the activity or the overall schedule. For example, you know it will take 100 hours to run new cable, you also know that sometimes you hit problem areas when running the cable. To make sure you don’t impact the project schedule, you build in a reserve time of 10 percent of your original estimate to account for the problems you might encounter.

Activity Duration EstimatesYou use the inputs and tools and techniques to establish these estimates. Activity duration estimates are an estimate of the required work periods needed to complete the activity. This is a quantitative measure usually expressed in hours, weeks, days, ormonths.

Develop Schedule • The Develop Schedule process is the heart of

the Planning process group.• The creation of the project schedule is

iterative. It’s rare for a schedule to get created, approved, and implemented without some iterative examination, arrangement, and management input—though on smaller projects it may be possible.

Develop Schedule

Schedule Management Plan• A Guide to the PMBOK notes that the schedule

management plan (a subsidiary of the project management plan) is produced as part of the Develop Project Management Plan process and contains the criteria for formatting, developing, and controlling the project schedule.

5. Develop Schedule5. Develop Schedule

Inputs

1. Activity List

2. Activity Attributes

3. Project Schedule

Network Diagrams


Requirements

5. Resource Calendars

6. Activity Duration

Estimates


8. O.P.A

9. E.E.F

Outputs

1. Project Schedule

2. Schedule Baseline

3. Schedule data

4. Project Document

updates

Tools & Techniques

1. Schedule Network

analysis

2. Critical Path Method

3. Critical Chain Method

4. Resource leveling

5. What if Scenarios

6. Applying Leads and

Lags

7. Schedule Compression

8. Scheduling Tool

- analyzing activity sequences, activity durations, and resource requirements to create the project schedule.

Develop Schedule (tools & Techniques)

Schedule Network Analysis• Schedule network analysis is a technique that

generates the project schedule. It employs a schedule model and various analytical techniques, such as critical path method, critical chain method, what-if analysis, and resource leveling to develop the schedule.

Develop Schedule (Tools & Techniques)

Critical path method (CPM) is a schedule network analysis technique. It determines the amount of float, or schedule flexibility, for each of the network paths by calculating the earliest start date, earliest finish date, latest start date, and latest finish date for each activity.

The critical path (CP) is generally the longest full path on the project. Any project activity with a float time that equals zero is considered a critical path task.

Determining the Critical Path for Project X

Floats

• Floats are not the same as lead or lag.• Lead or lags are introduced (manually) to correct the

sequence while float is calculated in CPM method• Float for all activities on critical path will be zero value. • A forward pass through the network diagram determines the

early start and finish dates. • A backward pass determines the late start and finish dates

Types of Floats (or Slacks)Float time is also called slack time and there are threetypes of float:

• Total Float – The amount of time an activity can be delayed without delaying the project end date or milestone.

• Free Float – The amount of time an activity can be delayed without delaying the early start date of successor activity.

• Project Float – The amount of time a project can be delayed without delaying an externally imposed project completion date (other than calculated by CPM) by customer.

Calculating Early and Late Start and Finish Dates

Critical Chain Method

Critical chain method is a schedule network analysistechnique that will modify the project schedule byaccounting for limited or restricted resources. After theproject schedule network diagram is constructed usingduration estimates, dependencies, and constraints,resource availability is entered into the scheduling tool.The modified schedule is calculated and you’ll find that itoften changes the critical path. The new critical pathshowing the resource restrictions is called the criticalchain.

Schedule CompressionSchedule compression is the method of shortening theproject schedule without changing the scope. Need forcompression occurs if a customer need a dateprior to the end date shown in original schedule or tobring back a project schedule back to baseline.

• Crashing – This approach adds more resources to activities on the critical path to complete the project earlier. Crashing almost always result in increased cost. Many options are considered and the option with maximum compression with minimum cost impact is selected.

Schedule Compression

• Fast Tracking –Critical activities that would normally be done in sequence are allowed to be done in parallel or with some overlap. Fast track may result in rework and increases risk. Communication requirements increases during fast tracking.

Develop Schedule: Outputs The schedule can be displayed in a variety ofways:• Project Schedule Network Diagram• Gantt Charts/ Bar Charts• Milestone Charts

The purpose of the Schedule Development process is todetermine the start and finish date for the each of the projectactivity. The project schedule should be approved andsigned off by stakeholders and functional managers.

This assures that they have read the schedule, understand the dates and resource commitments, and will likely cooperate

Control Schedule

Schedule Control is concerned with: 1. Determining the current status of the project

schedule 2. Influencing the factors that create schedule changes. 3. Determining that the project schedule has changed,

and 4. Managing the actual changes as they occur.

6. Control Schedule 6. Control Schedule

Inputs

1.ProjectManagement

Plan

2. Project Schedule

3. Work Performance

Information

4. O. P.A

Outputs

1. Work performance

Measurements

2. Project Management

Plan Updates

3. Organizational

Process Assets

Updates

4. Change Requests

5. Project Document

Updates

Tools & Techniques

1. Performance reviews

2. Variance Analysis

3. Project management

software

4. Resource Leveling

5. What if Scenarios

6. Adjusting Leads &

Lags

7. Schedule Compression

8. Scheduling Tool

- controlling changes to the project schedule.

Control Schedule ( Tools & Techniques)

• Performance Reviews- Performance reviewsmeasure , compare, and analyze schedule performancesuch as actual start and finish dates, percent complete, andthe remaining duration for the work in progress .

• Variance Analysis- Variance analysis is a key factorin monitoring and controlling project time because thistechnique helps determine variances in schedule start andend dates.

Control Schedule : OutputsThe Schedule Control process has the following outputs:1. Work Performance Measurements- CalculatedSchedule Variance (SV) and Schedule Performance Index(SPI) are documented and communicated withStakeholders.2. Organizational process asset updates (lessonslearned)3. Change Requests – Approved schedule baselines shallbe only updated through integrative change control. SV &SPI may result in change requests for baseline update forbaseline update.4. Project Management Plan Update 5. Project Document updates – Schedule data

Schedule Control

• Perform reality checks on schedules.

• Allow for contingencies.

• Don’t plan for everyone to work at 100 percent capacity all the time.

• Hold progress meetings with stakeholders and be clear and honest in communicating schedule issues.

Sample PMP Sample PMP Certification QuestionsCertification Questions

Solution: SD = (P-O)/6 = (7-3)/6 = 2/3

Source: PMP Exam Prep by Rita Mulcahy

Q1. The estimate for a task is O = 3 days, P = 7 days, M = 4 days. What is the standard deviation of the task?A. 5/6 of a dayB. 2/3 of a dayC. 1 ½ daysD. 5 2/3 days

Q2. A project has three critical paths. Which of the following BEST describes how this affects the project?

A. It makes it easier to manageB. It increases the project riskC. It requires more peopleD. It makes it more expensive



Q3. You are taking over a project and determine the following: Task B has an early finish of day 3, a late finish of day 6, and an early start of day 2. Task L is being done by a hard-to-get resource. The CPI is 1.1 and the SPI is 0.8. Based on the information above, what would you be most concerned about?

A. FloatB. ResourcesC. Cost D. Schedule

Project Cost Management


Project Cost ManagementAccording to PMBOK, Project Cost Management includes the processes involved in estimating, budgeting, and controlling so that the project can be completed within the approved budget costs. Project Cost Management include the following processes:

• Estimate cost- The process of developing an approximation of the monetary resources needed to complete project activities.

Project Cost Management• Determine Budget- The process of

aggregating the estimated cost of individual activities or work packages to establish an authorized cost baseline.

• Control Cost- The process of monitoring the status of the project to update the project budget and managing changes to the cost baseline

Quick Facts Cost Management• Costing is different from Pricing. Costing includes the

monetary resource required to complete the project and pricing normally include a profit margin.

• Costing is based on WBS and controlled by Control Accounts

• Costing shall be ideally done by the team who perform the work

• Schedule get affected by funding and project manager shall manage the link with organization.

• Final schedule can be done only after costing and final costing can only be done after risk since risk management involves budget for handling risk.

Project Cost ManagementLife cycle costingProject cost management should also consider the effect of project decisions on the subsequent recurring cost of using, maintaining, and supporting the product, service or result of the project.

• Value analysis (value engineering)- Looking at less costly way to do the same work within the same scope.

• Law of Diminishing Returns- E.g. adding twice resource to task may not get the task done in half cost/time.

• Cost will also affect the schedule• Cost risk vs. Type of contract• Time value of money (depreciation)

Types of Cost• Variable Costs

Change with the amount of production/work e.g. material, supplies, wages.

• Fixed CostsDo not change as production change e.g. set-up, rental.

• Direct CostsDirectly attributable to the work of project e.g. team travel, recognition, team wages.

• Indirect Costsoverhead or cost incurred for benefit of more than one project. E.g. taxes, fringe benefit, janitorial services

Estimate CostDeveloping an approximation or estimate of the costs of the resourcesneeded to complete a project.

Estimate Cost: Tools & TechniquesBottom-up Estimating

• Cost estimation starts from bottom level.• Each WBS work package is estimated and

rolled up to higher level. • While this method is more expensive, it is also

one of the most accurate.

Estimate Costs : Tools & Techniques Analogous Estimating• Analogous estimating relies on historical information

to predict the cost of the current project. It is also known as top-down estimating.

• The process of analogous estimating takes the actual cost of a historical project as a basis for the current project.

• Analogous estimating uses historical data and expert judgment.

• It is faster and less costlier than other methods, but less accurate.

Estimate Costs : Tools & TechniquesParametric Estimating

• Parametric estimate uses statistical relationship between historical data and other variables

• Per sq.ft cost of previous project of similar nature was XYZ and hence the new project shall cost XYZ multiplied by new total area.

• Parametric estimate can be applied to total project or part of project.

Estimate Costs : Tools & TechniquesThree Point Estimates

• PERT analysis calculates An Expected c(E) activity cost using a weighted average of three estimates :

• c(E) = [cO+4cM+cP]/6• PERT analysis consider estimation

uncertainties and risks and hence accuracy of estimate is improved.

Estimate Costs : Tools & Techniques Reserve Analysis• Reserves are added to costing to manage risks,

cost overruns and errors associated with costing. • The contingency reserve may be a percentage of

the estimated cost, a fixed number, or may be developed by using quantitative analysis methods.

• More details about reserve analysis in Risk Management

• Padding is not a good project management practice.

Estimate Costs : Tools & Techniques Cost of Quality (COQ)• Assumptions about cost of quality may be used to

prepare the activity cost estimates..

Project Management Estimating Software• Several different computer programs are available

that can streamline project work estimates and increase their accuracy.

• These tools can include project management software, spreadsheet programs, and simulations.

Estimate Costs : Tools & Techniques Vendor Bid Analysis• Sometimes it’s just more cost effective to hire

someone else to do the work. Other times, the project manager has no choice because the needed skill set doesn’t exist within the organization.

• In either condition, the vendors’ bids need to be analyzed to determine which vendor should be selected based on their ability to satisfy the project scope, the expected quality, and the cost of their services.

Estimate Costs :Outputs • The output of cost estimating is the actual cost

estimates of the resources required to complete the project work.

• Each resource in the project must be accounted for and assigned to a cost category. Categories include the following:

Labor costs Material costs Travel costs Supplies Hardware costs Software costs Special categories (inflation, cost reserve, and so on)

Quality/ Accuracy of Cost Estimation

Project Cost Estimating - Estimating Accuracy• Accuracy of estimate is normally refined during the course of

project to reflect additional details as it becomes available.

• Rough order of magnitude- This estimate is “rough” and is used during the initiating processes and in top-down estimates. The range of variance for the estimate can be from +/- 50%.

• Later the estimate can be refined to a range of +/- 10%

• Refinements and range of accuracy depends on policies of individual organizations.

Estimate Costs :Outputs• Basis of estimates

Once the estimates have been completed,supporting documentation should provide a clear and complete of how the estimates were derived.

Determine Budget• Cost of completing individual activities are now

completed. • During budgeting, the cost of individual activities are

aggregated to generate a complete time phased budget.• Cost of individual activities are rolled up to work package

level and as the work packages are now part of schedule baseline, this will result in a time phased cost.

• Schedule, estimate and risk analysis shall be complete prior to budgeting

• This cost is now linked to organization accounting system through control accounts placed above work package.

Determine Budget• Allocating the overall cost estimate to individual work items

to establish a baseline for measuring performance.

Determine Budget: Tool & Technique• Reserves are dollars included in a cost estimate to

mitigate cost risk by allowing for future situations that are difficult to predict. Budget reserves are kept for both contingency reserve and management reserve.

• Contingency reserves allow for future situations that may be partially planned for (sometimes called known unknowns ) and are included in the project cost baseline. Project manager will normally have the authority to utilize contingency reserves.

Determine Budget: Tool & Technique• Management reserve - Budget set aside to cover unforeseen

risks or changes (unknown unknowns) to the project.

• Management reserve will not be part of project budget and hence project manager need approval from management for using this reserve.

• The cost baseline will contain the contingency reserve and the cost budget will include the management reserve.

• Management reserves are not part of earned value calculations (since it is not part of cost baseline & measurements are based on baselines)

Determine Budget: Tool & TechniqueFunding Limit Reconciliation

• Funding limit reconciliation involves reconciling the amount of funds to be spent with the amount of funds budgeted for the project. The organization or the customer sets these limits. Reconciling the project expenses will require adjusting the schedule so that the expenses can be smoothed. You do this by placing imposed date constraints on work packages or other WBS components in the project schedule.

Determine Budget: Outputs• Cost Performance Baseline

The cost performance baseline is a time-phased budget that is used for project cost management, monitoring, and reporting. It is commonly shown as an S-curve graph. The cost baseline is a component of the project performance baseline.

• Project Funding RequirementsProject funding requirements refers to the entire estimated cost of the budget, including any contingency or management reserves.

Cost AggregationActivity costs are rolled upto work package costs. Work package costs arerolled up to control accountcosts and finally into projectcosts.

How to Control Cost• Follow the cost management plan• Look at any organizational process assets that are

available.• Manage change

- recording all appropriate change- preventing incorrect change- ensuring requested changes are agreed upon- Managing the actual changes when and as they occur

• Measure and measure and measure (monitoring)

Control CostControlling changes to the project budget.

Progress Report• Progress/ performance report (output from

communications management)• Where work cannot be measured, estimate could be

done by a guess.• Percent complete

- 50/50 Rule- 20/80 Rule- 0/100 Rule

Activity is considered X percent complete when itbegins and get credit for the last Y percent only when it isCompleted.

Earned Value Management (EVM) – EVM is a project performance measurement technique

that integrates scope, time, and cost data.

– Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals.

– You must enter actual information periodically to use EVM.

– More and more organizations around the world are using EVM to help control project costs.

Control Cost: Tools & TechniqueEarned Value Management

• Earned value management will indicate status and health of project at any time and can predict possible outcomes.

• EVM can be used for analysis of cost and schedule baselines

• Earned Value Management is carried out using the three main inputs: Planned Value (PV) Earned Value (EV) Actual Cost (AC)

Earned Value Technique

Control Cost: Tools & Technique• Forecasting• Using the earned value analysis, team can now forecast the

project performance.• Estimate at completion (EAC) may now differ from Budget at

Completion (BAC)

Terms & Formulas Definition

Budget at Completion (BAC) How much did we budget for the total project effort.

Estimate at Completion(EAC)= BAC/ CPI

What do we currently expect the project to cost (a forecast)

Estimate to Complete (ETC)= EAC- AC

From this point on, how much more do we expect it to cost to finish the project

Variance at Completion= BAC-EAC

As of today, how much over or under budget do we expect to be at the end of the project.

Earned Value Technique

Cost Control: Tools and Techniques

• Performance ReviewsPerformance reviews compare cost performance over time, schedule activities or work packages overrunning and under running the budget and estimated funds needed to complete work in progress.

Cost Control: Tools and Techniques• Variance Analysis

Cost performance measurements (CV, CPI) are used to assess the magnitude of variation to the original cost baseline. Important aspects of project cost control include determining the cause and degree of variance relative to the cost performance baseline and deciding whether corrective or preventive action is required.

QUESTION

Activity % Complete Cost

Side1 100% 1200Side2 100% 1000Side3 75% 750Side4 50% 500Side5 0% 0Side6 0% 0

You are the Project Manager for a small project. You need to build a structure with 6 sides in 6 days. Each side should cost $1000.00. Today is the end of day 3.The following is an extract from the Site Manager’s Report

Solve the following

Parameter Calculation Result

PV

EV

AC

BAC

CV

CPI

SV

SPI

EAC

ETC

VAC

Exercise Solution

Forecasting EAC • There are many ways to calculate EAC, depending on the

assumptions made.

• Simple EAC calculation( EAC= BAC/CPI) assume that the cumulative CPI adequately reflects past performance that will continue to the end of the project.

• AC+(BAC-EV)- used when current variances are thought to be atypical of the future.

• AC+(BAC-EV)/(Cumulative CPI + Cumulative SPI)- it assumes poor cost performance and need to hit a firm completion date.

Cost Control: Tools and Techniques• To-Complete Performance Index(TCPI)

Helps the determine the efficiency that must be achieved on the remaining work for a project to meet a specified endpoint, such as BAC or the team’s revised EAC.

• TCPI= Work Remaining (BAC- EV)

Funds Remaining (BAC- AC) or EAC - AC

Earned Value Management hints to remember:

• EV comes first in every formula• If its variance, it will be EV minus something• If its index, it will be EV divide something• If it relates to cost use Actual Cost• If it relates to schedule use Planned Value• Negative numbers are bad, positive ones are

good

QUESTION NO: 1A Project with a total funding of $70,000 finished with a BAC value of$60,000. What term can best describe the difference of $10,000?

• A. Management Contingency Reserve• B. Cost Variance• C. Schedule Variance• D. Management Overhead

Explanation:The difference between the Cost Baseline and Funding requirement atProject completion is Management Contingency Reserve. BACrepresents the revised Cost baseline for the project. So ManagementContingency Reserve is true.

QUESTION NO: 2Your project sponsor has requested a cost estimate for the project on whichyou're working. This project is similar in scope to a project you worked on lastyear. She would like to get the cost estimates as soon as possible. Accuracy isnot her primary concern right now. She needs a ballpark figure by tomorrow.You decide to use ___________________.• A. parametric modeling techniques• B. analogous estimating techniques• C. bottom-up estimating techniques• D. computerized modeling techniques

Explanation:Analogous-or top-down-estimating techniques are a form of expert judgment.Since this project is similar to another recent project, you can use the costestimates from the previous project to help you quickly determine estimatesfor the current project.

QUESTION NO: 123You know that PV = 470, AC = 430, EV = 480, EAC =500, and BAC = 525. What is VAC?

A. 25 B. 30C. 20D. 70

Explanation:VAC is calculated this way: VAC = BAC - EAC.Therefore, 525 - 500 = 25.

Project Quality Management


What is Quality ?

• Car Quality – Ride, Reliability, Fit & Furnish, Audio System ?

• Food Quality– Taste, Smell, Colour, Texture, Freshness ?

• Shoe Quality– Fit, Stitching, Comfort, Wear?

• Baby FurnitureSafety, Reputable, Durability, Easy to Assemble ?

What Is Quality?

Quality can be defined as “the degree to which project fulfils

requirements.”

314

What is Quality ?• The International Organization for

Standardization (ISO) defines quality as the totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs

• Other experts define quality based on– Conformance to requirements: meeting

written specifications– Fitness for use: ensuring a product can be

used as it was intended.– The degree to which a set of inherent

characteristics fulfill requirements

Quality Theorists• Joseph Juran- developed the 80/20 principle,

advocated top management involvement, defined quality as “fitness for use.’’

• W. Edwards Deming- developed 14 Steps to Total Quality Management, advocated the Plan-Do-Check- Act cycle as the basis for quality improvement.

Quality Theorists

• Phillip Crosby- popularized the concept of cost of poor quality, advocated prevention over inspection and “zero defects.” He believed that quality is “conformance to requirements.’’

• Kaizen approach- Quality technique from Japan. (Continuous improvement)Improve the quality of people first. Then quality of products or service.

Precision vs. Accuracy

• Precision is the degree to which repeatedmeasurements under unchanged conditions show the same results.

• Accuracy is the degree of closeness ofmeasurements of a quantity to its actual (true) value.

• The Project Management Team must determine how much accuracy or precision or both are required.

Precision and Accuracy

Quality vs. Grade

The degree to which a set of inherent characteristics fulfill requirements

• Quality≠ Grade– Grade = a category assigned to product /

service or a category or rank given to entities having the same functional use, but different technical characteristics.

Quality vs. Grade

Quality is the degree to which a set of inherent characteristics fulfills requirement.- Quality level that fails to meet quality requirements are always a PROBLEM.

• Grade is a category assigned to a product or service having the same functional use but different technical characteristics.- Low grade may not be a problem.

• A camera with lots of functions is high grade and a camera which takes bad pictures is low quality

What is Project Quality Management ?

“Project Quality Management processes include all activities of the performing organization that determine quality policies, objectives, and responsibilities, so that the project will satisfy the needs for which it was undertaken.”

PMBOK4 ®

Purpose of Project Quality Management

• To ensure that the Project will satisfy the needs for which it was undertaken.– Scope– Cost– Performance– Meet or exceed Customer Satisfaction

• The customer ultimately decides if Quality is Acceptable.

Project Quality Management • Addresses (i) the management of the project

and (ii) the product of the project.

– Meeting customer requirements by overworking the project team may result in increased employee attrition, errors or rework.

– Meeting project schedule objectives by rushing planned quality inspections may result in undetected errors.

PMI’s Quality Management Philosophy

Customer Satisfaction

“Understanding, evaluating, defining and managing expectations so that the customer’s

requirements are met.”


Prevention over Inspection

“The cost of preventing mistakes is much less than the cost of correcting them, as is

revealed by inspection.”


Continuous Improvement“Plan-Do-Check-Act.”

Plan to bring about improvement

Do changes on a small scale first

Act to get the greatest benefit from changes

Check to see if changes are working


Management Responsibility

“Success requires the participation of all members of the team, but it remains the

responsibility of management to provide the resources needed to succeed.”

Common understandingQuality management should complement modern projectmanagement as they both recognize the importance of :

• Customer satisfaction- Conformance to requirements, fitness for use.

• Prevention over inspection - Cost of preventing mistakes or cost of correcting.

• Management responsibility – to provided resources needed to succeed.

• Processes within phases - (plan- do- check- act cycle).

• Continuous Improvement (Kaizen)- small improvements to reduce costs and ensure consistency, uses quality initiatives such as 6 sigma, TQM.

Project Quality Management Processes

• Quality Planning

• Quality Assurance

• Quality Control

Quality Management includes:• Plan Quality - Identifying which quality standards are

relevant to the project and how to satisfy them.

• Perform Quality Assurance- Periodically evaluating overall project performance to ensure the project will satisfy the relevant quality standards.

• Quality Control - Monitoring specific project results to ensure that they comply with the relevant quality standards.

Quality Planning • Quality Planning involves identifying with quality

standards

• It is a key facilitating process during the Project planning Process

• In modern quality management quality is planned in and not inspected in

• Prior to the development of ISO 9000 series, quality

planning concepts were widely discussed as part of quality assurance.

Plan QualityQuality Planning is identifying which quality standards are relevant to the project and determining how to satisfy them.


• Plan Quality: identifying which quality requirements and/or standards for the project and product;

• & documenting how project will demonstrate compliance. i.e. Intends to satisfy the standards

What is “Plan Quality” focused on…

• Find existing standards and requirements for product and project mgt

• Create additional project specific standards• Determine what work you will do to meet the

standards• Determine how you will measure to make sure you

meet the standards• Balance the needs of quality, scope, cost, time,

risk, resources and customer satisfaction• Create a quality management plan as part of the

project mgt plan.

Quality Planning (Tools & Techniques)– Benefit/Cost Analysis - weight the benefit versus

the cost of meeting quality requirements.

– Benchmarking - comparing actual or planned practices to those of other projects.

– Flowcharting - Use to see a process or system flow and find potential quality problems.

– Design of Experiments (DOE) – use experimentation to statistically determine what variable will determine quality standard

– Statistical Sampling- we need it since studying entire population will take too long, cost too much and be too destructive.

Quality Planning (Tools & Techniques)

The Cost of Quality• The cost of quality is the cost of conformance

plus the cost of nonconformance.

– Conformance means delivering products that meet requirements and fitness for use.

– Cost of nonconformance means taking responsibility for failures or not meeting quality expectations.

.

The Cost of Quality

• Refers to the total cost of all efforts related to quality throughout the product life cycle.

• Ultimately impacts on product returns, warranty claims, recall campaigns etc.

The Cost of Quality

• The cost of quality is– The cost of conformance or delivering products

that meet requirements and fitness for use– The cost of non-conformance or taking

responsibility for failures or not meeting quality expectations.

Five Cost Categories Related to Quality

• Prevention Cost: the cost of planning and executing a project so it is error-free or within acceptable error range– Costs less to prevent during development than fix later in the life cycle

• Appraisal Cost : the cost of evaluating processes and their outputs to ensure quality

• Internal failure cost: cost incurred to correct an identified defect before the customer receives the product.

• External failure cost: cost that relates to all errors not detected and have to be corrected after customer receives the product.

• Measurement and test equipment costs: capital cost of equipment used to perform prevention and appraisal activities

Activity 1

• Identify four(4) Cost of Conformance & four (4) Cost of Non-Conformance.

Activity 1 Response

Cost of Conformance

• TRAINING• STUDIES• SURVEYS• EFFORTS TO ENSURE

EVERYONE KNOWS THE PROCESSES TO COMPLETE THEIR WORK

Cost of Non-Conformance

• Rework• Scrap• Inventory costs• Warranty costs• Lost business

The Cost of Quality (CoQ)

.

Prevention Costs(Build a quality product)•Training•Document Processes•Equipment•Time to do it right

Appraisal Costs (Assess the Quality)•Testing•Destructive testing loss•Inspection

Internal Failure Costs(Failures found by the project)•Rework•Scrap

External Failure Costs(Failures found by the customer)•Testing•Destructive testing loss•Inspection

Cost of Conformance Cost of Non-Conformance<Should be less than

D.O.E.• It is important to design in quality and communicate

important factors that directly contribute to meeting the customer’s requirements

e.g. Design of Experiments helps identify which variables have the most influence on the overall outcome of a process

DOE uses experimentation to statistically determine which variables improve quality….allows systematic change of all important factors in a process and see which combination has a lower impact on project.

Quality Planning (Tools & Techniques)

Quality Control Charts• A control chart is a graphic display of data that

illustrates the results of a process over time.

• The main use of control charts is to prevent defects, rather than to detect or reject them.

• Quality control charts allow you to determine whether a process is in control or out of control.

Normal Distribution curve showing 3 sigmas

Standard Deviation

• ± 1 = 68.3%• ± 2 = 95.46%• ± 3 = 99.8%

Standard Deviation

• A small standard deviation means that data cluster closely around the middle of a distribution and there is little variability among the data

• A normal distribution is a bell-shaped curve that is symmetrical about the mean or average value of a population

Standard Deviation

• PERT FORMULA(Triangular Distribution)

Expected Value / Duration =

(Optimistic time + 4 (most likely time) + pessimistic time) =___________________________________________

6

OT + 4MT +PT__________________

6

Standard Deviation for PERT

• Std Dev =

Pessimistic duration - optimistic duration_________________________________

6

Statistical Sampling and Standard Deviation

• Statistical sampling involves choosing part of a population of interest for inspection

• The size of a sample depends on how representative you want the sample to be

Proprietary Quality mgt methodologies

Six sigmaAn extension of TQM Achieved by improving

process performance so that all customer requirements are met.

3 sigma=2700 defects in 1 million

6 sigma=0.002 defects occur in 1 million

Quality Function DeploymentA practice of designing

manufacturer processes to respond to customer needs. Allows one to find innovative responses to those needs, and improve processes to maximum effectiveness.

Quality Planning

• Outputs • Quality Management Plan

• Quality Metrics• Quality Checklists• Process

Improvement Plan• Project

Management Plan (updates)

Quality Planning (Outputs)

Quality Metrics – defines how an item is measured bythe quality control process. Also known as OperationalDefinitions.

Quality ChecklistsA list of items to inspect, steps to be performed and note if any defects are found.

• Quality metrics is input for Quality Assurance AND Quality Control

• Quality checklist is input for Quality Control ONLY

Quality Planning (Outputs)

Quality Management Plan Contains: Project management methodRole and responsibility in managing qualityDeliverable measurementStandard for monitoring & control purposeProcess reviewMajor check pointsInspection & acceptance criteria

Perform Quality Assurance

• Perform Quality assurance is the process of auditing the quality requirements and results from quality control measurements to ensure that appropriate quality standards and operations definitions are met.

• Another goal of quality assurance is continuous

quality improvement.

• Normally done by a third party

Perform Quality Assurance

Quality assurance is evaluating the overall project performance on a regular basis to provide a confidence that the project will satisfy the relevant quality standards.


• Quality Assurance: the process of auditing requirements and the results of quality control measurements to ensure appropriate quality standards and operational definitions are used. (from PMBOK4®)

• Applies planned, systemic quality activities to ensure that the project employs all processes needed to meet the requirements and satisfy the relevant quality standards.

Inputs To Quality Assurance

Quality management plan as previously described

Results of quality control measurements which are records of quality control testing and measurement in a format of comparison or analysis

Operational definitions as previously described in the output of the Quality Planning

Quality Assurance (Tools &Techniques)

Are we using the standard?Can we improve the standard?

• Quality Audits which are a structured review of other quality management activities that identify lessons learned.

• Process Analysis – includes root cause analysis.

Quality Assurance • Quality assurance includes all the activities related to

satisfying the relevant quality standards for a project

• Another goal of quality assurance is continuous quality improvement

• Benchmarking can be used to generate ideas for quality improvements

• Quality Audits help identify lessons learned that can improve performance on current or future projects


• Quality Control: the process of monitoring and recording results of executing the quality activities to assess performance and recommend changes.

• Monitoring specific project results to ensure that they comply with relevant quality standards while identifying ways to improve overall quality.

Perform Quality ControlQC involves monitoring specific project results todetermine:• Whether they comply with relevant quality

standards.• Identifying ways to eliminate causes of

unsatisfactory results.• QC should be performed throughout the project.• Project results include deliverables and PM results,

such as cost and schedule performance.• QC is often performed by a quality control

Department.

Perform Quality ControlQuality Control is the monitoring of specific project results to determine if they comply with the relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance.

Quality Control (Tools & Techniques)

Inspection• Inspection includes activities such as measuring,

examining and testing undertaken to determine whether results conform to requirements

• Inspection can be carried out on the level of a single activity or a final product

• Inspections can be called reviews, product reviews, audits, and walk-throughs

Flowcharting• A graphical presentation of a process

showing the relationships among process steps.

• Process flowcharts show activities, decision points and order of processing.

• Helps anticipate problems that might occur.• Can develop approaches to deal with

potential problems

Example of Flow Chart

Example of Flow Chart

Quality Control(Tools & Techniques) Flowcharting

Flowcharting

• It helps to analyze how problems occur.• A flowchart is a graphical representation

of a process.• It shows how various elements of a

system interrelated and the order of processing.

• It helps the project team anticipate what and where quality problems might occur.

Quality Control Charts

• A control chart is a graphic display of data that illustrates the results of a process overtime. It helps prevent defects and allows you to determine whether a process is in a control or out of control.

Control Chart

Data

• Data is shown between the UCL and LCL, while varying about the central line or average, as long as the variation is the result of common causes

• Whenever a special cause impacts a process: – A plot point will penetrate the UCL or LCL– There will be a run of points on the row above or

below the average line, implies the process is out of control

Control ChartIt determines whether or not a process is stable or hasPredictable performance.When a process is outside acceptable limits the

process should be adjusted. The upper control limits and lower control limits are

usually set at +/- 3 sigma (i.e. standard deviation).• Specification limit – are normally drawn from

contract or customer requirement. It may be more stringent than control limits

• Mean represent the average of control limits or specification limits

375

Sample Quality Control Chart

Control Chart Cont.• Out of control – A process is considered out of

control if: - A data point falls out of control limits- Breaks the rule of seven

• Rule of seven – Is a rule of thumb or heuristic. A consecutive seven data points one single side of mean is considered out of control, even though the data points are within control limits.

• Assignable cause / Special Cause Variation – is a data point that requires investigation (either out of control limits or breaks rule of seven)

The Seven Run Rule

• The seven run rule states that if seven data points in a row are all below the mean , above the mean or increasing or decreasing, then the process needs to be examined for non-random problems.

QC (Tools & Techniques)

Run Chart• It shows the history and pattern of variation.

• It is a line graph that shows data points plotted in the order in which they occur.

• Can be used to perform trend analysis to forecast future outcomes based on historical patterns

Run Chart

Control Chart

Run Charts vs Control Charts• The run chart records the output results of a process

overtime. • The problem: it does not help differentiate the

variations due to special causes and common causes

• Special causes: – Changes in materials– Machine problems– Lack of employee training

• Common causes: purely random

TREND ANALYSIS• A statistical method for determining the equation that best

fits the data of a scatter plot • Used to determine the relationship between two or more

pieces of corresponding data• Data plotted on a X Y axis to provide correlation• Can assist in forecasting or providing trend analysis

predictions – Highly negative scatter – Highly positive scatter– No core relation– Low to moderate core relation

QC Tools and Techniques

Scatter Diagram Shows the pattern of the relationships between two variables.

Scatter Diagrams

• The simplest way to determine if a cause and effect relationship exists between 2 variables.

Scatter Diagrams

QC Tools and Techniques

- Cause and Effect Diagram• Ishikawa or fishbone diagram• Used to show how various factors are linked to

identify problems/ adverse effects• Diagnostic• Analyses data• Determines defects• Employs brainstorming technique

Sample FISHBONE DIAGRAM

Cause and Effect Diagram

Fishbone / Ishikawa Diagram

Fishbone or Ishikawa Diagram

Sample FISHBONE DIAGRAM

QC: Tools & Techniques

• Histogram: it is a bar chart showing the distribution of variables.

• Each column represents an attribute or characteristics of a problem or situation

• The height of each column represents the relative frequency of the characteristics.

• Histogram helps identify the cause of the problem in a process by the shape and width of the distribution

Histogram

QC Tools & Techniques

Pareto Diagram• A Pareto diagram is a histogram ordered by

frequency of occurrence which shows how many which shows how many defects were generated by type/category of identified cause.

• The project management team should take action to fix the problems that are causing the greatest number of defects first

Pareto Chart/ Juran Diagram

Vilfredo Pareto (economist) credited for the 80-20 rule concept states that 80% of wealth of region is concentrated in 20% of population.

Pareto’s Law/ Law of the vital few states that many events, 80% of the effects, come from 20% of the causes.

Primarily used to identify/ evaluate nonconformities.

Pareto Diagram – 80/20 Rule• Vilfredo Pareto: Credited for discovering the rule.

• PARETO’S PRINCIPLE: 20% of activities cause 80% of problems => a small no. of causes (20%) create the majority of problems (80%)

• Pareto chart is a bar chart where the data is arranged in order of importance… most significant problem is listed first and other problems fall in descending order

• The Benefit is to spend the majority of your time fixing, THE

MOST IMPORTANT problem.

QC Tools & Techniques

Pareto Analysis

• Pareto analysis involves identifying the vital contributions that account for the most quality problems in a system

• Also called the 80-20 rule, meaning that 80% of the problems are often due to 20% of the causes (Vilfredo Pareto developed Principle – adapted to quality by Juran)

• Pareto diagrams are histograms that help identify problem areas

Activity 2

• Take a minute to go through PMBOK 4. See the different tools and techniques that are used in each of the Quality Management Processes. Write the names of the tools & techniques in a tabulated form as shown below: (3 minutes)

• Did you notice any similaritiesPLAN QUALITY PERFORM Q.A. PERFORM Q.C.

PLAN QUALITY PERFORM Q.A. PERFORM Q.C.

Cost benefit analysis Any quality tools are used to check if proper processes were followed or if processes need to be improved.

Checklists used

Cost of quality Statistical sampling done

Control charts created Cause & effect diagrams

Benchmarking Flowcharting used

Design of experiments histogram

Statistical sampling planning

Pareto chart

Flowcharting created Run chart

Checklists created Scatter diagram

Control charts used

Sampling Methods

• A method of determining the value of a product or service when it is not practical to examine the entire population– Random sampling – Acceptance sampling– Attributes sampling– Special attributes sampling– Variables sampling

QC: Terminology

• Prevention – keeping errors out • Inspection – keeping errors out of the hands of

customers• Attribute sampling – involves “yes” or “no” decision• Variable sampling – involves rating the sample on a

continuous scale that measures the degree to which it conforms to specifications

QC: Terminology

• Special Causes – involves unusual events• Random Causes – involves normal process variations• Tolerances - indicates that the result is acceptable if

it falls within a specified tolerance range• Control Limits – indicates that the process is in

control limits

Quality Control

• The outputs are• Quality Control measures• Validated changes• Organizational Process Assets updates• Change Requests• Project Management Plan Updates• Project Document Updates

Perform Quality Control: Outputs

Quality Control Measurements• These measurements are the result of the QC

activities• These measurements are fed back to the QA to

reevaluate and analyze the quality standards & processes.

Validate Changes :• Any changed or repaired items are inspected and will

be either accepted or rejected before notification of the decision is provided .

• Rejected items may require rework

Perform Quality Control: Outputs

Validated Deliverables• QC aims to determine the correctness of deliverables • The result of the execution quality control process

are validated deliverables.Change Requests :• If the recommended corrective or preventive actions

or a defect repair requires a change to the project management plan , a change request should be initiated in accordance with the defined PerformIntegrated Change Control process

Quality Concepts

– Philosophy: definition of quality, avoidance of “Gold plating” – giving customer extras, this practice is not recommended.

– Marginal Analysis – optimal quality is reached at the point when revenue from improvement equals the costs to secure it.

– Just in Time (JIT) - just when they are needed or just before, it decrease amount of inventory/decrease investment.

– Total Quality Management (TQM) – company and their employees focus on finding ways to continuously improvement the quality of their business practices and products.

Quality vs. Grade

The degree to which a set of inherent characteristics fulfill requirements

• Quality≠ Grade– Grade = a category or rank given to entities having the

same functional use, but different technical characteristics.

Quality defines…

• Precision ≠ Accuracy– Precision = consistency of the value of repeated

measurements - very little scatter i.e. measurements tend to be clustered

– Accuracy = correctness that the measured value is very close to the true value

Project Quality Management

• Tips for the Review – ISO 9000– standards to ensure that corporations follow

their own quality procedures.– Normal Distribution – most common probability – used to

measure variations– Standard deviation (sigma) – measure how far away from

the mean (dotted vertical line)– 3 or 6 sigma – represents level of quality

• +/- 1 sigma equal to 68.26%• +/- 2 sigma equal to 95.46%• +/- 3 sigma equal to 99.73%• +/- 6 sigma equal to 99.99%

W. Edwards Deming

• Suggested that as much as 85% of the Cost of Quality is a management problem.

• Once the quality issue gets to the level of the worker, there is little control.

• Workers need to be shown what is acceptable quality and made to understand its importance.

• 85% OF QUALITY CONTROL RESTS WITH MANAGEMENT; 15% WITH PROJECT TEAM

Deming’s PDCA Cycle

• Plan- improvements to present practices

• Do- implement the plan

• Check – test to see if the desired results are achieved

• Act – implement corrective action

Joseph M. Juran

• Noted for “Fitness for Use”• This means that stakeholders’ and customers

expectations must be met or exceeded• The product of the project is what was set out to be

produced• Proposed that there can be grades of quality =>

strive for HIGH QUALITY at the acceptable Grade level

Philip B. Crosby

• Devised the “Zero Defects” Practice• Means “do it right the first time”• Costs will increase when quality planning isn’t

done up front => Engage in rework, thus affecting productivity.

• To prevent the defect implies conformance to requirements is easily met.

• Product returns, warranty claims and recall campaigns can impact on operational costs

• Because project is temporary, quality costs are often borne by the acquiring organization

KAIZEN Approach

• Quality technique from Japan• KAIZEN = Continuous Improvement• All project team members and managers

should constantly be looking for quality improvement opportunities

• Kaizen states one should improve the quality of the people first, then products and services.

Summary of Quality Concepts

• DEMING – conformance to specifications (85 % of poor quality is due to management)

• JURAN – fitness for use• CROSBY – zero defects = conformance to

requirements• KAIZEN – conformity around target – towards

continuous improvement• PMI ® - conformance to requirement

Quality Philosophy

DEMING

JURAN

CROSBY

Kaizen

PMI

• Conformance to specs

• Fitness for use

• Conformance requirements

• Uniformity around target

• Conformance to requirements

Cost Of Quality Categories

• Prevention costs• Appraisal costs (cost of ensuring that the product is

error-free)• Internal failure costs (cost of correcting defect before

product reaches customer)• External failure cost ( recall, warranty costs)• Measurement and test equipment (capital

expenditure to perform prevention and appraisal activities)

Quality Concepts And Terms

• Four absolutes of quality

Definition conformance of requirementsSystem prevention Performance standards zero defects Measurement cost of non conformance

10. Project Human Resource ManagementProject Management Training

Project Human Resource Management

Knowledge Area

Process

Initiating Planning ExecutingMonitoring &

ControlClosing

Human Resource

Management

Develop Human Resource Plan

Acquire Project Team

Develop Project Team

Manage Project Team

Enter phase/Start project

Exit phase/End project

InitiatingProcesses

ClosingProcesses

PlanningProcesses

ExecutingProcesses

Monitoring &Controlling Processes

Develop Human Resource Plan

• This is the process of identifying and documenting roles, responsibilities and required skills, reporting relationship and create the staffing management plan.

Organizational Chart & Position Desc. (Tools and Techniques)

• Ensure that each work package has an unambiguous owner.• All team member have a clear understanding of their roles and responsibility.• Types of Roles and Responsibility: -Hierarchal e.g. Organizational Breakdown Structure (OBS) - Matrix e.g. Responsibility Assignment Matrix (RAM) e.g. RACI (Responsible,

Accountable, Consult and Inform) - Text -oriented

Develop Human Resource Plan: Tools & Techniques

• Organizational Theory

Organizational theory refers to all the theories that attempt to explain what makes people, teams, and work units perform the way they do. I’ll talk more about motivation techniques (which are a type of organizational theory) in “Developing the Project Team.”

Human Resource Plan(Output)

HR Plan includes but (not limited to)1. Roles and Responsibility• Role• Authority• Responsibility• Competency

2. Project Organizational Chart3. Staffing Management Plan• Staff Acquisition• Resource calendars• Staff Release Plan• Training needs• Recognition and Rewards• Compliance, Safety

• Resource HistogramsBar chart shows number of resourceused per time period.

Resource calendars are an output of the Acquire Project team process.

Acquire Project Team• The process of confirming human resource availability and obtaining the

team necessary to complete project assignments.

Acquire project team• Pre –assignment - Resources who are assigned in advance.

• Negotiation - For gaining resources within the organization, vendors, suppliers,

contractors, etc (in contract situation)

• Acquisition- Acquiring or hiring resources from outside (outsource).

• Virtual Teams- This is the possibility of having groups of people in different

geographic locations, with little or no time spent to meet face to face.

Develop Project team• The process of improving the competencies, team interactions, and the

overall team environment to enhance project performance.

Develop Project Team (tools & techniques)• Interpersonal skills( soft skills)• Training- Can be formal(classroom or online) or non formal(on-the job

training, mentoring, coaching).• Ground rules- Guidelines that establish clear expectations regarding acceptable behavior by

teams.- Discussion to create it by all team members.• Co-location/ War Room- Placing many or all the most active team members in the same physical

location.- Can be temporary for strategy or to enhance communication & build sense of

community.• Recognition and Rewards- It will only be effective if it is satisfied or valued by individual

Team Building Activities (Tools and Techniques)

Tuckman’s stages of team formation and development:• Forming

- The team meets and learn about the project and their roles and responsibilities.• Storming

- Address the project work, technical decisions and the project management approach. Conflict/ disagreement may occur.

• Norming- Work together and adjust work habits and behavior that support the team.

• Performing- Being a well organized unit.

• Adjourning- Team completes the work and move on from the project.

Motivational Theory: Maslow’s Hierarchy of Needs

Motivational Theory: Mc Gregors X & Y Theory

• Theory X- People tend to be negative, impassive, e.g. incapable, avoid

responsibility, need to be watched- Extrinsic Motivation

• Theory Y-People tend to be positive e.g. want to achieve, willing to work without supervision, can direct their own effort- Intrinsic Motivation

x

y

Motivational Theory: Acquired Needs Theory

•David McClelland Theory

People are motivated by one of the three needs.

Motivational Theory: Two Factors Theory• Herzberg’s Theory- Job dissatisfaction due to hygiene factors.- Job satisfaction due to motivational factors

Manage Project Team

• The process of tracking team member performance, providing feedback, resolving issues and managing changes to optimize project performance.

Manage Project Team: Tools & Techniques

• Project Performance AppraisalProject performance appraisals are typically annual or semiannual affairs where managers let their employees know what they think of their performance over the past year and rate them accordingly. These are usually manager-to-employee exchanges but can incorporate a 360-degree review, which takes in feedback from just about everyone the team member interacts with, including stakeholders, customers, project manager, peers, subordinates etc.


Conflict Management• Conflicts can be beneficial(an opportunity for improvement).• Conflicts are an inevitable consequence of organizational interactions.

• Conflicts in the team are caused due to the following reasons in decreasing order of consequence.

1. Schedules2. Project Priorities3. Resources4. Technical opinions

• The most common cause of conflicts on projects are issues related to schedules (not personality differences).

• Conflicts are best resolved by the persons or team members involved in the conflict.

Conflict Management• General Techniques to resolving conflicts

Exercise: Conflict Management

Problem Solving

• The important thing to realize about problems is if they are not resolved completely they just return, again and again.

• The process of problem solving has these steps:1. Defining the cause of the problem2. Analyze the problem3. Identify Solution4. Implement a decision5. Review the decision and confirm that the problem is solved.


• Issue LogThe issue log is a place to document the issues that keep the project team from meeting project goals. These can range from differences of opinion to newly surfaced responsibilities that need to be assigned to a project team member. Each issue should be recorded in the log along with the person responsible for resolving it. You should also note the date the resolution is needed

Project Manager Power

A project manager may yield authority over the project team inone of the following ways:• Formal (Legitimate)- power due to project manager position.• Reward- Power stems from giving rewards• Penalty (coercive)- Power due to people being afraid of the power the project

manager holds. (punish, penalize).• Expert Power (Technical)- comes from being a technical or project

management expert.• Referent- Power due to charisma or fame, make another person like or

respect the project manager.

The best forms of power are Expert and Reward.Earned on your own: ExpertThe worst type of power: PenaltyThese forms of power are derived from positions within the company: Formal,Reward and Penalty.

Management & Leadership Styles

• Autocratic- Top down approach, the manager has the power to do whatever he/she wants. - Sometimes appropriate when decisions must be made in a emergency situation or under time pressure.

• Democratic(Participative)- Encourage team participation in the decision making process.- Best used for people whose behavior fit with theory Y.

• Laissez-Faire – a French term means ‘’leave alone.’’- The manager is not directly involved in the work of the team.- Effective for highly skilled teams.

Important Terms• Halo Effect

The assumption of because a person is good in a technical field, they will be a good project manager.

• ArbitrationA method to resolve conflict. A neutral party hears and resolve a dispute.

• Expectancy Theory- Victor. H. VroomThis is a motivational theory, which states that people put in more effort because they expect to be rewarded for their efforts.

• Perquisites (Perks)Some employees receive special rewards e.g. parking spaces, corner offices, executive dining.

• Fringe BenefitsStandard benefits formally given to all employees, such as insurance, educational benefits and profit benefits.

PM Responsibility (PMI-ism)

CAPM Preparatory Course

Communications Management

Project Communication Management

Knowledge Area

Process

Initiating Planning ExecutingMonitoring &

ControlClosing

Communication Indentify Stakeholder

Plan Communication

Distribute Information

Manage Stakeholders - Expectations

Report Performance

Enter phase/Start project

Exit phase/End project

InitiatingProcesses

ClosingProcesses

PlanningProcesses

ExecutingProcesses

Monitoring &Controlling Processes

What is project Communications Management

• Project Communications Management includes the processes required to ensure timely and appropriate generation, collection, distribution, storage, retrieval and ultimate disposition of project information.

Communications management includes:

Identify Stakeholders

Plan Communications

Distribute Information

Manage Stakeholder Expectations

Report Performance

Communications Planning

• Every project should include some type of communications management plan, a document that guides project communications.

• Creating a stakeholder analysis for project communications also aids in communications planning

Communication can take various methods :

• Internal i.e. within the project and external to the project such as with the customer, other projects, the media, the public etc.

• Formal, such as reports, memos and briefings and informal such as emails, ad-hoc discussions.

• Vertical (up and down the organization and horizontal (with peers),

• Verbal and Non-verbal ( voice inflections and body language).

• Written and Oral


• Identify Stakeholders is the process of identifying all people or organizations impacted by the project and documenting relevant information regarding their interest, involvement and impact on project success.


Stakeholder Analysis• A technique of systematically gathering and analyzing quantitative & qualitative information to determine whose interests should be taken into account throughout the project.

• Step 1: Identify all potential project stakeholders and relevant information

• Step 2: Identify the potential impact or support each stakeholder could generate and classify them so as to define an approach strategy.

• Step 3: Assess how key stakeholder are likely to react or respond in various situation

Sample grid showing classification model

Keep Satisfied

ManageClosely

KeepInformed

Monitor(Minimum Effort)

Interest

Power

Low High

High

• A

• B

• C

• D

• E

• F

• G

• H

Sample Stakeholder Analysis

Stakeholders Document Name DocumentFormat

Contact Person Due

CustomerManagement

Monthly StatusReport

Hard copy Gail Feldman,Tony Silva

First of month

CustomerBusiness Staff


Hard copy Julie Grant,

Jeff Martin

First of month

CustomerTechnical Staff


E-mail Evan Dodge,

Nancy Michaels

First of month

InternalManagement


Hard copy Bob Thomson First of month

InternalBusiness andTechnical Staff


Intranet Angie Liu First of month

TrainingSubcontractor

Training Plan Hard Copy Jonathan Kraus 11/1/1999

SoftwareSubcontractor

SoftwareImplementationPlan

E-mail Barbara Gates 6/1/2000

Stakeholder Register

• This is the main output of the identify stakeholders process and it contains all details related to the stakeholders such as name, organizational position, location, role in the project, contact information.

• It also contains the major requirements, main expectations, potential influence in the project. It also classify them as internal, external, supporter, neutral, resistor etc.

Output of Identify Stakeholder• Stakeholder Register

Stakeholder Stakeholder interest(s) in the project

Assessment of impact

Potential strategies for gaining support or reducing obstacles

NameContact Informa

tion

Role in Project

Department/

Supervisor

Company Impact InfluenceMain

expectations

Attitude about the

project

Major requirement

• Stakeholder Management Strategy- Defines an approach to increase the support and minimize negative impacts of stakeholder.

- The information could be too sensitive to be shared.- A common way of representing is by using a stakeholder analysis matrix.

Plan Communications

• Plan Communications is the process of determining the project stakeholder information needs and defining a communications approach.

• For example who needs what information, when will they need it, how it will be given to them and by whom.

Plan Communications

Communication Requirement Analysis

• Includes communicating in all directions

• Determine and limit who will communicate with whom and who will receive what information.

Customer, sponsor, Functional managers, and

Team Members

Other Project

ManagersOther

Projects

Other Stakeholders

TheProject

2

)1( NN

• Consider the number of potential communication channels or paths

• Formula:

The Impact of the Number of People on Communications Channels

Communication Model• Basic Communication Model

– The components in the model need to be taken into account when discussing project communications.– The sender is responsible for making information clear and complete so that the receiver can receive it correctly, and for confirming that it is properly understood.

ReceiverReceiverSenderSender

Encode

Decode

Encode

Decode

Noise

Noise

Medium

• To make effective communication, sender/receiver need to be aware of these factors:- Nonverbal: 55% of all communication is nonverbal- Paralingual: pitch and tone of voice- Effective listening

Communication Methods• Interactive Communication

– Most efficient way to ensure a common understanding– E.g. meetings, phone calls, video conferencing

• Push Communication

– Does not certify that it reached or understood– E.g. letters, email, press release, faxes, voice mail

• Pull communication

– Used for very large information volumes, very large audiences– E.g. intranet site, e-learning

Project manager cannot control all communications but should try to control to prevent miscommunication, unclear directions, and scope creeps.

Communications Management Plan

The output of plan communications is thecommunications management plan, and this plandocuments how you will manage and controlcommunications on your project.

Distribute InformationThis is the process of making relevant information available to project stakeholders as planned in the communications management plan

Managing Stakeholder ExpectationsThis is the process of communicating and working with stakeholders to meet their needs and addressing issues as they occur

Managing Stakeholder Expectations

• Actively managing the expectation of stakeholders.– Increase the likelihood of project acceptance by negotiating.– Influencing their desire to achieve & maintain project goals.

• Addressing concerns that have not become issues yet (anticipation).

• Clarifying and resolving issues that have been identified.

Report PerformanceThe process of collecting and distributing performanceinformation, including:

Status ReportProgress ReportTrend ReportForecasting ReportVariance ReportEarned ValueLessons Learned

Report Performance

Project Risk Management

Project Risk Management

• Risk is an uncertain event or condition, that if it occurs has an effect on at least one project objective.

• Risk Management Objectives- Increase the probability and impact of positive

events (opportunities).- Decrease the probability and impact of

negative events (threats)

Terms and concepts• Uncertainty: a lack of knowledge about an event

that reduces confidence.• Risk averse: someone who does not want to take

risks.• Risk tolerances: area of risk that are

acceptable/unacceptable.• Risk thresholds: the point at which a risk become

unacceptable.

– Remember that in this area there is no activity in executing process group

Plan Risk Management• The process of defining how to conduct risk management activities for a project.

Plan Risk Management• Importance of Risk Management Planning

-Ensure that the degree, type, and visibility of risk management are commensurate.-Provide sufficient resource and time for risk management activities.-Establish an agreed-upon basis for evaluating risk.

• Risk Categories-A standard list of risk categories can help to make sure areas of risk are not forgotten.-Companies and PMO should have standard list of risk categories to help identify risk.

• 2 Main type of Risk-Business – Risk of gain or loss-Pure (insurable) risk – Only a risk of loss (i.e. fire, theft, personal injury, etc)

– Sources of risk = risk categories– Risk categories may be structured into Risk Breakdown Structure (RBS)

Risk Breakdown Structure

Risk Breakdown Structure (RBS) - A hierarchically -organized depiction of the identified project risks arranged by category.

Risk Management Plan• Risk management plan describe how risk management will be

structured and performed on the project.Subset of project management plan.May include:

– Methodology– Roles & responsibilities– Budgeting– Timing– Risk categories. – Definition of probability and impact– Stakeholder tolerances– Reporting formats– Tracking– Probability and impact matrix (?)

Identify Risk• The process of determining which risk may affect the project and documenting

their characteristics.

Identify Risks (Tools & Techniques)Risk should be continually reassessed (iterative) such as in integrated change

control activity, when working with resources, when dealing with issues.

Information gathering techniques• Brainstorming

• Delphi technique: Expert participate anonymously; facilitator use questionnaire; consensus may be reached in a few rounds; Help reduce bias in the data and prevent influence each others.

• Interviewing: interviewing experts, stakeholders, experienced PM

• Root cause analysis: Reorganizing the identified risk by their root cause may help identify more risks.

Identify Risks cont’d• Checklist analysis: checklist developed based on

accumulated historical information from previous similar project.

• Assumption analysis: identify risk from inaccuracy, instability, inconsistency, incompleteness.

• SWOT analysis – Strengths, Weaknesses, Opportunities, Threats.

Diagramming techniques

• System or process flow charts.• Influence diagrams

-show the casual influences among project variables, the timing or time -ordering of events, and the relationships among other project variables and their outcomes.-excellent for displaying a decision’s structure-Described in Quality Management

•Cause & Effect diagrams (fish-bone / Ishikawa diagram)

Identify Risk(Output)

Risk RegisterAfter Indentify Risk process the output is initialentries into the risk register. It includes:

– List of risk– List of POTENTIAL responses– Root causes of risks– Updated risk categories

Perform Qualitative Risk Analysis• The process of prioritizing risks for further analysis of action by assessing

and combining their probability of occurrence and impact.

Qualitative Risk Analysis

• Help to focus on high priority risks• A subjective analysis (High, Medium, Low)• Analysis using…

-Relative probability or likelihood of occurrence-Impact on project objective-Time frame response-Organization’s risk tolerance-Etc.

• Can be also used to:-Compare risk to the overall risk of other projects-Determine whether the project should be selected, continued or terminated.-Determine whether to proceed to Perform

Probability Impact Matrix

Risk Register Updates• Update/add additional information to previous output i.e. Risk Register,

which include:

-Relative ranking/priority

-Risk grouped by categories

-List of risk requiring additional analysis in the near term

-List of risk for additional analysis and response

-Watch-list (non-critical or non-top risks)

-Trends, Since risk analysis process is iterative, PM should know if risk is increasing, decreasing or staying the same

-Cause of risk requiring particular attention

Perform Quantitative Risk Analysis

• The process of numerically analyzing the effect of identified risks on overall project objectives. If not necessary, this process may be skipped.

Quantitative Risk Analysis• Is a numerical evaluation (more objective)• This process may be skipped.

• Purpose of this process: -Determine which risk events warrant a response.-Determine overall project risk (risk exposure).-Determine the quantified probability of meeting project objectives.-Determine cost and schedule reserves.-Identify risks requiring the most attention.-Create realistic and achievable cost, schedule, or scope targets.

Quantitative Risk Analysis: Tools & Techniques

Determining Quantitative Probability and Impact mightbe done by: • Interviewing• Cost and time estimating• Delphi technique• Use of historical records from previous projects• Expert judgment• Sensitivity analysis – tornado diagram• Expected monetary value (EMV) analysis • Decision tree• Monte Carlo analysis (simulation)

Sensitivity Analysis• To determine which risks

have the most potential impact to the project.

• Changing one or more elements / variables and set other elements to its baseline and then see the impact.

• One typical display of the sensitivity analysis is the tornado diagram.

• Tornado diagram

Decision Tree and Expected Monetary Value (EMV)

– A decision tree is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain.

– Estimated monetary value (EMV) is the product of a risk event probability and the risk event’s monetary value.

– You can draw a decision tree to help find the EMV.

Risk Register Updates

Update/add additional information to previousoutput i.e. Risk Register, which include:

• Prioritize list of quantified risks• Amount of contingency time and cost reserve needed.• Possible realistic and achievable completion dates,

project cost, with confidence level.• The quantified probability of meeting project objectives.• Trends

Plan Risk Responses• The process of developing option and action to enhance opportunities and to

reduce threats to project objectives.

Plan Risk Responses• Do something to eliminate threats before they happens.• Do something to make sure the opportunities happens.• Decrease the probability and/or impact of threats.• Increase the probability and/or impact of opportunities.

• For the remaining (residual) threats that cannot be eliminated:-Do something if the risk happens (contingency plan).-Do something if contingency plan not effective (fallback plan)

Strategies for Threats• Avoid

Eliminate the threat entirelyIsolate project objectives from the risk’s impact

• Transfer (Deflect, Allocate)Shift some or all the negative impact of a threat to a third party.

• MitigateImplies a reduction in the probability and/or impact of an adverse risk event to be within acceptable threshold limits.

• AcceptDeal with the risksProject management plan is not changedTransferring a risk will leave some risk behind.

Strategies for Opportunities• Exploit

Seek to ensure the opportunities definitely happen.

• ShareAllocate some or all of the ownership of the opportunity to a third party who is best able to capture the opportunity for the project benefit.

• EnhanceIncrease the probability and/or the positive impacts of an opportunity.

• AcceptNot actively pursuing an opportunity

Monitor & Control Risk• The process of implementing: risk response plans, tracking identified

risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.

Residual and Secondary Risks

– It’s also important to identify residual and secondary risks.

– Residual risks are risks that remain after all of the response strategies have been implemented.

– Secondary risks are a direct result of implementing a risk response.

Tools for Monitor & Control Risk

– Risk Re-Assessment • Identify new risks, closing of outdated risks (status

mtgs.) – Risk Audits

• Examine the documents for effectiveness • Internal or External to the project

– Variance & Trend Analysis / Performance Measurements. • Comparing the planned result to the actual

– Reserve Analysis • Compares the amount of contingency reserves to

the remaining risk left in the project

Risk Monitoring and Control

– Involves executing the risk management process to respond to risk events.

– Workarounds are unplanned responses to risk events that must be done when there are no contingency plans.

– Main outputs of risk monitoring and control are: • Requested changes. • Recommended corrective and preventive actions. • Updates to the risk register, project management plan,

organizational process assets and project documents.

Important Terms• Mutual Exclusive: if two events cannot both occur in a single trial.

• Probability: something will occur.

• Normal Distribution: common probability density distribution chart .

• Statistical Independence: the probability of one event occurring does not affect the probability of another event occurring.

• Standard deviation (or Sigma): how far you are from the mean.

• 3 or 6 sigma.-Represent the level of quality has decided to try to achieve-6σ is higher quality standard than 3σ-Used to calculate the upper and lower control limits in a control chart

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PROCUREMENT MANAGEMENT


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PROCUREMENT

The acquisition or purchase of materials, goods, services and equipment from outside the organization.

Project Procurement Management

• Project procurement management is the process of purchasing the products for meeting the needs of the project scope.

• It involves planning, acquiring the products or services from sources, choosing a source, administering the contract, and closing out the contract.

Project Manager's Role in Procurement

The project manager must be involved in the creationOf contracts and fulfills the following key roles:• Know the procurement process• Understand contract terms and conditions• Make sure the contract contains all the project

management requirements such as attendance at meeting, reports, actions and communications deemed necessary

• Identify risks and incorporate mitigation and allocation of risks into the contract

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PROCUREMENT MANAGEMENT

• Many project managers lack the knowledge and skills to procure goods and services effectively.

• Poor procurement often results in poorly delivered scope, schedule delays, cost overruns and poor quality of the goods and services that the project is intended to deliver.

The Sequential Procurement Processes

• Plan Procurements• Conduct Procurements• Administer Procurement• Close Procurements

Plan Procurements

• Is the process of documenting project purchasing decisions, specifying the approach, and identifying potential sellers.

• Procurement planning is the process of identifying which part of the project should beprocured from resources outside of theorganization. It is concerned with determining what to procure, when, and how.

Plan ProcurementsThe process of obtaining seller responses, selecting a seller, and awarding a contract.

Plan Procurements: Inputs

• Teaming Agreements : are legal contractual agreements between two or more entities to form a partnership or joint venture , or some other arrangement as defined by the parties .the agreement defines the buyer seller roles for each party . Whenever a teaming agreement is in place for a project, the roles of buyer and seller are predetermined.

Plan Procurements: Inputs

• Activity Cost Estimates: developed by the procuring activity are used to evaluate the reasonableness of the bids or the proposals received from potential sellers

• Cost Performance Baseline: provides details of the planned budget overtime

• Enterprise Environmental Factors • Organizational Process Assets: How the

procurement process work within the performing organization

Plan Procurements – Tools & Techniques Make-or-buy analysis: general managementTechnique used to determine whether anorganization should make or perform a particularproduct or service inside the organization or buyfrom someone else.• Often involves financial analysis• Experts, both internal and external, can provide

valuable inputs in procurement decisions.

Plan Procurement ( Tools & Techniques)

Contract types:

• Fixed Price (lump sum)• Cost Reimbursable Contracts • Unit Price

Plan Procurements – Tools & Techniques• Fixed Price Contract• In this type of contract one price is agreed

upon for all the work.• The buyer has the least cost risk, provided the• buyer has a completely defined scope,

because the risk of higher costs is borne by the seller.

• The seller is most concerned with the contract statement of work in this type of contract.

Fixed Price Contract Variations

Fixed Price Incentive Fee Contracts (FPIF)• There are also incentives for fixed price contracts.• Contract = $ 1,100,000. For every month early the

project is finished, an additional $10, 000 is paid to the seller.

• Fixed Price Economic Price Adjustment (FPEPA)• Sometimes a fixed price contract allows for price

increases if the contract is for multiple years.• Contract = $ 1,100,00 but a price increase will be

allowed in year two based on the Consumer Price Increase report for year one. Or the contract price is $ 1,100,000 but a price increase will be allowed in year two to account for increases in specific material costs.

Purchase Order

• A purchase order is the simplest type of fixed price contract.

• This type of contract is normally unilateral (signed by one party) instead of bilateral.

• It is usually used for simple commodity procurements.

• Example Contract to purchase 30 linear meters of wood at $ 40 per meter.

Cost-reimbursable Contract

• The seller's cost are reimbursed, plus an additional amount.

• The buyer has the most cost risk because the total costs are unknown.

• This form of contract is often used when the buyer can only describe what is needed, rather than what to do.

• The seller will therefore write the detailed contract statement work.

Cost-reimbursable Contract - Variations

Cost plus Fixed Fee (CPFF)• This is the most common type of cost reimbursable

contract.• In this type, the buyer pays all costs, but the fee (or

profit) is fixed at a specific amount.• This helps to keep the seller's costs in line because a

cost overrun will not generate any additional fee or profit. Fees only change with approved change orders.

• Example Contract = Cost + Fee of $ 100,000

Cost-reimbursable Contract - Variations

Cost Plus Fee (CPF) or Cost Plus Percentage ofCosts (CPPC)• This type of cost reimbursable contract

requires the buyer to pay for all costs plus a percent of costs as a fee. Sellers are not motivated to control costs because the seller will get paid profit on every cost without limit.

• Example, Contract = Cost + 10% of costs as fee.

Cost-reimbursable Contract - Variations• Cost Plus Incentive Fee (CPIF) This type of cost reimbursable contract pays all

costs and an agreed upon fee, plus a bonus for beating the performance objectives stated in the contract.

Cost Plus Award Fee Contracts ( CPAF) :• The seller is reimbursed for all legitimate costs ,

but the majority of the fees is only earned based on the satisfaction of certain broad subjective performance criteria defined and incorporated into the contract.

• The determination of the fee is solely on the subjective determination of seller performance by the buyer, and is generally not subject to appeals.

Time and Material (T&M) or Unit Price• This type of contract is usually used for small amounts.• The contract is priced on a per hour or per item basis

and has elements of fixed price contract (in the fixed price per hour) and a cost reimbursable contract (in the material costs and the fact that the total cost is unknown).

• In this type of, the buyer has a medium amount of cost risks compared to CR and FP because the contract is usually for small amounts and for a shorter length of time.

• Example, Contract = $ 100 per hour + expenses or materials at cost or $10 per linear meter of wood.

Contract Type vs. Risk • Effect of contract type on buyer and seller risk.

Outputs from Procurement Planning

– Procurement Management Plan – describes how procurement process will be managed• Type of contract• Independent estimates needed?• Autonomy of project team• Standardized documents• Multiple provider management?• Incorporate with other project aspects

(scheduling and performance reporting)

Plan Procurements - Outputs• A procurement statement of work (SOW) contains

the details of the procurement item in clear, concise terms. It includes the following elements:

• The project objectives• A description of the work of the project and any

post-project operational support needed• Concise specifications of the product or• services required• The project schedule, time period of services, and

work location.

Plan Procurements – Outputs

• Source Selection Criteria: Source Selection criteria are included in the procurement document to give the seller an understanding of the buyer's needs and help them decide if they should bid or make a proposal on the work.

• During Select sellers, this criteria become the basis by which the bids or proposal are evaluated by the buyer.

• Selection criteria can be limited to purchase price if the procurement item is readily available from a number of acceptable sellers.

Plan Procurement: OutputProcurement Documents may include the following:

• Information for Sellers• Background information• Procedures for replying• Guidelines for preparation of the response• Form of response required• Evaluation Criteria• Pricing forms• Contract Statement of work• Proposed terms and conditions of the contract (legal

and business)

Procurement Documents

• Non-Disclosure Agreement - This is an agreement between the buyer and any prospective sellers stating what information or documents they will hold confidential and control, and who in their organization will gain access to the confidential information.

• Standard Contract - Companies frequently have standard, preauthorized contracts for the purchase of goods or services. These types of standard contracts need no further legal review if used as they are.

Procurement Documents• Special Provisions (Special Conditions)• The project manager should determine what needs to

be added, changed or removed from the standard provisions, so that the resulting contract addresses the particular needs of the project.

• Letter of Intent- NOT a contract but a letter, without legal binding, that says the buyer intends to hire the seller.

• Privity- Contractual relationship.• Example - Company A hires company B to do some work for

them. Company B subcontracts to company C. The project manager for A is at the job site and tells company C to stop work. Generally, does company C have to listen?

Conduct Procurements

• Is the process of obtaining seller responses, selecting a seller and awarding a contract.

• In this process the team will receive bids or proposals and will apply previously defined selection criteria to select one or more sellers who are qualified to perform the work and acceptable as a seller.

•

Conduct Procurement

Conduct Procurements – Tools & Techniques• Bidder Conferences : Bidder conferences are meetings with

prospective vendors or sellers that occur prior to the completion of their response proposal.

• Proposal evaluation techniques• Independent estimates / Should-Cost Estimate : Comparing the

cost to an estimate created in house or with outside assistance. • Expert judgment• Advertising: Advertising is letting potential vendors know that an

RFP is available.• Internet search• Procurement Negotiations: The project manager may be involved

during negotiations to clarify project requirements, and if for no other reason than to protect the relationship to clarify project requirements, and if for no other reason than to protect the relationship with the other side.

Conduct Procurements – Outputs

Selected Sellers• A seller may simply be selected and asked to sign a

standard contract• A seller may be asked to make a presentation and

then, if all goes well, go on to negotiations• The list of sellers may be narrowed down to a few• The short-listed sellers may be asked to make

presentations and the selected seller then asked to go on to negotiations

• The buyer can negotiate with more than one seller• Or some combination of presentations and

negotiations


2. Procurement Contract Award:• Contracts are known by many names: Agreement,

Subcontract, Purchase order, Memorandum of understanding

• Is awarded to each selected seller .• A contract can be in the form of a simple purchase

order or a complex document.• A contract is a mutually binding legal agreement that

obligates the seller to provide the specified products, services or results and obligates the buyer to compensate the seller.

Contracts What do you need to have a legal contract?• An offer• Acceptance• Consideration - Something of value, not

necessarily money• Legal capacity - Separate legal parties,

competent parties• Legal purpose - You cannot have a contract for

the sale of illegal goods


• Resource Calendars: the quantity and the availability of contracted resources and those dates on which each specific resource can be active or idle are documented

• Change Requests • Project Management Plan Updates : components of the plan that may

get updated include, but are not limited to : Cost baseline Scope baseline Schedule baseline• Project Document Updates : docs that may get updated include, but are

not limited to : Requirements documentation Requirements traceability documentation , and , Risk register

Administer Procurements

• This process consists of assuring that the performance of both parties to the contract meets contractual requirements.

• The Contract Administration process concerns monitoring the vendor’s performance and ensuring that all the requirements of the contract are met.

• Contracts are legal relationships, so it is important that legal and contracting professionals be involved in writing and administering contracts.

Administer Procurements

Administer Procurements: Inputs

• Contract• Project Management Plan• Contract management plan• Procurement Documents: contain complete supporting records

for administration of the procurement processes. This includes procurement contract awards and the statement of work

• Performance reports: seller performance related documentation includes:

• Seller developed technical documentation and other deliverable information provided in accordance with the terms of the contract

• Seller performance reports that indicate which deliverables have been completed and which have not

Administer Procurements: Inputs

• Approved change requests: can include modifications to the terms & conditions of the contract.

• Work performance Information: the extent to which the quality standards are being satisfied, what costs have been incurred, which seller invoices have been paid, etc

•

Administer Procurements – Tools & Techniques

Contract change control system • The contract change control system defines the

procedures for how the contract may be changed.• The system is part of integrated change control.• It documents how to submit changes, establishes the

approval process, and outlines authority levels.• It includes a tracking system to number the change

requests and record their status

Procurement performance reviews

• Buyer conducted performance reviews examine the seller’s performance on the contract to date.

• These reviews may be conducted at the end of the contract or at intervals during the contract period.

• Buyer reviews examine the contract terms and seller performance for elements such as these:

• Meeting project scope• Meeting project quality• Staying within project budgets• Meeting the project schedule

Administer Procurements – Tools & Techniques• Inspections and audits• As the vendor completes the contracted work, the buyer

will need to inspect the work for progress, compliance with contract requirements, and adherence to agreed-to time, cost, and quality constraints.

• • Performance reporting• This tool and technique entails providing your managers

and stakeholders with information about the vendor’s progress meeting the contract objectives.

• Performance reporting is part of communications and should be documented within the communications management plan.

Administer Procurements – Tools & Techniques• Payment system• Seller submit invoices as an input to this process, and

the payment system is the tool and technique used to issue payment.

• The organization may have a dedicated department, such as accounts payable, that handles vendor payments, or it might fall to the project manager.

• In either case, follow the policies and procedures the organization established regarding vendor payments.

Administer Procurements – Tools & Techniques

• Claims administration• A claim is an assertion that the buyer did something

that has hurt the seller and the seller asking for compensation.

• Another way of looking at claims is that they are a form of seller's change requests

• Claims can get nasty. Imagine a seller that is not making as much profit as he hoped for, issuing claims for every action taken by the buyer.

• Claims administration involves documenting, monitoring, and managing changes to the contract.

•

Claims administration

• Changes that cannot be agreed upon are called contested changes.

• Contested changes usually involve a disagreement about the compensation to the vendor for implementing the change.

• You might believe the change is not significant enough to justify additional compensation, whereas the vendor believes they’ll lose money by implementing the change free of charge.

Claims

• Contested changes are also known as disputes, claims, or appeals. These can be settled directly between the parties themselves, through the court system, or by a process called arbitration.

• Arbitration involves bringing all parties to the table with a third, disinterested party who is not a participant in the contract to try to reach an agreement.

• The purpose of arbitration is to reach an agreement without having to go to court.

Records Management System

• A contract is a formal, legal document. Recording keeping can be critical if actions taken or situations faced during a project are ever in question after the work is completed.

• This can happen related to unresolved claims or legal actions, or even in order to satisfy insurance needs.

• A record management system can be quite extensive, with one person assigned just to manage these records.

• They can also include indexing systems, archiving systems and information retrieval systems for projects with extensive documentation.

Administer Procurements - Outputs

• Administer Procurements - Outputs• Procurement documentation • Change Requests • Organizational process asset updates:

correspondence, payment schedules and requests , seller performance evaluation documentation

• Project management plan updates: docs that can get updated include: but are not limited to: procurement management plan , baseline schedule , etc

Procurement documentation

This output includes (but isn’t limited to) all of the following:

• Contract• Performance information• Warranties• Financial information (like invoices and payment

records)• Inspection and audit results• Approved and unapproved changes

Close Procurements

• This process consists of finishing all the loose ends of the contract.

• This process is part of the close project process described in integration.

• Contract closure is done:• When a contract ends• When a contract is terminated before the work• is completed• This process is concerned with• completing and settling the terms of the contract.• It supports the Close Project process because the Contract

Closure process determines if the work described in the contract was completed accurately and satisfactorily.

• This is called product verification

Close Procurements

• Close Project verifies and documents the project outcomes just like the Contract Closure process.

• Keep in mind that not all projects are performed under contract so not all projects require Contract Closure.

• However, all projects do require the Close Project process.

• Since verification and documentation of the project outcomes occur in both of these processes, projects that are performed

• under contract need to have project results verified only one time.

Close Procurements

Close Procurements : Inputs, Tools & Techniques• The Contract Closure process has two inputs: • Project Management Plan – Procurement management plan• Procurement Documentation

• Close Procurements – Tools & Techniques• The Contract Closure process has three tools and techniques:• • Procurement audits• • Records management system.• • Negotiated Settlements: In all procurement relationships the final equitable settlement of all

outstanding issues, claims, and disputes by negotiations is a primary goal. Whenever settlement cannot be achieved by direct

• negotiation, some form of alternative dispute• resolution (ADR) including mediation or arbitration may be explored .

• When all else fails, litigation

Chapter 12 – Project Procurement Management

• Tools & Techniques for Contract Close Out– Procurement Audits – structured review of entire

procurement process; identify successes and failures that warrant transfer to other procurement items

• Outputs from Contract Close Out– Contract File – complete index of records– Formal Acceptance and Closure – contract administration

responsibility to provide a formal notice that contract has been completed

Close Procurements - Outputs

1. Closed Procurements:• This is formal acceptance and closure of the

contract.• The buyer provides the seller with a formal

written notice that the contract has been completed .Requirements for formal procurement closure are usually defined in the terms and conditions of the contract and are included in the procurement management plan

• It’s your responsibility as project manager to document the formal acceptance of the contract.

• Many times the provisions for formalizing acceptance and closing the contract are spelled out in the contract itself.

• • Close Procurements - Outputs• 1. Organizational process assets (updates) : assets that may get updated ,

include but are not limited to :• Procurement File: a complete set of indexed contract documentation,

including the closed contract, is prepared for inclusion with the final• project files.• Deliverable acceptance: the buyer provides the seller with a formal

written notice that the deliverables have been accepted or rejected .• Lessons learned documentation

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CONTRACTS

• An agreement between competent parties for the consideration to accomplish lawful purpose with the terms clearly set forth.

• The Procurement Process is sometimes referred to as the Contract Process

• One of the main output of the Procurement Process

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RULES OF CONTRACTS• A formal agreement – buyer and seller• Oral or written – written is preferred• Clearly state all requirements• Changes –formally approved, controlled,

documented• Not fulfilled until all requirements are met• Be executed by someone with capacity and

authority.

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RULES OF CONTRACTS Cont.

• Contain an offer• Have been accepted• Provide for a consideration/payment• Be for legal purpose• Terms and conditions should define breaches,

copyrights, intellectual rights, force majeure.

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BASIC ELEMENTS OF CONTRACTS

1. Mutual Agreement– There must be an offer and agreement

2.Consideration– There must be a down payment

3.Contract Capability– The contract is binding only if the contractor has the

capability to perform the work

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BASIC ELEMENTS OF CONTRACTS Cont.

4. Legal Purpose– The contract must be for a legal purpose

5. Form Provided by Law– The contractor must reflect the contractor’s legal

obligation to deliver end products

THE END

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