PMP Session 3

Fundamentals of Project ManagementBased on PMP version 3

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Session # 3

How PMBOK Defines Project Management

9 Knowledge Areas

Scope Time Cost Quality Human Resources

Communication Risk Procurem

ent

Integration

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Cost Mgmt

Project Cost Managementthe processes involved in planning, estimating, budgeting, and controlling costs so that the project can be completed within the approved budget.

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Cost estimating:Developing an approximation of the costs of the resources needed to complete aproject’s activities.

How ?Cost for each WBS ElementTeamMaterialsSupplies

Life cycle costing:Examining the trade off analysis to pay more now to pay less later

Cost Management

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Direct costDirect Costs are the costs incurred for the exclusive benefit of the project (e.g., Salaries of full time project staff.

Indirect costAlso called overhead and G&A costs, are costs allocated to the project by the project team as a cost of doing business (e.g., cost of the electric utilities for the office).

Fixed costs fixed costs are defined as expenses that do not change in proportion to the activity of a business, within the relevant period. For example, a retailer must pay rent and utility bills irrespective of sales.

Variable costsare expenses that change in proportion to the activity of a business.Total Variable Cost = Total Quantity of Output * Variable Cost Per Unit of Output

Cost Management

Cost Elements

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Change Over time :Change over time (inflation over time i.e. gasoline , deflation over time i.e. new computers)

Change Over volume :Effect of the volume purchased on the unit price (e.g., if you buy 500 units, you pay EGP 50/unit, but if you buy 1000 units then you pay EGP 43/unit.

Cost Variability management

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Analogous:A form of expert judgment.

Unit cost based on effortA Technique that uses the time rates to calculate the cost of a unit deliverable.

ParametricTechnique that uses a statistical relationship between historical data and other variables(e.g., square footage in construction, lines of code in software development)

Vendor bids, fixed pricesin cases where the projects are won under competitive processes.

Cost management

N.B. anyone or several of the past could be used to estimate for each WBS Element.

Estimating Techniques

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Cost budgetingAggregate costs Include all costs.Cash flow Money to be paid or received over time.Cost baseline A baseline against all future measurements for the project to be done. Contingency The Unknowns that will impact a project .

Cost management

N.B. Baseline Changes Only after approved changes

N.B. a reserve should be available (in risk management) 10% contingency + baseline = total cost

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Cost management

Costing Tips

1. Round figures to the nearest decimal.2. Set the degree of precision.3. Consult the financial specialist on the Project budget accounting.

PV present value / net present value NPV/Rate of return ROR / payback period / expected rate of return / interest rates / inflation rates.

How PMBOK Defines Project Management

9 Knowledge Areas

Scope Time Cost Quality Human Resources

Communication Risk Procurem

ent

Integration

LTD

Quality Mgmt

Project Quality Managementit includes all the 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..

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Quality Management

What is quality?Conformance to requirements & Fitness for use

Quality Focuses:Customer satisfaction.Prevention vs. inspection.Continuous improvement

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Quality Planning

Define quality standards customer expectation

Req Analysis Design Development Implementation

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Quality Management

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Perform quality assurance

Quality Management

Doing the right things.Doing things better.

Perform quality control

Validating that we are producing the right results-testing-inspection-sampling-statistical control

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Quality Management

Examples of the Tools used in Quality Control (continuous Improvement )

Fishbone Analysis

Deliver only what u promise!!!

Pareto Chart (80/20)

Control chart (Rule of 7)

How PMBOK Defines Project Management

9 Knowledge Areas

Scope Time Cost Quality Human Resources

Communication Risk Procurem

ent

Integration

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H R Mgmt

Human resources management :The processes that organize and manage project teams.

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Human Resources Management

As a project manager, you have to know yourself and know your comfort zone.

Human Resource Planning.1-Develop Project org chart

2-Define roles and responsibilitiesProject manager, stakeholder, senior management, team, etc.

3-Develop staffing planWhoWhenHow manyHow long

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Acquire Project team

Human Resources Management

Staff projectmatch availability to plan

Develop project team

TrainingmotivationConflict managementProblem solving]

Project manager power comes from :FormalrewardPenaltyExpertReferent

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Human Resources Management

Manage project teammanage performance by mandating Performance reviews.360 reviews.

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Thanks