The PMP Exam Made Easy Your 24-Hour Study Guide to
Passing, 2013 Edition
by Ron Ponce and Christopher Scordo SSI Logic 2013 (337 pages) Citation ISBN:9780982576885 Containing expert tips for exam success, this all-in-one study guide offers top-notch tips, tools and techniques to help you prepare for and pass the PMP exam, while making it easy for you to focus on just the information you need to succeed. Table of Contents
The PMP Exam Made EasyYour 24-Hour Study Guide to Passing
Accessed 1 days ago
A Brief Introduction to this Guide
A Concise Overview of the PMP Exam
PMI Code of Ethics and Professional Conduct
The Project Management Framework
The Project Life Cycle & Organization
All About Project Management Processes
Deep Dive into Project Integration Management
Deep Dive into Project Scope Management
Deep Dive into Project Time Management
Deep Dive into Project Cost Management
Deep Dive into Project Quality Management
Deep Dive into Project Human Resource Management
Deep Dive into Project Communications Management
Deep Dive into Project Risk Management
Deep Dive into Project Procurement Management
Deep Dive into Project Stakeholder Management
A Review of Critical PMP Exam Formulas
Quick Guide to Important PMP Exam Acronyms
Quick Study Checklist for the PMP Exam
Helpful Hints for Taking the PMP Exam
More Exam Taking Tips
List of Figures
List of Tables
List of Cheat Sheets
A Brief Introduction to this Guide Overview Congratulations on deciding to take and pass the PMP exam! This guide will walk you through the process to apply for the exam and, most importantly, what you will need to know in order to pass the exam. You will find numerous references in this study guide to the Project Management Body of Knowledge, or PMBOK Guide. These terms are interchangeable. At the time of this writing, the PMBOK Guide Fifth Edition is the most recent version and is the standard upon which the PMP exam is based from 31 st of July, 2013. It is expected that the PMBOK Guide - Fifth Edition will remain the standard text upon which the exam is based until 2017. Important Note The page references indicated in this book refer to the PMBOK Guide - Fifth Edition. Why Take the PMP Exam? Today more than ever, organizations are looking at more than just a person's experience. They want to know that you are well versed in the best project management fundamentals and standards. Those standards are set by the Project Management Institute (PMI). The PMI provides several certifications around project and program management, but the flagship is the Project Management Professional or PMP certification. The PMP certification shows that you are part of an elite group of professionals that have been trained and credentialed in project management best practices recognized worldwide. A Concise Overview of the PMP Exam Qualification to Take the Exam To take the PMP exam, one needs to meet the requirements as stated by the Project Management Institute. The current requirements are described in the table below: Category General Education Project Management Education Project Management Experience Experience One 4-Year Degree (bachelor's degree or equivalent) 35 contract hours within the last eight years 4,500 hours Three years within the last eight years Two Secondary Degree (high school diploma or equivalent) 35 contract hours within the last eight years 7,500 hours Five years within the last eight years The qualifications show that you have not only been provided the proper education about project management but that you have the practical experience needed to apply the knowledge properly. Application You need to first go to the PMI.org site in order to begin the application process. There are two ways that you can apply for the PMP certification: Online By mail The recommendation is that you complete the application online at the PMI.org website. The processing and notification process is much faster than sending the application through the mail. You can print a copy of the application in order to help you capture your thoughts and experiences before you enter it online. It will be a time saver for you. The PMI does occasionally audit the information that is presented in applications in order to ensure that all the requisites are in order. You want to make sure that you are honest about the information that is being presented. If your application is audited your approval will be delayed until the audit is completed. Up to 10% of PMI applications are audited. Cost At the time of this publishing, the exam fee for the electronic exam is $405 for PMI members in good standing and $555 for non-PMI members. The current costs can always be found at the PMI.org website. Quick Overview of PMP Exam Details The PMP exam includes 200 multiple-choice questions. Each question will have four answer choices. You must complete the exam in four hours. Twenty-five of the 200 questions are "pretest (unscored) questions" which the PMI uses to validate the questions for inclusion in future exams. You will not be able to distinguish the "pretest questions" from the questions that will count toward your score. These pretest questions will appear randomly throughout the exam and will not be included in your score for the exam. Your score will then be calculated based on the response to the remaining 175 questions. Try to answer every question, since unanswered questions are considered wrong answers. The passing score for the exam is based on psychometric analysis and varies with exam difficulty. Although it is hard to determine an absolute passing point, it would be safe to say that having 75% of the questions correctly answered will have a high probability of passing the exam. The current exam is centered on the material covered within the Fifth Edition of the Project Management Body of Knowledge also known as the PMBOK Guide. While the PMBOK Guide represents the standard for the industry, the exam is not a test on how much you memorized from the guide. The exam may also include questions related to topics and concepts that are not directly covered in the PMBOK Guide. The Exam The exam covers the following five key Process Groups: 1. I nitiating 2. Planning 3. Executing 4. Monitoring & Controlling 5. Closing In addition to these five Process Groups, the exam will take into consideration the ten Knowledge Areas as outlined in the PMBOK Guide. The ten Knowledge Areas include: Integration Management Scope Management Time Management Cost Management Quality Management Human Resource Management Communications Management Risk Management Procurement Management Stakeholder Management The table below breaks out by each process group the percentage of scored questions on the PMP exam: Open table as spreadsheet Project Management Process Group Percent of Questions Project Initiating 13% Project Planning 24% Project Executing 30% Project Monitoring & Controlling 25% Project Closing 8% The Project Management Institute does make changes periodically to the exam, the application process, and the qualifications. You should always make sure to get the latest information directly from the PMI at their website www.pmi.org. Be Ready for the Exam As we mentioned previously, the PMP exam does not just cover the content of the PMBOK Guide. Although it tests your knowledge of how to apply the content of the guide, it is not a test that measures how much of the guide you have been able to memorize. There are parts of the exam where memorization will be important and come in very handy. Those areas will be clearly called out for you. In addition to a thorough knowledge of the PMBOK Guide, the exam also factors in how a project manager uses that knowledge when managing projects. While your project management experience may differ from that outlined by the PMI, it is important to keep the recommendations of the PMBOK Guide in mind when answering the questions rather than basing your answer only on your real world experience. You will find that many of the questions are situational or based on specific scenarios. This type of question is designed to see whether you can apply the information provided and determine which of the selections "is the best answer". These types of questions allow for confusion, because in some instances they contain information that has nothing to do with determining the answer. The sole reason the information is provided is to confuse you and lead you away from the best answer. The best answer also could signify that you were presented with two valid choices, but only one is the best selection for the specific situation described in the question. Read carefully! Don't confuse yourself by assuming you know what is being asked. Take the time to make sure you know exactly what is being asked, and review each answer choice in its entirety. We tend to read the first and second and then skim the third and fourth. That would be a huge mistake, because all you need to do is not read, or misread, a single word that can make the difference between choosing the correct or the incorrect selection. The first tip for the exam is this: Review and study the PMBOK Guide Fifth Edition. This first step is the key, since most of the questions on the exam reside within the guide. For many people, the terms and definitions that are provided within the guide are new or at least different from what they have experienced in the real world. That is why reading the guide and becoming familiar with what is being presented is so important even before going forward with this guide.
PMI Code of Ethics and Professional Conduct Overview The Code of Ethics and Professional Conduct (the Code) get to the core of who we are as a profession. We are project professionals with the objective of doing the best we can for our projects and our teams. The terms and concepts in the Code are in many cases intuitive, but for some they may be a change from the norm. In August 2011, the PMI incorporated the concept and terms from this section into the body of the questions within the PMP exam. Before that, there was a 6 th category of test questions that focused on this section. With the change, I wanted to bring the code front and center so that it is the first area we cover. It is important to realize that the Code touches all aspects of a project. As you look at the test, you will see questions that are related to the Code in each of the five Process Groups. As you read the important aspects of the Code, remember them as we move forward in each section of the guide. Vision and Purpose Describes the expectations that we have of ourselves and our fellow project managers in the global project management community. Articulates the ideals to which we aspire as the behaviors that are mandatory in the many roles we play. Instills confidence in the project management profession and helps an individual become the best project manager they can be. Assists us in making wise decisions when faced with difficult situations that challenge our integrity or place us in a position of compromise. Persons to Whom the Code Applies All PMI Members Non-members of PMI who fall into one of the following categories: o Who hold a PMI certification o Who apply to commence a PMI certification process o Who serve PMI in a voluntary capacity Aspiration and Mandatory Conduct Aspirational standards describe the conduct that we strive to uphold. o This is not easily measured o It is an expectation that the standards are upheld o They are not optional Mandatory standards establish firm requirements o Must adhere to the standards or face disciplinary action Structure of the Code Divided into sections that contain standards of conduct that are aligned with four values Values that Support this Code Responsibility Respect Fairness Honesty Responsibility Description Is our duty to take ownership for the decisions we make or fail to make, the actions we take or fail to take, and the resulting consequences. Responsibility - Aspirational Standards We make decisions and take actions based on the best interests of society, public safety, and the environment. We accept only those assignments that are consistent with our background, experience, skills, and qualifications. We do what we say we will do. We take ownership for our work and our team by o Making corrections promptly o Communicating errors to appropriate body We protect proprietary or confidential information that has been entrusted to us. We uphold this Code and hold each other accountable to it. Responsibility - Mandatory Standards We inform ourselves and uphold the policies, rules, regulations and laws that govern our professional work and volunteer activities. We report unethical or illegal conduct to appropriate management and, if necessary, to those affected by the conduct. We bring violations of this Code to the attention of the appropriate body for resolution. We only file ethics complaints when they are substantiated by facts. We pursue disciplinary action against an individual who retaliates against a person raising ethics concerns. Comments Specifically, we do not engage in any illegal behavior, including but not limited to: theft, fraud, corruption, embezzlement, or bribery. Further, we do not take or abuse the property of others, including intellectual property, nor do we engage in slander or libel. In focus groups conducted with practitioners around the globe, these types of illegal behaviors were mentioned as being problematic. Respect Description Our duty to show a high regard for ourselves, others, and the resources entrusted to us. Resources entrusted to us may include people, money, reputation, the safety of others, and natural or environmental resources. Respect - Aspirational Standards We inform ourselves about the norms and customs of others and avoid engaging in behaviors they might consider disrespectful. We listen to others' points of view, seeking to understand them. We approach directly those persons with whom we have a conflict or disagreement. We conduct ourselves in a professional manner, even when it is not reciprocated. Respect - Mandatory Standards We negotiate in good faith. We do not exercise the power of our expertise or position to influence the decisions or actions of others in order to benefit personally at their expense. We do not act in an abusive manner toward others. We respect the property rights of others.
Fairness Description To make decisions and act impartially and objectively. Our conduct must be free from competing self-interest, prejudice, and favoritism. Fairness - Aspirational Standards We demonstrate transparency in our decision-making process. We constantly reexamine our impartiality and objectivity, taking corrective action as appropriate. o One of the biggest problems practitioners report is not recognizing when we have conflicted loyalties and recognizing when we are inadvertently placing ourselves or others in a conflict-of-interest situation. We as practitioners must proactively search for potential conflicts and help each other by highlighting each other's potential conflicts of interest and insisting that they be resolved. We provide equal access to information to those who are authorized to have that information. We make opportunities equally available to qualified candidates. Fairness - Mandatory Standards We proactively and fully disclose any real or potential conflicts of interest to the appropriate stakeholders. When we realize that we have a real or potential conflict of interest, we refrain from engaging in the decision-making process or otherwise attempting to influence outcomes, unless or until: we have made full disclosure to the affected stakeholders; we have an approved mitigation plan; and we have obtained the consent of the stakeholders to proceed. We do not hire or fire, reward or punish, or award or deny contracts based on personal considerations, including but not limited to, favoritism, nepotism, or bribery. We do not discriminate against others based on, but not limited to, gender, race, age, religion, disability, nationality, or sexual orientation. We apply the rules of the organization (employer, Project Management Institute, or other group) without favoritism or prejudice.
Honesty Description Duty to understand the truth and act in a truthful manner both in our communications and in our conduct. Honesty - Aspirational Standards We earnestly seek to understand the truth. We are truthful in our communications and in our conduct. We provide accurate information in a timely manner. We make commitments and promises, implied or explicit, in good faith. We strive to create an environment in which others feel safe to tell the truth. Honesty - Mandatory Standards We neither engage in nor condone behavior that is designed to deceive others, including but not limited to, making misleading or false statements, stating half-truths, providing information out of context or withholding information that, if known, would render our statements as misleading or incomplete. We do not engage in dishonest behavior with the intention of personal gain or at the expense of another. The Project Management Framework What is a Project? (Page 3) You may think this is a trick question. Everyone knows this or they shouldn't be thinking about taking the exam. While that may be true, what is critical is that you know the right answer. So the correct way to answer the question is this: A project is a temporary endeavor undertaken to create a unique product, service, or result. The temporary nature of projects indicates a definite beginning and end. The key here is the word temporary. While the deliverables of a project may be lasting, the project activities involved in creating those deliverables, whether they be a product, a service, or a result, have a clear beginning and ending. For the exam, it will be critical to think of a project as being large in scale. The reason is that larger projects are more likely to provide the opportunity to cover all five Process Groups and all ten Knowledge Areas, whereas a smaller project may not require the need to deal with them all.
What is Project Management? (Page 5) Project management involves managing the activities required in order to meet the project objectives. This includes application of specific knowledge, skills, tools and techniques. There is systematic process that ties the activities of a project together in order for them to be accomplished successfully during the lifecycle of the project. The PMBOK Guide tells us that project management is accomplished through the appropriate application and integration of 47 logically grouped project management processes compromising the 5 Process Groups. Although project management is part science with its logic of step-by-step progression, it is also an art. It is an art, because you are dealing with people that need to execute those logical steps. Anytime you deal with people, their own opinions may overpower the logical steps necessary for successful completion of the project and its deliverables. As the project manager, you may feel more like a baby sitter in these situations, but we'll touch on that more in the upcoming pages. Relationship between: Portfolio Management, Program Management, and Project Management In most cases, project management is leveraged to serve a broader purpose or set of objectives. A single project can be part of a group of projects that are within a program or portfolio of projects. Organizational structures and strategies are formed in order to support program and portfolio management. It is important for the exam to understand this strong relationship as well as the differences between each. Portfolio Management (Page 9) Projects or programs may be combined into a portfolio in order to facilitate more effective management of those projects and help the organization achieve specific business goals. Portfolio management focuses on ensuring that projects and programs are reviewed to prioritize items like resource allocation in order to keep them aligned to organizational strategies. It is important to note that the collection of projects or programs within the portfolio may not be directly related or interdependent in any way. Depending on the organization, there is the flexibility to construct the portfolio in the best way to support the organizational objectives. Portfolio management helps to centralize the management of all the projects within the portfolio. There is a consistency in dealing with prioritization, authorization, and controlling of the projects. Program Management (Page 9) Individual related projects may be combined into a larger program. This allows management in a coordinated manner and provides a level of control that would not be available by managing them on an individual basis This coordination may provide decreased risk, economies of scale, and improved management that could not be achieved if the project were managed individually. Program management, unlike Portfolio Management, focuses on making sure there are ties or interdependencies between each of the projects within the program related to having a common outcome or collective capability. Projects and Strategic Planning (Page 10) Each organization is out to accomplish a set of objectives as part of a strategic plan or vision that ensures continued growth and success. At least that is the hope, otherwise that organization won't be around for very long. Projects play a critical role in the execution of that strategic plan. The strategic objectives can center on some of the following topics Business opportunities Customer requests Legal / Regulatory Market trends The projects that are created in order to achieve the objectives of the strategic plan can then be placed in programs or portfolios in order to gain the greatest economies of scale to ensure their successful execution. The strategic plan provides the guidelines on how the project is assigned to a program or portfolio, the prioritization of the resources that get assigned, and so much more. The key is recognizing the connection between the individual project, and the benefits that project's success can add to the organization. Project Management Office (Page 10) The Project Management Office (PMO) is a centralized organizational entity that provides coordinated management of the projects that are under its control. The projects under the PMO may or may not be related. Each organization has the flexibility to define how the PMO will function in order to best meet its needs. The typical responsibilities of the PMO can range from Terminating projects Managing the interdependencies between projects Providing resources Monitoring compliance with organizational processes Providing templates and define standards Centralizing communication about the projects under its control Being a member of the change control board Being a stakeholder Prioritizing projects
Project Management and Operations Management (Page 12) Operations management focuses on the requirements needed for ongoing execution of activities after the project is complete. These activities in many cases are more repetitive in nature unlike a project with a definitive beginning and end. There is a tight tie between a project and with operations during varying points such as: Close out phase The development of a new product or enhancing an existing one Lessons learned These points in time are examples of when information is transferred between the project team that creates and the operations team that manages the ongoing requirements. The communication during these transfer points is critical to ensure that the necessary information is passed between the two groups to mitigate any ongoing issues. Role of Project Manager (Page 16) In order to achieve the project objectives, the performing organization assigns a project manager. The project manager's responsibilities are unique when compared with other roles in the organization such as a functional manager or operations manager. Many of the tools and techniques for managing projects are specific to project management. Effective project management requires that the project manager possess the following characteristics: Knowledge Performance Personal As a project manager you need to have knowledge about project management and how best to apply that knowledge to successfully deliver the project. At the end of the day, project managers are judged on how well they and their team were able to meet the objectives of the project. As a project manager, your performance is based on your ability to take your knowledge about project management and apply it to successfully deliver on the objectives of the project at hand. It also involves how successfully you deal with the project team and stakeholder as well as your own behavior during the project. Challenges abound with any project and your ability to get through them personally as well as a team are also data points where your performance is judged. Your leadership abilities, the effectiveness of how you manage a project, the attitude that you have, day in and day out, provide measurements of your personal performance.
Enterprise Environmental Factors (Page 29) This may be one of those terms that make you go, "What?" As you read the list of items included in the guide or listed below, you begin to get a better idea of what this term means. Most organizations that have been executing projects have a history. They may have developed a way projects should be executed. The PMBOK Guide calls these items "enterprise environmental factors." They are inputs to the Develop Project Charter and many other processes as we will see in more detail. While they can have a positive influence on the project outcome by helping you as a project manager not have to reinvent the wheel for each project, they can also be a constraint to your project. Although the standards in place may not be appropriate for your project, you still need to adhere to them. They include but are not limited to: Organizational culture, structure, and process Government or industry standards Infrastructure o Facilities o Capital equipment Existing human recourses o Skills o Disciplines o Knowledge Personal administration o Staffing o Retention guidelines Company work authorization systems Marketplace conditions Stakeholder tolerances Political climate Organizational established communication channels Project Management information systems o Automated tools (scheduling software, configuration management system, etc.) Organizational Process Assets (pg. 27) Enterprise Environmental Factors have a counterpart called Organizational Process Assets. This term is a lot clearer about what it means. Project managers in most cases deal with existing processes, procedures, and historical information that is available to them when managing their projects. These assets help the project benefit from past organizational experience. The following are some examples of organizational process assets: Processes, Procedures, and Policies o Over time, organizations develop processes, procedures, and policies as they mature based on past projects. These items have been tested and considered to be best practices for project managers to follow. o They include items like: Standards or guidelines Templates Processes Procedures Policies Corporate Knowledge Base o Organizations have information such as historical records and lessons learned from previous projects. The organization sees the value of this information and then invests to centralize that data into an indexed corporate knowledge base that is available to all. Hint In the real world, an organization may or may not have such a knowledge base. For the exam you can assume that a database will be available to all project managers unless stated otherwise. o The items stored in the knowledge base may include but are not limited to: Measurement data points Metrics that have been captured to evaluate projects, products, processes Project files Plans Financial data Risk registers Diagrams Issues and defect management databases Configuration management Baseline & Versions Historical Information o Historical information (or data) is a record of past projects. It is used to plan and manage future projects, thereby improving the process of project management. Historical information can include: Activities Lessons Learned WBS Benchmarks Reports Risks Estimates Resources needed Project management plans Correspondence Lessons Learned o Project initiating involves looking up past lessons learned for use on the current project. The Project Life Cycle & Organization When we look at projects and how they are managed, we need to consider that they take place in a much broader landscape. Each project is one piece in an overall puzzle for any organization. As a project manager, the success of your project may depend to some extent on your understanding of your project's context in that full puzzle. This chapter describes the importance of understanding the basic structure of a project. You will also know the importance of the relationship between a Project Life Cycle and a Product Lifecycle, as well as project work and ongoing operational work. Finally, we will focus on the importance of stakeholders and the influence they have, as well as the effect an organizational structure can have on a project. Project Life Cycle Overview A life cycle is a progression through different stages of development. We can apply that general definition to both a project as well as a product as we will soon see. PMBOK Guide Definition Page 38 A project life cycle is the series of phases that a project passes through from its initiation to its closure. The phases are generally sequential, and their names and numbers are determined by the management and control needs of the organization or organizations involved in the project, the nature of the project itself, and its area of application. In order to successfully manage a project you need to have not only the structure of the project lifecycle but also partner that with a methodology of how that will be done. Characteristics of the Project Life Cycle (Page 38) Regardless of the size or complexity of a project, there are four basic characteristics of a Project Life Cycle including: Start Planning Organizing Executing Carry out the work Closing out The fact that these characteristics are common in all project life cycles makes it simpler to communicate the project status with all project team members and stakeholders. You are able to quickly provide a status without having to go too deeply into the details, especially when those details will not be meaningful to the audience. The types of information you can use a life cycle to help graphically display would be: Cost and Staffing levels o showing how they grow at the start, and how they drop rapidly as the project comes to a close Risk & Stakeholder influence o Both are highest at the start of a project, decreasing over the life cycle of the project Cost of change o Being able to show that it is best to make changes early in a project since the cost is low compared to the end where the cost can be very high. Product vs. Project Life Cycle Relationship The product life cycle consists of generally sequential, non-overlapping product phases determined by the manufacturing and control need of the organization. The life cycle lasts from the conception of a new product to its withdrawal from the market place. During that life cycle a product will require many different projects from the initial one to give it life to those that are done as it declines. Project Life Cycle Chart
There is a tight relationship between the product life cycle and the project life cycle. From a product perspective, given that there can be numerous projects created to support the product, the organization may decide that it is best to manage the project collectively in order to gain the most efficiency possible. PMBOK Guide Definition Page 41 Project Phases are divisions within a project where extra control is needed to effectively manage the completion of a major deliverable. In many cases you will see that phases in a project are completed in a sequential pattern, but there can also be overlap. This will depend in part on the type of methodology the organization has chosen to manage projects. Phases allow a project to be broken down into logical chunks to make it easier to plan and manage. Project phases also help with mitigating the complexity or size of a project, thus making the larger project less overwhelming to a project manager. In the end, each phase has a beginning and an end. This gives all phases similar characteristics. Finally, it is possible to have just one phase. Don't be surprised if you are presented with a single phase for a project. It may be that it is a simple and straight forward project so it only needs a single phase. Exam Hint A project phase is not a Project Management Process Group Project Governance Across the Life Cycle Project governance provides a comprehensive, consistent method of controlling the project and ensuring its success. Governance is important for all projects. Each organization, as part of it Organizational Process Assets, has a philosophy of how programs, portfolios and individual projects should be controlled. The phase structure allows a project manager to have stronger controls within each phase and thus over the entire project. Phase to Phase Relationships (Page 42) When involved with large and complex projects consisting of multiple phases, arranging the phases sequentially is not always the best approach because there could be constraints with respect to the timeline. As a result, the best approach may be to have the phases overlapping or concurrent. There are two basic types of phase-to- phase relationships: Sequential Relationship o Phase can only start once the previous phase is complete. Overlapping Relationship o Phase will start prior to the completion of the previous phase. Phase-to-Phase Relationships and Project Life Cycles The phase to phase relationship between the project phases heavily depend upon the selected project life cycle for the project. Three basic types of project life cycles that influence the phase to phase relationship of a project are: Predictive Life Cycles (page 44) o These are also known as fully plan-driven life cycles. o The project scope, time and cost requirements, and other project plans are developed early in the project life cycle. o Project phases are usually sequential in such project life cycles. o Rolling wave planning, where project plans are progressively elaborated as the project progresses and more and more project information becomes available, may be used in such life cycles. Iterative and Incremental Life Cycles (page 45) o Project phases are intentionally repeated as the project team's understanding of the product increases. o The product is iteratively and incrementally developed during these repeated cycles. o Such life cycles are preferred for projects where changes to the project's scope and objectives are expected during the life cycle. Adaptive Life Cycles (page 46) o Adaptive life cycles are also known as change-driven or agile methods. o Such life cycles are preferred for complex projects where changes to the project are expected to be very frequent and highly likely and stakeholder involvement is very critical for the success of the project. o The overall scope of the project is broken down into a set of requirements. During every iteration, the project team will select a subset of the requirements to be developed. o Adaptive methods are ideally suited for rapidly changing environments. Projects vs. Operational Work Many times we don't think about how to categorize work because it is just work. We just need to do it. That said, many organizations find that there are two main buckets that work can fall into. They are project or operational work. Operational work is made up of ongoing and repetitive tasks of a product or service that need to be executed in order to sustain that product or service. That is in contrast to the project work that is temporary and has a definitive beginning and end. Project Stakeholders (Page 30) Stakeholders are persons or organizations (e.g., customers, sponsors, the performing organization, or the public), who are actively involved in the project or whose interests may be positively or negatively affected by the project performance or completion of the project. For the exam, stakeholders have varying levels of responsibility and authority when participating on a project, and these can change over the course of the project life cycle. Stakeholders may include individuals or groups that you had not really thought about before as having a role or being impacted. The bottom line is that a stakeholder can be anyone or anything. Here are some examples: Customer User Sponsor PMO Functional Managers Business Partners Project Team Members Project Manager Operations Manager Stakeholders also have varying levels of influence. Remember that the influence can be both positive as well as negative toward your project. It will be important to determine which stakeholders are behind you and which ones will be possible obstacles. As a project manager, a major responsibility will be to manage these stakeholders and their expectations. This is not an easy task, as each will have their own opinions and requests. Organizational Influences on Project Management (Page 20) As a project manager, it is hard enough to take the requirements of any project and successfully deliver them even without any outside influences. In addition to the project requirements, there are always outside influences that a project manager must be aware of in order to deliver any project successfully. Every organization will have a different culture, structure, and style, and each of these areas may have an influence on the success or failure of a project. In addition, an organization's project management maturity will have a major impact on success or failure as well. Organizational Cultures and Styles (Page 20) Organizational culture is one of the Enterprise Environmental Factors. As a project manager, you need to know and understand the culture in detail. It is important to understand areas like: Shared vision Organizational values & beliefs Work ethic & hours Policies Procedures In addition to the above items, an organization's authority structure is a key area the project manager needs to understand Organizational Structures (Page 21) One of the major influences on any project is how an organization is organized structurally. The structure will dictate who the project manager goes to for resources, how communications will be distributed, and much more. Exam Hint When you see questions on the exam regarding organizational structure, be sure you know which structure the question is related to. The right answer will depend on it. Organizational structures have a direct correlation to the extent of the project manager's level of authority. This is an important concept to understand. Remember that we are taking an exam focused on project management, so it is critical to have that focus.
Here are the three types of organizations: Functional (Page 22) This is the most common form of organization. The organization is grouped by areas of specialization within different functional areas (i.e., Sales, Marketing, and Technology). In a functional organization each individual has one immediate superior. Projects generally occur within a single department. If information or project work is needed from another department, the request is sent from the head of the department to the head of the other department. Projectized (Page 25) In a projectized organization, the entire company is organized by projects. The project manager has control of projects. Personnel are assigned and report to a project manager. Team members do not have a department they belong to; they have projects. Once they finish one project, they move on to the next project. Matrix (Page 23) A matrix organization attempts to maximize the strengths of both the functional and projectized structures. In this structure, when team members are assigned to a project, they will typically report to the project manager for project work and to their functional manager for their organizational duties. In a strong matrix organization, power will rest with the project manager. Remember that the exam is focusing on project management, so it should not be a surprise that the project manager will be positioned front and center. In a weak matrix organization, the power rests with the functional manager. In the balance matrix organization, the power is split between the project manager and the functional manager. Now that we have seen the three different structures, you need to think of how these structures will impact your ability as a project manager. The following shows how to determine the impact of the organizational structure: Who has the power in each type of organization? Is it the project manager or functional manager? What are the advantages of each type of organization? What are the disadvantages of each type of organization?
The following recaps the three different structures: Open table as spreadsheet
Functional Matrix Projectized Weak Matrix Balanced Matrix Strong Matrix Project Manager's Authority Little or None Low Low to Moderate Moderate to High High to Almost Total Resource Availability Little or None Low Low to Moderate Moderate to High High to Almost Total Who Controls the Project Budget Functional Manager Functional Manager Mixed Project Manager Project Manager Project Manager's Role Part-time Part-time Full-time Full-time Full-time Project Management Administrative Staff Part-time Part-time Part-time Full-time Full-time All About Project Management Processes We need to start from the beginning with a definition for a process. PMBOK Guide Definition Page.47 A process is a set of interrelated actions and activities performed to create a pre- specified product, result, or service. As a project manager, processes help to provide structure to managing a project. The processes encompass the tools, techniques, inputs, and outputs as described in the Knowledge Areas of the PMBOK Guide. The focus of this section is solely on the process of managing a project. It will describe in detail what should be done, when it should be done, and it summarizes the information that is critical for the exam. According to the PMBOK Guide in order for a project to be successful, the project team must: Select appropriate processes required to meet the project objectives, Use a defined approach that can be adopted to meet requirements, Comply with requirements to meet stakeholders needs and expectations, and Balance the competing demands of scope, time, cost, quality, resources, and risk to produce the specified product, service, or result. Project processes performed by the project team will typically fall into one of two major categories: Project Management Processes. These processes help to ensure the project moves through its lifecycle in an effective manner. Product-Oriented Processes. These processes are necessary to define and create the project's product. Project Management Process Groups (Page 49) Project management processes are grouped into five different categories which are officially known as the Project Management Process Groups. Each of the five Process Groups contains individual processes associated with that group. There are a total of 47 project management processes that comprise the five Project Management Process Groups and the Project Management Knowledge Areas. Exam Hint This chapter is one of the most important to know and fully understand for the exam. Within the PMBOK Guide, page 61 is key. The table on this page shows the relationship between each process and its associated Knowledge Area and Process Group. I recommend that you "Memorize" this page or know it very, very well. In many cases, the majority of the exam questions you will see will be related in some way to having knowledge about the Process Groups and Knowledge Areas. The following are the five Project Management Process Groups: Initiating Process Group o The processes in this group: Define a new project or new phase of an existing project Provide the authorization to start the project or phase Planning Process Group o The processes in this group: Establish and define the scope of the project Refine the project objectives Define the course of action Executing Process Group o The processes in this group: Ensure that the work defined for the project and noted in the project plan are performed and completed to satisfy the project objectives. Monitoring and Controlling Process Group o The processes in this group: Track Review Regulate progress and performance Identify areas where change is required Initiate the approved change Closing Process Group o The processes in this group: Finalize all the activities across all the Process Groups to formally close a project or phase. How Do These Processes Work Together?
The diagram shows how the project management process groups fit together. The first step, Initiating, must be completed for the project to be approved. During this stage there is normally a rough high-level plan that is used to provide duration and impact in order to help with the selection process. Once the project is approved it moves on to the next step. Detailed planning of the project takes place in the Planning process. Details related to how the project will be executed and monitored and controlled are finalized. The project then moves into Executing. This is when the work is performed according to the processes and procedures detailed in the project management plan. While the work is being done, the results are fed into Monitoring and Controlling to make sure the project is tracking according to the baseline plan. If there are variances that require changes, the changes are fed into a change control process to determine if the change should be approved. If approved, the change will then be fed back into planning. Ultimately when the work is done (or the project is terminated), the project moves into the closing process group. Common Project Management Process Interaction Within the PMBOK Guide, you will see the presentation of the Process Groups and Knowledge Area as distinct entities. In practice, they are interdependent and overlap over the life cycle of a project. The Process Groups and their associated processes provide a guide to the project manager to determine how to apply the knowledge and skills within them for their project. While there are many ways one can manage a project to a successful completion, as a project manager, you need to determine how to best leverage these elements for your unique project. The application of the Process Groups is an iterative process as shown within the diagram, and in many cases many processes are repeated during the project. We will soon see that each process creates outputs. In most cases, those outputs are inputs to new processes. Initiating Process Group (Page 54) The Initiating Process Group formally starts by defining a new project or project phase through obtaining the necessary authorization to begin the project or phase. In many organizations, there is a formal project selection process with established selection criteria. Once a project is selected, a project charter is created and authorized. Initiating a project also involves the identification of stakeholders so their needs can be incorporated into the project. During the Initiating Process Group, large projects may be divided into separate phases. In that case, the initiating processes are enacted during each phase to validate the decisions made during the original Develop Project Charter and Identify Stakeholders processes. This helps keep the project focused on the original objectives. Planning Process Group (Page 55) It is the Planning Process Group that goes through the project in detail by determining the total scope of the effort, defining and refining the objectives, and developing the course of action required to achieve the stated objectives. The planning processes organize the work through the development of the project management plan and project documents that will be used to carry out actual work. It is during the planning process that you begin to see the likelihood of success of the project in achieving its stated objectives. It is during the execution of the processes within this group that the project team may discover opportunities to save on resources, time, and costs based on the high-level plan and assumptions made during the initiating process. Project planning addresses all the appropriate project management processes and knowledge areas. This means that the project manager and the project team will determine what processes in the PMBOK Guide are appropriate in order to avoid needless activities that are not relevant to the current project. The results of Project Planning are the project plan and supporting project documents that will be used to manage the project. A key point to remember is that planning is iterative. There are constant changes and adjustments that take place and need to be accounted for by the project manager and the team. The plan and supporting documents are the best way to detail, execute, and track those changes. Exam Hint In the real world and for the exam, you want to follow the processes in the planning group and attempt to complete each one as fully as possible. For the exam, the project planning process involves everyone. The project plan and documents are compiled by the project manager with input from stakeholders. Don't forget that you have Enterprise Environmental Factors and Organizational Process Assets. These contain items such as historical records from previous projects, company policies, and other similar information that may also be utilized in planning the project. At this point, since everything is in hand, the project manager may think they are finished planning. If such is the case, they have failed to recognize one very important aspect of project management: Risk. It is critical to consider risk identification, analysis, and response planning into the planning process. Once the risk is in hand, you then need to go back to finalize all the components of the project management plan and documents. The risk management process may uncover necessary changes that could impact the plan and project resources, including the final cost and any impact on schedule or resource allocation. This approach to planning is the most efficient way to proceed. I am sure each of you has experience where people don't understand the importance that planning has for a project. They are of the mindset that is in line with "Fire Ready Aim". They see action as being the primary driver, and they are not concerned with how the action happens. You would not be reading this guide nor wanting to pass the PMP if you had that mindset. As a project manager, you will need to help influence others to see the importance planning has to the success of the project. There is also a sense of balance that must be achieved in that the amount of time spent in the planning process group should be appropriate to the needs of the project. Projects in which the schedule requires a high level of confidence will require more planning time to reduce the possibility of schedule variance to the minimum level. Executing Process Group (Page 56) The Executing Process Group is where all the work is done. Officially it is made up of processes that complete the work defined in the project management plan to meet the project objectives. The focus is now on managing people, following processes, and distributing information, all in accordance with the project management plan and project documents. During the project execution, the project results may require planning changes and updates. These updates can include changes in resource availability, activity durations, and unidentified risks. These changes or variances to the project management plan may result in change requests being created, which if approved, would require updating the project management plan and documents. Exam Hint For the exam, you must assume proper project planning was done before the project work began. You need to get your mind around the critical difference planning makes and assume the project has been properly planned as you answer the questions. It is surprising how few project managers create a realistic plan or get it officially approved. In the real world, and in the world of the exam, that would be a huge mistake. A project manager should be spending time preventing problems, so he or she does not have to spend time solving them. Meetings are an activity that can consume a great deal of the project team's available time. Many project managers do not realize that proper planning can decrease the number of meetings they need, making meetings only a minor activity. You don't want to meet for meeting sake nor do you want to waste the time of a meeting on simple status updates when that can be captured in other more efficient ways. Exam Hint It is in this section that you need to be able to identify what you are not doing, or what you are doing wrong in the real world and leave those practices at the door. You will be penalized in the exam if you follow your poor real world practices. You want to keep the words "work to the project management plan," "be proactive," "manage," and "guide," in mind as a way to summarize executing activities while you take the exam. This frame of mind will ensure you have your PMI hat on when taking the exam. Monitoring and Controlling Process Group (Page 57) The Monitoring and Controlling Process Group comprises processes that focus on measuring the performance of the project to the project management plan and approving change requests, including any recommended corrective and preventive actions and defect repair. The key benefit of this set of processes is that the project performance is tracked and measured in a consistent way to identify any variances from the project management plan. The monitoring gives management and the project team insight into the status and health of the project, and more importantly where added attention may be required. Note: Exam Hint You have a project management plan that is realistic and complete. You have plans already in place for how and where you will measure time, cost, and scope performance against the performance measurement baseline. You are accountable for meeting the performance measurement baseline. You also measure against the metrics you have determined for the project and included in the project management plan to see how the project is performing. You can act to correct any variances that warrant action. Any deviation from the plan should be made up, rather than requesting a change to the project to accommodate them. Submitting a change request should be the very last resort and only used if there is no other way to make up the deviation. Closing Process Group (Page 57) The Closing Process Group consists of the processes needed to finalize all activities in order to formally complete the project, phase, or contractual obligations. This is one of the most ignored parts of the project management process because many project managers incorrectly believe that the project is complete when the final product scope is done. The project is completed only when the closure is completed. The closing processes will include administrative activities such as collecting and finalizing all the paperwork needed to complete the project, and technical work to validate that the product of the project is acceptable. It will also include any work needed to transfer the completed project to those who will use it and return all resources back to the performing organization and /or the customer. In many real world situations, projects never really end; they just seem to fade away. Sometimes the project manager goes on to another project, sometimes the project's priority decreases, or sometimes the work on the project just stops. In any situation, ignoring the closing processes is a real mistake, as the work to be done during closure is extremely important to the performing organization and to the customer. Project Management Knowledge Areas (Page 60) The PMBOK Guide documents 47 processes in the above mentioned five process groups. These 47 processes are further grouped into ten separate Knowledge Areas or project management fields/areas of specialization. The ten project management knowledge areas are: Project Integration Management Project Scope Management Project Time Management Project Cost Management Project Quality Management Project Human Resource Management Project Communications Management Project Risk Management Project Procurement Management Project Stakeholder Management These ten knowledge areas are managed in most projects. However, depending upon the complexity and the need of a project, the project manager can decided which project management processes from these ten knowledge areas must be applied on the project. Exam Hint Within the PMBOK Guide, page 61 is key. The table on this page shows the relationship between each process and its associated Knowledge Area and Process Group. I recommend that you "Memorize" this page or know it very, very well. In many cases, the majority of the exam questions you will see will be related in some way to having knowledge about the Process Groups and Knowledge Areas.
Deep Dive into Project Integration Management Project Integration Management (Page 63) The project manager's main role is to pull all the pieces of a project together into a cohesive whole. Integration Management has characteristics of unification, consolidation, and integrative actions that help to manage a project successfully between the team and the stakeholders. PMBOK Guide Definition Page 63 Project Integration Management includes the processes and activities need to identify, define, combine, unify, and coordinate the various processes and project management activities within the Project Management Process Groups. Many people have trouble with this knowledge area on the exam because they do not currently perform integration management on their project in the real world, or they don't think about integration management from a large project perspective. The project manager is responsible for integration putting all the pieces of the project puzzle together into one cohesive whole that gets the project done faster, cheaper, and with fewer resources, while meeting the project objectives. Think about integration as balancing all the processes in the knowledge areas with each other. These project management processes do not happen independently. In order to add a new resource to a project, it may require cost and schedule changes. In dealing with each situation that comes up on a project, the project manager is integrating the processes of project management. Given that integration management incorporates all the different groups and knowledge areas it is a difficult area of the exam. Always remember that the project management processes are iterative. Any process can be revisited as required Open table as spreadsheet The Integration Management Process Done During Develop Project Charter Initiating Process Group Develop Project Management Plan Planning Process Group Direct and Manage Project Work Executing Process Group Monitor and Control Project Work Monitoring and Controlling Process Group Perform Integrated Change Control Monitoring and Controlling Process Group Close Project or Phase Closing Process Group
Develop Project Charter The first part of integration management is creating a project charter. A project charter establishes a partnership between the performing organization and the requesting organization (or customer, in the case of external projects). The approved project charter formally initiates the project. PMBOK Guide Definition Page 66 Develop Project Charter is the process of developing a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. Don't underestimate the value of the project charter. The project charter is such an important document that a project can't be started without one. This is not always a best practice in the real world. If the project charter is your target for the project and serves as a definition of how success will be measured, then without a project charter, the project and project manager can't be successful. Exam Hint You need to know the following about a Project Charter for the exam: The project charter formally recognizes/authorizes the existence of the project, or establishes the project. It gives the project manager authority to spend money and commit corporate resources. The project charter provides the high-level requirements for the project. It links the project to the ongoing work of the organization. Guide Hint There will be inputs, tools and techniques, and outputs for the processes as we go forward. The guide will highlight and provide additional details on some of the terms as we move forward through the upcoming chapters. The additional details will help to explain the term and its use. Inputs Project Statement of Work (page 68) The project statement of work or SOW is a description of the product or services that are to be delivered by the project. The SOW can be used for both internal project as well as external projects. The SOW typically references the following: Business need o The following are examples of areas that may influence the business need Market demand Technological advances Regulations Legal requirements Product scope description o Documents the characteristics of the product and the relationship to the ongoing services and the tie in to the business need. Strategic plan o Documents the organization's strategic objectives. As a project manager, it is important to make sure that your project is in line with those objectives. Business Case (page 69) The business case documents all the information to help determine if a project is worth the organization's investment in time and resources. A key component within the business case is a financial analysis with a quantifiable justification for the project. The following items are drivers to create a business case: Market demand Organizational Need Customer request Technological advance Legal requirement Ecological impact Social need Agreements, memorandums of understanding (MOUs), service level agreements (SLAs), letters of agreement and letters of intent are all forms of legal documents establishing a contractual engagement between two parties Agreements Enterprise Environmental Factors Organizational Process Assets Do not confuse organizational process assets and enterprise environmental factors as internal and external project factors. Enterprise environmental factors can be internal to the performing organization, e.g., existing human resources and project management information system Tools and Techniques Guide Hint The Tools and Techniques are meant to be a practical application of how the process is derived and leveraged for the good of the project. Whenever the PMBOK Guide mentions "Expert Judgment", do not assume it is referring to an executive decision being taken by the project manager. Expert judgment is usually obtained from the subject matter experts and this may include the project manager Expert Judgment (page 71) Expert judgment is used a great deal, and is based on the expertise from an individual or groups that have special knowledge or training. The following are some examples of sources of expert judgment: o Stakeholders o Consultants o Subject matter experts Facilitation Techniques (page 71) Facilitation techniques are used by project managers collect and define the high level requirements from the project stakeholders. At this stage, facilitation techniques play a key role since the stakeholder influence and project risk is high. The following are examples of some facilitation techniques: o Brainstorming o Conflict resolution o Problem solving o Meeting management Outputs Project Charter (page 71) The project charter is the document that describes the business need, the customer need, and the new product, service, or result the project is intended to satisfy. There is a generic sample below just to show what a Project Charter might include: Project Title and Description Detail out at a high-level what the project is all about and what it is trying to accomplish. Project Manager Assigned and Authority Level Formally communicate the project manager for the effort. Provide details on the authority and decision making capabilities when it comes to budget, schedule, staffing, etc. Business Case Detail why the project is being done. Specify the financial or other justification for the project. Outline high-level objectives that are going to be used to track success for the project. Resources Assigned Provide the details on the size of the team and justification. Outline the names of known resources assigned.
Stakeholders Detail the names and roles of each of the stakeholders affected by the project. Product Description/ Deliverables Detail the high-level description of the product to be delivered. Highlight the key deliverables needed and their timing in order to meet business objectives. Measureable Project Objectives Define the project objectives and their tie in to the business objectives. Define measurable metrics to support and track the project objectives. Approval Requirements Detail the specific requirements that need to be met in order for the project to be approved by all the stakeholders. High-Level Project Risks Determine the known key risks that could impact the project as well as any plans to mitigate them. Develop Project Management Plan (Page 72) PMBOK Guide Definition Page 72 Develop Project Management Plan is the process of defining, preparing, and coordinating all subsidiary plans and integrating them into a comprehensive project management plan. Project managers must plan before they act. Management plans are the strategy for managing the project and the processes in each knowledge area. The concept of management plans is very important to understand. These plans are created for each project management knowledge area. You need to think ahead and document how you will plan this particular project based on the needs of the project, how you will manage the project, and how you will control it. This effort to think through the project in advance should cover all aspects of the project management process. A management plan is a necessity and unique to each project in order to address its particular needs. The creation of management plans is an integral part of the project manager's job. To reiterate to make sure we are all on the same page, a management plan covers how you will: Define Plan Execute Monitor & Control Close Exam Hint Here is a trick to understanding the topic of management plans for the exam. Know that management plans look forward in time, and that there are management plans for each knowledge area: o Scope o Schedule o Cost o Quality o Human Resources o Communications o Risk o Procurement Management o Stakeholder Management There are also the following management plans: Change Management Plan Configuration Management Plan Requirements Management Plan Process Management Plan Inputs Project Charter "Outputs from Other Processes" is an input to the Develop Project Management Plan process. This refers to the subsidiary project management plans developed during planning processes across each knowledge area Outputs from Other Processes (page 74) These are the management plans from the other planning processes described above Enterprise Environmental Factors that can influence, include but are not limited to: Governmental and/or industry standards Project management information systems Organizational structure and culture Infrastructure Personnel administration Organizational Process Assets (OPA) that can influence, include but are not limited to: Standardized guidelines Project management plan template Change control procedures Past project files Historical information and lessons learned Configuration management knowledge base Tools and Techniques Expert Judgment Make sure you are taking the unique aspects of your project into consideration including the project needs, resources and skills required, documentation and configuration, and much more. Facilitation Skills Outputs Project Management Plan Integrates and consolidates all subsidiary management plans & baselines. Project management plans can be either summary level or detailed, depending on the level of information that you and the project team have available to you at the time. Baselines Baselines are established when the project plan has been approved. Once the baseline is established, the key management plans as noted below can only be changed via a change request and approval through Perform Integrated Change Control process. Schedule Cost Scope The project manager must be able to clearly, completely, and realistically define the scope, schedule, and cost budget to derive baselines. The project performance and the performance of the project manager will be measured against those baselines. The project manager needs to be aware of any deviations from the baselines while the work is being done. If a deviation is discovered, the project manager needs to see if adjustments can be made to keep the project on track while dealing with the problem. If the adjustment is not sufficient to correct the variance, a formal change request to the baseline might be necessary.
Direct and Manage Project Work(Page 79) This is the integration part of the executing process group. In Direct and Manage Project Work, the project manager integrates all the executing processes into one coordinated effort to accomplish the project management plan and product deliverables. In addition, it involves requesting changes and completing the work accompanying approved change requests. Exam Hint Please note the confusing terms. If the exam talks about Direct and Manage Project Work, it is NOT talking about the entire executing process group. Instead, it is just talking about the integration piece of executing. The PMBOK Guide does not say too much about the Direct and Mange Project Work process, but this and the Monitor and Control Project Work process make up the majority of the project work. You want to make sure you remember that the Direct and Manage Project Work process involves managing people, doing the work, and implementing approved changes. The following are examples of possible Direct and Manage Project Work activities: Perform activities designed to accomplish the project requirements Create the project deliverables Staff, train, and manage team members Obtain, manage, and use resources assigned to the project, including materials, tools, equipment Implement the planned methods and standards Establish and manage the internal and external project communication channels Generate project data Issue change requests and implement approved changes Manage risks and risk responses Manage procurement Collect and document lessons learned During the executing of any project there are going to be changes that materialize throughout the lifecycle of the project. The only time that changes can be executed is when they have been approved. There are different types of approved changes to be aware of for the exam. Always remember that a corrective action fixes some of project work to bring it back in alignment the project management plan. On the other hand, a preventive action ensures that a mistake will not happen or be repeated in the future Corrective Action o A corrective action is any action taken to bring project performance in line with the project management plan. o Any corrective actions that would change the project management plan, baselines, policies or procedures, charter, contract, or scope of work require formal change requests, to be reviewed and approved or rejected as part of the Perform Integrated Change Control process. Preventative action o Preventive action deals with anticipated or possible deviations from the performance measurement baseline. o A preventive action ensures the future project performance is in line with the project management plan. Defect repair o This is when quality issues or defects have been identified and need to be corrected in order for them to meet the defined requirement standards. Each type has a different impact on a project and each plays an important role in the project success. Inputs Project Management Plan Approved Change Requests (page 82) The Integrated Change Control Process will facilitate which changes are approved and which are not. The approved changes can then be assessed in terms of the impact they will have on the project. Enterprise Environmental Factors Enterprise environmental factors which can influence Direct and Manage Project Work can include, but are not limited to: o Organizational and customer culture and structure o Infrastructure o Personnel administration o Risk tolerance of stakeholders o Project management information systems if available Organizational Process Assets Organizational process assets that may influence the Direct and Manage Project Execution can include, but are not limited to: o Work instructions and guidelines o Requirements defining communications media, record retention an security o Defect management procedures o Database of process measurements o Prior project files o Historical records regarding defect management Tools and Techniques Expert Judgment Expert judgment may be available from various areas in the organization. Some of these areas include but are not limited to: o Other organizational units o Internal and external consultants o Stakeholders including sponsors and customers o Technical and professional associations Project Management Information System (PMIS) (page 84) This is considered to be part of the Enterprise Environmental Factors. It is an automated tool such as a configuration management system, scheduling software, or other online tool that may be used to help the project execution be more efficient. Meetings Project activities and issues are discussed during meetings. Key objectives of a typical meeting are: o Information exchange o Brainstorming, option analysis, design review o Decision making Outputs Deliverables (page 84) We generally have a good idea of what a deliverable means, but it is important to make sure there is no doubt, especially for the exam. First the final deliverable needs to be approved. A deliverable is a verifiable result that can come in the form of a product or service. Work Performance Data This can take many forms. As project managers, we capture project data in status reports, budget reports, and progress per the plan. Change Requests Corrective action Preventative action Defect repair Updates o This is an added component to the above three that we covered previously. Every project's approved changes need to be incorporated into the controlled documentation created by the project. These updates are made to the control documents to ensure they are kept up to date. Project Management Plan Updates The following are examples of the different management plans that would be updated during the life cycle of the project to reflect the progress in each area: Scope management plan Requirements management plan Schedule management plan Cost management plan Quality management plan Human resource plan Communication management plan Risk management plan Procurement management plan Stakeholder management plan Project baseline Project Document Updates The different types of project documents that can be updated include but are not limited to: Requirements documents Project logs (issue, assumptions, etc) Risk register Stakeholder register Monitor and Control Project Work (Page 86) Monitoring and controlling project work is a control function that is done from project initiating through project closing. When you think of a large project, it makes sense that the project manager would need to monitor and control how the processes are going, because he or she would not typically be personally involved in performing all the project functions. The results of Monitor and Control Project Work are change requests, work performance reports, as well as updates to the project management plan and documents. PMBOK Guide Definition Page 86 Monitor and Control Project Work is the process of tracking, reviewing, and reporting the progress to meet the performance objectives defined in the project management plan. Monitor and Control Project Work is an integration function because the project manager must balance the demands of the different knowledge areas to control the project. This process also involves monitoring any other performance measures that the project manager has created for the project and distributing that information to stakeholders as needed. Exam Hint Keep in mind that a project must be controlled. If the exam asks what you should do if a work activity on the project takes longer than estimated, the answer is to take corrective action to make up for the schedule variance. Such action always keeps the project on or close to schedule and allows the project manager to feel comfortable that the scope will be completed according to the budget and schedule agreed to. This is the value of controlling the project. The Monitor and Control Project Work Process is Concerned with: Comparing actual project performance against project plan Assessing work performance to determine if corrective or preventive actions are required Identifying new risks and monitoring existing risks to make sure the risks are identified Maintaining accurate and timely information concerning the project's products and associated documentation Providing the information necessary for status reports, progress measurements, and forecasting Providing forecasts to update current cost and schedule information Monitoring implementation of approved changes Inputs Project Management Plan Schedule Forecasts (page 89) Schedule forecasts are obtained after analyzing the project progress against the schedule baseline. Earned Value Management Techniques (EVM) are used to measure the schedule performance. We will discuss these techniques in detail later in the guide. Cost Forecasts The cost forecasts are obtained after analyzing the project's spending against the cost performance baseline. Earned Value Measurements such as Earned Value (EV), Cost Variance (CV), Estimate to Complete (ETC), and Cost Performance Index (CPI) are some of the measures used to predict future costs. We will discuss these topics in a greater detail later in the guide. Validated Changes Approved change request, that result from the Perform Integrated Change Control process and implemented during the Direct and Manage Project Work process, require validation to ensure that the change was appropriately implemented. Work Performance Information The work performance information is obtained by analyzing the work performance data collected from various controlling processes. The project management team transforms the work performance data into work performance information. The work performance information helps the project management team take well informed decisions. Enterprise Environmental Factors Enterprise Environmental Factors that can influence this process include, but are not limited to: Governmental or industry standards Company work authorization system Stakeholder risk tolerance Project Management Information systems Organizational Process Assets Organizational Process Assets that can influence the process include, but are not limited to: Organization communication requirements Financial controls procedures Issue and defect management procedures Risk control procedures Process measurement database Lessons learned database Tools and Techniques Expert Judgment The project team may rely on expert judgment to interpret the information provided by the process. You should remember the names of the analytical techniques mentioned as the tools and techniques of the Monitor and Control Project Work process. While these tools and techniques may not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with them via external sources (online search, etc) Analytical Techniques The project management team can utilize various analytical techniques to forecast potential outcomes on possible variations or environment factors and their interrelationships. Some of the examples of such techniques are: Regression analysis Grouping methods Root cause analysis Simulations Trend analysis Earned value management Variance analysis Project Management Information System Meetings Outputs Change Requests Corrective action Preventative action Defect repair Work performance reports are not the same as work performance information. The work performance report is a physical or electronic representation of the work performance information. The work performance information is the processed form of the work performance data Work Performance Reports Work performance reports are the physical or electronic representation of work performance information obtained by transforming the work performance data. These reports play a critical role in providing key project information to the project stakeholders and enable them to take well-informed decisions. Project Management Plan Update examples include, but are not limited to: Schedule management plan Cost management plan Quality management plan Scope baseline Schedule baseline Cost performance baseline Project Document Update examples include, but are not limited to: Forecasts Performance reports Issue log
Perform Integrated Change Control (Page 94) During the executing, and monitoring and controlling processes, changes may be requested that affect any part of the project. These changes are accepted or rejected and handled in the Perform Integrated Change Control process. A key aspect of integrated change control is looking at the impact the change may have on each of the knowledge areas and the resulting impact a scope change may have on quality, risk, time, costs, human resource, etc. PMBOK Guide Definition Page 94 Perform Integrated Change Control is the process of reviewing all change requests, approving changes and managing changes to the deliverables, organizational process assets, project documents, and the project management plan; and communicating their disposition. Exam Hint Integrated change control is an important topic to know. Nearly 10% of the questions on the exam can touch on this one topic from different angles. As we have said, every project has changes. Integrated Change Control process starts with a review of those changes. In order to evaluate the impact of change, it is necessary to have: A realistic project management plan to measure against A complete product scope and project scope In the event that Integrated Change Control is a new concept to you or one that your organization does not follow, the following is a generic look from a high-level as well as detailed level on the steps you need to take from start to finish of the process: High-level Process for Making Changes Evaluate the impact o Evaluate the impact of the change to the project o Consider the project constraints against the change Create options o This can include cutting other activities, crashing, fast tracking, etc., as described in Time Management. Get the change request approved internally Get customer buy-in Now that you know the high-level process, let's take a look at the more detailed process for making changes.
Detailed Process for Making Changes Prevent/Remove the root cause of changes o The project manager should not just focus on managing changes, but proactively eliminate the need for changes. Identify change o Changes can come from the project manager, as a result of measuring against the project performance measures, or from the sponsor, the team, management, the customer, or other stakeholders. o The project manager should actively be looking for changes from all the different sources, because discovering a change early will decrease the impact of the change. Assess the impact of the change o If it is a scope change, how will it affect the rest of the scope of the project? If it is a time change, how will it affect the rest of the schedule for the project? Create a change request o Changes can be made to the product scope, contract, charter, or a host of other areas of the project. The process of making a change should follow the change management plan. Perform integrated change control o Assess the change o Look for options Options include actions to decrease threats further; increase opportunities; or compress the schedule. Change is approved or rejected Update the status of the change in the change control system Adjust the project management plan, documents, and baselines if approved. Manage stakeholders' expectations by communicating the change to the stakeholders affected by the change Manage the project to the revised project management plan and project documents. Changes can have both a positive as well as negative effects on a project. Depending on the timing of the change, the later in the project life cycle the higher the probability is for the change to be more expensive and disrupt the project. Generally the project manager should do their best to prevent the root cause of the need for changes or do their best to mitigate the impact. In order to help you as a project manager you want to make sure you to do the following: Work to obtain final requirements as soon as possible Spend enough time in risk management to comprehensively identify the project's risks Come up with time and costs reserves Have a process in place to control changes Follow the process to control changes Have a process and templates in place for creating change requests Have clear roles and responsibilities for approving changes Reevaluate the business case if the number of changes becomes excessive Consider terminating a project that has excessive changes and starting a new project with a more complete set of requirements Allow only approved changes to be added to the project baselines Update the project documents accordingly. Change in any project can produce an administrative nightmare in terms of being able to keep up with the documentation necessary in order to keep it in sync with the changes. In many organizations there are more formal tools in place such as a Configuration Management System. A Configuration Management System with integrated change control offers an effective and efficient method for managing change within a project. Project wide application of the configuration management system including change control processes, accomplishes three main objectives: o Establishes a method for consistently identifying and requesting changes to established baselines while assessing the value of effectiveness of those changes o Provides opportunities for validating and improving the project by evaluating the impact of each change o Provides a communication mechanism the project management team can use to communicate approved and rejected changes to the stakeholders Configuration Management activities included in Integrated Change Control process are as follows: o Configuration identification o Configuration status accounting o Configuration verification and audit Inputs Project Management Plan Work Performance Reports Change Requests Enterprise Environmental Factors Organizational Process Assets that can influence this process include, but are not limited to: Change control procedures Procedures for approving and issues change authorizations Process measurement database Project files Configuration management knowledge base
Tools and Techniques Expert Judgment Stakeholders may be asked to provide expertise and/or sit on the change control board. Meetings If a change control board is created, its responsibility will include meeting to review the change requests to either approve or reject them. Change Control Board (Page 96) Depending on the project manager's level of authority, their role might be to facilitate decisions about some changes, rather than actually make the decisions. For these reasons, many projects have change control boards. The board is responsible for reviewing and analyzing change requests. It then approves or rejects the changes. The board may include the project manager, customer, experts, the sponsor, and others. Exam Hint For the exam, assume that all projects have change control boards. Change Control Tools Various manual and automated tools can be used during this process in order to facilitate the configuration and change management. Such tools handle change requests and track the subsequent decisions and implementation. Outputs Approved Change Requests Change Log Project Management Plan Updates Project Document Updates Close Project or Phase (Page 100) Many high-level concepts of closing have already been touched on in the Project Management Process. What remains is to realize that this process finalizes all activities across all process groups to formally close out the project or project phase. It is critical to get formal acceptance of the project, issuing a final report that shows that you have been successful, issuing the final lessons learned, and archiving all the project records. Exam Hint Be sure to remember for the exam that as project manager you always close out a project, no matter the circumstances under which it stops, is terminated, or is completed. Here is a quick reminder of the closing activities: Confirm work is done to requirements Complete procurement closure Gain formal acceptance of the product Complete final performance reporting Index and archive records Update lessons learned knowledge base Hand off completed product Release resources Inputs Project Management Plan Accepted Deliverables Organizational Process Assets that can influence this process include, but are not limited to: Project or phase closure guidelines or requirements Historical information and lessons learned knowledge base Tools and Techniques Expert Judgment Analytical Techniques Meetings Outputs Final Product, Service, or Result Transition This refers to the transitions from the project to the ongoing servicing of the product or service once the project is approved and completed. Organization Process Assets that can influence this process include, but are not limited to: Project files Project or phase closure documents Historical information With the completed project, all the materials and documents that were created during the life cycle of the project need to be gathered and officially stored. This way other project managers and project teams can leverage this information to help them with their projects. Other Key Concepts Project Selection There are various ways to select which project to initiate from among the many possible choices. The projects that were considered before a particular project was chosen, as well as the process used to select the project, may have some influence how the project is planned and managed. Know the following two categories of project selection methods and their subsets for the exam: 1. Benefit measurement method (Comparative Approach) a. Peer Review b. Scoring Models c. Economic models more details below 2. Constrained optimization methods (Mathematical approach) a. Linear programming b. Integer programming c. Dynamic programming d. Multi-objective programming Economic Models from Project Selection The following are economic models for selecting a project: Present Value Net Present Value Internal Rate of Return Payback Period Benefit- cost ration
Present Value Historically, Present Value has only been mentioned once or twice on the exam. You will not have to calculate it, nor know the formula. You will just need to understand the concept behind it. Present value means the value today of future cash flow and is defined by the formula: PV = FV (1+r)n Open table as spreadsheet FV = future value R = interest rate N = number of time periods Watch out! PV also stands for planned value (described in the Cost Management section). You want to avoid confusing these terms. Net Present Value (NPV) You will not have to calculate NPV for the exam. You will need to know that it is the present value of the total benefits (income or revenue) minus the costs over many time periods. NPV is useful because it allows for a comparison of many projects to select the best project to initiate. Generally, if the NPV is positive, the investment is a good choice unless an even better investment opportunity exists. The project with the greatest NPV is selected. Internal Rate of Return (IRR) IRR does get confusing when you give it a formal definition such as: The rate (as in interest rate) at which the project inflows (revenues) and project outflows (costs) are equal. Calculating IRR is complex and requires the aid of a computer. You will not have to perform and IRR calculations on the exam. You will need to understand the definition and be able to answer questions related to the following: Payback Period This term refers to the number of time periods it takes to recover you investment in the project before you can start accumulating profits. Benefit Cost Ratio This term is one of many that is not in the PMBOK Guide, but may be on the exam. Benefit cost ratio relates to costing projects and determining what work should be done. This ratio compares the benefits to the costs of different options. A benefit costs ratio of greater than 1 means the benefits are greater than the costs. A benefit cost ratio of less than 1 means the costs are greater than the benefits. A benefit cost ratio of 1 means the costs and the benefits are the same. Benefit cost ratios can be expressed as decimals or ratios. Additional Accounting Terms: Economic Value Added (EVA) In terms of project selection, this concept is concerned with whether the project returns to the company more value that it costs. (Note that this is a different concept than earned value analysis, which can also have the acronym of EVA. Earned value, discussed in the Cost Management section, is frequently mentioned on the exam, whereas economic value added should rarely appear in questions or choices.) For the exam, simply remember that economic value added is the amount of added value the project produces for the company's shareholders above the costs of financing the project. Opportunity Costs This term refers to the opportunity lost by selecting one project over another. Sunk Costs Sunk costs are expended costs. Be aware that accounting standards say that sunk costs should not be considered when deciding whether to continue with a troubled project. Law of Diminishing Returns The law states that after a certain point, adding more input (e.g., resources) will not produce a proportional increase in productivity. Working Capital This term refers to current assets minus current liabilities for an organization, or the amount of money the company has available to invest, including investment in projects. Depreciation Large assets purchased by a company lose value over time. Accounting standards call this depreciation. Several methods are used to account for depreciation. 1. Straight Line Depreciation the same amount of depreciation is taken each year. 2. Accelerated Depreciation For many years, the exam has not asked detailed questions about this topic. For the exam you need to know the following: a. There are two forms of accelerated depreciation. You do not have to understand what these two forms mean or do any calculations. i. Double Declining Balance ii. Sum of Years Digits b. Accelerated depreciation depreciates faster than straight line. Project Integration Management Cheat Sheet
Open table as spreadsheet Process Descripti on Group Input Tools & Technique Output Develop Project Charter Formal authoriza tion of the project or phase Initiatin g Project SOW Business case Agreeme nts EEF OPA Expert judgment Facilitati on techniqu es Project Charter Develop Manage ment Plan Documen t actions to define, prepare, integrate, and coordinat e subsidiar y plans into the PMP Plannin g Project charter Outputs from other processes EEF OPA Expert judgment Facilitati on techniqu es Project managem ent plan Direct & Manage Project Work Execute the work defined in the project managem ent plan to achieve requirem ents in scope statement . Executi ng Project managem ent plan Approved changed requests EEF OPA Expert judgment PMIS Meetings Deliverab les Work performan ce data Change requests Updates project plan; docs Monitor & Monitor and Controll ing Project managem Expert judgment Change requests Process Descripti on Group Input Tools & Technique Output Control Work control the processes to meet the performa nce objective s. ent plan Schedule forecasts Cost forecasts Validated changes Work performa nce informati on EEF OPA Analytic al techniqu es PMIS Meetings Work performan ce reports Updates: project managem ent plan; document s Perform Integrate d Change Control Reviewin g change requests, approvin g change requests and controllin g changes. Controll ing Project managem ent plan Work performa nce reports Change requests EEF OPA Expert judgment Meetings Approved change requests Change log Updates: project plan; document s Close Project or Phase Finalize all activities to formally close the project or phase. Closing Project managem ent plan Accepted deliverabl es OPA Expert judgment Analytic al techniqu es Meetings Final product/se rvice Updates: OPA
Deep Dive into Project Scope Management Project scope is the work that is required to be completed. Always remember; scope = work PMBOK Guide Definition Page 105 Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. Exam Hint How the PMBOK Guide outlines the best practice for scope management and how you manage it in the real world might be different. There are a lot of acceptable ways to manage scope. For the exam, you want to be in the mindset of what the PMBOK Guide describes as the scope management process, which is: Make sure all requirements support the business need of the project as described in the charter. Sort through and balance the needs of the stakeholders to determine product scope and project scope. Create a WBS (Work Breakdown Structure) to break the scope down to small, more manageable pieces. Validate that the scope of work planned is actually being done. Measure scope performance, and adjust as needed. The following are the more formal scope management processes: Open table as spreadsheet The Scope Management Process Done During Plan Scope Management Planning Process Group Collect Requirements Planning Process Group Define Scope Planning Process Group Create WBS Planning Process Group Validate Scope Monitoring and Controlling Process Group Control Scope Monitoring and Controlling Process Group
Key Terms to be familiar with: Product Scope (Page 105) Product scope are the features and functions that define the product or service Product scope may be supplied as a result of a previous project to determine requirements, or it may be created as part of the project. Project Scope (Page 105) This is the work the project will do to deliver the product scope or product of the project. The work includes the planning, coordination, and management activities (such as meetings and reports) that ensure the product scope is achieved. Scope management involves managing both product scope and project scope. Plan Scope Management PMBOK Guide Definition Page 107 Plan Scope Management is the process of creating a scope management plan that documents how the project scope will be defined, validated, and controlled. The scope management plan is a component of the project management plan. It contains specifics about how the project scope will be defined, developed, monitored, controlled and validated. The completion of project scope is measured against the scope management plan. The scope management plan must be well integrated with other knowledge area management plans to ensure the successful delivery of the product scope. Exam Hint Scope creep refers to uncontrolled changes to the project scope during a project. The first step to prevent scope creep is the definition of a well- structured project scope management plan. Inputs Project Management Plan The approved subsidiary plans of the project management plan are used to create the scope management plan. Please note that neither the scope management plan nor the other management plans are developed in isolation. These processes are iterative in nature and the Develop Project Management plan from the Integration Management Knowledge Area coordinates this effort. Project Charter The project charter provides the initial inputs to this process. The high level project and product scope are documented in the project charter. This can serve as the primarily input to this project during the first few iterations when none of the other knowledge area management plan have been developed. Enterprise Environmental Factors The enterprise environmental factors that can influence the development of the scope management plan include, but are not limited to: Organization's culture Infrastructure Personnel administration Marketplace conditions Organizational Process Assets The organizational process assets that influence the Plan Scope Management process include, but are not limited to: Organizational policies and procedures Historical information and lessons learned knowledge base Tools and Techniques Expert Judgment Meetings Outputs Always remember that the scope management plan doesn't contain the project scope. The scope management plan is a project plan that tells how scope will be identified, managed and controlled Scope Management Plan The scope management plan is a subsidiary plan of the overall project management plan. It is the major input to the Develop Project Management Plan process. Typical components of a scope management plan include: Project scope statement development procedures Work Breakdown Structure (WBS) development procedures WBS maintenance and approval methods Formal project deliverables acceptance methods and criteria Scope change control procedures Requirements Management Plan The requirements management plan is also a component of the project management plan and supports the project scope management plan. It documents how the project requirements will be collected, analyzed, documented, and managed. Typical components of a requirements management plan include: Project requirements collection procedures Procedures regarding requirements activities planning, tracking and reporting Configuration management activities Requirements prioritization process Requirements traceability structure Collect Requirements (Page 110) The Collect Requirements process looks for all requirements as defined by the stakeholders that are necessary to meet the project objectives. Work should not be included in a project just because someone wants it. Instead, the requirements should relate to solving problems or achieving objectives. The high-level project and product requirements should have already been defined in the project charter, giving you and your project a leg up. The Collect Requirements process involves gathering more specific input on those requirements from all stakeholders. This process is critical to project success, as missed requirements could mean significant changes and conflict throughout the remainder of the project and could possibly result in project failure. The first step in collecting requirements to is to know who the stakeholders are. This is not an easy task since large project may contain a vast number of possible stakeholders. As a project manager, collecting requirements from such a large number of stakeholder may require using more than just one method, because missing a needed requirement can be expensive and may result in other problems later. The techniques described next can help in this process. The project manager needs to choose the techniques that are most appropriate for the project and the stakeholders they have identified. Many of these techniques can also be used in the risk management process to identify risks. Inputs Scope Management Plan Requirements Management Plan Stakeholder Management Plan This provides stakeholder communication requirements and the level of stakeholder engagement. This helps in assessing the level of stakeholder participation in requirements activities. Project Charter Stakeholder Register This is used to identify and track the stakeholder information that is collected. There are many tools and techniques associated with the Collect Requirements process. The PMBOK Guide does not discuss these tools and techniques in great detail. While these tools and techniques may not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with them via external sources (online search, etc.) Tools and Techniques Interviews This technique may also be called "expert interviewing" on the exam. The team or project manager interviews project stakeholders to identify their requirements for a specific element of the product or project work, or for the overall project. These interviews can take place between individuals or in group settings. Interviews can also be conducted via email, phone calls, letter, or other methods. Facilitated Workshops Facilitated workshops bring together stakeholders with different perspectives to talk about the product and ultimately arrive at consensus regarding the requirements. A key benefit with all the players in the room is that issue resolution can be done more quickly than through other techniques. Group Creativity Techniques Brainstorming o Use to generate and collect multiple ideas related to the requirements. Nominal Group Technique o This technique is usually, but not always, done during the same meeting as brainstorming. The meeting participants rank the most useful ideas generated during the brainstorming session. The Delphi Technique o With this technique, a request for information is sent to experts who participate anonymously, their responses are complied, and the results are sent back to them for further review until consensus is reached. Idea/Mind Mapping o A mind map is a diagram of ideas or notes to help generate, classify, or record information. It looks like several trees radiating out of a central core word. Colors, pictures, and notations can be used to make the diagram more readable. Affinity Diagram o In this technique, the ideas generated from any other requirements gathering techniques are sorted into groups by similarities. Each group of requirements is then given a title. This sorting makes it easier to see additional scope (or risks) that have not been identified. Group Decision Making Techniques Soliciting input on requirements from all stakeholders may result in too many or conflicting requirements. These need to be reviewed, analyzed, accepted or rejected, and prioritized before recording them in project documents. There are different ways to make decisions in a group setting such as: Unanimity Majority Plurality Dictatorship Questionnaire and Surveys Questionnaires or surveys are typically used for large groups. These tools present questions for the respondents that can help identify their requirements. Observations This technique involves job shadowing, allowing an opportunity to watch a potential user of the product at work, and through hands on experience, identify requirements. Prototypes A prototype is a model of the proposed product. In this technique, the prototype is presented to stakeholders for feedback. The prototype may be updated multiple times to incorporate the feedback until the requirements have been solidified for the product. Benchmarking Benchmarking helps the requirements collection and definition process by analyzing comparable organizations to identify best practices, new ideas, and standards for performance measurements. Context Diagrams These diagrams visually display the product scope by showing business systems and their interactions. They show the inputs and outputs of these business systems and their sources. Document Analysis Analyzing existing documentation elicit requirements. There are a wide range of documents that may be reviewed and analyzed including: Business plans Marketing literature Agreements Request for proposals Process flows Logical data models Business rules Software documentation Use cases Problem/issue logs Policies and procedures Laws, codes or ordinances etc. Outputs Requirements Documentation After the requirements have been collected and finalized, they are documented. This documentation helps to make sure the requirements are clear and unambiguous. You will have a lot of requirements that could easily be misunderstood. Therefore, one of the important aspects is to make sure the stakeholders are in agreement with the requirements. Components of requirements documentation can include, but is not limited to: Business need or opportunity Business and project objectives for traceability Functional requirements describing business processes Non-functional requirements Quality requirements Acceptance criteria Impacts to other entities Requirements assumptions and constraints Requirements Traceability Matrix There are many instances of a requirement being lost in the details, and the customer receiving one thing when they expected another. The requirements traceability matrix helps track requirements over the life of the project to ensure they are accomplished. The matrix usually takes the form of a table containing information such as the source of each requirement and its status. The concept is similar to risk or issue management, making sure there is an owner who is accountable for managing and controlling the work. The following are possible data points that requirements can be traced against: Business needs, opportunities, goals, objectives Project objectives Scope/WBS deliverables Product design Product development Test strategy and test scenarios High-level requirements to more detailed
Define Scope (Page 120) The Define Scope process is primarily concerned with what is and is not included in the project and its deliverables. This process uses the scope management plan, requirements documentation created in the Collect Requirements process, the project charter, the organizational process assets, and any information about the project risks, assumptions, and constraints to define the project and product scope. It is imperative to remember that planning is iterative. When the requirements have been determined, the project manager follows the project management process to determine the schedule and budget. If the budget and/or schedule do not meet with the sponsor's approval, the project manager needs to balance the requirements against all other constraints. The iteration process involves coming up with options for meeting the scope, time, or cost objectives of the project and presenting those options to management for a decision. The result is a realistic schedule and budget that can achieve the project's scope. Exam Hint The Define Scope process is important on the exam for the following reasons: Project managers complain about unrealistic schedule and do not realize the unrealistic schedules are their fault because they have not followed the iterations process described previously. Project managers spend a large portion of their time, while the work is being done, looking for options to adjust the project and still meet the project schedule and budget. Therefore, all the tools used in planning to come up with a realistic schedule and budget, such as negotiating scope and fast tracking, are also major activities while the work is being done. Inputs Scope management plan Project Charter Requirements Documentation Organizational Process Assets that can influence this process include, but are not limited to: Policies, procedures and templates Project files from previous projects Lessons learned
Tools and Techniques Expert Judgment Product Analysis The purpose of product analysis is to analyze the objectives and description of the product stated by the customer or sponsor and turn them into tangible deliverables. The analysis may include a detailed breakdown of the product, systems analysis, requirements analysis, and more. Alternatives Generation Important to be able to generate ideas on different approaches to completing the requirements. Facilitated Workshops Outputs Project Scope Statement (page 123) The primary result, or output, of the Define Scope process is the project scope statement. PMBOK Guide Definition Page 123 The project scope statement is the description of the project scope, major deliverables, assumptions, and constraints. The project scope statement documents the entire scope, including project and product scope. It describes, in detail, the project's deliverables and the work required to create those deliverables. The creation of the project scope statement can take a lot of time and involve the expert judgment of many stakeholders and even experts from outside the organization. While defining requirements and defining scope, the project manager will identify areas where people want scope but it was not approved to be included in the project. The project manager should also clarify areas where the work could easily be misunderstood. It is a waste of project time and money to create scope that is not needed or approved, yet it is easy for this to occur. The project manager should also consider different approaches to performing the work and incorporating the needs of stakeholders into the project. The project scope statement, along with the WBS and WBS dictionary, comprise the scope baseline, which is part of the project management plan. The scope statement may reference the following other documents: Product scope description Product acceptance criteria Project deliverables Project exclusions Project constraints Project assumptions Project document updates can include, but are not limited to: Stakeholder register Requirements documentation Requirements traceability matrix The Create WBS process is the process that defines the scope of the project. The scope baseline is the output of this process Create WBS Although the WBS may look like a corporate organizational chart, it is not. It is a cornerstone to building a realistic project plan. PMBOK Guide Definition Page 125 Create WBS is the process of subdividing project deliverables and project work into smaller, more manageable components. This is a top-down effort to decompose the deliverables, and the work required to produce them, into smaller pieces called work packages. Note that generally each work package consists of nouns things, rather than actions. The work package can then be scheduled, estimated, monitored and controlled. A WBS is deliverable-oriented. This does not mean that only customer deliverables are included in the WBS. The complete scope of the project, including product scope, project scope, and project management efforts, are included. The total scope of the project is included in the WBS. Watch out for the word "task." In the real world, it means one thing, but for the exam that level of detailed information is called "activity." Understand that there are a few rules that would be good to know for creating a WBS, especially for those that don't have a great deal of experience with WBS. There is more than one way to create a WBS, and two WBS documents for the same project, each created by a different person, will look different. That's acceptable, provided they comply with the following rules. The WBS is created with the help of the team. The first level is completed before the project is broken down further. Each level of the WBS is a smaller piece of the level above. The entire project is included in each of the highest levels of the WBSs. Eventually some levels will be broken down further than others. The WBS includes only deliverables that are really needed. Deliverables not in the WBS are not part of the project. Work packages are reached when they include deliverables that: Can be realistically and confidently estimated Can be completed quickly Can be completed without interruption (without the need for more information) May be outsourced or contracted out The work packages in the WBS are divided further into scheduled activities, or activities for short, with the help of the WBS dictionary. Note that dividing the work package into activities is part of the time management process of Define Activities. Exam Hint There can be many references to the WBS on the exam. In short, remember the following. A WBS: Is a graphical picture of the hierarchy of the project Identifies all the deliverables to be completed if it is not in the WBS, it is not part of the project Is the foundation upon which the project is built Is VERY important Should exist for every project Forces you to think through all aspects of the project Can be reused for other projects Does NOT show dependencies Inputs Scope management plan Project scope statement Requirements documentation Enterprise environmental factors that can influence this process include industry-specific WBS standards. Organizational process assets that can influence this process include, but are not limited to: Policies, procedures and templates Project files from previous projects Lessons learned
Tools & Techniques Decomposition (page 128) Decomposition is the exercise of subdividing the project deliverables into smaller, more manageable components on the way to getting to the work package level. The following activities are involved in decomposition: o Identifying and analyzing o Organizing the WBS o Decomposing WBS o Validating that decomposition has gone to the appropriate level WBS structure creation o There are several forms that the structure of the WBS can take such as: Use the phases of the project as a guide for first level of WBS Use the major deliverables as the guide for first level Use subprojects that are independent and complete packages of work that could be outsourced if needed. Expert Judgment Outputs Scope baseline The scope baseline is the approved version of a scope statement, work breakdown structure (WBS), and its associated WBS dictionary. Project scope statement WBS WBS dictionary (page 132) The WBS dictionary provides a description of the work to be done for each WBS work package and helps make sure the resulting work matches what is needed. It can be used as part of the work authorization system to inform team members of when their work package is going to start, schedule milestones, and other information. The WBS dictionary helps the project by putting boundaries on what is included in the work package. Information in the WBS dictionary may include: o Code of account identifier o Description of work o Assumptions and constraints o Responsible organization o Schedule milestones o Associated schedule activities o Resources required o Cost estimates o Quality requirements o Acceptance criteria o Technical references o Agreement information Project Documents Updates Requirements documentation might get updated during this process. The Validate Scope process should be performed for every project deliverable, or a group of deliverables, being presented to the customer or sponsor Validate Scope The Validate Scope process is very time intensive because the project team will be dealing with the clients. PMBOK Guide Definition Page 133 Validate Scope is the process of formalizing acceptance of the completed project deliverables. During this process you are reviewing the deliverables with the client to ensure that they are completed to their satisfaction. Another aspect of the Validate Scope process is it can be done at the end of each project phase in the project life cycle (to verify the phase deliverables along the way) and during the monitoring and controlling process group in the project management process. You can validate scope with the customer multiple times in one project. The last area that we'll cover here is how Validate Scope relates to Control Quality. Although Control Quality is generally done first (to make sure that work meets the quality requirements before meeting with the customer), the two processes are very similar in that both involve checking for the correctness of work. The difference is the focus of the effort and who is doing the checking. In Control Quality, the quality control department checks to see if the quality requirements specified for the deliverables are met and makes sure the work is correct. In Validate Scope, the customer checks and either accepts or rejects the deliverables. Inputs Project Management Plan Project scope statement WBS WBS Dictionary Requirements documentation Requirements traceability matrix Verified deliverables Work performance data Tools and Techniques Inspection (Page 135) This includes validation activities involving measuring, examining, and verifying that the deliverables are completed to the specification of the requirements. The inspections can take on different forms such as: o Audits o Product reviews o Walkthroughs Group decision-making techniques Outputs Accepted Deliverables (page 135) This must include a formal signoff. The formal documentation is then used in the Close Project or Phase process. Change Requests Work Performance Information Project Document Updates
Control Scope The Control Scope process involves measuring project and product scope performance and managing scope baseline changes. This control ensures that any approved changes are accounted for and managed into the scope successfully. It also ensures that any recommendations for change go through the formal Perform Integrated Change Control process. As a project manager, in order to control scope, you need to: 1. Have work completed with a clear definition of what the scope on the project is, which is captured in the project scope baselines from the project management plan. 2. Be aware of the original requirements recorded in the requirements documentation and the requirements traceability matrix. 3. Measure scope performance against the scope baseline to see the magnitude of any variances (variance analysis) and decide if corrective action or preventative action is required. 4. Determine if any updates to the scope baseline, other parts of the project management plan, or the project documents are needed, and what changes should be requested. 5. Look for the impact of scope changes on all aspects of the project (through the Perform Integrated Change Control process). The Control Scope process is an extremely proactive process for the project manager. It will involve thinking about where changes to scope are coming from on the project, and what can be done to prevent or remove the need for any more changes from that source going forward. The project manager's job is to control the project in accordance with the project management plan and to meet all the baselines. Therefore, the project manager should not be easily swayed or influenced and let others add scope or change scope without following the approved change management process. Inputs Project Management Plan contains information from the following: Scope baseline Scope management plan Change management plan Configuration management plan Requirements management plan Requirements Documentation Requirements Traceability Matrix Work Performance Data Organization Process Assets Tools and Techniques Variance Analysis (page 139) As project manager you will be capturing project performance measurements. If variance exists, it is important to recognize its cause, and to determine at what point corrective or preventive action is necessary for the success of the project. Outputs Work Performance Information Change Requests Project Management Plan Updates Scope baseline updates Other business updates Project Documents Updates Requirements documentation Requirements traceability matrix Organizational Process Assets Updates Project Scope Management Cheat Sheet
Open table as spreadsheet Process Descript ion Gro up Input Tools & Technique Output Plan Scope Managem ent Develop a scope manage ment plan Plan Project manageme nt plan Charter EEF OPA
Expert Judgment Meetings Scope manageme nt plan Requireme nts manageme nt plan
Collect Requirem Defining and Plan Scope manageme Focus groups Requireme nts Process Descript ion Gro up Input Tools & Technique Output ents documen ting stakehold ers' needs to ensure project objective s are met. nt plan Requireme nts manageme nt plan Stakehold er manageme nt plan Charter Stakehold er register Interviews Facilitated workshops Group creativity techniques Group decision- making techniques Questionna ires & Surveys Observatio ns Prototypes Benchmark ing Context diagrams Document analysis
documenta tion Requireme nts traceabilit y matrix
Define Scope Developi ng detailed descripti on of the project and product as a basis for future decisions . Plan Scope manageme nt plan Charter Requireme nts doc OPA
Expert judgment Alternative s Generation Product analysis Facilitated workshops
Scope statement Updates: docs
Create WBS Subdivid ing major deliverab les into smaller compone nts Plan Scope manageme nt plan Scope statement Requireme nts doc EEF OPA Decomposi tion Expert judgment Scope baseline Updates: docs Process Descript ion Gro up Input Tools & Technique Output Validate Scope Formal acceptan ce of the complete d project deliverab les. Cont rol Project mgmt plan Requireme nts docs Requireme nts traceabilit y matrix Verified deliverabl es Work performan ce data Inspection Group decision- making techniques Accepted deliverabl es Change requests Work performan ce informatio n Updates: docs Control Scope Monitori ng status of the project and product scope and managin g changes to scope baseline. Cont rol Project mgmt plan Requireme nts docs Requireme nts traceabilit y matrix Work performan ce data OPA Variance analysis Work performan ce informatio n Change requests Updates: OPA; docs; plan
Deep Dive into Project Time Management Overview Project Time Management includes seven processes. These processes are required to manage the timely completion of the project. On simpler and smaller projects, most of the planning processes (defining activities, sequencing activities, estimating activity resources, estimating activity durations, and developing schedule) can be viewed as a single process. Make sure you realize there is no such thing as true project management software. The software is only as good as the data that is provided to it. You can't follow the software; as a project manager you need to lead it. You need to make it conform to your needs, because the software does not always conform to proper project management methods. The following should help you understand how each part of time management fits into the project management process: Open table as spreadsheet Time Management Process Done During Plan Schedule Management Planning Process Group Define activities Planning Process Group Sequence Activities Planning Process Group Estimate Activity Resources Planning Process Group Estimate Activity Durations Planning Process Group Develop Schedule Planning Process Group Control Schedule Monitoring and Controlling Process Group The Plan Schedule Management process produces the project's schedule management plan. It does not contain the project's schedule. It only describes how the project's schedule will be developed, managed and controlled Plan Schedule Management PMBOK Guide Definition Page 145 Plan Schedule Management is the process of establishing the policies, procedures, and documentation for planning, developing, managing, and controlling the project schedule. The only output of this process is the schedule management plan. The schedule management plan is a component of the project management plan. It can be detailed or broadly framed, based on the needs of the project. Inputs Project Management Plan Project Charter Enterprise Environmental Factors Organizational culture and structure Resource availability and skills Project management software Published commercial information Organizational work authorization systems Organizational Process Assets Monitoring and reporting tools Historical information Schedule control tools Schedule control policies and procedures Templates Project closure guidelines Change control procedures Risk control procedures Tools and Techniques Expert Judgment Analytical Techniques Scheduling tools and techniques Estimating techniques Rolling wave planning Alternative analysis Meetings Outputs Schedule Management Plan (Page 148) Project time management processes and their associated tools and techniques are documented in the schedule management plan. The schedule management plan will help make the schedule estimating process faster by providing guidelines on how estimates should be stated. During monitoring and controlling, the schedule management plan can help determine if a variance is over the allowable threshold and therefore must be acted upon. The schedule management plan can also help determine the types of reports required on the project relating to schedule. The schedule management plan includes: The scheduling methodology and scheduling software to be used on the project Procedures to establish the schedule baseline; Identification of the performance measures that will be used on the project, to identify variances early Planning how schedule variances will be managed Identification of schedule change control procedures A schedule management plan requires that progress be measured along the way by the project manager. The project manager is playing an active role in gathering the data. Measures of performance are determined in advance so the project manager can plan to capture the necessary data. The schedule management plan can be formal or informal, but again it is part of the project management plan. The Define Activities process decomposes the work packages into project activities. However, care must be taken such that activities are decomposed up to a level that they do not complicate the project schedule and eliminate the room for creativity for the project team Define Activities This process involves taking the work packages created in the WBS and breaking them down further (decomposing) in order to reach the activity level, which is a level small enough to estimate, schedule, monitor, and manage. PMBOK Guide Definition Page 149 Define Activities is the process of identifying and documenting the specific actions to be performed to produce the project deliverables. In order to define the activities, the project manager must know the key inputs. This requires the schedule management plan, the scope baseline (scope statement, WBS, WBS dictionary), and the project team. Involving the project team helps define activities completely and accurately and therefore makes the estimates more accurate. When completed, the Define Activities process will result in an activity list and the details of the activities being completed. It will also result in the determination of milestones to be used on the project. Inputs Schedule management plan Scope Baseline Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Decomposition Rolling Wave Planning (page 152) This is a form of progressive elaboration where the activities that need to be completed in the near term are planned in detailed, while those activities targeted for the future are planned at a higher level. Expert Judgment Outputs Activity List (page 152) This is a comprehensive list of all the activities required on the project. The detail of the information on the list can vary so long as there is sufficient detail so that the team understands what needs to be completed. Activity Attributes (page 153) The attributes allows for additional data points to be added to the description of the activity. The data points evolve over time as more information is known. Examples include: o Activity ID o WBS ID o Activity name o Predecessor o Successor Milestone Lists (page 153) The list identifies all the milestones and can also provide additional information in terms of the milestone being required by a contract term, if it is optional, or if it is mandatory. Milestones Milestones are significant events within the project schedule. They are not work activities. If a checkpoint or milestone in the schedule arrives and all the planed work has been completed, it indicates that the project may be progressing as planned.
Sequence Activities The next process involves taking the activities and milestones and starting to sequence them into how the work will be performed. PMBOK Guide Definition Page 153 Sequence Activities is the process of identifying and documenting relationships among the project activities. It is important to remember that every activity, except for the first and last, are connected in the project schedule. There are many ways to show the connection by using software or manually. A manual best practice is to use a network diagram (also referred to as a project schedule network diagram), which can look like the following picture. Example of a Network Diagram
Methods to Draw Network Diagrams In the past, the Precedence Diagramming Method (PDM), the Arrow Diagramming Method, and the Graphic Evaluation and Review Technique (GERT) method were commonly used to draw network diagrams. Today most network diagrams are creating using PDM. Inputs Schedule management plan Activity Lists Activity Attributes Milestone List Project Scope Statement Enterprise environmental factors Organizational Process Assets
Tools and Techniques Precedence Diagramming Method (PDM) (page 156) PDM is a method that is used in Critical Path Methodology (CPM). In this method, nodes (or boxes) are used to represent activities, and arrows show activity dependencies and relationships as follows:
The start-to-finish relationship confuses many PMP candidates and should be thoroughly understood prior to entering the exam. While this relationship may not explicitly be detailed in the PMBOK Guide, it is valuable to familiarize yourself with it via external sources (online search, etc.) PDM can have four types of logical relationships between activities: Finish-to-start (FS) An activity must finish before the successor can start. o Example: You must finish digging a hole before you can start the next activity of planting a tree. o The most commonly used of the types Start-to-start (SS) An activity must start before the successor can start. o Example: You must start designing and wait for two weeks lag in order to have enough of the design completed to start coding. Finish-to-finish (FF) An activity must finish before the successor can finish. o Example: You must finish testing before you can finish documentation. Start-to-finish (SF) An activity must start before the successor can finish o Rarely used. Dependency Determination (page 157) The sequence of activities is determined based on the following dependencies. Mandatory and external dependencies may not be removed. During fast-tracking, the internal and discretionary dependencies are usually considered and removed. This increases the project risk as a tradeoff Mandatory Dependency o The dependency is inherent in the nature of the work being done or required by the contract. o The project team will determine if the dependency is mandatory during sequencing. o This is also referred to as "hard logic" Discretionary Dependency o This dependency is determined by the project team during the sequencing of activities. o Discretionary dependencies can be changed if needed, while the other types of dependencies cannot easily be changed. o Discretionary dependencies are important when analyzing how to shorten the project to decrease the project duration (fast track the project). o Also referred to as Preferred logic, Preferential logic, or Soft logic External Dependency o This dependency is based on the needs or desires of a party outside the project. o The project team will determine which dependencies are external during the sequencing of activities. Internal Dependency o This dependency is generally under the project team's control. The project team determines which dependencies are internal during the sequence activities process. Leads and Lags (page 158) Leads o A lead may be added to start an activity before the predecessor activity is completed. o For example, coding might be able to start five days before the design is finished. Lags o A lag is a delay or waiting time between activities. o For example, needing to wait three days after design before coding can begin. Outputs Project Schedule Network Diagrams (page 159) Standard network diagrams are schematic displays of the project's schedule activities and the logical dependencies among them. These can be produced manually or via software. Project Document Updates Activity lists Activity attributes Milestone list Risk register Exam Hint The next two management processes (Estimate Activity Resources and Estimate Activity Durations) involve estimating. The following are important points to understand about estimating for the exam: Estimating should be based on a WBS to improve accuracy. Estimating should be done by the person doing the work whenever possible to improve accuracy. Historical information from past projects (part organizational process assets) is a key to improving estimates. The schedule baseline (as well as the cost and scope baselines) should be kept and not changed except for approved project changes. The project schedule should be managed in the schedule baseline for the project. Changes are approved in integrated change control. Estimates are more accurate if smaller size work components are estimated. A project manager should never just accept constraints from management, but should instead analyze the needs of the project, come up with his or her own estimates, and reconcile any differences to produce realistic objectives. A project manager may periodically recalculate the estimate to complete (ETC) for the project in order to make sure there is adequate time (and funds, etc.) available for the project. Plans should be revised during completion of the work as necessary with approved changes. Padding is not acceptable project management practice. The project manager must meet any agreed upon estimates. Estimates must be reviewed when they are received to see if they are reasonable and to check for padding and risks. Estimates must be kept realistic through the life of the project by re-estimating and reviewing them periodically. Estimates can be decreased by reducing or eliminating the risks. The project manager has a professional responsibility to provide estimates that are as accurate as feasible and to maintain the integrity of those estimates throughout the life of the project. Estimate Activity Resources Once the activities are sequenced, the type and quantity of needed resources is determined. Remember that resources include equipment and materials, as well as people. Resources must be planned and coordinated in order to avoid common problems such as lack of resources and resources being taken away from the project. PMBOK Guide Definition Page 160 Estimate Activity Resources is the process of estimating the type and quantities of material, human resources, equipment, or supplies required to perform each activity.
Inputs Schedule Management Plan Activity List Activity Attributes Resource Calendars (page 163) The calendar provides information regarding availability of resources. It will also provide how long the resource will be available. Additional information around experience and skill level may also be incorporated into the calendar. Risk Register Activity Cost Estimates The activity cost estimates are obtained during the Estimate Costs process of the Cost Management Knowledge Area. The cost of resources may impact the resource selection. Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Expert Judgment Alternative Analysis Published Estimating data (page 164) Data that is published from an outside vendor. Data that includes production rates and unit costs for materials and equipment Bottom-up Estimating Project Management Software Outputs Activity Resource Requirements (page 165) Details the types and quantities of resources required to support the project. Resource Breakdown Structure (page 165) This is a graphical representation using a hierarchical structure of the identified project resources. The resources can be categorized or shown by skill level, grade level, or other category. Project Document Updates can include, but are not limited to: Activity lists Activity attributes Resource calendars Estimate Activity Durations In order to estimate well, you will need to know activity resource requirements, resource calendars, project scope, resource breakdown structure, organizational process assets (historical data and lessons learned about activity durations, past project calendars, and the defined scheduling methodology), and enterprise environmental factors (company culture and existing systems that the project will have to deal with or can make use of, such as estimating software and productivity metrics). Other inputs that guide this process include the schedule management plan, activity list, activity attributes and risk register. Keep in mind that the time estimates and any other information gathered during estimating will be an input to the risk management process. PMBOK Guide Definition Page 165 Estimate Activity Durations is the process of estimating the number of work periods needed to complete individual activities with estimated resources. Sometimes in the real world, you hear the concept of padding a schedule. Padding is a sign of unprofessional project management. A "pad" is an extra time or cost added to an estimate because the estimator does not have enough information. In the cases where the estimator has many unknowns, the need for a pad should be addressed through the risk management process, and the uncertainties should be turned into identifiable opportunities and threats (risks). Uncertainties should not remain hidden; instead they need to be identified and addressed openly with the project manager. Successful estimators have a WBS that they and their team created. They also have a description for each work package (the WBS dictionary). They may even have helped create the activity list from the work packages, and they may know there will be time reserves on the project. With that information, they should not need to pad estimates, since they have all the needed information and no reason to guess.
Inputs Schedule management plan Activity List Activity Attributes Activity Resource Requirements Resource Calendars Project Scope Statement Assumptions Constraints Risk Register This is described in a greater detail in the Risk Management knowledge area. The risk register provides the list of project risks and their corresponding planned responses. Considering project risks during the activity duration estimated provides more reliable estimates. Resource Breakdown Structure Enterprise Environmental Factors Organizational Process Assets Tools and Techniques How Is Estimating Done? Activities can be estimated using the following techniques: Single-Point Estimate (SPE) When estimating time using a single-point estimate, the estimator submits one estimate per activity. The time estimate can be made based on expert judgment, by looking at historical information, or even by just guessing. Single-point estimates per activity can have the following negative effects on the project: It can force people into padding their estimates. It hides important information about risks and uncertainties from the project manager, which is needed to better plan and control the project. It creates a schedule that no one believes in, thus losing buy-in to the project management process. It has the estimators working against the project manager to protect themselves, rather than with the project manager to help all involved in the project. The role of the project manager in estimating is to: Provide the team with enough information to properly estimate each activity. Let the team know how refined their estimating must be. Complete a sanity check of the estimates. Prevent padding. Formulate a reserve Make certain any assumptions made during estimating are recorded for later review and possible input into Risk Management. Single-point estimates should be used for projects that are smaller and not complex in nature. If single-point estimates are used, it is critical that the project manager provides the estimator with as much information as possible or the estimate will likely be unreliable. This information should include the WBS, the WBS dictionary, and the activity list, Expert Judgment Although the PMBOK Guide does not mention it, Analogous Estimating is also referred to as "Top-Down Estimating". Analogous Estimating (Page 169) Analogous estimating can be done for a project or an activity. Analogous estimating uses data points such as duration, budget, size, and complexity from past projects as the basis for estimating. It is used to estimate project duration when there is limited data. It is an inexpensive method to use, but it is not a very accurate one. Heuristics A heuristic means a rule of thumb. An example of a heuristic is the 80/20 rule. This rule applied to quality, suggests that 80 percent of quality problems are caused by 20 percent of the potential sources of problems. Parametric Estimating (Page 170) Parametric estimating calculates projected time for an activity based on historical records from previous projects and other information. The result is an activity estimate based on measures like time per line of code, time per linear meter, or time per installation. This technique can produce a higher level of accuracy depending on the quality of the data points used in the calculations. Always remember that both the PERT average and Simple Average are two approaches for Three-point Estimating. Most people associate only the PERT average with a Three-point Estimate Three-Point Estimating (Page 170) In creating estimates, remember that things do not always go according to plan. Analyzing what could go right and what could go wrong can help estimators determine an expected range for each activity. This technique tries to factor in the uncertainty and risk inherent in any project. With three-point technique, estimators give an estimate for each activity: o Optimistic (O), Best case scenario o Pessimistic (P), and Worst case scenario o Most likely (M) Exam Hint For the exam, you MUST memorize these formulas and know that they can be used for both time and cost estimates. Expected Activity Duration = (P + 4M+ O) / 6 Activity Standard Deviation = P-O/6 Activity Variance = [P-O/6] 2
Knowing the ranges of individual activity duration estimates is not enough to manage a project successfully, because you need to understand how these ranges affect the overall project duration estimate in order to effectively address variations on your project. Finding the range for the overall project duration estimate is not as simple as finding the range for an individual activity estimate. You start by: Finding the expected project duration o This is the sum of the PERT estimates (EADs or Expected Activity Durations) for each activity on the critical path. You then find the standard deviation for the project o You can't simply add the standard deviations for each activity on the critical path o You must calculate the variance for each critical path activity, add those variances, and then take the square root of the sum of the activity variance. The project duration estimate range is the expected project duration (the sum of the EADs) plus or minus the project standard deviation (the square root of the sum of the activity variance). Exam Hint For the exam, you need to be able to do simple calculations using the formulas, have general understanding that estimates of time (or cost) should be in a range, and know the concept of three-point time (or cost) estimates per activity. You could also see a PERT total project duration used in questions without requiring calculation. The exam addresses standard deviation and variance in many different ways (Schedule, Risk, etc.). Make sure you have a general understanding of these concepts, which you will, based on these sessions. Group Decision-Making Techniques Reserve Analysis (page 171) It is important for you to connect estimating to risk management, as estimating will help determine risks, and completing the risk management process will reduce the range of time and cost estimates and make them more accurate. Successful project management involves having a reserve to accommodate the risks that remain in the project after the completion of risk management activities. Outputs Activity Duration Estimates Project Document Updates Exam Hint You will frequently see a single-point estimate per activity used on the exam. This method is not always best, but it is an easier way to improve your understanding of finding critical paths and drawing network diagrams. Using single-point estimates also allows for quick calculations and proof that you understand those concepts. Develop Schedule Once a network diagram and estimates are completed, it is time to put the information into a schedule. The difference between a time estimate and a schedule is that the schedule is calendar based. PMBOK Guide Definition Page 172 Develop Schedule is the process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule model. During schedule creation, the project manager may need to review the duration estimates and resource estimates. Many times a scheduling tool will be used to capture the data points needed for a project schedule, such as the activities, durations, and resources. Exam Hint It is critical that any project schedule be realistic and that it is created with the full input from the entire project team. Inputs Schedule management plan Activity List Activity Attributes Project Schedule Network Diagrams Activity Resource Requirements Resource Calendars Activity Duration Estimates Project Scope Statement Risk Register Project Staff Assignments Resource Breakdown Structure Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Schedule Network Analysis (page 176) This is a technique that employs various analytical techniques to calculate the early and late start and finish dates for the uncompleted portion of the project activities. The different techniques are: o Critical path method o Critical chain method o Resource optimization techniques o Modeling techniques o Schedule compression Practice the forward pass and the backward pass on a schedule network and make yourself comfortable with it. Many people struggle with this and incorrectly compute the early and late start and finish dates Critical Path Method (page 176) The critical path method includes determining the longest path in the network diagram (the critical path), the earliest and latest an activity can start, and the earliest and latest it can be completed. A critical path is characterized by zero float on the critical path. Become very comfortable with the Critical Chain Method. While it may not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with examples via external sources (online search, etc).
Critical Chain Method (page 178) This is a technique that will alter the project schedule to account for limited resources. This is also known as resource-constrained critical path. This technique will add duration buffers that are non-work schedule activities to manage uncertainty. Resource Optimization Techniques (page 179) Resource leveling: The schedule first needs to be analyzed by the critical path method. In situations where required resources are only available at certain times, or when it's necessary to keep resource usage at a constant level, a project manager may use resource leveling. The technique can also be used where resources have been over allocated on a project. Resource leveling often alters the project's critical path and delays the project's completion date. Resource smoothing: This technique adjusts the activities in a schedule model such that the resource requirements on the project do not exceed a defined limit. In resource smoothing, the project's critical path in not changed and the completion date is not delayed. The Monte Carlo simulation technique is not discussed in the PMBOK Guide in great detail but is a critical exam concept. While this technique may not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with it via external sources (online search, etc.) Modeling Techniques (page 180) What If Scenario Analysis In creating a finalized, realistic schedule, it is helpful to ask "What if a particular thing changed on the project? What would happen?" The assumptions for each activity can change, and therefore the activity durations can also change. Simulation This method of estimating uses computer software to simulate the outcome of a project, making use of the three-point estimates (optimistic, pessimistic, and most likely) for each activity and the network diagram. The simulation can tell you: o The probability of completing the project on any specific day o The probability of completing the project for any specific cost o The probability of any activity actually being on the critical path o The overall project risk Monte Carlo analysis, a simulation technique, is a way of putting together the details of a three point estimate into a project estimate that is more accurate than other methods, because it simulates the actual details of the project and takes into account probability. Leads and Lags Schedule compression (page 181) One of the most common problems projects have is an unrealistic timeframe. This can occur during project planning when the customer requires a completion date that cannot be met, or during project executing when the project manager needs to bring the project back in line with the schedule baseline or to adjust the project for changes. This method of schedule network analysis is done during project planning to see if the desired completion date can be met and what can be changed to make that date. It is also done during integrated change control to look at the schedule impact of the changes to time, scope, risk, resources, and customer satisfaction. The objective is to try to compress the schedule without changing project scope. Crashing o This technique involves making cost and schedule trade-offs to determine how to compress the schedule the most for the least incremental cost while maintaining project scope. In crashing or fast tracking, it is best to see all potential choices and then select the choice or choices that have the least negative impact on the project. If you have negative project float, (the estimated completion date is after the desired date), you would analyze what could be done about the negative float by compressing the schedule. For the exam, remember that you need to identify all the possible options and, if given a choice between crashing or fast tracking options, select the choice or combination of choices with the least negative impact on the project. Fast tracking o This technique involves doing critical path activities in parallel that were originally planned in series. Fast tracking often results in rework, usually increases risk, and requires more attention to communication. Network Diagram Showing the Effect of Fast Tracking
Scheduling Tool Outputs Schedule Baseline (page 181) A schedule baseline is the approved version of the schedule model. Once approved, the schedule baseline can only be changed through the Integrated Change Control process. The schedule baseline is used to manage the project and the schedule that the project team's performance is measured against. Meeting the schedule baseline is one of the measures of project success. Project Schedule (page 182) A project schedule includes key data points such as a planned start date and a planned end date for each activity. The project schedule can be presented in different formats such as: Milestone charts o These are similar to bar charts, but they only show major events. Remember that milestones have no duration. They are simply the completion of activities. Milestones may include "requirements are complete" or "design is finished" and are part of the inputs to the Sequence Activities process. Milestone charts are good tools for reporting project status to management and the customer. Bar charts o Bar charts are not project management plans. Bar charts do not help organize the project as effectively as a WBS and a network diagram can. They are completed after the WBS and the network diagram in the project management process. Project schedule network diagrams Schedule Data (page 184) The schedule data for the project model is the collection of information for describing and controlling the project schedule. This typically include: Resource requirements Alternative schedules Scheduling for contingency reserves Project Calendars (page 184) The project calendar identifies the working times of the project. This includes the working days and shifts that are available for scheduling the project activities. Project management Schedule baseline Schedule management plan Project document updates can include, but are not limited to: Activity resource requirements Activity attributes Calendars Risk register
Control Schedule A major component of Control Schedule is knowing the current status of the project. The effort goes beyond measuring, because it looks at taking corrective and preventative action over and over again during the life of the project. Schedule control also means looking for things that are causing changes and influencing them to change. So, if there is one person or one piece of work causing a lot of changes, the project manager must do something about it. If the project can no longer meet the agreed-to completion date (the schedule baseline), the project manager might recommend the termination of the project before any more company time is wasted. You have to think of it as someone protecting the hard work of the stakeholders in planning to make sure what was planned occurs as close to the plan as possible. The following are some additional activities involved in controlling the schedule: Re-estimate the remaining components of the project partway through the project Conduct performance reviews by formally analyzing how the project is doing Adjust future parts of the project to deal with delays, rather than asking for time extension Measure variances against the planned schedule, and determine if those variances warrant attention Level resources to distribute work more evenly among the resources Continue to play "What if?" with the project schedule to better optimize it Adjust metrics that are not giving the project manager the information needed to properly manage the project Adjust progress reports and reporting Utilize the change control process Identify the need for change requests, including recommended preventive actions Inputs Project Management Plan Project Schedule Work Performance Data Project Calendars Schedule Data Organizational Process Assets Tools and Techniques Performance reviews (page 188) The reviews provide a way to measure, compare, and analyze the schedule performance. The reviews help determine schedule variance as well as what type of corrective action may be needed to address the variance. Project Management Software Resource Optimization Techniques Modeling Techniques Leads and Lags Schedule Compression Scheduling Tool Outputs Work Performance Information Schedule Forecasts Change Requests Project Management Plan Updates can include, but are not limited to: Schedule baseline Schedule management plan Cost baseline Project Document Updates can include, but are not limited to: Schedule data Project schedule Risk register Organizational Process Assets Updates Causes of variances Corrective actions chosen and reasons Lessons learned Project Time Management Cheat Sheet
Open table as spreadsheet Process Descripti on Grou p Input Tools & Technique Output Plan Schedule Managem ent Develop a schedule managem ent plan Plan Proj. Mgt. Plan Charter EEF OPA Expert judgment Analytical techniques Meetings Schedule manageme nt plan Define Activities Activity list Milestone list Plan Schedul e mgt. plan Scope baseline EEF OPA Decomposit ion Rolling wave planning Expert judgment Activity list Activity attributes Milestone list Sequence Activities Identify and document the logical relationsh ips and dependen cies Plan Schedul e mgt. plan Activity list Activity attribute s Milesto ne list Scope stateme nt EEF OPA Precedence diagrammin g methods Dependency determinatio n Leads & lags
Network diagrams Updates: docs Estimate Activity Resource s Estimatin g the type and quantities of resources required Plan Schedul e mgt. plan Activity list Activity attribute s Resourc e calendar s
Expert judgment Alternatives analysis Published estimating data Bottom-up estimating PM software Activity resource requireme nts RBS Updates: docs Process Descripti on Grou p Input Tools & Technique Output Resourc e calendar s Risk register Activity cost estimate s EEF OPA Estimate Activity Durations Estimate # of work periods per activity Plan Schedul e mgt. plan Activity list Activity attribute s Resourc e require ments Resourc e calendar s Scope stateme nt Risk register RBS EEF OPA Expert judgment Analogous estimating Parametric estimating 3-point estimating Group decision making techniques Reserve analysis Activity duration estimates Updates: docs Develop Schedule Analyze sequences , durations, resources and constraint s to document Plan Schedul e mgt. plan Activity list Activity attribute s Networ Schedule network analysis Critical path method Critical chain method Resource Schedule baseline Project Schedule Schedule data Project calendars Updates: Process Descripti on Grou p Input Tools & Technique Output project schedule k diagram s Activity resource require ments Resourc e calendar s Activity duration estimate s Scope stateme nt Risk register Project staff assignm ents RBS EEF OPA optimization Modeling techniques Leads and lags Schedule compression Scheduling tool
Proj. mgt. plan Updates: docs Control Schedule Controllin g changes Contr ol Project mgmt plan Project schedul e Work perf data Project calendar s Schedul e data OPA Performanc e reviews Project managemen t software Resource optimization Modeling techniques Leads and lags Schedule compression Scheduling tool Work perf informatio n Schedule forecasts Change requests Updates: docs; plan; OPA
Deep Dive into Project Cost Management Overview Cost Management is all about the planning, estimating, budgeting, and controlling costs related to the project in order to keep the project within the approved budget. As with the other Knowledge Areas, the processes within Cost Management interact and are interdependent. The processes are completed at least once and may be completed multiple times in phased projects. Open table as spreadsheet Cost Management Process Done During Plan Cost Management Planning Process Group Estimate Costs Planning Process Group Determine Budget Planning Process Group Control Costs Monitoring and Controlling Process Group Plan Cost Management The Plan Cost Management process produces a cost management plan for the project. The cost management plan is part of project management plan, and the project manager and project team need to spend the time required to determine the cost of the project. This is a concept that many project managers miss. PMBOK Guide Definition Page 195 Plan Cost Management is the process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs. The sole benefit of this process is to develop guidelines and direction on how the project costs should be managed and controlled during the project life cycle. Inputs: Project Management Plan Scope baseline Schedule baseline Project Charter Enterprise Environmental Factors Organizational culture and structure Market conditions Currency exchange rates Published commercial information Project management information system Organizational Process Assets Financial control procedures Historical information Financial databases Cost estimating and budgeting policies and procedures Tools & Techniques: Expert Judgment Analytical Techniques Strategic options identification and selection Financing options analysis Financial techniques: payback period, return on investment, internal rate of return, discounted cash flows, net present value Meetings Outputs: Cost Management Plan (page 198) Like other management plans, the cost management plan can be formal or informal. It is part of project management plan, and the project manager and project team need to spend the time required to determine the cost of the project The cost management plan includes: Level of accuracy o Define the level of rounding that is acceptable to monitor project data Units of measure Organizational procedures links o These are links that tie into the existing organizational infrastructure, such as the accounting system, to assist with cost management. Control thresholds o Defined data points to assist with determining variances in performance measurement. Rules of performance measurement o Define WBS and points at which measurement of control accounts are performed o Establish the Earned Value Measurement techniques o Specify the Earned Value Measurement computation equations Reporting formats Process descriptions Estimate Costs The Estimate Cost process is where the estimates for each activity are made. This process does not combine all the estimates into one time-phased spending plan or the cost budget. That happens in the next process, Determine Budget. PMBOK Guide Definition Page 200 Estimate Costs is the process of developing an approximation of the monetary resources needed to complete project activities. This process takes into account the best information available at the time. Given the iterative nature of a project, we know that information may change and so the potential is there to update the estimates as well. As a project manager, you will need to refine and keep current cost estimates based on the latest information at hand. In most cases, the communication of the estimates is generally expressed in some unit of currency or unit of time such as hours. Types of Cost There are several ways to look at costs when creating an estimate. Historically, the exam has only asked about three questions regarding types of cost. The following information should help you answer such questions. A cost can be either variable or fixed: Variable Costs These costs change with the amount of production or the amount of work. o Examples include the cost of material, supplies, and wages. Fixed Costs These costs do not change as production changes. o Examples include the costs of set-up, rental, etc. A cost can be either direct or indirect: Direct Costs These costs are directly attributable to the work on the project. o Examples are team travel, team wages, recognition, and costs of material used on the project. Indirect Costs Indirect costs are overhead items or costs incurred for the benefit of more than one project. o Examples include taxes, fringe benefits, and janitorial services. Inputs Cost Management Plan Human Resource Management Plan (page 202) The human resource management plan is discussed in detail in the Project Human Resource Management knowledge area. The human resource management plan provides information regarding staffing attributes, hourly rates, and related rewards and recognition. These costs must be considered during the Estimates Costs process. Scope Baseline (page 202) In order to estimate, you need to know the detail of what you are estimating, what is out of scope, and what constraints might have been placed on the project. These can be found by looking at all the components of the scope baseline: Scope statement Work breakdown structure WBS dictionary Project Schedule (page 203) This is one of the key inputs to cost management, as it contains the activities, the type and quantity of resources needed to complete the work, and when the work will occur. Keep in mind that you need a schedule before you can come up with a budget. Risk register Enterprise Environmental Factors Market Conditions Published commercial information Organizational Process Assets Cost estimating policies Cost estimating templates Historical information Lessons learned Tools and Techniques Expert Judgment Analogous estimating is the weakest estimating technique. However, at times, this is the only available option for the project team due to time and cost constraints Analogous Estimating Parametric Estimating Bottom-up Estimating Three Point Estimating Most likely Optimistic Pessimistic Reserve Analysis (page 206) It is a good project management practice to accommodate the cost and time risk in a project estimate through the use of reserves. In risk analysis, you identify which activities on your project have significant risks and determine how much time and money to set aside to deal with the risks if they happen. Cost of Quality (page 206) The costs of work added to the project to accommodate quality planning should be added to the project estimate. Project Management Software Vendor Bid Analysis (page 207) This is where project work may be awarded to a vendor under a competitive process. This will require the project team to factor in the additional costs the vendor selection process may incur. Group Decision-Making Techniques Outputs Activity cost estimates Basis of Estimates (page 208) The more information that is known about the costs and how they were derived, the easier those costs are to justify. The following are some of the supporting detail that may be included in the estimate: Documentation of the basis of the estimate Documentation of all assumptions made Documentation of any known constraints Indication of the range of possible estimates Indication of the confidence level of the final estimate
Project Document Updates Additional Estimate Concepts: Accuracy of Estimates As a project manager, it is important to set the right expectation around estimates. Estimates made in the early part of the project will be less accurate than those made later in the project. Because of this, it is best to communicate estimates early in the project as a range. As the project progresses, these estimates can become more refined. The Rough Order of Magnitude (ROM) estimate, as defined by the current PMBOK Guide (5th Edition), is in the range of -25% to +75%. The older PMBOK Guide (4th Edition) defined it to be in the range of -50% to +50%. For the exam, remember the correct ROM is in the range of -25% to +75% range Exam Hint These ranges do show up on the exam. Make sure to MEMORIZE the following: Rough Order of Magnitude (ROM) Estimate o This type of estimate is usually made early during the project. o A typical range from ROM estimate is from -25% to +75% from the actual, but this range can vary depending on how much is known about the project when creating the estimates. Budget Estimate o This type of estimate is usually made during the planning phase and is in the range of -10% to +25% from the actual. Definitive Estimate o Later during the project, the estimate will become more refined. Some project managers use the range of +/- 10% from actual, while others use -5% to +10% from actual. Determine Budget In this part of cost management, the cost of the project needs to be calculated in order to determine the amount of funds the organization needs to set aside or have available for the project. The result of this calculation is called the budget or the authorized cost baseline. Meeting the cost baseline will be a measure of project success, so the budget should be in a form the project manager can use while the work is being done to control costs and therefore make sure the overall project is controlled. Exam Hint A project estimate cannot be completed without risk management activities and the inclusion of reserves. Make sure you note this for the exam, especially if you do not do this in the real world. Two types of reserves to be aware of are: Contingency Reserves o Address the cost impacts of the risks remaining during risk response planning. Management Reserves o Are any extra funds to be set aside to cover unforeseen risks or change to the project These reserves make up the difference between the cost baseline and the cost budget. The cost baseline contains the contingency reserves. It represents the funds authorized for the project manager to manage and control. The cost budget is the cost baseline plus the management reserves. Remember, an unrealistic budget is the project manager's fault, given that it was built off an unrealistic schedule. Inputs Cost Management Plan Scope Baseline Scope statement WBS WBS dictionary Activity Cost Estimates Basis of Estimates Project Schedule Resource Calendars Risk Register Agreements(page 211) It is important to review any contractual costs and factor them into the overall project costs. Organizational Process Assets Tools and Techniques Cost Aggregation (page 211) This is the roll up of project costs. To create a budget, activity costs are rolled up to work package costs. Work package costs are then rolled up to control account costs and finally into project costs. Reserve Analysis Expert Judgment Consultants Stakeholders (including customers) Professional and technical associations Historical relationships (page 212) These are the historical data points that are used in parametric or analogous estimates. It is important to call those relationships out to determine the potential accuracy of the estimate based on the data. Funding Limit Reconciliation Outputs Always remember: Cost baseline = work package estimate (project estimate) + contingency reserves. On the other hand, the total project budget = cost baseline + management reserves Cost Baseline (page 212) This is an authorized budget at completion (BAC). It is time-phased and used to measure, monitor, and control overall cost performance on the project. When plotted graphically over time, the project budget takes the form of an S-curve. On the other hand, the funding requirements take the shape of a ladder Project Funding Requirements Project Document Updates can include, but are not limited to: Risk register Cost estimates Project schedule
Control Costs You and the team have worked hard to create a realistic budget. Now, as project manager, you need to make sure that the budget is tracked and met. PMBOK Guide Definition Page 215 Control Costs is the process of monitoring the status of the project to update the project costs and managing changes to the cost baseline. With resources entering actual cost data, be it hours and expenses, the project manager spends a great deal of their time analyzing the data to determine the amount of the budget that has been consumed and the quantity of work that still remains to be done. They key to being a successful project manager who can control costs is to be able to keep a tight grip on the performance baseline data and the changes to those baselines. When you think of project cost, you should think about the following factors. According to the PMBOK Guide, these factors may include: (page 216): Influencing the factors that create changes to the authorized cost baseline Ensuring that all change requests are acted on in timely manner Managing the actual changes when and as they occur Ensuring that expenditures do not exceed the authorized funding, both by period and in total for the project Monitoring cost performance to isolate and understand variances from the approved cost baseline Monitoring work performance against funds expended Preventing unapproved changes from being included in the reported cost or resource usage Informing appropriate stakeholders of all approved changes and associated costs Acting to bring expected costs overruns within acceptable limits Inputs Project Management Plan Cost baseline Cost management plan Project Funding Requirements Work Performance Data Organizational Process Assets Tools and Techniques Earned Value Management (page 217) Yes, earned value is on the exam. Many of you get worried when you hear or see earned value, and I realize that is it because for many the concept is not typically used in the real world. We need to begin with a clear definition so we are all starting from the same point. It is best to start from the high-level and then go into the detail. PMBOK Guide Definition pg. 217 Earned value management (EVM) is a commonly used method of performance measurement for projects. It integrates the scope baseline with the cost baseline, along with the schedule baseline, to form the performance baseline, which helps the project management team assess and measure project performance and progress. Results from an earned value analysis indicate potential deviation of the project from the scope, schedule, and cost baselines (the performance measurement baseline). Many project managers manage their project performance by comparing planned to actual results. With this method, you could easily be on time but overspend according to your plan. Using earned value measurement is better, because it integrates cost, time, and the work done (or scope) and can be used to forecast future performance and project completion dates and costs. Earned value will lead to budget forecasts, change requests, and other items that will need to be communicated. Since the results of earned value measurement should be a major part of project reporting, you will also see earned value mentioned in Communications Management. Cost Management Terminology and Acronyms Acronym Term Interpretations PV Planned Value As of today, what is the estimated value of the work planned to be done? EV Earned Value As of today, what is the estimated value of the work actually accomplished? AC Actual Cost (total cost) As of today, what is the actual cost incurred for the work accomplished? BAC Budget at Completion (the budget) How much did we BUDGET for the TOTAL project effort? EAC Estimate at Completion What do we currently expect the TOTAL project to cost (a forecast)? ETC Estimate to Complete From this point on, how much more do we expect it to cost to finish? VAC Variance at Completion As of today, how much over or under budget do we expect to be at the end of the project? Planned value: (page 218) The authorized budget assigned to the work to be accomplished for the project. It is sometimes referred to as the Performance Measurement Baseline (PMB). The total planned value for the project is also known as Budget At Completion (BAC). Earned value (page 218) Earned value represents the value of the work performed expressed in terms of approved budget assigned to that work. Actual costs These are the cost that have been incurred and reported for the work that has been performed. Positive values for Schedule Variance (SV) and Cost Variance (CV) are good project health indicators Schedule variance Open table as spreadsheet Concept Formula Result Interpretation Schedule Variance (SV) Provides schedule performance of the project. Helps determine if the project work is proceeding as planned.
SV = EV - PV Negative = behind schedule = bad Positive = ahead of schedule = good Cost variance Open table as spreadsheet Concept Formula Result Interpretation Cost Variance (CV) Provides cost performance of the project. Helps determine if the project is proceeding as planned. CV = EV - AC Negative = over budget = bad Positive = under budget = good Schedule performance index Open table as spreadsheet Concept Formula Result Interpretation Schedule Performance Index (SPI) Measure of schedule efficiency on a project. Ratio of earned value to planned value. Used to determine if a project is behind, on, or ahead of schedule. Can be used to help predict when a project will be completed. SPI = EV / PV 1 = good. We are progressing at the originally planned rate. >1 = good. We are progressing at a faster rate than originally planned. <1 = bad. We are progressing at a slower rate than originally planned. Be very careful when interpreting the SPI and CPI values. Although values greater than 1.0 are desirable, values greater than 1.5 means the project was not properly estimated earlier Cost performance index Open table as spreadsheet Concept Formula Result Interpretation Cost Performance Index (CPI) Measure of cost efficiency on a project. Ratio of earned value to actual cost. CPI = EV / AC 1 = good. We are getting $1 for every $1 spent. Funds are used as planned. >1 = good. We are getting >$1 for every $1 spent. Funds are used better than planned. <1 = bad. We are getting <$1 for every $1 spent. Funds are not used as planned. Exam Hint Make sure to also MEMORIZE the following: Notice the EV comes first in every formula. Concept Formula Result Interpretation Remembering this one fact alone should help you get about half the earned value question right. If it is variance, the formula is EV minus something. If it is an index, it is EV divided by something. If the formula relates to cost, use AC. If the formula relates to schedule, use PV. For variance interpretation: o Negative is bad and positive is good For indices interpretation: o Greater than one is good o Less than one is bad Forecasting (page 220) As a project manager we will constantly need to take performance measurements comparing the current information about the project as well as the planned information for the work left to be done. The following equations can assist the project manager in correctly forecasting for the project: Understand the concepts behind the EAC formulas. This will help you select the right formula to crack a question on your exam Open table as spreadsheet Concept Formula Result Interpretation Estimate at Completion (EAC) Expected final and total cost of an activity or project based on project performance. Helps determine an estimate of the total costs of a project based on actual costs to date. There are several EAC = BAC / CPI Assumption: use formula if current variances are thought to be typical in the future. This is the formula most often required on the exam. Original budget modified by the cost performance. The result is a monetary value. EAC = AC + ETC Assumption: use Actual Cost plus a new estimate for the remaining Concept Formula Result Interpretation ways to calculate EAC depending on the current project situation and how the actual work is progressing as compared to the budget. Look for certain keywords to determine what assumptions were made. formula if original estimate was fundamentally flawed or conditions have changed and invalidated original estimating assumptions.
work. Result is a monetary value.
EAC = AC + BAC - EV Assumption: use formula if current variances are thought to be atypical in the future and the original budget is more reliable. Actual cost to date (AC) plus remaining budget (BAC - EV). Result is a monetary value.
EAC = AC + ((BAC - EV) /(CPI * SPI)) Assumption: use formula if project is over budget but still needs to meet a schedule deadline. Actual cost to date (AC) plus remaining budget (BAC - EV)modified by both cost performance and schedule performance. Result is a monetary value. Estimate to Complete (ETC) Expected cost needed to complete all the remaining work for a schedule activity, a group of activities or the project. Helps predict what the final cost of the project will be upon completion. ETC = EAC - AC Inversion of the same formula from the EAC calculations. Expected total cost minus actual cost to date. Result is a monetary value that will tell us how much more the project will cost. ETC = BAC - EV Assumption: use formula if current The planned budget minus the earned value. Result is a Concept Formula Result Interpretation There are many ways to calculate ETC depending on the assumptions made. variances are thought to be atypical in the future. monetary value that will tell us how much more the project will cost. ETC = (BAC - EV) / CPI Assumption: use formula if current variances are thought to be typical in the future. The planned budget minus the earned value modified by project performance. Result is a monetary value that will tell us how much more the project will cost. ETC = We create a new estimate when it is thought that the original estimate was flawed. This is not the result of a calculation or formula, but simply a new estimate of the remaining cost. CPI tells you your current cost performance. On the other hand, TCPI tells you the required cost performance in order the meet the approved budget To-Complete Performance Index (TCPI) (page 221) Open table as spreadsheet Concept Formula Result Interpretation To-Complete Performance Index (TCPI) The calculated project of cost performance that must be achieved on the remaining work to meet a specific management goal (e.g. BAC or EAC). It is the work remaining divided by the funds Based on BAC: TCPI = (BAC - EV) / (BAC - AC) Based on EAC: TCPI = (BAC - EV) The TCPI is compared to the cumulative CPI to determine if a target EAC is reasonable. A target EAC is assumed to be reasonable if the TCPI is within plus or minus 0.05 of the cumulative CPI EVM Concept Formula Result Interpretation remaining. / (EAC - AC) metric. Performance Reviews (page 222) Variance analysis Trend analysis o Examines project performance over time to determine if performance is improving or deteriorating. Earned value performance Variance analysis Open table as spreadsheet Concept Formula Result Interpretation Variance at Completion (VAC) Anticipates the difference between the originally estimated BAC and a newly calculated EAC. In other words, the cost we originally planned minus the cost that we now expect. VAC = BAC - EAC Result is a monetary value that estimates how much over or under budget (the variance) we will be at the end of the project. <0 = over budget 0 = on budget >0 under budget Project Management Software Reserve Analysis Outputs Work Performance Information Cost Forecasts Change Requests Project Management Plan Updates can include, but are not limited to: Cost performance baseline Cost management plan
Project Document Updates Cost estimates Basis of estimates Organizational Process Assets Updates Causes of variances Corrective actions chose and reasons Financial databases Lessons learned Project Cost Management Cheat Sheet Open table as spreadsheet Process Descriptio n Gro up Input Tools & Technique Output Plan Cost Managem ent Develop the cost manageme nt plan Plan Project mgt. plan Charter EEF OPA Expert judgment Analytical techniques Meetings Cost manage ment plan Estimate Costs Develop an approximat ion of the costs of the resources to complete project activities Plan Cost mgt. plan Human resource mgt. plan Scope baseline Project schedule Risk register EEF OPA Expert judgment Analogous estimating Parametric estimating Bottom-up estimating 3-point estimating Reserve analysis Cost of quality Project mgt. software Vendor bid analysis Group decision making techniques Activity cost estimate s Basis of estimate s Updates : docs Determin Aggregatin Plan Cost mgt. Cost Cost Process Descriptio n Gro up Input Tools & Technique Output e Budget g estimated costs to establish an authorized cost baseline. plan Scope baseline Activity cost estimates Basis of estimates Project schedule Resource calendars Risk register Agreemen ts OPA aggregatio n Reserve analysis Expert judgment Historical relationshi ps Fund limit reconciliati on baseline Funding Require ments Updates : docs Control Costs Monitoring status of the project to update the project budget and managing changes to the cost baseline Plan Project manageme nt plan Funding requireme nts Work performan ce data OPA Earned value manageme nt Forecastin g TCPI Performan ce reviews Project mgt. software Reserve analysis Work perform ance informa tion Cost forecast s Change requests Updates : project plan, docs, OPA
Deep Dive into Project Quality Management This section will get you familiar with what quality is, why you need it, and how to get it. It is important to understand that the lack of attention to quality means more rework or defects. The more rework you and your project team are required to do, the more time and money you are wasting, and the less likely you are to meet the project time and cost baselines. You are also wasting your time as a project manager if you're not preventing, rather than dealing with problems. PMBOK Guide Definition Page 227 Project Quality Management includes the processes and 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. Performing the quality management processes well will prevent many issues that can arise later in the project. The following should help you understand how each part of quality management fits into the project management process: Open table as spreadsheet The Quality Management Process Done During Plan Quality Management Planning Process Group Perform Quality Assurance Executing Process Group Control Quality Monitoring and Controlling Process Group Definition of Quality Know the short definition for quality. Quality is defined as the degree to which the project fulfills requirements. Quality Theorists The following people are known for their theories on quality: Joseph Juran o He developed the 80/20 principal, advocated top management involvement, and defined quality as "fitness for use." W. Edwards Deming o He developed 14 points to total quality management and advocated the Plan-Do-Check-Act cycle as the basis for quality improvements. Philip Crosby o He popularized the concept of the cost of poor quality, advocated prevention over inspection, and "zero defects." He believed that quality is "conformance to requirements." Key Concepts (Page 228) Remember the difference between grade and quality. Grade refers to the characteristics of a product, while quality refers to conformance to customer requirements Quality & Grade definition It is also important to know the difference between quality and grade. We have the definition of quality above to reference. Grade is a category assigned to products or services having the same functional use but different technical characteristics. Precision is different than accuracy. Accuracy is the closeness of a measure against the target, while precision is the closeness of the repeated measurements with each other Precision & Accuracy definition Precision indicates that after repeated measurement the data points are all clustered together. Accuracy indicates the measured value is very close to the true value. It is the project team that determines the appropriate definition for both as it relates to the project. International Organization for Standardization (ISO) ISO 9000 This family of standards was created by the International Organization for Standardization (ISO) to help ensure that organizations have quality procedures and that they follow them. Many people incorrectly believe that ISO 9000 tells you what quality should be, or describes a recommended quality system. Always remember: prevention is always preferred over inspection Cost of Quality Refers to the total cost of all the efforts related to quality throughout the product life cycle. Quality management requires the partnership of other key concepts in order to be successful. These key concepts may include: Customer satisfaction Prevention over inspection Continuous improvement Management responsibility Quality management is the responsibility of the full team, but the project manager has the ultimate responsibility to ensure that the quality standards are met by the project and that the client is satisfied by the project deliverables. Additional Quality Terms: Continuous Improvement Continuous improvement involves continuously looking for small improvements in quality. It can also be referred to as Kaizen. Kaizen is a general term, while continuous improvement is a quality movement. Just In Time (JIT) Many companies are finding that holding raw materials in inventory is expensive and unnecessary. Instead, they have their suppliers deliver raw materials just when they are needed or just before they are needed, thus decreasing and maintaining a minimal inventory. A company using JIT must have high quality practices; otherwise, there will not be enough raw materials to meet production requirements because of waste and rework. A JIT system forces attention to quality. Total Quality Management (TQM) This philosophy encourages companies and their employees to focus on finding ways to continuously improve the quality of their business practices and products. Exam Hint The project manager should recommend improvement to the performing organization's standards, policies, and processes. Such recommendations are expected and welcomed by the management. Quality should be considered whenever there is a change to any component of the project constraints. Quality should be checked before an activity or work package is completed. The project manager must spend time trying to improve quality. The project manager must determine metrics to be used to measure quality before the project work begins. The project manager must put in place a plan for continually improving processes. The project manager must make sure authorized approaches and processes are followed, Some quality activities may be done by a quality assurance or quality control department. Some project managers have issues with trying to really understand the difference between the three processes of Quality Management. The following table will help in better understanding the difference before we go into detail on the three processes:
Focus of Quality Processes Open table as spreadsheet Plan Quality Management Perform Quality Assurance Control Quality High-Level description of What Each Process Focuses On What is high quality? How will we ensure it? Are we following the processes? Are we meeting the standards? More Detailed Description of What Each Process Focuses On Find existing quality standards and requirements for product and project management 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 with scope, cost, time, risk, resources, and customer satisfaction Create a quality management plan as part of the project management plan Use management from quality control Perform continuous improvement Determine if project activities comply with organizational and project policies, processes, and procedures quality audit Find good practices Share good practices with others in the organization Measure quality Identify quality improvements Validate deliverables Complete checklists Update lessons learned Submit change requests Update the project management plan and project documents Process Group Planning Executing Monitoring and Controlling
Plan Quality Management (Page 231) The objective of the Plan Quality Management process is to identify all relevant standards and requirements for the quality of the project, the product of the project, and the project management efforts. The main result of this process is a quality management plan. In addition, the project manager must plan the project so that it meets the customer's quality standards. Once the existing standards are identified, the project manager must create additional standards needed by the project that are not covered by any other standard. This is a point to remember for the exam, as this is not always the case in the real world. When all the standards have been identified or created, the Plan Quality Management process involves determining what work will need to be done to meet those standards. For example, perhaps additional testing needs to be added to the project activities, or resources need to be moved around. The project manager determines the specific requirements that will be made throughout the life of the project to ensure compliance with all standards. The Plan Quality Management process will result in additions or changes to the iterating project management plan and project documents to make sure the standards are met. Quality must be balanced with the other project constraints. Inputs Project Management Plan Scope baseline Schedule baseline Cost baseline Other management plans Stakeholder Register Risk Register Requirements Documentation Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Cost-Benefit Analysis (page 235) In this technique, the project manager weighs the benefits versus the costs of meeting quality requirements. Cost of Quality (page 235) This technique helps make sure that the project is not spending too much to assure quality. Cost of quality involves looking at what the costs of conformance and nonconformance to quality will be on the project and creating the appropriate balance. Keep in mind that Cost of Conformance is money spent during the project to avoid failures. Cost of Nonconformance is money spent during and after the project because of failures. Some examples are: Open table as spreadsheet Cost of Conformance Cost of Nonconformance Quality training Rework Studies Scrap Surveys Inventory costs Testing Warranty costs Inspections Lost business Seven Basic Quality Tools (page 236) 1. Cause-and-effect diagrams These are also known as fishbone or as Ishikawa diagrams. This tool is used to identify the root cause of a problem. 2. Flowcharts A flowchart is a graphic representation of how a process or system flows from beginning to end and how the elements interrelate. In the Plan Quality Management process, it can be used to see a process and find potential quality issues. Flowcharts are a tool that can be used in many parts of project management. 3. Checksheets These are also known as tally sheets. These are used as a checklist when gathering data. For example, data about the frequency of defects are collected through checksheets. 4. Pareto diagrams This is a special form of a vertical bar chart that sorts items or categories based on their frequencies. 5. Histograms 6. Control charts Control charts are typically set up in the Plan Quality Management process. However, they are utilized in Control Quality process, where they help determine if a process is within acceptable limits. Control charts can also be used to monitor things like project performance figures, such as cost and schedule variances. Most commonly, however, a control chart helps monitor production and other processes to see if these processes are within acceptable limits, or if any actions are required. o Other Charting Terms o Upper and Lower Control Limits These limits define the acceptable range of variation of a process. They are often shown as two dashed lines on a control chart. Every process is expected to have some variation. The acceptable range of measurements between the upper and lower control limits is set by the project manager and stakeholders based on the organization's quality standard. Normally this range is calculated based on a +/-3 sigma, or standard deviations. Data points within this range are generally thought of as "in control." When a data point is outside the control limits, or if seven consecutive points are above or below the mean, the process is considered to be "out of control." The concept of control limits is also important outside of a control chart. A project manager can have control limits for many things. o Mean (Average) The mean is indicated by a line in the middle of the control chart. It shows the middle of the range of acceptable variation of a process. o Specification Limits While control limits represent the performing organization's standards for quality, specification limits represent the customer's experience or contractual requirements for performance and quality on the project. Specification limits are characteristics of the measured process and are not inherent. o Out of Control A process is considered to be out of a state of statistical control under either of two circumstances: A data point falls outside the upper or lower control limit. There are nonrandom data points; these may be within the upper and lower control limits, such as the rule of seven Think of Out of Control as a lack of consistency and predictability in the process. o Rule of Seven The rule of seven is a rule of thumb or heuristic. It refers to nonrandom data points grouped together in a series that total seven on one side of the mean. The rule of seven tells you that, although none of these points are outside of the control limits, they are nonrandom and the process may be out of control. The project manager should investigate this type of situation and find a cause. Always remember: a correlation between two variables do not imply a causal relationship between the two variables 7. Scatter diagrams Scatter diagrams are used to determine if some sort of correlation exists between two project variables. For example overtime and defects etc. Benchmarking (page 239) This technique involves looking at other projects to identify best practices and get ideas for improvement on the current project. It can also provide a basis to use in measuring quality performance. Design of Experiments is a complex statistical technique. While this technique may not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with it via external sources (online search, etc) Design of Experiments (page 239) This technique is a statistical method that allows you to systematically change all of the important factors in a process and see which combination has a lower impact on the project. This technique is faster and more accurate than changing the variables one at a time. Statistical sampling (page 240) It is best to take a sample of a population if you believe there are not many defects, or if studying the entire population would: Take too long Cost too much Be too destructive Additional Quality Planning Tools (page 240) Brainstorming Force field analysis Nominal group technique Quality management and control tools Meetings Outputs Quality Management Plan (page 241) Remember that the purpose of the Plan Quality Management process is to determine what quality is and to put a plan in place to manage quality. A Quality Management Plan usually includes some of the following: The quality standards that apply to the project Who will be involved in managing quality; when and what their specific duties will be The meetings to be held addressing quality What metrics will be used to measure quality What parts of the project or deliverables will be measured and when Process Improvement Plan (page 241) The process improvement plan is a component of the project management plan. This plan describes the steps, actions and activities required to analyze the project management processes in order to improve and optimize them. The process improvement plan can include the following areas: Process boundaries Process configuration Process metrics Targets for improved performance Quality Metrics (page 242) The following are some examples of quality metrics: The number of changes The number of resources used The number of items that fail inspection The variances of the weight of a product produced by the project compared to the planned weight Quality Checklist (page 242) A Quality Checklist is a list of items to inspect, a list of steps to be performed, or a picture of the item to be inspected, with space to note any defects found.
Project Document Updates Stakeholder register Responsibility assignment matrix WBS and WBS dictionary The Perform Quality Assurance process is usually performed by someone outside of the project team Perform Quality Assurance This is the process of auditing the quality requirements and results of the quality control measurements to make sure that the project team is adhering to the quality standards defined for the project. It is important to remember that this is an execution process that leverages data created during Control Quality. The execution may actually, depending on the organization, be done by a quality assurance team or another team that is dedicated to ensuring quality. Inputs Quality Management Plan Process Improvement Plan Quality Metrics Quality Control Measurements Project Documents Tools and Techniques There are many quality management techniques listed in the PMBOK Guide but are not covered in a great detail. While these techniques may not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with them via external sources (online search, etc.) Quality Management and Control Tools (page 245) All of the Plan Quality Management and Control Quality tools and techniques are considered the tools and techniques for the Perform Quality Assurance process as well. In addition the following tools are also used during this process: Affinity diagrams Process decision program charts (PDPC) Interrelationship digraphs Tree diagrams Prioritization matrices Activity network diagrams Matrix diagrams Quality Audits (page 247) Audits are structured, independent reviews to determine if the project deliverables or activities are in line with the organizational policies and procedures. The standards can also be external, coming from contracts supporting the project. The objectives of an audit are generally: Identify all the good/best practices being implemented Identify all the gaps/shortcomings Share the good practice introduced or implemented in similar projects in the organization Proactively offer assistance in a positive manner to improve implementation of processes to help the team raise productivity Highlight contributions of each audit in the lessons learned repository of the organization Process Analysis (page 247) Process analysis is a part of the continuous improvement and identifies improvements that might be needed in processes. Outputs Change Requests Project Management Plan Updates Project Documents Updates Organizational Process Assets Updates Always remember that the Control Quality process is performed for every project deliverable before the Validate Scope process. However, these two processes can also be performed in parallel Control Quality (Page 248) Control Quality is the process of ensuring a certain level of quality in a product or service. It looks for products or services that do not meet the standards of quality. Control involves measuring, and that is the major function of the Control Quality process. It is a process that is performed throughout the project. Although a project manager must be involved and concerned about quality control, a quality control department may complete much of this work in a large organization. This department then sends the results to the project manager in the form of change requests, with the appropriate documentation and reports. There are different concepts about quality control that are important to know and understand, and they are: (page 250) Prevention and Inspection Attribute sampling and Variable sampling Tolerances and Control Limits Key Terms: Probability This term refers to the likelihood that something will occur. Probability is usually expressed as a decimal or a fraction, on a scale of zero to one. Normal Distribution A normal distribution is the most common probability density distribution chart. It is in the shape of a bell curve and is used to measure variations Mutual Exclusivity You may see statistical reference on the exam. One that often confuses people is mutual exclusivity. Two events are said to be mutually exclusive if they cannot both occur in a single trial. Statistical Independence Another confusing statistical term often showing up on the exam is statistical independence the probability of one event occurring does not affect the probability of another event occurring (i.e., the probability of rolling a six on a die is statistically independent from the probability of getting a five on the next roll). Standard Deviation (or Sigma) A measure of a range is its standard deviation. This concept is also sometimes stated as a measure of how far you are from the mean (not the median). 3 or 6 Sigma Sigma is another name for standard deviation. 3 or 6 sigma represents the level of quality that a company has decided to try to achieve. The graphic below is commonly referred to as a bell curve and shows standard deviation from the mean by percentages. For the exam, it is important to remember that a 2 sigma deviation will account for 95.46% of all data points while 99.73% will fall within a deviation of 3 sigma.
A plot of a normal distribution (or bell curve). Each colored bandhas a width of one standard deviation. Sigma is taken on both sides of the mean. Half of the curve is to the right of the mean, and half of the curve is to the left of the mean. +/- 1 sigma (or one standard deviation) is equal to 68.26%, which is the percentage of occurrences to fall between the two control limits. +/- 2 sigma (or two standard deviations) is equal to 95.46%, which is the percentage of occurrences to fall between the two control limits. +/- 3 sigma (or three standard deviations) is equal to 99.73%, which is the percentage of occurrences to fall between the two control limits. +/- 6 sigma (or six standard deviations) is equal to 99.99985% which is the percentage of occurrences to fall between the two control limits. Inputs Project Management Plan Quality Metrics Quality Checklists Work Performance Data can include, but are not limited to: Planned vs. actual technical performance Planned vs. actual schedule performance Planned vs. actual cost performance Approved Change Requests Deliverables Project Documents Organizational Process Assets
Tools and Techniques Seven Basic Tools of Quality (Page 252) The following tools are known as Ishikawa's seven basic tools of quality. Each is used during quality control. Cause and effect diagram Flowchart Histogram Pareto chart Checksheets Scatter diagram Control chart Cause & Effect Diagram (Fishbone diagram, Ishikawa diagram) This diagram highlights how various factors might be linked to potential problems or the root cause. Cause and effect diagrams can be used in quality control to help the project manage look backwards at what has contributed to quality problems on the project. Fishbone or Ishikawa Diagram
Control Charts Data are collected and analyzed to indicate the quality status of project processes and products. The charts can illustrate many different factors based on the data, as well as show if the values from the data fluctuate or are consistent. Flowchart Flow charts can be used in the Plan Quality Management and Control Quality processes.
Histogram A histogram displays data in the form of bars and columns. This tool shows what problems are worth dealing with. A typical histogram arranges data in no particular order. Histogram
Pareto Chart (Pareto Diagram) A Pareto chart or diagram is a type of histogram, but it arranges the results from most frequent to least frequent to help identify which root causes are resulting in the most problems.
Exam Hint Remembering the following phrases about Pareto charts should help you on the exam: Help focus attention on the most critical issues Prioritize potential "causes" of the problems Separate the critical few from the uncritical many Checksheets A checksheet is a form of a checklist that is used for collecting quality data. For example a team can use a standard checksheet to collect defect details (type, location, magnitude etc.) for each project deliverable. Scatter Diagram
This diagram tracks two variables to see if they are related. Statistical Sampling Inspection Approved Change Requests Review Outputs Quality Control Measurements Validated Changes Verified Deliverables Work Performance Information Change Requests Project Management Plan Updates can include, but are not limited to: Quality management plan Process improvement plan Project Documents Updates Organizational Process Assets Updates Quality in the Real World For those that are not as familiar with Quality processes and how they are applied in the real work, take a look at these generic steps to see the full life cycle and the role of the project manager in the process: Foundation: The customer determines their requirements. The project team clarifies those requirements. The project team determines what work will be done to meet those requirements. Quality Begins: The project manager determines the existing standards, policies, plans, and procedures that might be available for the project. He or she might approach a quality assurance or quality control department for help in finding standards. The project manager creates other standards and processes that may be needed. Quality becomes one of the knowledge areas that the project manager must integrate. Project planning work and project execution gets underway by the team. The following will happen a. Quality Control Department i. Measure the performance of the project b. Quality Assurance Department i. Audits periodically as part of the executing process, looking at the quality control measurements to see if there is any indication that the standards, polices, plans, and procedures are not being followed. ii. Looks for best practices that can be used throughout the organization. iii. Looks to improve processes being used throughout the organization. Change requests are issued, including notification of areas that need preventive actions, corrective actions, or defect repair. The change control board c. Evaluates all change requests The team adjusts plans and work as needed and returns to step seven until done. The organization has improved processes. Project Quality Management Cheat Sheet
Open table as spreadsheet Process Descripti on Grou p Input Tools & Technique Output Plan Quality Manage ment Identifyin g quality Requirem ents and/or standards for the project and product and documenti ng how the project will demonstra te complianc e. Plan Project mgt. plan Stakeholde r register Risk register Requireme nts documenta tion EEF OPA Cost benefit analysis Cost of quality (COQ) Seven basic quality tools Benchmark ing Design of experiment s Statistical sampling
Additional quality planning tools Meetings Quality mgmt plan Process improv ement plan Quality metrics Quality checklis ts Updates : docs Perform Quality Assuranc e Auditing the quality Requirem ents and the results from quality control measurem ents to ensure appropriat e quality standards and operations definitions are used. Exec ute Quality manageme nt plan Process improveme nt plan Quality metrics QC measureme nts Project docs. Quality audits Process analysis Plan Quality Mgt. T & T Control Quality T & T Change requests Updates : docs, plan, OPA Process Descripti on Grou p Input Tools & Technique Output Control Quality Monitorin g and recording results of executing the quality activities to assess performan ce and recommen d necessary changes. Monit or & Contr ol Project manageme nt plan Quality metrics Quality checklists Work perf data Approved change requests Deliverabl es Project docs. OPA 7 basic quality tools Statistical sampling Inspection Approved change requests review QC measur ements Validat ed changes Verifie d delivera bles Work perf informa tion Change requests Updates : docs, plan, OPA
Deep Dive into Project Human Resource Management The human resource management process takes time and effort to plan how you will use people, identify the people you will need, define everyone's role, create rewards systems, improve team members' performance individually and as a team, and track performance. It is much a more involved process on a large project for those that have only worked on small projects. PMBOK Guide Definition Page 255 Project Human Resource Management includes the processes that organize, manage, and lead the project team. Human resources can be divided into administrative and behavioral management topics. The following should help you understand how each part of human resource fits into the project management process: Open table as spreadsheet The Human Resource Management Process Done During Plan Human Resource Management Planning Process group Acquire Project Team Executing Process Group Develop Project Team Executing Process Group Manage Project Team Executing Process Group As a project manager, you are looked upon as a leader, and leading a project team includes; Influencing the project team using the following: o Team environment o Location o Communication o Politics (internal & external) Professional and ethical behavior o The project manager sets the tone that the team will follow. Exam Hint The following is a list of the responsibilities project managers need to know before they take the exam. Determine what resources you will need Negotiate with resource managers for the optimal available resources Create a project team directory Create project job descriptions for team members and other stakeholders Make sure all roles and responsibilities on the project are clearly assigned Understand the team members' needs for training related to their work on the project, and make sure they will perform - a human resource management plan Insert reports of team members' performance into their official company employment record Send out letters of commendation to team members and their bosses Make sure team members' needs are taken care of Create recognition and rewards systems described in the Human Resource Management Plan Plan Human Resource Management (Page 258) Making sure roles and responsibilities are clear occurs in the Plan Human Resource Management process. Project work often includes more than just completing work packages. For example, it may include assisting with risk, quality, and project management activities. PMBOK Guide Definition Page 258 Plan Human Resource Management is the process of identifying and documenting project roles, responsibilities, required skills, reporting relationships, and creating a staffing management plan. Team members need to know what work packages and activities they are assigned to, what skills they need to have, when they are expected to report, what meetings they will be required to attend, and any other "work" they will be asked to do on the project. Inputs Project management plan Activity Resource Requirements Determine the human resource needs of the project Enterprise Environmental Factors Organizational Process Assets
Tool and Techniques Organization Charts and Position Descriptions (page 261) There are lots of ways to record and communicate roles and responsibilities, including responsibility assignment matrices, organizational breakdown structures, resource breakdown structures, and position descriptions. They generally fall into three types: Hierarchical-type charts Traditional organization chart structure is an example of a top down format Matrix-based charts Responsibility Assignment Matrix (RAM) This chart cross-references team members with activities or work packages they are to accomplish. Open table as spreadsheet Activity J ess Paul Erica A P S B S P Key; P = Primary responsibility, S = Secondary Responsibility RACI Chart This chart is a type of responsibility assignment matrix that defines role assignments more clearly than the previous example. Instead of the P and S shown in the previous matrix, the letters: R = Responsible A = Accountable C = Consult I = Inform Text-oriented formats Other sections of the project management plan Details are placed within the plan rather than within stand-alone documents. Proactive correspondence, luncheon meetings, informal conversations, trade conferences and symposia are all examples of networking Networking (page 263) This is the formal as well as informal interaction with others in the organization, the project team, or other bodies. Relationships that can benefit the project can be formed and cultivated. The PMBOK Guide doesn't discuss organizational theory in much detail. However, expect some questions on this area. While this may not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with organizational theory via external sources (online search, etc.) Organizational Theory Expert Judgment Meetings Outputs Human Resource Management Plan The result (output) of the Plan Human Resource Management process is, of course, a human resource management plan. The Human Resource Management Plan includes: Roles and responsibilities o Role definition o Authority o Responsibility o Competency Project organization charts Staffing management plan o Staffing acquisition o Resource calendars o Staff release plan o Training needs o Compliance o Safety o Recognition and rewards Planning a system to reward resources on a large project can involve a significant effort. A project manager must be able to motivate the team, especially when working on a project in a matrix organization. To create a recognition and rewards system, ask yourself how you will motivate and reward not the team, but each member individually. This involves asking and knowing what your team members and stakeholders want to get out of the project, on a professional and personal level. The project manager takes his or her knowledge of the needs of the stakeholders and then creates a recognition or rewards system. Such a system might include the following actions: Say "thank you" more often Award prizes such as Team Member of the Month recognition Award prizes for performance Recommend team members for raises or choice work assignments Send notes to team members' managers about great performance Plan milestone parties or other celebrations Acquire Project Team (Page 276) The Acquire Project Team process occurs during the Executing Process group. Some of you might question that statement. Again, remember the PMBOK Guideis referring to large projects. In those cases, there are so many resources that they are not selected until just before the work is to begin. The final team might include contractors or others that are not employed by the organization. As a result, for the exam, you should read "acquire project team" as "acquire FINAL project team." Remember that on a properly managed project, team members need to have input into the project, including what work needs to be done, when, and at what cost, no matter when they get involved in the project. It is important that the following factors be considered when acquiring the team: The project manager or project management team needs to negotiate and influence others who are in a position to provide the required human resources for the project Failure to acquire the necessary human resources for the project may affect project schedules, budgets, customer satisfaction, quality, and risk. It could decrease the probability of success and ultimately result in project cancelation. Be prepared when resources are not available; have an alternative plan that may take into consideration resources that are not as skilled. Inputs Human Resource Management Plan Roles and Responsibilities Project organization charts indicating the number of people needed for the project Staffing management plan delineating the time periods each project team member will be needed and other information important to acquiring the project team Enterprise Environmental Factors Organizational Process Assets Exam Hint Acquiring the project team involves the following: Knowing which resources are pre-assigned and confirming their availability Negotiating for the best possible resources Hiring new employees Hiring resources through the contracting process from outside the performing organization outsourcing Understanding the possibilities and problems with using virtual teams - teams made up of people who never or rarely meet Managing the risk of resources becoming unavailable Tools and Techniques Please note that pre-assignment is also considered a project constraint since it limits the human resource options for the project management team Pre-Assignment (page 270) Sometimes resources are assigned in advance, and the project manager has to work with the resources he or she is given as part of the team. Negotiation Resources may be acquired through negotiation. You will see negotiation frequently referenced on the exam related to gaining resources from within your organization and in contract situations. To negotiate for resources from within the organization, the project manager should: Know the needs of the project and its priority within the organization Be able to express how the resource manager will benefit from assisting the project manager Understand that the resource manager has his or her own work to do and that the individual may not gain benefit from the supporting project Do not ask for the best resources if the project does not need them Be able to prove, by using the tools of project management such as the network diagram and project schedule, why the project requires the stated quantity and quality of resources Build a relationship so that the project manager can call on the resource manager's expertise later in the project if necessary. Acquisition Going outside the organization to gain the needed resources. Virtual Teams Virtual teams are groups of people that share a common goal who fulfill the goal with little to no face to face time.
Multi-Criteria Decision Analysis The use of multi-criteria decision analysis a project manager can sort and filter the best resources for the project. Such criteria are used to rate and score potential team members. The criteria are weighted based on the needs and the requirements of the project. Outputs Project Staff Assignments Resource Calendars Project Management Plan Updates Develop Project Team (Page 273) The Develop Project Team process is done as part of executing the project. This process results in decreased turnover, improved individual knowledge and skills, and improved teamwork by improving the team skill set, interaction, and overall team performance. Teamwork and a single team identity are critical to a project's success. It is up to the project manager to ensure that the team is always motivated to perform at its best. Don't be afraid to be proactive in influencing stakeholders and management in order to get their support to ensure the team has what it needs to be successful. Inputs Human Resource Management Plan Project Staff Assignments Resource Calendars Tools and Techniques Interpersonal skills (page 275) These are known as the soft skills. As project manager, it is important to take the time to get to know the team and learn what makes each person tick. Using skills like: Influencing Empathy Listening
Training Team-Building Activities (page 276) Team building is forming the project team into a cohesive group working for the best interest of the project, to enhance project performance. The project manager should: Guide, manage, and improve the interactions of the team members. Improve trust and cohesiveness among the team members. Incorporate team-building activities into all project activities. Provide concerted effort and continued attention throughout the life of the project. Involve the team when creating the WBS. Begin team-building early in the life of the project. There are even formally identified stages of team formation and development, which can show up on the exam. These stages are: It is very important to understand Tuckman's Ladder or the Tuckman's Team Development Stages. There will almost certainly be a question on the PMP exam around it Forming o People are brought together as a team. Storming o There are disagreements as people learn to work together. Norming o Team members begin to build good working relationships. Performing o The team becomes efficient and works effectively together. This is the point when the project manager can give the most attention to developing individual team members. Adjourning o The project ends, and the team is disbanded. Ground Rules (page 277) Ground rules provide the structure for the team that is to be followed during the project. They are simply the project rules. Some project managers have addressed such things as: The team will be honest in all communications. How should a team member resolve a conflict with another team member? When should a team member notify the project manager that he or she is having difficulty with an activity? Is it allowable for people to interrupt one another in a meeting? Is it allowable for people to join a meeting late? Who is allowed to talk to the vice president about the project? Who is authorized to give direction to contractors? Colocation and virtual teams are two totally opposite techniques. You must understand the pros and cons of both, and be able to identify the most suitable option for any given situation Co-location A project manager might try to arrange for the entire team in each city to have offices together in one place or one room. This is called co-location and helps to improve communication, decrease the impact of conflict (since all parties are right there), and improves project identity for the project team and for management in a matrix organization. A war room is a central location for project coordination, usually with the WBS, network diagram, schedule, etc. posted on the walls. Recognition and Rewards In the Develop Project Team process, the project manager appraises performance and give out team-member-appropriate recognition and rewards, which were planned in the Plan Human Resource Management process. Personnel Assessment Tools These tools help the project team assess their strengths and weaknesses. These tools include: Attitudinal surveys Specific assessments Structured interviews Ability tests Focus groups Outputs Team Performance Assessments (page 278) Among the outputs or results of developing the project team are formal and informal team performance assessments. These assessments are done by the project manager and meant to evaluate and enhance the effectiveness of the team. This may include an analysis of how much team member's skills have improved; how well the team is performing, interacting, and dealing with conflict; and the turnover rate. The results of the assessment provide the project team with specific areas where the team can improve their performance by leveraging additional training, coaching, and mentoring. Enterprise Environmental Factors updates
Manage Project Team (Page 279) Managing a project team is different from developing the team. The Manage Project Team process is done during the executing process group and involves all the day-to- day management of people that are part of the project team. PMBOK Guide Definition Page 279 Mange Project Team is the process of tracking team member performance, providing feedback, resolving issues, and managing team changes to optimize project performance. Managing the project team is not an easy task. A project manager needs to undertake the following actions to help challenge the team members to be part of a superior performing team: Encouraging good communication Working with other organizations Using negotiation skills Observing what is happening Using an issue log Communicating openly Completing project performance appraisals Making good decisions Influencing the stakeholders Being a leader Inputs Human Resource Management Plan Project Staff Assignments Team Performance Assessments Issue Log Work Performance Reports Organizational Process Assets Tools and Techniques Observation and Conversation (page 282) As project manager you need to pay attention to the tone of the e-mails and phone conversations of your team as they will tell you more about what is going on than simply looking at reports. A project manager must be aware of what is happening with the team. You also need to spend time talking with the team members. Walk the floor if you can, assuming the team is not all virtual. Firsthand information is important to help validate the data that is coming from other sources. Project Performance Appraisals (page 282) Evaluation of employees' performance by those who supervise them is a common business practice around the world. This evaluation should include the employees' work on projects. The project manager can adjust the project to handle changes in performance based on these appraisals. A more sophisticated way to complete performance appraisals is to include the input of coworkers and subordinates, as well as supervisors. This may result in a clearer picture of actual performance and is called a 360-degree review. Always remember, the team members having a conflict are initially responsible for its resolution Conflict Management (page 282) Though many may think conflict is bad, it actually can present an opportunity for improvement. As most project managers know, conflict is inevitable. Conflict is INEVITABLE because of the: Nature of the project trying to address the needs and requirements of many stakeholders Limited power of the project manager Necessity of obtaining resources from functional managers The project manager's professional responsibility in managing the project includes minimizing conflict through the following actions: Informing the team of: o Exactly where the project is headed o Project constraints and objectives o The contents of the project charter o All key decisions o Changes Clearly assigning work without ambiguity or overlapping responsibilities Making work assignments interesting and challenging Following good project management and project planning practices Many project managers think that the main source of conflict on a project is personality differences. They may be surprised to learn that this is rarely the case. It only becomes personal if the root cause of the problem is not resolved. Exam Hint The following describes the seven sources of conflict in order of frequency. For the exam, MEMORIZE the top four and remember that Personality is last. 1. Schedule 2. Project priorities 3. Resources 4. Technical opinions 5. Administrative procedures 6. Cost 7. Personality Conflict is best resolved by those involved in the conflict. The project manager should generally try to resolve problems and conflict as long as he or she has authority over those in conflict or the issues in conflict. If not, the sponsor or functional managers may be called in to assist. There is one exception. In the instances of professional and social responsibility (breaking the law, ethics, etc.) the project manager must go over the head of the person in conflict. Exam Hint The following are the main conflict resolution techniques you will need to know for the exam. Make sure you notice that some have more than one title and you should know both. Always remember, there is no silver bullet technique for conflict management. Each approach has its own place and use Collaborate Problem Solve o Incorporating multiple viewpoints and insights. o Requires a cooperative attitude and open dialogue typically leading to consensus and commitment. Compromise - Reconcile o This technique involves finding solutions that bring some degree of satisfaction to both parties. o Temporarily or partially resolves the conflict. Withdraw Avoid o In this technique, the parties retreat or postpone a decision on a problem. o This is not usually the BEST choice for resolving conflict. Smooth Accommodate o This technique emphasizes agreement rather than differences of opinion. Force - Direct o This technique involves pushing one viewpoint at the expense of another. Do not forget to read Appendix X3 in the PMBOK Guide where interpersonal skills are covered in great detail Interpersonal Skills (page 283) Projects involve people, and people have their own ways of going about their work as well as their own opinions. In order to be able to move the team in the same direction, a project manager needs to be able to have a strong set of interpersonal skills. Some of the most used skills are: Leadership You will likely need to use many leadership styles throughout the life of a project. The term "situational leadership" refers to a manager using different leadership styles, based on the people and project work they are dealing with. During the beginning of a project, a project manager must provide more leadership to the team in order to get them off the ground and moving towards the objectives of the project. During the project executing, the project manager needs to do more coaching, facilitating, and supporting. You should be aware of the following terms related to leadership and management styles. You should understand how the following terms are used if you see them on the exam: Directing o This style involves telling others what to do. Facilitating o This style involves coordinating the input of others. Coaching o In coaching, the manager helps others achieve their goals. Supporting o This style involves providing assistance along the way. Autocratic o This is a top-down approach where the manager has power to do whatever he or she wants. The manager may coach or delegate, but everyone is doing what the manager wants them to do. Consultative o This bottom-up approach uses influence to achieve results. The manager obtains others' opinions and acts as the servant for the team. Consultative-Autocratic o In this style, the manager solicits input from team members, but retains decision-making authority for him or herself. Consensus o This style involves problem solving in a group, and making decisions based on group agreement. Delegating o In delegating, the manager establishes goals and then gives the project team sufficient authority to complete the work. For basic project management, the manager would involve the team in the planning process and assign or delegate planning work and executing work to team members. Bureaucratic o This style focuses on following procedures exactly. It may be appropriate for work in which detail is critical or in which specific safety or other regulations must be strictly adhered to. Charismatic o Charismatic managers energize and encourage their team in performing project work. With this style, project success may become dependent on the presence of the charismatic leader, and the team relies on the leader for motivation. Democratic or Participative o This style involves encouraging team participation in the decision- making process. Team members "own" the decisions made by the group, which results in the improved teamwork and cooperation. Laissez-faire o The French term has been translated as meaning "allows to act," "allow to do, " or "leave alone." A laissez-faire manager is not directly involved in the work of the team, but manages and consults as necessary. This style can be appropriate with a highly skilled team. Analytical o This style depends on the manager's own technical knowledge and ability. Analytical managers often make the technical decisions for the project, which they communicate to their teams. Interview style communication, in which the project manager asks questions to get the facts, is common with this style. Influencing Ability to persuade by articulating points clearly Active listening skills Be willing to understand all sides of a situation Gather all the information that is available Effective decision making Determine the goal that you need to accomplish Develop your team to allow them to make their own decisions Manage opportunity and risk Follow a consistent process Outputs Change Requests Project Management Plan Updates Project Documents Updates Enterprise Environmental Factors Updates Organizational Process Assets Updates Other Important Terms, Topics, and Theories One of the things that drive people crazy about the exam is that they see terms they do not know. You should realize that the exam does have made-up terms and processes as choices on the exam. The following should help you get more familiar with some real terms that have been on the exam that you may not have run across previously. Arbitration In arbitration, a neutral party hears and resolves a dispute. Perks Some employees receive special rewards, such as assigned parking spaces, corner offices, and executive dining. Fringe Benefits These are the "Standard" benefits formally given to all employees, such as education benefits, insurance, and profit sharing. McGregor's Theory of X and Y McGregor believed that all workers fit into one of two groups, X and Y. The exam describes this concept in many different ways. It can be confusing to determine which answer is correct or even what the choices are saying. Theory X o Managers who accept this theory believe that people need to be watched every minute. People are incapable, avoid responsibility, and avoid work whenever possible. Theory Y o Managers who accept this theory believe that people are willing to work without supervision and want to achieve. People can direct their own efforts.
Maslow's Hierarchy of Needs Maslow's message is that people are not most motivated to work by security or money. Instead, the highest motivation is to contribute and to use their skills. Maslow calls this "self-actualization." He created a pyramid to show how people are motivated and said that one cannot ascend to the next level until the levels below are fulfilled.
ExhibitMaslow's Hierarchy of Needs David McClelland's Theory of Needs (or Acquired Needs Theory) This theory states that people are most motivated by one of the three needs listed in the following table. A person falling into one category would be managed differently than a person falling into another category. Open table as spreadsheet Primary Need Behavioral Style Need for Achievement These people should be given projects that are challenging but are reachable. They like recognition Need for Affiliation These people work best when cooperating with others. They seek approval rather than recognition. Need for Power People whose need for power is socially oriented, rather than personally oriented, are effective leaders and should be allowed to manage others These people like to organize and influence others. Herzberg's Theory This theory deals with hygiene factors and motivating agents.
Hygiene Factors Poor hygiene factors may destroy motivation, but improving them, under most circumstances, will not improve motivation. Hygiene factors are not sufficient to motivate people. Examples of these are: Working conditions Salary Personal life Relationships at work Security Status Motivating Agents Responsibility Self-actualization Professional growth Recognition The lesson to project managers is that motivating people is best done by rewarding them and letting them grow. Giving raises is not the most effective motivator. This is generally good news for project managers, as they often do not have any influence over the pay raises of their team members. Project Human Resource Management Cheat Sheet
Open table as spreadsheet Process Descripti on Grou p Input Tools & Technique Output Plan HR Managem ent Identify, document, assign R & R & reporting structure. Plan Proj Mgt. Plan Activity resource require ments EEF, OPA Organization charts Position descriptions Networking Organization al theory Expert judgment Meetings Human resource manage ment plan Acquire Project Team Obtaining required project Execu te HRmgm t plan EEF, Negotiation Preassignme nt Staff assignm ents Process Descripti on Grou p Input Tools & Technique Output resources. OPA Acquisition Virtual teams Multi- criteria decision analysis Resourc e calendar s Proj. plan updates
Develop Project Team Develop individual or group skills to enhance project performan ce. Execu te HR mgmt. plan Staff assignm ents Resourc e calendar s
Interpersonal skills Training Recognition & rewards Team building Ground rules Colocation Assessment tools Team perform ance assessm ents Updates: EEF Manage Project Team Track team performan ce, providing feedback, resolving issues, managing changes to optimize project performan ce. Execu te HRmgm t plan Staff assignm ents Team perform ance assessm ents Issue log Work perf. reports OPA Observation & conversation Project performance appraisals Conflict mgmt Interpersonal skills Change requests Updates: EEF, plan, OPA, docs
Deep Dive into Project Communications Management Project Communications Management (Page 287) You will see in this section that the project manager spends the majority of their time communicating. PMBOK Guide Definition Page 287 Project Communications Management includes the processes that are required to ensure timely and appropriate planning, collection, creation, distribution, storage, retrieval, management, control, monitoring, and the ultimate disposition of project information. Project communication happens informally and formally at all times during the life cycle of the project. Successful communicators are effective because they have found a way to bridge the gap between the stakeholder preferences, the team's cultural differences, and many more obstacles to successful completion of the project. The following should help you understand how each part of communications management plan fits into the project process: Open table as spreadsheet The Communications Management Process Done During Plan Communications Management Planning Process Group Manage Communications Executing Process Group Control Communications Monitoring and Controlling Process Group Communication activity has many potential dimensions, including: Internal Formal Vertical Official Written Verbal Common communication skills that are important to any project manager: Listening actively and effectively Questioning Educating Fact finding Setting and managing expectations Persuading Negotiation Resolving conflict Summarizing, recapping and identifying next steps Plan Communications Management (page 289) When you initiate a project you go through the process of identify stakeholders (from the Stakeholder Management knowledge area) and their communication requirements and preferences. In the Plan Communications Management, you determine how to apply that information. PMBOK Guide Definition Page 289 Plan Communications Management is the process of developing an appropriate approach and plan for project communications based on stakeholders' information needs and requirements, and available organizational assets. The Plan Communications Management process involves determining what effective and efficient communication will be planned for the project, to whom, when, with what method, and how frequently. Communications in a project occur internally and externally to the core project team, vertically (up and down the levels of the organization), and horizontally (among peers). Many people forget communications between projects in their plan. That is a mistake because the other projects could take resources, cause delay, or cause some other problem on the project. In order to have clear, concise communications, the project manager must handle communications in a structured way and choose the best type of communication for the situation. Communications can be expressed in different ways formally or informally, written or verbal. The decision to determine which type to use needs to be made for each instance of communication. Take a look at the following chart: Open table as spreadsheet Communication types When Used Formal written Complex problems, project management plans, project charter, memos, communication over long distance Formal verbal Presentations, speeches Informal written Email, handwritten notes Informal verbal Meetings, conversations Inputs
Project Management plan Stakeholder Register Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Communication Requirements Analysis (page 291) The requirements are determined by the project stakeholders based on the type and format of the information they need about the project. The following are examples of different pieces of information that can be leverage for the requirements: Org charts Project organization and stakeholder responsibilities Disciplines, departments, and specialties Internal information needs External information needs Communication Channels A project manager needs to understand the number of stakeholders that need to be in the communication loop. Understand that communications are complex and need to be managed, especially when you consider that there are multiple paths or channels that communication must pass through Communication channels can be calculated with the following formula: o [n(n-1)]/2 Where N = number of people You should understand this formula. It is the only formula with the letter "N" in it on the exam. Communication Technology (page 292) There are many different methods to distribute information to the stakeholders and project team. The following are factors that will influence the technology choices: Urgency of the need for information Availability of technology Expected project staffing Duration of the project Project environment
Communication Models (page 293) Project management requires more formality with communications than simply sending an email and hoping it is read and interpreted properly. It is critical that communications are understood by the recipient. Because of this, it is important that you understand communication models. A communication model shows how information is sent and received between two parties. Communication models are framed around three parts: The sender The message The receiver Each message is encoded by the sender and decoded by the receiver. Factors like the receiver's education, experience, language, and culture affect the way the receiver decodes the message. Communication models often call these types of factors "noise." Communication models have several key components including: Encoding Message and feedback message Medium Transmitting Noise Decoding Acknowledging Feedback/Response Communication Methods (page 294) When planning communications, it is also important to determine the communication method. These methods can be grouped into the following categories: Interactive Communications o The method is reciprocal and can involve just two people or many people. o Examples include conversations, meetings, and conference calls Push Communications o This method involves a one-way stream of information. o The sender provides the information to the people who need it, but the sender does not expect feedback on the communication. o Examples include status reports and emailed updates Pull Communication o With this method, the project manager places the information in a central location. The recipients are then responsible for retrieving or "pulling" the information from the location. Meetings Outputs Communications Management Plan (page 296) The primary output of the Plan Communications Management process is a communications management plan. A communications management plan documents how you will manage and control communications. Since communications are so complex, the communications management plan should be in writing in order for the plan to be understood by all project team members and stakeholders. As with other management plans, the communications management plan becomes part of the project management plan. The communications management plan usually provides some of the following: Time frame and frequency of communication Defines who will receive information Technology that will be used to distribute the information Define how communications will be updated Stakeholder requirements Format and content guidelines Project Document Updates Project schedule Stakeholder register Manage Communications (page 297) While the project is being executed, many stakeholders will need to receive information about the project. The project manager is responsible for providing this information. It is important to remember that different stakeholders need to receive different information in various formats, and at different times. PMBOK Guide Definition Page 297 Manage Communications is the process of creating, collecting, storing, retrieving, and the ultimate disposition of project information in accordance to the communications management plan. This process involves making sure the communications are received, effective, and efficient. There are many ways that information can be distributed. The following are techniques for effective information distribution: Sender-receiver models Choice of media Writing style Meeting management techniques Presentation techniques Facilitation techniques Listening techniques Inputs Communications Management Plan Work Performance Reports Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Communication Technology Communication Models Communication Methods Information Management Systems (page 300) Project communications can be varied in the types as well as the tools used to distribute them. As project manager, these tools need to be documented and well understood. The tools available are: Hardcopy Electronic communication - examples o Email o Fax o Voicemail Electronic tools for project management o Project management software Performance Reporting This includes collecting and distributing project performance information, including status reports, progress measurements, and forecasts. Typical activities involve: Analysis of past performance Analysis of project forecasts Current status of risks and issues Work completion during the period Work to be completed in the next period Summary of approved changes Performance reports provide information that the team and stakeholders need to know. The level of reporting needs to meet the needs of the audience. The following are examples of what performance reports can convey: Reports should be designed for the needs of the project Reports should provide the kinds of information and the level of detail required by stakeholders. The best way to have a report read and acted on is to use the most appropriate communication method in sending it. Reports should include measurements against the performance measurement baseline included in the project management plan. Reports must be truthful and not hide what is really going on. Reports help the team members know where they need to recommend and implement corrective actions. Outputs Project Communications The Manage Communications process requires distributing project information to project stakeholders. This includes: Performance reports Deliverables status Schedule progress Cost incurred Project Management Plan Updates Project Documents Updates Organizational Processes Assets that may be updated can include, but are not limited to: Stakeholder notifications Project reports Project presentations Project records Feedback from stakeholders Lessons learned documentation This should have a title (Control Communications) Control Communications (page 303) The Control Communications process ensures an optimal, smooth, and steady information flow is maintained among all project stakeholders. This process is closely linked with the Control Stakeholder Engagement process from the Stakeholder Management Knowledge area. Together with the Control Stakeholder Engagement process, the Control Communications process looks at the project stakeholders' changing communications needs and accordingly adjusts the project communications management plan. PMBOK Guide Definition Page 303 Control Communications is the process of monitoring and controlling communications throughout the entire project life cycle to ensure the information needs of the project stakeholders are met. The Control Communications process can initiate a revisit to the Plan Communications Management and Manage Communications processes to review the communications management plan, and implement the revised plan respectively. Controlling the project communications and ensuring timely, effective and smooth communications is critical for the success of any project. Inputs Project Management plan Project Communications Issue Log Work Performance Data Organizational Process Assets Tools and Techniques Information Management Systems An information management system contains a set of standard tools for the project manager to capture, store and distribute project information to stakeholders. These tools may also information analysis and facilitate reports creation. Graphical capabilities allow project information to be visually represented. Expert Judgment Meetings Outputs Work Performance Information Change Requests Project Management Plan Updates Project Document Updates Organizational Process Assets Updates Project Communications Management Cheat Sheet
Open table as spreadsheet Process Descripti on Gro up Input Tools & Technique Output Plan Commutat ions Managem ent Determine what, when, who and how to communic ate with project stakehold ers Plan Project mgmt. plan Stakehold er register EEF OPA Requirem ents analysis Communi cation methods, models, & technolog y Meetings Communi cations mgmt plan Updates: docs Manage Communi cations Process to communic ate with the stakehold ers in a timely manner Exec ute Communi cations mgmt plan Work performan ce reports EEF OPA Communi cation technolog y Communi cation models Communi cation methods Informati on managem ent systems Performa nce reporting Project communic ations Updates: Plan, Docs, OPA Control Communi cations Ensure effective communic ations in a project. Cont rol Project mgmt. plan Project communic ations Issue log Work performan ce data OPA Informati on managem ent systems Expert judgment Meetings
Work performan ce informatio n Change requests Updates: Plan, Docs, OPA Deep Dive into Project Risk Management Overview Remember that the project risk is always in the future. If a risk occurs, it is no longer a risk; it is either an issue or a realized opportunity Risk Management is a critical topic of the exam as well as for any successful project. If there is one area to be absolutely sure you know well, this is it! When Risk Management is truly an integral part of project planning and carried out throughout the project, some of the following are no longer issues: There are no longer huge fires to put out every day they are eliminated in the risk response plan Risks are brought up in every meeting to be addressed before they happen If the risk events do happen, there is a plan in place to deal with them, meaning no more hectic meetings to develop a response PMBOK Guide Definition page 309 Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. "Known-unknowns" are the risks that the project team has already identified. The "Unknowns-unknowns" are the risks that have not been identified Risk is all about the uncertainty of data or situations that a project will face. The team and project manager look out into the future and see if they can identify the problems or obstacles the project will face. The ability to look into the future is possible because as a project manager you have planned well during the early stages of the project with a focus on risk. The time spent here allows for you to not, as we mentioned above, spend time during the project fighting fires. That time is spent looking out at what is coming and focusing on the future because the present is moving forward. The definition and perception of risk is as variable as the people involved on the project. As project manager, it is very important that you and the project team develop a consistent approach to how risk will be managed. Make sure that from top to bottom, everyone agrees on the risk management approach. Be sure that includes the project team as well as the stakeholders.
Open table as spreadsheet The Risk Management Process Done During Plan Risk Management Planning Process group Identify Risks Planning Process group Perform Qualitative Risk Analysis Planning Process group Perform Quantitative Risk Analysis Planning Process group Plan Risk Responses Planning Process group Control Risks Monitoring and Controlling Plan Risk Management (page 313) Plan Risk Management, a process that defines how risk management will be structured and performed for the project, is something that everyone and every organization that is impacted by the project should actively participate. Risk management efforts should be appropriate to the size and complexity of the project, as well as the experience and skill level of the project team. Risk management requires time and thought. PMBOK Guide Definition pg. 313 Plan Risk Management is the process of defining how to conduct risk management activities for a project. Successful risk management cannot be done with just a standardized checklist of risks from past projects. Each project is different and the uniqueness of the project needs to be accounted for in the Plan Risk Management process. The more time spent, the higher the probability of successfully managing the risks for the project. Inputs Project Management Plan Project Charter Stakeholder Register Enterprise Environmental Factors Organizational Process Assets that can influence Plan Risk Management can include, but are not limited to: Risk categories Common definition of concepts Risk statement formats Standard templates Roles and responsibilities Authority levels of decision making Lessons learned Tools and Techniques Analytical Techniques Stakeholder risk profile analysis Strategic risk scoring sheets Expert Judgment Meetings (page 316) We talked about the importance of planning to make sure that Plan Risk Management had been thorough. Similar to what was done to create the requirements management plan, the project team should hold planning meetings to develop the risk management plan. During the meeting, the team should outline the risk activities as well as outline the possible costs associated with the activities. Risk contingency reserves may be established based on the identified risks. The outputs of these activities will be incorporated into the Risk Management Plan. Outputs Risk Management Plan (page 316) Like other management plans, the risk management plan will describe how risk management will be structured and performed on the project by the team. The plan includes the following: Methodology o This section defines how you will perform risk management for the particular project. Remember to adapt to the needs of each project. Roles and Responsibilities o Defines who will do what from leadership to support. o Outlines the responsibilities for each role o Remember that non-team members may have roles and responsibilities Budgeting o This section includes the cost for the risk management process. Timing o This section talks about when and how often to do risk management for the project. o Risk management should start as soon as you have the appropriate inputs and should be repeated throughout the life of the project, since new risks can be identified as the project progresses and the degree of risk may change. Risk Categories o Categories help to structure the risks that have been identified. o These categories can include things like technology changes, lack of resources, or cultural issues. o Companies and project management offices can have standard lists of risk categories that all project teams can use to help identify risks. Definition of Risk Probability and Impact o Given that each person has a different perception of risk, it is important to have a standard baseline for the team to judge each risk as well as how to measure and quantify the impact of a potential risk. Stakeholder Tolerances o Tolerance should not be implied, but uncovered in project initiating and clarified or refined continually. Reporting Formats o This describes any reports related to risk management that will be used and what they will include. Tracking o Take this to mean how the risk process will be audited, and documents what happens with risk management activities. More on Risk Categories and Types There are many ways to classify or categorize risk, such as: External o Regulatory, environmental, governmental, market shifts I nternal o Time cost, or scope changes; inexperience; poor planning; people; staffing; materials; equipment Technical o Changes in technology Unforeseeable o Only a small portion of risks (some say about 10%) are actually unforeseeable A better way to categorize or classify risks is based on specific categories of risk that may occur on your projects. There is research on risk that shows over 300 potential categories of risk. These include risks caused by or generated by: The customer Lack of project management effort Lack of knowledge of project management by the project manager and stakeholders The customer's customers Suppliers Resistance to change Cultural differences Another way to categorize risks is by source: Schedule Cost Quality Scope Resources Customer satisfaction Stakeholder satisfaction Exam Hint Expect the phrases "source of risk" and "risk categories" to be used interchangeably on the exam. Risk categories or sources of risk can be organized in an organizational chart or WBS-like format called a risk breakdown structure, also referred to as an RBS. Types of Risk In addition to risk categories, risk can be classified under two main types: Business Risk o Risk of gain or loss Pure (Insurable) Risk o Only a risk of loss Please note that, although the Identify Risks is a process from the planning process group, it is an iterative process. This process must be periodically visited until the closure of the project Identify Risks (Page 319) Risks are present in every project and can come from any areas. That is why it is critical that everyone participate in the process to identify project risks. That is because each person has a different perspective of the project and can provide thought on opportunities and threats. PMBOK Guide Definition pg. 319 Identify Risks is the process of determining which risks may affect the project and documenting their characteristics. As a project manager, you need to begin looking for risks as soon as a project is first discussed. In fact, the PMBOK Guide lists high-level risks as an output of the creation of the project charter in integration management. The majority of risk identification effort takes place during planning, as the information becomes clearer during scope baseline (the project scope statement, WBS, and WBS dictionary) which is an important input to risk identification. Exam Hint Even though the majority of risks will be identified during the initiating and planning of a project, don't forget that a smaller numbers of risk may also be identified during later parts of the project. Risks should be continually reassessed. The exam will specifically look for you to include risk identification during such activities as integrated change control, when working with resources, and when dealing with project issues. Risks generally are considered to be negative impacts to a project, but that is not always the case. There are positive risks that will be identified. Be sure to be on the lookout for both. Inputs Risk Management Plan Cost Management Plan Schedule Management Plan Quality Management Plan Human Resource Management Plan Scope Baseline Activity Cost Estimates Team should undertake reviews of cost estimates. Based on the reviews, risk will be identified if the cost estimate is not deemed sufficient to complete the activity. Activity Duration Estimates Stakeholder Register Project Documents including, but not limited to: Assumptions log Work performance reports Earned value reports Network diagrams Baselines Other project information Procurement Documents Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Documentation Reviews Information Gathering Techniques (page 324) Remember Collect Requirements? In that section we mentioned that many of the techniques used to collect requirements can be used to help identify risks. The following are some examples of the techniques available: Remember that the Delphi technique is preferred when influential stakeholders can introduce bias into the risk data Brainstorming Delphi technique Interviewing Root cause analysis Checklist Analysis (page 325) The checklist of risk categories was previously described in the Plan Risk Management process. This checklist is used to help identify specific risks within each category. Assumptions Analysis (page 325) Analyzing what assumptions have been made on the project and if they are valid may lead to the identification of more risks. Diagramming Techniques (page 325) Some of the tools described in the Quality Management section can also be used to analyze the root causes of issues. These include cause and effect diagrams and flowcharts. When used as part of risk identification, they help identify additional risks for the project. The techniques are: Cause and effect diagrams Fishbone & Ishikawa diagrams System or process flow charts Influence diagrams SWOT Analysis (page 326) This analysis looks at the project to identify its Strengths and Weaknesses and thereby identify risks (Opportunities and Threats). Expert Judgment Outputs Risk Register (page 327) The risk register is where most of the risk information is collected and managed. Think of it as one document for the entire life of the risk management process. It is a document that will be constantly updated with information as Identify Risks and later risk management processes are completed. Exam Hint Notice that an updated risk register is the only output of several of the risk management processes. Read exam questions carefully, as the risk register contains different information depending on when in the risk management process the question is referencing At this point in the risk management process, the risk register includes: List of identified risks List of potential responses o Though risk response planning occurs later, one of the things experienced risk managers know is that it is not always logical to separate work on each part of the risk management process. o There will be times when a response is identified at the same time as a risk. o These responses should be added to the risk register as they are identified, and analyzed later as part of risk response planning. Root causes of risk o The root causes of risk are documented. Updated risk categories o Make sure you are aware that lessons learned does not just happen at the end of the project. Remember that the Perform Qualitative Risks analysis is quicker but less accurate than the Perform Quantitative Risk Analysis process Perform Qualitative Risk Analysis (Page 328) Qualitative risk analysis involves creating a short list of previously identified risks. The shortlisted risks will then be further analyzed in the Perform Quantitative Risk Analysis process or will move into the Plan Risk Response process. PMBOK Guide Definition Page 328 Perform Qualitative Risk Analysis is the process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact. Remember that qualitative risk analysis is a subjective analysis of the risks identified. The analysis is usually a very cost effective means of establishing priorities given that you are just asking for people's opinions. To perform this analysis, the following are determined: The probability of each risk occurring, using a standard scale such as Low, Medium, High or 1 to 10. The impact (amount at stake or consequences, positive or negative) associated with the occurrence of each risk, using a standard scale such as Low, Medium, High or 1 to 10. Inputs Risk Management Plan Scope Baseline Risk Register Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Risk Probability and Impact Assessment (page 330) The assessment examines the likelihood of the risk occurring. Then the impact looks at the potential effect on the project if the risk materializes. Probability and Impact Matrix (page 331) Because qualitative risk analysis is based on subjective evaluation, the rating of any one risk can vary depending on the bias of the person doing the rating and how risk averse they are. Therefore, organizations frequently have a standard rating system to promote a common understanding of what each risk rating means. This standard is shown in a probability and impact matrix. Qualitative Risk Analysis Matrix Open table as spreadsheet Likelihood Consequences Insignificant Minor Moderate Major Severe Almost certain M H H E E Likely M M H H E Possible L M M H E Unlikely L M M M H Rare L L M M H This matrix may be used to sort or rate risks to determine which ones warrant an immediate response and which ones should be put on the watch list. The matrix may be standardized within the organization or department, or customized to the needs of the project. Such a matrix results in a consistent evaluation of scale being used for all projects.
Risk Data Quality Assessment (page 332) A risk data quality assessment requires having accurate and unbiased data. The analysis examines the quality of the data and determines if that data quality is sufficient to continue to assess the risk or if better data is needed. The assessment may include determining the following for each risk: Extent of the understanding of the risk Data available about the risk Quality of the data Reliability and integrity of the data Risk Categorization Risk Urgency Assessment (page 333) We look at risk from many different angles. As a project manager, we create a short list of risks, but even those risks are not created equal. We need a way to determine which risks require our near term attention. This is the urgency assessment. Urgent risks may then move independently into risk response planning, while the rest continue through quantitative risk analysis, or they may simply be the first ones for which you plan a response in risk response planning. A project manager may consider both the urgency of the risk and the risk's probability and impact rating to determine the overall severity of the risk. Expert Judgment Outputs Project Documents Updates Risk Register Updates o Relative ranking or priority list of project risks (page 294) Qualitative risk analysis can lead to a number to be used to rank the project in comparison to others. The impact of this is that once you complete risk response planning, you can then redo qualitative risk analysis and PROVE the value of your efforts o Risks grouped by categories o Cause of risk or project areas requiring particular attention o List of risks requiring response in the near term o List of risks for additional analysis and response o o Watch lists of low-priority risks o Trends in qualitative risk analysis results Assumptions log updates Always remember that the Perform Quantitative Risk Analysis process is performed on the risks already analyzed and prioritized by the Perform Qualitative Risks Analysis process Perform Quantitative Risk Analysis (Page 333) This involves a numerical analysis of the probability and impact (likelihood of occurrence as well as the amount at stake or consequences) of the risks moved forward to this process from qualitative risk analysis. Quantitative risk analysis also looks at how risks affect the objectives of the project. The purpose of quantitative risk analysis is to: Determine which risk events warrant a response Determine overall project 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 costs, schedule, or scope targets Many people get confused between qualitative and quantitative risk analysis. Remember that qualitative risk analysis is a subjective evaluation, even though numbers could be used for the rating. In contrast, quantitative risk analysis is a more objective or numerical evaluation: rating of each risk is based on an attempt to measure the actual probability and amount at stake (impact). Inputs Risk Management Plan Cost Management Plan Schedule Management Plan Risk Register Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Data Gathering and Representation Techniques (page 336) Interviewing Probability distributions (page 337) Quantitative probability and impact can be determined in various ways, including the following: o Interviewing o Cost and time estimating o Delphi technique o Use of historical records from previous projects o Expert judgment o Expected monetary value analysis o Monte Carlo analysis o Decision tree Quantitative Risk Analysis and Modeling Techniques Sensitivity analysis (page 338) This analysis helps to determine which risk can have the most potential impact on the project. Practice the expected monetary value analysis and decision tree analysis techniques. You can expect to see questions which cover these techniques on the exam Expected monetary value analysis (page 339) To evaluate a risk, you can look at the probability or the impact, but calculating the expected monetary value is a better measure to determine an overall ranking of risks. Expected monetary value (EMV) is simply probability (P) times impact (I) o EMV = P x I Decision Tree: o A decision tree takes into account future events in trying to make a decision today. o It calculates the expected monetary value (probability x impact) in more complex situations than the expected monetary value example previously presented. o It involves mutual exclusivity (previously explained in the Quality Management section) Some examples of decision trees have the costs occurring only at the end of the project, while others have costs occurring in the middle or early in the project. Because a decision tree models all the possible choices to resolve an issue, costs can appear anywhere in the diagram, not just at the end. On the exam, don't get confused when you look at different decisions trees. Pay attention to the data provided in the question in order to correctly interpret the answer. Modeling and Simulation (page 340) Simulation and modeling allows the project team to process the volume of data required to assess the risk. A technique that is often used is Monte Carlo. Monte Carlo analysis (or other simulation techniques) uses the network diagram and estimate to "perform" the project many times and to simulate the cost or schedule results of the project. This technique can be extremely valuable, but there have traditionally been only one or two questions about Monte Carlo analysis on the exam. It is mentioned as a choice a little more frequently, however.
ExhibitSample Decision Tree illustration Exam Hint Monte Carlo analysis: Is usually done with a computer-based Monte Carlo program because of the intricacies of the calculations Evaluates the overall risk in the project Provides the probability of completing the project on any specific day, or for any specific costs Provides the probability of any activity actually being on the critical path Expert Judgment Outputs Project Documents Updates Including Risk Register Updates Plan Risk Responses (Page 342) In risk response planning, you find ways to reduce the threat or eliminate it entirely, as well as find ways to make opportunities more likely or increase their impact. Responses may include doing one or all of the following for each top risk: Do something to eliminate the threats before they happen Do something to make sure the opportunities happen Decrease the probability and/or impact of threats or increase the probability and/or impact of opportunities PMBOK Guide Definition page 342 Plan Risk Responses is the process of developing options and actions to enhance opportunities and to reduce threats to project objectives. This process takes the prioritized list and determines the activities needed to address the risk as well as the resources responsible for the activities. The response needs to be appropriate to the significance of the risk. Exam Hint Qualitative risk analysis, quantitative risk analysis, and risk response planning do not end once you begin work on a project. You need to review risks throughout the project and then return to planning to determine what to do about any newly identified risks. Risk ratings and response strategies for existing risks can also change later in the project as more information about the risks and the selected strategies becomes known. Ratings and response strategies must be reviewed for appropriateness over the life of the project as well. Inputs Risk Management Plan Risk Register Tools and Techniques Strategies for Negative Risks or Threats (page 344) We respond to risks, as we have said, in many different ways depending on the risks. As we look to how we are going to respond to a risk, we can look to different strategies that can be employed to help. It is important to remember that a single strategy per risk is not the only approach. There can be a mix of strategies that are deployed that can be effective for each risk. Responding to threats or opportunities: Strategies must be timely. The effort selected must be appropriate to the severity of the risk avoid spending more money preventing the risk than the impact of the risk would cost if it occurred. One response can be used to address more than one risk. More than one response can be used to address the same risk. A response can address a root cause of risk and thereby address more than one risk. Involve the team, other stakeholders, and experts in selecting a strategy. There are four negative risk management approaches. None of the four approaches is best; each approach has its place and use The following are strategies that can be used: Avoid o Eliminate the threat by eliminating the cause. o The most radical option would be to shut down the project Mitigate o Reduce probability or the impact of a threat, thereby making it a small risk and removing it from the list of top risks on the project. o Options for reducing the probability are looked for separately from options for reducing the impact. o Any reduction will make a difference, but the option with the most probability and/or impact reduction is often the option selected. Transfer o Make another party responsible for the risk by purchasing insurance, performance bonds, warranties, guarantees, or outsourcing work. o One must complete risk assessment before a contract can be signed. o Transfer of risk is included in terms and conditions of the contract. Strategies for Positive Risks or Opportunities (page 345) You need to remember again that risks can have a positive impact on the project. The following are ways we can take advantage of those positive risks: Exploit o Be able to add work or change the project to make sure the opportunity occurs Share o Allocate ownership of the opportunity to a third party (forming a partnership, team, or joint venture) that is best able to achieve the opportunity Enhance o Increase the probability that the opportunity will occur Accept o Take advantage of the opportunity without having to actively pursue it. Contingent Response Strategies Expert Judgment
Outputs Project Management Plan Updates that may be impacted and need an update Schedule management plan Cost management plan Quality management plan Procurement management plan Human resource management plan Work breakdown structure Scope baseline Schedule baseline Cost baseline Project Documents Updates Risk Register Updates The risk register should be an accurate reflection of the current state of the project and the risks that have been identified. The content of the register should be written so that the high to moderate risks have the most details so it response to them is clear. The Risk Register should include information on items such as: o Identified Risks Description of each risk Impact to project objective o Response plans Response plans are plans describing the specific actions that will be taken if the opportunity or threat occurs. o Risk response owners A key concept in risk response planning is that the project manager does not have to do it all and neither does the team. Each risk must be assigned to someone who may help develop the risk response and who will be assigned to carry out the risk response or "own" the risk. The risk response owner can be a stakeholder other than a team member. o Secondary risks An analysis of the new risks created by the implementation of selected risk response strategies should be part of risk response planning. Frequently what is done to respond to one risk will cause other risks to occur. o Risk triggers These are events that trigger the contingency process. The early warning signs (indirect manifestations of actual risk events) for each risk on a project should be identified to know when to take action.
o Contracts A project manager must be involved before a contract is signed. Before the contract is finalized, the project manager will have completed a risk analysis and included opportunities. Any contract issued to mitigate risks should be noted in the risk register. o Fallback plans These are specific actions that will be taken if the contingency plan is not effective. o Reserves There can be two kinds of reserves for time and costs: contingency reserves and management reserves. Contingency reserves are kept for the unknown and are a perfect fit for risks. Make sure you realize that reserves are not an additional cost to the project. o Assumptions log updates The assumptions need to be kept up to date as information becomes available. This is an area that many times does not get updated. Technical documents updates Change requests Control Risks (Page 349) Given the amount of time that is invested in Risk Management during initiating and planning a project, you can't let up once the project gets underway. Monitoring and controlling the executing side and keeping up with the impact to the risks are critical. PMBOK Guide Definition pg. 349 Control Risks is the process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project. The purpose of the process is to help determine if: o Project assumptions are valid o Analysis shows an assessed risk changed or can be retired o Risk management policies and procedures are being followed o Contingency reserves of cost or schedule should be modified in alignment with the current risk assessment By ensuring that a project manager is on top of managing the risks, the team will be prepared to address any obstacle that is presented. The project manager will be able to implement a contingency or fallback plan. They will know who exactly to go to because clear ownership and responsibility has been created. Finally, the information that was gathered from this project will be leveraged by the organization on future projects. Inputs Project Management Plan Risk Register Work performance data needs to be current. Getting up to date data on such as those listed below is important: Deliverable status Schedule progress Costs incurred Work Performance Reports Tools and Techniques Risk Reassessment (page 351) It is important that the team periodically review the risk management plan and the risk register and adjust them as required. A good opportunity to do that could be a team meeting or even a separate meeting. Remember, a result of such reviews may be additional qualitative or quantitative risk analysis, as well as further risk response planning. Risk Audits (page 351) A risk audit will ask your project team to prove that you have identified all the risks that can be or should be identified for your project, that you have plans for each of the major risks, and that risk response owners are prepared to take action. The audit is arranged by the project manager and results in identification of lessons learned for the project and for other projects in the organization. Variance and Trend Analysis Technical Performance Measurement Reserve Analysis (page 352) This compares the amount that was set aside in the contingency reserve and the remaining amount of risk remaining at any time on the project in order to see if the reserve is adequate. Meetings Outputs Work Performance Information Change Requests (Page 353) When response plans are implemented, those activities may result in change requests being created. Don't forget that the actions taken may require their own contingency plans. Recommended corrective actions Recommended preventive actions Project Management Plan Updates Risk monitoring and control can result in updates to the schedule, cost, quality, and procurement management plans, as well as the human resource management plan, the WBS, and the time and cost baselines for the project. Project Document Updates Risk Register Updates examples are: o Outcomes of the risk reassessments and risk audits o Updates to previous parts of risk management, including the identification of new risks o Closing of risks that are no longer applicable o Details of what happened when risks occurred o Lessons learned Organizational Processes Assets Updates Exam Hint The following are examples of Risk Management errors that you want to avoid or be aware of for the exam: Risk identification is completed without knowing enough about the project. Risk identification ends too soon, resulting in a brief list rather than an extensive list. The processes of Identify Risks through Perform Quantitative Risk Analysis are blended, resulting in risks that are evaluated or judged as they come to light. This decreases the number of total risks identified and causes people to stop participating in risk identification. The risks identified are general rather than specific. Some things considered to be risks are not uncertain; they are facts, and are therefore not risks. Whole categories (technology, cultural, marketplace, etc.) of risks are missed. Only one method is used to identify risks rather than a combination of methods. A combination helps ensure that more risks are identified. The first risk response strategy identified is selected without looking at other options and finding the best option or combination of options. Risk management is not given enough attention during project executing. Project managers do not explain the risk management process to their team during project planning. Project Risk Management Cheat Sheet
Open table as spreadsheet Process Descriptio n Grou p Input Tools & Technique Output Plan Risk Managem ent Determine approach and plan risk mgmt activities Plan Project mgmt. plan Charter Stakehold er register EEF OPA Analytical techniques Expert Judgment Meetings
Risk manage ment plan Identify Risks Determine and document characteris tics of potential risks Plan Risk, cost, schedule, Quality, HR managem ent plans Scope baseline Activity cost estimates Activity duration estimates Stakehold er register Project Documen ts EEF and OPA Documentati on reviews Info gathering techniques Checklist analysis Assumption analysis Diagrammin g techniques SWOT analysis Expert judgment Risk register Process Descriptio n Grou p Input Tools & Technique Output Qualify Conduct qualitative analysis of risks and conditions and prioritize their effects Plan Risk managem ent plan Scope baseline Risk register EEF OPA Risk P/I assessment P/I matrix Risk data quality assessment Risk Categorizati on Risk urgency assessment Expert judgment Update s: Docs (risk register ) Quantify Measure probability and consequen ces of risks and estimate implicatio ns for project objectives Plan Risk managem ent plan Cost managem ent plan Schedule mgmt plan Risk register EEF OPA Data gathering & representatio n techniques Risk analysis & modeling techniques Expert judgment Update s: Docs (risk register ) Response s Develop options and actions to enhance opportunit ies and reduce threats to the project's objectives Plan Risk managem ent plan Risk register Strategies for positive risks Strategies for negative risks Contingent response strategies Expert judgment Update s: plan; docs (risk register ) Control Monitor residual risks, identifying new risks, Contr ol Project mgmt. plan Risk register Risk reassessment s Audits Variance, Work perform ance informa tion Process Descriptio n Grou p Input Tools & Technique Output executing risk response plans and evaluating their effectiven ess. Work performa nce data Work performa nce reports Trend & Reserve analysis Technical performance measuremen t Meetings Change request s Update s: plan, OPA, docs (risk register )
Deep Dive into Project Procurement Management Like formulas, this is an area of the exam that concerns many people. The main reason is that there are project managers that don't have a great deal of experience with procurements. They have other people in their organization that handle that stuff. Unfortunately, it is an important part of the exam and one that you must know and know well. Fortunately, you have all the information you need in the coming pages.. PMBOK Guide Definition Page 355 Project Procurement Management includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team. The Project Procurement Management Knowledge Area in the PMBOK Guide is targeted towards the "buyer" of a contract. The "seller" should apply all ten knowledge areas processes for contract management The following should help you understand how each part of procurement management fits into the project management process: Open table as spreadsheet The Procurement Management Process Done During Plan Procurement Management Planning Process Group Conduct Procurements Executing Process Group Control Procurements Monitoring and Controlling Process Group Close Procurements Closing Process Group General Overview: Procurement is a formal process by which many organizations obtain goods and services. In addition to contracts, outputs of the procurement management process include: Procurement management plan Procurement statements of work (SOW) Procurement documents Change requests Additional procurement documentation Lessons learned In most organizations, there is a department that handles and controls procurements. It is important to note that private companies have a lot of flexibility in their procurement practices, whereas government entities normally have to comply with laws, rules, and regulations. This department is often called the procurement, contracting, purchasing, or legal department. Project managers may not take the lead in many of the steps within the process but they must be familiar with all the steps. At the start of the project during planning, the work is analyzed to determine if internal resources can do everything. If not, then the work will be outsourced. The project manager will then decide how many procurements are needed. In most cases, the procurement department gets involved in the project to manage the procurements process. A project manager must understand what these procurement experts will need from them, provide the experts with that information, and then work with the procurement department throughout the life of the procurement. Once the decision has been made to procure goods or services from an outside source, the project manager will facilitate creating a plan for how the procurement process will proceed (a procurement management plan) and will create a description of the work to be done by the seller (a procurement statement or work). In addition, the procurement manager determines what type of contract and procurement documents should be used. Some of the most common procurement documents are: Request for Proposals (RFP) Invitation for Bid (IFB) Request for Quotation (RFQ) The type of procurement document used is connected to the contract type selected and the form of the procurement statement of work. The procurement department may review the scope of work for completeness, and the project manager might add scope related to the project management activities, resulting in the finalized procurement statement of work. This procurement statement of work is then combined with the contract terms to form the finalized procurement documents, which are sent to prospective sellers. At this point, the seller needs to take action and the buyer just waits. The prospective sellers will review the procurement documents and determine whether they are interested in submitting a bid or proposal to try to win the work. They may have the opportunity to submit questions relating to the procurement documents as part of the process. They would need to do that before the deadline for bids or proposals. It is important to note that the time that prospective sellers need to prepare a response to the procurement documents can be substantial (sometimes taking months), and so the project manager must plan this time into the project schedule. In most cases, procurement is competitive. There will generally be multiple sellers who can do the work and who are invited to submit a response to the procurement documents. Organizations may use several different methods to select a seller, but in the case of government agencies these methods may be dictated by law or internal policies. If the buyer receives competing submissions from many perspective sellers, the buyer might ask for presentations from all of the sellers or a select group of sellers. The buyer will then move into negotiations with the preferred seller or with more than one seller. All terms and conditions in the proposed contract, the entire procurement statement of work, and any other components of the procurement documents can be negotiated. Negotiations can take a lot of time, and they require the involvement of the project manager. At the end of the negotiations, one or more of the sellers are selected, and a contract is signed. The procurement management plan created earlier may also be updated. Notice that the procurement process doesn't end when the contract is entered into. Once the contract is signed, the procurement must be controlled. This involves making sure all the requirements of the contract, even ones that seem unimportant, are met. It also means keeping control of the contract and making approved changes. Once the procurement work is complete, the procurement will be closed. This includes the completion of a procurement audit to determine lessons learned. Since there can be many different procurements involved with any one project, the process of closing a procurement can occur many times on a project. Because there is only one project, the overall project is closed just once, upon completion of all the project work, unless the project is managed in phases. In that case, the Close Project or Phase process occurs at the end of each phase, after procurements completed in that phase have been closed out. Make sure you understand the difference between closing individual procurements and closing the project or project phase. During procurement closure, final reports are submitted, lessons learned are documented, and final payment is made. See now you are an expert! Exam Hint Seller and Buyer: In the real world, the company or person who provides services and goods can be called a "contractor," "subcontractor," "designer," or other titles. The PMBOK Guide uses only one term, "seller," but the exam may use any of these terms to describe the seller. The company or person who purchases the services is called the "buyer." Plan Procurement Management An important aspect of plan procurement management is to determine if any outside support will be needed. If so, then during the plan procurement management all the details that a seller will need in order to determine if they can meet the requirements will need to be defined and communicated. PMBOK Guide Definition Page 358 Plan Procurement Management is the process of documenting project purchasing decisions, specifying the approach, and identifying potential sellers. Don't forget about risks. In Plan Procurement Management, the team will need to identify and consider the risks that are involved in each make-or-buy decision that is made. Review items in the contracts of the sellers to manage those risks or ensure that risks that had been identified are being mitigated by transferring them to the seller. Inputs Project Management Plan Scope statement WBS WBS dictionary Requirements Documentation Risk Register Activity Resource Requirements Project Schedule Activity Cost Estimates Stakeholder Register Enterprise Environmental Factors can include, but are not limited to: Market conditions Product, services, and results that are available Suppliers, including past performance Typical terms and conditions for products and services Unique local requirements Organizational Process Assets Formal procurement policies and procedures Management systems Supplier system Contract types There are three basic types of contracts. Each one has its place and use. You must understand the differences and especially understand how different contract types determine the final costs of a contract There are many different types of contracts that can be chosen to acquire the goods and services needed on a project. The procurement manager will select the contract type based on the following considerations: o What is being purchased (a good or a service) o The completeness of the scope of work o The level of effort and expertise the buyer can devote to managing the seller o Whether the buyer wants to offer the seller incentives o The marketplace or economy o Industry standards for the type of contract used There are sometimes different names for the same type of contract. This can make it very difficult to learn the contract types. So here is a trick. Start out thinking that there are just three main categories of contract types, as shown in the following list. Then, when the exam asks a question relating to contract type, first see if knowing which category it is in helps you answer the question. The three categories of contracts are: Fixed-price contracts are more risky for the seller; Cost-reimbursable contacts are more risky for the buyer o Fixed Price (FP) o Time and Materials (T&M) o Cost Reimbursable (CR) You must understand the contract types and be able to recognize the differences between them. You should be able to answer situational questions describing what you would do differently depending on the contract type. There may also be questions that require you to pick the most appropriate contract type based on a described situation. Fixed Price (Page 362) A fixed price contract is used for acquiring goods or services with well- defined specifications or requirements, and when there is enough competition to determine a fair and reasonable fixed price before the work begins. This is the most common type of contract. If the costs end up being more than the agreed upon amount, the seller must bear the additional costs. Therefore, the buyer has the least cost risk in this type of contract, provided the buyer has a completely defined scope. It could be said that the seller is most concerned with the procurement statement of work (SOW) in this type of contract. There are many organizations that are not informed about contracts, they often ask the seller to provide a fixed price, even when the scope of work is incomplete. Think for a minute about the consequences of doing this: o Seller is forced to accept a high level of risk. o The seller would need to add a huge amount of reserve to their price to cover their risks, and the buyer, therefore, pays more than they might otherwise have. o The seller can more easily try to increase profits by cutting scope or claiming that work the buyer wants is outside the contract and thus requires a change. The buyer will not be able to state with certainty if something is within the scope of the work as specified by the procurement statement of work or outside of it if there is not a complete procurement statement of work. Fixed Price Incentive Fee (FPIF) In a FPIF contract, profits (or financial incentives) can be adjusted based on the seller meeting specific performance criteria such as getting work done faster, cheaper, or better. The final price is calculated by the formula based on the relationship or final negotiated costs to the total target cost. A variation on a FPIF is a FPIF successive target contract, in which the target for the incentive is changed after the first target is reached. Fixed Price Award Fee (FPAF) In a FPAF contract, the buyer pays a fixed price (which includes the fee) plus an award amount (a bonus) based on performance. This is very similar to the FPIF contract, except the total possible award amount is determined in advance and appropriated based on performance. In many instances, the award amount is judged subjectively. Therefore, procedures must be in place in advance for giving out the award, and a board must be established to help make the decision fairly. The cost to administer the award fee program versus the potential benefits must be weighed in the decision to use this type of contract. Fixed Price Economic Price Adjustment (FPEPA) If there are questions about future economic conditions (future price) for contracts that exist for a multi-year period, a buyer might chose a fixed price contract with economic price adjustment. Future costs of supplies and equipment that the seller might be required to provide under contract might not be predictable. 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 (signed by both parties). It is usually used for simple commodity procurement. Purchase orders become contracts when they are "accepted" by performance. Time and Material or Unit Price (Page 364) In this type of contract, the buyer pays on a per-hour or per-item basis. It is frequently used for service efforts in which the level of the effort cannot be defined at the time the contract is awarded. It has elements of a fixed price contract (in the fixed price per hour) and the cost reimbursable contracts (in material costs and the fact that the total cost is unknown).
Cost Reimbursable (Page 363) A cost reimbursable contract is used when the exact scope of the work is uncertain and, therefore, costs cannot be estimated accurately enough to effectively use a fixed price contract. This type of contract provides for the buyer to pay the seller allowable incurred costs to the extent prescribed in the contract. This type of contract requires the seller to have an accounting system that can track costs by project. Here the buyer has the most cost risk because the total costs are unknown. Research and development or information technology projects in which the scope is unknown are typical examples of cost reimbursable contracts. The following are common forms of cost reimbursable contracts. Cost Contract A cost contract is one which the seller receives no fee (profit). It is appropriate for work performed by nonprofit organizations. Cost Plan Fee or Cost Plus Percentage of Costs A CPF or CPPC contract requires the buyer to pay for all costs plus a percentage of costs as a fee. This type of cost reimbursable contract is not allowed for U.S. federal acquisitions or procurement under federal acquisition regulations and is bad for buyers everywhere. Cost Plus Fixed Fee (CPFF) A cost plus fixed fee contract provides for payment to the seller of the actual costs plus a negotiated fee that is fixed before the work begins. The fee does not vary with actual costs, thus providing some incentive for the seller to control costs. The fee may be adjusted as a result of changes to the procurement statement of work. Cost Plus Incentive Fee (CPIF) A cost plus incentive fee contract provides for the seller to be paid for actual costs plus a fee that will be adjusted based on whether the specific performance objectives stated in the contract are met. In this type of contract, an original estimate of the total costs is made (the target cost) and a fee for the work is determined (a target fee). The seller then gets a percentage of the savings if the actual costs are less than the target costs or shares the cost overrun with the seller. The ratio is usually 80 percent to the seller and 20 percent to the buyer. Cost Plus Award Fee (CPAF) In a cost plus award fee contract, the buyer pays all costs and a base fee plus an award amount (a bonus) based on performance. This is similar to CPIF contract, except the incentive is a potential award, rather than a potential award or penalty. The award amount in a CPAF contract is determined in advance and apportioned depending on performance. This is a type of incentive contract. In some instances, the award given out is judged subjectively. Tools and Techniques Make or buy analysis (page 365) This decision may be influenced by: Resources Budget Capabilities Expert Judgment Market Research Meetings Outputs Procurement Management Plan (page 366) Once the decisions have been made about what to procure from outside sources, the project manager can create a plan to manage those procurements. Like all management plans, the procurement management plan will describe how the procurement process will be planned, executed, and controlled. Make sure you understand the concept of management plans. They should be familiar, as they have been a part of almost every section so far. Procurement Statements of Work (page 367) The work to be done on each procurement is called the "procurement statement of work." It must be as clear, complete, and concise as possible, and must describe all the work and activities the seller is required to complete. If the procurement statement of work is not complete, the seller will need to constantly request clarification or ask for change orders, which may increase project costs. The project manager and procurement manager could be constantly dealing with issues of whether a specific piece of work is contained within the original cost or time submitted by the seller.
Procurement Documents The following are types of procurement documents: Request for Information Request for Proposal Request for Quotation Tender notice Procurement Statement of Work There are many types of procurement statements of work. Your choice will depend on the nature of the work and type of industry. Performance o This type conveys what the final product should be able to accomplish, rather than how it should be built or what its design characteristics should be. Functional o This type conveys what the end purpose or result, rather than specific procedures. o It is to be used in the performance of the work and may also include a statement of minimum essential characteristics of the product. Design o This type conveys precisely what work is to be done. Performance and functional procurement statements of work are commonly used for information system, information technology, high-tech, research and development, and projects that have never been done before. Design procurement statements of work are most commonly used in construction and equipment purchasing Components of procurement statement of work can include: Drawings Specifications Technical and Descriptive Wording Source Selection Criteria Source selection criteria are included in the procurement documents to give the seller an understanding of the buyer's needs and to help the seller decide whether to make a proposal on the work. When the buyer receives the sellers' responses during the Conduct Procurements process, source selection criteria become the basis by which the buyer evaluates the bids or proposals. If the buyer is purchasing a commodity like linear meters, the source selection criteria may just be the lowest price. If the buyer is procuring construction services, the source selection criteria may be price plus experience. If the buyer is purchasing services only, the source selection criteria will be more extensive. In the latter case, such source criteria may include: Understanding of need Overall or life cycle cost Technical capability Risk Management approach Technical approach Warranty Financial capacity Production capacity and interest Business size and type Past performance of sellers References Intellectual property rights Proprietary rights Make-or-Buy Decisions Change Requests Project Documents Updates Requirements documentation Requirements traceability matrix Risk register Conduct Procurements The process involves getting the procurement documents created in the Plan Procurement Management process to the seller, answering the sellers' questions, having them prepare responses, and reviewing the responses to select the seller or sellers. PMBOK Guide Definition Page 371 Conduct Procurements is the process of obtaining seller responses, selecting a seller, and awarding a contract. Before you can send procurement documents to prospective sellers, you need to know who those sellers are. A buyer may use techniques such as advertising or Internet searches to find sellers, or send the procurement documents to a select list of prequalified sellers.
Inputs Procurement Management Plan Procurement Documents Source Selection Criteria Seller Proposals Project Documents Make-or-Buy Decisions Procurement Statement of Work Organizational Process Assets Tools and Techniques Remember that all potential vendors must be invited for a bidder conference Bidder Conference (page 375) Once the prospective sellers have been identified and have received the procurement documents, the buyer controls who can talk to the seller and what can be said. This control allows the buyer to maintain the integrity of the procurement process and to make sure all sellers are bidding or proposing on the same work. A bidder conference can be the key to making sure the pricing in the seller's response matches the work that needs to be done and is, therefore, the lowest price. Bidder conferences benefit both the buyer and the seller. Many project managers do not attend these meetings nor realize their importance. Proposal Evaluation Techniques (page 375) After reviewing the proposals, the buyer uses the source selection criteria identified in the Plan Procurement Management process to assess the potential sellers' ability and willingness to provide the requested products or services. The criteria are measureable; therefore, they provide a basis to quantitatively evaluate proposals and minimize the influence of personal prejudices. To select a seller: The buyer may simply select a seller and ask them to sign a standard contract. The buyer may ask a seller to make a presentation and then, if all goes well, move on to negotiations. The buyer may narrow down (short list) the list of sellers to a few. The buyer may ask the short-listed sellers to make presentations, and then ask the selected seller to go on to negotiations. The buyer can negotiate with more than one seller. The buyer can use some combination of presentations and negotiations. The choice of method in most cases depends on the importance of the procurement, the number of interested sellers, and the type of work to be performed. Independent Estimates (page 376) The buyer may compare the seller's proposed cost with an estimate created in-house or with outside assistance. This allows the buyer to discover significant differences between what the buyer and seller intended in the procurement statement of work. The buyer must have their own estimate to check reasonableness and cannot rely solely on the seller's cost estimates. Expert Judgment Advertising (page 376) To attract sellers, an advertisement may be placed in newspapers, in magazines, on the Internet, or in other types of media. Note: The U.S. government is required to advertise most of its procurements. Analytical Techniques Procurement Negotiations (page 377) It is important for everyone involved in negotiations to understand that the objectives of negotiation are to: Obtain a fair and reasonable price Develop a good relationship with the seller Negotiation Tactics This topic is often included on the exam, though it is not covered in the PMBOK Guide. You should be familiar with the following types of negotiation tactics. Do not memorize them. Simply be able to pick the negotiation tactic being used in a situation. o Attacks o Personal insults o Good guy / bad guy o Deadline o Lying o Limited authority o Missing man o Fair and reasonable o Delay o Extreme demands o Withdrawal
Main Items to Negotiate The main items to address while negotiating a contract can be vastly different, depending on what is being purchased. To achieve a signed contract, the following are usually negotiated in order. o Scope o Schedule o Price There are other things that need to be negotiated, however. These include: o Responsibilities o Authority o Applicable law If you are working with a seller from a different state, country or region, you need to agree upon whose law will apply to the contract. o Project management process to be used o Payments schedule Outputs Selected Sellers Agreements (page 377)Once the seller has been determined, the procurement contract or agreement can take many forms. The key is that the contract is a mutually binding legal agreement. The contract can only be remedied in court if there are issues. Contract or agreement documents typically include some of the following items: Memorize the typical components of a procurement agreement Statement of work Schedule baseline Performance reporting Period of performance Roles and responsibilities Seller's place of performance Pricing Payment terms Place of delivery Inspections and acceptance criteria Warranty Product support Limitation of liability Fees and retainer Penalties Incentives Insurance and performance bonds Subordinate subcontractor approvals Change request handling Termination clause and alternative dispute resolution (ADR) mechanisms. Resource Calendars Change Requests Project Management Plan Updates Cost baseline Scope baseline Schedule baseline Communication management plan Procurement management plan Project Document Updates Requirements documentation Requirements traceability documentation Risk register Stakeholder register Control Procurements (Page 379) The Control Procurements process involves managing the relationship between the buyer and the seller and assuring that the performance of both parties to the procurement meets contractual requirements. Both the buyer and the seller will administer and control the procurement, each looking out for their interests as it relates to the project while making sure the other is meeting their contractual obligations. As project manager you must be aware of the legally binding commitments and what the project team needs to do to meet them or what the seller needs to do to meet them. The following project management processes play a role in helping to Control Procurements: o Direct and Manage Project Work o Control Quality o Perform Integrated Change Control o Control Risks An important item to remember is that there is also a financial aspect to procurement that needs a project manager's attention. Payments need to be monitored to ensure they are being paid in a timely manner. The budget will need to be tracked to ensure the seller is on track. These are just additional items to the monitoring and controlling needed to keep watch over the buyer' and seller's activities.
Inputs Project Management Plan Procurement Documents Agreements Approved Change Requests Work Performance Reports Work Performance Data Tools and Techniques Contract Change Control System (page 383) Procurements, like all projects, have changes. To handle these changes, a contract change control system is established. This system includes change procedures, forms, dispute resolution processes, and tracking systems, and is specified in the contract. Procurement Performance Reviews (page 383) During the Control Procurements process, the project manager should analyze all available data to verify that the seller is performing as they should. This is called a procurement performance review. Often the seller is present to review the data and, most importantly, to talk about what the buyer can do differently to help the work progress. The purpose of the review is to determine if changes are needed to improve the buyer/seller relationship and the processes being used. Inspections and Audits Performance Reporting Payment Systems Claims Administration (page 384) A claim is an assertion that the buyer did something that has hurt the seller and the seller is asking for compensation. Claims can get nasty. They are usually addressed through the contract change control system. The best way to settle them is through negotiation or the use of the dispute resolution process specified in contract. Many claims are not resolved until after the work is completed. Records Management System (page 384) A contract or an agreement is a formal, legal document, so thorough records relating to the contract must be kept. Record keeping can be critical if actions taken or situations that occurred during a procurement are ever in question after the work is completed, such as in the case of unresolved claims or legal actions. Records may also be necessary to satisfy insurance requirements. On large or complex projects, a records management system can be quite extensive, with one person assigned just to manage these records. A records management system can include indexing systems, archiving systems, and information retrieval systems. Outputs Work Performance Information Change Requests Project Management Plan Updates Procurement management plan Schedule baseline Cost baseline Project Documents Updates Organizational Process Assets Updates can include, but are not limited to: Correspondence Payment schedules and requests Seller performance evaluation documentation Always remember that the Close Procurement process is conducted for every procurement contract that has completed and delivered the required products or services. This can be done during any stage of the project Close Procurements (Page 386) This process consists of completing and verifying that all work and deliverables are accepted, finalizing any open claims, and making final payments for each of the procurements on the project. The buyer will provide the seller with formal notice that the contract has been completed. Procurements are closed: When a contract or an agreement is completed When a contract or an agreement is terminated before the work is completed All procurements must be closed out, no matter the circumstances under which they stop, are terminated, or are completed. Procurements are closed through negotiated settlements between the buyer and the seller. Exam Hint There may be many procurements in one project, so there will be many procurement closures, but only one project closure. All procurements must be closed before the project is closed. Procurement closure needs to happen before project closure. Some projects are managed by phase, such as a design phase, testing phase, and installation phase. For such project, the Close Project or Phase process can technically occur at the end of each project phase. o Remember that project closure may be done at the end of each project phase and at the end of the project as a whole. Procurement closure requires more record keeping and must be done more formally than is generally required for project closure, to make sure to protect legal interests of both parties. Inputs Project Management Plan Procurement Documents Tools and Techniques Procurement Audits Always remember that negotiation is the preferred procurement conflict resolution technique Procurement Negotiations Records Management System Outputs Closed Procurements Organizational Process Assets Updates can include, but are not limited to: Procurement file Deliverable acceptance Lessons learned documentation Project Procurement Management Cheat Sheet
Open table as spreadsheet Process Descript ion Grou p Input Tools & Technique Output Plan Procurem ent Managem Determin e what, how and when to Plan Project mgmt. plan Requireme nts Make-or- buy analysis Expert Procurem ent mgmt plan; Procurem Process Descript ion Grou p Input Tools & Technique Output ent procure. Prepare procure ment documen ts to support vendor selection and develop the procure ment SOW. documenta tion Risk register Activity resource requiremen ts Project schedule Activity cost estimates Stakeholde r register EEF OPA judgment Market Research Meetings ent SOW Procurem ent document s Source selection criteria Make/buy decisions Change requests Updates: docs Conduct Procurem ents Select from potential sellers Exec ute Procureme nt manageme nt plan Procureme nt documents Source selection criteria Seller proposals Project documents Make or buy decisions Procureme nt statement of work OPA Bidder conferenc e Proposal evaluation technique s Independe nt estimates Expert judgment Advertisin g Analytical technique s Procurem ent negotiatio ns Selected sellers Agreemen ts Resource calendars Change requests Updates: docs; plan Control Procurem ents Manage seller relations hip, review seller Contr ol Project mgmt. plan Procureme nt docs Agreement s Contract CC system Performan ce reviews Work performan ce informatio n Change Process Descript ion Grou p Input Tools & Technique Output performa nce and manage contract related changes Approved changes Work performan ce data Work performan ce reports Inspection s & audits Performan ce reporting Payment systems Claims administra tion Records managem ent system requests Updates: plan; docs; OPA Close Procurem ents Select from potential sellers Close Project mgmt plan Procureme nt documents Procurem ent audits Procurem ent negotiatio ns Records mgmt system Closed procurem ents Updates: OPA
Deep Dive into Project Stakeholder Management The Project Stakeholder Management is closely connected with the Project Communications Management as it focuses on continuous communications with stakeholders to understand their needs and expectations. PMBOK Guide Definition - Page 391 Project Stakeholder Management includes the processes required to identify the people, groups, or organizations that could impact or be impacted by the project, to analyze stakeholder expectations and their impact on the project, and to develop appropriate management strategies for effectively engaging stakeholders in project decisions and execution. Please note that the project stakeholders' influence is at the maximum during the start of the project and reduces gradually as the project progresses Project Stakeholder Management also involves resolving stakeholder issues, managing conflicting interests, and fostering stakeholder engagement. Effective stakeholder management is the key to success of many projects, especially complex and large projects. Effective communications and stakeholder engagement with the project activities and decisions are the two key stakeholder management techniques. The following should help you understand how each part of stakeholder management fits into the project management process: Open table as spreadsheet The Procurement Management Process Done During Identify Stakeholders Initiating Process Group Plan Stakeholder Management Planning Process Group Manage Stakeholder Engagement Executing Process Group Control Stakeholder Engagement Monitoring and Controlling Process Group Every project has both positive and negative stakeholders. Effectively managing both types of stakeholders is critical for the success of any project Projects have both positive and negative stakeholder and both need to be managed carefully. Many project managers take negative stakeholders for granted and in the end pay hefty price for it. On some projects, especially large and complex projects, negative stakeholders need to be more closely managed than the positive stakeholders. Negative stakeholders are the ones who are negatively impacted by the outcome of the project, e.g., resistant users of a new software application, resistant employees of a new performance management system etc. The Identify Stakeholders process is an initiating process. However, it must be periodically revisited to ensure that the project's Stakeholder Register is always up to date Identify Stakeholders (Page 393) It is important to clearly understand who a stakeholder is on a project. They are persons and organizations like a customer, project sponsor, or a team member who are actively involved in the project or whose interests may be positively or negatively impacted by the execution or completion of the project. PMBOK Guide Definition Page 393 Identify Stakeholders is the process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project, analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on process success. As a project manager and a project team it is critical to the overall success that stakeholders are identified as early as possible during the project life cycle. Stakeholder management must be well thought out to maximize the effort by the team given the number of stakeholder on the project. Stakeholders How can you use them during the project? Determine the requirements o This is neither easy nor fast, but the project manager must make every effort to obtain "ALL" the requirements before works begins. o The requirements should not just relate to how stakeholders want the product of the project to function, but should also include their communications requirements. Determine their expectations o Expectations tend to be much more ambiguous than stated requirements, or they may be undefined requirements. They may be intentionally or unintentionally hidden. o Naturally, expectations that go unidentified will have major impacts across all constraints. o Expectations are converted to requirements and become part of the project. Determine their interest o Stakeholders may be particularly interested in working on some part of the project, getting a chance to learn new skills, getting a chance to prove their skills, or even getting out of working on certain parts of the project. Determine their level of influence o To some degree, each stakeholder will be able to negatively or positively affect a project. This is their level of influence, and it should be identified and managed. Plan how you will communicate with them o Project management focuses on planning before taking action. Since communications are the most frequent cause of problems on projects, planning communications is critical. Communicate with them o Stakeholders are included in project presentations and receive project information, including progress reports, updates, changes to the project management plan, and maybe even changes to the project documents. Manage their expectations and influence o Managing stakeholders doesn't end during initiating. They must be managed throughout the life of the project. A key to your success as a project manager is how you handle stakeholders. Stakeholders must be engaged, and their engagement must be managed by the project manager. That engagement may be either extensive or minor, depending on the needs of the project and the performing organization. Inputs Project Charter Procurement Documents Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Stakeholder Analysis (page 395) Stakeholder Analysis involves systematically identifying all the stakeholders. The project manager can use the initial list of stakeholders from the project charter and, if applicable, any contracts related to the project as a starting point or input to the process. As new stakeholders are identified, they may be able to suggest other stakeholders to add to the list. The project manager then needs to analyze each stakeholder's potential impact or influence and identify ways to manage those impacts effectively. Classification tools such as power/interest grids and salience models can be used to group stakeholders by qualifications like authority level, impact or influence, or requirements. These classifications can then help the project manager determine how, what, and when to communicate with each stakeholder. Stakeholder analysis can follow some of these steps: Identify stakeholders and their relevant information such as: o Roles o Interests o Knowledge level o Influence level Memorize the Power/Interest Grid given at PMBOK page 397. There will most certainly be questions that pertain to this grid on the exam Identify the potential impact or support each stakeholder could generate and classify them in order to determine a strategy to manage them. The following are examples of classification models: o Power/interest grid o Power/influence grid o Influence/impact grid o Salience model Assess how key stakeholders are likely to react or respond Expert judgment Meetings Outputs Stakeholder Register (page 398) All the information about stakeholders is compiled in the stakeholder resister. The information about stakeholders can be categorized in the following way: Identification information Assessment information Stakeholder classification Plan Stakeholder Management (Page 399) The objective of the Plan Stakeholder Management process is to develop an actionable plan to interact with project stakeholders in order to enhance the chances of the project's success. PMBOK Guide Definition Page 399 Plan Stakeholder Management is the process of developing appropriate management strategies to effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs, interests, and potential impact on project success. The Plan Stakeholder Management process is an iterative process and must be frequently reviewed by the project manager. You must also remember the following regarding the Plan Stakeholder Management process: Identifies how project will affect stakeholders, and developing approaches to effectively engage stakeholders Manages stakeholder expectations to achieve project objectives It is more than improving stakeholder communications It requires more than managing a team It is about maintaining relations between the stakeholders and the project team The aim is to satisfy each stakeholder within the project boundaries Inputs Project Management Plan Stakeholder Register Enterprise Environmental Factors Organizational Process Assets Tools and Techniques Expert Judgment Meetings Analytical Techniques (page 402) The Plan Stakeholder Management is an iterative process and the project manager must periodically revisit this process to keep the stakeholder management plan updated. During every review, the project stakeholders' current and planned engagement levels need to be determined. One good way of presenting stakeholders' current and planned engagement levels is stakeholder engagement assessment matrix as shown below: Open table as spreadsheet Stakeholder Unaware Resistant Neutral Supportive Leading Stakeholder 1 C D Stakeholder 2 C D Stakeholder 3 C, D This analytical process helps identify the gaps between the current and the desired states, and hence facilitate determining ways to close these gaps. Outputs Stakeholder Management Plan (page 403) The stakeholder management plan can be detailed or broadly framed based on the needs and requirements of the project. It is a subsidiary plan of the project management plan. Typical components of a stakeholder management plan include: Desired and current engagement levels of key stakeholders Scope and impact of change to stakeholders Identified interrelationships and potential overlap between stakeholders Stakeholder communication requirements for the current project phase Information to be distributed to stakeholders Reason for the information distribution Time frame, frequency, methods, language, format, content and level of detail of the information Project Documents Updates Project schedule Stakeholder register o Exam Tip Please remember that a project manager is required to share the project plans, project documents and reports with the project stakeholder as defined by the communications management plan. The project manager must be honest and open. However, due to the sensitive nature of the stakeholder management plan, it shouldn't be shared with every stakeholder, at times and some situations, even with the project team members. Manage Stakeholder Engagement (Page 404) Managing stakeholder engagement is a primary responsibility of the project manager. Stakeholders' needs must continue to be met and their issues resolved throughout the project. It is important to be proactive and make stakeholders feel that their needs and concerns are at least being considered, even if they are not agreed to. It is important to keep open communication channels with the stakeholders, which will keep the project manager informed of potential changes, added risks, and other information. PMBOK Guide Definition Page 404 Manage Stakeholder Engagement is the process of communicating and working with stakeholders to meet their needs/expectations, addressing issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle. Expectations are tricky as they are beliefs about the future. People create a mental picture many times of the end result of their expectations. Such a difference between what he or she thinks will happen and what actually happens might causes conflicts, rework, and those dreaded changes. Managing stakeholders' engagement/expectations will require taking the time with stakeholders to ensure they are clear about what will occur. That time and effort to make sure they do not have unrealistic expectations will pay off tremendously. Managing stakeholder engagement requires attention to the stakeholders' needs while the work is being done and making sure trust is built, conflicts are resolved, and problems are prevented. As project manager ensure you are doing the following when dealing with your stakeholders: Actively managing the expectations and engagement Addressing concerns before they become issues Clarifying and resolving identified issues promptly Successfully managing expectations with the stakeholders will increase the probability of the overall success of the project. As project manager, take the time and effort necessary to make this process a primary responsibility. Many project managers unknowingly introduce communication blockers into their projects. Communication blockers include: Noisy surroundings Distance between those trying to communicate Improper encoding of messages Making negative statements Hostility Language Culture Inputs Stakeholder Management Plan Communications Management Plan Change Log Organizational Process Assets Tools and Techniques Communication Methods Interpersonal Skills (page 407) Managing stakeholder engagement requires strong interpersonal skills. The skills will be applied in different ways with different stakeholders. Some of the skills needed are: Building trust Resolving conflict Listening actively Overcoming resistance to change
Management Skills (page 408) Trying to influence people in order to ensure that the expectations are in line requires a strong set of management skills. A project manager should have some of the following skills: Facilitation skills Influencing skills Negotiating skills Change management skills Outputs Issue Log Change Requests Project Management Plan Updates Project Documents Updates Organizational Process Assets Updates Control Stakeholder Engagement (Page 409) The target of the Control Stakeholder Engagement process is to increase the efficiency and effectiveness of stakeholder management and engagement activities. The stakeholders' needs and expectations change over time as the project progresses and its environment changes. The Control Stakeholder Engagement process ensures that the stakeholder management strategy is realistic, effective and updated. PMBOK Guide Definition Page 409 Control Stakeholder Engagement is the process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders. Inputs Project Management Plan Issue Log Work Performance Data Percentage work completed Technical performance measurements Start and finish of scheduled activities Summary of change requests Defects reports Actual costs Actual durations Project Documents Project schedule Stakeholder register Issue log Change log Project communications Tools and Techniques Information Management Systems (page 412) Information management systems provide a set of standard tools for the project manager to capture, store and distribute project information. It allows the project manager to analyze information and create consolidated reports. Expert Judgment Meetings Outputs: Work Performance Information (page 413) The work performance information is the work performance data collected from various sources and processes, analyzed in context, and integrated based on relationships. The work performance information is the transformation of the work performance data. The work performance information is an output of the Control Stakeholder Engagement process, however, it is circulated through the communication processes. Change Requests Project Management Plan Updates All of the subsidiary plans Project Documents Updates Stakeholder register Issue log Organizational Process Assets Updates Stakeholder notifications Project reports Project presentations Project records Feedback from stakeholders Lessons learned Project Stakeholder Management Cheat Sheet
Process Description Group Input Tools & Technique Output Identify Stakehol ders Identify people impacted by the project Initiati ng
Charter Procureme nt docs EEF OPA
Stakehold er analysis Expert judgment Meetings
Stakeho lder register
Plan Stakehol der Manage ment Develop appropriate stakeholder managemen t strategies Plannin g
Project mgmt. plan Stakeholde r register EEF OPA
Expert judgment Meetings Analytical techniques
Stakeho lder manage men t plan Update s: Docs
Manage Stakehol der Engage ment Communica ting and working with stakeholders to meet their needs/expec tations Executi ng Stakeholde r mgmt. plan Communic ations mgmt. plan Change log OPA
Communi cation methods Interperso nal skills Managem ent skills
Issue log Change request s Update s: Plan; Docs; OPA
Control Stakehol der Engage ment Monitoring overall project stakeholder relationship Monito ring and Control ling Project mgmt. plan Issue log Work performanc Informatio n manageme nt systems Expert Work perform ance informa tion Process Description Group Input Tools & Technique Output s and adjusting stakeholder engagement strategies e data Project documents
judgment Meetings
Change request s Update s: Plan; Docs; OPA
A Review of Critical PMP Exam Formulas The Formula Table Explained On the following pages you will find the essential formulas that you will need to know and apply in order to pass the PMP Exam. The formulas are listed in a table with three columns. For each entry we explain the concept, list the formula(s), and explain how to interpret the result of the calculation. Here are some explanations to help you better understand what you will find in each of the three columns: Open table as spreadsheet Concept Formula Result Interpretation The first column contains the "concept" behind the formula. Instead of just giving you the formula "CV=EV - AC" we want to make sure that you understand what the formula is trying to achieve. The best way to do that is by explaining its concept. We list the actual formula in the second column. For some concepts multiple formulas are needed so we list them all. When helpful we also add examples for better understanding. The formula won't do you much good if you cannot explain what the result is or means. That is why we include an interpretation in the third column. PMP questions may require interpretation. Example: Cost Variance (CV) Provides cost performance of the project. Helps determine if the project is proceeding as planned. Example
CV = EV - AC
Example Negative = over budget = bad Positive = under budget = good
Exponentiation A number of formulas needed on the PMP Exam require exponentiation. The exponent is usually shown as a superscript to the right of the base. For instance: 3 4 . This exponentiation can be read as 3 raised to the 4th power or as 3 raised to the power of 4. And 3 4 would be calculated as 3*3*3*3=81. The superscript notation 3 4 is convenient in handwriting but can lead to errors when you are in a hurry like on the PMP Exam. For instance it is very easy to forget to "raise" the exponent in a formula when you are hurriedly writing it down in the minutes before you start the exam. So it could easily happen that the formula PV = FV / (1+r) n gets written down as PV = FV / (1+r)n. The difference may seem trivial but the result is disastrous. Therefore, we chose to use an accepted, alternative way of expressing the exponentiation by using the ^ character. When using this character, 3 4 is now expressed as 3^4 and PV = FV / (1+r) n is expressed as PV = FV / (1+r)^n. This removes any margin for visual errors. Open table as spreadsheet Concept Formula Result Interpretation Cost Variance (CV) Provides cost performance of the project. Helps determine if the project is proceeding as planned. CV = EV - AC Negative = over budget = bad Positive = under budget = good Cost Performance Index (CPI) Measure of cost efficiency on a project. Ratio of earned value to actual cost. CPI = EV / AC 1 = good. We are getting $1 for every $1 spent. Funds are used as planned. >1 = good. We are getting >$1 for every $1 spent. Funds are used better than planned. <1 = bad. We are getting <$1 for every $1 spent. Funds are not used as planned. Schedule Variance (SV) Provides schedule performance of the project. SV = EV - PV Negative = behind schedule = bad Positive = ahead of schedule = Concept Formula Result Interpretation Helps determine if the project work is proceeding as planned. good Schedule Performance Index (SPI) Measure of schedule efficiency on a project. Ratio of earned value to planned value. Used to determine if a project is behind, on, or ahead of schedule. Can be used to help predict when a project will be completed. SPI = EV / PV 1 = good. We are progressing at the originally planned rate. >1 = good. We are progressing at a faster rate than originally planned. <1 = bad. We are progressing at a slower rate than originally planned. Estimate at Completion (EAC) Expected final and total cost of an activity or project based on project performance. Helps determine an estimate of the total costs of a project based on actual costs to date. There are several ways to calculate EAC EAC = BAC / CPI Assumption: use formula if current variances are thought to be typical in the future. This is the formula most often required on the exam. Original budget modified by the cost performance . The result is a monetary value. EAC = AC + ETC Assumption: use formula if Actual Cost plus a new estimate for the Concept Formula Result Interpretation depending on the current project situation and how the actual work is progressing as compared to the budget. Look for certain keywords to determine what assumptions were made. original estimate was fundamentally flawed or conditions have changed and invalidated original estimating assumptions. remaining work. Result is a monetary value. EAC = AC + BAC - EV Assumption: use formula if current variances are thought to be atypical in the future and the original budget is more reliable. Actual cost to date (AC) plus remaining budget (BAC - EV). Result is a monetary value. EAC = AC + ((BAC - EV) / (CPI * SPI)) Assumption: use formula if project is over budget but still needs to meet a schedule deadline. Actual cost to date (AC) plus remaining budget (BAC - EV) modified by both cost performance and schedule performance. Result is a monetary value.
Estimate to Complete (ETC) Expected cost needed to complete all the remaining work for a schedule activity, a group ETC = EAC - AC Inversion of the same formula from the EAC calculations. Expected total cost minus actual cost to date. Result is a monetary value that will tell us how much more the Concept Formula Result Interpretation of activities or the project. Helps predict what the final cost of the project will be upon completion. There are many ways to calculate ETC depending on the assumptions made. project will cost. ETC = BAC - EV Assumption: use formula if current variances are thought to be atypical in the future. The planned budget minus the earned value. Result is a monetary value that will tell us how much more the project will cost. ETC = (BAC - EV) / CPI Assumption: use formula if current variances are thought to be typical in the future. The planned budget minus the earned value modified by project performance . Result is a monetary value that will tell us how much more the project will cost. ETC = We create a new estimate when it is thought that the original estimate was flawed. This is not the result of a calculation or formula, but simply a new estimate of the remaining cost. Concept Formula Result Interpretation Percent Complete How much of the planned budget do we have completed? Percent Complete = EV / BAC * 100 The result is a percentage. What is currently completed divided by the original budget times 100. To-Complete Performance Index (TCPI) The calculated project of cost performance that must be achieved on the remaining work to meet a specific management goal (e.g. BAC or EAC). It is the work remaining divided by the funds remaining. Based on BAC:
TCPI = (BAC - EV) / (BAC - AC)
Based on EAC:
TCPI = (BAC - EV) / (EAC - AC)
The TCPI is compared to the cumulative CPI to determine if a target EAC is reasonable. A target EAC is assumed to be reasonable if the TCPI is within plus or minus 0.05 of the cumulative CPI EVM metric. Variance at Completion (VAC) Anticipates the difference between the originally estimated BAC and a newly calculated EAC. In other words, the cost we originally planned minus VAC = BAC - EAC Result is a monetary value that estimates how much over or under budget (the variance) we will be at the end of the project. <0 = over Concept Formula Result Interpretation the cost that we now expect. budget 0 = on budget >0 under budget Earned Value (EV) A quick formula for calculating the Earned Value on a project. EV = % complete * BAC The result is the EV, a monetary value. Program Evaluation and Review Technique (PERT) Three point estimate for the expected duration of a schedule activity using pessimistic, optimistic and most likely durations. A probabilistic approach, using statistical estimates of durations. (Pessimistic + (4 * Most Likely) + Optimistic) / 6 The result is the estimated duration of a schedule activity expressed as a weighted average. PERT Standard Deviation (Single Activity) The standard deviation () is a reflection of the uncertainty in the estimates. It is a good measure of the statistical = (Pessimistic - Optimistic) / 6 The result is the standard deviation from the mean of a schedule activity. For instance, the duration +/- 1 standard deviation Concept Formula Result Interpretation variability of an activity. will give you a 68.26% confidence that you can meet the estimated duration. PERT Activity Variance Every activity has a variance, which is a statistical dispersion. Here is an example: The PERT three point estimate gives a 15-day duration. The variance formula tells you that you have a two-day variance. Therefore the activity duration is 15 days +/- 2 days. Variance = ((Pessimistic - Optimistic) / 6)^2 The Activity Variance will give you the expected variance in the activity's duration. For instance: +/- 3 days. PERT Standard Deviation (All Activities) You may be required to calculate the duration of multiple activities and give their standard deviation. This is done by taking the Sum ((Pessimistic - Optimistic) / 6)^2 (Add up the variances of all the activities and then take the square root.) The result is one standard deviation (or variance) from the mean of the given series of activities. Concept Formula Result Interpretation square root of the total variance. Activity Duration Determines how long an activity lasts. There are two formulas both will give the same result. Duration = EF - ES + 1 Duration = LF - LS + 1 Number of days this activity lasts. Free Float Determines how many days you can delay an activity without delaying the early start of the next activity. On most sample PMP exam questions, the network diagrams are too small to show activities where free float and total float are different. In most sample questions they will be the same. Free Float = Earliest ES of Following Activities - ES of Present Activity - Duration of Present Activity Number of days this activity can be delayed without delaying the early start of the next activity. Note: If the present activity has more than one following activities, then use the Earliest ES of any of the following activities. Total Float Determines how many days you can delay an activity without delaying the project. Total Float = LS - ES Total Float = LF - EF Number of days this activity can be delayed without delaying the project. Concept Formula Result Interpretation There are two formulas both will give the same result. Early Finish (EF) Determine when an activity will finish at the earliest. EF = (ES + duration) - 1
Early Start (ES) Determine when an activity can start at the earliest. ES = (EF of predecessor) + 1
Late Finish (LF) Determine when an activity should finish at the latest. LF = (LS of successor) - 1
Late Start (LS) Determine when an activity should start at the latest. LS = (LF - duration) + 1
Present Value (PV) Receiving money in the present (today) has a different value than receiving money in the future (in three years). This formula PV = FV / (1+r)^n The result is the amount of money you need to invest today (PV) for n years at r % interest in order to end up with the target sum (FV). Concept Formula Result Interpretation calculates how much. Also described as value today of future cash flows. PV in this case should not be confused with the Planned Value (PV). The higher the PV the better. Net Present Value (NPV) Method for financial evaluation of long-term projects. Also described as Present value of cash inflow / benefits minus present value of cash outflow / costs. Positive NPV is good. Negative NPV is bad. The project with the higher NPV is the "better" project. Return on Investment (ROI) Ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost is often referred to as interest, profit/loss, gain/loss, or net income/loss. The project with the higher ROI is better and should be selected. Concept Formula Result Interpretation Internal Rate of Return (IRR) Interest rate at which the present value of the cash flows equals the initial investment. More precise and more conservative than NPV. The project with the higher IRR is better and should be selected. Payback period Rough tool to estimate the time it takes to recover the initial investment by adding up the future cash inflows until they are equal to the initial investment. Add up the projected cash inflow minus expenses until you reach the initial investment. The project with the shorter payback period is better and should be selected. Benefit Cost Ratio (BCR) Ratio that describes the cost versus benefits of a project. Benef it / Cost BCR < 1 is bad. BCR > 1 is good. The project with the bigger BCR is the "better " one. Cost Benefit Ratio (CBR) Ratio that describes the benefits versus cost of a project. This is simply the reverse of the Benefit Cost Ratio Cost / Benefit CBR > 1 is bad. CBR < 1 is good. The project with the lower CBR is the "better" one.
Opportunity Cost Opportunity cost is the cost For the PMP exam the opportunity cost is
Concept Formula Result Interpretation incurred by choosing one option over an alternative one. Thus, opportunity cost is the cost of pursuing one choice instead of another. usually a monetary value Note that NO calculation is required. Communication Channels The number of communication channels on a team. n * (n-1) / 2 Total number of communicati on channels among n people of a group
Expected Monetary Value (EMV) Gain or loss that will result when an event occurs. Takes probability into account. For instance: If it rains we will lose $200. There is a 25% chance that it will rain, therefore the EMV is: 0.25 * $200 = $50. A monetary value that represents the expected gain or loss of an event should it come to be.
Point of Total Assumption (PTA) The point of total assumption (PTA) is a price determined by a fixed price plus PTA = ((Ceiling Price - Target Price) / Buyer's Share Ratio) + Target Cost The result is a monetary value. When reached then the seller covers all of the cost risk
Concept Formula Result Interpretation incentive fee contract (FPIF) above which the seller pays the cost overrun. In addition, once the costs on an FPIF contract reach PTA, the maximum amount the buyer will pay is the ceiling price. beyond. Straight-line Depreciation A method that depreciates the same amount (or percent) each year by dividing the asset's cost by the number of years it is expected to be in service. The simplest of the depreciation methods. Depreciation Expense = Asset Cost / Useful Life Depreciation Expense = (Asset Cost - Scrap Value) / Useful Life Depreciation Rate = 100% / Useful Life The result is either the Depreciation Expense (the yearly depreciation amount: $200) or the Depreciation Rate (the yearly depreciation percentage: 5%). If a Scrap Value is given then this can also be factored in by subtracting it.
Double Declining Balance Most common depreciation method that provides for a higher depreciation Depreciation Rate = 2 * (100% / Useful Life) Depreciation Expense = Depreciation Rate * Book Value at The Depreciation Rate stays the same over the years, but the Depreciation Expense
Concept Formula Result Interpretation charge in the first year of an asset's life and gradually decreasing charges in subsequent years. It does this by depreciating twice the straight-line depreciation rate from an assets book value at the beginning of the year. Beginning of Year Book Value = Book Value at beginning of year - Depreciation Expense gets smaller each year because it is calculated from a smaller book value each year. Sum-of-Years' Digits Method Sum-of-Years' Digits is a depreciation method that results in a more accelerated write-off than straight line, but less than declining- balance method. Under this method annual depreciation is determined by multiplying the Depreciable Cost by a schedule of fraction based on the useful life of the asset.
Quick Guide to Important PMP Exam Acronyms Open table as spreadsheet Acronym Term Description AC Actual Cost Total cost expended and reported during the accomplishment of a project task or project. This can be labor hours alone; direct costs alone; or all costs, including indirect costs. BAC Budget at Completion The sum of all budgets allocated to a project. BCR Benefit Cost Ratio Ratio that compares benefits to cost CBR Cost Benefit Ratio Ratio that compares cost to benefit (Inversion of BCR) CPI Cost Performance Index The CPI is a cost efficiency rating on a project, expressed as a ratio of AC to EV. CV Cost Variance A measure of cost performance on the project, expressed as the difference between earned value and actual cost. EAC Estimate at Completion The expected total cost for scheduled activity, a group of activities, or the project when the work will be completed. EF Early Finish ES Early Start ETC Estimate to Complete ETC is the expected cost needed to complete all the remaining work for a scheduled activity, a group of activities, or the project. ETC helps project managers predict what the final cost of the project will be upon completion. EV Earned Value EV is the value of completed work expressed in terms of the approved budget assigned to that work for a scheduled activity or work breakdown structure component. FV Future Value Value of money on a given date in the future IRR Internal Rate of A capital budgeting metric used by firms to decide Acronym Term Description Return whether they should make investments. It is an indicator of the efficiency of an investment. LF Late Finish LS Late Start NPV Net Present Value Standard method for the financial appraisal of long- term projects. Measures the excess or shortfall of cash flows, in present value (PV) terms, once financing charges are met. PERT Program Evaluation and Review Technique Method that allows the estimation of the weighted average duration of tasks PV Planned Value PV is the authorized budget assigned to the scheduled work to be accomplished for a scheduled activity or work breakdown structure component. ROI Return on Investment Ratio of money gained or lost on an investment relative to the amount of money invested SPI Schedule Performance Index Ratio of work accomplished versus work planned, for a specified time period. The SPI is an efficiency rating for work accomplishment, comparing work accomplished to what should have been accomplished. SV Schedule Variance A measure of schedule performance on the project, expressed as the difference between earned value and planned value. TCPI To-Complete Performance Index The calculated project of cost performance that must be achieved on the remaining work to meet a specific management goal (e.g. BAC or EAC). It is the work remaining divided by the funds remaining. VAC Variance at Completion VAC forecasts the difference between the Budget-at- Completion and the expected total costs to be accrued over the life of the project based on current trends.
Quick Study Checklist for the PMP Exam Read the PMBOK Guide Read through this study guide thoroughly Take many PMP practice exams (see other books by SSI Logic, or visit www.PMPerfect.com for a great set of PMP practice exams) Know the material thoroughly, but do not approach the exam assuming it tests the memorization of facts. The exam tests knowledge, application, and analysis. You must understand how to use the concepts and processes in the real world, and how they work in combination with each other. You must also have real world experience applying those concepts and procedures to larger projects. Have real world experience using all the major project management tools and techniques. Make sure you are thinking larger projects when taking the actual exam. Understand the areas PMI emphasizes Be familiar with the types of questions you can expect on the exam Be prepared to see ambiguous and wordy questions on the exam that might be multiple paragraphs long. Practice interpreting these types of questions. Decide in advance what notes you will write down when you are given a scrap piece of paper at the actual exam. You can use it as a download sheet for formulas or gaps in your project management knowledge. Deal with stress before you take the exam. Plan and use your strategy for taking the exam. This may mean taking a 10- minute break every 50 questions to clear your head. Expect that there will be questions you cannot answer or even understand. This happens to everyone. Visit the exam site before the exam if possible to determine how long it will take to get there and park. Don't expect the test taking environment to be quiet. There could be outside noise to deal with during the exam. Don't over study! Don't study the night before the exam! Get a good night sleep and be prepared and confident that you have done all you can do ahead of that last night. Helpful Hints for Taking the PMP Exam You must bring your authorization letter from the PMI to the test site, as well as two forms of ID with exactly the same name you entered on the exam application. Make sure you are comfortable during the exam. As soon as you are given scratch paper when you arrive at the exam, create your "download sheet" by writing down everything you were having trouble with or formulas. When you take the exam you will see one question on the screen at a time. You can answer a question and/or mark it to return to it later. You will be able to move back and forth throughout the exam. Use deep breathing techniques to help relax. This is particularly helpful if you are very nervous before or during the exam. Use all the exam time. Do not leave early unless you have reviewed each question twice. Remember your own unique test taking quirks and how you plan to deal with them while taking the test. Control the exam: do not let it control you. Control your frustration and maintain focus on each question. Answer each question from PMI's perspective, not the perspective you have acquired from your real world or life experience. First identify the actual question in the words provided, and then read the rest of the question. This should help you understand what the question is asking and reduce the need to reread questions. Practice reading the questions and all four choices when you take the practice exams. It is best to read the choices backwards. Practice quickly eliminating answers that are highly implausible. Many questions only have two plausible options. There may be more than one "correct" answer to each question, but only one BEST answer. Write things down that you do not understand as you take the exam. Watch out for choices that are true statements but do not answer the question. Assume proper project management was done. Notice where you are in the story as the answer may vary depending on situation (planning vs. execution) The following tips will help you pick the right answer for questions that ask what you should do and for many other questions where there seems to be more than one answer. o Determine the immediate problem to address o Deal with the root cause first o Deal with the problem with the greatest NEGATIVE impact first o Solve the problem that occurred the earliest o Look for a proactive solution More Exam Taking Tips Studying for a multiple choice exam entails preparing in a unique way as opposed to other types of tests. The PMP exam asks one to recognize correct answers among a set of four options. The extra options that are not the correct answer are called the "distracters"; and their purpose, unsurprisingly, is to distract the test taker from the actual correct answer among the bunch. Students usually consider multiple choice exams as much easier than other types of exams; this is not necessarily true with the PMP exam. Among these reasons are: Most multiple choice exams ask for simple, factual information; unlike the PMP exam which often requires the student to apply knowledge and make a best judgment. The majority of multiple choice exams involve a large quantity of different questions so even if you get a few incorrect, it's still okay. The PMP exam covers a broad set of material, often times in greater depth than other certification exams. Regardless of whether or not multiple choice testing is more forgiving; in reality, one must study immensely because of the sheer volume of information that is covered. Although four hours may seem like more than enough time for a multiple choice exam, when faced with 200 questions, time management is one of the most crucial factors in succeeding and doing well. You should always try and answer all of the questions you are confident about first, and then go back about to those items you are not sure about afterwards. Always read carefully through the entire test as well, and do your best to not leave any question blank upon submission even if you do not readily know the answer. Many people do very well with reading through each question and not looking at the options before trying to answer. This way, they can steer clear (usually) of being fooled by one of the "distracter" options or get into a tug-of-war between two choices that both have a good chance of being the actual answer. Never assume that "all of the above" or "none of the above" answers are the actual choice. Many times they are, but in recent years they have been used much more frequently as distracter options on standardized tests. Typically this is done in an effort to get people to stop believing the myth that they are always the correct answer. You should be careful of negative answers as well. These answers contain words such as "none", "not", "neither", and the like. Despite often times being very confusing, if you read these types of questions and answers carefully, then you should be able to piece together which is the correct answer. Just take your time! Never try to overanalyze a question, or try and think about how the test givers are trying to lead astray potential test takers. Keep it simple and stay with what you know. If you ever narrow down a question to two possible answers, then try and slow down your thinking and think about how the two different options/answers differ. Look at the question again and try to apply how this difference between the two potential answers relates to the question. If you are convinced there is literally no difference between the two potential answers (you'll more than likely be wrong in assuming this), then take another look at the answers that you've already eliminated. Perhaps one of them is actually the correct one and you'd made a previously unforeseen mistake. On occasion, over-generalizations are used within response options to mislead test takers. To help guard against this, always be wary of responses/answers that use absolute words like "always", or "never". These are less likely to actually be the answer than phrases like "probably" or "usually" are. Funny or witty responses are also, most of the time, incorrect so steer clear of those as much as possible. Although you should always take each question individually, "none of the above" answers are usually less likely to be the correct selection than "all of the above" is. Keep this in mind with the understanding that it is not an absolute rule, and should be analyzed on a case-by-case (or "question-by-question") basis. Looking for grammatical errors can also be a huge clue. If the stem ends with an indefinite article such as "an" then you'll probably do well to look for an answer that begins with a vowel instead of a consonant. Also, the longest response is also oftentimes the correct one, since whoever wrote the question item may have tended to load the answer with qualifying adjectives or phrases in an effort to make it correct. Again though, always deal with these on a question-by-question basis, because you could very easily be getting a question where this does not apply. Verbal associations are oftentimes critical because a response may repeat a key word that was in the question. Always be on the alert for this. Playing the old Sesame Street game "Which of these things is not like the other" is also a very solid strategy, if a bit preschool. Sometimes many of a question's distracters will be very similar to try to trick you into thinking that one choice is related to the other. The answer very well could be completely unrelated however, so stay alert. Just because you have finished a practice test, be aware that you are not done working. After you have graded your test with all of the necessary corrections, review it and try to recognize what happened in the answers that you got wrong. Did you simply not know the qualifying correct information? Perhaps you were led astray by a solid distracter answer? Going back through your corrected test will give you a leg up on your next one by revealing your tendencies as to what you may be vulnerable with, in terms of multiple choice tests. It may be a lot of extra work, but in the long run, going through your corrected multiple choice tests will work wonders for you in preparation for the real exam. See if you perhaps misread the question or even missed it because you were unprepared. Think of it like instant replays in professional sports. You are going back and looking at what you did on the big stage in the past so you can help fix and remedy any errors that could pose problems for you on the real exam. List of Figures Deep Dive into Project Human Resource Management ExhibitMaslow's Hierarchy of Needs Deep Dive into Project Risk Management ExhibitSample Decision Tree illustration List of Tables Deep Dive into Project Risk Management Qualitative Risk Analysis Matrix List of Cheat Sheets Deep Dive into Project Integration Management Project Integration Management Cheat Sheet Deep Dive into Project Scope Management Project Scope Management Cheat Sheet Deep Dive into Project Time Management Project Time Management Cheat Sheet Deep Dive into Project Quality Management Project Quality Management Cheat Sheet Deep Dive into Project Human Resource Management Project Human Resource Management Cheat Sheet Deep Dive into Project Communications Management Project Communications Management Cheat Sheet Deep Dive into Project Risk Management Project Risk Management Cheat Sheet Deep Dive into Project Procurement Management Project Procurement Management Cheat Sheet Deep Dive into Project Stakeholder Management Project Stakeholder Management Cheat Sheet