You are on page 1of 232

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