Presentation To Ipm 2008

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I gave this presentation at the Integrated Project Management 2008 Conference in Washington DC.

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Presentation To Ipm 2008

  1. 1. CPM100E – Time, Cost, Risk and Procurement Management Presented by Mark A. Buchholz, PMP 2008 Integrated Project Management Conference CPM100E - Time, Cost, Risk and Procurement Management slide 1
  2. 2. Lesson Overview Time and Cost Management The student will understand the concept of time management The student will understand the concept of cost management Risk and Procurement Management The student will understand the value of risk management to the project manager The student will understand the role of procurement management in the project office The student will understand the implications of contract terminations during project execution CPM100E - Time, Cost, Risk and Procurement Management slide 2
  3. 3. Time Management Project Time Management (PMBOK 3rd Ed, p. 123) Activity definition – identifying the specific schedule activities that need to be performed to produce the various project deliverables Activity sequencing – identifying and documenting dependencies among schedule activities Activity duration estimating – estimating the number of work periods that will be needed to complete individual activities Activity resource estimating – estimating the type and quantities of resources required to perform each schedule activity Schedule development – analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule Schedule control – controlling changes to the project schedule CPM100E - Time, Cost, Risk and Procurement Management slide 3
  4. 4. Time Management Project time management includes the processes to accomplish timely completion of the project PMBOK 3rd Ed, p. 123. Project Scheduling is the process of sequencing and timing when the work will be performed Scheduling is determining “the When” CPM100E - Time, Cost, Risk and Procurement Management slide 4
  5. 5. Time Management The Project Scheduling Process We need to know what we’re going to do We need to know in what order we’re going to do it We need to know how long each thing we’re going to do is going to take We need to know who’s going to do what needs to be done We need to arrange those things we’re going to do according to how they relate to each other Then over the course of the project we need to control these things and our plan to do that CPM100E - Time, Cost, Risk and Procurement Management slide 5
  6. 6. The Integrated Master Schedule (IMS) The IMS is The document which represents the Integrated Planning and Scheduling processes At the top level of the project A Network diagram which encompasses all the scope, defines when things will get done, and tracks how much work was accomplished CPM100E - Time, Cost, Risk and Procurement Management slide 6
  7. 7. The IMS is a Communication Tool Enables communication by establishing a common language Shared understanding of tasks and relationships Defines “what/who” impacts “my tasks” Defines “what/who” “my tasks” impact Enables use of project management language Focus on planned start/finish versus actual start/finish How much has been done, versus was planned to be done Helps to answer the questions When am I going to start? When am I going to be done? What does that mean to the next task? CPM100E - Time, Cost, Risk and Procurement Management slide 7
  8. 8. The IMS is a Management Tool Enables Baseline to be established Establishes what was planned to be accomplished Reference point from which to measure performance Gives clear picture of slips and early starts Clarifies task dependencies Shows who’s responsible for what and when Shows impact of extending task duration beyond the plan Reliability of the IMS depends upon Regular reporting: every day/week/two-weeks/month/etc. Accurate statusing: how much of the planned work was actually accomplished in that period Project Management becomes pro-active not reactive CPM100E - Time, Cost, Risk and Procurement Management slide 8
  9. 9. Cost Management Project Cost Management includes the processes involved in planning, estimating, budgeting and controlling costs so that the project can be completed within the approved budget (PMBOK 3rd Ed, p. 157) Cost estimating – developing an approximation of the costs of the resources needed to complete project activities Cost budgeting – aggregating the estimated costs of individual activities or work packages to establish a cost baseline Cost control – influencing the factors that create cost variances and controlling changes to the project budget CPM100E - Time, Cost, Risk and Procurement Management slide 9
  10. 10. Cost Estimating We know what needs to be done Scope defined in our WBS Activities defined Durations estimated Resources assigned Now it’s a “simple” matter of A times B equals C Labor rates times the hours equals the cost Add in all the “other” costs to get a total cost Or you can use other methods to estimate cost Analogous – using the actual cost of a previous project Resource cost rates – research the market rates for materials Bottom-up estimating – start with the lowest level tasks and gradually add-up these costs Parametric – use of historical data to statistically develop a cost CPM100E - Time, Cost, Risk and Procurement Management slide 10
  11. 11. Cost Budgeting Adding it all up to create the total cost for the project Aggregate all the activity or WBS element costs Apply a reserve margin to the total you develop to create a new total cost How much do you need to add in to accommodate the risk on this project Adding in funding for the “Unknown Unknowns” Evaluate and reconcile against how much money is available Establish a cost baseline A time-phased budget – when the project will spend the money, i. e. month-by-month, or quarter-by-quarter Project funding requirements Once a management reserve margin is applied, establish what the total funds the project will need CPM100E - Time, Cost, Risk and Procurement Management slide 11
  12. 12. Risk Management Project risk management includes the processes concerned with conducting risk management planning, identification, analysis, responses, and monitoring and control on a project; most of these processes are updated throughout the project. (PMBOK 3rd Ed, P. 237) The objectives of project risk management are to Increase the probability and impact of positive events Decrease the probability and impact of events adverse to the project CPM100E - Time, Cost, Risk and Procurement Management slide 12
  13. 13. Risk Management Risk management planning – deciding how to approach, plan and execute the risk management activities for a project Risk identification – determining which risks might affect the project and documenting their characteristics Qualitative risk analysis – prioritizing the risks for subsequent further analysis or action by assessing and combining their probability of occurrence and impact. Quantitative risk analysis – numerically analyzing the effect on overall project objectives of identified risks Risk response planning – developing options and actions to enhance opportunities and to reduce threats to project objectives Risk monitoring and control – tracking identified risks, monitoring residual risks, identifying new risks, executing risk response plans, and evaluating their effectiveness 3rd Ed, p. 237 PMBOK throughout CPM100E - Time, Cost, life cycle the project Risk and Procurement Management slide 13
  14. 14. Risk Management Planning Deciding ahead of time how the project team will handle the process of risk management Usually they will simply model the behavior of their “parent” organization Will need to declare on the project team who, how, and when risk management activities will occur Its everyone’s responsibility Its continuous – But it has to start early! It must be integrated with every other process that the project team performs Includes deciding on what level of risk the project is willing to assume CPM100E - Time, Cost, Risk and Procurement Management slide 14
  15. 15. Risk Identification Developing a list of what could go wrong – within reason (but seriously, dude, the rain will never get that bad) Risk Register List of identified risks List of potential responses Root causes of the risk Updated risk categories CPM100E - Time, Cost, Risk and Procurement Management slide 15
  16. 16. Qualitative and Quantitative Risk Analysis Qualitative risk analysis – the focus is on whether the risk event will occur Quantitative risks – the focus is on the impact if the risk does occur Risk factor is probability times impact Risk alpha has a probability of 3 with an impact of 4 therefore the RF is 12 Risk beta has a probability of 1 with an impact of 5 therefore the RF is 5 Risk gamma has a probability of 5 with an impact of 5 therefore the RF is 25 CPM100E - Time, Cost, Risk and Procurement Management slide 16
  17. 17. Risk Response Planning We know something is going to happen. We’re not sure when but we know it will hurt when it happens So what are we going to do when the risk event occurs Make it “hurt” less – Mitigate Make it go away faster – Mitigate Make it someone else’s problem – Transfer Don’t do the thing that is most likely to cause it – Avoid Have a plan – Contingency response strategy Suffer the pain – Acceptance CPM100E - Time, Cost, Risk and Procurement Management slide 17
  18. 18. Risk Monitoring and Control We’ve figured it all out, we have a plan, now its time to watch, observe, and be ready to act Identify, analyze and plan for new risks Monitor triggers to see if a risk event has occurred Monitor the execution of our risk response plans to make sure that they really are having the intended effect Determine if we need to change how we are managing risk CPM100E - Time, Cost, Risk and Procurement Management slide 18
  19. 19. Project Procurement Management Plan purchases and acquisitions – determining what to purchase or acquire and determining when and how Solicitation planning – plan contracting – documenting products, services and results requirement and identifying potential sellers Request seller responses – obtaining information, quotations, bids, offers, or proposals, as appropriate Source selection – select sellers – reviewing offers, choosing among potential sellers, and negotiating a written contract with each seller Contract administration – managing the contract and relationship between the buyer and seller, reviewing and documenting how a seller is performing or has performed to establish required corrective actions and provide a basis for future relationships with the seller, managing contract-related changes and when appropriate, managing the contractual relationship with the outside buyer of the project Contract closure – completing and settling each contract, including the resolution of any open items, and closing each contract 3rd Ed, p. 269 PMBOK applicable to the project or a project phase CPM100E - Time, Cost, Risk and Procurement Management slide 19
  20. 20. What is a Contract A contract is a legally binding agreement between two or more parties Non-verbal Verbal Written A contract has certain key elements Offer Consideration Acceptance CPM100E - Time, Cost, Risk and Procurement Management slide 20
  21. 21. The Contracting Process What do we need someone to provide for us Services, product, support, etc What are the terms by which we want them to provide it to us What is it supposed to look like When do we want it What are the rules that have to be followed when they provide it Make us an offer Accept the offer Make sure we get what we want when and how we need it – enforce the terms of the agreement When we’re done, make sure we’re really done CPM100E - Time, Cost, Risk and Procurement Management slide 21
  22. 22. Questions and Contact Info Questions/Answers? Don’t forget to fill out the Course Evaluation Sheets Contact: Mark A. Buchholz, PMP Account Manager, Acquisition Solutions, Inc. Email: mbuchholz@acquisitionsolutions.com CPM100E - Time, Cost, Risk and Procurement Management slide 22

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