Project Management Frame Work Module 4 as describe in PMBOK 5th Editon

1. Lesson 4
Ch.3 Project Management Process
Pages 47 -62

2. Lesson objectives
1. To understand and be able to identify a Process
2. To understand each project management process
group with its mapping to project management
areas
3. To learn about criteria for selecting individual
projects

3. Project Management Processes
• Application of skills, knowledge tools and
techniques
• Applied to meet project objectives
Project Management
• Set of interrelated actions
• To create a pre-specified service, result, product
• Having input, tools and techniques, and the pre-
defined output.
Processes

4. Project Management Processes
• Initiation Process Group
• Planning Process Group
• Executing Process Group
• Monitoring & Controlling Process Group
• Closing Process Group
The five process groups

5. Common process interaction

6. Common process interaction

7. Project Information
• Collected during project execution
Data
• Data collected during execution is
analyzed, processed and transformed
into information during M/C processes
• Information is distributed as reports
Information

8. Project Information
• Raw data, measurement related to the actual work
• E.g: actual cost, % of work done, number of defects, actual duration,
etc
Work performance data
• Data collected through various controlling processes analyzed in
context across various knowledge areas
• E.g: status of deliverables, estimates to complete, etc.
Work performance information
• The physical or electronic representation of WPI
• E.g: Reports for decision makings
Work performance report

9. • Various economic criteria are used for
selecting one project over another
• The criteria are as follow:
1. Benefit Cost Ratio
2. Cash flow
3. Internal Rate of Return
4. Present Value
5. Return on Investment
6. Opportunity Cost
Project Selection Criteria

10. • The value obtained by dividing the benefit by
the cost.
• The greater the value, the more attractive the
project is.
• For example: Project A costs 40,000 and
benefits 80,000 and Project B cost 20,000 and
benefits 30,000.
• You choose project A over project B
Project Selection Criteria:
Benefit Cost Ratio

11. • Cash flow refers to both the money coming in
and the money going out of an organization.
• A single project with positive cash flow is
undertaken
• When there are many projects to choose
from, the project with higher cash flow is
selected.
Project Selection Criteria:
Cash flow

12. • Internal Return Rate looks at the cost of the
project as the capital investment and
translates the profit into the interest rate over
the life of that investment.
• Calculations for IRR are not part of this
certification.
• The greater the value for IRR, the more
beneficial the project is.
Project Selection Criteria:
Internal Rate of Return

13. • The value of money in future is called PV
• When calculating PV, inflation rates are
considered
• NPV means the PV of cash inflows minus cash
outflows in future
• PV tell us the value of our project’s product at the
time of selecting the project
• For a project to be worth-while economically, the
NPV must be positive.
• When selecting between various projects, you
choose the one with higher NPV values
Project Selection Criteria:
PV and NPV

14. Example,
Assume you invest 300,000 today to build a
house, which will be completed and sold after
three years for 500,000. Also assume that real
estate that is worth 400,000 today will be worth
500,000 after three years.
In this case PV = 400,000, and
NPV = 400,000 – 300,00 = 100,000
Project Selection Criteria:
PV and NPV

15. • The ROI is the percentage profit from the
project.
• For example, if you spend 400,000 on the
project, and the benefit for the first year is
500,000, then ROI equals (500,000-
400,000)/400,000, which equals 25%.
• You select a project with higher ROI
Project Selection Criteria:
Return on Investment

16. • Opportunity Cost refers to selecting a project
over another due to the scarcity of resources.
Questions:
There are three projects
Project A: 30,000 NPV
Project B: 40,000 NPV
Project C: 23,000 NPV
You choose project B, what is the opportunity cost?
The answer should be: 30,000
Project Selection Criteria:
Opportunity Cost

17. 1. Question: Which of the following is NOT a
characteristic of a project?
1. Constrained by limited resources
2. Planned, executed, and controlled
3. Creates a unique product or service
4. Ongoing and repetitive

18. Correct choice 4
Justification:A project is a temporary endeavor undertaken to
create a unique product, service, or result. The temporary
nature of projects indicates that a project has a definite
beginning and end.

19. Question: In a kick-off meeting for your project, you provided
information to your team members about the different
process groups to be followed in the project. According to
PMI, which are the project management process groups?
1. Conceptualizing, Initiating, Executing, Monitoring and
Controlling, and Closing
2. Initiating, Planning, Executing, Monitoring and Controlling,
and Closing
3. Initiating, Verifying, Executing, Monitoring and Controlling,
and Closing
4. Initiating, Planning, Executing, Controlling, and
Administrative Closure

20. Correct choice 2

21. Question: You are managing the release of a new drug in the
market. Your role is that of a:
1. Functional Manager, because you have good functional
knowledge of the pharmaceutical industry
2. Project Manager, because you are creating a unique
product within specific time schedules
3. Operations Manager, because you have to do several
repetitive tasks
4. Program Manager, because you have to manage several
projects to do your job effectively

22. Correct choice 2
Justification: Every project creates a unique product, service,
or result. A project can create a service or a capability to
perform a service (e.g., a business function that supports
production or distribution).

23. Question: You are working in the Project Management Office
(PMO) of your organization. Your job responsibility is to:
1. Manage the operational activities in the company
2. Manage human resource and risk management issues for
individual projects
3. Provide support functions to project managers in the form
of training, providing software, standardizing policies, etc.
4. Provide subject matter expertise in the functional areas of
the project

24. Correct answer 3
Justification: A project management office (PMO) is a
management structure that standardizes the project-related
governance processes and facilitates the sharing of resources,
methodologies, tools, and techniques. The responsibilities of a
PMO can range from providing project management support
functions to actually being responsible for the direct
management of one or more projects.

25. Question: Which of the following statements is NOT true
about a project life cycle?
1. All project life cycles are usually identical.
2. The level of risk is highest at the start of the project and
decreases as the project progresses.
3. The ability of the stakeholders to influence the final
characteristics is highest at the start and gets progressively
lower as the project continues.
4. Cost and staffing requirements usually peak during the
intermediate phases.

26. Correct choice 1
Justification: Although many projects may have similar phase
names with similar deliverables, few are identical.
Further, look out for absolute statements with terms like "All",
"None", "Never", "Always", "Must", etc. Such options should
be carefully evaluated because they may be incorrect.

27. Question: Almost all projects are planned and implemented in
a social, economic, or environmental context, and have
intended and unintended positive or negative impacts. In this
context, which of the following statements about Enterprise
Environmental Factors is NOT true?
1. Neither promote nor hold back the project management
processes
2. May restrict the project management processes
3. May promote the project management processes
4. May either promote or hold back the project management
processes
.

28. Correct choice 1
Justification: Enterprise environmental factors may enhance or
constrain project management options, and may have a
positive or negative influence on the outcome.

29. Question: In your company, the project manager shares
responsibility with the functional manager to assign priorities
and directs the team members of the project. In this case, it is
NOT the responsibility of the project manager to:
1. Plan resources
2. Manage cost and budget
3. Carry out performance appraisal of project team
4. Define tasks

30. Correct choice: 3
Justification: In a matrix organization, the project manager
shares responsibility with the functional managers for
assigning priorities and for directing the work of persons
assigned to the project.
PMstudy.com comments: In most matrix organizational
structures, personnel performance management is not the
responsibility of the project manager; this task is usually done
by the functional manager. However, a project manager is
always responsible for Plan resources (Option 1), Manage cost
and budget (Option 2), and Define tasks (Option 4).

31. Question: The CEO of ABC bank is concerned about the
increase in "call answering time" in the bank`s call center (i.e.,
customers have to wait longer for their calls to be answered
by an operator). She wants to improve call center processes to
decrease the "call answering time." What should the CEO do
to address the situation?
1. Set up a PMO
2. Assign a very competent project manager to manage
activities in the call center
3. Move to a projectized organizational structure
4. Continue with a functional organizational structure, and
try to streamline activities

32. Correct choice: 4
Justification: This is an operation and not a project (projects
are temporary and unique, but call center activities are
ongoing and repetitive).
In this context, the CEO should not try to handle this issue as a
project and do none of the activities mentioned in option 1,
option 2, or option 3.
Since this is an operation, option 4 provides the best course of
action for the CEO to address this situation, i.e., continue with
a functional organizational structure (which is recommended
for managing operations) and try to streamline activities.

33. Question: As a project manager, you realize that managing
project stakeholder expectations is an important priority.
Which statement on project stakeholders is NOT correct?
1. Negative stakeholders must be ignored if the project has
to be successfully completed.
2. 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.
3. Some key stakeholders include project manager,
operations management, project team, customers, and
sponsor.
4. Stakeholder expectations may be difficult to manage,
because stakeholders often have very different or
conflicting objectives.

34. Correct answer 1
Justification:In the case of stakeholders with positive
expectations for the project, their interests are best served by
making the project successful.... In contrast, the interests of
negatively affected stakeholders are served by impeding the
project`s progress. Overlooking negative stakeholders interest
can result in an increased likelihood of failures, delays, or
other negative consequences to the project.