ProfessionalResponsibility• The PMP Code of Professional Conduct is theauthoritative guide on how the PMP shouldact as a professional, and how the PMP shouldbehave with customers and the public ingeneral.• The PMP exam candidate will be tested ontheir knowledge of the PMP Code ofProfessional Conduct.
ProfessionalResponsibilityThe five areas of professional responsibilityconsist of the following:• Ensuring integrity• Contributing to the knowledge base• Applying professional knowledge• Balancing stakeholder interests• Respecting differences
Responsibilities to theprofession• The PMP/ CAPM must adhere to a high set ofprinciples, rules, and policies.• This includes the organizational rules and policies,the certification process, and the advancement ofthe profession.• On the exam, always choose the answer which bestsupports the PMP profession and the higher set ofprinciples the candidate is expected to adhere to.
Balancing Stakeholdersneeds• Balance Stakeholder’s Objectives– Understand the various competing stakeholders’interests and needs– Comprehend the conflict resolution techniquesuseful in handling differing objectives– Be able to resolve conflicts in a fair manner– Exercise negotiation skills based on properinformation
Complying with Rules andPoliciesHonesty is expected in all areas regarding the PMPexamination process including:• Exam applications must be honest and reflect actualeducation and work experience.• Test items, questions, answers, and scenarios are not tobe shared with other PMP/ CAPM candidates.• PMP renewal information must reflect an honest• assessment of education and experience.• Continuing education information must be honest andaccurate; continuing education reporting must reflectactual courses completed
Applying Honesty to theProfession• The candidate is expected, at all times, toprovide honesty in experiencedocumentation, the advertisement of skills,and the performance of services.• The PMP must, of course, adhere to andabide by all applicable laws governing theproject work. In addition, the ethicalstandards within the trade or industry shouldalso be adhered to.
Advancing the Profession• The PMP/ CAPM must respect and recognizethe intellectual work and property of others.• The PMP/ CAPM can’t claim others’ work astheir own.• He/ She must give credit where credit is due.• Work, research, and development sourcesmust be documented and acknowledged bythe PMP when relying on others’ work.
Responsibilities to the Customerand to the Public• The candidate also has a responsibility to thecustomer of the project and the public.• Projects that affect internal customers are expectedto meet requirements and standards, and fulfill thebusiness need of the performing organization.• Essentially, the candidate is working for thecustomer.
Enforcing ProjectManagement Truth &Honesty• The candidate must represent themselves and theirprojects truthfully to the general public.• This includes statements made in advertising, press• releases, and in public forums.• When project managers are involved in the creation ofestimates, truth is also expected.• The candidate must provide accurate estimates ontime, cost, services to be provided—and realisticoutcomes of the project work.
Eliminating InappropriateActions• A PMP/ CAPM must avoid conflicts of interestand scenarios where conflicts of interest couldseem apparent, opportunistic, or questionableto the customer or other stakeholders.• In addition, the candidate must not accept anyinappropriate gifts, inappropriate payments,or any other compensation for favors, projectmanagement work, or influence of a project.
Respecting Differences• Interact with team and stakeholders in aprofessional and cooperative manner– Understand cultural diversity, norms andstakeholders’ communication styles– Show flexibility towards diversity, tolerance andself control– Becoming empathetic to differences
Project ManagementFrameworkIntroduction to Project Management
What is the PMBOK GuideThe Project Management Book of Knowledge(pmbok) is a recognised standard for theproject management profession.• A standard is a formal document, it describesnorms, methods, processes and practices.
What is a projectAccording to PMBOK a project is atemporary endeavor undertaken to createa unique product, service or result.’’
Project CharacteristicsYou’ve just learned that a project has severalcharacteristics:• Projects are unique.• Projects are temporary in nature and have a definitebeginning and ending date.• Projects are completed when the project goals are achievedor it’s determined the project is no longer viable.• A successful project is one that meets or exceeds theexpectations of your stakeholders
Operational WorkOperational Works are quite opposite in nature toProjects. Operations are ongoing and repetitive.They involve work that is continuous without anending date, and you often repeat the sameprocesses and produce the same results.
Project Management vs. OperationsThe purpose of operations is to keep theorganization functioning, while the purpose of aproject is to meet its goals and to conclude.At the completion of a project, the end product(or result) may get turned over to the organization’soperational areas for ongoing care andmaintenance.
What is Project ManagementProject Management is the application ofknowledge, skills, tools and techniques tomeet the project requirements. It is theresponsibility of the project manager toensure that project management techniquesare applied and followed.
What is a PortfolioPortfolios are a collections of programsand projects grouped together to supporta strategic business goal or objective. Theprograms may not be related other thanthe fact that they are helping to achievethat common goal.
What is a Program• Programs are groups of related projects that aremanaged using the same techniques in a coordinatedfashion. When projects are managed collectively asprograms, it’s possible to capitalize on benefits thatwouldn’t be achievable if the projects were managedseparately.• A project may or may not be part of a program but aprogram will always have projects.
SUBPROJECTProjects are frequently divided into moremanageable components or subprojects.Subproject are often contracted to an externalenterprise or to another functional unit in theperforming organization.Subprojects can be referred to as projects andmanaged as such
What is a Project Management OfficeThe project management office (PMO) is anorganisational body or entity assigned tooversee the management of projects andprograms throughout the organization.
Primary Function of PMOA Primary function of PMO is to support project managers in avariety of ways which may include, but are not limited to:• Managing shared resources across all the projects administered by thePMO.• Identifying and developing project management methodology, practices &standards.• Coaching, mentoring , training and oversight.• Monitoring compliance with project management standard policies,procedures , and templates via project audits.• Developing and managing project policies, procedures, templates, andother shared documentation ( organizational process assets);• Co coordinating communication across projects
Role of a Project Manager• The Project Manager is the person responsible for accomplishing theproject objectives.• Project managers strive to meet the triple constraint by balancing projectscope, time, and cost goals.• Depending on the organization structure , a project manager may report tofunctional manager.• In other cases project manager may be one of the several project managerswho report to a portfolio or program manager that is ultimately responsiblefor enterprise wide projects . In this type of structure, the project managerworks closely with the portfolio or program manager to achieve the projectobjectives
Project Manager SkillsSkills every good project manager should have:• Integration Skills• Communication skills• Planning and Organizational skills• Leadership Skills• Team Building and Motivational Skills• Budgeting Skills• Conflict Management Skills• Negotiation and Planning Skills
Organisational StructureJust as projects are unique, so are the organizationsin which they’re carried out. Organizations have theirown styles and cultures that influence how projectwork is performed..One of the keys to determining the type of organization you work in is measuring how muchauthority senior management is willing to delegate to project managers
Types of OrganisationalStructureAlthough uniqueness abounds in businesscultures, all organizations are structured in one ofthree ways:• Functional• Projectized• Matrix
Functional OrganisationOne common type of organization is the functionalorganization. Chances are you have worked in this type oforganization. This is probably the oldest style of organizationand is therefore known as the traditional approach toorganizing businesses.Functional organizations are centered on specialties andgrouped by function, which is why it’s called functionalorganization. As an example, the organization might have ahuman resources department, finance department,marketing department, and so on.
Projectized OrganisationsIn this type structure, organisational resources are dedicated toprojects and project work in purely projectized organizations. Projectmanagers almost always have ultimate authority over the project inthis structure and report directly to the CEO.In a purely projectized organization, supporting functions such ashuman resources and accounting might report directly to the projectmanager as well. Project managers are responsible for makingdecisions regarding the project and acquiring and assigningresources. They have the authority to choose and assign resourcesfrom other areas in the organization or to hire them from outside ifneeded.
Matrix OrganisationsThis form is an attempt to maximize the strengths of both thefunctional and projectised forms. Team members report to twobosses, the project manager and functional manager (i.e., VPEngineering). Communication goes from team member to bothbosses. Team member do project work in addition to normaldepartmental work.• In a strong matrix, power rests with the project manager, in a weakmatrix power rests with the functional manager and the power iscomparable to that of a coordinator or expediter.• In a balanced matrix, the power is shared between the functionalmanager and the project manager.
Project Expediter and Coordinator• Project Expediter- The project expediter actsprimarily as a staff assistant and communicationscoordinator. The expediter cannot personally make orenforce decisions.• Project Coordinator- This position is similar to theproject expediter except the coordinator has somepower to make decisions, have some amount ofauthority and reports to a higher- level manager.
Who are project Stakeholders• Stakeholders are persons or organizations who are actively involved inthe project or whose interests may positively or negatively beaffected by the performance or completion of the project.• Stakeholders have varying levels of responsibility and authority andcan change over the project life cycle.• Project management team must continuously identify both externaland internal stakeholders.• Project manager must manage the influence of various stakeholders inrelation to the requirements and balance stakeholders’ interest.
Stakeholders• Some examples of project stakeholders
Enterprise Environmental Factors• Refer to both internal & external environmental factors that surround orinfluence a project’s success.• As an input in almost all project management process.• May enhance or constrain project management options.• May have positive or negative influence on the outcome.• Examples: Organizational culture, structure, and processes Government or industry standards Infrastructure Existing human resources Personnel administration Company work authorization systems Marketplace conditions Stakeholder risk tolerances Political climate Organization’s established communications channels Commercial databases Project management information
Organizational Process Assets• Processes & Procedures Organizational standard processes such as standards, policies Standardized guidelines, work instruction, proposal evaluation criteria, andperformance measurement criteria Templates Financial control procedures Procedures for prioritizing, approving, and issuing work authorization, etc.• Corporate Knowledge Base Process measurement databases Project files Historical information & lesson learned knowledge bases Issue and defect management databases Configuration management knowledge bases Financial databases, etc.
Project Management ProcessGroupsProject management processes organize anddescribe the work of the project. ThePMBOK®Guide describes five process groupsused to accomplish this end. These processesare performed by people and, much likeproject phases, are interrelated anddependent on one another.
The five process groups are:• Initiating• Planning• Executing• Monitoring and Controlling• Closing
Project Management ProcessesAll these process groups have individual processes that collectivelymake up the group. For example, the Initiating process group hastwo processes called Develop Project Charter and IdentifyStakeholders.Collectively, these process groups—including all their individualprocesses—make up the project management process.Projects start with the Initiating process and progress through all theprocesses in the Planning process group, the Executing processgroup, and so on, until the project is successfully completed or it’scanceled. All projects must complete the Closing processes, even ifa project is killed.
Knowledge AreasThere are nine knowledge areas and they are:• Integration Management• Scope Management• Time Management• Cost Management• Quality Management• Human Resource Management• Communication Management• Risk Management• Procurement Management
Knowledge Areas• Each Knowledge area has further Processes.There are a total of 42 processes. Eachprocess has inputs, outputs and "tools andtechniques" (ITTO’s). The PMBOK primarilycovers each of the processes and its ITTO’s indetail. You need to understand the conceptsrelated to each of the input, output and "toolsand techniques".
Project Life cycleThe project life cycle is the agglomeration ofall phases in the project.All projects are divided into phases, and allprojects, large or small, have a similar life cyclestructure: These are:• Starting the project• Organizing and preparing• Carrying out the project work• Closing the project
Characteristics of the Project LifeCycleThe project life cycle serves to define the beginning and theend of a project.Phases are generally sequential and are usually definedby some form of technical information or technicalcomponent handoff.Deliverables from the preceding phase are usually approvedbefore work starts on the next phase.
Characteristics of the Project Life CycleMost project life-cycles share a number of commoncharacteristics:Cost and staffing levels are low at the start, highertoward the end, and drop rapidly as the project draws to aconclusion.The ability of the stakeholders to influence the finalcharacteristics of the project’s product and the finalcost of the project is highest at the start and getsprogressively lower as the project continues.
The probability of successful completion generallygets progressively higher as the project continues.Characteristics of the Project Life CycleThe probability of successfully completing theproject is lowest, and hence risk and uncertainty arehighest, at the start of the project.
Project Phases and the Project LifeCycleA project life cycle is a collection of projectphases that defines: What work will be performed in each phase. What deliverables will be produced and when. Who is involved in each phase. How management will control and approve work produced ineach phase. A deliverable is a product or service produced or provided aspart of a project
HandoffsProject phases evolve through the life cycle ina series of phase sequences called handoffs, ortechnical transfers. The end of one phasesequence typically marks the beginning of thenext.
Phase-to-Phase RelationshipsThere are three basic types of phase–to Phaserelationships:• A Sequential relationship : where a phase can only startonce the previous phase is complete.• An Overlapping relationship : where the phase starts priorto completion of the previous one (Fast tracking).Overlapping phase may increase risk and can result inrework.• An Iterative relationship : where only one phase is plannedat any given time and the planning for the next is carried outas work progresses on the current phase and deliverables
PROJECT INTEGRATIONMANAGEMENTProject Management Training
Project IntegrationManagementIntegration managementis an element of projectmanagement thatcoordinates all aspects ofa project.
The Key to Overall Project Success:Good Project Integration Management• Project managers must coordinate all of the otherknowledge areas throughout a project’s life cycle.• Many new project managers have trouble looking atthe “big picture” and want to focus on too manydetails.
Project Integration Management Processes:• Develop the project charter: Work with stakeholders tocreate the document that formally authorizes a project—the charter.• Develop the project management plan: Coordinate allplanning efforts to create a consistent, coherentdocument—the project management plan.• Direct and manage project execution: Carry out theproject management plan by performing the activitiesincluded in it.
Project Integration Management Processes (cont’d)• Monitor and control the project work: Overseeproject work to meet the performance objectives ofthe project.• Perform integrated change control: Coordinatechanges that affect the project’s deliverables andorganizational process assets.• Close the project: Finalize all project activities toformally close the project.
How do Projects come about:• As a result of Needs and Demands, namely:Market needCustomer RequestStrategic opportunity/business needTechnological advanceLegal requirementEcological impactsSocial need
Strategic Planning and Project Selection• Strategic planning involves determining long-term objectives, predictingfuture trends, and projecting the need for new products and services.• Organizations often perform a SWOT analysis:– Strengths, Weaknesses, Opportunities, and Threats• As part of strategic planning, organizations should:– Identify potential projects.– Use realistic methods to select which projects to work on.– Formalize project initiation by issuing a project charter.
Project Selection MethodsThere are many ways to select a project to beinitiated from among many possible projects.Project selection methods measure the value ofwhat the product, service, or result of the projectwill produce and how it will benefit theorganization.
Methods for Selecting Projects• There is usually not enough time orresources to implement all projects.• Methods for selecting projects include:– Focusing on broad organizational needs.– Categorizing projects.– Performing net present value or other financialanalyses.– Using a weighted scoring model.– Implementing a balanced scorecard.65
Project Selection MethodsThere are generally two categories ofselection methods:• Benefit Measurement Methods (Comparativeapproach).• Constrained Optimization Methods(Mathematical models).
Benefit Measurement Method• Murder BoardA panel of people who try to shoot down a newproject idea.• Peer Review• Economic Models• Benefit Compared to Cost
Economic Models for ProjectSelection• Present Value• Net Present Value• Internal Rate of Return• Payback Period• Benefit Cost Ratio
Net Present Value• Net present value (NPV) analysis is a method ofcalculating the expected net monetary gain or loss froma project by discounting all expected future cash inflowsand outflows to the present point in time.Note:• Projects with a positive NPV should be considered iffinancial value is a key criterion.• The higher the NPV, the better.
Internal Rate of Return• The internal rate of return (IRR) is the most difficultequation to calculate of all the cash flowtechniques.• It is a complicated formula and should beperformed on a financial calculator or computer.• Technically speaking, IRR is the discount rate whenthe present value of the cash inflows equals theoriginal investment.
Internal Rate of Return cont’dNote:When choosing between projects or whenchoosing alternative methods of doing theproject, projects with higher IRR values aregenerally considered better than projectswith low IRR values.
Payback Period• The payback analysis/payback period is another importantfinancial consideration.• The payback period is the amount of time (number of timeperiods) it will take to recoup your investment in the projectbefore you start accumulating profit.• Many organizations want IT projects to have a fairly shortpayback period.
Project Selection – Economic ModelsConcepts you should know:• Present value (PV): The value today of future cash flows.• Net present value (NPV): Project with positive & greater NPVvalue is better.• Internal rate of return (IRR): Project with greater IRR value isbetter.• Payback period: The shorter the payback period the better.• Benefit-cost ratio: compares the benefits to the costs of differentoptions relates to costing projects and to determining what workshould be done. Project with greater benefit-cost ratio value isbetter.
Project Selection – Economic ModelsMethod MAIN POINTPresent value (PV): value today of future cash flowsNet present value(NPV):greater NPV value is betterInternal rate ofreturn (IRR):greater IRR value is betterPayback Period time periods it takes to recover your investmentSHORTER Payback Period THE BETTERBenefit-cost ratio ABOVE 1; greater benefit-cost ratio value is better.
Weighted Scoring Model• A weighted scoring model is a tool that provides a systematicprocess for selecting projects based on many criteria.• Steps in identifying a weighted scoring model:1. Identify criteria important to the project selectionprocess.2. Assign weights (percentages) to each criterion so theyadd up to 100 percent.3. Assign scores to each criterion for each project.4. Multiply the scores by the weights to get the totalweighted scores.• The higher the weighted score, the better.76
Sample Weighted Scoring Model for Project Selection77Weighted Scoring Model
Implementing a Balanced Scorecard• Drs. Robert Kaplan and David Norton developed thisapproach to help select and manage projects that alignwith business strategy.• A balanced scorecard is a methodology that converts anorganization’s value drivers, such as customer service,innovation, operational efficiency, and financialperformance, to a series of defined metrics.• See www.balancedscorecard.org for more.
Project Selection – Key Terms• Economic Value Added (EVA): concerned with whether theproject returns to the company more value than it costs.• Opportunity Cost: the opportunity given up by selecting oneproject over another.• Sunk Costs: Are expended costs, should not be consideredwhen deciding whether to continue with a troubled project.• Law of Diminishing Returns: after a certain point, addingmore input/resource will not produce a proportional increasein productivity.
Why have a Project Charter• It formally recognises (authorise) the existence of theproject, without it a project does not exist.• It gives the project manager authority to spend moneyand commit corporate resources.• It provides high level requirements for the project. Theproject charter is broad enough so it does not need tochange as the project changes.
Why have a Project Charter• It provides direction on the project’s objectives andmanagement.• Key project stakeholders should sign a projectcharter to acknowledge agreement on the need andintent of the project; a signed charter is a key outputof project integration management.
Develop Project CharterThe process of developing a document that formally authorizes a project or phase,and documenting initial requirements that satisfy the stakeholders’ needs andexpectations.
Develop Project Charter• Projects are authorized by someone external to theproject such as sponsor, PMO, portfolio steeringcommittee.• The project charter can be created by them ordelegated to Project Manager.
Develop Project Charter: Inputs• Statement of Work (SOW)A narrative description of products or services to bedelivered by the project. The SOW references: Business need Product scope description Strategic plan• Business caseProvide the necessary information from businessstandpoint to determine whether or not the project isworth the required investment.
Develop Project Charter: Inputs cont’d• ContractApplicable when the project is being done for an externalcustomer.• Enterprise Environmental Factors Government or industry standards Organization infrastructure Marketplace conditions• Organizational Process Assets Organizational standard processes, policies Templates Historical information and lessons learned
Develop Project Charter: Tools & Techniques• Expert JudgmentThe expertise of individuals or groups with specializedknowledge or training to assist with the technical ormanagement details.They include: Internal customers – people within the organization Consultants Stakeholders Professional & technical associations Industry groups PMO
Develop Project Charter: Outputs• The Project CharterThe project charter documents the businessneeds, current understanding of the customer’sneeds, and the new product,service, or result that it is intended to satisfy.
Develop Project Charter: Outputs cont’dThe project charter documents :– Project purpose or justification– Measurable project objectives and related success criteria– High-level requirements– High-level project description– High-level risks– Summary milestone schedule– Summary budget– Project approval requirements– Assigned project manager, responsibility and authority level– Name and authority of the sponsor or other person(s) authorizingthe project charter
Develop Project Management Plan• The Develop Project Management Plan process includesthe actions necessary to define, integrate, and coordinateall subsidiary plans into a project management plan.• The Develop Project Management Plan process brings allthese subsidiary plans together, along with the outputs ofthe Planning group processes, into one document calledthe project management plan.• The project management plan defines how the project isexecuted, monitored and controlled, and closed.
Develop Project Management PlanThe process of documenting the actions necessary to define,prepare, integrate and coordinate all subsidiary plans.
Develop Project Management Plan:Inputs• Project Charter• Outputs from Planning Processes Outputs from many of the planning processes described inchapter 5 through 12 are integrated to create the projectmanagement plan. Any baselines and subsidiary management plans that are anoutput from the other planning processes are inputs to thisprocess. In addition, updates to these documents can necessitateupdates to the project management plan.
Subsidiary Management PlansThese subsidiary plans include, but are not limited to:• Project scope management plan• Schedule management plan• Cost management plan• Quality management plan• Process improvement plan• Staffing management plan• Communication management plan• Risk management plan• Procurement management plan
Develop Project Management Plan:Inputs• EEF Government or industry standards PMIS Organizational structure and culture Infrastructure Personnel administration• OPA Standardized guidelines, work instructions, evaluation criteria, etc. Project management plan template Change control procedures Project files re: past projects
Project Management Plan (Output)• The strategy for managing the project and the processes ineach knowledge area.• Covers how you will define, plan, manage, and control theproject.• How to handle a problem on a project?look at your management plan to see how you planned tohandle such a problem.• The project management plan can be either summary level ordetailed, and can be composed of one or more subsidiaryplans and other components. Each of the subsidiary plans andcomponents is detailed to the extent required by the specificproject.
The Project Management PlanA Project Management Plan includes:• Project Charter• Budget• Schedule• Resources• Scope Statement• Responsibility charts/assignments• Subsidiary Management Plans
Develop Project Management Plan (cont…)Those other components include, but are notlimited to: Milestone list Resource calendar Schedule baseline Cost baseline Quality baseline Risk register
Project BaselineProject baseline refers to the original version ofthe project management plan. Once the projectmanagement plan is base-lined, it may only bechanged by raising a change request.
Baseline (Performance measurement baseline)• The project management plan contains scope, schedule, and cost baselines,against which the project manager will need to report projectperformance.• Baseline created during planning. Scope baselineThe project scope statement, work breakdown structure (WBS), and WBSdictionary. Schedule baselineThe agreed-upon schedule, including the start and stop times. Cost baselineThe time-phased cost budget.• Deviations from baselines are often due to incomplete risk identificationand risk management.
Configuration Management PlanThis plan describes how configurationmanagement will be performed on theproject.The configuration management systemdefines configurable items, such as productspecifications, and the change controlprocedures on those items.
Configuration Management• Ensures that the descriptions of the project’s productsare correct and complete.• Involves identifying and controlling the functional andphysical design characteristics of products and theirsupport documentation.• Configuration management specialists identify anddocument configuration requirements, control changes,record and report changes, and audit the products toverify conformance to requirements.
Change Management Plan• Describes how changes will be managed and controlled.• Covers for the project as whole.• May include:- Change control procedures (how and who)- The approval levels for authorizing changes- The creation of a change control board to approve changes.- A plan outlining how changes will be managed and controlled.- Who should attend meetings regarding changes.- Tools to use to track and control changesEach knowledge area are described in the individual management plans
Requirements Management PlanDescribes how the requirements will be elicited,analyzed, documented, prioritized, and managedthroughout the project.Requirements drive the features andcharacteristics of the project’s deliverables. Thisplan is created in the Collect Requirementsprocess.
Stakeholder Analysis• A stakeholder analysis documents important (often sensitive)information about stakeholders such as:– Stakeholders’ names and organizations.– Their roles on the project.– Unique facts about each stakeholder.– Their level of influence on and interest in the project.– Suggestions for managing relationships with eachstakeholder.
Progressive ElaborationProgressive Elaboration involves theprocess of taking a project fromconcept to detailed design.
Kickoff MeetingKick-off meeting happens after the planningphase and before the project execution. It istypically used to communicate responsibilitiesof key stakeholders.
Project Execution• During project execution the project teamfocuses on completing the tasks assigned.• The Sponsor protects the project fromchanges and loss of resources.• The Project Manager integrates all the piecesinto the project as a whole.
Project Execution (Cont…)• Project execution involves managing andperforming the work described in the projectmanagement plan.• The majority of time and money is usuallyspent on execution.• The products of the project are producedduring project execution.
Coordinating Planning and Execution• Project planning and execution are intertwinedand inseparable activities.• Those who will do the work should help to planthe work.• Project managers must solicit input from theteam to develop realistic plans.
Important Skills for Project Execution• General management skills such asleadership, communication, and politicalskills.• Product, business, and application area skillsand knowledge.• Use of specialized tools and techniques.
Direct and Manage Project ExecutionThis process requires implementation ofapproved changes covering:• Corrective action• Preventive action• Defect repair
Direct & Manage Project ExecutionThis is the process for performing the work defined in the project managementplan to achieve the project’s objectives
Using Software to Assist in Project Integration Management• Several types of software can be used to assist in projectintegration management:– Word processing software creates documents.– Presentation software creates presentations.– Spreadsheets or databases perform tracking.– Communication software such as e-mail and Web authoringtools facilitate communications.• Project management software can pull everything together andshow detailed and summarized information. The exam does not focuson any specific system (for example Microsoft Project ).
Project Execution: Tools and Techniques• Project Management Information Systems:Hundreds of project management softwareproducts are available on the market today,and many organizations are moving towardpowerful enterprise project managementsystems that are accessible via the Internet.
Project ManagementInformation System (PMIS)Project Management Information System(PMIS) is a system that keeps track of statusof all the project tasks. It is used to track thestatus of the project.
Change Requests• When a change request is received, the followingsteps must be taken (in this order):• Evaluate (assess) the impact of change to the project• Create alternatives including cutting other tasks,crashing, fast-tracking etc.• Meet with management, sponsors etc.• Meet with the customer if necessary
Monitoring and Controlling ProjectWork• Changes are inevitable on most projects, so it’simportant to develop and follow a process tomonitor and control changes.• Monitoring project work includes collecting,measuring, and disseminating performanceinformation.• Outputs of monitoring and controlling project workinclude Change Requests, Project management planupdates and project document updates.
Monitor & Control Project Work•This process includes tracking, reviewing and regulating the progress to meet theperformance objectives defined in the project management plan.
Monitor & Control Project Work: Input• Performance Reports : Reports should be prepared bythe project team detailing activities ,accomplishments ,milestones ,identified issues andproblems . Performance reports can be used to reportthe key information , but not limited to :– Current status– Significant accomplishments for the period– Scheduled activities– Forecasts– Issues
Perform Integrated Change ControlThe process of reviewing all change requests,approving changes, and managing changes tothe deliverables, organisational processassets, project documents and the projectmanagement plan.
Perform Integrated ChangeControl• The integrated change control process is a control functionthat is done from project initiating through project closing.• This is where all the recommendations for changes,corrective actions, preventive actions and defect repairsare evaluated across all the knowledge areas and eitherapproved or rejected.• Changes to any part of the project management plan or theproduct of the project are handled in the integrated changecontrol process.
Integrated Change Control• Three main objectives are:– Influence the factors that create changes toensure that changes are beneficial.– Determine that a change has occurred.– Manage actual changes as they occur.• A baseline is the approved projectmanagement plan plus approved changes.
Change Control SystemA formal, documented process thatdescribes when and how officialproject documents and work maybe changed.Describes who is authorized to makechanges and how to make them.
Change Control BoardChange Control Board is formed to reviewchange requests. It is used to approve orreject change requests. After the projectscope has been baselined, each requestedchange must go through a change controlreview process.
Change Control Boards (CCBs)• A formal group of people responsible forapproving or rejecting changes on a project.• CCBs provide guidelines for preparing changerequests, evaluate change requests, and managethe implementation of approved changes.• CCBs include stakeholders from the entireorganization.
Configuration Management• Ensures that the descriptions of the project’s products arecorrect and complete.• Involves identifying and controlling the functional andphysical design characteristics of products and their supportdocumentation.• Configuration management specialists identify and documentconfiguration requirements, control changes, record andreport changes, and audit the products to verify conformanceto requirements.
Defines how you will manage changes to the deliverables and the resultingdocumentation, including which organizational tools you will use.PMISConfigurationManagement SystemChange Control System
Closing Projects• To close a project, you must finalize allactivities and transfer the completed orcancelled work to the appropriate people.• Main outputs include:– Administrative closure procedures.– Contract closure procedures.– Final products, services, or results.– Organizational process asset updates.
Close Project or PhaseProjects come to an end for several reasons:• They’re completed successfully.• They’re canceled or killed prior to completion.• They evolve into ongoing operations and no longer exist asprojects.There are four formal types of project endings you mightneed to know for the exam:• Addition• Starvation• Integration• Extinction
Close Project or Phase• Addition- Projects that evolve into ongoingoperations are considered projects that end due toaddition; in other words, they become their ownongoing business unit.• Starvation- When resources are cut off from theproject or are no longer provided to the project, it’sstarved prior to completing all therequirements and you’re left with an unfinishedproject on your hands.
Close Project or Phase• Integration- Integration occurs when the resources of theproject—people, equipment, property, and supplies— aredistributed to other areas in the organization or areassigned to other projects.• Extinction- This is the best kind of project end becauseextinction means the project has been completed andaccepted by the stakeholders. As such, it no longer existsbecause it had a definite ending date, the goals of theproject were achieved, and the project was closed out.
Close ProjectThe Close Project or Phase is the process of formal completion of all project relatedactivities.
Lessons LearnedAt the end of each phase of a project, a lessonslearned document must be prepared. The lessonslearned document defines what was done right,wrong etc. It is required to be completed in orderfor the project to be completed.Also called “Post – Mortem”
AssumptionsAssumptions are beliefs held to be true for the purposesof the project – you don’t have to prove them, but theymust be documented in the Project Plan. As they areassumptions then be aware that they have an element ofrisk attached to them. If assumptions later turn out to befalse during the execution of the project then this maylead to changes in project scope.
Project ConstraintsEvery project has to manage at leastthree basic constraints; time, cost andscope. The success of a project dependson the skills and knowledge of a projectmanager to take into considerationthese constraints and develop the plansand processes to keep them in balance.
Project Scope Management• Processes required to ensure that project includes allthe work required, and only the work required, tocomplete the project.• Managing a project scope is primarily concerned withdefining and controlling what is and is not included inthe project.• Scope management defines how the deliverables ofproject will be verified and accepted.• Develop project management plan, under integrationproduces the scope management plan which willdefine how the scope shall be defined, verified andcontrolled.
Scope management means:• Not letting people randomly add to the scopewithout a structured change control system.• Making sure all changes fit within the projectcharter.• Preventing extra work or “gold plating”.• Uncontrolled scope is called scope creep.
In the project context the term scope may refer to:• Product scope : the features and functions that are to beincluded in a product or service. Completion of product scopeis measured against requirements.• Project scope : The work that must be done in order to delivera product with the specified features and functions.Completion of project scope is measured against the projectmanagement plan.Both types of scope management must be well integrated toensure the work of the project will result in the delivery of thespecified product.
project scope, product scope & requirementsExample: Lets say you have a plot of land and you want to build a houseon it.Product: The houseProduct Scope: The house should have 3 storeys, 1000 sq. m ofbuilt up area, 4 bedrooms with attached baths, 2 living room, akitchen, basement and a garage. The exteriors should be white.Project Scope: Hiring a building contractor, an architect and aninterior designer, acquiring legal permits, estimating the cost, takingbank loan, planning for risks such as rains and storms, designing thehouse, buying building materials,
Example: project scope, product scope & requirementsconstructing the house, conducting inspections, conductingregular site visits to track the progress, resolving disputes,Making payments and compensations, closing contracts andmoving in.Requirements: In addition to product scope, there could beother requirements for the house. Using a particular grade ofcement could be your quality requirements. Making the houseearthquake- proof could be a performance requirement. Gettinga weekly progress update from your contractor, and makingmonthly payments could be your project managementrequirements.
Documenting the Scope Management PlanThe scope management plan describes how theproject team will go about defining project scope,verifying the work of the project, and managing andcontrolling scope. The PMBOK Guide does not gointo detail regarding this plan, but there are somethings you may need to know about this plan for theexam.
Project Scope Management PlanThe project scope management plan should contain thefollowing:• The process you’ll use to prepare the project scopestatement.• A process for creating the work breakdown structure(WBS).• A definition of how the deliverables will be verified foraccuracy and the process used for acceptingdeliverables.• A description of the process for controlling scope changerequests, including the procedure for requesting changesand how to obtain a change request form.
Project Scope Management Processes:• Collect Requirements : the process of defining anddocumenting stakeholder’s needs to meet the projectobjectives.• Define Scope : the process of developing a detaileddescription of the project and the product.• Create WBS: the process of subdividing the projectdeliverables and the project work into smaller, moremanageable components• Verify Scope : the process of formalizing acceptance of thecompleted project deliverables• Control Scope : the process of monitoring the status of theproject and product scope and managing changes to thescope baseline.
Requirements• Requirements describe the characteristics of thedeliverables. They might also describe functionalitythat a deliverable must have or specific conditions adeliverable must meet in order to satisfy theobjective of the project.• Requirements are typically conditions that must bemet or criteria that the product or service of theproject must possess in order to satisfy theobjectives of the project.
Collect Requirements• Collect requirements is the process of defining anddocumenting stakeholders’ needs to meet the projectobjectives .• Requirements include the quantified and documented needsand expectations of the sponsor, customer, and otherstakeholders.• These requirements need to be elicited , analyzed, andrecorded in enough detail to be measured once projectexecution begins .• Collecting requirements is defining and managing customerexpectations . Requirements become the foundation of theWBS. Cost , Schedule, and quality planning are all built uponthese requirements
Collect Requirements• The development of requirements begins with ananalysis of the information contained in the projectcharter and the stakeholder register .• Many organizations categorize requirements intoproject requirements and product requirements• Project requirements : business requirements, projectmanagement requirements ,delivery requirements etc• Product requirements: technical, security,performance , etc
Collect RequirementsCollect Requirements is the process of defining and documenting stakeholdersneeds to meet the project objectives.
Collect Requirements: Tools &TechniquesInterviews :• Is a formal or informal approach to discover informationfrom stakeholders by talking to them directly• It is typically performed by asking prepared andspontaneous questions and recording the responses .• Interviewing experienced project participants,stakeholders and subject matter experts can aid inidentifying and the defining the features and thefunctions of the desired project deliverables .
Collect Requirements – Tools &TechniquesFocus Groups :• Focus groups bring together prequalifiedstakeholders and subject matter experts to learnabout their expectations and attitudes about aproposed product, service, or result .• A trained moderator guides the group through aninteractive discussion , designed to be moreconversational than a one-on-one interview
Collect Requirements – Tools &TechniquesFacilitated workshops:Cross-functional stakeholders come together in afacilitated workshop to discuss and define requirementsthat affect more than one department. For example, ifyou’re implementing a software package that impactsseveral business units, you’ll need representatives fromeach unit together in a workshop so that each of theirneeds are represented and prioritized. This way, all theparticipants understand the various needs and havea facilitated forum to discuss and resolve their issues.
Collect Requirements – Tools &TechniquesGroup Creativity Techniques : Group creativityinvolves several techniques, like brainstorming,nominal group technique, the delphi technique, andaffinity diagrams.• Brainstorming : a technique used to generate andcollect multiple ideas related to the project andproduct requirements .
Collect Requirements – Tools &TechniquesGroup Creativity Techniques :• Nominal Group Technique : enhancesbrainstorming with a voting process used torank the most useful ideas for furtherbrainstorming or prioritization (Brainstorming+ Voting)
Collect Requirements – Tools &TechniquesGroup Creativity Techniques :• The Delphi Technique is an anonymousmethod to query experts. Delphi techniqueuses an experienced Facilitator.• The responses are only available to thefacilitator.• Participants can express ideas or opinionswithout fear or being intimidated.
Collect Requirements – Tools &TechniquesGroup Creativity Techniques :• Idea/mind mapping : ideas created throughindividual brainstorming are consolidated into asingle map to reflect commonality and differences inunderstanding , generate new ideas (Brainstorming+Map).• Affinity Diagram : this technique allows largenumber of ideas to be sorted into groups for reviewand analysis
Collect Requirements – Tools &TechniquesGroup Decision Making Techniques : there aremultiplemethods of reaching a group decision :• Unanimity :everyone agrees on a single course ofaction• Majority : support from more than 50% of themembers of the group.• Plurality : the largest block in a group decides evenif a majority is not achieved.• Dictatorship : one individual makes the decision forthe group
Collect Requirements – Tools &TechniquesQuestionnaires and Surveys:This technique involves querying a largegroup of participants via questionnaires orsurveys. These tools allow you to gatherinformation quickly and apply statisticalanalysis, if needed, to the results.
Collect Requirement : Tools &TechniquesObservation:This technique is typically a one-on-one experiencewhere an observer sits side by side with theparticipant to observe how the participant interactswith the product or service. This technique is alsoknown as job shadowing. For example, you may usethis technique to determine requirements for anupgrade to a software product. Sitting with the userand watching their interactions with the productenables the observer to uncover requirements theywould not have ordinarily discovered.
Collect Requirements – Tools &TechniquesPrototypes :Prototyping is a technique involving constructing aworking model or mock-up of the final product forparticipants to experiment with. The prototype does notusually contain all the functionality the end productdoes, but it gives participants enough information thatthey can provide feedback regarding the mock-up. This isan iterative process where participants experiment andprovide feedback and the prototype is revised and thecycle starts again
Balance Stakeholder’s Requirement• There is a need to balance stakeholder’s requirement.• Some issue are so complex they cannot be resolved by PM alone.• Facilitate the resolution of competing requirement, consider:1. business case,2. project charter,3. project scope statement,4. project constraintsWhat you can do:Conflict resolution, team building, meeting, problem solving skills, escalation,approval from stakeholder.• Stakeholder request to do or add something that is not related to the reasonof project created should be rejected!
Collect Requirements: OutputsRequirements DocumentationAs mentioned earlier, requirements quantify and prioritizethe wants, needs, and expectations of the project sponsorand stakeholders. Requirements typically start out high-leveland are progressively elaborated as the project progresses.You must be able to track, measure, test, and trace therequirements of the project. If you can’t measure or testwhether the requirement satisfies the business need of theproject, the definition of success is left to the subjectiveopinions of the stakeholders and team members.
Requirements DocumentationThe requirements document may include the following elements:• Business need for the project and why it was undertaken• Objectives of the project and the business objectives theproject hopes to fulfill• Functional requirements and Nonfunctional requirements• Quality requirements• Acceptance criteria• Business rules• Organizational areas and outside entities impacted• Support and training requirements• Assumptions and constraints
Collect Requirements- OutputsRequirements Management Plan :• Documents how requirements will be analyzed , documentedand managed throughout the project.• The type of phase relationship you choose to manage theproject will determine how requirements are managedthroughout the project. For example, in a sequentially phasedproject, it’s possible to define requirements in later phases ofthe project after some work has been completed. In anoverlapping phased relationship, you’ll need to define anddocument most all the requirements early in the life cycle.• Configuration management is often used to manage and trackchanges to deliverable (product, service or result)requirements.
Requirements Management PlanThe Requirements Management Plan should include the following:• How planning, tracking, and reporting of requirements activitieswill occur• How changes to the requirements will be requested, tracked, andanalyzed along with other configuration management activities• How requirements will be prioritized• What metrics will be used to trace product requirements• What requirements attributes will be documented in thetraceability matrix• Remember that the requirements management plan can beconsidered a subsidiary management plan and be included in theproject management plan.
Requirements Traceability MatrixIt is a matrix that links requirements to their origin and tracesthem throughout the project life cycle .It helps to ensure thatrequirements approved in the requirements documentation aredelivered at the end of the project. It can include:• Unique identifier• Textual description• Rationale• Owner source• Status• Date Completed
Define ScopeScope is collectively the product, service, or result of theproject.Now that you’ve documented the project requirements,you’re ready to further define the needs of the project in theDefine Scope process. The project scope statement (an outputof this process) is what you’ll use to develop and document adetailed description of the deliverables of the project and thework needed to produce them. This process is progressivelyelaborated as more detail becomes known.
Define ScopeThis is the process of developing a detailed description of the project andproduct
Define Scope – Tools and Techniques1. Product Analysis• The purpose of product analysis is to analyze the objectives statedby the customer or sponsor and turn them into real requirements.(Product breakdown, systems analysis, value engineering,requirements analysis and value analysis).2.Alternative Identification• Identifying alternatives is a technique used to generate differentapproaches to execute and perform the work of the project. Brainstorming Lateral Thinking Pair wise comparison
Lateral ThinkingLateral thinking is a form of alternativesidentification that can be used to help define scope.Edward de Bono created this term and has doneextensive research and writing on this topic. Thesimplest definition is that it’s thinking outside thebox.Lateral thinking is a process of separating the problem, or inour case the components of project scope (the deliverablesand requirements), looking at them from angles other thantheir obvious presentation and encouraging team membersto come up with ways to solve problems or look at scope thatare not apparently or obvious.
Lateral Thinking ExampleQuestion: How could your pet Yorkie fall from thewindow of an 18-story building and live?Answer: The question asks how your pet could fallfrom an 18-story building and live; however, thequestion doesn’t state that your pet fell from the18th floor. So, your pet Yorkie fell from thebasement-level window.
Define Scope - OutputsProject Scope Statement• Project scope statements describes, in detail(remember SOW), project deliverables andwork required to create these deliverables.• It helps to create a common understandingamong stakeholders (avoid scope creep)• Project team can perform detailed planningnow
What is Work Breakdown Structure (WBS)?The PMBOK Guide describes a WBS as “a deliverable-orientedhierarchical decomposition of the work to be executed by the projectteam, to accomplish the project objectives and create the requireddeliverables…the WBS defines the total scope of the project.” Like theScope statement, the WBS serves as a foundational agreement amongThe stakeholders and project team members regarding project scope.Work that doesn’t fit into the WBS does not fit within the project.• Projects are normally too big to manage and WBS breaks the projectworks into smaller more manageable components arranged accordingto deliverables.• This is a top down effort, break works down from top to bottom.
Create WBS• Each level of WBS is a smaller piece of the levelabove.• The top most level of each WBS is the total projectitself.• Work is broken down to the lowest level possible tillfurther division is logically not possible or the workcan be confidently estimated and scheduled.• WBS represents total work specified in the currentapproved scope statement and shall be revised if amajor scope change occurs.
Create WBS Cont’• Work package: lowest level WBS component which canbe scheduled, cost estimated, monitored and controlled.• WBS Structure can be organized by- Phases- Major deliverables- Subprojects e.g. contracted work.• Beware of excessive decomposition. It can lead to non-productive management effort, inefficient use ofresources (performing work)
Control Accounts• Unique identifiers are normally taken from theorganization’s code of accounts to track cost by category.• Each item in WBS need to be estimated, resourced,budgeted and controlled. If management need to measuresPerformance (budget & time), WBS shall be linked toaccounting system.• Normally control account is placed in WBS for this purpose.• Control account is placed above work package level in WBS• Each control account may have more than one workpackage but one work package shall only be linked to onecontrol account.
100% Rule• Each WBS levels represents a breakdown of WBSlevel above.• Lowest level in the WBS is called work package• If the lowest levels are rolled up to the higher levels,the total must represents the total work of theproject. This is called 100% rule.• This ensures that no work is left out or no extra workis added.
Develop WBS100% rule: WBS includes 100% of the work defined by project scope and capture ALL deliverables (external,internal, interim) in term of work to be completed including project management.
Develop WBS: Tool & TechniqueDecomposition• This technique involves breaking down thedeliverables into smaller, more manageablecomponents of work.• The idea here is to break down the deliverables to apoint where you can easily plan, execute, monitorand control, and close out the project deliverables.• Each level of WBS is a more detailed definition of thelevel above it.
WBS DictionaryIn order to more clearly define the work necessary for project completion the WBS Dictionary isused. The WBS Dictionary includes but not limited to the following: level, WBS element, elementname, description of work, deliverable.
WBS DictionaryWBS dictionary should include the following elements for eachcomponent of the WBS:• Code of accounts identifier• Description of the work of the component• Organization responsible for completing the component• List of schedule milestones• Required resources• Cost estimates• Quality requirements• Criteria for acceptance• Technical references• Contract information
Scope BaselineThe Scope Baseline is a component of theproject management plan and include thefollowing:• Project scope statement• Work Breakdown Structure (WBS)• WBS Dictionary
Verify Scope• It is the process of obtaining formalacceptance of the project scope by thestakeholders.• It requires reviewing deliverables and workresults to ensure that all were completedcorrectly and satisfactorily• If the project is terminated early, the scopeverification process should establish anddocument the level and extent of completion
Verify Scope Cont’d.• Scope verification is concerned withacceptance of deliverables but Quality controlis concerned with meeting the qualityrequirements specified.• Quality control is normally performed prior toscope verification but both may be performedin parallel.
Verify Scope : Tools & TechniquesInspection• To complete scope verification, the work must be inspected.• This may require measuring, examining, and testing theproduct to prove it meets customer requirements.• Inspection usually involves the project manager and customerinspecting the project work for verification, which in turnresults in acceptance.• Depending on the industry, inspection may also be known as:Reviews, Product Reviews, Audits & Walkthroughs.
Verify Scope : Outputs• Accepted Deliverables: This is a formal process that requiressigned documentation of the acceptance by the sponsor orcustomer.• Change Requests : those completed deliverables that havenot been accepted are documented , along with the reasonsfor non-acceptance . Those deliverables may require a changerequest for defect repair .• Project Document Updates : Project documents that may beupdated include any documents that define the product orreport status on product completion
Control Scope• Monitor the status of project and productscope and manages any changes to scopebaseline.• Is part of integrative change control.• Uncontrolled scope changes result in scopecreep.
Control ScopeThe process of monitoring the status of the project and product scope and managing changes tothe scope baseline.
Control Scope – Tools &Techniques1. Variance Analysis :• Project performance measurements are used to assessthe magnitude of variation from the original scopebaseline .• Important aspects of the project scope control includedetermining the cause and the degree of variancerelative to the scope baseline and deciding whethercorrective or preventive action is required
Control Scope - Outputs1.Work Performance Measurements: Measurements can includeplanned vs. actual technical performance or other scopeperformance measurements. This information is documented andcommunicated to the stakeholders.2. Change Requests : change requests to the scope baseline or othercomponents of the project management plan. Change requests caninclude preventive or corrective actions or defect repairs .3. Project Management Plan Updates :• Scope Baseline Updates• Other Baseline Updates4. Project Document Updates : requirements documentation update,requirements traceability matrix updates , etc
Scope ChangeChanges to scope will likely require that you repeatsome of the project planning processes and makeany needed adjustments, including updating theproject documents. Scope changes require an updateto the project scope statement. This may require anupdate to the WBS and WBS dictionary as well.Scope baseline updates are part of the projectmanagement plan updates.
Scope Change Cont’dScope changes include any changes to the projectscope as defined by the agreed upon WBS. This inturn might require changes or updates to projectobjectives, costs, quality measures or controls,performance measurements baselines, or time in theform of schedule revisions. Scope changes almostalways affect project costs and/or require schedulerevisions
You are the project manager of a project.You have just completed the CollectRequirements and Define Scope. Whatshould you do next?A. Control ScopeB. Create WBSC. Value analysisD. Verify ScopeQUESTION NO: 1
QUESTION NO: 2A summary WBS is usually developed in the:A. close-out phaseB. Conceptual phaseC. implementation phaseD. planning phase
QUESTION NO: 3The work that must be done in order to delivera product with the specified features andfunctions is:A. Project verificationB. Project scopeC. Project controlD. Product scope
QUESTION NO: 4The project manager is assigned in the?A. Management PlanB. SOWC. Charter (contract)D. Planning Stage
QUESTION NO: 5You are a project manager for Dutch Harbor Consulting. Yourlatest project involves the upgrade of an organizations operatingsystem on 236 servers. You performed this project under contract.You are in the closing process and know that product verificationis for what purpose?A. To verify that all the work was completed correctly and satisfactorilyB. To evaluate project goals and ensure that the product of the projectmeets the requirementsC. To verify the goals of the project and ensure that the product of theproject is completeD. To evaluate all the work of the project and compare the results toproject scope
TIME MANAGEMENTThe PMBOK states that Project TimeManagement is the Knowledge Area that“includes the processes required toaccomplish timely completion of the project.
TIME MANAGEMENTProject Time Management Processes:• Activity Definition• Activity Sequencing• Activity Resource Estimating• Activity Duration Estimating• Schedule Development• Schedule Control
Process Groups & Time ManagementProcess Groups & Time ManagementActivitiesActivitiesInitiating PlanningPlanning Executing ControllingControlling ClosingActivity DefinitionActivity DefinitionActivity SequencingActivity SequencingResource EstimatingResource EstimatingDuration EstimatingDuration EstimatingScheduleScheduleDevelopmentDevelopmentSchedule ControlSchedule Control
Project Time Management Processes• Activity definition: Identifying the specific activities that the projectteam members and stakeholders must perform to produce theproject deliverables.• Activity sequencing: Identifying and documenting the relationshipsbetween project activities.• Activity resource estimating: Estimating how many resources aproject team should use to perform project activities.• Activity duration estimating: Estimating the number of work periodsthat are needed to complete individual activities.• Schedule development: Analyzing activity sequences, activityresource estimates, and activity duration estimates to create theproject schedule.• Schedule control: Controlling and managing changes to the projectschedule.211
Define Activity• Involves identifying and documenting the work thatis planned to be performed• This process identifies the deliverables at the lowestlevel of the work breakdown structure (WBS), calledthe work package• The work package is then broken down into smallercomponents called schedule activities*These provide a basis for estimating, scheduling, executing, andmonitoring and controlling the project work
1.Define Activity1.Define ActivityInputs01. ScopeBaseline02. OPA03. EEF04. Constraints05. AssumptionsOutputs01. Activity list02. ActivityAttributes03. Milestones listTools & Techniques01. Decompositions02. Templates03. Rolling WavePlanning04. Expert JudgmentIdentifying the specific activities that must be performed to produce the variousproject deliverables.
– The Project Management Plan contains theschedule management plan, which providesguidance on the development and planning ofschedule activities.– Decomposition: The process of subdividing theproject work packages into smaller, moremanageable components called scheduleactivities.
Define Activity ( Tools & Techniques)Templates• A standard activity list or a portion of an activity listfrom a previous project can often be used as atemplate.Rolling Wave Planning• A form of progressive elaboration planning wherethe work to be accomplished at the near term isplanned in detail at a low level of the WBS, whilethe work far in the future is planned at relativelyhigh levels of the WBS.
Rolling Wave Plan• Detailed decomposition of work may not bepossible for works that will be completed inthe future since project team is not fullyaware of details of work. Team waits for themore details and only work in the near futureis decomposed. This is called Rolling WavePlanning• Work in the near term is elaborated in moredetail than work to performed in the future.
Expert judgment, in the form of project teammembers with prior experience developing projectscope statementMilestone list (Output) are typically majoraccomplishments of the project and mark thecompletion of major deliverables or some otherkey event in the project. For example, approval andsign-off on project deliverables might beconsidered milestones.
Define Activity (Outputs)• An activity list is a tabulation of activities to be included ona project schedule. The list should include:– The activity name– An activity identifier or number– A brief description of the activity• Activity attributes provide more information about eachactivity, such as predecessors, successors, logicalrelationships, leads and lags, resource requirements,constraints, imposed dates, and assumptions related to theactivity.
Sequence Activities• Activity list prepared are now logically sequenced.• A dependency or relationship between activities established.• Dependencies shall be determined in order to use criticalpath analysis.• Can be performed by using manual or automated techniquesor project management software
Dependency Determination• Mandatory dependencies: Also referred to as hard logic Requiredas per contract or inherent in the nature of the work. Usually involvephysical limitations (e.g., you cannot build the ceiling until walls areconstructed) Are determined by the project management team duringthe activity sequencing process.• Discretionary dependencies: Also referred to as preferred logic,preferential logic, or soft logic Are determined by the projectmanagement team during the activity sequencing process Should beused with care and well documented, since they may limit laterscheduling options.
External Dependency• External dependencies: Are determined by theproject management team during the activitysequencing process. Involve a relationshipbetween project and non-project activitiessuch as activities outside the project team’scontrol (e.g., dependence on external sourcesfor deliveries, environmental factors governedby statutes, etc
Network Diagrams• Network diagrams are the preferredtechnique for showing activity sequencing.• A network diagram is a schematic display ofthe logical relationships among, or sequencingof, project activities.• Two main formats are the Arrow andPrecedence diagramming methods.224
Precedence Diagramming MethodPrecedence Diagramming Method(PDM)(PDM)• Activities are represented by boxes• Arrows show relationships between activities• More popular than ADM method as used by PM software• Better at showing different types of dependencies• In PDM, finish-to-start is the most common relationship
Precedence DiagrammingMethod(PDM)Includes four types of dependencies or logical relationships:– Finish-to-start (FS)– Finish-to-finish (FF)– Start-to-start (SS)– Start-to-finish (SF)The PDM is also called Activity–On-Node (AON) and it does notuse dummy activities nor does it allow for loops orconditional branches.
Arrow Diagramming Method (ADM)Arrow Diagramming Method (ADM)• Uses arrows to represent activities• Connects activities with nodes• Uses only finish-to-start dependencies• May require dummy activities to define relationships
PERT( Program Evaluation and ReviewTechnique)• Program Evaluation and Review Technique (PERT) has the followingcharacteristics.– It uses three estimates per activity - optimistic, pessimistic and mostlikely– It can be drawn only using AOA diagrams– It can have dummy events• PERT utilizes more information than CPM as it considers the "Pessimistic"and "Optimistic" values in addition to the "Most Likely" value in itscalculations. The following are formula used by PERT -Mean = (P + 4M + O)/6Standard Deviation = (P-O)/6Variance = ((P-O)/6)2• GERT is another type of network diagram. It can support looping.
Applying Leads and Lags• A Lead may be added to start an activity before thepredecessor activity is finished. Ex: Furniture may beinstalled 2 weeks prior to completion of painting (Finishto start relationship with 2 weeks lead)• Lag introduces waiting period between activities. Lagintroduces a delay in the successor activity.
Sequence Activities : Outputs1. Project Schedule Network Diagrams :• It can be produced manually or by using a projectmanagement software• Project Schedule Network Diagrams are not finalschedule For the exam, know that, in its pure form, thenetwork diagram shows just dependencies.2. Project Document Updates
Estimate Activity Resources• All projects, from the smallest to the largest, requireresources. Before estimating activity durations, you musthave a good idea of the quantity and type of resourcesthat will be assigned to each activity• The term resources in this case does not mean justpeople; it means all the physical resources required tocomplete the project.• People• Equipment• Materials
3. Estimate Activity Resources3. Estimate Activity ResourcesInputs01. Activity list02. Activity Attribute03. Resource calendars04. EEF05. O.P.AOutputs01. Activity ResourceRequirements02. Resource BreakdownStructure (R.B.S)03. Project Document UpdatesTools & Techniques01. Expert judgment02. Alternative Analysis03. Published Estimating Data04. Bottom Up Estimating05. Project Management Software-this process is concerned with determining the types of resources needed and inwhat quantities for each schedule activity.
Resource Calendars( Input)- is a calendar that is usedTo reflect specific working hours, vacations, leaves ofabsence, and planned personal time for individualresources. Resource calendars can be used for humanresources as well as equipment.Alternative Analysis (Tool & Technique)-is usedWhen thinking about the methods you might use toaccomplish the activities your resources have beenassigned. Many times, you can accomplish an activity inmore than one way, and alternatives analysis helpsdecide among the possibilities.
Estimate Activity ResourcesEstimate Activity Resources(Tools &Techniques)Published Estimating data- Estimating data mayinclude organizational guidelines, industry rates orestimates, production rates, and so on.Bottom Up Estimating-Bottom-up estimating isA process of estimating individual scheduleactivities or costs and then adding thesetogether to come up with a total estimate for thework package.
Activity Resource EstimatingActivity Resource Estimating(Outputs)(Outputs)Activity Resource Requirements – Activity resourcerequirements provide an estimate of the type and quantityof resources needed to complete activities. The ScheduleDevelopment process considers when the requiredResources will be used.Resource Breakdown Structure (RBS) - The ResourceBreakdown Structure (RBS) displays the hierarchicalstructure of the categories and types of resources needed.
Estimate Activity Durations• Here the network diagram is updated by estimating durationfor each activities.• The Activity Duration Estimating process attempts to estimatethe work effort and number of work periods needed tocomplete each schedule activity.• A person or team most familiar with work of the project shallestimate duration to make it more accurate.• All data and assumptions used for estimation shall bedocumented for future analysis (remember this, we need thisinformation during the risk management process)
4.4. Estimate Activity DurationsInputs01. Activity list02. Activity Attribute03. Activity ResourceRequirements04. Resourcecalendars05. Project ScopeStatement06. O.P.A07. E.E.FOutputs01. Activity durationestimates02. Project DocumentupdatesTools & Techniques01. Expert judgment02. Analogousestimating03. ParametricEstimating04. Three PointEstimates04. Reserve Analysis(contingency)- estimating the number of work periods that will be needed to completeindividual activities.
Analogous EstimatingAnalogous Estimating, is a form of expert judgmentand is also known as Top-down Estimating.Analogous estimates are typically less timeconsuming and less costly than other estimatingtechniques, but it’s also less accurate.
Estimate Activity Durations : Tools &TechniquesParametric Estimating• Parametric estimate uses a statistical relationship betweenhistorical data and other variables.• More accurate than analogous estimate• Example : A resource will take 20hrs per module and hence1000 modules will take 50hrs (50X20 = 1000hrs)• Estimation is done by multiplying quantity of work by laborhours per unit of work.
Three-Point EstimatesThree-point estimates, as you can probablyguess, use three estimates that whenaveraged come up with a final estimate. Thethree estimates you’ll use in this technique are themost likely estimate, an optimistic estimate, and apessimistic estimate.Three-point estimates are needed for PERT estimates and Monte Carlo simulations
Three-Point EstimatesPERT analysis calculates An Expected t(E)activity duration using a weighted average ofthree estimates : t(E) = [to+4tm+tp]/6• PERT analysis consider estimationuncertainties and risks and hence accuracy ofestimate is improved.
Reserve AnalysisReserve time, also called buffers, time reserves, orcontingency reserve in the PMBOK Guide, means aportion of time that is added to the activity toaccount for schedule risk or uncertainty. You mightchoose to add a percentage of time or a set numberof work periods to the activity or the overallschedule.For example, you know it will take 100 hours to run new cable, you also know that sometimes you hit problemareas when running the cable. To make sure you don’t impact the project schedule, you build in a reserve time of 10percent of your original estimate to account for the problems you might encounter.
Activity Duration EstimatesYou use the inputs and tools and techniques toestablish these estimates. Activity durationestimates are an estimate of the required workperiods needed to complete the activity. This is aquantitative measure usually expressed in hours,weeks, days, ormonths.
Develop Schedule• The Develop Schedule process is the heart ofthe Planning process group.• The creation of the project schedule isiterative. It’s rare for a schedule to getcreated, approved, and implemented withoutsome iterative examination, arrangement, andmanagement input—though on smallerprojects it may be possible.
Develop ScheduleSchedule Management Plan• A Guide to the PMBOK notes that the schedulemanagement plan (a subsidiary of the projectmanagement plan) is produced as part of theDevelop Project Management Plan process andcontains the criteria for formatting, developing,and controlling the project schedule.
Develop Schedule (tools &Techniques)Schedule Network Analysis• Schedule network analysis is a technique thatgenerates the project schedule. It employs aschedule model and various analyticaltechniques, such as critical path method,critical chain method, what-if analysis, andresource leveling to develop the schedule.
Develop Schedule (Tools &Techniques)Critical path method (CPM) is a schedule network analysistechnique. It determines the amount of float, or scheduleflexibility, for each of the network paths by calculating theearliest start date, earliest finish date, latest start date, andlatest finish date for each activity.The critical path (CP) is generally the longest full path on theproject. Any project activity with a float time that equals zerois considered a critical path task.
Floats• Floats are not the same as lead or lag.• Lead or lags are introduced (manually) to correct thesequence while float is calculated in CPM method• Float for all activities on critical path will be zero value.• A forward pass through the network diagram determines theearly start and finish dates.• A backward pass determines the late start and finish dates
Types of Floats (or Slacks)Float time is also called slack time and there are threetypes of float:• Total Float – The amount of time an activity can be delayedwithout delaying the project end date or milestone.• Free Float – The amount of time an activity can be delayedwithout delaying the early start date of successor activity.• Project Float – The amount of time a project can be delayedwithout delaying an externally imposed project completiondate (other than calculated by CPM) by customer.
Calculating Early and Late Start andFinish Dates
Critical Chain MethodCritical chain method is a schedule network analysistechnique that will modify the project schedule byaccounting for limited or restricted resources. After theproject schedule network diagram is constructed usingduration estimates, dependencies, and constraints,resource availability is entered into the scheduling tool.The modified schedule is calculated and you’ll find that itoften changes the critical path. The new critical pathshowing the resource restrictions is called the criticalchain.
Schedule CompressionSchedule compression is the method of shortening theproject schedule without changing the scope. Need forcompression occurs if a customer need a dateprior to the end date shown in original schedule or tobring back a project schedule back to baseline.• Crashing – This approach adds more resources to activities onthe critical path to complete the project earlier. Crashingalmost always result in increased cost. Many options areconsidered and the option with maximum compression withminimum cost impact is selected.
Schedule Compression• Fast Tracking –Critical activities that wouldnormally be done in sequence are allowed tobe done in parallel or with some overlap. Fasttrack may result in rework and increases risk.Communication requirements increasesduring fast tracking.
Develop Schedule: OutputsThe schedule can be displayed in a variety ofways:• Project Schedule Network Diagram• Gantt Charts/ Bar Charts• Milestone ChartsThe purpose of the Schedule Development process is todetermine the start and finish date for the each of the projectactivity. The project schedule should be approved andsigned off by stakeholders and functional managers. This assures that they have read the schedule, understand the dates and resourcecommitments, and will likely cooperate
Control ScheduleSchedule Control is concerned with:1. Determining the current status of the projectschedule2. Influencing the factors that create schedule changes.3. Determining that the project schedule has changed,and4. Managing the actual changes as they occur.
6. Control Schedule6. Control ScheduleInputs1.ProjectManagementPlan2. Project Schedule3. Work PerformanceInformation4. O. P.AOutputs1. Work performanceMeasurements2. Project ManagementPlan Updates3. OrganizationalProcess AssetsUpdates4. Change Requests5. Project DocumentUpdatesTools & Techniques1. Performance reviews2. Variance Analysis3. Project managementsoftware4. Resource Leveling5. What if Scenarios6. Adjusting Leads &Lags7. Schedule Compression8. Scheduling Tool- controlling changes to the project schedule.
Control Schedule ( Tools & Techniques)• Performance Reviews- Performance reviewsmeasure , compare, and analyze schedule performancesuch as actual start and finish dates, percent complete, andthe remaining duration for the work in progress .• Variance Analysis- Variance analysis is a key factorin monitoring and controlling project time because thistechnique helps determine variances in schedule start andend dates.
Control Schedule : OutputsThe Schedule Control process has the following outputs:1. Work Performance Measurements- CalculatedSchedule Variance (SV) and Schedule Performance Index(SPI) are documented and communicated withStakeholders.2. Organizational process asset updates (lessonslearned)3. Change Requests – Approved schedule baselines shallbe only updated through integrative change control. SV &SPI may result in change requests for baseline update forbaseline update.4. Project Management Plan Update5. Project Document updates – Schedule data
Schedule Control• Perform reality checks on schedules.• Allow for contingencies.• Don’t plan for everyone to work at 100 percentcapacity all the time.• Hold progress meetings with stakeholders and beclear and honest in communicating scheduleissues.
Solution: SD = (P-O)/6 = (7-3)/6 = 2/3Source: PMP Exam Prep by Rita MulcahyQ1. The estimate for a task is O = 3days, P = 7 days, M = 4 days. Whatis the standard deviation of thetask?A. 5/6 of a dayB. 2/3 of a dayC. 1 ½ daysD. 5 2/3 days
Q2. A project has three critical paths.Which of the following BESTdescribes how this affects theproject?A. It makes it easier to manageB. It increases the project riskC. It requires more peopleD. It makes it more expensiveSource: PMP Exam Prep by Rita Mulcahy
Source: PMP Exam Prep by Rita MulcahyQ3. You are taking over a project and determinethe following: Task B has an early finish ofday 3, a late finish of day 6, and an early startof day 2. Task L is being done by a hard-to-get resource. The CPI is 1.1 and the SPI is 0.8.Based on the information above, what wouldyou be most concerned about?A. FloatB. ResourcesC. CostD. Schedule
Project Cost ManagementProject Management Training
Project Cost ManagementAccording to PMBOK, Project Cost Managementincludes the processes involved in estimating,budgeting, and controlling so that the project can becompleted within the approved budget costs. ProjectCost Management include the following processes:• Estimate cost- The process of developing anapproximation of the monetary resources needed tocomplete project activities.
Project Cost Management• Determine Budget- The process ofaggregating the estimated cost of individualactivities or work packages to establish anauthorized cost baseline.• Control Cost- The process of monitoring thestatus of the project to update the projectbudget and managing changes to the costbaseline
Quick Facts Cost Management• Costing is different from Pricing. Costing includes themonetary resource required to complete the projectand pricing normally include a profit margin.• Costing is based on WBS and controlled by ControlAccounts• Costing shall be ideally done by the team who performthe work• Schedule get affected by funding and project managershall manage the link with organization.• Final schedule can be done only after costing and finalcosting can only be done after risk since riskmanagement involves budget for handling risk.
Project Cost ManagementLife cycle costingProject cost management should also consider the effect of projectdecisions on the subsequent recurring cost of using, maintaining, andsupporting the product, service or result of the project.• Value analysis (value engineering)- Looking at less costly way to do the same work within the same scope.• Law of Diminishing Returns- E.g. adding twice resource to task may not get the task done in halfcost/time.• Cost will also affect the schedule• Cost risk vs. Type of contract• Time value of money (depreciation)
Types of Cost• Variable CostsChange with the amount of production/work e.g. material,supplies, wages.• Fixed CostsDo not change as production change e.g. set-up, rental.• Direct CostsDirectly attributable to the work of project e.g. team travel,recognition, team wages.• Indirect Costsoverhead or cost incurred for benefit of more than one project.E.g. taxes, fringe benefit, janitorial services
Estimate CostDeveloping an approximation or estimate of the costs of the resourcesneeded to complete a project.
Estimate Cost: Tools & TechniquesBottom-up Estimating• Cost estimation starts from bottom level.• Each WBS work package is estimated androlled up to higher level.• While this method is more expensive, it is alsoone of the most accurate.
Estimate Costs : Tools & TechniquesAnalogous Estimating• Analogous estimating relies on historical informationto predict the cost of the current project. It is alsoknown as top-down estimating.• The process of analogous estimating takes the actualcost of a historical project as a basis for the currentproject.• Analogous estimating uses historical data and expertjudgment.• It is faster and less costlier than other methods, butless accurate.
Estimate Costs : Tools & TechniquesParametric Estimating• Parametric estimate uses statistical relationshipbetween historical data and other variables• Per sq.ft cost of previous project of similar naturewas XYZ and hence the new project shall cost XYZmultiplied by new total area.• Parametric estimate can be applied to total projector part of project.
Estimate Costs : Tools & TechniquesThree Point Estimates• PERT analysis calculates An Expected c(E)activity cost using a weighted average ofthree estimates :• c(E) = [cO+4cM+cP]/6• PERT analysis consider estimationuncertainties and risks and hence accuracy ofestimate is improved.
Estimate Costs : Tools & TechniquesReserve Analysis• Reserves are added to costing to manage risks,cost overruns and errors associated with costing.• The contingency reserve may be a percentage ofthe estimated cost, a fixed number, or may bedeveloped by using quantitative analysismethods.• More details about reserve analysis in RiskManagement• Padding is not a good project managementpractice.
Estimate Costs : Tools & TechniquesCost of Quality (COQ)• Assumptions about cost of quality may be used toprepare the activity cost estimates..Project Management Estimating Software• Several different computer programs are availablethat can streamline project work estimates andincrease their accuracy.• These tools can include project managementsoftware, spreadsheet programs, and simulations.
Estimate Costs : Tools & TechniquesVendor Bid Analysis• Sometimes it’s just more cost effective to hiresomeone else to do the work. Other times, theproject manager has no choice because the neededskill set doesn’t exist within the organization.• In either condition, the vendors’ bids need to beanalyzed to determine which vendor should beselected based on their ability to satisfy the projectscope, the expected quality, and the cost of theirservices.
Estimate Costs :Outputs• The output of cost estimating is the actual costestimates of the resources required to complete theproject work.• Each resource in the project must be accounted for andassigned to a cost category. Categories include thefollowing: Labor costs Material costs Travel costs Supplies Hardware costs Software costs Special categories (inflation, cost reserve, and so on)
Project Cost Estimating - Estimating Accuracy• Accuracy of estimate is normally refined during the course ofproject to reflect additional details as it becomes available.• Rough order of magnitude- This estimate is “rough” and isused during the initiating processes and in top-downestimates. The range of variance for the estimate can be from+/- 50%.• Later the estimate can be refined to a range of +/- 10%• Refinements and range of accuracy depends on policies ofindividual organizations.
Estimate Costs :Outputs• Basis of estimatesOnce the estimates have been completed,supporting documentation should provide aclear and complete of how the estimateswere derived.
Determine Budget• Cost of completing individual activities are nowcompleted.• During budgeting, the cost of individual activities areaggregated to generate a complete time phased budget.• Cost of individual activities are rolled up to work packagelevel and as the work packages are now part of schedulebaseline, this will result in a time phased cost.• Schedule, estimate and risk analysis shall be completeprior to budgeting• This cost is now linked to organization accounting systemthrough control accounts placed above work package.
Determine Budget• Allocating the overall cost estimate to individual work itemsto establish a baseline for measuring performance.
Determine Budget: Tool & Technique• Reserves are dollars included in a cost estimate tomitigate cost risk by allowing for future situationsthat are difficult to predict. Budget reserves are keptfor both contingency reserve and managementreserve.• Contingency reserves allow for future situations thatmay be partially planned for (sometimes calledknown unknowns ) and are included in the projectcost baseline. Project manager will normally have theauthority to utilize contingency reserves.
Determine Budget: Tool & Technique• Management reserve - Budget set aside to cover unforeseenrisks or changes (unknown unknowns) to the project.• Management reserve will not be part of project budget andhence project manager need approval from management forusing this reserve.• The cost baseline will contain the contingency reserve and thecost budget will include the management reserve.• Management reserves are not part of earned valuecalculations (since it is not part of cost baseline &measurements are based on baselines)
Determine Budget: Tool & TechniqueFunding Limit Reconciliation• Funding limit reconciliation involves reconcilingthe amount of funds to be spent with the amountof funds budgeted for the project. Theorganization or the customer sets these limits.Reconciling the project expenses will requireadjusting the schedule so that the expenses canbe smoothed. You do this by placing imposeddate constraints on work packages or other WBScomponents in the project schedule.
Determine Budget: Outputs• Cost Performance BaselineThe cost performance baseline is a time-phasedbudget that is used for project cost management,monitoring, and reporting. It is commonly shown as anS-curve graph. The cost baseline is a component of theproject performance baseline.• Project Funding RequirementsProject funding requirements refers to the entireestimated cost of the budget, including anycontingency or management reserves.
Cost AggregationActivity costs are rolled upto work package costs.Work package costs arerolled up to control accountcosts and finally into projectcosts.
How to Control Cost• Follow the cost management plan• Look at any organizational process assets that areavailable.• Manage change- recording all appropriate change- preventing incorrect change- ensuring requested changes are agreed upon- Managing the actual changes when and as they occur• Measure and measure and measure (monitoring)
Control CostControlling changes to the project budget.
Progress Report• Progress/ performance report (output fromcommunications management)• Where work cannot be measured, estimate could bedone by a guess.• Percent complete- 50/50 Rule- 20/80 Rule- 0/100 RuleActivity is considered X percent complete when itbegins and get credit for the last Y percent only when it isCompleted.
Earned Value Management (EVM)– EVM is a project performance measurement techniquethat integrates scope, time, and cost data.– Given a baseline (original plan plus approved changes),you can determine how well the project is meeting itsgoals.– You must enter actual information periodically to useEVM.– More and more organizations around the world are usingEVM to help control project costs.
Control Cost: Tools & TechniqueEarned Value Management• Earned value management will indicate statusand health of project at any time and can predictpossible outcomes.• EVM can be used for analysis of cost andschedule baselines• Earned Value Management is carried out usingthe three main inputs: Planned Value (PV) Earned Value (EV) Actual Cost (AC)
Control Cost: Tools & Technique• Forecasting• Using the earned value analysis, team can now forecast theproject performance.• Estimate at completion (EAC) may now differ from Budget atCompletion (BAC)
Terms & Formulas DefinitionBudget at Completion (BAC) How much did we budget for the total projecteffort.Estimate at Completion(EAC)= BAC/ CPIWhat do we currently expect the project to cost (aforecast)Estimate to Complete (ETC)= EAC- ACFrom this point on, how much more do we expectit to cost to finish the projectVariance at Completion= BAC-EACAs of today, how much over or under budget dowe expect to be at the end of the project.Earned Value Technique
Cost Control: Tools andTechniques• Performance ReviewsPerformance reviews compare costperformance over time, schedule activities orwork packages overrunning and underrunning the budget and estimated fundsneeded to complete work in progress.
Cost Control: Tools andTechniques• Variance AnalysisCost performance measurements (CV, CPI) are usedto assess the magnitude of variation to the originalcost baseline. Important aspects of project costcontrol include determining the cause and degree ofvariance relative to the cost performance baselineand deciding whether corrective or preventive actionis required.
QUESTIONActivity % Complete CostSide1 100% 1200Side2 100% 1000Side3 75% 750Side4 50% 500Side5 0% 0Side6 0% 0You are the Project Manager for a small project.You need to build a structure with 6 sides in 6 days.Each side should cost $1000.00. Today is the end ofday 3.The following is anextract from the SiteManager’s ReportSolve the following
Forecasting EAC• There are many ways to calculate EAC, depending on theassumptions made.• Simple EAC calculation( EAC= BAC/CPI) assume that the cumulativeCPI adequately reflects past performance that will continue to theend of the project.• AC+(BAC-EV)- used when current variances are thought to be atypical of thefuture.• AC+(BAC-EV)/(Cumulative CPI + Cumulative SPI)- it assumes poor cost performance and need to hit a firmcompletion date.
Cost Control: Tools and Techniques• To-Complete Performance Index(TCPI)Helps the determine the efficiency that mustbe achieved on the remaining work for aproject to meet a specified endpoint, such asBAC or the team’s revised EAC.• TCPI= Work Remaining (BAC- EV)Funds Remaining (BAC- AC) or EAC - AC
Earned Value Management hints toremember:• EV comes first in every formula• If its variance, it will be EV minus something• If its index, it will be EV divide something• If it relates to cost use Actual Cost• If it relates to schedule use Planned Value• Negative numbers are bad, positive ones aregood
QUESTION NO: 1A Project with a total funding of $70,000 finished with a BAC value of$60,000. What term can best describe the difference of $10,000?• A. Management Contingency Reserve• B. Cost Variance• C. Schedule Variance• D. Management OverheadExplanation:The difference between the Cost Baseline and Funding requirement atProject completion is Management Contingency Reserve. BACrepresents the revised Cost baseline for the project. So ManagementContingency Reserve is true.
QUESTION NO: 2Your project sponsor has requested a cost estimate for the project on whichyoure working. This project is similar in scope to a project you worked on lastyear. She would like to get the cost estimates as soon as possible. Accuracy isnot her primary concern right now. She needs a ballpark figure by tomorrow.You decide to use ___________________.• A. parametric modeling techniques• B. analogous estimating techniques• C. bottom-up estimating techniques• D. computerized modeling techniquesExplanation:Analogous-or top-down-estimating techniques are a form of expert judgment.Since this project is similar to another recent project, you can use the costestimates from the previous project to help you quickly determine estimatesfor the current project.
QUESTION NO: 123You know that PV = 470, AC = 430, EV = 480, EAC =500, and BAC = 525. What is VAC?A. 25B. 30C. 20D. 70Explanation:VAC is calculated this way: VAC = BAC - EAC.Therefore, 525 - 500 = 25.
Project Quality ManagementProject Management Training
What is Quality ?• Car Quality– Ride, Reliability, Fit & Furnish, Audio System ?• Food Quality– Taste, Smell, Colour, Texture, Freshness ?• Shoe Quality– Fit, Stitching, Comfort, Wear?• Baby FurnitureSafety, Reputable, Durability, Easy to Assemble ?
What Is Quality?Quality can be defined as “thedegree to which project fulfilsrequirements.”314
What is Quality ?• The International Organization forStandardization (ISO) defines quality as thetotality of characteristics of an entity that bear onits ability to satisfy stated or implied needs• Other experts define quality based on– Conformance to requirements: meetingwritten specifications– Fitness for use: ensuring a product can beused as it was intended.– The degree to which a set of inherentcharacteristics fulfill requirements
Quality Theorists• Joseph Juran- developed the 80/20 principle,advocated top management involvement,defined quality as “fitness for use.’’• W. Edwards Deming- developed 14 Steps toTotal Quality Management, advocated thePlan-Do-Check- Act cycle as the basis forquality improvement.
Quality Theorists• Phillip Crosby- popularized the concept ofcost of poor quality, advocated preventionover inspection and “zero defects.” Hebelieved that quality is “conformance torequirements.’’• Kaizen approach- Quality technique fromJapan. (Continuous improvement)Improve thequality of people first. Then quality ofproducts or service.
Precision vs. Accuracy• Precision is the degree to which repeatedmeasurements under unchanged conditions showthe same results.• Accuracy is the degree of closeness ofmeasurements of a quantity to its actual (true) value.• The Project Management Team must determine howmuch accuracy or precision or both are required.
Quality vs. GradeThe degree to which a set of inherentcharacteristics fulfill requirements• Quality≠ Grade–Grade = a category assigned to product /service or a category or rank given toentities having the same functional use, butdifferent technical characteristics.
Quality vs. GradeQuality is the degree to which a set of inherentcharacteristics fulfills requirement.- Quality level that fails to meet quality requirements arealways a PROBLEM.• Grade is a category assigned to a product or servicehaving the same functional use but different technicalcharacteristics.- Low grade may not be a problem.• A camera with lots of functions is high grade and a camera whichtakes bad pictures is low quality
What is Project Quality Management ?“Project Quality Management processes includeall activities of the performing organizationthat determine quality policies, objectives,and responsibilities, so that the project willsatisfy the needs for which it wasundertaken.”PMBOK4 ®
Purpose of Project QualityManagement• To ensure that the Project will satisfy theneeds for which it was undertaken.– Scope– Cost– Performance– Meet or exceed Customer Satisfaction• The customer ultimately decides if Quality isAcceptable.
Project Quality Management• Addresses (i) the management of the projectand (ii) the product of the project.–Meeting customer requirements byoverworking the project team may result inincreased employee attrition, errors orrework.–Meeting project schedule objectives byrushing planned quality inspections mayresult in undetected errors.
PMI’s Quality ManagementPhilosophyCustomer Satisfaction“Understanding, evaluating, defining andmanaging expectations so that the customer’srequirements are met.”
PMI’s Quality ManagementPhilosophyPrevention over Inspection“The cost of preventing mistakes is much lessthan the cost of correcting them, as isrevealed by inspection.”
PMI’s Quality ManagementPhilosophyContinuous Improvement“Plan-Do-Check-Act.”Plan to bringaboutimprovementDo changes ona small scalefirstAct to get thegreatestbenefit fromchangesCheck to seeif changesare working
PMI’s Quality ManagementPhilosophyManagement Responsibility“Success requires the participation of allmembers of the team, but it remains theresponsibility of management to provide theresources needed to succeed.”
Common understandingQuality management should complement modern projectmanagement as they both recognize the importance of :• Customer satisfaction- Conformance to requirements, fitnessfor use.• Prevention over inspection - Cost of preventing mistakes orcost of correcting.• Management responsibility – to provided resources neededto succeed.• Processes within phases - (plan- do- check- act cycle).• Continuous Improvement (Kaizen)- small improvements toreduce costs and ensure consistency, uses quality initiativessuch as 6 sigma, TQM.
Project Quality ManagementProcesses• Quality Planning• Quality Assurance• Quality Control
Quality Management includes:• Plan Quality - Identifying which quality standards arerelevant to the project and how to satisfy them.• Perform Quality Assurance- Periodically evaluatingoverall project performance to ensure the projectwill satisfy the relevant quality standards.• Quality Control - Monitoring specific project resultsto ensure that they comply with the relevant qualitystandards.
Quality Planning• Quality Planning involves identifying with qualitystandards• It is a key facilitating process during the Projectplanning Process• In modern quality management quality is planned inand not inspected in• Prior to the development of ISO 9000 series, qualityplanning concepts were widely discussed as part ofquality assurance.
Plan QualityQuality Planning is identifying which quality standards are relevant to theproject and determining how to satisfy them.
Project Quality ManagementProcesses• Plan Quality: identifying which qualityrequirements and/or standards for theproject and product;• & documenting how project willdemonstrate compliance. i.e. Intendsto satisfy the standards
What is “Plan Quality” focused on…• Find existing standards and requirements forproduct and project mgt• Create additional project specific standards• Determine what work you will do to meet thestandards• Determine how you will measure to make sure youmeet the standards• Balance the needs of quality, scope, cost, time,risk, resources and customer satisfaction• Create a quality management plan as part of theproject mgt plan.
Quality Planning (Tools & Techniques)– Benefit/Cost Analysis - weight the benefit versusthe cost of meeting quality requirements.– Benchmarking - comparing actual or plannedpractices to those of other projects.– Flowcharting - Use to see a process or systemflow and find potential quality problems.– Design of Experiments (DOE) – useexperimentation to statistically determine whatvariable will determine quality standard– Statistical Sampling- we need it since studyingentire population will take too long, cost too muchand be too destructive.
Quality Planning (Tools & Techniques)The Cost of Quality• The cost of quality is the cost of conformanceplus the cost of nonconformance.– Conformance means delivering products that meetrequirements and fitness for use.– Cost of nonconformance means takingresponsibility for failures or not meeting qualityexpectations..
The Cost of Quality• Refers to the total cost of all efforts related toquality throughout the product life cycle.• Ultimately impacts on product returns,warranty claims, recall campaigns etc.
The Cost of Quality• The cost of quality is– The cost of conformance or delivering productsthat meet requirements and fitness for use– The cost of non-conformance or takingresponsibility for failures or not meeting qualityexpectations.
Five Cost Categories Related to Quality• Prevention Cost: the cost of planning and executing a project so it iserror-free or within acceptable error range– Costs less to prevent during development than fix later in the life cycle• Appraisal Cost : the cost of evaluating processes and their outputs toensure quality• Internal failure cost: cost incurred to correct an identified defectbefore the customer receives the product.• External failure cost: cost that relates to all errors not detected andhave to be corrected after customer receives the product.• Measurement and test equipment costs: capital cost of equipmentused to perform prevention and appraisal activities
Activity 1• Identify four(4) Cost of Conformance & four(4) Cost of Non-Conformance.
Activity 1 ResponseCost of Conformance• TRAINING• STUDIES• SURVEYS• EFFORTS TO ENSUREEVERYONE KNOWS THEPROCESSES TO COMPLETETHEIR WORKCost of Non-Conformance• Rework• Scrap• Inventory costs• Warranty costs• Lost business
The Cost of Quality (CoQ).Prevention Costs(Build a quality product)•Training•Document Processes•Equipment•Time to do it rightAppraisal Costs(Assess the Quality)•Testing•Destructive testing loss•InspectionInternal Failure Costs(Failures found by the project)•Rework•ScrapExternal Failure Costs(Failures found by the customer)•Testing•Destructive testing loss•InspectionCost of Conformance Cost of Non-Conformance<Should beless than
D.O.E.• It is important to design in quality and communicateimportant factors that directly contribute to meetingthe customer’s requirementse.g. Design of Experiments helps identify which variableshave the most influence on the overall outcome of aprocessDOE uses experimentation to statistically determinewhich variables improve quality….allows systematicchange of all important factors in a process and seewhich combination has a lower impact on project.
Quality Planning (Tools & Techniques)Quality Control Charts• A control chart is a graphic display of data thatillustrates the results of a process over time.• The main use of control charts is to prevent defects,rather than to detect or reject them.• Quality control charts allow you to determine whethera process is in control or out of control.
Standard Deviation• A small standard deviation means that datacluster closely around the middle of adistribution and there is little variabilityamong the data• A normal distribution is a bell-shaped curvethat is symmetrical about the mean oraverage value of a population
Standard Deviation• PERT FORMULA(Triangular Distribution)Expected Value / Duration =(Optimistic time + 4 (most likely time) + pessimistic time) =___________________________________________6OT + 4MT +PT__________________6
Standard Deviation for PERT• Std Dev =Pessimistic duration - optimistic duration_________________________________6
Statistical Sampling and StandardDeviation• Statistical sampling involves choosing part of apopulation of interest for inspection• The size of a sample depends on how representativeyou want the sample to be
Proprietary Quality mgtmethodologiesSix sigmaAn extension of TQMAchieved by improvingprocess performance sothat all customerrequirements are met.3 sigma=2700 defects in 1million6 sigma=0.002 defects occur in1 millionQuality Function DeploymentA practice of designingmanufacturer processes torespond to customer needs.Allows one to findinnovative responses tothose needs, and improveprocesses to maximumeffectiveness.
Quality Planning (Outputs)Quality Metrics – defines how an item is measured bythe quality control process. Also known as OperationalDefinitions.Quality ChecklistsA list of items to inspect, steps to be performed and noteif any defects are found.• Quality metrics is input for Quality Assurance ANDQuality Control• Quality checklist is input for Quality Control ONLY
Quality Planning (Outputs)Quality Management Plan Contains:Project management methodRole and responsibility in managing qualityDeliverable measurementStandard for monitoring & control purposeProcess reviewMajor check pointsInspection & acceptance criteria
Perform Quality Assurance• Perform Quality assurance is the process ofauditing the quality requirements and results fromquality control measurements to ensure thatappropriate quality standards and operationsdefinitions are met.• Another goal of quality assurance is continuousquality improvement.• Normally done by a third party
Perform Quality AssuranceQuality assurance is evaluating the overall project performance on a regular basis toprovide a confidence that the project will satisfy the relevant quality standards.
Project Quality Management Processes• Quality Assurance: the process of auditingrequirements and the results of quality controlmeasurements to ensure appropriate qualitystandards and operational definitions are used.(from PMBOK4®)• Applies planned, systemic quality activities toensure that the project employs all processesneeded to meet the requirements and satisfy therelevant quality standards.
Inputs To Quality AssuranceQuality management plan as previously describedResults of quality control measurements which arerecords of quality control testing and measurementin a format of comparison or analysisOperational definitions as previously described in theoutput of the Quality Planning
Quality Assurance (Tools &Techniques)Are we using the standard?Can we improve the standard?• Quality Audits which are a structured review ofother quality management activities that identifylessons learned.• Process Analysis – includes root cause analysis.
Quality Assurance• Quality assurance includes all the activities related tosatisfying the relevant quality standards for a project• Another goal of quality assurance is continuousquality improvement• Benchmarking can be used to generate ideas forquality improvements• Quality Audits help identify lessons learned that canimprove performance on current or future projects
Project Quality ManagementProcesses• Quality Control: the process of monitoringand recording results of executing thequality activities to assess performance andrecommend changes.• Monitoring specific project results toensure that they comply with relevantquality standards while identifying ways toimprove overall quality.
Perform Quality ControlQC involves monitoring specific project results todetermine:• Whether they comply with relevant qualitystandards.• Identifying ways to eliminate causes ofunsatisfactory results.• QC should be performed throughout the project.• Project results include deliverables and PM results,such as cost and schedule performance.• QC is often performed by a quality controlDepartment.
Perform Quality ControlQuality Control is the monitoring of specific project results to determine if they comply with therelevant quality standards and identifying ways to eliminate causes of unsatisfactory performance.
Quality Control (Tools & Techniques)Inspection• Inspection includes activities such as measuring,examining and testing undertaken to determinewhether results conform to requirements• Inspection can be carried out on the level of a singleactivity or a final product• Inspections can be called reviews, product reviews,audits, and walk-throughs
Flowcharting• A graphical presentation of a processshowing the relationships among processsteps.• Process flowcharts show activities, decisionpoints and order of processing.• Helps anticipate problems that might occur.• Can develop approaches to deal withpotential problems
Flowcharting• It helps to analyze how problems occur.• A flowchart is a graphical representationof a process.• It shows how various elements of asystem interrelated and the order ofprocessing.• It helps the project team anticipate whatand where quality problems might occur.
Quality Control Charts• A control chart is a graphic display ofdata that illustrates the results of aprocess overtime. It helps preventdefects and allows you to determinewhether a process is in a control orout of control.
Data• Data is shown between the UCL and LCL, whilevarying about the central line or average, as long asthe variation is the result of common causes• Whenever a special cause impacts a process:– A plot point will penetrate the UCL or LCL– There will be a run of points on the row above orbelow the average line, implies the process is outof control
Control ChartIt determines whether or not a process is stable or hasPredictable performance.When a process is outside acceptable limits theprocess should be adjusted. The upper control limits and lower control limits areusually set at +/- 3 sigma (i.e. standard deviation).• Specification limit – are normally drawn fromcontract or customer requirement. It may be morestringent than control limits• Mean represent the average of control limits orspecification limits
Control Chart Cont.• Out of control – A process is considered out ofcontrol if:- A data point falls out of control limits- Breaks the rule of seven• Rule of seven – Is a rule of thumb or heuristic. Aconsecutive seven data points one single side ofmean is considered out of control, even though thedata points are within control limits.• Assignable cause / Special Cause Variation – is adata point that requires investigation (either out ofcontrol limits or breaks rule of seven)
The Seven Run Rule• The seven run rule states that if seven datapoints in a row are all below the mean , abovethe mean or increasing or decreasing, thenthe process needs to be examined for non-random problems.
QC (Tools & Techniques)Run Chart• It shows the history and pattern of variation.• It is a line graph that shows data pointsplotted in the order in which they occur.• Can be used to perform trend analysis toforecast future outcomes based on historicalpatterns
Run Charts vs Control Charts• The run chart records the output results of a processovertime.• The problem: it does not help differentiate thevariations due to special causes and common causes• Special causes:– Changes in materials– Machine problems– Lack of employee training• Common causes: purely random
TREND ANALYSIS• A statistical method for determining the equation that bestfits the data of a scatter plot• Used to determine the relationship between two or morepieces of corresponding data• Data plotted on a X Y axis to provide correlation• Can assist in forecasting or providing trend analysispredictions– Highly negative scatter– Highly positive scatter– No core relation– Low to moderate core relation
QC Tools and TechniquesScatter Diagram Shows the pattern of the relationships between two variables.
Scatter Diagrams• The simplest way to determine if a cause andeffect relationship exists between 2 variables.
QC Tools and Techniques- Cause and Effect Diagram• Ishikawa or fishbone diagram• Used to show how various factors are linked toidentify problems/ adverse effects• Diagnostic• Analyses data• Determines defects• Employs brainstorming technique
QC: Tools & Techniques• Histogram: it is a bar chart showing thedistribution of variables.• Each column represents an attribute orcharacteristics of a problem or situation• The height of each column represents therelative frequency of the characteristics.• Histogram helps identify the cause of theproblem in a process by the shape and width ofthe distribution
QC Tools & TechniquesPareto Diagram• A Pareto diagram is a histogram ordered byfrequency of occurrence which shows howmany which shows how many defects weregenerated by type/category of identifiedcause.• The project management team should takeaction to fix the problems that are causing thegreatest number of defects first
Pareto Chart/ Juran DiagramVilfredo Pareto (economist) credited for the 80-20 rule concept states that 80% of wealth ofregion is concentrated in 20% of population.Pareto’s Law/ Law of the vital few states thatmany events, 80% of the effects, come from 20%of the causes.Primarily used to identify/ evaluatenonconformities.
Pareto Diagram – 80/20 Rule• Vilfredo Pareto: Credited for discovering the rule.• PARETO’S PRINCIPLE: 20% of activities cause 80% ofproblems => a small no. of causes (20%) create the majorityof problems (80%)• Pareto chart is a bar chart where the data is arranged in orderof importance… most significant problem is listed first andother problems fall in descending order• The Benefit is to spend the majority of your time fixing, THEMOST IMPORTANT problem.
Pareto Analysis• Pareto analysis involves identifying the vitalcontributions that account for the most qualityproblems in a system• Also called the 80-20 rule, meaning that 80% of theproblems are often due to 20% of the causes(Vilfredo Pareto developed Principle – adapted toquality by Juran)• Pareto diagrams are histograms that help identifyproblem areas
Activity 2• Take a minute to go through PMBOK 4. See thedifferent tools and techniques that are used in eachof the Quality Management Processes. Write thenames of the tools & techniques in a tabulated formas shown below: (3 minutes)• Did you notice any similaritiesPLAN QUALITY PERFORM Q.A. PERFORM Q.C.
PLAN QUALITY PERFORM Q.A. PERFORM Q.C.Cost benefit analysis Any quality tools are usedto check if properprocesses were followed orif processes need to beimproved.Checklists usedCost of quality Statistical sampling doneControl charts created Cause & effect diagramsBenchmarking Flowcharting usedDesign of experiments histogramStatistical samplingplanningPareto chartFlowcharting created Run chartChecklists created Scatter diagramControl charts used
Sampling Methods• A method of determining the value of a product orservice when it is not practical to examine the entirepopulation– Random sampling– Acceptance sampling– Attributes sampling– Special attributes sampling– Variables sampling
QC: Terminology• Prevention – keeping errors out• Inspection – keeping errors out of the hands ofcustomers• Attribute sampling – involves “yes” or “no” decision• Variable sampling – involves rating the sample on acontinuous scale that measures the degree to whichit conforms to specifications
QC: Terminology• Special Causes – involves unusual events• Random Causes – involves normal process variations• Tolerances - indicates that the result is acceptable ifit falls within a specified tolerance range• Control Limits – indicates that the process is incontrol limits
Quality Control• The outputs are• Quality Control measures• Validated changes• Organizational Process Assets updates• Change Requests• Project Management Plan Updates• Project Document Updates
Perform Quality Control: OutputsQuality Control Measurements• These measurements are the result of the QCactivities• These measurements are fed back to the QA toreevaluate and analyze the quality standards &processes.Validate Changes :• Any changed or repaired items are inspected and willbe either accepted or rejected before notification ofthe decision is provided .• Rejected items may require rework
Perform Quality Control: OutputsValidated Deliverables• QC aims to determine the correctness of deliverables• The result of the execution quality control processare validated deliverables.Change Requests :• If the recommended corrective or preventive actionsor a defect repair requires a change to the projectmanagement plan , a change request should beinitiated in accordance with the defined PerformIntegrated Change Control process
Quality Concepts– Philosophy: definition of quality, avoidance of “Goldplating” – giving customer extras, this practice is notrecommended.– Marginal Analysis – optimal quality is reached at thepoint when revenue from improvement equals the coststo secure it.– Just in Time (JIT) - just when they are needed or justbefore, it decrease amount of inventory/decreaseinvestment.– Total Quality Management (TQM) – company and theiremployees focus on finding ways to continuouslyimprovement the quality of their business practices andproducts.
Quality vs. GradeThe degree to which a set of inherent characteristicsfulfill requirements• Quality≠ Grade– Grade = a category or rank given to entities having thesame functional use, but different technicalcharacteristics.
Quality defines…• Precision ≠ Accuracy– Precision = consistency of the value of repeatedmeasurements - very little scatter i.e.measurements tend to be clustered– Accuracy = correctness that the measured value isvery close to the true value
Project Quality Management• Tips for the Review– ISO 9000– standards to ensure that corporations followtheir own quality procedures.– Normal Distribution – most common probability – used tomeasure variations– Standard deviation (sigma) – measure how far away fromthe mean (dotted vertical line)– 3 or 6 sigma – represents level of quality• +/- 1 sigma equal to 68.26%• +/- 2 sigma equal to 95.46%• +/- 3 sigma equal to 99.73%• +/- 6 sigma equal to 99.99%
W. Edwards Deming• Suggested that as much as 85% of the Cost ofQuality is a management problem.• Once the quality issue gets to the level of theworker, there is little control.• Workers need to be shown what is acceptablequality and made to understand itsimportance.
• 85% OF QUALITY CONTROL RESTS WITHMANAGEMENT; 15% WITH PROJECT TEAM
Deming’s PDCA Cycle• Plan- improvements to present practices• Do- implement the plan• Check – test to see if the desired results are achieved• Act – implement corrective action
Joseph M. Juran• Noted for “Fitness for Use”• This means that stakeholders’ and customersexpectations must be met or exceeded• The product of the project is what was set out to beproduced• Proposed that there can be grades of quality =>strive for HIGH QUALITY at the acceptable Gradelevel
Philip B. Crosby• Devised the “Zero Defects” Practice• Means “do it right the first time”• Costs will increase when quality planning isn’tdone up front => Engage in rework, thusaffecting productivity.• To prevent the defect implies conformance torequirements is easily met.
• Product returns, warranty claims and recallcampaigns can impact on operationalcosts• Because project is temporary, quality costsare often borne by the acquiringorganization
KAIZEN Approach• Quality technique from Japan• KAIZEN = Continuous Improvement• All project team members and managersshould constantly be looking for qualityimprovement opportunities• Kaizen states one should improve the qualityof the people first, then products and services.
Summary of Quality Concepts• DEMING – conformance to specifications (85 % ofpoor quality is due to management)• JURAN – fitness for use• CROSBY – zero defects = conformance torequirements• KAIZEN – conformity around target – towardscontinuous improvement• PMI ® - conformance to requirement
Quality PhilosophyDEMINGJURANCROSBYKaizenPMI• Conformance to specs• Fitness for use• Conformance requirements• Uniformity around target• Conformance to requirements
Cost Of Quality Categories• Prevention costs• Appraisal costs (cost of ensuring that the product iserror-free)• Internal failure costs (cost of correcting defect beforeproduct reaches customer)• External failure cost ( recall, warranty costs)• Measurement and test equipment (capitalexpenditure to perform prevention and appraisalactivities)
Quality Concepts And Terms• Four absolutes of qualityDefinition conformance of requirementsSystem preventionPerformance standards zero defectsMeasurement cost of non conformance
10. Project Human ResourceManagementProject Management Training
Develop Human Resource Plan• This is the process of identifying and documenting roles, responsibilities andrequired skills, reporting relationship and create the staffing management plan.
Organizational Chart & Position Desc. (Tools and Techniques)• Ensure that each work package has an unambiguous owner.• All team member have a clear understanding of their roles and responsibility.• Types of Roles and Responsibility:-Hierarchal e.g. Organizational Breakdown Structure (OBS)- Matrix e.g. Responsibility Assignment Matrix (RAM) e.g. RACI (Responsible,Accountable, Consult and Inform)- Text -oriented
Develop Human Resource Plan: Tools &Techniques• Organizational TheoryOrganizational theory refers to all the theoriesthat attempt to explain what makes people,teams, and work units perform the way theydo. I’ll talk more about motivation techniques(which are a type of organizational theory) in“Developing the Project Team.”
Human Resource Plan(Output)HR Plan includes but (not limited to)1. Roles and Responsibility• Role• Authority• Responsibility• Competency2. Project Organizational Chart3. Staffing Management Plan• Staff Acquisition• Resource calendars• Staff Release Plan• Training needs• Recognition and Rewards• Compliance, Safety• Resource HistogramsBar chart shows number of resourceused per time period.Resource calendars are an output of theAcquire Project team process.
Acquire Project Team• The process of confirming human resource availability and obtaining theteam necessary to complete project assignments.
Acquire project team• Pre –assignment- Resources who are assigned in advance.• Negotiation- For gaining resources within the organization, vendors, suppliers,contractors, etc (in contract situation)• Acquisition- Acquiring or hiring resources from outside (outsource).• Virtual Teams- This is the possibility of having groups of people in differentgeographic locations, with little or no time spent to meet faceto face.
Develop Project team• The process of improving the competencies, team interactions, and theoverall team environment to enhance project performance.
Develop Project Team (tools & techniques)• Interpersonal skills( soft skills)• Training- Can be formal(classroom or online) or non formal(on-the jobtraining, mentoring, coaching).• Ground rules- Guidelines that establish clear expectations regarding acceptable behavior byteams.- Discussion to create it by all team members.• Co-location/ War Room- Placing many or all the most active team members in the same physicallocation.- Can be temporary for strategy or to enhance communication & build sense ofcommunity.• Recognition and Rewards- It will only be effective if it is satisfied or valued by individual
Team Building Activities (Tools and Techniques)Tuckman’s stages of team formation and development:• Forming- The team meets and learn about the project and their roles and responsibilities.• Storming- Address the project work, technical decisions and the project management approach.Conflict/ disagreement may occur.• Norming- Work together and adjust work habits and behavior that support the team.• Performing- Being a well organized unit.• Adjourning- Team completes the work and move on from the project.
Motivational Theory: Mc Gregors X & Y Theory• Theory X- People tend to be negative, impassive, e.g. incapable, avoidresponsibility, need to be watched- Extrinsic Motivation• Theory Y-People tend to be positive e.g. want to achieve, willing to workwithout supervision, can direct their own effort- Intrinsic Motivationxy
Motivational Theory: AcquiredNeeds Theory•David McClelland TheoryPeople are motivated by one of the three needs.
Motivational Theory: Two Factors Theory• Herzberg’s Theory- Job dissatisfaction due to hygiene factors.- Job satisfaction due to motivational factors
Manage Project Team• The process of tracking team member performance, providing feedback,resolving issues and managing changes to optimize project performance.
Manage Project Team: Tools & Techniques• Project Performance AppraisalProject performance appraisals are typically annualor semiannual affairs where managers let theiremployees know what they think of theirperformance over the past year and rate themaccordingly. These are usually manager-to-employeeexchanges but can incorporate a 360-degree review,which takes in feedback from just about everyonethe team member interacts with, includingstakeholders, customers, project manager, peers,subordinates etc.
Manage Project Team: Tools & TechniquesConflict Management• Conflicts can be beneficial(an opportunity for improvement).• Conflicts are an inevitable consequence of organizational interactions.• Conflicts in the team are caused due to the following reasons indecreasing order of consequence.1. Schedules2. Project Priorities3. Resources4. Technical opinions• The most common cause of conflicts on projects are issues related toschedules (not personality differences).• Conflicts are best resolved by the persons or team members involved inthe conflict.
Conflict Management• General Techniques to resolving conflicts
Problem Solving• The important thing to realize about problems is if they arenot resolved completely they just return, again and again.• The process of problem solving has these steps:1. Defining the cause of the problem2. Analyze the problem3. Identify Solution4. Implement a decision5. Review the decision and confirm that the problem is solved.
Manage Project Team: Tools & Techniques• Issue LogThe issue log is a place to document the issues thatkeep the project team from meeting project goals.These can range from differences of opinion to newlysurfaced responsibilities that need to be assigned toa project team member. Each issue should berecorded in the log along with the personresponsible for resolving it. You should also note thedate the resolution is needed
Project Manager PowerA project manager may yield authority over the project team inone of the following ways:• Formal (Legitimate)- power due to project manager position.• Reward- Power stems from giving rewards• Penalty (coercive)- Power due to people being afraid of the power the projectmanager holds. (punish, penalize).• Expert Power (Technical)- comes from being a technical or projectmanagement expert.• Referent- Power due to charisma or fame, make another person like orrespect the project manager.The best forms of power are Expert and Reward.Earned on your own: ExpertThe worst type of power: PenaltyThese forms of power are derived from positions within the company: Formal,Reward and Penalty.
Management & Leadership Styles• Autocratic- Top down approach, the manager has the power to do whatever he/shewants.- Sometimes appropriate when decisions must be made in a emergencysituation or under time pressure.• Democratic(Participative)- Encourage team participation in the decision making process.- Best used for people whose behavior fit with theory Y.• Laissez-Faire – a French term means ‘’leave alone.’’- The manager is not directly involved in the work of the team.- Effective for highly skilled teams.
Important Terms• Halo EffectThe assumption of because a person is good in a technical field, they will be agood project manager.• ArbitrationA method to resolve conflict. A neutral party hears and resolve a dispute.• Expectancy Theory- Victor. H. VroomThis is a motivational theory, which states that people put in more effortbecause they expect to be rewarded for their efforts.• Perquisites (Perks)Some employees receive special rewards e.g. parking spaces, corner offices,executive dining.• Fringe BenefitsStandard benefits formally given to all employees, such as insurance,educational benefits and profit benefits.
What is project Communications Management• Project Communications Management includes the processes required to ensure timely and appropriate generation, collection, distribution, storage, retrieval and ultimate disposition of project information.
Communications Planning• Every project should include some type of communications management plan, a document that guides project communications.• Creating a stakeholder analysis for project communications also aids in communications planning
Communication can take variousmethods :• Internal i.e. within the project and external to the project such as with the customer, other projects, the media, the public etc.• Formal, such as reports, memos and briefings and informal such as emails, ad-hoc discussions.• Vertical (up and down the organization and horizontal (with peers),• Verbal and Non-verbal ( voice inflections and body language).• Written and Oral
Identify Stakeholders• Identify Stakeholders is the process of identifying all people or organizations impacted by the project and documenting relevant information regarding their interest, involvement and impact on project success.
Stakeholder Analysis• A technique of systematically gathering and analyzing quantitative & qualitative information to determine whose interests should be taken into account throughout the project.• Step 1: Identify all potential project stakeholders and relevantinformation• Step 2: Identify the potential impact or support each stakeholder could generate and classify them so as to define an approach strategy.• Step 3: Assess how key stakeholder are likely to react or respond in various situationSample grid showing classification modelKeepSatisfiedManageCloselyKeepInformedMonitor(Minimum Effort)InterestPowerLow HighHigh• A• B• C• D• E• F• G• H
Sample Stakeholder AnalysisStakeholders Document Name DocumentFormatContact Person DueCustomerManagementMonthly StatusReportHard copy Gail Feldman,Tony SilvaFirst of monthCustomerBusiness StaffMonthly StatusReportHard copy Julie Grant,Jeff MartinFirst of monthCustomerTechnical StaffMonthly StatusReportE-mail Evan Dodge,Nancy MichaelsFirst of monthInternalManagementMonthly StatusReportHard copy Bob Thomson First of monthInternalBusiness andTechnical StaffMonthly StatusReportIntranet Angie Liu First of monthTrainingSubcontractorTraining Plan Hard Copy Jonathan Kraus 11/1/1999SoftwareSubcontractorSoftwareImplementationPlanE-mail Barbara Gates 6/1/2000
Stakeholder Register• This is the main output of the identify stakeholders process and it contains all details related to the stakeholders such as name, organizational position, location, role in the project, contact information.• It also contains the major requirements, main expectations, potential influence in the project. It also classify them as internal, external, supporter, neutral, resistor etc.
Output of Identify Stakeholder• Stakeholder RegisterStakeholder Stakeholder interest(s)in the projectAssessment ofimpactPotential strategies for gainingsupport or reducing obstaclesNameContactInformationRole inProjectDepartment/SupervisorCompany Impact InfluenceMainexpectationsAttitudeabout theprojectMajorrequirement• Stakeholder Management Strategy- Defines an approach to increase the support and minimize negative impacts of stakeholder.- The information could be too sensitive to be shared.- A common way of representing is by using a stakeholder analysis matrix.
Plan Communications• Plan Communications is the process ofdetermining the project stakeholder informationneeds and defining a communicationsapproach. • For example who needs what information, when will they need it, how it will be given to them and by whom.
Communication RequirementAnalysis• Includes communicating in all directions• Determine and limit who will communicate with whom and who will receive what information.Customer, sponsor, Functionalmanagers, and Team MembersOtherProjectManagersOtherProjectsOtherStakeholdersTheProject2)1( −NN• Consider the number of potential communication channels or paths• Formula:
The Impact of the Number of People on CommunicationsChannels
Communication Model• Basic Communication Model– The components in the model need to be taken into account when discussing project communications.– The sender is responsible for making information clear and complete so that the receiver can receive it correctly, and for confirming that it is properly understood.ReceiverReceiverSenderSenderEncodeDecodeEncodeDecodeNoiseNoiseMedium• To make effective communication, sender/receiver need to be aware of these factors:- Nonverbal: 55% of all communication is nonverbal- Paralingual: pitch and tone of voice- Effective listening
Communication Methods• Interactive Communication– Most efficient way to ensure a common understanding– E.g. meetings, phone calls, video conferencing• Push Communication– Does not certify that it reached or understood– E.g. letters, email, press release, faxes, voice mail• Pull communication– Used for very large information volumes, very large audiences– E.g. intranet site, e-learningProject manager cannot control all communications but should try to control toprevent miscommunication, unclear directions, and scope creeps.
Communications Management PlanThe output of plan communications is thecommunications management plan, and this plandocuments how you will manage and controlcommunications on your project.
Distribute InformationThis is the process of making relevant information available to project stakeholders asplanned in the communications management plan
Managing Stakeholder ExpectationsThis is the process of communicating and working with stakeholders to meet theirneeds and addressing issues as they occur
Managing Stakeholder Expectations• Actively managing the expectation of stakeholders.– Increase the likelihood of project acceptance by negotiating.– Influencing their desire to achieve & maintain project goals.• Addressing concerns that have not become issues yet (anticipation).• Clarifying and resolving issues that have been identified.
Report PerformanceThe process of collecting and distributing performanceinformation, including:Status ReportProgress ReportTrend ReportForecasting ReportVariance ReportEarned ValueLessons Learned
Project Risk Management• Risk is an uncertain event or condition, that ifit occurs has an effect on at least one projectobjective.• Risk Management Objectives- Increase the probability and impact of positiveevents (opportunities).- Decrease the probability and impact ofnegative events (threats)
Terms and concepts• Uncertainty: a lack of knowledge about an eventthat reduces confidence.• Risk averse: someone who does not want to takerisks.• Risk tolerances: area of risk that areacceptable/unacceptable.• Risk thresholds: the point at which a risk becomeunacceptable.– Remember that in this area there is no activity inexecuting process group
Plan Risk Management• The process of defining how to conduct risk management activities for a project.
Plan Risk Management• Importance of Risk Management Planning-Ensure that the degree, type, and visibility of risk management arecommensurate.-Provide sufficient resource and time for risk management activities.-Establish an agreed-upon basis for evaluating risk.• Risk Categories-A standard list of risk categories can help to make sure areas of risk are notforgotten.-Companies and PMO should have standard list of risk categories to helpidentify risk.• 2 Main type of Risk-Business – Risk of gain or loss-Pure (insurable) risk – Only a risk of loss (i.e. fire, theft, personal injury, etc)– Sources of risk = risk categories– Risk categories may be structured into Risk Breakdown Structure (RBS)
Risk Breakdown StructureRisk Breakdown Structure (RBS) - A hierarchically -organized depiction of theidentified project risks arranged by category.
Risk Management Plan• Risk management plan describe how risk management will bestructured and performed on the project.Subset of project management plan.May include:– Methodology– Roles & responsibilities– Budgeting– Timing– Risk categories.– Definition of probability and impact– Stakeholder tolerances– Reporting formats– Tracking– Probability and impact matrix (?)
Identify Risk• The process of determining which risk may affect the project and documentingtheir characteristics.
Identify Risks (Tools &Techniques)Risk should be continually reassessed (iterative) such as in integrated changecontrol activity, when working with resources, when dealing with issues.Information gathering techniques• Brainstorming• Delphi technique: Expert participate anonymously; facilitator usequestionnaire; consensus may be reached in a few rounds; Help reducebias in the data and prevent influence each others.• Interviewing: interviewing experts, stakeholders, experienced PM• Root cause analysis: Reorganizing the identified risk by their root causemay help identify more risks.
Identify Risks cont’d• Checklist analysis: checklist developed based onaccumulated historical information from previoussimilar project.• Assumption analysis: identify risk frominaccuracy, instability, inconsistency,incompleteness.• SWOT analysis – Strengths, Weaknesses,Opportunities, Threats.
Diagramming techniques• System or process flow charts.• Influence diagrams-show the casual influences among project variables, thetiming or time -ordering of events, and the relationshipsamong other project variables and their outcomes.-excellent for displaying a decision’s structure-Described in Quality Management•Cause & Effect diagrams(fish-bone / Ishikawadiagram)
Identify Risk(Output)Risk RegisterAfter Indentify Risk process the output is initialentries into the risk register.It includes:– List of risk– List of POTENTIAL responses– Root causes of risks– Updated risk categories
Perform Qualitative Risk Analysis• The process of prioritizing risks for further analysis of action by assessingand combining their probability of occurrence and impact.
Qualitative Risk Analysis• Help to focus on high priority risks• A subjective analysis (High, Medium, Low)• Analysis using…-Relative probability or likelihood of occurrence-Impact on project objective-Time frame response-Organization’s risk tolerance-Etc.• Can be also used to:-Compare risk to the overall risk of other projects-Determine whether the project should be selected, continuedor terminated.-Determine whether to proceed to Perform
Risk Register Updates• Update/add additional information to previous output i.e. Risk Register,which include:-Relative ranking/priority-Risk grouped by categories-List of risk requiring additional analysis in the near term-List of risk for additional analysis and response-Watch-list (non-critical or non-top risks)-Trends, Since risk analysis process is iterative, PM should know if risk isincreasing, decreasing or staying the same-Cause of risk requiring particular attention
Perform Quantitative Risk Analysis• The process of numerically analyzing the effect of identified risks onoverall project objectives. If not necessary, this process may be skipped.
Quantitative Risk Analysis• Is a numerical evaluation (more objective)• This process may be skipped.• Purpose of this process:-Determine which risk events warrant a response.-Determine overall project risk (risk exposure).-Determine the quantified probability of meeting projectobjectives.-Determine cost and schedule reserves.-Identify risks requiring the most attention.-Create realistic and achievable cost, schedule, or scopetargets.
Quantitative Risk Analysis: Tools &TechniquesDetermining Quantitative Probability and Impact mightbe done by:• Interviewing• Cost and time estimating• Delphi technique• Use of historical records from previous projects• Expert judgment• Sensitivity analysis – tornado diagram• Expected monetary value (EMV) analysis• Decision tree• Monte Carlo analysis (simulation)
Sensitivity Analysis• To determine which riskshave the most potentialimpact to the project.• Changing one or moreelements / variables and setother elements to its baselineand then see the impact.• One typical display of thesensitivity analysis is thetornado diagram.• Tornado diagram
Decision Tree and Expected MonetaryValue (EMV)– A decision tree is a diagramming analysistechnique used to help select the best course ofaction in situations in which future outcomes areuncertain.– Estimated monetary value (EMV) is the product ofa risk event probability and the risk event’smonetary value.– You can draw a decision tree to help find the EMV.
Risk Register UpdatesUpdate/add additional information to previousoutput i.e. Risk Register, which include:• Prioritize list of quantified risks• Amount of contingency time and cost reserve needed.• Possible realistic and achievable completion dates,project cost, with confidence level.• The quantified probability of meeting project objectives.• Trends
Plan Risk Responses• The process of developing option and action to enhance opportunities and toreduce threats to project objectives.
Plan Risk Responses• Do something to eliminate threats before they happens.• Do something to make sure the opportunities happens.• Decrease the probability and/or impact of threats.• Increase the probability and/or impact of opportunities.• For the remaining (residual) threats that cannot beeliminated:-Do something if the risk happens (contingency plan).-Do something if contingency plan not effective (fallbackplan)
Strategies for Threats• AvoidEliminate the threat entirelyIsolate project objectives from the risk’s impact• Transfer (Deflect, Allocate)Shift some or all the negative impact of a threat to a third party.• MitigateImplies a reduction in the probability and/or impact of anadverse risk event to be within acceptable threshold limits.• AcceptDeal with the risksProject management plan is not changedTransferring a risk will leave some risk behind.
Strategies for Opportunities• ExploitSeek to ensure the opportunities definitely happen.• ShareAllocate some or all of the ownership of the opportunity toa third party who is best able to capture the opportunityfor the project benefit.• EnhanceIncrease the probability and/or the positive impacts of anopportunity.• AcceptNot actively pursuing an opportunity
Monitor & Control Risk• The process of implementing: risk response plans, tracking identifiedrisks, monitoring residual risks, identifying new risks, and evaluating riskprocess effectiveness throughout the project.
Residual and Secondary Risks– It’s also important to identify residual andsecondary risks.– Residual risks are risks that remain after all of theresponse strategies have been implemented.– Secondary risks are a direct result ofimplementing a risk response.
Tools for Monitor & Control Risk– Risk Re-Assessment• Identify new risks, closing of outdated risks (statusmtgs.)– Risk Audits• Examine the documents for effectiveness• Internal or External to the project– Variance & Trend Analysis / PerformanceMeasurements.• Comparing the planned result to the actual– Reserve Analysis• Compares the amount of contingency reserves tothe remaining risk left in the project
Risk Monitoring and Control– Involves executing the risk management processto respond to risk events.– Workarounds are unplanned responses to riskevents that must be done when there are nocontingency plans.– Main outputs of risk monitoring and control are:• Requested changes.• Recommended corrective and preventive actions.• Updates to the risk register, project management plan,organizational process assets and project documents.
Important Terms• Mutual Exclusive: if two events cannot both occur in a single trial.• Probability: something will occur.• Normal Distribution: common probability density distribution chart .• Statistical Independence: the probability of one event occurring doesnot affect the probability of another event occurring.• Standard deviation (or Sigma): how far you are from the mean.• 3 or 6 sigma.-Represent the level of quality has decided to try to achieve-6σ is higher quality standard than 3σ-Used to calculate the upper and lower control limits in a control chart
506PROCUREMENTMANAGEMENTProject Management Training
507PROCUREMENTThe acquisition or purchase of materials,goods, services and equipment fromoutside the organization.
Project ProcurementManagement• Project procurement management is theprocess of purchasing the products formeeting the needs of the project scope.• It involves planning, acquiring the productsor services from sources, choosing asource, administering the contract, andclosing out the contract.
Project Managers Role in ProcurementThe project manager must be involved in the creationOf contracts and fulfills the following key roles:• Know the procurement process• Understand contract terms and conditions• Make sure the contract contains all the projectmanagement requirements such as attendance atmeeting, reports, actions and communicationsdeemed necessary• Identify risks and incorporate mitigation andallocation of risks into the contract
510PROCUREMENT MANAGEMENT• Many project managers lack the knowledgeand skills to procure goods and serviceseffectively.• Poor procurement often results in poorlydelivered scope, schedule delays, costoverruns and poor quality of the goods andservices that the project is intended to deliver.
The Sequential Procurement Processes• Plan Procurements• Conduct Procurements• Administer Procurement• Close Procurements
Plan Procurements• Is the process of documenting projectpurchasing decisions, specifying the approach,and identifying potential sellers.• Procurement planning is the process ofidentifying which part of the project should beprocured from resources outside of theorganization. It is concerned with determiningwhat to procure, when, and how.
Plan ProcurementsThe process of obtaining seller responses, selecting a seller, and awarding a contract.
Plan Procurements: Inputs• Teaming Agreements : are legal contractualagreements between two or more entities to form apartnership or joint venture , or some otherarrangement as defined by the parties .theagreement defines the buyer seller roles for eachparty . Whenever a teaming agreement is in place fora project, the roles of buyer and seller arepredetermined.
Plan Procurements: Inputs• Activity Cost Estimates: developed by theprocuring activity are used to evaluate thereasonableness of the bids or the proposalsreceived from potential sellers• Cost Performance Baseline: provides details ofthe planned budget overtime• Enterprise Environmental Factors• Organizational Process Assets: How theprocurement process work within the performingorganization
Plan Procurements – Tools &TechniquesMake-or-buy analysis: general managementTechnique used to determine whether anorganization should make or perform a particularproduct or service inside the organization or buyfrom someone else.• Often involves financial analysis• Experts, both internal and external, can providevaluable inputs in procurement decisions.
Plan Procurement ( Tools & Techniques)Contract types:• Fixed Price (lump sum)• Cost Reimbursable Contracts• Unit Price
Plan Procurements – Tools &Techniques• Fixed Price Contract• In this type of contract one price is agreedupon for all the work.• The buyer has the least cost risk, provided the• buyer has a completely defined scope,because the risk of higher costs is borne bythe seller.• The seller is most concerned with the contractstatement of work in this type of contract.
Fixed Price Contract VariationsFixed Price Incentive Fee Contracts (FPIF)• There are also incentives for fixed price contracts.• Contract = $ 1,100,000. For every month early theproject is finished, an additional $10, 000 is paid to theseller.• Fixed Price Economic Price Adjustment (FPEPA)• Sometimes a fixed price contract allows for priceincreases if the contract is for multiple years.• Contract = $ 1,100,00 but a price increase will beallowed in year two based on the Consumer PriceIncrease report for year one. Or the contract price is $1,100,000 but a price increase will be allowed in yeartwo to account for increases in specific material costs.
Purchase Order• A purchase order is the simplest type of fixedprice contract.• This type of contract is normally unilateral(signed by one party) instead of bilateral.• It is usually used for simple commodityprocurements.• Example Contract to purchase 30 linearmeters of wood at $ 40 per meter.
Cost-reimbursable Contract• The sellers cost are reimbursed, plus anadditional amount.• The buyer has the most cost risk because thetotal costs are unknown.• This form of contract is often used when thebuyer can only describe what is needed,rather than what to do.• The seller will therefore write the detailedcontract statement work.
Cost-reimbursable Contract -VariationsCost plus Fixed Fee (CPFF)• This is the most common type of cost reimbursablecontract.• In this type, the buyer pays all costs, but the fee (orprofit) is fixed at a specific amount.• This helps to keep the sellers costs in line because acost overrun will not generate any additional fee orprofit. Fees only change with approved changeorders.• Example Contract = Cost + Fee of $ 100,000
Cost-reimbursable Contract - VariationsCost Plus Fee (CPF) or Cost Plus Percentage ofCosts (CPPC)• This type of cost reimbursable contractrequires the buyer to pay for all costs plus apercent of costs as a fee. Sellers are notmotivated to control costs because the sellerwill get paid profit on every cost without limit.• Example, Contract = Cost + 10% of costs asfee.
Cost-reimbursable Contract - Variations• Cost Plus Incentive Fee (CPIF)This type of cost reimbursable contract pays allcosts and an agreed upon fee, plus a bonus forbeating the performance objectives stated in thecontract.Cost Plus Award Fee Contracts ( CPAF) :• The seller is reimbursed for all legitimate costs ,but the majority of the fees is only earned basedon the satisfaction of certain broad subjectiveperformance criteria defined and incorporatedinto the contract.• The determination of the fee is solely on the subjective determination of sellerperformance by the buyer, and is generally not subject to appeals.
Time and Material (T&M) or UnitPrice• This type of contract is usually used for small amounts.• The contract is priced on a per hour or per item basisand has elements of fixed price contract (in the fixedprice per hour) and a cost reimbursable contract (inthe material costs and the fact that the total cost isunknown).• In this type of, the buyer has a medium amount ofcost risks compared to CR and FP because the contractis usually for small amounts and for a shorter length oftime.• Example, Contract = $ 100 per hour + expenses ormaterials at cost or $10 per linear meter of wood.
Contract Type vs. Risk• Effect of contract type on buyer and seller risk.
Outputs from Procurement Planning–Procurement Management Plan – describeshow procurement process will be managed• Type of contract• Independent estimates needed?• Autonomy of project team• Standardized documents• Multiple provider management?• Incorporate with other project aspects(scheduling and performance reporting)
Plan Procurements - Outputs• A procurement statement of work (SOW) containsthe details of the procurement item in clear, conciseterms. It includes the following elements:• The project objectives• A description of the work of the project and anypost-project operational support needed• Concise specifications of the product or• services required• The project schedule, time period of services, andwork location.
Plan Procurements – Outputs• Source Selection Criteria: Source Selectioncriteria are included in the procurementdocument to give the seller an understanding ofthe buyers needs and help them decide if theyshould bid or make a proposal on the work.• During Select sellers, this criteria become thebasis by which the bids or proposal are evaluatedby the buyer.• Selection criteria can be limited to purchase priceif the procurement item is readily available froma number of acceptable sellers.
Plan Procurement: OutputProcurement Documents may include the following:• Information for Sellers• Background information• Procedures for replying• Guidelines for preparation of the response• Form of response required• Evaluation Criteria• Pricing forms• Contract Statement of work• Proposed terms and conditions of the contract (legaland business)
Procurement Documents• Non-Disclosure Agreement - This is an agreementbetween the buyer and any prospective sellers statingwhat information or documents they will holdconfidential and control, and who in their organizationwill gain access to the confidential information.• Standard Contract - Companies frequently havestandard, preauthorized contracts for the purchase ofgoods or services. These types of standard contractsneed no further legal review if used as they are.
Procurement Documents• Special Provisions (Special Conditions)• The project manager should determine what needs tobe added, changed or removed from the standardprovisions, so that the resulting contract addresses theparticular needs of the project.• Letter of Intent- NOT a contract but a letter, withoutlegal binding, that says the buyer intends to hire theseller.• Privity- Contractual relationship.• Example - Company A hires company B to do some work forthem. Company B subcontracts to company C. The projectmanager for A is at the job site and tells company C to stopwork. Generally, does company C have to listen?
Conduct Procurements• Is the process of obtaining seller responses,selecting a seller and awarding a contract.• In this process the team will receive bids orproposals and will apply previously definedselection criteria to select one or more sellerswho are qualified to perform the work andacceptable as a seller.•
Conduct Procurements – Tools &Techniques• Bidder Conferences : Bidder conferences are meetings withprospective vendors or sellers that occur prior to the completion oftheir response proposal.• Proposal evaluation techniques• Independent estimates / Should-Cost Estimate : Comparing thecost to an estimate created in house or with outside assistance.• Expert judgment• Advertising: Advertising is letting potential vendors know that anRFP is available.• Internet search• Procurement Negotiations: The project manager may be involvedduring negotiations to clarify project requirements, and if for noother reason than to protect the relationship to clarify projectrequirements, and if for no other reason than to protect therelationship with the other side.
Conduct Procurements – OutputsSelected Sellers• A seller may simply be selected and asked to sign astandard contract• A seller may be asked to make a presentation andthen, if all goes well, go on to negotiations• The list of sellers may be narrowed down to a few• The short-listed sellers may be asked to makepresentations and the selected seller then asked togo on to negotiations• The buyer can negotiate with more than one seller• Or some combination of presentations andnegotiations
Conduct Procurements – Outputs2. Procurement Contract Award:• Contracts are known by many names: Agreement,Subcontract, Purchase order, Memorandum ofunderstanding• Is awarded to each selected seller .• A contract can be in the form of a simple purchaseorder or a complex document.• A contract is a mutually binding legal agreement thatobligates the seller to provide the specified products,services or results and obligates the buyer tocompensate the seller.
ContractsWhat do you need to have a legal contract?• An offer• Acceptance• Consideration - Something of value, notnecessarily money• Legal capacity - Separate legal parties,competent parties• Legal purpose - You cannot have a contract forthe sale of illegal goods
Conduct Procurements – Outputs• Resource Calendars: the quantity and the availability of contractedresources and those dates on which each specific resource can be activeor idle are documented• Change Requests• Project Management Plan Updates : components of the plan that mayget updated include, but are not limited to : Cost baseline Scope baseline Schedule baseline• Project Document Updates : docs that may get updated include, but arenot limited to : Requirements documentation Requirements traceability documentation , and , Risk register
Administer Procurements• This process consists of assuring that theperformance of both parties to the contractmeets contractual requirements.• The Contract Administration process concernsmonitoring the vendor’s performance andensuring that all the requirements of the contractare met.• Contracts are legal relationships, so it isimportant that legal and contractingprofessionals be involved in writing andadministering contracts.
Administer Procurements: Inputs• Contract• Project Management Plan• Contract management plan• Procurement Documents: contain complete supporting recordsfor administration of the procurement processes. This includesprocurement contract awards and the statement of work• Performance reports: seller performance relateddocumentation includes:• Seller developed technical documentation and otherdeliverable information provided in accordance with the termsof the contract• Seller performance reports that indicate which deliverableshave been completed and which have not
Administer Procurements: Inputs• Approved change requests: can includemodifications to the terms & conditions of thecontract.• Work performance Information: the extent towhich the quality standards are beingsatisfied, what costs have been incurred,which seller invoices have been paid, etc•
Administer Procurements – Tools &TechniquesContract change control system• The contract change control system defines theprocedures for how the contract may be changed.• The system is part of integrated change control.• It documents how to submit changes, establishes theapproval process, and outlines authority levels.• It includes a tracking system to number the changerequests and record their status
Procurement performance reviews• Buyer conducted performance reviews examinethe seller’s performance on the contract to date.• These reviews may be conducted at the end ofthe contract or at intervals during the contractperiod.• Buyer reviews examine the contract terms andseller performance for elements such as these:• Meeting project scope• Meeting project quality• Staying within project budgets• Meeting the project schedule
Administer Procurements – Tools &Techniques• Inspections and audits• As the vendor completes the contracted work, the buyerwill need to inspect the work for progress, compliance withcontract requirements, and adherence to agreed-to time,cost, and quality constraints.•• Performance reporting• This tool and technique entails providing your managersand stakeholders with information about the vendor’sprogress meeting the contract objectives.• Performance reporting is part of communications andshould be documented within the communicationsmanagement plan.
Administer Procurements – Tools &Techniques• Payment system• Seller submit invoices as an input to this process, andthe payment system is the tool and technique used toissue payment.• The organization may have a dedicated department,such as accounts payable, that handles vendorpayments, or it might fall to the project manager.• In either case, follow the policies and procedures theorganization established regarding vendor payments.
Administer Procurements – Tools &Techniques• Claims administration• A claim is an assertion that the buyer did somethingthat has hurt the seller and the seller asking forcompensation.• Another way of looking at claims is that they are aform of sellers change requests• Claims can get nasty. Imagine a seller that is notmaking as much profit as he hoped for, issuing claimsfor every action taken by the buyer.• Claims administration involves documenting,monitoring, and managing changes to the contract.•
Claims administration• Changes that cannot be agreed upon arecalled contested changes.• Contested changes usually involve adisagreement about the compensation to thevendor for implementing the change.• You might believe the change is not significantenough to justify additional compensation,whereas the vendor believes they’ll losemoney by implementing the change free ofcharge.
Claims• Contested changes are also known as disputes,claims, or appeals. These can be settled directlybetween the parties themselves, through thecourt system, or by a process called arbitration.• Arbitration involves bringing all parties to thetable with a third, disinterested party who is nota participant in the contract to try to reach anagreement.• The purpose of arbitration is to reach anagreement without having to go to court.
Records Management System• A contract is a formal, legal document. Recording keepingcan be critical if actions taken or situations faced during aproject are ever in question after the work is completed.• This can happen related to unresolved claims or legalactions, or even in order to satisfy insurance needs.• A record management system can be quite extensive, withone person assigned just to manage these records.• They can also include indexing systems, archiving systemsand information retrieval systems for projects withextensive documentation.
Administer Procurements - Outputs• Administer Procurements - Outputs• Procurement documentation• Change Requests• Organizational process asset updates:correspondence, payment schedules and requests ,seller performance evaluation documentation• Project management plan updates: docs that can getupdated include: but are not limited to: procurementmanagement plan , baseline schedule , etc
Procurement documentationThis output includes (but isn’t limited to) all ofthe following:• Contract• Performance information• Warranties• Financial information (like invoices and paymentrecords)• Inspection and audit results• Approved and unapproved changes
Close Procurements• This process consists of finishing all the loose ends of thecontract.• This process is part of the close project process described inintegration.• Contract closure is done:• When a contract ends• When a contract is terminated before the work• is completed• This process is concerned with• completing and settling the terms of the contract.• It supports the Close Project process because the ContractClosure process determines if the work described in the contractwas completed accurately and satisfactorily.• This is called product verification
Close Procurements• Close Project verifies and documents the projectoutcomes just like the Contract Closure process.• Keep in mind that not all projects are performedunder contract so not all projects require ContractClosure.• However, all projects do require the Close Projectprocess.• Since verification and documentation of the projectoutcomes occur in both of these processes, projectsthat are performed• under contract need to have project results verifiedonly one time.
Close Procurements : Inputs, Tools &Techniques• The Contract Closure process has two inputs:• Project Management Plan – Procurement management plan• Procurement Documentation• Close Procurements – Tools & Techniques• The Contract Closure process has three tools and techniques:•• Procurement audits•• Records management system.•• Negotiated Settlements: In all procurement relationships the final equitable settlement of alloutstanding issues, claims, and disputes by negotiations is a primary goal. Whenever settlementcannot be achieved by direct• negotiation, some form of alternative dispute• resolution (ADR) including mediation or arbitration may be explored .• When all else fails, litigation
Chapter 12 – Project ProcurementManagement• Tools & Techniques for Contract Close Out– Procurement Audits – structured review of entireprocurement process; identify successes and failures thatwarrant transfer to other procurement items• Outputs from Contract Close Out– Contract File – complete index of records– Formal Acceptance and Closure – contract administrationresponsibility to provide a formal notice that contract hasbeen completed
Close Procurements - Outputs1. Closed Procurements:• This is formal acceptance and closure of thecontract.• The buyer provides the seller with a formalwritten notice that the contract has beencompleted .Requirements for formalprocurement closure are usually defined in theterms and conditions of the contract and areincluded in the procurement management plan
• It’s your responsibility as project manager to document the formalacceptance of the contract.• Many times the provisions for formalizing acceptance and closing thecontract are spelled out in the contract itself.•• Close Procurements - Outputs• 1. Organizational process assets (updates) : assets that may get updated ,include but are not limited to :• Procurement File: a complete set of indexed contract documentation,including the closed contract, is prepared for inclusion with the final• project files.• Deliverable acceptance: the buyer provides the seller with a formalwritten notice that the deliverables have been accepted or rejected .• Lessons learned documentation
561CONTRACTS• An agreement between competent parties forthe consideration to accomplish lawfulpurpose with the terms clearly set forth.• The Procurement Process is sometimesreferred to as the Contract Process• One of the main output of the ProcurementProcess
562RULES OF CONTRACTS• A formal agreement – buyer and seller• Oral or written – written is preferred• Clearly state all requirements• Changes –formally approved, controlled,documented• Not fulfilled until all requirements are met• Be executed by someone with capacity andauthority.
563RULES OF CONTRACTS Cont.• Contain an offer• Have been accepted• Provide for a consideration/payment• Be for legal purpose• Terms and conditions should define breaches,copyrights, intellectual rights, force majeure.
564BASIC ELEMENTS OF CONTRACTS1. Mutual Agreement– There must be an offer and agreement2.Consideration– There must be a down payment3.Contract Capability– The contract is binding only if the contractor has thecapability to perform the work
565BASIC ELEMENTS OF CONTRACTS Cont.4. Legal Purpose– The contract must be for a legal purpose5. Form Provided by Law– The contractor must reflect the contractor’s legalobligation to deliver end products