Study Guide

PM FRAMEWORK AND Standard for Project Management of a Project STUDY NOTES
PMBOK 3rd Edition based, Version 1
In Preparation For PMP Certification Exam
IBM Education and Training Worldwide Certified Material
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PM Framework and Standard for Project Management of a Project
Study Notes
Reference Material for Study:

A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapter 4 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 PMP Suggested Resource Pack, by PMI, 2000, various authors and books What to Study? The PMBOK Framework (first 3 chapters): Introduction, The Project Management Context; and Project Management Processes The mapping of the nine knowledge area processes to the five process groups. See the PMBOK Guide, Chapter 3, pg. 38 **Note: Its very important for exam takers to understand this mapping! This is at the heart of the PMP Certification Examination. Chapter 4 of the PMBOK Guide on Project Integration Management processes: Project Plan Development, Project Plan Execution, and Integrated Change Control. Be familiar with the Inputs, Tools and Techniques, and Outputs of each process. Know the difference between a project and a program. Know the difference between a project and an operation. Know key definitions (see list in study notes or PMBOK Guide glossary). Know the characteristics of a project life cycle. Know the phases of a generic project life cycle. Know what is entailed in each of the phases of a generic project life cycle. Be familiar with the organizational influences which affect projects. Be familiar with general management skills and understand the relation between these skills and project management skills. Be familiar with socioeconomic and environmental influences which affect projects.
"PMBOK" is a trademark of the Project Management Institute, Inc. which is registered in the United States and other nations. PMI is a service and trademark of the Project Management Institute, Inc. which is registered in the United States and other nations. PMP and the PMP logo are certification marks of the Project Management Institute which are registered in the United States and other nations.
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PM Framework and Standard for Project Management of a Project 1-3 Course materials may not be reproduced in whole or in part without the prior written permission of IBM
Key Definitions
Accountability Matrix A structure which relates the project organizational structure to the work breakdown structure to help ensure that each element of the projects scope is assigned to a responsible individual. Also referred to as a Responsibility Assignment Matrix (RAM). Generating, gathering, and disseminating information to formalize phase or project completion. Is the extent, or impact, of adverse consequences which could occur to a project. Factors which for planning purposes can be considered to be true, real, or certain. Is the process where an organization will compare its processes, products, performance against other organizations. These other organizations can be in the same or other industries. Influences factors that create any change; including changes to project deliverables. Defines and controls changes to project deliverables. Any documented procedure used to apply technical and administrative direction and surveillance to: define and document characteristics of a system; control changes; record and report changes; ensure conformance to requirements. Factors which will limit the project management teams options. A management control point where the integration of scope, budget and schedule occurs, and the measurement of performance will happen. CAPs are placed at selected management points of the work breakdown structure. A measurable, verifiable work product such as a specification, feasibility study report, detailed design document or working prototype. A method for integrating scope, schedule, and resources, and for measuring project performance. It compares the amount of work that was planned, versus actually earned, versus actually spent, to determine if cost and schedule performance are as planned. A manager responsible for activities in a specialized department or function. (e.g., engineering, marketing, manufacturing) An organizational structure in which staff are grouped hierarchically by specialty (e.g., production, marketing, engineering). Making trade-offs among competing objectives and alternatives. The learning gained from the process of performing the project. Lessons learned may be identified at any point. Also considered a project record. The same as an accountability matrix or responsibility assignment matrix. 1) The manager of any group that actually makes a product or performs a service. 2) A Functional Manager. A system of managerial leadership that defines individual managerial responsibilities in terms of corporate objectives.
Administrative Closure Amount at stake Assumptions Benchmarking
Change control Configuration management
Constraints Control Account Plan (CAP)
Deliverable
Earned Value Management
Functional Manager Functional Organization Integration Lessons Learned
Linear Responsibility Chart Line Manager Management By Objectives (MBO)
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Matrix Organization
Modern Project Management (MPM) Management by Projects Operation Organizational Breakdown Structure (OBS) Program Program Management Project Project Charter
An organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of the individuals assigned to the project. A term used to distinguish the current broad range of project management (scope, cost, time, quality, risk, etc.) from narrower, traditional use that focused on cost and time. An organizational approach that treats many aspects of ongoing operations as projects with the intention of applying project management techniques to these aspects. Work that is ongoing and repetitive. A depiction of the project organization arranged so as to relate work packages to organizational units. A group of related projects managed in a coordinated way. Programs usually include an element of ongoing activity. Management of a related series of projects over a period of time to accomplish broad goals to which the individual projects contribute. A temporary (finite) endeavor undertaken to create a unique product, service, or result. A document issued by senior management that formally authorizes the existence of a project. The charter also authorizes the project manager to apply organizational resources to the project. A characteristic of projects that integrates the concepts of temporary and unique. Because the resulting product/service of a project is unique, the characteristics which distinguish the product/service must be carefully worked out in detail over time. It is expected that the distinguishing factors will be broadly defined at the start of the project and become more explicit and detailed as the project team develops more comprehensive knowledge of the project. A collection of generally sequential project phases whose name and number are determined by the control needs of the organization(s) involved in the project. The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. The members of the project management team who are directly involved in project management activities.
Progressive Elaboration
Project Life Cycle
Project Management Project Management Team
Project Phase Project Management
Project Team Projectized Organization Regulation
Responsibility Assignment Matrix (RAM)
Rolling Wave Planning Stakeholder Standard
Work Authorization System
A collection of logically related project activities, usually culminating in the completion of a major deliverable. The application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project. The group of people that are performing the work of the project. Any organizational structure in which the project manager has full authority to assign priorities and to direct the work of individuals assigned to the project. A government-imposed requirement, which specifies product, process, or service characteristics, including the applicable administrative provisions, with which compliance is mandatory. A structure which relates the project organization structure to the WBS to help ensure that each element of the projects scope of work is assigned to a responsible individual. Also called an Accountability Matrix, Responsibility Chart, or Responsibility Matrix. A term used to describe progressive detailing of the project plan, thus recognizing that planning is an iterative and ongoing process. Individuals and organizations who are involved in or may be affected by project activities. A document established by consensus and approved by a recognized body that provides, for common and repeated use, rules, guidelines, or characteristics for activities or their results, aimed at achievement of the optimum degree of order in a given context. A collection of formal documented procedures that define how project work will be authorized to ensure that the work is done by the identified organization at the right time and in the right sequence.
Project Management Introduction

Project Management:
The application of knowledge, skills, tools, and techniques to project activities to meet project requirements. Is accomplished through the use of a series of processes such as initiating, planning, executing, controlling, and closing. Is an integrative endeavor -- an action, or failure to take action, in one area will usually affect other areas. Includes: Identifying requirements Establishing clear and achievable objectives Balancing the competing demands for quality, scope, time, and cost Adapting the specifications, plans, and approach to the different concerns and expectations of the various stakeholders To be effective, requires that the project management team understand and use knowledge and skills from at least five areas of expertise: The Project Management Body of Knowledge Application area knowledge, standards, and regulations Comprehension of the project environment General management knowledge and skills Interpersonal skills
Project Managers and the Project Team:

The Project Manager is responsible for accomplishing the project objectives. The Project Team is comprised of all the project team members including the project manager, the project management team, and in some cases, the project sponsor. The Project Team Members includes those people who report either directly or indirectly to the project manager and who are responsible for performing project work as a regular part of their assigned duties. The Project Management Team includes all members of the project team who are directly responsible for project management activities. The Project Management Team has a professional responsibility to its stakeholders, including customers, the performing organization, and the public. PMI members are required to adhere to a Code of Ethics and those with the PMP certification are required to adhere to a Code of Professional Conduct. The Project Sponsor is the person or group that provides the financial resources for the project.
Project vs. Operation vs. Program:

A project is a temporary endeavor undertaken to create a unique product, service, or result. It has a definite starting and ending point. Progressive elaboration, developing in steps and continuing by increments, is another characteristic of projects.
An operation has similar characteristics to a project: it is performed by people; constrained by limited resources; planned, executed, and controlled. The major difference is that an operation is ongoing and repetitive. A program is a group of related projects managed in a coordinated way to obtain benefits and control not available if managed individually. Example: AIX is a program. Each release of AIX is a project. Many programs also include elements of on-going operations. Example: The Fly Right airline program includes both the projects(s) to design and implement the craft as well as the ongoing manufacturing and maintenance support in the field. Program Management is the centralized and coordinated management of a series of projects to achieve an organizations strategic objectives. Many electronic firms have program managers who are responsible for both individual product releases (projects) and the coordination of multiple releases over time. An approach called management by projects treats many aspects of ongoing operations as projects to apply project management techniques to these operations. Projects and operations have fundamentally different objectives. The purpose of a project is to attain its specific objectives and then terminate; whereas, the purpose of an operation is to sustain the business. Projects are a means of organizing activities that cannot be addressed within the organizations normal operational limits. Projects, whether done in-house or outsourced, are often used to achieve the organizations strategic plan. Projects are typically authorized as a result of one or more of the following strategic considerations: A market demand An organizational need (e.g., new training course) A customer request A technological advance A legal requirement Projects are frequently divided into more manageable components called subprojects. (Subprojects may be referred to and managed as projects.) Subprojects are often contracted out to external organizations or to another functional unit within the performing organization.
Project Characteristics:
Temporary: The project has a definite beginning and end. This temporary nature may apply to other aspects of the project, as well. Such as: The opportunity or market window is usually temporary. The project team assigned to the project is temporary, and project members will be disbanded and reassigned upon completion of the project. Unique products, services, or results: The project creates unique deliverables. Progressive elaboration: The project is developed by steps and continued by increments.
Project Factors:
The quality of the project is affected by balancing the three factors of the triple constraint: project scope, project time, and project cost while managing competing
project requirements. If any one factor changes, at least one other factor is likely to be affected. High quality projects deliver the required product, service, or result within scope, on time, and within budget. Project risk is an uncertain event or condition that, if occurs, has a positive or negative effect on at least one project objective. Project managers must account for project risk and manage accordingly.
Portfolios and Portfolio Management:

A portfolio is a collection of projects or programs and other work that are grouped together to meet strategic business objectives. The projects or programs may or may not be related or interdependent. Portfolios are managed according to an organizations goals. Goals include: Maximize the value of the portfolio through careful examination and selection of projects and programs for inclusion in the portfolio Balance the portfolio among incremental and radical investments Balance the portfolio for efficient use of resources Bottom line: portfolio management is utilized to achieve strategic objectives Portfolio management is usually the responsibility of senior management or senior management teams.
Project Management Office:

A Project Management Office is an organizational unit to centralize and coordinate the management of projects under its domain. Other names include: Project Office, Program Management Office, or Program Office. A PMO oversees the management of projects, programs, or both. PMOs may have the direct responsibility of managing projects as well as providing support functions such as training, software, tools, standardized policies and procedures. Reference Section 1.6.4 in the PMBOK Guide, 3rd Edition for more information regarding PMOs.
Areas of Expertise
Project Management Body of Knowledge and the PMBOK Guide:

Describes the knowledge unique to the project management discipline. Overlaps other management disciplines. The material in the PMBOK Guide is a subset of the larger Project Management Body of Knowledge. The following project management knowledge is described within the PMBOK Guide: Project Life Cycle Definition Five Project Management Process Groups: Initiating, Planning, Executing, Controlling, Closing Nine Knowledge Areas: Integration Management, Scope Management, Time Management, Cost Management, Quality Management, Human Resource Management, Communications Management, Risk Management, and Procurement Management.
General Management Knowledge and Skills:

Provides the foundation for building project management skills and is often essential for the project manager. Encompasses planning, organizing, staffing, executing, and controlling the operations of an ongoing enterprise. Includes supporting disciplines such as: Financial management and accounting Purchasing and procurement Sales and marketing Contracts and commercial law Manufacturing and distribution Logistics and supply chain Strategic, tactical, and operational planning Organizational structures and behavior, personnel administration, compensation, benefits and career paths Health and safety practices Information technology
Application Area Knowledge, Standards and Regulations:

Refers to the knowledge, standards and regulations specific to an application area that are not needed or present in other projects. Application areas are categories of projects that have significant common elements not found or used in all projects. Application areas are usually defined in terms of: Functional departments and supporting disciplines such as: legal, production and inventory management, marketing, logistics and personnel. Technical elements such as: software development, pharmaceuticals, water and sanitation engineering, or construction engineering. Management specialization such as: government contracting, community development, or new product development. Industry groups such as: automotive, chemicals, agriculture, or financial services.
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Each application area generally has a set of accepted standards and practices that are often codified in regulations. Examples of the need for practices that are specific to an application area include: Unique or unusual aspects of the project environment which require special attention from the Project Management Team Practices which, if followed, will improve the efficiency and effectiveness of the project. Examples of Application Area Practices: Some construction procurement practices that do not apply to other application areas. Some common biosciences practices that are driven by the regulatory environment. Some government contracting practices that are driven by government acquisition regulations. In some application areas, program management and project management are used as synonyms; in others, project management is a subset of program management.
Understanding the Project Environment:

Virtually all projects are planned and implemented within a social, economic, and environmental context. Important for the project team to be cognizant of this context and consider project impacts. Cultural and social environment: Understand how the project affects people and people affect the project. Understand economic, demographic, educational, ethical, ethnic, religious, and other characteristics of people affected by the project or who have an interest in the project. Project manger should examine the organizational culture to understand his/her recognized accountability and authority in managing the project. International and political environment: Be familiar with applicable international, national, regional and local laws; customs, and political climate that could affect the project. Consider time-zone differences, national and regional holidays, travel requirements for physically present meetings and the logistics of teleconferencing. Physical Environment: Understand the local ecology and physical geography that could affect the project or be affected by the project.
Interpersonal Skills:
The management of interpersonal skills includes: Effective communication - exchange of information Influencing the organization - the ability to get things done Leadership - developing a vision and strategy, and motivating people to achieve the vision and strategy Motivation - Energizing people to achieve high levels of performance and to overcome barriers to change Negotiation and conflict management - conferring with others to come to terms with them or to reach an agreement
Problem solving - the combination of problem definition, alternatives identification and analysis, and decision-making
Project Life Cycle and Organization

Project Life Cycle:
Project managers can divide projects into phases with links to the ongoing operations of the performing organization. Many organizations identify a specific set of life cycles for use on all of their projects.
Characteristics of a Project Life Cycle:

Defines the phases of a project from beginning to the end. Generally, some form of technical hand-off occurs when transitioning between one phase of a project life cycle to another. In general, deliverables from one phase are reviewed for accuracy and completeness before the next phase begins. However, phases can overlap. The practice of overlapping phases is an example of schedule compression called fast tracking. Varies based on the industry, organization, and/or application area. Generally speaking, project life cycles define: The technical work to be done in each phase When the deliverables are to be generated in each phase and how each deliverable is to be reviewed, verified, and validated The skills involved in each phase (the who) How each phase will be controlled and approved Most project life cycle descriptions share a number of common characteristics: In general, phases are sequential and usually involve transfer of technical information or hand-off of a technical component Cost and staffing levels are low at the start; peak during the intermediate phases, and drop rapidly as the project nears conclusion. (see PMBOK, page 21 , Figure 2-1) The probability of successfully completing the project is lowest at the start of the project. Hence, risk and uncertainty are highest at the start of the project. Generally speaking, the probability of a successful completion progressively increases as the project continues. The ability of the stakeholders to influence the final characteristics of the project product is highest at the start of the project and becomes progressively lower as the project continues. This can largely be contributed to the increased cost of changes and error correction as the project develops. (see PMBOK, page 21, Figure 2-2) Project life cycles generally have four to five phases, but some have nine or more. Even within the same application area, one organizations project life cycle may vary from anothers. For the purposes of the PMP Certification Exam, know the following 4-phase generic life cycle: Initial/Concept/Feasibility Planning/Development (intermediate phase) Execution/Implementation (intermediate phase)
Close-out/Termination/Final Each project phase is marked by completion of one or more deliverables. Phases can be further divided into subphases. Each phase is concluded with a review of the key deliverables and the project performance to determine if the project should proceed to the next phase and to detect and correct costly errors. These phase-end reviews are often called phase exits, stage gates, or kill points. The practice of overlapping project phases when the risks are deemed acceptable is called fast tracking. Subprojects within projects may also have distinct project life cycles. The driving forces that create the stimuli for a project are typically referred to as problems, opportunities, or business requirements. Distinguish between project life cycle and product life cycle. For example, a project to deliver a new computer system to the market may be one phase or stage in the product cycle. The product life cycle could consist of several follow-on enhancements/releases (via unique projects) for this computer system before the product reaches the end-of-life phase (stage).
Project Stakeholders:
Project stakeholders are individuals and organizations: Who are actively involved in the project Whose interests may be positively or negatively affected by the outcome of the project execution or completion Who may exert influence over the project and its results. The Project Team must identify the stakeholders, determine their requirements, and then manage as well as influence those requirements to ensure a successful project. Project stakeholders have varying levels of responsibility and authority and these may change over the course of the projects life cycle Identifying project stakeholders is not an easy task. Key stakeholders on every project include: Project manager Customer Performing organization (the organization most involved in doing the work of the project) Project Team Project Management Team Sponsor Influencers (due to their position within customer or performing organization) Project Management Office There are many different categories and names for stakeholders. Because stakeholders may have conflicting objectives, managing stakeholder expectations is often not easy.
Organizational Influences:
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Projects are influenced by the organization(s) that set it up. Projects can also be influenced by the maturity of the organization with respect to its: Project management systems (as related to organizational systems, below) Culture and style Organizational structure Project Management Office
Organizational Systems:
Project-based organizations: Derive their revenue primarily by performing projects for others. Examples include: architectural and engineering firms, consultants, government contractors, construction contractors, etc. May also be organizations that have adopted management by projects. Generally have management systems in place to facilitate project management. Nonproject-based organizations: Often lack management systems designed to support project needs effectively and efficiently. Usually make project management more difficult.
Organizational Cultures and Style:

Most organizations have developed unique and describable cultures. These cultures are reflected in their shared values, norms, beliefs, and expectations, policies/procedures, work ethic and work hours, and view of authority relationships. Examples of organizational culture influencing projects: A team proposing an unusual or high-risk approach is more likely to secure approval within an aggressive or entrepreneurial organization. A project manager with a highly participative style is apt to encounter problems in a rigidly hierarchical organization while a project manager with an authoritarian style will be equally challenged within a participative organization.
Organizational Structures:
The structure of the performing organization often influences the terms under which resources become available to a project. Structure types: (Reference PMBOK pgs. 28-31) Functional:
A hierarchy where each employee has one clear superior. Staff are grouped by specialty, such as production, marketing, engineering, and accounting. Project work is done independently within each department. Maintains the functional (vertical) lines of authority while establishing a relatively permanent horizontal structure to interact with all functional units supporting the projects.
Matrix:
One result of the matrix is that workers frequently find themselves caught between the project manager and their functional manager. Advantages: Improved project manager control over resources compared to the functional organization, rapid response to contingencies, improved coordination effort across functional lines, people have a home after the project is over, etc. (See Principles of Project Management, pg. 18) Disadvantages: Not cost effective due to excess administrative personnel, workers report to multiple bosses, more complex structure to monitor and control, higher potential for conflicts due to differing priorities, power struggles, and competition for resources, etc. (See Principles of Project Management, pg. 19) Weak matrix: Maintains many of the characteristics of a functional organization. The project managers role is more like that of a project coordinator or project expeditor. Balanced matrix: In-between weak and strong. The project manager has more authority than in a weak matrix. The project manager is more likely to be full-time than part-time. Strong matrix: Similar in characteristics to a projectized organization. There is likely to be a department of project managers who are full-time, have considerable authority and administrative staff. Team members are often collocated. Most of the organizations resources are involved in project work. Project managers have a great deal of independence and authority. Departments either report directly to the project manager or provide services to the various projects.
Projectized:

Most modern organizations involve all these structures at various levels depending upon the project/situation. For instance, within IBM, various types of organizational structures can be seen between business units and even within the same business unit.
Project Office:
Many organizations have a project office. Uses of the project office may vary from providing support to project managers to being responsible for the project results. Manages the Project Management System to ensure consistency in application between the projects Project Management System: The project management system is the set of tools, techniques, methodologies, resources, and procedures, used to manage a project. Can be formal or informal Aids a project manager in effectively guiding a project to completion
Project Management Processes

Project Processes:
For a project to be successful, the project team must: Select appropriate processes within the process groups that are required to meet project objectives Use a defined approach to adapt the product specifications and plans to meet project and product requirements Comply with requirements to meet stakeholder needs, wants, and expectations Balance the competing demands of scope, time, cost, quality, resources, and risk to produce a quality product. Projects are composed of processes. A process is a series of interrelated actions and activities that are performed to achieve a product, service, or result. Project processes are performed by people and can be categorized as: Project Management Processes:
Concerned with describing and organizing the work of the project. Are applicable to most projects, most of the time. May include aspects or all of the nine knowledge area processes: Project Integration Management, Project Scope Management, Project Time Management, Project Cost Management, Project Risk Management, Project Quality Management, Project Human Resources Management, Project Communications Management, and Project Procurement Management. Can be organized into five groups of one or more processes each. (See Process Groups) Are integrated and interact in complex ways that cannot be fully explained in a document or graphical drawing. Concerned with specifying and creating the project product or supplying the project service. Typically defined by the project life cycle. Typically vary by application area.
Product-Oriented Processes:
Project management and product-oriented processes typically overlap and interact throughout the life of the project.
Project Interactions:
Project management is an integrative undertaking. Interactions often require tradeoffs among project requirements and objectives. Successful project management requires actively managing these interactions.
Project Management Process Groups:

Initiating Processes (22 questions on exam) Defines the project or phase Authorizes the project or phase
Planning Processes (46 questions on exam) Defines and refines objectives Plans and selects the best of the alternative course of action to attain the project objectives. Executing Processes (54 questions on exam) Integrates and coordinates people and other resources to carry out the project management plan. Monitoring and Controlling Processes (42 questions on exam) Ensuring that project objectives are met by regularly monitoring and measuring progress and identifying variances. Performs corrective action when necessary. Closing Processes (18 questions on exam) Formalizes acceptance of the project or phase. Brings the project or phase to an orderly end. Responsibility for determining what processes from the process groups will be deployed, by whom, and the degree of rigor that the processes will be executed rests with the project manager and the project team. Process Groups are linked by the produced results -- the result or outcome of one becomes an input to another: (See PMBOK Guide, pgs. 39-40, Figures 3-1, 3-2) Process Groups: Are integrative and iterative. Are not discrete, one time events. Overlap one another and occur at varying levels of intensity throughout each phase of the project. Are NOT the same as project phases. For instance, large or complex projects may be separated into distinct phases such as feasibility, concept, design, prototype, build, test, etc. Process Groups would normally be repeated for each phase.
Process Interactions:
In general, the output of one process either becomes input to another process or is a deliverable of the project. Within the PMBOK Guide, each process is described in terms of its inputs, tools and techniques, and outputs. Inputs: Documents or documentable items that will be acted upon. Tools and Techniques: Mechanisms applied to the inputs to create the outputs. Outputs: Documents or documentable items that are a result of the process. Planning is an iterative and ongoing process. This progressive detailing of the project plan is often called rolling wave planning. The processes and interactions defined in the PMBOK Guide will apply to most projects most of the time; however, not all of the processes will be needed for all projects and not all of the interactions will apply to all projects. Each project is different; therefore, not all of the possible process interactions will apply to all projects or project phases. For instance, the project completion date may be imposed by Executive Management and not an output of the planning process.
Project Management Process Mapping

The following is a mapping of the Nine Knowledge Area Processes to the Five Process Groups (Project Initiation, Project Planning, Project Executing, Project Control, and Project Close-out.) This mapping is depicted graphically in the PMBOK Guide, pg. 70). Be familiar with this mapping.
Sample Questions
1. Which of the following are considered to be project process groups? (choose BEST answer) A. Initiating, Planning, Executing, Closing B. Planning, Executing, Verifying, Closing C. Initiating, Planning, Executing, Monitoring and Controlling, Closing D. Concept, Development, Execution, Termination
2. Which of the following statements is false? A. Leading, communicating, negotiating, problem solving, and the ability to influence the organization are considered key skills for project managers to possess. B. Project managers should take into consideration and plan accordingly for influences such as standards and regulations, internationalization, and cultural differences which may impact the success of the project. C. Project management skills have no relation to general management skills and should be considered completely independent and totally separate. D. Organizations are increasingly accountable for impacts resulting from projects as well as the effects of the project on people, the economy, and the environment long after the project is completed. 3. The review of key deliverables and project performance at the conclusion of a project phase is called: A. Phase exit B. Kill point C. Stage gate D. all of the above 4. Which of the following is a common characteristic of most project life cycle descriptions? A. Cost and staffing are low at the start, higher towards the end of implementation, and drop rapidly as the project nears completion. B. The probability of successfully completing the project is highest at the start of the project. C. Stakeholders have the most influence on the final characteristics of the product at the end of the project. D. Risk and uncertainty are lowest at the start of the project. 5. Which of the following is NOT TRUE about project life cycles and project phases? A. B. C. D. Project phases within a project cycle are always sequential. Project phases are marked by the completion of one or more deliverables. The project life cycle serves to define the beginning and end of a project. The project life cycle definition will determine whether the feasibility study is treated as the first project phase or as a separate, stand-alone project.
6. Which of the following processes are all considered part of planning? A. Scope Planning, Risk Identification, Perform Quality Assurance, Procurement Planning B. Scope Definition, Cost Estimating, Risk Quantification, Request Seller Responses C. Scope Definition, Schedule Development, Staff Acquisition, Manage Project Team D. Scope Planning, Schedule Development, Develop Project Management Plan, Risk Response Planning 7. Which of the following processes are all considered part of executing? A. Direct and Manage Project Plan Execution, Team Development, Schedule Control, Cost Control B. Direct and Manage Project Plan Execution, Information Distribution, Scope Verification, Quality Control C. Direct and Manage Project Plan Execution, Information Distribution, Select Sellers , Perform Quality Assurance D. Project Plan Development, Project Plan Execution, Contract Administration, Overall Performance Reporting 8. The management of interpersonal skills includes which of the following? A. Cultural and social environment, International and Political Environment B. Effective communication, influencing the organization, leadership, and motivation C. Organizational structures and behavior, personnel administration, compensation, benefits and career paths D. Strategical, tactical, and operational planning
9. Which of the following statements regarding portfolios and portfolio management is false? ? A. Organizations manage their portfolios based in specific goals. B. Funding and support can be assigned on the basis of risk/reward categories, specific lines of business, or more general types of projects such as infrastructure and internal process improvement. C. Organizations manage their portfolios based on general goals. D. Projects or programs in the portfolio may not necessarily be interdependent or directly related. 10. Which of the following is not a characteristic or key feature of the Project Management Office? ? A. A PMOs sole responsibility and function is to directly manage the project objectives. B. A PMO is an organization unit that centralizes and coordinates the management of projects under its domain. C. Other names for the PMO include: project office, program office, and program management office. D. Support functions such as training, software, standardized policies, and procedures may also be part of the function of a PMO. 11. The knowledge area that describes the processes and activities that integrate the various elements of project management is: : A. Project Scope Management B. Project Time Management C. Project Integration Management D. Project Communications Management
12. A formal procedure for sanctioning project work to ensure that work is done at the right time and in the proper sequence is called: (choose BEST answer) A. Work package B. Project plan C. Project charter D. Work authorization system 13. A project management plan is: A. A formal, approved document that defines how the project is executed, monitored, and controlled. B. A document issued by senior management that provides the project manager with the authority to apply organizational resources to project activities. C. A narrative description of products or services to be supplied. D. A document describing the organizational breakdown structure of the company. 14. A type of organizational structure where the majority of the resources are involved in project work and the project manager has a great deal of authority and independence is: A. Functional B. Weak Matrix C. Composite D. Projectized 15. Using a scale of low, moderate, and high, which of the following statements is true in regards to organizational types? A. In a balanced matrix, the project managers authority is high. B. In a functional organization, the project managers role is typically full-time. C. In a balanced matrix, responsibility for controlling the project budget will be shared between the functional manager and the project manager. D. In a projectized organization, the project managers authority will be moderate. 16. A project charter is: A. A formal, approved document used to guide both project execution and project control. B. A document issued the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. C. A narrative description of products or services to be supplied. D. A document describing the organizational breakdown structure of the company. 17. Which of the following characteristics is shared by MOST project life cycles. A. The amount at stake decreases as the project continues. B. The cost of changes decreases as the project continues. C. Project life cycles mirror their product life cycles. D. The probability of successfully completing a project is lowest at the beginning of a project.
18. In which type of organization(s) is the project managers role most likely part-time? A. Functional B. Weak Matrix C. Strong Matrix D. a and b 19. Which of the following activities are included in the group of monitoring and controlling processes? A. Measuring project performance and identifying variances from the plan. B. Making adjustments to the plan C. Taking preventive action in anticipation of possible problems D. All the above are part of the monitoring and controlling process group. 20. Which of the following statements is false regarding processes within the Planning Process Group? A. The project management team uses the Planning Process Group and corresponding processes and interactions to successfully plan and manage projects. B. Rolling wave planning describes a planning process that is iterative and on-going. C. When planning and reviewing a project, it is best if the project team limits the stakeholders to a few people; otherwise, the planning may not complete in the desired timeframe. D. Because planning cannot continue indefinitely, the organization sets procedures to identify the end of the planning effort. 21. Which of the following statements is FALSE regarding areas of expertise? A. The Project Management Body of Knowledge refers to knowledge that is unique to the project management profession and separate from other management disciplines. B. General management skills provide the foundation for project management skills and are often essential. C. Interpersonal skills include effective communication and problem solving. D. Application areas are categories of projects that share significant common elements that are not present or needed in other projects. 22. Which of the following statements is FALSE regarding the ways that organizations influence projects? A. Project-based organizations derive their revenue primarily by performing projects for others. B. Organizations have unique and describable cultures that are reflected in shared values, norms, beliefs, expectations, policies and procedures, and view of authority relationships. C. A team proposing an unusual or high-risk approach is more likely to secure approval within a rigidly hierarchical organization compared to an entrepreneurial organization. D. Every project operates within a context of one or more cultural norms. 23. The MOST effective way to accelerate the project integration process is: A. Through frequent periodic team communications B. By assigning specific responsibilities to each project employee. C. By having the sponsor apply direct influence on the project team. D. To use crisis periods to reinforce integration activities.
24 Which of the following statements is true regarding the Project Management System? A. The project management system is a set of tools, methodologies, techniques, resources, and procedures used to manage a project. B. The project management plan describes how the project management system will be used. C. In organizations where a Project Management Office exists, the PMO typically manages the project management system. D. All of the above. 25. An organizational structure that involves various organizational types at various levels is called a: A. Strong matrix B. Balanced organization C. Composite D. Balanced matrix 26. Which knowledge area does the Develop Project Charter process belong? A. Initiating B. Project Scope Management. C. Project Integration Management. D. Managing actual changes when and as they occur. E. Project Communications Management 27. Which process group is associated with schedule control, scope control, and cost control? A. B. C. D. Monitoring and Controlling Planning Executing Closing
28. Request Seller Responses and Select Sellers is associated with which process group? A. B. C. D. Planning Procurement Management Initiating Executing
29. The process for improving the competencies and interactions of the team members to enhance project performance is called: A. B. C. D. Fire and Hire Acquire Project Team Develop Project Team Information Distribution
30. The process for identifying which quality standards are relevant to the project and for determining how to meet the standards is called: A. B. C. D. Standards Planning Standards Identification Quality Assurance Quality Planning
Answer Sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. a a a a a a a a a a a a a a a b b b b b b b b b b b b b b b c c c c c c c c c c c c c c c d d d d d d d d d d d d d d d 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. a a a a a a a a a a a a a a a b b b b b b b b b b b b b b b c c c c c c c c c c c c c c c d d d d d d d d d d d d d d d
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 C C D A A D C B C A C D A D C B D D D C A C A D C B A D C D PMBOK Guide, Chapter 3,, pg. 38 PMBOK Guide, Section 1.5.4 , pg. 15 General management skills provide much of the foundation for building project management skills. PMBOK Guide, Section 2.1.2, pg. 23 PMBOK Guide, Section 2.1.1 . pgs. 19-21 12 PMBOK, Guide, Section 2.1.1 pgs. 19-21 PMBOK Guide, Figure 3-45, pg. 70 PMBOK Guide, Figure 3-45, pg. 70 PMBOK Guide, Section 1.5 pg. 15 PMBOK Guide, Section 1.6.2 , pg. 17 PMBOK Guide, Section 1.6.4 , pg. 17 PMBOK Guide, Section 1.4.3 , pg. 9 PMBOK Guide, Glossary, pg. 379 The key word in the question is procedure. The project plan and project charter are documents. Answer b is a project charter; answer c is a statement of work; answer d is an OBS. PMBOK Guide, Section 2.3.5 , pg. 33 PMBOK Guide, Section 2.3.3 , pg. 29 PMBOK Guide, pg. 28, Figure 2-6 PMBOK Guide, glossary, page 368 PMBOK Guide, Section 2.1.1 , pg. 21 PMBOK, Guide, Figure 2-6 pg. 28 PMBOK, Guide, Section 3.2.4 , pgs. 59-65 PMBOK Guide, Section 3.2.2 , pg. 46 All appropriate stakeholders should be involved at the appropriate time during the planning process. PMBOK, Guide, Section 1.5.1 , pg. 12 PMBOK Guide, Section 2.3.2, pgs. 27-28 Industry information. Communication is ALWAYS key PMBOK , Guide, Section 2.3.5 , pg. 33 PMBOK , Guide, Figure 2-12, pg. 31 PMBOK , Guide, Figure 1-1, pg. 11 PMBOK , Guide, Figure 3-9, pg. 60 PMBOK , Guide, Figure 3-8 , pg. 55 PMBOK , Guide, Section 3.2.3, , pg. 57 PMBOK , Guide, Section 3.2.2, , pg. 52
PMP Certification Exam Preparation What did I do wrong ?
I would have answered a larger number of questions correctly if I had ___________.

1. Read the question properly and identified the keywords 2. Read the answer properly and identified the keywords 3. Read ALL the answers before answering the question 4. Used a strategy of elimination 5. Known the formula 6. Known the PMBOK definition 7. Checked the mathematics 8 Used the PMI rather than my own perspective 9. Reviewed my answer after reading the other questions 10. NOT rushed to finish Total
Number
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
PROJECT INTEGRATION MANAGEMENT
STUDY NOTES
PMBOK 3rd Edition based, Version 1
Trademarks
Project Integration Management
Project Integration Management Study Notes

Reference Material to Study:
A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapter 4 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 What to Study? The PMBOK Guide processes for Project Integration Management: Develop Project Charter, Develop Preliminary Project Scope Statement, Develop Project Management Plan, Direct and Manage Project Execution, Monitor and Control Project Work, Integrated Change Control, and Close Project. (Be familiar with the Inputs, Tools and Techniques, and Outputs of each process) Know how the processes for this knowledge area relate to the five Project Process Groups While all project management processes are integrative to some extent, Project Integration Processes are primarily integrative Project Integration Management involves making trade-offs among competing objectives and alternatives Know key definitions (see list in study notes or PMBOK Guide glossary).
Copyright IBM Corp. 2002, 2005 Project Integration Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Key Definitions
Administrative Closure Assumptions Change control Configuration Identification Configuration management Generating, gathering, and disseminating information to formalize phase or project completion. Factors which for planning purposes can be considered to be true, real, or certain. Influences factors that create any change; including changes to project deliverables. Providing the basis from which the configuration of products is defined and verified, products and documents are labeled, changes are managed, and accountability is maintained. Defines and controls changes to project deliverables. Any documented procedure used to apply technical and administrative direction and surveillance to: define and document characteristics of a system; control changes; record and report changes; ensure conformance to requirements. Capturing, storing and accessing configuration information needed to manage products and product information effectively. Establishing that the performance and functional requirements defined in the configuration documentation have been met. Factors which will limit the project management teams options. A method for integrating scope, schedule, and resources, and for measuring project performance. It compares the amount of work that was planned, versus actually earned, versus actually spent, to determine if cost and schedule performance are as planned. Making trade-offs among competing objectives and alternatives. The learning gained from the process of performing the project. Lessons learned may be identified at any point. Also considered a project record. A document issued by senior management that formally authorizes the existence of a project. The charter also authorizes the project manager to apply organizational resources to the project. Tools and techniques used to gather, integrate, and disseminate the outputs of the project management processes. Description of project scope including deliverables, objectives, assumptions and constraints, and a statement of work that provides a documented basis for making future decisions. Sustained mental or physical effort to overcome obstacles and achieve an objective.
Configuration Status Accounting Configuration Verification and Auditing Constraints Earned Value Management
Integration Lessons Learned
Project Charter
Project Management Information System (PMIS) Project Scope Statement Project Work
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Project Integration Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Project Integration Management:

Includes the processes required to coordinate the process and project management activities within the Project Management Process groups. In relation to project management, integration includes characteristics that are important for project completion, managing expectations and meeting customer and stakeholder requirements. In relation to managing a project focuses on resources, work effort, potential issues, and coordinating work. Integration is important where individual processes interact. Processes include: Develop Project Charter Develop Preliminary Project Scope Statement Develop Project Management Plan Direct and Manage Project Execution Monitor and Control Project Work Integrated Change Control Close Project
Develop Project Charter (4.1) : (Process Group: Initiating)

Involves developing the document that formally authorizes a project or a project phase. Provides the project manager with authority to apply organizational resources to the project. Issued by the project sponsor . Involves documenting the business needs, project justification, current customer requirements, and the new product or service. Addresses the following: Requirements, needs, wants and expectations of the customer, sponsor and stakeholders, Business needs, Project purpose Milestone schedule Stakeholder influences Functional organizations and their participation Organization, environmental and external assumptions and constraints Business case including ROI Budget Inputs include: Contract Project statement of work A narrative description of products and services supplied to the project Indicates a business need, product scope description, and strategic plan
Copyright IBM Corp. 2002, 2005 Project Integration Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 1-5
Provided by the sponsor of internal based on business needs, product or service requirements Provided by customer of external projects as part of a bid Enterprise Environmental Factors: Includes Organization or company culture and structure Governmental or industry standards Infrastructure Human resources Personnel administration Company work authorization system Marketplace conditions Stakeholder risk tolerances Commercial databases Project management information systems Organizational Process Assets Represents the organizations experiences from previous projects Includes processes and procedures for conducting work Organizational standard processes Standardized guidelines Templates Guidelines and criteria for tailoring standard processes Organization communication requirements Project closure guidelines Financial controls Issue and defect management procedures Change and control procedures Risk control procedures Procedures for approving and issuing work authorizations Includes organizational corporate knowledge base for storing and retrieving information: Process measurement database Project files Historical information and lessons learned knowledge base Issue and defect management database Configuration management knowledge database Financial database Tools and Techniques used during develop project charter include: Project Selection Methods: Determines which project the organization will select. Benefit measurement method Mathematical model Project Management Methodology Assists project management team in developing a project charter. Defines a set of project management process groups, their related processes and functions. Project Management Information Systems Consists of automated tools available within the organization and integrated into a system. Supports the development of a project charter, provides feedback of the document, and controls changes to the chart. Expert Judgment
1-6 Project Integration Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Provided by groups or individuals with specialized knowledge or training. Available from other units in an organization, consultants, stakeholders, professional and technical associations and industry groups. Outputs include: Project charter
Develop Preliminary Project Scope Statement (4.2) : (Process Group:

Initiating) Defines the project. Documents characteristics and boundaries of the project, its products and services and methods of acceptance and scope control. Includes the following: Project and product objectives Product or service requirements and characteristics Product acceptance criteria Project boundaries Project requirements and deliverables Project constraints Project assumptions Initial project organization Initial defined risks Schedule milestones Initials WBS Order of magnitude cost estimate Project configuration management requirements Approval requirements Developed by information from the sponsor and further defined by the project management team. Inputs include: Project charter Project Statement of Work Enterprise Environmental Factors Organization Process Assets Tools and techniques used during develop preliminary project scope statement include: Project Management Methodology Project Management Information System Expert Judgment Outputs include: Preliminary project scope statement
Develop Project Management Plan (4.3): (Process Group: Planning)

Includes actions required to define, integrate and coordinate the subsidiary plans into a project management plan. Defines how the project is executed. Documents outputs of the planning process and includes: Project management processes
Descriptions of tools and techniques How selected processes will be used to manage the project and its dependencies How work is executed How changes are monitored and controlled How configuration management will be performed How the performance measurement baselines are maintained Key management reviews Project Management Methodology Subsidiary plans include: Project scope management statement Schedule management plan Cost management plan Quality management plan Process improvement plan Staffing management plan Communication management plan Risk management plan Procurement management plan Milestone list Resource calendar Schedule baseline Cost baseline Quality baseline Risk register Inputs include: Preliminary project scope statement Project management processes Enterprise environmental factors Organizational process assets Tools and techniques used during develop project management plan include: Project management methodology Project Management Information System Configuration management system Includes the process for submitting changes, tracking systems for review and approval of changes, approval levels for authorizing changes and a method that validates approved changes. Includes the change control system. Includes a collection of formal procedures to identifying the functional and physical characteristics of a product or component, control changes, record and report each change, and support the audit of the products to verify that requirements are being met. Change control system Defines how project deliverables and documentation are controlled, changed and approved. Subsystem of the configuration management system. Expert judgment Outputs include: Project management plan.
Direct and Manage Project Execution (4.4): (Process Group: Executing)

Requires the project manager and team perform actions to execute the project management plan. Actions for directing and managing project execution include: Accomplish project objectives Train and manage project team members Expend funds and efforts Obtain quotes and bids Select and manage sellers Use resources Implement methods and standards Requires implementation of approved corrective actions, approved preventive actions and approved defect repair request. Inputs include: Project Management Plan Approved Corrective Actions: Documentation of corrected actions Approved Preventive Actions: Documentation that reduces the changes of negative consequences. Approved Change Requests: Documentation of authorized changes. Approved Defect Repair: Documentation request for correction of a defect. Validated Defect Repair: Notice that items are either accepted or rejected. Administrative Closure Procedure: Documents all activities needed in executing the administrative closure procedure. Tools and techniques used during direct and manage project execution include Project Management Methodology Project Management Information System Outputs include: Deliverables: Unique and verifiable product that must be produced to complete the project. Requested Changes: Changes that expand or reduce the project scope. Maybe be external, internal, optional or legally mandated. Implemented Change Requests Implemented Corrective Actions Implemented Preventive Actions Implemented Defect Repair Work Performance Information: Information on the status of the project. Includes, but not limited to: Schedule progress Completed deliverables Scheduled activities Authorized and incurred costs Resource utilization detail
Monitor and Control Project Work (4.5): (Process Group: Monitoring and
Controlling) Monitors initiating, planning, executing and closing processes. Performed throughout the project. Provides insight into the health of the project. Compares project performance against the project management plan. Assesses performance to determine if corrective actions are required.
Provides forecasts. Monitors implementation of approved changes when they occur. Inputs include: Project Management Plan Work Performance Information Rejected Change Requests Tools and techniques used during monitor and control project work include: Project Management Methodology Project Management Information System Earned Value Technique: Measures the project performance from initiation through closure. Provides a method of forecasting future performance. Expert Judgment Outputs include: Recommended Corrective Actions Recommended Preventive Actions Forecasts: Estimates of conditions in the projects future, based on information available at the time of the forecast. Forecasts are updated during the course of the project. Recommended Defect Repair Requested Changes
Integrated Change Control (4.6): (Process Group: Monitoring and Controlling)

Integrated change control is concerned with: Influencing the factors which create changes to ensure that changes are beneficial. Determining that change has occurred Managing the actual changes when and as they occur Controlling and updating the scope, cost, budget, schedule and requirements Validating defect repair Integrated change control requires: Maintaining the integrity of the performance measurement baselines. Ensuring that changes to the product scope are reflected in the project scope. Coordinating changes across knowledge areas (change often affects cost, risk, quality, staffing, scope, time, etc.) Change Control accomplishes three objectives: Establishes a method to identify and request changes to the project baseline Provides opportunities to validate and improve the project Provides a tool for the project management team to communicate with all stakeholders. Configuration management activities include: Configuration identification: Defines and verifies the configuration of products, changes are managed and accountability is maintained. Configuration status accounting: Capturing information required to manage products and information effectively. Configuration verification and auditing: Determines whether the performance and functional requirements have been met. Inputs include: Project Management Plan Requested Changes
Work Performance information Recommended Preventive Actions Recommended Corrective Actions Recommended Defect Repair Deliverables Tools and techniques used during Integrated change control include: Project Management Methodology Project Management Information System Expert Judgment Outputs include: Approved Change Requests Rejected Change Requests Project Management Plan (updates) Project Scope Management (updates) Approved Corrective Actions Approved Preventive Actions Approved Defect Repair Validated Defect Repair Deliverables
Close Project (4.7): (Process Group: Closing)

Involves closing the project management plan. Finalizes all activities across all project management process groups and transfer the project as required. Establishes procedures required to verify and document the project deliverables. Two primary procedures Administrative closure procedure: Details all activities, interactions and related roles and responsibilities of the team and stakeholders. Includes collecting project records, reviewing successes and failures, gathering lessons learned and archiving project information for future use. Contract closure procedure: Settles the contract agreement. Involves product verification (work is complete and satisfactory) and administrative closure (updating records). Inputs include: Project management plan Contract documentation: Includes the contract and other documentation changes. Enterprise Environmental Factors Organizational Process Assets Work Performance Information Deliverables Tools and techniques used during close project include: Project management methodology Project management information system Expert judgment Outputs include: Administrative closure procedure: Establishes the procedures to transfer the project products to production. Includes a step-by-step methodology that addresses the following actions and activities:
Defines the stakeholder approval requirements for changes and deliverables. Confirms that the project has met all requirements, deliverables are verified and accepted, and validates that completion and exit criteria are met. Ensures that completion or exit criteria is satisfied. Contract closure procedure: Includes a step-by-step methodology that addresses terms and conditions of the contracts and any completion criteria. : Includes all activities and responsibilities of project participants involved in project closure. Closes all contacts associated with the completed project. Final product, service or result: Formal acceptance and handover of the product. Includes a formal statement indicating that the contract terms have been met. Organizational process assets (update): Includes the index and location of project documentation using the configuration management system: Formal acceptance documentation: Indicates the customer/sponsor has officially accepted the deliverables. Project files: Includes all documentation including project management plan, scope, cost, schedule, baselines, project calendars, risk registers and more. Project closure documents: Formal documents showing completion of the project and the transfer of deliverables. Projects terminated early include an a statement explaining why the project was terminated early and the status of the deliverables. Historical information: Lessons learned and historical information is entered into a knowledge base for future use. Management Concepts
Project Integration
Project Plan:
A formal, approved document used to manage and control project execution. A document or collection of documents that should be expected to change over time as additional information becomes available. Commonly includes: Project Charter Description of approach or strategy Project Scope statements Work breakdown structure Performance measurement baselines for cost and schedule Cost Estimates Key or required staff and expected cost/effort Risk management plan Subsidiary management plans (procurement management, communications management, schedule management, staffing management, etc.) Major milestones and deliverables. Open issues and pending decisions. The project plan is used to: Guide project execution. Document project planning assumptions. Document project planning decisions regarding alternatives chosen. Facilitate communication among stakeholders.
Define key management reviews as to content, extent, and timing. Provide a baseline for progress measurement and project control.
Constraints:
Factors that will limit the project management team's options First mentioned in Project Integration Management but are used throughout the PMBOK
Assumptions:
Factors that, for planning purposes, may be considered to be true, real, or certain First mentioned in Project Integration Management but are used throughout the PMBOK
Corrective Action:
Anything done to bring expected future project performance into line with the project plan. Is an input to the Project Plan Execution process to complete the feedback loop required to ensure effective project management. First mentioned in Project Integration Management but are used throughout the PMBOK, as an output of various control processes.
Work Authorization System:

Formal procedure for sanctioning project work to ensure that work is done at the right time and in the proper sequence Typically a written authorization to begin the work on a specific activity or work package Must balance cost of Work Authorization System with benefit On a small project, a verbal authorization may be adequate Work package directs what is to be done, when it is to be done, how much budget is allocated for the task, who is to do it
Work Results:
Outcomes of the activities performed to accomplish the project Information on work results, includes: Which deliverable have and have not been completed To what extent quality standards are been met What costs have been incurred or committed Collected as part of Project Plan Execution and are feed into the performance reporting process
Change Control System:

Collection of formal, documented procedures that defines the steps by which official project documents may be changed Must include procedures to handle changes which may be approved without prior review
Principal tool used for integrated change control May include a Change Control Board (CCB) which is responsible for approving or rejecting change requests.
Change Control Board:

Change Control Board (CCB) which is responsible for reviewing and approving or rejecting change requests. Chaired by the project manager (or designee) Powers and responsibilities must be well defined Agreed upon and approved by key stakeholders
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Configuration Management:
Any documented procedure used to apply technical and administrative direction and surveillance to: Identify and document the functional and physical characteristics of an item or system. Control any changes to characteristics. Record and report the change and status. Audit to verify conformance to requirements. A subset of the change control system Used to ensure that the product of the project's description is correct and complete Manages the product configuration and any changes to it
Configuration management relates to the product - not the project Lessons Learned:
Need to be documented in order to show causes of variances and the reasons behind selected corrective actions Output of the Integrated Change Control process Information gathered can be used on the current project as well as in future projects First mentioned in Project Integration Management but are used throughout the PMBOK
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Sample Questions
1. Which of the following are considered to be integrative project management processes? A. Initiating B. Planning C. Direct and manage project execution D. Development
2. Which of the following statements is true? A. The statement of work (SOW) assigns the project manager and authority level. B. Project management skills have no relation to general management skills and should be considered completely independent and totally separate. C. The project charter should address requirements that satisfy customer, sponsor, and other stakeholder needs, wants and expectations. D. The preliminary scope statement documents actions necessary to define, prepare, integrate and coordinate the project management plan. 3. Which of the following statements is NOT true? A. Integration involves effectively integrating processes among the project management process groups. B. Integrated change control includes reviewing all change requests, approving changes and controlling changes to the deliverables. C. The project scope statement provides a high-level scope narrative. D. The project management plan is an input in developing the preliminary project scope statement. 4. Which of the following are inputs in the Close Project process? A. Project management plan, deliverables, organizational process assets B. Project management plan, work performance information rejected change requests. C. Project management plan, deliverables, requested changes D. Project management plan, project statement of work, organizational process assets 5. Which of the following is NOT TRUE about Integrated Change Control? A. The process includes finalizing all activities across all of the Project Management Process Groups. B. The process includes reviewing all change requests. C. The process includes approving all changes. D. The process includes controlling changes to the deliverables and organizational process assets. 6. Which of the following describes the administrative closure procedure? A. Maintains the integrity of the project baseline. B. Indicates formal acceptance and handover of the final product. C. Provides a step-by-step methodology that addresses terms and conditions of the contract.
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D. Contains all activities and related roles and responsibilities of project team members cope Planning, Schedule Development, Project Plan Development, Risk Response Development 7. Which of the following is used to perform the contract closure process? A. Deliverables B. Administrative closure procedure C. Contract documentation D. Contract Administration 8. Chartering a project links the project to A. Funding of the project B. Decisions regarding the project C. The ongoing work of the organization D. Resource Planning 9. What is the difference between the SOW and the project charter? A. The project charter formally authorizes the project; the SOW describes the products or services supplied by the project. B. The project charter identifies dependencies that must be performed; the SOW describes processes are essential to the project. C. The project charter identifies required processes of the project; the SOW describes the project management plan. D. The project charter provides a high-level scope narrative; the SOW identifies the business needs. 10. Which of the following are all considered processes of Project Integration Management? A. Project Management Plan Development, Direct and Manage Project Execution, Integrated Change Control B. Initiation, Project Management Plan Development, Direct and Manage Project Execution, Information Distribution C. Project Management Plan Development, Direct and Manage Project Execution, Performance Reporting, Information Distribution D. Project Management Plan Development, Integrated Change Control, Performance Reporting 11. The set of processes required to ensure that the various elements of the project are properly coordinated are called: A. Project Control Management B. Project Plan Execution C. Project Integration Management D. Project Communications Management
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12. A formal procedure for sanctioning project work to ensure that work is done at the right time and in the proper sequence is called: (choose BEST answer) A. work package B. project plan C. project charter D. work authorization system 13. A project plan is: A. A formal, approved document used to define, prepare, integrate and coordinate all subsidiary plans. A document issued by senior management that provides the project manager with the authority to apply organizational resources to project activities. B. A narrative description of products or services to be supplied. C. A document describing the organizational breakdown structure of the company. 14. What is a Project Management Information System (PMIS)? A. A system that consists of the tools and techniques used to gather, integrate, and disseminate the outputs of project management processes. B. A system that supports all aspects of the project from initiating through closing and generally includes both manual and automated systems. C. A tool used during the development of the Project Plan. D. all the above 15. Which of the following are tools and techniques which can be used during the Direct and Manage Project Execution Process? A. Configuration management, PMIS, Work Authorization System B. Stakeholder skills and knowledge, Status review meetings, PMIS C. Project management methodology, Project management information system D. Product skills and knowledge, Performance measurement, Change control system 16. A project charter is: A. A formal, approved document used to guide both project execution and project control. B. A document issued by senior management that provides the project manager with the authority to apply organizational resources to project activities. C. A narrative description of products or services to be supplied. D. A document describing the organizational breakdown structure of the company. 17. Which of the following is indicated in an SOWs? A. Organizational or company structure B. Company work authorization system C. Project management information systems D. Business need 18. Which of the following documents the relationship among the products or services being created? A. Enterprise Environmental factors B. Organizational process assets A. Strategic Plan B. Product scope description
19. Which of the following activities are included in the monitor and control project work process? A. Developing estimates B. Selecting sellers C. Transfer historical information and lessons learned to the knowledge base for future use D. Providing information to support status reporting, progress measurement and forecasting 20. Which of the following statements is true regarding the Contract closure procedure and the Administrative closure procedure? A. Administrative Closure is one of the processes of Project Integration Management. B. Contract close-out and contract termination are the same. C. The processes are similar in that Contract Close-out is concerned with completing the documentation and obtaining formal acceptance for the contract while the Administrative Closure Process is concerned with completing the documentation and obtaining formal acceptance of the entire project. D. All of the above statements are true. 21. Project Integration Management ensures that: A. The various elements of the project are properly coordinated. B. The proper scope has been defined for the project. C. The project is completed within the approved budget and schedule. D. The project will satisfy the needs for which it was undertaken. 22. Which of the following statements are included in the preliminary project scope statement? A. Project management information system, project constraints, financial controls B. Project measurement database, project files, and issue and defect management database C. Project boundaries, requirements and deliverables, order of magnitude cost estimates D. Project charter, requirements, business needs, milestone schedule 23. The MOST effective way to accelerate the project integration process is: A. Through frequent periodic team communications B. By assigning specific responsibilities to each project employee. C. By having the sponsor apply direct influence on the project team. D. To use crisis periods to reinforce integration activities.
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24. Integrated change control is concerned with: A. Influencing the factors which create changes to ensure that the changes are beneficial. B. Determining that a change has occurred. C. Managing actual changes when and as they occur. D. All of the above 25. Factors and systems that surround and influence the projects success include: A. Configuration management knowledge databases, scope, cost and schedule B. Organizational standard processes, financial controls, procedures for approving and issuing work authorizations C. Stakeholder risk tolerances, commercial databases, governmental or industry standards D. Factors that influence the scope of the project 26. As one of the tools and techniques in developing the project charter, expert judgment is used to: A. Influence the factors which create change in the project charter B. Is used to assess inputs needed to develop the project charter C. Is used to refine the project charter D. All of the above 27. Which of the following is NOT a output of the direct and manage project execution process? A. B. C. D. Deliverables Approved change requests Requested changes Implemented change requests
28. Subsidiary plans of the project management plan include: A. The project performance baseline, the change control system and the staffing management plan B. The project contractual, resource calendar and the project charter. C. The milestone list, the schedule baseline and the risk register D. The list of resources, forecasts, requested changes 29. Lessons learned should be documented and become part of the historical database because the lessons: A. Indicate if the project manager should be fired. B. Show how the project performance baseline was affected by approved changes. C. Can be used for future projects to show the causes of variances and reasoning behind the corrective actions chosen. D. Indicate which of the project team members will be rolling on to the next project. 30. The administrative closure procedure address: A. Actions and activities to define the stakeholder approval requirements for changes B. Actions and activities that confirm the project has met all requirements C. Actions and activities that satisfy completion D. All of the above.
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Answer Sheet
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Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 C C D A A D C B A A C D A D C B D D D C A C A D C B B C C D PMBOK Guide, Chapter 4, pg.. 78 PMBOK Guide, Section 4.1 pgs. 81-82 PMBOK Guide, Chapter 4, pgs. 77-80 Section 4.1.2.3 pg. 86 PMBOK Guide, Section 4.7.1 pg.. 101 PMBOK, Guide, Section 4.6 pg. 96 PMBOK Guide, Section, 4.7.3.1 pg. 101 PMBOK Guide, Section 4.7.3 pg.. 101 PMBOK Guide, Section 4.1 pg.. 81 PMBOK Guide, Section 4.1 pg. 81 and Section 4.1.1.2 pg. 82 PMBOK Guide, Chapter 4, pg.. 79 PMBOK Guide, Chapter 4, pg.. 77 PMBOK Guide, Section 4.1, pg. 81 PMBOK Guide, Chapter 4, pg. 78 and Section 4.3, pgs 88-89 PMBOK Guide, Section 4.1.2.3, pg.. 86 PMBOK Guide, pgs. Chapter 4, pg.. 79 and Section 4.4.2., pg. 93 PMBOK Guide, glossary, page 368 PMBOK Guide, Section 4.1.1.2, pgs. 82-83 PMBOK, Guide, Section 4.1.1.2, pg.. 82 PMBOK, Guide, Section 4.5, pg.. 94 PMBOK Guide, Section 4.7, pg. 100 PMBOK, Guide, Chapter 4, pg.. 77 PMBOK Guide, Section 4.2, pgs 86-87 Industry information. Communication is ALWAYS key PMBOK , Guide, Section 4.6, pgs 96-98 PMBOK, Guide, Section 4.1.1.3 pg.. 83 PMBOK, Guide, Section 4.1.2.3, pg., 86 PMBOK, Guide, Section 4.4.3 pgs. 93-94 PMBOK, Guide, Section 4.3, pg. 89 PMBOK, Guide, Section 4.7.3.4, pg. 102 PMBOK, Guide, Section 4.7.3.1, pgs. 101-102
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Number
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PROJECT SCOPE MANAGEMENT
STUDY NOTES
PMBOK
Third Edition based, Version 9
Trademarks
Project Scope Management
Project Scope Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapters 5 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 What to Study? Chapter 5 of the PMBOK on the Project Scope Management processes: Initiation, Scope Planning, Scope Definition, Create WBS, Scope Verification, and Scope Change Control. (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase) Know the difference between project and product scope. Know the difference between a scope statement and a statement of work (SOW). Know key definitions (see list in study notes or PMBOK glossary). Know what a Work Breakdown Structure (WBS) is and what it is used for. Know what a work package is and how it relates to the WBS. Know how to label the levels of a WBS chart. Know what a project plan is and how it is used.
PMBOK" is a trademark of the Project Management Institute, Inc. which is registered in the United States and other nations. PMI is a service and trademark of the Project Management Institute, Inc. which is registered in the United States and other nations. PMP and the PMP logo are certification marks of the Project Management Institute which are registered in the United States and other nations. Copyright IBM Corp. 2002, 2005 Project Scope Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 2-3
Key Definitions
Baseline Bill of Materials (BOM) Change Control Board (CCB) Chart of Accounts The original plan plus or minus approved changes. A hierarchical diagram of the physical assemblies, subassemblies, and components needed to create manufactured product. A formally constituted group of stakeholders responsible for approving or rejecting changes to the project baselines. Any numbering system used to monitor project costs by category (e.g., labor supplies, materials). The project chart of accounts is usually based on the primary performing organizations corporate chart of accounts. Any numbering system used to uniquely identify each element of the work breakdown structure. Any measurable, tangible, verifiable outcome, result, or item that must be produced to complete a project or subproject. A form of participative expert judgment, it is a anonymous, interactive forecasting technique used to derive consensus about future events on a project. The purpose of the Delphi technique is to elicit information and judgments from participants to facilitate problem-solving, planning, and decision-making. Compressing the project schedule by overlapping activities that would normally be done in sequence. Also used to imply overlapping of normally sequential phases in a project life cycle. A hierarchically organized representation of the project organization arranged so that work packages can be related to the performing organizational units. The features and functions that characterize a product, service, or result. A temporary endeavor undertaken to create a unique product or service. A formal document issued by senior management which explains the purpose of the project including the business need the project addresses and the resulting product. It provides the project manager with the authority to apply organizational resources to project activities. The members of the project team who are directly involved in project management activities. On some smaller projects, the project management team may include virtually all of the project team members. A formal, approved document used to guide both project execution and project control. The primary uses of the project plan are to document planning assumptions and decisions, to facilitate communication among stakeholders, and to document approved scope, cost, and schedule baselines.
Code of Accounts Deliverable Delphi Technique
Fast Tracking
Organizational Breakdown Structure (OBS) Product Scope Project Project Charter
Project Management Team
Project Plan
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Project Scope Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Project Notebook
Project Scope Project Team Members Responsibility Assignment Matrix (RAM)
Resource Breakdown Structure (RBS)
Risk Breakdown Structure (RBS) Scope Change Scope Change Control Scope Definition Scope Planning Scope Management Plan
A device which houses the project plan. It can be as simple as a 3-ring binder or more complex such as a Lotus Notes database. The notebook is updated throughout the life of the project. The work that must be done to deliver a product with the specified features and functions. The people who report either directly or indirectly to the project manager. A structure which relates the project organization structure to the WBS to help ensure that each element of the projects scope of work is assigned to a responsible individual. Also called an Accountability Matrix, Responsibility Chart, Responsibility Matrix, or Linear Responsibility Chart. A hierarchical structure of resources by resource category and resource type used in resource leveling schedules and to develop resource limited schedules, and which may be used to identify and analyze project human resource assignments. A hierarchically organized description of the identified project risks arranged by risk category and subcategory that identifies the various areas and causes of potential risks. Any change to the project scope. Controlling changes to project scope. Decomposing the major deliverables into smaller, more manageable components to provide better control. Developing a written scope statement that includes the project justification, the major deliverables, and the project objectives. A plan which describes how project scope will be managed and how scope change will be integrated into the project. Includes an assessment of how likely and frequently the project scope may change and a description of how scope changes will be identified and classified. Process of verifying that that all identified project deliverables have been completed correctly and satisfactorily and obtaining formal acceptance of the project scope from the stakeholders. A narrative description of products or services to be supplied under contract. Individuals and organizations who are involved in or may be affected by project activities. Process of sanctioning all project work. A deliverable-oriented grouping of project elements which organizes and defines the total scope of the project. A deliverable at the lowest level of the work breakdown structure. A work package may be divided into activities.
Scope Verification
Statement of Work (SOW) Stakeholder Work Authorization Work Breakdown Structure (WBS) Work Package
Copyright IBM Corp. 2002, 2005 Project Scope Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Project Scope Management Processes

Project Scope Management:
Includes the processes necessary to ensure that the project includes all the work required, and only the work required, to complete the project successfully. Primarily concerned with defining and controlling what is (in scope) and what is not included (out of scope) in the project. Processes include Scope Planning, Scope Definition, Create WBS, Scope Verification, and Scope Control. Scope refers to product scope (features and functions of a product, service, or result) and project scope (work that needs to be accomplished)
Scope Planning (5.1): (Process Group: Planning)

Describes how the team will define and develop the WBS, verify the project scope and control the project scope. Begins with analysis of information in the project charter, the project scope statement, the latest approved project management plan, historical information, and relevant enterprise environmental factors. Inputs include: Enterprise Environmental Factors: Includes the organizations culture, infrastructure, tools, human resources, personnel policies, and marketplace conditions. Organizational Process Assets: Formal and informal policies, procedures, and guidelines that could impact how the projects scope is managed. Important to project scope planning are: Organizational policies as the pertain to project scope planning and management Organizational procedures related to project scope planning and management Historical information about previous projects Project Charter Preliminary Project Scope Statement Project Management Plan Tools and techniques include: Expert Judgment : Expert judgment related to how equivalent projects have managed scope is used in developing the project scope management plan. Templates, Forms and Standards: Templates, forms, standards: Templates could include work breakdown structure templates, scope management plan templates, and project scope change control forms. Outputs include: Project Scope Management Plan: Provides guidance on how project scope will be defined, documented, verified, managed, and controlled by the project management team. The components include: A process to prepare a detailed project scope statement A process that enables the creation of the WBS from the detailed project scope statement A process that specifies how formal verification and acceptance of the completed project deliverables will be obtained
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A process to control how requests for changes to the detailed project scope statement will be processed.
Scope Definition (5.2): (Process Group: Planning)

The process of defining and describing the project scope in specific terms. Preparation of a detailed project scope statement is critical to project success and builds upon the major deliverables. Assumptions, and constraints that are documented during project initiation in the preliminary project scope statement. Inputs include: Organizational Process Assets Project Charter Preliminary Project Scope Statement Project Scope Management Plan Approved Change Requests Tools and techniques include: Product Analysis: Involves developing a better understanding of the product of the project. Includes techniques such as product breakdown analysis systems engineering, value engineering, value analysis, function analysis, and quality function deployment. Alternatives Identification: Generates different approaches to execute and perform the project work. Includes brainstorming and lateral thinking. Expert Judgment: Uses experts who can develop parts of the detailed project scope statement. Stakeholder Analysis: Identifies the influence and interests of the various stakeholders and documents their needs, wants, and expectations. The analysis selects, prioritizes, and quantifies the needs, wants, and expectations to create requirements. Outputs include: Project Scope Statement: Describes the projects deliverables, work required to complete deliverables; provides a common understanding among stakeholders; describes the project objectives, enables the team to perform detailed planning and guides the teams work during execution. Includes the following reference documents: Project objectives: Measurable success criteria of the project. Product scope description: Describes product characteristics, service or result the project was undertaken to create. Project requirements: Decries the conditions or capabilities that must be met. Project boundaries: Identifies what is included in the project. Project deliverables: Includes outputs that comprise the product service and ancillary results. Product acceptance criteria: Defines the process and criteria for accepting completed products. Project constraints: Describes the project constraints associated with the project scope. Project assumptions: Descriptions assumptions associated with the project scope.
Copyright IBM Corp. 2002, 2005 Project Scope Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 2-7
Initial project organization: Identifies the team and stakeholders. Initial defined risks: Identifies known risks. Schedule milestones Fund limitation: Describes limitations including total value or specified time frames. Cost estimate Project configuration management requirements Project specifications Approval requirements: Identifies approvals applied to project objectives, deliverables, documents and work. Requested Changes Project Scope Management Plan
Create WBS (5.3): (Process Group: Planning)

The WBS is a deliverable-oriented hierarchical decomposition of the work to be executed by the project team, to accomplish the project objectives and create the required deliverables. The process of subdividing the major project deliverables into smaller, more manageable components to: Improve the accuracy of the cost, duration, and resource estimates. Define a baseline for performance measurement and control. Facilitate clear responsibility assignments. Proper scope definition is critical to project success. Inputs include: Organizational Process Assets Project Scope Statement Project Scope Management Plan Approved Change Requests Tools and techniques include: Work Breakdown Structure Templates Decomposition: Involves subdividing project deliverables into the work package level. Identifies the deliverables and related work. Organizes and structures the WBS. Decomposes the WBS levels into lower level details Develops and assigns identification codes to the WBS components. Verifies the decomposition of work is required and sufficient. Are the lower level items both necessary and sufficient? Is each item clearly and completely defined? Can each item be appropriately scheduled, budgeted, assigned? Identifies the major deliverables of the project, including project management. Defines deliverables in terms of how the project will be organized. (i.e., The first level of decomposition may be the phases of the project cycle followed by the project deliverables at the second level.) Decides if adequate cost and duration estimates can be developed at this level of detail for each deliverable. Identifies constituent components of the deliverable. Constituent elements should be described in terms of tangible, verifiable results in order to facilitate performance measurement. Should always be defined in terms of how the work of the project will actually be organized and accomplished.
2-8 Project Scope Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Outputs include: Project Scope Statement (Updates): Incorporates approved change requests. Work Breakdown Structure: Assigns a unique identifier from a code of accounts to the WBS components. Should not be confused with other breakdown structures. WBS Dictionary: Describes the detailed components in the WBS. Includes a code account identifier, a statement of work, the responsible organization and a list of scheduled milestones. Scope Baseline Project Scope Management Plan (updates) Requested Changes: Changes are processed for review and approval.
Scope Verification (5.4): (Process Group: Monitoring & Controlling)

The process of obtaining formal acceptance of the project scope by the stakeholders (sponsor, client, customer, etc.) Requires reviewing deliverables and work results to ensure that all were completed correctly and satisfactorily. If the project terminates early, scope verification documents the extent of completion. Differs from Quality Control in that Scope Verification is primarily concerned with acceptance of the work results while Quality Control is primarily concerned with the correctness of the work results. Both processes are generally performed in parallel. Inputs include: Project Scope Statement: Describes the projects product to be reviewed and the product acceptance criteria. WBS Dictionary: Verifies the deliverables being produced are included in the approved project scope. Project Scope Management Plan Deliverables Tools and techniques include: Inspection: Includes activities such as measuring, examining, reviewing and testing to determine whether work and deliverables meet requirements and product acceptance criteria. Outputs include: Accepted Deliverables Requested Changes Recommended Corrective Actions
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(Process Group: Monitoring & Controlling) The process of controlling changes to project scope. Scope Change Control is concerned with: Influencing the factors that create scope changes to ensure that changes are agreed upon. Determining that a scope change has occurred. Managing the actual changes when and if the changes occur. Must be thoroughly integrated with the other control processes such as Schedule Control, Cost Control, Quality Control, etc. Inputs include: Project Scope Statement: Defines the projects scope baseline and product scope (along with the associated WBS and WBS dictionary). Work Breakdown Structure WBS Dictionary Performance Reports: Provides information on project work performance. Approved Change Requests: Modifies the agreed-upon project scope baseline, as defined by the approved project scope statement, WBS, and WBS dictionary Tools and techniques include: Change Control System: Defines procedures by which the project scope may be changed. Includes the paperwork, tracking systems, and approval levels necessary for authorizing changes. Should be integrated with the Integrated Change Control Process and any system(s) in place to control product scope. Must comply with all relevant contractual obligations. Variance Analysis: Uses project performance measurements to asses the amount of variation. Replanning: Updates the project management plan based on required modifications to the WBS, WBS dictionary, the project scope statement and the project scope management plan. Configuration Management System: Provides procedures for the status of deliverables. Assures that requested changes are thoroughly considered and documented before being processed. Outputs include: Project Scope Statement (Updates) Work Breakdown Structure (Updates) WBS Dictionary (Updates) Scope Baseline (Updates) Requested Changes Recommended Corrective Action Organizational Process Assets (Updates) Project Management Plan (Updates)
Scope Control (5.5):
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Generic Project Life Cycle:

A generic project life cycle may have the following phases: Initiation/Concept/Feasibility: Someone has identified a need that must be met. The definition of the problem to be solved may be fuzzy. Feasibility studies may be done during this phase to clarify the problem before preceding. Order of magnitude costs may be obtained. Other items that may be identified at this phase include stakeholders, risk, goals and objectives, strategy, potential team, and alternatives. The output of this phase is the project charter which grants permission for the project to proceed to the next phase. Development/Planning: The purpose of this phase is to determine exactly what is to be done. A problem statement is developed along with objectives, strategies for achieving the objectives, and detailed work plans to support the strategies. The scope baseline is determined. Budgetary costs are determined, and the budget is developed. A risk assessment is done. The WBS is established. The players are identified along with the levels of authority, responsibility, and accountability. Control systems are developed (if not already in place) and quality standards determined. Detailed planning is completed and documented in the project plan. The project plan is kept within a hard-copy or electronic device called a project notebook. The project plan/notebook serves as the controlling document throughout the life of the project. Implementation/Execution: The lines of communication between teams and team members are established. Work packages are established and implemented. Definitive estimates are determined. Goods and services are procured. Scope, quality, time, and cost are directed, monitored and controlled. Problems are resolved. Termination/Close-out: The product is finalized, reviewed and accepted. Product responsibility is transferred. The project is evaluated and the results documented along with lessons learned in the project notebook. Resources are redirected or released, and the project team is reassigned.
Feasibility Phases of the Life Cycle:

The feasibility phases are the concept and development phases of a generic project life cycle. Generally speaking, these phases count for approximately 25% of the project time. While the feasibility phases are critical to project success, they are also the most often neglected. These phases are often compromised by implementation pressure. The principle issues during these phases are cost, time, quality, and risk. Project controls should be established. Some characteristics of a good project control system: The controls should be tailored to each project The controls should limit informal changes in scope The controls should be designed to avoid surprises The frequency and type of control is project phase dependent. Depending on the control, there may be varying degrees of management involvement. The focal point for scope change control is the WBS.
Copyright IBM Corp. 2002, 2005 Project Scope Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 2-11
Acquisition Phases of the Life Cycle:

The acquisition phases are the implementation and termination phases of a generic project life cycle. Generally speaking, these phases count for approximately 75% of the project time. Project controls during the implementation phase: Emphasize performance measurement against cost, quality, and schedule baselines. Maintain scope, cost, time and quality balance. Types of reports: cost, schedule, performance status; S curves; earned value; variances; trends, and exceptions
Work Breakdown Structure:

An output of the Scope Definition Process. A deliverable-oriented grouping of project components that organizes and defines the total scope of the project. Used to develop or confirm a common understanding of project scope. A detailed representation of the scope of the project expressed in terms of work, resource, and cost. Each descending level represents an increasingly detailed description of the project deliverables. Lowest level of the WBS may be referred to as the work package, especially in organizations that follow earned value management practices. Work packages may be further decomposed in a subproject WBS (such as contracting work to another organization.) Developing a WBS (from class notes by Infotech): 1. Identify major issues. 2. Break down each issue into smaller deliverable units. 3. Subdivide deliverables into measurable units. 4. Define each work package as subcontractable units of work. 5. Review for patterns and anomalies. 6. Review again. Developing a WBS (from Project Planning, Scheduling & Control by Lewis): 1. What tasks must be done? 2. Who will do each one? 3. How long will each task take? 4. What materials/supplies are required? 5. How much will each task cost? Examples of names of WBS structure levels: 1. Program 2. Project 3. Task 4. Sub-Task 5. Work Package See PMBOK pgs. 114 - 116 for examples of WBSs.
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An example of numbering a WBS:

1
1.1
1.2
1.3
1.1.1
1.1.2
1.2.1
1.2.2
1.3.1
1.3.2
1.3.3
Work Package:
The lowest level of a WBS. Work packages are further broken down into activities during the Activity Definition Process. (part of Project Time Management)
Role of Project Manager:

Produce end item with available resources, within time, cost and performance constraints. Make all required decisions regarding the project. Act as interface with customer and top functional managers. Negotiate with functional managers to accomplish necessary work within time, cost, and quality goals. Resolve conflicts.
Functions Performed by Project Manager:

Planning and scheduling, performance analysis, progress reporting Client/consultant relations Project and cost trend analysis, logistics management, cost control Organization and resource planning Contract and materials administration and estimating
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Sample Questions
1. Using the following WBS, a work package would be ________________. 1. Develop Software 1.1 Develop kernels 1.1.1 Develop Inventory control 1.1.2 Develop supervisor control 1.2 Develop Reports 1.3 Develop screens 1.3.1 Develop supervisor screens A. Element 1.1.1, 1.1.2, 1.3.1 only B. Element 1 only C. Element 1.1 only D. Elements 1.1.1, 1.1.2, 1.3.1 and 1.2 only 2. Which of the following Project Scope Management processes involves subdividing the major project deliverables into smaller, more manageable components? A. Scope Planning B. Scope Decomposition C. Scope Change Control D. Scope Definition 3. Why is it important to have a scope statement? A. Provides a summary of the project scope B. Provides a documented basis for making future project decisions C. Provides a basis for developing a project cost estimate D. Forms the basis for creating the project charter 4. Reviewing deliverables and work results to ensure that they were completed correctly and satisfactorily is part of: A. Administrative Closure B. Risk management planning C. Quality control D. Scope verification 5. Project scope is: A. The work that must be done in order to deliver a product with the specified features and functions B. The features and functions that characterize a product or service C. A narrative description of work to be performed under contract D. All of the above
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6. What is the purpose of the WBS? A. To show which work elements have been assigned to organizational units. B. To ensure that all work within a project is identified and defined within a common framework. C. To show the organizational structure of a program. D. To indicate which individuals have responsibility for which work packages. 7. The unique identifiers assigned to each item of a WBS are often known collectively as: A. The work package codes B. The project identifiers C. The code of accounts D. The element accounts 8. Approved change requests can cause a change to: A. Project quality B. Estimated costs C. Project scope D. all of the above 9. What is the difference between scope verification and quality control? A. There is no difference. B. Scope verification is primarily concerned with the correctness of work results while quality control is primarily concerned with the acceptance of work results. C. Scope verification is concerned with ensuring that changes are beneficial while quality control is concerned that the overall work results are correct. D. Scope verification is primarily concerned with the acceptance of work results while quality control is primarily concerned with the correctness of work results. 10. Which of the following are outputs of the Scope Verification Process? A. Inspection B. Work results C. Accepted deliverables D. Scope changes 11. Which of the following are outputs of the Scope Control Process? A. Scope changes and scope management plan B. Corrective action and formal acceptance C. Schedule updates and corrective action D. Project scope statement (updates) requested changes, recommended corrective action
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12. Project scope is measured against: A. Product requirements B. The project management plan, the project scope statement and its associated WBS C. Risks which might affect the project D. Estimated costs 13. The document that represents the work specified in the current approved project scope statement is the A. GANTT Chart B. Work breakdown structure C. Scope Statement D. Project Baseline 14. Which of the following tools and techniques are commonly used in the Scope Definition Process? A. Inspection B. Expert judgment C. Stakeholder analysis D. B and C 15. Your company is planning to enter into a new niche market and you previously expressed interest in pursuing new opportunities. You are asked to starting planing the project, what is the FIRST step you should take as you begin planning? A. Develop a resource plan B. Identify the risk associated with the new venture C. Plan the scope of the project D. Create a network diagram 16. Decomposition is a technique used to construct a: A. Cost variance plan B. Responsibility assignment matrix C. Work breakdown structure (WBS) D. Precedence network diagram 17. What is a linear responsibility chart? A. An accountability matrix B. A responsibility assignment matrix (RAM) C. An OBS D. A and B 18. Completion of the product scope is measured against: A. The product requirements B. The Project Plan C. The Project Charter D. The Change Control Plan
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19 The document which describes the project deliverables and the work required to create those deliverables is the: (choose the BEST answer) A. Project plan B. Project objectives C. Project scope statement D. Project scope management plan 20. Which of the following statements concerning a scope statement are true? A. It develops a common understanding of the project scope among stakeholders B. Scope statement and Statement of work are synonymous C. Project justification and project objectives are not included or referenced in the scope statement D. Once written, the scope statement should never be revised. 21. Which is an output of Scope Planning? A. Organizational process assets B. Project scope management plan C. Project charter D. Standards 22. Which of the following documents is NOT an input to Scope Verification? A. Deliverables B. Strategic plan C. WBS dictionary D. Scope Management Plan 23. Scope Control is PRIMARILY concerned with: A. Influencing the factors that create scope changes B. Defining a baseline for performance measurement and control C. Developing a written scope statement which will serve as the basis for future project decisions D. Assigning work elements to the proper organizations. 24. A technique used to generate different approaches to performing the work of the project is: A. Alternatives identification B. Stakeholder analysis C. Project Analysis D. Expert judgment
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25. Which technique uses systems analysis, value engineering, and functional analysis? A. Stakeholder analysis B. Project analysis C. Product analysis D. Project configuration management 26. Which of the following statements is NOT true about the WBS? A. The WBS indicates when certain activities are to be done. B. The WBS is a hierarchical breakdown of the project deliverables. C. The WBS represents the entire scope of the project. D. The WBS subdivides work into small, manageable pieces.. 27. A work package is: A. The code of accounts B. The definition of the scope statement C. Items at the lowest level of the WBS D. Activity that can be assigned to more then one person 28. Which of the following is an output of the Scope Verification Process? A. WBS B. Project Plan C. Accepted Deliverables D. Lessons Learned 29. The baseline may be modified for what reasons? (choose the best answer) A. The project manager decides to expand the scope of the project. B. A change in a government regulation has occurred which impacts the project. C. A change request for enhanced function has been received and approved through the Scope Control Process. D. b and c. 30. Decomposition involves: A. Identifying the major elements of the project. B. Deciding if adequate cost and duration estimates can be developed at this level of detail for each element.. C. Identifying the constituent elements of the deliverable. D. All of the above.
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Answer Sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
a a a a a a a a a a a a a a a
b b b b b b b b b b b b b b b
c c c c c c c c c c c c c c c
d d d d d d d d d d d d d d d
16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
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Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 D D B D A B C D D C D B B D C C D A C A B D A A C A C C D D PMBOK Guide, Section 5.3.2, pg.. 113-116 PMBOK Guide, Section 5.2 pg.. 109 PMBOK Guide, Section 5.5.3.1 pg.. 121 PMBOK Guide, Section 5.4, pg.. 118 PMBOK Guide, Chapter 5, pg.. 104. The distinction between project scope and product scope is very fine. B is product scope. C is statement of work. PMBOK Guide, Section 5.3, pg.. 112 PMBOK Guide, Section 5.3.3.2, pg. 117 PMBOK Guide, Section 5.2.1.5, pg.. 109 PMBOK Guide, Section 5.4, pg.. 118 Answer D, scope changes, is an output of the Scope Change Control Process. PMBOK Guide, Section 5.4.3, pg.. 119 PMBOK Guide, Section 5.5.3, pgs. 121-122 PMBOK Guide, Section 5.5, pg.. 119 PMBOK Guide, Section 5.3. pg.. 112 PMBOK Guide, Section 5.2.2 pg.. 110 PMBOK Guide, Section 5.1, pgs. 107-108 PMBOK Guide, Section 5.3.2.2, pgs. 114-116 A linear responsibility chart is defined in the Lewis book. See PMBOK Guide, Glossary, pg.. 207 PMBOK Guide, Chapter 5, pg.. 104 PMBOK Guide, Section 5.2.3 pgs. 110-112 PMBOK Guide, Section 5.2.3.1, pg.. 110 PMBOK Guide, Section 5.1.3.1, pg. 108 PMBOK Guide, Section 5.4, pgs. 118-119 PMBOK Guide, Section 5.5, pg.. 119 PMBOK Guide, Section 5.2.2, pg.. 110 PMBOK Guide, Section 5.2.2, pg.. 110 PMBOK Guide, Section 5.3, pgs. 112 PMBOK Guide, Section 5.3,, pg.. 112 PMBOK Guide, Section 5.4.3.1, pg.. 119 PMBOK Guide, Section 5.5.3, pg.. 121 PMBOK Guide, Section 5.3.2.2, pgs. 114-116
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PMP Certification Exam Preparation What did I do wrong ? I would have answered a larger number of questions correctly if I had ___________.
Number
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
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PROJECT TIME MANAGEMENT
STUDY NOTES
PMBOK
Third Edition, Version 12
Trademarks
Project Time Management
Project Time Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapter 6 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 What to Study? The PMBOK Guide processes for Project Time Management: Activity Definition, Activity Sequencing, Activity Resource Estimating, Activity Duration Estimating Schedule Development, Schedule Control (Be familiar with Inputs, Tools and Techniques, and Outputs for each process) Be familiar with the different types of scheduling charts (Gantt, Milestone, Networking) Be familiar with the different techniques of networking (ADM, PDM, PERT, and GERT) Understand the concept of critical path and how to determine critical path. Know how to facilitate recovery through techniques such as crashing, fast tracking, managing slack and overtime. Understand how to calculate the expected duration of activities in the Program Evaluation & Review Technique (PERT) network technique. Know how to calculate the forecast variance of the expected duration of a PERT activity. Know the concept of the Schedule Performance Index (SPI) and how to calculate it. Understand the logical relationships between tasks. (FS, FF, SS, SF, lead, and lag) Know what float is and how to determine it. Know how to calculate Early Start, Early Finish, Late Start, and Late Finish.
Copyright IBM Corp. 2002, 2005 Project Time Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Key Definitions
Activity An element of work performed during the course of a project. (Normally has duration, expected cost, and expected resource requirements.) Also called a work item. See Arrow Diagramming Method See Precedence Diagramming Method The calculation of late finish and start dates for the uncompleted portions of all network activities. Determined by working backwards through the network logic from the projects end date. The end date may be calculated by a forward pass or set by the customer or sponsor. A graphic display of schedule related information. Typically, activities or project elements are listed on the left side of the chart, dates are displayed across the top, and activity durations are shown as date-placed horizontal bars. Also called a Gantt Chart. The original plan plus or minus approved changes. The smallest unit of time used to schedule the project. The unit can be months, weeks, days, hours, minutes, or shifts. Primarily used in conjunction with project management software tools. Taking action to decrease the total project duration after analyzing a number of alternatives to determine how to get the maximum duration compression for the least cost. Any activity on a critical path. Most commonly determined by using the critical path method. A sequence of activities which determines the earliest possible completion (duration) of the project. The critical path is usually defined as those activities with float less than or equal to a specified value (usually zero). It is the longest path through the project. A project may have multiple critical paths. A network analysis technique used to predict project duration by analyzing which path (sequence of activities) has the least amount of scheduling flexibility (float or slack). Early dates are calculated using a forward pass; late dates are calculated using a backwards pass. The point in time that separates actual (historical) data from future (scheduled) data. Also called as-of date.
Activity-On-Arrow Activity-On-Node Backward Pass
Bar Chart
Baseline Calendar Unit
Crashing
Critical Activity Critical Path
Critical Path Method (CPM)
Data Date (DD)
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Project Time Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Dummy Activity
Duration (DU)
Early Finish Date (EF)
Early Start Date (ES)
Effort Fast Tracking
Float
Forward Pass Free Float (FF)
An activity of zero duration used to show a logical relationship in the arrow diagramming method. Dummy activities are used when logical relationships cannot be completely or correctly described with regular activity arrows. Dummies are shown graphically as a dashed line headed by an arrow. The number of work periods (not including holidays and other non-working periods) required to complete an activity or other project element. Typically expressed as workdays or workweeks. In the critical path method, the earliest possible date in which the uncompleted portions of an activity or project can complete based on the network logic and any schedule constraints. Can change as the project progresses and changes are made to the project plan. In the critical path method, the earliest possible date in which the uncompleted portions of an activity or project can start based on the network logic and any schedule constraints. . Can change as the project progresses and changes are made to the project plan. The number of labor units required to complete an activity or other project element. Should not be confused with duration. Compressing the project schedule by overlapping activities that would normally be done in sequence (such as design and construction). The amount of time that an activity may be delayed from its early start without delaying the project finish date. Float is a mathematical calculation and can change as the project progresses and changes are made to the project plan. (Also called slack, total float, and path float). Calculated by subtracting LS - ES or LF - EF. Both results should be the same. The calculation of the early start and early finish dates for the uncompleted portions of all network activities. The amount of time an activity can be delayed without delaying the early start of any immediately succeeding activities.
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Gantt Chart Hammock
Lag
Late Finish Date (LF)
Late Start Date (LS)
Lead
Level of Effort (LOE)
Logical Relationship
Master Schedule Milestone
A graphic display of schedule-related information using bars. See Bar Chart. An aggregate or summary activity. (A group of related activities is displayed at one and reported at a summary level.) A hammock may or may not have an internal sequence. A modification of a logical relationship that directs a delay in the successor task. For example, in a FS relationship with a 10 day lag, the successor can not start until 10 days after the completion of the predecessor. In the critical path method, the latest possible date that an activity may be completed without delaying a specified milestone (usually the project finish date). In the critical path method, the latest possible date that an activity may begin without delaying a specified milestone (usually the project finish date). A modification of a logical relationship which allows an acceleration of the successor task. For example, in a FS relationship with a 10 day lead, the successor can start 10 days prior to the completion of the predecessor. Also called overlap. Support type activity (e.g., vendor or customer liaison) that does not readily lend itself to measurement of discrete accomplishment. Generally characterized by a uniform rate of activity over a specific period of time. A dependency between two project activities or between an activity and a milestone. Four possible types: FS, FF, SS, and SF. (see logical relationships under concepts). A summary level schedule which identifies the major activities and key milestones. A significant event in the project, usually completion of a major deliverable. A summary level schedule which identifies the major milestones. A technique that performs a project simulation many times to calculate a distribution of likely results. An activity that has low total float.
Milestone Schedule Monte Carlo Analysis Near Critical Activity
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Parametric Estimating Path Convergence
Percent Complete PERT Chart Precedence Diagram Method (PDM)
An estimating technique that uses a statistical relationship between historical data and other variables (e.g., lines of code, square footage) to calculate an estimate. The node in the schedule where parallel paths merge or join. At that node, delays or elongation or any converging path can delay the project. In quantitative risk analysis of the schedule, significant risk may occur at this point. An estimate, expressed as a percent, of the amount of work that has been completed on an activity or group of activities. Commonly used to refer to a project network diagram. A network diagramming technique in which activities are represented by nodes. Activities are linked by precedence relationships to show the sequence in which the activities are to be performed. Also called Activity-On-Node (AON)
Remaining Duration (RDU) Resource Leveling
The time needed to complete an activity. Any form of network analysis in which scheduling decisions (start and finish dates) are driven by resource management concerns. (e.g., limited resources or difficulty in managing changes to resource levels) A project schedule whose start and finish dates reflect expected resource availability. The final project schedule should always be resource limited. The schedule efficiency ratio of earned value accomplished against the planned value. The SPI describes what portion of the planned schedule was actually accomplished. SPI = EV/PV.
Resource-Limited Schedule Schedule Performance Index (SPI)
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Schedule Variance (SV) Scheduled Finish Date (SF)
Scheduled Start Date (SS)
Slack Time-Scaled Network Diagram
1) Any difference between the scheduled completion of an activity and the actual completion of the activity. 2) In earned value, SV = EV - PV. (Budgeted Cost of Work Scheduled) The point in time work was scheduled to finish on an activity. The scheduled finish date is normally within the range of dates delimited by the early finish date and the late finish date. It may reflect leveling or scarce resources. The point in time work was scheduled to start on an activity. The scheduled start date is normally within the range of dates delimited by the early start date and the late start date. It may reflect leveling or scarce resources. Synonymous with float. Any project network diagram drawn is such a way that the positioning and length of the activity represents its duration. Essentially, it is a bar chart that includes network logic. Synonymous with float.
Total Float
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Project Time Management Processes

Project Time Management:
Includes the processes necessary to accomplish timely completion of the project. Processes include Activity Definition, Activity Sequencing, Activity Resource Estimating, Activity Duration Estimating, Schedule Development, Schedule Control. Activity sequencing, activity resource estimating, activity duration estimating and schedule developed often viewed as a single process that can performed over in a short time frame; tools and techniques for each differ.
Activity Definition (6.1): (Process Group: Planning)

The process of identifying and documenting the specific activities that must be performed to produce the various project deliverables identified in the WBS. Defines the activities such that the project objectives will be met. Inputs include: Enterprise Environmental Factors: Includes project management information systems and scheduling software tools Organizational Process Assets: Contains the formal and informal activity planing-related policies, procedures and guidelines. Includes a lessons-learned knowledge base. Project Scope Statement: Documents the project deliverables, constraints and assumptions. Work Breakdown Structure WBS Dictionary Project Management Plan Tools and Techniques include: Decomposition: Involves subdividing project work packages into schedule activities. . Templates: Lists or portions of activity lists from previous projects. Also contains a list of resource skills, required hours of effort, identification of risks, expected deliverables, schedule milestones, and other descriptive information. Rolling Wave Plan: Progressive elaboration where near term work is planned at a low level of the WBS and future work is planned at a high level. During early strategic planning activities may be kept at the milestone level. Expert Judgment: Utilizes experienced team members to develop the project scope statements, WBS, and project schedules. Planning Component: Used by project teams to plan and schedule future work at various higher levels in the WBS. Includes summary activities such as support detailed estimating, scheduling, executing, monitoring, or controlling of the project work. Includes two planning components: Control account: Used as the basis for planning when work packages have not yet been planned. Planning package: Used for planning unknown work content that does not have detailed scheduled activities. Consist of a WBS component below the control account but above the work package.
Copyright IBM Corp. 2002, 2005 Project Time Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 3-9
Outputs include: Activity List: Includes scheduled activities that are planned for the project such as activity identifier and a scope of work description for each activity. The activity list is used in the schedule model and is a component of the project management plan. Activity Attributes: Attributes used for project schedule development and for selecting, ordering and sorting scheduled activities within reports. Milestone List: Identifies all milestones and indicates if milestones are mandatory. Requested Changes: Generates changes that affect the project scope statement and WBS. Activity Sequencing (6.2): (Process Group: Planning) The process of identifying and documenting interactivity logical relationships. Activities must be sequenced accurately to support later development of a realistic and achievable schedule. Sequencing can be performed manually or via computerized tools such as project management software. Inputs include: - Project scope statement - Activity list - Activity attributes - Milestone list - Approved Change requests Tools and techniques include: Precedence Diagramming Method (PDM) conditional diagramming methods. Includes four types of dependencies Finish-to-Start: Initiation of the successor activity depends upon the completion of the predecessor activity. Finish-to-Finish: Completion of the successor activity depends on the completion of the predecessor activity. Start-to-Start: Initiation of the successor activity depends upon the initiation of the predecessor activity. Start-to-Finish: Completion of the successor activity depends upon the initiation of the predecessor activity. Arrow Diagramming Method (ADM) Method for constructing a project schedule that uses arrows to represent activities and connect at nodes to show dependencies. Uses finish-to-start dependencies Dummy activities are not schedule activities and are given a zero value duration Schedule Network Templates: Used to expedite the preparation of networks of project schedule activities. Dependency Determination: Includes three types of dependencies. Mandatory dependencies: The project management team determines which dependencies are mandatory. Used to expedite the preparation of networks of project schedule activities. Referred to as hard logic. Discretionary dependencies: Established based on best practices within a particular application area. Documented since they can create arbitrary total float values and can limit later scheduling options.
3-10 Project Time Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
External dependencies: Involves a relationship between project activities and non-project activities. Applying Leads and Lags: Lead allows an acceleration of the successor activity. Lags directs a delay in the successor activity. Outputs include: - Project schedule network diagrams: Schematic displays of the project activities and the logical relationships (dependencies). May be produced manually or via a computer. May include full project details or have one or more summary activities Should be accompanied by a summary narrative that describes the basic sequencing approach. Unusual sequences should be fully described. Activity List (Updates) Activity Attributes (Updates) Requested Changes
Activity Resource Estimating (6.3): (Process Group: Planning)

The process of estimating the schedule activity resources. Involves determining the resources and quantities each resource will use. Inputs include: - Enterprise Environmental Factors - Organizational Process Assets: Provides the policies of the performing organization regarding staffing and equipment. Activity List Activity Attributes: provides the primary data input for estimating required resources for each schedule activity. Resource Availability: Provides information on which resources are available. Includes consideration of various geographical locations where resources originate. Project Management Plan Tools and techniques include: - Expert judgment: Used to assess the resource related inputs to the process. - Alternative analysis: Uses various levels of resource capability, different machines and tools regarding resources. - Published estimating data: Includes routinely published data for different countries and geographical locations. - Project Management Software - Bottom-up Estimating: Decomposes schedule activity into more detail when a schedule activity cannot be estimated with a reasonable degree of confidence. Outputs include: Activity resource requirements:
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Identification and description of the types and quantities of resources required for each schedule activity. Can include the basis of estimate for each resource.
Activity Attributes (Updates) Resource Breakdown Structure: Hierarchical structure of the identified resources by resource category and resource type. Resource Calendar (Updates) Requested Changes
Activity Duration Estimating (6.4): (Process Group: Planning)

The process of estimating the number of work periods required to complete a schedule activity. Uses information on schedule activity scope of work, required resource types, estimated resource quantities and resource calendars with resource availabilities. Inputs originate from the person or group most familiar with the work content in the specified schedule activity. Schedule activities are worked according to the project calendar. Inputs include: Enterprise Environmental Factors Organizational Process Assets Project Scope Statement Activity List Activity Attributes Activity Resource Requirements Resource Calendar Project Management: Contains the risk register and activity cost estimates. Tools and techniques include: Expert judgment: Use when available since durations are difficult to estimate due to the number of influencing factors. Where possible, use in conjunction with historical information as a guide. Analogous estimating: Use the actual duration of a previous, similar activity as the basis for estimating the duration of a future activity. Frequently used to estimate project duration when there is a limited amount of detailed information about the project. Considered a form of expert judgment. Most reliable when the previous activities are similar in fact and the individuals preparing the estimates have the necessary expertise. Parametric Estimating: The estimated durations are obtained by multiplying the quantities to be performed for each specific work category with the productivity unit rate. For example, the amount of cable in meters multiplied by the meters of cable per hour will yield the estimated duration in hours for producing the desired amount of cable. Three-Point Estimates: Based on three types of estimates.
Most likely: Optimistic: Based on best-case scenario. Pessimistic: Based on a worst-case scenario Reserve Analysis: Additional time identified as recognition of schedule risks. Outputs include: Activity duration estimates: Quantitative assessments of the likely number of work periods that will be required to complete an activity. Should always include some indication of the range of possible results. For example: 2 weeks +/- 2 days or 3 weeks with a 15% probability of exceeding. Activity Attributes (updates)
Schedule Development (6.5): (Process Group: Planning)

The process of analyzing activity sequences, durations, and resource requirements to create the project schedule. Determines planned start and finish dates for project activities. Inputs include: - Organizational Process Assets: Uses the project calendar in the schedule development Project Scope Statement: Contains assumptions and contracts that can affect the development schedule. Imposed dates restrict the start or finish of an activity to occur either no earlier or no later than a specified date. Most popular are the start no earlier than and the finish no later than. Used in situations such as weather restrictions on outdoor activities, government-mandated compliances, market windows, delivery of material from parties not represented in the schedule. Key events or major milestones: specified dates for deliveries that are determined by the project sponsor, customer, management, or other stakeholders. May also be used to indicate interfaces with work outside of the project. (especially work that is not in the project database) Activity lists Activity attributes Project Schedule Network Diagrams Activity Resource Requirements Resource Calendars Activity Duration Estimates Project Management Plan: Contains the schedule, cost and project scope management plans. Risk register: Identifies the project risk and associated risk response plans. The tools and techniques include: Schedule Network Analysis: Generates the project schedule. Uses a schedule model to calculate the early and late start and finish dates and scheduled start and finish dates. Critical Path Method: Schedule network analysis using the schedule model.
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Calculates the theoretical early start and finish dates and late start and finish dates for all schedule activities. Resulting dates indicate the time periods in which the schedule activity should be scheduled. Schedule Compression: A special case of mathematical analysis that looks for ways to shorten the project schedule without changing the project scope. Crashing: a technique in which cost and schedule tradeoffs are analyzed to determine how, if at all, to obtain the greatest amount of compression for the least incremental cost. Does not always produce a viable alternative and often results in increased cost. Fast tracking: a technique in which selected activities are done in parallel that would normally be done sequentially. Often results in rework and usually increases risk. What-If Scenario Analysis: Involves calculating multiple project durations with different sets of activity assumptions. A technique where the logic network is used to simulate different scenarios such as delaying the start of an activity, etc. The outcome of what-if simulations can be used to assess the feasibility of the schedule under adverse conditions. Can also be used to prepare contingency/response plans. Monte Carlo Analysis: a technique in which a distribution of probable results is defined for each activity and used to calculate a distribution of probable results for the total project. Resource leveling: Addresses schedule activities that need to be performed to meet specified delivery dates, to address the situation where critical resources are available at a certain time. Often applied after mathematical analysis to resolve issues where more resource has been allocated than available. Often results in a project duration that is longer than the preliminary schedule. Resource reallocation from non-critical to critical activities is a common means of realigning the schedule as close as possible to its originally intended overall duration. Productivity increases based on the use of different technologies and/or machinery are another way to shorten durations that have extended the preliminary schedule. Projects with a finite and critical resource may require that the resource be scheduled in reverse from the project end date. Other methods of reducing the schedule include utilization of multiple shifts, weekends, and extended hours or fast tracking. ** Note that fast tracking does add risk just as adding additional work time increases risk. Also, if these methods are used upfront, then its difficult to use these same methods for mitigation later in the project if the team gets in trouble. Critical Chain Method: Modifies the project schedule to account for limited resources. Built using non-conservative estimates for activity durations then calculates an altered critical path. Project management software:
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Software tools which automate the calculation of the mathematical analysis and resource leveling, thus allowing for rapid consideration of many schedule alternatives. Also widely used to print or display the outputs of schedule development. Applying Calendars: Identify periods when work is allowed. Reflects resource schedules such as normal business hours, shifts vacation or training or labor contracts. Adjusting Leads and Lags Schedule Model: Used in conjunction with manual methods or project management software to perform schedule network analysis to generate the project schedule. Outputs include: Project schedule: At a minimum, includes planned start and expected finish dates for each activity. Remains preliminary until resource assignments have been confirmed. (Although should be finalized before the completion of the Project Plan Development.) May be presented in summary form, called the master schedule, or in detail. Usually represented graphically via one of the following formats: project schedule network diagrams with date information added, bar (gantt) charts, or milestone charts. .
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Schedule Model Data: At a minimum, includes documentation of all identified assumptions and constraints. The amount of additional detail varies by application area. Includes resource requirements by time period, alternative schedules and schedule contingency reserves. Schedule Baseline: The approved schedule developed by the project management team. Includes baseline start and finish dates. Resource requirement (updates): Resource leveling updates may have a significant effect on preliminary estimates of resource requirements. May have to follow-up with additional requirements. Activity Attributes (Updates) Project Calendar (Updates) Requested Changes Project Management Plan (Updates): Includes Schedule Management Plan updates.
Schedule Control (6.6): (Process Group: Controlling)

The process of controlling changes to the project schedule. Is concerned with: Influencing the factors that create schedule changes to ensure that changes are agreed upon. Determining that the schedule has changed. Managing the actual changes when and as the changes occur. Must be thoroughly integrated with the other change control processes. Inputs include: Schedule Management Plan Schedule Baseline Performance reports: Provide information on schedule performance, such as which planned dates have been met and which have not. May alert the project team to issues that may cause problems in the future. Approved Change Requests Tools and techniques include: Progress Reporting: Includes actual start and finish dates and durations for remaining work. If earned value is used, the percent complete of in-progress activities is also included. Schedule Change Control System Defines procedures used to change the project schedule. Includes paperwork, tracking systems and approval levels required for authorizing changes. Performance measurement: Assesses the magnitude of project schedule changes.
Determines if corrective action is required. Project Management Software Variance Analysis: Compares target schedule dates with the actual and forecasted start and finish dates. Useful in detecting deviations. Determines if corrective action is required. Schedule Comparison Bar Charts: Indicates schedule progress. Shows current actual status and status of the approved project schedule baseline. Indicates slippages. Outputs include: - Schedule Model Data (Updates): Any modification to the schedule information that is used to manage the project. Appropriate stakeholders must be notified as needed. Schedule updates may or may not require adjustments to other aspects of the project plan. Schedule Baseline (Updates): Revisions are a special category of schedule updates which involve changes to the schedule start and finish dates in the schedule baseline. Revisions are generally incorporated in response to scope changes or changes to estimates. Appropriate stakeholders must be notified as needed. Performance Measurements Requested Changes Actions that bring expected future project schedule performance in line with the approved project schedule baseline. Requires root cause analysis to identify the cause of the variation. Recommended Corrective Actions Organizational Process Assets (Updates)
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Project Time Management Concepts

Dependencies:
Mandatory Those which are inherent in the nature of the work being done They often involve physical limitations Mandatory dependencies are also called hard logic Discretionary Those which are defined by the project management team They should be used with care since they may limit later scheduling options Discretionary dependencies are also called preferred logic, preferential logic, or soft logic External Those which involve a relationship between project and non-project activities
Scheduling Charts:
Gantt: Bar oriented In pure form, a gantt does not show task dependencies and relationships. Milestone: Consumes no resources or duration. Marks the start or finish of a significant event. Network: Shows task relationships and dependencies. Sometimes incorrectly referred to as a PERT chart.
Hard Coded Constraints:

Must Start/Finish On Start No Earlier/Later Than Finish No Earlier/Later Than As soon as possible (ASAP) (Calculated using forward pass) As late as possible (ALAP) (Calculated using backwards pass)
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Project Time Management Concepts Diagram Techniques

Precedence diagram Method (PDM):
A method which uses nodes to represent the activities and connects the nodes via arrows to show dependencies. Also called Activity-On-Node (AON). Can be done manually or via a computer. Four types of logical relationships: Finish to Start: The predecessor activity must finish before the successor activity can start. Finish to Finish: The predecessor activity must finish before the successor activity can finish. Start to Start: The predecessor activity must start before the successor activity can start. Start to Finish: The predecessor activity must start before the successor activity can finish. Finish to Start is the most common whereas Start to Finish is the least common. Also can show lead or lag time. Activities that lag one another have a delayed start or finish depending on the logical relationship. Activities that have lead time have an accelerated start or finish depending on the logical relationship. Lead time may also be referred to as negative lag.
Arrow Diagram Method (ADM):

Also called Activity-On-Arrow (AOW). Arrows represent activities while nodes represent the dependencies. May require the use of dummy activities to define all logical relationships correctly. Only shows Finish to Start relationships.
Conditional Diagramming Methods:

Graphical Evaluation and Review Technique (GERT) and System Dynamics models. Unlike PDM or ADM, allows for non-sequential activities such as loops or conditional branches.
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Project Time Management Concepts Mathematical Analysis

Critical Path Method (CPM):
Calculates a single, deterministic early start, late start, early finish, and late finish date for each activity. (ES, LS, EF, LF) The dates are calculated based on specified, sequential network logic and a single duration estimate. The focus is on calculating float to determine which activities have the least amount of scheduling flexibility. Early start and early finish dates for all activities are calculated using a forwards pass. Late start and late finish dates for all activities are calculated using a backwards pass. Float, slack, total float, and path float all refer to the amount of time that an activity may be delayed from its early start without delaying the project finish date. Free float refers to the amount of time that an activity may be delayed from its early start without delaying the early start of any immediately succeeding activities.
Graphical Evaluation Review Technique (GERT):

Allows for probabilistic treatment of both network logic and activity duration estimates. Under GERT, some activities may not be performed at all.
Program Evaluation Review Technique (PERT):

Developed for use in Aerospace industry. Uses a weighted average duration estimate to calculate activity durations. PERT differs from CPM primarily in that it uses the distributions mean (expected value) instead of the most likely estimate used in CPM. Activity duration = (O + 4M + P)/6 where O = optimistic estimate; M = most likely estimate; and P = pessimistic estimate. Standard deviation = (P - O)/6. One standard deviation: 68% chance of completing. Two standard deviations: 95% chance of completing. Three standard deviations: 99% chance of completing. As the range of time increases, the probability of completing within that time frame increases. Example: Activity As duration estimates: P = 8 days, M = 6 days, O = 4 days. Distribution Mean = 6 days; SD = 0.66 days Activity A has a 68% chance of completing within 5.34 to 6.66 days. Activity A has a 95% chance of completing within 4.68 to 7.32 days. Activity A has a 99% chance of completing within 4.02 to 7.98 days.
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Sample Questions
1. During what Time Management Process are the specific activities that must be performed to produce the deliverables in the WBS identified and documented? A. Activity Sequencing B. Activity Definition C. Schedule Development D. Activity Duration Estimating
2. A period of time in work weeks which includes non-working days is called: A. Elapsed Time B. Duration C. Effort D. Earned Time 3. The amount of time that an activity can be delayed from its early start without delaying the project end date is called: A. Total Float B. Free Float C. Float D. Both A & C 4. What are you likely to see as a project progresses in a schedule with must fix dates and little or no slack? A. Lots of free float B. Idle resources C. Negative float D. Positive float 5. Given the following estimates: Optimistic 3 days, Pessimistic 9 days, and most likely 6 days, what is the PERT calculation? A. 6 B. 4 C. 6.3 D. 6.1
6. What is the standard deviation for the estimates in the above problem? A. 0.6 B. 2 C. 1.5 D. 1
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7. In crashing the schedule, you would focus on: A. Accelerating as many tasks as possible B. Accelerating just the non-critical tasks C. Accelerating the performance of tasks on the critical path D. Accelerating the milestones 8. To calculate the early and late start and finish dates for a set of tasks, you must do: A. An analysis of the critical path B. A forwards pass C. A backwards pass D. all of the above 9. An activity that consumes no time or resources and shows only that a dependency exists between two activities is called: A. A milestone B. A hammock C. A dummy activity D. A hanger 10. A modification of a logical relationship that allows an acceleration of the successor task is represented by: A. Lead B. Lag C. Slack D. a or b 11. Assuming a PERT weighted average computation, what is the probability of completing the project within plus-or-minus 3 standard deviations of the mean? A. 68% B. 99.74% C. 95% D. 75% 12. Schedule variance can be determined by: A. EV - AC B. AC - EV C. EAC - AC D. EV - PV
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13. Activity resource estimating A. Uses the most likely resources. B. Involves determining what resources and quantities of each resource will be used. C. Focuses on calculating float in order to determine which resources have the least scheduling flexibility. D. Calculates a single, deterministic early and late start and finish date for each activity. 14. The Time Management Process that involves identifying and documenting logical relationships among schedule activities is called: A. Activity Definition B. Activity Duration Estimating C. Activity Dependencies D. Activity Sequencing 15. Activity resource estimating tools and techniques are: A. Templates, rolling wave planning and planning component B. Bottom-up estimating, alternatives analysis and expert judgment C. Critical path method, schedule network analysis, and resource leveling D. Schedule network templates, expert judgment and published estimating data
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For Questions 16-18 use the following assumptions: A PDM network Duration = finish date minus start date + 1 For a simple FS relationship, the start date of the successor will be one day after the finish date of the predecessor. For a simple SS relationship, the start date of the successor will be the same day as the start of the predecessor. ** Note: There are several means of specifying assumptions for start and end dates. For the purposes of these sample questions, MS Project was chosen as the model for specifying date assumptions. 16. Activity A starts on Day 1; has a duration of 3 days, and a FS relationship with succeeding Activity B. If the duration for Activity B is 5 days, calculate the Early Start and Early Finish dates for Activity B. (Assume that Activity B has no other dependencies.) A. B. C. D. Early Start is Day 2; Early Finish is Day 6 Early Start is Day 4; Early Finish is Day 9 Early Start is Day 3; Early Finish is Day 7 Early Start is Day 4; Early Finish is Day 8
17. Activity C is preceded by Activities A and B. Activity A has a FS relationship with a 1 day lead with Activity C. Activity B has SS relationship with Activity C with a 2 day lag. Given the following: Activity A: Early Start is Day 2; Early Finish is Day 4 Activity B: Early Start is Day 3; Early Finish is Day 6 Activity C: Duration is 3 days. Assuming no other dependencies for Activity C, calculate Activity Cs Early Start and Finish dates. A. Early Start is Day 4; Early Finish is Day 6. B. Early Start is Day 1; Early Finish is Day 4. C. Early Start is Day 5; Early Finish is Day 8. D. Early Start is Day 7; Early Finish is Day 9.
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18. Activity J has a FS relationship with a 1 day lag with succeeding Activity K. Activity J also has a SS relationship with a 5 day lag with succeeding Activity L. Assume that Activity J has no other immediate succeeding relationships. Given the following:
Activity K: Late Start is Day 11; Late Finish is Day 15 Activity L: Late Start is Day 11; Late Finish is Day 15 Activity J: Duration is 5 days. Calculate Activity Js Late Start and Finish dates. A. Late Start is Day 5; Late Finish is Day 9. B. Late Start is Day 6; Late Finish is Day 11. C. Late Start is Day 6; Late Finish is Day 10. D. Late Start is Day 5; Late Finish is Day 11. 19. Activity Sequencing and Schedule Development are considered part of which process group? A. Initiating B. Executing C. Controlling D. Planning 20. Which of the following is time management processes estimates the number of work periods needed to complete individual schedule activities? A. Activity Duration Estimating B. Activity Resource Estimating C. Activity Definition D. Activity Control
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Use the following information and assumptions for questions 21-22: A PDM network Duration = finish date minus start date + 1 For a simple FS relationship, the start date of the successor will be one day after the finish date of the predecessor. Activity B Early Start is Day 1; Early Finish is Day 3. Late Start is Day 6; Late Finish is Day 8. Activity B has a FS relationship with succeeding Activity C. Activity B has no other immediate succeeding activities. Activity C has an Early Start of 6 days and a Late Start of 11 days. 21. What is the float or total float for Activity B? (use PMBOK Guide definition of float as defined above.) A. 2 days B. 5 days C. 7 days D. 0 days 22. What is the free float for Activity B? (use definition of free float as defined in PMBOK Guide above.) A. 2 days B. 5 days C. 7 days D. 0 days
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23. As an output of the Schedule Control Process, corrective actions include: (choose BEST answer) A. Using resource leveling to reassign staff B. Rebaselining the schedule on a frequent basis C. Expediting the schedule to ensure completion of an activity on time or with the least possible delay D. Reducing the duration of the critical path 24. If you were crashing a project, you would focus your attention on: A. All non-critical tasks B. Only those task on the critical path without concern for cost C. Accelerating performance for minimum cost increase for all activities D. Accelerating performance for activities on the critical path for the least amount of incremental cost 25. Which of the following are inputs of schedule control: A. Progress reporting and approved change request B. Schedule baseline and approved change requests C. Requested changes and corrective actions D. Performance measurements and approved change requests.
26. A comprehensive list including all schedule activities that are planned to be performed on a
project. is called a: A. Control List B. Planning List C. Dependencies D. Activity list 27. The project is behind schedule. Which of the following actions should the project manager most likely consider to bring the project back on schedule? (choose the best answer) A. Increase the number of daily status meetings and insist that the technical people attend B. Focus on all behind schedule activities, including those activities which have not exceeded slack C. Focus primarily on critical activities which are behind schedule. Consider alternatives for accelerating performance. D. Crash the schedule and fast track the majority of the activities. Worry about cost and risk, later.
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28. Fast-tracking is: A. Obtaining the greatest amount of compression for the least incremental cost B. Doing activities in parallel that would normally be done in sequence to reduce project duration C. Completing multiple projects in parallel D. Reducing the duration of selected activities by vending out to another organization 29. Schedule control is concerned with: A. Influencing the factors which create schedule changes to ensure that changes are beneficial B. Determining that the schedule has changed C. Managing the actual changes when and as they occur D. All of the above 30. Which of the following is NOT an output of the Schedule Development Process? A. Project Schedule B. Schedule model data C. Project network diagram D. Resource requirement updates
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Answer Sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
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Answers
1 B 2 A 3 D PMBOK Guide, Section 6.1, pgs. 127-130 Basic scheduling terminology PMBOK Guide Glossary, page 361 . Free float is the amount of time an activity can be delayed without affecting the early start time of the succeeding activity. Adding constrained dates like must start and must finish to a schedule with no float significantly increases the likelihood that negative float will appear. (O + 4ML + P)/6 (P - O)/6, O = most optimistic time, P = most pessimistic time PMBOK Guide, Section 6.5.2.3, pg. 148 Critical Path Method. PMBOK Guide Glossary, page 359 PMBOK Guide Glossary, page 363 PMBOK Guide, Section 6.1.3.2 , pg.. 130 Lewis, pg... 181 PMBOK Guide Glossary, page 374 PMBOK Guide, Section 6.3, pg. 138 PMBOK Guide, Section 6.2, pg.. 130 PMBOK Guide Section 6.3.2., pg. 137 Activity As Early Start is Day 1. Activity A has a duration of 3 days, so the Early Finish would be Day 4. (Finish = Start + Duration) Activity B has no other dependencies, so its Early Start is Day 4. A five day duration gives Activity B an Early Finish of Day 9. Using a forward pass, check both dependencies: From assumptions, the succeeding activitys start date is one day later than preceding activitys finish date for an FS relationship. The start date of the succeeding activity in an SS relationship is the same as the start date of its predecessor. Must look at both relationships. Early Start for C = (Finish Date for A) - 1 day lead = Day 3 or Early Start for C = Start Date for B + 2 day lag = Day 5 you will use the higher of the two. For a forward pass, you use the later date. In this case, Day 5. Activity C has a duration of 3 days, so the early finish would be Day 8. (From assumptions, finish = start + duration). Using a backwards pass, check both dependencies: Late Finish for J = (Late Start for K ) - 1 day lag = Day 10 or Late Finish for J = Late Start for L - 5 day lag + (Duration of J) = Day 11. When performing a backwards pass, use the earliest dates. Therefore, Late Finish for J is Day 10 with a Late Start of Day 5. (Late Finish - Duration) PMBOK Guide, Figure 3-4, pg.. 42 PMBOK Guide, Chapter 6, pg.. 123
4 C 5 6 7 8 9 10 11 12 13 14 15 16 A D C D C A B D B D B B
17 C
18 A
19 D 20 A
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21 B
22 A
23 C 24 D
25 B 26 D 27 C
28 B 29 D 30 C
PMBOK Guide Glossary, page 361. Float is defined as the amount of time an activity can be delayed from its early start without affecting the project end date. This can be calculated by either of the following: LS-ES or LF-EF. Either calculation should give you the same result. (If not, there is something wrong with the dates.) A PMBOK Guide Glossary, page 362. Free float is defined as the amount of time an activity can be delayed without impacting the early start dates of any immediately succeeding activities. Since Activity Bs early finish is Day 3 and Activity Cs early start is Day 6, Activity B has a free float of 2 days. 6 - 3 - 1 (to account for the next day start) PMBOK Guide, Section 6.6.3 pg.. 155 PMBOK Guide Glossary, page 357 Since the intent of crashing is to reduce the total project duration (after analyzing several alternatives) for the least incremental cost, this can best be accomplished in the example by compressing the critical path. PMBOK Guide, Section 6.5.2 pg.. 145 PMBOK Guide, Section 6.6, pg. 152 Theres a definite purpose for reserve time; however, using it liberally will inflate the expected cost of the project. PMBOK Section 6.1.3, page 129 Option A seems to be a popular method for handling a schedule performance crisis. The danger (and complaint) is that technical people arent getting the work done and are often distracted if they are statused to death. Option B is also commonly used especially among managers/project managers who micro-manage. The danger in over-focusing on all activities, not just the critical ones, is that non-critical activities may receive too much attention while critical activities are ignored. Crashing and fast tracking are not always the right answers and often result in increased costs , risks, and rework. These methods should be used after careful consideration. PMBOK Guide, Section 6.5.2.3, pgs. 145-146 PMBOK Guide, Section 6.5.2.3 pg.. 146 PMBOK Guide, Section 6.6, pg.. 152 PMBOK Guide, Section 6.5.3, pg..149-152
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I would have answered a larger number of questions correctly if I had ___________. 1. Read the question properly and identified the keywords 2. Read the answer properly and identified the keywords 3. Read ALL the answers before answering the question 4. Used a strategy of elimination 5. Known the formula 6. Known the PMBOK definition 7. Checked the mathematics 8 Used the PMI rather than my own perspective 9. Reviewed my answer after reading the other questions 10. NOT rushed to finish Total
Number
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
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PROJECT COST MANAGEMENT
STUDY NOTES
PMBOK
Third Edition Version 12
Trademarks
Project Cost Management
Project Cost Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Guide), Chapter 7 (Third Edition) Project Planning, Scheduling & Control, Lewis, James P., 1995, Chapter 10 Project Management, A Managerial Approach, Meridith, Jack R. 1995, Chapter 7, and Chapter 10, pgs. 457-459 The New Project Management, Frame, J. Davidson, 1994, Chapters 8-9, 11 PMP Exam Prep, 3rd Edition, by Mulcahy, Rita, PMP, 2001 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003
What to Study? The PMBOK processes of Project Cost Management: Resource Planning, Cost Estimating, Cost Budgeting, and Cost Control (Be familiar with Inputs, Tools and Techniques, and Outputs for each process) Cost Estimates and Ranges: Order of Magnitude, Budgetary, and Definitive Earned Value Analysis: EV (BCWP), PV (BCWS), ACWP, EAC, BAC, ETC, CV, SV, CPI, SPI Cost Estimating Techniques: analogous (also called top-down), parametric modeling, and bottom-up Present Value and Net Present Value Straight-Line, Double Declining Depreciation and Sum of Yrs Digits
Copyright IBM Corp. 2002, 2005 Project Cost Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Key Definitions
Actual Cost (AC) / Actual Cost of Work Performed (ACWP) Total actual cost incurred that must relate to whatever cost was budgeted within the planned value and earned value in accomplishing work during a given time period. Formerly called Actual Cost of Work Performed (ACWP), this is now referred to as Actual Cost (AC). The original approved plan plus or minus approved scope changes. The sum of the total budgets for a project. Replaced with the term earned value.
Baseline Budget At Completion (BAC) Budgeted Cost of Work Performed (BCWP) Budgeted Cost of Work Scheduled (BCWS) Chart of Accounts
Replaced with the term planned value.
Code of Accounts Contingency Reserve
Control Account Plan (CAP)
Cost Performance Index (CPI)
Cost Variance (CV) Earned Value (EV)
Any numbering system used to monitor project cost by category (e.g., labor, supplies, materials). The project chart of accounts is usually based upon the corporate chart of accounts of the primary performing organization. Any numbering system used to uniquely identify each element of the WBS. The amount of money or time needed above the estimate to reduce the risk of overruns of project objectives to a level acceptable to the organization. A management control point where the integration of scope and budget and schedule takes place, and where the measurement of performance will happen. CAPs are placed at selected management points of the work breakdown structure. Previously referred to as a Cost Account Plan. The cost efficiency ratio of earned value to actual cost. CPI is often used to predict the magnitude of a cost overrun using the following formula: BAC/CPI = projected cost at completion, where CPI = EV/AC. Any difference between the budgeted cost of an activity and the actual cost of that activity. In earned value, CV = EV-AC. 1) The physical work accomplished plus the authorized budget for this work. 2) The sum of the approved cost estimates (may include overhead allocation) for activities or portions of activities completed during a given period, usually from the beginning of the project until now. Previously called the Budgeted Cost of Work Performed (BCWP).
4-4 Project Cost Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Earned Value Management (EVM)
Estimate
Estimate at Completion (EAC)
Estimate/Estimated To Complete (ETC)
Parametric Estimating Percent Complete (PC) Planned Value (PV)
Project Cost Management Reserve
S-Curve
Schedule Performance Index (SPI) Schedule Variance (SV) To-Complete
A method for integrating scope, schedule, and resources and for measuring project performance. It compares the amount of work that was planned with what was actually earned with what was actually spent to determine if cost and schedule performance are as expected. An assessment of the likely quantitative result. Usually applied to project cost and durations and should always include some indication of accuracy. (e.g. +/- percent) Usually used with a modifier (e.g., preliminary, conceptual, feasibility) Some application areas have specific modifiers that imply particular accuracy ranges (e.g., order of magnitude, budget estimate, and definitive estimate.) The expected total cost of an activity, a group of activities, or of the project when the defined scope of work has been completed. Most techniques for forecasting EAC include some adjustment of the original cost estimate based on project performance to date. See formulas under Estimate at Completion (EAC) Variations. (Also known as forecast final cost) The expected additional cost needed to complete an activity, a group of activities, or the project. Most techniques for forecasting ETC include some adjustment to the original cost estimate based on project performance to date. ETC = EAC - AC. An estimating technique that uses a statistical relationship between historical data and other variables to calculate an estimate. An estimate, expressed as a percent, of the amount of work that has been completed on an activity or group of activities. The physical work scheduled plus the authorized budget to accomplish the scheduled work. Formerly called Budgeted Cost of Work Scheduled (BCWS). A subset of project management that includes the processes required to ensure that the project is completed within the approved budget. A provision in the project plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g., management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated. The specific definition of the modified term varies by application area. A graphic display of cumulative cost, labor hours, percentage of work, or other quantities plotted against time. The name derives from the S-like curve of a project that starts slowly, accelerates, then tails off. Also a term for the cumulative likelihood distribution that is a result of simulation. (see Risk Management) The schedule efficiency ratio of earned value accomplished against the planned value. The SPI describes what portion of the planned schedule was actually accomplished. The SPI = EV/PV. Any difference between the scheduled completion of an activity and the actual completion of that activity. In earned value, SV = EV - PV. Index used to determine how efficient the project team must be to complete the remaining work within the remaining money.
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Performance Index (TCPI) Value Engineering (VE)
TCPI = (BAC-EV)/(BAC-AC) Value engineering is a creative approach used to optimize life cycle cost, save time, increase profits, improve quality, expand market share, solve problems, and/or use resources more effectively.
Project Cost Management Introduction

Project Cost Management:
Includes the processes required to ensure that the project is completed within the approved budget. Includes planning, estimating, budgeting and controlling costs. Is primarily concerned with the cost of the resources required to complete project activities. Should consider the effect of project decisions on the cost of using the projects product. For example: limiting the number of design reviews may reduce the cost of the project at the expense of an increase in service cost and an increase in the customers operating cost. A broader view of project cost management is often referred to as life-cycle costing. It involves including acquisition, operating, and disposal cost when evaluating various project alternatives. A creative approach used to optimize life cycle cost, save time, increase profits, improve quality, expand market share, use resources more effectively, and solve problems is called value engineering. Life cycle costing and value engineering techniques are used together to reduce cost and time, improve quality and performance, and optimize the decision-making. In many application areas, predicting and analyzing the prospective financial performance of the projects product is done outside the project. In some areas such as capital facilities projects, project cost management includes predicting and analyzing the prospective financial performance of the projects product. In these situations, project cost management will include general management techniques such as: Return on investment Discounted cash flow Payback analysis Should consider the information needs of the project stakeholders and the different ways and times stakeholders measure project cost. For example, the cost of a procurement item may be measured when committed, ordered, delivered, incurred, or recorded for accounting purposes. When project cost are used as a component of a reward and recognition system, controllable and uncontrollable cost should be estimated and budgeted separately to ensure that rewards reflect actual performance. The ability to influence cost is greatest at the early stages of the project. Early scope definition and requirements identification are critical to reducing cost in a project. Cost management planning can establish: Precision level Units of measure Organizational procedures links Control thresholds Earned value rules Reporting formats Process descriptions
Copyright IBM Corp. 2002, 2005 Project Cost Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 4-7
Project Cost Management Processes

Cost Estimating (7.1): (Process Group: Planning)
The process of developing an approximation (estimate) of the cost of the resources needed to complete project activities. In approximating cost, the estimator considers the causes of variation of the final estimate for purposes of better project management. Includes identifying and considering various costing alternatives. Where possible, estimates should be done prior to budget request rather than after budgetary approval is provided. Cost estimates can be refined during the project or reflect additional detail. Cost estimates may increase as the project progresses. Care must be taken to distinguish between cost estimating and pricing, especially for projects performed under contract. Cost estimating: involves developing an assessment of the likely quantitative result thus determining how much will it cost the performing organization to provide the product/service. Pricing: is a business decision which determines how much the performing organization will charge for the product or service. The cost is taken into consideration along with other factors. Estimated costs can include labor, materials, equipment, services, facilities, inflation allowance or contingency costs. Inputs include: Enterprise Environmental Factors Marketplace Conditions: The products, services and results and terms and - conditions under which they are available. Commercial databases: Provides resource cost rate information Organizational Process Assets - Cost estimating policies: Predefined approaches to cost estimating Cost estimating templates: Standard templates developed by - organizations Historical information: Provides information about a projects product or - service. Project files: Records of previous project performance, used to develop - cost estimates. Project team knowledge: Team recollection of previous actual costs or - estimates. Lessons learned Project Scope Statement Describes the projects business need, justification, requirements and - boundaries - Includes constraints, assumptions and requirements. Provides a list of deliverables and acceptance criteria. Work Breakdown Structure WBS Dictionary: Provides identification of the deliverables and a description of the work in each WBS component. Project Management Plan Schedule management plan
- Staffing management Risk register Tools and techniques include: Analogous estimating: (top down estimating) Uses the actual cost of a previous similar project as the basis for estimating - the cost of the current project. Is frequently used to estimate total project cost when there is a limited amount of detailed information about the project. (e.g., in the early project - phases) Generally less costly than other estimating techniques, but it is also generally less accurate. Most reliable when 1) the previous projects are similar in fact and not just in appearance, 2) the individuals or groups - preparing estimates have the needed expertise. Considered a form of expert judgment. Determine Resource Cost Rates: Uses project characteristics (parameters) in a mathematical model to - predict project cost. Requires knowledge of the cost rates such as staff cost per hour and bulk - material cost per cubic yard. Involves gathering quotes and obtaining data from commercial databases - and seller published price lists. If rates are not know, then the rates must be estimated. Bottom-up estimating: Involves estimating the cost of individual activities or work packages, then - summarizing or rolling-up the individual estimates to get a project total. The cost and accuracy is driven by the size and complexity of the individual activity or work package: smaller items increase both cost and accuracy of - the estimating process. The project management team must weigh the additional accuracy against the additional cost. Parametric estimating: - Uses statistical relationship between historical data and other variables - Produces higher levels of accuracy Involves multiplying the planned quantity of work by the historical cost per unit Project Management Software: - Project management software spreadsheets and simulation/statistical tools - are widely used to assist with cost estimating. Can simplify the use of the techniques described earlier and facilitate more rapid consideration of costing alternatives.
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Vendor Bid Analysis: : - Includes an analysis of what the project should cost. Additional cost estimating may be required to examine the deliverables and determine the costs. Reserve Analysis: - Also called contingency allowances. - Overstating the cost estimate is a potential problem. - Includes an analysis of what the project should cost. Additional cost estimating may be required to examine the deliverables and determine the costs. Cost of quality Outputs include: Activity Cost estimates: Quantitative assessments of the likely cost of the resources required to - complete project activities. (may be presented in summary or detail) Must be estimated for all resources that will be charged to the project. This includes, but is not limited to: labor, materials, supplies, and special - categories such as inflation allowance or cost reserve. Generally are expressed in units of currency to facilitate comparisons both within and across projects; however, units of measure such as staff hours or staff days may be used in addition to units of currency to facilitate appropriate project management control. Activity Cost estimate Supporting detail: A description of the scope of work estimated. (usually by a reference to the - WBS) - A description of how the estimate was developed. - Documentation of assumptions. - Documentation of any constraints. An indication of the range of possible results. For example, $30,000 $5,000 indicates that the cost is somewhere between $25,000 and $35,000 Requested Change Cost Management Plan
Cost Budgeting (7.2): (Process Group: Planning)

The process of allocating the overall cost estimates to individual activities or work packages to establish a cost baseline for measuring project performance. Inputs include: Project Scope Statement Work Breakdown Structure WBS Dictionary Activity Cost Estimates Activity Cost Supporting Detail Project Schedule Resource Calendars Contract Cost Management Plan Tools and techniques include: Cost aggregation: - Aggregates work packages per the WBS. Work package cost estimates are aggregated for the higher component levels in the WBS (control accounts and the entire project). Reserve analysis: - Establishes contingency reserves. Management contingency reserves are budgets reserved for unknown - unknowns (potentially required changes to project scope and cost). - Approval is required before the PM can spend this reserve. Reserves are not part of the project cost baseline nor the earned value calculation. Parametric estimating: - Involves using project characteristics in a math model to predict total costs. - Models can be simple or complex. Accuracy is reliable when historical information is used, the parameters are readily quantifiable, or the model is scalable. Funding limit reconciliation: Necessitates that scheduled work be adjusted to regulate expenditures by imposing constraint dates. . Outputs include: Cost baseline Cost baseline: A time-phased budget used to measure and monitor project cost - performance. Developed by summing estimated cost by period and is usually displayed - in the form of an S-curve. Many projects, especially larger ones, may have multiple cost baselines to measure different aspects of cost performance. For example, a spending plan or cash-flow forecast is a cost baseline for measuring disbursements. Project funding requirements: Derives total and periodic funding requirements from the cost baseline. Cost management plan (Updates) Requested Changes
Cost Control (7.3): (Process Group: Controlling)

The process of: Influencing the factors that create changes to the cost baseline to ensure that changes are beneficial Determining that the cost baseline has changed Cost control includes: Monitoring cost performance to detect and understand variances from plan. Ensuring that all appropriate changes are recorded accurately in the cost baseline. Preventing incorrect, inappropriate, or unauthorized changes from being included in the cost baseline. Informing appropriate stakeholders of authorized changes. Acting to bring expected cost within acceptable limits. Managing the actual changes when and as they occur. Recording all appropriate changes accurately against the cost baseline Assuring cost overruns do not exceed authorized funding Inputs include: Cost Baseline Project Funding Requirements Performance Reports: Provide information on project scope and cost performance such as which - budgets have been met and which have not. May also alert the project team to issues that may cause problems in the future. Work Performance Information: -- Status and cost of the project activities being performed. Includes completed and not yet completed deliverables, authorized and incurred costs, estimates to completion for schedule activities and percent complete of schedule activities. Approved Change Requests Project Management Plan Tools and techniques include: Cost change control system: - Defines the procedures by which the cost baseline may be changed. Includes the paperwork, tracking system and approval levels necessary for - authorizing changes. Should be integrated with the integrated change control system.
Performance measurement analysis: Assesses the magnitude of any variations which occur. Useful for cost control, resource management and production. Includes the following key values for each schedule activity, work package or control account: Planned value (PV): Budgeted cost for scheduled work on an activity or - WBS component. Earned value (EV): Budgeted amount for completed work on the schedule - activity or WBS component. Actual cost (AC): Total cost incurred in accomplishing work on the - schedule activity or WBS component. - Estimate to Complete (ETC) - Estimate at Completion (EAC) Cost variance (CV): The difference between the budget at completion and - the amount spent. Formula: CV+EV-AC Schedule variance (SV): Project is completed because all of the planned - values are earned. Formula: SV+EV-PV Cost Performance index (CPI): Less than 1.0 indicates a cost of overrun of the estimates. Greater than 1.0 indictees of cost underrun of the - estimates. Formula: CPI=EV/AC Schedule performance index (SPI): Predicts the completion date. Formula: SPI=EV/PV. Forecasting Includes making predictions regarding the projects future based on - available information. - Helps assess the cost or amount of work to complete scheduled activities. ETC based on new estimate: equals the revised estimate for the work - remaining. ETC based on atypical variances: Used when current variances are seen - as atypical. ETC based on typical variances: Used when current variances are typical - of future variances. EAC using a new estimate: Equals the actuals costs to date plus a new ETC. Project Performance Reviews: Compares cost performance over time, schedule activities or work packages, planned value, and milestones. Variance analysis: Compares actual project performance to planned or - expected value. Trend analysis: Examines project performance over time to determine if - performance is improving. Earned value technique: Compares planned performance to actual performance. Project Management Software: Used to track planned cost versus actual cost and to forecast the effects of cost changes. Variance Management: Describes how cost variances are managed. Outputs include: . Cost estimates (Updates): Modifications to the cost information used to manage the project.
- Appropriate stakeholders must be notified as needed. Revised cost estimates may or may not require adjustments to other aspects of the project plan. Cost baseline (Updates): Involves changes to an approved cost baseline. Performance Measurements: - The calculated CV, SV, CPI and SPI values for WBS components, in particular work packages and control accounts, are documented and communicated. Forecasted Completion: Either a calculated EAC value or a performing organization-reported EAC value is documented and the value communicated to stakeholders. Requested Changes Recommended Corrective Actions Organizational Process Assets (Updates) Project Management Plan (Updates)
Project Cost Management Concepts

Estimate Types:
Order of Magnitude: Range: -25% + 75% Typical method of estimating used: Analogous (top down) An approximate estimate made without detailed data Used during the initial evaluation of the project (Concept) Other terms: feasibility, conceptual, ball park Budget: Range: -10% + 25% Typical method of estimating used: parametric (accuracy may vary) Used to establish the funds required for the project (Development) Also used to obtain approval for the project Other terms: appropriations Definitive Range: -5% + 10% Typical method of estimating used: bottom up (WBS) Prepared from well defined specifications, data, drawings, etc. Used for bid proposals, bid evaluations, contract changes, extra work, legal claims, permit and government approvals.
Cost Types:
Sunk Cost: A historical or expended cost. Since the cost has been expended, we no longer have control over the cost. Sunk cost are not included when considering alternative courses of action. Fixed Cost: Nonrecurring cost that do not change based on the number of units, like expenses related to equipment required to complete a project. Variable Cost: Cost that rise directly with the size of the project, like expenses related to consumable materials used to accomplish the project. Indirect Cost: Cost that are part of the overall organizations cost of doing business and are shared among all the current projects. These include salaries of corporate executives, administrative expenses, any cost that would be considered part of overhead. Opportunity Cost: The cost of choosing one alternative and, therefore, giving up the potential benefits of another alternative. Direct Cost: Cost incurred directly by a specific project. These include cost for materials associated with the project, salary of the project staff, expenses associated with subcontractors.
Depreciation:
Straight-line Method: Takes an equal credit during each year of the useful life of an asset. Accelerated Method: Writes off the expense even faster than straight-line. Examples are double-declining balance and sum-of-the-years digits.
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Estimate at Completion (EAC) Variations:

EAC = Actuals to date plus a new estimate for all remaining work. (estimate to complete: ETC) Most often used when past performance shows that the original estimating assumptions were fundamentally flawed or no longer relevant to a change in conditions. Formula: EAC = AC + ETC. EAC = Actuals to date plus remaining budget. The remaining budget can be obtained by subtracting the earned value from the Budget at Completion (BAC). Most often used when any current variances are seen as atypical and the project management team expectations are that similar variances will not occur in the future. Formula: EAC = AC + (BAC - EV). EAC = Actuals to date plus the remaining project budget modified by a performance factor, often the cumulative cost performance index (CPI). Most often used when current variances are seen as typical of future variances. Formula: EAC = (AC + (BAC - EV)/CPI)
Profitability Measures for Project Selection:

Return on Sales (ROS) ROS = NEBT/Total Sales NEBT=net earnings before taxes ROS = NEAT/Total Sales NEAT=net earnings after taxes Return on Assets or return on investment ROA = NEAT/Total Assets ROI = NEAT/Total Investment Present Value (PV) A financial decision tool for accessing the value today of future cash flows based on the concept that payment today is worth more than payment tomorrow. PV = FV (1 + i)n
PV = present value of future money FV = future value of todays money i = interest rate (also called discount rate) n = no. of periods over which interest is compounded
Future Value (FV) How much today's money will grow when compounded at a given rate FV of money is calculated by compounding the present value with the prevailing interest rates FV = PV * (1 + i)n PV = Present Value i = interest rate (also called discount rate) n = no. of periods over which interest is compounded Net Present Value (NPV) Method A discounted cash flow (DCF) method of ranking investment proposals. The NPV is equal to the present value of future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment. If NPV of an investment is negative or is Zero, there is no real profit coming out of the investment If NPV is positive, it means that the rate of return from the project more than offsets reduction in the value of money over a period of time NPV = Sum of Present value of future Cash flows - Sum of Present Value of the Expenditures Benefit Cost Ratio (BCR) Benefit cost ratio (BCR) provides a measure of the expected profitability of a project by dividing the expected revenues by the expected cost BCR of 1.0 indicates that the project is break-even, expected benefits equal - expected cost BCR of less than 1.0 indicates that the project is not financially attractive, - expected cost exceed expected benefits BCR of greater than 1.0 indicates that project is profitable, expected benefits exceed expected cost Target Revenue should be at least 1.3X the cost. Does not indicate when you make a profit or loss. Benefit-cost ratio (BCR) = PV of revenue/PV of cost
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Internal Rate of Return (IRR) Average rate of return earned over the life of the project, expressed as a percentage The discount rate that equates the present value of the expected future cash flows to the present value of the cost of the project. Payback Period Number of time periods required to return the original investment. Calculates the duration taken to recover the investment by using predicted future cash flows Does not take into account factors like inflation and rate of interest, ignores the time value of money Payback period = Net Investment /Average Annual Cash Flow
Earned Value Analysis:

The problem of reporting work completed without the associated cost is resolved by Earned Value (EV). EV combines effort and time into a single dollar schedule. Financial data is important to a project manager because it can help manage a project to a successful completion. PV (BCWS) Planned value or budgeted cost of work scheduled. Equates to the physical work scheduled and the associated budget for the scheduled work. What was the planned spending for a given period of time? Earned value or budgeted cost of work performed. Equates to the physical work accomplished and the associated budget for this accomplished work. What work has been completed and what measurement is used to establish the accomplished value of these items? EV is the bridge between PV and AC. It is the key to relating three independent variables which can be used to measure the performance of the project and obtain a forecast for the future. Actual Cost or Actual Cost of Work Performed. Equates to the physical work accomplished and the actual cost of this accomplished work. What has been completed and what is the actual cost of these items? Budget at Completion = Total Budgeted Cost. What is the projects budget? Estimate at Completion (Estimated Cost at Completion) Depending on the situation, EAC may be calculated by different means. 1) EAC = AC + ETC when original assumptions are flawed 2) EAC = AC + (BAC - EV) when variances are considered to be atypical and not expected to occur again. 3) EAC = AC + (BAC-EV)/CPI where CPI is a cumulative. Used when variances are considered typical. 4) EAC = BAC/CPI ** Authors note. This is the old formula used by PMI . Know this one and use it if the only information you have is BAC and CPI and you are asked to calculate EAC. ** What is the total project expected to cost? How much will the project cost at completion? Estimate to Complete (Estimate of the additional funds needed to complete the project). ETC = EAC - AC What is the estimate of additional funds needed to complete the project? Variance at Completion. The difference between the total amount the project was supposed to cost (BAC) and the amount the project is now expected to cost (EAC). VAC = BAC - EAC Cost Performance Index (cost performance factor, measures efficiency) CPI = EV/AC, a value of less than 1.0 indicates less productivity than expected. This is a measure of the financial well being of the project. How efficient is the project? How fast are things getting done from a financial point of view?
EV (BCWP)
AC (ACWP)
BAC EAC
ETC
VAC
CPI
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CV
SPI
SV
PC
PS
TCPI
Rule of Thumb: 20-80 Rule 50-50 Rule of Progress Reporting 0-100 Rule of Progress Reporting 100-0 Rule of Progress Reporting Milestone Rule of Progress Reporting
Cost Variance (valued in dollars). This is a measure of the financial well being of the project. CV = EV - AC, a value of zero indicates that the project is on budget. How far off are the scheduled cost of things to be completed from the actual amount spent? Schedule Performance Index (schedule performance factor, measures effectiveness). Indicates which portion of the planned schedule was actually accomplished. SPI = EV/PV, a value of less than 1.0 indicates less has been completed than was scheduled. How well is the project progressing in comparison to the expected progression? Schedule Variance (valued in dollars). SV = EV - PV, a value of zero indicates that the project is on schedule. How far off schedule is the project from a financial point of view? Percent Complete (real value of work accomplished). Tells the PM how much of the project has been completed. PC = EV/BAC How much of the project has been completed? Percent Spent. Tells the PM how much of the BAC has been used to date. PS = AC/BAC How much of the budget at completion has been used to date? To-Complete Performance Index (verification factor) TCPI = (BAC-EV)/BAC-AC) (a cost index). Values for the TCPI index of less then 1.0 is good because it indicates the efficiency to complete is less than planned. How efficient must the project team be to complete the remaining work with the remaining money? You can use indexes (CPI or SPI) to determine efficiency if youve completed at least 20% of the project. Researchers have found that the cumulative CPI doesnt change by more then 10% when 20% of a project is done. 50% credit of the PV is charged to the activitys account; when the task completes, the remaining 50% is charged to the account. Assumes all tasks generally are of the same size. 0% credit is taken when activity starts and 100% of the PV is credited when activity completes. Used for activities that are started and completed within 1 accounting period. 100% credit is assumed when the activity starts. Used for activities that are generally small and do not take much time to complete. A percentage (%) of the value is assumed when a definitive milestone is reached.
Sample Problems

Given the following problem: Work Completion Unit Date A B C D E F G H I J Jan. 31 Feb. 28 Mar. 31 May 12 June 30 July 18 Aug. 30 Sept. 22 Oct. 29 Nov. 30 Budget (in $M) 10 5 6 15 20 3 35 22 12 9 Work Performed ($M) 10 4 8 13 20 0 0 0 0 0 Actual Cost (in $M) 12 5 8 12 30 0 0 0 0 0
Today is June 30th.
1. 2. 3. 4. 5. 6. 7. 8. 9.
What is the Cost Variance? What is the Schedule Variance? What is the CPI? What is the SPI? What is the EAC? What is the ETC? What is the Percent Complete? What is the Percent Spent? What can be said about this project?
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Present Value and Net Present Value:

1. What is the present value of $1000 at 12% at the end of 5 years? 2. What is the present value of an annual income flow of $1600 at 10% over the next 3 years? 3. Management is considering buying a machine for $10,000 which is expected to save $4,000 per year over the next 3 years. If the desired rate of return is 15% per annum, should the machine be bought? May use the following table to simplify the calculations. Yr 1 2 3 1/(1+.15)**t 0.870 0.756 0.658
4. For problem #3 above make the assumption that the company didnt have to pay for the machine until the third year. Compute the net present value and determine if the company should buy the machine. 5. Given the following:
Yrs 0 1 2 3 4 5 6 7
Revenue 0 3,000 13,500 30,000 40,000 50,000 50,000 50,000
PV(r)
Cost 50,000 35,000 15,000 5,000 5,000 5,000 10,000 15,000
PV(c)
A. Calculate the present value of both revenue and cost assuming a 10% interest rate. B. Calculate the benefit-cost ratio. C. Based on the BCR and profitability alone, would you do this project?
Sample Problem Answers

Given the following problem: Work Completion Unit Date A B C D E F G H I J Jan. 31 Feb. 28 Mar. 31 May 12 June 30 July 18 Aug. 30 Sept. 22 Oct. 29 Nov. 30 Budget (in $M) 10 5 6 15 20 3 35 22 12 9 Work Performed ($M) 10 4 8 13 20 0 0 0 0 0 Actual Cost (in $M) 12 5 8 12 30 0 0 0 0 0
Today is June 30th. BAC = Sum of the Budgets for all of the work units = $137
1. What is the Cost Variance? Work Performed (EV) - Actual Cost $55 - $67 = -$12 2. What is the Schedule Variance? Work Performed (EV) - Budget (PV) $55 - $56 = -$1 3. What is the CPI? EV/AC $55/$67 = 0.82 4. What is the SPI? EV/PV $55/$56 = 0.98 5. What is the EAC? AC + (BAC - EV)/CPI $67 + ($137-$55)/.82 = $167 or BAC/CPI $137/.82 = $167 6. What is the ETC? EAC - AC $167 - $67 = $100 7. What is the Percent Complete? EV/BAC $55/$137 = 40% 8. What is the Percent Spent? AC/BAC $67/$137 = 49% 9. What can be said about this project? Over cost, a little behind schedule
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Present Value and Net Present Value:

1. What is the present value of $1000 at 12% at the end of 5 years? PV(5) = $1000/(1.12)**5 = $567.44 So, if $567.44 is invested at a rate of 12%/year for 5 years, we will have $1000 at the end of the fifth year. 2. What is the present value of an annual income flow of $1600 at 10% over the next 3 years? Yr 1 2 3 1/(1+.10)**t .909 .826 .751 PV $1600*.909 = $1454.55 $1600*.826 = $1322.31 $1600*.751 = $1202.10
PV = $1454.55 + $1322.31 + $1202.10 = $3978.96 3. Management is considering buying a machine for $10,000 which is expected to save $4,000 over the next 3 years. If the desired rate of return is 15% per annum, should the machine be bought? May use the following table to simply the calculations. Yr 1 2 3 1/(1+.15)**t 0.870 0.756 0.658
NPV = PV(1) + PV(2) + PV(3) - Sum of Investment Cost NPV = $4000(0.87) + $4000(.756) + $4000(.658) - $10,000 NPV = $3480 + $3024 + $2632 - $10,000 = -$864 NPV is negative; therefore, this is not considered a good investment. 4. For problem #3 above make the assumption that the company didnt have to pay for the machine until the third year. Compute the net present value and determine if the company should buy the machine. NPV = PV(1) + PV(2) + PV(3) - Sum of Investment Cost NPV = $4000(0.87) + $4000(.756) + $4000(.658) - $10,000(.658) NPV = $3480 + $3024 + $2632 - $6,580 = $2,556 NPV is positive; therefore, this is considered a good investment.
5. Given the following:
Yrs 0 1 2 3 4 5 6 7
Revenue 0 3,000 13,500 30,000 40,000 50,000 50,000 50,000
PV(r) 0 2,727 11,157 22,539 27,321 31,046 28,224 25,658 148,672
Cost 50,000 35,000 15,000 5,000 5,000 5,000 10,000 15,000
PV(c) 50,000 31,818 12,397 3,757 3,415 3,105 5,644 7,697 117,833
A. Calculate the present value of both revenue and cost assuming a 10% interest rate. B. Calculate the benefit-cost ratio. BCR = PV(r)/PV(c) BCR = 148,672/117,833 = 1.26 C. Based on the BCR and profitability alone, would you do this project? Depends on who you ask. Should be 1.3 x cost before considering.
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Depreciation:
Given $100,000 depreciated over 4 years, what would be the depreciation per year for the straight-line, double-declining, and sum-of-the-years-digits methods? Year 1 2 3 4 SL $25,000 $25,000 $25,000 $25,000 DDB $50,000 $25,000 $12,500 $6,250 SYD $40,000 $30,000 $20,000 $10,000
SL: Same amount depreciated each year/period. Accelerated DDB: The depreciation rate is 2*(1/n) where n is the life of the asset. This gives a depreciation rate of 2*(1/4) = 0.5. Thus the asset depreciates 50% during the first year. Apply the same rate every year to the remaining balance. Thus, in year two the depreciation is 0.5*$50,000 = $25,000, etc. SYD: No. of years left/Sum of the years. Year 1: 4/10 or 40% Year 2: 3/10 or 30% Year 3: 2/10 or 20% Year 4: 1/10 or 10% Sum of the Years is arrived at in this example by adding the years, for 4 years you add 4 + 3 + 2 + 1 to get the 10. You then take for the first year 4/10, the second year 3/10, the third year 2/10, and the fourth year 1/10. If this was being depreciated over 5 years, you would add 5 + 4 + 3 + 2 + 1 and get 15. You would then take for the first year 5/10, the second year 4/10, the third year 3/10, the fourth year 2/10, and the fifth year 1/10.
Sample Questions
1. Which of the following are all considered processes of Project Cost Management?
A. Resource Leveling, Resource Planning, Cost Estimating, Cost Budgeting, Cost Control
B. Resource Planning, Schedule Development, Cost Budgeting, Cost Control C. Resource Planning, Cost Estimating, Schedule Control, Cost Budgeting D. Cost Estimating, Cost Budgeting, Cost Control 2. What is double declining balance? A. It is a form of asset depreciation where the asset is depreciated by equal amounts over its asset life B. It is a form of accelerated asset depreciation. C. It is a form of non-accelerated asset depreciation. D. It is a formula for calculating project payback. 3. The inputs to Cost Budgeting includes all of the following except: A. Activity Cost estimates B. Cost baseline C. WBS D. Project schedule 4. During the six month update on a 1 year, $50,000 project, the analysis shows that the PV is $25,000; the EV is $20,000 and the AC is $15,000. What can be determined from these figures? A. The project is behind schedule and over cost. B. The project is ahead of schedule and under cost. C. The project is ahead of schedule and over cost. D. The project is behind schedule and under cost. 5. Earned value is: A. Actual cost of work performed. B. Budgeted cost of work scheduled. C. Budgeted cost of work performed. D. Budget at completion. 6. Which of the following Cost Management processes are concerned with cost baseline? A. Cost estimating B. Cost budgeting C. Cost control D. B and C
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7. Cost control is concerned with: A. Allocating the overall estimates to individual work packages in order to establish a cost baseline. B. Influencing the factors which create changes to the cost baseline to ensure that changes are beneficial. C. Determining that the cost baseline has changed. D. B and C 8. Which of the following statements concerning bottom-up estimating is true? A. The cost and accuracy of bottom-up estimating is driven by the size of the individual work items. B. Smaller work items increase both cost and accuracy of the estimating process. C. Larger work items increase both cost and accuracy of the estimating process. D. A and B 9. Percent complete is calculated by: A. AC/BAC B. EV-AC C. EV/BAC D. EAC/BAC 10. Life cycle costing: A. Improves decision-making, reduces cost and execution time and improves the quality and performance of the project deliverable. B. Includes only the cost of the development or acquisition of a product or service. C. Does not take into consideration the effect of project decisions on the cost of using the resulting product. D. B and C 7. Analogous estimating: A. Uses bottom-up estimating techniques. B. Uses the actual cost from a previous, similar project. C. Is synonymous with top-down estimating. D. B and C 8. For a project with original assumptions that are no longer relevant to a change in conditions, Estimated at Completion is most likely determined by which technique? A. ETC + AC B. AC + BAC - EV C. AC + (BAC - EV)/CPI D. ETC + EV
13. Parametric cost estimating involves: A. Calculating individual cost estimates for each work package. B. Using rates and factors based on historical experience to estimate cost. C. Using the actual cost of a similar project to estimate total project cost. D. A and B 14. A cost management plan is: A. A plan for describing how cost variances will be managed. B. A subsidiary element of the project charter. C. An input to the Cost Estimating process. D. A and C 15. Cost estimating: A. Involves developing an estimate of the cost of the resources needed to complete project activities. B. Includes identifying and considering various costing alternatives. C. Involves allocating the overall estimates to individual work items. D. A and B 16. Which of the following is not established by the cost management plan? A. Control thresholds B. Units of measure C. Organizational procedures links D. Assumptions
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Questions: 17 - 20 Task PV 1 9,500 2 15,000 3 13,000 4 8,000 AC 10,000 13,000 13,000 8,000 EV 9,500 11,000 13,000 9,000
17. Which task is MOST over budget? A. Task 1 B. Task 2 C. Task 3 D. Task 4 18. Which task is ahead of schedule and under cost? A. Task 1 B. Task 2 C. Task 3 D. Task 4 19. Which task is on schedule with a cost variance of $0? A. Task 1 B. Task 2 C. Task 3 D. Task 4 20. Which task has the greatest schedule variance? A. Task 1 B. Task 2 C. Task 3 D. Task 4
21. A Reserve is GENERALLY intended to be used for: A. Rework activities. B. Compensate for inaccurate project cost estimates. C. Reducing the risk of missing the cost or schedule objectives. D. Compensate for inaccurate project schedule estimates. 22. Which of the following statements is true about the code of accounts ? It is a numbering system used to monitor project cost by category. B. It is based on the corporate chart of accounts of the performing organization. It is a numbering system used to uniquely identify each element in the WBS. is synonymous with chart of accounts. 23. Present Value measures: A. The value today of future cash flows. B. The rate of return on an investment. C. The current estimate of our project budget. D. The value of work completed. 24. If the schedule variance is negative, then: A. We have shortened the critical path. B. We are running the project in "fast track" mode. C. The cost has increased for critical path elements. D. We need more information to determine the cause of the variance. 25. You have calculated both the cost variance and schedule variance on your project and have found that they are exactly the same; -$200. This indicates that: A. The value of the work completed is equal to the value of the work scheduled. B. The actual cost of work completed is $200 less than the value of the work scheduled. C. The value of the work scheduled is equal to the actual cost of the work completed. D. The value of the work scheduled is equal to the value of the work completed. 26. Which of the following is NOT a key input to cost budgeting? A. Project cost estimates B. Project schedule C. The WBS D. Staff availability 27. The cost change control system: A. Should not be integrated with the integrated change control system. B. Compensates for inaccurate project cost estimates. C. Defines the procedures by which the cost baseline may be changed. D. Describes how cost variances will be managed. A. C. D. It
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28. The payback period of an investment is: A. The period of time required for the cash income to equal to the original investment plus the required investment margin. B. The period of time required for the cash income to equal the original investment. C. The period of time required for the original investment to return an amount equal to the cost of capital. D. The period of time required for the original investment to return an amount equal to the original investment less applicable taxes and depreciation.
29. When using Earned Value Management, the difference between what has been accomplished and what was scheduled is called the: A. Cost Variance B. Schedule Variance C. Projected Variance at completion D. Labor Variance 30. Which of the following is used to determine how efficient the project team must be to complete the remaining work within the remaining money? A. Schedule Performance Index (SPI) B. Percent Complete (PC) C. To-Complete Performance Index (TCPI) D. Cost Performance Index (CPI)
Answer Sheet
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Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 D B B D C D D D C A D A B A D D B D C B C C A D PMBOK Guide, Chapter 7 pg 157 Project Cost Management Study Guide section on Depreciation. PMBOK Guide, Section 7.2.1, pgs 168 Can verify through CV and SV or CPI and SPI. PMBOK Guide, Section 7.3.2.2 pg 172-173 PMBOK Guide, Section 7.2 and 7.3 pg 167-178 PMBOK Guide , Section 7.3, pg 171-172 PMBOK Guide , Section 7.1.2.3, pg 165 (Option A is percent spent), Glossary page 366 PMBOK Guide , Section Chapter 7, pg 157 7.2.2.1, pg 88 PMBOK Guide , Section 7.1.2.1 pg 164 PMBOK Guide , Section 7.3.2.2, pg 172-173 PMBOK Guide , Section 7.1.2.4 pg 165 PMBOK Guide , Chapter 7, pg 157 PMBOK Guide , Section 7.1, pg 161 PMBOK Guide , Chapter 7, pg 158 Check the cost variance. CV = EV - AC A negative number means over budget. Check the schedule and the cost variance. CV = EV - AC; SV = EV - PV Check cost and schedule variances. Check the schedule variances. PMBOK Guide glossary, page 372 Section 7.1.2.7 pg 166 PMBOK Guide glossary 354 Definition of Present Value Schedule variance = EV - PV. If the variance is negative then PV > EV. This just tells us that the project is behind schedule, but not the reason for the delay. SV = EV - PV and CV = EV - AC If SV = CV, then PV = AC since EV is the common variable in both equations. PMBOK Guide , Section 7.2.1, pg 168 PMBOK Guide , Section 7.3.2.1 pg 172 This is the standard definition of Payback Period . PV is not used PMBOK Guide glossary, page 359 Project Cost Management Study Guide section on "Earned Value Analysis"
25 C 26 27 28 29 30 D C B B C
Number
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
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PROJECT QUALITY MANAGEMENT
STUDY NOTES
PMBOK
Trademarks
Disclaimer PMI makes no warranty, guarantee, or representation, express or implied, that the successful completion of any activity or program, or the use of any product or publication, designed to prepare candidates for the PMP Certification Examination, will result in the completion or satisfaction of any PMP Certification eligibility requirement or standard., service, activity, and has not contributed any financial resources. Initially Prepared By: Kim Ulmer Edited By: Peter Dapremont
July 2005 Edition The information contained in this document has not been submitted to any formal IBM test and is distributed on an as is basis without any warranty either express or implied. The use of this information or the implementation of any of these techniques is a customer responsibility and depends on the customers ability to evaluate and integrate them into the customers operational environment. While each item may have been reviewed by IBM for accuracy in a specific situation, there is no guarantee that the same or similar results will result elsewhere. Customers attempting to adapt these techniques to their own environments do so at their own risk.
Project Quality Management
Quality Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Third Edition), Chapter 8 Quality Management for Projects and Programs, Ireland, Lewis R., 1991 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 What to Study? The PMBOK phases of Project Quality Management: Quality Planning, Perform Quality Assurance, and Perform Quality Control (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase) Know the difference between quality and grade. Know the difference between Quality Control and Quality Assurance Project characteristics and attributes (the bilities) (Ireland, Chapter II) Cost of Quality (Ireland, Chapter IV) Statistical Concepts and Quality Tools (Ireland, Chapter V) Cost Trade-offs Know the difference between the ISO 9001 Certification and the Malcom Baldrige Award. Know the difference between the Deming, Juran, and Crosby Management approaches Pareto chart and fishbone diagrams
Copyright IBM Corp. 2002, 2005 Project Quality Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Key Definitions
Control The process of comparing actual performance with planned performance, analyzing variances, evaluating possible alternatives, and taking appropriate corrective action as needed. A graphic display of the results, over time and against established control limits, of a process. The charts are used to determine if the process is in control or in need of adjustment. Changes made to bring expected future performance of the project in line with the plan. The cost incurred to ensure quality. Includes quality planning, quality control, quality assurance, and rework. A category or rank used to distinguish items that have the same functional use (e.g., hammer), but do not share the same requirements for quality (e.g., different hammers may be built to withstand varying degrees of force) The capture, analysis, and reporting of project performance, usually as compared to plan. A technique that performs a project simulation many times to calculate a distribution of likely results. A histogram ordered by frequency of occurrence that shows how many results were generated by each identified cause. Collecting and disseminating information about project performance to help access project progress. Includes status reporting, progress measurement, and forecasting. The processes required to ensure that the project will satisfy the needs for which it was undertaken. Modern quality management complements modern project management in that both recognize the importance of customer satisfaction and prevention over inspection. The totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs. 1) The process of evaluating overall project performance on a regular basis to provide confidence that the project will satisfy the relevant quality standards. 2) The organizational unit that is assigned responsibility for quality assurance.
Control Charts
Corrective Action Cost of Quality Grade
Monitoring Monte Carlo Analysis Pareto Chart Performance Reporting
Quality Quality Assurance (QA)
5-4 Project Quality Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Quality Control (QC)
Quality Plan
Quality Policy
Quality Planning Rework Total Quality Management (TQM)
1)The process of monitoring specific project results to determine if they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance. 2) The organizational unit that is assigned responsibility for quality control. A document setting out the specific quality practices, resources and sequence of activities relevant to a particular product, service, contract or project. (ISO-8402) The overall quality intentions and direction of an organization as regards quality, as formally expressed by top management. (ISO-8402) Identifying which quality standards are relevant to the project and determining how to satisfy them. Action taken to bring a defective or nonconforming item into compliance with requirements or specifications. A common approach to implementing a quality improvement program within an organization.
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Project Quality Management Concepts

Project Quality Management:
Includes the processes required to ensure that the project will satisfy the needs for which it was undertaken. Includes all activities of the overall management function that determine the quality policy, objectives, and responsibilities and implements these by means such as quality planning, quality assurance, quality control, and quality improvement within the quality system. Must address both the management of the project and the product or service of the project. Failure to meet quality requirements in either dimension can have serious negative consequences for the project stakeholders. For example: Meeting customer requirements by overworking the project team may produce negative consequences in the form of increased employee attrition. Meeting project schedule objectives by rushing planned quality inspections may produce negative consequences when errors go undetected. Today quality management complements project management, both disciplines recognize the importance of: Customer satisfaction: Understanding, managing, and influencing needs so that customer expectations are met. Requires a combination of conformance to requirements and fitness for use. (the product/service must satisfy real needs) Prevention over inspection: the cost of preventing mistakes is always much less than the cost of correcting the mistakes, as revealed by inspection. Management responsibility: success requires the participation of all members of the team, but it remains the responsibility of management to provide the resources needed to succeed. Continuous improvement: the repeated plan-do-check-act cycle described by Deming and others is highly similar to the Project Management Processes. (described in Chapter 3 of the PMBOK Guide.)
Quality:
Is the totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs. Stated and implied needs are the inputs to developing project requirements. Should not be confused with grade. Grade is a category or rank given to entities having the same functional use but different technical characteristics. Low quality is always a problem; low grade may not be. For example: A software product may be of high quality (very few defects, a readable users manual) but of low grade meaning it has a limited number of features. Or, a software product may be of low quality but of high grade meaning it has many defects but lots of customer features.
Project Quality Management Processes

Quality Planning (8.1): (Process Group: Planning)
The process of identifying which quality standards are relevant to the project and determining how to satisfy them. Quality should be planned in, not inspected in. Inputs include: - Enterprise environmental factors: Regulations, rules, standards and guidelines specific to the application and how they affect the project - Organizational Process Assets Quality policies, procedures, guidelines, historical databases, and lessons learned specific to the application and how they affect the project. The overall intentions and direction of an organization with regard to quality, as formally expressed by top management. When a formal quality policy is not available, or in the case of joint ventures involving multiple performing organizations, the project management team will need to develop a quality policy for the project. Regardless of origin, the project management team is responsible for ensuring that the project stakeholders are fully aware of the quality policy. Project Scope Statement: Documents the project deliverables and objectives that define the requirements. If cost time or resources are exceeded, the project management team must take action. Project Management Plan
Tools and techniques used during quality planning include: Cost/benefit analysis: Must consider cost/benefit tradeoffs during quality planning. The primary benefit of meeting quality requirements is less rework which translates to higher productivity, lower costs, and increased stakeholder satisfaction. The primary cost of meeting quality requirements is the expense associated with project quality management activities. The benefits of the quality management discipline outweigh the costs. Benchmarking: involves comparing actual or planned project practices to those of other projects (either within the performing organization or external) to generate ideas for improvement and to provide a standard by which to measure performance. Design of Experiments: A statistical method that helps identify which factors might influence specific variables of a product or process under development or in production. Cost of quality Refers to the total cost incurred by investment in preventing nonconformance to requirements Failure costs are called cost of poor quality
Copyright IBM Corp. 2002, 2005 Project Quality Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 5-7
Additional Quality Planning Tools: Includes brainstorming, affinity diagrams, matrix diagrams and flowcharts. Outputs include: Quality Management Plan Describes how the performing organizations quality policy is implemented. Addresses quality control, quality assurance and continuous process improvement. Should include efforts to ensure that earlier decisions are correct. Quality Metrics Describes what the actual value of something is and how the quality control process measures it. Examples include defect density, failure rate, availability, reliability and test coverage. Quality Checklists: Verifies that a set of required steps are completed. Process Improvement Plan: Details the steps for analyzing processes that increase customer value. Process boundaries: Describes the purpose, start and end of processes, inputs and outputs, required data, the owner and stakeholders, Process configuration: A flowchart of processes to facilitate analysis with interfaces. Process metrics: Maintain control over status of processes. Targets for improved performance: Guides the process improvement activities. Quality Baseline: Records quality objectives. Records quality objectives. This is the basis for measuring and reporting quality performance. Project Management Plan (Updates)
Perform Quality Assurance (8.2): (Process Group: Executing)

The process of planned, systematic quality activities to provide confidence that the project will satisfy the relevant quality standards. Provides opportunity for continuous process improvement which improves the quality of all processes Reduces was and non-value added activities. Should be performed throughout the project. Often, although not always, provided by a Quality Assurance Department or similarly titled organization. Inputs include: - Quality management plan: Results of quality control measurements and operation definitions - Quality metrics - Process improvement plan - Work performance information: Includes technical performance measures, the status of project deliverables, corrective actions and performance reports. - Approved change requests: Approved changes can be used in audits, quality reviews, and process analyses. - Quality control measurements: Used in reevaluating and analyzing quality standards and processes of the performing organization. - Implemented change requests - Implemented corrective actions - Implemented defect repair - Implemented preventive actions Tools and techniques used include: Quality planning tools and techniques: includes benefit/cost analysis, benchmarking, flowcharting, checklists, etc. Quality audits: A structured review of other quality management activities. The objective of a quality audit is to identify inefficient and ineffective policies, processes and procedures in use. Results in reduced cost of quality and an increase in percentage of acceptance of the product or service. May be scheduled or random; may be carried out by trained in-house auditors or by third parties such as quality system registration agencies. Process analysis Identifies organizational and technical improvements needed Examines problems, constraints and non-value-added activities Includes root cause analysis Quality control tools and techniques Outputs include: Requested changes Recommended corrective actions
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Organizational Process Assets (Updates) Project management plan (Updates)
Perform Quality Control (8.3): (Process Group: Controlling)

The process of monitoring specific project results to determine if the results comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance. Should be performed throughout the project. Project results include both product results such as deliverables and project management results such as cost and schedule performance. Often, although not always, provided by a Quality Control Department or similarly titled organization. Project management team should have a working knowledge of statistical quality control, especially sampling and probability, to help evaluate quality control outputs. The team may find it useful to know the differences between: Prevention: keeping errors out of the process, versus, Inspection: keeping errors out of the hands of the customer. Attribute sampling: the result either conforms or it does not, versus, Variables sampling: the result is rated on a continuos scale that measure that degree of conformity. Special causes: unusual events, versus, Random causes: normal process variation. Tolerances: the result is acceptable if it falls within the range specified by the tolerance, versus, Control limits: the process is in control if the result falls within the control limits. Note: Result can be within the control limits of a process but out of tolerance. Inputs include: Quality management plan Quality metrics Quality checklists Organizational process assets Work performance information: Includes technical performance measures, status of project deliverables and implementation of corrective actions. Approved change requests: Includes modifications such as revised work methods and schedule. Deliverables Tools and Techniques used during quality control include: - Cause and effect diagram: Also called fishbone or Ishikawa diagrams. Identifies how various factors are linked to problems or effects. Control charts: Graphic displays of the results over time of a process. Shows when a process is subject to special variation.
Used to determine if the process is in control (e.g., are differences in the results attributed to random variations or unusual events whose causes must be identified and corrected?) Although most frequently used to track repetitive activities such as manufacturing lots, control charts may be used to monitor any type of output variable. Examples: cost and schedule variances, volume and frequency of scope changes, errors in project documents, etc. Can be used for project and product life cycle processes. Flowcharting: Graphical representation of a process that analyzes how problems occur. Shows activities, decision points and the order of processing. Helps a team anticipate what and where quality problems may occur. Histogram: Shows how variables are distributed using a bar chart. Helps identify the cause of problems Pareto charts: Histograms ordered by frequency of occurrence that display how many results were generated by type or category of an identifiable cause. Rank ordering is used to guide corrective action with the assumption that the project team should take action to fix the problems that are causing the greatest number of defects, first. Are conceptually related to Paretos Law which holds that a relatively small number of causes will typically produce a large majority of the problems or defects. This is commonly referred to as the 80/20 principle where 80% of the problems are due to 20% of the causes. Run chart: Shows the history and pattern of variation. Shows data points plotted in the order of occurrence on a line graph. Shows trends in a process over time. Uses trend analysis to monitor technical performance and cost and schedule performance. Scatter diagram: Shows the pattern of relationship between two variables. Enables the quality team to study and identify the relationship between changes observed in the two variables. Statistical Sampling: Involves choosing part of a population of interest for inspection. (e.g., selecting ten engineering drawings at random from a list of seventy-five). Reduces the cost of quality control. In some application areas, the project management team must be familiar with a variety of sampling techniques. Inspection: Includes activities such as measuring, examining, and testing undertaken to determine whether results conform to requirements. May be conducted at any level (e.g., the results of a single activity may be inspected or the final project product). May be called reviews, product reviews, audits, and walkthroughs. Note: in some application areas these terms have narrow and specific meanings.
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Defect Repair Review: Ensures that product defects are repaired and brought into compliance with requirements or specifications. Outputs include: - Quality control measurements: Represents the results of quality control activities that are fed to quality analysis. - Validated defect repair: Acceptance or rejection of repaired items after re-inspection. - Quality baseline (updates) - Recommended corrective actions - Recommended preventive actions Requested changes - Recommended defect repair - Organization Process Assets: Includes completed checklists and lessons learned documentation. Validated deliverables: Determines the correctness of deliverables. - Project management plan (updates)
Project Quality Management Concepts

Definition of Quality: (from Ireland book)
Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Some goals of quality programs include: Fitness for use. (Is the product or service capable of being used?) Fitness for purpose. (Does the product or service meet its intended purpose?) Customer satisfaction. (Does the product or service meet the customers expectations?) Conformance to the requirements. (Does the product or service conform to the requirements?)
Quality Movements:
ISO (International Organization for Standardization) A worldwide federation of national standard bodies. The work of preparing international standards is done by ISO technical committees. ISO 9001 and ISO 9004 are a set of complementary standards with a focus on quality. ISO 9001 specifies requirements for a quality management system that can be used for internal application, ISO certification, or for contractual purposes. ISO 9004 provides guidance on a wider range of objectives of a quality management system than ISO 9001. It emphasizes the continual improvement of an organizations overall performance, efficiency, and effectiveness. Used in organizations whose top management wishes to move beyond the requirements of ISO 9001 in pursuit of continual improvement. ISO 9004 is not used for ISO certification or contractual purposes. Requirements are centered around a methodology called Plan, Do, Check, Act (PDCA) Plan: Establish the objectives and processes necessary to deliver results in accordance with customer requirements and the organizations policies. Do: Implement the processes. Check: Monitor and measure processes and product against policies, objectives, and requirements for the product and report the results. Act: Take actions to continually improve process performance.
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Quality Movements, cont.

Deming Prize (Overseas) Administered by the Union of Japanese Scientists and Engineers (JUSE) Awarded to overseas companies that demonstrate a superior quality program Checklist includes: organizations policy, structure, education, collection, dissemination, and use of information, analysis of problems, establishment and use of standards, management system, quality assurance, effects, and future plans. (See Ireland, Appendix A) Demings 4 step cycle for improvement: Plan, Do, Check, Act Demings major points for implementing quality 1. Participative approach 2. Adopt new philosophy 3. Cease mass inspection 4. End awards based on price 5. Improve production and service 6. Institute leadership 7. Eliminate numerical quotas 8. Education and training 9. Encourage craftsmanship Malcolm Baldrige The Malcolm Baldrige National Quality Improvement Act was established in Aug. 20, 1987. Purpose of the act was to promote quality awareness; to recognize quality achievements of U.S. companies, and to publicize successful quality strategies. Covers the following seven categories: (See Ireland, Appendix B) 1. Leadership 2. Information and Analysis 3. Strategic Quality Planning 4. Human Resources 5. Quality Assurance 6. Results 7. Customer Satisfaction Department of Defense: Total Quality Management (TQM) Quality is key to maintain level of readiness Quality is vital to our defense, requires a commitment by all personnel Quality is a key element of competition
Quality Movements, cont.

Juran Attitude breakthrough Identify vital new projects Knowledge breakthrough Conduct the analysis Institute change Overcome resistance and institute controls
Philip Crosby (ITT): Quality is Free Four absolutes of quality management: 1. Quality is conformance to requirements. 2. The system of quality is prevention. 3. The performance standard is zero defects 4. The measurement of quality is the price of nonconformance. 14 steps to improving quality. 1. Management commitment 2. Quality improvement team 3. Measurement 4. Cost of quality 5. Quality awareness 6. Corrective action 7. Zero defects planning 8. Employee education 9. Zero defects day 10. Goal setting 11. Error cause removal 12. Recognition 13. Quality councils 14. Do it over again
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Quality Concepts:
Zero Defects Implies that there is no tolerance for errors within the system. The goal of all processes is to avoid defects in the product or service. Similar to six sigma: almost zero defects The Customer is the Next Person in the Process The internal organization has a system that ensures the product or service is transferred to the next person in the process in a complete and correct manner. The product or service being built is transferred to another internal party only after it meets all the specifications and all actions at the current work station. Avoids incorrectly assembled components and poor workmanship. Do the Right Thing Right the First Time (DTRTRTFT) Implies that it is easier and less costly to do the work right the first time than it is to do it the second time. Entails the training of personnel to ensure sufficient skills and tools to correctly complete the work. Continuous Improvement Process (CIP) (From Japanese word, Kaizen) A concept which recognizes that the world is constantly changing and any process that is satisfactory today may well be unsatisfactory tomorrow. A sustained, gradual change to improve the situation. Differs from innovation -- does not make a sudden jump to a plateau where it matures over time. (see Ireland, I-6) Focuses on 11 principles: constancy of purpose, commitment to quality, customer focus and involvement, process orientation, continuous improvement, system-centered management, investment in knowledge, teamwork, conservation of human resources, total involvement, and perpetual commitment. Rather than manage the output of the project, the focus is on managing the total process and subprocesses. The process is held constant only after it has been proven capable of the work. Hence, the product naturally meets the requirements. CIP steps: Define and standardize processes (and subprocesses). Assess process performance. Improve processes. Measure progress.
Project Characteristics/Attributes that bear on quality:

Producibility (technology required) Ability of a product or service to be produced within the existing technology, human resources, skills, knowledge, and materials at a cost compatible with market expectations. Producibility is one of the most critical aspects of developing any new product. Usability (effort expended to use) The ability of a product to perform its intended function for the specified user under the prescribed conditions. Usability is determined by examining performance, function and condition of a product. Reliability (Mean-Time-Between-Failure: MTBF) The degree to which a unit of equipment performs its intended function under specified conditions for a specified period of time. Computed by 2 methods of Mean-Time-Between-Failure (MTBF): Predicted MTBF: Based on a mathematical computation of a component failure using a tree diagram to determine sequential failure aspects of the component rated periods. Least desirable method because it cannot account for environmental variations that can degrade components to lower rates. Actual MTBF: Use of field collected data to compute the failures under realistic operating conditions to find the average time between failure. The actual reliability will seldom be the same as the predicted reliability. Maintainability (Mean-Time-To-Repair: MTTR) The ability of a unit to be restored within a specified time to its performance capability under the environmental operating conditions within a specified, average period of time. Availability (Probability of performance) The probability of a product being capable of performing a required function under the specified conditions when called upon. The key parts of availability are reliability and maintainability. Operability (Expected conditional use) The ability of a product to be operated by human resources for specified periods of time under given conditions without significant degradation of the output. Flexibility (Expected variable use) The ability of a product to be used for different purposes at different capacities and under different conditions. Social Acceptability (Environment and safety) The degree of compatibility between the characteristics of a product or service and the prevailing values and expectations of the relevant society The degree to which a public accepts a product for use.
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Affordability (Return for quality required) The ability to develop, acquire, operate, maintain, and dispose of a product over its life. The cost of each phase of ownership has a different value based on such items as design, manufacture, maintainability, reliability, and use. There must be a balance between the initial cost of a product and the operation and maintenance costs. For example: a $30,000 automobile with maintenance costs of 20 cents per mile may be considered more affordable than a $100,000 automobile with maintenance costs of 1 cent per mile or a $5,000 automobile with maintenance costs of $2 per mile.
Cost of Quality: (from Quality Management by Ireland)

Cost of quality is the total price of all efforts to achieve product or service quality. This includes all work to build a product or service that conforms to the requirements as well as all work resulting from nonconformance to the requirements. Quality programs also have costs that are not apparent. The general categories of additional direct costs include: Cost to build right the first time Training programs Statistical Process Control (SPC) Costs Cost of a quality system is often viewed as a negative cost because errors in work have been traditionally accepted as a cost of doing business.
Cost of Conformance:
Planning Training and indoctrination Process control Field testing Product design validation Process validation Test and evaluation Inspection/Quality audits Maintenance and calibration
Cost of Nonconformance
Scrap Rework Expediting Additional material or inventory Warranty repairs or service Complaint handling Liability judgments Product recalls Product corrective actions
Cost of Non-Quality:
Cost of non-quality is estimated to be 12-20% of sales versus the should cost of 3-5% of sales for a quality program. Waste of time and materials Rework of poor quality products and additional material for rework Delays in schedule Product and service image Corporate image
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Major Cost Categories of Quality:

Prevention Cost - cost to plan and execute a project so that it will be error-free Appraisal Cost - cost of evaluating the processes and the outputs of the processes to ensure the product is error-free Internal Failure Cost - cost incurred to correct an identified defect before the customer receives the product External Failure Cost - cost incurred due to errors detected by the customer. This includes warranty cost, field service personnel training cost, complaint handling, and future business losses. Measurement and Test Equipment - capital cost of equipment used to perform prevention and appraisal activities.
Opportunities for Reducing Cost:

Just-in-Time - concept of zero inventory in a manufacturing plant. Reduces cost of storing and moving parts; cost of inventory; cost of parts damaged through handling, etc. Product Life Cycle Cost - concept of reducing overall product life cycle cost by linking the cost areas of the product life cycle (R&D, acquisition, and operations and maintenance) and considering each ones cost implications for the other. Product Maturity - Identifying, documenting, and correcting failures early helps products achieve stability earlier in the life cycle. (see Ireland, IV-9) Areas of Waste in Projects Waste in rejects of completed work Waste in design flaws Waste in work-in-process Waste in motion for manpower (under-trained employee) Waste in management (Improper direction of work) Waste in manpower (Misplaced or waiting workers) Waste in facilities (Ordering excess material) Waste in expenses (Unnecessary meetings, travel)
Statistical Concepts and Quality Tools

Statistical Quality Control:
Method used to measure variability in a product for evaluation and corrective actions Normal Distribution Curve or Bell Curve Six standard deviations (+/- 3 Sigma) encompass 99.73% of area Four standard deviations (+/- 2 Sigma) encompass 95.46% of area Two standard deviations (+/- 1 Sigma) encompass 68.26% of area Sigma () = Standard Deviation
Quality Control Systems:

Process Control Charts Statistical techniques used for monitoring and evaluating variations in a process. Identifies the allowable range of variation for a particular product characteristic by specifying the upper and lower bounds for the allowable variation. Upper Control Limit (UCL), Lower Control Limit (LCL), process average: the mean of the averages for the samples taken over a long period of time. (see Ireland V-2 through V-7. Also see PMBOK Guide 2000 Figure 8-4.) Visual patterns indicating out-of-control state or a condition that requires attention: 1. Outliers: a sample point outside the control limits (also referred to as out-of-control) 2. Hugging control limit: a series (run) of points that are close to a control limit. Requires correction to prevent data points from going outside the control limit. Rule of Thumb: Considered abnormal if two of three, three of seven, or four of ten data points fall within the outer one-third of the chart. 3. Cycle: A repeating pattern of points. 4. Trend: A series of consecutive points which reflect a steadily increasing or decreasing pattern. Rule of Thumb: Considered abnormal when seven or more consecutive data points reflect a steadily increasing or decreasing pattern. 5. Run: A series of 7 or more consecutive points (observations) that tend in the same direction and fall on the same side of the average (mean) (Ireland V-6, V-7) Rule of Thumb: Considered abnormal if seven consecutive points, ten of eleven, or twelve of fourteen data points are above or below the process average.
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Acceptance Sampling Used when expensive and time-consuming to test 100%. Random sampling may be used to check the characteristics and attributes of a given lot of goods. Determines whether or not the lot conforms to the specifications or standards necessary to support the overall project requirements. Inspection and test standards must be established to ensure that procedures are adequate to determine whether a lot is conforming or nonconforming to specifications. Standards must also be set for qualification of the sampled lot. Important to select a sample size that will provide sufficient information about the larger lot of goods without costing a great deal of money. Must determine in advance the number of allowable defects before a lot is rejected. (see Ireland V-8)
Quality Management Tools:

Histograms Shows frequency of occurrence of items within a range of activity. Can be used to organize data collected for measurements done on a product or process. Pareto Diagram Ranks defects in order of frequency of occurrence to depict 100% of the defects. (Displayed as a histogram) Defects with most frequent occurrence should be targeted for corrective action. 80-20 rule: 80% of problems are found in 20% of the work. Does not account for severity of the defects Cause and Effect Diagrams (fishbone diagrams or Ishikawa diagrams) Analyzes the inputs to a process to identify the causes of errors. Generally consists of 8 major inputs to a quality process to permit the characterization of each input. (See Ireland, V-13) Scatter diagrams Used to determine the relationship between two or more pieces of corresponding data. The data are plotted on an X-Y chart to determine correlation (highly positive, positive, no correlation, negative, and highly negative) (See Ireland, V-14) Other Tools Graphs Check sheets (tic sheets) and check lists Flowcharts
Quality and People in Project Management:

Management defines type and amount of work Management is 85% responsible for quality The employee can only assume responsibility for meeting the requirements of completing the work when the employee: Knows whats expected to meet the specifications Knows how to perform the functions to meet the specifications Has adequate tools to perform the function Is able to measure the performance during the process Is able to adjust the process to match the desired outcome Project quality team consists of: Senior Management Project Manager Project Staff Customer Vendors, suppliers, and contractors Regulatory Agencies Project Manager has the ultimate responsibility for Quality Control and Quality Assurance. Customer sets the requirement for acceptable quality level. Reviews & Audits Management reviews determine the status, progress made, problems, and solutions Peer reviews determine whether proposed or completed work meets the requirements Competency center reviews are used to validate documentation, studies, and proposed technical solutions to problems. Fitness reviews and audits determine the fitness of a product or part of a project. (addresses specific issues) The collection of quantitative data for statistical analysis is the basis for proactive management by FACT rather than by EXCEPTION. Management by exception lets errors and defects happen before management intervention.
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Sample Questions
1. The application of planned, systematic quality activities to ensure that the project will employ all processes needed to meet requirements is called: A. Quality Assurance B. Quality Control C. Quality Planning D. Quality Review 2. The process of monitoring specific project results to determine if they comply with relevant quality standards is called: A. Quality Assurance B. Quality Control C. Quality Planning D. Quality Review 3. A histogram ordered by frequency of occurrence that shows how many results were generated by each identified cause is: A. Statistical Histogram B. Juran Histogram C. Fishbone Diagram D. Pareto Chart 4. Tools and techniques used during the Quality Planning process include: A. Cost-benefit analysis B. Benchmarking C. Quality audits D. a and b 5. Top managements overall intentions and direction with regard to quality is formally expressed in the: A. Quality Plan B. Quality Statement C. Quality Policy D. TQM 6. CIP is: A. Synonymous with innovation B. A sustained, gradual change C. A substantial change which matures over time D. The same as DTRTRTFT 7. The practice of ceasing mass inspections and ending awards based on price is credited to: A. Edward Deming B. Philip Crosby C. Juran D. Pareto 8. Which of the following are costs of quality? A. Product design and process validation B. Quality planning C. Scrap, rework, product recalls, and warranty repairs or service
D. All the above 9. The concept of making a giant leap forward followed by a period of maturity is: A. Innovation B. Continuous improvement C. Just in time D. Paradigm 10. The concept that it is easier and less costly to do the work right the first time is called: A. Zero defects B. Continuous improvement C. DTRTRTFT D. The customer is the next person in the process 11. The ability of a product to be used for different purposes at different capacities and under different conditions determines its: A. Usability B. Flexibility C. Operability D. Availability 12. Which of the following is NOT considered a cost of nonconformance to quality? A. Scrap B. Rework C. Expediting D. Process control 13. Which of the following statements is false? A. The cost of quality is the total price of all efforts to achieve product or service quality. B. The cost of non-quality is all expenditures that waste time, motion, material or other valuable resources. C. Having an acceptable quality level such as an allowable defect rate is an example of a quality cost. D. Acceptance of the extra burden of non-quality costs as a cost of doing business can materially affect the profit of a project. 14. Which of the following statements regarding grade and quality is/are true? A. The terms are synonymous. B. Grade is a category given to entities having the same functional use but different characteristics while quality refers to the characteristics of an entity that bear on its ability to satisfy stated or implied needs. C. Low quality and low grade are always considered problematic. D. B and C
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15. A series of consecutive points on the same side of the average is called: A. A run B. A trend C. An outliner D. A cycle 16. Which of the following statements concerning acceptance sampling is true? A. Acceptance sampling is used when it is expensive and time-consuming to test the product 100%. B. Inspection and test standards must be established to ensure that procedures can adequately determine conformance and nonconformance. C. If the number of defects found in the sample exceeds the predetermined amount, the entire lot is rejected. D. All of the above are true 17. The philosophy that the majority of defects are caused by a small percentage of the identifiable problems can be contributed to: A. Edward Deming B. Philip Crosby C. Juran D. Pareto 18. A tool used to compare actual or planned project practices to those of other projects is called: A. Quality Policy B. Benchmarking C. Trend analysis D. Pareto diagram 19. A tool that analyzes the inputs of a process to identify the causes of errors is called: A. Cause and effect diagram or Ishikawa diagram B. Scatter diagram C. Trend diagram D. Pareto diagram 20. The concept of zero inventory is called: A. Six sigma B. Continuous improvement C. Just in Time D. Zero defects
21. Design of experiments is a statistical technique that helps: A. Determine how various elements of a system interrelate B. Anticipate what and where quality problems might occur C. Identify which factors might influence specific variables D. Establish a standard by which to measure performance 22. Which of the following statements about the cost of quality is/are true? A. The costs of quality are mostly the direct responsibility of workers who are manufacturing the product. B. The cost of quality is the cost of conformance and non conformance to the requirements and specifications. C. Quality control programs should only be implemented when the costs of quality are deemed affordable by management. D. All are true. 23. Quality control charts are used to: A. Monitor and evaluate process variations B. Determine if a process is stable or has predictable performance C. Monitor the activity known as curve fitting or least squares D. Identify the lot rejection ratio 24. A Pareto diagram is MOST useful for: A. Identifying nonconformity types B. Providing an evaluation of data at a single point in time C. Determining where to focus corrective action D. Accepting or rejecting a production lot 25. In ISO terminology, the quality management plan should do which of the following? (choose BEST answer) A. Describe the expected grade of the project product B. Describe the terms and conditions of the contract C. Describe the project quality system D. Describe the degree of acceptable nonconformance to quality 26. Quality Planning is: A. Identifying which quality standards are relevant to the project and determining how to satisfy them B. Preparing the design to the customers specifications C. Monitoring the project results to decide if the outputs fulfill the requirements D. Determining the necessary quality sampling techniques
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27. The continuous quality improvement process is a concept that states: (choose the BEST answer) A. The customer is the most important aspect of a quality product B. The work is continuously changing and that any procedure or process that is satisfactory today, will more than likely become unsatisfactory in the near future C. To succeed in business; it is important to retain customers and for them to have a willingness to repurchase D. The customer is driving the need to improve quality 28. The rule of seven: A. States that a batch should be rejected if there are seven consecutive rejects B. States that seven consecutive observations on one side of the mean indicates a batch should be rejected C. Means that a minimum sample size of seven should be taken D. States that seven consecutive observations on one side of the mean is highly improbable 29. Which of the following is a tool and technique used in quality assurance process? A. Design of experiments B. Continuous improvement C. Quality audits D. Inspections 30. Which of the following are tools and techniques used in quality control? A. Process analysis, cause and effect diagram, quality control tools and techniques B. Histogram, run chart statistical sampling C. Benchmarking, design of experiments, cost-benefit analysis D. Cost of quality (COQ)
Answer Sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
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Answers
1 2 3 4 5 6 7 8 A B D D C B A D PMBOK Guide, Section 8.2, pg. 187 PMBOK Guide , Section 8.3, pg. 190 PMBOK Guide, Section 8.3.2.5 pg. 195 PMBOK Guide, Section 8.1.2. pg. 185 Quality audits are used during Quality Assurance Ireland, pg. C-8 Ireland, pg. I-6 Project Quality Management Study Guide Ireland, pgs. IV-1 thru IV-2 The cost of quality includes all work to build a product or service that conforms to the requirements as well as all work resulting from nonconformance to the requirements. Perform Quality Control Pg 190 PMBOK rel 3 Ireland, pg. I-5 Ireland, pg. II-4 Ireland, pg. IV-2, Process Control is a conformance cost. Ireland, pgs. IV-2 and IV-11. Having an allowable defect rate is an example of the cost of non-quality. Any system or process that will accept defects adds cost to the product or service. PMBOK Guide, Chapter 8, pg. 180 Low quality is always a problem; however, low grade in itself is not necessarily a problem. Ireland, pg. V-7 Ireland, pgs. V-7 thru V-8 Ireland, pg. C-6 PMBOK Guide, Section 8.1.2.2, pg. 185 Ireland, pg. V-11 Ireland, pg. IV-7 PMBOK Guide , Section 8.1.2.3, pg. 185 Ireland pg. C-2 PMBOK Guide , Section 8.3.2.2, pg. 192 PMBOK Guide , Section 8.3.2.5, pg. 195 PMBOK Guide , Section 8, pg. 180 PMBOK Guide, Section 8.1, pg. 183 Ireland pg. I-6 Ireland pg. V-6 The probability of seven consecutive observations falling on one side of the mean is (0.5) ** 7 = .78%. PMBOK Guide, Section 8.2.2, pg. 189 PMBOK Guide, Section 8, pg. 182
9 10 11 12 13
B C B D C
14 B 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A D D B A C C B A C C A B D
29 C 30 B
Number
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
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PROJECT HUMAN RESOURCES MANAGEMENT
STUDY NOTES
PMBOK
Third Edition, Version 9
Trademarks
Project Human Resource Management
Project Human Resources Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapters 2 and 9 Human Resource Skills for the Project Manager, Verma, Vijay K, 1996 Organizing Projects for Success, Verma, Vijay K., 1995 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 What to Study? The PMBOK phases of Project Human Resources Management: Human Resource Planning, Acquire Project Team, Develop Project Team, Manage Project Team (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase) Know the various organizational aspects which influence projects. These include: organizational systems, organizational cultures and styles, and organizational structures. (see PMBOK, Chapter 2) Know the different types of organizational structures: functional, weak matrix, balanced matrix, strong matrix, and projectized are the main ones. Also be familiar with the differences between project expediter and project coordinator. Know the roles and responsibilities of the project manager. (see Principles of Project Management, pgs. 69-84) Know the primary sources of authority and control (power) for project managers: formal, coercive, reward, expert, and referent (see Human Resource Skills for the Project Manager, pgs. 232-233) Know the different leadership styles for project managers: autocratic, consultative autocrat, consensus manager, shareholder manager. (see Principles of Project Management, pg. 158) Know the various motivation theories of human behavior: Theory X, Y, and Z, Expectancy, Contingency, Goal-Setting, Reinforcement, and Equity. (see Human Resource Skills for the Project Manager, pgs. 70-75) Know the different methods of managing conflict: forcing, problem solving, compromising, smoothing, and withdrawal. (see Principles of Project Management, pgs. 178-179) Know the one party conflict management methods: win-lose, yield-lose, lose-leave, compromise, and integrative and understand the relation between this method and the above methods. For instance, forcing is considered a win-lose situation. (see Principles of Project Management, pgs. 179-180)
Copyright IBM Corp. 2002, 2003 Project Human Resource Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Project Human Resources Management Study Notes

Read and become familiar with Team Building . (see Principles of Project Management, pgs. 125-164) Read and become familiar with the Project Managers Work Environment . (see Principles of Project Management, pgs. 29-63)
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Project Human Resource Management Copyright IBM Corp. 2002, 2003 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Key Definitions
Colocation Functional Manager Functional Organization Leading Manage Stakeholders Matrix Organization Placement of project team members in the same physical location to enhance their ability to perform as a team. A manager responsible for activities in a specialized department or function. (e.g., engineering, manufacturing, marketing) An organizational structure in which staff are grouped hierarchically by specialty (e.g., production, marketing, engineering, accounting) at the top level and then further divided within specialty. The action of directing, aligning, and motivating people. The action of producing the results expected by stakeholders. Any organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of individuals assigned to the project. A depiction of the project organization arranged so as to relate work packages to organizational units. The members of the project team who are directly involved in project management activities. On some smaller projects, the project management team may include virtually all of the project team members. The individual responsible for managing a project. The people who report either directly or indirectly to the project manager. Any organizational structure in which the project manager has full authority to assign priorities and to direct the work of individuals assigned to the project. A structure that relates the project organization structure to the WBS to help ensure that each element of the projects scope of work is assigned to a responsible individual. Also called an Accountability Matrix. Developing individual and group competencies to enhance project performance.
Organizational Breakdown Structure (OBS) Project Management Team
Project Manager Project Team Members Projectized Organization Responsibility Assignment Matrix (RAM) Team Development
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Project Human Resource Management Concepts

Project Human Resource Management:
Includes the processes required to make the most effective use of the people involved with the project, including organizing and managing the team. Includes all of the project stakeholders - sponsors, customers, partners, individual contributors, project management team, etc. Human resource topics which deal with people in an operational, ongoing context include: Leading, communicating, negotiating, problem solving, and influencing the organization. Delegating, motivating, coaching, mentoring, and other skills related to working with individuals. Performance appraisals, recruitment, retention, labor relations, health and safety regulations, and other subjects related to administering the human resource function. Project managers should be familiar with human resource topics as well as savvy in how the knowledge is applied to the project. For example: The temporary nature of projects means that the personal and organizational relationships may be both temporary and new. In this situation, the project manager must take care to select techniques that are appropriate for such transient relationships. The nature and number of project stakeholders will often change as the project moves from phase to phase of its life cycle. As a result, techniques that are effective in one phase may not be effective in another. The project management team must take care to use techniques that are appropriate to the current needs of the project. While human resource administrative activities are seldom a direct responsibility of the project management team, the team must be sufficiently aware of administrative requirements to ensure compliance. (e.g., export licenses for foreign nationals to work on specific projects)
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Project Human Resource Management Processes

Human Resource Planning (9.1): (Process Group: Planning)
The process of identifying, documenting, and assigning project roles, responsibilities, reporting relationships and creating the staffing management plan Roles, responsibilities, and reporting relationships may be assigned to individuals or to groups. The individuals and groups may be part of the organization performing the project or they may be external to it. On most projects, organizational planning is done in the early project phases; however, the results of the process should be reviewed regularly to ensure continued applicability. Organizational planning and communications planning are often tightly linked since the projects organizational structure will have a major effect on the projects communications requirements. Inputs include: Enterprise Environmental Factors: Organizational: Determines the organizations and departments that will be involved in the project, the working arrangements and formal and informal reporting relationships among different organizational units. Technical : Determines the disciplines and specialties that are required for the project. Interpersonal: Determines the formal and informal reporting relationships among different individuals working on the project. Logistical: Physical distances of team members Political: Determines the agendas of the project stakeholders; who has power in what areas of the project and if there are informal Organizational Process Assets: Lessons learned from past Human Resource Planning experiences. Templates: Includes organizational charts, position descriptions, and a standard conflict management approach. Checklists: Includes project roles and responsibility, team ground rules, safety considerations, and reward ideas Project Management Plan: Activity resource requirements and descriptions of project management activities.
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Tools and Techniques used during human resource management: Organization charts and position description: Documents team member roles and responsibilities and ensure that each work package has an owner. Hierarchical-type charts: Show positions and relationships in a graphic. Matrix-based charts indicates connection between work to be completed and the responsible team members. Text oriented formats: Provide information such as responsibility, authority, competency and qualifications. Used as templates for future projects. Other sections of the project management plan: Responsibilities can be listed in various sections of the project management plan such as communication plan, risk register, and quality plan. Networking: Informal interaction with other members of an organization to understand politics and personalities. Organizational Theory: Theoretical information that explains how people, teams, and organizational units behave. Outputs include: Roles and responsibilities: Role: Describes the part of the project for which team members are accountable such as business analyst. - Authority: The right to make decisions about project resources and sign approval. - Responsibility: The work that project team members are required to perform. - Competency: Skill and capacity to complete required projects tasks and activities. Project Organization Charts: Formal or informal graphic display of team members and their report relationships. Large teams require more detailed project organization charts than smaller teams. Staffing Management Plan: Frequently updated plan describing how and when resource requirements will be met. Items to include are: Staff acquisition Timetable: Individual and collective time frames for the team. Release criteria Training needs Recognition and rewards Compliance Safety -
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Acquire Project Team (9.2): (Process Group: Planning)

The process of obtaining the required human resources (individuals or groups) and having them assigned and working on the project. If the best resources are not available, the project management team must take care to ensure that the resources that are available will meet project requirements. Inputs include: Enterprise Environmental Factors: Considerations include: Availability (Will the most desirable individuals or groups be available in the necessary time frame?) Ability (What competencies are required and at what level?) Experience (Have the individuals or groups done similar or related work before?) Interests (Do they want to work on the project?) Costs (How much will team members cost? Organizational Process Assets: policies, guidelines, or procedures governing staff assignments which may constrain the staff acquisition process). Roles and Responsibilities Project Organization Charts Staffing Management Plan Recruitment practices Tools and techniques during the acquire project team process are: Negotiations: May need to negotiate with: Responsible functional managers to ensure that the project receives appropriately competent staff in the necessary time frame. Other project management teams within the performing organization to assign scarce or specialized resources appropriately. Pre-assignment. Staff may be pre-assigned when: The project is an internal service project, and staff assignments were defined as part of project charter. The project is the result of a competitive proposal agreement and specific staff were promised as part of the proposal. Acquisition: Used when organization lacks sufficient in-house human resource or skills. Virtual teams: Team members with a shared goal who have little or no face-to-face meetings. Clear communication regarding expectations and protocols is essential when virtual teams are used. Virtual teams make it possible to: Form teams in various geographies Add expertise from various geographic areas Include work-at-home employees Form teams with members who work varying shifts or hours Include team members with mobility handicaps Proceed when travel restrictions are in place Outputs include: Project staff assignments: Documentation may include the project team directory. Resource Availability: Identifies when project team members will work on the project.
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Staffing Management Plan (Updates): Addresses unexpected staff changes (illnesses, retirements, promotions, etc. )
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Develop Project Team (9.3):
(Process Group: Executing)
The process of developing individual and group competencies to enhance project performance. Objectives include: Improving team member skills Improving cohesiveness among team members Examples of effective team work: sharing information and resources, communicating based on individual preferences, balancing workloads by assisting one another. Team development on a project is often complicated when individual team members are accountable to both a functional manager and a project manager. Effective management of this dual reporting relationship is often a critical success factor for the project and is generally the responsibility of the project manager. Inputs include: Project staff assignments Staffing management plan: Identifies strategies for developing the team. Resource availability Tools and techniques include: Team-building activities: Include management and individual actions taken specifically and primarily to improve team performance. May vary from a five minute agenda item in a regular status review meeting to an extended, off-site, professionally facilitated experience designed to improve interpersonal relationships among key stakeholders. General management skills: Uses skills such as empathy, influence, creativity and group facilitation to reduce problems and increase cooperation. Reward and recognition systems Formal management actions that promote or reinforce desired behavior. To be effective, must make the link between project performance and reward clear, explicit, and achievable. Should consider cultural differences. Co-Location: Involves placing all, or almost all, of the most active project team members in the same physical location to enhance their ability to perform as a team. (a war room is an example of co-location) Training (includes all activities designed to enhance the competencies of the project team.) Ground rules: Establishes clear expectations regarding behavior by all team members. Outputs include: Team Performance Assessment: Indicators used to evaluate a teams effectiveness include: : Improvements in individual skills may allow personnel to perform their work more effectively. Improvements in competencies and sentiments. Reduced staff turnover.
Manage Project Team (9.4): (Process Group: Executing)
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The process of enhancing project performance by assessing the performance of team members, providing feedback, resolving issues and managing changes. The staffing management plan is updated, change requests are submitted and issues resolved based on results of the assessment. Objectives include: Improving team member skills Improving cohesiveness among team members Examples of effective team work: sharing information and resources, communicating based on individual preferences, balancing workloads by assisting one another. Team development on a project is often complicated when individual team members are accountable to both a functional manager and a project manager. Effective management of this dual reporting relationship is often a critical success factor for the project and is generally the responsibility of the project manager. Inputs include: Organizational Process Assets: Uses the organizations policies and procedures for employee recognition and rewards. Project staff assignments: Provides list of the team members to be evaluated. Roles and responsibilities: List the teams roles and responsibilities to be monitored and evaluated. Project Organization Chart: Provides a look at the reporting structure among team members. Staffing management plan: Indicates times that team members are expected to work on the project, training plans, compliance issues and certification requirements. Team performance assessment: Formal or informal team continuing team assessments. Work Performance Information: Observation of team members by the project management team. Performance Reports: Provides feedback to the project team about performance against the project plan. Tools and techniques include: Observation and Conservation: Enables the project management team to monitor the work and attitudes of team members. Project Performance Appraisals: Provides team members with feedback about their performance from project managers Feedback may also be submitted by other team members (360-degree feedback) Objectives include re-clarification of roles and responsibilities, structured time to ensure feedback, discovery of unknown or unresolved issues and future goals. Conflict Management: Involves reducing the amount of conflict. Increases productive and positive working relationships. Allows different opinions and increased creativity and better decision making. Feedback may also be submitted by other team members (360-degree feedback). If managed early, formal procedures will be used less often, thereby reducing the use of disciplinary actions. Issue Log:
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Identifies persons responsible for resolving issues by a specific date. Allows the team to closely monitor issues until closure. Addresses obstacles which block team goals. Outputs include: Requested Changes: Resolves issues that may arise with staff changes that may affect the project plan. Recommended Corrective Actions: Includes staffing changes, additional training and disciplinary actions. The project management team can also make decisions regarding recognition and rewards based on team performance. Recommended Preventive Actions: Reduces the probability or impact of problems before they occur. Includes cross-training, additional role clarification and added personal time. Organizational Process Assets (Updates): - Input to organizational performance appraisals: Enables project staff to provide input for regular organizational performance appraisals of other team members. - Lessons learned documentation: All knowledge learned is documented as part of the historical database. - Lessons learned include project organization charts, ground rules, procedures for virtual team and the issues log.
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Project Human Resource Management Concepts Organizational Influences

Organizational Systems:
Project based: Operations consist primarily of projects. Two categories: Organizations that derive their revenue primarily from performing projects for others (architectural firms, engineering firms, consultants, construction contractors, government contractors, etc.) Organizations that have adopted management by projects
Have management systems such as accounting, financial, reporting and tracking in place to facilitate project management
Non-project based: Absence of project-oriented systems generally makes project management more difficult. Examples include: manufacturing companies, financial service firms, etc.
Organizational Cultures and Style:

Culture is reflected in shared values, beliefs, norms, expectations, policies, procedures, view of authority relationships, etc. Organizational cultures often have a direct influence on the project. A team proposing an unusual or high-risk approach is more likely to secure approval in an aggressive or entrepreneurial organization. A project manager with a highly participative style may encounter problems in a rigidly hierarchical organization while a project manager with an authoritarian style may be equally challenged in a participative organization. Project managers need to be aware of the organizations cultures and style.
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Organizational Structure:
The organizations structure often constrains the availability of resources for the project. Structure types: Functional:
A hierarchy where each employee has one clear superior. Staff are grouped by specialty, such as production, marketing, engineering, and accounting. Project work is done independently within each department.
Executive
Functional Manager
Functional Manager
Functional Manager
Staff Staff Staff
Staff Staff Staff
Staff Staff Staff
Project Expeditor (PE):

The project expediter acts as a staff assistant to the executive who has ultimate responsibility for the project. The workers remain in their functional organizations and provide assistance as needed. The PE has little formal authority. The PEs primary responsibility is to communicate information between the executive and the workers. Most useful in the traditional functional organization where the projects worth and costs are relatively low.
Executive Project Expeditor
Functional Manager
Functional Manager
Functional Manager
Staff
Staff Staff
Staff Staff Staff
Staff Staff Staff
Project Coordinator (PC):

Project expediter is moved out of facilitator position into a staff position reporting to a much higher level in the hierarchy.
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The project coordinator has more authority and responsibility than a PE. The PC has the authority to assign work to individuals within the functional organization. The functional manager is forced to share resources and authority with the PC. The size of projects in terms of dollars is relatively small compared to the rest of the organization.
Vice President
Project Co-ordinator
Executive
Functional Manager
Functional Manager
Functional Manager
Staff Staff Staff
Staff Staff Staff
Staff Staff Staff
Matrix: (see PMBOK, pgs. 22-23)

Maintains the functional (vertical) lines of authority while establishing a relatively permanent horizontal structure to interact with all functional units supporting the projects. One result of the matrix is that workers frequently find themselves caught between the project manager and their functional manager. Advantages: Improved PM control over resources, rapid response to contingencies, improved coordination effort across functional lines, people have a home after the project is over, etc. (see Adams, Principles of Project Management, pg. 19) Disadvantages: Not cost effective due to excess administrative personnel, workers report to multiple bosses, more complex structure to monitor and control, higher potential for conflicts due to differing priorities, power struggles, and competition for resources, etc. (see Adams, Principles of Project Management, pg. 19) Weak matrix: Maintains many of the characteristics of a functional organization. The project managers role is more like that of a project expediter. Balanced matrix: In-between weak and strong. The project manager has more authority than in a weak matrix. The PM is more likely to be full-time than part-time as in a weak matrix.
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Strong matrix: Similar in characteristics to a projectized organization. There is likely to be a department of project managers which are full-time.
Executive
Functional Manager
Functional Manager
Functional Manager
Project Managers
Staff Staff Staff
Staff Staff Staff
Staff Staff Staff
Project Manager Project Manager Project Manager
Project 1
Note: The term tight matrix refers to colocation of the project team in a single area such as a bull pen and is not an organizational structure.
Projectized: Team members are often collocated. Most of the organizations resources are involved in project work. Project managers have a great deal of independence and authority. Departments either report directly to the project manager or provide services to the various projects.
Executive
Project Manager
Project Manager
Project Manager
Staff Staff Staff
Staff Staff Staff
Staff Staff Staff
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Project Human Resource Management Concepts

Roles and Responsibilities of the Project Manager:
Integrator PM is the most likely person who can view both the project and the way it fits into the overall plan for the organization. Must coordinate the efforts of all the units of the project team. Communicator Communicates to upper management, the project team, and other stakeholders. The PM who fails to decipher and pass on appropriate information to the appropriate people can become a bottleneck in the project. The PM has the responsibility of knowing what kind of messages to send, who to send them to, and translating the messages into a language understood by all recipients. Project Leader Must be able to solve problems Guide people from different functional areas Coordinate the project to show leadership capabilities Decision Maker Makes key decisions such as allocation of resources, costs of performance and schedule tradeoffs, changing the scope, direction or characteristics of the project. This is an important role with significant consequences for the project as a whole. Creator of a Team Climate The PM should attempt to build a climate conducive to maximizing the output of the project team so that team members work together Encourage the creative potential of all the project team members Seek to avoid unrest and negative forms of conflict by building supportive atmosphere early.
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Sources of Authority and Control: (Power)

The PM must deal with upper management, subordinates, functional managers, interface personnel, and people outside the firm. The degree to which the PM can influence each of these groups will have a bearing on the success or failure of the project. The PM must exert some type of power so that the necessary concessions or cooperation can be obtained. Formal:
A legitimate (or positional) form of power. Based on a persons formal position in the company. A legitimate (or positional) form of power. Refers to positive consequences or outcomes that a person can offer. A legitimate (or positional) form of power. Refers to negative consequences that a person can inflict on others. (firing, docking, reprimand, etc.) A legitimate (or positional) form of power. Is influenced by the degree of control you have on money or resources A form of personal power. Refers to earned power when people admire a person and want to follow that person. Can also refer to power that a person possesses due to their connections with other people or by citing the authority of a more powerful person as the basis for their authority. A form of personal power. Refers to earned power that a person acquires based on his/her technical knowledge, skill, or expertise on some topic or issue. A form of personal power. Originates from your knowledge of rules, policies, procedures, and regulations. A form of personal power. Originates from personal ability to communicate charismatically. (also called charisma) It is the nearest to being purely personal power
Reward:
Coercive (Penalty):
Resource Control Power:
Referent:
Expert:

Bureaucratic Power:
Charismatic/Persuasive Power:
NOTES: 1) The exam may equate legitimate power with formal power. Formal power, reward power, and coercive power are considered legitimate forms of power. Youll have to figure out from the question as to what context legitimate is being used. 2) Some texts do not distinguish charismatic power from referent power. For purposes of the exam, referent power may or may not include charisma. Check the context of the question.
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Leadership Styles:
Many PMs have a preferred style of leadership. Some may fit their leadership style to the situation. Leadership styles have been described in terms of four possible extremes: (as described in Adams, Principles of Project Management, pg. 158-159) Autocratic:
The PM solicits little or no information from team. Makes decision solely. Also referred to as Directing. Intensive information input is solicited from the team. The PM still makes the decisions, solely. May also be referred to as Persuading. Problem presented to the team for open discussion and information gathering. Team makes decision. Also referred to as Participating. Little or no information exchange takes place within the group. The team has the ultimate authority for the final decision. Also referred to as Delegating. This style is considered to be poor management.
Consultative autocrat:
Consensus Manager:
Shareholder Manager:
NOTE: May also want to study the leadership styles as defined in Vermas, Human Resource Skills for the Project Manager, pg. 218. The styles are slightly different.
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Motivation Theories:
Motivation theories attempt to explain and analyze how personal and intrinsic factors interact and influence one another to produce certain types of behavior. It is important for project managers to understand what motivates their workers. Maslows hierarchy of human needs: (from lower to higher) Physiological needs - food, water, clothing, shelter, etc. Security (Safety) - economic and physical Social - love, friendship, group membership Self Esteem - reputation, respect from others Self Actualization - creativity, striving for excellence, also referred to as 'self-fulfillment' Herzberg's Theory of Motivation related Maslows needs to the job. Hygiene factors (pay, attitude of supervisor, working conditions) can only destroy motivation. These are sometimes referred to as 'dissatisfiers'. Relate to Maslow's physiological, security, and social needs Motivators (opportunity to achieve and experience self-actualization) will improve motivation. These are sometimes referred to as 'satisfiers'. Relate to Maslow's needs for self esteem and self actualization McGregor's Theory X and Theory Y Theory X: (developed to describe how managers relate to subordinates)
Most people dislike their work and will avoid it. Most people lack ambition and have little capacity for problem solving and creativity. Workers prefer direction and avoid taking responsibility and initiative. Workers motivated only by Maslows lower level needs (physiological and safety). Workers are self-centered, indifferent to the needs of the organization, and resistant to change. Most people meet high performance expectations if appropriately motivated and the climate supportive. Most people are creative, imaginative, ambitious, and committed to meeting the organizations goals. Most people are self-disciplined, can direct and control themselves, desire responsibilities, and accept them willingly. Workers are motivated by Maslows higher level needs (self esteem and self actualization)
Theory Y: (developed to describe how managers relate to subordinates)
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Motivation Theories, cont.:

Theory Z: (Developed by Ouchi. The source was the Japanese workplace)
Similar characteristics as Theory Y. Management deems workers as trustworthy and capable of working without close supervision. Workers are motivated by self esteem and self actualization. Japanese management provides a supportive environment with lifetime employment, consensus decision making, and collective responsibility. Ouchi compared Japanese organizations (Type J) with traditional American organizations (Type A). Ouchi theorized that to the extent lifetime employment, consensus decision making, and collective responsibility could be incorporated into American organizations, then worker productivity and motivation would improve. Ouchi called this new hybrid American organization, Type Z. People have a central need to develop a sense of competence. This need continues to motivate even after competence has been achieved. Project managers should ensure that there is a good match between team members skills and their assignments and that the organizational climate is conducive to meeting team members needs and achieving a sense of competence. Working towards a goal is a major source of job motivation. Individuals have an internal desire to achieve goals. Clear, specific, concise, and challenging goals motivate team members. Project participants must be allowed to participate in setting goals, formulating plans and implementation strategies in order to gain participants acceptance and commitment to meeting project goals. People think seriously about how much effort they should put into a task before doing it. Motivation occurs if there is an expectation of a favorable outcome. A persons behavior is based on the strength of their expectation that an act will be followed by a desired outcome or good performance. A persons behavior is based on their expectation that good performance will be rewarded. The attractiveness of the reward to the individual also influences a persons behavior. Project managers should try to ascertain the most important needs of their team via informal communication and by developing interrelationships with team members. Human behavior is shaped by the previous positive or negative outcomes experienced by a person. Desirable behavior will be repeated if rewarded and undesirable behavior can be discouraged by punishment.
Contingency Theory: (Developed by Morse and Lorsch)
Goal Setting Theory: (Developed by Latham and Locke)

Expectancy Theory: (Developed by Victor Vroom)

Reinforcement Theory: (Based on Skinners behavior modification theories)
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Motivation Theories, cont.:

Equity Theory: (Developed by Adams)
People are motivated by their desire to be treated equitably. People compare their jobs and compensation with those of others on the project. Inequities can influence the degree of effort they exert. Inequities can result in conflicts and problems, thus requiring considerable effort from the project manager, functional managers, and human resources personnel to resolve. Project managers must ensure that all project participants are compensated fairly for their contributions to project success.
See Vermas, Human Resource Skill for the Project Manager, pg. 75, for general suggestions on motivating employees. The suggestions are taken from the best of the above motivation strategies.
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Conflict Management:
Contemporary view of conflict management: Inevitable between humans Often beneficial Natural result of change Can and should be managed Neither good nor bad but can have positive and negative results for the organization. The PM must carefully select the method of managing conflict appropriate for his/her organization so that an atmosphere conducive to constructive results is developed. Six methods of managing conflict: Withdrawal: (avoidance)
Retreating from actual or potential disagreements and conflict situations. Appropriate only in certain situations such as when a cooling-off period is needed. A temporary tactic: does not resolve the conflict, only delays it. Considered a lose-lose situation because the conflict is delayed, not resolved. De-emphasizes differences and emphasizes commonalties. Keeps the atmosphere friendly. A temporary tactic: does not resolve the conflict, only delays it. (considered a lose-lose situation) Should be used in conjunction with another method. Exerts ones viewpoint at the potential expense of another party. This method provides resolution but is considered to be a win-lose. Considers various issues and searches for solutions which bring some degree of satisfaction to the conflicting parties. Both parties must give up something that is important to them; however, this method usually provides some acceptable form of resolution. May or may not provide the best solution to the conflict. Hence, many texts consider compromise to be a lose-lose resolution since both parties give ground. However, some texts consider compromise to be win-lose. Involves incorporating multiple ideas and viewpoints from people with different perspectives. Used when a project situation is too important to be compromised. Offers a good opportunity to learn from others. Active participation by both parties makes consensus and commitment to resolution easier. Loses effectiveness with the involvement of more than a few people with mutually exclusive perspectives. Considered a win-win.
Smoothing: (accommodating)
Forcing: (coerce)
Compromising: (bargaining)
Collaborating:

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Problem Solving: (confrontation)

Directly addresses disagreements. Conflict is treated as a problem. The problem is defined; information is collected; alternatives are identified and analyzed, and the most appropriate alternative is selected. Theoretically considered the best because both parties can be satisfied if they work together to solve the problem. Both parties must want to solve the problem and be willing to work together. Time-consuming method. This method is considered to be a win-win.
One Party Conflict Management:

This method relates more specifically to personal styles of the leaders handling conflict. Five styles of handling conflict: Win-Lose: High concern for personal goals and low concern for relationships. Related to the forcing method above. Yield-Lose:

Low concern for personal goals and high concern for relationships. Related to the smoothing method above.
Lose-Leave: Low concern for personal goals and low concern for relationships. Related to the withdrawal method above. Compromise: Moderate concern for personal goals and moderate concern for relationships. Related to the compromise method above. Integrative: High concern for personal goals and high concern for relationships. Related to the problem solving method above .
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Team Building:
Definition: the process of getting a diverse group of individuals to work together effectively as a team. Purpose: to get project team members focused on the big-picture and to concentrate on overall project goals. Benefits of Team Building: Establishment of realistic, achievable, objectives for the team Commitment of team member support to make the team successful Understanding of team member's priorities to help address difficulties Encouragement of open communications More effective problem solving due to broader base of expertise More meaningful performance feedback based on establishment of expectations Allows for more effective conflict resolution Maintenance of balance between group productivity and individual team members needs Encouragement of team members to test their abilities and ideas Conformation of individual behavior to meet team standards Creates a pool of effective team members for future projects Understanding the boundaries placed on the team which may dictate what the team can and cannot do Symptoms of bad teamwork: Frustration Conflict and unhealthy competition among team members Team meetings are unproductive and demoralizing Team members work independently and avoid needed cooperation Problem-solving activities like constructive conflict are avoided Lack of trust or confidence in the project manager Team members are unresponsive to the needs of the team or the project Team building process guide. (Must be carried out by the PM although not necessarily in this sequence): Plan for team building Team goals and objectives must be well developed and aligned with those of the project Project procedures and controls should be planned and implemented to encourage team effort Project roles must be defined to assist in selecting the right team members for each assignment Negotiate for team members Selecting the right team is crucial to effective team building Match interests and technical skills to the assignments Organize the diverse group into a team Make specific assignments Clearly define roles and responsibilities
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Team Building:
Hold a kick-off meeting Crucial to the team building process because it helps start the project on the right foot Carefully set the agenda to ensure that all technical and procedural items are covered Get the team members to meet each other Establish open working relationships and communications among team members Obtain team member commitments One of the most important objectives of the kick-off meeting Obtain commitments of time, role, and priority Build communication links Good communications links both within and outside the performing organization are essential Must recognize both formal and informal communications links Must establish links for upward, downward, and lateral communications Obtain top management support They must emphasis the importance of team building Demonstrate their support Conduct team-building exercises Utilize ongoing project team development Team building is an ongoing process Should be part of meetings, counseling sessions, informal conferences with team members, celebrations, and organizational events Introduce appropriate rewards and recognition systems Effectively manage team conflicts Effective Team Communications: Be an effective communicator Be a communications expediter Get rid of communication blockers Use a tight matrix. A tight matrix is aimed at improving communications and teamwork. It involves taken project personnel from their various functional departments (which could be spread across several buildings or even site locations) and collocating them in a single area. (such as a bull pen or a row of offices) Have a war room. Make meetings effective.
Establish a meeting policy. Only call a meeting if there is a real need. Make the purpose of the meeting clear. Prepare an agenda and follow it. Encourage participation. Use meetings as part of the team building process. Issue minutes. Follow-up on assigned tasks and action items.
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Sample Questions
1. The project managers leadership style should be matched to the corresponding developmental level of the project team and should move through successive steps in the following order: A. Disciplinary, autocratic, participative B. Staff planning, team training, performance monitoring C. Team building, team development, responsibility assignment D. Directing, persuading, participating, delegating
2. Which of the following conflict resolution techniques is most appropriate for a life-death situation where decisions must be made quickly? A. Collaborating B. Forcing C. Smoothing D. Compromise 3. Which of the following is not a part of team-building activities: A. Status review meeting B. Informal communication and activities C. Performance reports D. Professionally facilitated experience for improving relationships 4. Which of the following is best for handling cross-functional project needs for a large, complex project? A. A strong matrix organization B. A project coordinator C. A project expediter D. A functional organization 5. Co-location can mean: A. All, or almost all, team members are moved to a central physical location for the life of the project. B. Active team members may be at different physical locations, but meet on a regular basis. C. A war room is established where team members can meet periodically. D. a and c 6. A key barrier to team development is: Choose the BEST answer. A. A strong matrix management structure. B. When major problems delay the project completion date or budget targets. C. When team members are accountable to both functional and project managers. D. When members cannot be collocated .
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7. Which of the following are examples of project-based organizations? A. Architectural firms, engineering firms, and consultants B. Most manufacturing companies and financial service firms C. Organizations that have adopted a management by projects approach D. a and c 8. Legitimate power is: A. Power derived from a persons formal position in the organization. B. Power bestowed due to a persons personal qualities and abilities. C. Power earned based on a persons technical knowledge, skill, or expertise in a particular area. D. Power to distribute information as one sees fit. 9. What impact does a matrix organization have on project team development? A. No impact at all B. It complicates team development. C. It simplifies team development. D. It hinders team development completely. 10. Which of the following is NOT a process of project human resource management? A. Organizational process assets B. Project staff assignments C. Information Distribution D. Staffing management plan 11. A technique for resolving conflict in which the parties agree to have a neutral third party hear the dispute and make a decision is called: A. Negotiation B. Arbitration C. Smoothing D. Forcing 12. Which of the following is NOT an input into develop project team? A. Recruitment practices B. Project staff assignments C. Staffing management plan D. Resource availability 13. Forcing, as a means to manage conflict: A. Exerts ones view at the potential expense of another party. B. Emphasizes areas of agreement while avoiding points of disagreement. C. Establishes a lose-lose situation. D. a and c
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14. When should the project expediter form of organization be used? A. When the project is extremely important to the organization. B. When a projects cost and importance are relatively low. C. When the project manager has a lot of responsibility and accountability. D. When the organizations primary source of revenue is derived from projects. 15. The belief that managements high levels of trust, confidence and commitment to workers leads to high levels of motivation and productivity on the part of workers is a part of which motivation theory? A. Theory Y B. Theory Z C. Theory X D. Contingency Theory 16. Which of the following is part of the expectency theory of motivation? A. Clear, specific, and challenging goals generally motivate team members. B. Project managers should ensure that tasks assigned to project participants match their skills and the organizational climate is conducive to helping them meet their needs and achieving a sense of competence. C. People tend to be highly productive and motivated if they believe their efforts will lead to successful results and that success will lead to personal rewards. D. All of the above are part of the expectency theory of motivation 17. Which of the following statements concerning compromise as a conflict resolution is false? A. Neither party wins but both parties get some degree of satisfaction. B. Important aspects of the project may be hindered in order to achieve personal objectives. C. Compromise is generally considered a lose-lose situation. D. A Definitive resolution is seldom achieved. 18. In which type of organization is team building likely to be most difficult? A. Functional B. Projectized C. Matrix D. Project expediter 19. A document or tool which describes when and how human resources will be brought onto and taken off the project team is called a: A. Staffing Management Plan B. Responsibility Assignment Matrix (RAM) C. Organizational Breakdown Structure (OBS) D. Resource Assignment Chart
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20. A tool which links the work that needs to be done and the project team members. : A. Scope Definition Matrix B. Responsibility Assignment Matrix C. Roles Assignment Matrix D. Project Scope and Roles Matrix 21. Which of the following organization types results in the project managers having the least authority A. Projectized B. Balanced Matrix C. Functional D. Strong Matrix 22. Management by projects: A. Is the same as program management B. Treats many aspects of ongoing operations as projects in order to apply project management techniques to them C. Refers specifically to the application of project reporting techniques D. Uses the OBS to assign specific responsibilities for projects to the different units within an organization 23. The project manager is having a conflict with project personnel. Which of the following methods decreases the immediate intensity of the conflict? A. Smoothing B. Compromising C. Confronting D. Forcing 24. Which of the following is NOT a technique for project team development? A. Collocation B. Recognition and rewards C. Confronting D. Training 25. The outputs of project team development are: A. Responsibility assignment matrix, and input to performance appraisals B. External feedback process, and input to performance appraisals C. Performance improvement and staff management plan D. Team performance assessment
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26. Human Resource Planning includes the following processes: A. Organizational planning, staff acquisition, and performance appraisal B. Organizational process assets, Networking and roles and responsibilities C. Organizational planning, personnel administration, and team development D. Organizational planning, staff acquisition, and performance reporting 27. A document or tool used to describe when and how human resource requirements will be met: A. Organizational Breakdown Structure B. Responsibility Assignment Matrix C. Staffing Management Plan D. Resource Assignment Chart 28. Which of the following statements describes the difference between a balanced matrix project organization and a strong matrix project organization ? A. A strong matrix has a project manager and a balanced matrix does not have a project manager B. In a strong matrix organization, the project manager reports directly to the CEO, while in the balanced matrix, the project manager reports to a functional manager C. In a strong matrix organization, project coordination is performed by the project manager who resides in a department of project managers while in the balanced matrix, coordination is performed by a project manager who resides in a functional department with other staff members. D. There is no difference. A balanced matrix is another name for a strong matrix. 29. Which of the following is NOT true about the team development process? A. Team development includes enhancing the ability of stakeholders to contribute as individuals B. Team development occurs throughout the project life cycle C. Reward and recognition systems are important techniques for team development D. The primary output from team development is the identification of required training 30. Which of the following is NOT a tool and technique of managing the project team? A. Negotiation B. Conflict management C. Observation and conversation D. Issue log
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Answer Sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
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Answers
1 D 2 B 3 4 5 6 7 C A D C D Project Human Resources Management Study Guide, Section on Leadership Styles Project Human Resources Management Study Guide, Section on Conflict Management PMBOK Guide, Section 9.3.2.3 pg. 214 PMBOK Guide, Section 2.3.3 pg. 28 PMBOK Guide, Section 9.3.2.5 pg. 213 PMBOK Guide, Section 9.4 pg. 215 PMBOK Guide, Section 2.3.1, pg. 27 Project-base organizations fall into 2 categories: organizations that derive their revenue primarily from performing projects for others and organizations that use a management by projects approach -- meaning that they typically have management systems such as financial, accounting, tracking, and reporting specifically designed to support project management. Project Human Resources Management Study Guide, Section on Sources of Authority and Control Complicates team development because team members are accountable to both their functional manager and the project manager., PMBOK Guide, Section 2.3.3 pg. 30 PMBOK Guide, Figure 9-1, pg. 201 Project Human Resources Management Study Guide, Section on Conflict Management PMBOK Guide, Section 9.3.1 pg. 213 Project Human Resources Management Study Guide Section on Conflict Management. Forcing establishes a win-lose situation. Project Human Resources Management Study Guide, Section on Organizational Structure Project Human Resources Management Study Guide, Section on Motivation Theories Project Human Resources Management Study Guide, Section on Motivation Theories. A is part of Goal-Setting Theory and B is part of the Contingency Theory A definitive resolution is achieved when a compromise is reached and accepted as a just solution by all parties in conflict.... Project Human Resources Management Study Guide, Section on Conflict Management PMBOK Guide, Section 2.3.3 pgs. 28-32; Project Human Resources Management Study Guide, Section on Organizational Structure PMBOK Guide, Section 9.1.3.3, pg. 208. The staffing management plan often includes resource histograms PMBOK Guide, Section 9.1.2.1, pg. 206 PMBOK Guide, Section 2.3.3 pgs. 28-32; Project Human Resources Management Study Guide, Section on Organizational Structure PMBOK Guide, Section 1.3, pg. 8 Project Human Resources Management Study Guide, Section on Conflict Management PMBOK Guide, Section 9.3.2, pgs. 213-214 PMBOK Guide, Section 9.3.3 pg. 215
8 A 9 B
10 C 11 B 12 A 13 A 14 B 15 B 16 C
17 D
18 C 19 A 20 B 21 C 22 B 23 A 24 C 25 D
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26 B 27 C 28 C 29 D 30 A
PMBOK Guide, Chapter 9, pg. 203 PMBOK Guide Glossary, pgs. 208 PMBOK Guide, Section 2.3.3 pgs. 28-32; Project Human Resources Management Study Guide, Section on Organizational Structure PMBOK Guide, Section 9.3 pgs. 212-215 PMBOK Guide, Section 9.4.2 pg. 217
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Number
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
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PROJECT COMMUNICATIONS MANAGEMENT
STUDY NOTES
PMBOK Third Edition based, Version 9
Trademarks
Project Communications Management
Project Communications Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapters 2 and 10 Human Resource Skills for the Project Manager, Verma, Vijay K., 1996, Chapter 1 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 What to Study? The PMBOK phases of Project Communications Management: Communications Planning, Information Distribution, Performance Reporting, and Manage Stakeholders (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase) Know the difference between the general management skill of communicating and Project Communications Management. The general management skill of communicating is the broader subject and involves knowledge such as: sender-receiver models, choice of media, writing style, presentation techniques, and meeting management techniques. Be familiar with the goals of interpersonal communication. Understand how interpersonal communication works. (sender-receiver model) Know the different methods of communication. (written, verbal, and non-verbal including body language) Be familiar with the barriers to successful communication. Be familiar with communication channels and links. Know the formula for communications channels: (N*(N-1))/2 Be familiar with effective listening techniques. Be familiar with the barriers to effective listening and the guidelines for active listening. Know the four major communication styles: concrete-sequential, abstract-sequential, concrete-random, and abstract-random. Know the amount of time project managers spend communicating
Copyright IBM Corp. 2002, 2005 Project Communications Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Key Definitions
Active Listening Is engaged listening. It requires patience, self-control, empathy, and a willingness to understand the other persons perspective. Helps facilitate the development of mutual trust, respect, and good working relationships thus improving the overall performance of the team. Note: Active Listening is a part of Effective Listening The medium by which information is transmitted. Obstacles that impede communications. For example: limited communication channels, distance, noise, cultural differences, organizational climate, perceptions, limited information, withholding of information, terminology, number of communication links, manipulation (hidden agenda), etc. Communications requirements are the sum of the information requirements of the project stakeholders. The originator of the message. The source of the communication. Also known as the Sender. Is the ability to recognize the importance of verbal and nonverbal listening behaviors including body language. Its also the ability to utilize gestures and body language consciously (with consideration for cultural differences) to put people at ease and enhance communication. Information on how well the message was received. Occurs when a large portion of the message is lost from the sender to the receiver. Generally caused by problems of language, culture, semantics, knowledge base, etc. The vehicle or method used to convey message, for example written or electronic communications Sensory data that is encoded by the communicator (sender) and decoded by the receiver (recipient). Noise: Any interference or disturbance that confuses the message. The person for whom the message is intended. Refers to bringing together all the project team members into one location or in close proximity.
Channel Communication Barriers
Communications Requirements Communicator Effective Listening
Feedback Filtering
Medium Message Noise Receiver (Recipient) Tight Matrix
7-4 Project Communications Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Project Communications Management Processes

Project Communications Management:
Includes the processes required to ensure timely and appropriate generation, collection, distribution, storage retrieval, and ultimate disposition of project information. Provides the critical links among people and information that are necessary for successful communication. The project team must understand how the communications in which they are involved as individuals affect the project as a whole. The general management skill of communicating is related to, but not the same as, project communications management. Communicating is the broader subject and involves a substantial body of knowledge that is not unique to projects. Communicating includes: Sender-receiver models: feedback loops and barriers to communications Choice of media: when to communicate in writing, when to communicate orally, when to write an informal memo versus formal report, and when to communicate face-to-face versus by e-mail. Writing style: active versus passive voice, sentence structure and word choice. Presentation techniques: non-verbal communication (including body language), design of visual aids Meeting management techniques: preparing an agenda and dealing with conflict
Communications Planning (10.1): (Process Group: Planning)

The process of determining the information and communications needs of the project stakeholders: Who needs what information? When will they need it? How will it be given to them? Who will give it to them? While all projects share the need to communicate project information, the needs and methods of distribution can vary. Identifying the informational needs of the stakeholders and determining a suitable means of meeting those needs is an important factor for project success. Communications planning is often tightly linked with enterprise environmental factors and organizational influences since the projects organizational structure will have a major effect on the projects communications requirements. The majority of communications planning is usually done in the early phases of the project; however, the process results should be regularly reviewed and revised as needed to ensure continued applicability.
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Inputs include: Enterprise Environmental Factors: Organizational or company culture and structure Governmental or industry standards Infrastructure Existing human resources Personnel administration Company work authorization system Marketplace conditions Stakeholder risk tolerances Commercial databases Project management information systems Organizational Process Assets: Any and all organizations involved in the project can have formal and informal policies, procedures, plans, and guidelines whose effects must be considered. Organizational process assets also represent the organizations learning and knowledge from previous projects. Organizational process assets could be grouped into two categories: organizations processes and procedures for conducting work and organizational corporate knowledge base for storing and retrieving information. Project Scope Statement: The project scope statement provides a documented basis for future project decisions and for confirming a common knowledge of project scope among stakeholders. Stakeholder analysis is completed as part of the Scope Definition process. Project Management Plan: The project management plan provides background information about the project, including dates and constraints that may be relevant to Communications Planning. Constraints: factors that will limit the project management teams options. Assumptions: specific assumptions that affect Communications Planning will depend upon the particular project. Tools/Techniques used during communications planning are: Communications Requirements Analysis: Sum of the information needs of the project stakeholders. Requirements are defined by combining the type and format of information needed with an analysis of the value of that information. The number of communication channels is n(n-1)/2, where n is the number of stakeholders. Information required to determine project communications requirement include organization charts; project organization and stakeholder
responsibility relationships; disciplines, departments and specialties involved in the project; logistics of how many persons will be involved and at which locations; internal information needs; external information needs; and stakeholder information. Communications Technology: Communications technology factors that can affect the project include the urgency of the need for information; availability of technology; expected project staffing; length of the project; and the project environment. Outputs include: Communications management plan. Provides: - Stakeholder communication requirements - Information to be communicated - Person responsible for communicating information - Person or groups who will receive the information - Methods or technologies used to convey the information, such as memoranda, e-mail, and/or press releases - Frequency of the communication - Escalation process - Method for updating and refining the communications management plan - Glossary of common terminology
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Information Distribution (10.2): (Process Group: Executing)

The process of making needed information available to project stakeholders in a timely manner. It includes implementing the communications management plan, as well as responding to unexpected requests for information. Inputs include: Communications management plan Tools/Techniques used during information distribution are: Communication skills: Used to exchange information. The sender is responsible for clarity, accuracy, completeness of information, and for ensuring that the message is understood. The receiver is responsible for ensuring the information is received in its entirety and correctly understood. The many dimensions of communication include: written and oral, listening and speaking; internal and external to the organization; formal and informal; vertical and horizontal. Information gathering and retrieval systems: Methods for sharing information include: Manual filing systems Electronic databases Project management software Systems allowing access to technical documentation such as engineering drawings, design specificiations, and test plans, Information distribution methods: Methods for distributing project information include: Project meetings, hard-copy document distribution, manual filing systems and shared-access electronic databases Electronic communication and conferencing tools Electronic tools for project management software Lessons learned process: Focuses on identifying project successes and failures and includes recommendations to improve future performance on projects. Focus can vary. The team identifies lessons concerning technical, managerial, and process aspects of the project. Lessons are compiled, formalized and store through the project duration. Lessons learned provide future project teams with information that can increase effectiveness and efficiency of project management and provide good team building exercise. Project managers have a professional obligation to conduct lessons learned for all projects with key internal and external stakeholders. Results of lessons learned include updated of the lessons learned knowledge base; input to knowledge management system; ;updated corporate policies, procedures and processes; improved business skills;
overall product and service improvements; and updates to the risk management plan. Outputs include: Organizational Process Assets (Updates) Lessons learned documentation: lessons documented as part of the historical database for this project and the performing organization. Lessons learned includes the causes of issues, reasoning behind the corrective action chosen and other types of lessons learned Project records: should be appropriately maintained in an organized fashion. Records can include correspondence, memos, and documents describing the project. Project reports formal reports on project status and/or issues. Project presentations: information distributed formally or informally to any or all of the project stakeholders. The information is relevant to the needs of the audience and the method of presentation is appropriate. Feedback from stakeholders: information received form stakeholders concerning project operations can be distributed and used to modify or improve future performance of the project. Stakeholder notifications: information may be provided to stakeholders about resolved issues, approved changes and general project status. Requested changes Changes to the Information Distribution process should trigger changes to the project management plan and communication management plan. Requested changes are reviewed and the disposition is managed through the Integrated Change Control process.
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Performance Reporting (10.3): (Process Group: Controlling)

The process of collecting and disseminating baseline data and performance information to provide stakeholders with knowledge of how resources are being used to achieve project objectives. Performance reporting generally provides information on: Scope Schedule Cost Quality Risk Procurement Inputs include: - Work performance information: Contains information on the completion status of the deliverables and what has been accomplished as part of the project execution. - Performance measurements: The calculated schedule variance (SV) and schedule performance index values for WBS components are documented and communicated to stakeholders. - Forecasted completion: The EAC value is documented and communicated to stakeholders. - Quality control measurements: Represents the results of quality control activities that are fed back to QA to reevaluate and analyze the quality standards and processes of the performing organization. - Project management plan: Provides baseline information and the Performance measurement baseline which is an approved plan for the project work against which project execution is compared and deviations are measured for management control. - Approved changed requests: Expands or contracts project scope, to modify the estimated cost, or to revise activity duration estimates that have been approved and are ready for implementation. - Deliverables: Unique and verifiable products, results, or capabilities to perform a service that must be produced to complete a process, phase, or project. Tools/Techniques used during performance reporting include: - Information presentation tools: Software packages that include table reporting, spreadsheet analysis, presentations, or graphic capabilities used to create presentation-quality images of project performance data. Performance information gathering and compilation: Gathering and compiling information from various media that allows access to technical documentation to produce forecasts, performance, status and progress reports. - Status review meetings: Regularly scheduled events used to exchange information about the project. - Time reporting systems: Provides time expended for the project. - Cost reporting systems: Provides the cost of time expended for the project. Outputs include:
Project Communications Management -
Performance reports: Gantt charts, S-curves, histograms, and tables. Forecasts: Information about the projects past performance that could impact the project in the project in the future such as estimate to completion and estimate to complete. Requested changes: Changes processed and dispositioned through the Integrated Change Control process. Recommended corrective actions: Changes that bring the expected future performance of the project in line with the project management plan. Organizational process assets: Includes lessons learned.
Manage Stakeholders (10.4): (Process Group: Monitoring and Controlling)

The process of managing communications to satisfy the needs of, and resolve issues with stakeholders. Increases the likelihood that project will not veer off track due to unresolved issues and limits disruptions during the project. The project manager is responsible for stakeholder management. Inputs include: - Communications management plan: Identifies, analyzes and documents the stakeholder needs and expectations. - Organizational process assets: Tools/Techniques used during manage stakeholders: - Communications methods - Issue logs Outputs include: - Resolved issues - Approved change requests - Approved corrective actions - Organizational process assets (updates) - Project management plan (updates)
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Project Communications Management Concepts

(From Vermas Human Resource Skills for the Project Manager) Importance of communication:
By using communication skills, project managers help to plan, direct, control, and coordinate their operations throughout the project life cycle. Peter Drucker states that the communicating ability is essential for success and is perhaps the most important of all the skills an individual should possess. In project management, Sievert emphasizes the importance of communication by stating that a high percentage of the friction, frustrations and inefficiencies in working relationships are traceable to poor communication.
Goals of Interpersonal Communication:

Understanding the exact meaning and intent of others. Being understood by others. Gaining acceptance for yourself and/or your ideas. Producing action or change.
Interpersonal Communication:
To ensure messages are received and understood, two-way communication is necessary. When communicating in a project environment, both the sender and receiver have a duty to understand and to be understood. This is accomplished through feedback. Interpersonal communication is the process of sharing information with others. The four parts of the communications model: The sender/communicator (or encoder) of the message. The signal or the message. The medium for transmitting the message The receiver/recipient (or decoder) of the message. Process of interpersonal communication: (Wilbur Schramm) Sender determines what information to share and with whom and encodes the message. Sender transmits the message as a signal to the receiver. The receiver receives the message. The receiver decodes the message to determine its meaning and then responds accordingly. Communication is successful if the decoded message is the same as the sender intended. Utilizing experience, the sender anticipates how the message will be decoded and encodes the message, accordingly.
Tools/Techniques of Interpersonal Communication:

Project managers must have the ability to think logically and communicate effectively. Three forms are: Verbal: Advantages: Timely exchange of information Rapid feedback Immediate synthesis of message Timely closure Disadvantages: Technical jargon especially in complex projects may make verbal communication difficult for non-technical people and other stakeholders. No paper trail. Three stages of effective verbal communication and presentation: The introduction: Tell them what youre going to tell them. The explanation: Tell them. The summary: Tell them what you just told them. Non-verbal: Encoding a message without using words. Includes gestures, vocal tones, facial expressions, environmental settings, manner of dress, and body language. Generally, a receivers interpretation of a message is based not only on the words in the message, but also on the nonverbal behaviors of the sender. In an interpersonal communication situation in projects, nonverbal factors generally have more influence on the total impact of a message than verbal factors. Total Message Impact = Words (7%) + Vocal tones (38%) + Facial expressions (55%) (Albert Meharabian) Project managers may use nonverbal ingredients to complement verbal message ingredients whenever possible but must be careful that contradictory messages are not presented. Project managers should avoid sending ambiguous messages by walking the talk (mean what you say and say what you mean). Written communication (or graphic): In a project environment, written communication includes reports, plans, proposals, standards, policies, procedures, letters, memoranda, legal documents, and other forms of information to be transmitted. The main aim of business writing is that it should be understood clearly when read quickly. The message should be well planned, simple, clear, and direct. Major steps to writing: Establish the basic purpose of the message. Collect and organize material. Prepare draft. Check the overall structure Send the message. Determine when to put the message in writing. Written communication is effective in the following cases:
Copyright IBM Corp. 2002, 2005 Project Communications Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 7-13
When conveying complex information or data. When requiring future action from team members. When it is the receivers preferred communication style. When communicating company policies or changes to policies. When conveying a message that could be misunderstood either accidentally or intentionally. Make messages easy to read. Project managers and others can increase their personal power or influence by developing a power vocabulary when writing executive summaries, cover letters, bid proposals, project reports, marketing strategies, presentations, etc. Front-load the message Use concise language and stick to the point Use powerful visual language and persuasive language Own the message and display confidence
Macro-Barriers to Successful Communication:

Macro-barriers are elements of the communication environment that hinder successful communication in a general sense. Information overload: Keep messages simple and direct. Provide sufficient information - keep it simple and short. Lack of subject knowledge: Must have sufficient knowledge to send message. Must know level of understanding of receiver. Cultural differences: Meanings and interpretations may vary among different cultures. Encourage team members to learn each others cultures. Organizational climate: Minimize the differences associated with status and ego within the organization. Create an atmosphere of openness and trust by talking with people. Avoid talking down to people. Number of links: Reduce the number of transmission links. The more links, the more opportunity for distortion in the message. Be aware of entropy. 23-27% of message is lost in upward communication. (from PMI)
Micro-Barriers to Successful Communication:

Micro-barriers are elements of the communication environment that obstruct successful communication in a specific sense. Perceptions: Senders view of the receiver: senders communicate differently depending on how they perceive the receivers level of knowledge and ability to understand the message. Senders should be careful not to imply any negative attitudes towards the receiver through communication behavior. Receivers view of the sender: How the receiver personally feels about the sender may influence how carefully the receiver listens. If negative, these feelings may cause the receiver to ignore the message. If overly positive, these feelings may inhibit the receivers judgment. Message competition: Communicate only when you have the total attention of the recipient. Try to minimize noise or other factors contributing to message interference. Project jargon and terminology: Define project terminology used in messages. Be aware of the use of project terminology and the intended audience.
Types of Project Communications:

Interpersonal communication: Listening, self-presentation, problem solving, decision making, negotiating, and conflict management. Necessary skills for interacting with the project team and with the client on a daily basis. Communication with public and community: Includes all public relations efforts necessary to encourage community involvement, enhance public understanding of the project, break down resistance, gain acceptance, and be a project spokesperson. May involve public speaking, making presentations, dealing with media representatives, and producing written publicity or PR materials. Formal communication: Is carried out through traditional responsibility and relationship channels. Includes strategic plans, project planning systems, standards, policies, procedures, proposals, letters, etc. Most effectively done in written form. Informal communication: Done through informal groups in which relationships are dependent upon common ties such as interests, hobbies, kinship, friendship, social status, etc. Project managers must identify the strengths and limitations of informal communications and explore strategies to increase overall project effectiveness through informal communications.
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Managing Meetings Effectively:

Meetings provide a means to exchange and share messages, ideas and information. Meetings require a great deal of time and effort and therefore should be called only when necessary. Meetings should not take the place of project managers resolving problems and issues by working individually with the team members via the telephone, personal discussion, or e-mail. Avoid calling a meeting just for the sake of calling a meeting. Meetings should be productive. Guidelines for effective meetings: Before the meeting: Determine purpose, set ground rules for discussion, determine necessary attendees, notify participants in advance of location and agenda, start and end on time. During the meeting: Identify the specific objectives of the meeting, gather input from participants, stick to the agenda, use visual aids to illustrate points, periodically summarize the results of the discussion, assign action items as appropriate, and stick to the specified time limit. After the meeting: Follow up on individual action items, distribute concise minutes and use the minutes at the next meeting to measure results.
Communication Channels and Links:

The project manager must recognize and understand the projects formal communication channels. Three basic channels of communication in the project environment: Upward communication (vertically or diagonally): Information provided to upper management for their purposes of evaluating the overall performance of the projects for which they are responsible, or to refine organizational strategy. Project managers may use the by exception format for project status. This feedback helps top management assess priorities and make organizational modifications to effectively meet project goals and objectives and be more effective in the future. Downward communication (vertically or diagonally): Provides direction and control for project team members and other employees. Contains job-related information focusing on scope and definition, quality, schedule, implementation, and evaluation and feedback. May include statements of organizational philosophy, policies, project objectives, schedules, budgets, and constraints, position descriptions and other written information relating to the importance, rationale and interrelationships and interactions of various departments projects, and jobs in an organization. Lateral communication (horizontally): Information exchange between the project manager and his/her peers: functional managers, staff personnel, contractors, other project managers, etc.
Involves negotiating resources, schedules, and budgets; coordinating activities between groups, as well as developing plans for future operating periods. Is vital to the success of a project and is also the most important factor for survival and growth in a highly competitive and turbulent environment. Requires diplomacy and experience. If managed properly, it creates a harmonious, cooperative environment based on trust and respect for one another. If poorly managed, it may lead to conflict, blame, and failure to meet project objectives.
High Performance Communication:

A project managers performance depends upon how well he/she works with the project team in planning, implementing, coordinating, interfacing, integrating, and controlling the project. Self-awareness is key. Project managers must be aware of their own communication strengths and weaknesses. The project manager achieves project objectives by using effective communication to inspire high team performance. Key requirements for achieving high team performance include: Openness in communication Development of trust (so that accuracy of communication is achieved) Continuous support and counseling
Effective Listening:
Effective listening is one of the most important skills for a project manager to acquire and practice. It is essential for successful project management. Improves communication and helps develop mutual respect, rapport, and trust among project participants. Verbal listening behaviors: Asking questions to clarify and gather more information. Questions should be probing and constructive. Paraphrasing what the speaker has said. Summarizing at intervals what the speaker has said to confirm what you have understood. Asking the speaker for examples. Ascertaining the speakers feelings and acknowledging them. (You seem angry.) Directing the speaker to the most appropriate listener. (George can best help you with that.) Or, just listen if the person needs to let off steam.
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Non-verbal listening behaviors: Actions that reinforce the message or undermine it. Includes: Making eye contact. (indicates honesty and openness) Being expressive and alert. (indicates interest - motivates speaker to be open) Moving closer to the speaker. (establishes friendly environment) Listening for the intention behind the speakers communication. (sometimes the real message is not whats said, but how it is said) Facial expressions, touching, use of personal space, use of time. Body language (a subset of non-verbal) accounts for 55 percent of communication) It includes facial expressions, touching, and body positioning.
Barriers to Effective Listening:

The mismatch between our speed of talking (100-400 words per minute) and our speed of thinking (approx. 600 words per minute) makes effective listening tough. Some of the personal and environmental barriers that influence the overall effectiveness of communication include: Poor listeners: People do not talk freely when they know the audience isnt listening. This inhibits effective communications. Resistance to the message: People dont like to listen to something that is contrary to their preconceived ideas. When they should be listening, they are concentrating on their response or defense, instead. Physical distractions: telephone calls, people coming in and out of office/meetings, etc. Also, environments that create feelings of inequality in status discourage effective listening. Perceptual differences: Can influence the behavior of people which in turn can affect communications. For example, when perceptual differences occur, people tend to: Jump to conclusions Confuse facts with opinions Make frozen evaluations (those that cannot be easily changed) Project managers must be aware of these barriers to effective listening that might be caused by interpersonal , distractions, management response to new ideas or the overall project climate. Project managers should try to minimize barriers by nurturing better understanding and good working relationships necessary to effective communication among project participants. Use of I messages instead of you messages assists the speaker with delivery of a nonjudgmental, non-critical message while still conveying the speakers points. Checking perceptions and asking for clarification from speaker of intended message helps facilitate effective communications.
Guidelines for Active Listening: (part of effective listening)

Effective listening requires paying attention to the task, relationship and environmental dimensions of communication. Effective listening requires being genuinely concerned for the individual as a person, practicing neutrality, and taking an objective approach. It requires patience, mutual trust and respect. Active listeners empathize with the speaker, ask questions to clarify the message, and provide frequent feedback so that the sender can evaluate the accuracy of his or her message. Active listeners are equally aware of the influence of vocal tones, facial expressions and other nonverbal components in addition to the verbal component of communications. Some practical guidelines for active listening include: Stop talking! Show the speaker you are ready to listen: Silence: signals you are ready to listen. Few distractions: shut the door, put the phone on hold, refrain from impatient mannerisms, etc. A receptive attitude: empathize with the speakers point of view. Listen for total meaning, not just for points of opposition.
Communication Styles:
The project manager uses communication more than any other skill set to manage the project throughout its life cycle and to ensure that team members are working cohesively and resolving problems. Two dimensions of thinking and action include: The thinking and decision-making approach which varies from logical (sequential) to intuitive (random) The action style which varies from hands-on (concrete) to research based (abstract) When the two dimensions are combined, the results are four major communication styles all of which are applicable at various times in the project life cycle. The styles are: Concrete-sequential: (Mr./Ms. Fix-it) Person likes to focus on ideas and tasks, thinks systematically and predictably. Person wants to complete tasks and minimize change.
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Abstract-sequential: (Organizer) Person who relies on logical analysis and systematic planning to solve problems. These communicators are people and task-oriented, which makes them effect team builders. These communicators prefer to have all information before making a decision, and they know how to control resources and information. Concrete-random: (Explorer/entrepreneur) Person relies on people and technology, finds practical use for theories and models. These communicators make decisions after thorough analysis and evaluation and excel at facilitating planning sessions, discussions, and changes. Abstract-random: (Intuitive free thinker) Person views experiences from different perspectives and sees the big picture and the long-term vision. These communicators make good brainstormers because they can listen actively and enjoy the process of generating new ideas.
How Project Managers Spend Their Time: (from PMI)

Approximately 75-90% of project managers time is spend communicating (proper answer on the PMP Exam would be 90%). Of the PMs time spend communicating, approximately 45% is spent listening. Another 30% is spent speaking. Approximately 10% is spent reading; another 10% writing, and 5% other. Project managers spend 50% of their time in meetings.
Sample Problem
1. How many communication channels are added when three additional people are assigned to a four person team?
Answer: 15 communication channels are added. No. of channels for a 4 person team: (n*(n-1))/2 (4*3)/2 = 6 No. of channels for a 7 person team: (7*6)/2 = 21 Therefore, adding 3 people to a 4 person team increases the no. of communication channels by 15. (21-6)
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Sample Questions
1. Which of the following is NOT a process of Project Communications Management? A. Information Distribution B. Performance Reporting C. Conflict Resolution D. Communications Planning
2. Which of the following is an output of the Communications Planning process?

A. Project records
B. Communications management plan C. Performance reports D. Formal acceptance 3. Referring to the process of interpersonal communication as defined by Wilbur Schramm which of the following statements is false?
A. The process of encapsulating information into a message and then transmitting the
message is called decoding. B. The destination decodes the message to determine its meaning and then responds accordingly. C. Communication is considered successful if the message decoded is the same as the sender intended. D. Perceptual differences can influence the way the message is decoded. 4 How much time does the typical project manager spend communicating both formally and informally?
A. 40-60%
B. 50-70% C. 60-80% D. 75-90% 5. Which of the following organizational forms has the greatest requirement for effective communications?
A. Matrix
B. Project C. Hierarchical D. Functional
6. The sending or conveying of information from one place to another is the process of: A. B. C. D. Networking Transmitting Encrypting Promoting
7. You send milestones reports to a key stakeholder by e-mail. He expresses dissatisfaction with the reports and complains about the lack of details. Where would this be best addressed? A. Scope planning B. Risk planning C. Communication planning D. Scope initiation and Project Charter production 8. In Albert Meharabians interpersonal communication dynamics formula of Total Message Impact = Words + Vocal tones + Facial expressions, words make up what percentage of the total message impact? A. 20% B. 55% C. 7% D. 38% 9. All of the following are outputs from the Performance Reporting process EXCEPT:
A. Trend analysis B. S curves, histograms, bar charts, and tables C. Performance reports D. Change Requests
10. All of the following aid in achieving consensus EXCEPT:

A. Maintaining a focus on the problem, not each other.
B. Avoiding conflict. C. Seeking facts. D. Avoiding voting, trading, or averaging . 11. A person who is visionary and enjoys being a catalyst for organizational change, but prefers the conceptual phase over the implementing phase is most likely to have a preference for which communication style? (choose the BEST answer) A. Concrete-sequential B. Abstract-sequential C. Abstract-random D. Concrete-random
12. Which of the following is NOT an example of an effective verbal listening behavior? A. Paraphrasing what the speaker has said B. Asking the speaker for examples
Copyright IBM Corp. 2002, 2005 Project Communications Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 7-23
C. Use of personal space D. Acknowledging the speakers feelings 13. As project manager, you wish to impose a complex accounting method by which subordinates will calculate project costs. You only have time for one approach. Which type of communication would be most effective in communicating this standard ? A. B. C. D. Verbal face-to-face Written Verbal, telephone Nonverbal
14. The sender is responsible for: A. B. C. D. Confirming the message is understood Ensuring the receiver agrees with the message Scheduling communication exchange Presenting the message in the most agreeable manner
15. What are the four parts of the communications model? A. B. C. D. Sending, Receiving, Decoding, and Comprehending Sender, Message, Medium, Receiver Communicator, Message, Receiver, Decoder Communicating, Transmitting, Receiving, Comprehending
16. Formal written correspondence is mandated in which one of the following situations: A. Product undergoes casual in-house testing B. Client requests additional work not covered under contract C. Project manager calls a meeting D. Customer executive requests a review of the project 17. Which of the following communications management processes is considered executing?
A. Performance Reporting B. Manage Stakeholders C. Communications Planning D. Information Distribution
18. A cell phone ringing during a meeting is an example of: (choose the BEST answer) A. B. C. D. A perpetual difference Resistance to the message Poor listening A physical distraction
19. Who is usually responsible for stakeholder management? A. B. C. D. Project management team Project manager Project team Project Sponsor
20. The receiver filters messages based on all BUT which of the following: A. B. C. D. Language Distance Culture Knowledge
21. A communication plan details all of the following except:

A. To whom information will flow and what Tools/Techniques will be used to distribute
various types of information B. What information will be gathered, how it will be gathered and how often it will be gathered C. Tools/Techniques for accessing information D. All memos, correspondence, reports and documents related to the project from all personnel 22. Which of the following is NOT an output of managing stakeholders? A. B. C. D. Approved change requests Project management plan updates Resolved issues Contract file
23. Among the MOST common pitfalls in effective communication is:

A. Not selecting the correct medium B. Not considering the position of the receiver C. Assuming that because a message is sent, it has been received in the same form it
was sent
D. Being overly judgmental in communicating
E. All of the above
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24. Which of the following statements regarding stakeholder management is true? (choose the BEST answer) A. Refers to managing stakeholders project expectations B. Actively managing stakeholders increases the likelihood that the project will not veer off track due to unresolved stakeholder issues C. Is the primary responsibility of the project management team D. Is not important for helping to ensure the overall success of the project 25. Which of the following techniques is used in the communications planning process? A. Communications requirements analysis B. Executive interviews C. PMIS analysis D. Channel evaluation 26. Communication barriers may result in:
A. B. C. D. Trust and cooperation among the project team members High levels of conflict A more enjoyable work environment for the project manager Projects that are completed on time and within budget
27. You are chairing a meeting in which you are using experts to identify the best solution to a very critical problem facing your project. A conflict has arisen between some team members who are anxious for closure and others who wish to consider more alternatives. As project manager and meeting chairperson, you should ____________. Choose the best answer.
A. Conclude meeting because more discussion is a waste time B. Allow people who are anxious for closure to leave meeting and continue meeting with
remaining team members

C. Facilitate continued discussion of alternatives while being cognizant of the impact of
delays
D. Smooth conflict by telling attendees which alternative to take
28. A formal written response is MOST SUITABLE when _________. Choose the best answer.
A. Discussing work assignments B. Directing the contractor to make changes
C.
The interpreter has a short memory D. Contacting the client is necessary
29. Five people are involved on a project that requires significant communication between all project participants. How many lines of communication exist on this project ?
A. 5 B. 6 C. 8 D. 10
30. What are the key components of the basic communications model? A. Encode, Send, Message, Medium, Decode B. Encode, Message, Medium, Receive, Decode C. Encode, Message, Medium, Noise, Decode D. Encode, Message, Noise, Receive, Decode
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Answer Sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
Answers
1 C 2 B 3 A PMBOK Guide, Chapter 10, pg 221 PMBOK Guide, Section 10.1.3, pg 227 Project Communications Management Study Guide, Section on Interpersonal Communication.....Vermas Human Resource Skills for the Project Manager, pgs. 17-18 Project Communications Management Study Guide, Section on How Project Managers Spend Their Time PMBOK Guide Glossary, page 379. Experience- limited commitment or two bosses gives rise to bad communication. Project Communications Management Study Guide, Section on Interpersonal Communication..... Vermas Human Resource Skills for the Project Manager, pgs. 17-18 PMBOK Guide, Section 10.1, pg 225. Communications planning in key stakeholder analysis Project Communications Management Study Guide, Section on Tools/Techniques of Interpersonal Communication..... Vermas Human Resource Skills for the Project Manager, pg. 19 PMBOK Guide, Section 10.3.3, pgs. 223. The outputs are change requests and performance reports. Option B provides examples of the formats for performance reports. Trend analysis is a tool and technique of performance reporting. In the modern view, conflict is inevitable and is a natural result of change. If managed properly, conflict is frequently beneficial. Withdrawal tends to minimize conflict but also fails to resolve the issue. Project Communications Management Study Guide, Section on Communication Styles..... Reference Verma, Human Resource Skills for the Project Manager, pg. 49 The abstract-random communicator is a brainstormer and visionary. Use of personal space is a non-verbal listening behavior Management would want to provide written instructions on how to calculate costs. Writing is used so that subordinates can later reference the standard. PMBOK Guide, Section 10.2.2.1, pg. 229 Project Communications Management Study Guide, Section on Interpersonal Communication..... Reference Verma, Human Resource Skills for the Project Manager, Chapter 1 Work requested but not covered under a contract will require a contract change. PMBOK Guide, Figure 3-8, pg. 55. Performance Reporting is usually done regularly and consistently. Physical distraction is the best answer. The receiver may very well be listening to the sender but the communication link is interrupted with a physical occurrence such as a ringing phone. PMBOK Guide Section 10.4, pg. 235 Distance does not have an impact on the receiver providing that the communications media is acceptable. PMBOK Guide, Section 10.1, pg. 225 The communications plan details a plan for storing important memos, documents, etc. related to the project, but does not contain the actual documents itself. PMBOK Guide, Section 10.4.3, pgs. 236 Project Communications Management Study Guide, Section on Interpersonal Communication.....
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4 D 5 A 6 B
7 C 8 C
9 A
10 B
11 C
12 C 13 B 14 A 15 B
16 B 17 D 18 D
19 B 20 B 21 D
22 D 23 E
24 B 25 A 26 B
27 C 28 B 29 D 30 C
PMBOK Guide, Project Communications Management, Section 10.4, pg. 235, PMBOK Guide, Section 10.1.2.1, pg. 226 Project Communications Management Study Guide, Section on Interpersonal Communication..... Reference Verma, Human Resource Skills for the Project Manager, Chapter 1 PMBOK Guide, general reading and experience PMBOK Guide, general reading and experience The formula used to compute the total number of communications channels between N persons is: N(N-1))/2. In this case the answer is 10. PMBOK Guide, Project Communications Management, pg. 224

Number
_________
_________ _________ _________ _________ _________ _________ _________ _________
_________ _________
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PROJECT RISK MANAGEMENT
STUDY NOTES
PMBOK
Trademarks
Project Risk Management
Project Risk Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapter 11 Project and Program Risk Management, A Guide to Managing Project Risks and Opportunities, PMI, Edited by R. Max Wideman, 1992 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003 What to Study? The PMBOK phases of Project Risk Management: Risk Management Planning, Risk Identification, Qualitative Risk Analysis, Quantitative Risk Analysis, Risk Response Planning, and Risk Monitoring and Control (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase) The means for determining the value of a risk event: R=P*I where R is the calculated value of the risk event, P is the probability of the occurrence of the risk event, and I is the impact of the risk event should it occur. (A risk event is a discrete occurrence that could affect the project for better or worse.) The relationship of risk and the project life cycle: the amount of uncertainty and risk is highest at the start of the project and lowest at the end of the project Positive risk as defined by opportunities and negative risk as defined by threats The various means of classifying risk: business, pure (insurable), known, unknown Risk assessment using Decision Trees and Expected Monetary Value Monte Carlo Analysis, Delphi Technique, Cause-and-effect (also called Ishikawa or fishbone) diagrams The different types of scales used in risk analysis: ordinal and cardinal
Copyright IBM Corp. 2002, 2005 Project Risk Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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Key Definitions
Amount at Stake Assumptions The extent of adverse consequences which could occur to the project. (Also referred to as risk impact). Factors that for planning purposes are considered to be true, real, or certain. Assumptions affect all aspects of project planning and are part of the progressive elaboration of the project. Project teams frequently identify, document, and validate assumptions as part of their planning process. Assumptions generally involve a degree of risk. A technique that explores the accuracy of the assumptions and identifies risks to the project from inaccuracy, inconsistency, or incompleteness of assumptions. A general creativity technique that can be used to identify risks using a group of team members or subject-matter experts. Typically, a brainstorming session is structured so that each participants ideas are recorded for later analysis. The inherent chances for both profit or loss associated with a particular endeavor or line of business. A comprehensive listing of many possible risks that might occur on a project. Several types of risk that have been encountered on previous projects are included. The development of a management plan that identifies alternative strategies to be used to ensure project success if specified risk events occur. The amount of money or time needed above the estimate to reduce the risk of overruns of project objectives to a level acceptable to the organization. A diagram that describes a decision under consideration and the implications of choosing one or another of the available alternatives. It incorporates probabilities or risks and the costs or rewards of each logical path of events and future decisions. The act of transferring all or part of a risk to another party, usually by some form contract provision, insurance policy, or warranty. Also called risk transference. The product of an events probability of occurrence and the gain or loss that will result. Expected Monetary Value = Money at Risk x probability. For example, if there is a 50% probability it will rain, and rain will result in a $100 loss, the expected monetary value of the rain event is $50 (.5 * $100).
Assumptions analysis
Brainstorming
Business Risk Checklist
Contingency Planning
Contingency Reserve
Decision Tree Analysis
Deflection
Expected Monetary Value
8-4 Project Risk Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Copyright IBM Corp. 2005
Impact Analysis
Insurable Risk
Management Reserve
Mitigation Monte Carlo Analysis Opportunities
Probability
Probability and Impact Matrix Project Risk Management Pure Risk Reserve
Residual Risk Risk
The mathematical examination of the nature of individual risks on the project, as well as potential arrangements of interdependent risks. It includes the quantification of their respective impact severity, probability, and sensitivity to changes in related project variables, including the project life cycle. To be complete, the analysis should also include an examination of the external status quo prior to project implementation as well as the projects internal intrinsic worth as a reference baseline. A determination should also be made as to whether all risks identified are within the scope of the projects response planning process. A particular type of risk which can be covered by an insurance policy. (i.e., floods, fire, etc.) Includes potential loss and no chance for business profit. Also called a pure risk. A separately planned quantity used to allow for future situations which are impossible to predict. Management reserves are intended to reduce the risk of missing cost or schedule objectives. Use of management reserves requires a change to the projects cost baseline. Management reserves are not included in the projects cost and schedule baseline. Also used to manage unknown unknowns types of risk. Taking steps to lessen risk by lowering the probability of a risk events occurrence or reducing its effect should it occur. A technique that performs a project simulation many times in order to calculate a distribution of likely results. Future events or series of events that if they occur will have a positive impact on the project. Benefits which can be realized from undertaking a project. As related to risk, positive outcomes of risk events. The likelihood of occurrence. The ratio of the number of chances by which an event may happen (or not happen) to the sum of the chances of both happening and not happening. A common way to determine whether a risk is considered low, moderate, or high by combining the two dimensions of a risk: its probability of occurrence and its impact on objectives if it occurs. Includes the processes concerned with identifying, analyzing, and responding to project risk. See Insurable risk A provision in the project plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g., management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated. The specific meaning of the modified term varies by application area. A risk that remains after risk responses have been implemented. An uncertain event or condition that, if occurs, has a positive or negative effect on a project objective.
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Risk Event Risk Management Plan
A discrete occurrence that may affect the project for better or worse. A subsidiary element of the overall project plan which documents the procedures that will be used to manage risk throughout the project. Also covers who is responsible for managing various risk areas; how contingency plans will be implemented, and how reserves will be allocated. A document detailing all identified risks, including description, cause, probability of occurrence, impacts on objectives, proposed responses, owners, and current status. Also known as the risk register. As related to risk, negative outcomes of risk. All information is known. No information is available and nothing is known. By definition, total uncertainty cannot be envisaged. Indications that a risk has either occurred or is about to occur. (Also referred to as risk symptoms or warning signs) The possibility that events may occur which will impact the project either favorably or unfavorably. Uncertainty gives rise to both opportunity and risk. A response to a negative risk event. Distinguished from contingency plan in that a workaround is not planned in advance of the occurrence of the risk event.
Risk Response Plan
Threats Total Certainty Total Uncertainty Triggers Uncertainty
Workaround
Project Risk Management Concepts

Project Risk Management:
Includes processes involving risk management planning, risk identification, qualitative and quantitative risk analysis, response planning, and monitoring and control. Includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives.
Project Risk:
Is an uncertain event or condition that, if occurs, has a positive or negative effect on a project objective. Has its origins in the uncertainty that is present in all projects. Includes both threats (negative effects) to the projects objectives and opportunities (positive effects) to improve on those objectives. A risk has a cause and, if it occurs, a consequence. Known risks are those that have been identified and analyzed and may be possible to plan for their occurrence and mitigation. Unknown risks cannot be managed, although project managers may address by applying a general contingency based on past experience with similar projects. Risks that are threats to the project may be accepted if they are in balance with the reward that may be gained by taking the risk. Likewise, risks that are opportunities may be pursued to benefit the projects objectives. Organizations must be committed to addressing risk management throughout the project. One measure of an organizations commitment is its dedication to gathering high-quality data on project risks and the characteristics of the risks.
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Project Risk Management Processes

Risk Management Planning (11.1): (Process Group: Planning)
Is the process of deciding how to approach and plan the risk management activities for a project. Planning for subsequent risk management processes helps ensure that the level, type, and visibility of risk management are commensurate with both the risk and importance of the project to the organization. Inputs include: Enterprise environmental factors Organizational process assets (predefined approaches to risk analysis and response) Project scope statement Project management plan Tools and techniques used during risk management planning include: Planning meetings and analysis The risk management plan is developed in the planning meeting. Risk cost elements and schedule activities are determined. Templates for risk categories and definitions of terms are tailored to the project. Outputs include: Risk Management Plan Describes how risk management will be structured and performed during the project life cycle. May include: Methodology: Defines the approaches, tools, and data sources that may be used to perform risk management on the project. Different types of assessments may be appropriate, depending upon the project stage, amount of information available, and flexibility remaining in risk management. Roles and responsibilities: Defines the lead, support, and risk management team membership for each type of action in the risk management plan. Team members are assigned roles and their responsibilities are determined. Budgeting: Resources and estimated costs needed for risks included in the project baseline. Timing: Defines how often the risk management process will be performed throughout the project life cycle. Risk management activities are included in the project schedule. Results should be developed early enough to affect decisions. The decisions should be revisited periodically during a project execution. Risk Categories: Ensures a comprehensive process of identifying risk to a consistent level of detail and contributes to the effectiveness and quality of Risk Identification. Revised stakeholders tolerances: May be revised in the Risk Management Planning process.
Reporting formats: Describes the content and format of the risk register and other risk reports. Defines how the results of the risk management processes will be documented, analyzed, and communicated to the project team, internal and external stakeholders, sponsors, and others. Tracking: Documents how all facets of risk activities will be recorded for the benefit of the current project, future needs, and lessons learned. Documents if and how risk processes will be audited.
Risk Identification (11.2):
(Process Group: Planning)
The process of determining which risks are likely to affect the project and documenting the characteristics of each. Where feasible, participants in the risk identification process generally include: the project team, the risk management team, subject matter experts from other parts of the company, customers, end users, other project managers, stakeholders, and outside experts. Risk identification is an iterative process. Inputs include: Enterprise environmental factors: Includes information from commercial databases, academic studies, and other industry studies Organization process assets Project scope statement Risk management plan Tools and techniques used during risk identification include: Documentation reviews - Includes a structured review of the project plans and assumptions, both at the total project and detailed scope levels as well as reviews of prior project files and other informational sources. Information-gathering techniques: Brainstorming: Probably the most frequently used risk identification technique. Generally performed by the project team although a multidisciplinary set of experts can also perform this technique. The goal is to obtain a comprehensive list of risks that can be addressed later in the qualitative and quantitative risk analysis processes. Under the leadership of a facilitator, the team generates ideas about project risk. Sources of risk are identified in broad scope, posted, categorized by type of risk, and then the definitions sharpened. Delphi technique: A means for achieving a consensus of experts on a subject such as project risk. Project risk experts are identified but participate anonymously. A facilitator uses a questionnaire to solicit ideas about the important project risks. The responses are submitted and then circulated to the experts for further comment. Consensus may be reached in a few rounds of this process. This technique helps reduce bias in the data and keeps any person from having undue influence on the outcome. Interviewing: Risks are identified by interviewing experienced project managers or subject-matter experts. The person in charge of risk identification identifies the appropriate individuals, briefs them on the project, and provides information such as the WBS and the list of assumptions. The interviewees then identify risks.
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Root cause identification: Determines the primary causes of a projects risks. It fine tunes the definition of the risk and risks are grouped by causes. Strengths, weaknesses, opportunities, and threats (SWOT) analysis: Ensures examination of the project from each of the SWOT perspectives to increase the breadth of the risks considered. Checklist Analysis: Lists based on historical information and knowledge that has been accumulated from previous similar projects and other sources of information. An advantage of using a checklist is that the risk identification is quick and simple. The disadvantage of using a checklist is that building a checklist with every possible risk is impossible, and the user may be limited to the categories that appear on the list. Care should be taken to explore relevant items that do not appear on a standard checklist. The checklist should itemize all types of possible risks to the project. The checklist should be formally reviewed at every project-closing to improve the list of potential risks and to improve the description of risks. Assumptions analysis: Every project is conceived and developed based on a set of hypotheses, scenarios, or assumptions. Assumptions analysis is a technique that explores whether or not the assumptions are valid. Identifies project risks from inaccuracy, inconsistency, or incompleteness of assumptions. Diagramming techniques: Cause-and-effect diagrams (also known as Ishikawa or fishbone diagrams) System or process flow charts Influence diagrams - a graphical representation of a problem showing causal influences, time ordering of events, and other relationships among variables and outcomes. Outputs include the Risk Register which contains outcomes of the other risk management processes. The Risk Register begins with the Risk Identification process and becomes available to other project management and Project Risk Management processes. List of identified risks. Describes the root causes and uncertain project assumptions of the identified risks. List of potential responses: Used as inputs to the Risk Response Planning process. Root causes of risks: Indications that a risk has occurred or is about to occur. Updated risk categories Enhanced or amended risk categories.
Qualitative Risk Analysis (11.3): (Process Group: Planning)

The process of assessing the impact and likelihood of identified risks. Prioritizes risks for further action according to their potential effect on project objectives.
8-10 Project Risk Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. Copyright IBM Corp. 2005
A means for correcting biases that are present in data used in this process and determining the importance of addressing specific risks and guiding risk responses. Requires that the probability and consequences of the risks be evaluated using established qualitative-analysis methods and tools. The importance of a risk may be magnified due to time-criticality of risk-related actions. Trends in the results when qualitative analysis is repeated can indicate the need for more or less risk-management action. Use of these tools helps correct biases that are often present in a project plan. Should be revisited during the projects life cycle to stay current with changes in the project plan.
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Inputs include: Organizational Process Assets: Includes data about previous projects and lesson s learned. Project Scope Statement: Provides information on well-understood and uncertain risks. Risk Management Plan: Risk Register Tools and techniques used during qualitative risk analysis include: Risk Probability and Impact Assessment: Risk probability is the likelihood that a risk will occur. Risk impact (or consequences) is the effect on project objectives if the risk event occurs. These two dimensions of risk are applied to specific risk events, not to the overall project. This technique helps identify those risks that should be managed aggressively. Probability and Impact Matrix: A matrix that assigns risk ratings (very low, low, moderate, high, and very high) to risks or conditions based on combining probability and impact scales. The risk rating is determined using a matrix and risk scales for each risk. The organization must determine which combinations of probability and impact result in a risks being classified as a high risk (red condition), moderate risk (yellow condition), and low risk (green condition) for either a cardinal or ordinal approach. The risk score helps put the risk into a category that will guide risk response actions. Risk Data Quality Assessment: A technique used to evaluate the degree to which the data about risks is useful for risk management. It involves examining: Extent of understanding of the risk. Data available about the risk. Quality of the data Reliability and integrity of the data. Risk Categorization: Risks are group to determine root causes and develop effective risk responses. Categories include sources of risk and the area of the project affected. Risk Urgency Assessment: Determines which risks are urgent. Indicators that determine urgency include time to effect a risk response, symptoms and warning signs and the risk rating. Outputs include: Risk Register updates with information from the Qualitative Risk Analysis. The risk register updates include: Relative ranking or priority list of project risks: Classifies risks according to their significance. Indicates the overall risk position of a project relative to other projects by comparing the risk scores. Can be used to assign personnel or other resources to projects with different risk rankings, to make a benefit-cost analysis decision about a project, or to support a recommendation for project initiation, continuation, or cancellation.
Risks grouped by categories: Improves effectiveness of risk responses by exposing common root causes of risk or project areas requiring attention. List of risks requiring response in the near-term: Places risks that require urgent responses and those that can be handled later into different groups. List of risks for additional analysis and response: Risks classified as high or moderate would be prime candidates for more analysis, including quantitative risk analysis, and for risk management action. Watchlists of low priority risks: Places least important risks on a watchlist for continued monitoring. Trends in qualitative risk analysis results: As the analysis is repeated, a trend of results may become apparent, and can make risk response or further analysis more or less urgent and important.
Quantitative Risk Analysis (11.4):
The process of measuring the probability and consequences of risks and estimating their implications for project objectives. Aims to analyze numerically the probability of each risk and its consequence on project objectives, as well as the extent of overall project risk. Uses techniques such as Monte Carlo simulation and decision analysis to: Quantify the possible outcomes for the project and their probabilities Assess the probability of achieving project objectives Identify realistic and achievable cost, schedule, or scope targets. Determine the best project management decision when some conditions are uncertain. The quantitative and qualitative risk analysis processes can be used separately or together. Trends in the results when quantitative analysis is repeated can indicate the need for more or less risk management action. Inputs include: Organizational Process Assets: Information on previous projects and their risks. Project Scope Statement Risk Management Plan: Includes roles and responsibilities for conducting risk management and scheduling activities for risk management, risk categories and revised stakeholders risk tolerances. Risk Register: Includes the list of identified risks, the priority list of project risks and risks grouped by category. Project Management Plan: The project management plan includes the project schedule and the project cost management plans. Tools and techniques used in quantitative risk analysis include: Data Gathering and Representation Techniques: Interviewing techniques: Used to quantify the probability and consequences of risks on project objectives. The information needed depends upon the type of probability distributions that will be used. For instance, information would be gathered on the optimistic (low), pessimistic (high) and the most likely scenarios if triangular distributions are used, or on mean and standard deviation for the normal and log normal distributions. (see PMBOK Guide Figures 11-10). For effective
Copyright IBM Corp. 2002, 2005 Project Risk Management Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 8-13
Quantitative Risk Analysis and Modeling Techniques: Sensitivity analysis: Determines which risks have the most potential impact on a project. Expected monetary value analysis (EMV): Calculates the average outcome when the future includes scenarios that may or may not happen. The formula is calculated by multiplying the value of each possible outcome by its probability of occurring and adding them together (see PMBOK Guide Figures 11-12). Decision tree analysis: Usually structured as a decision tree (see PMBOK Guide Figures 11-12). The decision tree is a diagram that describes a decision under consideration and the implications of choosing one or another of the available alternatives. Decision tree analysis attempts to break down a series of events into smaller, simpler, and more manageable segments. Incorporates probabilities of risks and the costs or rewards of each logical path of events and future decisions. Solving the decision tree indicates which decision yields the greatest expected value to the decision-maker when all the uncertain implications, costs, rewards, and subsequent decisions are quantified. Modeling and Simulation: Uses a model that translates the uncertainties specified at a detailed level into their potential impact on objectives that are expressed at the level of the total project. Project simulations are typically performed using the Monte Carlo technique. For a cost risk analysis, a simulation may use the traditional project WBS as its model. For a schedule risk analysis, the Precedence Diagram Method (PDM) schedule is used. Outputs include the Risk Register (Updates) which is a component of the management plan. Updates include the following: Prioritized list of quantified risks: List of risks that includes those which pose the greatest threat or present the greatest opportunity to the project together with the measure of the impact for each quantified risk. Probabilistic analysis of the project: Forecasts of potential project schedule and cost results listing the possible completion dates/project duration and costs with their associated confidence levels. Probability of achieving the cost and time objectives: The probability of achieving the project objectives under the current plan and with the current knowledge of the project risks can be estimated using quantitative risk analysis.
risk response strategies, it is important to document the rationale of the risk ranges. Probability distributions: Represents the uncertainty regarding the duration of schedule activities and the cost of project components. Discrete distributions can be used to represent certain events. (see PMBOK Guide Figures 11-11). Expert judgment: Subject experts validate the data and techniques.
Trends in quantitative risk analysis results: As the analysis is repeated, a trend in the results may become apparent.
Risk Response Planning (11.5): (Process Group: Planning)

The process of developing options and determining actions to enhance opportunities and reduce threats to the projects objectives. Includes the identification and assignment of individuals or parties to take responsibility for each agreed risk response. Ensures that identified risks are properly addressed. The effectiveness of response planning will directly determine whether risk increases or decreases for the project. Risk response planning must be: Appropriate for the severity of the risk Cost effective in meeting the challenge Timely to be successful Realistic within the project context Mutually agreed upon by all involved parties Owned by a responsible person Selects the best risk response from the available options Inputs to risk response planning include: Risk Management Plan: Includes roles and responsibilities, risk analysis definitions, risk thresholds and time and budget required to conduct Project Risk Management. Risk Register: Process that refer to identified risks, root causes of risks, potential responses, risk owners, symptoms and warning signs in developing risk responses. The Tools and techniques methods used in risk response planning: Strategies for Negative Risks or Threats Avoid: Changes the project plan to eliminate the risk , protects the project objectives from the risk impact, or relaxes the object that is in jeopardy. Some risk events that arise early in the project can be avoided by clarifying requirements, obtaining information, improving communication, acquiring expertise. Transfer: Shifts the consequence of a risk to a third party together with ownership of the response. Transferring is most effective in dealing with financial risks. Transference can include the use of insurance, performance bonds, warranties and guarantees. . Mitigate: Reduces the probability of impact of and adverse risk event to an acceptable level. Taking early action helps reduce the probability of an adverse risk occurring and/or the severity of the impact and is more effective than repairing the consequences after the risk has occurred. Must take into consideration the mitigation costs given the likely probability of the risk and its consequences. Strategies for Positive Risk or Opportunities Exploit: Removes uncertainty associated with positive risks. Actions are taken to ensure that the risk occurs. Responses include adding talented resources to reduce time to completion or providing better quality.
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Share: Assigns ownership of a positive risk to a third part who is best able to capture the opportunity to benefit the project. Sharing includes forming risk-sharing partnerships, teams or joint ventures. Enhance: Increases the probability or positive impacts of an opportunity by identifying key drivers of the positive-impact risks. Strategies for Both Threats and Opportunities Acceptance: Project team makes a conscious decision to not change the project plan to handle the risk. Project team may not be able to identify any other suitable response strategy other than accepting the risk. Contingent Response Strategy: Response plans designed for use if predefined conditions occur. Outputs for risk response planning include: Risk register (Updates): a detailed plan which describes the actions that will be taken in regards to handling/accepting risk. The risk register should include some or all of the following: Identified risks and descriptions, areas of the affected project (e.g., WBS element), causes of identified risks, and impact on project objectives. Risk owners and assigned responsibilities. Results from the qualitative and quantitative risk analysis processes. Agreed responses including avoidance, transference, mitigation, or acceptance for each risk in the risk response plan. The level of residual risk expected to be remaining after the strategy is implemented. Specific actions to implement the chosen response strategy. Budget and times for responses. Contingency plans and fallback plans Contingency reserves Secondary risks that arise as a direct result of implementing a risk response. Residual risks that remain after the execution of avoidance, transfer, or mitigation responses. Project Management Plan (Updates) Agreed-upon actions are implemented and monitored Risk-Related Contractual Agreements: Should specify each partys responsibility for specific risks. (example: insurance)
Risk Monitoring and Control (11.6): (Process Group: Controlling)

The process of tracking identified risks, monitoring residual risks and identifying new risks, ensuring the execution of risk plans, and evaluating their effectiveness in reducing risks. Records risk metrics that are associated with the implementation of contingency plans. Is an ongoing process for the life of the project. Provides information that assists with effective decision making in advance of the risk occurrence. The purpose of risk monitoring is to determine if: Project assumptions are still valid.
Risk exposure has changed from its prior state, with analysis of trends. A risk trigger has occurred. Proper policies and procedures are followed. Contingency reserves should be modified. Risks have occurred or arisen that were not previously identified. Risk control may involve choosing alternative strategies, implementing a contingency plan, taking corrective action, or replanning the project. The risk response owner should report periodically to the project manager and the risk team leader on the effectiveness of the plan, any unanticipated effects, and any midcourse correction needed to mitigate the risk. Inputs to risk response control include: Risk Management Plan: Includes the assignment of resources, including people, risk owners and time Risk Register: Includes, but not limited to, identified risk and risk owners, actions, symptoms, warnings signs, low priority risk Approved Change Requests: Includes changes to work methods, contracts, scope and schedule. Changes may produce risks or changes to identified risks that require analysis. All changes must be formally documented. Work Performance Information: Includes the status of deliverables, corrective actions and performance reports. Performance Reports: Provides information on project work performance. Tools and Techniques used during risk monitoring and control: Risk Reassessment Identifies new risks and reassesses existing risks Additional response planning is required if the a new risk emerges or the impact of the risk differs from the original plan Risk Audits: Examines and documents the effectiveness of the risk responses for identified risks and their root causes. Variance and Trend Analysis: Should be reviewed using performance data. Used to monitor overall project performance. Deviations may indicate the potential impact of threats or opportunities. Technical performance measurement: Compares technical accomplishments during project execution to the project plans schedule of technical achievement. Deviation can imply a risk to achieving the projects objectives. Reserve Analysis: Compares remaining contingency reserve to the amount of remaining risks to determine if the remaining reserve is sufficient. Status Meetings: Project risk management can be an agenda item at periodic status meetings. Outputs include: Risk Register (Updates): Includes the following: Outcomes of risk reassessments, audits and periodic reviews. Actual outcomes of the projects risks and risk responses Requested Changes: Change requests to the project plan as a result of implementing contingency plans or workarounds. Recommended Corrective Actions: Execution of the contingency plan or workaround.
Recommended Preventive Actions: Brings the project into compliance with the project management plan. Organizational Process Assets (Updates): Information is captured for future use and entered into the lessons learned knowledge database. The final version include the risk register, risk management plan templates, checklists and risk breakdown structure. Use of this database will assist risk management throughout the organization and form the basis of a risk lessons learned program over time. Project Management Plan (Updates):
Project Risk Management Concepts

Event Probabilities: (ref: Project and Program Risk Management by Wideman from
PMI, pg. IV-7.) Determining probabilities of related events using simple probabilities: Probability of Event 1 multiplied by Probability of Event 2 = Probability of both Events The probability of an event occurring plus the probability of the same event not occurring should always equal one. Example: Given an 0.80 probability that the project scope will be defined by next month and a 0.70 probability that the scope will be approved, what is the probability of both events occurring? Answer: 0.8 X 0.7, or 56%. Given that only one of the above events needs to occur before project planning begins, what is the probability that project planning will occur? Answer: Consider that project planning will not occur if neither event occurs. Therefore, the Probability (Scope not defined) X Probability (Scope not approved) = 0.2 X 0.3 = 0.06. Therefore, there is a 94% chance of project planning beginning.
Scope of Project Risk Management: (ref: Project and Program Risk Management by
Wideman from PMI, pg. I-2) Scope of project risk management lies somewhere between the two extremes of total certainty and total uncertainty Spectrum: Total Uncertainty, General Uncertainty, Specific Uncertainty, and Total Certainty Spectrum: Unknown Unknowns (no information), Known Unknowns (partial information), and Knowns (complete information) Management Reserves handle unknown unknowns while contingency reserves handle known unknowns** ** PMBOK Guide considers these as knowns.
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Sample Questions
1 Which of the following processes is NOT part of Project Risk Management? A. Qualitative Risk Analysis B. Risk Identification C. Risk Analysis D. Risk Response Planning
2. Using the PMBOK Guide definition of contingency reserve, which of the following statements about contingency reserves is false? A. A contingency reserve is a separately planned quantity of money or time that has been set aside to allow for future situations which may be planned for only in part. B. Contingency reserves are used to reduce the risks of overruns of project objectives to a level acceptable to the organization. C. Contingency reserves may be set aside for known risks. D. Contingency reserves can be included in the projects cost and schedule estimates without any identifying documentation . 3. Which of the following is NOT a tool or technique used during the Quantitative Risk Analysis process? A. Earned value analysis B. Sensitivity analysis C. Interviewing D. Modeling techniques 4. Which of the following statements regarding risk reassessment is false? A. Requires identification of new risks B. Examines the effectiveness of risk responses C. Should be an agenda at project team status meetings D. a and c 5. A contingency response strategy is: A. A planned response that defines the steps to be taken if an identified risk event should occur. B. A workaround C. A comprehensive listing of many possible risks that might occur on a project. D. a and b 6. Which of the following is NOT an output of Risk Response Planning: A. Risk register (Updates) B. Risk-related contractual agreements C. Project management plan (Updates) D. Risk management plan
7. A risk response which involves eliminating a threat is called: A. Mitigate B. Exploit C. Avoid D. Transfer 8. Deflection or transfer of a risk to another party is part of which of the following risk response categories? A. Mitigate B. Accept C. Avoid D. Transfer 9. When should risk identification be performed? (select BEST answer) A. During Concept Phase B. During Development Phase C. During Implementation Phase D. Risk identification should be performed on a regular basis throughout the project. 10. Which of the following statements is false? A. Project risk is an uncertain event or condition with positive or negative effects on at least one project objective B. Qualitative risk analysis numerically analyzes the effect on overall project objectives of identified risks. C. During risk response planning options and actions to enhance opportunities are developed. D. Project risk management includes the processes concerned with conducting risk management planning. 11. A contingency plan is executed when: A. A risk is identified. B. An identified risk event occurs. C. When a workaround is needed. D. All of the above 12. The impact scale: A. Are specific to the objective potentially impacted B. Quantify possible outcomes for the project C. Assesses the probability of achieving specific project objectives D. All of the above 13. Organizations that desire very much to avoid high-impact risks may use which of the following techniques during qualitative risk analysis? Choose the BEST answer. A. Avoidance B. Data precision ranking with low precision C. A probability and impact risk matrix using nonlinear scales D. The organization would not use any techniques 14. What is the Delphi technique as it relates to the risk identification process? A. An information-gathering technique where experts perform a Strengths, Weaknesses,
Opportunities, Threats (SWOT) analysis. B. An information-gathering technique where experts are briefed about the project and then interviewed for their opinions. C. An information-gathering technique where experts meet and generate ideas about project risk. D. An information-gathering technique where experts participate anonymously and ideas about project risk are gathered via a circulated questionnaire. 15. Which of the following are considered tools and techniques for qualitative risk analysis? A. Risk probability and impact assessment, probability and impact matrix, and risk categorization B. Interviewing, sensitivity analysis, decision tree analysis, and simulation C. Avoidance, transference, mitigation, and acceptance D. Checklists, sensitivity analysis, and simulation 16. A contingency plan has a 20% chance of failing. The corresponding risk event has a 30% chance of occurring. Whats the probability for the risk to occur AND the contingency plan to fail?
A. 50% B. 25% C. 6% D. 10%
17. Sensitivity Analysis can be used in quantitative risk analysis to: A. Substitute for uncertainty analysis in risk qualification B. Estimate the level of management's risk aversion C. Estimate the effect of change one project variable would have on the overall project D. Validate statistical probability analysis 18. Which of the following documents is primarily used as an input into the Risk Identification Process? A. Risk Management Plan B. WBS C. Scope Statement D. Contingency Plan 19. Risks are accepted when: A. The project team decides to transfer the risk to a third party. B. The project team decides not to change the project plan to deal with a risk or is unable to identify any other suitable response strategy. C. The project team reduces the probability and consequences of an adverse risk event to an acceptable threshold. D. Risks are never accepted.
20. The amount of money or time needed above the estimate to reduce the risk of overruns of project objectives to a level acceptable to the organization is USUALLY called the: A. Executive reserve B. Project manager slush fund C. Contingency reserve D. Mitigation buffer 21. By using Project Risk Management techniques, project managers can develop strategies that do all but which of the following: A. Significantly reduce project risks B. Eliminate project risks C. Provide a basis for better decision making on overruns D. Identify risk, their impact(s) and any appropriate responses 22. In the following network, all three tasks, A, B and C, each have a duration 5 days. The value p indicates the probability of each task finishing on schedule. If all 3 tasks start on day 1, what is the probability that all 3 tasks will finish in 5 days? A. p = .45 B. p = .003 C. p = .014 D. Probability cannot be determined from the data given
Task A p=0.1 Task B
p=0.2
Task C p=0.15
23. A risk event is defined as : A. The severity of the consequences of a loss B. How likely the event is to occur C. An uncertain event or condition that may affect the project for better or worse D. A symptom of a risk
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24. An analysis has identified four different options for reducing project costs. Given the following decision tree, which option should be selected ?
P=0.7 P=0.1 P=0.4 P=0.2
Option A value $100 Option B value $1,000 Option C value $ 5,000
P=0.6
Option D value $ 2,000
A. B. C. D.
Option A Option B Option C Option D
25. Risk avoidance involves: A. Accepting the consequences B. Developing a contingency plan C. Eliminating a specific threat, usually by eliminating the cause D. Reducing the effect of the risk event by reducing the probability of the occurrence 26. Examples of probability distributions used in quantitative risk analysis are: A. Six-sigma distributions B. Probability-impact matrix distributions C. Delphi distributions D. Beta and triangular distributions 27. When developing a risk response plan, which risks should you focus on first? Choose the BEST answer. A. Near term risks with a high probability of occurrence B. High impact risks with a low probability of occurrence C. Risks with a high risk score D. a and c
28. Warning signs that indicate a risk has occurred or is about to occur are called: Risks B. Triggers C. Sign posts D. Stop gaps 29. The risk register includes: A. List of identified risks B. Root causes of risk C. Risks grouped by categories D. a and b
A.
30. A project of $1.5 million has an adverse event that has a probability of 0.07 of occurring and a potential loss of $15,000. This represents an expected negative monetary value of how much? A. $100,500 B. $105 C. $1,050 D. $15,000
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Answer Sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
Answers
1 C 2 D 3 A 4 B 5 A 6 7 8 9 10 11 12 13 D C D D B B A C PMBOK Guide, Chapter 11, pg. 252 PMBOK Guide, Glossary, page 370 and Section 11 pg. 252-281 PMBOK Guide, Section 11.4.2 pgs. 252-258 Earned value analysis is used as part of Risk Monitoring and Control PMBOK Guide, Section 116.2.1 pg 266 PMBOK Guide, Section 11.5.2.4, pg. 263 A workaround is an unplanned response to a negative risk event. Option C is the definition of a checklist. PMBOK Guide, Section 11.5.3, pgs. 263-264 PMBOK Guide, Section 11.5.2.1 pgs. 261-262 PMBOK Guide, Section 11.5.2.2 pgs. 261-262 PMBOK Guide, Section 11.2 pg. 246 PMBOK Guide, Chapter 11, pg 237 PMBOK Guide, Section 11.5.2.4, pg. 263 PMBOK Guide, Section 11.1.3.1 pg. 245 PMBOK Guide, Section 11.3.2.2 pg. 251. A nonlinear scale can provide a greater risk score for risks with high impacts and probabilities. This allows the organization with high-impact risk aversion to better rank and focus on these risks. The use of data with low precision as suggested in Option B may lead to qualitative risk analysis of little use to the project manager. Option A is a type of risk response. PMBOK Guide, Section 11.2.2.2 pg. 248 PMBOK Guide, Section 11.3.2 pg. 251-253 0.2 x 0.3 = 0.06, Project Risk Management Study Guide, Section Project Risk Management Concepts PMBOK Guide, Section 11.4.2.2 pg. 257 PMBOK Guide, Section 11.2.1 pg. 247 PMBOK Guide, Section 11.5.2.3, pg. 263 Option A is transference; Option C is mitigation. PMBOK Guide, pg. Glossary, page 355 PMBOK Guide, Chapter 11 Risks can never be completely eliminated on a project. 0.1 x .2 x .15 = .003 PMBOK Guide, Glossary, page 373 a. Option A Expected value of Opportunity = (.4)(.7)($100) = $ 28 c. Option B Expected value of Opportunity = (.4)(.1)($1000) = $ 40 b. Option C Expected value of Opportunity = (.4)(.2)($5000) = $ 400 d. Option D Expected value of Opportunity = (.6)($2000) = $1200 PMBOK Guide, Section 11.5.2.1, pg. 261 PMBOK Guide, Section 11.4.2, pg. 256 and Figure 11-11, pg. 256 PMBOK Guide, Section 11.5., pgs. 260-264 PMBOK Guide, Glossary, page pg. 378 PMBOK Guide, Section 11.2.3 pg. 248 $15,000 x .07 = $1,050
14 D 15 A 16 C 17 C 18 A 19 B 20 C 21 B 22 B 23 C 24 D
25 26 27 28 29 30
C D D B B C
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Number
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PROJECT PROCUREMENT MANAGEMENT
STUDY NOTES
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Project Procurement Management
Project Procurement Management Study Notes

A Guide to the Project Management Body of Knowledge (PMBOK Guide Third Edition), Chapter 12 Project and Program Risk Management, A Guide to Managing Project Risks and Opportunities, PMI , Edited by R. Max Wideman, 1992 Project Management Experience and Knowledge Self-Assessment Manual , by PMI PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP & PMBOK Package, by PMI, 2000 PMP Exam Practice Test and Study Guide, 5th Edition, Edited By J. LeRoy Ward, 2003 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Kerzner, Harold, 8th edition, 2003
What to Study?
The PMBOK phases of Project Procurement Management: Plan Purchases and Acquisitions, Plan Contracting, Request Seller Responses, Select Sellers, Contract Administration, and Contract Closure (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase) VERY IMPORTANT: Understand the viewpoint of the PMBOK Guide. Project Procurement Management is discussed from the perspective of the buyer in the buyer-seller relationship. The buyer is the organization seeking the service or product. The seller is the provider of the service or contract and is often referred to as the vendor, the supplier, or the contractor. Project Management should be done by both the buyer and the seller. Understand the definitions and terms. (buyer, seller, express and implied warranties, fitness for a particular use, invitation to bid, request for proposal, etc.) Understand the viewpoint of the reading material. Is procurement management discussed from the viewpoint of the buyer (the organization or person seeking to outsource) or the seller (the person or organization selling their services/products)? Understand the different types of contracts: fixed price, cost plus percentage, cost plus fixed fee, cost plus incentive fee, and fixed price plus incentive fee. Know who assumes the most risk (buyer or seller) in each type of contract. Study examples of each type of contract so that you are comfortable with the different types and can adequately distinguish between each type of contract (especially the various shades of cost plus contracts!). Know the elements of a legally enforceable contract: Mutual assent, consideration must be provided to both parties (sufficient cause to contract), signing parties must have legal right to contract, the contract must have a legal purpose, and the contract must not violate public policy. Be familiar with the reasons for contracting and subcontracting and the risks associated with procurement
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9-4 Project Procurement Management Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Key Definitions
Back Charge Bid Protest Bill of Lading Cost of corrective action by purchaser and chargeable to the supplier under terms of the contract. Allows an unsuccessful supplier an opportunity to protest the award of a government contract to another supplier. A document issued to a shipper by a carrier describing the goods to be shipped, acknowledging their receipt, and stating the terms of the contract for their carriage. Occurs when change is caused by the acquirer's conduct or by one of its agents. As a result of action or inaction that forces the supplier to perform in a manner different from that prescribed or contemplated by the contra t, and usually at a higher cost. A mutually binding agreement that obligates the seller to provide the specified product and obligates the buyer to pay for it. Contracts generally fall into one of the three broad categories: fixed-price (lump-sum), cost-reimbursable, and time and material contracts. See Contract Types and Risks section below for extended definitions The PMBOK Guide equates this with Request for Proposal and recognizes that it may have a more specific or narrower meaning in certain application areas. (appropriate for high dollar, standard items.) In order to get an award, a contractor may submit at bid thats unrealistically low. A seller responds to an RFP by developing a proposal. For sanity purposes, the proposal is passed through the pink team once the outline is completed. The pink team looks at the outline through the perspective of the buyer. The purpose of the team is to catch problems with the proposal in the early stages. Based on information gathered and analyzed about demand and supply. This forecast provides a prediction of short and long term prices and the underlying reasons for those trends. The doctrine of privity means that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it. One sure sign of the personal nature of contracts is that no one but one of the parties can go to court and enforce the contract even if the contract was to operate to a third party's benefit. This is known as the "privity of contract" rule. Once the proposal is in draft form, it passes through a red team which again looks at the proposal through the buyers perspective. A judicial remedy by which a court interprets the contract so as to express the real intention of the parties (this is different from changes to the contract).
Constructive change
Contract
Invitation for Bid (IFB)
Lowball Pink Team Review
Price Forecast
Privity of Contract
Red Team Review Reformation
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Request for Proposal (RFP)
Request for Quotation (RFQ)
Specification
Statement of Work (SOW)
A type of bid document used to solicit proposals from prospective sellers of products or services. In some application areas, it may have a narrower or more specific meaning. (appropriate for high dollar, non-standard items). In general, the PMBOK Guide equates RFQs to RFPs. However, the PMBOK Guide does recognize that some application areas have a more narrower or specific meaning for an RFQ (appropriate for low dollar items such as supplies and materials). Precise description of a physical item, procedure, service, or result for the purpose of purchase and/or implementation of an item or service. A narrative description of products or services to be supplied under contract. In general, this is different from the product description (which tends to be more broader). Under the circumstance where the seller is producing the entire product, the distinction between SOW and the product description becomes moot. Government terms: SOW is reserved for a procurement item that is a clearly a specified product or service, and Statement of Objectives (SOO) is used for procuring an item that is presented as a problem to be solved.
Project Procurement Management Processes

Project Procurement Management: Includes the processes required to acquire goods and services for purposes of attaining project scope from outside the performing organization. The seller, also referred to in application areas as a subcontractor, vendor, or supplier, is the supplier of the goods or services. The buyer, considered a customer and a key stakeholder of the seller, is the acquirer of the goods and services. The terms and conditions of the contract become a key input or consideration to many of the sellers processes. The contract may contain the actual input to the sellers processes such as major deliverables, key milestones, cost objectives, etc. The contract may also limit the project teams options. For example, buyer approval of staffing decisions is often required on design projects. Note: For purposes of clarity, the PMBOK Guide discusses project procurement management from the perspective of the buyer. The guide also assumes that the seller is external to the performing organization; however, most of the process discussion is also applicable to formal agreements between units of the performing organization. In situations where informal agreements are used, the processes in Communications Management and Human Resources Management are more likely to apply from a procurement perspective. When project scope (products or services) is obtained from outside of the organization, the processes from plan contracting through contract closure would be performed once for each product or service item. When the project does not obtain products and services from outside the performing organization, the processes from plan contracting through contract closure would not be performed. Plan Purchases and Acquisition (12.1): Process Group: Planning) The process of identifying which project needs can be best met by procuring products or services outside the project organization and which project needs can be met by the team during project execution. Procurement planning should be accomplished during the scope definition effort. Involves knowing whether to procure, how to procure, what to procure, how much to procure, and when to procure. Procurement planning should also include consideration of potential sellers, particularly if the buyer wishes to exercise some degree of influence or control over contracting decisions. Inputs include: Enterprise environmental factors - Include the marketplace conditions; available products, services; and results and terms and conditions Organizational Process Assets - Provides important information regarding project needs and strategies including procedures, guidelines, and management systems. Project Scope Statement
Describes the project boundaries: requirements, constraints, and assumptions - Requirements have contractual and legal implications - Constraints limit buyer and seller options - Assumptions are factors that are considered true Work Breakdown Structure WBS Dictionary Project Management Plan - Provides the overall plan for project management - Includes additional plans for scope, procurement, quality and contract management - Other outputs that are considered include risk register, risk-related contractual agreements, activity resource requirements, project schedule, activity cost estimates, and cost baseline Project Procurement Management Processes, cont. Tools/Techniques used during plan purchases and acquisitions are: Make-or-buy analysis: - Analysis should include both indirect as well as direct costs. For instance, the buy decision of the analysis should include both the actual out-of-pocket cost to purchase the product as well as the indirect costs of managing the purchasing process. - Analysis should also reflect the perspective of the organization as well as the immediate needs of the project. For example, purchasing an item rather than renting or leasing may not be cost effective on the surface. However, if the organization has an ongoing need for the item, then overtime purchasing may be more cost effective than renting or leasing. Expert judgment: Often required to assess the inputs to this process. May be provided by individuals or groups including: - Other units within the organization - Consultants - Professional and technical associations - Industry groups Contract type selection: Different types of contracts are more or less appropriate for different types of purchases. Contracts generally fall into one of three broad categories: (see detailed section for each of the types) - Fixed-price or lump-sum contracts: involves fixed total priced - Cost-reimbursable: involves payment to the seller for actual costs plus a fee representing seller profit Time and Material (T&M) Contracts: involves cost reimbursable and fixed-price type agreement
Outputs include: Procurement management plan: Describes how the remaining procurement processes from developing procurement documentation through contract closure will be managed. May be formal or informal, detailed or broadly framed, and is considered a subsidiary element of the project plan. May include: - The types of contracts that will be used - Names the people/organizations who will prepare any independent evaluation criteria and the time frame for supplying the criteria - If the organization has a procurement department, describes the actions the project management team will assume versus the procurement department - The location of any standardized procurement documents - The procedure for managing multiple providers - The process/procedure for coordinating procurement with other project activities such as scheduling and performance reporting - Constraints and assumptions affecting purchases and acquisitions in the plan - The lead times required to purchase or acquire items - Make-or-buy decisions - The dates for the contract deliverables - Directions to sellers on developing and maintaining a contract work breakdown structure - The performance bonds or insurance contracts for mitigating project risks - The pre-qualified selected sellers - Procurement metrics Contract Statement of work: - Describes the procurement item in sufficient detail to allow prospective sellers to assess whether or not they are capable of providing the item or service. - Should be clear, concise, and as complete as possible. Should also include a description of any required collateral services such as performance reporting or post project operational support. - May be revised and refined as it moves through the procurement process. - Individual procurement items generally require a separate statement of work for each item; however, multiple products or services may be grouped as one procurement item with a single SOW. Make-or-buy Decisions Requested Changes
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Plan Contracting (12.2):
Process of preparing the documents needed to support the Request Seller Responses and Select Sellers processes. Inputs include: Procurement management plan Contract Statement of Work Make-or-Buy Decisions Project Management Plan Tools/Techniques Tools/Techniques used during Plan Contracting are: Standard forms Expert judgment Outputs include: Procurement documents: - Used to solicit proposals from prospective sellers. - Should be structured to facilitate accurate and complete responses from prospective sellers. - Should always include the SOW, a description of the desired form for response submission, and any required contractual provisions. Note: For government contracts, regulation may define some or all of the content and structure of the procurement document. - The terms bid and quotation are generally used when the source selection decision will be based on price (as when buying commercial or standard items). - The term proposal is generally used when other considerations such as technical approaches or technical skills are important or critical. - Common names for different types of procurement documents include: Invitation for Bid (IFB), Request for Proposal (RFP), Request for Quotation (RFQ), Invitation for Negotiation, and Contractor Initial Response. ** Note: while bid, quotation, and proposal generally have specific meanings, the terms may be used interchangeably and care must be taken not to base assumptions on the name alone. - Procurement documents should be rigorous enough to ensure consistent, comparable responses, but flexible enough to allow consideration of seller suggestions for better ways to satisfy the requirements. Evaluation criteria: - The criteria that will be used to rate or score proposals. Are often included as part of the procurement documents. - The criteria may be objective (e.g., the proposed project manager must be an IBM Certified Project Manager.) or subjective (e.g., the proposed project manager must have documented, previous experience with similar projects. ) - May be limited to just the purchase price if the procurement item is readily available from a number of acceptable sources.
Examples of evaluation criteria include: Does prospective sellers proposal demonstrate an understanding of the need? Will the prospective seller produce the lowest total cost (purchase plus operating)? Does the prospective seller have, or can be reasonably expected to acquire, the technical skills and knowledge required for the project? Does the prospective seller have, or can be reasonably expected to develop, the management processes and procedures to ensure a successful project? Does the prospective seller have, or can be reasonably expected to obtain, the necessary financial resources?
Contract Statement of work updates. Request Seller Responses (12.3): (Process Group: Executing) The process of obtaining information (bids and proposals) from prospective sellers on how project needs can be met. Most of the actual effort in this process is expended by the prospective sellers, normally at little or no cost to the project. Inputs include: Organizational process assets: Lists or files with information on bidders Procurement management plan Procurement documents Tools/Techniques used during Request Seller Responses are: Bidders conferences: - Meetings with prospective sellers. - Are used to ensure that all prospective sellers have a clear, common understanding of the procurement (technical requirements, contract requirements, etc.) - Responses to questions may be incorporated into the procurement documents as amendments. - All potential sellers must remain on equal standing during this process. - Also referred to as contractor conferences, vendor conferences, and pre-bid conferences. Advertising: - Potential seller list may be expanded by placing advertisements in general circulation publications such as newspapers or professional journals. - Some government jurisdictions require public advertising of certain types of procurement items. - Most government jurisdictions require public advertising of subcontracts on a government contract. Develop Qualified Sellers List - The list is developed from organization assets.
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The project team can develop its own sources if such lists are not readily available. Detailed information requires extensive effort while general information is available through the Internet, library, local associations, etc.
Outputs include: Qualified Sellers List: Sellers who are asked to submit bids Procurement Document Package Proposals: documents prepared by the sellers explaining how the seller can provide the requested product or service. The documents are prepared in accordance with the requirements of the relevant procurement documents. Proposals may be supplemented with an oral presentation.
Select Sellers (12.4): (Process Group: Executing) The process of receiving the bids and proposals from the sellers and applying the evaluation criteria to select a provider. Factors for evaluation: : Price and cost. For off-the-shelf items, price may be the determining factor; however, for proposals, the lowest proposed price may not be the lowest cost if the seller proves unable to deliver the product in a timely manner. Proposals are often separated into technical (approach) and commercial (price) sections with each evaluated separately. Multiple sources may be required for critical products, services and results to mitigate risks. The process may be repeated for major procurement items. A short list of qualified sellers may be selected based on a preliminary proposal. A more detailed evaluation may then be conducted based on a more detailed and comprehensive proposal with the goal of narrowing the list of qualified sellers or selecting the seller(s). Inputs include: Organizational Process Assets Procurement Management Plan Evaluation criteria: - May include samples of the suppliers previously produced products or services for the purpose of providing a way to evaluate their capabilities and qualities of products. - May include a review of the suppliers history with the contracting organization. Procurement Document Package Proposals Qualified Sellers List Project Management Plan Tools/Techniques used during Select Sellers are: Weighting System: A method for quantifying qualitative data in order to minimize personal prejudice on source selection. Most such systems involve: - Assigning a numerical weight to each of the evaluation criteria - Rating the prospective sellers on each criterion - Multiplying the weight by the rating
- Totaling the resultant products to compute an overall score Independent Estimates: Referred to as should-cost estimate. The procuring organization either prepares the estimate or has and independent estimate prepared to check on proposed pricing. Differences in estimates may indicate that the statement of word is not adequate, seller misunderstands the contract or the market has changed. Screening System: Involves establishing minimum requirements of performance for one or more of the evaluation criteria. For example, the seller project manager must have a particular certification before the remainder of the proposal would be considered. Contract Negotiation: Involves clarification and mutual agreement on the structure and requirements. Final contract language should reflect all agreements reached. Subjects covered generally include, but are not limited to: - Responsibilities and authorities - Applicable terms and law - Technical and business management approaches - Contract financing - Price Seller Rating Systems: Rates sellers based on past performance, quality ratings, delivery performance, and contractual compliance. Should be used with the proposal evaluations screening system. Expert Judgment: Used by a expert multi-discipline review team to evaluate seller proposals. Areas of expertise include functional disciplines such as contracts, legal, finance, development, sales and manufacturing. Proposal Evaluation Techniques: - Uses input from multiple reviewers and resolves significant differences in scoring - An overall assessment is developed using a weighting system - Employees a screening system and uses data from a seller rating system
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Outputs include: Selected Sellers: Sellers who have been judged in a competitive range and provide a draft contract which becomes the actual contract when awarded the contract. Contract: A mutually binding agreement that obligates eh seller to provided the specified product or service and obligates the buyer to pay for it. Contract management plan: A plan used to administer the contractor based on the buyer-specific items such as delivery and performance. Resource availability: Availability of rescues and dates that resources are active. Procurement Management Plan (updates) Requested Changes Contract Administration (12.5): (Process Group: Monitoring & Controlling) The process of ensuring that the seller and the buyer meet contractual obligations and that their legal rights are protected. Managing the interfaces among various product and service providers is a key aspect of contract administration especially for large projects. The legal nature of the contractual relationship makes it imperative that the project team be acutely aware of the legal implications of actions taken when administering the contract. Other project management processes that apply during contract administration include: Direct and manage project execution: to authorize the contractors work at the appropriate time Performance reporting: to monitor contractor cost, schedule, and technical performance Perform quality control: to inspect and verify the adequacy of the contractors product Integrated change control: to ensure that changes are properly approved and that those who need to know are aware of such changes. Risk monitoring and control: to mitigate risks Seller performance is reviewed and documented and corrective action can be taken. Contract administration includes managing early termination based on the termination clause of the contract. Amendments to contracts can be made anytime prior to contract closure by mutual consent. Inputs include: Contract Contract management plan Selected Sellers Performance reports Approved change request: modifications to the terms of the contract or to the description of the product or service to be performed. Work performance information: Information collected as part of project execution that identified whether quality standards are met, what the costs and seller invoices. The information identifies which deliverables have been completed. Tools/Techniques used during Contract Administration are: Contract change control system: - Defines the process by which the contract may be modified
Includes the paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes. - Should be integrated with the integrated change control system. Buyer-Conducted Performance Review: - Provides a structured review of the sellers progress. - Can include a review of seller-prepared documentation and buyer inspections. - Identifies performance successes or failures, progress and contract non-compliance. Inspections and Audits - Identify weaknesses in the sellers work processes or deliverables. - Teams can include buyer procurement personnel. Performance reporting: - Provides management with information about how effectively the seller is achieving the contractual objectives. - Should be integrated with the integrated project performance reporting. Payment system: - How payments are made to the seller. - Must include appropriate reviews and approvals by the project management team. Claims Administration: - Requested changes where the buyer and seller cannot agree on compensation for the change or cannot agree that the change occurred - If a claim is not resolved, it must be handled according the dispute resolution procedures defined in the contract. - Contract clauses can involve arbitration or litigation before or after contract closure. Records Management System: - A specific set of processes, related control function and automation tools that are combined as part of the project information system. - Used by the project manager to manage contract documentation and records. - Useful in retrieving and archiving documentation. Information Technology: - Enhances the efficiency and effective of contract administration. - Automates parts of the records management system, payment system, claims administration or performance reporting. - Provides electronic information exchange between the buyer and seller. Outputs include: Contract documentation: Correspondence: written documents of certain aspects of buyer/seller communication including contract changes or clarifications. Requested Changes Recommended Corrective Action Organization Process Assets (Updates)
- Correspondence - Payment schedules and requests - Seller performance evaluation documentation Project Management Plan (Updates) - Procurement management plan - Contract management plan
Contract Closure (12.6): (Process Group: Closing) The process of verifying that work and deliverables are acceptable and completing and settling the contract including any resolution of open items. Includes administrative duties such as updating records to reflect final results and archiving information for reuse. Similar to administrative closure but more specific to contracts. Litigation may occur for unresolved claims after contract closure. Early termination is a special case of contract closeout. Inputs include: Procurement Management Plan Contract Management Plan Contract Documentation Contract Closure Procedure Tools/Techniques used during Contract Closure are: Procurement Audits - A structured review of the procurement process from Plan Purchases and Acquisitions process through Contract Administration procurement planning through contract administration. - Identifies successes and failures that warrant transfer to other procurement items on the project or to other projects within the performing organization. Records Management System Outputs include: Closed Contracts: Formal written notice indicating that the contract has been completed. Organizational Process Assets (Updates): - Contract file: A complete set of indexed records which should be prepared for inclusion with the final project records. - Deliverable acceptance: Written notice, presented through the buyers authorized contract administrator, that the deliverables have been accepted or rejected. - Lessons learned documentation: Developed for future purchasing and acquisition planning and implementation.
Procurement Concepts
(from Principles of Project Management by PMI )
Contract Origination:
Two ways in which a contract can originate: unilaterally or bilaterally Unilaterally: Has only one partys signature. Common form for contract is a relatively simple type of document called a purchase order. Very little, if any, negotiation is involved. A purchase order is used when routine, standard cost items are needed. A purchase order is legally binding and should be specific. Bilaterally: Procurement documents are used to solicit proposals from prospective sellers. The procurement document then becomes the basis for the sellers proposal.
Procurement Documents:
Request for quotation (RFQ) from different suppliers Items are of relatively low dollar value such as supplies and materials A survey of potential suppliers is completed. The quotation request informing suppliers of the goods or services needed is sent to a scaled-down number of possible suppliers. Request for proposal (RFP): Items or services are usually high dollar and non-standard. Examples: construction project, a research and development project; a made-to-order, highly complex piece of machinery. Blueprints, drawings, specifications, and other appropriate data should be included with proposal.
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Invitation for bid (IFB): Appropriate for high dollar, standard items. A prerequisite to this process is a clear and accurate description of the supplies, equipment, and services required. Includes specifications, drawings, industry standards, performance requirements, etc. Must ensure fair competition among all bidders. Provisions should be stated in such a manner to avoid misinterpretation. Formal bids are submitted to the contracting department in sealed envelopes. All bids are opened at a specific time. In most cases, the contract award goes to the lowest responsible bidder. If not awarded to the lowest bidder, must document reasons carefully. Type of contract is open to fraud, collusion, and other dishonest conduct. Hence, PM and contracting personnel must practice defined ethical business procedures. Other names for procurement documents: Invitation for Negotiation Contractor Initial Response
Contract Types and Risks

Contract Type
In negotiating a contract it is the buyer's objective to maintain an incentive for efficient and economical performance while placing maximum risk on the seller. The objective of the seller is to maximize the profit potential while minimizing the risk. Contracts generally fall into one of three broad categories. Fixed-price or lump-sum contracts: Fixed total price for a well-defined product If the product is not well-defined, both the buyer and seller are at risk Fixed price contracts may also include incentives for meeting or exceeding selected project objectives Cost-reimbursable contracts: Typically, payment (reimbursement) to the seller for actual costs, plus a fee representing seller profit. Costs are classified as direct costs or indirect costs - Direct costs are costs incurred for the exclusive benefit of the project (e.g., salaries of full-time project staff) - Indirect costs, (overhead costs) are costs allocated to the project by the performing organization as a cost of doing business. (e.g., salaries of business executives) - Indirect costs are usually calculated as a percentage of direct costs. Often include incentives for meeting or exceeding selected project objectives. Time and Material contracts (T&M): A hybrid type of contract that contains aspects of both cost-reimbursable and fixed-price contracts. Like cost-type arrangements, T&M contracts are open ended because the full value of the arrangement is not defined at the time of the award. T&M contracts can also resemble fixed-unit arrangements such as when the unit rates are preset by the buyer and seller. Unit Price contracts: Preset amount per unit of goods or service Total value of the contract is a function of the quantities needed. For example: buying a certain number of movie tickets from a web site. ** Note **: Unit price contracts may also be considered a simple example of a fixed-price contract.
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The following contracts are ordered in increasing risk to the seller and decreasing risk to the buyer:
Cost-Plus-a-Percentage-of-Cost (CPPC):
Seller is reimbursed for allowable costs of performing the contract and receives as profit (a fee) an agreed upon percentage of the costs. No limit on the sellers profit. If the sellers cost increases, so does the profit. Most undesirable type of contract from buyers standpoint. Prohibited for federal government use. Used in private industry, particularly construction projects. Susceptible to abuse. No motivation for seller to decrease costs. The buyer bears 100% of the risk. The buyer project manager must pay particular attention to the control of the labor and material costs so that the seller does not purposely increase these costs. Bottom line: no limit on sellers profit!
Cost-Plus-Fixed Fee (CPFF):

Seller is reimbursed for allowable costs of performing the contract and receives as profit a fixed fee payment. (usually based on the percentage of the estimated costs) The fixed fee does not vary with actual costs unless the scope of work changes. Susceptible to abuse in that there is a ceiling on profit, but no motivation to decrease costs. Primarily used in research projects where the effort required to achieve success is uncertain until well after the contract is signed. Bottom line: limit on profit but no incentive to control costs.
Cost-Plus-Incentive Fee (CPIF):

Seller is paid for allowable performance costs along with a predetermined fee and an incentive bonus. If the final costs are less than the expected costs, both the buyer and seller benefit by the cost savings based on a pre-negotiated sharing formula. The sharing formula reflects the degree of uncertainty faced by each party. Primarily used when contracts involve a long performance period with a substantial amount of hardware development and test requirements. Risk is shared by both buyer and seller. Bottom line: provides incentive to seller to reduce costs by increasing profit potential.
Fixed Price-Plus-Incentive Fee (FPI):

Most complex type of contract. Consists of target cost, target profit, target price, ceiling price, and share ratio. For every dollar the seller can reduce costs below the target cost, the savings will be shared by the seller and buyer based on the share ratio. The share ratio is a negotiated formula which reflects the degree of uncertainty faced by each party. If the costs exceed the ceiling price, the seller receives no profit. Regardless of the actual costs, the buyer pays no more than the ceiling price. Risk is shared by both buyer and seller, but risk is usually higher for seller. Usually used when contracts are for a substantial sum and involve a long production time. Bottom line: provides incentive to decrease costs which in turn increases profits. If costs exceed a ceiling, then contractor is penalized.
Firm-Fixed-Price (FFP):
Seller agrees to perform a service or furnish supplies at the established contract price. Also called lump-sum. Seller bears the greatest degree of risk. Seller is motivated to decrease costs by producing efficiently. Best specifications are available and costs are relatively certain. Common type of contract.
Seller Risk
LOW CPPC HIGH
-----------CPFF <-----------
-----------CPIF -------------
----------> FPI -------------
HIGH FFP LOW
Buyer Risk
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Cost-Plus-Award-Fee (CPAF):
(from The New Project Management by J. Davidson Frame) An award pool is created. The level of award is determined by an award committee. Buyers have more flexibility with CPIF. Subjective judgments can be used to determine rewards (such as a contractors attitude). Type of contract is gaining with popularity. Downside: administrative cost is high due to award committee.
Contract Incentives:
Contract incentives are fundamentally designed to provide motivation for desired performance. There is growing recognition that contract incentives are valuable tools to motivate the desired performance. Incentives can be objectively based and evaluated or subjectively based and evaluated Objectively based and evaluated are tied to performance areas like cost, schedule or delivery, and quality. Subjectively based and evaluated involve award fees and other special incentives.
Examples of Contract Types

CPPC: (In K dollars where 1K = $1,000)
Estimated cost: $100K Fee Percentage: 10% of cost ($10K) Estimated total price: $110K (Estimated cost + 10%*Estimated cost) If cost increases to $110K the total price would be $110K plus 10% of the actual costs = $121K.
CPFF: (In K dollars where 1K = $1,000)

Estimated cost: $100K Fixed Fee, such as 10% of estimated cost ($10K) Estimated total price: $110K (Estimated cost + 10%*Estimated cost) If cost increases to $110K the total price would be $110K plus 10% of the original estimated costs = $120K.
CPIF: (In K dollars where 1K = $1,000)

Estimated cost: $100K Predetermined fee: $10K Sharing formula: 85/15 (buyer absorbs 85% of the uncertainty and the seller absorbs 15% of the risk) Actual cost: $80K Savings: $20K Seller gets: $80K + $10K + $3K = $93K (Actual cost + Fee + 15%*Savings) Buyer saves: $17K
FPI: (In K dollars where 1K = $1,000)

Target cost: $100K Target price: $110K Share ratio: 70/30 Target profit: $10K (Sellers fee) Ceiling price: $120K (The maximum payout to the seller)
Example A: Actual cost: $80K Savings: $20K (Target cost - Actual cost) Seller gets: $80K + $10K + 6K = $96K (Actual cost + fee + 30%*savings) Buyer saves: $14K Example B: Actual cost: $130K Seller gets: $120K (no profit and a $10K loss on costs) Buyer loses: $10K (the payout is $10K over Target price = Ceiling Price)
FFP: (Lump Sum) (In K dollars where 1K = $1,000)

Price: $100K Example A: Actual cost: $70K Seller makes a profit of $30K (Price - Actual Cost) Example B: Final cost $110K Seller loses $10K on contract
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Contract Execution Special Considerations

Changes:
The change control system should be defined and included in the changes clause of the project. The system should cover who initiates a change request, how is it processed and funded, and who has the final approval authority. For major projects, a configuration control committee should be established. The change proposal must be explicit in terms of the impact of the change on the contract work statement, specifications and drawings. Legal: there must be mutual agreement to modify a contract and that agreement must be supported by consideration (change clause is important!) OR Change may also be accomplished by unilateral action if pursuant to the exercise of options contained in the terms of the original contract.
Specifications:
Either standard in nature where a specific design has been accepted throughout the industry or tailored and unique to the situation at hand. There is a behavioral component associated with the development of specifications: These include: Drive for competency: The person keeps changing the design which results in increasing complexity and cost. (cannot come to a closure) Safety margin coefficient: related to design parameters in terms of how much is enough. At some point, costs increase exponentially, but safety gains do not. Indifference methodology: related to an attitude that promotes a contingency approach to specifications even when such an approach is not warranted. (Design becomes too flexible -- the engineer or architect is indifferent to the final structure of the product) Monument syndrome: based on the desire to build a product that will last forever regardless of the cost. (i.e., the pyramids) Budget expansion: the designer develops the specifications with an eye to the available funds. The more money available, the more complex and costly the design. Sole-source shelter: specifications are developed so that equipment, materials and supplies are tailored to require the products of a specific manufacturer or supplier. Careful review during the drafting stage of the contract is of extreme importance! Correcting problems after the contract is signed may rarely be done without costly negotiation or litigation.
Quality Control:
Quality control must be applied as part of Contract Administration to inspect and verify the adequacy of the contractors product. Quality cannot be inspected into the product -- it must be built into it. The attitude of quality must be present when the product is designed. Controls must be established to ensure quality is kept in mind as work progresses. Periodic checks for specification conformance are a must. Cost of rework can be high -- the emphasis should be on doing it right the first time. Defects can be costly and damaging to the reputation of the company and the project manager and the project team.
Warranties:
The concept of warranty is based on one partys assurance to the other that the goods will meet certain standards of quality, including condition, reliability, description, function or performance. Express warranty: applies when service or product does not meet the level of quality specified in the contract. (Section 2-313(1)(a) of the Uniform Commercial Code) Express warranties are created by Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model. Implied warranty: is measured by merchantability or fitness for a particular use/purpose. (Sections 2-314 and 2-315 of the Uniform Commercial Code) The implied warranty of merchantability arises in every sale of goods made by a merchant who deals in goods of the kind sold. It means the goods must be reasonably fit for the ordinary purposes for which such goods are used. (applies to goods which can be resold)
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The implied warranty of fitness for a particular use applies to both merchants and non-merchants, alike. The warranty is implied, if at time of contracting, the seller knows a particular purpose for which the item is being purchased, and the seller also knows the buyer is relying on the sellers judgment in selecting or furnishing suitable goods. The implied warranty is NOT applicable in the following cases:
1. The client PM is knowledgeable of the product, has inspected it, and made his own independent judgment without relying on the sellers skill. 2. The product meets the specifications and plans furnished by the client project manager.
Analogy: If you buy a lawnmower, you would expect it to cut grass. If you use it on the carpet, the warranty doesnt apply.
Waiver:
The client PM must be continually aware of the waiver pitfall. Under the doctrine of a waiver, a party may relinquish rights he otherwise has under the contract. If the client PM knowingly accepts incomplete, defective or late performance and accepts that performance without objection, the PM has waived his right to strict performance.
Bonds:
Bonds contain penal amounts sufficient to assure performance and payment. When appropriate, bonds are drafted into the contract. Types of bonds: Performance: secures the performance and fulfillment of all the undertakings, terms and conditions of the contract. (The penal amount could be as much as 100% of the contract price such as in construction projects) Payment: secures the payment of materials and labor by the prime contractor to all subcontractors and material suppliers. Additionally, the PM may want to include a contract clause requiring the prime contractor to secure payment bonds from any subcontractor on the project for the subcontractors suppliers of labor and material. Under certain circumstances, fidelity and patent infringement bonds may be required. The Miller Act requires both performance and payment bonds on all but minor construction projects in which the U.S. government is a party to the contract.
Breaches:
Breach of contract: failure to perform a contractual obligation. The measure of the damages for a breach is the amount of loss the injured party has sustained. No one should suffer loss because another has failed to perform a contract properly. Material breach of contract: The non-faulted party is discharged from any further obligations under the contract. The breach is so serious that it also deprives the non-faulting party the expected benefits of the bargain. Time: Should no time for performance be stated or implied in the contract, the performance must be completed within a reasonable amount of time. However, if time is critical, the contract should explicitly state time is of the essence. Time is of the essence: when explicitly stated within the contract, failure to perform within the allotted time will constitute a materials breach of contract and the buyer will not be required to accept late performance.
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Negotiation
Stages of Negotiation:
1. Protocol: Introductions are made, and the negotiators get to know each other. The atmosphere for the rest of the negotiations is determined in this stage. 2. Probing: The negotiators begin the search process. Each party identifies issues of concern. Strengths and weaknesses are identified and possible areas of interest. 3. Scratch Bargaining: This is the essence of the meeting. Actual bargaining occurs and concessions are made. Points of concession are identified. 4. Closure: The two positions are summed up and final concessions are reached. The agreements are summarized and documented. 5. Agreement: The main difficulty in this stage is ensuring both parties have an identical understanding of the agreements. This stage should establish the plans for recording the agreements in a written contract.
Negotiation Tactics:
The PM should be aware of the following negotiation tactics. Imposing a deadline for reaching an agreement A powerful tactic because it implies a possible loss to both parties Other party does not have to accept deadline, but often does Surprise -- One party springs information such as a price change on the other party Stalling One party may claim that an agreement cannot be finalized because he has limited authority and cannot commit the companys resources. A party may claim that the person with final authority is absent. The missing man technique may also be used when the party does not have the information asked for by the other party. Fair and reasonable Negotiator may claim the price for a computer is equitable because that is what another company is paying. Delays Useful when tempers are beginning to flare, a team member is going astray, to divert from a subject, etc. Examples of delays: arrival of refreshments, request for recess, etc. Reasoning together Confusing the other party: deliberately distorting issues and figures. (If this is done, someone should speak up before agreeing to anything) Withdrawal Sometimes done to divert attention from an area of weakness One party may make an attack upon an issue, then retreat. Make the other party appear unreasonable by pointing out all the concessions made by the party Arbitration - a third party may be brought in when agreement cannot be reached. Fait accompli - a party may claim that what is being asked for has already been accomplished and cannot be changed.
Sample Questions
1. Which of the following is an example of a unilateral contract under which the seller is paid a preset amount per unit of service?:
A. B. C. D. A cost reimbursable contract A fixed-price incentive fee A purchase order A request for bid
2. Which of the following is considered during the Plan Purchases and Acquisitions Process? A. Whether to procure B. How to procure and how much to procure C. What and when to procure D. All of the above 3. From a buyers standpoint, which of the following is true?
A. Procurement planning should include consideration of potential subcontractors B. Procurement planning does not include consideration of potential subcontractors since this is the duty of the seller C. Sellers are first considered during the Solicitation Process D. None of the above
4. Which of the following processes involves obtaining information (bids and proposals) from prospective sellers?
A. B. C. D. Plan Purchases and Acquisitions Request Seller Responses Select Sellers Plan Contracting
5. Which of the following is true about procurement documents?

A. Procurement documents are used to solicit proposals from prospective sellers. B. Invitation for Bid and Request for Proposal are two examples of procurement documents. C. Procurement documents should be structured to facilitate accurate and complete responses from prospective sellers. D. All of the above
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6. Which of the following is a method for quantifying qualitative data in order to minimize the effect of personal prejudice on source selection?
A. B. C. D. Weighting system Screening system Selecting system All of the above
7. Which of the following is true concerning evaluation criteria?

A. Can often be found in procurement documents B. Can be objective or subjective C. May be limited to purchase price if procurement item is readily available from number of sources D. all of the above
8. Which of the following are inputs to the Select Sellers Process?

A. B. C. D. Evaluation criteria Organizational process assets Contract negotiation A and B
9. A significant difference between independent estimates and proposed pricing could mean that:
A. B. C. D. The independent estimates are most likely incorrect and the proposed pricing correct The SOW was not adequate The prospective seller either misunderstood or failed to respond fully to the SOW. b or c
10. By which means is a contractor able to control cost due to changing requirements?
A. B. C. D. Project data review Purchase order amendment Change control Fixed price contract
11. Which of the following contract types places the greatest risk on the seller?
A. B. C. D. Cost-plus-fixed-fee contract Cost plus-incentive-fee contract Firm-fixed-price contract Fixed-price-incentive contract
12. Informal agreements between functional units to produce project work packages requires focus on
A. B. C. D. Quality and Procurement Management Schedule and Risk Management Human Resources and Communications Management Risk and Procurement Management
13. A cost-plus-percentage-cost (CPPC) contract has an estimated cost of $120,000 with an agreed profit of 10% of the costs. The actual cost of the project is $130,000. What is the total reimbursement to the seller?
A. B. C. D. $143,000 $142,000 $140,000 $132,000
14. A cost-plus-incentive-fee (CPIF) contract has an estimated cost of $150,000 with a predetermined fee of $15,000 and a share ratio of 80/20. The actual costs of the project is $130,000. How much profit does the seller make?
A. B. C. D. $31,000 $19,000 $15,000 none of the above
15. A fixed-price-plus-incentive-fee (FPI) contract has a target cost of $130,000, a target profit of $15,000, a target price of $145,000, a ceiling price of $160,000, and a share ratio of 80/20. The actual cost of the project was $150,000. How much profit does the seller make?
A. B. C. D. $10,000 $15,000 $0 $5,000
16. Under what circumstances is it better for a contractor to subcontract?

A. The subcontractor possesses special technical and engineering skills that the contractor does not have. B. The work to be subcontracted represents almost all of the overall work effort. C. The subcontractor can perform the work at a lower cost than the contractor. D. A and C
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17. Which type of bilateral procurement document is used for high dollar, standard items?
A. B. C. D. Purchase order Request for proposal (RFP) Invitation for bid (IFB) Request for quotation (RFQ)
18. Which of the following are characteristics of a purchase order?

A. B. C. D. A bilateral contract used for low dollar items A unilateral contract used when routine, standard cost items are required. A bilateral contract used for high dollar, standard items a and c
19. In which stage of the negotiation meeting are points of concession identified?
A. B. C. D. Probing Closure Agreement Scratch bargaining
20. Which type of warranty is enacted if a service or product does not meet the level of quality specified in the contract?
A. B. C. D. Implied warranty of merchantability Implied warranty of specified quality Express warranty none of the above
21. Which type of contract provides the highest risk to the owner (buyer) ?
A. B. C. D. Cost-plus Incentive Fee Cost-plus Percentage of Costs Cost-plus Fixed Fee Fixed-Price Plus Incentive Fee
22. In negotiations, what is a fait accompli tactic ?

A. B. C. D. Completing a phase of work before the other side is ready Pretending to accept the other side's offer Claiming an issue has already been decided and therefore cannot be changed Promising that a requirement will be completed before it is due
23. The Contract Statement of Work (SOW) is an output of which process?

A. B. C. D. Plan Purchases and Acquisitions Plan contracting Contract Administration None of the above
24. A legally binding document offered unilaterally is a:

A. B. C. D. Purchase Order Scope of Work Express warranty None of the above
25. Contract administration is the process of:

A. B. C. D. Product verification and administrative close-out Obtaining information from prospective sellers Clarification and mutual agreement on the structure and requirements of the contract Ensuring that the sellers performance meets contractual requirements
26. Breach of contract is best described as:

A. B. C. D. Failure by the buyer to perform part or all of the duties of a contract Failure by either the buyer or seller to perform part or all of the duties of a contract Failure by the seller to perform part or all of the duties of a contract None of the above
27. Contract Closure and Clsoe Project are similar because the both involve:
A. B. C. D. Administrative closure and customer satisfaction analysis Product verification, administration closure, and lessons learned Product verification and administration closure None of the above
28. During procurement planning the project team is responsible for:

A. B. C. D. Developing the procurement management plan Developing the procurement documents Developing the contract statement of work a and c
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29. The criteria for evaluating a proposal are developed as part of:
A. B. C. D. Plan Purchases and Acquisitions Plan Contracting Request Seller Responses Select Sellers
30. Which of the following is a tool used during the Select Sellers process?
A. B. C. D. Advertising Payment system Bidder conferences Screening system
Answer Sheet
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Answers
1 C 2 D 3 A 4 5 6 7 8 9 10 B D A D D D C
Project Procurement Management Study Notes section on Contract Types PMBOK Guide, Section 12.1 , pg.. 274 PMBOK Guide, Section 12.1 , pg.. 274 Particularly if buyer wishes to exercise some degree of influence or control over contracting decisions. PMBOK Guide, Section 12.3, pgs 284 PMBOK Guide, Section 12.2.3.1, pg.. 282 PMBOK Guide, Section 12.4.2.1, pg.. 288 PMBOK Guide, pg.. Section 12.4.1.3, pg.. 287 PMBOK Guide, Section 12.4.1, pg.. 287 PMBOK Guide, Section 12.4.2.4 , pg.. 288 PMBOK Guide, Section 4.3, pg.. 103. This question addresses the need for Integrated Change Control in order to keep cost low Project Procurement Management Study Notes section on Firm-Fixed Price (FFP) contracts PMBOK Guide, Chapters 9 and 10 Project Procurement Management Study Notes section on Cost-Plus-a-Percentage-of-Cost (CPPC) and calculation examples in the
11 C 12 C 13 A 14 B
following section
Project Procurement Management Study Notes section on
Cost-Plus-Incentive-Fee (CPIF) and calculation examples in the following section 15 A

Project Procurement Management Study Notes section on
Fixed-Price-Plus-Incentive-Fee (FPI) and calculation examples in the following section 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 D C B D C B C B A D B C D B D

Project Procurement Management Study Notes section on Procurement Planning Project Procurement Management Study Notes section on Contract Origination Project Procurement Management Study Notes section on Contract Origination Project Procurement Management Study Notes section on Stages of Negotiation Project Procurement Management Study Notes section on Warranties Project Procurement Management Study Notes section on Contract Types Project Procurement Management Study Notes section on Negotiation Tactics PMBOK Guide, Section 12.2.3, pg. 284 Project Procurement Management Study Notes section on Contract Origination PMBOK Guide, Section 12.5 , pgs 290 Project Procurement Management Study Notes section on Breach PMBOK Guide, Section 12.6, pgs 100-102 and 295-297 PMBOK Guide, Section 12.1.3, pgs 279-280 PMBOK Guide, Section 12.2, pgs 281 PMBOK Guide, Section 12.4.2, pgs. 288-289
Number
_________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
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PROFESSIONAL and SOCIAL RESPONSIBILITY
STUDY NOTES
Trademarks
Disclaimer PMI makes no warranty, guarantee, or representation, express or implied, that the successful completion of any activity or program, or the use of any product or publication, designed to prepare candidates for the PMP Certification Examination, will result in the completion or satisfaction of any PMP Certification eligibility requirement or standard., service, activity, and has not contributed any financial resources. Initially Prepared By: Peter Dapremont Edited By: Kim Ulmer July 2005 Edition The information contained in this document has not been submitted to any formal IBM test and is distributed on an as is basis without any warranty either express or implied. The use of this information or the implementation of any of these techniques is a customer responsibility and depends on the customers ability to evaluate and integrate them into the customers operational environment. While each item may have been reviewed by IBM for accuracy in a specific situation, there is no guarantee that the same or similar results will result elsewhere. Customers attempting to adapt these techniques to their own environments do so at their own risk.
Professional and Social Responsibility
Professional and Social Responsibility Study Notes
Reference Material to Study: PMI Professional and Social Responsibility reference list
Doing Business Internationally: The Guide to Cross-Cultural Success, Blake, Terence, Danielle Walker, and Thomas Walker, 1995 The Cultural Dimension of International Business, Ferraro, Gary, 1997 Global Literacies: Lessons on Business Leadership and National Cultures, Rosen, Robert, Patricia Digh, and Carl Phillips, 2000 PMI publications that address Professional and Social Responsibility PMI Member Ethical Standards: Member Code of Ethics and Member Standards of Conduct PMI Member Ethics Case Procedures Project Management Experience and Knowledge Self-Assessment Manual Project Management Professional (PMP ) Code of Professional Conduct A Guide to the Project Management Body of Knowledge (PMBOK Guide, 2000 Edition) PMP Exam Prep, 4th Edition, by Mulcahy, Rita, PMP, 2002 PMP Resource Pack, by PMI and other publishers PMP Certification Handbook, by PMI, 2000
What to Study?
In 2000, PMI published the Project Management Professional (PMP) Role Delineation Study which defined the project management profession in terms of 6 performance domains, tasks that are performed in the performance domains, and the knowledge and skills needed to perform the tasks. Professional and Social Responsibility was added as a performance domain as a result of this study. Professional and Social Responsibility covers the legal, ethical, professional, and social behaviors of the profession. In 2001, PMI added Professional Responsibility performance domain, renamed in 2005 to Professional and Social Responsibility, questions to the PMP certification exam. The questions deal with the project managers use of judgment, ethics and responsibility as it relates directly to PMI , to themselves, to the profession, and to their organizations. When answering exam questions related to Professional and Social Responsibility it is important to think about legal, ethical, professional,
Copyright IBM Corp. 2002, 2005 Professional and Social Responsibility Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
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and social behavior. You should anticipate situational questions in this area. Professional and Social Responsibility is not covered as a specific knowledge area in the PMBOK Guide, although its issues are addressed throughout the guide. Therefore, you must refer to publications such as those listed above under Reference Materials to Study. Use the list of the major Professional and Social Responsibility topics, shown later in this guide, which are based on the role delineation study to help focus your study efforts on the areas most likely to appear on the exam.
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Professional and Social Responsibility Copyright IBM Corp. 2002, 2005 Course materials may not be reproduced in whole or in part without the prior written permission of IBM.
Major Topics
Ensuring Personal Integrity and Professionalism Adhering to legal requirements Adhering to ethical standards Protecting the community and stakeholder values Contributing to the Project Management Knowledge Base Sharing lessons learned with other project managers within company/organization Providing mentoring and training to other project mangers and stakeholders Writing articles related to project management Performing research Using effective communication techniques Enhancing Personal Professional Competence Increasing and applying personal strengths and weaknesses Applying instructional methods and tools Increasing appropriate professional competencies Ascertaining personal learning style Applying training options Promoting Interaction Among Team Members and Other Stakeholders in a Professional and Cooperative Manner Following standards for professional communication Understanding/recognizing ethnic and cultural norms of team members and stakeholders Understanding stakeholders' and team members' communication preferences Managing stakeholder expectations Understanding and satisfying competing needs and objectives Using conflict resolution techniques
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Ensuring Individual Integrity and Professionalism

PMI holds that ensuring personal integrity and professionalism is accomplished "by adhering to legal requirements, ethical standards, and social norms in order to protect the community and all stakeholders and to create a healthy working environment."
PMI views a code of ethics as an essential part of a profession. In order to establish project
management as a recognized profession, it is necessary to have a code of ethics and standards of conduct. These Member Ethical Standards are an inseparable obligation of individuals joining the Institute. Member Ethical Standards consists of: (available on the PMI website under Membership) PMI Member Code of Ethics - defines and clarifies the ethical responsibilities for PMI members PMI Member Standards of Conduct - describes the obligations and expectations associated with membership in PMI PMI Member Ethics Case Procedures - defines the procedures for processing possible violations of the ethics standards Ethics Review Process The Ethics Review Committee administers the Board oversight of any member ethical complaint. The ethics procedures are not formal legal processes and are designed to operate without the involvement of an attorney, however, any party maybe represented by an attorney if desired. Actions by the Ethics Review Committee may include: Denial and rejection of PMI membership Private reprimand or censure Public reprimand or censure Membership probation for up to 3 years Suspension of membership status for no less than 6 months Termination of membership and expulsion from PMI Answering the questions in this area will require: Knowledge of: Legal requirements Ethical standards Social norms Community and stakeholder values Communication techniques Skill in: Exercising appropriate judgment
Researching law and regulation, ethical standards, organizational and stakeholder values, and social norms Gathering, assessing, compiling, and documenting information Negotiating effectively Resolving conflicts Communicating effectively
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Points to remember Questions will address individual actions as well as the perception of the actions Actions should be defensible by both the project manager and the project team The PMI Member Code of Ethics highlights: Integrity and professional conduct Responsibility for actions Enhancement of professional capabilities Fairness and honesty Encouraging others to act ethically and professionally
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Contributing to the Project Management Knowledge Base

PMI stresses the importance of gathering and sharing lessons learned, best practices, research, etc. within appropriate communities to improve the quality of project management services, build the capabilities of colleagues, and advance the profession as part of a PMP 's professional and social responsibility. The focus is on enhancing the project management profession knowledge base. Encompasses those people that need the information to work effectively with the client Sharing of the information doesn't violate confidentiality or nondisclosure agreements Answering the questions in this area will require: Knowledge of: Body of Knowledge of project management Effective communication techniques Techniques for transferring knowledge Research techniques Skill in: Communicating effectively with members of the appropriate communities Exercising judgment in the handling of information and relationships Transferring knowledge to build the capabilities of colleagues and advance the profession (coaching, mentoring, training, etc.) Implementing research strategies for discovering best practices and calculating performance metrics Gathering, assessing, compiling, and documenting information Points to remember Gathering and sharing lessons learned with appropriate communities.
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Enhancing Individual Competence

PMI stresses the importance of self-assessment and enhancing one's individual competencies by increasing and applying professional knowledge in order to improve project management services. Project Management Experience and Self-Assessment Manual, was developed by PMI to assist individuals in assessing their current levels of project management knowledge and related experience base. The manual can be used to Develop individual preparation plans Identify or verify education and training outcomes Answering the questions in this area will require: Knowledge of: Personal strengths and weaknesses Instructional methods and tools Appropriate professional competencies Training options Self-assessment strategies Skill in: Planning personal development Attaining and applying new project management practices Communicating effectively Points to remember The three books listed under PMI Professional and Social Responsibility reference list address cultural awareness, self-assessment, and competencies. The authors of Doing Business Internationally: The Guide to Cross-Cultural Success describe six competencies required by global managers and maps them to six personal characteristics. Competence Personal Characteristic Managing Competitiveness Knowledge Managing Complexity Analysis Managing Adaptability Flexibility Managing Teams Sensitivity Managing Uncertainty Judgment Managing Learning Reflection The authors of Doing Business Internationally: The Guide to Cross-Cultural Success describe four levels of cultural competence. Having open attitudes - developing a receptivity to cross-cultural learning Awareness of self and others - recognize key differences and similarities between oneself and others Knowledge of cultures - develop a solid base of cultural knowledge on which to ground your awareness Cross-cultural skills - developing behaviors that will help to maximize cross-cultural effectiveness The author of The Cultural Dimension of International Business stress that before we can begin to understand other cultures we must first understand how our own culture
Copyright IBM Corp. 2002, 2005 Professional and Social Responsibility Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 1-9
influences our thinking and behaviors. This will allow us to increase our cultural self-awareness. The authors of Global Literacies: Lessons on Business Leadership and National Cultures stress that a core competency of the global leader is the ability to understand the uniquenesses and universals within each culture, what is universal to all people, businesses, and countries and what is unique to each. Be familiar with various instructional methods and tools, recognizing that experiential cues in learning are most important. Recognize that anything you can do to enhance the competencies describe above is important.
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Interacting in a Professional and Cooperative Manner

PMI stresses the importance of knowing the cultural environment you are facing and to take time to understand the individuals and their personal as well as cultural histories. Interacting with team members and stakeholders in a professional and cooperative manner by respecting personal and cultural differences in order to ensure a collaborative project management environment is critical. You must adapt and adopt multifaceted strategies and approaches that enable multiple cultures and attitudes to coexist productively.
Answering the questions in this area will require: Knowledge of: Interpersonal techniques Cultural differences Community and stakeholder values Communication techniques Team motivation strategies Skill in: Exercising judgment Researching organizational and stakeholder values Gathering, assessing, compiling, and documenting information Negotiating effectively Resolving conflicts Communicating effectively Respecting cultural differences Motivating teams Points to remember The three books listed under PMI Professional and Social Responsibility reference list addresses cultural issues and diversity. The authors of Global Literacies: Lessons on Business Leadership and National Cultures list 4 layers of cultures for the 21st century businesses which they point out leaders of today have to understand that all four layers matter. Leaders must use these like they use "any other business asset, as tools for business success, turning them into strengths instead of liabilities.". World Culture National Culture Business Culture Leadership Culture Linked to the Leadership Culture they describe four literacies of business Personal - understanding and valuing others Social - engaging and challenging people Business - focusing and mobilizing your business Cultural - valuing and leveraging cultural differences The authors of Doing Business Internationally: The Guide to Cross-Cultural Success describe five success factors related to culture and diversity. Success in Understanding culture, leveraging cultural competence into a competitive advantage
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Crossing cultures, what they refer to as cross-cultural journeys, understanding the predominant belief systems in a region will help you make sense of the behaviors and values you will find Communicating across cultures, understanding how communication flows and the barriers to cross-cultural communication Negotiating across cultures, seeing conflict as a challenge and opportunity Global management, focusing on three key influences (1) the dynamics of a global workforce, (2) business reengineering, (3) organizational issues. The author of The Cultural Dimension of International Business also presents similar issues as the other authors Communicating across cultures, where he looks at both the language and nonverbal dimensions Contrasting cultural values, where he defines five two-faceted dimensions and discuss the implications to business Negotiating across cultures, where he discusses the nature of cross-cultural negotiation and effective strategies Coping with culture shock, where he discusses the nature of cultural shock and how to minimize it Developing global managers, where he defines four categories of selection criteria communication skills, personality traits, motivation, and family circumstances Culture thus Creates communication issues Alters the dynamics of how people interact Changes negotiation strategies
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PMI PMP Code of Professional Conduct

As a PMI Project Management Professional (PMP), I agree to support and adhere to the responsibilities described in the PMI PMP Code of Professional Conduct.
I. Responsibilities to the Profession A. Compliance with all organizational rules and policies: 1. Responsibility to provide accurate and truthful representations concerning all information directly or indirectly related to all aspects of the PMI Certification Program, including, but not limited to the following: examination application, test item banks, examination, answer sheets, candidate information and PMI Continuing Certification Requirements Program reporting forms. 2. Upon a reasonable and clear factual basis, responsibility to report possible violations of the PMI Code of Professional Conduct by individuals in the field of Project Management. 3. Responsibility to cooperate with PMI concerning ethics violations and the collection of related information. 4. Responsibility to disclose to clients, customers, owners or contractors, significant circumstances that could be construed as a conflict of interest or an appearance of impropriety. B. Candidate/Certificant Professional Practice 1. Responsibility to provide accurate, truthful advertising and representations concerning qualifications, experience and performance of services. 2. Responsibility to comply with laws, regulations and ethical standards governing professional practice in the state/province and/or country when providing project management services. C. Advancement of the Profession 1. Responsibility to recognize and respect intellectual property developed or owned by others, and to otherwise act in an accurate, truthful and complete manner, including all activities related to professional work and research. 2. Responsibility to support and disseminate the PMP Code of Professional Conduct to other PMI certificants. II. Responsibilities to Customers and the Public A. Qualifications, experience and performance of professional services 1. Responsibility to provide accurate and truthful representations to the public in advertising, public statements and in the preparation of estimates concerning costs, services and expected results. 2. Responsibility to maintain and satisfy the scope and objectives of professional services, unless otherwise directed by the customer.
Copyright IBM Corp. 2002, 2005 Professional and Social Responsibility Course materials may not be reproduced in whole or in part without the prior written permission of IBM. 1-13
3. Responsibility to maintain and respect the confidentiality of sensitive information obtained in the course of professional activities or otherwise where a clear obligation exists. B. Conflict of interest situations and other prohibited professional conduct 1. Responsibility to ensure that a conflict of interest does not compromise legitimate interests of a client or customer, or influence/interfere with professional judgments. 2. Responsibility to refrain from offering or accepting inappropriate payments, gifts, or other forms of compensation for personal gain, unless in conformity with applicable laws or customs of the country where project management services are being provided
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Sample Questions
1. There are strikingly different opinions about matters of personal space in the world's cultures. To have effective cross-cultural communications you need to understand how people use space in their interactions. What area of nonverbal communications is this known as? A. Body posturing B. Gaze C. Proxemics D. Bodily contact
2. Conflict is an integral part of life and can have an impact on the completion of a project. Each conflict is unique but the management challenge is to mold each conflict constructively to achieve a win-win solution for the parties involved. The strategy MOST often associated with positive outcomes is: A. Bargaining B. Problem solving C. Avoiding D. Smoothing 3. You have recently completed building a water treatment facility for which the customer has accepted the work and paid your company. While running some routine test you discover low level contaminants in the water which pose an extremely low risk for causing any sickness. In this situation what should you do? A. Do nothing since the project is completed and accepted by the customer B. Document this as a lesson learned C. Put in place a process to improve your quality assurance for future projects D. Alert your management to the problem
4. All of the following are the responsibility of the project manager EXCEPT? A. Determine whether company procedures are legal B. Provide accurate and truthful representations in the preparation of estimates C. Maintain and respect the confidentiality of sensitive information D. Ensure that a conflict of interest does not compromise legitimate interests of a client or customer 5. While working on a new technology project you discover a design error which will interfere with the project's ability to meet the performance objectives. What is the PREFERRED response? A. Develop an alternative solution to the problem B. Develop a risk control plan C. Re-plan to meet reduce performance objectives D. Conduct a variance analysis .
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6. What is the MOST effective process to ensure that cultural and ethical differences do not hinder the success of multinational projects? A. Frequent meetings B. Co-location C. Teaming D. Training 7. Communication skills are vitally important in conducting business and managing projects. The importance of these skills is magnified when working in an international setting. The best way to effectively communicate as an expatriate is to: A. Use an interpreter proficient in both languages B. Rely on the use of nonverbal forms of communication C. Become proficient in the local language D. Rely primarily on written communications 8. An American working on a project in Japan was invited to the home of one of his Japanese team members. While there he noticed a brightly colored map of the world which his host children were using for a school project. To his surprise directly in the center of the map was Japan where he expected to see the United States. What behavior is the American exhibiting? A. Socialism B. Ethnocentrism C. Globalism D. Nationalism 9. One of the most important tasks in doing business internationally is building and sustaining credibility. Which of the following will not help a person's credibility? A. Demonstrating ethical behavior B. Demonstrating reliability and commitment C. Demonstrating expertise by answers you give D. Demonstrating respect for others 10. The negotiating behavior of an individual is certainly influenced by their culture, but other factors are also at work such as education, biology, or work experience. As a result of education or work experiences a person may assume a frame of reference for a different culture. In negotiating, this represents the importance of: A. Moving beyond cultural stereotyping and getting to know people as individuals with their own unique set of personality traits and experiences B. Looking at the cultural stereotypes of the individuals C. Being over dependent on cultural information as the basis for negotiation D. Focusing on the interests behind the negotiators positions
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11. You are managing a large construction contract in an environmentally sensitive area. The sponsor is focused on a timely completion of the project and has provided contract incentives which will reward you and your company for early completion. An environmental group is concerned about the impact of specific design specifications on the area, and the labor union used by your major contractor is ready to strike for higher wages. You need to: A. Complete the project according to the original specifications, not worrying about any stakeholders concerns B. Keep all parties informed as to the status of the project C. Find appropriate resolutions to resolve the stakeholder differences D. Prioritize the sponsor's requirements when seeking a resolution 12. A KEY rule for achieving customer satisfaction is: A. Establish a change control system B. Always do what the customer suggests C. Define the specifics of the product D. Conduct a needs analysis 13. Conflict within a project team can be avoided with prior planning and by maintaining effective communications between the project manager and the team members. The most important information for the project manager to convey to the team is: A. Clear, unambiguous goals as to where the project is headed B. That top management will not be interfering with the project C. That key decisions have been made and how the key decisions impact the team D. The system of rewards for recognition of team members . 14. You have been contacted by a former colleague, who is now a project manager for one of your major competitors, who managed a large technology project on which you were a team member. He is requesting an updated copy of the project charter for that project in order to compare it to one of his current charters, because the charter for the technology project was very detailed. In this situation you should A. Send him the update since he developed the original charter and basically knows what it includes anyway B. Not send him the update, he does not have a legitimate need to know the contents of the document C. Send him a confidentiality agreement to sign before sending the updates D. Invite him to the office where he can review it in your presence 15. What is the psychological disorientation experienced by people who suddenly find themselves living and working in radically different cultural environments? A. Cultural Anxiety B. Reentry shock C. Culture shock D. Ethnocentrism
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16. While working aboard you are accused by one of your team members of behaving in an ethnocentric manner. You are being accused of which of the following? A. Focusing on the personality traits of others B. Using stereotypes to evaluate other members of the team C. Believing in the inherent superiority and naturalness of your own culture D. Having trouble adjusting to the culture 17. You have been assigned to work on a project. The project sponsor has approved the estimated cost of the project at $2,000,000. In your analysis of the project you have determine that the project will come in on time and under budget by $300,000. Based on this calculation your bonus will be $3,000 less. In this situation you should: A. Add task to increase the actual project cost B. Communicate to the project sponsor the projected project financial outcome C. Inform the end users that additional functionality can be added to utilize the entire budget D. Invoice the full $2,000,000 amount of the contract 18. You are a project manager for a company which specializes in designer lighting fixtures. Your company has prepared a standard WBS and has established a standard integrated change control system which is used in developing most of the lighting fixtures. On your last project one of your companies biggest customers requested that a different type of wiring be used. This constituted a scope change, however, the new wiring reduced cost and improved the efficiency of the lights by 15%. At the end of the project you realized that the continued use of the new wiring would lead to improvements in the quality and cost of the fixtures. Your next step should be to: A. Adjust the cost baseline to reflect the reduction in cost B. Pass the calculated savings onto the customer C. Create a new methodology and mandate that it be followed D. Document the lessons learned and share them within the company 19. You have discovered that your primary contractor for your project is consistently late in providing deliverables. The contractor approaches you and requests that you continue to accept the late deliverables in exchange for an overall decrease in the project cost. Which style of conflict resolution is the contractor employing? A. Smoothing B. Withdrawal C. Confrontation D. Compromise
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20. You are meeting with the customer and several of the major stakeholders to discuss the status of a critical project. During the course of the meeting a debate ensues which leads to a violent disagreement regarding the best way to proceed with the project. As the project manger your goal is to balance the stakeholders' interest while striving for a fair resolution to satisfy competing needs and objectives. In general, disagreements among stakeholders should be resolved in favor of the: A. Shareholders B. Sponsor C. Customer D. Performing organization 21. You have been sent abroad to conduct negotiations for a large construction project. Before departing you sent a request to your host inviting them to join you for dinner and drinks in order to spend some time getting to know them in a social environment before beginning negotiations in the morning. When you arrive at the hotel you have a message declining the invitation with an indication that they will meet you in their company's conference room promptly at 9:00 am to begin the negotiations. Given their approach your host's culture is noted for which of the following: A. Low context B. Expressive C. Instrumental D. High context 22. At a high-level status meeting for a very important program you note that the project manager on one of the other projects has reported that his project is on schedule. In looking back at your project you notice that many of the deliverables from the other project arrived late. In this situation what should you do? A. Discuss the situation with your manager B. Setup a meeting with the program manager C. Setup a meeting to discuss with the other project manager D. Do nothing
23. You are ready to enter into negotiations with an Asian firm where they have a high context cultural orientation to communication. To enhance your chances of having a successful negotiation you should concentrate on: A. Building long-term relationships B. Preparing carefully ahead of time C. Learning to listen effectively D. Developing a sensitivity to timing
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24. You recently joined PMI and have been contacted by the PMI Ethics Review Committee about an alleged violation of the PMI Intellectual Property guidelines for reproducing and distributing potions of the PMBOK Guide without approval from PMI. You have no direct knowledge of this incident but are now involved in the delivery of training using the materials. The Ethics Review Committee has asked you to answer a series of questions related to this alleged misdeed. In this situation, you have: A. No responsibility because you were not a PMI member when the alleged violation took place B. No obligation to provide information since you have no firsthand knowledge of what took place C. No obligation since you are not a party in the ethics proceedings D. A responsibility to cooperate with PMI concerning ethics violations and the collection of related information 25. You are working on a project where management tells the project manager to subcontract part of the project to a company that they have worked with many times. In this situation the project manger should be MOST concerned about: A. Meeting management's expectations B. The cost impact on the project for using the subcontractor C. Ethical situation and if it violates any company rules or laws D. Making sure that the company is qualified to complete the project task 26. You are working on an international assignment and submit a proposal to the ministry of social services in the country for the development and implementation of a national identification card. Two weeks later you are approached by a government "representative" ensuring you of a win and requesting a "reasonable" contribution to the political party currently in power in the country. What should you do in this situation? A. Make the contribution if you feel that local customs explicitly allow for such payments B. Refrain from knowingly engaging in professional misconduct C. Follow the laws and regulations governing this type of situation in your country D. Negotiate with the representative for favorable consideration in other projects 27. You have been offered an assignment to manage an international project office overseas. You are interested in the opportunity but need to consider the cultural differences you will face and to which you will have to adjust. In listing the pros and cons of the assignment there is one question above all others which you must answer honestly before making the final decision. The question is: A. How adaptable are they? B. How adaptable am I? C. How can I continue to build a practical knowledge base of cultural information that will serve me over the long term? D. How can I continue to refine my skills and develop my level of cultural competence and adaptability?
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28. You are working on a project where the sponsor informs you that their company has run out of money to pay for the project. What should you as the project manger do FIRST? A. Stop work B. Cut back on resources assigned to the project C. Reduce the scope of the work and enter administrative closure D. Redo the schedule to shit work to later in the project
29. Silent language, second-order messages, paralinguistics, and the hidden dimension of communication are referred to as: A. Communication functions B. Subliminal communication C. Nonverbal communication D. Communication skills 30. Since negotiating across cultures involves mutual interdependence between the parties the negotiation MUST be conducted in an atmosphere of: A. Uncertainty and caution B. Winner take all C. Focus on personal agenda D. Mutual trust and cooperation
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Answer Sheet
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Answers
1 2 3 C B D The Cultural Dimension of International Business, pages 86-89 Doing Business Internationally: The Guide to Cross-Cultural Success, page 192 Further action is required even though the project is closed. Professional conduct, customer relations, and responsibility to the public must be considered when working as a project management professional. PMI Professional Code of Conduct, section II PMI Professional Code of Conduct, section II The Cultural Dimension of International Business, pages 163-168 or Doing Business Internationally: The Guide to Cross-Cultural Success, page 243 The Cultural Dimension of International Business, chapter 3 The Cultural Dimension of International Business, pages 35-37 or Doing Business Internationally: The Guide to Cross-Cultural Success, pages 169-170 Doing Business Internationally: The Guide to Cross-Cultural Success, pages 178-179 The Cultural Dimension of International Business, page 132 The project manager must balance stakeholders' interest by recommending approaches that strive for fair resolution in order to satisfy competing needs and objectives. PMP Role Delineation Study, page 60 The project manager must understand the needs and requirements of the customer to ensure they can put plans in place to achieve customer satisfaction Clear and concise communications of the goals and objectives of a project are critical to getting team members working together to achieve the desired project results PMI Professional Code of Conduct and the PMI Member Ethical Standards The Cultural Dimension of International Business, chapter 7, Doing Business Internationally: The Guide to Cross-Cultural Success, page 44 The Cultural Dimension of International Business, pages 35-37 or Doing Business Internationally: The Guide to Cross-Cultural Success, pages 169-170 PMI Professional Code of Conduct It is important for the project manager to contribute to the project management base by sharing lessons learned and best practices. PMP Role Delineation Study, page 59 Doing Business Internationally: The Guide to Cross-Cultural Success, pages 191 The project manager must satisfy the requirements of the customer but must also consider the needs and expectation of the stakeholders so must also look for ways to bring about a fair resolution (PMP Role Delineation Study, page 60) Doing Business Internationally: The Guide to Cross-Cultural Success, pages 54-59 and 196 PMI Professional Code of Conduct Doing Business Internationally: The Guide to Cross-Cultural Success, pages 54-55, The Cultural Dimension of International Business, pages 58-62 PMI Member Ethical Standards document, Member Standards of Conduct section PMI Professional Code of Conduct PMI Member Ethical Standards document, Member Standards of Conduct section Doing Business Internationally: The Guide to Cross-Cultural Success, page 32-35
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4 5 6 7 8 9 10 11
A A D C B C A C
12 13
D A
14 15 16 17 18
B C C B D
19 20
D C
21 22 23 24 25 26 27
A C C D C B B
28 29 30
C C D
The project manager has the professional responsibility to provide the customer with the value of the work performed The Cultural Dimension of International Business The Cultural Dimension of International Business or Doing Business Internationally: The Guide to Cross-Cultural Success
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PM FRAMEWORK AND Standard for Project Management of a Project STUDY NOTES

PMBOK 3rd Edition based, Version 1

In Preparation For PMP Certification Exam

IBM Education and Training Worldwide Certified Material

PM Framework and Standard for Project Management of a Project

PM Framework and Standard for Project Management of a Project

Reference Material for Study:

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

Administrative Closure Amount at stake Assumptions Benchmarking

Change control Configuration management

Constraints Control Account Plan (CAP)

Earned Value Management

Functional Manager Functional Organization Integration Lessons Learned

Linear Responsibility Chart Line Manager Management By Objectives (MBO)

PM Framework and Standard for Project Management of a Project

Project Life Cycle

Project Management Project Management Team

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

Project Phase Project Management

Project Team Projectized Organization Regulation

Responsibility Assignment Matrix (RAM)

Rolling Wave Planning Stakeholder Standard

Work Authorization System

PM Framework and Standard for Project Management of a Project

Project Management Introduction

Project Managers and the Project Team:

Project vs. Operation vs. Program:

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

PM Framework and Standard for Project Management of a Project

Portfolios and Portfolio Management:

Project Management Office:

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

PM Framework and Standard for Project Management of a Project

Project Management Body of Knowledge and the PMBOK Guide:

General Management Knowledge and Skills:

Application Area Knowledge, Standards and Regulations:

PM Framework and Standard for Project Management of a Project

Understanding the Project Environment:

PM Framework and Standard for Project Management of a Project

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

Project Life Cycle and Organization

Characteristics of a Project Life Cycle:

PM Framework and Standard for Project Management of a Project

PM Framework and Standard for Project Management of a Project

Organizational Cultures and Style:

PM Framework and Standard for Project Management of a Project

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

Project Management Processes

Project Management Process Groups:

PM Framework and Standard for Project Management of a Project

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

Project Management Process Mapping

PM Framework and Standard for Project Management of a Project

Copyright IBM Corp. 2002, 2005

PM Framework and Standard for Project Management of a Project

PM Framework and Standard for Project Management of a Project