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Project Management

Professional (PMP) Certification


Fourth Edition

Copyright Element K Corporation

Project Management Professional


(PMP) Certication - Fourth Edition
Part Number: NH85042(EBEE)
Course Edition: 1.2

ACKNOWLEDGMENTS
Project Team
Content Developer: Divya Jose, Pradeep Reddy and Reshma R Content Manager: Adrian Bk Graphic Designer: Karthik PB,
Mohammed Baroda, Vasanth K. and Charles Amalorpavaraj Project Manager: Media Instructional Designer: Divya Jose,
Pradeep Reddy and Reshma R Content Editor: Peter Bauer Materials Editor: Frank Wosnick Business Matter Expert:
Dhananjay M. Gokhale Technical Reviewer: Dhananjay M. Gokhale Project Technical Support: Mike Toscano Project
Lead: Abbas A

NOTICES
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logo is a registered mark of the Project Management Institute, Inc. All other product names and services used throughout this course may be common law or registered trademarks of their respective
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CONTENTS

PROJECT MANAGEMENT PROFESSIONAL


(PMP) CERTIFICATION- FOURTH
EDITION
LESSON 1 - EXAMINING PROFESSIONAL PROJECT MANAGEMENT
A. Identify Project Management Processes . . . . . . . . . . . . . . . . . . . . . . . . . . .

Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Subprojects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Portfolios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Project Management Office (PMO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Project Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Types of Project Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Project Life Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11


General Characteristics of a Project Life Cycle . . . . . . . . . . . . . . . . . . . . 12
Project Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Governance Activities in the Project Life Cycle . . . . . . . . . . . . . . . . . . . . 13
Phase-to-Phase Relationships in a Project. . . . . . . . . . . . . . . . . . . . . . . . . 13
Progressive Elaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Organizational Cultures and Styles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Organizational Cultures Inuence on Projects . . . . . . . . . . . . . . . . . . . . 15
Project Management Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Project Management Inputs, Tools and Techniques, and Outputs . . . . 16
Project Management Process Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Project Management Process Group Interactions . . . . . . . . . . . . . . . . . 16
Knowledge Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Enterprise Environmental Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Organizational Process Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
B. Identify Professional and Social Responsibilities. . . . . . . . . . . . . . . . . . . . . . 23
The PMI Code of Ethics and Professional Conduct . . . . . . . . . . . . . . . . . 23
Upholding Responsibilities to the Profession . . . . . . . . . . . . . . . . . . . . . . . 24
Upholding Responsibilities to the Customer and to the Public . . . . . . . . 25
Adhering to Other Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
C. Identify the Interpersonal Skills Required for a Project Manager . . . . . . . . 28
Interpersonal Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Leadership Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Team Building Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Motivation Skills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Communication Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Inuencing Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Decision Making Skills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Six Phases of Decision Making. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Political and Cultural Awareness Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Negotiation Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

LESSON 2 - INITIATING A PROJECT


A. Examine the Project Management Context . . . . . . . . . . . . . . . . . . . . . . . . . 38
Program Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Relationships Among Project, Program, and Portfolio Management . . 39
Operations Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Project and Operations Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Agile Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

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B. Examine Project Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Business Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Project Selection Criteria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Project Selection Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Project Selection Decision Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Capital Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Scoring and Rating Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Feasibility Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Cost-Benet Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
C. Prepare a Project Statement of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Project Statements of Work (SOW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
D. Create a Project Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Project Charters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
The Develop Project Charter Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Develop Project Charter Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Develop Project Charter Tools and Techniques . . . . . . . . . . . . . . . . . . . . 55
Develop Project Charter Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Business Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Business Case Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
E. Identify Project Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
The Identify Stakeholders Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Identify Stakeholders Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Identify Stakeholders Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . 61
Identify Stakeholders Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Stakeholder Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Stakeholder Registers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
The Stakeholder Analysis Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Stakeholder Management Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

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LESSON 3 - PLANNING PROJECT WORK
A. Identify the Elements of a Project Management Plan . . . . . . . . . . . . . . . . . 72
The Project Management Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
The Develop Project Management Plan Process . . . . . . . . . . . . . . . . . . . 73
Develop Project Management Plan Inputs . . . . . . . . . . . . . . . . . . . . . . . 74
Develop Project Management Plan Tools and Techniques . . . . . . . . . . 74
Develop Project Management Plan Output . . . . . . . . . . . . . . . . . . . . . . 75
B. Document Stakeholder Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
The Collect Requirements Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Collect Requirements Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Collect Requirements Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . 77
Collect Requirements Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Facilitated Workshops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Group Creativity Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Group Decision Making Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Requirements Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Requirements Management Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
The Requirements Traceability Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
C. Create a Scope Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
The Project Scope Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Components of the Scope Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
The Dene Scope Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Dene Scope Inputs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Dene Scope Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Dene Scope Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Product Analysis Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Techniques for Alternatives Identication . . . . . . . . . . . . . . . . . . . . . . . . . 90
Project Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

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D. Develop a Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Work Breakdown Structures (WBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
The Create WBS Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Create WBS Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Create WBS Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Create WBS Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Code of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

LESSON 4 - DEVELOPING PROJECT SCHEDULES


A. Create an Activity List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Work Package . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
The 8/80 Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
The Dene Activities Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Dene Activities Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Dene Activities Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Dene Activities Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
B. Create a Project Schedule Network Diagram . . . . . . . . . . . . . . . . . . . . . . . . 116
The Sequence Activities Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Sequence Activities Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Sequence Activities Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . 117
Sequence Activities Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Activity Dependencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Types of Activity Dependencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Precedence Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Precedence Relationship Types. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Lead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Project Schedule Network Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
The Precedence Diagramming Method (PDM) . . . . . . . . . . . . . . . . . . . . 122
Summary Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Conditional Diagramming Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

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C. Estimate Activity Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Project Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
The Estimate Activity Resources Process . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Estimate Activity Resources Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Estimate Activity Resources Tools and Techniques . . . . . . . . . . . . . . . . . . 129
Estimate Activity Resources Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Schedule Management Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
D. Estimate Duration for Project Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
The Estimate Activity Durations Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Estimate Activity Durations Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Estimate Activity Durations Tools and Techniques . . . . . . . . . . . . . . . . . . 135
Estimate Activity Durations Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
E. Develop a Project Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Project Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
The Develop Schedule Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Develop Schedule Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Develop Schedule Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . 141
Develop Schedule Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Standard Schedule Diagramming Notations . . . . . . . . . . . . . . . . . . . . . . 142
The Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Total Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Free Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Schedule Network Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
The Critical Path Method (CPM). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
The Critical Chain Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
The What-If Scenario Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Resource Leveling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Schedule Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
F. Identify the Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Critical Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

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G. Optimize the Project Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Schedule Compression . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Fast-Tracking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Crashing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Crash Cost Plotting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
H. Establish a Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Schedule Baselines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

LESSON 5 - DEVELOPING COST ESTIMATES AND BUDGETS


A. Estimate Project Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
The Estimate Costs Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Estimate Costs Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Estimate Costs Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Estimate Costs Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Common Estimate Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Analogous Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Bottom-Up Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Parametric Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Estimating Techniques Advantages and Disadvantages . . . . . . . . . . . . 179
B. Estimate the Cost Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Cost Baselines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
The Determine Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Determine Budget Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Determine Budget Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . 185
Determine Budget Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Funding Limit Reconciliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Contingency Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Cost Assignment Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

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C. Reconcile Funding and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

LESSON 6 - PLANNING PROJECT QUALITY, STAFFING, AND


COMMUNICATIONS
A. Create a Quality Management Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Quality Management Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
The Plan Quality Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Plan Quality Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Plan Quality Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Plan Quality Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Process Improvement Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Process Improvement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Total Quality Management (TQM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Standards and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
The ISO 9000 Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Cost of Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Checklists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Flowcharts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Control Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Design of Experiments (DOE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

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B. Document the Project Roles, Responsibilities, and Reporting
Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
The Develop Human Resource Plan Process . . . . . . . . . . . . . . . . . . . . . . 213
Develop Human Resource Plan Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Develop Human Resource Plan Tools and Techniques . . . . . . . . . . . . . . 214
Develop Human Resource Plan Outputs . . . . . . . . . . . . . . . . . . . . . . . . . 215
Organizational Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Organizational Structure Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Organization Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Relative Authority in Organizational Structures . . . . . . . . . . . . . . . . . . . . 218
Project Interfaces. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
The Responsibility Assignment Matrix (RAM) . . . . . . . . . . . . . . . . . . . . . . . 219
Staffing Management Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Staffing Management Plan Components . . . . . . . . . . . . . . . . . . . . . . . . . 221
C. Create a Communications Management Plan . . . . . . . . . . . . . . . . . . . . . . 225
Communications Management Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
The Plan Communications Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Plan Communications Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Plan Communications Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . 226
Plan Communications Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Communications Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Communications Requirements Analysis . . . . . . . . . . . . . . . . . . . . . . . . . 228
Communications Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228

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LESSON 7 - ANALYZING RISKS AND PLANNING RISK RESPONSES
A. Examine a Risk Management Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Project Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Business Risk vs. Insurable Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Types of Business Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Types of Insurable Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Risk Management Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
The Plan Risk Management Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Plan Risk Management Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Plan Risk Management Tools and Techniques . . . . . . . . . . . . . . . . . . . . . 239
Plan Risk Management Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Risk Management Plan Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240
Risk Breakdown Structures (RBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Effect-Based Risk Classication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Source-Based Risk Classication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Probability Scales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Impact Scales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Levels of Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Risk Tolerance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
Levels of Risk Tolerance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
B. Identify Project Risks and Triggers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Triggers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
The Identify Risks Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Identify Risks Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
Identify Risks Tools and Techniques. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Identify Risks Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Information-Gathering Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
Risk Registers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
Risk Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252

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C. Perform Qualitative Risk Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
Qualitative Risk Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
The Perform Qualitative Risk Analysis Process . . . . . . . . . . . . . . . . . . . . . . 256
Perform Qualitative Risk Analysis Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
Perform Qualitative Risk Analysis Tools and Techniques . . . . . . . . . . . . . 257
Perform Qualitative Risk Analysis Output. . . . . . . . . . . . . . . . . . . . . . . . . . 257
Risk Data Quality Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Probability and Impact Risk Rating Matrix . . . . . . . . . . . . . . . . . . . . . . . . . 258
Components of Risk Registers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
The Ongoing Risk Assessment Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
D. Perform Quantitative Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
Quantitative Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
The Perform Quantitative Risk Analysis Process . . . . . . . . . . . . . . . . . . . . 265
Perform Quantitative Risk Analysis Inputs . . . . . . . . . . . . . . . . . . . . . . . . . 265
Perform Quantitative Risk Analysis Tools and Techniques . . . . . . . . . . . . 266
Perform Quantitative Risk Analysis Output . . . . . . . . . . . . . . . . . . . . . . . . 266
Quantitative Risk Analysis Update Components . . . . . . . . . . . . . . . . . . . 267
Project Risk Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
Basics of Probability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
Probability Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Uniform Distribution PDF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
Normal Distribution PDF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
Triangular Distribution PDF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Decision Making Under Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
Quantitative Analysis Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Simulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274
Monte Carlo Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274

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E. Develop a Risk Response Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
The Plan Risk Responses Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Plan Risk Responses Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
Plan Risk Responses Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . 279
Plan Risk Responses Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
Negative Risk Strategies (Threats) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
Positive Risk Strategies (Opportunities) . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Contingency Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Contingency Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282

LESSON 8 - PLANNING PROJECT PROCUREMENTS


A. Plan Project Procurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
The Plan Procurements Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
Plan Procurements Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Plan Procurements Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . 292
Plan Procurements Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292
Procurement Management Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Teaming Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Risk-Related Contract Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
B. Prepare a Procurement Statement of Work . . . . . . . . . . . . . . . . . . . . . . . . . . 297
Procurement Statements of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
Make-or-Buy Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Factors in Make-or-Buy Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Lease, Rent, or Buy Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
C. Prepare a Procurement Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Procurement Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Types of Procurement Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304
Components of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304
Types of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Source Selection Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
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LESSON 9 - EXECUTING PROJECT WORK
A. Identify the Direct and Manage Project Execution Process . . . . . . . . . . . . 316
The Direct and Manage Project Execution Process . . . . . . . . . . . . . . . . . 316
Direct and Manage Project Execution Inputs. . . . . . . . . . . . . . . . . . . . . . 316
Direct and Manage Project Execution Tools and Techniques . . . . . . . . 317
Direct and Manage Project Execution Outputs . . . . . . . . . . . . . . . . . . . . 317
Project Management Information Systems (PMIS). . . . . . . . . . . . . . . . . . 318
Common PMIS Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Work Authorization Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Work Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
Project Execution Direction and Management Techniques. . . . . . . . . . 320
B. Execute a Quality Assurance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
Quality Assurance Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
The Perform Quality Assurance Process . . . . . . . . . . . . . . . . . . . . . . . . . . 323
Perform Quality Assurance Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324
Perform Quality Assurance Tools and Techniques . . . . . . . . . . . . . . . . . . 325
Perform Quality Assurance Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
Quality Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
Topics of Quality Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
C. Acquire the Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
The Acquire Project Team Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
Acquire Project Team Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Acquire Project Team Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . 331
Acquire Project Team Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332
Virtual Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332

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D. Develop the Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
The Develop Project Team Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
Develop Project Team Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Develop Project Team Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . 336
Develop Project Team Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Team Development Stages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Team-Building Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Co-location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Reward and Recognition Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Rewarding Individual Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
E. Manage the Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
The Manage Project Team Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Manage Project Team Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Manage Project Team Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . 344
Manage Project Team Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Causes of Conict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Conict Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Conict Management Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Tasks of Performance Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
F. Distribute Project Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
The Distribute Information Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
Distribute Information Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
Distribute Information Tools and Techniques. . . . . . . . . . . . . . . . . . . . . . . 352
Distribute Information Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
G. Manage Stakeholder Relationships and Expectations . . . . . . . . . . . . . . . . 355
The Manage Stakeholder Expectations Process . . . . . . . . . . . . . . . . . . . 355
Manage Stakeholder Expectations Inputs . . . . . . . . . . . . . . . . . . . . . . . . 355
Manage Stakeholder Expectations Tools and Techniques . . . . . . . . . . . 356
Manage Stakeholder Expectations Outputs . . . . . . . . . . . . . . . . . . . . . . 357

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CONTENTS
LESSON 10 - MANAGING PROJECT PROCUREMENT
A. Examine the Conduct Procurements Process . . . . . . . . . . . . . . . . . . . . . . . 364
The Conduct Procurements Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364
Conduct Procurements Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364
Conduct Procurements Tools and Techniques . . . . . . . . . . . . . . . . . . . . . 365
Conduct Procurements Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366
Qualied Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
B. Obtain Responses from Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371
C. Determine Project Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374
Weighting Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374
Procurement Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
Term vs. Completion Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376

LESSON 11 - MONITORING AND CONTROLLING PROJECT WORK


A. Identify the Monitor and Control Project Work Process . . . . . . . . . . . . . . . . 384
The Monitor and Control Project Work Process . . . . . . . . . . . . . . . . . . . . . 384
Monitor and Control Project Work Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . 385
Monitor and Control Project Work Tools and Techniques . . . . . . . . . . . . 385
Monitor and Control Project Work Outputs . . . . . . . . . . . . . . . . . . . . . . . . 386
Monitor and Control Project Work Process Best Practices . . . . . . . . . . . . 386
B. Develop an Integrated Change Control System . . . . . . . . . . . . . . . . . . . . . 388
Integrated Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388
Change Control Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388
Causes of Project Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
Conguration Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390
Process Control Structures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390

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C. Utilize the Integrated Change Control System . . . . . . . . . . . . . . . . . . . . . . . 393
The Perform Integrated Change Control Process . . . . . . . . . . . . . . . . . . 393
Perform Integrated Change Control Inputs . . . . . . . . . . . . . . . . . . . . . . . 394
Perform Integrated Change Control Tools and Techniques . . . . . . . . . . 395
Perform Integrated Change Control Outputs . . . . . . . . . . . . . . . . . . . . . 395
Change Management Advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396
Formal Acceptance of Project Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396
D. Review Deliverables and Work Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
The Verify Scope Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
Verify Scope Inputs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Verify Scope Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Verify Scope Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
Inspection Report Components. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
E. Control the Project Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
The Control Scope Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Control Scope Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404
Control Scope Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
Control Scope Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405

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CONTENTS
LESSON 12 - MONITORING AND CONTROLLING PROJECT SCHEDULE AND
COSTS
A. Control the Project Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414
The Control Schedule Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414
Control Schedule Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414
Control Schedule Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . 415
Control Schedule Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415
Earned Value Management (EVM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
EVM Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
Planned Value (PV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
Earned Value (EV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
Actual Cost (AC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418
EVM Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418
Schedule Performance Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . 418
Schedule Variance (SV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
Schedule Performance Index (SPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
SPI Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421
Working with EVM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421
B. Control Project Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
The Control Costs Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
Control Costs Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Control Costs Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Control Costs Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428
Cost Variance (CV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
The Cost Performance Index (CPI). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430
Performance Measurement Analysis Techniques . . . . . . . . . . . . . . . . . . 430
Performance Reporting Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431
Budget at Completion (BAC) Calculations . . . . . . . . . . . . . . . . . . . . . . . 431
Estimate to Complete (ETC) Calculations . . . . . . . . . . . . . . . . . . . . . . . . . 431
Estimate at Completion (EAC) Calculations. . . . . . . . . . . . . . . . . . . . . . . 432
To-Complete Performance Index (TCPI) . . . . . . . . . . . . . . . . . . . . . . . . . . 432

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CONTENTS
LESSON 13 - MONITORING AND CONTROLLING PROJECT PERFORMANCE
AND QUALITY
A. Perform Quality Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444
The Perform Quality Control Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444
Perform Quality Control Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444
Perform Quality Control Tools and Techniques . . . . . . . . . . . . . . . . . . . . . 445
Perform Quality Control Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446
Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
Causes of Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
The Analyzing Variances Task . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Tolerances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
The 6-Sigma Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Variability Indications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Pareto Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
The 80/20 Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Statistical Sampling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
The Statistical Sampling Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
Attribute Sampling Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
Variable Sampling Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452
B. Report on Project Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
The Report Performance Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
Report Performance Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
Report Performance Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . 456
Report Performance Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456
Forecasting Methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457
Benets of Creating Performance Reports . . . . . . . . . . . . . . . . . . . . . . . . 458

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CONTENTS
LESSON 14 - MONITORING AND CONTROLLING PROJECT RISKS AND
PROCUREMENTS
A. Monitor and Control Project Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
The Monitor and Control Risks Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
Monitor and Control Risks Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
Monitor and Control Risks Tools and Techniques . . . . . . . . . . . . . . . . . . . 467
Monitor and Control Risks Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467
The Project Risk Response Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468
B. Administer Project Procurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472
The Administer Procurements Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472
Administer Procurements Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472
Administer Procurements Tools and Techniques . . . . . . . . . . . . . . . . . . . 473
Administer Procurements Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474
The Duties of the Procurements Administrator . . . . . . . . . . . . . . . . . . . . . 475
Changes to Contract Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476
Legal Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476
Types of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477
Types of Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477
Breaches of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477

LESSON 15 - CLOSING THE PROJECT


A. Close Project Procurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486
The Close Procurements Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486
Close Procurements Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486
Close Procurements Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . . . 487
Close Procurements Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487
Procurement Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488
Elements of Procurement Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489
Procurement Audit Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490

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CONTENTS
B. Close the Project or Phase Administratively . . . . . . . . . . . . . . . . . . . . . . . . . 493
The Close Project or Phase Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
Close Project or Phase Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
Close Project or Phase Tools and Techniques . . . . . . . . . . . . . . . . . . . . . . 494
Close Project or Phase Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Administrative Closure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Project Records to Archive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Lessons Learned Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
Considerations of Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
Closeout Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497

APPENDIX A - PMP CERTIFICATION MAPPING


APPENDIX B - UPDATES TO THE PMBOK FOURTH EDITION GUIDE
LESSON LABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
SOLUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545
INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629

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INTRODUCTION

ABOUT THIS COURSE


If you are taking this course, you probably have some professional exposure to the duties of a
project manager, or you may be considering embarking on a career in professional project
management. Your ability as a project manager to demonstrate best practices in project
managementboth on the job and through professional certicationis becoming the standard
to compete in todays fast-paced and highly technical workplace. In this course, you will apply
the generally recognized practices of project management acknowledged by the Project Management Institute (PMI) to successfully manage projects.
Project management is one of the hottest careers in the world today. Project managers with
proven skills and experience can nd exciting, high-visibility opportunities in a wide range of
elds. This course is specically designed to provide you with the proven, practical body of
project management knowledge and skills that you need to demonstrate project management
mastery on the job. Additionally, this course can be a signicant part of your preparation for
the Project Management Professional (PMP) Certication Exam. The skills and knowledge
you gain in this course will help you avoid making costly mistakes and increase your competitive edge in the project management profession.

Course Description
Target Student
This course is designed for persons who have on the job experience performing project management tasks, whether or not project manager is their formal job role, who are not certied
project management professionals, and who might or might not have received formal project
management training. The course is appropriate for these persons if they wish to develop professionally, increase their project management skills, apply a formalized and standards-based
approach to project management, seek career advancement by moving into a formal project
manager job role, as well as to apply for Project Management Institute, Inc. (PMI) Project
Management Professional (PMP) Certication.

Course Prerequisites
Familiarity with project management concepts and some working experience with project management are required. Experience with a specic project management software tool is not
required.

Microsoft Word Level 1 is required.


Introduction

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INTRODUCTION

Project Management Fundamentals is recommended.

How to Use This Book


As a Learning Guide
Each lesson covers one broad topic or set of related topics. Lessons are arranged in order of
increasing prociency with project management; skills you acquire in one lesson are used and
developed in subsequent lessons. For this reason, you should work through the lessons in
sequence.
We organized each lesson into results-oriented topics. Topics include all the relevant and supporting information you need to master project management, and activities allow you to apply
this information to practical hands-on examples.
You get to try out each new skill on a specially prepared sample le. This saves you typing
time and allows you to concentrate on the skill at hand. Through the use of sample les,
hands-on activities, illustrations that give you feedback at crucial steps, and supporting background information, this book provides you with the foundation and structure to learn project
management quickly and easily.

As a Review Tool
Any method of instruction is only as effective as the time and effort you are willing to invest
in it. In addition, some of the information that you learn in class may not be important to you
immediately, but it may become important later on. For this reason, we encourage you to
spend some time reviewing the topics and activities after the course.

As a Reference
The organization and layout of the book make it easy to use as a learning tool and as an afterclass reference. You can use this book as a rst source for denitions of terms, background
information on given topics, and summaries of procedures.

Course Objectives
In this course, you will apply the generally recognized practices of project management
acknowledged by the Project Management Institute (PMI) to successfully manage projects.
You will:

describe professional project management.

xxiv

initiate a project.

plan project work.

develop project schedules.

develop cost estimates and budgets.

plan project quality, staffing, and communications.

analyze risks and plan risk responses.


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INTRODUCTION

plan project procurements.

execute project work.

manage project procurement.

monitor and control project work.

monitor and control project schedule and costs.

monitor and control project performance and quality.

monitor and control project risks and procurements.

close the project.

Introduction

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LESSON 1

LESSON 1

Lesson Time
2 hour(s), 30 minutes

Examining Professional
Project Management
In this lesson, you will describe professional project management.
You will:

Identify project management processes.

Identify professional and social responsibilities of a project manager.

Identify the interpersonal skills required by a project manager.

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LESSON 1
Introduction
Successfully managing your projects requires effective planning up-front, as well as an adherence to the industrys best practices through every step of the process. By identifying the
project management process groups that are considered standards for excellence, you will be
better prepared to initiate a project in your organization and position it for success. In this lesson, you will identify the effective practice of project management and related project
management processes. You will also identify the guidelines for ethical behavior and professional conduct that are outlined in the Project Management Institute Code of Conduct and
understand the interpersonal skills necessary to complement your project management skills, so
that you will be ready to move forward strategically and with condence.
At this point in your professional development, you are ready to further advance your practice
of project management. You can do this by developing a solid understanding of the eld and
its underlying structure and elements, which include stakeholders and project life cycles. You
want to be able to identify the project management process groups that are recognized
industry-wide as good practice. And as a professional project manager striving for excellence,
you want to be sure that you meet the high standards for ethical behavior and professional
conduct for project managers outlined in the PMI Code of Conduct. Also, having a good
knowledge of interpersonal skills is essential for managers to work efficiently with different
kinds of people in the organization.
The following gure shows the mapping of the project management processes to the project
management process groups and the knowledge areas.

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LESSON 1

Figure 1-1: The project management framework.

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LESSON 1

TOPIC A
Identify Project Management
Processes
Before you can begin planning and managing your project, you need to dene the projects
needs, determine which processes are appropriate, and determine the degree of rigor needed to
meet the project objectives. To do this, you will identify the project management processes that
are generally recognized as good practice on most projects across industry groups and the nine
relevant knowledge areas that the Project Management Institute, or PMI, has identied. In this
topic, you will identify project management processes and the project management process
groups.
Business organizations around the world are using project management as a competitive advantage to achieve corporate strategic objectives. Effective project managers combine their skills
and knowledge with appropriate processes to meet project objectives and deliver results in line
with corporate strategies. By identifying the main elements of effective project management
practice and project management processes, you can enhance the chances of success over a
wide range of projects across application areas and industries.

Projects
Denition:
A project is a temporary work endeavor that creates a unique product, service, or
result. It has a clearly dened beginning and end. The end of a project is reached when
either its objectives are met, the need for the project no longer exists, or it is determined that the objectives cannot be met. Projects can vary widely in terms of budget,
team size, duration, expected outcomes, and industries.
Example: The Intranet Website Creation Project
Consider a project authorized by a rm to create an intranet website that would display
its employee related information. The outcome of the project is the website, and the
duration will depend on the complexity and size of the work involved. The project will
come to an end when the website is posted on the server and is ready for use by
appropriate users.

Subprojects
Denition:
A subproject is an independently manageable component of an existing project. A
project can have multiple subprojects, and they in turn can have even smaller subprojects. Usually, a subproject is given on contract either to an external enterprise or to
another functional unit in an organization.
Example: Subprojects in a Car Project
The project team working on the interior design of a solar powered car decided to subcontract the designing of seats and the air-conditioning system to two individual
external vendors as subprojects.

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LESSON 1
Project Management
Denition:
According to the PMI, project management is dened as the application of knowledge, skills, tools, and techniques to project activities to meet project requirements.
Managing projects typically involves scheduling; identifying requirements; establishing
objectives; balancing quality, scope, time, and cost; and addressing the concerns and
expectations of the stakeholders.
Project management is different from the management of routine, ongoing work initiatives. Projects generally involve temporary initiatives, unique circumstances, and crossfunctional teams. Projects may involve new or specially formed teams taking on new
tasks and attempting unfamiliar skills, processes, or work efforts.
Example: Responsibilities of a Project Manager
In any given project, some of the common responsibilities of a project manager would
include communicating cross-functionally, managing the efforts of people who do not
report directly to them, and delivering the work on time, within the allotted budget and
specications for quality.
PMP Certication
For information about the PMP certication process and examination, visit the PMI
website www.pmi.org and review the Career Development page information. The
process for obtaining PMP credentials requires specic professional experience and
formal training, including completing 35 hours of specic project management education; successfully completing this course fullls that educational requirement.
PMBOK Reference
For more information on project management, refer to the PMBOK Guide, Fourth
Edition 2008, p. 6 and 7. The name PMBOK Guide refers to the book, A Guide to
the Project Management Body of Knowledge, published by the Project Management
Institute, Inc. The PMBOK Guide is considered the denitive text for information
about the practice of project management. Element K is a Registered Education Provider (REP) for the PMP certication examination.
Linear Presentation
Although project management is an iterative, cyclical process in real life, it is necessarily presented in a linear manner throughout this course.

Programs
Denition:
A program is a group of related projects that have a common objective. It offers great
control over the constituent projects and delivers benets that the organization can use
to meet its goals. A program is managed by a program manager, and the individual
projects are managed by project managers who work for the program manager. However, all projects need not always be a part of programs. Projects that do not have a
common objective, but still are managed in a group, are generally known as multiple
projects.

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LESSON 1
Example: A Retail Chain Expansion Program
A retailing company launched a new program that aims at expanding a retail chain.
This expansion program consists of many projects, such as market research to establish
demand, construction of new stores, franchise selection, designing the marketing campaign, and consolidation of customer base by establishing loyalty programs.

Portfolios
Denition:
A portfolio is a collection of projects, programs, and other operational work to achieve
the strategic business objectives of an organization. The projects in a portfolio may or
may not be interdependent, but they are grouped to give management a broader view
of the organizations projects and their adherence to organizational objectives. For a
project to be part of a portfolio, its attributes such as cost, resource requirements,
timelines, strategic goals, and benets should be in line with other projects in the portfolio. Portfolios are generally managed by a senior manager or senior management
teams.

Figure 1-2: A portfolio and its contents.


Example: A Company Portfolio
An alternate energy producing company designed a breakthrough technology capitalizing on solar energy. The companys strategy is to exploit the technical know-how in all
possible areas to generate revenue and become a trendsetter. It initiated a portfolio that
contains various programs and independent projects to identify the potential use of this
technology in power generation, transportation, and domestic and industrial markets.
The portfolio also included other operational work such as administration and logistics
related activities. It was essential for the company to ensure that these operational
works continuously support the projects and programs.
Programs vs. Portfolios
Program management includes related and interdependent projects, which is different
from a portfolio, which may collect several otherwise unrelated projects if they all support major goals or a signicant product line.

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LESSON 1
Operations
Denition:
Operations are ongoing and repetitive tasks that produce the same outcome every time
they are performed. The purpose of operations is to carry out day-to-day organizational
functions, generate income to sustain the business, and increase the value of organizational assets. Operational processes are aligned with the business requirements of the
organization. Therefore, when organizations update or adopt new objectives based on
organizational needs, customer requirements, or market demand, these processes are
continuously revised to accommodate the changes. Such process revisions can be considered to be an internal project.
Example: Operations in a Petrochemical Industry
One of the major petrochemical companies has set up a new renery to meet its
increasing market demand. The company plans to break-even in three years by achieving the desired volume of output from its new plant. Once the new plant is set up, the
operations to be carried out in the new branch include daily production, routine maintenance of the plant, wages and salary credits to employees, purchase of raw materials,
grievance handling, logistics, and supply of nished products to the market.

Project Management Office (PMO)


Denition:
A Project Management Offce (PMO) is a centralized, permanent, ongoing administrative unit or department that serves to improve project management performance within
an organization. The people in the PMO provide support on project management concepts, tools, training, and mentoring to project managers; they may or may not actually
do hands-on project management themselves. The PMO will try to maintain standards
across projects and improve efficiency. It has the authority to make key decisions in
the projects. In some organizations, the project managers are provided or assigned by
the PMO.
PMOs function differently in different organizations, depending on the business needs.
Unlike programs, the projects supported by the PMO may not be related to each other.
The structure and function of the PMO depends upon the respective organizational
requirements. The PMO may be referred to in some organizations as the project
office, program office, central project office, project management center of excellence, or program management office.
Some organizations may have PMOs that are exclusively assigned to handle large
projects and programs. These PMOs are sometimes called Autonomous Project Teams
(APT).
Some of the primary functions of the PMO include:

Maintaining project historical information.

Managing shared resources across projects managed by the PMO.

Monitoring project timelines, budget, and quality at an enterprise level.

Identifying and implementing new project management methodologies.

Creating effective project policies and templates.

Helping project managers develop estimates and schedules.

Managing communication across projects.

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LESSON 1
Example: A Newspaper PMO
A regional newspaper chain identied a business need to decrease editorial costs on
special issues and features in all its editions. Every project manager at the chain was
operating independently, developing individual solutions to problems, and hiring writers and photographers to produce local articles that would be published only once. The
project managers came out with new processes and economies of scale, such as buying
inexpensive, generic articles from a wire service and publishing them in all editions
simultaneously. The PMO in this case introduced standardized processes for calculating, leveling, loading, and developing project budgets and also helped the project
managers with updating the project schedules. The PMO also planned for developing
project data references and organized a best practices sharing session every month.

Project Stakeholders
Denition:
A project stakeholder is a person who has a business interest in the outcome of a
project or who is actively involved in its work. Stakeholders take on various roles and
responsibilities; their participation in the project will have an impact on its outcome
and its chances for success.
Stakeholders may have competing interests, needs, priorities, and opinions. They may
have conicting visions for the projects successful outcome. Project managers must
identify the internal as well as external stakeholders as early as possible, learn what
their needs are, and secure their participation in dening the projects parameters and
success criteria. While it may be difficult to negotiate to a consensus early in the
project, it is far less painful and costly than getting to the end of the project only to
learn that someones needs were not met or were misunderstood.
Example: Project Stakeholders Involved in the New Stadium Project
The New York Yankees baseball organization broke ground on a proposed $800 million Bronx stadium in 2006. Stakeholders for this project included the staff,
management, and owners of the New York Yankees; Major League Baseball; local
chambers of commerce; local and statewide elected officials; the engineers, architects,
and construction workers employed by the project; and fans. New York City budgeted
an additional $1 million to train another group of stakeholders, the local residents, to
deal with the effects of the massive construction project.

Types of Project Stakeholders


Project stakeholders can be of different types.

Project Stakeholder

Description

Customers/users

The customers/users may be multiple individuals or companies with


varying requirements and specications. Some of their responsibilities
include:
Dening the needs for the project output.
Taking the delivery of the project output.
Paying for the project output.

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LESSON 1
Project Stakeholder

Description

Sponsor

Sponsors may be individuals or groups that provide nancial assistance to the project. If the sponsor is outside of the company, such as
a customer, the duties listed here may be the responsibility of the
project manager:
Has the nancial resources for the project.
Signs and publishes the project charter.

Portfolio managers/portfolio
review board

Has ultimate responsibility for project success.


Signs off on all planning documents and change requests.
Authorizes team to use resources.
Champions and supports the project manager and team.
Reviews progress and quality.
Cuts through red tape and expedites activities.

Portfolio managers or the executives in the portfolio review board are


a part of the project selection committees and belong to the high-level
project governance side of the organization. Their review considerations may include:
Gauging the Return on Investment (ROI) of the project.
Identifying the value of the project.
Analyzing the risks involved in taking up the project.
Identifying the factors that may inuence the project.

Program managers

Program managers in coordination with the project managers manage


related projects in a program to obtain maximum benets. They also
provide guidance and support to every individual project.

Project Management Office


(PMO)

A PMO is an administrative unit that supervises and coordinates the


management of all projects in an organization. It focuses on providing:
Administrative support services, which include processes, methodologies, policies, standards, and templates.
Training and mentoring support to project managers and project
team members.
Support and guidance in managing projects and usage of tools.
Support for resource allocation.
Assistance in better communication among project managers, sponsors, and other stakeholders.

Project managers

Project managers are individuals responsible for managing all aspects


of the project. The project manager:
Works with stakeholders to dene the project.
Plans, schedules, and budgets project activities with team input.

Works with the team to carry out project plans.


Monitors performance and takes corrective action.
Identies, monitors, and mitigates risks.
Keeps the sponsor and the stakeholders informed.
Requests and documents scope changes.
Provides timely report on project metrics.
Acts as a liaison between the project team and other stakeholders.

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LESSON 1
Project Stakeholder

Description

Project management team

The project team members who perform project management activities.

Project team

The project team comprises the project manager, project management


team, and other individual team members. The individual team members perform project work and might not be involved in the
management side of the project. The project team contains people
from different groups who possess knowledge on specic subjects or
have unique skill sets to carry out project work.

Functional managers

Functional managers are individuals who are a part of the management in the administrative or functional side, such as human
resources, nances, accounting, or even procurement of the business
in the organization. They sometimes act as subject matter experts or
may provide services needed for the project.

Operations managers

Operations managers manage the core business areas such as the


design, manufacturing, provisioning, testing, research and development, or maintenance side of the organization. Some of their
functions include:
Directly managing the production and maintenance of the nal
products and services that the organization provides.
Handing off technical project documentation and other records to
the operations management group upon project completion.

Sellers and business partners

Sellers are external parties who enter into a contractual agreement


with the organization and provide components or services needed for
the project. In the same way, business partners are external to the
company and provide specialized support in tasks such as installation,
customization, training, or support.

Types of Stakeholders Involved in the New Stadium Project


In the previous example of the New York Yankees new stadium project, there were
several types of stakeholders. The New York Yankees owners were sponsors; Major
League Baseball, the local chambers of commerce, and local and statewide elected
officials were the customers; the engineers, architects, and construction workers
employed by the project were project team members.
Positive and Negative Stakeholders
Positive stakeholders usually benet from the successful outcome of a project, while
the negative stakeholders are keen on the negative outcome of a successful project. A
good example of positive stakeholders is business leaders from a community who benet from an industrial expansion project because it involves economic growth for the
community. The negative stakeholders in this scenario will be the environmental
groups who are more concerned about the environment, and will consider the project
as harmful to the environment.
Furthermore, the positive stakeholders can go to the extent of getting the needed permits to proceed with the project because they are more interested in the projects
success. But, the negative stakeholders can block the progress of the project by
demanding more environmental reviews.

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LESSON 1
The Role of a Project Manager
Project managers are responsible for meeting project objectives and their job role is
different from that of a functional or operations manager. Based on the organizational
structure, a project manager may report to a portfolio or program manager. The project
manager works in tandem with his or her manager to meet the project objectives and
ensure that the project plan is in alignment with the overall program plan.
A project manager should have the following characteristics.

Knowledge: Having a good knowledge of project management.

Performance: Performing well in projects through the application of the knowledge of project management practices.

Personal effectiveness: Including the project managers attitude, personality, and


leadership skills.

The Project Life Cycle


Projects are typically broken down into manageable, sequential phases of work activities.
These project phases, taken together, are referred to as the project life cycle. A project life
cycle may have four or ve phases, which can vary because the life cycle is customized to
meet the needs of specic projects.
The project life cycle is marked by the beginning and end of the project. At the start-up, the
projects general scope and timing are determined. In the next phase, detailed planning occurs
followed by another phase of actual project work activities. In the nal phase, project-closing
activities occur.

Figure 1-3: The project life cycle.


Product vs. Project Life Cycle Relationships
Product development typically takes place in several stages, which include introduction, growth, maturity, and decline. These stages constitute the product life cycle.
A product life cycle contains product phases that are determined based on the manufacturing and control needs of the organization. In this life cycle, product phase-out
generally happens at the last phase. Normally, a project life cycle is included within
one or more product life cycles. So it is important to differentiate the project life cycle
from that of a product. If a project produces a service or result as its outcome, then it

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LESSON 1
will have a project life cycle and not a product life cycle. But if the outcome is a
product, then it may have many possible relationships to the project life cycle. For
example, developing a new product can be a project by itself, or if an existing product
has new functions or features, then developing a new model of the product can be a
project of its own.
There are many facets to a product life cycle that can run as projects. Some of the
examples include conducting market research, performing a feasibility study, running
an ad campaign, and installing a product. In these cases, a product will have many
projects associated with it and the product gains only when they are handled collectively.

General Characteristics of a Project Life Cycle


Though projects differ in nature, size, and complexity, they display certain common characteristics. At the beginning of the project, the cost and staffing levels are quite low. They reach the
peak once the work is carried out and drop rapidly upon project completion. The inuences,
uncertainties, and risks involved with stakeholders are high at the project start and diminish
over the life of the project.
Likewise, the ability to inuence the characteristic of the nal product, without impacting the
project cost, is high during the initial phases of a project and is lower towards project completion.

Figure 1-4: The variance of project cost and stakeholder influence, risk, and uncertainty based on project time.

Project Governance
Project governance is a comprehensive methodology to control a project and ensure its success. It is carried throughout the life cycle of a project and provides guidance in the form of
project phase reviews to monitor and control the project. Every phase in the project is formally
initiated to decide on the deliverables expected out of that phase. A management review is performed at the start of every phase to decide whether to begin the activities of a particular
phase. This assumes signicance in cases where the activities of the prior phase are not yet
complete.

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LESSON 1
Governance Activities in the Project Life Cycle
At the beginning of each phase, it is a good practice to verify and validate the former assumptions made to the project, analyze risks, and explain in detail the processes required to achieve
a phases deliverables. After the key deliverables of a particular phase are produced, a phaseend review is necessary to ensure completeness and acceptance. Even though this method
signies the start of the subsequent phase, a phase can be closed or the project terminated
when huge risks are involved for the project or when the objectives are no longer required.

Phase-to-Phase Relationships in a Project


Projects that are multi-phased generally follow a sequential process that ensures greater control
over the project and aids in achieving the desired product, service, or result. There are three
types of phase-to-phase relationships: sequential, overlapping, and iterative. Sometimes, multiphased projects will have more than one phase-to-phase relationship occurring during the life
cycle of a project. In such cases, factors such as the level of control, effectiveness, and the
degree of uncertainty decide the relationship that can be applied between phases. Based on
these factors, all three types of relationships can be applied between different phases of a
project.
Each of the phase-to-phase relationships has specic characteristics.

Relationship Type

Description

Sequential

This type of relationship:


Contains consecutive phases.
Starts only when the previous phase is complete.
Reduces the level of uncertainty, which may eliminate the option for
shortening the schedule.

Overlapping

This type of relationship:


Contains phases that start prior to the completion of its preceding
phase.
Increases the level of risk and can cause rework if the subsequent
phase begins before it receives accurate information from the previous
phase.

Iterative

This type of relationship:


Includes one phase at a time that will be planned and carried out.
Requires planning for the next phase as the work in the current phase
progresses.
Is largely helpful in environments that are quite uncertain and undened.
Reduces the chances for long term planning.
Helps in minimizing project risk and maximizing the business value of
the product.
Is an extension or corollary of the overlapping relationship, but in this
case the same phase repeats itself multiple timesonce in every iteration.

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LESSON 1
Progressive Elaboration
The phases of the project life cycle are arranged to allow for progressive elaboration, in which
successive layers of detail are added to the plans as the project progresses. Usually, the
sequence of the phases dened by most project life cycles involves some type of handoff or
deliverable. Most often, deliverables from one phase are approved before work begins on the
next phase. For example, design specications are approved and handed off before the design
phase begins. However, a subsequent phase may begin before approval is gained on the
deliverables of a previous phase if the risks are considered acceptable. It helps the project
management team plan work to a greater level of detail as the project progresses.
According to PMI, Progressive detailing of the project management plan is often called rolling wave planning.

Figure 1-5: Detail is added to plans in progressive elaboration.

Organizational Cultures and Styles


Projects are greatly inuenced by the various cultures followed by the organizations. Some of
the factors that form a part of organizational culture are policies, values, management styles,
and work environment.

14

Factor

Description

Policies

The organizational policies and procedures inuence the projects the company undertakes. For example, the organizational procedures will determine
how to implement new strategies and if the work environs will be formal or
informal.

Values

The values, beliefs, and expectations of an organization have a major impact


on the organizational culture. For example, the organizations strategic
decision-making choices, preferences, and approach will vary based on its
values and beliefs.

Management style

The management style of the organization is another factor that affects the
organizational culture. For example, factors, such as managers following a
coaching style of management or controlling style of management, the
employees being allowed to give feedback, and the implementation of their
feedback, are all dependent upon the different styles followed by management.

Work environment

The work ethics followed by the organization also constitute the organizational culture. For example, some organizations may allow employees to
work anytime from 7:00 AM to 7:00 PM, and some others may want them
to work strictly from 8:00 AM to 5:00 PM and work late nights if their
workload is high.

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LESSON 1
Organizational Cultures Inuence on Projects
Several aspects of projects are inuenced by the organizational culture.

Project Aspect

Description

Project policies and procedures

The project policies and procedures should reect that of the organizations as they are interdependent.

Project selection

The criteria for the selection of projects are determined by the organizational culture. For example, a competitive, ambitious, and assertive
organization will select projects with high risks while a highly rigid
and authoritarian organization might not take projects with high risks.

Project management style

The project manager should adapt to the management style of an organization. For example, a project manager cannot follow a permissive
management style in an autocratic organization where all decisions are
made unilaterally.

Team performance assessments

A project manager should adhere to a companys policies when assessing the performance of a team. For example, an employee should not
be promoted to the next level unless he or she meets all the standards
set by the organization.

Project Management Processes


A process is a sequence of activities designed to bring about a specic result in response to a
business need. Project management processes are all the activities that underlie the effective
practice of project management; they include all the phases of initiating, planning, executing,
monitoring and controlling, and closing a project. Project management processes may produce
project deliverables, such as schedules and performance reports, or product deliverables, such
as software interface specications or a buildings foundation.
Project management processes are recognized within the profession as good practice; applying
them appropriately improves the chances of success on nearly any project. Since not every
process takes place on every project, determining which processes are appropriate for a given
project is referred to as tailoring. The project manager and the project team are responsible for
tailoring the applicable processes to meet the needs of a specic project or phase.

Figure 1-6: The project management processes.

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LESSON 1
Project Management Inputs, Tools and
Techniques, and Outputs
Project management processes are implemented through inputs, tools and techniques, and outputs. Inputs are the information and data that project managers draw on, create, or gather to
guide their work for a specic process to achieve project goals; inputs can be new information
or information that has been derived during the course of the project. Tools and techniques are
the methods, templates, or approaches that project managers employ within a particular process, using a combination of inputs, to achieve stated goals. Outputs are the end results and
deliverables achieved during project management processes and can become inputs into subsequent processes.

Figure 1-7: The relationship between project management inputs, tools and techniques, and outputs.

Project Management Process Groups


Project management processes are organized into ve groups.

Process Group

Description

Initiating

Initiating processes involve dening the need for a new project or the
new phase of an existing project, and obtaining a commitment to move
forward.

Planning

Planning processes are used to create the project scope, rene objectives,
and develop a strategy to accomplish the work in the project or phase.

Executing

Executing processes involve carrying out the work mentioned in the


project management plan in order to meet project specications.

Monitoring and controlling

Monitoring and controlling processes include regular monitoring of


project performance and track progress that was made in the project or
phase. They also include changes that are to be made to the plan when
required and make corrective actions needed to get back on track.

Closing

Closing processes involve nalizing the project activities, handing off the
project or phase output, gaining formal acceptance, tying up administrative and contractual loose ends, and nally closing the project or phase.

Project Management Process Group Interactions


Outputs from one project management process become inputs to others. Feedback loops are
built in, particularly between the planning, executing, and monitoring and controlling process
groups. Project management process groups interact with each other; they are not discrete, onetime events. Processes repeatedly overlap throughout the project life cycle.

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LESSON 1

Figure 1-8: The process group interactions.


The process groups are not phases and would usually be repeated for each subproject or phase.
Typically, once a project is initiated, you move into the planning processes where you develop
a project management plan. From there, you start executing the plan and controlling and monitoring work results in the executing and monitoring and controlling processes. The work results
your team generates may indicate a need for modications to the project schedule, budget, or
scope statement, which requires more planning. The loop continues between planning, executing, and monitoring and controlling until the projects objectives are completely and
satisfactorily met. Then, you move into the closing process group.

Knowledge Areas
Each of the nine knowledge areas is an identied area of project management described in
terms of its component processes and dened by its knowledge requirements.

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Figure 1-9: Overview of project management knowledge areas and project management processes.

Knowledge Area

Description

Project integration management

Ensures that the various elements of the project are properly


coordinated.

Project scope management

Ensures that the project includes all the work required, and only
the work required, to successfully complete the project.

Project time management

Ensures timely completion of the project.

Project cost management

Ensures that the project is completed within the approved budget.

Project quality management

Ensures that the project will satisfy the needs for which it was
undertaken.

Project human resource management

Ensures the most effective use of project team members.

Project communications management Ensures timely and appropriate generation, collection and dissemination, storage, retrieval, and ultimate disposition of project
information.
Project risk management

Identify, analyze, and respond to project risks.

Project procurement management

Ensures the purchase or acquisition of the products, services, or


results needed to perform project work external to the project
team.

At this point, this is just an overview of the component processes. As you proceed through this course, you will
examine in detail each of the nine project management knowledge areas and their component processes.

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LESSON 1
Enterprise Environmental Factors
Enterprise environmental factors are the internal or external factors that can have a positive or
negative inuence on the project outcome. These factors can either support or limit the project
management options and act as inputs for planning processes. Examples of enterprise environmental factors may include organizational culture, the human resources pool, marketplace
conditions, stakeholder risk tolerances, political situations, and project management information
systems.

Organizational Process Assets


Organizational process assets are any asset that can be used to inuence the success of a
project. Policies, procedures, guidelines, formal and informal plans, lessons learned documents,
and even historical information come under the organizational process assets. They may also
include completed schedules, earned value data, and risk data. Any updates to the organizational process assets are handled by the project team members.
Organizational process assets can be classied into two categories.

Category

Description

Processes and procedures

These are the processes and procedures the organization uses for
performing project related tasks. Examples may include:
Policies, product and project life cycles, and quality policies
and procedures.
Standard guidelines, proposal evaluation criteria, work instructions, and performance measurement criteria.
Templates such as work breakdown structures, project schedule network diagrams, and contract templates.
Tailored guidelines and criteria for organizational processes
that will satisfy specic project needs.
Organizational communication requirements and project closure guidelines.

Corporate knowledge base

This is a corporate knowledge repository for storing and retrieving information. Examples may include:
Process measurement databases that provide measurement data
on processes and products.
Project les such as scope, cost, schedule, and quality
baselines; performance measurement baselines; project calendars; and risk registers.
Lessons learned knowledge bases and historical information.
Issue and defect management databases.
Conguration management knowledge bases.
Financial databases.

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LESSON 1

ACTIVITY 1-1
Identifying Project Management Processes
Before You Begin:
From the C:\085042Data\Examining Professional Project Management folder, open the OGC
Business Transformation Scenario Overview document and the Project Management Framework
image.
Scenario:
You are a project manager for Our Global Company (OGC), a large office products provider.
You are one of 10 project managers within your organization that will be involved in implementing a business transformation strategic plan that calls for acquiring large, successful
competitors in the high-growth, high-population-density metropolitan areas of North America.
The competitors that are identied for acquisition must have a unique, creative business model
that can be integrated into a synergistically superior overall OGC model. It is the development
and roll-out of this business model that is the focus of this program. The plan is backed by
venture capital funds and as such has some very high expectations in highly specied time
frames.
Review the OGC Business Transformation Scenario Overview document before answering the
questions in this activity.
You may also nd it helpful to review the Project Management Framework image before
answering the questions in this activity.

1.

Upon review of the document, at which point in the project management process are
you?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling
e) Closing

2.

20

Match each stakeholder with the appropriate responsibility.

Sponsors

a.

Customers/users

b.

Project managers
Project team

c.
d.

Operations managers

e.

The PMO

f.

Supervises and coordinates the management of all projects in an


organization.
Performs project work and might not
be involved in the management side
of the project.
Denes needs for the project output.
Keeps the sponsor and the stakeholders informed.
Signs and publishes the project charter.
Manages the core business area of the
organization.

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LESSON 1
3.

Based on the OGC Business Transformation Scenario Overview document, who are the
appropriate stakeholders for the Business Transformation program? Choose all that
apply.
a) Senior executives
b) Venture capital principals
c) CEOs and CFOs
d) Program IT staff
e) OGC travel

4.

Which project management process will you apply to refine program objectives and
the courses of action the project team will take to meet program objectives?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling
e) Closing

5.

Which project management process group will you apply to regularly measure progress
and identify variances from the project management plan?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling
e) Closing

6.

Which project management process group will you apply to integrate people and other
resources to fulfill the project management plan for the program?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling
e) Closing

7.

True or False? OGC follows an overlapping phase-to-phase relationship in the current


program.
True
False

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LESSON 1

ACTIVITY 1-2
Identifying Programs, Portfolios, and Operations
Scenario:
In preparation for the Business Transformation, OGC funded and launched an Enterprise
Project Management Office (PMO). Over the past two years, you have managed several successful, high-prole, concurrent projects within OGC and you have been selected along with
several other project managers to be included in the PMO. The PMO charter is to:

Assess the project management capabilities of the organization.

Facilitate and manage the many projects that would become necessary for the
Business Transformation to be successful.

Facilitate the project prioritization of all projects greater than $10,000.

Audit projects for compliance to project management processes and metrics.

Ensure that all of the projects included in the portfolio are aligned with the business strategic objectives and priorities.

Since you have never been involved in a PMO, you have decided to take some time to better
understand what is involved.

1.

Which statement is not a responsibility of a PMO?


a) To plan and execute projects and subprojects based on the overall business objectives.
b) To primarily approve and reject projects that do not support business goals.
c) To audit projects for compliance to project management processes and metrics.
d) To ensure that all of the projects included in the portfolio are aligned with the business strategic objectives and priorities.

2.

Who provides the software, templates, and standardized policies for a project?
a) Stakeholders
b) Human resources
c) Project Management Office (PMO)
d) Project budget

3.

True or False? Based on the scenario, OGC is using specific criteria to determine which
projects will be included in the portfolio.
True
False

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LESSON 1
4.

Which statement best describes a program?


a) A set of repetitive ongoing tasks.
b) A set of related projects that have a common objective.
c) A collection of projects that are grouped to achieve the strategic business objectives
of an organization.
d) A temporary endeavor that is undertaken to create a unique product, service, or
result.

5.

Which tasks produce the same outcome every time they are performed?
a) Programs
b) Projects
c) Portfolios
d) Operations

TOPIC B
Identify Professional and Social
Responsibilities
As you advance in your development as a project manager, you need to make sure that you are
familiar with and maintain compliance with the PMI Code of Ethics and Professional Conduct
and its comprehensive guidelines. Developing a sound understanding of the Code of Ethics and
Professional Conduct and using it as the basis for all your interactions will help you move forward with condence, always adhering to the highest standards of excellence, whether you are
interacting with the public, with your customers, or within your own organization. In this
topic, you will identify the elements of the PMI Code of Ethics and Professional Conduct as
well as how the Code relates to the everyday practice of project management.
As a project manager striving to achieve new levels of excellence, you want to build your
reputation as a professional with high standards for ethical behavior. You want to be able to
make appropriate, ethical decisions about interacting with customers, and you want to represent
yourself and your services fairly and accurately. By recognizing and following the guidelines
set forth in the PMI Code of Ethics and Professional Conduct, you will ensure that you are
acting professionally, ethically, and appropriately in all your business dealings.

The PMI Code of Ethics and Professional Conduct


The PMI Code of Ethics and Professional Conduct provides a framework for ethical behavior
and professional conduct by project management professionals. These guidelines relate to your
practice of project management both within the profession and beyond, in your interactions
with customers and the public. The purpose of the code is to instill condence in the project
management profession and to help an individual become a better practitioner. The code relates
to values considered most important to the global project management community: responsibility, respect, fairness, and honesty.

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LESSON 1
Even though the PMBOK Guide refers to the PMI Code of Ethics and Professional Conduct, it will not receive a
grade as an individual category in the examination.

More Information on the PMI Code of Ethics and Professional Conduct


To view the Code of Ethics and Professional Conduct document, navigate to the
C:\085042Data\Examining Professional Project Management folder.

Upholding Responsibilities to the Profession


Responsibilities to the profession include compliance with all applicable laws as well as organizational rules and policies.
Guidelines:
To uphold responsibilities to the profession, consider the following guidelines:

Take ownership for the decisions we make or fail to make, the actions we take or
fail to take, and the consequences that result.

Accept only those assignments that are consistent with our background, experience, skills, and qualications.

Fulll the commitments that we undertake; do what we say we will do.

Protect any proprietary or condential information that has been entrusted to us.
Report possible violations of the PMI Code of Ethics and Professional Conduct by
individuals in the eld of project management, and cooperate with PMI concerning ethics violations and the collection of related information.

Disclose to clients, customers, owners, or contractors, signicant circumstances


that could be construed as a conict of interest or an appearance of impropriety.

Behave in a truthful and ethical manner. This includes complying with all applicable laws, regulations, and ethical standards governing professional practice,
respecting the intellectual property developed or owned by others, and providing
truthful advertising concerning your qualications and services.

Example: Responsibilities to the Profession


David was a project manager supervising the expansion of a large municipal public
library. Stakeholders in this project included government agencies, taxpayers, the voters who had voted to authorize the city to issue bonds for the project, and private
donors who had contributed more than $5 million towards costs.
Several non-certied project managers were working on Davids team. David not only
had to accurately represent his own credentials and qualications when working with
project stakeholders, but also to behave ethically when mentoring his proteges. When
they asked him for special tutoring and exam tips, David said no. Although he wanted
to see the less-experienced project managers on his team achieve certication status, he
could not breach the condentiality of the PMP exams by offering them inappropriate
coaching or advice.
David also had to concern himself with even the appearance of impropriety. He had to
make sure that none of the private donors accrued inappropriate benets by making
contributions to the building campaign. He maintained transparency with the project
schedule and its books, keeping them open for inspection, so that all the stakeholders
could monitor the work that was being done and how funds were being spent.

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LESSON 1
Upholding Responsibilities to the Customer and to
the Public
A project managers responsibilities to customers and to the public relate to the ethics of public representations, condentiality, and conicts of interest.
Guidelines:
To uphold your responsibilities to customers and the public, consider the following
guidelines:

Provide truthful representations in all of your advertising, public statements, and


in any of your estimates concerning costs, your services, and your expected
results.

Uphold the policies, rules, regulations, and laws that govern your work, professional, and volunteer activities.

Negotiate in good faith.

Respect the property rights of others.

Respect the condentiality of sensitive information.

Ensure that a conict of interest does not compromise the legitimate interests of a
client or customer, or inuence your professional judgments.

Refrain from offering or accepting inappropriate payments, gifts, or other forms of


compensation for personal gain.

Example: Responsibilities to the Customer and to the Public


Project managers responsibilities to their customers and to the public include projects
that are publicly funded or that have an impact on public safety. When a municipality
hires a project management rm to oversee construction of a public bridge, for
example, the burden of responsibility is on the rm to ensure that contractors are
working within applicable laws.
When the construction costs skyrocketed during the building of a public elementary
school, one proposed solution was to lower costs by employing teams of undocumented workers, in violation of state and federal labor laws. Such failure to uphold
responsibilities to the customers and to the public may leave project managers vulnerable to losses from litigation and damage to reputation.

Adhering to Other Responsibilities


In addition to the Code of Ethics and Professional Conduct, the PMI has identied several
additional professional and social responsibilities for project managers.
Guidelines:
To maintain compliance with additional professional and social responsibilities, consider the following guidelines:

Adhere to appropriate ethical and legal standards. Upholding such standards of


professionalism will contribute to the integrity of the eld and set a positive
example for others to follow.

Advance the eld of project management by contributing ideas and research ndings to the shared body of knowledge. Share professional expertise and experience
to help others increase their skills and competence in the eld.

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LESSON 1

Promote interaction within the project management community by contributing to


a culture of understanding and respect. Share information regarding successes,
challenges, and obstacles overcome in order to help others improve their professional skills.

Demonstrate transparency in the decision-making process.

Earnestly seek to understand the truth. Strive to create an environment in which


others feel safe to tell the truth.

Do not engage in or condone behavior that is designed to deceive others, including but not limited to, making misleading or false statements, stating half-truths,
providing information out of context or withholding information that, if known,
would render your statements as misleading or incomplete.

Example: Other Responsibilities


Hurricane Katrina struck the coastal areas of Louisiana and Mississippi in the United
States in 2005, resulting in more than 1,000 deaths and billions of dollars in property
losses. In response, a group of PMI leaders formed the Project Managers Disaster
Recovery Coalition in a shared effort to provide project management, planning, and
logistics services to devastated areas. The coalitions stated goals were two-fold: to
assist fellow project managers from PMI chapters in stricken areas; and to provide professional services to governments, companies, and organizations in the effort to
rebuild. This is a notable example of project managers adherence to their additional
professional and social responsibilities.

ACTIVITY 1-3
Identifying Professional and Social Responsibilities
Scenario:
As with most project managers, you have more than one project to manage at OGC. You are
one of eight project managers within OGC managing a large, nationwide IT infrastructure
project. The project involves approximately 200 technical staff, many of whom are subcontractors. You are in the 12th month of the 18 month life of the project. To date labor costs have
been about $22 million program-wide, which is within the projects budget. The roll-out of the
new technology is on schedule and the customer is pleased.
You arrive at the address listed for one of the subcontractors in your area and you discover
that there is not an office. You call the subcontractors telephone number and get a voice mail
indicating you will receive a call back within four hours. You attempt to nd the subcontractors technicians in order to get better contact information, but you cannot nd any actual
technicians. You know that the subcontractor has been listed in the projects accounting for
work completed. The no-show rate on-site for technicians, both employees and subcontractors, is about 10%, a phenomenon that has historically introduced a lot of slip in similar
projects controls.
In summary, there are two technicians that are being paid in your area but no one knows who
they are. Because most of this work is done at night in several cities within a large geographical area, it is unusual for project managers to actually meet with every technician. All
subcontracting, time sheet management, and approval for payments are done at the program
level in the corporate office. Further discreet inquiries show that there appears to be two to
three technicians in each of the top ve busiest geographic areas that cannot be found who
account for 5 percent of the $22 million spent to date.
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LESSON 1
1.

Based on the scenario, what unethical behavior has been described?

2.

Within the context of your organization, what steps would you take next and within
what time frame?

3.

What would you expect your manager, the overall program manager, to do next and in
what time frame?

4.

In a general fashion, outline what your organization has in place that might facilitate
the resolution of this problem.

5.

What would you change in your organization to prevent the above scenario from
occurring?

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LESSON 1

TOPIC C
Identify the Interpersonal Skills
Required for a Project Manager
You identied the professional and social responsibilities dened in the PMI Code of Ethics
and Professional Conduct. Adhering to the highest standards of excellence and improving on
your capabilities in project management requires knowledge of the interpersonal skills required
to effectively carry out the role of a project manager. In this topic, you will identify the interpersonal skills required by a project manager.
In any team sport, success depends not only on the ability and skill of the team captain, but
also on how effectively the captain is able to lead, motivate, and guide the team. Similarly, a
project is not a simple task that can be executed by the project manager alone; it involves
everyone right from project stakeholders to individual team members. The role of human relations in deciding the outcome of a project cannot be understated. It is, therefore, essential that
aspiring project managers cultivate and enhance their interpersonal skills to carry out their
responsibilities successfully. Project managers with positive interpersonal skills increase productivity in the organization.

Interpersonal Skills
Interpersonal skills are abilities that an individual should possess to work harmoniously and
efficiently with others. Being in the project management profession, it is important that you
develop a balance of conceptual, technical, and interpersonal skills that will enable you to analyze situations and deal with them appropriately. Some of the important interpersonal skills
critical to effectively manage a project are:

Leadership

Team building

Motivation

Communication

Inuencing

Decision making

Political and cultural awareness

Negotiation

Leadership Skills
Leadership is the capacity of a person to guide and inspire others to achieve results. The ability to lead can be characterized as learning from ones mistakes, building relationships, taking
initiatives, and inspiring others through positive inuence. Characteristics of effective leadership include self-awareness, personal accountability, and personal integrity. These
characteristics are important for a manager to establish rapport, enhance credibility, and gain
others trust.
Though the leadership capabilities of a manager are important throughout all the phases of a
project, it is critical at the beginning of a project or phase where the emphasis will be to communicate the vision and motivate and inspire team members for higher project performance.

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LESSON 1
Leadership Style
Leadership style indicates how a person prefers to interact with others in various situations. They are based on low or high assertiveness and low or high responsiveness. An
understanding of characteristics of leadership styles will help you, as a leader, to assess
the behaviors, feelings, and tendencies that comprise self-awareness.

A four-quadrant approach best represents leadership styles. Many categorizations of


leadership styles are based on the concepts of assertiveness and responsiveness. Of
course, this is not an exact method of determining a leaders personal style, but it is
useful for generalizing how leaders make decisions and interact with other people.
Variations may exist on a situational basis. No one style of leadership works for every
situation, and no one person will always be using the same style in all interactions.
However, knowledge of characteristics of these styles is helpful when considering your
interactions with others.
Assertiveness
Assertiveness refers to the degree of effort that a person puts into inuencing others
and their surroundings. If you interact with others and your surroundings with the
intention of inuencing them, then you may be high in assertiveness. You would seek
to understand, but not necessarily to be understood by others. Conversely, if you
exhibit low assertiveness, then you are most likely not noticing your own inuence on
others and your surroundings. Generally, you may make decisions based on others
analyses and perceptions, rather than your own.
Responsiveness
Responsiveness refers to the degree of effort that a person puts into responding to others and their surroundings. If you put more energy into responding to others and your
surroundings than on completing tasks, you are probably closer to high responsiveness.
If you tend to focus more on tasks than ideas, then you are probably closer to low
responsiveness.

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LESSON 1
Team Building Skills
Team building is an ongoing process of helping the project team work collaboratively, rather
than individually, to achieve a common purpose. Good leadership and team building activities
cultivate a work environment that fosters teamwork, creates a sense of ownership across the
team, helps build mutual trust, facilitates the exchange of high quality information, and enables
sound decision making and effective project control. Good team building skills help you to
handle project related issues as a team without making individual team members accountable
for those issues. It is essential for any manager to develop a good team environment that possesses these qualities.
Certain barriers deter good teamwork. It is the prime duty of a manager to help the team overcome these barriers to perform good teamwork.

Barriers to Teamwork

Description

Withholding information

Team members sometimes do not share their knowledge.


Encourage your team members to share their knowledge and
experience. Holding back information hinders effective problem solving and lowers team effectiveness.

Guarded ideas

If team members feel they will be punished or receive negative reactions from freely sharing their ideas, they will tend
to be very cautious.

Uncontested ideas

Team members may avoid challenging each others ideas.


While this may appear to be a team that is unied, it is more
likely that team members are masking their feelings or are
unwilling to share information. If they challenge each others
ideas, they can discover innovative ways to solve problems.

Ineffective meetings

Meetings need to be well structured to be productive. Provide


opportunities for all members to participate and make decisions.

Unrealistic goals

Team members sometimes set unreachable targets for themselves. Team members need to continually clarify
expectations and control scope creep, which is the tendency
of projects to expand beyond their original bounds.

Unhealthy competition

It can happen that team members compete with each other


instead of working together as a team. Intra-team rivalry can
prevent your team from successfully accomplishing its goals.

Wariness

Team members do not always trust each other. You need to


instill a sense of condence in the abilities of individual team
members and in the ability of the team to overcome problems
together.

Motivation Skills
Motivation skills are imperative for managers to get work done from their project team members and improve team performance. Motivation is what makes a team member want to
accomplish goals with a high level of quality rather than just doing the minimum work
required. A manager should understand that all individuals in the team are unique and have
their own expectations, values, and objectives. Some of the motivation factors that individuals
consider necessary and important are job satisfaction; challenging work; a sense of accomplishment, achievement, and growth; nancial compensation; and rewards and recognitions.
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LESSON 1
Motivational Techniques
Consider a variety of methods of recognizing employees contributions:

Say Thank you.

Ask their advice and give them credit for ideas.

Greet your employees when you see them.

Invite them to coffee or lunch, alone or with members of the team.

Give verbal praise in private, in a team meeting, or in small groups.

Give team members a chance to shine. Allow them the opportunity to speak at a
conference or a meeting.

Allow increased autonomy.

Communicate their achievements to higher level management.

Send employees to seminars or conferences and ask them to report back to the
team.

Give awards and commendations.

Or, make speeches that recognize individual contributions.

Communication Skills
Effective communication is where everyone is kept informed, knows exactly what to do, and
has all of the information to do their jobs. It is essential that a manager is able to clearly
express his or her ideas to others, and that the manager understands what other people are trying to say. The ability to motivate, delegate, organize, solve problems, and obtain information
depends on effective communication. Listening is another important aspect of communication.
By using effective listening techniques, a manager can manage conicts, make appropriate
decisions, and provide suitable solutions.

Inuencing Skills
A manager who possesses inuence can get along well with others and prefers to use persuasion, as opposed to coercion, when interacting with others. The ability to inuence someone is
based on credibility, trust, support, and collaboration. A manager can achieve a level of inuence by demonstrating good listening and responding skills, a sense of humor, and the ability
to express oneself. Inuential managers tend to be sociable and optimistic, and they demonstrate an obvious enthusiasm for their work. Managers who can apply inuence get results
because people want to work with them.

Decision Making Skills


In the business world, you do not often make decisions alone. Major decisions are the result of
collaboration and negotiation, so as a manager you need to establish your credibility in order
to affect the decision making process. You must employ sound decision making skills and
engage in active collaboration. Given the complexity of many business decisions that require
input from multiple sources, you must establish your credibility as a decision maker and learn
to foster critical thinking when interacting with your project team.

Six Phases of Decision Making


Project managers along with the team can use the six-phase model for better decision making.

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LESSON 1
Phase

Involves

Dene the problem

Exploring and clarifying the problem or situation.

Generate solutions or alternatives for


the problem

Brainstorming ideas, solutions, or alternatives for the problem.

Put ideas into action

Evaluating the pros and cons of the discussed alternative and


selecting the best solution for implementation.

Plan for solution action

Contributors acceptance and commitment to make the solution


work.

Plan for solution evaluation

Evaluation, post-implementation audit, and lessons learned.

Evaluate the outcome and process

Evaluating how well the problem was solved and project goals
achieved.

Political and Cultural Awareness Skills


Political skills and cultural awareness are among the managerial skills that should be acquired
to effectively manage projects in an organization. Political environments, internal or external to
the organization, will have a huge impact on a project. The right kind of political awareness
and effective political leadership is therefore necessary to build an environment of trust and
create a win-win atmosphere in the organization.
Cultural differences can either be individual or corporate in nature and may involve both internal and external stakeholders. There might be situations when people working on a project
come from diverse backgrounds and their cultural upbringing and beliefs may differ from each
other. These differences when not understood properly may sometimes impact project progress,
affect the decision making process, and lead to unnecessary stress in the work environment,
which in turn affects project performance. To effectively manage cultural diversity, it is essential to get to know about the individual team members, and communication planning should be
made a mandatory task as part of the overall project plan.
The word politics in this context does not refer to governmental or public politics, but it is the politics of professional relationships.

Negotiation Skills
Negotiation is an approach used by individuals or organizations with mutual or opposite interests to come together to reach a nal agreement. Negotiation is indispensable to project
management and, when done effectively, will contribute to the success of a project. Some of
the skills or behaviors that managers can adapt to negotiate successfully are:

Analyzing the situation.

32

Differentiating the needs and wants of both parties.

Focusing on issues and interests rather than on positions.

Being realistic when making proposals.

Impressing the other party while giving concessions to indicate that you are providing
them something of value.

Ensuring a win-win situation for both parties at the end of the deal.

Communicating in an appropriate manner.

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LESSON 1

ACTIVITY 1-4
Identifying the Interpersonal Skills Required for a Project
Manager
Scenario:
Carl Thompson, a senior manager at OGC, is conducting an interpersonal skills training program for all the managers as part of the management initiative. The training module mainly
focuses on the skills mentioned in the PMBOK Guide. You are one of the project managers
attending the training program. During the training session, the trainer gives you some realtime scenarios and wants you to give an appropriate response based on them.

1.

One of your team members, a shy person, values working quietly on projects and
appreciates an ordered and secure work environment. Which assignment do you think
would be most motivating for this person?
a) An assignment with frequent changes and interruptions.
b) An assignment to lead a new team.
c) An assignment to work on independent research.
d) An assignment to represent the company in the public eye.

2.

You have directed one of your team members to complete a task, and he has tried to
take your directions and work on the project independently. Once the job is completed, you are disappointed to find that it was not done the way you had envisioned
it. As a manager, which response would you consider most appropriate?
a) I guess I did not adequately explain to you what I had in mind. Let me try to explain
it better.
b) I feel very disappointed that you did not do what I specifically asked you to do.
c) If you are not willing to follow my directions exactly, I will find someone who is.
d) I guess if I want something done right, I have to do it myself.

3.

Tom is a manager who maintains an optimistic outlook and lifts employees spirits with
his unique sense of humor. The employees feel that Tom listens to their concerns and
looks out for them in an ever-changing organization. As a result of this, his employees
want to work harder. This results in Toms team having one of the highest productivity
rates in the organization. His employees morale is usually fairly high, and they feel
like they can have fun occasionally on the job. Tom appreciates how much work the
team processes daily. Based on this scenario, what interpersonal skill is Tom displaying?
a) Communications skills
b) Decision making skills
c) Team building skills
d) Influencing skills

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LESSON 1
4.

You are leading a team that is contemplating instituting new work processes to help
improve productivity. Your productivity has fallen off, deadlines are not being met,
and the team members are complaining about a lack of resources as well as being
overworked. The management has blamed the employees work habits and inefficiency, while employees have complained about managements failed leadership and
general myopia. What is the most important decision you will make while tackling your
teams problems?
a) Develop an individual strategy to deal with each problem.
b) Search for an underlying cause of problems.
c) Avoid involving individuals from outside your immediate team.
d) Always assume that the cause of your problem was a major change.

Lesson 1 Follow-up
In this lesson, you discovered that a solid foundation is the essential building block to successfully managing projects. You identied the project management process groups that are
recognized in the trade as good practice on any given project most of the time across industries. You also identied the high standards for ethical behavior and professional conduct that
are outlined in the PMI Code of Conduct, along with the interpersonal skills required for a
project manager. Now you are better prepared to initiate a project in your organization, ensuring that your project starts out right and is positioned for success.

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1.

How do you think that developing the ability to tailor each of the five project management process groups to meet the needs of a specific project or phase will improve your
chances of success?

2.

How do you think that adhering to the guidelines included in the PMI Code of Conduct
will help you navigate difficult interactions within your practice of project management?

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LESSON 2

LESSON 2

Lesson Time
3 hour(s), 15 minutes

Initiating a Project
In this lesson, you will initiate a project.
You will:

Identify how larger-scale project management efforts function within an organization.

Identify factors in the project selection decision-making process.

Prepare a project statement of work.

Create a project charter.

Identify project stakeholders.

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LESSON 2
Introduction
Project management is an integrated endeavor composed of ve interlinked process groups and
their component processes. Initiating is the rst of ve process groups that you will perform
on virtually every project you manage. In this lesson, you will initiate a project, a critical rst
step in laying the foundation for your projects success.
Starting a project is like starting a new job; the more you know about the company, your team
members, and what is expected of you, the more likely you are to hit the ground running and
make a good impression. Ensuring that your project starts out right will save you time and
resources. It will also eliminate the need to backtrack once your project is officially underway.

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LESSON 2

Figure 2-1: The project management framework.

Lesson 2: Initiating a Project

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LESSON 2

TOPIC A
Examine the Project Management
Context
Before you can initiate a project, you need to identify how project management functions
within an organization and how each part of project management relates to the whole. In this
topic, you will identify the coordinated and interdependent efforts of program management,
portfolio management, and operations management, and explore the ways in which they serve
the strategic objectives of the business.
You want to work effectively within the hierarchy of centralized project management efforts,
and to do this you need to be conversant with the project management context: the overlapping
ways in which people use project management inside the workplace.

Program Management
Denition:
Program management is the centralized, coordinated process of managing a program in
accordance with the business strategic objectives. It helps realize benets that cannot
be obtained from managing individual projects. The distinguishing characteristic of
program management is that it requires managers to manage related and interdependent
projects by allocating resources, prioritizing efforts, resolving issues, and maintaining
the related projects alignment with business objectives in an integrated manner.
The following is a real-world example.

Example: NEH Programs


The National Endowment for the Humanities is a government agency that supports
research, education, and public programs in the humanities domain. One large NEH
program, We the People, has a strategic objective of strengthening American history
education. In this case, program management coordinates many interdependent projects
around the country, including museum exhibitions, teachers workshops, and supplementary materials such as the publication of history books.

Portfolio Management
Denition:
Portfolio management is the effective management of programs and independent
projects to achieve strategic goals of an organization. Portfolio management allows
managers a global, top-down view of the health and viability of all the projects in the
group. The projects collected in a portfolio and managed together may or may not be
interdependent, but they are grouped together to give management the long view of the
organizations projects and their adherence to organizational objectives.

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LESSON 2
Example: Managing a Portfolio in an Insurance Company
The senior manager of an insurance companys information management group uses
portfolio management to oversee several unrelated projects, including information technology expenditures, customer relationships, and data warehouse support. Part of this
effort includes making sure that all of the projects included in the portfolio, across the
board, are aligned with the business strategic objectives and priorities.
Levels of Hierarchy
It is unlikely that a project manager would have responsibility for portfolio management, which, in the hierarchy of most organizations, would remain in the hands of the
most senior levels of management. As you strive for greater professional growth and
PMI certication, you should have an understanding that portfolio management
resides at the top level of the organizational hierarchy, and program management
resides between that and individual project management.

Relationships Among Project, Program, and


Portfolio Management
In large organizations, projects are generally managed through programs and portfolios, with
projects at the lowest level, programs in the next level, and portfolios at the top of the hierarchy. The relationships among the project, program, and portfolio are generally cyclical, in that
the information ows from the higher to the lower levels during the initial phases and from
lower to higher levels during later phases.
Portfolios, programs, and projects interact with each other, and this interaction is considered
when initiating a project or program, updating the constituent programs and projects with
changes made to the portfolio, conducting project and program governance, and providing
information to the portfolio or program during the program or project life cycle. The relationships among individual projects and programs and portfolios are interrelated with the strategies
and priorities of the organization. Organizational planning, therefore, focuses on this interrelation and determines the prioritization, directs project funding, and provides support to
constituent projects.
Comparative Overview of Project, Program, and Portfolio Management
The table provides a comparative overview of project, program, and portfolio management.

Characteristic

Project

Program

Portfolio

Scope

Project objective or
scope is dened
when the project
starts and is progressively
elaborated throughout its life cycle.

Program scope is usually comprehensive


and provides signicant benets to
business objectives.

The business scope of


the portfolio changes
with the strategic
organizational goals.

Lesson 2: Initiating a Project

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LESSON 2

40

Characteristic

Project

Program

Portfolio

Change

Project managers
must identify and
implement processes
to manage and control changes in the
projects.

Changes can occur


from both inside and
outside the program.
Program managers are
responsible for managing and controlling
these changes and
guiding the project
managers to manage
project changes.

Changes in the broad


environment are
monitored by the
portfolio managers.

Planning

Project planning
occurs throughout
the project life
cycle. As a project
progresses, highlevel information is
introduced into the
detailed project
plans.

A program plan is
developed during the
initial stages of the
program. Detailed
high-level plans are
created laterat the
component level.

Portfolio managers
manage the required
processes and communication related to
the portfolio.

Management

Project managers
handle or manage
their respective
project teams.

Program managers
provide vision and
overall leadership for
their constituent
projects and also manage program staff.

Portfolio managers
manage the portfolio
management staff.

Success

Success is measured
by the quality of the
product, compliance
to project timelines,
budget, and degree
of customer satisfaction.

Success is measured
by the degree to which
the program attains the
benets, fullls the
needs for which it was
undertaken, and
achieves business
objectives.

Success is measured
in collective performance of all
components in the
portfolio.

Monitoring

Project managers
monitor the production of products or
services that the
project is intended
to produce.

Program managers
monitor the progress
of a programs constituent projects, and
ensure that the program components meet
the overall goals,
schedules, budget, and
the expected program
benets.

Portfolio managers
monitor collective
performance and
value indicators.

Project Management Professional (PMP) Certication - Fourth Edition


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LESSON 2
Operations Management
Denition:
Operations management is the management of resources and processes involved in
producing and delivering products and services. It ensures that business operations are
efficient and effective and that the quality of goods or services produced is optimal.
The operational processes and products are aligned with the business requirements of
the organization. Therefore, the operations manager must ensure that these processes
and products are continuously revised to accommodate the changes made to the business and organizational requirements. Operations management also includes identifying
the best practices and implementing them in the existing processes and systems.
Example: Operations Management in a Petrochemical Company
A petrochemical company has assigned Steven Edwards as the operations manager of
its new renery. Steven has been handling the operations of the new facility since last
month. He has identied the roles and responsibilities required to effectively carry out
the identied operational works and dened the processes and procedures to be followed by each team. He also talked with the operations managers of other plants to
identify the best practices they follow. In addition to this, Steven is also involved in
managing daily production activities; administering routine maintenance of the plant;
handling wage increases; and supervising raw material purchases, grievance-handling,
logistics, and supply of nished products to the market. He also ensures that his work
is in line with the current organizational strategies and procedures.

Project and Operations Management


In an organization, projects and operations complement each other in order to achieve organizational goals and objectives. This is primarily done by splitting the management of activities
into project and operations management. Project management involves planning, organizing,
and managing resources involved in a project and thus ensuring the successful completion of
specic project goals and objectives. Projects are undertaken to meet a specic objective and
are time bound and temporary in nature. On the other hand, operations management involves
managing ongoing endeavors that produce repetitive outputs. Organizations may change their
operations based on any change in the business or organizational objectives.
During the project life cycle, project management and operations management interact at various points such as:

When developing new products, upgrading existing products, or expanding outputs.

When improving the operations or the product development process.

During the closeout phases.

Agile Project Management


Agile project management refers to taking an iterative approach to managing a project throughout its life cycle. It allows the project manager to continually re-evaluate progress,
development, and priorities and make adjustments as needed. It is a uid, dynamic process that
emphasizes face-to-face communication.

Lesson 2: Initiating a Project

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LESSON 2

Figure 2-2: The Agile project management process.

ACTIVITY 2-1
Describing Project Management Context
Scenario:
OGC is a $2 billion company established in the United States. Its annual turnover has been
increasing consistently. There are several programs under the ve portfolios that meet the companys strategy. You are a project manager at OGC and are required to oversee projects from
different programs. Periodically, the senior management reviews the projects and takes action if
it does not meet the strategic goals.

1.

Based on the scenario, who is responsible for portfolio management within the organization?
a) Project managers
b) Project sponsors
c) Stakeholders
d) Senior management

2.

How would you describe portfolio management?

3.

Who is responsible for a group of similar projects?


a) Program manager
b) Project manager
c) Operations manager
d) Portfolio manager

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LESSON 2

TOPIC B
Examine Project Selection
Now that you have a sound understanding of how project management functions within an
organization, you need to identify the ways in which decision makers make critical choices
among competing projects. In this topic, you will identify some of the most signicant components of project selection, which include project selection criteria, project selection methods,
and project selection decision models. You will also explore some of the different approaches
for conducting analyses, such as capital budgeting and feasibility analyses.
In increasingly competitive business environments, there will always be projects competing for
funding, resources, and priority. As a professional project manager, you will typically not be
responsible for selecting the projects that your organization will pursue, but you need to understand the methodologies behind making sound choices about which projects to pursue,
prioritize, and fund, and when. Applying appropriate project management methodology to this
area will increase your chances for success.

Business Requirements
Denition:
Business requirements are the pressing organizational needs or market stimuli that
drive decision-makers to sponsor projects and to prioritize competing projects. They
may also be referred to as problems and opportunities. Business requirements
force management to make critical choices about which projects to authorize, and
when.
Example: Business Forces
Business requirements may include forces such as:

Market demands.

Organizational needs.

Customer requests.

Technological advances.

Legal requirements.

Social needs.

Project Selection Criteria


Denition:
Project selection is the act of choosing a project from among competing proposals.
Project selection criteria are the standards and measurements an organization uses to
select and prioritize projects. The organizations strategic goals provide a source for at
least one dimension of selection criteria. Any project selected should be clearly linked
to one or more strategic goals. Other selection criteria may be qualitative or quantitative. Qualitative criteria deal with the projects t with the organizations capabilities.
Quantitative criteria may specify nancial targets that the project must meet.

Lesson 2: Initiating a Project

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LESSON 2
As a professional project manager, you will typically not be responsible for selecting the projects that
your organization will pursue, but you need to understand the methodologies that decision makers use
when choosing which projects to pursue, prioritize, and fund.

Example: Project Selection Criteria at a Financial Services Organization


A nancial services organization considering a project proposal to integrate their customer and nancial databases may develop the following project selection criteria:

Links to the organizations strategic goal of obtaining a technological advantage


over the competition.

Qualitative criteriaFeasible to produce using only internal resources.

Quantitative criteriaMeet or exceed the dened internal goal of increasing new


sales revenue by 10 percent.

Project Selection Methods


Denition:
Project selection methods are any systematic approaches that decision makers use to
analyze the value of a proposed project. These evaluations may be formal and very
detailed or informal guesstimates, depending on the organization and its needs. Ideally, they should take into account the organizations strategic objectives, as well as
historical information about past successes and failures.
Example: Selecting Projects
A nancial services rm that has the opportunity to implement two new projects but
has resources for only one by the end of a scal year might perform an analysis of the
projected cost, projected duration, and projected nancial benets to prioritize the one
that will give the greater nancial return within a short period of time.

Project Selection Decision Models


A project selection decision model provides a framework for comparing competing project proposals by helping decision makers compare the benets of one project alternative with another.

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Method

Description

Benet measurement models

Analyze the predicted value of the completed projects in different


ways. They may present the value in terms of forecasted revenue,
Return on Investment (ROI), predicted consumer demand in the marketplace, or the Internal Rate of Return (IRR).

Mathematical models

Use different types of mathematical formulas and algorithms to determine the optimal course of action. They may consider variables such
as business constraints, the highest possible prot that could be made
on a project, and the laws and safety regulations that govern business
operations.

Project Management Professional (PMP) Certication - Fourth Edition


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LESSON 2
Project Selection Factors
Project selection can be difficult because each project may present a complex array of
seemingly incomparable selection criteria. Economic and technological considerations
often inuence project selections. In many application environments where ecological,
health, and ethical impacts are increasingly important, often the only way to choose
from many different project alternatives is by relying on unsubstantiated professional
judgment or past experience. To improve the efficiency and effectiveness of the assessment, many organizations use formal decision models to select the appropriate project
to initiate.

Capital Budgeting
Capital budgeting helps senior executives make determinations about when and whether to
make signicant investments in capital expenditures such as new equipment, machinery, and
facilities. Capital budgeting is often used if a project is large or if it is likely to involve the
purchase of xed assets. In these cases, the decision makers may use formal methods such as
payback period, discounted cash ow, and Net Present Value (NPV).

Scoring and Rating Systems


A scoring and rating system is used to nd the best available solution or outcome.

Rating System

Description

Decision tree

In a decision tree model, selection criteria are arranged along the


branches of a tree owchart. The project is evaluated against criterion
#1 on branch #1. If the project meets the criterion, it travels down to
branch #2, where it is evaluated against criterion #2, and so on. If the
project fails to meet any one criterion, it is removed from consideration.

Criteria proling

This is similar to the decision tree in that the project is evaluated


using one criterion at a time. However, in this model the project continues to be considered even if it fails to meet some of the criteria. At
the end of consideration, the project is scored on the number of criteria met. The score is then compared to other projects also under
consideration. The standard format of criteria proling is considered an
unweighted factor model because the same score is assigned to each
criterion in the prole.

Weighted factor

This type of model is similar to criteria proling, but different criteria


may be weighted and factored into the scoring. For example, a project
may get one point for meeting a low-priority criterion and three points
for meeting a high-priority criterion.

Q-sorting

In a Q-sorting model, groups of people rate the relative priority of a


number of projects. The process begins by determining rating criteria.
Each group member is given a deck of cards with a different project
listed on each card. Each group member sorts the deck into high,
medium, and low priority, based on the pre-determined criteria. The
high priority projects are further sorted to identify very high priority
projects. The group compares their high priority project selections.
Any projects they decide to pursue would be chosen from among the
consensus of high priority projects.

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LESSON 2
Rating System

Description

Delphi technique

The Delphi technique allows experts to be located remotely and


remain anonymous, yet still participate in group decision making.
People participating in a Delphi process are given criteria, asked to
rate a project on a zero-to-ten scale, and provide reasons for their ratings. The resulting statistics are fed back to the participants along with
a summary of the groups reasoning. Participants can then revise their
rating based on the group ndings. The process repeats until some predetermined score is reached.

Feasibility Analysis
Denition:
A feasibility analysis gives management the technical and operational data they need to
make a decision about project selection. In many cases, the feasibility analysis is based
on expert judgment about current technological developments, in-house technical capabilities, and historical data relating to previous project phases.
If the feasibility analysis is a formal study, it should include:

Description of the problem that the project is expected to solve.

Summary of relevant historical data about previous project phases.

Summary and evaluation of available technologies that could be used to solve the
problem, including the potential output quality of each.

Evaluation, based on current assessment of the organizations technical capability


and readiness to use each technology.

Estimate of the costs and time to implement each alternative.

Statement of assumptions or constraints used to derive the previous evaluations


and estimates.

Recommendation as to the best alternative to pursue, based on projected cost,


time, and quality.

Statement of project goals and major development milestones.

Example: Feasibility Analysis Performed by a Utility Company


A Canadian utility company produced a feasibility analysis to analyze a proposed
project involving the use of wind turbines to generate renewable electricity and offset
losses incurred from rising oil prices. The data to be analyzed included:

Historical data, such as wind data collected over a year, a wind energy assessment, and a wind speed frequency distribution.

46

Technical data, including an analysis of the anticipated power quality and stability.

Financial and economic data, including detailed information about projected costs,
capital expenditures, and operational and management costs.

A summary of impacts on the environment, sound, wildlife, public safety, and


land use.

A conclusion, which summarized the analysts ndings and made a recommendation regarding the wind turbines feasibility.

Project Management Professional (PMP) Certication - Fourth Edition


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LESSON 2
Cost-Benet Analysis
Denition:
A cost-benet analysis presents a projects estimated costs alongside its predicted benets to help decision makers make informed decisions about project selection. Costbenet analyses may be formal or informal. Although they contain quantitative
information, they are merely forecasted expectations, rather than hard data. It is important to recognize and document any assumptions used to derive the cost and benet
forecasts.
The costs include current operating costs and expected project costs related to the
function under analysis. The benets include quantiable benets, such as increased
sales or reduced costs expected as a result of the project, and intangible benets, such
as enhanced image or brand awareness that can only be described subjectively.
Example: Cost-Benet Analysis for Developing an E-Commerce Capability in a
Retail Firm
The senior management of a large retail rm is considering a proposal for the development and addition of an e-commerce capability on their existing website to increase
revenue. Before committing, management asks each department director to evaluate the
feasibility and provide rough cost estimates. The directors then agree that the project is
indeed feasible given their current capabilities and should cost around $25K.
The VP of Sales and Marketing estimates that the e-commerce site will result in a 5%
increase in sales in the next ve years. Given the companys current threshold of $1
million, the estimated improvement would result in an additional $50K in sales over
the next ve years. With the $25K in upfront costs, the net benet is estimated to be
$25K. The cost-benet analysis results in a rough estimation of the companys net
gain.
Lost Opportunity Costs
Projects 1, 2, and 3 were considered for funding. These projects showed a net prot of
$120K, $350K, and $400K, respectively. The logical decision, with minimal information, is to select project 3. If the project team selects project 3 and does not execute
projects 1 and 2, the team loses the prot that could be gained by executing those
projects. In this example, the team loses $470K because they did not execute those
projects. This is lost opportunity costs.

Lesson 2: Initiating a Project

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LESSON 2

ACTIVITY 2-2
Reviewing Project Selection
Scenario:
So that you can best understand the priorities and focus of the PMO selection process, you are
meeting with OGCs senior management. But before the meeting, you wish to test your knowledge on the standard project selection processes.

1.

2.

Match the rating and scoring system on the left with its description on the right.

Decision tree

a.

Criteria proling

b.

Weighted factor

c.

Q-sorting

d.

Delphi technique

e.

A type of screening system decision


model that uses a branch diagram to
choose among two different alternatives.
A decision model using groups of
people to rate the relative priority of
a number of alternatives.
A group technique that extracts and
summarizes anonymous group input
to choose among various alternatives.
A decision model that applies a multiplier based on importance to each
criterion, which is factored into the
scoring.
A decision model used to evaluate
and score alternatives on each criterion.

Choose the option to which the OGCs project selection criteria should be linked.
a) Their strategic objectives
b) Their cost-benefit analysis
c) Their feasibility analysis
d) Root cause analysis

3.

In OGCs decision-making methodology, there are 10 weighted project criteria that


yield a score which determines the projects priority. One of those criteria is purely
subjective for those times when an emphasis on go-with-your-gut is appropriate. The
resulting statistics are fed back to the participants along with a summary of the
groups reasoning. Participants can then revise their rating using a zero-to-ten scale.
The process repeats until some pre-determined score is reached. Which combination
of scoring and rating systems is being used?
a) Decision tree and weighted factor
b) Decision tree and Q-sorting
c) Weighted factor and Q-sorting
d) Weighted factor and Delphi technique

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LESSON 2
4.

You have moved into the feasibility analysis and cost-benefit analysis of project selection. One project budgeted for $100,000 came out of the selection process. This is the
company-wide training initiative to be implemented for all project managers to adhere
to PMO project management standards and guidelines. The intent of the training is to
ensure that each member of the project management team understands the scope,
time, and costs in managing competing project requirements. The program will include
specific technology training in the use of a software tool that OGC recently purchased
that totaled $20,000 so that managers can create, manage, and track their projects.
Currently only 10% of the project managers are using the software. One senior manager is questioning the need for the budget to be as high as $100,000. What are your
justifications for the allotted budget? What are the benefits?

TOPIC C
Prepare a Project Statement of Work
As a project manager looking for efficiencies and performance improvement in your projects,
you need to plan how to acquire project resources by crafting effective statements of work,
which provide enough detail that internal resources and potential sellers can evaluate their
capability to perform it. In this topic, youll focus on creating an effective statement of work.
Effective project management requires you to reduce costs, avoid rework, and streamline
efforts when possible. An effective statement of work describes the work being sought in sufficient detail so that potential sellers and internal resources can evaluate their capability to
perform it appropriately. This saves time, effort, and money, and increases your projects
chances for meeting the requirements of the business.

Project Statements of Work (SOW)


Denition:
A Project Statement of Work (SOW) is a document that describes the products or services that the project will supply, denes the business need that it is designed to meet,
and species the work that will be done during the project.

Lesson 2: Initiating a Project

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LESSON 2
Example: A Project Statement of Work

Figure 2-3: Project statement of work for the OGC PM Training Roll-Out
project.
Internal or External SOW
A SOW may be internal, supplied by the projects sponsor in response to an organizational need, or external, supplied by a potential client during a bidding process. An
external project SOW could be included with a request for a proposal or as part of a
contract.

How to Prepare a Project Statement of Work


An effective statement of work describes the work being procured in sufficient detail so that
internal resources and potential sellers can evaluate their capability to perform this work. In
addition, the SOW will serve as a basis for developing the procurement documents during the
solicitation process.
Guidelines:
To prepare an effective statement of work, follow these guidelines:

Review the product description to ensure that you fully understand the scope of
the work being procured.

Consult technical experts to dene specications clearly, concisely, and completely.


In some cases, inputs for creating a SOW will be given either by clients or vendors based on
business requirements.

Determine appropriate SOW format.

If your organization has a preferred or mandated SOW format, be sure to use


it and comply with any standards and policies regarding content.

If there is no standard SOW format for your organization, you may be able
to modify a SOW from a previous, similar project.

Present the information in a logical sequence.

Use consistent terminology and level of detail throughout the SOW.

Determine if any collateral services are required from a seller external to the organization as a part of the contract.

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What are the sellers performance reporting requirements?


Project Management Professional (PMP) Certication - Fourth Edition
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LESSON 2

Will the seller be required to provide any post-project operational support?

Determine the acceptable criteria for the product or service.

Make sure your SOW includes the following key elements:

Clear identication of the project name and deliverable name or identication


number.

A summary of work requested and benets.

The major deliverables or key events anticipated.

List all major identiable results of the work being performed on the
project.

List the estimated date of completion for each deliverable.

All resource requirements.

List every person, work group, or material that will perform or be used
to perform actual work on the project.

Provide a brief description of what they will be doing.

Estimate the actual hours of work they will devote to the project.

A description of the expected commitments from other departments or people


and how they will impact the project.

A list of all risks and concerns.

Include any event or activity that has the potential of affecting the
timeline for completion.

Pay attention to any assumptions made in identifying work and scope.

A description of the project completion criteria.

A list of outstanding issues.

Have the SOW reviewed by a knowledgeable third party to ensure that it is complete, correct, and understandable.

Example: Statement of Work for a Carnival Project


The City of Buttereld Visitors Bureau has decided to hold a carnival as a tourist
attraction. To create a SOW for this project, the project manager enlisted the help of
her organizations chief negotiator and a lawyer. She also hired a consultant to dene
the specications of the various carnival rides and attractions that would be utilized.
The organization had no existing preferred SOW format, so the project team
researched SOWs used by other companies for similar events. They ensure that the
SOW is laid out in a logical sequence and uses consistent terminology throughout.
The statement also denes acceptable service criteria and includes key elements such
as a schedule and acceptance standards. Before sending this SOW to prospective bidders, the project team had the document reviewed and validated by an independent
legal rm.

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LESSON 2

DISCOVERY ACTIVITY 2-3


Preparing a Project Statement of Work
Data Files:

Blank OGC Project Statement of Work

Before You Begin:


Review the Prepare a Statement of Work guidelines and then read the scenario.
Scenario:
The Business Transformation Project is the rst time that OGC has undertaken such a large
enterprise-wide project. For this reason, the senior executives and core individuals of the Business Transformation PMO will be selecting key individuals to create a project charter to
provide project management training for all team members. The intent of this training is to
allow team members the ability to efficiently use a recently purchased software tool to create
and manage all project schedules. The training will also include internal process training for
the Business Transformation Project with an overview of the management system that has been
developed for tracking and reporting on multiple, simultaneous projects. The goal of OGC is to
complete this high-priority training before the initiation of the primary Business Transformation Project.

Without exception, all managers will use the project management scheduling and
tracking software tool. OGC plans to use a local training center to provide training on the standard features of the software. The goal is to locate a training
provider that can accommodate at least 12 individuals at a time; that can offer
basic, intermediate, and advanced training for the software; and that can provide
after-training support.

OGC will also provide internal training on the use of customized reporting features and customized views that stray from standard software training. There are
high expectations that the scheduling and tracking capabilities of this software
will provide senior management with the most up-to-date information on the status of each individual project and its impact on the business transformation.

Only 10 percent of the project managers in OGC have actually used the software
tool to manage their projects. There are approximately 50 managers who will take
the training, and three members of the PMO have been selected to create the
project Statement of Work (SOW).
The format of the Project SOW used in this activity is just an example of how a Project SOW can be
formatted.

1.

What might be a logical first step in preparing the SOW?


a) Verify if you should use the standard OGC SOW format.
b) Present the information in a logical sequence.
c) Provide a description of the project completion criteria.
d) List every person or work group that will perform actual work on the project.

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LESSON 2
2.

Based on the scenario, which one or more of the following should be included in the
SOW?
a) A clear description of what is required for the internal and external training.
b) The specifications as to how both the internal and external training will be produced
and methods for ensuring that the specifications have been met.
c) A detailed breakdown of all deliverables that will be required to complete the
project.
d) A list of the human resources or work groups that will perform actual work for the
training project.
e) The estimated date of completion for both the internal and external training classes.

3.

Yes or No? Based on the scenario, do you think that it will be necessary for OGC to create an additional external SOW for this training project?
Yes
No

4.

From the C:\085042Data\Initiating a Project folder, open the List of Deliverables and
Resources document to use as a guide while creating the project statement of work.

5.

From the C:\085042Data\Initiating a Project folder, open the Blank OGC Project Statement
of Work document and, based on the scenario, complete the project statement of work.

6.

Compare your Project Statement of Work document with the Completed OGC Project
Statement of Work document, in the C:\085042Data\Initiating a Project\Solutions folder.

TOPIC D
Create a Project Charter
Determining the appropriate project management processes to apply to your project is an
important step in the initiating process. However, before you can apply organizational
resources to project activities, you need formal authorization to do so. In this topic, you will
create a project charter.
To accomplish project objectives, you need the support of the organization behind you. Without it, you may be unable to convince anyone that your project is valuable to the organization
or obtain the resources you need. An effective project charter ensures that you gain your organizations support for the project and the authority to apply resources to project activities.

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Project Charters
Denition:
The project charter is a document that provides a clear, concise description of the
business needs that the project is intended to address. It makes a project official; it
authorizes the project manager to lead the project and draw on organizational resources
as needed. The project charter documents initial assumptions about the project, any
known constraints, and the expected results.
Example: A Project Charter

Figure 2-4: Project charter for the OGC PM Training Roll-Out project.
Sample Project Charter
To view a sample project charter, open the C:\085042Data\Initiating a Project\
Solutions\Completed Project Charter document.

The Develop Project Charter Process


Develop project charter is the rst process in the project integration management knowledge
area. The purpose of developing a project charter is to formally launch and authorize a new
project or to authorize an existing project to continue into its next phase. A project receives
authorization when the initiator signs the project charter. To be successful, the project must
link to the ongoing work of the organization and it must match its goals and capabilities with
business requirements. The project charter may be developed by an initiator such as a sponsor
or it may be delegated to the project manager. If the project charter is created by the sponsor,
it is advisable that the project manager is also involved in the development process.

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Figure 2-5: The develop project charter process.

Develop Project Charter Inputs


Various components provide input into the develop project charter process.

Input

Description

Project statement of work

A document describing the products or services to be delivered by the


project.

Business case

A document that justies the investment made on a project and determines the benets expected from the project. The reasons for creating
the business case include market demand, organizational and social
requirements, and customer requests.

Contract

If the project is commissioned for an external customer, a contract


from the customers organization is an input for project charter development.

Enterprise environmental factors

These are internal or external inuences that affect project success.


For project charter development, these items include company culture,
government or industry standards, stakeholder risk tolerances, market
conditions, human resources, and information systems.

Organizational process assets

The processes and procedures for accomplishing work and the corporate knowledge base for storing and retrieving information. For project
charter development, organizational process assets include policies,
procedures and guidelines, templates, methods for approving and issuing work authorization, and communication requirements. The
corporate knowledge base may include a process measurement database, project les, conguration management, nancial data, and
historical information.

Develop Project Charter Tools and Techniques


Only one tool and technique is used in developing the project charter.

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Tools and Techniques

Description

Expert judgment

Knowledge provided based upon expertise in a knowledge area, an


application area, an industry, or discipline relevant to the project charter development process. Expert judgment may be from internal or
external sources such as stakeholders, professionals, subject matter
experts, industry groups, PMO, and functional units.

Develop Project Charter Output


The only output from the develop project charter process is the project charter.

Output

Description

Project charter

Documents information such as project purpose, project objectives, high-level


project requirements, description, and risks, and summary milestone schedule and
budget. Responsibility for the creation of a project charter varies widely from
organization to organization. In many companies, the project manager is responsible for its creation, but it is issued by the sponsor.

Business Cases
Denition:
A business case is a brief document that justies the investments made for the project
and describes how a particular investment is in accordance with the organizations
policy. It outlines the technical, investment, and regulatory factors that inuence a
project. The business case provides a framework to link an investment proposal to the
achievement of an organizational objective.
Example: Business Case for the Geothermal Energy Project
Senior management at OGC called a meeting to review project selections by the PMO.
As project manager, Barbara Tolliver is required to present a business case that outlines the technical, investment, and regulatory factors inuencing the geothermal
energy project. Barbara used a cost estimate to justify the investments made for the
project.

Business Case Components


A number of components need to be added to a business case.

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Component

Description

Business need

Substantiates the business reason for conducting the project.

Project contribution

Determines the projects contribution toward the organizations objectives.

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Component

Description

Stakeholders

Lists the project stakeholders, their expectations, and contributions toward


the project.

Constraints

Compiles the limitations of the project.

Strategic risks

Lists the risks that the project may face and the possible risk management measures.

Benets evaluation

Analyzes and outlines the key benets to be obtained.

Project roles

Lists the members of the project team and their respective job roles in
the project.

Benets realization plan

Provides an outline of the benets realization plan.

Contingency plan

Outlines the alternate solutions for unplanned events.

How to Create a Project Charter


An effective project charter clearly communicates the projects importance to the organization
and formally authorizes the project.
Guidelines:
To create an effective project charter, follow these guidelines:

Use a corporate template, if one is in existence at your company.

Include the project and authority identication information:

Title of the project and the date of authorization.

Name and contact information of the project manager.

Name, title, and contact information of the initiating authority (usually the
customer or sponsor).

Include a clear, concise description of the business need, opportunity, or threat


that the project is intended to address:

What are the circumstances that generated the need for the project?

What is the market demand for the product or service?

Consider any legal requirements associated with the project.

Include summary descriptions of the product or service of the project:

What is the required outcome of the project?

What are the critical characteristics of the product or service?

Include a description of the projects relationship to the business need it is


intended to address:

Why is it important to do the project now?

How will this project address the business need, opportunity, or threat for
which it is intended?

Consider any known constraints and/or assumptions:

Are there any known time, cost, scope, quality, or resource issues or factors
that will limit the way you and your project team can approach the project?

Are there any factors or issues that you and your project team will presume
to be true, real, or certain in order to begin planning your project?

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Ensure the person with the required knowledge and authority signs the project
charter.

Distribute the signed charter to the appropriate project stakeholders:

Project team members.

Customer and, if relevant, sellers (vendors).

Relevant functional managers.

Finance and/or accounting departments.

Example: Creating a Project Charter for an Internal Process Improvement


Project
Catherine Long, a vice president at your company, is authorized to initiate an internal
process improvement project. She develops a project charter to formally authorize the
project. The Process Improvement project is named in the memo and the memos date
serves as the authorization date. The memo establishes the authority of her colleague,
John, as the project manager and provides Johns contact information. Because
Catherine is the project sponsor, she includes her contact information and has the
authority to reassign people, release materials, and spend the money required to proceed with this project.
The business need of improving the internal processes and procedures to improve time
to market while striking the appropriate balance between quality and speed is clearly
stated. The memo provides a brief description of the service and product of the project,
which is to analyze the current processes and procedures and make recommendations.
The known constraints of completing the project with minimal impact on current
project schedules within three months are included in the memo. Catherines signature
is on the memo, which is being distributed to all the department directors, vice presidents, and project managers who might be affected by or involved in this project. It
also establishes the priority of the project and asks these groups to lend their support.

DISCOVERY ACTIVITY 2-4


Creating a Project Charter
Data Files:

Blank Project Charter

Before You Begin:


From the C:\085042Data\Initiating a Project folder, open the Blank Project Charter document.

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LESSON 2
Scenario:
Your project SOW is completed and you have just nished another meeting with Vicky Morris,
who requested that you create the project charter for the training initiative. Vicky will sign the
authorization for the project upon its completion. The project has been given the name OGC
PM Training Roll-Out. The PMO has allocated a budget of $100,000 for this project. The
project must nish no later than September 20th due to the start of phase one of the business
transformation.
Before creating the project charter, you decide to review your notes from previous meetings.

The training will include an overview of the management system that has been
developed for tracking and reporting on multiple, simultaneous projects. One of
the organizational goals is to complete this training before the initiation of all
other business transformation projects.

There are high expectations that by initiating this project, the scheduling and
tracking capabilities of this software will provide senior management with the
most up-to-date information on the status of each individual project and its impact
on the business transformation project.

All managers will be required to use the project management scheduling and
tracking software when managing their future projects.

OGC plans to use a local training center to provide training on the standard software due to classroom and computer limitations within OGC.

The training provider must be able to provide the application training at a basic,
intermediate, and advanced level.

The training provider must be able to offer support after training.

OGC will provide in-house additional training tailored for the business transformation program.

There are approximately 50 managers who will need to complete the training.

The supervisors of these managers would like to know their performance in the
training.

Development of a pre- and post-assessment is required.

1.

How would you describe the goals and objectives of this project?

2.

How would you describe the projects impact to the organization?

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3.

Are there any assumptions that you would include? If so, describe them.

4.

Based on what you know at this point, how would you describe the primary
deliverables for this project?

5.

Yes or No? At this time, are there any real constraints in the project charter?
Yes
No

6.

Open the file C:\085042Data\Initiating a Project\Blank Project Charter and, based on the
scenario, complete the project charter.

7.

Compare your Blank Project Charter document with the C:\085042Data\Initiating a Project\
Solutions\Completed Project Charter.

TOPIC E
Identify Project Stakeholders
You have a project charter providing the formal authorization to apply organizational resources
to project activities. Before you can begin the planning process, it is vital to identify the
groups or individuals who will have a role to play either directly or indirectly in the project. In
this topic, you will identify the stakeholders of your project.
Stakeholders are an integral part of any project and extensively support the success of the
project. It is imperative that you document the relevant information regarding the stakeholders
interests and expectations as they strongly inuence a projects product or service.

The Identify Stakeholders Process


During the identify stakeholders process, the project manager identies all stakeholders that are
impacted by the project and documents information that is relevant regarding their interests,
involvement, and impact on project success. Stakeholders exert inuence on the project and its
deliverables, and their interests may be positively or negatively affected by the execution or
completion of the project.
Stakeholders need to be classied based on factors such as their level of interest and inuence
in a given project. This would enable the project manager to prioritize the level of importance
to be assigned for a specic stakeholder.

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Figure 2-6: The identify stakeholder process.

Identify Stakeholders Inputs


The project manager uses four inputs to identify stakeholders that are impacted by the project.

Input

Description

Project charter

Provides information about internal and external parties who are impacted
by the project, namely project sponsor(s), customers, key team members,
groups and departments participating in the project, and other people and
organizations affected by the project.

Procurement documents

Provide information to indicate if the project involves procurement or is


based on an established contract. The parties involved in the contract, the
suppliers, are key project stakeholders and are added to the project stakeholders list.

Enterprise environmental
factors

The enterprise environmental factors that can inuence the identify stakeholders process include:
The culture and structure of the organization or company.
Government or industry standards, namely product standards or regulations.
Availability or unavailability of web-based project management systems in the organization.
Extent of complexity and presence of condentiality needs on the
project.

Organizational process
assets

The organizational process assets that can inuence the identify stakeholders process include:
Stakeholder register templates.
Lessons learned from previous projects.
Stakeholder registers from previous projects.

Identify Stakeholders Tools and Techniques


Two tools and techniques are employed to identify stakeholders for the project.

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Tools and Techniques

Description

Stakeholder analysis

The process of systematically gathering and analyzing quantitative and


qualitative information to determine the stakeholders whose interests need
to be considered throughout the project. It helps identify stakeholder relationships to build coalitions and partnerships that can enhance the projects
chance of success.

Expert judgment

Identication and listing of stakeholder groups and individuals with specialized training or knowledge on the subject area can be sought from senior
management, other units within the organization, key stakeholders, project
managers who worked on similar projects, Subject Matter Experts (SMEs)
in business or project area, industry groups and consultants, and professional and technical associations. Expert judgment is obtained through
individual consultations, such as one-on-one meetings and interviews.
Expert judgment could also be obtained through a panel format, such as
focus groups and surveys.

Identify Stakeholders Outputs


There are two outputs of the identify stakeholders process.

Output

Description

Stakeholder register

Contains the list of the identied project stakeholders with information


on their identication, assessment, and stakeholder classication details.

Stakeholder management
strategy

Denes an approach to increase the support and minimize negative


impacts of stakeholders throughout the entire project life cycle.

Stakeholder Analysis
Stakeholder analysis is the formal process of identifying all of the stakeholders of a project by
gathering and analyzing quantitative and qualitative information, and building coalitions at the
onset of a project by identifying their needs, objectives, goals, issues, and impact.
Stakeholder analysis is performed through a series of steps:
1. Identify all potential stakeholders of the project.
2.

Classify stakeholders based on their potential impact or support on the project.

3.

Plan for likely stakeholder reaction or response and plan how to enhance their support and
mitigate potential negative impact on the project.

Ideally, project managers will question the stakeholders about their interest in the project, their
desired outcome, their goals, and any lessons learned from prior projects. This increases the
effectiveness of the stakeholder analysis process. As the project progresses, the analysis will be
validated against the current state of project work and stakeholders changing needs.

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Figure 2-7: The stakeholder analysis process.

Stakeholder Registers
Denition:
A stakeholder register is a document that identies stakeholders of a project with
information that includes their identication, assessment, and stakeholder classication.
Typical stakeholder register entries may include the stakeholder name, organizational
position, location, role in the project, contact information, requirements, expectations,
inuence on the project, specic interest in the project or a phase, whether internal or
external, and whether for, against, or neutral to the project.
Example: A Stakeholder Register

Figure 2-8: Stakeholder register for the OGC PM Training Roll-Out project.

The Stakeholder Analysis Matrix


Denition:
A stakeholder analysis matrix is a document that describes the strategies used to manage the stakeholders of a project. The project manager prepares the stakeholder
analysis matrix during the identify stakeholders process. The stakeholder analysis
matrix is a shared document, and therefore it is imperative that the project manager
exercise proper judgment and due caution with regards to the kind of information and
detail that need to be included in it.

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Example: A Stakeholder Analysis Matrix

Figure 2-9: A stakeholder analysis matrix template used to manage the


project stakeholders.

Stakeholder Management Strategy


Denition:
A stakeholder management strategy is a management strategy that is created to ensure
maximum support and to minimize the negative impacts of stakeholders throughout the
entire project life cycle. The stakeholder management strategy is created by the project
manager during the identify stakeholders process. The strategy information is ideally
represented in a stakeholder analysis matrix.
Example: Components of a Stakeholder Management Strategy Document
A typical stakeholder management strategy document could include:

Stakeholder Identicationa list of the identied stakeholders along with their


identication related information.

Stakeholder Mapa chart showing the interest of different stakeholders and levels
of participation required from each identied stakeholder.

Stakeholder Analysis Inuence and Importance Matrixa matrix that describes


the stakeholders based on their inuence and importance to the project.

Stakeholder Lista list of various stakeholder groups involved in the project and
their management.

Stakeholder Communicationa description of how the project will engage various


stakeholders that includes communication routes and frequency for each stakeholder or group of stakeholders.

Communication Efficiencyspecies how the efficiency of the communication


process will be measured.

How to Identify Project Stakeholders


It is important to identify the stakeholders early in the project; analyze relevant information
regarding their interests, expectations, importance, and inuence; and devise a strategy to
ensure their involvement to maximize positive inuences and mitigate potential negative
impacts.
Guidelines:
To identify project stakeholders, follow these guidelines:

Perform a review of project and related information to ascertain the list of internal
and external parties who may be impacted by the project. The documents or information are a valuable source for stakeholder identication. These may include:

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LESSON 2

Procurement documents

Organization or company structure

Organization or company culture

Government or industry standards

Stakeholder register templates

Lessons learned from previous projects

Stakeholder registers from previous projects

Identify groups or individuals with specialized training or knowledge who can


help in the comprehensive identication and listing of the stakeholders.

Perform interviews of the identied stakeholders to gain knowledge of their roles,


departments, interests, knowledge levels, expectations, and inuence levels within
the organization.

Analyze your lists to identify the key stakeholders of the project. These include
anyone in a decision-making or management role who is impacted by the project
outcome, such as the sponsor, the project manager, and the primary customer.

Determine and classify the potential impact or support that each stakeholder could
generate during the project life cycle and dene an approach strategy. You need to
prioritize the key stakeholders to plan for efficient communication and management of their expectations.

Assess how stakeholders would react or respond in various situations during the
project life cycle. You need to plan how to inuence the stakeholders to enhance
their support to the project and also mitigate any potential negative impacts arising from them.

Document stakeholder information to include identication, assessment, and stakeholder classication in the stakeholder register.

Devise a stakeholder management strategy to increase support and minimize negative impacts of stakeholders to the project.

Example: Identifying the Computer Networks Upgrade Project Stakeholders


Andrew is the project manager for the computer networks upgrade project within your
company. He collects project information that includes the project charter, the organization structure, the organizations policy documents, lessons learned and stakeholder
register of previous projects, and other related documents related to the current networking and computer resources deployed within the company. He studies the
information gathered to identify the stakeholders from senior management.
Andrew interviews the key stakeholders, namely the department heads for marketing,
nance, human resources, content development, media development, and quality control, and expands the list of identied stakeholders based on these interviews. The
additional stakeholders would be the department heads for IT services, customer support, purchase, administration, and accounts. Further, Andrew classies the
stakeholders based on their potential impact or support to the project. Andrew documents the details of the stakeholders in the stakeholder register and based on his
assessment of each stakeholder, he denes the stakeholder management strategy in a
stakeholder analysis matrix.

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LESSON 2

DISCOVERY ACTIVITY 2-5


Identifying Project Stakeholders
Data Files:

Blank OGC PM Training Roll-Out Stakeholder Register

Before You Begin:


From the C:\085042Data\Initiating a Project folder, open the OGC Quality Plans Training
Stakeholder Register and OGC Project Charter documents.
Scenario:
Vicky Morris, the sponsor, has authorized the OGC PM Training Roll-Out project. As part of
the project charter, a preliminary list of project stakeholders was identied. Your intent as a
project manager is to be able to identify all the stakeholders for the project. You can refer to
the stakeholder register for a similar project, the OGC Quality Plans Training project, to
determine the likely stakeholders of your project. You are in the process of creating the stakeholder register for your OGC PM Training Roll-Out project.

1.

How would you approach ascertaining the total list of project stakeholders for the OGC
PM Training Roll-Out project?

2.

True or False? Members of the OGC PM Training Roll-Out project team are considered
to be stakeholders.
True
False

3.

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How would you identify the positive and negative stakeholders of the project?

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4.

Which statements are true of the stakeholder management strategy?


a) Identifies key stakeholders who can impact the project.
b) Describes the government and industry standards to be applied to stakeholder management.
c) Describes the level of participation for each identified stakeholder in the project.
d) Identifies the stakeholder groups and their management.

5.

How would you establish levels of stakeholders based upon their interest in the project
and the impact they can have on the project?

6.

What is the documentation needed for each level of stakeholder?

7.

Which documents can you use as a basis for your stakeholder register?

8.

Open the Blank OGC PM Training Roll-Out Stakeholder Register document from the C:\
085042Data\Initiating a Project folder, and based on the scenario, complete the
stakeholder register.

9.

Compare your Blank OGC PM Training Roll-Out Stakeholder Register document with the
Completed OGC PM Training Roll-Out Stakeholder Register document in the C:\085042Data\
Initiating a Project\Solutions folder.

Lesson 2 Follow-up
In this lesson, you explored the signicant elements of initiating a project, which is one of the
ve interlinked process groups and a critical part of every project you will ever manage. By
effectively initiating your project and laying a solid foundation for the work that will follow,
you will signicantly increase your chances for success.
1.

Consider the importance of making sound decisions about project selection. How do
you think this will affect your eventual chances for success?

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2.

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Consider the benefits of identifying project stakeholders. How do you think you can
use this process to your advantage on your next project?

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LESSON 3

LESSON 3

Lesson Time
3 hour(s)

Planning Project Work


In this lesson, you will plan project work.
You will:

Identify the elements of the project management plan.

Document stakeholder requirements.

Create a scope statement.

Develop a Work Breakdown Structure (WBS).

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LESSON 3
Introduction
With your project dened at a high level and authorized by the sponsor, youre ready to begin
planning your project. Project planning is the second of ve project management process
groups that you will perform on most projects you manage. In this lesson, youll use the rst
four component processes in the planning process group to plan project work.
As the project manager, its up to you to dene how the project will be carried out. Youll also
be responsible for identifying the stakeholders needs so that you can ensure their satisfaction.
With the project objectives and scope clearly dened and documented, you can lead your
project toward the agreed-upon measures of success.

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Figure 3-1: The project management framework.

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TOPIC A
Identify the Elements of a Project
Management Plan
Your project has been authorized and the charter names you project manager. Youre eager to
get started. But before any progress can be made, youll need to plan how your team will manage the project to its successful completion. In this topic, youll identify the elements of a
project management plan.
Developing a realistic, usable, dynamic project management plan helps the project team stay
focused on the objectives and purpose of your project. Continually updating your project management plan as new information becomes available will help you to circumvent problems
before they develop and ensure project work occurs according to the plan.

The Project Management Plan


Denition:
A project management plan is a plan that details how a project will be executed to
achieve its objectives. A well-dened plan consists of certain components, including:

A list of the project management processes that will be utilized and the level of
implementation for each.

A description of the tools and techniques that will be used to complete those processes.

An extensive description of the tasks to be completed to fulll the objectives.

Plans for monitoring and controlling changes to the project.

Details on conguration management.

Performance measurement baselines.

Techniques for communication with stakeholders.

A denition of the project life cycle.

A plan for identifying, documenting, and addressing open issues.

Project management plans may be very detailed or a simple summary, and might
include any number of subsidiary management plans.

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Subsidiary Plan

Description

Scope management plan

Provides guidance on how project scope will be dened,


documented, veried, managed, and controlled.

Requirements management plan

Documents how requirements will be analyzed, documented, and managed throughout the project.

Schedule management plan

Describes the scheduling methodology, the scheduling


tool(s) to be used, and the format and established criteria
for developing and controlling the project schedule.

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LESSON 3
Subsidiary Plan

Description

Cost management plan

Describes the format and establishes the criteria for planning, structuring, estimating, budgeting, and controlling
project costs.

Quality management plan

Describes how the performing organizations quality


policy will be implemented by the project management
team throughout the project.

Process improvement plan

Details the steps for analyzing processes to identify


activities that enhance their value.

Human resource plan

Provides guidance on how the human resources required


for a project should be dened, staffed, managed, controlled, and eventually released.

Communications management plan

Provides details that document the approach to communicate efficiently and effectively with the stakeholders.

Risk management plan

Describes how risk management is structured and performed on the project.

Procurement management plan

Describes how the procurement processes will be managed from developing procurement documents through
contract closure.

The subsidiary plans may be formal or informal, highly detailed, or broadly framed, and are created based on the
requirements of the project.

Example: Project Management Plan for a Supermarket Chain


A national supermarket chain sought to reduce the average amount of time its customers spent waiting in the checkout lines. The project management plan listed the
management processes thought to be necessary and the tools used to complete those
processes.
The plan also included the tasks to be completed (hiring more clerks, expanding
checkout areas), plans for controlling changes to the project (a designated change control board), details on conguration management, performance measure baselines,
stakeholder communication plans (weekly regional manager meetings), a project life
cycle (implementation, evaluation, and analysis), and the plan for addressing open
issues.
The plan also contained a cost management plan and a quality assurance management
plan.

The Develop Project Management Plan Process


The develop project management plan process involves documenting the appropriate actions to
dene, create, integrate, and coordinate the subsidiary management plans as one single plan.
The project management plan is created and modied through a series of integrated processes
until the project closes. Therefore, the process results in the progressive elaboration of the
project management plan that is updated with changes, which are controlled and approved
through the perform integrated change control process.

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Figure 3-2: The develop project management plan process.

Develop Project Management Plan Inputs


There are four inputs to a successful project management plan; they will be dened by the
organizations infrastructure and culture, the type of project, and how complicated the project
is.

Input

Description

Project charter

The project charter formally authorizes the project, provides authority


to the project manager to commit resources, and is the starting point
for the project management plan. It also provides information on the
results that it is expected to satisfy such as project purpose or justication, project objectives and success criteria, project requirements,
project description, summary milestone schedule, and summary budget.

Outputs from planning processes Baselines and subsidiary management plans that are outputs from
other planning processes are inputs to the develop project management plan process. The baselines and subsidiary management plans
are integrated to create the project management plan and any updates
to these in the respective planning processes would require the
project management plan to be updated.
Enterprise environmental factors

Factors that may inuence the projects success should always be


considered during plan development. These could include anything
from existing assets (information systems, human resources) to external factors (governmental regulations, marketplace conditions).

Organizational process assets

Existing processes that may impact a projects success. These may


include policies, guidelines, historical information, or knowledge
gained from previous projects.

Develop Project Management Plan Tools and


Techniques
The tool and technique commonly employed in the creation of the project management plan is
expert judgment.

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Tools and Techniques

Description

Expert judgment

Insight in specialized areas that will generate valuable technical and


management content for the project management plan.

Develop Project Management Plan Output


The sole output from the develop project management plan process is the project management
plan.

Output

Description

Project management plan

A formal document that denes how the project is executed, monitored


and controlled, and closed. This includes all the subsidiary management
plans and baselines.

ACTIVITY 3-1
Identifying the Elements of a Project Management Plan
Data Files:

OGC Project Management Plan

Before You Begin:


From the C:\085042Data\Planning Project Work folder, open the OGC Project Management
Plan document.
Scenario:
As one of the project managers of OGCs Business Transformation project, you will be
responsible for putting together a project management plan. Before you begin, you have
decided to review the elements that the OGC PMO requires all project managers to include in
any project that has a budget of $10,000 or more.

1.

As you review the OGC Project Management Plan outline, identify the elements that
your organization requires, if any, for your project management plans.

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2.

Match the project management plan input with the appropriate description.

Project charter

a.

Outputs from planning


processes

Enterprise environmental
factors

Organizational process
assets

3.

This input uses baselines and subsidiary management plans that are
integrated to create or update the
project management plan.
b. This input uses existing processes
that may impact a projects success
such as policies, guidelines, or
knowledge gained from previous
projects.
c. This input includes factors that inuence the projects success, such as
anything from existing assets to external factors that should always be
considered during plan development.
d. This input authorizes and provides
vital information relating to the
project based on which the project
management plan is built.

Which subsidiary plan of the project management plan deals with closure of contracts?
a) Scope management plan
b) Procurement management plan
c) Process improvement plan
d) Communications management plan

TOPIC B
Document Stakeholder
Requirements
You identied the elements and are integrating the various subsidiary plans into the project
management plan. In the process of nalizing your project management plan, you need to be
aware of the project stakeholder requirements and document them so as to avoid missing critical information. In this topic, you will document stakeholder requirements.
As a project manager, you have to analyze the needs of the project stakeholders. A clear and
authentic documentation of those needs will be critical to the projects success. Identifying and
documenting the stakeholders needs will permit you as a project manager to provide probable
solutions, and to assure the stakeholders that none of their needs are being overlooked.

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LESSON 3
The Collect Requirements Process
In the collect requirements process, the project manager denes and documents the stakeholders needs and expectations to meet the project objectives. The requirements need to be
elicited, analyzed, and recorded in sufficient detail from the sponsor, customer, and other stakeholders of the project to enable measurement during project execution.
The collected requirements form the basis for planning the cost, schedule, and quality for the
project.

Figure 3-3: The collect requirements process.


Project and Product Requirements
Requirements are further categorized into project requirements and product requirements depending on the needs of the project. Project requirements could typically
include the business, project management, and the delivery requirements of the project.
Product requirements could typically include the technical, security, and performance
requirements of the product.

Collect Requirements Inputs


The collect requirements process uses two inputs to identify the requirements of the project
stakeholders.

Input

Description

Project charter

Provides the high-level project or product descriptions that are used to


develop the detailed project requirements.

Stakeholder register

Identies stakeholders who can provide information on the detailed project


or product requirements.

Collect Requirements Tools and Techniques


Project or product requirements are captured and managed using a variety of tools and techniques.

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Tools and Techniques

Description

Interviews

Used to get information from stakeholders by talking to them directly. It


aids in identifying and dening the features and functions or the desired
project deliverables.

Focus groups

A trained moderator guided interactive discussion that includes stakeholders and subject matter experts to elicit their expectations and attitudes
towards the proposed product, service, or result of the project.

Facilitated workshops

Interactive group focused sessions that bring together key cross-functional


stakeholders to dene the project or product requirements. It is a primary
technique to dene cross-functional requirements and reconcile stakeholder
differences to the project much faster than individual discussions.

Group creativity techniques

Group activities that are organized to identify project and product requirements, and include brainstorming and the Delphi technique.

Group decision making


techniques

An assessment process of multiple alternatives to generate, classify, and


prioritize project or product requirements.

Questionnaires and surveys

Written sets of questions designed to quickly accumulate information from


a broad audience. It is used when statistical analysis is appropriate for the
collect requirements process.

Observations

A direct way of viewing individuals in their work environment or while


using the product to identify the project or product requirements. Also
referred to as job shadowing.

Prototypes

A method of obtaining feedback on requirements by providing a working


model of the expected product.

Collect Requirements Outputs


There are several outputs from the collect requirements process.

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Output

Description

Requirements documentation

Describes how the individual requirements would meet the business need for the project. Its format ranges from a simple
document listing all the requirements categorized by stakeholder
and priority to more elaborate forms containing executive summary, detailed descriptions, and attachments.

Requirements management plan

Documents how the project requirements will be analyzed, documented, and managed throughout the project life cycle.

Requirements traceability matrix

A table that links the requirements to their origin and tracks them
throughout the project life cycle.

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LESSON 3
Facilitated Workshops
Denition:
Facilitated workshops are group sessions that bring together key multidisciplinary or
cross-functional stakeholders to dene the project or product requirements for the
project. Facilitated workshops are an important technique to quickly dene crossfunctional requirements of the various stakeholders of the project. It helps to build
trust, foster relationships, reconcile differences, and improve communication among the
stakeholders, thereby leading to enhanced stakeholder consensus. Because multiple perspectives are available, the issues or questions related to the requirements are resolved
quickly.
Example: Conducting Facilitated Workshops for OGCs Warehouse Management
Software Project
Vicky Morris, the project sponsor, has approved the project charter for OGCs Warehouse Management Software project. The project charter lists stakeholders from
various departments such as the Process Development and Implementation department
and the key project managers and administration personnel, especially those arranging
the training logistics. It also includes key PMO staff, and the Chief of the Business
Transformation team. To build stakeholder consensus, Mark Anderson, the project
manager of OGCs Warehouse Management Software project, decides to conduct a
facilitated workshop rather than holding one-on-one discussions with the key stakeholders. He invites the key project stakeholders for a Warehouse Management
Essential Requirements workshop.
Mark coordinates discussions with key stakeholders during the workshop to dene the
requirements of this project. Discussions in the workshop highlight the differences
among various stakeholder requirements. Mark is not only able to reconcile the stakeholder differences, but also to obtain a consensus on all the project requirements.

Group Creativity Techniques


Group creativity techniques are group activities organized within organizations to identify
project or product requirements for a project.

Group Creativity Technique

Description

Brainstorming

Used to generate and create multiple ideas related to project and product
requirements.

Nominal group technique

A voting process is used in this technique to rank the most useful ideas
obtained through brainstorming. This ranking allows for further brainstorming or for prioritization.

The Delphi technique

A group technique that extracts and summarizes anonymous group input


to choose among various alternatives.

Idea or mind mapping

Ideas created through brainstorming are consolidated into a map that


reects the commonality, differences in understanding, and generation of
new ideas.

Affinity diagram

This technique enables the sorting of a large number of ideas collected


during brainstorming into distinct categories for review and analysis.

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LESSON 3
Group Decision Making Techniques
Group decision making techniques are assessment processes that assess multiple alternatives to
arrive at an expected outcome. These techniques are used to generate, classify, and prioritize
project or product requirements. The outcome is the resolution of future action for the project.
Various methods are adopted to reach a group decision.

Method

Description

Unanimity

Everyone in the group agrees on a single course of action.

Majority

Requires support from more than 50% of the members of the group to indicate
the selected decision.

Plurality

The largest batch in the group decides for the group even if a majority is not
achieved.

Dictatorship

One individual makes the decision for an entire group.

Requirements Documentation
Denition:
Requirements documentation describes how individual requirements meet the business
requirements of the project. The requirements that are documented in the requirements
documentation must be unambiguous, traceable, complete, consistent, and acceptable to
key stakeholders of the project.

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LESSON 3
Example: Requirements Document

Figure 3-4: A requirements document for the OGC PM Training Roll-Out


project.
Sample Requirements Document
To view a sample requirements document, open the C:\085042Data\Planning Project
Work\Solutions\Completed OGC Requirements Document document.

Requirements Management Plans


Denition:
A requirements management plan is a plan that describes how the project requirements
will be analyzed, documented, and managed throughout the project life cycle. Phaseto-phase relationships between various phases of the project strongly inuence how
requirements are managed. Components of the requirements management plan require
project managers to choose the most effective relationships to aid the success of the
project and document this approach in the plan.
Components of the requirements management plan include:

Methods to plan, track, and report requirement activities.

Conguration management related activities.

Process for requirements prioritization.

Project or product related metrics.

Traceability matrix for requirements.

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LESSON 3
Example: Requirements Management Plan for OGCs Warehouse Management
Software Project
Mark Anderson, the project manager for OGCs Warehouse Management Software
project, prepares the requirements documentation for the project. Mark documents the
requirements collected during the Warehouse Management Essential Requirements
workshop and through subsequent interviews conducted with each stakeholder. He creates the requirements management plan with information on how these requirements
will be analyzed, documented, and managed throughout the project life cycle.

The Requirements Traceability Matrix


Denition:
A requirements traceability matrix is a tabular document that links the project or product requirements to their origin and traces them throughout the project life cycle. The
requirement traceability matrix links each requirement to the business and project
objectives, WBS, product design and development, and test scenarios. It also ensures
that approved requirements in the requirements documentation are met at the end of
the project. It also provides a structure for managing changes to the project or product
scope.
Example: A Requirements Traceability Matrix

Figure 3-5: Requirements traceability matrix for the OGC Warehouse Management Software project.
Forward traceability in the gure implies that it is possible to trace a requirement to elements in the
outputs of later phases in the project life cycle.

How to Document Stakeholder Requirements


The success of a project depends on the effective capture and management of the various
project and product requirements. Care should be taken in dening and documenting the needs
and expectations of various project stakeholders in order to meet the project objectives.
Guidelines:
To effectively dene and manage project and product requirements, follow these guidelines:

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LESSON 3

Study the project charter to identify the high-level project requirements and product descriptions.

Examine the stakeholder register to identify stakeholders who can provide information on detailed project and product requirements.

Use various methods to collect project or product requirements. These methods


include:

Interviews

Focus groups

Facilitated workshops

Group creativity techniques

Group decision making techniques

Questionnaires and surveys

Observations

Prototypes

If possible, provide a working model or prototype of the expected product to


obtain feedback on requirements.

Create the requirements documentation to describe how individual requirements


meet the business need for the project. Ensure that the requirements are measurable, testable, traceable, complete, consistent, and acceptable to key stakeholders.

Review and validate the requirements management plan along with the key stakeholders and make sure it:

Describes methods to plan, track, and report requirement activities.

Describes conguration management related activities.

Includes process for requirements prioritization.

Includes project or product related metrics.

Provides a traceability matrix for requirements.

Example: Identifying the OGC Warehouse Management Software Project


Requirements
Mark, the project manager for OGCs Warehouse Management Software project, is
dening and documenting the requirements for the project. From the project charter
authorized by Vicky Morris, he lists the high-level project requirements and product
descriptions. He interviews the key stakeholders of the project who provide him with
the detailed project and product requirements. He also analyzes the stakeholder register
to determine the other stakeholders of the project and enhances his list of project
requirements by conducting a facilitated workshop to determine the remaining needs
and expectations of the stakeholders.
Mark gets the project team to develop a prototype for the Warehouse Management
software and distributes it to key stakeholders for their review and obtains their feedback on the functional requirements of the project.
Using the requirements obtained from the stakeholders, Mark creates the requirements
documentation for the project. He also creates the requirements management plan,
which includes the requirements traceability matrix that documents how the requirements will be analyzed, documented, and managed throughout the project life cycle.

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LESSON 3

DISCOVERY ACTIVITY 3-2


Documenting Stakeholder Requirements
Data Files:

OGC Project Charter

WIP OGC Requirements Document

Before You Begin:


From the C:\085042Data\Planning Project Work folder, open the OGC Project Charter document.
Scenario:
Vicky Morris, the sponsor, has authorized the project charter and named you as the project
manager for the OGC PM Training Roll-Out project. As project manager, you are responsible
for documenting the various needs and expectations of the stakeholders of the project.
Before interviewing and documenting stakeholder requirements, you decide to review your
notes from earlier meetings with key stakeholders:

The training will include an overview of the management system that has been
developed for tracking and reporting on multiple, simultaneous projects. One of
the organizational goals is to complete this training before the initiation of all
other business transformation projects.

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There are high expectations that by initiating this project, the scheduling and
tracking capabilities of this software will provide senior management with the
most up-to-date information on the status of each individual project and its impact
on the business transformation project.

All managers will be required to use the project management scheduling and
tracking software when managing their future projects.

OGC plans to use a local training center to provide training on the standard software due to classroom and computer limitations within OGC.

The training provider must be able to provide the application training at a basic,
intermediate, and advanced level.

The training provider must be able to offer support after training.

OGC will provide in-house additional training tailored for the business transformation program.

There are approximately 50 managers who will need to complete the training.

The supervisors of these managers would like to know their performance in the
training.

Development of a pre- and post-assessment is required.

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LESSON 3
1.

What would you do to identify the internal stakeholders for the OGC PM Training RollOut project?

2.

Where would you start the process of finding the external stakeholders for the OGC PM
Training Roll-Out project?

3.

Which is the method used to identify requirements by studying the individuals in their
work environment or while using the product?
a) Surveys
b) Facilitated workshops
c) Observations
d) The Delphi technique

4.

For the OGC PM Training Roll-Out project, which one or more of these tools and techniques could you use initially to identify the requirements of the stakeholders?
a) Interviews
b) Focus groups
c) Facilitated workshops
d) Prototypes

5.

In which output document would you store the guidelines on requirements


prioritization along with product related metrics for the OGC PM Training Roll-Out
project?
a) Requirements documentation
b) Requirements traceability matrix
c) Requirements management plan
d) Idea/mind map

6.

Which documents can you use as a basis for your requirements documentation?

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LESSON 3
7.

Open the C:\085042Data\Planning Project Work\WIP OGC Requirements Document document and based on the scenario, complete the requirements documentation.

8.

Compare your WIP OGC Requirements Document with C:\085042Data\Planning Project


Work\Solutions\Completed OGC Requirements Document.

TOPIC C
Create a Scope Statement
You have the rst of many subsidiary plans incorporated into your project management plan.
Now you can focus on the dene scope process, a critical planning process essential to achieving project success. In this topic, you will create a scope statement.
A clear and concise scope statement will help you dene the success that will guide your
project. Without a strong scope statement, you could end up spending valuable time and
resources on work that isnt even supposed to be part of your project.

The Project Scope Statement


Denition:
A scope statement denes the project and what it does and does not need to accomplish. A project scope statement is created at an early stage in the project to reect the
stakeholders common understanding of major activities to be performed in the project,
and to provide a basis for future project decisions about what should and should not be
included in the project.
Depending upon the size and scope of the project, a project scope statement should
typically include:

Project objectives, deliverables, and requirements.

Project constraints and assumptions.

Product acceptance criteria.

It may also include initial project organization, dened risks, schedule milestones, initial work breakdown structure, and approval requirements.
The project management team renes the project scope statement in the dene scope
process.

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LESSON 3
Example: A Project Scope Statement

Figure 3-6: Project scope statement for the OGC PM Training Roll-Out project.
Sample Project Scope Statement
To view a sample project scope statement, open the C:\085042Data\Planning Project
Work\Solutions\Completed Project Scope Statement document.

Components of the Scope Statement


There are several components of the scope statement.

Component

Description

Project objectives

These are the measurable success criteria for the project. Project objectives
are called critical success factors in some organizations.

Product description

The characteristics of the product, service, or result of the project undertaken.

Project requirements

The conditions or capabilities the deliverables of the project must meet to


satisfy a standard, contract, specication, or government or industry regulation.

Project deliverables

Any tangible, measurable result or outcome required to complete a project


or portion of a project. The scope statement should include a list of the
summary-level subproducts that, taken together, constitute completion of
the project.

Project boundaries

The parameters of what is and what is not included within a project.

Product acceptance criteria

The process and criteria for accepting nished products or services resulting from a project.

Project constraints

Factors that limit the way that the project can be approached. These limitations may concern time, cost, scope, quality, resources, and others. For
example, you may be given a project deadline or overall budget that your
project must work within.

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Component

Description

Project assumptions

Statements that must be taken to be true in order for the planning to begin.
For example, if your project requires that you incorporate energy costs into
your budget, you may want to make the assumption that the price of oil on
the project start date will remain the same as it is today in order to create
project cost estimates.

The Dene Scope Process


During the dene scope process, the project manager denes the scope of the project and nalizes a project scope statement. Scope denitions are shaped by the deliverables, assumptions,
and constraints that are documented during project initiation.

Figure 3-7: The define scope process.


Triple Constraints
Triple constraints are limitations that concern scope, time, and cost. These factors are
interrelated and exist in a state of equilibrium. As the project progresses, if one of
these factors is altered, the other two factors should be balanced to accommodate the
change without compromising the quality of the product or service.

Dene Scope Inputs


There are several common inputs for scope denition.

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Input

Description

Project charter

The scope statement will be derived from the project charter. Therefore, if a charter is not used in a performing organization, then
comparable information must be generated.

Requirements documentation

Describes how the individual requirements would meet the business


need for the project.

Organizational process assets

Any relevant, existing process assets such as procedures, and templates that are likely to impact the dene scope process.

Project Management Professional (PMP) Certication - Fourth Edition


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LESSON 3
Dene Scope Tools and Techniques
A well-dened scope statement can be created using a variety of tools and techniques.

Tools and Techniques

Description

Expert judgment

Experts in different areas across the project may contribute to the


project scope statement.

Product analysis

The process of translating project objectives into tangible deliverables


and requirements. It includes techniques such as product breakdown,
system analysis, and value analysis.

Alternatives identication

The process of creating different plans to achieve project goals.

Facilitated workshops

Help to quickly dene the cross-functional project or product requirements of various stakeholders.

Dene Scope Outputs


There are two outputs from the dene scope process.

Output

Description

Project scope statement

Details, either directly or by reference, the project deliverables and


the work to be performed to meet the deliverables. It helps the
project team to make detailed plans, guides in project execution, and
provides the baselines with which the change requests can be evaluated.
A detailed project scope statement includes the project scope description, product acceptance criteria, project deliverables, project
exclusions, project constraints, and project assumptions.

Project document updates

The scope denition may necessitate changes to the initial project


documents that include the stakeholder register, requirements documentation, and the requirements traceability matrix.

Product Analysis Techniques


There are several product analysis techniques, each of which is an evaluation of the projects
end product and what it will take to create this product.

Technique

Description

Functional analysis

Analyzing all of the things that a product does, including primary


and related functions, to identify unnecessary functions that might
drive up cost on a product.

Value engineering and value


analysis

Identifying and developing the cost versus benets ratio for each
function of a product. A method for controlling costs while maintaining performance and quality standards. Very common in military
and construction contracts.

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Technique

Description

Quality function deployment

Identifying what the customers needs are, and translating those


needs into technical requirements. Appropriate for each stage of the
product development cycle.

Systems engineering

Analyzing products holistically, integrating factors such as users,


usage environment, and related hardware or software with which
the product must function.

Techniques for Alternatives Identication


Alternatives identication techniques are methods for generating as many alternative solutions
and plans as possible during project planning.

Technique

Description

Lateral thinking

A creative approach to problem solving in which the team attempts to


think about a problem in new ways and generate a fresh solution.

Brainstorming

A general creativity technique for generating possible alternatives. Brainstorming methods can be structured or unstructured in approach. The goal
is to generate as many ideas as possible from as many team members as
possible.

Delphi technique

A group technique that extracts and summarizes anonymous expert group


input to choose among various alternatives. Often used to arrive at an estimate or forecast.

Project Objectives
Denition:
Project objectives are the criteria used to measure whether a project is successful or
not. Objectives must be:

Specic in terms of scope.

Quantiable in terms of time, cost, and quality.

Realistic and attainable.

Consistent with organizational plans, policies, and procedures.

Inclusive of at least one objective.

Projects may have one or several objectives, and subobjectives may be added to the
project in order to further clarify the project goals.
Example: Project Objectives for the Arithmetic on a Stick Project
The following objective was developed for a project devoted to the development of an
educational product, Arithmetic on a Stick.
Develop a handheld interactive math game for three- to six-year-olds that includes
four levels of instruction, practice, and remediation in early math skills, based on
national math standards, produced by June 1, 2009, for less than $2.5 million.

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LESSON 3
Note how the objective has the characteristics of a quantiable objective:

The objective species the scope: handheld interactive math game for three- to
six-year-olds that includes four levels of instruction, practice, and remediation in
early math skills.

It is quantiable in terms of time: by June 1, 2009.

It is quantiable in terms of cost: less than $2.5 million.

A quality measurement is specied: based on national math standards.

How to Create a Scope Statement


A well-dened scope statement provides a basis for project stakeholders to make future decisions about the projects scope. It also serves as a baseline for monitoring the scope during
execution.
Guidelines:
To create an effective detailed scope statement, follow these guidelines:

Rene the project objectives, deliverables, and product scope description from the
requirements documentation.

Re-examine the project requirements. Do they need to be re-prioritized with


respect to the results of the stakeholder analysis?

Review the project boundaries. If the stakeholder analysis revealed expectations


that are out of alignment with the project objectives, it may be necessary to add
these expectations to the list of excluded items.

Update the preliminary project constraints, risks, and assumptions. As the project
scope comes more into focus, the constraints, risks, and assumptions will most
likely need to be reconsidered.

Create schedule milestones so that the client and project team have dates for setting goals and measuring progress.

Include a revised overall cost estimate and dene any cost limitations.

Identify and document known risks.

Map out the internal organization with regard to personnel, including management, project teams, and stakeholders. Be sure to include the management
requirements, which will dene how the project scope and changes therein are
managed.

Document project specications and approval requirements.

Finalize the procedure for accepting completed products.

Example: Creating a Scope Statement


As project manager for the launching of an educational product, Arithmetic on a
Stick, Hector reviewed the objectives, deliverables, and product scope description
from the requirements documentation. They had not changed very much.
However, Hector altered the project requirements to include a new, more aggressive
deadline in response to stakeholder needs.
Hector amended the project boundaries to encompass several new parameters, including that it would not conform to international math standards. Conforming to
international math standards was a stakeholder expectation that was not feasible and
fell outside the project scope.

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LESSON 3
Hector reviewed the preliminary constraints, risks, and assumptions and made no
changes. He did modify the schedule to include milestones. Those marked the projected completion dates for major project components. Meanwhile, Hectors team
prepared a revised cost estimate.
To keep the project focused, Hector put together a list of management requirements.
This document dened how the project scope would be managed. Hector also drafted a
project team hierarchy, which dened the roles and stature of project team members.
Finally, Hector worked with the team to review and rene the project specications,
approval requirements, and procedure for accepting the completed product.
Once the scope statement was completed, he distributed it to the project team and
stakeholders.

DISCOVERY ACTIVITY 3-3


Creating a Scope Statement
Data Files:

Blank Project Scope Statement

Scenario:
It is now time for you to create the detailed scope statement that will be included in the Scope
Management Plan for the OGC PM Training Roll-Out. Vicky Morris, the PMO director, has
provided you with the PMOs scope statement template.
To create the scope statement, you gather the following information:

All managers will be assessed at 75% or higher in their understanding of OGC


project management methodologies and best practices. All managers will be
assessed at 75% or higher in their understanding of the OGC project management
software.

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Development of the OGC Project Management Plan reference manual and development and implementation of the internal training content and instruction for all
project managers is required. Project management software training is to be completed by all project managers within the organization.

All training must be completed on or before September 20th. The training provider will provide the pre-and post-assessment for assessing managers at 75% or
higher in their understanding of the project management software. The OGC Internal Training Team will create a pre-and post-assessment for assessing managers at
75% or higher in their understanding of OGC project management methodologies
and best practices.

Development of the OGC Project Management Plan guidelines that will be the
focus of the internal training is required. A project management plan reference
document will be developed to be used by all project managers during the business transformation program.

OGC project management methodologies and best practices must be implemented


by all project managers who are involved in the Business Transformation Program. These methodologies and best practices also help to increase the knowledge
of all project managers in the use of the project management software.

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LESSON 3
You are now ready to create the scope statement.

1.

Which documents can you use as a basis for your scope statement?

2.

From the C:\085042Data\Planning Project Work folder, open the Blank Project Scope
Statement document and based on the scenario, complete the scope statement.

3.

Compare your completed document with the C:\085042Data\Planning Project Work\


Solutions\Completed Project Scope Statement document.

TOPIC D
Develop a Work Breakdown Structure
You developed a scope statement that clearly states the objectives and lists your projects
major deliverables. Now you can break down the major deliverables into smaller, more manageable pieces. In this topic, you will develop a Work Breakdown Structure (WBS).
Its always easier to successfully complete a project by breaking it down into smaller, more
manageable chunks. Creating an effective Work Breakdown Structure (WBS) helps improve
the accuracy of your time, cost, and resource estimates by providing a baseline for performance measurement and project control.

Work Breakdown Structures (WBS)


Denition:
A Work Breakdown Structure (WBS) is a logical grouping of project deliverables
arranged in a hierarchical structure. A WBS denes the total scope of work required to
complete the project. The deliverables and their component sub-deliverables are represented on the WBS in levels of descending order. The smallest, most granular
deliverable that cannot be further subdivided is called a work package. A work package must describe a deliverable that can be adequately scheduled, budgeted, and
assigned to an individual person or group.

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LESSON 3

Figure 3-8: A work breakdown structure.


Thorough work breakdown structures feature several input elements, such as organizational process elements, the project scope statement, the project scope management
plan, and approved change requests.
Deliverables listed at each level on the WBS equal the sum of all of the items on the level directly
beneath them.

Example: Work Breakdown Structure in Movie Making


Movie making is a great example of a process that commonly employs work breakdown structures. A lm director is responsible for the coordination of several different
departments, such as the set designers, photographers, and editors.
Creating a robust WBS allows the director to more easily manage the numerous crews
working on the lm. It will organize every component of the lm into separate work
packages, each with its own deliverables, deadlines, and budget.
Organization of Work in a WBS
In a WBS, major components of work can be grouped by:

Major project deliverables.

Life cycle phases.

Organizational or functional responsibility.

Geographical location.

The Create WBS Process


The create WBS process is the method of dividing the project deliverables into smaller, more
manageable components. This helps create a deliverable-oriented hierarchical decomposition of
work to be executed by the project team.

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Figure 3-9: The create WBS process.


For more information on WBS, refer to Project Management Institute, 2008, Practice Standard for Work Breakdown Structures Second Edition, Newton Square, PA: PMI.

Create WBS Inputs


There are several common inputs for creating a WBS.

Input

Description

Project scope statement

The deliverables listed in the WBS will all be drawn from the project
scope statement.

Requirements documentation

Describes how the individual requirements would meet the business


need for the project.

Organizational process assets

Existing process assets are likely to impact project WBS creation.


These include policies, procedures, and templates for the WBS, project
les, and lessons learned from previous projects.

Create WBS Tools and Techniques


There is only one tool and technique for creating a WBS.

Tools and Techniques

Description

Decomposition

The subdivision of the project work, separating deliverables and their


required work into manageable, measurable, assignable, and more specic work packages.
Decomposition of the project work involves activities such as:
Identication and analysis of deliverables and related work.
Structuring and organization of the WBS.
Breaking down the upper WBS levels into lower level detailed components.
Development and assignment of identication codes for the WBS
components.
Verication of the decomposed work.

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Create WBS Outputs
A well-executed WBS yields several outputs.

Output

Description

WBS

The primary result of the create WBS process that will organize deliverables
and work packages into a manageable hierarchy.

WBS dictionary

An auxiliary document containing details about each element in the WBS;


may contain information such as description of work, code of accounts identication, milestones, contract information, cost, quality requirements, resource
requirements, time estimates, or resource information for measuring performance and completeness.

Scope baseline

Includes the detailed project scope statement, the WBS, and the WBS dictionary.

Project document
updates

Project documents such as requirements documentation should be updated to


include any approved changes introduced when creating the WBS.

Code of Accounts
Denition:
A code of accounts is any system for numbering the elements in a WBS. A code of
accounts system allows project managers to more easily track individual WBS components, which is especially helpful in the areas of performance, reporting, and cost.
Example: Code of Accounts Specied by a School District
A school district requires its schools to comply with a uniform code of accounts so
that it can easily record, track, and document specic types of revenues and expenditures in every school. The code of accounts could be shown as Function/Category/
Program. If functions include administrative salaries (30), teacher salaries (31), and
consultants fees (32); categories include para-professional expenditures (100) and professional expenditures (101); programs include regular instructional (411), special
education (417), and languages (419), then the fee paid to a consultant leading a
teacher training workshop in special education services would be coded 32/101/417.

How to Develop a Work Breakdown Structure


Procedure Reference: Develop a Work Breakdown Structure (WBS)
To develop a WBS:
1.

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Gather the reference materials and other inputs you will need. Some of the materials needed include:

The scope statement.

The requirements documentation.

A WBS template, if available.

Constraints and assumptions.


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3.

LESSON 3

Relevant historical information.

Other planning inputs that may impact scope denition.

Determine how you are going to organize the work of your project. Regardless of
the organization, these elements represent the level directly below the project
name on your WBS. The WBS can be created using various methods.

Subdividing the project into phases as the rst level of decomposition and
then subdividing the phases into product and project deliverables as the second level of decomposition.

The project can be subdivided into major deliverables, which can be the rst
level of decomposition.

Making the subprojects conducted outside the organization the rst level of
decomposition and the supporting contract work the second level of decomposition.

Identify the major deliverables, or subprojects, for the project. The major
deliverables should be listed in the scope statement or contract, but your team
may think of more deliverables that are necessary to achieve the projects objectives.
If you are organizing your project work by major deliverables, this step will represent the level directly below the project name. If you are organizing your work
by some other method, the major deliverables will probably be two levels below
the project name.
The PMI recommends that you include project management as a major deliverable on the WBS.

4.

Analyze each element to determine whether it is sufficiently decomposed. Can


each deliverable be adequately scheduled, budgeted, and assigned to an individual
person or group? If yes, youve reached the work package level; decomposition
for this element is complete. Skip the next step and go to Step 6. If no, further
decomposition is required for this element. Move on to Step 5.

5.

Break down each WBS element into subdeliverables until you reach the work
package level. For each element, ask yourself, In order to create this deliverable,
what subdeliverables will we have to produce? Repeat Step 4.

6.

Validate your WBS using a bottom-up approach. Starting at the work package
level, ensure that:

The lower-level components are necessary and sufficient for the completion
of each decomposed item.

Each element is described as a deliverable (preferably as a noun), and is distinguishable from all other deliverables.

Each element can be adequately budgeted, scheduled, and assigned to an


individual person or group.
Remember that, although it is not necessary to have the same number of levels for each deliverable, a disproportionate number of levels may indicate
that the deliverable is inappropriately decomposed. Analyze the element to
determine whether one of the higher-level components should be broken into
two subdeliverables or whether two or more subdeliverables should be combined.
Make any necessary modications before moving on to Step 7.

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7.

Using your organizations or projects code of accounts, assign a unique numeric


cost code for each element, indicating its branch and level on the WBS for cost
performance tracking and reporting.

DISCOVERY ACTIVITY 3-4


Developing a Work Breakdown Structure
Data Files:

OGC WBS

Before You Begin:


From the C:\085042Data\Planning Project Work folder, open the OGC WBS document.
Scenario:
You have been asked to create a high-level Work Breakdown Structure for the PM Training
Roll-Out. It has been decided that all WBS codes for the business transformation projects will
start with a 3-character prex. The prex is being used to track deliverables across all business
transformation subprojects. The 3-character prex for the PM Training Roll-Out is TRN. Based
on this projects SOW, you have listed the following deliverables.

Assemble Internal Training Team


Identify Resources

Needs Assessment

Determine External Training Provider


Create SOW

Content and Training Delivery Planning

Training Development

Develop Training Delivery

Review the deliverables in the OGC WBS document and answer the questions in this activity.

1.

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When creating the WBS for the OGC Training Roll-Out, what types of reference materials and other inputs could you use?

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LESSON 3
2.

Based on the scenario, which work breakdown structure in Group 1 of the OGC Work
Breakdown document follows PMI recommendations for the OGC Training Roll-Out
project?
a) WBS A
b) WBS B
c) WBS C
d) WBS D

3.

As the project manager, you are asked to decompose the WBS deliverables. Which
activity would you perform during decomposition?
a) Assign unique ID numbers to each deliverable.
b) Break the deliverables down into smaller components.
c) Arrange the deliverables into categories, based on risk.
d) Organize the deliverables, based on which project team is responsible for their
completion.

4.

The scenario shows two deliverables that have been partially decomposed during a
recent meeting. Which of these activities are decomposed? Choose all that apply.
a) Assemble Internal Training
b) Identify Resources
c) Needs Assessment
d) Determine External Training Provider

5.

In Group 2, which WBS would most resemble the inclusion of the decomposed
deliverables?
a) WBS A
b) WBS B
c) WBS C
d) WBS D

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OPTIONAL DISCOVERY ACTIVITY 3-5


Creating a WBS
Scenario:
You are a project manager in the IT department of OGC. You are currently assigned to a
project that involves creating a new Warehouse Management System for the production team.
The project has been officially kicked-off and the project charter and the scope statement have
been released. You are now creating a work breakdown structure for the new project. You
know that the major breakup of the Warehouse Management System project work would
include, managing the project, software design and development, system test, software installation, and providing support services.
Before creating the WBS, review the following points you recorded from the kick-off meeting
conducted last week and subsequent discussions with the stakeholders of this project.

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The Project Management work component will involve planning project activities,
managing project schedule, cost, scope, project tasks, project communications,
human resources, space and facilities, risks, procurements, and quality.

The Software Design and Development work component will involve the software
design, software build, and the unit test sub components.

The Software Design subcomponent will involve specifying software requirements, dening the software work package, software prototyping, and
detailed designing of the software unit.

The Software Build subcomponent will involve software unit coding and
debugging.

The Unit Test subcomponent will involve planning for unit test, preparing the
unit test case, conducting the unit test, and maintaining the unit test records.

The System Test work component will involve testing the module and subsystem,
testing system integration, acceptance testing, and classifying the identied
defects, tracking defect resolution, and verifying with the metrics.

The Support Services work component will involve conguration management,


quality assurance, development tools and utilities, development environment
upkeep, internal product liaison, and providing technical training to the team.

The Installation work component will involve planning for software installation,
user support documentation, enabling user communications and providing training,
installation management and coordination, testing and verifying the installation,
and monitoring the installation performance.

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LESSON 3
1.

Based on the scenario, develop the second-level work components for the WBS.

2.

Based on the points you recorded from the kick-off meeting and discussions with the
stakeholders, what work packages would you include in the Project Management work
component?

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3.

To the WBS you have created, add the subcomponents for the Software Design and
Development work component and their corresponding work packages.

4.

Complete the remainder of the Warehouse Management System project WBS.

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LESSON 3
Lesson 3 Follow-up
In this lesson, you learned that an effective project management plan will ultimately dene the
execution, monitoring, controlling, and closing of your project. You examined the various components of a successful management plan, including the nalized scope statement. You also
created the requirements document, which records your stakeholder requirements. Using these
components, you developed a work breakdown structure and organized your project management plan accordingly. With this knowledge and these skills, you are better prepared to not
only create a strong project plan, but also to manage it successfully.
1.

What factors of the define scope process are the most important to your organization?

2.

In your experience, what are the most critical inputs to developing a WBS?

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LESSON 4

LESSON 4

Lesson Time
4 hour(s), 30 minutes

Developing Project
Schedules
In this lesson, you will develop project schedules.
You will:

Dene activities.

Create a project schedule network diagram.

Estimate activity resources.

Estimate activity durations.

Develop a project schedule.

Identify the critical path.

Optimize the project schedule.

Establish a schedule baseline.

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LESSON 4
Introduction
Now that you have planned your project work, you are poised to begin implementation by
developing project schedules, which will drive and guide all the work in your projects. In this
lesson, you will advance your skills by creating the organizational tools you will use in schedule development: a comprehensive project activity list, a robust project network schedule
diagram, and estimations of activity duration. You will also utilize techniques for adjusting
exibility within schedules.
The project schedule is the guiding light of every project, and as such is an essential component of any project management effort. As you strive to achieve PMP certication and to
advance your skills as a professional project manager, you need to maintain a powerful command of all of its related elements. Developing effective project schedules, as well as
developing the skills to manage schedules in response to organizational constraints on time and
resources, will help you bring your projects in on time and on budget.

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LESSON 4

Figure 4-1: The project management framework.

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TOPIC A
Create an Activity List
The rst step in developing a project schedule is to accurately dene project activities, so that
you can be sure the activities are tied to the project scope and you can mitigate scope creep. In
this topic, youll gather your WBS and other relevant information to create an activity list.
The activity list is a fundamental building block for an effective project schedule and budget.
Dening the activities helps ensure all project activities remain within the project scope so you
can avoid missing critical activities. If you dene exactly what needs to be done, you can
avoid performing unnecessary work.

Activities
Denition:
An activity is an element of project work that requires action to produce a deliverable.
Activities lay the foundation for estimating, scheduling, executing, and monitoring and
controlling the project work. The characteristics of an activity are:

It has an expected duration.

It consumes budget and/or human resources.

It is named in verb-noun format.

Example: Activity Examples


Some examples of activities are:

Revising a user manual.

Making a sales presentation.

Reserving a conference room.

Each of these items requires action to produce a deliverable. Each has an expected
duration and will consume budget and human resources. Finally, they are all named in
verb-noun format.
Activity Components
Activities can be broken down into smaller components. For example, the activity
reserve conference room, could be broken down in the following way:

Determine budget.

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Determine size requirement.

Determine date needed.

Identify possible room alternatives.

Select room.

Call to reserve room.

File conrmation when received.

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LESSON 4
Activity vs. Task
Although the words activity and task may be interchangeable in common usage
and in many organizations, they are not considered synonyms in the PMBOK Guide.
One of your goals as a professional project manager seeking certication should be to
align your language with the language used in the PMBOK Guide whenever possible.
Use the word activity to refer to the components of work performed during the
course of a project. Use the word task sparingly, typically only in reference to
brands of project-management software.

Work Package
Denition:
Work package refers to the planned work or the deliverables that are contained in the
lowest-level component of the work breakdown structure. The work package can be
described as a manageable work effort, or a level at which the cost and schedule for
the work can be easily estimated. Work packages can be broken down or subdivided
into smaller, even more manageable and executable components, called activities.
Because activity denition is the rst step in the schedule development process, activities are also
referred to as schedule activities.

Note that every single component of work is not typically tracked on the master
project schedule. However, work package ownersthose responsible for the completion of the work packagesmay develop a schedule containing the itemized
components of work necessary to complete the activities in the work package.
Example: Sample Work Packages

Figure 4-2: A work breakdown structure showing the work packages.

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The 8/80 Rule
The 8/80 rule refers to a general guideline regarding work packages: they require more than 8,
but fewer than 80, hours of effort to complete. The 8/80 rule helps project managers create the
work package list by identifying which work components should be considered work packages.
Any work component that can be completed in fewer than 8 hours does not rise to the level of
a work package. Any work component requiring more than 80 hours of work is too monumental to be categorized that way.
Large Projects
While the 8/80 rule may be a useful guideline on small projects, it would be impractical to apply it to large projects, which would necessitate tracking millions of work
packages.

The Dene Activities Process


The dene activities process is the identication and documentation of the specic activities
that must be performed to produce the projects deliverables. Activities are usually dened by
decomposing the work packages. Dening specic activities at this level gives the project team
a tool with which to effectively estimate, schedule, and monitor the progress, cost, and execution of project work. Dening activities is achieved through a variety of different methods,
such as the reuse of existing project templates.

Figure 4-3: The define activities process.


Example: Dening Activities During Movie Production
Film studios routinely use work breakdown systems and activities denition during the
production of their movies. In fact, movies are essentially just large projects. The original lm treatment is like a project charter and the screenplay is really just a set of
deliverables.
Before a scene can be shot, for instance, the lmmakers must engage in detailed activity denition. The location must be scouted, the set must be prepared, and the crew
must be assembled. As a result, each activity can be effectively managed, ensuring the
work package is successfully completed.

Dene Activities Inputs


Several inputs are commonly used to dene activities.

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LESSON 4
Input

Description

Scope baseline

A component of the project management plan. It includes the detailed


project scope statement, the WBS, and the WBS dictionary that provide
information on the project scope, deliverables, constraints, and assumptions.

Enterprise environmental
factors

Include external variables such as availability of software or Project


Management Information Systems (PMIS).

Organizational process assets

Include existing policies or rules for dening activities and the lessonslearned document that provides historical information regarding similar
activities in previous projects.

Dene Activities Tools and Techniques


Several tools and techniques are used to dene activities.

Tools and Techniques

Description

Decomposition

Breaking down WBS work packages into separate activities. The WBS
and the WBS dictionary serve as a base to create the activities.

Rolling wave planning

Method in which short-term planning is in-depth (for example, detailed


WBS work packages) and long-term plans are less dened.

Templates

Activity lists from previous projects can be used as a model for new
projects. Templates may also contain related activity attributes information such as resource skills, and the hours of effort required.

Expert judgment

Information sourced from subject matter experts or team members with


relevant experience in developing the project scope statements, WBS,
and project schedules can be used to dene activities.

Dene Activities Outputs


Thorough denition of activities will result in several outputs.

Output

Description

Activity list

A denitive list of activities that must be completed to produce deliverables.

Activity attributes

Information describing the activities by listing the different components associated with the activities, which include responsible team members and
manpower required. Activity attributes are used to develop project schedules,
and to select, order, and sort planned activities.

Milestone list

Helps identify and prioritize activities during scheduling by indicating if the


milestones are mandatory or are optional.

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How to Dene Activities
Accurately dening project activities ensures that all project activities are tied to the project
scope, which will mitigate the potentially damaging effects of scope creep.
Guidelines:
To dene activities and create an activity list, follow these guidelines:

First, gather the inputs and resource materials you will need. These may include:

The WBS.

An activity list template.

The scope statement.

Relevant historical information.

Constraints and assumptions.

Analyze and decompose each work package of the WBS into activities that will
be required to produce the deliverable.

Conduct brainstorming sessions with the project team to ensure that no


required activities are overlooked.

Consult the scope statement to ensure that activities will enable you to meet
the project objectives.

Consult records of similar projects to identify possible activities.

Consult subject matter experts about unfamiliar material.

Evaluate all constraints and assumptions for their possible impact on activity denition.

Once you have decomposed each work package into activities, evaluate your
activity list:

Ensure that the descriptions accurately reect the actions to be performed.

Verify that the activity descriptions are as specic as possible. For example,
if the desired outcome is a revised user manual, describe the activity as
revise user manual, rather than produce new user manual.

Conrm that the activities listed for each work package are necessary and
sufficient for satisfactory completion of the deliverable.

Verify that the list is organized as an extension of the WBS.

Example: Creating an Activity List for a Web Design Project


A project team for a web design company used their WBS and an activity list from a
previous, similar project to create an activity list for their initial design work package.
The team used historical records of that project to help identify the activities that
might be required to complete the deliverable. Depending on which they select, the
length of time may be lengthened or shortened.
Additionally, an outside multimedia expert was consulted about activity identication.
Finally, to make sure the activities supported the project objectives, the team reviewed
the scope statement. The project team gathered inputs and resource materials to create
this activity list for the work package.

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LESSON 4

DISCOVERY ACTIVITY 4-1


Creating an Activity List
Scenario:
You are now ready to create the activity list for the Assessing Needs WBS. You are reviewing
your notes from a recent brainstorming meeting with your team where you documented the
following:

All WBS codes for this project start with the prex TRN0002.

Training Needs Review with Key Resources: Business Transformation Strategic


Planning group and the PMO Steering Committee.

From the Strategic Planning group, gather high-level business transformation


project management needs that the content should address.

From the PMO Steering Committee, identify new project management processes
that should be included in the content.

Review the training content based on the information gathered for deciencies and
get feedback from both the Strategic Planning group and the PMO Steering Committee.

Review existing documentation for OGC project management methods.

Document all ndings to complete the training material review.

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LESSON 4
1.

The first step in creating an activity list is to gather your resource materials. Which
items below will be helpful in creating your list?
a) Cost-benefit analysis
b) The WBS
c) The scope statement
d) Activity lists from similar projects

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LESSON 4
2.

In the provided table, list the activities and the appropriate WBS codes that are necessary and sufficient for the successful completion of the Assessing Needs work package.

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LESSON 4

TOPIC B
Create a Project Schedule Network
Diagram
You created an activity list for your project. Now you can sequence the project activities and
establish the relationship between them. In this topic, you will delve into the sequence activities process and create a project schedule network diagram. You will also examine the
sequencing process and helpful scheduling tools.
You are the project manager for the launching of a new product line. If you do not understand
the sequence in which the project work must occur, you cannot develop an effective schedule.
You will end up with rework and additional costs. Creating a project schedule network diagram for your project will help you uncover the true nature of the relationship between tasks,
avoiding unnecessary work and expense.

The Sequence Activities Process


The sequence activities process is a planning process that involves identifying and documenting interactivity dependencies among project activities for the purpose of creating the project
schedule. All activities, except the rst and the last, have at least one predecessor and successor. Activities may be sequenced manually, or automatically using project management
software or other automated techniques.

Figure 4-4: The sequence activities process.


Example: Sequencing Activities Using Flow Chart
A basic example of activity sequencing is the common ow chart: a simple list of
activities that must occur in a specic order for the desired outcome to occur. Project
activity sequencing is really a matter of determining the optimum order to begin work
on each activity.

Sequence Activities Inputs


There are several inputs for sequencing activities.

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LESSON 4
Input

Description

Activity list

Includes all activities that must be sequenced to create a project


schedule.

Activity attributes

Describe the sequence of events or their dened predecessor and


successor relationships.

Milestone list

Serves as a logical starting point for sequencing of activities. It


may also list the scheduled dates for some milestones.

Project scope statement

Contains the product description, which could affect sequencing. It


is therefore recommended that the product scope be reviewed for
accuracy during activity sequencing.

Organizational process assets

Inputs that can inuence the sequence activities process. For


example, les from a corporate knowledge base can be used for
scheduling methodology.

Sequence Activities Tools and Techniques


There are several tools and techniques for sequencing activities.

Tools and Techniques

Description

Precedence Diagramming Method


(PDM)

Creates a project schedule network diagram with boxes, or


nodes, representing activities, and arrows representing dependencies.

Dependency determination

Establishes dependencies among the activities, creating logical


sequences.

Applying leads and lags

Allows for the acceleration or delay of successor activities to


accurately dene the logical relationship affecting the overall
project schedule.

Schedule network templates

Existing models can speed the preparation of the project activities.

Sequence Activities Outputs


There are two common outputs of activity sequencing.

Output

Description

Project schedule network diagrams

Show the sequence of all project activities and the logical relationship that exists between them.

Project document updates

Documents that need to be updated after activity sequencing


include activity lists, activity attributes, and the risk register.

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LESSON 4
Activity Dependencies
Denition:
An activity dependency is a logical relationship that exists between two project activities. The relationship indicates whether the start of an activity is contingent upon an
event or input from outside the activity. Activity dependencies shape the sequence
among project activities.
Example: Activity Dependencies for Designing Room Layouts
An architect has designed a residence and has a vision for the room layouts. However,
he will not be able to assess the functionality of the design until the builders have
framed in the structure with walls, windows, and a roof. Once the structure is in place,
he will be able to reassess the plans to determine if modications are necessary.

Types of Activity Dependencies


There are three common types of activity dependencies.

Dependency

Description

Mandatory

A mandatory dependency is inherent to the work itself. They are usually


affected by physical constraints. Activities must be done in a specic
sequence for the work to be successful. Also known as hard logic.
Example: Books cant be bound before theyre printed.

Discretionary

A discretionary dependency is dened by the project and project management team at their discretion. It is dened based on the best practices
followed in a specic application area or on specic requirements. If there
is no mandatory or external dependency between two activities, the team
has some exibility in activity sequencing. Also known as soft logic,
preferential logic, and preferred logic.
Example: The sponsor would like to see the books cover design as soon
as possible, so the team may decide to have the cover artwork done before
the inside illustrations.

External

An external dependency is contingent on inputs from outside the project


activities.
Example: The books cant be printed until the shipment of paper arrives.

Precedence Relationships
Denition:
A precedence relationship is the logical relationship between two activities that
describes the sequence in which the activities should be carried out. Each activity has
two open points: Start and Finish points. Precedence relationship considers appropriate
logic while connecting these points. Precedence indicates which of two activities
should come rst (the predecessor activity) and which should come later (the successor
activity). Precedence relationships are always assigned to activities based on the dependencies of each activity.

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LESSON 4
Example: Precedence Relationship Between Two Activities
An example of the precedence relationship can be: Drywall installation must nish
before painting can begin.

Precedence Relationship Types


Precedence relationships may vary in the way they start and nish.

Precedence Relationship Type

Description and Example

Finish-to-Start (FS)

The precedence relationship between two activities where the


predecessor activity must nish before the successor activity
can start. Can be expressed as, Activity A must nish before
Activity B can begin.
Example: The foundation for the house must be nished
(Activity A) before the framing can start (Activity B). The
total time for these two activities is the sum of A + B.

Finish-to-Finish (FF)

The precedence relationship between two activities where the


predecessor activity must nish before the successor activity
can nish. Can be expressed as, Activity A must nish before
Activity B can nish.
Example: Construction must be nished (Activity A) before
the building inspection can be nished (Activity B). The total
time to complete both activities is based on when B begins.

Start-to-Start (SS)

The precedence relationship between two activities where the


predecessor activity must start before the successor activity
can start. Can be expressed as, Activity A must start before
Activity B can start.
Example: The building design must start (Activity A) before
the electrical layout design can start (Activity B). As with the
FF example, the total time for activities A and B will vary,
depending on when Activity B starts. But in SS, there is a
longer window of time during which Activity B can begin.

Start-to-Finish (SF)

The precedence relationship between two activities where the


predecessor activity must start before the successor activity
can nish. Can be expressed as, Activity A must start before
Activity B can nish.
Example: The electrical inspections must start (Activity A)
before you can nish the drywalling (Activity B). The total
time for Activities A and B can vary widely, depending on the
relative duration of each activity. This type is rarely used.

Lag
Denition:
A lag is a delay in the start of a successor activity. Some relationships require a lag
before a subsequent activity can begin. Lags are determined by an external or mandatory dependency and may affect activities with any of the four precedence
relationships.

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Example: Effects of Lag in FS Relationship
When lag is introduced into a nish-to-start (FS) relationship, the overall elapsed time
required for the chain of activities increases. The start and nish dates of the successor
activity are delayed when there is a lag.

Figure 4-5: FS relationship with lag.


Possible Lags
There are several reasons why lags occur. Examples of two possible lags are:

The permit application takes six weeks to process.

The adhesive must dry until tacky before the laminate can be installed.

In the rst example, the activity that follows the submission of the permit application
is delayed by six weeks due to an external dependency of the application processing
time. In the second example, the installation of the laminate activity is delayed by the
amount of time the adhesive takes to dry. This is a lag due to a mandatory dependency, because the delay is inherent to the work itself.

Lead
Denition:
A lead is a change in a logical relationship that allows the successor activity to start
before the predecessor activity ends in an FS relationship. A lead is implemented when
you need to accelerate a successor activity in order to shorten the overall project
schedule.
Leads will vary in length, depending on the acceleration required by the amended
schedule. Sometimes, a lead introduces a risk of rework as the successor activity starts
before the completion of the predecessor activity, and the complete, comprehensive
inputs may not be available.

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Example: Effects of Lead in FS Relationship

Figure 4-6: FS relationship with lead.


Possible Lead
The programmer for a website may decide to start programming the home page four
days before the interface design is approved. Starting the programming may shorten
the overall project schedule by four days. However, if the design is not approved, there
may be signicant rework for the programmer, resulting in the loss of some or all of
the four day gain.

Project Schedule Network Diagrams


Denition:
A project schedule network diagram is a graphical representation of the sequence of
project activities and the dependencies among them. Project schedule network diagrams read from left to right or top to bottom and are typically accompanied by
summary information. The diagram can either include the entire project or just specic
parts of it. Parts of a schedule network diagram may be referred to as a subnetwork or
a fragmented network.
The summary information describes the basic approach used to sequence project activities.

Project schedule network diagrams may differ in that they may be:

Very detailed or more high level.

Generated manually or with software.

Constructed using a variety of methods.

Of several types, including the precedence diagramming method.

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Example: A Project Schedule Network Diagram

Figure 4-7: A project schedule network diagram representing the project


activities.

The Precedence Diagramming Method (PDM)


Denition:
The Precedence Diagramming Method (PDM) produces a project schedule network
diagram that uses rectangular boxes, or nodes, to represent activities and arrows to represent precedence relationships between activities. This type of diagram:

Always reads from left to right.

Shows duration only in the nodes.

May be created manually or with software.

May report a group of related activities as an aggregate activity.

May use all precedence relationship types.

Example: A Project Schedule Network Diagram Using PDM


A project has ten activities, which are represented by the letters A through J, and the
project team has determined the precedence relationships for each activity. The following table shows the precedence relationships.

This gure shows the project schedule network diagram that was constructed using the
precedence diagramming method.

Figure 4-8: A project schedule network diagram using the precedence diagramming method.

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Summary Activities
Denition:
A summary activity is a group of related activities that, for reporting purposes, is
shown as a single aggregate activity in a bar chart or graph. It may also be called a
hammock activity. Some summary activities have their own internal sequence of
activities, but others include separate activities. A summary normally spans several
activities and encompasses xed resources or costs associated with one type of activity.
Example: A Summary Activity

Figure 4-9: A summary or hammock activity.

Conditional Diagramming Methods


Denition:
Activity sequences that must be revisited or repeated are called loops, while activities
that will be implemented only under specic conditions are called conditional
branches. A conditional diagramming method is any network diagramming method that
allows for nonsequential activities such as loops or conditional branches. Typically,
activities in these types of diagrams are represented by rectangles, decision points are
represented by diamonds, and directional ow is indicated by arrows.
Conditional diagramming methods will vary based on which method is used. The most
common conditional diagramming methods are the Graphical Evaluation Review Technique (GERT) and system dynamic models.
When creating a network diagram, you may want to create a Start node that connects by arrows to
all of the nodes for activities with no dependencies.

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Example: GERT Network Diagrams

Figure 4-10: A GERT network diagram with loop.


The graphic below illustrates a GERT network diagram with conditional branch.

Figure 4-11: A GERT network diagram with conditional branch.


PMI has discarded the usage of GERT in all the editions of the PMBOK Guide. However, it is better
to be aware of this technique as well.

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How to Create a Project Schedule Network
Diagram
Procedure Reference: Create a Project Schedule Network Diagram
To create a project schedule network diagram using PDM, one of the most commonly
used types, with all the activities having the most common precedence relationship,
Finish-to-Start (FS):
1.

Determine the dependencies among project activities using your activity list and
product descriptions.

2.

Identify predecessor and successor activities.


a. Create a table with two columns.
b.

In the rst column, list each activity to be sequenced. Identify each with a
letter.

c.

In the second column, write the letter of the predecessor activities for each
activity.

3.

Create nodes for all activities with no predecessor activities or dependencies.

4.

Create nodes for all activities that are successor activities to the nodes already
created.

5.

Draw arrows from the predecessor activities to the successor activities.

6.

Continue drawing the network diagram, working from left to right until all activities are included on the diagram and their precedence relationships are indicated
by arrows. Include any known lags or leads.

7.

Verify the accuracy of your diagram. Check to ensure that:


a. All activities on the activity list are included in the diagram.
b.

All precedence relationships are correctly indicated by arrows going from the
predecessor activities to the successor activities.

c.

Any known lags or leads are indicated on the diagram.

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DISCOVERY ACTIVITY 4-2


Creating a Project Schedule Network Diagram
Data Files:

OGC Activity List

Before You Begin:


From the C:\085042Data\Developing Project Schedules folder, open the OGC Activity List
document.
Scenario:
Your activity list for Assembling Internal Training Team (WBS TRN0001) and Assessing
Needs (WBS TRN0002) is complete. You have evaluated the discretionary, mandatory, and
external dependencies and have entered the precedence relationships into a table in the OGC
Activity List document.
You have scheduled a meeting with your team to discuss the project activities. To prepare for
the meeting, you will use the OGC Activity List document to create a network diagram for the
activities starting with WBS TRN0001, Assembling Internal Training Team.

1.

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During a recent meeting with your team, a decision was made to add five days
between identifying resources and defining roles and responsibilities due to other
commitments that some members of the team need to address in other projects. Will
this be a lag or lead relationship that you should account for? Please explain.

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2.

Referring to the OGC Activity List document, for the Assessing Needs activity, which of
the following activities are summary activities? Choose all that apply.
a) Training Needs Review with Key Resources
b) Identify High-Level BT PM Needs
c) Training Needs Review with PMO Steering Committee
d) Review Current Documentation for Deficiencies

3.

Referring to the OGC Activity List document, draw your network diagram for WBS
TRN0001, Assembling Internal Training Team. Make sure that all the required activities
are included in your network diagram. Make sure your diagram shows the sequence
constraints from left to right. Check to make sure the activities that are connected by
arrows correctly indicate their precedence relationship. Include inside each node the
WBS Code, duration, and lag or lead time.

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TOPIC C
Estimate Activity Resources
You identied the logical dependencies and precedence relationships between the project
activities and created a project schedule network diagram for your project. Now you can determine the types and quantities of resources needed to accomplish project work. In this topic,
you will estimate activity resources.
If your project team lacks the required skills or materials to perform an activity, your project
may fail to meet milestones along the way. If the missed milestones are for activities on your
projects critical path, your entire project is in serious jeopardy of being late. Costs may skyrocket. Your reputation as a project manager who can meet deadlines to which you have
committed could be damaged. On the other hand, effective activity resource estimating will
help ensure that you have all the resources you need to meet your designated milestones and
ensure project success and stakeholder satisfaction.

Project Resources
Denition:
Project resources refer to any useful material object or any person needed for the
project work to be completed.
Project resources will vary greatly in size, cost, and function. They typically fall into
one of the following categories: labor, materials, facilities, equipment, consultants, services, supplies, or utilities. Project resources are almost always limited in quantity, and
therefore require thoughtful allocation.
Example: Resources Required to Organize a Seminar
A project for a Human Resources team could be to present an annual employee health
and wellness seminar. Resources would include the conference room, which would be
used for the seminar; the tangible information materials, such as brochures and pamphlets that would be given to employees; the visiting consultants, who would be hired
to make presentations and answer employees questions; and the vendors, who would
participate in the seminar and offer their services.

The Estimate Activity Resources Process


The estimate activity resources process involves determining specic resources necessary for
completing project activities. Such estimates should also include the quantities and availability
of each resource. Numerous factors can affect which resources are available and which
resources you need to complete your project.

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Figure 4-12: The estimate activity resources process.


Example: Activity Resource Estimation for Hosting a Training Session
Every project requires activity resource estimating. Before you can host a training session, you need to identify the supplies and materials that will be necessary, how many
people will be attending, and what ancillary materials are necessary to complete the
task. Will you need to prepare handouts? Are there other supplementary materials you
want to make available? Have you reserved a room large enough to accommodate all
the participants?

Estimate Activity Resources Inputs


There are several common inputs for estimating activity resources.

Input

Description

Activity list

Lists the activities that are in need of resources to complete a


project successfully.

Activity attributes

Contain the fundamental information about all the activity


resources in the activity list.

Resource calendars

List availability of resources for each activity. Composite calendars


will list additional information such as the available list of
resources and the skills and capabilities of human resources.
Resource calendars are used to estimate resource utilization.

Enterprise environmental factors

Include factors that can inuence the estimate activity resources


process such as resource availability and skillsets.

Organizational process assets

Include organizations policies, procedures, and guidelines about


hiring procedures and resource acquisitions. It also includes historical information about resources used in previous projects.

Estimate Activity Resources Tools and Techniques


There are several tools and techniques for estimating activity resources.

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Tools and Techniques

Description

Expert judgment

May be necessary to consult outside experts if resource inputs are outside the project teams knowledge sphere.

Alternatives analysis

Identies different ways of accomplishing activities and the different


resources required by each method.

Published estimating data

Studies and commercial publications about production rates, resource


cost, and labor requirements, for different countries and regions.

Bottom-up estimating

Decomposes work in an activity to the last executable level and generates activity resource estimates by adding the resources required by
each activity. This technique is used when a detailed understanding of
the project or part of the project is available to decompose the activities into more depth. The accuracy of the estimates received using this
technique is generally very high.

Project management software

Can generate and organize resource information, such as cost estimates and breakdown structures, which helps optimize resource
utilizations.

Estimate Activity Resources Outputs


There are several possible outputs for the estimate activity resources process.

Output

Description

Activity resource requirements

Description of identied resources (and quantities) necessary


to complete project activities.

Resource breakdown structure

Hierarchy of identied resources, organized by category and


type. Category includes labor and equipment and type includes
resource skills and grade levels. The resource breakdown
structure helps organize and report the project schedule information along with the resource utilization data.

Project document updates

Documents that are updated when estimating activity


resources. Updated documents include activity lists, activity
attributes, and resource calendars.

Schedule Management Plans


Denition:
A schedule management plan, one of the subsidiary plans in the overall project plan, is
an approach to developing, maintaining, and managing the project schedule.
A typical schedule management plan describes:

The purpose of the plan.

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Approved schedule development tools and techniques, such as a particular project


management software.

The number, types, and purposes of the project schedules to be developed and
maintained.
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How changes to the schedule baseline will be managed.

Who is responsible for developing and maintaining the project schedules.

How and when schedule performance will be reported.

Example: Schedule Management Plan for the Arithmetic on a Stick Project


The Schedule Management Plan document contains the schedule management plan for
the Arithmetic on a Stick project. It clearly describes the project teams approach to
developing the schedule and for making changes to the schedule baseline. The plan
names the person responsible for maintaining the project schedules and contains a
policy for schedule performance reporting.
You can open the Schedule Management Plan document from the C:\085042Data\Developing Project
Schedules folder.

How to Estimate Activity Resources


Accurate estimations of the resources required to complete project deliverables are vital in
developing a realistic project schedule and budget.
Guidelines:
To determine the resource requirements for your project, follow these guidelines:

Determine what resources are necessary to complete each activity in the work
packages.

Determine what quantity of resources is necessary to complete each activity.

Generate possible alternatives for unavailable resources and areas where:

Resources are known to be constrained.

The work is new to your organization so new resources will need to be


brought in.

Many different resourcing options are known to exist.

There have been disagreements about resource requirements in the past.

Certain activities are high risk.

Analyze the scope statement to ensure youve identied all the resources required
to perform the project work.

Consider organizational policies that could affect resource acquisition and usage.

Can you use contract labor to take advantage of lower hourly rates for certain types of work?

Is renting equipment preferred over purchasing?

Must suppliers be selected only from a list of those approved and qualied?

Are there any resource usages that require authorization from upper management?

Identify and use expert judgment resources. Consider the following sources:

Knowledge base on your project team.

Organizations within your company.

Colleagues in the industry.

Technical or professional associations.

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Subject matter experts.

Other project managers of projects with aspects similar to your project.

Analyze the resources already available to you.

Does the available in-house staff have the required skills and experience or
will you have to procure some resources?

Will you have access to the materials, facilities, and equipment you need to
perform the work when it is scheduled to be done?
Most project managers use a spreadsheet program to capture the resource requirements
for their projects. This allows exibility in formatting the information and lets you output
the columns you want for a particular purpose.

Example: Determining Resources for the Website Design Project


Robert is trying to determine the resources required for the initial design work package
for a website project. The art director has provided him with a list of resources he will
need. Since there are no in-house graphic designers available, Robert authorizes him to
hire a contractor.
The computer and workstation and black-and-white printer are overhead items that are
already available to the art department. However, there is no color printer on site and
the software program will need to be purchased. The companys policies require that
this equipment be rented rather than purchased. As an alternative, Robert directed the
art department to utilize a commercial printing facility for presentation items that
require color.

DISCOVERY ACTIVITY 4-3


Estimating Activity Resources
Scenario:
You now have all of the appropriate activities listed with their unique WBS codes, and you
have established the appropriate relationships with each predecessor for the OGC PM Training
Roll-Out. It is now time to estimate the activity resources for your project. During previous
meetings it was determined based on the work packages that the following resources will be
required for these roles:

Training Manager

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Four Team Members

OGC Lead Trainer

OGC Trainer

OGC Business Transformation SME

OGC Instructional Design Lead

OGC Content Developer

External Training Coordinator

Software Training Vendor

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One area of concern is based on recent discussions as to whether OGC has the instructional
expertise to design the content for the internal training. This is something that will need to be
determined quickly if the project should meet the deadline.

1.

What are some additional factors that you would consider when identifying the
resources to fill the identified roles?

2.

What are some things that you would consider when determining the software training
vendor?

3.

As the project manager, what factors would you consider to make a decision on
whether to outsource development of the internal training content?

4.

What other types of resources, other than people, would you list for this project?

TOPIC D
Estimate Duration for Project
Activities
You have identied the activity resources that will be needed for each scheduled activity in a
work package. Now it is time for you to determine how long each activity will take. In this
topic, you will estimate activity durations.
Estimating activity durations is important because missing delivery dates almost always results
in cost overruns. Leaping in with a can-do attitude is one thing, but realistic assessments of
what must be done and how long it will take will keep you from making promises you cannot
keep. Without accurate activity duration estimates, you cannot create a meaningful, realistic,
and useful schedule.

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The Estimate Activity Durations Process
The estimate activity durations process involves the act of estimating the duration of work that
will be needed to complete individual project activities using the available resources. It uses
information on factors such as activity scope of work and resource calendars. The inputs for
estimating activity durations are collected from people or groups who are familiar with the
work an activity involves. The resulting activity duration estimates will shape the preliminary
project schedule. They contain assumptions made when making the estimatefor example, the
availability of required resourcesand a range of variance for the provided estimate, such as
plus or minus ten percent, or plus or minus two days.

Figure 4-13: The estimate activity durations process.


Example: Estimating Activity Durations for Training an Assistant
Your department head asks how long you think it will take to train a new assistant.
You have never worked with this assistant before, so you are unsure how to estimate
the activity duration.
In this case, you might make a comparison with previous projects at your company. If
your company has trained other people in the past for similar positions, you can use
the old training duration as a model for the new training project. The more similar two
projects are, the more similar their durations are likely to be.
Elapsed Time
Elapsed time is the actual calendar time required for an activity from start to nish. An
activity that requires two weeks to complete would take four calendar weeks of
elapsed time if theres a two-week plant shutdown in the middle.
Effort
Effort is the number of person-hours or person-days required for completion of an
activity. The estimates of effort provide the basis for cost estimating and resource allocation.

Estimate Activity Durations Inputs


There are several inputs to the estimate activity durations process.

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Input

Description

Activity list

Lists activities for duration estimation.

Activity attributes

Contain details about activity resources, which help estimate


duration.

Activity resource requirements

Resource availability will inuence how easily and quickly the


required quantities of resource requirements can be met, thus
impacting the overall activity duration.

Resource calendars

Contain information about resource availability and capability,


which affects duration.

Project scope statement

Contains constraints and assumptions such as availability of


information and existing conditions that could affect activity
durations.

Enterprise environmental factors

Include existing duration estimation databases, whether internal


or commercial, productivity metrics, and contract terms and
requirements may provide estimates and reference data.

Organizational process assets

Include existing policies or les such as project calendars and


lessons learned from past projects may prove useful.

Estimate Activity Durations Tools and Techniques


There are many tools and techniques for estimating activity duration.

Tools and Techniques

Description

Expert judgment

Helps estimate durations for each activity. It will most often come
from work package owners with relevant experience or from historical information documentation. However, if the activity is outside
the organizations knowledge sphere, it may be necessary to confer
with external contractors or consultants for their expert judgment.

Analogous estimating

A top-down estimating technique using durations of previous similar


activities to estimate future durations.

Parametric estimating

Some durations can be estimated by multiplying a productivity rate


by the quantities to be performed for a specic work category.

Three-point estimates

Incorporate three types of estimates into a singular duration estimate


scenario: most likely, optimistic, and pessimistic.

Reserve analysis

Extra time added to duration estimates that can serve as a buffer as


recognition of scheduled risk (contingency reserves).

PERT Analysis
The three-point estimates technique is based on PERT (Program Evaluation and
Review Technique) analysis, which uses a weighted average of the three estimate types
(most likely, optimistic, and pessimistic) to calculate the expected activity duration.
The formula is as follows: [optimistic time + 4(most likely time) + pessimistic time]/6.

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Estimate Activity Durations Outputs
There are two possible outputs for estimating activity durations.

Output

Description

Activity duration estimates

Approximate number of work units required to complete project activities. Lags are not considered when estimating activity durations.

Project document updates

New activity attributes and assumptions may be added as a result of


duration estimation.

How to Estimate Duration for Project Activities


Accurate activity duration estimates form the basis of an accurate project schedule.
Guidelines:
To ensure your estimates are as accurate and realistic as possible, follow these guidelines:

Involve the work package owners or others who are very familiar with the work
of the activity.
In general, the people responsible for doing the work are the ones who can best
estimate the effort and duration for the activities under their control. The project
manager will, however, be responsible for actually making the estimates, based on
numbers provided by the experts. In some cases, the project manager may take
sole responsibility for making the duration estimates. Some examples are:

Small projects in which the project manager is very familiar with the activities required.

Projects with activities that are well dened, and for which there is good historical information from very similar past projects.

Consult historical information.

Are there any detailed records from previous, similar projects that you could
use to derive your estimates?

Are there any relevant commercial duration estimating databases?

Do any project team members have experience with similar activities?

Determine how you want to quantify the work that needs to be done: in terms of
the estimated hours of labor that will be needed, the number of units to be produced, and the number of customers to be served.

Consider resource requirements and capabilities.

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Which people will be assigned to this activity?

How will the skills of the assigned staff affect the duration estimates?

Determine the appropriate estimation method to use.

If it is early in the planning phase or if there is good historical data, consider


using analogous estimating.

If there is inadequate historical data, consult subject matter experts.

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Use quantitatively based durations to estimate activities when quantities of


work units can be multiplied by the productivity rate.

If you are using the three-point estimating technique, ask the estimators for
the best-case, most likely, and worst-case estimates.

Modify the constraints and assumptions from the other planning processes.

Verify the accuracy of your estimates.

What is the probability associated with this estimate?

What was this estimate based upon?

Are there any risks associated with this estimate?

Consider the need for reserve time.


As more information becomes available about the activity or work package, the reserve time can
be modied.

Include the list of assumptions made in the creation of the estimates.

Include a range of variance for each estimate.

Example: Estimating Activity Duration for a Website Project


Paul, the project manager for the companys website project, asked his work package
owners to provide estimates for each of their activities.
Tracy, the art director, needs to hire a contractor to do the design work. Also, she is
unsure how long the design reviews will take. Based on these factors, she submitted an
activity duration estimate to Paul. Tracys estimate denes work units as days, according to Pauls specications.
Her estimate also species who will be used on the project and how their skills will
affect the duration. She has used a quantitative method for her estimate and included
relevant assumptions made earlier. Finally, Tracys estimate includes a range of variance for each duration.

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DISCOVERY ACTIVITY 4-4


Estimating Activity Durations
Data Files:

Estimating Activity Duration

Before You Begin:


From the C:\085042Data\Developing Project Schedules folder, open the Estimating Activity
Duration document.
Scenario:
After determining the resources that you will need to complete the OGC PM Training Roll-Out
project, you are now ready to estimate the durations for each activity:

Assemble Internal Training TeamThis team will be responsible for identifying


internal training needs and managing the effort to fulll those needs. External
resources representing both the need areas and the audience are identied and
incorporated into the team.

Assessing NeedsIdenties potential areas of training that would be most benecial to the Business Transformation Program. Benecial is dened by the
organizational components represented in the team.

You have given the group a list that includes each activitys WBS, name, predecessor relationship, and assigned resource. The goal of the meeting is to determine the durations for these
activities.

1.

For the summary task, Resources Identification, the team members explained that,
based on past experience, they would need a week to complete the interviews, if all
of the managers were available during that week. When asked how many hours they
expected to work during the week, they responded with 10 hours. Based on their
response to this question, what will the elapsed time be for these activities?
a) 10 hours
b) One week
c) 50 hours
d) A day and a half

2.

When the team members determined how long they thought it would take to complete
the manager interviews, what type of duration estimating technique were they probably using?
a) Parametric estimating
b) Analogous estimating
c) Reserve analysis
d) Expert judgment

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3.

In the Estimating Activity Duration document, what will be the total duration for the
summary activity, Training Needs Review with Key Resources?
a) 1 day
b) 2 days
c) 4 days
d) 11 days

4.

Do you find it helpful in the activity list to have milestones represented with zero
duration? Why or why not?

TOPIC E
Develop a Project Schedule
You identied the necessity of effective activity duration estimating in successful schedule
planning. Now you will put that to good use by moving on to the next stage of schedule
development. In this topic, you will develop a project schedule.
The project schedule is one of the most important tools for keeping upper management and
project stakeholders informed about the projects status and for tracking performance. Given its
importance and high visibility, you want to make sure that the schedule you create is realistic.
If you dont take the time to establish realistic start and nish dates, it is unlikely that your
project will nish on time.

Project Schedules
Denition:
A project schedule is the project teams plan for starting and nishing activities on
specic dates and in a certain sequence. The schedule also species planned dates for
meeting project milestones.
With its supporting detail, the schedule is the main output of the develop schedule process. The purpose of the project schedule is to coordinate activities into a master plan
in order to complete the project objectives on time. It is also used to track schedule
performance and to keep upper management and project stakeholders informed about
project status.

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Example: A Project Plan Listing the Project Schedule

Figure 4-14: A project schedule for a website design project (deliverable categories in bold).

The Develop Schedule Process


The develop schedule process is the act of dening specic start and end dates for each project
activity. The end result of the develop schedule process is the project schedule. The project
manager analyzes the activity sequences, durations, resource requirements, and schedule constraints to create the schedule. As the project progresses, the project schedule is revised or
modied continuously to accommodate the changes in the project work.

Figure 4-15: The develop schedule process.

Develop Schedule Inputs


In order to develop a well-constructed project schedule, several elements should be included.

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Input

Description

Activity list

Lists activities that are the building blocks of project schedules.

Activity attributes

Information about responsibility assignment, location of the work,


and type of work to be performed is important when assigning
dates to activities.

Project schedule network diagrams

Show the sequence of all project activities.

Activity resource requirements

Can affect project schedules depending on how difficult the requirements are to fulll.

Resource calendars

Provide information about when work can be performed and which


resources are available.

Activity duration estimates

Approximate number of work units required to complete project


activities.

Project scope statement

Contains assumptions and constraints, both of which can affect the


project schedule.

Enterprise environmental factors

Existing environmental factors may include a schedule development software.

Organizational process assets

Existing assets may include a project calendar or a scheduling


methodology.

Develop Schedule Tools and Techniques


There are many tools and techniques available for use in developing a project schedule.

Tools and Techniques

Description

Schedule network analysis

Produces the project schedule through a mix of analysis methods.

Critical path method

Analysis that calculates early and late start and nish dates for all
activities in the project.

Critical chain method

Alters the project schedule to accommodate limits on resources.


Involves adding buffer activities to keep focus on activity durations.

Resource leveling

Assists in making scheduling decisions when there are resource management concerns.

What-if scenario analysis

Analysis that involves creating a scenario (What if X happens?),


and then calculating various possible project durations. This analysis
is helpful in assessing different schedules under adverse conditions.

Applying leads and lags

Leads and lags may need to be applied to accommodate other scheduling elements. Improper use may distort the project schedule.

Schedule compression

Involves shortening the schedule without affecting the scope of the


project.

Scheduling tool

Automates or accelerates the schedule development process. May be


used along with commercial project management software or
in-house, custom-built applications.

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Develop Schedule Outputs
In addition to the project schedule and its supporting detail, the develop schedule process can
produce several outputs.

Output

Description

Project schedule

Includes start and nish dates for each activity. Project schedule outputs may include:
A resource histogram, table, or network diagram showing resource
requirements by time period.
Alternative schedules, such as high-level, detailed, best-case or
worst-case, with or without imposed dates.
Contingency reserves.
Optionally, additional items including cash-ow projections and
order and delivery schedules.

Schedule baseline

Version of the schedule created through schedule network analysis.


Features approved baseline start and nish dates.

Schedule data

Includes milestones and activities and their attributes, constraints, and


assumptions.

Project document updates

Documents that are updated during the develop schedule process


include:
Activity resource requirements: May be impacted and require
updates if resource leveling is used to develop the schedule.
Activity attributes: May be altered, especially if resource requirements are updated.
Calendar: Used as a basis for project scheduling. The calendar
units may change for each project.
Risk register: Updated with opportunities and threats that arise
while scheduling assumptions.

Standard Schedule Diagramming Notations


Project network diagrams use standard diagramming nomenclature.

Figure 4-16: Standard schedule diagramming notations for an activity.

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Notation

Description

ES

Early start. The earliest time an activity can start. Usually, the ES of the rst
activity in a network diagram is zero. The ES of all other activities is the latest
Early Finish (EF) of any predecessor activities (assuming that any successor
activity starts as soon as all its predecessor activities are nished).

EF

Early nish. The earliest time an activity can nish. The EF for the rst activity
is the same as its duration. For all other activities, EF is the latest EF of all of an
activitys predecessor activities plus its duration.

LF

Late nish. The latest time an activity can nish. The LF for the last activity is
the same as its EF time. The LF for any predecessor activity is the earliest LS of
any of its successor activities.

LS

Late start. The latest time an activity can start. The LS for the last activity is its
EF minus its duration. The LS for any predecessor activity is its LF minus its
duration.

DU

Duration. The number of work periods required for completion of an activity.

The Critical Path


Denition:
The critical path is the network path that has the longest total duration. Activities on
the critical path cannot be delayed or the whole project will be delayed unless subsequent activities are shortened.
The critical path is calculated by doing a forward pass to calculate the ES and EF for
each activity and then a backward pass to calculate the LS and LF for each activity.
The path with the longest total duration and no scheduling exibility is the critical
path.
Although it is easy to calculate the critical path by using software, students preparing for the PMP
certication exam should be aware that you may be asked to calculate a critical path with paper and
pencil during the exam.

Example: Critical Path of Activities

Figure 4-17: A network diagram showing the critical path of activities.

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Float
Denition:
Float is the amount of time an activity can be delayed from its ES without delaying
the project nish date or the consecutive activities. Float occurs only in activities that
are not on the critical path. Float is also called slack. There are two types: total oat
and free oat.
Example: Float in Project Activities

Figure 4-18: A schedule network diagram showing float.

Total Float
Denition:
Total oat is a type of oat where the total amount of time an activity requires can be
delayed without delaying the project nish date. Total oat for an activity can be calculated by subtracting its EF from its LF or its ES from its LS.
When you see the term oat by itself, it generally refers to total oat.

Example: Total Float in Activities


In this CPM diagram, Activity C has an ES of 25 days. However, should it begin on
its Late Start (LS) date, the value is 36. Therefore, the amount of time the start date
can be delayed without affecting the nish date is 11 days. The Total Float (TF) value
is 11 (36 25 = 11).

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Figure 4-19: CPM network diagram with total float.

Free Float
Denition:
Free oat is the amount of time an activity can be delayed without delaying the ES of
any activity that immediately follows it. It allows exibility of the start or nish time
within that activity only. If there is a string of activities with oat, free oat will be
available only for the activity at the end of the string. Free oat on the activity is calculated by subtracting the EF of an activity from the ES of its successor activity.
Example: Free Float in Activities
In the CPM diagram, the free oat for activity E can be calculated by subtracting the
EF from the ES of the successor activity, which in this case is Activity H. The free
oat value is Activity Hs ES (61) Activity Es EF (50), or 61 50. The free oat is
11.

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Figure 4-20: CPM network diagram with free float.

Schedule Network Analysis


Denition:
Schedule network analysis is a technique used to calculate the theoretical early and late
start and nish dates for all project activities. In other words, it helps create a project
schedule. This method also generates oat or slack.
Schedule network analysis may be achieved using one of four methods:

Critical Path Method (CPM)

Critical chain method

What-if scenario

Resource leveling

Example: Developing a Schedule for a Marketing Campaign Project


You are trying to craft a schedule for the creation of a new marketing campaign, which
will involve nding a new advertising agency, creating the advertisements, and producing marketing materials. Because the project contains so many different work
packages, you decide that schedule network analysis is necessary. Using a project management software application, you are able to dene the network path from request
for proposals to launch campaign. From there, you can estimate the points in the
schedule where there is slack and adjust the activities accordingly.

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The Critical Path Method (CPM)
Denition:
The Critical Path Method (CPM) is a schedule network analysis method that uses a
sequential nish-to-start network logic and calculates one early and late start and nish
date for each activity using a single duration estimate. The longest path through the
networkthe critical pathis identied. Then oat is calculated to identify activities
where there is some scheduling exibility. CPM is the mathematical analysis technique
used in most types of project management software.
Example: A Project Schedule Showing the Critical Activities

Figure 4-21: Critical path method involves calculating one early and late start
and finish date for each activity.

The Critical Chain Method


Denition:
The critical chain method is a schedule network analysis method that allows you to
consider resource limitations and adjust the schedule as appropriate to work within
those limitations. The critical chain is established by analyzing the critical path alongside the resources that are actually available. The critical chain method is also used to
plan and manage reserves or buffers and helps mitigate possible cost and schedule
risks.
Example: A Project Schedule

Figure 4-22: A project schedule allows you to consider resource limitations


and adjust the schedule.

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The What-If Scenario Analysis
Denition:
The what-if scenario analysis method allows you to consider different situations that
might occur and inuence the schedule; it assesses the feasibility of the schedule under
various adverse conditions. It allows you to compute different schedules based on
potential delays, or the unplanned events that are a normal part of business life, such
as key employees resigning during a project. The outcomes are also used to mitigate
the impact of unexpected situations when preparing risk response plans. This method
helps in selecting the optimum plan.
Example: What-If Scenario for Planned Move of Corporate Headquarters
A project manager could use the what-if scenario analysis method to compute different
schedules for a planned move of corporate headquarters to a new facility. He would
base his computations on several scenarios, such as: What if the contractor for the new
building brings the goods in late? What if key decision makers are allocated elsewhere
during the planning process? What if there is a union strike affecting the construction
workers?

Resource Leveling
Denition:
Resource leveling is used to analyze the schedule model. It allows you to readjust the
work as appropriate so that people are not overly allocated. It is also used to address
scheduling activities when critical resources are only available at certain times.
Resource leveling is normally done after the critical path has been initially identied.
The critical path frequently changes as a result of resource leveling. Resource leveling
tools are found in many types of project management software.
The most common scheduling conicts are under-allocation of resources to a critical task and overallocation of a critical resource.

Example: Resource Leveling at a Construction Company


Daniel, a project manager who worked for a construction company, always managed
several simultaneous projects. His project resources included construction workers who
were paid varying hourly wages. By using the resource leveling method via a tool in
his project management software, Daniel could make sure that the most expensive
hourly workers, including electricians and stone masons, were appropriately and consistently allocated.
Automated Leveling
Most project management software packages have resource leveling capabilities. However, make sure you analyze the results before accepting them. Automated leveling
often pushes out the projects completion date. Resources may be reallocated to work
at times that are inappropriate due to other constraints.

Schedule Formats
The project schedule can be presented in several different formats, depending on the circumstances.

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Graphical Format

Characteristics

Bar chart

Shows the start and end dates, expected durations, and the dates and
order of project milestones.
Can show precedence relationships between activities.
Can show the percentage of an activity completed to date and actual
progress in relation to planned progress.
Typically lists activities or work packages vertically on the left. Time
is represented with horizontal bars that correspond to the activities
and show projected start and end dates.
Often used for project status presentations to upper management.
A detailed view is effective in reviewing project status with the
project team.

Milestone chart

Provides a summary level view of the projects schedule in terms of


its milestones.
Uses an icon or symbol to show scheduled milestone events.
Milestones are typically listed from the left to right of the chart.
Time intervalsdivided into hours, days, weeks, or monthsare usually presented horizontally across the top or bottom of the chart.
Effective in demonstrating the projects overall schedule to project
team members, stakeholders, and upper management.

Project schedule network


diagrams with dates

Helps assign start and nish dates to activities on the project schedule
network diagram.
Useful when you need to communicate project status in terms of
activity precedence relationships.

Examples for Different Schedule Formats


The following gures show a bar chart, a milestone chart, and a project schedule network diagram with dates assigned to each activity.

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Figure 4-23: A bar chart.

Figure 4-24: A milestone chart.

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Figure 4-25: A network diagram with dates.

How to Develop a Project Schedule


Procedure Reference: Develop a Draft Project Schedule
To develop a draft project schedule:
1.

Perform a mathematical analysis to determine the time periods within which


activities could be scheduled once resource limits and other known constraints are
applied.

2.

Evaluate the possible impact of any constraints and assumptions on schedule


development.

3.

Consider the availability of your resources.

Will you have the staff you need to perform the work when it is scheduled to
be done?

4.

Will you have access to the materials, facilities, and equipment you need to
perform the work when it is scheduled to be done?

Consult project calendars and assign dates to activities.

Are there any holidays during which your project team will not conduct work
activities?

Will your project team conduct work activities on weekends?

When will your key project team members be taking vacations?

Are there any unmovable milestone dates that must be met?

5.

Assess the feasibility of the schedule under adverse conditions by conducting


what-if scenario analysis.

6.

Consider external resource date constraints, if applicable.

Are there any regional or national holidays not previously accounted for?

7.

Do you need to make considerations for travel time for meetings?

Select project management software that best meets the needs and budget of your
project. If your organization does not require the use of a particular software program, ask yourself the following questions to make the selection:

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How complex is the project?

Do I need to manage more than one project at a time?

How easy will the software be to learn and to use?

How well will the software adapt to projects that vary greatly?

What type and depth of analyses do I need to perform?

What is the reputation of the software company?

What do other project managers in the eld use and what do they recommend?

8.

Review rough drafts of the schedule with the project team, sponsor, and customer.
You may also need to review the rough drafts with functional managers to ensure
that there are no conicts with functional resources.

9.

Choose the format in which youll publish the schedule.

If your audience only requires a summary-level view of the projects


progress in terms of milestones, consider using a milestone chart.

If you are reviewing the schedule with your project team, consider publishing
a detailed bar chart or a network diagram with dates.

If you are preparing a presentation for key project stakeholders or upper


management, consider printing the schedule in several different formats to
show various views of the projects progress versus planned progress.

10. Distribute the preliminary schedule to all program office personnel, functional

team members, functional management, and the customer or sponsor to obtain


approval.
11. Following approval, baseline the schedule and distribute to the team.

Example: Developing Project Schedule for the Website Project


As project manager for your companys website project, you perform mathematical
analysis without regard for resource limits. This helps you determine the time periods
within which project activities can be scheduled. Next, you evaluate the constraints and
assumptions from earlier planning processes.
After reviewing your resource pool, you consult the project calendars. Using project
management software, you enter all holidays, weekends, and vacation days of key
team members into the schedule.
Next, you print a rough draft of the schedule in a Gantt chart format and call a review
meeting with the project team, sponsor, and affected managers.

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LESSON 4

DISCOVERY ACTIVITY 4-5


Developing a Project Schedule
Data Files:

May 2009 Calendar

Before You Begin:


From the C:\085042Data\Developing Project Schedules folder, open the May 2009 Calendar
document.
Scenario:
Now that you have the list of activities, estimated durations, and estimated resources, it is time
to draft the project schedule to determine the start and nish dates for the project activities.
The project is scheduled to start on May 11th and must nish no later than September 20th.
To draft the schedule, you refer to the May 2009 Calendar document.
In this activity, you will develop the project schedule for a work package, and not the entire project.

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1.

What other inputs will you need to have available before developing the project schedule?
a) Resource calendars
b) Schedule baseline
c) Project scope statement
d) Specific milestone dates that must be met

2.

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Use the supplied table to draft the project schedule for the work package, WBS
TRN0001, Assembling Internal Training Team.

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TOPIC F
Identify the Critical Path
Now that you have drafted a project schedule, you are ready to establish the start and nish
times for each of the activities in your project and determine the duration of the entire project.
That means you will need to know the critical path through your project activities. In this
topic, you will identify the critical path.
Sometimes, the resources you are counting on may not be available when they are scheduled
to be. How do you know when this means your project cannot be successfully completed? The
answer is that you must identify the critical path during the develop schedule process. Identifying the critical path allows you to determine which activities have scheduling exibility before
you complete your project schedule.

Critical Activities
Denition:
Critical activities are the activities that are on the critical path. Generally, for all
activities along the critical path, ES = LS and EF = LF. There can be no exibility in
the start time or the nish time for these activities. Activities that are not on the critical path usually have some exibility in their start and nish times.
Example: Critical Activities in a Project

Figure 4-26: Critical activities lie on the critical path (Activities A, B, F, G,


and H).
Near-critical Activity
Near-critical activities are project work schedule activities that have a minimum
amount of total oat. These activities have a high potential of becoming critical.

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The project team determines the near-critical activities for a project based on expert
judgment. For example, the project team, based on past experience with similar
projects, denes that an activity with a total oat of 1 is a near-critical activity for the
project. Therefore, all activities having a total oat of 1 are near-critical activities for
this project.

How to Identify the Critical Path


Procedure Reference: Identify the Critical Path
To identify the critical path for a project with nish-to-start precedence relationships:
1.

2.

3.

Conduct a forward pass to determine ES and EF times for each activity.


a.

Use zero (0) for the rst activitys ES.

b.

Enter the rst activitys duration as its EF.

c.

Calculate the ES for each successor activity using the latest EF from any of
its predecessor activities plus or minus any leads or lags.

d.

Calculate the EF for each successor activity by adding its duration to its ES.

e.

Move through all the activities until you have an ES and EF for each one.

Perform a backward pass to determine LS and LF times for each.


a. Enter the last activitys EF for its LF time.
b.

Subtract the last activitys duration from its EF to determine its LS.

c.

Calculate the LF for each predecessor activity using the earliest LS from any
of its successor activities plus or minus any leads or lags.

d.

Calculate the LS for each predecessor activity by subtracting its duration


from its LF.

e.

Move backward through all the activities until you have the LF and LS for
each one.

Calculate oat.
a. For each activity, subtract its EF from its LF to determine total oat.
b.

For each string of activities with oat, calculate the free oat for the last
activity in the string by subtracting its EF from its successor activity ES.
There is software available that will quickly compute these elements, including the critical path,
but you may be expected to perform these calculations yourself, on paper, in order to pass the
PMP certication exam.

4.

Identify the critical path as the path with the longest duration and least amount of
oat.

Example: ES, EF, LS, LF, and Float Calculations


This gure shows a CPM network diagram with ES, EF, LS, LF, and oat calculated
and its critical path identied. The activities in the network all have FS relationships.

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Figure 4-27: Identifying the critical path.


Note the following characteristics in the CPM gure:

The ES for the rst activity (A) equals zero.

The EF for the rst activity is its ES plus its duration (0 + 10 = 10).

The ES for all successor activities is the latest EF of any of its predecessor activities plus or minus any leads or lags between the two activities.
For example, the ES for activity D is the same as the EF for activity C (29), and
the ES for activity G is the EF for activity F (41) plus an 8-hour FS lag, which is
indicated as FS 8 (41 + 8 = 49).
Although the ES of the rst activity can be zero, it can also have the value one. But when the ES
of the rst activity is one, then the duration should be calculated as ES + DU - 1. The ES of the
successor activity will then be the EF of the predecessor activity plus one.
For example, if the ES of the rst activity is one, then its EF would be 1 + 10 - 1 = 10 and the
ES of the second activity would be 11.

The EF for all subsequent activities is its ES plus its duration. For example, the
EF of activity B (25) is its ES (10) plus its duration (15).

The LF for the last activity is the same as its EF time (66).

The LS for the last activity (61) is its EF (66) minus its duration (5).

The LF for any predecessor activity is the same as the earliest LS of any of its
successors plus or minus any leads or lags between the two activities.
For example, the LF of activity E is the same as activity H LS (61), and the LF
for activity F (41) is the LS for activity G (49) minus the 8-hour FS lag (49 - 8 =
41).

The LS for any predecessor activity is its LF minus its duration. For example, the
LS for activity E (48) is its LF (61) minus its duration (13).

Only the three activities that are not on the critical path (C, D, and E) have total
oat (TF = 11).

Only the last activity in that string (activity E) has free oat (FF = 11).

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The critical path is indicated by bold lines with arrows and includes activities A,
B, F, G, and H. It is the path with the longest total duration and zero oat.

DISCOVERY ACTIVITY 4-6


Identifying the Critical Path
Data Files:

OGC Critical Path

Before You Begin:


From the C:\085042Data\Developing Project Schedules folder, open the OGC Activity List and
the OGC Critical Path documents.
Scenario:
You have listed the activities, estimated durations, estimated resources, and drafted the project
schedule. Next you are going to calculate the critical path to document in the network diagram
any oat that you currently have in the schedule. At this point, you will focus on the rst two
phases of the OGC PM Training Roll-Out project.

158

1.

Perform a forward pass to determine the Early Start (ES) and Early Finish (EF) for each
activity. Enter your answers in the appropriate place in the network diagram. What is
the ES for activity TRN1.1, Identify Team Lead?

2.

What is the EF for activity TRN1.1?

3.

What is the ES for activity TRN1.2.1, Human Resources?

4.

What is the EF for activity TRN1.2.1, Human Resources?

5.

Calculate the ES and EF for the remaining activities. Why is the ES for activities
TRN1.2.3 and TRN1.2.4 the same as the ES for TRN1.2.2?

6.

Determine the float for this network. Which activities have total float in this network?

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7.

What is the critical path?

TOPIC G
Optimize the Project Schedule
Now that you have drafted your project schedule and identied the critical path, you are ready
to begin the hands-on management of the schedule, which involves successfully negotiating
organizational constraints on time and resources. To do so, you must identify the tools that
project managers use to respond to resource uctuations, ordinary setbacks, and delays while
responding to the perennial business need of bringing in the project on time. In this topic, you
will optimize the project schedule.
Setbacks, delays, constraints on time and resources, and competing priorities are all part of
everyday life in business, and they will affect every project you work on. You want to be able
to work effectively in the face of these challenges by optimizing your project schedule, which
means using project management tools to work around these problems so that you can support
the needs of the business.

Schedule Compression
Denition:
Schedule compression is the shortening of the project schedule without affecting the
project scope. Setbacks or revised deadlines can cause production problems, in which
there is little time to do a lot of work. When these issues occur, product quality is
often sacriced. Schedule compression alleviates the pressure of completing too many
activities in too little time without negatively affecting the project scope. Compression
may be achieved in one of two ways: fast-tracking and crashing.
Example: Schedule Compression when Building and Installing Cabinets
A carpenter and his sub-contractor are building and then installing cabinets in a new
housing development. The realty company has a higher demand than expected and asks
the carpenter to move up his nish date by three weeks. In order to meet this deadline,
the carpenter decides to change the order of assignments for the remaining carpentry
work. He tells the sub-contractor to work on the installation of the cabinets while he
nishes building the cabinets. This changes the precedence. Instead of nishing the
building of all the cabinets and then installing them, the installation is able to start
before the building of the cabinets is complete as in the original schedule. Due to the
increase in production, the carpenter nishes a week ahead of schedule, rather than
three weeks behind.

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Fast-Tracking
Denition:
Fast-tracking is the process of compressing total project duration by performing some
activities concurrently that were originally scheduled sequentially.
Typically, fast-tracking involves identifying FS relationships that could be done in parallel, either as FF, SF, or SS relationships, or by simply adding some leads to FS
activities.
Some fast-tracking may entail looking very creatively at the network diagram to see if
some discretionary dependencies could be done completely independently. Usually no
added costs are incurred from fast-tracking; however, it can result in increased risk and
rework.
Example: Fast-Tracking Activities to Produce a New Product
Sponsors are pressuring Carol to bring a new product to market quickly. Carol decides
to fast-track some activities by putting a lead relationship between the development of
the new product and the writing of the associated user manual. The total duration of
the two activities is shortened, since writing the manual can start before the product
development is completed. Consequently, the project duration is shortened, as well.

Crashing
Denition:
Crashing is a schedule compression method that analyzes cost and schedule trade-offs
to determine how to obtain the greatest schedule compression for the least incremental
cost. Crashing typically involves allocating more resources to activities on the critical
path in an effort to shorten their duration and thereby increases project costs.
To crash a schedule, analyze:

Duration estimate under normal (for example, not compressed) conditions.

Cost associated with the normal condition.

Duration estimate under the crash condition.

Cost associated with the crash condition.

The formula for calculating crash costs per week is (crash cost normal cost) / (normal time crash time).
Example: Crashing the Company Website Project
As project manager for the company website project, you are asked to compress the
schedule for the design deliverable. There are 11 activities, ve of which are on the
critical path. Using the formula (crash cost normal cost) / (normal time crash
time), you calculate the crash costs per week for each of the ve activities to determine which activities would provide the greatest duration reduction for the least
incremental cost. Your calculations are:

160

Normal
Time (wk)

Crash Time
(wk)

Normal Cost
($)

Crash Cost
($)

Crash Cost/Wk
($)

10

15,000

23,000

4,000

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Normal
Time (wk)

Crash Time
(wk)

Normal Cost
($)

Crash Cost
($)

Crash Cost/Wk
($)

12

11

10,000

14,500

4,500

5,000

8,000

1,500

6,000

7,500

500

12,000

18,000

2,000

Totals

45

34

48,000

71,000

While you havent yet analyzed the effect of crashing the activities, you can determine
from your calculations that:

Activities D and C are the best candidates for crashing.

Activity D has a net gain of three weeks at a cost of just $500 per week.

Activity C reduces the schedule by two weeks at a cost of only $1,500 per
week.

Activity E is another possible candidate with a three-week reduction at a cost of


$2,000 per week.

Activity B, which has a crash cost of $4,500 per week and a reduction of only
one week, is the worst candidate for crashing.

The order in which the activities should be crashed is D, C, E, A, and B.

The total number of weeks by which the project could be shortened if all of the
activities on the critical path are crashed is 11 (45 34).

The total additional cost if all activities on the critical path are crashed is $23,000
($71,000 $48,000).

Crash Cost Plotting Methods


Denition:
Crash cost plotting methods are techniques for analyzing the crash costs through creating a graph or a visual representation that clearly illustrates those costs. With the X
axis showing the duration and the Y axis showing the cost, the activities are plotted on
the grid from right to left, starting with the activity with the lowest crash cost per
week. Activities with atter slopes are the activities with relatively larger time savings
for the associated cost. Crashing may result in increased risk and rework; the project
team needs to identify the point where it becomes impractical to crash the schedule
any further.
Example: Presenting a Projects Crash Costs
In this example, the project manager has plotted the crash costs against total project
costs and total project duration in weeks. Notice that the crash cost plotting illustrates
the activities that have the greater savings of time as well as savings of associated
costs.

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Figure 4-28: Plotting crash costs on a graph.

How to Optimize the Project Schedule


Procedure Reference: Optimize the Project Schedule
To compress the schedule when necessary:
1.

2.

3.

162

Consider your resource leveling options.


Can you pull needed resources from activities with oat and apply them to
critical activities?

Can you authorize overtime or comp time to meet your project requirements?

Is shift work possible?

Can an activity be contracted out to free up resources during a critical


period?

Consider fast-tracking the project.


Can any activities on the critical path be done concurrently that were originally scheduled sequentially?

Are there any discretionary dependencies that could be done completely independently?

Are there any increased costs associated with fast-tracking activities?

What are the associated risks?

Analyze activities on the critical path to determine if crashing the schedule will
produce a viable option.
Are there any activities on the critical path that can be shortened if more
resources are added?

What are the costs associated with crashing those activities?

Which activities will provide the biggest duration decrease while incurring
the least amount of incremental cost?

What are the resource allocation implications of crashing the activity? Will
some key resources be overextended? Will all resources be available when
needed?

Are there any quality implications associated with crashing the activities?
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4.

Analyze each activity on the critical path to determine whether reducing scope is
a viable option for reducing duration.

5.

Recalculate the critical path after compressing the schedule.

6.

Review any schedule changes with key stakeholders.

7.

Revise the schedule and distribute to the team.

Example: Optimizing the Schedule for the Companys Website Project


You have created a draft schedule for your companys website project. At the draft
schedule review meeting, the sponsor informs you that the schedule must be compressed by a week so that the new website will go live in time to coincide with a
major industry conference.
You analyze the critical path and discover that two activities could be performed concurrently, instead of sequentially. You fast-track the activities and gain the needed
week, then review the critical path and conrm that it has not been altered.
You review the revised schedule with the project sponsor and obtain approval. The
schedule becomes the baseline for the project.

DISCOVERY ACTIVITY 4-7


Crashing a Project Schedule
Scenario:
You are assisting the project manager in crashing the schedule due to some recent contractor
delays. You have transferred the normal activity durations from the network diagram to a table
along with the normal cost estimates. Together you have determined how much each activity
can be crashed and the associated crash cost estimates. You are just about done, but you are
having trouble evaluating the real impact crash costs will have on this project.
To calculate the project durations under normal conditions, use the following graphic.

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164

1.

Which activity has the highest crash cost per week? Which has the lowest?

2.

Which activities are on the critical path for this project?

3.

What is the project duration under normal conditions?

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4.

Which activities are the best candidates for crashing, and in what sequence?

5.

Plot the slope for crashing each activity on the critical path. Use the graph to make
your plots.

6.

Which activity is the best candidate for crashing? Why?

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7.

If you crashed all the activities identified on the original critical path, what would happen to the duration for that network path?

8.

If you crashed all activities identified on the original critical path, what would happen
to the total project cost?

9.

What would happen to the total project cost if you decided to crash every activity in
the project?

10. What other factors would you need to consider when deciding whether to crash this
schedule?

11. What should you do if the normal time and the crash time for an activity are the same?

TOPIC H
Establish a Schedule Baseline
Now that you have optimized the schedule, you need to create a schedule baseline in order to
get management approval for your project schedule. In this topic, you will establish a schedule
baseline.
As a project manager, it is your responsibility to get management approval for your project
schedule so that you can begin your project on the right footing, setting the stage for proper
monitoring and measuring of schedule performance throughout the life cycle of the project.
The schedule baseline is the key mechanism for gaining that approval and so your ability to
generate the appropriate baseline will be critical to project success.

Schedule Baselines
Denition:
A schedule baseline is the management-approved version of the project schedule; it is
drawn from the schedule network analysis and includes baseline start and nish dates.
It provides the basis for measuring and reporting schedule performance. It is a formal
part of the project management plan.

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Example: A Schedule Baseline

Figure 4-29: A chart showing a schedule baseline.

How to Establish a Schedule Baseline


Obtaining approval from the stakeholders for your project will be vital as you move through
the project life cycle and monitor schedule performance. By establishing a schedule baseline,
you will further enhance the projects integrity by securing approval from the project management team and stakeholders.
Guidelines:
To establish the schedule baseline, follow these guidelines:

Gather your preliminary project schedule, which includes the projects start and
nish dates. Make sure that all of its components are accurate and up-to-date,
including resources, durations, calendars, predecessor dates, task dependencies,
cost estimates, and constraints. Conrm that resources have not been overallocated.

Distribute the proposed schedule baseline to the appropriate stakeholders and


project management team for approval. This approval is a formal requirement, and
as such, it should be received in writing from the project sponsor.

Incorporate any changes to the schedule baseline as required by the management


team.

Changes to your schedule baseline may require additional resources or more time;
these changes will affect the project cost and will require you to update your cost
baseline as well.

Revisions made to the schedule baseline after it has been approved will need to
be made through a formal change process approved by management.

Save the original schedule baseline. During the life cycle of the project, changes
will be made as the schedule baseline is updated and revised; you will need to
preserve the historical data included in your original schedule baseline.

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Example: Establishing the Schedule Baseline when Launching a New Line of
Products
A cosmetics company is launching a new line of products. The project manager needs
to establish a schedule baseline and secure approval from both company management
and the group of stakeholders, which includes the companys sales and marketing
teams. The project manager will begin by distributing the preliminary product rollout
schedule along with resource calendars, cost estimates, and any related constraints. He
will distribute the schedule to the appropriate parties for formal approval.
Before the team members give their approval, they will submit changes to the schedule; the project manager will be responsible for incorporating those changes. Making
these changes will impact the cost baselines as well, and the project manager will need
to follow the organizations formal change process and secure approval from management before continuing. Finally, he will save the original schedule baseline and
preserve the historical data related to this product launch.

DISCOVERY ACTIVITY 4-8


Establishing a Schedule Baseline
Scenario:
As the project manager for the PM Training Roll-Out project, you have completed all preliminary project work. All stakeholder requirements have been collected; project scope has been
dened; the WBS has been created; activities have been dened and sequenced; and activity
resources and durations have been estimated. You are preparing to baseline the project schedule.

1.

What should be done before establishing the schedule baseline?


a) Distribute the stakeholder register templates to the project management team for
approval.
b) Distribute the procurement documents to the appropriate stakeholders and project
team for approval.
c) Distribute the project management plan to the appropriate stakeholders and project
management team for an in-depth review, then after revising, obtain approval by the
project sponsor.
d) Distribute the project charter to the appropriate stakeholders and project management team for approval.

2.

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How would you describe the difference between the draft schedule and the schedule
baseline?

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LESSON 4
3.

Which tasks will you be able to do once the schedule baseline has been established and
project execution has begun?
a) You will be able to determine project or activity slippage.
b) You will be able to determine a variance in the start and finish dates for the project.
c) You will be able to determine if resources are over-allocated.
d) You will be able to determine if the amount of scheduled work for each work package has changed.

4.

True or False? When the schedule baseline is first saved, the schedule variance for
each activity should be equal to zero.
True
False

Lesson 4 Follow-up
In this lesson, you identied the major elements of project schedules, which include activity
lists, project network schedule diagrams, estimates of activity duration, and techniques for
responding to organizational constraints by adjusting exibility within schedules. You will now
be able to develop effective project schedules and manage schedules in response to organizational constraints on time and resources so that you can bring your projects in on time and on
budget.
1.

Consider the importance of creating an activity list. How do you think that creating an
activity list for your projects will help ensure that your project activities are tied to
the project scope?

2.

Reflect on the advantages of creating a project schedule network diagram. How do you
think this will help you organize your project more effectively?

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LESSON 5

LESSON 5

Lesson Time
2 hour(s)

Developing Cost Estimates


and Budgets
In this lesson, you will develop cost estimates and budgets.
You will:

Estimate project costs.

Estimate the cost baseline.

Reconcile funding and costs.

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LESSON 5
Introduction
Good project management requires the ability to create accurate estimates regarding the costs
of project completion. It also requires you to have a budgeting process that helps you to monitor progress against expectations and to work with the sponsor to make adjustments to the
schedule or scope as changes arise. In this lesson, you will develop cost estimates and budgets.
The ability to deliver projects on time and on budget is a key element of good project management. You want to be able to create accurate estimates regarding the work that must be done
and the costs that will be incurred, as well as monitor progress against expectations. By identifying methods of creating accurate cost estimates and the budgets that will guide your projects,
you can effectively meet expectations and deliver the desired results.

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Figure 5-1: The project management framework.

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TOPIC A
Estimate Project Costs
You have developed your project schedules and determined the activities and resource requirements for your project. But how much will those resources cost? Estimating project costs will
provide the answer. In this topic, you will estimate project costs.
Inappropriately high cost estimates may discourage sponsors from pursuing projects that have
the potential for success. Conversely, estimates that are too low could waste precious resources
on a project that ultimately proves unfeasible. As a project manager, it is your responsibility to
estimate project costs as accurately and realistically as possible. Mastering the tools and techniques for estimating project costs will help you to effectively control project costs.

The Estimate Costs Process


Estimate costs is the process of projecting the total expenditures necessary for the completion
of your project. Logical estimates provide a basis for making sound decisions about projects
and they establish baselines against which the success of the projects can later be measured.
Cost estimating also involves identifying and considering cost alternatives. A different type of
cost estimate and level of accuracy may be required for different phases of the project life
cycle.
A cost estimating method might be chosen due to:

Software availability.

Team member experience.

Project life cycle phase.

Time constraints.

Project denition.

Personal preference.

Figure 5-2: The estimate costs process.

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Example: Cost Estimation for a Software Application Project
Your team is trying to estimate costs of an extensive software application project.
However, some of the functionality has not yet been nalized, leaving only half of the
WBS truly dened. Your team creates denitive estimates for each of the dened work
packages. Then, you use historical information from similar projects to approximate
the costs for each undened work package.

Estimate Costs Inputs


Accurate cost estimating requires numerous inputs.

Input

Description

Scope baseline

The scope baseline includes the approved detailed project


scope statement along with its associated WBS and WBS dictionary.
Project scope statement: Contains relevant information,
such as project requirements, constraints, assumptions, and
deliverables.
WBS: Provides the relationship between individual project
components and deliverables.
WBS dictionary: The WBS dictionary along with the
statements of work provide specic details of work activities and deliverables.

Project schedule

The project schedule includes start and nish dates for each
activity, and details of resources along with the time needed
for them to complete project work that will incur project cost.

Human resource plan

The human resource plan includes the components necessary


for developing cost estimates such as the project staffing
attributes, personnel rates, and its related rewards and recognitions.

Risk register

Risks that have an impact on cost.

Enterprise environmental factors

External factors, such as market trends, unavoidable budget


restructuring, or commercial nancial analysis may affect cost
estimation.

Organizational process assets

Intra-organizational cost estimating policies or templates, team


experience, or data from old projects.

Estimate Costs Tools and Techniques


There are many tools and techniques that can be used to estimate cost.

Tools and Techniques

Description

Expert judgment

Variables such as labor costs, material costs, ination, and risk factors
can inuence cost estimates. Expert judgment along with historical
information will provide an insight on the information related to prior
similar projects.

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LESSON 5
Tools and Techniques

Description

Analogous estimating

Uses the cost of a previous project with similar scope or activities to


predict the cost of future activities.

Parametric estimating

Relies on the statistical relationship that exists between historical information and variables so as to arrive at an estimate for parameters such
as duration and cost.

Bottom-up estimating

Estimates the cost of individual activities then rolls up to higher levels.

Three-point estimate

Incorporates three types of estimates into a singular cost estimate scenario: most likely, optimistic, and pessimistic.

Reserve analysis

Contingency funds that are built into a cost estimate for as-yet
unknown costs. Reserve analyses run the risk of inating a cost estimate.

Cost of Quality (COQ)

A technique that focuses on the cost of ensured quality. Peripheral


costs include quality planning, control, and assurance.

Project management estimating


software

Project management cost estimating software simplies the cost estimation process, can accelerate estimation time, and is applicable to
most projects, regardless of scale or scope.

Vendor bid analysis

Cost estimation is based on the responsive bids obtained from vendors.


Results must often be revisited once contract approval has been
gained.

Estimate Costs Outputs


In addition to cost estimates, there are several possible outputs from the estimate cost process.

Output

Description

Activity cost estimates

Provide estimates on probable costs necessary to nish project work. This


includes costs on direct labor, materials, equipment, facilities, services, information technology, contingency reserves, or indirect costs, if any.

Basis of estimates

Supporting or additional information needed to justify the cost estimates.


Details can include project scope, justication for the estimate, range of estimates, the assumptions, constraints, condence level on the estimate, and
expected range of estimates.

Project document updates Updated project documents may include the risk register, human resource
plan, activity list, project schedule, and training plans.

Common Estimate Types


This table describes some common estimate types and their associated degrees of accuracy.

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Type or Level of Accuracy

Description or Accuracy Rating

Rough Order of Magnitude (ROM)

Generally made early in the project. Developed without basis


of detailed data and often based on very high level historical
data, expert judgment, or a costing model. Accuracy: -50 percent to +100 percent.

Budgetary

Often used for appropriation purposes. Accuracy: -10 to +25


percent.

Range of estimate

Often used as an alternative to ROM where the accuracy of the


estimate is not well known. So, rather than $10M 30 percent,
the estimate could be stated as $7M to $13M. Accuracy: 35
percent.

Approximate estimate

Based on more information than ROM estimates, but still lacks


the detail required for high accuracy. May be possible if the
project is similar to previous ones with reliable historical data
for costing or where a proven costing model is applicable.
Accuracy: 15 percent.

Denitive estimate (or control or


detailed)

Based on detailed information about the project work. Developed by estimating the cost for each work package in the
WBS. Accuracy: - 5 percent to + 10 percent.

Phased estimate (or rolling wave or


moving window)

Allows the use of ROM or approximate estimates for some


later parts of the work, while work that must be done earlier in
the project life cycle is estimated at the denitive level. Accuracy: 5 percent to 15 percent in the window closest to
present time; 35 percent farther in the future.

Analogous Estimating
Denition:
Analogous estimating, or top-down estimating, is a method of cost estimating in which
managers use their experience, historical information from similar projects, and expert
judgment to determine the total project cost or time estimate. The resulting total is then
apportioned across the major categories of project work. Estimates are generated for
the top levels of the WBS and then apportioned downward through the levels of the
WBS.
Analogous cost estimating is used when:

You have a limited amount of detailed information about the project.

You have a similar project to use for comparison.

Those preparing the estimates have the requisite expertise.

Example: Analogous Estimating for a Web-Design Project


A project manager for a web-design rm might use analogous estimating to produce
cost and time estimates for new accounts. He would base their estimates on past experience and expert judgment. If several other similar sites, each of which included ve
pages and basic functionality, each took approximately 15 hours to develop, then he
could fairly estimate that a site with 10 pages would require 30 hours of development
time.

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LESSON 5
Bottom-Up Estimating
Denition:
Bottom-up estimating is a method of estimating the cost for each work package in the
WBS. The estimates are then rolled up or aggregated for progressively higher levels
within the WBS. The project manager reviews the estimate gures and adds the
required overhead estimates to compile the total project cost. Bottom-up estimating is
the most accurate method but it is also the most challenging, costly, and time consuming.
Use bottom-up estimating later in the project life cycle, when:

More detail is available about the work packages.

You need more accurate estimates.

You have the time to invest in making the estimates.

You should also use bottom-up estimating for work packages with the highest level of
uncertainty associated with cost. Make sure you weigh the additional accuracy provided by bottom-up estimating against the additional cost of making the estimates.
Example: Bottom-Up Estimating for a Complex Project
Bottom-up estimating is best used to reach a very accurate estimate on a complex
project, such as a caterer submitting a bid to a client for a large corporate event. The
caterer would be able to use the bottom-up estimating technique based on a detailed
WBS, which would include dinner (decomposed by the cost of food and drink, rental
costs for the conference room, table and chairs, linens and glassware) and so on. The
estimate for each work package would be rolled up until the caterer reached one accurate cost estimate for the event.

Parametric Estimating
Denition:
Parametric estimating is a technique used to predict total project costs by using the
projects characteristics in a mathematical model. It requires the project manager to do
a statistical analysis using historical information about scope, cost, budget, and duration. The accuracy of a parametric estimate will only be as good as the accuracy of the
data used in it.
Example: Parametric Estimating Technique

Figure 5-3: A sample of parametric estimating.

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Estimating Techniques Advantages and
Disadvantages
There are benets and drawbacks to using different estimating techniques.

Technique

Advantages and Disadvantages

Analogous estimating

Can ensure no work is inadvertently omitted from work estimates. Can


sometimes be difficult for lower-level managers to apportion cost estimates.

Bottom-up estimating

Is very accurate and gives lower-level managers more responsibility. May


be very time consuming and can be used only after the WBS has been
well-dened.

Parametric estimating

Is not time consuming. May be inaccurate, depending on the integrity of


the historical information used.

How to Estimate Project Costs


Accurately estimating project costs will avoid overruns and unforeseen expenditures. Making
good cost estimates will help you to create a strong cost baseline, which will ultimately be
used for measuring project cost performance.
Guidelines:
To develop accurate cost estimates, follow these guidelines:

Involve the work package owners.

When possible, the cost gures that go into the cost estimates for individual
work packages should be provided by those who will actually provide the
resources. As always, it is the people who will do the work, provide the service, or supply the material that can best estimate what the associated costs
will be. It is the project managers responsibility to compile these cost gures into realistic estimates.

For some projects, though, the project manager will be solely responsible for
generating the cost estimates. This may be the case for:

Small projects in which the project manager is very familiar with the
activities required.

Projects with very well-dened resource requirements.

Projects that are very similar to past projects for which the costs are
well documented.

Even in such cases, the project manager may want to do a quick reality
check with the resource supplier to make sure no incorrect assumptions have
been made.

Gather any relevant input information that may help you prepare the estimates,
such as estimating publications and resource rates.

Determine which estimating technique to use.

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LESSON 5

Use analogous estimating when you have a limited amount of detailed information about the project, you have a similar project to use for comparison,
and the work package owners preparing the estimates have the requisite
expertise.

Use parametric estimating to estimate work packages when you have reliable
parametric models and the work conforms closely to those models.

Use bottom-up estimating later in the project life cycle, when more detail is
available about the work packages, you need more accurate estimates, and
you have the time to invest in making the estimates. Also use bottom-up estimating for work packages with the highest level of uncertainty or risk
associated with cost. Make sure you weigh the additional accuracy provided
by bottom-up estimating against the additional cost of making the estimates.

Use a combination of estimating techniques when you have a combination of


circumstances for different deliverables on the WBS.

Look for alternative costing options. Some options you might explore could
include:

Using stock components versus custom-made.

Stretching the duration of an activity to eliminate overtime charges.

Leasing versus purchasing of capital equipment.

Outsourcing as opposed to handling the work in-house.

Determine the units of measure that will be used.

Estimates should all be in the same unit of measure (usually monetary).

Units must be clearly dened and easily interpreted.

Consider possible risks that may impact cost.

Ensure that all cost estimates are assigned to the appropriate account, according to
the chart of accounts.

Make sure your cost estimates include the following key elements:

Estimated costs for all resources that will be charged to the project. Use the
WBS and resource requirements document to develop the estimates.

The level of estimate (degree of certainty).

A list of assumptions made when developing the estimates.

Example: Estimate Project Costs for a Website Project


You are estimating the costs of the company website project with a budget of
$100,000. Although you have rough estimates from some of the work package owners,
it is early in the project life cycle. Therefore, you decide to use analogous estimation.
After researching outsourcing costs and consulting several nancial references, you
apportion the money across the major deliverables. Once you review the individual
estimates to make sure they are assigned to the proper accounts, you submit your cost
estimate and a list of assumptions.

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LESSON 5

DISCOVERY ACTIVITY 5-1


Estimating Project Costs
Data Files:

Public Meeting Estimate

Before You Begin:


From the C:\085042Data\Developing Cost Estimates and Budgets folder, open the Public
Meeting Estimate document.
Scenario:
You are an OGC project manager assigned to manage the launching of a new OGC store and
related media campaign in Seattle, Washington. Earlier, you met with the senior executives and
core individuals of the Business Transformation group to discuss project cost estimates. Based
on their input, you allocated $63,000 of the $100 million total project budget to the Media
Campaign deliverable, which includes the Website, Public Meeting, and Information Packets
work packages. The $63,000 allocation was based on previous projects with a similar major
deliverable. Now that more information is known about the Media Campaign deliverable, you
ask the work package owners to provide detailed estimates. The estimates must include direct
labor and overhead costs (burdened rate) for each in-house staff resource. The standard hourly
burdened rate for in-house staff is averaged to a at $80.
The Website work package owner gave you an estimate that came to $15,000. The Information
Packets work package owner gave you an estimate of $18,000. The Public Meeting work package owner summarizes her preliminary information for you in the Public Meeting Estimate
document.
In the past, public meetings of this size have cost approximately $30,000.

1.

Which estimating technique was used to come up with the $63,000 allocation to the
Media Campaign deliverable? Why?

2.

How would you describe the level of accuracy for the $63,000 estimate?

3.

What was the impact of involving the work package owners in preparing the cost estimates? Why?

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LESSON 5
4.

Which estimating technique was used when you asked the work package owners for
their estimates?

5.

What technique would you use to estimate the Conduct Planning Meetings activity?
Why?

6.

What are the benefits of the parametric modeling technique?

7.

What is the estimated cost of the Conduct Planning Meetings activity?

8.

Are there activities in the work package for which you will use more than one estimating technique? Why?

9.

Using the information in Public Meeting Estimate document, estimate the cost of each
of the activities.

10. What is your total cost estimate for the Public Meeting work package?

11. What is the level of your cost estimate now?

12. Do you need to take any action regarding your preliminary estimate of $63,000 for the
Media Campaign deliverable? If so, what action should you take?

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LESSON 5

TOPIC B
Estimate the Cost Baseline
After estimating project costs, you need to consolidate the costs into a project budget and prepare the project cost baseline. In this topic, you will estimate the cost baseline.
Costs are one of the major constraints of any project, and your ability to manage the projects
costs will directly correlate to its success or defeat. You need to be able to employ sound
methodology when estimating costs and carefully monitor expenditures throughout the project
life cycle. You need to be able to track project costs associated with each work package in the
WBS at the points in the project life cycle when those costs will be incurred. By establishing a
cost baseline, you can track those project costs, set up the cash ow for the project, and measure cost performance.

Cost Baselines
Denition:
A cost baseline is a time-phased budget that will monitor and measure cost performance throughout the project life cycle. It is developed by adding the estimated costs
of project components by period. The cost baseline typically includes a budget contingency to accommodate the risk of incurring unidentiable, but normally occurring
costs, within the dened scope. Cost baselines will vary from project to project,
depending on each projects unique budget and schedule.
Once the baseline is established, the cost becomes a commitment from the project managers perspective. The project manager should try to closely match the projects committed funds to the baseline,
from a timing perspective.

Example: Cost Performance Baseline


Many project management software packages can create an S-curve of the cost
baseline for you; a generic example of a cost baseline displayed in an S-curve is
shown here. Cost is on the Y axis and time is on the X axis. Developed by totaling the
estimated project costs by period, this cost performance baseline shows how the cumulative planned project costs are distributed across the projects duration.

Figure 5-4: A generic cost baseline shown as an S-curve.

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LESSON 5
The Determine Budget Process
Determine budget is the process of allocating the overall cost estimates to individual activities
or work packages across the project life cycle. The purpose of cost budgeting is to establish a
budget as well as a cost baseline for measuring the projects cost performance.

Figure 5-5: The determine budget process.


Example: Cost Budgeting by Aggregated Cost
Most cost estimates are derived at the activity level. One example of cost budgeting
requires project managers to add up those estimated costs for activities to derive a cost
estimate at the work package level. This is also referred to as the aggregated cost.
Those costs are aggregated until the entire work package has an estimated budget, and
then the process is repeated for each work package. Then, each work package cost
budget is aggregated to the next highest level of the WBS. The process is iterated until
the top of the WBS is reached and a single cost budget gure for the whole is
obtained.

Determine Budget Inputs


There are numerous inputs for accurate cost budgeting.

184

Input

Description

Activity cost estimates

Cost estimates for each activity are added together to create an overall
cost estimate for the work package.

Basis of estimates

Supporting information required to justify the activity cost estimates


should be specied. Assumptions made to the addition or exclusion of
indirect project costs made to the project budget are to be mentioned in
the basis of estimates.

Scope baseline

The scope baseline includes the approved detailed project scope statement along with its associated WBS and WBS dictionary.
Project scope statement: May contain relevant funding constraints.
WBS: Identies project elements to which costs will be allocated.
WBS dictionary: Identies deliverables and describes the work that
will be required to produce them.

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LESSON 5
Input

Description

Project schedule

Has the start and nish dates, which are necessary to assign costs of
project components to the time period when cost is expected to be
incurred.

Resource calendars

Provides information relating to the resources. Availability of resources


may affect budgeting.

Contracts

Relevant purchase costs will be detailed in contracts.

Organizational process assets

Policies, procedures, and guidelines related to formal and informal cost


budgeting, cost budgeting tools, and reporting methods.

Determine Budget Tools and Techniques


There are some common tools and techniques used in the determine budget process.

Tools and Techniques

Description

Cost aggregation

Activity costs are combined into work package costs, which are
then aggregated up the WBS until a single project cost is produced.

Reserve analysis

Contingency reserves may be necessary additions to the budget,


allowing for unforeseen costs and setbacks.

Expert judgment

Expertise provided by a group or individual who possesses specialized education, knowledge, experience, skill, or training in
cost budgeting, such as people from other departments within
the organization, consultants, stakeholders including customers,
professional and technical associations, and industry groups.

Historical relationships

Involves relationships that result in parametric or analogous estimates, which use project parameters to develop simple or
complex mathematical models to calculate project costs. The
cost and accuracy of the parametric and analogous estimates will
vary widely. They can be relied upon when the historical information used is accurate, parameters used are quantiable, and
when the models are scalable to be used for big or small
projects or even in phases of a project.

Funding limit reconciliation

If there are existing funding limits set by the organization or


customer, the budget must be mapped accordingly.

Determine Budget Outputs


There are several useful outputs of the determine budget process.

Output

Description

Cost performance baseline

The primary output of the determine budget process. It will be


used to monitor and measure cost performance for the duration
of the project.

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LESSON 5
Output

Description

Project funding requirements

Created from the cost baseline, these are built-in cost increments
that will allow for overruns and/or rapid progress on the project.

Project document updates

Project documents that may need to be updated; includes risk


register, project schedule, and cost estimates.

Funding Limit Reconciliation


Denition:
Funding limit reconciliation is a method of adjusting, spending, scheduling, and
resource allocation in order to bring expenditures into alignment with budgetary constraints. Most budgets are created on the premise of steady incoming and outgoing
ows. Large, sporadic expenditures are usually incompatible with organizational operations. Therefore, funding limits are often in place to regulate the outgoing capital ow
and to protect against over-spending.
Budgets must be reconciled with such limits. This will affect the scheduling of project
work and possibly reshuffle WBS work packages entirely. The schedule, in turn, can
affect the distribution or acquisition of resources.
Example: Set Funding Limits for Projects
Customers set funding limits for large projects based on internal considerations such as
when their scal years begin and end, and how healthy their cash ows are. A customer who wants to spread the costs of a project over two quarters might authorize
$250,000 in spending during Quarter 1 and $350,000 during Quarter 2. In response,
the project manager would need to align the resources, schedules, and activities so that
the project work does not exceed those limits on funding.

Contingency Allowances
Contingency allowances are additional funds that are sometimes built into cost estimates to
allow for unanticipated events. Planning for contingency allowances for a project ensures that
the project manager is able to manage unforeseen costs and expenditures.
Guidelines:
When considering adding a contingency allowance to your budget:

Avoid contingency on contingency. Based on the WBS input, make sure that the
work packages do not already have a contingency amount tacked onto the basic
estimate.

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Inform the project team. Let them know that the project will be managed against
a point estimate without contingency.

As project manager, you must release contingency funds only through a closely
controlled and well-documented process, which is typically included in the cost
management plan. A contingency allowance is not to be used as a slush fund
without controls.

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LESSON 5
Example: Contingency Allowances for the Jazz Festival
The city of Montreal hosts the worlds largest jazz festival every year, with thousands
of performances and more than two million attendees. Contingency allowances for this
event might include funds to cover an unexpected problem, such as a cancellation by a
headlining act. Such a cancellation would force the festival to issue ticket refunds
while incurring overhead costs, including theater rental and advertising. Contingency
allowances would not be used for general operating support; if ticket sales failed to
meet expectations, for example.

Cost Assignment Methods


Consider the way costs are assigned when establishing the baseline; this is important because
the cost should be earned or tracked in the same way it is assigned.

Cost Assignment Method

Description

50/50 percent rule

50 percent credit is given when the activity begins and 50 percent


credit is given when the work is completed. For example, if an
activity is budgeted to cost $3,000, the activity will receive the
other $1,500 when the work is complete. The basic assumption
when using this rule is that activities are approximately the same
size. This same method can vary in the percentage values. You
could also use a 25/75 or 75/25 rule, for instance. Some of the
variants to the 50/50 percent rule include 20/80 and the 0/100 rule.

Percentage complete rule

Completion percentages are estimated and assessed at specied


reporting intervals. This is perhaps the most commonly used rule.

Weighted milestones

The total work package value is divided up and assigned to milestone intervals within the work package. Each milestone carries a
budgeted value. The value is earned when the milestone is
achieved. This method works well for long work packages with
multiple activities.

There are certain activities that are not measurable; for example, research-based activities. It becomes difcult to
account for earned values for such activities. So to avoid non-measurability in such cases, the 50/50 rule is used.
The moment activity starts, 50% work completion credit is given to the activity. However, no further credit is
given until the activity is complete.

How to Estimate the Cost Baseline


Procedure Reference: Estimate the Cost Baseline
To estimate a cost baseline:
1.

Gather the inputs you will need to establish the baseline, such as the WBS,
project schedule, cost estimates, and risk management plan.

2.

Use the project schedule to determine when activities will be taking place.

3.

Using one of the methods for assigning costs, allocate funds for each activity or
work package for the time period in which it will be taking place.

4.

Consider adding in a contingency amount to accommodate the risk of incurring


extra expenses.

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LESSON 5
5.

Total the costs for each time period.

6.

Plot the costs for each period on a chart to create an S-curve of the baseline.

7.

Publish and distribute the cost baseline to the appropriate project stakeholders.

DISCOVERY ACTIVITY 5-2


Establishing a Cost Baseline
Data Files:

Media Campaign

PM Cost Estimate

Public Meeting Estimate

OGC_WBS

Before You Begin:


From the C:\085042Data\Developing Cost Estimates and Budgets folder, open the Media
Campaign, PM Cost Estimate, OGC_WBS, and Public Meeting Estimate documents.
Scenario:
You are ready to move forward with the public meeting work package for the Media Campaign deliverable for the Seattle Store project. The director of nance is ready to allocate
project funds but is interested in your cash ow. Before creating the cash ow document, you
review your notes from a recent meeting:

Staffing arrangements must be made.

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Contracts for the venue must be completed.

Five weeks before the event, a promotional newspaper ad will be purchased. Subsequent ads will be placed in the nal week before the meeting.

Planning meetings will be scheduled over the 10 weeks. The rst one will happen
right away, another at week four. The remaining meetings will occur at two-week
intervals until the event.

A food budget that covers lunch at the rst meeting and the third meeting must be
set.

The project schedule is 10 weeks.

The cost of the event is $3,000.

1.

Do you have all the necessary inputs to establish a cost baseline?

2.

During what time period will the Public Meeting activities take place?

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LESSON 5
3.

What cost assignment method will you choose to allocate funds? Why?

4.

What are the weekly cost estimates for the activities in the Public Meeting work package? Refer to the Cost Estimates Per Week chart given below to estimate costs per
week and round up to the nearest thousand.

5.

Will you include a contingency amount?

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LESSON 5
6.

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How would you plot the estimates to create an S-curve? Use the graph to plot your
results. Cost is on the y-axis and time is on the x-axis.

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LESSON 5

TOPIC C
Reconcile Funding and Costs
Once costs are estimated, you need to verify that there is no discrepancy between the funding
committed and the costs of the work to be done. You want to be able to reconcile the funding
with the actual costs to make sure that your project stays on track. In this topic, you will identify methods of reconciling funding with costs.
The sponsor has planned to spend a certain amount of funding on your project and is expecting you to deliver the desired results on time and on budget. It is your responsibility to make
sure that the sponsors expectations are in alignment with the reality of the cost of completing
the work, or to nd an acceptable solution to funding constraints by making necessary adjustments to the budget and the schedule. Your ability to reconcile funding and costs will be
critical to meet real-world project challenges like this.

How to Reconcile Funding and Costs


Frequently, it is only at this point in a project, after you have established a cost baseline, that
funding deciencies become apparent. It is your responsibility as a project manager to reconcile the costs with the funding that has been approved by the sponsor.
Guidelines:
To reconcile funding and costs, follow these guidelines:

Gather the materials you will need, including:

The project budget and schedule.

The project scope statement, which may contain information regarding funding constraints.

The cost estimation and activity cost estimates, so that you can monitor
expenditures against estimates.

The WBS, so that you can monitor deliverables.

Contracts, so that you can monitor the commitments and requirements that
must be met.

Map the project budget, scope statement, and schedule to the funding available.

Make sure that the promised work and the promised funding are in alignment.

Review the project scope statement, making sure that the budget accounts for
the funding constraints.

If there is already a clear disconnect between the work that has been promised and the funding that has been allocated, you must alert the sponsor now.

Identify alternatives. If funding deciencies are apparent, look for suggestions of alternatives that the sponsor could agree to, which are typically a
reduction in scope, an increase in the budget, an extension of the schedule,
or some combination of those.

Involve the project sponsor.

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LESSON 5

Reconciliation requires good communication. Now is the time to discuss


funding limitations, expectations, changes to the project scope, and options
for resource allocation and schedule revisions.

Work with the sponsor on an ongoing basis from this point forward to adjust
the projects scope and/or schedule and/or cost to be in line with the funding
that the sponsor is willing to formally commit.

Make sure that the sponsor is apprised of changes in resource allocation that
may affect deliverables.

Partner formally with the companys nancial decision makers.

Discuss the initial project overall cost validation and mapping of nancial
transactions for cash ow reasons.

Discuss the on-going monitoring of the projects nancial performance to


enhance the nancial integrity of the project.

Reconcile funding with costs on an iterative basis throughout the project. Many
problems can be avoided through careful monitoring and adjusting resources in
response to the changes that will arise.

Actual costs may exceed the estimated costs during different time frames. Keep
the sponsor (and the external customer, if there is one) apprised of any additional
costs that are incurred.

Monitor spending.

As work begins on the project, you will need to monitor expenditures both in
terms of cash and in terms of effort, or hours of labor.

Monitor and document unexpected expenses as they arise, such as rework


that may be required. Unexpected expenses will affect the budget and/or
schedule, and must be discussed with the sponsor.

Monitor the schedule. As work begins on the project, it will be your responsibility
to monitor the activities as they are completed or partially completed so that you
can identify and adjust for delays before they derail the project.

Monitor the risks that have been identied for your project. Alert the sponsor if
those risks become reality, so that appropriate changes can be made to the scope
or schedule. Make sure any risks that arise during reconciliation are reected in
an updated risk register.

Example: Reconcile Funding and Costs for Your Company


A key decision maker at your company has an ambitious plan for a signicant redesign
of the companys website. He wants the site to incorporate new functionality including
the ability for customers to access your site and order products, view streaming videos
about your products, and access inventory. This is a dramatic change from the website
your company currently has. You collect the project budget, scope statement, and
schedule, and compare those specications to the funding that has been allocated.
Immediately, it becomes clear that the small amount of funding allocated is out of line
with the cost estimates received. The company has committed less than half the
amount of funding that would be needed. You go directly to the project sponsor to discuss the discrepancies and nd alternative ways to reach the objectives of the project.
Throughout the life cycle of the website redesign, you monitor spending closely, since
it is clear that the sponsors ambitions threaten to overwhelm the available funding.

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LESSON 5

DISCOVERY ACTIVITY 5-3


Reconciling Funding and Costs
Scenario:
As the project manager coordinating the launching of the new Seattle store, you have responsibility for the stores grand opening and related advertisements. You have estimated the baseline
costs for the project, which are based in part on previous expenditures for other stores grand
openings in similar markets, and your estimate shows that the costs will exceed $2,500. The
funding for this one project was set at $1,000 by the Finance Director. You are concerned that
the senior executives expectations may not be in alignment with the reality of the cost of
completing all the work for this project.

1.

The project scope statement specifies a specific number of ads to be placed in the
newspaper in the weeks leading up to the grand opening. You have researched the
cost of ad space and you know that the sponsors requirements will exceed the funding
commitment. How would you proceed?

2.

Assume that you have no background in advertising or marketing. How could you go
about generating alternative ideas to suggest regarding less expensive advertising
options so that you can deliver the desired results within budget?

3.

You need to partner formally with your companys financial decision makers regarding
the costs of this project. Given the above scenario, what steps would you take to further this goal?

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LESSON 5
4.

The advertising agency that has been contracted to produce the ads for the Seattle
stores grand opening has unexpectedly gone over budget. You receive an invoice that
exceeds their original estimate. How would you proceed?

Lesson 5 Follow-up
In this lesson, you identied methods of creating accurate cost estimates and the budgets that
will guide all of the work done on your projects, so that you can effectively meet expectations
and deliver the desired results. Delivering projects on time and on budget is the cornerstone of
good project management.

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1.

How do you think the ability to estimate costs effectively will improve your performance on the job?

2.

How do you think incorporating good funding reconciliation practices helps completing
a project within the allocated budget?

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LESSON 6

LESSON 6

Lesson Time
2 hour(s)

Planning Project Quality,


Staffing, and
Communications
In this lesson, you will plan project quality, staffing, and communications.
You will:

Create a quality management plan.

Document the project roles, responsibilities, and reporting relationships.

Create a communications management plan.

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LESSON 6
Introduction
You developed project schedule and cost baselines and incorporated these essential planning
documents into your project management plan. In this lesson, you will continue planning your
project by focusing on the quality, human resource, and communications component processes
in the planning process group. In this lesson, you will plan project quality, staffing, and communications.
As you continue your progressive elaboration of your project work, how you handle competing
demands for time, resources, and quality can have a signicant impact on the success of your
project. One of the ways that you can minimize potential resource conicts, communication
issues, and misunderstood quality standards is to enlist the support of your project stakeholders, both internal and external, to help you create effective quality, staffing, and
communications plans.

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LESSON 6

Figure 6-1: The project management framework.

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LESSON 6

TOPIC A
Create a Quality Management Plan
You developed project schedule and cost baselines, two of the three benchmarks for measuring
project success. In this topic, youll focus on quality, the third benchmark for measuring
project success. You will create a quality management plan.
What good is a project that is completed on time and within budget if the quality is inconsistent or even substandard? Clearly dening quality standards for project stakeholders ensures a
common understanding of how project quality will be measured and achieved.

Quality
Quality is dened as the totality of features and characteristics of a product or services that
bear on its ability to satisfy stated or implied needs. In business, quality should be feasible,
modiable, and measurable.
This denition is provided by the International Organization for Standardization, ISO Standard 8402: Terms and
Denitions.

Quality Management Plans


Denition:
A quality management plan is a subsidiary of the project management plan. It
describes for project stakeholders the teams approach to implementing the quality
policy; it explains how quality control and quality assurance will be performed. It may
be formal or informal, depending on the projects requirements.
Example: Ensuring Quality in an Outsourced Task
A manufacturer of high-end clothing might seek to reduce costs by outsourcing some
of its labor. The quality management plan would articulate exactly how quality control
and assurance would be performed, to ensure that the new source of labor could meet
the companys high standards. The quality management plan would identify who
would be responsible for quality control; how, when, and to what degree they would
conduct inspections for quality; and how the team would respond to any quality issues
that arose.

The Plan Quality Process


Plan quality is the process of putting plans into place to ensure that a project will satisfy its
stated objectives or business needs. It must be performed regularly and concurrently with other
planning processes to adjust for cost or time factors. It involves identifying the projects quality standard requirements, performing an analysis to determine how to satisfy those standards,
and creating a quality management plan.

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LESSON 6

Figure 6-2: The plan quality process.

Plan Quality Inputs


There are several inputs for planning project quality.

Input

Description

Scope baseline

Includes the scope statement, the WBS, and the WBS dictionary.

Stakeholder register

Lists the stakeholders whose decisions can inuence or impact various aspects of the project. It helps the project team to identify the
inuences of stakeholders on quality.

Cost performance baseline

Describes the approved time phase that is used to measure and


monitor project cost performance.

Schedule baseline

Describes the approved schedule performance measures with start


and nish dates.

Risk register

Documents information about opportunities and threats that may


inuence the quality requirements.

Enterprise environmental factors

Includes regulations, rules, standards, guidelines, and operating conditions that may affect the application area.

Organizational process assets

Includes quality policies, procedures, guidelines, and historical information.

Plan Quality Tools and Techniques


Various tools and techniques are used to plan project quality.

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LESSON 6
Tools and Techniques

Description

Cost-benet analysis

Considers the tradeoffs and the benet of meeting quality requirements of higher productivity and lower costs while increasing
stakeholder satisfaction. The business case of each activity is used to
compare the cost of each step with its expected benets.

Cost of Quality (COQ)

Costs incurred by preventing non-conformance to requirements,


appraising for conformance to requirements, and failing to meet
requirements (rework), internal or external.

Control charts

Analyze the variability of a process or project activities over time.


They can be used to monitor repetitive activities and help identify if
the project management processes are under control.

Benchmarking

Compares the quality of your projects processes and systems to


those of other comparable groups, both internally and externally.

Design of Experiments (DOE)

A statistical method of identifying the factors that may inuence


certain product or process variables. During quality planning, DOE
determines the number and type of tests to be used and their inuence on the cost of quality.

Statistical sampling

Measures an entire population by studying a randomly selected part


of the population.

Flowcharting

Graphical representation of the relationships between process steps.


It helps the project teams to identify potential problems and to
develop strategies for mitigating them.

Proprietary quality management


methodologies

A set of available methodologies invented over a period of time. For


example, Six Sigma, Lean Six Sigma, and Quality Function Deployment are methodologies that may facilitate effective project quality
planning.

Additional quality planning tools

Additional quality planning tools include brainstorming, affinity diagrams, matrix diagrams, prioritization matrices, owcharts, and
others that help dene and plan effective quality management activities.

Plan Quality Outputs


There are several quality planning outputs that a project manager uses.

200

Output

Description

Quality management plan

Describes the project management teams approach to implementing


the quality policy.

Quality metrics

Specically describes what something is and how the quality control


process measures it.

Quality checklists

Job aids that prompt employees to perform activities according to a


consistent standard.

Process improvement plan

Describes the project management teams approach to identify


unnecessary activity, including process boundaries indicating all
aspects of a process, process conguration owcharting, process
interfaces, metrics for process control, and improvement guidelines.

Project Management Professional (PMP) Certication - Fourth Edition


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LESSON 6
Output

Description

Project document updates

Documents that are updated during the process are the stakeholder
register, Responsibility Assignment Matrix (RAM), cost baseline,
and the SOW, among others.

Process Improvement Planning


Process improvement planning is the process of analyzing and identifying areas of improvement in project processes and enumerating an action plan based on the project goals and
identied issues. The process involves:

Describing operational theories and project roles and responsibilities.

Identifying long- and short-term goals.

Describing process improvement objectives and activities.

Identifying risks and resource requirements.

Determining process improvement activities.

Creating a process improvement plan.

Receiving approval from stakeholders and senior managers.

Executing the process improvement plan.

Process Improvement Plans


Denition:
The process improvement plan is a subsidiary plan of the project management plan that
describes the steps to analyze and determine areas of improvements in project process.
The areas of process improvements include process boundaries, process conguration,
process metrics, and targets for improved performance.
Example: Process Improvement Plan at a Software Development Company
Sharon Parker is a project manager at a software development company. When managing one of the high-priority projects, Sharon realized that the product testing process
was taking longer than required. She decided to review the existing process followed
by her project. The process of testing software involves senior developer review at the
end of each phase, unit testing, systems testing, user acceptance testing, SME review,
and customer review.
Sharon discussed the issue with the process managers and other senior managers. They
agreed with Sharon and appointed her as the project manager to handle the process
improvement plan initiative. She created a process improvement plan to reduce the
time taken to test the product. The plan included information on the long- and shortterm goals, purpose of goal, actions to be taken, priority, time estimate, and who will
perform which activity while improving the process.

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LESSON 6

Figure 6-3: A record of changes included in the process improvement plan.

Total Quality Management (TQM)


Denition:
Total Quality Management (TQM) is an approach to improve business results through
an emphasis on customer satisfaction, employee development, and processes rather
than functions. TQM should be viewed as a long-term, ongoing process rather than a
one-time event.
Example: Approaches to Total Quality Management
Total quality management has been implemented in varying ways by different quality
theorists.

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Theorist

Approach

W. Edwards Deming

Focuses on continuous process improvement in which quality


must be continuously improved in order to meet customer
needs.

Joseph Juran

Breaks quality management into quality planning, control, and


improvement. Quality improvement leads to breakthrough
improvement, meaning improvement that raises the quality
bar to an unprecedented level.

Philip Crosby

His approach is based on four absolutes:


Quality is conformance to requirements rather than a measure of how good it is.
Quality is caused by prevention rather than inspection.
Everyone in the company must work to a standard of zero
defects.
Quality can be measured by determining the cost of quality.

Genichi Taguchi

Emphasizes that quality should be designed into the product


so that factors that cause variation can be identied and controlled.

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LESSON 6
Theorist

Approach

Bill Smith (Six Sigma)

This approach to TQM for the manufacturing sector emphasizes responding to customer needs and improving processes
by systematically removing defects. Originally developed by a
Motorola, Inc. engineer named Bill Smith, Six Sigma is now
closely associated with General Electric, Inc. and other major
industrial companies such as Eastman Kodak.

Further Reading
As part of your quest to further your project management skills, you should consider
investigating some of the major motivational and leadership theories that are a key part
of serious project management efforts today. Many organizations are increasingly using
project-based continuous improvement approaches; the work of W. Edwards Deming
provided the foundation for this effort. Demings 14 Points for Management,
included in his book, The New Economics for Industry, Government, Education,
provides a systematic and pragmatic approach to transforming a western style of management in industry, education, or government to one of optimization. For further
reading, see Out of the Crisis by W. Edwards Deming.

Standards and Regulations


Denition:
Standards are voluntary guidelines or characteristics that have been approved by a recognized body of experts such as the International Organization for Standardization
(ISO). In some cases, the standards body will provide certication that suppliers conform to the requirements of their standards. Often, the conformance to standards is a
customer requirement.
Regulations are compliance-mandatory characteristics for specic products, services, or
processes. Standards often start out as accepted or de facto best practices describing a
preferred approach, and may later become de jure regulations, such as using the critical
path method in scheduling major construction projects.
There are also de facto standards that arent approved by a standards body. For example, TCP/IP is the
de facto standard protocol for all modern computer networks. It is the approved standard for the
Internet, but everyone uses it on private networks now as well.

Example: Standards and Regulations in Toy Manufacturing


In the U.S., consumer-safety legislation governs the manufacturing of products, including toys. In 2007, a recall of millions of toys produced with lead-based paint led
lawmakers to introduce stricter federal regulations, with criminal penalties for noncompliance. But major U.S. toy retailers, in response to public demand, went further;
they forced their suppliers to meet even tougher standards for lead in surface paint
than the government had required.

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LESSON 6
The ISO 9000 Series
The ISO 9000 Series is a quality system standard that is applicable to any product, service, or
process in the world. It was developed by ISO, which is a consortium of approximately 100 of
the worlds industrial nations. There are limits to the certication, which does not guarantee
that an organization will produce quality products or services; it simply conrms that appropriate systems are in place. Subsections of the standard address particular industries or products.
For more information about the ISO 9000 Series, you may visit the http://www.iso.org/iso/home.htm website.

Cost of Quality
Cost of quality refers to the total cost of effort needed to achieve an acceptable level of quality
in the projects product or service. Those costs include all the work necessary to ensure conformance and all the work performed as a result of non-conformance to requirements.
Prevention costs, appraisal costs, and failure costs combine to form the cost of quality.
Types of Cost
The four types of cost associated with quality are prevention costs, appraisal costs,
internal failure costs, and external failure costs. Prevention and appraisal costs are
called conformance costsamount spent to avoid failures. Internal and external failure
costs are called nonconformance costsamount spent to rectify errors.

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Type of Cost

Description

Example

Prevention costs

The up-front costs of programs or processes needed to


meet customer requirements,
or to design in quality.

Design plans
Quality plans
Employee and customer
training
Process evaluations and
improvements
Vendor surveys
Other related preventive
activities

Appraisal costs

The costs associated with


evaluating whether the programs or processes meet
requirements.

Inspections
Testing
Design reviews
Destructive testing loss

Internal failure costs

The costs associated with


making the product or service
acceptable to the customer
after it fails internal testing
and before its delivered to
the customer.

Scrap or rejects
Design aws
Rework or repair
Defect evaluation

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LESSON 6
Type of Cost

Description

Example

External failure costs

The costs resulting from


rejection of the product or
service by the customer.

Product returns
Liabilities
Evaluation of customer
complaints
Maintenance costs
Corrective action
Loss of contract

Checklists
Denition:
A checklist is a job aid that prompts employees to perform activities according to a
consistent quality standard. Items on checklists are phrased as either imperatives, such
as Make sure you save this le correctly, or questions, such as Does this image
match the description in the database?
Checklists can be simple or complex and may range in detail depending on the experience and skill level of the employees and the complexity of the situation.
Example: An Image Quality Checklist
A checklist for printing images is shown. Note that the checklist prompts the graphic
artist to create images to a consistent quality standard. The items on the list are
phrased as interrogatives. If the artist cannot answer all the questions in the affirmative,
the image should not be handed off.

Obtain a printout of the image specications from the graphics database. Use this checklist to
ensure that the images are ready to be handed off to the programmer.
#

Item

Does the image match the


description in the database?

Does the style meet the specications set for the course or
lesson?

Does the quality of the image


meet the standards set for the
course?

Is the image size correct?

Is the image named correctly?

Is the correct border on the


image?

Is the image in the correct


palette?

Is the opacity correct (transparent or opaque)?

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Y/N

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LESSON 6
9

Is the bit-depth correct?

10

Is the resolution correct?

11

Does it have the correct


extension?

12

Have all stray pixels been


cleaned up?

Flowcharts
Denition:
A owchart is a diagram that shows the relationships of various elements in a system
or process. The two most widely used owcharting techniques are the cause-and-effect
diagram and the process or system owchart. Flowcharting techniques can assist the
teams efforts in identifying potential quality problems and the possible effects of those
problems.
Example: A Flowchart

Figure 6-4: A process flowchart.


Process Flowcharts
The process owchart or system owchart shows the sequence of events and ow of
inputs and outputs between elements in a process or system. There is a denite beginning and end along with decision points clearly called out with the actions to take
based on the result of each decision.

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Cause-and-Effect Diagrams
A cause-and-effect diagram, also called the Ishikawa diagram or shbone diagram, is a
type of owchart organized by category. The cause-and-effect diagram provides a
structured method to identify and analyze potential causes of problems in a process or
system. This method organizes potential causes of problems into dened categories.
Using these dened categories promotes the identication of potential causes. Some
common categories include, but are not limited to:

Material

Method

Environment

Personnel

Measurement

Energy

In the diagram below, each category shows potential snags that might lead to the rejection of images.

Figure 6-5: A cause-and-effect diagram.

Control Charts
Denition:
Control charts are graphs used to analyze and communicate the variability of a process
or project activity over time. Control charts help to show the potential capability of the
process and also suggest the range of variability in the process. This range of variability can assist a project manager in determining if the variance is caused by common or
assignable sources. If the process variability uctuates around the average, or statistical
mean, the process shows very little variability and is said to be stable.
The components of a control chart include the process mean, the upper control limit
(UCL), and the lower control limit (LCL). The process mean is determined by taking
samples from the actual process and calculating the statistical mean. As additional
samples are taken and tested, they are evaluated in terms of standard deviations from
the process mean. For most organizations and projects, the UCL will be three standard
deviations above the mean, while the LCL will be three standard deviations below the
mean.

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LESSON 6
Example: Control Charts Indicating Variance Instability
These control charts have measurements that indicate instability because they each
have measurements that exceed the range between the UCL and LCL. Analysis of the
rst chart shows that there are more than seven consecutive points above the mean. On
the second chart, more than seven consecutive points are below the mean. This sevenpoint variance is called the seven-run rule.

Figure 6-6: Variability above the upper control limit (UCL).

Figure 6-7: Variability below the lower control limit (LCL).


Seven-Run Rules
Run rules are used to indicate situations that are out-of-statistical control. When seven
or more consecutive points lie on one side of the mean, it indicates that there should
be a shift in the mean.

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Benchmarking
Denition:
Benchmarking addresses the evaluation of a groups business or project practices in
comparison to those of other groups. It is used to identify the best practices in order to
meet or exceed them. Benchmarking can be conducted between identical processes in a
variety of ways: in similar industries, in dissimilar industries, and with internal or with
external organizational areas.
Example: Benchmarking the Espresso-Based Beverages
Twenty percent of Americans drink espresso-based beverages every day, and the $12
billion premium coffee market is expected to grow signicantly in the next several
years. Several leading fast-food retailers have benchmarked the performance of Seattlebased Starbucks Corp., the worlds largest chain of coffee houses. McDonalds,
Dunkin Donuts, and Tim Hortons have expanded their menus of premium coffees to
compete in this arena and offer similar, high quality coffee products.
Benchmarking Purpose and Results
Benchmarking is commonly used to determine:

The products or services to offer and the features that should be included.

The processes used by other groups to achieve customer satisfaction.

The metrics or goals used to measure the processes or products that achieve customer satisfaction.

Design of Experiments (DOE)


Denition:
Design of Experiments (DOE) is a technique to systematically identify varying levels
of independent variables. DOE can determine:

Which variable has the greatest effect.

What the relationship is between each variable and the customer-focused quality
specications.

What the best value is for each variable, ensuring optimal quality or value.

When done properly, DOE can result in signicant improvements to products and processes, including shorter development cycles, more robust products, and cost
reductions.
Example: Design of Experiments for Producing a New Style of Jar
A cannery was about to put a new style of jar into production. As development of the
packaging moved forward, questions arose regarding the ability of the in-line capper to
deliver the precise amount of torque when rotating the lid onto the new jar. Early testing demonstrated that lid torque less than three inch pounds would result in a leaky
package. Torque greater than eight inch pounds would mar the nish on the screw-on
lid.

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LESSON 6
The project team given the task of determining the optimum torque requirement for the
new packaging used a DOE software program to generate statistical information about
how torque was affected by other interconnected factors. Two of the factors tested
were spindle speed and conveyor speed. The results indicated that these speeds had the
greatest effect on lid torque.
Armed with this information, it was a simple exercise in determining adjustments to
these settings that would result in consistent optimum torque. The experiment
employed by the project team was successful because it was able to identify the variable that had the greatest effect and its relationship to the quality specication of lid
torque.

How to Create a Quality Management Plan


Creating a quality management plan will ensure that the organizational structure, responsibilities, procedures, processes, and resources are in place to implement quality management.
Guidelines:
To create an appropriate quality management plan, follow these guidelines:

Review the organizations quality policy and determine how your project team
will implement the policy.
How will your team identify potential quality problems and their potential
impact on the quality of the projects product, service, systems, or processes?
Will you use particular owcharting methods, benchmarking, design of
experiments, or other techniques?

Are there any standards and regulations that are applicable to your project?

Are there any activities or components that require the development of operational denitions to provide a common understanding of the projects quality
standards? If so, who is responsible for developing them?

Does your organization have any standard checklists that can be modied, or
used as is, to prompt employees to perform certain activities according to a
specic quality standard? If not, should checklists be developed? Who is
responsible for developing them? What are the conditions under which they
should be developed?

Review the product description to identify customer/stakeholder quality requirements.

Determine the cost of quality trade-offs.

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How will your team design in quality to avoid expensive rework to bring
the quality back into conformance?

Are the proposed processes and systems worth the cost of implementing
them?

Review the quality management plan and make sure it:

Describes the project management teams approach to implementing its quality policy (quality assurance, quality control, and quality improvement
approaches).

Describes the resources required to implement quality management.

Includes quality management roles and responsibilities for the project.

Is as detailed and formal as required, based on the quality needs of the


project.
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LESSON 6

Includes how customer satisfaction will be measured and managed.

Example: Quality Management Plan


The project team is given the task of creating a quality management plan. The team
determines that the company has an adequate quality policy. However, it does not
address potential problems. The team assigns roles and responsibilities to the individuals responsible for project quality and includes a project quality assurance coordinator.
The team reviews the baseline performance requirements and customer-requested quality requirements. They determine a cost-effective quality trade-off would be to repeat
the design process and peer plan reviews. Finally, the organizations quality manual is
referenced in regard to approved approaches to each relevant quality assurance and
control item, including specications, change control, checking criteria, and control
logs.

DISCOVERY ACTIVITY 6-1


Creating a Quality Management Plan
Scenario:
As the project manager, you are responsible for formulating a quality management plan for the
PM Training Roll-Out. You have listed the primary project objectives in order to develop a
quality management plan.
The PMO authorized this project in order to enhance the project managers tracking and scheduling capabilities during the business transformation program. The PMO identied that all
project managers should be able to:

Develop a WBS that includes summary, milestones, and detailed activities.

Allocate resources in their project using an OGC resource pool.

Include activity costs and resource costs.

Set activities as effort driven, xed duration, or xed units.

List and document all project constraints.

Identify the critical path.

Set a baseline for their project.

Set interim baselines when necessary.

Track the completion of activities by resource work and/or by percent complete.

Use existing software lters and create new lters to print reports: Project Status,
Resource Allocation, Budget, and Cash Flow.

Other project objectives include:

Conrming that all the project managers will use the project software during the
business transformation program.

Developing an assessment by a training provider that addresses the PMOs list of


tracking and scheduling activities.

All managers passing the post-assessment at 75% or above.

The selected training vendor providing follow-up support after training.

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LESSON 6
1.

Based on the scenario, which documents would you have used to identify the primary
project objectives for this project quality plan?
a) OGC quality policies and procedures
b) Project scope statement
c) Process improvement plan
d) Project management plan

2.

True or False? The process improvement plan helps remove activities that do not contribute to producing products of required quality.
True
False

3.

Which tool can be used to monitor repetitive activities and help identify if the project
management processes are under control?
a) Benchmarking
b) Control charts
c) Flowcharting
d) Cost-benefit analysis

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4.

The PMO has identified a list of objectives for all project managers in the use of the
software. What would you include in your quality plan that will address the level of
quality achieved by each project manager?

5.

The PMO has provided a complete list of activities as expected improvements after
training. What could your team use as a way to determine the degree of improvement
after training?

6.

What are some ways that you could identify the level of quality of the vendor instructor?

7.

How will you measure the quality of support after training?

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LESSON 6

TOPIC B
Document the Project Roles,
Responsibilities, and Reporting
Relationships
Now that you have created a quality management plan for your project and put plans into
place to ensure that standards for quality will be met and measured, you are ready to move
forward with the next element of good planning, which is documenting how people on your
project will interact. In this topic, you will document the roles, responsibilities, and reporting
relationships for the people working on your project.
You want to take steps to make sure that everyone working on your project knows what their
roles and duties are and that those responsibilities are clearly articulated and documented. By
carefully orchestrating the roles and responsibilities of everyone involved on your project, and
making sure that those relationships are documented, you will effectively ensure that everyone
on the project has a clear understanding of their duties. This will help eliminate confusion and
misunderstandings throughout the life cycle of the project, and will help everyone feel that
they are part of a smoothly running operation.

The Develop Human Resource Plan Process


Develop human resource plan is the process of identifying, documenting, and assigning project
roles, responsibilities, and reporting relationships. It is commonly performed during early
project phases.
The process involves:

Creating a human resource plan that documents the human resource skills required to
complete the project successfully.

Identifying training requirements, team-building strategies, and planning recognition and


rewards systems.

Planning for the availability of resources with a rare blend of skills and of those working
on multiple projects.

The develop human resource plan process tries to make the most effective use of people
involved in the project by rst determining project interfaces, staffing requirements, and constraints. Factors such as project costs, schedules, risks, and quality may also be affected when
developing the human resource plan, which should include these issues and a plan for providing appropriate solutions.

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LESSON 6

Figure 6-8: The develop human resource plan process.

Develop Human Resource Plan Inputs


Several inputs are required for planning human resources.

Input

Description

Activity resource requirements

List the required people and competencies necessary for each


activity, which will be progressively elaborated when developing
the human resource plan.

Enterprise environmental factors

Include organizational structure and culture, marketplace scenario,


and existing human resources.

Organizational process assets

Items from previous projects such as organizational processes,


policies, and structures; lessons learned; templates; and checklists
help shorten planning time and ensure nothing is overlooked.

Develop Human Resource Plan Tools and


Techniques
Develop human resource plan tools and techniques include organization charts and position
descriptions, networking, and organizational theory.

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Tools and Techniques

Description

Organization charts and position


descriptions

Document team members roles and responsibilities so each work


package has a clear owner and each team member understands his or
her role using hierarchical, matrix, and text-oriented formats. Subsidiary project plans may list resource roles as well.

Networking

Formal and informal interactions such as correspondence, meetings,


and conversations are networking tools to understand how interpersonal factors impact staffing options. Networking also enhances the
professional project management practices of a project manager at
different phases of a project.

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LESSON 6
Tools and Techniques

Description

Organizational theory

Provides information on the organization of work processes through,


among other things, organizational structure, power, culture, and
behavior of people. The project manager must understand how different organizational structures inuence or impact human resources
differently.

Develop Human Resource Plan Outputs


The human resource plan is the only output for the develop human resource plan process.

Output

Description

Human resource plan

Describes how human resources working on the project must be identied, managed, controlled, and released after the end of the project. The
human resource plan should be reviewed throughout the project life
cycle to ensure applicability and validity. It includes:
Roles and responsibilities: Determined for each element of the
projects scope of work. Typically done with a Responsibility
Assignment Matrix (RAM). Some of the factors that need to be fullled when determining roles and responsibilities include role,
authority, responsibility, and competency.
Project organization charts: Illustrate the projects organizational
structure.
Staffing management plan: Describes the project management
teams approach to managing the increase and decrease of project
staff across the project life cycle.

Organizational Structures
An organizational structure dictates how the various groups and individuals within the organization interrelate. The organizational structure also impacts how the project team is structured.
The type of organizational structure often limits the availability of resources and the terms
under which those resources are available to the project.

Figure 6-9: A sample organizational structure.

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LESSON 6
Organizational Structure Types
There are four types of organizational structures: functional, projectized, matrix, and composite.

Organizational Structure

Characteristics

Functional organization

Each department is responsible for carrying out a specic, similar set of activities.
Multiple people perform each type of activity.
Reporting is hierarchical, with each individual reporting to a
single manager.
The project managers authority is low, relative to the functional
managers authority.

Projectized organization

The project manager and a core project team operate as a completely separate organizational unit within the parent
organization.
Core team members are typically responsible for the work of
extended team members in their functional area.
Team members are often co-located.
The project manager typically reports to a program manager and
has a signicant amount of authority and independence.
Some organizations may contain their own support systems,
such as a separate procurement or personnel department, or
share support systems with the parent organization.

Matrix organization

A blend of functional and projectized structures in which individuals still report upwards in the functional hierarchy, but they
also report horizontally to one or more project managers.
The matrixed reporting scheme may be a permanent one.
May be characterized as weak, balanced, or strong, depending
on the relative authority of the project manager to the functional
manager. An organization is said to have a strong matrix when
the project managers authority is higher than that of the functional manager.

Composite organization

Most modern organizations involve all the above structures at various levels. It is a combination of all the other types of
organizations.

Organization Charts
Denition:
An organization chart is a visual representation of a projects organizational structure.
Its purpose is to show both the reporting relationships within the project and the
projects relationship to the parent organization.
The complexity of the organization chart will vary with the complexity of the project.
Finally, the organization chart must clearly assign project tasks to team members.

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A traditional functional organization chart is hierarchical and organized by department.
In a projectized organization chart, the functional team members report directly to the
project managers rather than the functional managers. An organization chart for a company using the matrix structure shows that the team members report vertically to a
functional manager and horizontally to a project manager.
Position Descriptions
To effectively create an organization chart, each team member must have a position
description that clearly delineates what his or her responsibilities are. Templates and
checklists, often obtainable from human resources, are good tools for creating position
descriptions.
Example: Different Organization Charts

Figure 6-10: A functional organization chart.

Figure 6-11: A projectized organization chart.

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LESSON 6

Figure 6-12: A matrix organization chart.

Relative Authority in Organizational Structures


Denition:
Relative authority refers to the project managers authority relative to the functional
managers authority over the project and the project team. In a purely functional organizational structure, the project managers authority is low relative to the functional
manager. Conversely, in the projectized organizational structure, the opposite is true.
Example: Relative Authority in Different Organizations
An auto manufacturing company has a functional organizational structure, and its management is hierarchical. A project manager coordinating the companys participation in
a trade show will have engineers, designers, and sales and marketing executives
assigned to the project, but he does not have functional authority over those resources;
they all report to their functional managers in their own departments. His authority is
low relative to the functional managers authority. Conversely, a web design company
has a projectized organizational structure, with independent project teams working
independently on their own projects. A project manager in this organization has much
more autonomy and authority.

Project Interfaces
Project interfaces are the various reporting relationships that occur within the project as well
as the boundaries of the project.

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Interface

Description

Organizational

Reporting relationships among different organizational units. They may be


internal or external to the parent organization and include interfaces between
the project team, upper management, other functional managers that may need
to support the team, and even the organizations customers.

Technical

Reporting relationships among technical disciplines on the project that can


occur during a phase or during the transition between phases. They reect
informal and formal relationships with people on the project team as well as
outside of the team.

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Interface

Description

Interpersonal

Formal and informal reporting relationships among individuals working on the


project, whether internally or externally.

Logistical

Relationships between project team members who are distributed across different buildings, countries, and time zones.

Political

Goals and expectations of internal and external project stakeholders and their
relationships with the projects.

The Responsibility Assignment Matrix (RAM)


Denition:
A Responsibility Assignment Matrix (RAM) is a chart that links key project stakeholders to specic project deliverables or activities by assigning responsibility to an
individual stakeholder for each element of work. Some of the questions the RAM
attempts to answer include:

Who is accountable for the completion of a specic deliverable or activity?

Who has sign-off authority on the deliverable or activity?

Who must be notied of the completion?

Who makes the acceptance or rejection decision?


In a large or complex project, a matrix might be used to show the responsibilities for major
deliverables only. A lower-level matrix may be developed to show work package roles and responsibilities within each deliverable. Work package owners may develop a RAM that assigns responsibility to
each activity in the work package.

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LESSON 6
Example: A Responsibility Assignment Matrix

Figure 6-13: A responsibility assignment matrix links key project stakeholders


to project deliverables.
Listing RAM Elements
On a RAM, the deliverables or activities are typically listed vertically, with the key
project stakeholder positions, titles, or names listed horizontally. Responsibility for
each deliverable or activity is assigned to one of the stakeholders.
RACI Chart
A RACI chart is a type of RAM that helps detect the level of responsibility for each
project team member. RACI stands for Responsible, Accountable, Consultive, and
Informed. The RACI matrix helps identify who is responsible for making decisions and
how the people responsible are supported. RACI is generally used to provide clarity on
the roles and responsibilities assigned to each project team member. RACI chart is also
called a RASI chart, where S stands for Supportive.

Figure 6-14: A RACI chart.

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PARIS Charts
PARIS charts are similar to RACI charts, where P stands for Participant, A for
Accountable, R for Responsible, I for Information, and S for Signature.

Staffing Management Plans


Denition:
A staffng management plan forecasts what types of staff will work on the project,
when they will be needed, how they will be recruited onto the project, and when they
will be released from the project. Depending upon the project requirements, the staffing
management plan may be formal or informal, exhaustive or brief. The plan is a subsidiary plan to the human resource plan and is an important input to the develop human
resource plan process.
Example: Staffing Management Plans for Writing a Book
To coincide with a companys 100th anniversary, the CEO might decide to have a
book written to document the companys growth and evolution. The staffing management plan for this project would stipulate external resources with expertise in writing,
design, printing, and publishing, but it would also include internal resources with specialized knowledge about the company history. The staffing management plan would
identify who would be needed to help with the book, when they would be needed,
what they would be expected to contribute, and how long they would be expected to
participate.

Staffing Management Plan Components


There are several components of the staffing management plan that will continue to evolve as
you develop the project plan.

Item

Description

Staff acquisition

When planning resources, consider whether you will use team members
from within the organization or from external sources, the costs associated with the level of expertise required for the project, physical
location of resources, and the amount of assistance that can be provided
by other departments for the project management team.

Resource calendars

The staffing management plan details the time frame required for a
project and for each project team member. Optimizing the use of people
on a project will help nish the project on time and within budget. Use
of human resource charting tools such as resource histograms can help
illustrate the number of hours that a person, department, or entire
project team will be needed for each week or month over the course of
the project.

Staff release plan

Developing a plan for releasing resources helps control project costs by


using team members expertise or skills as and when they are needed.
Planning for release also allows for a smooth transition to other projects
and mitigation of human resource risks that may occur during the nal
phases of the project.

Training needs

A training plan can be developed for team members who need to


improve their competency levels or who may need to obtain certications that will benet the project.

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LESSON 6
Item

Description

Recognition and rewards

Creating incentives for meeting milestones or other project deliverables


can have a positive effect on morale. An effective recognition plan
rewards team members for meeting goals that are under their control.

Compliance

If the contract requires compliance with government regulation, contracts, or other standards, this should be stipulated in the staffing
management plan.

Safety

Projects performed where specic safety precautions must be taken, i.e.,


construction sites or nuclear power plants can have documented policies
and procedures for the protection of team members. These procedures
should also be documented in the risk register.

How to Document the Project Roles,


Responsibilities, and Reporting Relationships
Documenting roles, responsibilities, and reporting relationships will give project personnel a
clear understanding of their duties.
Guidelines:
To document roles, responsibilities, and reporting relationships, follow these guidelines:

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Review the staffing requirements for your project, which were identied during
resource planning, as well as external relationship requirements with clients, consultants, and/or vendors.

Make sure you have a good understanding of any constraints that may limit your
organizational planning options.

Address the organizational structure of the performing organization and how this
affects the structure of the project team.

If necessary, incorporate required roles and reporting relationships from any contractual agreements with unions or other employee groups.

Consider the competencies of expected staff members and how they affect the
projects reporting relationships or roles and responsibility assignments.

Create an organization chart to document the reporting relationships among your


project team.

Ensure all key project stakeholders with reporting relationships are indicated in a
hierarchical format on the chart.

Analyze the formal and informal project interfaces that exist among the organizational units, technical disciplines, and individuals working on the project for their
possible impact on your organizational planning.

Create a RAM to document the roles and responsibilities for key project stakeholders.

Ensure the RAM is created as early as possible in the project and is updated as
necessary to reect changes in personnel or project focus.

Assign roles and responsibilities to stakeholders who are directly involved with
the project work rather than to senior managers or customers who have limited
and/or indirect involvement.

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Make sure each element of the projects scope is accounted for in the RAM and
provide a key to describe responsibility codes.

Distribute the organization chart and RAM appropriately, to all project team members and other key project stakeholders.

Example: Project Roles, Responsibilities, and Reporting Relationships in a Construction Firm


Charles is working on a project team at a construction rm. He decided to document
the roles and reporting relationships of the project team members. Charles began by
reviewing the staffing requirements of the project, which state that a senior foreman
must oversee the primary labor force and should report directly to the assistant project
manager.
He reviewed the project constraints and identied that the plumbing sub-contractor
requires employment of at least ve full-time laborers for the duration of the project.
The sub-contractor also must report to the union branch chief.
Charles identied all the key stakeholders on the project and created an organization
chart. Using this information, he then built a Responsibility Assignment Matrix
(RAM).
After reviewing this document for omissions, he distributed it among the team members and stakeholders.

DISCOVERY ACTIVITY 6-2


Documenting Reporting Relationships
Scenario:
You want to ensure that everyone on the OGC Training Roll-Out project has a clear understanding of their duties; therefore, you document the roles, responsibilities, and reporting
relationships for the PM Training Roll-Out project.

1.

Which step would be the logical first step in documenting the roles, responsibilities,
and reporting relationships of project team members?
a) Create a RAM to document the roles and responsibilities for key project stakeholders.
b) Create an organization chart to organize the team members into a hierarchy.
c) Consider the competencies of expected staff members and how they affect the
projects reporting relationships or roles and responsibility assignments.
d) Examine the staffing requirements of the project.

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2.

After examining the staffing requirements of the project, your next step is to list possible constraints that would affect the organizational planning. Which options would
you include as constraints for this project?
a) The project includes resources from several different OGC buildings.
b) The project includes resources from outside the organization.
c) The project requires resources that are assigned to another project that may not be
released.
d) The project includes some resources that are new hires.

3.

Which item would you include in your documentation of the reporting relationships on
this project?
a) The training quality requirements.
b) The number of years of experience of each project manager.
c) The training instructor and manager will not only report to their management but will
also be responsible for several deliverables in your project.
d) The training and assessment costs.

4.

You have reviewed the Staffing Management Plan; to your surprise, it appears that
there are now staffing gaps due to resource reassignments. What could you do to
address this problem?

5.

At the conclusion of documenting project roles and reporting relationships, what key
documents would you create and distribute to project team members?
a) The project charter and a RAM.
b) An organization chart and a RAM.
c) The company quality policy and a RAM.
d) A cost-benefit analysis and a RAM.

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TOPIC C
Create a Communications
Management Plan
You determined the roles, responsibilities, and reporting relationships for your project. Now
you need to dene how you and your project team will communicate with each other. In this
topic, youll put strategies in place to ensure effective communication by creating a communications management plan.
An effective communications management plan ensures that the right people receive the right
information at the right time. You dont want your people expending unnecessary energy
reporting on every little detail. Nor do you want to spend hours generating unnecessarily long
reports. Mastering the tools and techniques to develop an effective communications management plan will ensure that you deliver the signicant information to your stakeholders when
they need it.

Communications Management Plans


Denition:
A communications management plan describes the project teams approach to communicating information about the project. It documents what information must be
communicated to whom, by whom, when, and in what manner. It also documents how
information is collected, archived, and accessed.
Example: Communications Management Plan to Arrange for a Companys
Annual Meeting
A project manager in charge of presenting the companys annual meeting with shareholders would have many stakeholders from different departments and at different
levels of company management. The communications management plan might include
regularly scheduled status meetings with the employees assigned to the project, with
meeting minutes to be distributed to upper management. It might also stipulate an
email distribution list with all stakeholders and resources included on all relevant
project communications.

The Plan Communications Process


Plan communications is the process of ensuring timely and appropriate generation, collection,
dissemination, storage, and ultimate disposition of project information. It involves identifying
communications requirements while accounting for the project scope, performing stakeholder
analysis, reviewing available technology, and nally, creating a communications management
plan. Creating the communications plan when developing the project management plan helps
allocate resources such as time and budget to communication activities. This plan must be
reviewed and updated regularly to ensure that it continues to meet stakeholder needs.

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LESSON 6

Figure 6-15: The plan communications process.

Plan Communications Inputs


The plan communications process inputs include the stakeholder register, stakeholder management strategy, enterprise environmental factors, and organizational process assets.

Input

Description

Stakeholder register

Provides information regarding the identied project stakeholders.


It includes identication information, assessment information, and
stakeholder classication.

Stakeholder management strategy

Denes a strategy to maximize the stakeholder support and mitigate the negative impact of stakeholders on the project.

Enterprise environmental factors

These factors help in understanding the communication needs of


the existing organizations and stakeholders.

Organizational process assets

Assets such as lessons learned from previous projects help to identify communication needs and to plan project communication
activities.

Plan Communications Tools and Techniques


Various communications planning tools and techniques are available to project managers.

Tools and Techniques

Description

Communication requirements analysis Yields the communication needs of each stakeholder, allowing
the project manager to make informed decisions about communications systems.
The information used to identify communications requirements
of a project are:
Organization charts.
Project organizations.
Disciplines and departments working on a project.
Internal and external information requirements.

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Tools and Techniques

Description

Communication technology

The particular communications systems available, such as


Internet access, email, and video/web conferencing, will impact
the technological choices a project manager can make.

Communication models

Determine how information must ow from the sender to the


receiver. The major components of the communication model
include encoding, message and feedback-message, medium,
noise, and decoding. The communication model must be considered when planning for project communications. The project can
be negatively impacted if the communication between the
sender and receiver fails.

Communication methods

Used to share information among stakeholders in a project.


Some of the communication methods include:
Interactive communication: Involves communication
between multiple people performing multidirectional information exchange.
Push communication: Involves sending information to a
receiver. It ensures that the information has been distributed
but does not guarantee that it has reached the receiver.
Pull communication: Involves receivers to access information whenever required.

Plan Communications Outputs


The two communications planning outputs are the communications management plan and the
project document updates.

Output

Description

Communications management plan

Documents the project teams approach to communicating project


information. It can include:
Stakeholder communication requirements.
Information to be communicated including language and level
of detail.
Reason for distributing the information.
Resources allotted for communication activities such as time
and budget.
A glossary of common terminologies.

Project document updates

Documents that are updated when planning for communications


include project schedule, stakeholder register, stakeholder management strategy, and cost performance baseline.

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LESSON 6
Communications Requirements
Denition:
Communications requirements are the project stakeholders documented communications needs. They include relevant information that contributes to the success of a
project, as well as an analysis of cost, time, and logistics. Not all stakeholders will
require the same amount, level, or timeliness of communication. The variances must be
factored into the communications requirements.
Example: Communications Requirements for Meeting Stakeholder Needs
Communications requirements might include weekly meetings with a stakeholder to
summarize the progress of a project and the installation of a software program, such as
Microsoft Outlook, that facilitates the exchange of necessary information.

Communications Requirements Analysis


Denition:
A communications requirements analysis is an investigation that leads to a clear articulation of the stakeholders communications needs and helps the project manager make
effective choices regarding the technologies to be recommended in the communications
management plan.
This analysis should take the form of a grid, questionnaire, or survey that documents
the communications and technology requirements for each stakeholder. It will also
enable the project manager to obtain buy-in from stakeholders and to shape their perceptions by providing the right information at the right time.
Example: Conducting a Communications Requirements Analysis
A project manager conducting a communications requirements analysis might survey
stakeholders regarding their communications needs by asking: How often would you
like to receive status reports? How would you prefer to receive information: by phone,
by email, or in face-to-face meetings? What level of detail are you expecting to see?
Issues of appropriateness, level of detail, timeliness, and cost should be considered in
addition to the preferences and technology capabilities of stakeholders.
Identifying Communication Channels
Project managers need to identify the number of communication channels or paths,
which will indicate the complexity of the projects communications. The maximum
number of channels that can be used is identied with the formula: (n(n 1)) / 2,
where n is the number of stakeholders. For example, when there are 12 key stakeholders for a project, the probable number of communication channels will be (12 x
11) / 2 = 66. The project manager must plan and use the optimum number of communication channels. This can be identied using tools such as organizational structures.

Communications Technologies
Denition:
Communications technology is any type of technology that is used for communications
planning, including websites, email, instant messaging, phones, and video
conferencing.

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Some technologies are instantaneous, while others take time; some are interactive,
while others are one-way only. Some provide a historical record of what was communicated, while others are transient.
Example: Different Communications Technologies

Figure 6-16: Communications technologies used for planning communications.


Selecting a Communications Technology
Questions to ask when determining a communications technology for each type of
communications are:

How quickly must the information reach the audience?

Is there likely to be feedback from the communication? How will it be collected


and integrated?

Must there be a record of the communication? What type of record is required?

What technologies are available for transmitting the given communication? Are
they appropriate to the type and value of the communication?

What technology will the audience need to receive the communications? Is it


likely that the receiving technology is in place? If not, how expensive is it to
acquire?

Are there technical difficulties or learning curve issues with communicating via
the technology?

Are there access issues, such as security-protected sites, which could limit the
number of audience members who could receive the communications?

What types of archival technology will be used to store the communications?


Where will they be stored? Are there compatibility or access issues that must be
addressed?

Is the particular mode of technology (transmittal, storage, or reception) likely to


become outdated before the project is completed?

What is the relative cost of each technology, taking into account the number of
communications and number of audience members who must receive them?

Consider any relevant global communications issues that may affect your project;
how might they inuence your choice of the most appropriate technology?

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LESSON 6
How to Create a Communications Management
Plan
Effective communications management plans ensure that all project team members are aware
of the type and format of information shared with project stakeholders for the success of the
project.
Guidelines:
To create an effective communications management plan, follow these guidelines:

Gather and distribute contact information for all involved parties.

Determine the communication needs of project stakeholders.


Work from an organization chart to avoid omitting a key stakeholder.

Ask for your project sponsors input.

Ask open-ended questions.

As a rule of thumb, project team members require more detail on a more frequent
basis. Senior management typically requires summary information on a less frequent basis.

Analyze the value to the project of providing the information.

Evaluate any constraints and assumptions to determine their possible impact on


communication planning.

Determine the appropriate communications technologies to use for communicating


project information.

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Determine the immediacy of the need for information.

Analyze the availability of technology systems.

Evaluate the expected project staff to identify their knowledge of and access
to proposed technology.

Conduct research to determine the likelihood that there will be changes to the
proposed technology before the project is over.

Make sure your communications management plan includes all key elements:

A description of the types of information required for each project stakeholder.

A collection and ling structure that describes the methods the project team
will use to collect and le project information.

A distribution structure describing to whom and by who project information,


such as status reports, data schedules, and meeting minutes should be provided.

The methods that will be used to distribute the various types of information.

Schedules for the production of each type of communication.

Methods for accessing information between scheduled communications.

A method for updating and rening the communications management plan


throughout the project life cycle.

Integrate the communications management plan into the overall project plan.

Distribute the plan to project stakeholders.

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LESSON 6
Example: Creating a Communications Management Plan for a New Project
You are working on a project for a multinational company. Communications for this
project have been particularly difficult, with members missing the vast amount of information being generated or acting on misinformation. These errors have cost thousands
of dollars in lost work hours. Youve discovered that the problem is due to the geographic dispersal of team members and the irregular schedules of several stakeholders.
Based on these considerations, you have determined that the communications management plan will use a web-based template that allows deployed staff to submit their
information into a uniform database. To facilitate information collection and dissemination, you determine that an online form will categorize the data while the online
program organizes the data and automatically prepares reports in email format that are
delivered on a schedule based on the needs of all stakeholders.
You integrate all information into the communications management plan and provide
copies to all project stakeholders.

DISCOVERY ACTIVITY 6-3


Creating a Communications Management Plan
Scenario:
You have assigned roles and responsibilities to your project team members and now you need
to dene in your communications management plan how you and your project team will communicate with each other. While most of your team is local, several key members are
geographically dispersed across several states.

1.

Which item should you use to determine the communications needs of your project
stakeholders?
a) Research material
b) Stakeholder analysis data
c) Project report deadlines
d) Executive board schedule

2.

Given the scenario, what would be a good technology for enhancing team member
interactions and building relationships through the life of the project?
a) Team building event at project kick-off.
b) Project team threaded discussion board.
c) Use email and databases to collect and store information.
d) High quality virtual teleconferencing on a semi weekly or weekly basis.

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LESSON 6
3.

Given the scenario, what would be a good primary communication technology for
exchanging project information?
a) Phone exchange with email confirmation
b) Weekly face to face meetings
c) Voice mail
d) Video conferencing

4.

After integrating the communications management plan into the overall project plan,
what would be the next logical step?
a) Determining whether there will be changes to the proposed technology before the
project is over.
b) Creating a schedule for the production of each type of communication.
c) Distributing the plan to all the stakeholders.
d) Creating a description of stakeholder communication requirements.

Lesson 6 Follow-up
In this lesson, you identied quality standards and metrics for measuring quality performance.
You also identied project team interactions and addressed the communications needs of the
team and stakeholders and created an effective communications plan. These tools provide you
with the necessary framework to effectively plan project quality, staffing, and communications.

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1.

What specific benefits would enlisting stakeholder support bring to your quality,
resource, and communications planning efforts?

2.

What are some factors you will consider when determining a structure for your organization?

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LESSON 7

LESSON 7

Lesson Time
2 hour(s), 45 minutes

Analyzing Risks and


Planning Risk Responses
In this lesson, you will analyze risks and plan risk responses.
You will:

Examine a risk management plan.

Identify project risks and triggers.

Perform qualitative risk analysis.

Perform quantitative risk analysis.

Develop a risk response plan.

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LESSON 7
Introduction
You have gone to considerable effort to construct a sound project management plan, including
plans for managing cost, quality, and communications. In this lesson, you will develop a risk
management plan so that you can identify and mitigate the risks to your project.
Unexpected events can upset your work plan or bring your project to a screeching halt. Experienced project managers take steps to plan how they will manage potential risks to their
projects. Risk analysis and planning allow you to be proactive, identifying and circumventing
potential issues, rather than scrambling to respond to problems. Your risk management plan
will help to identify and neutralize risks before they can affect the project.

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LESSON 7

Figure 7-1: The project management framework.

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LESSON 7

TOPIC A
Examine a Risk Management Plan
All projects carry risk, and as a project manager, it is your responsibility to conduct effective
risk management planning to mitigate any potential issues. In this topic, you will plan and
execute risk management activities and examine a risk management plan.
The nature of project management carries with it inherent risk that things can go differently
than you had hoped or planned. Deciding how to approach and plan for project risk early in
the planning phase can help you to maximize the opportunities in positive risks and minimize
the consequences of adverse risks that may occur during the life of your project.

Risks
Denition:
A risk is an uncertain event that may have either a positive or negative effect on the
project. Its primary components are a measure of probability that a risk will occur and
the impact of the risk on a project. Some common ways to classify risk are effectbased classication, source-based classication, and level of uncertainty. The level of
uncertainty describes how much is known about the risks, which are often described as
knowns, known-unknowns, and unknown-unknowns.
Example: Weather Risks
Due to its relative unpredictability, the weather is a risk common to business. An organization planning an outdoor festival will likely choose a location and day with the
highest probability for agreeable weather. In this scenario, the threat of rain is a risk
that could seriously affect attendance and revenue. Because the weather is known to be
a possible risk, but its impact is yet unknown, this risk would be classied as knownunknown.

Project Risk Management


The project risk management process is a high-level process that includes six main processes:
plan risk management, identify risks, perform qualitative risk analysis, perform quantitative
risk analysis, plan risk responses, and monitor and control risks.
The design of this PMP course is based on process groups. The rst ve processes of the project risk management process is covered in this lesson as part of the planning process group and the sixth process that comes
in the monitoring and controlling process group has been dealt in detail in Lesson 14.

Figure 7-2: The project risk management process with the six main processes.
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LESSON 7
Business Risk vs. Insurable Risk
Denition:
Risk can further be classied in two ways: as business risk or insurable risk. A business risk is one that is inherent in a business endeavor, such as when a company
assumes that it will spend money as well as make money, and that any project undertaken carries with it the potential for either success or failure, prot or loss. Insurable
risk is a risk that has only the potential for loss and no potential for prot or gain. An
insurable risk is one for which insurance may be purchased to reduce or offset the possible loss.
Example: Risks in a Retail Store
For a retail store owner, the outlay of money to purchase inventory without a guarantee that it will sell is a business risk. A loss of inventory due to a re is an insurable
risk.

Types of Business Risks


Project managers should be aware of some of the common types of business risks.

Business Risk

Description

Competitive

Risks such as the risk of increased competition in the marketplace and a


rival company developing a superior product.

Legislative

Risks such as the risk of new laws or changes in regulations governing your
products, goods, or services requiring your company to spend more to maintain compliance.

Monetary

Risks such as the risk of increased prices for raw materials, increased taxes,
increased operating costs, and losses due to nonpayment by customers.

Operational

Risks such as the risk of fraud, theft, employee injury, workplace accidents,
and damage to equipment.

Types of Insurable Risks


There are several types of insurable risks of which you should be aware.

Insurable Risk

Description

Direct property risk

Risk of property damage due to weather, re, and so on.

Indirect property risk

Risk of additional expenditures needed to recover from property loss.

Liability risk

Risk of needing to make good after causing damage to another.

Personnel-related risk

Liability risk for damage to employees.

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LESSON 7
Risk Management Plan
Denition:
A risk management plan is a document that describes the teams approach to identifying risks. It identies the methodology, approaches, and tools that will be used,
documents the roles and responsibilities of those involved, identies the budgeting and
the scheduling for risk management activities, and identies risk categories.
The risk management plan does not address responses to risks. These are addressed in the risk
response plan.

Example: Risk Management Plan for a New Project


Entrepreneurs seeking funding from venture capitalists for a new business would
present a risk management plan to their potential investors. For a proposed amusement
park, the risk management plan would describe business risks, such as operational risks
of potential losses due to employee theft, and insurable risks, including liabilities for
injuries sustained on the park rides.

The Plan Risk Management Process


Plan risk management is the process of deciding how to plan and execute the risk management
activities for a project. It involves identifying the project charter, current policies, roles, risk
tolerance, the project management plan, and any templates for risk management, and performing an analysis on the inputs. The nal output of this process is the risk management plan. It
is imperative that the plan risk management process is initiated at the early stages of project
planning.

Figure 7-3: The plan risk management process.

Plan Risk Management Inputs


Accurate inputs are essential to forging an effective risk management plan.

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LESSON 7
Input

Description

Project scope statement

Describes the deliverables and a common understanding among


the stakeholders. Project assumptions are found here. Uncertainty in project assumptions should be evaluated as potential
causes of project risk.

Cost management plan

Describes how risk budgets, contingencies, and management


reserves will be communicated and accessed.

Schedule management plan

Describes how schedule contingencies will be communicated


and assessed.

Communications management plan

Describes the interactions that happen on the project and determine the right resource to share the available information on
risks and responses at a suitable time and location.

Enterprise environmental factors

Factors that inuence the risk management plan include attitudes


towards risk and risk tolerance, and the individuals involved in
the project. These attitudes and tolerances may be expressed in
policy statements or by personal action.

Organizational process assets

Pre-dened approaches to risk management include risk categories, common denition of concepts and terms, risk statement
formats, standard templates, roles and responsibilities, authority
levels for decision-making, lessons learned, and stakeholder registers.

Management Reserves
Management reserves are budgets withheld by senior management to manage
unplanned changes to project scope and cost. They are not part of the cost baseline but
may be included in a projects total budget. Project managers must obtain approval to
spend management reserves.

Plan Risk Management Tools and Techniques


Only one tool and technique is used in risk management planning.

Tools and Techniques

Description

Planning meetings and analysis

Planning meetings is the only tool for risk management planning.


Project teams conduct planning meetings to develop the risk management plan. Generally, the project manager, project team
leaders, and anyone in the organization with responsibility to
manage risk planning and execute activities will attend risk management planning meetings. The outcome of these meetings is
documented in the risk management plan.

Plan Risk Management Output


There is one output from the plan risk management process.

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LESSON 7
Output

Description

Risk management plan

Made up of methodology, descriptions of roles and responsibilities, budgeting, timing, risk categories, denitions of risk probability and impact,
probability and impact matrix, revised stakeholders tolerances, reporting
formats, and tracking.

Risk Management Plan Components


A good risk management plan will include several components.

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Component

Description

Methodology

Denes the tools, approaches, and data sources


that may be used to perform risk management on
the project.

Roles and responsibilities

Denes the lead, support, and risk management


team membership for each type of action in the
risk management plan.

Denitions of risk probability and impact

Scales of risk probabilities and impact are dened


for use in qualitative risk analysis using terms like
very unlikely to almost certain with respected
values in numbers for these terms. For instance,
very unlikely might have 0.05 probability value.

Probability and impact matrix

Predened matrix with risk priority areas earmarked, which has product of impact value on x
axis and probability value on y axis.

Revised stakeholder tolerances

Revised stakeholder tolerances may need to be


updated as a result of the plan risk management
process.

Budgeting

A budget for project risk management should be


established and included in the risk management
plan.

Timing

Denes how often the risk management activities


will be performed throughout the project life cycle.

Risk categories

Documentation such as Risk Breakdown Structure


(RBS) or categories from previous projects will
help identify and organize risks.

Reporting formats

Denes how outputs of this process will be documented, analyzed, and communicated.

Tracking

Documents how risk activities will be recorded


and audited.

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LESSON 7
Risk Breakdown Structures (RBS)
Denition:
A Risk Breakdown Structure (RBS) is a hierarchical arrangement of identied risks that
helps project managers to organize potential sources of risk to the project. Functioning
much like a work breakdown structure, an RBS arranges categories into a hierarchy.
This approach allows the project team to dene risk at very detailed levels.
Example: RBS

Figure 7-4: A risk breakdown structure.

Effect-Based Risk Classication


Denition:
Effect-based risk classication is a way of analyzing the major risks that are inherent
to a project that could have an impact on its success. These major risks include time,
cost, quality, and scope. All these risks are interrelated such that changes to one will
affect all of the others.
Example: Effect-Based Risk Classication for a Project
A project manager might choose to use effect-based risk classication for a complex
project in which many of the risk factors are interrelated, such as a large-scale corporate production in which many departments, teams, and external resources are
participating. Any one departments failure to produce its work on time or on budget
will affect the schedule, cost, quality, and scope of the project, so the project manager
would need to classify all of the risks as well as their potential impact on the rest of
the project.

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LESSON 7
Source-Based Risk Classication
Denition:
Source-based risk classication is a method of analyzing risk in terms of its origins.
Sources may be internal or external to the project, as well as technical, non-technical,
industry-specic, or generic.
Example: Source-Based Risk Classication for a Project
For a project requiring internal and external resources, such as an advertising campaign, a project manager might classify the risks in terms of where they originate. One
source of risk could be the potential rise in the price of advertising time on network
television, which could affect cost and scope. Another source of risk could be the failure of an external advertising agency to meet its deadlines, which would affect
schedule and scope.

Probability Scales
Denition:
A probability scale is a graph showing the assignment of value to the likelihood of a
risk occurring. Probability scales are designed using a variety of values, such as linear,
non-linear, or an ordinal scale using relative probability values ranging from very
unlikely to almost certain. A risks probability score can range in value from 0.0 (no
probability) to 1.0 (certainty).
Example: A Probability Scale

Figure 7-5: A probability scale with values showing the likelihood of a risk
occurring.

Impact Scales
Denition:
An impact scale is a rating system showing the assignment of a value that reects the
magnitude of the impact of a risk event on project objectives. They can be ordinal
scales using values of very low, low, moderate, high, and very high. They can also be
ordinal scales using linear or non-linear numeric values. Often, impact scales use both
methods. To improve the integrity and quality of the data and make the processes consistent and repeatable, organizations typically develop denitions for each value to help
the risk management team assign each risks impact score consistently.
Example: Impact Rating Scale
The following table shows an organizations impact scale.

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LESSON 7
Impact Rating

Impact Level

Denition

Very low

If this risk occurs, the impact on the projects objectives would


be minor and not noticeable outside the project.

Low

If this risk occurs, the impact on the projects objectives would


be minor but noticeable to the customer or sponsor.

Moderate

If this risk occurs, the impact to the projects objectives would


be signicant and would create customer or sponsor dissatisfaction with the project.

High

If this risk occurs, the impact on the project would be signicant and would create major customer or sponsor
dissatisfaction. The project would be in jeopardy.

Very high

If this risk occurs, the impact would be catastrophic. The


project would be canceled.

Levels of Uncertainty
Levels of uncertainty describe the risks of a project based on how much is known about the
source and effect of the risk.

Level of Uncertainty

Description and Example

Known

Items that you know could affect you, and for which you can
roughly predict the nature and extent of the effect.
Example: Staff turnover.

Known-unknown

Items that you know could affect you, although you are not able to
predict how or how much they will affect you.
Example: Competition in the marketplace.

Unknown-unknown

Items that are beyond your ability to foresee, predict, or prepare for.
Example: Unexpected budget cuts.

Risk Analysis
Denition:
Risk analysis is the evaluation of the probability and impact of the occurrence of a
risk. Risk analysis is typically conducted through either qualitative or quantitative techniques. The level of risk to the project is the product of the probability of the risk
occurring and the predicted impact that the risk will have on the projects success.
Example: Risk Analysis for a New Venture
A manufacturing company would conduct various kinds of risk analyses before launching a new line of products. They would evaluate the probability and impact of the risks
that would be associated with this new venture, which might include the costs of
research and design, the potential for future sales and revenue from a new product line,
uctuating consumer demand, competition from rivals, and pending consumer-safety
legislation, which might govern the manufacturing of the new products.
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LESSON 7
Risk Tolerance
Denition:
Risk tolerance refers to the level of risk acceptable to a project manager or key stakeholder when the investment is compared to the potential payoff.
Example: Risk Tolerance Between Stakeholders
Two stakeholders might perceive risk differently. One stakeholder might be interested
in only conservative, low-risk projects that are similar in nature and scope to many
past successes. Another stakeholder might seek out high-risk ventures in uncharted territory; they might be willing to risk a great amount of capital on a speculative project
with the potential for large returns.

Levels of Risk Tolerance


Risk tolerance can be classied by three levels.

Risk Tolerance Classication

Description

Risk-averter

Not likely to take a risk that is considered a high risk.

Risk-seeker

Accepts an uncertain outcome and may be willing to take a high risk regardless of the consequences.

Risk-neutral

Tolerance to risk is proportional to the amount of money at stake.

How to Create a Risk Management Plan


Creating an effective risk management plan provides the project team with a secure approach
to identifying, analyzing, responding to, monitoring, and controlling project risk.
Guidelines:
To create an effective risk management plan, follow these guidelines:

Determine how you will organize your projects risk management team.

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Consider assigning a risk officer to coordinate all risk management activities.


While not all organizations typically have risk officers, it may be a helpful
option to consider.

Dene the roles and responsibilities for each person on the risk management
team.

The sponsor may be able to assist in some risk management activities, such
as developing response strategies for all risks classied as high risks.

Conduct risk planning meetings to develop the risk management plan.

Establish a budget for risk management.

Consult your organizations risk management policy and make sure your risk
planning complies with the policy. If your organization has a risk management
plan template, use it and make modications to meet the specic needs of your
project.

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LESSON 7
Describe the approaches, tools, and data sources that may be used to perform risk
management activities for this project.

How will the risks be identied? Will you conduct brainstorming sessions?
Will you use the Delphi technique? Will you use subject matter experts?

How will the identied risks be scored and analyzed so that effective
response strategies can be developed? Is there organizational policy mandating a specic scoring and prioritization method?

Determine and describe the schedule for performing risk management activities.

Determine and describe how your team will document risk response efforts.

What tools will your team use to store risk information and track responses?

How will the risk response efforts be communicated to the project stakeholders?

Determine and describe how the lessons learned from your risk management
activities will be documented for the benet of future projects.

If an organization, sponsor, or customer has specic guidelines or requirements


regarding risk thresholds, this information should be included in your risk management plan.

Example: Drafting a Risk Management Plan


You have been asked to draft a risk management plan for the Arithmetic on a Stick
project. You are provided with the organizations risk management policy, which contains information concerning the organizations risk threshold and scoring and
interpretation methods. While organizing the risk management team, you assign a risk
officer to set up a risk database for the plan.
You arrange for the team to have planning meetings. The team determines a budget
and decides that weekly brainstorming meetings will be used to identify risks. The
organization has a policy outlining scoring. It turns out that all scoring must be done
twice by independent parties and the results averaged together. To accommodate this
stipulation, you add a scoring controller to the team. Finally, you decide that all information will be entered into the risk database for documentation and future project
purposes.

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LESSON 7

DISCOVERY ACTIVITY 7-1


Examining a Risk Management Plan
Data Files:

OGC Risk Management Plan

Before You Begin:


From the C:\085042Data\Analyzing Risks and Planning Risk Responses folder, open the OGC
Risk Management Plan document.
Scenario:
You have constructed your project management plan for the OGC PM Training Roll-Out,
which includes plans for managing costs, quality, and communications. The risk management
plan for the project has been developed and you would like to review its content before you
share it with the project team. You know that your risk management plan needs to address all
risks associated with the internal training as well as the external training provider.

1.

During your project review, you determine that a risk officer is needed to handle risk
management activities. Which activities would you assign to this person?
a) Develop response strategies.
b) Confirm and articulate the risks probability and impact to the business strategy.
c) Coordinate risk identification and analysis activities.
d) Assign roles and responsibilities to each team member.

2.

With your planning meetings started and budget decided, your team begins the task of
determining how to identify risks. Which is the first place to look for risk planning?
a) Other project risk management policies
b) The organizations risk management policy
c) The project scope statement
d) The organizations quality policy

3.

The risk management plan for your OGC PM Training Roll-Out project uses a probability
scale to define the probability of occurrence of a risk listed in the risk register. Which
is the probability scale defined for the project?
a) 1, 3, 5, 7, 9, 11
b) 0.1, 0.3, 0.5, 0.7, 0.9
c) 2, 4, 6, 8, 10, 12
d) 1.1, 1.3, 1.5, 1.7, 1.9

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4.

Which additional factor should you consider when developing your risk management
plan?
a) Job descriptions
b) Geography of the project team
c) Thresholds
d) Communication technology

5.

You have integrated specific risk related activities and deliverables into the projects
schedule and documented how to track risk response efforts in your risk management
plan. Which task should you perform to complete the risk management plan?
a) Determine how to document lessons learned for future projects.
b) Determine the necessary budget.
c) Make sure that roles and responsibilities are clearly understood by the team and
other stakeholders.
d) Create a payoff matrix.

6.

Which section of the risk management plan highlights the risk priority areas for the
project?
a) Methodology
b) Probability and Impact Matrix
c) Roles and Responsibilities
d) Frequency of Updating Risk Registers

7.

True or False? As per the OGC Risk Management Plan, the OGC PM Training Roll-Out
project requires a quantitative risk analysis to be performed to assess the risk exposure events of your project.
True
False

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TOPIC B
Identify Project Risks and Triggers
You created a risk management plan. Using the approach outlined in the plan, you can begin
the process of identifying the potential risks that may affect your project. In this topic, you will
delve into the risk identication component process and identify project risks and triggers.
Identifying risks and triggers helps you determine the most effective action to take for each
risk. Mastering the tools and techniques to identify project risks and triggers ensures that you
are prepared to take the appropriate action.

Triggers
Denition:
Triggers are the early warning signs or indications that a risk to your project is about
to occur. Triggers could be external factors that inuence your project, such as changes
in relevant legislation. They could also be internal factors that inuence your project,
such as changes in staffing, governance, or funding within your organization. Triggers
must be examined during regularly scheduled risk review sessions held during the life
of the project.
Example: Trigger Indicators
For a project involving the production of an independent documentary for television,
news of an impending television writers strike would be a trigger. If the writing on
the documentary had not yet been completed, the trigger could indicate the negative
risk that critical external resources would not be available during the strike. If the writing on the documentary had been completed, the trigger could indicate the positive risk
that the networks demand for the product could increase in the absence of other new
programming.

The Identify Risks Process


Identify risks is an iterative process of identifying the risks and triggers facing a project. It
requires an understanding of the projects schedule, its costs, and its quality management plan.
Project managers can design data-related triggers for their projects; when the data falls outside
a dened acceptable variance range, the project manager is alerted to imminent risk.

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Figure 7-6: The identify risks process.

Identify Risks Inputs


There are several inputs to the identify risks process.

Input

Description

Risk management plan

Describes the teams approach to identifying risks.

Activity cost estimates

Provide a quantitative assessment of the costs involved in completing each scheduled activity, with range of estimates indicating risk
range. They also provide an indication whether the cost estimates
are sufficient or insufficient to complete the activities.

Activity duration estimates

Indicate the time allotted for each activity or for the whole project.
They are reviewed periodically for identifying the risk involved in
the estimated durations.

Scope baseline

Contains the project scope statement that includes project assumptions and their uncertainties, and the detailed WBS of potential
risks.

Stakeholder register

Contains information on stakeholders that is useful in seeking opinions to identify risks.

Cost management plan

A subsidiary of the project management plan, it contains a cost


management approach specic to the project that helps to generate
or mitigate risks.

Schedule management plan

Includes guidelines for handling changes to the schedule, updated


risks, and associated response plans.

Quality management plan

Describes the project management teams approach to implementing the quality policy. It is reviewed to identify risks related to
quality and those might be generated by the quality management
plan.

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Input

Description

Project documents

Includes an assumptions log, work performance reports, earned


value reports, network diagrams, baselines, and other project information that helps to identify risks.

Enterprise environmental factors

External sources of risk information may include commercial databases, academic studies, published checklists, industry studies, risk
attitudes, or benchmarking.

Organizational process assets

Historical information includes les from previous projects, lessons


learned, risk statement templates, and commercially available published information such as benchmarking or best practices data.
Historical information can provide important data about potential
future risks that could affect a current project.

Identify Risks Tools and Techniques


There are a number of tools and techniques available to the project manager to aid in risk
identication.

Tools and Techniques

Description

Documentation reviews

Structured reviews of project plans and related documents at both


the total project and detailed scope levels.

Information-gathering techniques

Data collection methods such as brainstorming, the Delphi technique, interviewing, and root cause analysis that the project team
can use to assist in identifying risks.

Checklist analysis

Developed based on historical information as a standardized way


to identify risks. Be careful to look for items that do not appear
on the existing checklist, as each project is unique.

Assumptions analysis

Technique used to explore the validity of project assumptions.

Diagramming techniques

Cause-and-effect diagrams, process owcharts, and inuence diagrams are used to identify risk causes.

SWOT analysis

Analysis that examines the project from the perspective of


strengths, weaknesses, opportunities, and threats.

Expert judgment

Input from subject matter experts or team members with relevant


experience and expertise on similar projects or business areas
who can suggest possible risks based on previous experience.

Identify Risks Output


The risk register is the only output from the risk identication process.

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Output

Description

Risk register

The risk register contains the list of identied risks and the potential responses.
When complete, the risk register will ultimately contain the outcomes of the
other risk management processes, including the results of the qualitative risk
analysis, quantitative risk analysis, and risk response planning.

Information-Gathering Techniques
Information-gathering techniques are methods used to collect data that will assist the project
team in identifying risks to the project.

Technique

Description

Brainstorming

Used to identify overall project risks or may focus in on the risks within
a particular project segment or work package.

Delphi technique

Generates a consensus among project risk experts who anonymously


submit their risk list to a facilitator. Because it relies on achieving consensus, the Delphi technique may be difficult to implement in many
organizations.

Interviewing

Used to get information from people with a wide experience across


many projects, such as stakeholders, team members, project managers
from previous projects, and functional management peers to quantify the
probability and consequences of risk on project objectives. The output is
a statistical interpretation of the data from which a range of probability
can be expressed against a level of condence that the risk will or will
not occur, such as optimistic/low and pessimistic/high.

Root cause analysis

Used to identify problems, discover the root cause, and develop corrective actions.

Types of Interviewing Methods


There are two interviewing methods used for generating risk probabilities.

Interviewing Methods Description


Direct

Asks an expert to assign subjective probabilities to a given range of


values, providing a lowest possible value, most likely value, and highest possible value.

Diagrammatic

Uses diagrams for an expert to assign subjective probabilities to a


given range of values, providing a lowest possible value, most likely
value, and highest possible value.

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Risk Registers
Denition:
The risk register is a document that identies and categorizes risks, potential risk
responses, and their triggers, or warning signs. If risk categories are changed, the risk
register must be updated. Any possible risk responses included in the risk register are
forwarded for use in the risk response planning process. The risk register will be
updated with the results of other risk management processes and provided to any
project team members involved in project risk management.
The risk register will ultimately contain the outcomes of the other risk management processes, including the results of the qualitative risk analysis, quantitative risk analysis, and risk response planning. In
its initial stage, the risk register does not necessarily contain information regarding planned responses
to mitigate the effects of risk.

Example: A Risk Register

Figure 7-7: A risk register that identifies and categorizes risks.

Risk Categories
Risk categories divide project risks into areas reecting common sources of the risk.

Risk Category

Examples

Technical, quality, or performance


risks

Project management risks

Inadequate time and resource allocation.


Ineffective project plan development.
Poor cost estimates.

Organizational risks

Resource conicts with other projects.

Technical changes.
Changes to industry standards during the project.
Reliance on unproven or complex technology.
Unrealistic performance goals.

Inadequate project funding.


Inconsistent management support.
External risks

Union issues.
Change of management in customers organization.
Regional security issues.

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How to Identify Project Risks and Triggers
It is important to identify and document the characteristics of risks that might affect the project
so that the project team can determine the most effective action to take for each risk.
Guidelines:
The project risks and triggers identied will determine the type of risk analysis to be
performed. To identify project risks and triggers, follow these guidelines:

Perform a structured review of appropriate documentation from other planning


processes with key project stakeholders to ensure an understanding of each. These
documents are a valuable source for risk identication and they may include:

Project charter

WBS

Product description

Schedule and cost estimates

Resource plan

Procurement plan

List of constraints and assumptions

Use one or more risk identication techniques to identify risks and their possible
triggers. Techniques may include:

Information-gathering techniques, such as brainstorming, interviewing, the


Delphi technique, and SWOT analysis, among others.

Risk identication checklists (make every effort to itemize all types of possible risks to the project on the checklist).

Assumptions analysis.

Diagramming techniques such as cause-and-effect diagrams and system ow


charts. You can also use inuence diagrams, which provide a graphical representation of a problem showing causal inuences, time ordering of events,
and other relationships among variables and outcomes.

Be consistent. Whatever method you adopt, apply it systematically across your


project. Before the project begins, identify risks in every project segment and
work package. At the start of each project segment, re-examine the risks for that
segment. Update your list of risks at the close of each project segment.

Think outside the box. Apply your method consistently, but be on the lookout for
special circumstances that might arise in any project segment. Those checklists
and templates are in place to help get the risk identication process going, but
they are far from complete. As the project progresses, circumstances change. Be
on the lookout for changed assumptions, new risks, or additional impacts from
previously identied risks.

Consult relevant historical information, such as risk response plans and nal
reports from previous, similar projects that may include lessons learned describing
problems and their resolutions. Another source of historical information for risk
identication is published information, such as commercial databases, academic
studies, and benchmarking results.

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Once risks have been identied, group them into categories that reect common
sources of risk for your industry or application area. Examine each identied risk
to determine what triggers will indicate that a risk has occurred or is about to
occur.

Use the results of your analysis to initiate the risk register.

Consider implementing any risk-register software that may be in common


usage at your company. You can also create a risk register without specialized software by using a spreadsheet or table.

Include the projects name, sponsor, key stakeholders, and objectives.

Identify the risks inherent in your project with a description of each.

Example: Identify Project Risks and Triggers


A car manufacturer conducted an internal study and concluded that passengers had difculty buckling the companys standard seat belt. A team was commissioned to
redesign the belt buckle. The project manager directed the risk management team to
review the project documentation and results of the study. The risk management team
brainstormed a list of potential risks and their triggers for the new buckles. Two risks
identied were that the buckles would fail to provide proper slack during regular use
and that the buckles might accidentally release during a collision.
The project team examined old test results for similar buckle designs and commercial
safety studies concerning seat belts. After reviewing the information, these risks were
categorized as technical. The project manager called for tests that would specically
check the probability of these risks occurring. Because public safety was at risk, the
team agreed that even one failed test would trigger an immediate risk response plan.
The team noted all of their results in the initial project risk register for later analysis.

DISCOVERY ACTIVITY 7-2


Identifying Project Risks and Triggers
Scenario:
With a completed risk management plan, your project team moves into the risk identication
phase. You are meeting with your team and you provided each team member with a copy of
the project charter and technical documentation for the risk identication process.

1.

To identify risks for this project, you and your project team will meet as a group to
identify and examine as many of the strengths and weaknesses within OGC that can
potentially impact the project as you can, as well as any opportunities or threats that
may be imposed by the external training provider. Which information-gathering techniques will you use?
a) Brainstorming
b) Interviewing
c) Delphi technique
d) SWOT analysis

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2.

There is a new upgrade to the project management software with enhancements to


the project tracking and communications features. This upgrade is mandatory in a
networked environment and therefore, when available, will be required by OGC. In
what risk category should your team place this risk?
a) Technical, quality, or performance risks
b) Project management
c) Organizational
d) External

3.

What is the trigger for the software upgrade risk that has been identified?
a) The enhancements to the project tracking and communications software.
b) The IT department scheduling the software upgrade.
c) The impact the upgrade will have on the PM Training Roll-Out project by narrowing
the RFPs sent to external training providers.
d) The potential increase to the total costs of training that the upgrade will cause.

TOPIC C
Perform Qualitative Risk Analysis
You identied which risks might affect your project and documented their characteristics. Now
you must assess the impact and likelihood of these identied risks. In this topic, you will
explore the perform qualitative risk analysis process, where you will rank and prioritize project
risks according to their potential effect on project objectives.
Identifying risks is only one part of an effective strategy to minimize work activity disruptions
that could cause your project to go over budget or exceed its promised deadline. Its important
to rank their importance so that precious time isnt wasted trying to mitigate risks with a low
priority. Qualitative risk analysis lays the foundation for effectively quantifying high priority
risks to your project.

Qualitative Risk Analysis


Denition:
Qualitative risk analysis is a technique used to determine the probability of occurrence
and the impact of identied risk. This is then used to determine the risk exposure of
the project by multiplying the probability and impact. The qualitative risk analysis process ultimately provides the list of prioritized risks for further actions.
Example: Performing Qualitative Risk Analysis for a Music Concert
An event management company is planning to organize a jazz concert in a coastal city.
An initial marketing survey undertaken by the company indicates that the response for
the concert would be good, since the general population of that city likes jazz music.
Also the historical data show that the response towards similar musical concerts held
in this city has been very encouraging.
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However, a recent weather bureau announcement has indicated that there is a slight
possibility that the low-pressure area that has developed beside the coastal city can
cause heavy rains on the day of the concert. The organizing committee officials decide
to have a discussion about the weather risk with all the stakeholders involved to evaluate the impact of risk on the project objectives, on the basis of a scale of low, medium,
and high.
The members discuss the issue, list different areas of concern, and rate them. The
members nd that in the worst case scenario, the low-pressure area over the coast may
develop into a tropical storm, accompanied by very heavy rains and wind. But the
chances of that are remote, since the weather bulletin does not project a tropical storm
and indicates that there is only a slight possibility of heavy rains.
Secondly, some of the members were concerned that heavy rains might force people to
stay indoors and reduce the incremental revenue from ticket sales at the box office on
the day of the event, as well as from sales of souvenirs and concessions at the event.
But on the contrary, others felt that since the concert is to be held inside an auditorium, the chance of rain having a big impact on the audience turnout is remote. Also,
even a seat occupancy rate of 50% would ensure that the expenditure involved with
this event can be reclaimed.
Based on the deliberations, the organizing committee nally concludes that the risk
exposure is low or at the worst, is moderate in nature. The event managing company
documents the information in the risk register.

The Perform Qualitative Risk Analysis Process


Perform qualitative risk analysis is the process of assessing, ranking, and prioritizing risks for
subsequent analysis. It takes into account the probability of different risks occurring and their
likely impact. Qualitative analysis provides the foundation for assessing risk. To be effective,
qualitative analysis should be conducted early in the project life cycle so that potential problems can surface early enough to develop an effective response plan. When qualitative analysis
is repeated, trends can be evaluated and corrective action may be taken early enough to avoid
or lessen a negative consequence.

Figure 7-8: The perform qualitative risk analysis process.

Perform Qualitative Risk Analysis Inputs


Several elements go into the perform qualitative risk analysis process.

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Input

Description

Risk register

Contains the list of identied risks.

Risk management plan

Contains important information about roles and assignments in risk


management, schedule activities for risk management, risk categories, the probability and impact matrix, and revised stakeholders
risk tolerances.

Project scope statement

A project scope that is very complex or unfamiliar to the organization will carry much more risk than project scopes that are more
common. The risks inherent in familiar project scopes are already
documented and more easily anticipated.

Organizational process assets

Includes information on completed projects of similar scope, studies


of risk specialists, and risk databases.

Perform Qualitative Risk Analysis Tools and


Techniques
There are several qualitative risk analysis tools and techniques that you can employ.

Tools and Techniques

Description

Risk probability and impact


assessment

Probability is the likelihood that a risk event will occur or prove


true. In risk analysis, each risk is assigned a value to represent its
probability or degree of uncertainty. Impact is the likely effect on
project objectives if the risk event occurs. In risk analysis, each
risk is assigned a value representing the likely consequences of the
risk event occurring. These factors are often described in terms of
being very high, high, moderate, low, and very low.

Probability and impact matrix

Illustrates a risk rating assignment for identied risks. The matrix


species the probability and impact of the risks identied and rates
them as high, medium, or low priority.

Risk data quality assessment

Techniques to evaluate if the obtained data is unbiased, accurate,


and of high quality.

Risk categorization

Categorizes risks to identify the areas of the project most exposed


to the effects of uncertainty.

Risk urgency assessment

Indicates priority and can include specic information on timing


for response.

Expert judgment

Information provided by a group or individual with expertise based


on relevant experience on similar projects, and through risk facilitation interviews or workshops. Helps assess the impact and
probability of each risk.

Perform Qualitative Risk Analysis Output


Risk register updates constitute the only output of qualitative risk analysis.

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Output

Description

Risk register updates

The risk register contains the list of identied risks; it should be updated
with the results of the qualitative analysis.

Risk Data Quality Assessment


Denition:
Risk data quality assessment is the evaluation of the usefulness of the available data
concerning the risk. It includes examining the data obtained about a particular risk for
the amount of data available, the quality of data available, the extent to which the
source of the information understands the risk, and the legitimacy and dependability of
the data.
Example: Risk Assessment for a Restaurant Chain
As project manager for a restaurant chain, Barry is responsible for new site development. The company is interested in expanding to a location in the northern section of
the city, and Barry has conducted a risk assessment to determine whether or not it
would be nancially sound to purchase property in a large shopping plaza there. The
risk assessment includes the average cost per square foot of real estate within that
neighborhood; this gure indicates that real estate is selling at a very reasonable price.
Upon detailed examination of the risk data, however, Barry discovers that the information used to calculate the average cost per square foot is ve years old. Barrys quality
assessment indicates that the data is too out-of-date to be useful in the risk analysis,
and purchasing property based on this information would be a poor idea.

Probability and Impact Risk Rating Matrix


Denition:
A probability and impact risk rating matrix is a graph showing the assignment of a
risk rating to risks or conditions. The matrix combines the probability and impact
scales to prioritize risks and identify risks that are likely to require further analysis.
The risk rating is calculated by multiplying the risks impact score by its probability
score. It may indicate risk thresholds by applying shading, color, or line variations. The
probability and impact risk rating matrix will guide the response plans.
Example: A Probability and Impact Risk Rating Matrix
The sample probability and impact risk rating matrix shown here is a simplied
example; the shadings of color indicate the levels of probability and impact. A real
probability and impact risk rating matrix would be used to assess very complicated
risks with many factors and data points.

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Figure 7-9: A simplified probability and impact risk rating matrix.

Components of Risk Registers


There are several components of risk registers that project managers identify at the qualitative
risk analysis stage.

Component

Description

Relative ranking or priority list of project risks

The overall risk ranking for a project can be determined by adding the individual risk factor scores
and dividing by the number of risks.

Risks grouped by categories

Placing risks in categories may reveal areas of risk


concentration. It may also highlight common
causes of risk, allowing you to improve risk anticipation and response.

Causes of risk or project areas requiring particular


attention

Identifying specic frequently occurring causes in


risk occurrence enables better risk response planning.

Lists of risks requiring response in the near term

Some risks may require action in the near term.


These can be grouped separately from the risks
that will be addressed at a later date.

List of risks for additional analysis and response

Risks that may require additional analysis and


management typically include risks classied as
high or moderate. For example, a schedule risk
that threatens to delay the project end date beyond
acceptable limits will require quantitative analysis.

Watchlist of low-priority risks

Risks that are not urgent and do not require nearterm action can be documented on a watchlist for
monitoring.

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Component

Description

Trends in qualitative risk analysis results

As qualitative risk analysis is repeated, a trend


may result that can make risk response or further
analysis more or less urgent.

The Ongoing Risk Assessment Process


The ongoing risk assessment process is an iterative process of identifying, analyzing, and
documenting the risks facing your project; it is conducted throughout the project life cycle.
This is primarily an organizational issue that requires the project manager (or the PMO) to
have project managers outside the project, shadow the project manager and provide oversight
and fresh perspective during risk management reviews.

Figure 7-10: The ongoing risk assessment process.

How to Perform Qualitative Risk Analysis


Performing qualitative risk analysis provides a method by which you can rank and prioritize
risks. Effective qualitative risk analysis can assist an organization with the decision-making
process when selecting which project to do and what resources are assigned.
Guidelines:
To perform qualitative risk analysis, follow these guidelines:

Examine the list of identied risks.

260

Are all the risks identied?

Are all the risks completely documented?

Analyze the data available for each risk to assign a data precision ranking score.

Does the source of the data fully understand the risk?

Is the source reliable and trustworthy?

Is the amount of data sufficient to adequately analyze the risk?

What is the accuracy and quality of the data?

Are there risks that require further monitoring? Should they be placed in the
risk register for watching?
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LESSON 7

Determine the organizations risk threshold for this project.

Analyze the assumptions identied during risk identication as potential risks


against the validity of the assumption and the impact on the project if false.

Analyze the probability and impact of each identied risk using well-dened
probability and impact scales.

Determine the risk factor scores using a probability and impact risk matrix.

Prioritize the risks according to the risk management plan. Identify risks that
require further analysis. Determine the overall risk for the project and compare
with the organization risk threshold.

Document all changes to the risk register.

Example: Qualitative Risk Analysis for a Fast Food Company


A fast food company wanted to reduce its long lines and increase its hourly sales. The
company discovered that by reducing the cooking time of hamburgers by 30 seconds,
they could average 10 more customers served per hour. The shift managers decided to
perform qualitative risk analysis to identify potential problems with this plan. Most of
the risks they identied centered on food safety and were based on existing health and
safety standards for the cooking of meat products. These regulations forced the restaurant chains risk threshold to be very low.
A probability and impact matrix was created and each identied risk was scored on the
matrix. Highest in the ranking was the cooks inability to guarantee consistency of
internal food temperature based on a formula of cooking times.

DISCOVERY ACTIVITY 7-3


Performing Qualitative Risk Analysis
Data Files:

Risk Register

Before You Begin:


From the C:\085042Data\Analyzing Risks and Planning Risk Responses folder, open the Risk
Register document.
Scenario:
After brainstorming the potential risks for the OGC PM Training Roll-Out, it is now time to
analyze the risks qualitatively and document them in the Risk Register document. You and
your team have created a risk summary outlining all identied risks and have assigned a risk
probability factor to each risk. There are a total of 25 activities in the project; however, at this
time you are reviewing the risks associated with the Obtain External Training Provider.

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1.

Based on the OGC Risk Event Impact Scale, which of the risks should receive the highest priority for this project?

a) IT might not approve project management software upgrade.


b) Temporary loss of a team member.
c) Change in organizational requirements to use external training.
d) RFPs do not meet OGC specifications for training, i.e., dates and costs.
2.

Based on OGCs risk event impact scale, the risk event impact is 2.5. How is the risk
impact for this project best described?
a) Between Very Low to Low
b) Between Low to Moderate
c) Between Moderate to High
d) Between High to Very High

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3.

You need to enter the risk factors into the risk register for the work activity, Obtain
External Training Provider. In the Risk Register document, list the risk probability rating for each task.

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LESSON 7
4.

For each risk that is identified, provide an impact rating for the work activity, Obtain
External Training Provider. In the Risk Register document, list the risk impact rating
for each task.

TOPIC D
Perform Quantitative Risk Analysis
You performed a qualitative risk analysis for your project. Now you can determine the extent
of the risk exposure to your entire project. In this topic, you will examine the perform quantitative risk analysis process and perform a quantitative risk analysis.
Taking advantage of opportunities can often mean turning a negative outcome into a positive
one. By performing a quantitative risk analysis, you can take steps to maximize the positive
consequences of the opportunities facing your project.

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Quantitative Risk Analysis
Denition:
Quantitative risk analysis is a technique used to assess the risk exposure events to
overall project objectives and determine the condence levels of achieving the project
objectives. Quantifying risk can help you to identify time and cost contingencies of a
project. It further renes and enhances the prioritization and scoring of risks produced
during qualitative analysis.
Example: Quantitative Risk Analysis for the Supply-Chain Management Software
Project
The project team on the Supply-Chain Management Software project identies process
data for a statistical analysis using a Monte Carlo simulation to determine the condence level that the project will be completed on time and within the budget. The team
identies critical project parameters, which affect project schedule. The team further
determines project success rate, and makes decisions about viable project alternatives
taking into account the risks within the project.
Everyday Practicalities
In most everyday project management scenarios, conducting a qualitative risk analysis
is adequate to meet the project managers purposes; only in very sophisticated, mature
project management environments is there much additional value added by conducting
further quantitative risk analysis.

The Perform Quantitative Risk Analysis Process


Perform quantitative risk analysis is the process of numerically assessing the probability and
impact of each risk and determining the extent of the overall project risk. It involves gathering
documents indicating risk planning and project scope, as well as the risk register; analyzing
each risk using such tools as interviewing, expert judgment, probability distributions, sensitivity analysis, expected monetary value analysis, decision tree analysis, and simulation; and
nally entering any alterations into the risk register.

Figure 7-11: The perform quantitative risk analysis process.

Perform Quantitative Risk Analysis Inputs


There are several inputs to the perform quantitative risk analysis process.

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Input

Description

Risk register

List of identied risks and relative ranking and categories.

Risk management plan

Contains roles and responsibilities, budgets and schedule for risk


management activities, RBS, risk categories, the probability and
impact matrix, and risk tolerances.

Cost management plan

Sets the criteria for planning, estimating, budgeting, and controlling


project costs.

Schedule management plan

Sets the criteria for developing and controlling the project schedule.

Organizational process assets

Contains information on completed projects, studies from risk specialists, and risk databases.

Perform Quantitative Risk Analysis Tools and


Techniques
There are some tools and techniques used in the perform quantitative risk analysis process.

Tools and Techniques

Description

Data gathering and representation


techniques

There are two techniques used in data gathering and representation:


Interviewing: Taking subjective probability and representing
that data objectively.
Probability distributions: Visually represent risk probability.

Quantitative risk analysis and modeling techniques

There are three techniques used in risk analysis and modeling:


Sensitivity analysis: Examines how the uncertainty of a
project element affects the objective in question if the other
uncertain elements remain unchanged.
Expected monetary value analysis: Calculates the average
outcome under uncertainty.
Modeling and simulation: Includes cost risk analysis, which
is most commonly performed using the Monte Carlo method.

Expert judgment

Utilizes subject matter expertise to analyze potential cost, identify schedule impacts, and validate risks. Also, utilized for
interpretation of data and to identify the strength and weakness
of the tools used.

Perform Quantitative Risk Analysis Output


Risk register updates constitute the only output of the perform quantitative risk analysis process.

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Output

Description

Risk register updates

Include probabilistic analysis of the project, the probability of achieving


the cost and time objectives, a newly prioritized list of quantied risks,
and trends in quantitative risk analysis results.

Quantitative Risk Analysis Update Components


There are several quantitative risk analysis update components.

Component

Description

Probabilistic analysis of the project

Once risks are qualitatively and quantitatively analyzed, the


project team should be able to forecast the possible completion
dates and costs and provide a level of condence for each.

Probability of achieving the cost and


time objectives

Using quantitative risk analysis, the project team can estimate


the likelihood of achieving the project objectives under the
current plan and with the current knowledge of the project
risks.

Prioritized list of quantied risks

Identied risks are prioritized according to the threat they pose


or the opportunity they present to the project. This prioritized
list includes a measure of the impact of each identied risk.

Trends in quantitative risk analysis


results

Repeating the quantitative risk analysis allows the projects


risk management team to analyze the trends and make adjustments as necessary. Information on project schedule, cost,
quality, and performance gained through the perform quantitative risk analysis process will help the team to prepare a
quantitative risk analysis report.

Project Risk Ranking


Denition:
Project risk ranking is the overall risk ranking for producing the nal deliverable of
the product or service of the project. It allows for comparisons among other projects,
assisting in project initiation, budget and resource allocation, and other decisions.
Example: Risk Ranking for a Project
The risk management team for a project created a probability and impact matrix that
illustrates the relative position of threats as identied in the qualitative risk analysis.
The team now calculates the percent exposure of the top four risks.

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The qualitative risk analysis has already suggested the descending order of risks. The
following table displays the total exposure of all the risks for the project as 3.22% and
the exposure of the top four risks as 2.37%. Considering the top four risks, the team
determines the exposure to these risks as 73.6%.

Basics of Probability
When you perform probabilistic analysis, you will need to apply some of the basic principles
of probability.

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Principle of Probability

Description

Sum of probabilities

The sum of the probabilities of all possible events must equal 1


(100%).

Probability of single event

The probability of any single event must be greater than or


equal to 0 and less than or equal to 1.

Dependent joint events

The probability of joint events is the product of the probability


that one event occurs and the probability that another event
occurs, given that the rst event has occurred. Under these circumstances, the events are considered to be dependent
(connected in some way with each other).

Independent joint events

When the probability of joint events occurring is the product of


the probabilities of each, the events are considered to be independent (the two events have nothing in common and may occur
simultaneously).

Mean

The sum of the events divided by the number of occurrences.

Median

The number that separates the higher half of a probability distribution from the lower half. It is not the same as the average,
although the two terms are often confused.

Average

The number that typies the data in a set. It is calculated by


adding the values of a group of numbers and dividing that total
by the number of objects included.

Standard deviation

This is the measure of the spread of the data, or the statistical


dispersion of the values in your data set.

Probability Distribution
Denition:
Probability distribution is the scattering of values assigned to likelihood in a sample
population. It can be visually depicted in the form of a Probability Density Function
(PDF). In a PDF, the vertical axis refers to the probability of the risk event and the
horizontal axis refers to the impact that the risk event will have on the project objectives.
Example: A Probability Distribution Graph

Figure 7-12: A probability distribution graph displaying the probability and


impact of a risk event.
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Subjective vs. Objective Probability
Probability can be assigned subjectively or objectively. Subjective probability is based
on peoples opinions, which may be shaped by information, experience, and attitude.
Even if they are given the same set of facts, they may make very different determinations of the probability of an event. Objective probability is deduced mathematically.

Uniform Distribution PDF


Denition:
A uniform distribution PDF results when all outcomes are equally likely to occur, so
the data is shown in a straight line.
Example: A Uniform Distribution PDF Graph

Figure 7-13: A visual depiction of a uniform distribution PDF.

Normal Distribution PDF


Denition:
A normal distribution PDF results when there is a symmetrical range or variation in
the probabilities of each outcome. Visually, the data is distributed symmetrically in the
shape of a bell with a single peak, resulting in the common term bell curve. The
peak represents the mean; the symmetry indicates that there is an equal number of
occurrences above and below the mean.

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Example: A Bell Curve

Figure 7-14: A normal distribution PDF graph.

Triangular Distribution PDF


Denition:
A triangular distribution PDF results when there is an asymmetrical distribution of
probabilities. Visually, the data is skewed to one side, indicating that an activity or element presents relatively little risk to project objectives. Note that if either the
probability of occurrence is low or the impact is low, then this necessarily indicates
there is little risk.
Example: A Triangular Distribution PDF Graph

Figure 7-15: A triangular distribution PDF graph displaying asymmetrical distribution of probabilities.

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Decision Making Under Risk
Denition:
Decision making under risk refers to assigning probabilities to the possibility of each
state of nature occurring. The best choice of strategy is the strategy with the largest
expected value where the expected value is the sum of the payoffs multiplied by the
probability of occurrence for each state of nature.
When assigning probabilities, it is important that they are based on valid information and are not
assigned erroneously.

Example: Decision Making Under Risk by a Ski Resort


A ski resort sought to weigh the probabilities of different weather patterns against the
cost of two different snow-making machines. The project managers knew from past
history that without any new machine, the resort could make up to $100,000, but had
the potential to make more with the addition of a snow-making machine. The Snowmaker Lite costs $10,000, and the Deluxe model costs $25,000. The following table
indicates how much prot could be made in three different weather conditions after
paying for power and materials to make the snow.

Strategy

Lots of Snow

Little Snow

Dry and Cold

Strategy 1: Snow-maker
Lite

$90,000

$55,000

$35,000

Strategy 2: Snow-maker
Deluxe

$75,000

$70,000

$65,000

To analyze each strategy under risk, probabilities must be assigned to the possibility of
each state of nature occurring. Based on weather history in their area, the probability
of lots of snow is considered to be 45%, of little snow 35%, and of a dry but cold season as 20%.

Strategy

Calculation

Snow-maker Lite

(80)(.45) + (45)(.35) + (25)(.20) = 56.75

Snow-maker Deluxe

(50)(.45) + (45)(.35) + (40)(.20) = 46.25

We should consider the cost of machines in this calculation. $10,000 should be subtracted from the
prot value of Snow-maker Lite and $25,000 should be subtracted from the prot value of Snow-maker
Deluxe.

The best choice of strategy is the strategy with the largest expected value (Snow-maker
Lite strategy) where the expected value is the sum of the payoffs multiplied by the
probability of occurrence for each state of nature.

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Quantitative Analysis Methods
Quantitative analysis methods allow project managers to consistently determine the probability
and impact of each risk.

Method

Description

Sensitivity analysis

Places a value on the effect of changing a single variable within a


project by analyzing that effect on the project plan.

Expected Monetary Value (EMV)


analysis

Assesses the average outcome of both known and unknown scenarios.

Decision tree analysis

Factors both probability and impact for each variable, indicating


the decision providing the greatest expected value when all uncertain implications and subsequent decisions are quantied.

Modeling and simulation

Uses models that calculate potential impact of events on the


project, based on random input values.

EMV and decision tree analysis are commonly used together to come to a nal decision.

Sensitivity Analysis
Sensitivity analysis is a method of assessing the relative impact of changing a variable
in the project to gain insight into possible outcomes of one or more potential courses
of action. Sensitivity analysis places a value on the effect of changing a single variable
within a project by analyzing that effect on the project plan.
Sensitivity analysis is probably the simplest method of analyzing the impact of a
potential risk and its results are easy for project stakeholders to understand. However,
it does not lend itself well to assessing combinations of risks and how they might
affect a project. Furthermore, the sensitivity diagram does not provide an indication of
anticipated probability of occurrence of the risk event.
Often, sensitivity analysis is performed independently on a number of variables. When
displayed on a single graph or sensitivity diagram, the results allow you to compare
which variables have the highest likely impact on project performance. Typically, it is
only performed for variables that are likely to have a major impact on project performance in terms of cost, time, or economic return.
Decision Tree Analysis
Decision tree analysis is an assessment of the data obtained using the decision tree
method to evaluate various possible outcomes. Decision trees allow decision-makers to
factor in both probability and impact for each branch of every decision under consideration, making it a useful tool for risk analysis. Solving the decision tree indicates the
decision that will provide the greatest expected value when all the uncertain implications, costs, rewards, and subsequent decisions are quantied.
Expected Monetary Value (EMV) Analysis
Expected Monetary Value (EMV) analysis is a method of calculating the average outcome when the future is uncertain. Opportunities will have positive values and risks
will have negative values.

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EMV is found by multiplying the monetary value of a possible outcome by the probability it will occur. This is done for all possible outcomes and their gures are added
together. The sum is the EMV for that scenario.
This technique is used in decision tree analysis; EMV must be calculated in order for
the analysis to nd the best outcome. The best outcome is the lowest combination of
cost and EMV.
Modeling and Simulations
Simulations involve calculating multiple project durations with different sets of activity
assumptions. A project simulation uses a model that translates project uncertainties into
their potential impact on project objectives. The project model is created many times
with different variables to calculate a probability distribution.

Simulations
Denition:
Simulation is a technique that uses computer models and estimates of risk to translate
uncertainties at a detailed level into their potential impact on project objectives. For
schedule development, simulation involves calculating multiple project durations with
varying sets of assumptions regarding project activities.
Example: Simulations
You are planning a multimedia campaign for a client. Your team is divided as to which
printing contractor to use. Printer A has handled similar projects for you in the past.
However, they are poorly staffed and turnaround time can be slow. Printer B is a large
company with modern equipment and fast turnaround time. However, their remote
location will add at least a day for each shipment of the product.
Your team simulates two project activity durations using each of the printers. Your
simulations take into account factors such as previous turnaround times for similar
projects, realistic shipping times, and maximum production capabilities. Based on your
simulation results, you decide to stick with Printer A.

Monte Carlo Analysis


Denition:
Monte Carlo analysis is a technique used by project managers to make predictions
about the optimistic, most likely, and pessimistic estimates for variables in the model
and simulates various outcomes of the project schedule to provide a statistical distribution of the calculated results. In addition to the what-if scenario analysis method, this
is the other most common simulation type. A Monte Carlo analysis does not produce a
single result, but calculates a range of possible results.

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In more general business terms, Monte Carlo refers to not one single analysis
method but to a wide class of techniques, mostly making use of sophisticated computers and inputs of random numbers, probabilities, and algorithms. It has a wide range of
applications in many elds, including nance and engineering; since it works effectively with large inputs of numbers, it is well suited to complex project management
problems in which more than a few inputs like costs, activity, and durations are
unknown.
Example: Monte Carlo Analysis for a Project
Stakeholders have asked a project manager to estimate how long it will likely take to
produce a project involving three tasks and an inexperienced team. The rst task is
scheduled to take 30 days, the second task is scheduled to take 60 days, and the third
task is scheduled to take 90 days, but with inexperienced resources these activity durations are optimistic and could take more time. Using a software application, the project
manager would run a Monte Carlo simulation analysis using these inputs as well as the
probability that each task will be completed early, on time, and late. After running the
Monte Carlo analysis repeatedly to generate a range of results, he estimates that this
project has a 40% probability of being completed within 170 days, a 60% probability
of being completed within 180 days, and an 80% probability of being completed
within 200 days.

How to Perform Quantitative Risk Analysis


Performing quantitative risk analysis enables the project team to prioritize risks according to
the threat they pose or the opportunity they present to the project. The prioritized list can be
used to develop an effective response plan for each risk.
Guidelines:
To effectively perform quantitative risk analysis, follow these guidelines:

Begin with your original estimate of time or cost. Break out the various components of the estimate into manageable chunks. Determine the variable that you
wish to investigate and identify its likely range of variation.

Calculate and assess the impact of changing the range of results on the overall
project estimate for each value in the range.

Consult historical information, such as similar completed projects, studies of similar projects by risk specialists, and risk databases for information that may be
useful for quantitative risk analysis on your project.

Use the appropriate interviewing technique and obtain probability distributions


from stakeholders and subject matter experts.

If expertise resides with more than one or two people and the problem does
not lend itself to precise analytical techniques but can benet from subjective
judgments on a collective basis, consider using the Delphi technique.

Consider using the direct method when time or resource constraints do not
allow for more complex, resource-intensive methods and questions can be
phrased clearly and concisely.

If your expert has a solid understanding of probability concepts and is familiar with PDFs, consider using the diagrammatic method.

Depict the distributions in a PDF.

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Perform a sensitivity analysis to determine which risks have the most potential
impact on the project by examining the extent to which the uncertainty of each
element affects the objective being examined if all other uncertain elements are
held at their baseline values. Use the decision tree analysis technique to examine
the implications of choosing one or two or more alternatives by incorporating the
probabilities of risks and the costs or rewards of each logical path of events and
future decisions.

Conduct a project simulation using a model to translate uncertainties at a detailed


level into their potential impact on project objectives at the total project level.
Prioritize the quantied risks according to the threat they pose or the opportunity
they present to the project objectives. Include a measure of each risks impact.
Document all changes to the risk register.

Example: Performing Quantitative Risk Analysis for a Presidential Campaign


The campaign staff of a candidate for president was given the project of deciding if
money spent on campaign ads in a western state was likely to garner the votes needed
to win in a general election. One method was to analyze the states voter history in
each of the past 11 elections.
Based on this information, the project team set out to determine the likelihood that a
candidate from Party A could win the state. Using 100 percent of the vote as Best
Case and 0 percent of the vote as Worst Case, the Most Likely Case was derived from
an average of the historical voting record. The data was plotted in a probability distribution resulting in the expected normal distribution of data about the mean. Also
expected was the reasonably small standard deviation, indicating that the plotted data
was tightly distributed about the mean.
The deviation indicated a range of possibility about the mean from about 40 percent to
slightly more than 54 percent. Although initial reaction to this news was positive,
everyone agreed that more analysis was required. So the team set out to analyze just
the data from the last three elections, knowing that voter sentiment goes with the
times. The difference was disconcerting. It seems that the Party A electorate represented on average 37 percent of the vote over the last three elections. The data was
just as stable and in fact the standard deviation shrank to just 4.59 percent, resulting in
a probability range between 32.5 and 41.5 percent.

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DISCOVERY ACTIVITY 7-4


Performing Quantitative Risk Analysis
Data Files:

Analyzing Project Risk

Before You Begin:


From the C:\085042Data\Analyzing Risks and Planning Risk Responses folder, open the
Analyzing Project Risk image.
Scenario:
Your project requires an external training provider. Your team has assessed each training providers rate of success in delivering the project management software training within the
required time-frame and within budget and you have graphed the results.

1.

Which analysis technique was used in the Analyzing Project Risk image to determine
the most cost-effective choice of a training provider?
a) Delphi
b) Diagrammatic
c) Simulation
d) Decision tree

2.

What is the probability that Vendor 1 will complete the project on time?
a) 70 percent
b) 60 percent
c) 50 percent
d) 40 percent

3.

What is the probability that Vendor 2 will run over the allotted time for the project?
a) 40 percent
b) 50 percent
c) 60 percent
d) 70 percent

4.

What is Vendor 3s expected monetary value?


a) $0
b) $200
c) $1,700
d) $10,300

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5.

Your team combines the EMV at the end of each vendors network end-points to arrive
at a net proceed for each vendor. You want to choose the vendor bid with the most
economic advantage for OGC. Based on this number, which vendor should your team
choose?
a) Vendor 1
b) Vendor 2
c) Vendor 3
d) Vendor 1 and Vendor 3

TOPIC E
Develop a Risk Response Plan
You performed a quantitative risk analysis for your project. Now you need to decide how you
are going to address these project risks. In this topic, you will perform risk response planning,
the nal risk planning component process, by developing a risk response plan.
Whether you realize it or not, each planned response stems from an identied risk. Developing
a risk response plan provides insurance for your project, because you are taking steps to ensure
that each possible scenario has an action plan.

The Plan Risk Responses Process


Plan risk responses is the process of examining each risk and corresponding response alternatives, determining which response will improve the likelihood of a positive outcome. First, you
review the risk management plan and risk register, which were updated with previous risk
management planning outputs. Then, you employ an appropriate technique for each risk, such
as avoidance, mitigation, or exploitation. Finally, you enter any alterations into the risk register, risk response plan, or other necessary project documentation.

Figure 7-16: The plan risk responses process.


Initial risk response planning on a project-wide basis should happen early in the project in order to be proactive
in addressing risk issues. Additional risk response planning initiatives should be undertaken at the start of each
project segment and work package.

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Plan Risk Responses Inputs
There are several important risk response planning elements contained in the risk management
plan and the risk register.

Input

Description

Risk register

Contains prioritized lists of project risks, root causes of risk, list


of potential responses, risk ranking, lists of near- and long-term
risks, trends in qualitative risk analysis, categorized risks, and a
watchlist of low priority risks.

Risk management plan

Contains the guidelines, methodology, templates, and formats


necessary to perform all risk management processes, including
plan risk responses.

Plan Risk Responses Tools and Techniques


Each risk may require that you employ one of several different strategies, depending on the
potential effectiveness of the different techniques.

Tools and Techniques

Description

Strategies for negative risks or threats

The common strategies for threats are:


Avoid
Transfer
Mitigate
Accept

Strategies for positive risks or opportunities

The common strategies for opportunities are:


Exploit
Share
Enhance
Accept

Contingent response strategy

A contingency plan is created in advance so that if a risk is


about to happen, the contingency plan can be invoked.

Expert judgment

Expertise provided by a group or individual with relevant experience and skill to take action on identied risks and establish
risk responses.

Plan Risk Responses Outputs


There are four outputs to the plan risk responses process.

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Output

Description

Risk register updates

Updated information in the risk register may include identied


risks, team members responsible for specic risks, response strategies, warning signs of particular risks, contingency plans and
their trigger condition, and contingency reserves.

Risk-related contract decisions

Decisions to transfer risk that include insurance agreements, service agreements, or any risk sharing agreements.

Project management plan updates

Subsidiary management plans and their various requirements


needed for the plan risk responses process. Elements that need to
be updated include:
Schedule management plan
Cost management plan
Quality management plan

Project document updates

Procurement management plan


Human resource management plan
Work breakdown structure
Schedule baseline
Cost performance baseline

Contains assumptions log updates and technical documentation


updates.

Negative Risk Strategies (Threats)


Negative risk strategies address how to deal with risk scenarios that have a possible negative
impact on the project.

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Strategy

Description

Risk avoidance

Involves changing the project plan to prevent a potentially detrimental


risk condition or event from happening. One way to eliminate a risk is to
reduce or change the scope of the project in an attempt to avoid high-risk
activities. The scope change could involve the requirements or specications, or it can mean changing the approach to meeting the requirements
or specications.

Risk transference

Involves shifting the impact of a risk event and ownership of the risk
response to a third party. This strategy typically is used in connection
with nancial risk exposure and most often involves payment of a risk
premium to the party assuming the risk.

Risk mitigation

Attempts to reduce the probability or impact of a potential risk event to


an acceptable level. Mitigation may involve implementing a new course
of action in an effort to reduce the problem or changing the current conditions so that the probability of the risk occurring is reduced.
Sometimes, when reducing the probability is not possible, the focus must
be on reducing the consequences of the risk event.

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LESSON 7
Strategy

Description

Risk acceptance

Involves accepting that a risk exists. The acceptance may be passive or


active. Active acceptance indicates that the plan is ready for execution if
the risk occurs. Passive acceptance indicates that no action is planned if
the risk occurs and whatever action is suitable will be executed on an
extempore basis.

Positive Risk Strategies (Opportunities)


Positive risk strategies address how to deal with risk scenarios that have a possible positive
impact on the project.

Strategy

Description

Risk exploitation

Often used when a project team wants to make sure that a positive risk is
fully realized. This is often done by hiring the best experts in a eld or
ensuring the most technologically advanced resources are available to the
project team.

Risk sharing

Entails partnering up with another party in an effort to give your team the
best chance of seizing the opportunity. Joint ventures are a common
example of risk sharing.

Risk enhancement

Attempts to increase the probability that an opportunity will occur. This is


done by focusing on the trigger conditions of the opportunity and trying to
optimize their chances for occurrence.

Risk acceptance

Involves accepting the risk and actively responding to it as it comes, but


not through pursuit.

Contingency Plans
Denition:
A contingency plan is a risk response strategy developed in advance, before things go
wrong; it is meant to be used if and when identied risks become reality. An effective
contingency plan allows a project manager to react quickly and appropriately to the
risk event, mitigating its negative impact or increasing its potential benets. A contingency plan may include a fallback plan for risks with high impact. The fallback plan is
implemented if the initial contingency plan is ineffective in responding to the risk
event.
Example: Contingency Plan for an Outdoor Event
A rain date is a classic example of a contingency plan. For an outdoor event that could
be spoiled by inclement weather, such as a company picnic, the project manager could
announce in advance the contingency plan: in case of rain, the picnic will be postponed by one week.

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LESSON 7
Contingency Reserves
Denition:
A contingency reserve is a predetermined amount of additional time, money, or
resources set aside in advance to be used to further the projects objectives in the event
that unknown risks or accepted known risks become reality. Contingency reserves
cover risk events that are not accounted for in the projects baseline duration and cost
estimates. The amount of the reserve is determined by the potential impact of the risk,
but should include enough to implement any contingency plans as well as a buffer for
dealing with unidentied risks.
Example: Contingency Reserve for a Trade Show
A project manager in charge of company participation at a trade show might solicit
help in the form of employees willing to participate. His contingency reserve would
take the form of human resources; he could solicit more volunteers than he expects he
will need. In the event that some employees are not able to participate at the last
minute, he will have a reserve of other employees to call upon.

How to Develop a Risk Response Plan


An effective risk response plan describes the response strategies for each identied risk. The
selected response strategies should take advantage of opportunities and reduce the probability
and/or impact of threats to project objectives.
Guidelines:
To develop an effective risk response plan, follow these guidelines:

Examine each identied risk to determine its causes and how it may affect project
objectives. Brainstorm possible strategies for each risk.

Identify which project stakeholders can be assigned responsibility of a risk.


Involve those people in your risk response planning.

Write down every idea mentioned regardless of feasibility or cost.

Choose the response strategy that is most likely to be effective for each identied
risk. Ensure that the chosen risk response strategies are:

Enough to bring the risk threshold below the organizations limit.

Appropriate to the severity of the risk.

Cost effective.

Timely enough to be successful.

Realistic within the context of the project.

Agreed to by all parties involved.

Owned by a responsible person.

If you are unable to bring a risks rating below the organizations risk threshold,
ask your sponsor for help. Develop specic actions for implementing the chosen
strategy.

Identify backup strategies for risks with high risk factor scores.

Determine the amount of contingency reserves necessary to deal with accepted


risks.

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How much will your contingency plans cost?

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LESSON 7

How much time will your contingency plans add to the schedule?

Determine how much of a contingency reserve you should set aside for unknown
risks (ones that have not been identied).

Consult the risk management plan for the description of the content and format of
the risk response plan. Include the following elements in your risk response plan:

A description of the identied risks along with the area of the project
affected (that is, the WBS element).

Risk owners and assigned responsibilities.

Qualitative and/or quantitative risk analysis results.

Response strategies selected and the specic actions for implementing the
strategies.

Level of residual risk expected to remain after the response strategies are
implemented.

Budget and schedule for responses.

Contingency plans and fallback plans for all accepted risks with high impact.

Incorporate the risk response plan into the overall project plan so the strategies
can be implemented and monitored. As the project progresses through the life
cycle, examine trends in qualitative and quantitative analysis results that may
guide your response strategies.

Example: Risk Response Plan for a New Product


You and your team have been asked to create a new line of exercise equipment. Your
project team reviews all documentation for risks. From these documents, they identify
three risks that need risk response planning. As the rst risk deals with the negative
loss time due to possible worker injuries, the team decides to employ risk transference,
paying a premium for insurance.
The second risk involves a scenario in which the new products could be rst to market. To address this opportunity, the team settles on risk exploitation by hiring more
staff to ensure the positive outcome. After a lengthy review, the team is unable to
determine a course of action for the nal risk, which is the possibility that a key patent
may not be approved in time for production.
In response, the team develops a contingency plan and documents all changes to the
risk register, risk management plan, and project plan.

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LESSON 7

DISCOVERY ACTIVITY 7-5


Developing a Risk Response Plan
Scenario:
You and your team have identied risks in the PM Training Roll-Out project.

A potential project software upgrade. IT approval may occur during the project
life cycle.

Change in organizational requirements. Vicky Morris, the PMO Director, has


resigned.

Instructor illness.

Now it is time to consider your risk response planning.

1.

The first risk has possible positive outcomes. Which risk response strategy should you
employ?
a) Risk avoidance
b) Risk enhancement
c) Risk mitigation
d) Risk sharing

2.

What response do you have regarding the risk of a potential project software upgrade
during the project life cycle?

3.

The change in organizational requirements due to the resignation of Vicky Morris has
possible negative outcomes to the project, but you have determined there is no way to
avoid the scenario completely. Which risk response strategy should you employ?
a) Risk avoidance
b) Risk enhancement
c) Risk mitigation
d) Risk exploitation

4.

You determine that instructor illness cannot be avoided. Which risk response strategy
should you employ?
a) Risk enhancement
b) Risk exploitation
c) Risk acceptance with a contingency plan
d) Risk acceptance without a contingency plan

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5.

What are some ways you would respond to the potential risk of instructor illness during the training?

Lesson 7 Follow-up
In this lesson, you analyzed risks and planned for risk responses. You created a risk management plan that describes how project risk management activities are structured and performed
throughout the project. By taking a proactive approach during risk planning, you arm yourself
with the necessary information to manage potential risks to your projects and ensure the best
possible environment for success.
1.

How could your organization benefit from comprehensive risk planning?

2.

What tools and techniques will you use to effectively perform qualitative risk analysis
for future projects you manage?

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NOTES

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LESSON 8

LESSON 8

Lesson Time
1 hour(s), 30 minutes

Planning Project
Procurements
In this lesson, you will plan project procurements.
You will:

Create a procurement management plan.

Prepare a procurement statement of work.

Prepare a procurement document.

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Introduction
You have planned for project risk and you are almost ready to transition your project into the
executing process group. But before you can do that, you need to identify ways of securing
external resources when necessary. In this lesson, you will plan project procurements and create a procurement management plan.
Competitive pressure and increased time-to-market are forcing many companies to look outside
their organizations to ll resource gaps and gain a competitive advantage. By clearly dening
your expectations and requirements, you enhance your chances of nding qualied, responsive
suppliers who can help you achieve a successful outcome for your project.

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Figure 8-1: The project management framework.

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TOPIC A
Plan Project Procurements
Before you transition your project to the executing process group, you need to plan for the
project procurements based on the resource requirements that you have identied. In this topic,
you will plan project procurements.
Before you commence with the execution of a project, the project purchasing requirements and
decisions are to be identied and documented. This requires the identication of resources that
need to be procured from outside the project organization and an approach to identify potential
sellers for the project. A good procurement plan ensures that the risks and changes to the
project schedule are minimal.

The Plan Procurements Process


The plan procurements process allows project managers to document project purchasing decisions, specify the approach to be followed for project procurements, and identify potential
sellers to meet the purchase requirements of the project. It also determines whether the project
needs will be met internally by the project team, or whether the required products, services, or
results need to be acquired from outside the project organization.
When the project needs are to be procured from outside the project organization, the project
management team needs to determine what to acquire, how to acquire, how much to acquire,
and when to acquire the project resources. The buyers involvement in the procurement process
should also be considered when planning procurements. The process includes consideration of
the risks inherent in making decisions in the planning phase of the project. In mitigating the
risks, the project managers would consider the type of contract to be used for the procurement
and may involve transference of the risks to the seller.

Figure 8-2: The plan procurements process.

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Plan Procurements Inputs
Project managers would require several inputs during the plan procurements process.

Input

Description

Scope baseline

Includes the detailed project scope statement, the WBS, and the
WBS dictionary.

Requirements documentation

Includes information about project requirements along with details


of any contractual or legal implications that may apply to the
requirements.

Teaming agreements

The legal contractual agreements between the organization and one


or more external entities to form a partnership, joint venture, or
other arrangement between the parties. Teaming agreements
predene the buyer-seller roles of parties involved in the project.

Risk register

Includes identied project risks, risk owners, and risk responses


that may inuence project procurements.

Risk-related contract decisions

Includes details of the agreements that are prepared to specify


each partys responsibility for specic risks in the project.

Activity resource requirements

Includes information on the specic activity resource needs of the


project, namely people, equipment, or location.

Project schedule

Contains information on the required timelines or the mandated


deliverable dates.

Activity cost estimates

Includes cost estimates developed for the procuring activity within


the project that are used to evaluate bids or proposals received
from the sellers.

Cost performance baseline

Provides details on the planned budget over the timelines of the


project.

Enterprise environmental factors

The enterprise environmental factors that can inuence the plan


procurements process include:
Conditions of the marketplace.
Availability/unavailability of products, services, or results in the
marketplace.
Suppliers past performance and reputation.
Terms and conditions applicable for products, services, or
results.
Terms and conditions for the project specic industry.
Local requirements that may be unique.

Organizational process assets

The organizational process assets that inuence the plan procurements process include:
Policies, procedures, and guidelines for formal procurements.
Management systems used by the organization in developing
the procurement management plan and in selecting the contract
types to be used to facilitate procurement.
The established multi-tier supplier system of pre-qualied suppliers based on prior project experience.

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Plan Procurements Tools and Techniques
Project managers use several tools and techniques in conducting the plan procurements process.

Tools and Techniques

Description

Make-or-buy analysis

Assesses the cost-effectiveness of using in-house resources as


opposed to outside sellers.

Expert judgment

Expert judgment is available from sources such as the organizations


nance department, legal consultants, risk professionals or technical
associations, and so on.

Contract types

Contracts have different benets and risks, depending on the type of


agreement.

Plan Procurements Outputs


Several outputs are created by the plan procurements process.

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Output

Description

Procurement management plan

Describes how the procurement processes will be handled. It includes


the information on contract types to be used, standard procurement
documents, procurement metrics, constraints and assumptions, and
procurement related risk management issues.

Procurement statements of work

Detailed, written description of a product or service being procured


under contract.

Make-or-buy decisions

Decisions about which resources, services, or products will be created


or purchased by the organization.

Procurement documents

The documents that are submitted to prospective sellers and service


providers to solicit their proposals for the work needed. These can
include Request for Information (RFI), Invitation for Bid (IFB),
Request for Proposal (RFP), and Request for Quotation (RFQ).

Source selection criteria

The metrics that are used to evaluate each sellers proposal and make
comparisons among different proposals. The criteria can be objective
or subjective and are used to rate or score seller proposals.

Change requests

May apply to the subsidiary management plans in the project management plan, especially in light of new products or services being
acquired.

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Procurement Management Plans
Denition:
The procurement management plan is a document that outlines the specications for
procuring work from outside sources; it species the types of contracts that will be
used, describes the process for obtaining and evaluating bids, mandates the standardized procurement documents that must be used, and describes how multiple providers
will be managed. The plan also states how procurement activities will be coordinated
with other project management activities, such as scheduling and performance reporting. Depending on the needs of the project, the procurement management plan may be
formal or informal; brief or highly detailed.
Example: Planning Procurement Management for an Advertising Agency
A small advertising agency would procure contracts from external sources for some of
the work considered necessary but beyond its core capabilities, such as specialized
printing and professional photography services. The procurement management plan
would outline the companys processes for soliciting and evaluating bids from competing service providers and would specify how management would schedule the contract
work, schedule payments to providers for the work done, and evaluate the quality.

Teaming Agreements
Denition:
A teaming agreement is a legal contractual agreement between two or more parties to
form a joint venture or other arrangement as dened by the parties to meet the requirements of a business opportunity. The parties can be internal or external to the
organization executing the project. When a teaming agreement is created for a project,
it signicantly impacts the planning processes for the project, and predenes issues
such as scope of work and competition requirements.
Example: OGC Corporations Agreement with Janrex Inc.
OGC Corporation and Janrex Inc. have been associated partners for the last four years.
The agreement insists that OGC Corporation will have to procure the hardware from
Janrex Inc. for any implementation-related and/or turn-key projects executed by OGC
in the North American region. However, this arrangement is not obligatory when the
implementation is done in any other area but North America.

Risk-Related Contract Decisions


Risk-related contract decisions are made when:

Planning risk responses for the project.

Sharing or transferring part or all of the risk (opportunity or threat, respectively).

Enhancing or mitigating part or all of the opportunity or threat, respectively, faced by an


organization.

Some of the risk-related contract decisions include agreements for insurance, bonding, services,
Letter of Credit (LoC), bank guarantee, and other items as appropriate for the project.

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How to Create a Procurement Management Plan
Effective planning of project procurements documents the project purchasing decisions, species the approach to be used in project procurements, and identies potential sellers for the
project and documents these in the procurement management plan.
Guidelines:
To generate an effective procurement management plan, follow these guidelines:

Identify the project needs that can be fullled by acquiring products, services, or
results. Determine:

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What is to be acquired.

How to acquire.

How much to acquire.

When to acquire.

Study the various plan procurement input documents to determine information


related to the procurement requirements. The input documents could include:

Project scope baseline.

Requirements documentation.

Existing teaming agreements.

Project risk registers.

Risk-related contract decisions.

Activity resource requirements.

The project schedule.

Activity cost estimates.

The cost performance baseline.

Appropriate enterprise environmental factors.

Existing organizational process assets.

Consult technical experts to dene specications for the project needs clearly,
concisely, and completely.

Perform a make-or-buy analysis to determine whether particular work can be


accomplished by the project team or must be procured from outside the organization.

Determine the contract types to be used for the specic procurement needs of the
project.

Document the plan procurement information you have identied so far in the procurement management plan.

After the procurement management plan is created, you will also generate other
relevant plan procurement outputs, including:

Procurement statements of work.

Make-or-buy decisions.

Procurement documents.

Source selection criteria.

Change requests.Some of the information developed in generating these outputs will be used to nalize the procurement management plan.

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Example: Creating a Procurement Management Plan for a Warehouse Management Software Project
Mark Anderson, the project manager of OGCs Warehouse Management Software
project, is creating the procurement management plan for the project. Mark discusses
with stakeholders the various project requirements that include the warehouse management software, related computer hardware, networking, database, and project staffing.
He studies the project scope baseline to determine the scope of the warehouse management software implementation within OGC. He goes through the requirements
documentation for each of the project requirements.
Mark involves Brian Wells, the IT Consultant of OGC, to draw up the technical specications of the project requirements. Further, discussions with Brian indicate that the
warehouse management software and other requirements of this project have to be procured from outside the organization as the current infrastructure at OGC does not
support the requirements of this project.
Based on the procurement information collected, Mark prepares the procurement management plan for OGCs Warehouse Management Software project.

DISCOVERY ACTIVITY 8-1


Examining a Procurement Management Plan
Data Files:

OGC Procurement Management Plan

Before You Begin:


From the C:\085042Data\Planning Project Procurements folder, open the OGC Procurement
Management Plan document.
Scenario:
During the development of the OGC PM Training Roll-Out project charter and project scope
statements, it had been determined that an outside seller would deliver the project management
software training due to time and logistical constraints within the organization. You have
updated the OGC procurement management plan that describes how the procurement processes
will be managed from developing procurement documents through contract closure. Before you
meet David Anderson, OGCs procurement manager, to discuss the procurement requirements,
you want to ensure that the procurement management plan includes suitable guidance for successful project procurement.

1.

In the OGC Procurement Management Plan, who is authorized by OGC to enter a prescribed contract with the external training provider?
a) Project sponsor
b) Project manager
c) Procurement manager
d) Operations manager

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2.

In the OGC Procurement Management Plan, which of these job tasks are defined for
the solicitation process of the project?
a) Characteristics of project requirements are to be documented in a procurement
statement of work.
b) A Request for Proposal (RFP) will be sent to prospective sellers.
c) Provide necessary electronic and paper documentation and source files.
d) Evaluation criteria are to be determined to evaluate proposals from sellers.

3.

Which of OGCs plan procurements inputs contains information about the time frame
for each project deliverable?
a) Requirements documentation
b) Scope baseline
c) Project schedule
d) Activity resource requirements

4.

Match the plan procurement inputs with their descriptions.

Risk-related contract decisions


Teaming agreements

Activity resource requirements


Enterprise environmental
factors

Organizational process
assets
5.

a.

Factors that can inuence the plan


procurements process such as market
conditions and supplier information.
b. Factors that can inuence the plan
procurements process such as policies, procedures, guidelines, and
management systems.
c. Contracts between the organization
and one or more external entities to
work together.
d. Include details of the agreements that
are prepared to specify each partys
responsibility for specic risks in the
project.
e. Include information on the specic
activity resource needs of the project.

Which section in the OGC Procurement Management Plan refers to the parameters to
choose sellers?
a) Contract Type
b) Procurement Description
c) Procurement Responsibility
d) Source Selection

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TOPIC B
Prepare a Procurement Statement of
Work
As a project manager, you have a responsibility to acquire project resources from outside your
organization at a fair and reasonable cost and in an efficient and dependable manner. In this
topic, youll focus on preparing a procurement statement of work.
Youre the project manager for a new brand of organic pasta sauce. In order to meet the product launch deadline, you purchase tomatoes from a wholesale distributor in South America.
Unfortunately, the tomatoes that arrive are small, green, and hard. In a panic, you call your
seller to let him know that you wanted large, red, juicy tomatoes to meet the recipe requirements. Your seller says, You ordered tomatoes and we sent you tomatoes. Clearly describing
the exact type and specications of the product you want to buy from the supplier in a procurement statement of work ensures you will avoid costly outsourcing errors.

Procurement Statements of Work


Denition:
A procurement SOW is a detailed narrative description of the resources, goods, or services that are being sought from external sources to fulll a projects requirements. It
is distributed to potential sellers, who will use it to evaluate their capability to perform
the work or provide the services. In addition, the SOW will serve as a basis for developing the procurement documents during the solicitation process. Information in the
project scope baseline is used to create the procurement SOW. The procurement SOW
goes through multiple rounds of reviews and xes until the contract award is signed.
Though a procurement SOW is created for each procurement item, multiple products or services can
be grouped and specied in one procurement SOW.

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Example: A Procurement Statement of Work

Figure 8-3: A procurement statement of work for the OGC PM Training RollOut project.

Specications
Denition:
Specications are descriptions of the work to be done or the service or product to be
provided; they dene the requirements that must be met in exacting detail. These
descriptions can be in the form of words, pictures, or diagrams. Specications may
relate to a products design, performance, or functionality.
Example: Performance Specications for a Childrens Toy
Performance specications identify measurable capabilities that the end product must
achieve in terms of operational characteristics. The performance specications for a
childrens toy, for example, might specify that the lighted elements of the product must
have a mean time between failures rating of 1,000 hours.

Outsourcing
Denition:
Outsourcing refers to moving beyond the organization to secure services and expertise
from an outside source on a contract or short-term basis; it is done for core work that
has traditionally been done within the organization. It is becoming more common as it
allows businesses to focus more on their core competencies. On the other hand, many
businesses are emphasizing that work should be kept in-house whenever possible, in an
effort to maintain stricter quality controls. As a project manager, youll need to work
within the expectations and constraints that result from either situation.

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Example: Outsourcing by a Clothing Manufacturer
A New York clothing manufacturer that has been producing its own buttons for
decades might nd that it is more cost-effective to move this part of its operations to
an outside source. By outsourcing the button production to a company in Mexico, the
company might realize signicant cost savings while focusing on its core operations.

Make-or-Buy Analysis
Denition:
A make-or-buy analysis is a technique used to determine whether it would be more
cost-effective to produce a product or service in-house or to procure it from an outside
seller. Make-or-buy decisions can signicantly impact project time, cost, and quality. In
the case of a buy decision, you must also consider if the product needs to be purchased, leased, or rented.
Example: Make-or-Buy Analysis for Developing Training Materials
A multimedia company was required to deliver several days of training to a client on
the operation of its agship product. The companys project team had to decide
whether to increase staff in order to develop the training materials in-house or to
outsource the work to a seller. The companys budget constraints and relative inexperience made it cost-effective to contract with an experienced outside rm.

Factors in Make-or-Buy Decisions


When considering a make-or-buy decision, it is important to consider several factors.

Factor

Consideration

Impact

Consider the impact on cost, time, or quality. For instance, if current personnel must be retrained for services requiring a new skill set, it may be
less expensive to outsource those services.

Ongoing need

If the organization will continue to need a specic skill seteven for


future, unrelated projectsit may be a worthwhile investment to train current personnel to perform that service.

Learning curve

While it may make nancial sense to develop an in-house solution, there


may not be enough time to train personnel and/or implement the necessary
policies and equipment to produce that solution.

Cost-effectiveness

If the required resources are readily available internally, organizations will


usually use them. However, if the project involves technology, skills,
materials, or resources that are beyond the organizations capabilities, it
may be cost-effective to hire outside help.

Lease, Rent, or Buy Decisions


Denition:
A lease, rent, or buy decision refers to a business analysis that determines the most
cost-effective way to procure the necessary equipment for a project. Such a decision is
primarily based on nancial analysis.

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Example: Lease, Rent, or Buy Decisions for Acquiring a High-speed Copier
A project requires a high-speed copier with collating capabilities. If it is a small, onetime project and the equipment is very expensive and prone to breaking, it might be
most cost-effective to lease the equipment and take advantage of a service agreement.
But if the project will be ongoing over a period of months and service needs are not
anticipated, it might be more cost-effective to rent a copier for the duration of the
project. For a long-term project requiring extensive copying resources, it might be
most cost-effective to purchase the equipment.

How to Prepare a Procurement Statement of Work


An effective procurement statement of work describes the work being procured in sufficient
detail so that potential sellers can evaluate their capability to perform this work. In addition,
the procurement SOW will serve as a basis for developing the procurement documents during
the solicitation process.
Guidelines:
To prepare an effective procurement statement of work, follow these guidelines:

Review the product description to ensure that you fully understand the scope of
the work being procured.

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Consult technical experts to dene specications clearly, concisely, and completely.

If your organization has a preferred or mandated procurement SOW format, be


sure to use it and comply with any standards and policies regarding content. If
there is no standard procurement SOW format for your organization, you may be
able to modify a procurement SOW from a previous, similar project.

Present the information in a logical sequence.

Use consistent terminology and level of detail throughout the procurement SOW.

Determine whether any collateral services will be required of the seller as a part
of the contract:

What are the sellers performance reporting requirements?

Will the seller be required to provide any post project operational support?

Determine the acceptable criteria for the product or service.

Make sure your procurement SOW includes the following key elements:

Clear identication of the project name and deliverable name or identication


number.

A clear description of the deliverable.

When, where, and how delivery is required.

Specications to which the deliverable must be produced and methods for


ensuring that the specications have been met.

Acceptance standards for the deliverable.

Documentation requirements the seller must complete as part of the bidding


process (that is, references, compliance documents, condentiality agreements, proof of insurance, contractors license number, and so on).

Description of any required collateral services that would support the main
work activities provided for in the contract.

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Any additional instructions the prospective seller will need to bid on the
item.

Have the procurement SOW reviewed by a knowledgeable third party to ensure


that it is complete, correct, and understandable.

Document your make-or-buy decisions.

Example: Preparing a Procurement Statement of Work to Hold a Public Carnival


The City of Buttereld Visitors Association has decided to hold a public carnival to
increase tourism to Buttereld. To create a procurement SOW for this project, Rachel,
the project manager enlisted the help of her organizations chief negotiator and a lawyer. She also hired a consultant to dene the specications of the various carnival rides
and attractions that would be utilized.
The organization had no existing preferred SOW format, so the project team
researched SOWs used by other companies for similar events. The SOW is laid out in
a logical sequence and uses consistent terminology throughout.
The statement also denes acceptable service criteria and includes key elements such
as a schedule and acceptance standards. Before sending this SOW to prospective bidders, the project team had the document reviewed and validated by an independent
legal rm.
Skills Necessary to Prepare a Procurement SOW
To prepare a procurement SOW, you will need to identify procurement resources with
the necessary expertise. If there is not a formal contracting group or department within
your organization to support you in your procurement efforts, youll need to obtain
those resources and expertise from within your project team. Some of the skills and
expertise required for a full-blown procurement effort include:

Supplier base and supplier qualication.

Contracting expertise.

Negotiating.

Legal services.

Knowledge of company policies and forms.

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DISCOVERY ACTIVITY 8-2


Preparing a Procurement Statement of Work
Data Files:

OGC Procurement SOW

Before You Begin:


From the C:\085042Data\Planning Project Procurements folder, open the OGC Procurement
SOW document.
Scenario:
During the development of the OGC PM Training Roll-Out project charter and project scope
statements, it had been determined that an outside training seller would deliver the project
management software training due to time constraints and logistical constraints within the
organization. You have updated the procurement statement of work that will serve as a basis
for the procurement team to develop the OGC procurement documents during the solicitation
process. You are meeting with key members of your team to make sure that it includes all of
the work for this portion of the project.

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1.

In the OGC Procurement SOW document, which components define the specifics of the
work being procured?

2.

Were there any inconsistencies used in the document that might be confusing?

3.

Does the OGC Procurement SOW include any collateral services to be provided by the
client?

4.

Does the OGC Procurement SOW describe when, where, and how delivery is required?

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LESSON 8
5.

Does the OGC Procurement SOW provide specifications on how the assessment must be
produced and methods for ensuring that the specifications have been met?

TOPIC C
Prepare a Procurement Document
You created a procurement SOW for your project. Now you need to incorporate the SOW into
a procurement document to facilitate acquiring responses from prospective sellers. In this topic,
you will prepare a procurement document.
Congratulations! Youre the project manager for an urban redevelopment project thats receiving a lot of positive press coverage. There are numerous sellers eager to provide you with the
outsourcing services the project requires. But these sellers will send you different documents if
you dont specify what information you need and the format for receiving bids. Mastering the
tools and techniques to prepare effective procurement documents ensures that sellers and service providers can respond completely and accurately to your projects contract needs.

Procurement Documents
Denition:
Procurement documents are the documents that are submitted to prospective sellers and
service providers to solicit their proposals for the work needed. There are different
types of procurement documents. The type of document used will depend on the type
of project and the product or service being procured.
Example: An RFP
A request for proposal is a specic type of procurement document. A company seeking
a new advertising agency for a marketing campaign would send out RFPs to several
agencies. The RFP would describe the companys marketing needs and ask for proposals that describe the agencies qualications and past campaigns, the key employees
work history, and their approach to creating a campaign. The RFP would request a
quote for services provided and an outline of a marketing strategy.

Types of Procurement Documents


Many organizations use procurement document terms interchangeably. It is important to be
sure that you understand the terms and denitions used by your organization.

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Term

Description

Request for Bid (RFB)

Commonly used when deliverables are commodities for which


there are clear specications, and when price will be the primary determining factor. Submitted to selected sellers for a
formal bidding process. Some negotiation may be anticipated.

Request for Quotation (RFQ)

Like an RFB, commonly used when deliverables are commodities for which there are clear specications, and when price will
be the primary determining factor. Unlike an RFB, this solicited
price quote is used for comparison purposes and is not a formal
bid for work. This may allow for some negotiation of price.

Request for Proposal (RFP)

Commonly used when deliverables are not well-dened or when


other selection criteria will be used in addition to price. Sellers
are often encouraged to offer suggestions and alternative
approaches to meet the project goals. Preparing the RFP is time
consuming and costly for the seller. Negotiation is expected.
Since it is time-consuming and expensive to create a proposal in
response to an RFP, it is typical that not all the sellers solicited
will respond.

Invitation for Bid (IFB)

Sometimes used interchangeably with RFP, an IFB is most commonly used when deliverables are commodities for which there
are clear specications and when the quantities are very large.
The invitation is usually advertised and any seller may submit a
bid. Negotiation is typically not anticipated.

Request for Information (RFI)

Commonly used to develop lists of qualied sellers and to gain


more input for resource availability.

Contracts
Denition:
Contracts are mutually binding agreements that detail the obligations of both parties;
in terms of procuring work, they relate to both the buyer and the seller. While contracts are customized for each agreement, they tend to fall into a number of standard
patterns, such as xed price, cost-reimbursable, or Time and Material (T&M) contracts.
Example: A Fixed-Price Contract
A project team is procuring the manufacturing unit for its new line of footwear. After
seeking the advice of subject matter experts and reviewing historical records of similar
projects, the team estimates the manufacturing cost at $25,000. Including the manufacturers fee of $10,000, the entire contract will be worth $35,000. Additionally, the
contract states that the manufacturer will receive $5,000 if they complete at least three
of the four project milestones on time.
This is an example of a xed-price contract because it establishes a denitive determined total price for a product or service. In addition, this contract has an incentive for
the seller to meet or exceed schedule objectives.

Components of Contracts
In general, any contract must include these elements, at a minimum:

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Description of the project, its deliverables, and scope.

Delivery date or other schedule information.

Identication of authority, where appropriate.

Responsibilities of both parties.

Management of technical and business aspects.

Price and payment terms.

Provisions for termination.

Applicable guarantees and warranties.

Limits of liabilities or damages.

Indemnity or compensation paid for losses incurred.

Insurance requirements.

Non-disclosure, patent indemnication, non-compete, or other applicable legal statements.

Other applicable terms and legal requirements.

Types of Contracts
Three common types of contracts are used in the procurement of goods and services.

Contract Type

Description

Fixed price

Also called a lump sum contract, it establishes a total price for a product or service. The seller agrees to perform the work at the negotiated
contract value. This value is based on anticipated costs and prot, as
well as a premium to cover unforeseen problems. The contract may
include incentives for meeting requirements such as schedule milestones. Fixed-price contracts provide maximum protection to the buyer
but require a long time for preparation and bid evaluation. Since this
type of contract is tied to a xed cost, it is most suited to projects with
a high degree of certainty about their parameters.
Types of xed-price contracts include:
Firm Fixed Price Contracts (FFP): This is a commonly used contract type favored by most buying organizations because the price for
products or services is set at the outset and not subject to change
unless the scope of work changes.
Fixed Price Incentive Fee Contracts (FPIF): This xed-price contract is exible in that it allows for deviation from performance.
Financial incentives are tied to achieving metrics that are agreed to
earlier.
Fixed Price with Economic Price Adjustment Contracts (FPEPA): This is a xed-price contract type with special provision to
allow pre-dened nal adjustments to the contract price due to
changed conditions, such as ination changes, or cost increases or
decreases for specic commodities such as fuel, and for currency
uctuations. An FP-EPA contract protects both buyer and seller from
external conditions beyond their control. It is used whenever the sellers performance period spans a considerable period. The Economic
Price Adjustment (EPA) clause must relate to a reliable nancial
index, which is used to precisely adjust the nal price.

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Contract Type

Description

Cost-reimbursable

This contract provides sellers a refund of the expenses incurred while


providing a service, plus a fee representing seller prot. Incurred costs
are generally classied as direct costs (those incurred for the project),
or indirect costs (costs allocated to the project by the organization as a
cost of doing business). These contracts sometimes include incentives
for meeting certain objectives, such as costs, schedule, or technical performance targets. This approach is tied to the actual cost to perform the
contract, and therefore is most suitable if project parameters are uncertain.
The cost-reimbursable contracts include:
Cost Plus Fixed Fee Contracts (CPFF): This contract ensures that
the seller is reimbursed for all allowable costs for performing the
contract work. The seller receives a xed fee payment calculated
based on the initial estimated project costs. This xed fee does not
change due to seller performance.
Cost Plus Incentive Fee Contracts (CPIF): This contract ensures
that the seller is reimbursed for all allowable costs for performing
the contract work. The seller also receives a predetermined target
fee. In addition to this, there is a provision of an incentive fee payable to the seller, which is based on achieving certain performance
objectives as set forth in the contract. In case the nal costs are
lesser or greater than the original estimated costs, then both the
buyer and seller share the costs from the difference based on the prenegotiated cost sharing formula; for example, an 80/20 split over or
under target costs based on actual performance of the seller.
Cost Plus Award Fee Contracts (CPAF): This contract ensures that
the seller is reimbursed for all legitimate costs. The majority of the
fee is earned based on the satisfaction of certain broad subjective
performance criteria dened and incorporated into the contract. The
determination of the fee is based on the buyers subjective determination of seller performance and is generally not subject to appeals.

Time and Material (T&M)

This type of contract includes aspects of both xed-price and costreimbursable contracts. The buyer pays the seller a negotiated hourly
rate and full reimbursement for materials used to complete the project.
This contract is used for staff augmentation, acquisition of experts, and
any outside support when a precise statement of work cannot be
quickly prescribed.
Many organizations include not-to-exceed values and time limits in
T&M contracts to prevent unlimited cost growth.

Point of Total Assumption (PTA)


The Point of Total Assumption (PTA) is a price determined by a Fixed Price Incentive
Fee contract (FPIF) above which the seller bears all the loss of a cost overrun. It is
also known as the most pessimistic cost because it represents the highest point
beyond which costs are not expected to rise, given reasonable issues. If costs go
beyond the PTA, they are assumed to be due to mis-management rather than a worstcase set of difficulties. The seller bears all of the cost risk at PTA and beyond.
Any FPIF contract species a target cost, a target prot, a target price, a ceiling price,
and one or more share ratios. The PTA is the difference between the ceiling and target
prices, divided by the buyers portion of the share ratio for that price range, plus the
target cost. PTA = ((Ceiling Price - Target Price)/Buyers Share Ratio) + Target Cost.
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For example:
Target Cost: $60,000
Target prot: $6,000
Target Price: $63,000
Ceiling Price: $65,000
Share Ratio: 70% buyer and 30% seller
PTA = (($65,000 - $63,000) / 0.7) + $60,000 = $62,857

Source Selection Criteria


Denition:
Source selection criteria are the standards used to rate or score proposals, quotes, or
bids and form a part of the procurement solicitation documents. Some criteria are
objective and can be readily demonstrated and measured. Other criteria are subjective
and open to different interpretations. Objective criteria tend to be much more specic
than subjective criteria.
Example: Criteria
This table shows examples of objective and subjective criteria.

Objective Criteria

Subjective Criteria

Ph.D. chemist with at least ve


years experience in chromatographic research.

Experienced laboratory chemist with strong analytical


skills.

80,00090,000 square-foot storage


area within three miles of the
Dallas-Fort Worth Airport.

Ample square foot storage area near Dallas-Fort Worth


Airport.

The subjective criteria statements leave room for interpretation as to what is meant by
experienced and strong. Conversely, the requirement of a Ph.D. with ve years
experience is very specic and not open to interpretation, making it an objective criterion.
Sample Source Selection Criteria
Sample source selection criteria include:

Source Selection Criteria

Description

Understanding of need

Does the sellers proposal effectively address the procurement statement of work while demonstrating the clear
understanding of the needs?

Overall or life-cycle cost

Does the selected seller produce the lowest total cost of


ownership, which includes the purchase cost plus operating
cost?

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Source Selection Criteria

Description

Technical capability

Does the seller have or is the seller expected to acquire the


technical skills and knowledge needed for the project?

Management approach

Does the seller have or can the seller reasonably develop


the management processes and procedures to ensure a successful project?

Technical approach

Do the sellers proposed technical methodologies, techniques, solutions, and services meet the project
requirements?

Warranty

Does the seller provide warranty for the nal product and
for what duration?

Financial capacity

Does the seller have or is the seller expected to obtain the


necessary nancial production capacity and interest
resources?

Production capacity and interest

Does the seller have the capacity and interest to meet the
project requirements?

Business size and type

Does the sellers company meet a specic category of business dened by the buyer, or established by a governmental
agency, and included as a condition in the contract? Categories could include small, women-owned, or disadvantaged
small businesses.

Past performance of sellers

Does the company have past experience with selected sellers?

References

Does the seller provide references from previous customers


verifying the sellers work experience and compliance with
contractual requirements?

Intellectual property rights

Are intellectual property rights established by the seller in


work processes or services to be used for the project?

Proprietary rights

Are proprietary rights ensured by the seller in the work processes or services to be used for the project?

How to Prepare a Procurement Document


An effective procurement document provides all the necessary information so that prospective
sellers can respond completely and accurately to your solicitation. A well-crafted procurement
document will elicit consistent and comparable responses and allow sellers to suggest other
ways to satisfy the requirements of the product or service.
Guidelines:
To create a thorough procurement document, follow these guidelines:

Examine the procurement need and determine which procurement document to


use.

Use standard procurement forms or templates if available.

Develop a strong set of source selection criteria based on the real needs of your
project.

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Objective criteria will probably be required when requesting bids for most
goods and facilities.

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However, you may nd that using objective criteria alone will be too restrictive when it comes to selecting resources such as a video producer, graphic
artist, or central office site.

Leave yourself some room to select from a range of capabilities and experience to
get the best t possible.

Determine how you want the prospective sellers to respond:

Must the response be provided on a specic form?

Is there a specic format that must be followed?

What is the deadline for proposal submissions?

Is there any additional documentation that must be provided?

Where and to whom should the proposals be sent?

Examine the relevant SOW and make any necessary modications that may have
been identied during plan contracting.

Ensure that the procurement document is structured to facilitate consistent, comparable responses from sellers. It should include, at the minimum, the following
key elements:

Reference to (or inclusion of) the relevant SOW. You may also include other
relevant project documents, such as the WBS or network diagram, as appropriate.

Clear instructions for how the prospective seller should respond.

Any required contractual provisions, such as condentiality agreements and


certications.

Criteria by which proposals will be evaluated.

In addition, your procurement document may include:

Listing of qualied sellers expected to bid (to drive down costs).

Bidders conferences.

Supplier payment plan.

How change requests will be managed.

Take into account any regulations that may dene the required structure of procurement documents for government contracts.

Example: Prepare a Procurement Document


The Arithmetic on a Stick project team is preparing a procurement document for the
manufacturing of their product. After reviewing the project schedule and the scope
statement, the team examines the manufacturing needs to determine which type of procurement document to use.
Since the product has well-dened specications and a tight production schedule, and
prospective sellers will primarily be evaluated on price, the team agrees that they
should use a Request for Quotation (RFQ). They use their organizations standard RFQ
form to prepare the RFQ for this procurement project.
Before including the SOW in the procurement document, the team reviews it to ensure
that it accurately reects the procurement needs and makes minor modications that
they identied as necessary during solicitation planning. The team also develops a set
of objective and subjective evaluation criteria that will be used to score and rank the
quotations they receive. High on the list of criteria is a competitive price.

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The RFQ includes all of the key elements listed in the guidelines, as well as a description of how change requests will be managed. In an effort to drive down costs, the
RFQ also includes a list of sellers expected to bid on the solicitation.

DISCOVERY ACTIVITY 8-3


Preparing a Procurement Document
Data Files:

OGC Procurement SOW and Procurement Document

Scenario:
It is OGCs policy that all project managers must get approval from the procurement department for all external procurements. You are meeting with the OGC procurement manager to
discuss the procurement documents that will be created based on the statement of work that
you had previously prepared. The manager has asked you to come to the meeting prepared
with an outline of the SOW that is to be included in the procurement documents. You are now
ready to begin the preparation of the procurement documents with the procurement manager.

1.

Based on the scenario, what would be a logical first step in creating the procurement
document?
a) Determine how you want training sellers to respond.
b) Define the training specifications.
c) Determine the most appropriate procurement document to use.
d) Examine the project SOW and make any necessary changes.

2.

The assessment development, the project software training needs, delivery of the
training, and costs will be the determining factors in your choice of training providers.
What type of procurement document would be most appropriate to use in this situation?
a) Request for quotation
b) Request for proposal
c) Request for bid
d) Invitation for bid

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3.

From the C:\085042Data\Planning Project Procurements folder, open the OGC Procurement SOW and Procurement document. Which criterion for evaluating training
sellers is subjective?
a) Seller must provide an instructor with a minimum 3 years of project management
software training.
b) Seller must be creative and flexible about changes made to the design of the assessment documents, even in late production phases.
c) Seller must have a minimum 20 years of collective training experience on staff.
d) Seller must have produced at least three projects of similar scope in the last 10
years.

Lesson 8 Follow-up
In this lesson, you planned for procuring products or services from external sources. You created a procurement management plan and specied how project procurements should be
handled. You also prepared a procurement SOW that clearly and concisely describes the product or service you intend to acquire, and you incorporated the procurement SOW into a
procurement document. The effective planning and documentation of all project procurements
up-front ensures the successful outcome of your project.
1.

How could your organization benefit from more effective procurement planning?

2.

In the future, what do you plan to use to prepare better SOWs and procurement documents?

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LESSON 9

Lesson Time
3 hour(s), 30 minutes

Executing Project Work


In this lesson, you will execute project work.
You will:

Describe the direct and manage project execution process.

Execute a quality assurance plan.

Acquire the project team.

Develop the project team.

Manage project teams.

Distribute project information.

Manage stakeholders relationships and expectations.

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Introduction
You nished your project planning and integrated the outputs from each of the planning processes into a comprehensive project management plan. Now your project transitions from
planning to executing. Project execution is the third of ve project management process groups
that you will perform on most projects you manage. In this lesson, you will execute project
work.
Coordinating the people and other resources you need to carry out your project management
plan is essential to your projects success. The project team members need a coach to guide
them as they undertake the work dened in the scope statement. Executing project work
ensures that your team is on the same page and that your project nishes on time, on budget,
and with the required quality.

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Figure 9-1: The project management framework.

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TOPIC A
Identify the Direct and Manage
Project Execution Process
Your project has officially advanced from planning to executing. Now it is nally time to start
leveraging the plan. In this topic, you will identify the components and purpose of the direct
and manage project execution phase of the project.
Coordinating people and other resources to carry out the project plan is like conducting musicians in an orchestra. Effectively directing and managing project execution ensures that the
project team starts and nishes the project work according to the project management plan.

The Direct and Manage Project Execution Process


The direct and manage project execution process involves carrying out the project management
plan to produce a product or provide a service so as to meet the project objectives. It requires
the project team to build on the foundation laid during project plan development as they coordinate and direct the technical and organizational project interfaces. This is not just one
coherent task, but is a lengthy and complex iterative process.

Figure 9-2: The direct and manage project execution process.

Direct and Manage Project Execution Inputs


There are several inputs to direct and manage project execution.

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Input

Description

Project management plan

Describes each step of the project including the way it is executed,


monitored, controlled, and closed.

Approved change requests

Include approved changes, which are ready for implementation by the


project team. These change requests are recorded and can either
increase or decrease the project scope. They may also be used for
revising policies, project management plans, procedures, costs and
budgets, and adjusting schedules.

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Input

Description

Enterprise environmental factors

Include factors such as organizational culture and structure, infrastructure, personnel administration, stakeholder tolerances, and PMIS that
can inuence the direct and manage project execution process.

Organizational process assets

Include existing documents and databases such as standard guidelines,


communication requirements, defect management processes, and process measurement databases that can inuence the direct and manage
project execution process.

Direct and Manage Project Execution Tools and


Techniques
There are two tools and techniques used in the direct and manage project execution process.

Tools and Techniques

Description

Expert judgment

Used to provide direction to effectively execute the project management plan. The expertise provided by the project manager, project
management team, consultants, other departments in the organization, or other stakeholders will be applied to both technical and
management details.

Project Management Information


System (PMIS)

An automated or manual system, which is a part of the enterprise


environmental factors, helps with directing and managing project
execution. PMIS includes systems such as scheduling software and
conguration management system.

Direct and Manage Project Execution Outputs


There are several outputs from the direct and manage project execution process.

Output

Description

Deliverables

A product, result, or capability produced as a result of project


execution.

Work performance information

Periodically collected information about project activities being


performed to accomplish the project work, including deliverable
status and costs incurred.

Change requests

Changes requested by the stakeholders that may impact the


project scope, policies, procedures, cost, and budgets, or lead to
reworking of project schedules. Changes may be categorized as
preventive and corrective actions, defect repairs, and updates.

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Output

Description

Project management plan updates

Project management plan components that may be updated


when directing and managing project execution include:
Requirements management plan
Schedule management plan
Cost management plan
Quality management plan
Human resource management plan

Project document updates

Communications management plan


Risk management plan
Procurement management plan
Project baselines

Project documents that may be updated include the requirements


document, project logs, risk register, and stakeholder register.

Project Management Information Systems (PMIS)


Denition:
A Project Management Information System (PMIS) is an automated or manual system
used by a project team to gather, analyze, communicate, and store project information.
The PMIS collects information on the work that has and has not been accomplished in
each work package, and how that work result compares to the planned schedule, cost,
quality, and scope. A PMIS can utilize sophisticated software tools, either those purchased off-the-shelf or custom built by an internal IT group, to manage some of its
components. There is some overlap between a communication plan and a PMIS; the
PMIS has a calendar associated with it and includes a lot of communication between
the project manager and the team.
A common pitfall associated with using a PMIS is creating a system in which the various pieces of
data are incompatible with one another. For example, the nancial data may be created in one application and the reporting in a different application and there is no way to get these two systems to talk to
each other.

Example: PMIS
One example of a project management information system available for purchase is
Microsoft Project.

Common PMIS Problems


Several common PMIS problems arise when directing and managing project execution.

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Problem

Description

Reacting to lagging indicators

PMIS reports show problems after-the-fact. Good project management requires proactive problem prevention.

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Problem

Description

Managing symptoms rather than


problems

While the PMIS reports exceptions and overruns, it cant explain


the reason for the problem. It is important to focus on nding the
cause and solving the problem, rather than making the exception
or overrun go away.

Over-reliance on PMIS communication

Project managers need to communicate frequently with team


members and other stakeholders. Sending PMIS reports is important, but shouldnt take the place of other types of
communication.

Invalid data in the PMIS

PMIS reports can be wrong, either making problems look greater


or smaller than they are. Some very real problems may not show
up in the PMIS at all. The project manager must look beyond the
PMIS to verify information about the problems, and then concentrate on getting the problems solved.

Too much information

Too much information is counterproductive, forcing people to


cope by ignoring some of the messages. It is important to make
sure that the right people get the information they need at the
right time, but it is equally important not to swamp people with
irrelevant or untimely information. Someone has to control the
scope of the information in the PMIS, or it will overload the
team and the project manager.

Work Authorization Systems


Denition:
A work authorization system is a tool used to communicate official permission to begin
working on an activity or work package. It is a function, or component, of the PMIS.
Its purpose is to ensure that work is done at the appropriate time, by the appropriate
individual or group, by a specic time, and in the proper sequence. Work authorization
systems include the necessary processes, documents, tracking systems, and approval
levels required to provide work authorizations. Depending on the project, your work
authorization mechanism may be a simple email or a formal, written notice to begin
work. Smaller projects may only require verbal authorization. The work authorization
system is integrated with the communications plan.
Example: A Work Authorization System

Figure 9-3: A contract work authorization system.

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Work Performance Information
Work performance information consists of periodically collected information about project
activities that are performed to accomplish the project work. This data would reside in your
PMIS, if you have one.
This information includes:

Schedule progress with status information.

Deliverables that have been completed and not completed.

All schedule activities and their start and nish dates.

The degree to which quality standards are being accomplished.

Expenses authorized and incurred.

Estimates to complete the schedule activities already in progress.

Percent of completed schedule activities that have been started.

Lessons learned that are posted to the lessons learned knowledge base.

Details on resource utilization.

Status for implementation of change requests.

Details on corrective and preventive actions and defect repairs.

Project Execution Direction and Management


Techniques
Throughout the entire execution of a project, the project manager can employ various techniques to coordinate and direct the various technical and organizational aspects of a project.
Tools, such as the PMIS and the work authorization system, are powerful work aids that an
organization can use to ensure project success.
Selecting and implementing a PMIS is outside the scope of this class, but the guidelines presented here are
some considerations that you may want to be aware of as you move forward in your pursuit of advanced project
management skills.

Guidelines:
To effectively execute the project plan, follow these guidelines:

Comply with any organizational policies and procedures that the organization has
in place regarding project execution to ensure predictable and consistent results.
Make sure that all contractors are familiar with and comply with the procedures.

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Evaluate and select the work authorization system you will use to formally sanction work to begin on an activity or deliverable. The value of the control your
system provides should be balanced with the cost (money and time) of designing,
implementing, and using the system.

In line with good project management practice, use the artifacts necessary to get
the job done. Use the organizations project management infrastructure. If it is not
there already, then invent it.

If necessary, work with a systems analyst to create a PMIS that is workable for
your project. Make sure the systems analyst understands the following:

Who needs to use the information?

What types of information will be needed by each user?

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When and in what sequence will the information be used?

Who will generate the initial information to be incorporated into the system?

Once the system is in place, determine who will be responsible for its day-to-day
operation, whether it will be you or someone else. Specically, you need to determine who will be responsible for:

Data entry of initial information. This includes assigning people to do the


data entry, and setting up specications for what data must be entered, how it
will be entered, and when it will be entered.

Analysis of information. Analysis means summarizing the information, drawing conclusions from it, and creating graphical depictions of what the
information is saying. Your task here is to assign people to do the analysis,
and provide specications for how the data is to be analyzed, how it is to be
reported, and what reporting formats will be used.

Storage, archiving, and retrieval. This includes assigning individuals to


handle day-to-day storage and retrieval, as well as setting specications for
backing up data and for archiving it.

Systems documentation. Whatever system you choose, it must be documented. Remember that you will be straining your PMIS during project
execution. You may need to adjust it, or even repair it, to improve its performance during this phase of the project. Good documentation will allow
support staff to make the adjustments and repairs efficiently, without losing
data or backing up the project schedule.

Evaluate the effectiveness of the PMIS for your project.

Dont rely too much on the PMIS. Be proactive in managing problems rather
than waiting for the PMIS to report a problem before addressing it.

Avoid the temptation to manage the PMIS instead of the project.

Example: Execution of a Project Plan at a Municipal Fire Station


The project team for a municipal re station has completed their project plan and is
well into execution. Using the services of a systems analyst, they designed and implemented a PMIS that includes manual and computerized methods.
The team analyzed the needs of the project and balanced cost and benet to develop a
work authorization system. The system requires an email to be sent to notify the
appropriate people that work can begin on the next component.
Each Monday morning the team has a status review meeting. Before the meeting, the
project manager sends out the most recent open task report. During the meeting, the
person responsible for a task reports on its progress. If problems or barriers are identied, the administrative assistant logs them in the issues log and the issue is assigned to
an individual.

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ACTIVITY 9-1
Identifying the Responsibilities for Directing and
Managing Project Execution
Scenario:
In preparation for the business transformation, the PMO will implement a PMIS that all project
teams will use to gather, analyze, communicate, and store project information. The PM Training Roll-Out project team will be the rst team within the organization to use the system. You
have completed your project planning and the project is ready to begin. You now have to coordinate and direct both the technical and organizational aspects of the project.

1.

You need to assist the systems analyst in the creation of a PMIS that is workable for
your project. In order to design an effective PMIS, what are the inputs that a systems
analyst should know about the project that the PMIS will manage?
a) What people will have access to the information?
b) When will the information be needed?
c) Who will incorporate the information into the system?
d) Who is the customer?

2.

As the project manager, you have made sure all organizational policies and procedures
were followed, and the contract training vendor is familiar with their responsibilities.
What would you do next?
a) Call a meeting with the project sponsor so she can commence work.
b) Issue work authorization.
c) Work with a systems analyst to create a PMIS.
d) Collect work performance information.

3.

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An activity did not start on its scheduled date. The responsible team, Team 1, claimed
that they could not start the activity because its predecessor activity did not show a
completion date in the latest status report. Team 2 claimed that they had completed
the activity on time and had followed the appropriate procedure for updating its
completion status. What are some things you would do to investigate why the status
report was not up to date?

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LESSON 9

TOPIC B
Execute a Quality Assurance Plan
Now that you know what is involved in creating a quality assurance plan, you are ready to
move forward with this key element of ensuring that your project meets its stated goals. This
is the action phase of your work, in which you will measure, verify, and quantify the progress
achieved. In this topic, youll execute quality assurance.
You can set quality goals for your project, but how do you know if they are being met on an
ongoing basis? Performing quality assurance ensures the project will meet the identied quality
standards and that stakeholders are condent in the quality of the work being produced.

Quality Assurance Plans


Denition:
A quality assurance plan is a document that species a projects parameters and standards for quality, identies how testing will be carried out, and describes how, when,
in what manner, and to what degree the project will be reviewed and evaluated against
quality criteria. It includes recommendations for the appropriate actions to be taken to
improve quality, and it lists the quality assurance team members who are responsible
for carrying out the quality reviews.
Example: Quality Assurance Planning for a Software Design Project
A team of software engineers designing a new product would be guided by a quality
assurance plan to monitor quality throughout the project life cycle. The quality assurance plan would document the criteria for functional and technical requirements,
outline the testing and evaluation process, and ensure that all steps of the project are
monitored. It would document signoff procedures for various milestones and identify
specic procedures for testing, correction, re-testing, and review sessions. The quality
assurance plan would also document how issues should be logged and addressed, and
who would be responsible for oversight and approval.

The Perform Quality Assurance Process


The perform quality assurance process is a method of evaluating overall project performance
through planned, systematic activities; it creates condence that the project will employ the
appropriate processes and satisfy standards for quality. It also ensures that the appropriate quality standards are used by analyzing the projects quality requirements and results of the quality
control measurements. It is part of a continuum of quality activities that started with the development of the quality management plan that begins in the initiating and planning processes and
continues throughout the project. The actual quality assurance process varies with the needs of
each project. Quality assurance is iterative and it may be adapted based on the identication
and resolution of quality problems over the projects life cycle.

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Figure 9-4: The perform quality assurance process.


Example: Performing Quality Assurance for a Website Design Project
The quality assurance team for a website project would monitor its progress throughout
the development process, checking its overall performance to make sure it meets quality standards. Criteria to be reviewed and evaluated would include functionality,
aesthetic quality, and usability.
Quality Assurance (QA) and Quality Control (QC)
The differences between quality assurance and quality control are listed in the following table.

Quality Assurance

Quality Control

Focuses on process.

Focuses on product.

Are we following the right processes in right


manner? This is the question that QA asks.
However QA needs data from QC to analyze
the trend.

Is this product/deliverable correct?

Concerned with the future.

Concerned about the current/past performance


of the deliverables.

Perform Quality Assurance Inputs


There are several inputs to the perform quality assurance process.

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Input

Description

Project management plan

Contains the quality management and process improvement plans


to ensure project quality.
Quality management plan: Details how project quality assurance should be conducted.
Process improvement plan: Provides detailed steps for analyzing processes and identifying ways to enhance the value of
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Input

Description

Quality metrics

Describes what specic elements of the project are going to be


measured, how they will be measured, and how they are factored
into the project.

Work performance information

Periodically collected information about project activities being


performed to accomplish the project work. Some of the performance results that might support the audit process are the
technical performance measures, status of project deliverables,
progress of the project schedule, and cost incurred.

Quality control measurements

Used to assess the organizations quality standards and processes.


These measurements are the results of the control project quality
process and are developed during the quality control processes.
They are assessed and analyzed for determining the process reliability.

Perform Quality Assurance Tools and Techniques


There are several perform quality assurance tools and techniques.

Tools and Techniques

Description

Plan quality and perform quality con- All tools and techniques used for the plan quality and perform
trol tools and techniques
quality control processes such as the cause-and-effect diagrams,
control charts, owcharting, histogram, Pareto diagram, run
chart, scatter diagram, statistical sampling, inspection, approved
change requests review, cost-benet analysis, cost of quality,
control charts, benchmarking, design of experiments, proprietary
quality management methodologies, and additional quality planning tools are used to perform the quality assurance process.
Quality audits

A quality audit is a review to determine if the activities comply


with policies, processes, and procedures in an attempt to identify
inefficient or ineffective procedures in use, resulting in lower
cost of quality and higher percentage of output acceptance.
Quality audits may be carried out by internal or external auditors
at regular intervals or at random. It conrms that the approved
changes have been implemented.

Process analysis

Used for identifying organizational and technical improvements


to processes. Includes root cause analysis to determine underlying causes and develop corrective actions.

Quality Audit Objectives


There are various objectives for performing quality audits. Some of them are:

Identify the best practices that have been implemented.

Identify the aws or deciencies in the project processes.

Use the best practices followed in similar projects performed earlier.

Help increase team productivity by providing assistance for process implementation improvements.

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Highlight the contributions of each quality audit in the organizations lessons


learned library.

Perform Quality Assurance Outputs


There are several outputs to the perform quality assurance process.

Output

Description

Organizational process assets


updates

Include updates to components such as project quality standards.

Change requests

Actions suggested to improve quality, effectiveness, and efficiency


of policies, processes, and procedures in the organization. This
results in enhanced stakeholder benets. Change requests are used to
analyze recommended improvements and take appropriate corrective
or preventive actions.

Project management plan updates

Include updates in the project management plan elements such as


quality, schedule, and cost management plans.

Project document updates

Include documents such as quality audits, training plans, and process


documentations.

Quality Audits
Denition:
A quality audit is an independent evaluation, inspection, or review of a projects quality assurance system to improve quality performance of a project. The audits can take
place at scheduled or random intervals. The auditor may be a trained individual from
within the performing organization or a qualied representative of a third-party organization. During a quality audit, the quality management plan is analyzed to make sure
that it is still reective of what has been learned in the project and to make sure the
operational denitions are still adequate and valid. The results of a quality audit are
important for the current project, as well as for later projects or other parts of the organization.
Example: Quality Audits at a Manufacturing Company
An auditor for a manufacturing company performs quality audits regularly. Every six
months he walks into the factory and reviews the companys quality management plan,
cost of quality, and quality process design to make sure these processes are up-to-date,
being used correctly, and still valid.

Topics of Quality Audits


Several topics can be included in a quality audit.

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Topic

Description

Quality management policy

May be evaluated to determine how well management uses quality data


and how well others in the organization understand how the data is
being used. The evaluation might include an analysis of management
policies for collection, analysis, and use of data in decision-making or
strategic planning.

Collection and use of informa- May be evaluated to determine how well the project team is collecting,
tion
distributing, and using quality data. Items for analysis in this category
might include consistency of data collection processes, speed of information distribution, and use of quality data in decision-making.
Analytical methods

May be evaluated to determine if the best analytical methods are being


used consistently and how well their results are being used. Items for
audit might include how analysis topics and analysis methods are
selected, what technology is used, and how results are fed back to others in the process.

Cost of quality

May be evaluated to determine the most effective proportion between


prevention, inspection, and costs of repair or rework.

Quality process design

May be evaluated to determine how process design, process analysis,


and statistical process control should be used to establish and improve
the capability of a process.

How to Execute a Quality Assurance Plan


Effective quality assurance provides condence that the projects product or service will satisfy
relevant quality requirements and standards.
Guidelines:
To execute a quality assurance plan, follow these guidelines:

Ensure that random and/or scheduled quality audits are conducted by qualied
auditors to evaluate the quality management plan, quality testing procedures, and
measurement criteria.

Are the quality parameters set forth in the quality assurance plan valid?

Are the operational denitions and checklists adequate and appropriate to


achieving the desired nal results?

Are the testing methods being implemented correctly?

Are the data being interpreted, recorded, and fed back into the system properly?

Use one or more of the quality assurance tools and techniques to determine the
causes of quality problems of the projects product, service, systems, or processes.

Identify and implement the appropriate actions to take to increase the effectiveness and efficiency of the project teams work results to improve quality in the
product or service.

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Example: Execution of Quality Assurance Plan by a Coffee Brewing Equipment
Manufacturer
A leading coffee brewing equipment manufacturer is beginning to produce a new product line, and John Smith has been assigned as the project manager for the project. John
has been given the task of maintaining a satisfactory level of quality while maintaining
the scal goals for the project.
A quality audit was commissioned to determine if in-process monitoring produced the
expected improvements to cost and quality. Following an examination of the testing
procedure outlined in the quality management plan, the audit team analyzed the collected data from the latest series of testing seven days per week.
The analyzed data was compared to projected quality data based on the in-process
monitoring system and showed that the projections matched the actual data. Armed
with this information, the audit team recommended modications to the quality management plan requiring testing only twice each week. At a cost of $100 per test, the
company is now spending $200 per week instead of $700 and therefore saving $500
per week on testing. Through careful review of the quality management plan, analysis
of the use and distribution of collected data, and monitoring the cost of quality, the
company achieved marked improvements in quality while realizing an improved
bottom-line.

DISCOVERY ACTIVITY 9-2


Executing Quality Assurance
Scenario:
For the Seattle OGC store, the construction phase is getting started. Materials have been
ordered and delivered and excavation has begun. Olson and Sons Construction has a standard
quality management plan that you adapted slightly for your project. The plan contains specic
operational denitions for measuring the quality of the construction work. In addition, it states
that scheduled and random quality inspections will occur. These inspections will be done by an
internal quality assurance engineer and will be in addition to the inspections conducted by the
city. Your company is ISO certied, so relevant ISO standards and regulations must be adhered
to as well. You have selected a good team of workers for the construction and you are condent in their ability to meet the quality standards.

1.

The manager of quality assurance has asked you about your quality management plan.
Which feature might he find problematic?
a) Scheduled and random quality inspections will take place, which will be conducted
by an internal quality assurance engineer, as well as by the city.
b) Any corrective actions that a project manager feels will improve the effectiveness or
efficiency.
c) Operational definitions were defined for measuring the quality of the construction
work.
d) Occurrence of scheduled and random quality inspections during the course of the
project.

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2.

As construction gets underway, random inspection results of completed construction


elements are unexpectedly negative. What sort of quality activities should be taking
place?

3.

The stakeholders are questioning the amount of resources dedicated to quality assurance. How can you demonstrate to them that the benefits of quality assurance
outweigh the cost?
a) Perform benchmarking to compare project practices to other projects to generate
ideas for improvement.
b) Conduct an array of experiments to identify which factors may be influencing specific
variables.
c) Use flowcharts to see how systems relate and how various factors might be linked to
problems or effects.
d) Document the identified corrective actions so that their effect on project quality,
cost, and schedule can be monitored during quality control.

TOPIC C
Acquire the Project Team
During project planning, you paved the way for effectively documenting the roles, responsibilities, and reporting relationships for your project. Now youre ready to begin appointing the
individuals you need to fulll these positions. In this topic, you will acquire your project team.
People make projects happen. You may be well-versed in many aspects of project management, but youre not going to succeed if you cant put the right players on your team.
Naturally, you want the best people in the organization to work on your project, but they may
not all be available all of the time. Mandated team members, projects with higher priorities,
and functional managers with their own agendas can squash your chances of putting together
your dream team. Your chances for success will be much greater if you can negotiate for the
best people possible for your project.

The Acquire Project Team Process


The acquire project team process involves making the identied resources available to the
project.
Resource selection may be driven by different factors such as collective bargaining agreements,
or other internal or external reporting relationships. In such cases, the project management
team may not be directly involved in the team member selection processes.
Resources may be dictated by senior management, in which case a project manager has no
room to negotiate. In this case, the project manager needs to build a cohesive team, ensure
effective communication, and clearly dene peoples roles and responsibilities.

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Figure 9-5: The acquire project team process.


Planning for Acquiring a Project Team
Factors to be considered when planning for acquiring the project team include:

Project managers must effectively negotiate with the appropriate people for the
needed project resources.

Failure to acquire the appropriate resources may impact project performance and
may ultimately result in the termination of the project.

If human resources with the required skills and capabilities are not available at the
appropriate time, alternate resources with lower competencies may be assigned
without violating legal, regulatory, or other criteria.

Documenting Resource Constraints


The project team or the project management team must ensure that all project documents such as the project schedule, budget, risks, quality, training plans, and the
project and project management plan components reect the possible resource constraints and other problems in acquiring the required resources.

Acquire Project Team Inputs


There are several inputs to the acquire project team process.

Input

Description

Project management plan

Contains the human resources plan that provides information


about how to identify, acquire, assign, manage, control, and
later release the human resources. It also species:
The roles and responsibilities, the positions, skills, and competencies required for each project.
The project organization chart indicating the number of
human resources required to work on the project.
The staffing management plan that provides information
about acquiring the project team and the duration for which
each team member will work on the project.

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Input

Description

Enterprise environmental factors

Factors the project management team needs to take into consideration when acquiring their team include:
Information about human resources such as which resources
are free during the required time frame, their experience, and
their cost rate.
Personnel administration policies.
Organizational structure.
Location(s) of the resources.

Organizational process assets

Any kind of policies, guidelines, or procedures that organizations follow when delegating staff assignments and selecting
resources for the project.

Acquire Project Team Tools and Techniques


Several tools and techniques are used in acquiring a project team.

Tools and Techniques

Description

Pre-assignment

When project team members know in advance what their assignment


is before the project has its official kick-off.

Negotiation

Staff assignments can be negotiated with functional managers, vendors,


or external organizations. This helps ensure that the appropriate staff is
assigned within the time frame, when there is a need for scarce or specialized resources.

Acquisition

When there isnt enough staff to complete the project, outside sources
such as consultants or contractors can be hired.

Virtual teams

Groups of people, hired for the same project, who never or rarely
speak face to face. Using currently available communications technology, such as collaborative software, aids in communication. Virtual
teams make it possible for people to:
Form teams where people live in widespread geographic areas, but
work for the same company.
Add expertise to projects from people who are not in the same geographical area.
Include employees who work from home.
Include employees who work different shifts.
Include employees with disabilities.
Avoid travel expenses.
Planning for effective communication among the virtual team members
is an important consideration that needs to be considered when setting
up a virtual team.

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Acquire Project Team Outputs
Outputs from acquiring a project team include project staff assignments, resource calendars,
and project management plan updates.

Output

Description

Project staff assignments

The assignment of the people who will work on the project,


whether full-time, part-time, or as needed. This includes members of the project office as well as all other members of the
project team and usually includes a team directory, memos
to/from team members, and project organization charts and
schedules.

Resource calendars

Provides information on the schedule and availability of the


project resources. It also prevents resource scheduling conicts
and factors in details such as vacation time and other project
commitments.

Project management plan updates

As people are assigned to project roles and responsibilities,


changes may need to be made to the human resources management plan due to promotions, retirements, illnesses, performance
issues, workloads, and expertise.

Virtual Teams
Denition:
A virtual team is a team that is distributed across multiple locations. Some virtual
teams have occasional physical meetings, while others may never meet face-to-face.
Virtual team building is more difficult, for a number of reasons.

Bonding and team identity can be hard to create when team members are geographically dispersed, because nding ways to provide a sense of team spirit and
cooperation may be difficult.

Communication and information sharing need to rely on various forms of technology because teams cannot meet face-to-face. However, managing electronic
collaboration so that everyone on the team can reliably transmit and access information from one another can be challenging.

Because roles, reporting, and performance can be harder to track on a dispersed


team, individual contributions may be overlooked.

Example: Virtual Team for the Apollo 13 Mission


The Apollo 13 spacecraft was launched from the Kennedy Space Center in April, 1970,
but an accidental explosion in an oxygen tank aborted its mission to the moon. The
virtual team responsible for Apollo 13s launch and its subsequent safe return included
the three crew members on board as well as the staff of mission control in Houston,
Texas. Telecommunications included voice and television communications between
astronauts and Earth.

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How to Acquire the Project Team
Acquiring well-formed project teams will result in meeting the resource needs of the project to
fulll project requirements.
Guidelines:
To acquire a project team, follow these guidelines:

Form good relationships with functional managers.

Know when you need specic resources.

Negotiate with the appropriate organizations or parties for critical resources timed
with project need.

Look for synergy and diversity among team members.

Look outside to competent suppliers where in-house resources are not available.

Make sure that roles and responsibilities are clearly understood by the team and
other stakeholders.

Publish an organization chart to all stakeholders.

Example: Acquiring the Project Team for a Fundraising Event


Greg has been assigned to organize a fundraiser for a childrens hospital. First, Greg
meets with his functional managers, Kim and Rob, to determine what kinds of people
should be running each activity, if they need to hire any extra help, and how much
resources will cost. They employ about 40 people, and 20 have been pre-assigned by
Kim and Rob to work on activities based on previous experience with the fundraiser.
Some activities have already been decided including a hoop-shooting contest, balloon
volleyball, and a karaoke contest.
Greg receives a list of everyone who has been assigned to work with him, and calls a
meeting to develop his team and assign responsibilities. Some team members need to
have good organizational skills, some need to have creative skills; however, all need to
be good with kids. Based on skills and abilities Greg selects his team, including a high
school basketball coach to be in charge of the hoop-shooting contest, and an art major
to run arts and crafts. Greg nds a local college that agrees to rent its gymnasium to
the event for only $100.
The next day, Greg goes over roles and responsibilities one nal time with his team to
make sure all is understood. An organization chart is made and given to the college
and Kim and Rob so they know exactly how the gym will be used and who will be
involved in each activity. Now, organization and setup can begin for the event.

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DISCOVERY ACTIVITY 9-3


Acquiring a Project Team
Scenario:
During project planning, you have documented the roles, responsibilities, and reporting relationships for your project. Now youre ready to determine the individuals you will need to
fulll these positions.

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1.

Three members of your project team have to be allocated to you on a part-time, 50


percent basis from the IT department. What would be your first step in acquiring these
resources for the project team?

2.

The functional manager of the IT department informs you that, based on the time
frame for your project, two of the resources that are available are new hires who have
not worked earlier in a project on their own at this point. What should you do?

3.

During the first meeting of the new project team, some confusion arises between two
team members about their roles and responsibilities. Since this conversation is not
appropriate in this forum, how might you respond?

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TOPIC D
Develop the Project Team
Now that you have acquired your project team, you need to help them achieve peak performance. Team building ensures that you build an atmosphere of trust and open communication.
In this topic, you will develop the project team.
Project teams comprise individuals, drawn from different disciplines, who must learn to work
together to achieve a common goal in a short period of time. The individuals working on your
team, all of whom have their own communication styles, work habits, motivations, and career
agendas, have to come to trust one another and work together rather than compete against one
another for resources and time. Team building ensures that you build an atmosphere of trust,
collaboration, and open communication.

The Develop Project Team Process


The develop project team process is an on-going effort to build a cohesive team that benets
from good communication and a foundation of trust. Its goal is to enhance the teams collective performance and improve their skills so that you increase the likelihood of meeting project
objectives. It includes good general management practices including providing training and
coaching to the team, building trust, encouraging good communication and the sharing of
resources, and recognizing and rewarding desirable behavior. Project managers use the develop
project team process to enhance the performance of the project and the project team in an
effort to increase the likelihood of meeting project objectives.

Figure 9-6: The develop project team process.


Foster Team Building
To foster team building within a project team, a project manager might ask each of the
veteran employees on the team to partner with a less experienced team member, offering coaching as needed and sharing knowledge, information, and expertise. Working
collaboratively towards a shared goal is a great way for team members to help each
other reach a higher level of performance.

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Effective Project Teams
The team members should work in a collaborative way to ensure project success. It is
the responsibility of the project manager to build an effective project team and foster
teamwork. Managers should give opportunities that challenge the team members abilities, provide support and timely feedback, and recognize and reward good
performance. To achieve highest team performance, managers should use effective
communication methods, develop trust among team members, manage conicts, and
promote collaborative decision making and problem solving.
Project managers should seek support from the management or the appropriate stakeholders to effectively build project teams. This will help improve people skills,
advance technical competencies, build good team environment, and increase project
performance.

Develop Project Team Inputs


There are several inputs for developing the project team.

Input

Description

Project staff assignments

The assignment of the people who will work on the project,


whether full-time, part-time, or as needed. This includes members
of the project office as well as all other members of the project
team.

Project management plan

Contains the human resource plan that identies training strategies


and plans for developing the project team through rewards, feedback, and disciplinary actions.

Resource calendars

Helps identify the schedules of team members and the time when
they can participate in team development tasks.

Develop Project Team Tools and Techniques


You can use several tools and techniques to develop the project team.

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Tools and Techniques

Description

Interpersonal skills

Interpersonal skills, often referred to as soft skills, can help a


project manager prevent or resolve team issues that hinder successful
completion of the project. Leadership, inuencing, communicating,
delegating, and empowerment skills are particularly relevant to team
development.

Training

Project team members can acquire new or enhanced management or


technical skills, knowledge, or attitudes through training. Training
may be provided to teams, small groups, or individuals through a
variety of methods such as classroom, online, computer-based, and
on-the-job training, mentoring, and coaching.

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Tools and Techniques

Description

Team-building activities

Exercises that help the team develop into a mature, productive team.
Effective project teams can be realized through factors such as:
Gaining support from top management.
Obtaining commitment from team members.
Encouraging team members through awards and recognition.
Creating a team identity.
Managing conicts effectively.
Building trust among team members.
Promoting effective communication methods.
Providing good team leadership.

Ground rules

Rules setting clear expectations as to the expected code of conduct


from team members so as to increase productivity and decrease misunderstandings.

Co-location

The establishment of a common physical location for a project team


to enhance overall team performance. Co-location can be done on a
temporary or permanent basis for a given project.

Recognition and rewards

A formal method used to reinforce behaviors or performance, which


will make individuals feel that they are valued in the organization.

Develop Project Team Outputs


There are two outputs to project team development.

Output

Description

Team performance assessment

Formal or informal evaluations of the teams performance


are done periodically in order to help improve interaction
between team members, solve issues, and deal with conicts. A teams technical success is measured on the basis
of meeting the project objectives, and nishing the project
on time and within the decided budget. An effective team
will show improvements in skills, competencies, and team
cohesiveness.

Enterprise environmental factors updates

Includes updates on employee training records and skills


assessments.

Team Development Stages


The development of the project team generally proceeds in ve stages.

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Stage

Description

Forming

Team members are wondering whether the decision to join the team was a
wise one. They are making initial judgments about the skills and personal
qualities of their teammates, as well as worrying about how they personally
will be viewed by the rest of the team. During this stage, conversations tend
to be polite and noncommittal, as people hesitate to reveal too much about
their personal views. In addition, team meetings tend to be confusing, as the
team tries to gure out who is in charge.

Storming

Team members begin to assert themselves and control issues as they emerge.
Personality differences begin to arise. Conicts result as team members differ
on the way they want to do the project work, or the way they want to make
decisions.

Norming

The team begins to work productively, without worrying about personal


acceptance or control issues. There are still conicts; however, they tend to
be focused on process issues rather than personality differences. The team
begins to operate off mutual dependence and trust.

Performing

The team is working at optimum productivity. It is collaborating easily, communicating freely, and solving its own conict problems. Team members feel
safe in reporting problems, trusting their fellow team members to help them
create the best solution for the team as a whole.

Adjourning

The team members complete their assigned work and shift to the next
project or assigned task. This phase is sometimes known as mourning.

Lock Step
The process of forming, storming, norming, and performing is not done in a lock
step fashion by the team. Team members keep coming in and going out of the team.
Whenever a new member joins, forming takes place; even if the rest of the team has
already crossed the forming stage. So, these stages are not followed one after the other
but are rather situational.

Training
Denition:
Training is an activity in which team members acquire new or enhanced skills, knowledge, or attitudes. Training may be provided to teams, small groups, or individuals and
can cover management, technical, or administrative topics. It can range from a multiday, formal workshop in a classroom to a ve-minute, informal on-the-job training
demonstration at the employees desk. It may be formulated to provide generic skills
or customized to provide a specic skill set that is unique to the project. Training
should be made available to team members as soon as the need becomes apparent.
Example: Training on a Software Program
Mark is the programmer assigned to the company website project. Recently, Mark was
informed that he would have to create the entire site using a website development software program with which he was unfamiliar because the entire organization was using
the program and maintenance would be easier if the tool was standardized.

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Since Mark was the only programmer available to work on the project, Carrie, the
project manager, arranged for Mark to take a training course to learn the technical program. Not only would Marks training help the project achieve its objectives and abide
by organizational policy, but it would also enhance Marks skills and help position him
to advance within the organization.

Team-Building Activities
Denition:
Team-building activities are the specic functions or actions taken to help the team to
develop into a mature, productive team. They can be formal or informal, brief or
extended, and facilitated by the project manager or a group facilitator.
Example: Team-Building Activity
Robin, a new project manager for a line of youth-oriented sportswear, decided that a
good way to get to know her team was to plan an outdoor team-building activity. Two
of the designers were located on the east coast and would be working very closely
with the manufacturing team at the companys San Diego facility. Robin arranged to
y the two designers to San Diego to participate in the all day, off-site ropes course.
Robin participated in the rope climbing exercise as well, and an experienced teambuilding coach facilitated the activity.

Co-location
Denition:
Co-location refers to positioning most or all key team members in the same physical
location to make communication easier and enhance team performance and team spirit.
Although most commonly used on large projects, smaller project teams may also benet from co-location. There are different degrees of co-location. On some projects,
some of the team may be co-located, while others are not.
Example: Co-location for a National Campaign
A political candidate announcing a run for the presidency of the United States would
establish a national campaign headquarters office, at which the key members of the
campaigns project team would be co-located. The headquarters would serve as a base
for national operations and centralize the efforts of the candidates political machine.
The co-location of the project team would only last for the duration of the campaign.

Reward and Recognition Systems


Denition:
A reward and recognition system is a formal system used to reinforce performance or
behavior. The purpose is to motivate the team to perform well. Rewards could include
monetary gifts, additional vacation time or other perks, company plaques or trophies,
or small gifts. Reward and recognition systems are generally standardized throughout
an organization and approved through corporate channels.
Rewarding or recognizing a team member for working overtime due to poor planning or in an effort to
receive extra pay is not an effective reward and recognition system because it does nothing to motivate
the team to perform well or to improve team morale.

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Example: Rewards and Recognition
Tim is an art director assigned to the company website. Often, Tim helps new team
members and provides coaching and mentoring. Carrie, the project manager, recognized Tims extra efforts at the weekly project team meeting. She presented Tim with a
gift certicate to a new restaurant as a reward and incentive for his outstanding performance.

Rewarding Individual Performance


Denition:
In traditional U.S. organizations, rewarding individual performance refers to giving pay
increases or promotions to individuals based on merit. In a team environment, it is difcult to tie merit increases to individual performance because of the mutual
interdependence of the team members.
Recognizing individual team member performance is considered culturally unacceptable in many countries, particularly China and Japan.

Example: Recognition
In an effort to reward individual performance, the managers of a real estate company
decided to offer a 10% salary increase to the sales representatives who exceeded their
sales quota by more than 25% for the year.

How to Develop the Project Team


Effective team development results in improved individual and team performance, which
increases the teams ability to achieve project objectives.
Guidelines:
To effectively develop your project team, follow these guidelines:

Recognize the project teams current stage of development and be proactive in


helping the team be as productive as possible.

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During the forming stage, conduct activities that will help the team get to
know one another and develop a sense of mutual respect. The following is a
list of activities for the forming stage:

A kick-off meeting that includes time for introductions.

Creation of a team handbook documenting the teams goal, the major


tasks required to achieve the goal, and any constraints under which the
team must operate.

Publication of a team directory.

Development of a team charter that sets forth guidelines on how team


members will behave toward one another, how they will communicate,
when they will meet, how they will make decisions, and how they will
escalate problems.

Selection of a team name or emblem.

Initial social events to allow time to get to know one another on a personal level.

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During the storming stage, use conict management approaches to help the
team work through problems.

In the norming stage, concentrate on issues of project performance.

Focus on the teams productivity towards meeting the project goals.

If the team is bogged down on certain problems, help to create crossfunctional sub-teams to work on the problems.

Eliminate barriers that may be hampering team performance.

Provide opportunities for recognition for the teams performance from


management, customers, or peers.

In the performing stage, provide recognition for team performance, but stay
out of the way as the team manages its own problems. However, if project
progress is sluggish, this is a good stage in which to challenge the team with
more stringent performance goals.

In the adjourning stage, team members complete project work and shift to
the next project or assigned task.

This phase indicates the transformational phase of achievement through


synergy.

In this phase, ensure formal closure and completion of the tasks happen.
Also, facilitate the smooth transition of the project team members to the
next project.

Develop and implement a formal reward and recognition system.

Consider co-location to enhance the teams ability to perform as a team and


improve communication. When co-location is not feasible, it becomes especially
important to encourage and enhance interaction among team members.

Provide appropriate training and coaching to help team members acquire new or
enhanced skills, knowledge, or behaviors.

Example: Developing the Beautication Project Team


A city council passed a proposal for a beautication project, including a new public
park. The new park design fell to a board comprising citizens and government officials.
The Director of Parks and Recreation, Elizabeth Fry, served as the project manager.
Elizabeth scheduled a kick-off meeting that included introductions and an exchange of
information for creating a team directory.
As the project moved through execution, the team performed well for the most part.
One team member owned an Internet hosting service and made arrangements for the
team to use web-collaboration software, making team communication much easier. To
reward team members efforts, Elizabeth offered small gifts of appreciation, which
were donated by local merchants. She also made sure she recognized the extra efforts
of her team during city council meetings.
Elizabeth arranged for local landscape architects and gardeners to offer special training
seminars to interested team members, which proved to be extremely motivating. When
conicts arose, like a disagreement over what to use as surfacing materials in the playground, Elizabeth monitored the situations but usually let the team work them out for
themselves.

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DISCOVERY ACTIVITY 9-4


Developing Your Project Team
Scenario:
As your project team continues executing the project plan, you are learning more about the
team members and their interpersonal skills and relationships.

1.

2.

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Match each team development stage to its appropriate description.

Forming

a.

Storming

b.

Norming

c.

Performing

d.

Adjourning

e.

Team members complete their


assigned project work and shift to the
next project or task.
Team members begin to assert themselves and conict management
approaches are used to help the team
work through problems.
Team members make initial judgments about the skills and personal
qualities of their teammates, as well
as worry about how they personally
will be viewed by the rest of the
team.
Team members begin to work productively, without worrying about
personal acceptance or control issues.
Team members collaborate easily,
communicate freely, work at optimum
productivity, and solve their own conict problems.

You notice that Rachel, a team member, has consistently met her deliverable deadlines and is always on time with her status reports. She actively participates in
brainstorming sessions and makes valuable contributions to the discussions. When
required, she has gone beyond her responsibilities and has helped her project manager
facilitate brainstorming meetings and discussion sessions. How should you respond?

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3.

One of your junior team members, who is assigned to gather information from managers through an interview process, has confided in you that he is not comfortable during
the interviews. He feels that the managers seem impatient with the questions he is
asking. The other junior team members assigned to interviews have not had any problems. What are some things you would do to address this issue?

TOPIC E
Manage the Project Team
Your staffing management plan describes when and how you will meet your project team
requirements. Now that your project is well underway, you need to monitor individual and
team performance and provide relevant feedback and appraisals. In this topic, you will manage
your project team.
Virtual teams and matrix organizations make managing project teams more complicated for
project managers. However, when team members are accountable to a functional manager and
a project manager, this dual reporting relationship becomes a critical component for project
success. Effective project managers monitor and track team member performance throughout
the projects life cycle.

The Manage Project Team Process


The manage project team process monitors individual performance, gives feedback, solves
issues, and organizes changes to improve project performance. This results in updates to the
human resource plan, submission of change requests, resolved issues, input given for performance appraisals, and documentation of lessons learned. Efficiently managing a project team
requires a combination of project management and interpersonal skills to foster teamwork and
enhance the team performance.

Figure 9-7: The manage project team process.

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Dual Reporting
Managing the project team can become more complicated when team members are
required to report to both a functional manager and a project manager. Coordination of
this dual reporting relationship can be very important for the success of the project; it
is the project managers responsibility to make sure that team members are reporting
appropriately.

Manage Project Team Inputs


There are several inputs to successfully managing a project team.

Input

Description

Project staff assignments

Documentation on the list of project team members, project organization charts, and schedules.

Project management plan

Contains the human resource plan that includes the roles and responsibilities of project team members and the staffing management plan.

Team performance assessments

During the project, the project management team makes formal and
informal judgments on team performance. Continual assessment can
result in resolving issues, improving communication, recognizing conict, and improving team interaction.

Performance reports

Give documented performance information on the status of the project


with regards to the forecasts made. Performance areas that are documented include schedule control, cost control, quality control, and
scope verication. This information can be helpful when determining
corrections or updates required in future human resource requirements,
awards and recognition, and modications to the staffing management
plan.

Organizational process assets

Inputs that can inuence the manage project team process include certicates of appreciation, websites, newsletters, bonus structures,
corporate apparel, and organizational prerequisites.

360-degree Feedback
360-degree feedback is the collection of performance data from several key sources,
including peers, managers, and subordinates. Condentiality is crucial to employing
360-degree feedback as it is implemented in most organizations. Many project practices do not have the sophistication and/or resources to manage employee relations in a
manner that makes implementation of 360-degree feedback practical. Thus, even
though 360-degree is mentioned in the PMBOK Guide, there is consensus within the
human resources eld that 360-degree feedback is best used only for developmental
purposes, and not for performance management.

Manage Project Team Tools and Techniques


A project manager has several tools and techniques available to manage the team.

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Tools and Techniques

Description

Observation and conversation

Used to stay in constant communication with the work and attitudes of the team. Measurements include progress toward
deliverables, interpersonal issues, and accomplishments resulting
in pride for team members.

Project performance appraisals

The need for formal or informal appraisals often relies on project


length, project complexity, organizational policy, labor contract
requirements, and amount and quality of communication. Evaluation can come from supervisors and people who interact with the
team. Some of the main objectives to conduct performance
appraisals are to clarify the roles and responsibilities of project
team members, provide constructive feedback, identify unknown
or unresolved issues, develop individual training plans, and establish futuristic goals.

Conict management

Proper conict management will result in improved productivity


and good relationships. To reduce the amount of conict, establish team rules, group norms, and stable project management
practices. If the team is managed properly, disagreements will be
healthy and can lead to increased productivity and good decision
making. Care should be taken that conicts are handled early and
in private using a direct, collaborative approach.

Issue log

An issue log is used to document individuals responsible for


resolving certain issues by a specic date, whereas issue resolution addresses obstacles that hinder the team from achieving its
goals.

Interpersonal skills

Skills that capitalize on the strengths of team members include


leadership, inuencing, and effective decision making.

Manage Project Team Outputs


Several outputs result from managing a project team.

Output

Description

Enterprise environmental factors


updates

Updates include inputs to organizational performance appraisals


and on personnel skills.

Organizational process assets updates

Updates include historical information, lessons learned documents, templates, and organizational standard processes.

Change requests

Staffing changes can affect the project plan. This results in a


request to be processed through the perform integrated change
control process. These changes include moving people to different tasks, outsourcing work, and replacing team members
during absence or when they leave the company. Preventive
methods can be adopted to avoid such situations.

Project management plan updates

Any approved change requests and corrective actions should


result in updates to the staffing management plan, a subset of
the project management plan.

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Causes of Conict
Conict arises in most groups and working situations. Causes of conict include:

Competition.

Differences in objectives, values, and perceptions.

Disagreements about role requirements, work activities, and individual approaches.

Communication breakdowns.

Characteristics of Conicts
Project managers should be aware of certain characteristics of conict that will help
them effectively handle conicts when they arise. Conict is natural and forces the
need for exploring alternatives. It is a team aspect and openness about the situation or
opinions can resolve conicts. While resolving conicts, focus should be on the issues
and not on individuals; on the present situation and not the past.

Conict Management
Denition:
Conict management is the application of one or more strategies for dealing with disagreements that may be detrimental to team performance. Effective conict
management can lead to improved understanding, performance, and productivity. Conversely, ineffective or nonexistent conict management can lead to destructive
behavior, animosity, poor performance, and reduced productivityall of which threaten
successful completion of the projects deliverables. There are certain conict resolution
methods and the need to follow a particular method includes the intensity and importance of conict, the time given to resolve the conict, the positions of the conicting
parties, and the motivation to resolve conicts on a short-term or long-term basis.
Example: Conict Management Between Two Salespeople
Two salespeople accustomed to working independently, on commission, might be
asked to partner together on a project to bring in a major new account. If the two
become embroiled in conicts regarding their commission splits and their differing
sales styles, and they cannot agree to work together amicably for the sake of the
project, the business will suffer. Conict management strategies would be used to help
the team members work through their differences.

Conict Management Approaches


There are six basic approaches for handling conicts; each is effective in different circumstances.

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Approach

Description

Confronting/Problem solving

Focuses on identifying the underlying problem and working out


alternatives or solutions for it in a way that allows the involved parties to work through their disagreements.

Compromising

Involves working out a middle ground that satises all parties to


some degree.

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Approach

Description

Smoothing/Accommodating

Focuses on de-emphasizing the differences between points of view


and focuses on commonalities.

Forcing

Requires others to yield to the point of view of one side or another.


It may increase conict and end in a win-lose situation.

Collaborating

Incorporates insights and viewpoints from different perspectives,


which can lead to commitment between the conicting parties.

Withdrawing/Avoiding

Involves avoiding or retreating from the conict or potential conict


and allowing the involved parties to work out the conict on their
own.

Different problem-solving business philosophies interpret and categorize compromise and confrontation differently, in terms of their effectiveness and desirability; additionally, different companies may have their own way
of interpreting and implementing these approaches. Also, there cannot be one effective way to resolve a conict
as they are mostly situational.

Tasks of Performance Appraisals


You can use the performance appraisal to accomplish a number of tasks, including:

Comparing performance to goals.

Reclarifying roles and responsibilities.

Delivering positive as well as negative feedback.

Discovering unknown or unresolved issues.

Creating and monitoring individual training plans.

Establishing future goals.

How to Manage the Project Team


Using good management skills to manage your project team results in a solid staffing management plan, updated and submitted change requests, resolution of issues, and good lessons
learned documentation, as well as productive team members.
Guidelines:
To effectively manage a project team, follow these guidelines:

Establish good communication among team members, internally and externally.

On virtual teams, communication can become a major issue and challenge


especially when team members are in different time zones and in different
countries.

In the era of electronic mail, use proper etiquette. For example, typing with
all capital letters is synonymous to shouting. Avoid conducting arguments
with people through email. Know when to use the phone or a personal visit
to discuss issues.

Cultural-sensitivity training is essential to ensure that communications are


well-maintained with global project teams. Remember that on some project
teams, English may be a second language. Keep communications simple and

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to the point. Eliminate slang, sports terms, or jokes. Many jokes do not translate well in other cultures or may even result in people being offended or
insulted.

Monitor progress of team members by speaking with them on a one-to-one


basis. Dont wait for the emails or monthly reports. Get out there and see for
yourself what progress is being made by the team, and what intangibles
(such as morale, engagement, or cynicism) are at play.

Develop a set of metrics for each project to measure team performance.


Establish tolerances for each so that corrective actions can be taken when
needed. Use a management by exception approach to avoid micromanaging
the team.

Provide constructive feedback to team members on a frequent basis. Team


members need to know they are either on track or need to take steps to get
back on track. Performance reviews can be formal or informal. If disciplinary
actions are taken, these must be in writing to avoid any misunderstanding.

Consider additional training for those team members who need to improve
their performance.

Consider having a quality audit to get another perspective on whether the team is
headed in the right direction to meet the projects quality requirements. The quality audit team needs to be independent from the project team to be effective.

Manage conict using the appropriate approach based on the circumstances and
the individuals involved. Regardless of the approach, apply the following principles.

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Monitor performance of team members on an ongoing basis.

Allow people to have their say. Make sure you give both sides a chance to
state their case. Demonstrating respect and acknowledging peoples different
positions are necessary to address conicts effectively.

Listen hard to what people are telling you. Paraphrase or ask questions to be
sure everyone understands what is being said.

Find those areas at issue where both sides are in agreement.

Encourage both sides to nd a win-win resolution to the problem. Restate the


resolution and get agreement from both parties.

Focus on the reasons that the group has come together: to nd a resolution to
the problem.

To help avoid unnecessary conict, set expected ground rules in the beginning for the team to operate with based on the communications management
plan.

During the project life cycle, follow established project management practices. Refer to your communications management plan for guidance.

When conict occurs among team members or between the team and other
organizational entities, it may be effective to implement the conict management approach of confrontationfocusing on the problem. It may be
advantageous to try to defuse conicts early to avoid escalation.

As results are being obtained during the implementation phase, establish an issues
log to track and assign project issues. This log is useful for regular follow-up with
the project team. Hold specic team members accountable for resolution of issues.

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Example: Managing the Project Team in an Advertising Company
An advertising company has plans to develop a campaign for a customer over the next
four months, and David is acting as the project manager.
David wanted to make sure that everything got off to a good start, so he called a kickoff meeting. Before the meeting, he developed a set of metrics to measure team
performance, and planned to monitor the progress of his team by meeting with them
individually once a week.
During the kick-off meeting, David asked the team to make weekly status reports using
email and to use instant messaging software to keep in close contact with one another.
He also let the team know how their performances would be monitored, and he set up
a meeting schedule. However, as might be expected, there was some conict on the
team. Two team members disagreed on the direction for their campaign. One wanted to
use a very contemporary, almost edgy approach, while the other wanted to appeal to
traditional, more conservative values. After a series of meetings with the customers
product analyst, the team was able to nd a middle ground that satised both team
members and pleased the customer.
From the earliest days of the project, David instituted the practice of using an issues
log to track all changes in the project. This became extremely valuable as the project
got to the nal stages and prepared for hand off to the customer. Everyone was clear
on exactly what they had committed to, and the customer received the expected
deliverables.

DISCOVERY ACTIVITY 9-5


Managing a Project Team
Scenario:
Work on the new OGC store continues to move along. All deadlines are being met. However,
one of the masonry supervisors, Joe, sends you an email detailing a recent argument between
the plumbing contractor and the tile contractor assigned to the project. He is concerned that
their possible inability to get along may jeopardize the project.

1.

Given the masonry supervisors email about the conflict between the plumbing and tile
contractors, what should you do?
a) Confirm their inability to get along and its probable impact on the team. Responding
to alleged interpersonal conflict from second hand sources is almost always a mistake.
b) Wait for results of the weekly masonry work progress report.
c) Provide constructive feedback to the contractors.
d) Consider offering an online conflict resolution course for the contractors.

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2.

In speaking with the contractors, you discover that the tile contractor feels that the
plumber is spending too much time at lunch and on breaks, which causes him to work
past 6:00 each day. The plumber responds that he takes a normal lunch break. What
can you to do resolve this situation?

3.

The roofing team has been working effectively, meeting all deadlines and experiencing
no personnel problems. What approach should you take when monitoring this team?

TOPIC F
Distribute Project Information
During project planning, you developed a communications management plan describing the
teams approach to project communications. Now that work results are being accomplished,
you need to let project stakeholders know how the project is progressing. In this topic, you
will identify the process involved in distributing project information.
In a project, information provides the critical links for successfully meeting the projects objectives. Distributing project information efficiently and effectively ensures meaningful and
appropriate information is available to project stakeholders. This in turn assists stakeholders in
making appropriate decisions by giving a clear view of the project progress.

The Distribute Information Process


The distribute information process involves getting the right information to the right people,
both internally and externally, at the right time. During information distribution, the project
team implements the communications management plan. This plan documents what information will be communicated, to whom, by whom, when, and in what manner, as well as how
information is collected, archived, and accessed.

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Figure 9-8: The distribute information process.


Effective Information Distribution Techniques
Different techniques can be used to distribute information effectively.

Techniques

Description

Sender-receiver models

Includes setting up appropriate feedback loop and avoiding communication barriers.

Choice of media

Includes specifying when to communicate in writing or in


oral form and which communication media should be
used such as verbal, written, email, and phone.

Writing style

Includes choosing the right tone and word choice.

Meeting management techniques

Includes identifying the meeting agenda and managing


conicts.

Presentation techniques

Includes using appropriate design of visual aids and body


language.

Facilitation techniques

Includes building harmony within the team.

Distribute Information Inputs


There are a few inputs to the distribute information process.

Input

Description

Project management plan

Contains the communications management plan, which


describes the details for distributing information to various concerned parties in the form of how to distribute the info, such as
whom to, when to, and what to.

Performance reports

Describes the current performance status of a project. These


reports are distributed to the relevant stakeholders prior to
project meetings. Based on the performance reports, the management and the stakeholders assess the project progress and
can forecast future course of action, if any.

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Input

Description

Organizational process assets

Factors that can have an impact on the distribute information


process could include:
Past lessons learned and historical project information.
Guidelines, policies, and procedures regarding information
distribution.
Templates.

Distribute Information Tools and Techniques


Two tools and techniques are used to distribute information.

Tools and Techniques

Description

Communications methods

The communication methods could include video and audio conferences, computer chats, individual group meetings, and other remote
communication methods.

Information distribution tools

The tools that can be used to provide project information to stakeholders. The tools could include electronic mail, hard-copy
documents, presentations, video conferencing, meetings, and phone
calls.

Distribute Information Outputs


There is one output from the distribute information process.

Output

Description

Organizational process assets updates

Organizational process assets that may need to be updated include:


Lessons learned documentation
Project records
Project reports
Project presentations
Feedback from stakeholders
Stakeholder notications

How to Distribute Project Information


Effective information distribution ensures that project information is appropriately dispensed to
project stakeholders. Getting the necessary information in a timely manner enables the stakeholders to make decisions regarding the project in time to make a difference.
Guidelines:
To distribute project information effectively, follow these guidelines:

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Create and distribute requests for project information, such as project records,
reports, and presentations, in accordance with the communications management
plan.

Use effective communication skills to exchange information.

Use an information retrieval system to provide stakeholders access to project


information. Everyone should have access to the information needed. Whether
manual, computerized, or a combination of both, make sure your system complies
with the following standards:

The system has sufficient storage capacity to hold the necessary project information.

The system follows any security protection protocols established in the communications management plan so that sensitive information can be accessed
only by appropriate stakeholders.

The system provides a method of version control to protect data and to


ensure that everyone is working off the same, most recent document.

The system is organized to meet the needs of the project and the stakeholders.

Select the appropriate information distribution method for distributing project


information.

Sending an email announcing that a report is posted on the intranet site.

Making a telephone call to schedule a one-on-one meeting.

Taking notes of phone calls to provide a written record of the communication.

Making a presentation to highlight the important points in a report.

Monitor the communications system for feedback to make sure that messages are
getting through as planned. If individuals, locations, or organizations are not able
to send or receive messages adequately, identify the problem and adjust the communications management plan, information distribution method, or retrieval
system accordingly.

When unexpected requests for information surface, determine their effect on other
aspects of managing the execution and control of the project, such as risk monitoring and schedule control. Take appropriate action to make changes to the plan
as necessary.

Example: Information Distribution to Stakeholders


As the company website project continues through the executing process, a huge
amount of project information is generated and collected. Carrie, the project manager,
is diligent in providing the stakeholders with the information they need to make sound
decisions. First, she and her team review the communications management plan to
make sure they implement an information retrieval system.
The executive stakeholders present a challenge regarding project communications. On
the one hand, they need to make decisions about the project and require enough information to support their decision-making, but they are impatient with lengthy
presentations. So Carrie prepares a clear, concise summary of key information as well
as a more detailed report with charts and status updates for those who are interested.
Carrie invites the stakeholders to ask questions or provide other feedback. She monitors the communications system to make sure that messages are getting through as
planned and that the recipients fully understand the content.
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DISCOVERY ACTIVITY 9-6


Distributing Project Information
Scenario:
A primary PMO goal for all projects during the Business Transformation program is consistent
and timely reporting of project information. This was in large part the justication for the PM
Training Roll-Out project and the implementation of the PMIS at OGC. However, the project
managers at OGC are now concerned that they will be spending more time creating reports for
senior management than actually managing their projects. You are meeting with Sharon Williams, the new PMO Director, to discuss these concerns.

1.

An automated information retrieval system will provide stakeholders with access to


project information via the intranet. What, if any, concerns do you have with relying
on this type of distribution of project information to stakeholders?

2.

As people strive to meet their deadlines, reporting the status of activities can become
a low priority. This is a problem when you are trying to distribute up-to-date information on the status of the project. What are some things that you could do to make sure
that people report accurate and timely information to you?

3.

You are asked by your manager to provide the senior executives your projects
progress to date. Which information distribution methods would be most appropriate
in this situation?
a) Send an email announcing that a report is posted on the intranet site.
b) Make a telephone call to schedule one-on-one meetings with each executive.
c) Send an email based on status notes that you took over the phone while communicating with team members.
d) Make a presentation to the senior executives and highlight the important points in
the report.

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TOPIC G
Manage Stakeholder Relationships
and Expectations
Youve informed project stakeholders about how project resources are being used to achieve
project objectives. As project issues arise, you need to address and resolve them with the
appropriate project stakeholders. In this topic, you will identify the process involved in actively
managing stakeholder relationships and work within their expectations.
Managing communications to satisfy the requirements of and resolve issues with project stakeholders can make or break a project. Actively managing relationships with your projects
stakeholders and working with their expectations increases the chances that your project will
remain on track and that issues are resolved right away to avoid disruptions at a later stage in
the project life cycle.

The Manage Stakeholder Expectations Process


The manage stakeholder expectations process aims at managing communications to meet the
needs and expectations of the stakeholders. The project manager is responsible for managing
stakeholders expectations. Actively managing stakeholder expectations:

Increases the chances of project acceptance.

Addresses emerging issues and concerns before they manifest into a serious impediment.
This includes clarifying and resolving issues that have already been identied.

Figure 9-9: The manage stakeholder expectations process.

Manage Stakeholder Expectations Inputs


There are a few inputs associated with the manage stakeholder expectations process.

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Input

Description

Stakeholder register

A list that contains all relevant stakeholders in a project and


ensures that all the relevant stakeholders in a project are included
in the project communications.

Stakeholder management strategy

Contains the procedure for understanding the stakeholder goals and


objectives, in order to manage their expectations.

Project management plan

Includes the communications management plan, which describes


the objectives and expectations of each stakeholder in a project. It
also documents the level of communication required by a stakeholder.

Issue log

Used to track and assign project issues. It is useful for regular


follow-up with the project team. These issues are usually very
minor, but nevertheless are addressed to maintain a good working
relationship with stakeholders. Any unresolved issues can result in
conict among team members and stakeholders and delays in the
project.

Change log

A record of the changes that occur during project execution. Appropriate stakeholders are told of these changes in order to gain their
consent.

Organizational process assets

Organizational process assets include:


Change control procedures
Past project information
Issue management procedures
Organizational communication

Manage Stakeholder Expectations Tools and


Techniques
Project managers have a few tools and techniques at their disposal when managing stakeholder
expectations.

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Tools and Techniques

Description

Communications methods

Each stakeholders method of communication is documented in


the communications management plan and applied during stakeholder management. Face-to-face meetings are the best way to
communicate with stakeholders. When face-to-face meetings
are not possible, phone calls, email, and other electronic tools
are acceptable for exchanging information.

Interpersonal skills

A project manager should apply appropriate interpersonal skills


to manage stakeholder expectations. These could include skills
such as conict resolution, building trust, active listening, and
overcoming resistance to change.

Management skills

A project manager should apply his management skills of


directing and controlling the team members, thus channeling
their efforts towards achieving the project objectives. These
skills could include presentation, writing, and negotiation skills.

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LESSON 9
Manage Stakeholder Expectations Outputs
Several outputs result from managing stakeholder expectations.

Output

Description

Organizational process assets


updates

Updates to the organizational process assets could include reasons for issues, and the motives behind why certain corrective
actions are chosen. The updates could also include lessons
learned from managing stakeholder expectations. Lessons learned
are documented to be part of the historical database for the current project and future projects in the organization.

Change requests

There may be changes that might take place to the product or


project during the process of managing stakeholder expectations.
These could also include preventive and corrective actions.

Project management plan updates

The project management plan is updated due to a change in the


stakeholder communication management. This may occur as a
result of the identication of a new communication requirement
or method. The project management plan can also be updated in
case a communication method is deemed redundant.

Project document updates

Documents that may be updated include stakeholder management


strategy, stakeholder register, and issue log.

How to Manage Stakeholder Relationships and


Expectations
Actively managing stakeholders ensures that your stakeholders understand the progress your
project is making. Managing stakeholder expectations will support your teams project schedule, enhance team performance, and decrease project interruption.
Guidelines:
To effectively manage stakeholders, follow these guidelines:

During the planning phase of the project, the communication plan for each stakeholder is developed. In managing stakeholders, the project manager needs to
follow that plan and periodically obtain stakeholder feedback to make any
required adjustments to the plan.

Face-to-face meetings with stakeholders are most effective. Assessing body language provides the project manager with an opportunity to determine if the
stakeholder is pleased or not with the projects progress. For example, if during a
project update the stakeholder is frowning, has arms folded, and is looking at his
shoes, it is essential that the project manager determine the stakeholders concerns. By managing stakeholder expectations, the project will continue to have
their buy-in.

When face-to-face meetings are not practical, as in global projects, video/web


conferencing, webinars, desktop sharing, net meeting, and video chat can be useful substitutes if available to the project team.

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Be exible in communications for the project sponsor or other members of senior


management. Be prepared to provide a summary of project status in ve minutes
or less if the need arises.
Flexible communication is the ability to meet the specic communication requirements of each stakeholder. For example, one might prefer extensive numerical
data while some others might just prefer a synopsis.

Use an issue log to assign, track, and resolve open issues that are of interest to
stakeholders. Issues that remain unresolved can lead to project delays.

Change requests need to be processed to update the communication plan reecting


changes in project staffing.

Take corrective action as needed to bring project performance in line with customer expectations.

Document lessons learned to reect the causes of issues and changes made to rectify them.

Example: Managing Stakeholders at an Insurance Company


Alex is a project manager at an insurance company. His team has been developing a
new type of insurance plan for car owners. When the project kicked off, Alex created a
communications plan and handed it off to the project stakeholders for their review. He
met with them and got their feedback, so now a communication plan is in place that
seems to be working well.
The communication plan set up a regular status meeting. Before each meeting, Alex
prepares a summary of the project status. The stakeholders appreciate this brief summary. Alex also always gives the stakeholders an opportunity to bring up concerns. At
the most recent meeting, the stakeholders had an issue with the discount the new insurance plan offers to people with clean driving records. While the stakeholders think this
is a good offer, they would like to extend this offer to single car owners with no
co-ownership.
Alex agreed that this change is manageable, and immediately logged this change in
requirements into the database for it to be analyzed and processed through the integrated change control system.

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DISCOVERY ACTIVITY 9-7


Managing Stakeholders
Scenario:
The OGCs Seattle New Store project has faced several challenges, including staffing changes
and construction problems. Although you have consistently informed stakeholders of all
changes using the protocols outlined in the communications plan, several stakeholders have
been expressing concern that the project has gotten off track.

1.

Stakeholders are worried about the current state of the project. How should you
handle their concerns?
a) Follow processes outlined in the communications plan.
b) Take corrective action.
c) Conduct a face-to-face meeting with a clear agenda targeting their specific concerns.
d) Document lessons learned.

2.

Two stakeholders are out of town on a business trip and are available sporadically.
Another has an extremely busy schedule and cant squeeze another lengthy meeting
into his day. You know it is important to have face-to-face interaction with each stakeholder. How can you accommodate their needs? Check all that apply.
a) Use video conferencing.
b) Send a memo via email.
c) Use an instant messaging service.
d) Hold a brief summarization meeting.

3.

During the face-to-face meeting with project stakeholders, you offer a recap of some
contractor changes that occurred. It became necessary to add another electrical contractor to the team, which resulted in changes to the project cost baseline. While you
are talking about this issue, you notice that one of the project stakeholders continually
looks down at the floor and rapidly taps her pen against the table. What does her
behavior indicate?

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Lesson 9 Follow-up
In this lesson, you managed project execution. Executing project work according to your
project management plan ensures that your project team is on the same page and that your
project nishes on time, on budget, and with the required quality.

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1.

What aspects of executing the project plan have you found to be the most challenging?
Why?

2.

What tools and techniques will you use to more effectively execute projects in the
future?

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LESSON 10

LESSON 10

Lesson Time
2 hour(s)

Managing Project
Procurement
In this lesson, you will manage project procurement.
You will:

Identify the components of the conduct procurements process.

Obtain responses from sellers.

Determine project sellers.

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Introduction
Earlier in the process, you planned project procurement. Now it is time to execute your procurement plan, and so you are ready to manage this phase of work by soliciting bids from
prospective sellers and making effective choices among the bids received. You will do this by
determining which proposal best meets your projects time, cost, and quality commitments. In
this lesson, you will manage project procurement by requesting seller responses and selecting a
seller.
As the project manager, it is your responsibility to make sure that your projects work will be
done well, on time, and at a reasonable cost. Obtaining proposals or bids from sellers provides
you with the condence that work products will meet your project objectives for a fair and
reasonable cost. And once you have those bids in hand, you need to be able to follow established techniques for evaluating them accurately and choosing among them.

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Figure 10-1: The project management framework.

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TOPIC A
Examine the Conduct Procurements
Process
Your project is now in the executing process group and you need to procure the external
resources that are required by your project. In this topic, you will conduct project procurements.
Procuring products and services from external suppliers requires identifying suppliers, obtaining bids or proposals from them, and awarding contracts based on their evaluation. All
procurements for the project must be done within the specied parameters of time, cost, and
quality so as to ensure that the project meets the stakeholders requirements.

The Conduct Procurements Process


In the conduct procurements process, project managers will obtain seller responses, select a
seller, and award contracts to the identied seller for the procurement of the required product,
service, or result from the seller. In this process, the project management team will receive
bids or proposals from sellers, apply predened selection criteria to select sellers who are
qualied to perform the work, rank all proposals using weighted evaluation scores and conduct
negotiations with the selected sellers, and nally select a single seller who is required to sign a
standard contract that will meet the procurement requirements of the project.

Figure 10-2: The conduct procurements process.

Conduct Procurements Inputs


There are several inputs for the conduct procurements process.

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Input

Description

Project management plan

Describes every management step of the procurement process


starting with development and ending with closing the contract.

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Input

Description

Procurement documents

Contain information that you provide to prospective sellers so that


they can completely and accurately respond to your request.

Source selection criteria

Can include examples of existing products from the supplier, services, the suppliers history with the organization and other
organizations, or results from the evaluation of the suppliers
capabilities and quality of their products.

Qualied seller list

Contains the names of prospective sellers who are pre-approved


by the organization based on past experience.

Seller proposals

A response submitted by a potential seller that is prepared in


accordance with the requirements stated in the procurement documents. The proposal should demonstrate an understanding of the
procurement need, describe the sellers ability to provide the service or product, and detail the price for delivering the desired
goods and/or services.

Project documents

Project documents used in conducting the project procurement


include the risk register and the risk-related contract decisions
document.

Make-or-buy decisions

Decisions about which resources, services, or products will be


procured in-house or purchased by the organization.

Teaming agreements

The legal contractual agreements between the organization and


one or more external entities to form a partnership, joint venture,
or other arrangement between the parties. Teaming agreements
dene the buyer-seller roles of parties involved in the project.

Organizational process assets

A list of sellers (or sometimes called bidders) who can be asked to


bid, quote, or propose work. These lists give information about
sellers past experience. These may be previously qualied sellers
or a preferred sellers list.

Conduct Procurements Tools and Techniques


Project managers can use several tools and techniques to conduct project procurements.

Tools and Techniques

Description

Bidder conferences

These conferences are conducted by the buyer prior to submissions


of a bid or proposal by the sellers. The buyer explains the requirements, proposed terms, and conditions. Sellers clarify their queries
during this meeting. The buyer facilitates the conference to ensure
that all prospective sellers have a clear and common understanding
of the technical and contractual requirements of the procurement.
Bidder conferences are also called vendor conferences, pre-bid conferences, or contractor conferences.

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Tools and Techniques

Description

Proposal evaluation techniques

A set of methods to evaluate, shortlist, and then select the seller.


The fundamental part of any evaluation technique is the setoff
evaluation criterion. The evaluation techniques may suggest subjective or objective criteria or a combination of both. Though a
weighting system is the most commonly used evaluation technique,
short-listing (screening) or independent estimating are also used in
combination.

Independent estimates

Usually, youll have at least a general idea of what you expect the
price to be. If a proposal comes in at an unexpectedly high or low
price, you may want to obtain an independent estimate to verify
that the proposed price is reasonable and responsible. The Purchasing Department is a good source for independent estimates. For
large projects, they will usually prepare an independent estimate
before the procurement documents go out, so they will have sound
current data against which to evaluate the proposals received.

Expert judgment

Used by a multi-discipline review team to evaluate seller proposals.


The review team has expertise in the topics covered in the procurement documents and the proposed contract.

Advertising

Companies regularly post advertisements in newspapers, magazines,


business journals, television, and other media, requesting sellers for
bids and proposals. Advertising is a mass method for seeking
responses from prospective sellers.

Internet search

The Internet is used to quickly search for information on the availability and prices of commodities, components, and off-the-shelf
items that meet the project procurement requirements.

Procurement negotiations

Procurement negotiation is the process of bargaining to come to a


mutual agreement regarding the terms and conditions of a contract.

Conduct Procurements Outputs


Several outputs are created by the conduct procurements process.

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Output

Description

Selected sellers

Sellers who have been judged based on the outcome of the proposal or bid evaluation. These sellers include those who have
negotiated an outline of a contract, which will turn into the
actual contract when the deal is made.

Procurement contract award

A mutually binding agreement that details the obligations of the


buyer and seller. One is given to each selected seller.

Resource calendars

The quantity and availability of resources and documented dates


on when each resource can be active or idle.

Change requests

Certain changes to the project management plan, its sub-plans,


and other components may result from the conduct procurements process. Any requested changes are sent for review and
disposition in the integrated change control process.

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LESSON 10
Output

Description

Project management plan updates

Elements of the plan updates include the cost baseline, scope


baseline, schedule baseline, and the procurement management
plan.

Project document updates

Various documents that require updates include the requirements


documentation, the requirements traceability documentation, and
the risk register.

Components of the Procurement Contract Award


Major components of the contract document include:

Statement of work or deliverables

Schedule baselines

Period of performance

Performance reporting

Roles and responsibilities

Sellers place of performance

Place of delivery

Pricing

Payment terms

Inspection and acceptance criteria

Warranty

Product support

Limitation of liability

Fees and retainage

Penalties

Incentives

Insurance and performance bonds

Subordinate subcontractor approvals

Change request handling

Termination and Alternative Dispute Resolution (ADR) mechanisms

Qualied Sellers
Denition:
Qualied sellers are sellers who are approved to deliver the products, services, or
results based on the procurement requirements identied for a project. The list of
qualied sellers can be obtained from historical information about different sellers who
delivered the resources required for prior projects executed in your organization.

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If the resources you require are new to the organization, you may need to do some
research in collaboration with your Purchasing Department to identify qualied sellers
for each resource. This research will generate a list of possible sellers, and you would
need to interview the prospective sellers, visit their work sites, review work samples,
interview their references, check with certication boards, or use other approaches to
validate whether they qualify as sellers for the procurement requirements.
In case further information is required about the prospective sellers, you can send a Request for Information (RFI) to each of them to gather information about their capabilities.

Example: Qualied Sellers Selection by OGC Corporation


OGC Corporation invites bids from sellers for setting up a Wi-Fi network for their new
corporate office in New York. The Wi-Fi network needs to meet all specications of
the newly announced governmental regulations. On reviewing the list of their old suppliers, OGC found that none of the suppliers could provide them with a Wi-Fi network
that could enable them to meet the governmental regulations.
An advertisement requesting the submission of information about prospective sellers
was announced in all the national dailies and business journals. There was an overwhelming response from a large group of sellers. Based on the sellers information,
OGC Corporation was able to generate a list of 10 prospective qualied sellers. The
qualied sellers were then called in for a conference, where each seller was asked to
demonstrate their capability in delivering the required product. At the end of the presentation, Rudison Technologies Ltd. and Janrex Inc. were selected as the qualied
sellers for the Wi-Fi network installation, as they met most of the requirements and
standards prescribed by OGC corporation. OGC later on sent the RFP to these two
organizations and continued the process of seller selection.

Figure 10-3: A qualified sellers list for the Computer Network Upgrade
project.

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LESSON 10
Request for Information (RFI)
A Request for Information (RFI) is a buyer generated document to solicit information
about prospective sellers. The RFI helps gather information from the seller on various
parameters such as the seller organizations history, balance sheets, type of business
(family owned, private, or publicly listed, and so on), family background, directors /
owners background, succession plans, past 3 years bank statements, plant capacity,
and other factors that may assist in determining the sellers qualications.

ACTIVITY 10-1
Examining the Conduct Project Procurements Process
Scenario:
As the project manager for OGC, you are in the process of outsourcing a major software
effort, the OGC Warehouse Management Software project, and the associated testing by the
subcontractors, which will take place prior to the corporate internal testing to verify content
and operational aspects. Included in this contract should be the usability of the resulting
product. The schedule maintenance is as important to you as is the quality of the deliverables.
The details of the product to be delivered are as rm as they can be at the present time, but
are subject to change requests under contract change control. Before you conduct your project
procurements, you would like to check your understanding of the conduct procurements process.

1.

You have a list of 10 potential sellers and have to narrow the list down to a more manageable number of candidates. What will be the process to create a short list of
sellers that you will consider?

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2.

You now have a short list of sellers. Name some of the selection criteria you might use
in finalizing the selection of the seller.

3.

Included in the contract should be performance criteria, on both schedule and costs,
expected of the subcontractor. What is some of the information that you would want
to see in the way of performance reporting by the subcontractor?

4.

Why might you hold a bidder conference in this situation?

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LESSON 10

TOPIC B
Obtain Responses from Sellers
During project planning, you prepared a procurement document. Now you are ready to obtain
bids from prospective sellers to meet project purchasing requirements. In this topic, you will
obtain responses from sellers.
Obtaining proposals or bids from sellers provides project stakeholders with the condence that
work products will meet project objectives for a fair and reasonable cost. Mastering the tools
and techniques for requesting seller responses ensures you obtain relevant, accurate, and appropriate responses from prospective sellers.

How to Obtain Responses from Sellers


A well crafted seller response request, sent to carefully selected sellers, ensures that you obtain
relevant, accurate, and appropriate responses from prospective sellers.
Guidelines:
To obtain responses from sellers, follow these guidelines:

Gather and review all of your procurement documents for accuracy and completeness.

If necessary, obtain or develop a qualied sellers list.

If your organization has a centralized Purchasing Department, there will often


be lists of qualied or approved sellers available, or at least some historical
information about different sellers. If the resources are similar to ones procured by your organization in the past, you may be able to tap into some
expert judgment and historical information about different sellers and their
track records. Try talking with sales and marketing people in your company;
they may have contacts or know other sources to try.

You may also consider talking to the people in your company who will be
using the resource being sought to nd out more information about their
needs.

If the resource you require is new to your organization, you may need to do
some research in collaboration with your Purchasing Department to identify
qualied sellers for that resource. You could try to search in locations that
include Internet searches, telephone and business directories, library services,
and trade and professional organizations.
This research may only generate lists of possible sellers. You will then need
to go into more depth to learn if these sellers are actually qualied to deliver
what you need. The additional qualication step could involve interviewing
the prospective sellers, visiting their work sites, reviewing work samples,
interviewing their references, checking with any available certication
boards, or other approaches to ensure that they are indeed qualied candidates.

Determine how and from whom you will request seller responses.

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If your list of qualied sellers is sufficient for the work being procured, you
may decide to send your procurement documents to just those prospective
sellers.

If your list is insufficient, you may want to advertise to expand the list of
potential sellers. If your project is a sub-contract to a large government
project, you may be obliged to advertise the request. Check with your legal
consultants or Purchasing Department experts on wording for the advertisement. Most government projects over a specied dollar value require that
bids be publicly advertised to ensure that no supplier has unfair advantage
over others. Such notication may be in formats that include local newspapers, government publications, professional journals, and other appropriate
venues.

If necessary, hold a bidder conference to allow prospective sellers to ask questions


and get clarication about the deliverables and the requirements for preparing
their responses.

The questions raised at a bidder conference should be of great interest to the


team who prepared the original procurement documents. If there are common
misinterpretations of wording, or if important information is found to be
missing, try to capture this so you will do a better job in the future. You may
need to go back to the standard documents to include a cue to cover that
information.

If the bidder conference points out serious problems that could cause the
resulting proposals to be in error, you may need to amend the original procurement documents and send the amended versions to all the sellers
originally provided with the documents. If this is done, the sections amended
must be clearly identied, and the areas of difference annotated clearly.

Send the request for seller responses to the identied prospective sellers. The type
of request sent to prospective sellers is dependent on the procurement criteria set
for the project. The types of request sent to obtain responses include:

Request for Bid (RFB)

Request for Proposal (RFP)

Example: Obtaining Sellers Responses for the Wi-Fi Network Project


Mark Anderson, the project manager for the OGC Corporate Office Wi-Fi Network
project, reviews procurement documents for the project to ensure that the requirement
specications are specied in suitable and sufficient detail. Based on the qualied sellers lists obtained from the Purchasing Department, Mark is able to identify prospective
sellers from the existing list. Knowing that there might be other sellers in the market
who fulll the project procurement requirements, Mark seeks to expand his seller list
by advertising in local newspapers and professional journals.
A number of sellers of the Wi-Fi technology respond to these advertisements and add
to Marks list of sellers. From the list, Mark now proceeds to shortlist and identify 15
prospective sellers who meet the projects procurement criteria.
Mark holds a bidder conference, which is attended by all the prospective sellers. During the bidder conference, a number of clarications are sought by the sellers
regarding the procurement specications, and these are addressed by the project team.
The updated procurement documents are now sent along with an RFP to each prospective seller. Sellers submit their bids in response to the RFP sent to them.

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DISCOVERY ACTIVITY 10-2


Obtaining Responses from Sellers
Scenario:
Working with David Anderson, OGCs Procurement Manager, you have planned the OGC PM
Training Roll-Out projects external training provider procurement and you are ready to manage this phase of work by soliciting proposals from prospective sellers. An RFP has been
created and the procurement manager has approved it for release to potential training providers. The next step is to send the RFP to prospective training providers.

1.

What do you think would be the most appropriate method of finding qualified training
providers for the OGC PM Training Roll-Out project?

2.

There are only two local training providers in a 20 mile radius of OGC. You decide to
expand your seller list outside of your local area. What methods would you use to do
this?

3.

Based on the scenario, would you conduct a bidder conference? Why or why not?

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TOPIC C
Determine Project Sellers
As a result of requesting seller responses, you now have proposals, quotes, or bids from prospective sellers. Now you can determine which seller best meets your projects time, cost, and
quality commitments. In this topic, you will determine project sellers.
You received bids from three web designers who would like to work with you on your
website. You have worked with two of them in the past. The third person was recommended to
you by a senior level executive in your company. All three bids are within your price range.
Because rolling out your new website is a high prole project for the business as a whole, you
cant afford to make a mistake by selecting the wrong seller. Using best practices to select the
best seller helps you avoid making critical errors in judgment before signing a contract to purchase products or services.

Weighting Systems
Denition:
A weighting system is a method for quantifying qualitative data to minimize the inuence of personal bias on source selection. By assigning numerical weights to
evaluation criteria, you can objectively prioritize the criteria that best meet the needs
of your project.
Example: Weighted Scorecard
A weighted scorecard is one type of weighting system. In a weighted scorecard, evaluation criteria are grouped in general categories and each category is given a numerical
weight. The seller is rated on a scale of zero to ve for each of the technical criteria.
These numbers are totaled and then multiplied by the weighting factor to determine the
weighted score for that category.
In this example, the company received scores of four, three, and ve in the three technical criteria for a total score for the technical category of 12 out of a possible 15.
When multiplied by the weighting factor, the weighted technical score is 240 out of a
possible 300. The weighted score for each of the other categories is calculated in a
similar manner. Then all the weighted scores are totaled to obtain a grand total score.

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Figure 10-4: A sample weighted scorecard.

Procurement Negotiations
Procurement negotiation is the process of bargaining to come to a mutual agreement regarding
the terms and conditions of a contract. Before a contract is signed by both parties, a number of
stages of procurement negotiation are conducted between the concerned parties to arrive at a
consensus on the terms and conditions of the contract.
There are ve different stages for contract negotiation.

Stage

Description

Introduction

All parties become acquainted and the overall attitude of the negotiation is
established; this tone is largely set by the buyers team leadernormally, the
person with authority to sign the contract will lead the contract negotiation
team.

Probing

Each side attempts to learn more about the others real position.

Bargaining

Give-and-take discussions take place to arrive at the best possible agreement


for all.

Closure

The tentative agreement is revised and everyone has an opportunity to tweak


the results.

Agreement

The team tries to ensure that all parties clearly understand and agree to all
terms and conditions of the contract.

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LESSON 10
Term vs. Completion Contracts
Denition:
A term contract engages the seller to deliver a set amount of servicemeasured in
staff-hours or a similar unitover a set period of time. A completion contract stipulates that the work will not be considered complete until the seller delivers the product
to the buyer and the buyer accepts the product.
Example: Types of Contracts
Salt Lake City, Utah, hosted the 2002 Winter Olympics and needed many contracts for
sellers and service providers. Term contracts would have been appropriate for the independent security rms that were contracted to provide professional security services for
the duration of the Olympic events. Completion contracts would have been appropriate
for the construction companies hired to improve interstate roads and build a new light
rail system to handle the increased area traffic.

How to Determine Project Sellers


Procedure Reference: Determine Project Sellers
To determine a project seller:

376

1.

Assign a numerical weighting factor to each evaluation criterion or category of


criteria based on its relative importance to the success of the project.

2.

Develop or obtain a rating scale for scoring the criteria.

3.

Score each prospective seller on each criterion using the rating scale.

4.

Multiply the sellers score by the weighting factor for each criterion or sum of the
criteria in a category.

5.

Add the nal scores.

6.

Select the seller with the highest score.

7.

If necessary, negotiate with the seller on the terms and conditions of the contract.

8.

It is a good idea to identify the seller who would be your second choice in case
negotiations fall through with your rst choice.

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LESSON 10

DISCOVERY ACTIVITY 10-3


Determining a Project Seller
Data Files:

Blank OGC Seller Scoring Sheet

OGC Seller Proposal Notes

Scenario:
You are the project manager for the OGC PM Training Roll-Out project. You have received
the proposals from prospective training providers and now it is time to determine which provider has met the criteria outlined in the RFP:

Seller must provide an instructor with a minimum 3 years of project management


software training.

Seller must be creative and exible about assessment design changes, even in late
production phases.

Seller must have a minimum 20 years of collective training experience on staff.

Seller must have produced at least three projects of similar scope in the last 10
years.

Based on discussions that you have had with the procurement manager, you expect the costs
will not exceed $35,000.

1.

To find a qualified seller you decide to use a weighted system. What would be your
first step?
a) Assign a numerical weighting factor to each evaluation criterion.
b) Score each prospective seller based on the rating scale for criteria.
c) Select the seller with the highest score.
d) Develop a rating scale for scoring the criteria.

2.

For each evaluation criterion, you have specified a rating scale. What should you do
next?
a) Add the scores of the scale.
b) Select the highest rated score.
c) Score each prospective seller on each criterion using the rating scale.
d) Multiply the sellers score by the weighting factor for each criterion or sum of the criteria in a category.

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3.

You have selected a seller. You and the procurement manager are meeting with the
seller to negotiate the contract. The procurement manager asks the seller if they will
use an in-house instructor or outside contractor for the project software training.
Which part of the negotiating phase are they engaged in?
a) The introduction stage
b) The probing stage
c) The bargaining stage
d) The agreement stage

4.

From the C:085042Data\Managing Project Procurement folder, open the OGC Seller
Proposal Notes and Blank OGC Seller Scoring Sheet documents. Based on the scenario
and the seller notes provided, complete the seller scoring sheet.

5.

Compare your Blank OGC Seller Scoring Sheet document with the Completed OGC
Seller Scoring Sheet document in the C:\085042Data\Managing Project Procurement\
Solutions folder.

6.

Based on your quantitative evaluation of the seller proposals, which seller would you
choose for your project?

Lesson 10 Follow-up
In this lesson, you managed project procurement by requesting seller responses and selecting a
seller. You identied sellers who can provide the best quality of work for your project, selected
sellers after conducting procurement negotiations on the contract, and nally awarded the procurement contract to the selected seller at a fair and competitive price. By effectively
conducting project procurements, you ensured that the procurement requirements of your
project were suitably met within the scope of your projects time, cost, and quality commitments.

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1.

How will you make sure that you are specifying adequate detail when requesting seller
responses?

2.

How do you think it will help you to assign a numerical weighting factor to the evaluation criteria when you are trying to make critical choices about selecting sellers?

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LESSON 11

LESSON 11

Lesson Time
2 hour(s), 30 minutes

Monitoring and Controlling


Project Work
In this lesson, you will monitor and control project work.
You will:

Identify best practices for the monitor and control project work process.

Develop an integrated change control system.

Utilize the integrated change control system.

Review deliverables and work results.

Control the project scope.

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LESSON 11
Introduction
You have begun executing your project. As the project work accelerates, your focus will
advance from execution to monitoring and controlling project work, which is a key element in
your overall goal of controlling the project cost and schedule. In this lesson, you will focus on
the monitoring and controlling process group, the fourth of ve project management process
groups.
Effective project monitoring and controlling is essential to successful project completion. It
allows you to monitor trends that may affect process improvements and it positions you to
ensure that the project will meet expectations. It is also critical to monitor work results so that
you can effectively communicate both good and bad information to project stakeholders.

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Figure 11-1: The project management framework.

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LESSON 11

TOPIC A
Identify the Monitor and Control
Project Work Process
With your project execution well on its way, you need to control changes to the projects performance baseline so that you can best ensure that it meets expectations for schedule and cost.
Change control and several other tasks are part of the monitor and control project work process. In this topic, you will identify best practices for the monitor and control project work
process.
As a project manager, it is your responsibility to deliver your project on time, on budget, and
to the required specications. By monitoring and controlling the project work, you will be better positioned to ensure that your project meets stakeholders expectations for time, cost, and
quality performance and maintain an efficient and effective ow of work throughout the project
life cycle.

The Monitor and Control Project Work Process


The monitor and control project work process involves tracking, reviewing, and regulating the
project processes to meet the projects performance objectives. Monitoring includes collecting,
measuring, and distributing performance information, as well as reviewing trends to make process improvements. Controlling involves identifying corrective or preventive actions or
replanning and tracking the execution of action plans. When executed regularly, the monitor
and control project work process gives the project management team a closer look at the
strengths of the project and identies weaknesses. Monitoring and controlling occurs throughout the project from inception to closeout.

Figure 11-2: The monitor and control project work process.


The monitor and control project work process is not one specic task; it is an overarching process that is ongoing, cyclical, interactive, and interlocking. It involves ongoing work throughout the life cycle of the project.

Change Categories
Project changes can be classied into three broad categories.

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Category

Description

Corrective action

Documented direction on actions that must be carried out to


help bring the future project performance requirements back on
track and conform with the current project management plan.

Preventive action

Documented direction on actions that must be implemented to


diminish the effects of any negative risks.

Defect repair

Formally documented measures that must be undertaken to


address the defects in the project components, which are recommended either to be repaired or replaced.

Monitor and Control Project Work Inputs


Monitoring and controlling project work uses several inputs.

Input

Description

Project management plan

Contains all subsidiary management plans and baselines that must be


considered when performing the monitor and control project work process and describes each step of the project, including the way it is
executed, monitored, and closed.

Performance reports

Provide key information such as current project status, signicant


accomplishments for the given period, scheduled activities (activities
completed vs. those that should have been completed), issues, and forecasts.

Enterprise environmental
factors

Include governmental or industry standards, stakeholder risk tolerances,


and project management information systems.

Organizational process assets

Include organizational communication requirements, nancial control


procedures such as reporting time and accounting codes, and lessons
learned databases.

Monitor and Control Project Work Tools and


Techniques
Expert judgment is the only tool and technique a project manager can use to monitor and control project work.

Tools and Techniques

Description

Expert judgment

Used by the project management team to understand the data obtained


from the monitor and control processes. Based on the interpretation,
the project manager and the project team identify the necessary actions
to make sure that the project performance is aligned with the project
expectations.

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LESSON 11
Monitor and Control Project Work Outputs
Monitoring and controlling project work results in several outputs.

Output

Description

Change requests

Issued as a result of comparison between actual and planned


results. Change request may result in modifying project scope,
policies, procedures, cost and budgets, or a rework of project
schedules. Documents such as the project management plan and
product deliverables may also be impacted by change requests.

Project management plan updates

Include the project management plan components such as the


schedule management plan, cost management plan, quality management plan, and scope, schedule, and cost performance
baselines.

Project document updates

Include forecasts, performance reports, and issue log.

Monitor and Control Project Work Process Best


Practices
During the monitor and control project work process, the project manager tracks, reviews, and
regulates the project processes to meet the projects performance objectives. Effective monitoring ensures that necessary preventative actions are taken in order to control project
performance.
Guidelines:
To effectively monitor and control project work, follow these guidelines:

Compare and evaluate project performance with the project plan. If necessary,
recommend actions.

Analyze, track, and monitor risks to make sure they are being recognized and
reported, and that response plans are being executed.

Maintain accurate information about the project as it unfolds.

Maintain the integrity of baselines ensuring that only approved changes are incorporated.

Provide information to support status reporting, progress, and forecasting.

Provide forecasts to update recent cost and schedule information.

Monitor the execution of approved changes when they occur.

Example: Monitoring and Controlling Project Work in a Software Development


Project
Mike is the project manager for the tax preparation software development project. The
project is multi-phased and is in its second phase. Mikes programmers have been
meeting schedule deadlines and showing good time management skills. However, the
documentation department that creates user manuals and help systems works very
slowly and is making mistakes. Assessment of reviewer feedback conrmed these
observations.

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Mike realizes this is a risk for the project. If the deliverables are wrong, he will lose
his customer. He decides the documentation department needs a bit more monitoring.
In the companys procedures for documentation, it clearly states that the preliminary
software documentation must be created within three days of development of each
deliverable from the software department. Mike has created a database where the
deliverable turnaround time is recorded. After looking through information on past performance, Mike sees that the accuracy of deliverables was 10 percent better than what
it is now. Mike believes that with this newly implemented database, the performance
and quality will continue to improve.

ACTIVITY 11-1
Monitoring and Controlling Project Work
Scenario:
The OGC PM Training Roll-Out project has been running smoothly, thanks in large part to the
efforts of the instructional designer, Sarah. She has been instrumental in getting all teams to
work together to meet their tight deadlines. During a crucial phase in the project, Sarah falls
ill. A less experienced designer, Kevin, is brought in to replace her. For this project, it is more
important to maintain the schedule than to maintain the cost baseline.

1.

What can you do, as the project manager, to mitigate the negative effects of a staffing
change?
a) Put the project on hold until Sarah returns from sick leave.
b) Rebuild the schedule to include additional time for Kevin to complete his tasks.
c) Closely monitor Kevins work to assess any possible risk.
d) Discuss with the team the impending change and that the team can expect to go
through the team development stages again.

2.

Kevin missed an important deadline. What action can you take to help Kevin get back
on schedule?

3.

After he has been given extra help, Kevin manages to meet his next important deadline. What should be your next action as project manager?
a) Keep a private log for your own reference, detailing changes that have been made to
the project.
b) Update recent cost and schedule changes that have resulted from recent changes.
c) Ask Kevin to closely monitor changes to the projects cost and schedule.
d) Ask Kevin to let you know if he has any further problems as the project progresses.

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LESSON 11

TOPIC B
Develop an Integrated Change
Control System
Now that you have identied the best practices for monitoring and controlling project work,
you understand the important steps you must take towards making sure that your project is
conducted with the appropriate internal integrity and oversight. You will further this goal by
developing an integrated change control system, which formally governs signicant changes to
the project work, schedule baseline, and budget. In this topic, you will develop an integrated
change control system.
You want to make sure that none of the customers, stakeholders, or members of the project
management team are surprised by delays to your schedule or signicant cost overruns. By
developing an integrated change control system for your project, documenting its parameters,
and adhering to its guidelines, you can reduce the risk to your project and maintain its positive
forward movement.

Integrated Change Control


Integrated change control is the process of identifying, documenting, approving or rejecting,
and controlling any changes to the project baselines. Integrated change control reduces risk to
your project by governing the execution of proposed changes that will affect schedule and cost
or any other objectives of the project. It allows project managers to record the changes that are
requested, make sure that changes are implemented in a standardized and approved manner,
minimize their disruptive effect, and monitor their progression from initial request through
completion.

Change Control Systems


Denition:
A change control system is a collection of formal, documented procedures for changing
official project documents; it species how project deliverables will be controlled,
changed, and approved. An effective change control system includes the forms, tracking methods, processes, and approval levels required for authorizing or rejecting
requested changes. Change control systems often specify that a Change Control Board
(CCB) will address the issues that affect cost, time, and product quality.
Example: Change Control System for an Internal Project
A project manager for an internal project documented the project change control system. It required that any changes affecting the original scope, cost, or schedule
baselines be submitted with a standardized change request form, including a description of the change being requested, its relative priority, and the reason behind it. The
internal Change Control Board (CCB) would evaluate each proposed change request
for potential risks and benets and make a decision whether to approve or reject the
change.

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Change Control Boards (CCB)
A Change Control Board (CCB) is an internal unit or department charged with not
only monitoring, controlling, coordinating, and implementing changes to all elements
of project work, but also with accepting or rejecting changes that have been requested
by customers. Normally, the CCB operates closely with the projects sponsor, customers, and other key stakeholders. The responsibilities of the CCB will have been
delineated, documented, and agreed to by the stakeholders, customers, and project
team. Decisions made during the change control board meetings are documented and
communicated to the required stakeholders. Stakeholders can use this information to
follow-up on the necessary actions.

Causes of Project Changes


Performance variation is an inevitable component of project work, and can be caused by any
of several common factors.

Cause

Description

Inaccurate initial estimates

There are many reasons why initial time and cost estimates for completing the project work prove to be inaccurate. These reasons may
range from lack of experience, lack of information, or precedence to
inaccurate data, excessive optimism, technological difficulties, and
unreliable resources. Getting those original estimates to be as realistic
and accurate as possible makes the control process more manageable.

Specication changes

Project work can open up new avenues of development and design that
were not considered during the initial planning of the project work and
scope. As new options for a product or service become apparent, customers, sponsors, or the project manager may broaden the projects
scope to include new specications and deliverables.

New regulations

As project work is progressing, new governmental or industry-specic


regulations may be enacted. This can be especially true for very
lengthy projects. If the new regulations are related to the ongoing
projects, project change becomes necessary. Accommodating new regulations or legislation can also mean revisiting the planning process to
determine the effect the new regulations will have on resource needs,
schedule durations, and quality specications.

Missed requirements

Many times the requirements are understood by reviewing the documentation, and interviewing the end users and policy makers. However,
there are times when complete and comprehensive understanding may
not be possible.
The interviewer feels that he/she has understood the point. And the
interviewee feels that he has expressed all that matters. Although a
Requirements Traceability Matrix (RTM) is prepared, the same confusion might arise in a written document. Prototyping is used where a
demonstration of functional and/or technical requirements is done.
Although all these techniques reduce the chances of missing any
requirements, it cannot guarantee that every requirement is captured.
There are always some slippages that surface at different phases in the
project.

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LESSON 11
Conguration Management
Denition:
Conguration management is a tool used to manage changes to a product or service
being produced. These can include changes of a technical nature, and changes in
administrative direction. Conguration management is used to:

Control product iterations.

Ensure that product specications are current.

Control the steps for reviewing and approving product prototypes, testing standards, and drawings or blueprints.
When dealing with government contracts or other large systems, a conguration management system
is often required.

Example: Implementing Conguration Management to Control Change


Requests
An art director implemented a conguration management system specically for controlling change requests to the images and animations in customers advertisements.
She created a database to track the project images. When a customer identied a need
for an image or animation, the team created a new entry in the database; each entry
included the name and size of the image along with a detailed description of the ad.
Using this conguration management system, the art director could easily check the
database for new entries, assign the change requests to team members, and track them
through the approval process.
Conguration Management Systems
A conguration management system is a tool that contains procedures that help provide technical and administrative guidance for identifying and recording the
characteristics of a product or service; controlling changes made to the characteristics;
documenting the changes and the status of implementation; and verifying the products
conformance to the requirements. One of the subsystems of the conguration management system is the change control system.
Conguration management systems, when combined with the integrated change control, provide standardized and effective ways of managing approved changes and
baselines within a project. Conguration control involves specifying the deliverables
and processes, while change control involves identifying, recording, and supervising
changes to project baselines.

Process Control Structures


Denition:
A process control structure is the formal organization of the modications made to
deliverables that are controlled by conguration management. The process control
structure denes how modications will be reviewed, documented, delivered, communicated, and revised. The process control structure establishes standardization within
the project team, as it forces everyone working on modications to adhere to the same
conformance standards.

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Example: Process Control Structure for Modifying Software Design
A team of software engineers working on a new product would all conform to the
same process control structure when implementing modications to the software
design. They would have a formalized system in place for reviewing proposed modications to the product, controlling product iterations, and carrying out testing and
review cycles. Without a process control structure, the software engineers would be
slowed down by the confusion and unnecessary rework of trying to keep track of various modications and revisions made to the product.

How to Develop an Integrated Change Control


System
Your goal in developing an integrated change control process should be, in part, to ensure that
the project management team and the stakeholders are not surprised by schedule delays or cost
overruns. By developing a change control process, documenting its parameters, and adhering to
its guidelines, you can reduce the risk to your project and maintain its momentum.
Guidelines:
To develop an integrated change control process, follow these guidelines:

There may already be an approved integrated change control process in common


usage within your organization, in which case it is your responsibility to implement it for your project in accordance with all relevant company procedures and
requirements.

If there is not an integrated change control process in use at your organization, it


is your responsibility to develop one for your project. Gather any relevant historical data within the organization that relates to the process of identifying,
documenting, approving or rejecting, and controlling changes to the project
baselines.

Identify what will be considered a change that is signicant enough to require


management approval. For the sake of maintaining forward momentum on project
work, project managers will not bring minor changes to schedule and to cost estimates to upper management for approval. Make sure that the organizational
expectations regarding change control have been clearly dened and documented.
How much latitude does the team have in making autonomous decisions about
changes? At what point should you bring a change request to the project management team?

In conversation with stakeholders and the project management team, identify these
responsible parties:

The people who are able to initiate change requests. These may include
stakeholders, project management team members, and customers, among others.

The parties who are authorized to give or withhold business approval to a


request for a change. Who will make the decision about whether or not a
change is necessary and appropriate?

Who has the authority to approve additional funding, overtime costs, and
purchase orders?

The parties who will be responsible for executing the work necessary to satisfy the requested change, as well as evaluating the work for quality
assurance.

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LESSON 11

The person(s) who will be responsible for managing changes. In some organizations, this may be the project manager, but in other organizations, it may
be one or more functional managers.

The parties who are responsible for prioritizing changes and making qualitative decisions about them. Is this change imperative to the success of the
project, or merely nice to have if time and resources allow?

Identify how change requests must be approved. Some organizations might require
written approval from customers before changes to the scope, schedule baseline,
and budget can be implemented.

Example: Developing an Integrated Change Control System in an Independent


Company
A project manager at a small, independent company will be responsible for following
the organizations guidelines regarding change control. He will rst need to determine
if there is a formal change control process in place; if there is not, he will take on the
responsibility of developing one for his project. He will begin by gathering all relevant
information and documentation, and will identify the changes that require management
approval.
He will proceed to identify who the key players are within the management team who
need to approve or initiate change requests. This will be very important when it comes
to asking for additional funding for the project or deadlines extensions. He will identify who will manage changes and give authorization for expenditures. He will also
need to document who needs to give consent to change requests, and whether the consent of customers is required.

DISCOVERY ACTIVITY 11-2


Developing an Integrated Change Control System
Scenario:
The OGCs PM Training Roll-Out project has a very tight deadline, as well as a strict budget.
You are concerned that any possible changes could negatively affect project performance
baselines. You need to ensure that there is a standardized method for handling changes to
project work.

1.

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Who will you involve in the change control process for the PM Training Roll-Out project
and what is their role in the change control process?

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2.

The IT department informs you that the project software upgrade will have a significant delay in delivery. In the risk register, you accounted for a delay due to the
software upgrade, but this delay is much longer than originally anticipated. What
action should you take first?
a) Coordinate changes across knowledge areas.
b) Document the change request in a change control system.
c) Update the project plan to reflect changes.
d) Bring the information to the stakeholders for evaluation and approval.
e) Identify corrective action to take to resolve the problem.

3.

The procurement manager contacted the software vendor and was able to secure a
beta version of the project software. The beta version may have some minor bugs, but
it will be available in time for the training. Based on your change control process, what
further action, if any, should you take?

TOPIC C
Utilize the Integrated Change Control
System
By managing changes to performance baselines, you will be able to ensure that your project
stays on course. This is a key element in the overarching process of monitoring and controlling
project work. In this topic, you will manage changes through the integrated change control
system.
A great project manager is an effective manager of change, able to anticipate, respond to, and
deal with the changes that will inevitably arise on any project. As you further your development as a professional project manager, you want to be able to master this key area of your
practice by utilizing the change control process. This is the best way to take control of changes
that arise and minimize their disruptive effect on your projects bottom line.

The Perform Integrated Change Control Process


The perform integrated change control process is the formal method of governing and organizing the manner in which changes will be requested, reviewed, approved or rejected,
implemented, controlled, and coordinated. Its goal is to make sure that changes to the projects
baselines are managed with the least amount of disruption to important project parameters such
as cost, time, and quality.

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LESSON 11
All change requests must be recorded in the change management or conguration management
system. Change requests follow the processes specied in the conguration management system. These processes may need information about the estimated time and cost impacts for
implementing the changes. The change control process also ensures that the appropriate parties
such as stakeholders, project team members, and/or customers are aware of and approve of
changes to the project that will affect time, cost, and quality.

Figure 11-3: The perform integrated change control process


Example: Performing Integrated Change Control on a Website Redesign Project
A project manager is assigned to work on a website redesign project. The site has been
developed and the project team has presented the draft site to the companys management team for feedback and approval. One team member suggests that the sites
functionality should be extended to include tools for the sales team. In accordance with
the companys integrated change control process, the project manager completes the
documentation for the change control board, including the cost, impact to current
schedule, and change in the scope. After reviewing his documentation, the change control board agrees that added functionality would be valuable. The customers and other
stakeholders are notied about this change and it is recorded in the change management system.

Perform Integrated Change Control Inputs


The perform integrated change control process requires several inputs.

394

Input

Description

Project management plan

Describes each step of the project including the way it is


executed, monitored, and closed.

Work performance information

Periodically collected information about project activities being


performed to accomplish the project work.

Change requests

Include corrective actions, preventive actions, and defect repairs.


This may result in modifying project scope, policies, procedures,
cost, and budgets, or a rework of project schedules. Corrective
and preventive actions do not generally affect the project
baselines, but the performance against baselines.

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Input

Description

Enterprise environmental factors

Include project management information systems that can inuence the integrated change control process. The PMIS includes
automated tools such as scheduling software tools or information
collection and distribution system.

Organizational process assets

Include process assets such as:


Change control procedures, which will also include steps used
to modify official company standards, policies, and plans and
to approve, validate, and implement changes.
Procedures used to approve and issue change authorizations.
Process measurement databases used to collect and create
measurement data on products and processes.
Project les such as scope, cost, schedule, and performance
measurement baselines.
A conguration management knowledge base that contains
the versions of all documents such as the official standards
and procedures of the company.

Perform Integrated Change Control Tools and


Techniques
There are two tools and techniques a project manager can use to integrate change control.

Tools and Techniques

Description

Expert judgment

People with skills to manage and support the technical and management details of all requested changes in the project can be asked to sit
on the change control board. People who can provide expert judgment
include consultants, customers, sponsors, subject matter experts, PMO,
and industry groups.

Change control meetings

Meetings held by the change control board to review and approve


changes. All decisions made during the change control board meetings
are communicated to the stakeholders.

Perform Integrated Change Control Outputs


The perform integrated change control outputs are the change request status updates, project
management plan updates, and project document updates.

Output

Description

Change request status updates

Status of all change requests (approved or unapproved) should


be updated in the change request log when updating the process
documents.

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LESSON 11
Output

Description

Project management plan updates

Any actions needed to dene, integrate, and coordinate all sub


plans into a project management plan. Documents that may be
updated during the process include subsidiary management plans
and baselines that have been changed as a result of the change
control process. Changes made to the baselines should not affect
the past performance data.

Project document updates

Documents such as change request logs and other documents


that are affected by the change control process may be updated
during the perform integrated change control process.

Change Management Advantages


Effective change management presents several advantages to project managers, including:

Faster response time.

Maximum traceability of changes.

Increased team awareness of change needs.

Increased engagement of team and stakeholders, internally and externally.

Fuller team support for change requirements.

An organizational framework for moving forward effectively.

Formal Acceptance of Project Work


Formal acceptance of project work is the process for securing approval for completing the
remainder of the project work. It requires change requests to be documented and analyzed for
their impact on other aspects of project work including time, cost, quality, and risk. It includes
a receipt, or documented acknowledgment, that the terms of the contract have been satised. It
also validates that the acceptance criteria will still be satised as a consequence of this change.

How to Utilize the Integrated Change Control


System
Managing changes to performance baselines ensures that the original project scope and the
integrity of performance baselines are maintained. Ensuring that changes are agreed upon and
continuously managing changes as they occur minimizes the impact changes may have on
project time, cost, and quality concerns.
Guidelines:
To effectively utilize the change control process for managing changes in the project
performance baselines, follow these guidelines:

Make sure your change control system is cost-effective. It should not cost more
money to implement than it saves through controlling.

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Establish or make use of an existing CCB composed of project stakeholders to


evaluate change requests.

Document the effect the changes have on the project performance baseline.

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Obtain approval from the appropriate parties for all change requests before implementing the change.

Use conguration management to document and control changes to original product characteristics.

Coordinate changes across knowledge areas as appropriate. For example, does a


proposed schedule change affect cost, risk, quality, and/or staffing?

Use performance reports to measure project performance and assess whether plan
variances require corrective action. Make sure performance reports are timely and
accurate to increase the effectiveness of control decisions.

Identify corrective action necessary to bring expected performance in line with the
project plan.

Determine the source and severity of the problem.

Review the project plan and objectives.

Consider factors inside and outside the project that may inuence corrective
action decisions.

Identify alternative options available.

Choose from among the alternatives by evaluating the impact of each alternative on cost, schedule, and quality.

Update the project plan to reect changes made that affect performance baselines.

Document the causes of variances, the steps taken to correct performance problems, and the rationale behind the decision-making process to avoid similar
problems on future projects.

Example: Change Control Process for an Elementary School-Age Reading


Project
As the project team for an elementary school-age reading program moves through the
execution phase, Ben, the project manager, monitors progress by reviewing performance reports and evaluating any variances to the original scope denition and
performance baselines. When variances are identied, the project management team
examines the causes and determines the corrective action necessary to bring future performance in line with the project plan. They diligently document the lessons learned
for the benet of future projects.
As change requests are generated, both Ben and the projects CCB review and evaluate
their impact on performance baselines as outlined in the change control system. When
changes are made that affect performance baselines, Ben updates the project plan to
reect the changes. Using conguration management methods such as the image tracking database, all changes to the original characteristics of the course are controlled and
tracked. The project teams efforts enable them to effectively maintain the original performance baselines and scope denition and keep the project on track.

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DISCOVERY ACTIVITY 11-3


Utilizing the Change Control Process
Scenario:
Working with the senior executives at OGC and with the PMO, a formal change control process has been put in place for all OGC Business Transformation projects as well as a change
control board, which includes the Business Transformation program manager, the PMO director, and the CCB administrator. You are reviewing the formalized CCB process and
summarizing the following for your team:
When a change in the project appears to be necessary or desirable, the initiator of a change
completes a Change Request form, attaches any supporting material, and submits it to the person responsible for change management in the project (it could be the program/project
manager) for review and concurrence. The program/project manager (or whoever responsible)
reviews or ensures that the change request is reviewed by the people/bodies responsible for
reviewing the request for validity, completeness, and accuracy, and forwards the request to the
director. The director reviews and disposes of the request in one of the following ways:

Reject: Indicates disagreement with the proposed change on the request form; it is
rejected and returned to the program manager.

Concur: Indicates agreement with the proposed change on the request form; it is
returned to the program manager for submission to the CCB administrator to set
up a meeting.

Approve: Recommends approval without a meeting of the CCB. Notes the reason
for, and any conditions of, approval on the decision page of the Change Request
form and forwards it to the CCB administrator.

The PMO, upon receipt of change request decisions, records the information in a database to
track all change request patterns.

1.

The internal team responsible for assembling documentation for the training vendor
cannot meet their contracted deliverable of March 25. What actions should you take?
a) Identify required corrective action to resolve the problem.
b) Update the project plan to reflect these changes.
c) Recommend corrective actions to the CCB.
d) Use configuration management to document and control changes to the original vendor contract.

2.

What are the tasks that you should consider when determining appropriate corrective
actions?
a) Record how corrective actions should be tracked.
b) Identify alternative options available.
c) Determine the source of the problem and its severity.
d) Review the project plan and objectives.

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3.

OGCs change control process states, The PMO, upon receipt of change request decisions, records the information in a database to track all change request patterns.
What benefits do you see in tracking change request patterns?

TOPIC D
Review Deliverables and Work
Results
Your project team has produced deliverables and work results. Before you can gain formal
acceptance of deliverables from your stakeholders, you need to verify that they meet project
requirements and stakeholders expectations. In this topic, youll review deliverables and work
results.
As the project manager, it is your responsibility to prove to stakeholders that you are delivering what you agreed to deliver. While this may sound simple, it is often overlooked by
inexperienced project managers. The last thing that you would want to happen on your project
is your stakeholders nding errors or omissions that you should have found and corrected by
reviewing the deliverables and work results. Therefore, it is important for you to provide a
proper review to ensure quality project results, as well as stakeholder satisfaction.

The Verify Scope Process


Verify scope is the process of demonstrating to stakeholders that they have received what they
have been promised in a given deliverable and formalizing their acceptance. The verify scope
process usually involves reviewing the deliverables with the project customer or sponsor to
ensure that they are satised with the nal deliverable and securing their formal acceptance for
the completeness of the deliverable. Scope verication is generally done after quality control to
ensure that only the correct deliverables are validated for completeness based on criteria as
described in the official project plans and product documentation.

Figure 11-4: The verify scope process.

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LESSON 11
Verify Scope Inputs
Several inputs are used for scope verication.

Input

Description

Project management plan

Contains the project scope baseline of all planning processes. The


scope baseline components include the project scope statement, WBS,
and WBS dictionary.

Requirements documentation

Lists the project, product, technical, and other project requirements


and their acceptance criteria.

Requirements traceability matrix

Links the identied requirements with their source and helps track
them throughout the project. This also helps ensure that all approved
requirements are delivered at the end of the project.

Validated deliverables

Deliverables that are completed and validated for correctness by the


perform quality control process.

Verify Scope Tools and Techniques


Only one tool and technique is used to verify project scope.

Tools and Techniques Description


Inspection

Used for scope verication. Inspection refers to measuring, examining, and


verifying to be sure that work and deliverables meet requirements and acceptance criteria. It is sometimes referred to as reviews, product reviews, audits,
or walkthroughs. These terms have specic meanings in some application
areas.

Verify Scope Outputs


There are several outputs from scope verication.

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Output

Description

Accepted deliverables

The verify scope process keeps track of all deliverables that are
completed, accepted, and formally signed-off. The deliverables that
have been formally signed-off or acknowledged by the sponsors or
customers are moved to the close phase or project process.

Change requests

Any deliverable that has not been accepted formally is documented


along with the reasons for rejection. These deliverables may undergo
change requests for defect repairs. Change requests can be developed
for review through the perform integrated change control process.

Project document updates

Documents that dene the product or report status on project


completion may need to be updated as a result of project scope verication.

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Inspections
Denition:
An inspection is an official examination of work results to verify that requirements are
met. It is sometimes referred to as a review, product review, audit, or walkthrough. The
inspection may be conducted by an internal or external inspection team. During scope
verication, an inspection typically involves:

Comparing the baseline specications and any approved changes to the actual
project results.

Determining the likelihood that remaining deliverables will be completed as promised.

Identifying actions that may be needed to ensure that the work results will meet
specications, scope, or schedule and budget goals.

Example: Inspecting an Educational Toy


An inspector was asked to examine a new childrens educational toy to determine
whether its design requirements had been met. His inspection revealed that the instruction booklets accompanying the toy had not been adequately translated into all
languages; some children and their parents were not able to decipher the instructions.
The inspector recommended that the instruction booklets needed to be improved before
the work requirements could be considered fullled.
Inspectors
In some cases, your team will be asked to conduct the inspection. In other cases,
stakeholders may decide to ask an outside entity to either conduct the inspection, or to
participate with you in conducting it.

Inspection Report Components


Inspection reports are necessary and contain several components.

Component

Description

Project baseline and status


comparison

This is the comparison of the baseline specications, schedules, and


budgets to the actual project results for the project phase or deliverable.

Overall project status

This is a discussion of whether the project as a whole is on track, or


whether it is likely to deviate in some way from the project plans.

Change recommendations

Based on the inspection result, you may want to recommend changes


that will be needed in order to meet specications, scope, or schedule
and budget goals.

Scope and methodology of the


inspection

This section should explain what the audit attempted to prove, how it
went about proving it, what measurements were used to determine
conformance to requirements, and what assumptions or limitations
inuenced the way that data was collected.

Some application areas and organizations have specic expectations for scope verication inspections and will
probably have documented guidelines and procedures for preparing and conducting them.

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How to Review Deliverables and Work Results
Procedure Reference: Review Deliverables and Work Results
To ensure that deliverables are complete:
1.

Prepare for a scope verication inspection.


a.

Establish the scope and boundaries of the inspection.

b.

Establish and/or approve measurements to be used in the inspection.

c.

Establish and/or approve the methodology of the inspection, including a


methodology for double-checking data or measurements.

d.

Gather all relevant scope documentation (for example, WBS, scope statement, and requirements documentation).

e.

Communicate with all team members in advance so they can prepare for the
inspection in a timely fashion.

2.

Conduct an inspection to review deliverables and work results to ensure satisfactory completeness.

3.

Prepare an inspection report.

4.

Provide the inspection report to key stakeholders to obtain complete or conditional


formal acceptance of the deliverables and work results.

5.

Distribute formal acceptance documentation to project stakeholders according to


the communications management plan. If the project is terminated early, document
the level and extent of deliverables completed and distribute the documentation to
project stakeholders.

DISCOVERY ACTIVITY 11-4


Reviewing Deliverables and Work Results
Scenario:
You have just received the draft assessments from the training provider. You need to verify that
they meet project requirements and stakeholders expectations.

1.

Your team has been designing a plan that calls for testing and verification of the
assessment questions. The team has determined the criteria for acceptability for each
assessment question. What should be your next step in the inspection process?
a) Establish the scope of the review.
b) Determine the methodology of the review.
c) Conduct the review.
d) Prepare a review report for stakeholders.

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2.

Your team has decided to use a checklist and job aid in combination for the assessment review. Before beginning the actual review, what else would you consider doing?

3.

The draft assessments have passed the inspection. What should be included in your
review report, and why?

4.

You receive formal approval for the assessments. How will you inform stakeholders?

TOPIC E
Control the Project Scope
You dened your projects scope and developed a WBS as part of your project planning effort.
Now that the project work is moving forward, you need to control changes to project scope
using the control scope inputs and tools. In this topic, youll examine the control scope process
and control the scope of the project.
Because it is the nature of business to get the most products for the lowest price, customers
will sometimes push the edge of the project scope beyond its limits. Since changes to project
scope almost always impact performance baselines, you want to be able to control the project
scope. Controlling project scope changes helps you minimize the impact to project time, cost,
and quality commitments.

The Control Scope Process


Control scope is the process of monitoring project scope and holding changes to the project
scope baseline in check by:

Evaluating change requests to determine the need and impact of the change to project
objectives.

Making sure changes are agreed upon.

Managing the actual changes to ensure that they are implemented correctly and that they
are effective.

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LESSON 11
Scope change control must be integrated with the other controlling processes to prevent unauthorized changes that result in scope creep.

Figure 11-5: The control scope process.

Control Scope Inputs


Several inputs are used to control project scope.

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Input

Description

Project management plan

Includes several components such as:


Scope baseline: Used in determining if a change or if a corrective or preventive action is required by comparing the scope
baseline with the actual results.
Scope management plan: Includes guidelines for managing and
controlling the project scope. The project management team follows these guidelines when controlling the project scope.
Change management plan: Details the process of change management.
Conguration management plan: Provides information on elements that can be congured, those that need to undergo formal
change control, and the process of controlling such changes.
Requirements management plan: Provides information about
how requirements activities should be planned, tracked, and
reported and how changes to the product requirements must be
initiated.

Work performance information

Periodically collected information about project activities that are


being performed to accomplish the project work.

Requirements documentation

Documents how each project requirement meets the overall business need of the project. Requirements documentation components
include the projects business needs, functional requirements such
as business processes and information, and non-functional requirements such as performance, safety, and supportability.

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Input

Description

Requirements traceability matrix

Links project requirements to the business and project objectives


and ensures that the requirements add business value to the project.
It also helps track requirements throughout the project life cycle
and ensures that the approved requirements are delivered when the
project ends.

Organizational process assets

Includes existing formal and informal policies, procedures, and


guidelines that are related to scope control and the necessary monitoring and reporting methods.

Control Scope Tools and Techniques


There is only one tool and technique used for controlling project scope.

Tools and Techniques

Description

Variance analysis

The analysis of variance from the original scope baseline or the quantication of departure from expected results. Scope control includes
determining the cause of variance relative to the baseline, and deciding if corrective or preventive action is necessary.

Control Scope Outputs


Several outputs result from scope control.

Output

Description

Work performance measurements

Include measuring the variance between the planned and


actual, technical or other scope performance measurements.
The results are documented and communicated to the
project stakeholders.

Organizational process assets updates

Any causes of variances, reasons for corrective actions, and


any other types of lessons learned from project scope control are documented in the organizational process assets
database.

Change requests

Project scope performance analysis may cause changes such


as defect repairs or preventive or corrective actions, which
are then processed for review and disposition in compliance
with the integrated change control process.

Project management plan updates

If any change requests impact the project scope or project


baselines, then the project scope, the scope statement, the
WBS, the WBS dictionary, and any corresponding cost
baseline and schedule baselines of the project management
plan need to be updated and reissued to accommodate the
approved changes.

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Output

Description

Project document updates

Project documents such as requirements documentation and


the requirements traceability matrix may need to be updated
when controlling project scope.

How to Control the Project Scope


Continually monitoring and controlling changes to the project scope enables you to maintain
the original project scope denition. In addition, controlling project scope changes ensures that
cost, schedule, and quality performance baselines are maintained.
Guidelines:
To effectively control project scope, follow these guidelines:

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Develop and implement a scope change control system. Make sure that your system:

Is integrated with the projects integrated change control system.

Includes the paperwork, tracking systems, and approval levels necessary for
authorizing scope changes.

Complies with any relevant contractual provisions when the project is done
under contract.

Complies with the guidelines specied in the scope management plan.

Evaluate change requests by asking questions:

What is the magnitude of the change when compared to the scope statement
and WBS?

What is the impact of the change on project cost, schedule, and quality
objectives?

What are the potential risks and benets of the change?

Identify and document corrective action to take to bring expected future project
performance in line with planned performance.

Make sure that formal agreements are reached and new specications detailed
when project scope is expanded to include either additional work that is clearly
outside the original scope, or else additional work that is required as a result of
scope boundary clarications.

Depending upon the nature of the change, you may need to revise the cost, schedule, or quality performance baselines to reect the changes and to form a new
baseline against which future performance can be measured. Notify project stakeholders of any changes made to project baselines.

Use performance measurement techniques to monitor the changes.

Are the changes being properly implemented?

Do the changes bring about the desired results?

Are new risks being introduced as a result of implementing the changes? It


would be very unusual for additional risks to not appear or for the nature of
existing risks to not change signicantly. Structuring a risk review after any
change in scope is considered prudent practice.

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LESSON 11
Document lessons learned during scope change control for use on future projects.
The documentation should include:

Causes of variances.

Performance baselines affected by the changes.

Rationale behind the recommended corrective action.

Any other lessons learned during scope change control.

Example: Controlling the Project Scope in a Website Designing Project


Two months into the production of a website designed to increase American
preschoolers readiness for kindergarten, the project team received a formal change
request submitted through the change control system by one of the team members, an
expert in early childhood education. The change request proposed making changes to
the sites functionality that were categorized as a high priority. Before approving the
change request, the CCB asked the team to analyze the change to the schedule, budget,
and resources as well as the potential risks and benets.
The multimedia lead explained that the requested change would require an interface
design modication; he estimated that it could be done with current resources and no
signicant impact on the schedule. The technical lead agreed the change could be
implemented easily and would not require additional resources since the heavy programming for the course would not start for another month. Both leads felt that the
risk to the project was extremely minimal when compared to the potential benets
described in the change request.
Given this information, the CCB approved the change request and documented the
decision. The project manager updated the scope statement and the WBS. In addition,
the project manager documented the decision and monitored the implementation of the
change carefully to ensure that it was properly implemented and that no new risks
were introduced.

DISCOVERY ACTIVITY 11-5


Controlling Project Scope
Scenario:
The OGCs new PMO director has spent several weeks reviewing the business transformation
project. Due to the complexity of such a large company-wide initiative, the director has
received authorization for all project managers to attend a one week comprehensive project
management workshop. This workshop is to be incorporated into the PM Training Roll-Out
project. While the departure of Vicky Morris and possible organizational changes were
included in the risk management plan, no cost or schedule contingency was allocated for such
a change to the project scope.

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LESSON 11
1.

You have various inputs available to manage a scope change, such as the one in the
scenario. Match the input with its description.

Conguration management plan

Work performance information

Requirements documentation

Requirements traceability
matrix
2.

a.

Periodically collected information


about project activities that are being
performed to accomplish the project
work.
b. Provides information on elements that
can be congured, those that undergo
formal change control, and the process of controlling such changes.
c. Links project requirements to the
business and project objectives and
ensures that the requirements add
business value to the project.
d. Documents how each project requirement meets the overall business need
of the project.

A scope change request recommending additional test documentation has been submitted to the CCB for analysis. This change might impact the project finish date. What
should be done first with this request?
a) Evaluate the request.
b) Ensure that new specifications are detailed.
c) Monitor changes.
d) Identify corrective action to take.

3.

The CCB informs you that the additional costs for the workshop will be adjusted in the
project budget. However, the project finish date must remain the same. As the project
manager, what could you do to ensure that the project finishes on time?

Lesson 11 Follow-up
In this lesson, you monitored and controlled project work. Monitoring and controlling the
project is the only way that you can ensure that your project will meet stakeholders expectations for time, cost, and quality performance.
1.

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When preparing for a scope verification inspection, what do you think are the steps
required to make your project successful?

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LESSON 11
2.

How can you make the change management processes followed in your organization
more effective?

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LESSON 12

Lesson Time
2 hour(s), 45 minutes

Monitoring and Controlling


Project Schedule and Costs
In this lesson, you will monitor and control project schedule and costs.
You will:

Control the project schedule.

Control project costs.

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LESSON 12
Introduction
Monitoring and controlling project work is only a part of the monitoring and controlling process. As the project progresses, changes are likely to delay the project leading to superuous
cost increases. So tracking project performance and focusing on schedules and budgets are crucial for any project manager. In this lesson, you will monitor and control project schedules and
costs.
Monitoring and controlling project schedules and costs helps your organization maintain its
competitive advantage in the marketplace. Without it, your project may exceed its promised
deadline and go over budget. By making the necessary changes along the way, through effective schedule and budget monitoring and control, you can increase your chances of leading
your project to a successful conclusion.

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Figure 12-1: The project management framework.

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TOPIC A
Control the Project Schedule
When you planned your project, you developed a schedule to serve as a baseline during
project execution, monitoring, and controlling. Now you need to determine how much variance
exists between the actual work completed and the work scheduled. In this topic, you will
examine the control schedule process and control the project schedule.
When was the work scheduled to be completed? Can we change the project end date?
Are we going to nish the project on time? Answering questions like these is what the control schedule process is all about. Effective control over the project schedule ensures that you
complete your project on time according to the project schedule.

The Control Schedule Process


Control schedule is a process of monitoring schedule performance and controlling changes to
the schedule baseline. During this process, the project manager continually monitors schedule
performance by comparing actual work completed to the amount of work that was planned to
be completed. In addition, the project manager, along with a CCB, monitors, coordinates, and
implements changes to the project schedule and evaluates the impact of those changes on other
performance baselines and the original scope denition.

Figure 12-2: The control schedule process.

Control Schedule Inputs


There are several inputs used in the control schedule process.

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Input

Description

Project management plan

Contains the schedule management plan, which sets up guidelines


on how the project schedule will be administered and directed. It
also contains the schedule baseline that is used for comparing
actual results and determining the type of corrective action that is
needed.

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LESSON 12
Input

Description

Project schedule

Contains the up-to-date version of the project schedule with details


on completed activities and activities that are yet to commence,
with their respective start and end dates.

Work performance information

Provides information on project progression, such as activities that


are started, in progress, or nished.

Organizational process assets

Include schedule control related policies, procedures, and guidelines, schedule control tools, and monitoring and reporting methods
that are to be followed.

Control Schedule Tools and Techniques


There are several tools and techniques a project manager can use to control schedules.

Tools and Techniques

Description

Performance reviews

Reviews to measure, analyze, and compare schedule performance. This includes comparing the actual start and nish dates,
percent complete, and the time needed to complete the work in
progress.

Variance analysis

Determines the cause and degree of variance compared to the


schedule baseline and helps you decide whether corrective or
preventive action is required.

Project management software

Provides ways of tracking planned dates vs. actual dates, and to


forecast effects of changes to the project schedule.

Resource leveling

Assists in making scheduling decisions when there are resource


management concerns and enables optimum distribution of work
among the available resources.

What-if scenario analysis

Analysis that involves the review of multiple scenarios and then


calculating various possibilities of project durations, activity
sequences, and resource loading to bring schedule in alignment
with the plan.

Adjusting leads and lags

Brings the project activities, which are behind or ahead of schedule, in alignment with the plan. Working out possibilities of
accelerating (adding leads to) or decelerating (adding lags to) the
schedule to meet the demands of the plan.

Schedule compression

Shortens the schedule so as to align the project activities to the


project plan without affecting the project scope.

Scheduling tool

Uses updated schedule data and the scheduling tool with the
project management software or other methods to perform schedule network analysis and generate an updated project schedule.

Control Schedule Outputs


There are several outputs from the control schedule process.

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Output

Description

Work performance measurements

Schedule Variance (SV) and Schedule Performance Index (SPI)


values calculated for WBS components are documented and
communicated to the respective stakeholders.

Organizational process assets updates

Items documented in the organizational process assets include


lessons learned about the causes of variance, the reason why
corrective actions are chosen, as well as other types of lessons
learned from schedule control.

Change requests

Any changes requested to the project schedule baseline can


originate from schedule variance analysis, review of progress
reports, results of performance measures, and modications to
the project schedule.

Project management plan updates

Contains updated components such as the schedule baseline,


schedule management plan, and cost baseline to reect changes
caused by the schedule adjustments.

Project document updates

Contains updated project documents such as schedule data and


project schedule.

Earned Value Management (EVM)


Earned Value Management (EVM) is a method of measuring project progress by comparing
actual schedule and cost performance against planned performance as laid out in the schedule
and cost baselines. Assessing the value of work requires rst determining what work has actually been performed and therefore what value it has contributed to the project.
Cost variances occur when the actual cost of the project (AC) and its exible budget differ.
The benet of using EVM as opposed to just a exible budget is the time dimension associated with earned value.
During planning, project work is broken down into work packages and activities. Each work
package is assigned a budget and a schedule. Since each increment of work is time-phased, a
Schedule Variance (SV) results when work is not completed when it was scheduled to be completed. It is always better to understand the monetary value of work contribution, whether it is
less or more to the project. Therefore, the SV is often expressed in terms of monetary value.
Developed primarily by the Department of Defense, earned value is a metric for achieving meaningful comparisons between planned and completed work.

Cost and Schedule Performance


The EVM approach to monitoring cost and schedule performance provides metrics that
show variances from the baselines. Armed with this information, the project manager
can identify appropriate corrective actions. When cost and schedule variance analysis is
conducted at the appropriate time intervals and levels, it can be effective in controlling
against further cost and schedule problems.

EVM Variables
EVM involves calculating three independent variables to assess and monitor project cost and
schedule performance progress. The variables include:

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Planned Value (PV).

Earned Value (EV).

Actual Cost (AC).

These three variables are used to provide measures of whether or not work is being accomplished as planned and to forecast project cost at completion.

Planned Value (PV)


Denition:
Planned Value (PV) is the budgeted portion of the approved cost estimate to be spent
during a particular time period to complete the scheduled project work. This amount is
specied in the projects cost baseline. In simpler terms, PV indicates the value of
work to be done during a particular time period.
Planned value was formerly referred to as the Budgeted Cost of Work Scheduled (BCWS).

Example: Evaluating Planned Value


A project to build a shed was proposed. It involved three tasks to be done: ooring,
drywalling, and roong. Flooring was budgeted for $200 and will take two days to
complete. The task of drywalling was budgeted for $800 and will take four days to
complete. Roong was budgeted for $600 and will take three days to complete. The
total budget for building the shed came to $1,600. The total budget calculated for the
rst six days of work, involving two days of ooring and four days of drywalling, will
be $200 + $800 = $1,000. Therefore, the PV of this project for six days is $1,000.

Earned Value (EV)


Denition:
Earned Value (EV) is a composite measurement of both cost and time performance in
relation to scheduled or planned cost and time performance. EV is calculated by multiplying the percentage of work completed by the budgeted cost for the activity as laid
out in the cost baseline.
In order to determine the EV of the project work to date, you will have to look back at
the cost baseline to determine how costs were assigned originally. If the PV was determined by the percentage completed to date method, you would apply the same method
of assessing the EV. In other words, EV indicates the value of work actually performed
during a particular time period.
EV was formerly referred to as the Budgeted Cost of Work Performed (BCWP).

Example: Evaluating Earned Value


The manager of the shed building project receives a project report at the end of day
six, which says that the ooring task ($200) is 100% complete and the drywalling task
($800) is 75% complete. To calculate the earned value for the completed work:
EV = (100% x Flooring budget) + (75% x Drywalling budget)
EV = (100% x 200) + (75% x 800)
EV = 200 + 600
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LESSON 12
EV = $800
Therefore, the calculated EV for the project at the end of day six is $800.

Actual Cost (AC)


Denition:
Actual Cost (AC) refers to the total amount of costs incurred while accomplishing
work performed, either during completion of a schedule activity or during the completion of a work breakdown structure component. Actual cost is calculated and
documented once the work is complete. In other words, AC indicates the actual money
that has been spent for work that has been completed.
Example: Evaluating Actual Cost
The shed building project report also states that the actual money spent on ooring is
$180 and on drywalling is $700. So, the actual cost for the project as of day six is
$880.

EVM Measures
The most commonly used EVM measures are:

Schedule Variance (SV = EV - PV).

Schedule Performance Index (SPI = EV / PV).

Cost Variance (CV = EV - AC).

Cost Performance Index (CPI = EV / AC).


Content related to schedule and costs has been dealt with as separate topics in this course. For detailed information on Cost Variance (CV) and Cost Performance Index (CPI), refer to the Control Project Costs topic.

Schedule Performance Measurement


Denition:
Schedule performance measurement is any technique used to determine how the
project is performing in terms of time as compared to its planned performance. Schedule performance measurement tells the project manager how much variance exists
between the actual work completed and the work scheduled.
Performance measurement techniques such as Schedule Variance (SV), Schedule Performance Index (SPI), trend analysis, and variance analysis are used to help determine
if the schedule variance is potentially detrimental to the project and if corrective
actions are needed to ensure on-time deliverables.
Using the approved schedule baseline as the standard for measuring progress, the
project manager collects reporting information for each activity and uses a Gantt chart
to summarize the data.

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Example: Schedule Performance
Consider an example of a software development project. The estimated duration of the
entire project is four months. Dan, the project manager, decides early in the project life
cycle that there will be eight reporting periods and that work package owners will supply schedule performance reports every two weeks.

Figure 12-3: Software development Gantt chart.


On the fth reporting period, Dan receives the schedule reports and plots the results on
a Gantt chart, shown in the software development Gantt chart.
The Gantt chart shows that:

Activities A, B, and C are nished.

Activity B nished behind schedule.

Activity C nished early.

Activity D started a week late.

Activity E is behind schedule.

Activity F has not started yet.

The Gantt chart is an effective tool for providing up-to-date summary information and
can be extremely helpful for analyzing the projects overall time performance. The
Gantt chart also shows when milestones are scheduled and if those critical dates are
still on track.
Schedule Control Chart
Another tool you can use to illustrate schedule performance is the schedule control
chart. This chart can be used to show trends in schedule performance. The following
graphic is an example of a typical schedule control chart.

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This chart plots the variance in the schedule for a project. It shows that the project
started behind schedule and that corrective action was probably taken to bring the
project back in line with planned schedule estimates.

Schedule Variance (SV)


Denition:
Schedule Variance (SV) is the measured difference between the actual completion of an
activity and the planned or scheduled completion of an activity. To calculate the SV,
subtract the planned value from the earned value. A negative SV indicates that the
project is behind schedule. A positive SV indicates that the project is ahead of schedule. When the SV is zero, it indicates that a project is on schedule. The formula for
schedule variance is (SV = EV - PV).
Example: Calculating Schedule Variance for a Construction Project
A project manager for a construction project plans to calculate the schedule variance at
the end of every month to measure schedule performance. The project is scheduled to
last eight months and has a budget of $800,000. According to the cost baseline, by the
fourth reporting period, he planned to spend $500,000 accomplishing project work.
This is the PV through this reporting period. By collecting reporting data through the
fourth period, he determines that only $425,000 worth of the work has actually been
accomplished. This is the EV through the fourth reporting period. He subtracts
$500,000 (the PV) from $425,000 (the EV) to determine that the project currently has
an SV of -$75,000, which indicates that the project is behind schedule.

Schedule Performance Index (SPI)


Another measurement of schedule performance efficiency is the Schedule Performance Index
(SPI). The SPI is the ratio of work performed to work scheduled. To calculate the SPI, divide
the EV by the PV. An SPI of 1.0 or 100 percent means the project is right on schedule. If the
SPI is greater than 1.0 or 100 percent, the project is ahead of schedule. If the SPI is less than
1.0 or 100 percent, the project is behind schedule. The formula for schedule performance index
is (SPI = EV / PV).

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SPI Trend Analysis
Performance indices can be plotted on a graph to show a trend. An SPI curve for a project
with normal variance would show some uctuations on the graph but tends to remain within
the range of SPI 1.0.

Figure 12-4: A normal SPI curve.


If no corrective action is taken to make up for any schedule overrun, the trend could be unfavorable and the SPI graph could potentially show a trend where it starts to fall below SPI 1.0.

Figure 12-5: A potential SPI curve for a schedule overrun.

Working with EVM


To calculate EVM:
1. Determine the AC incurred for the work completed for each activity to calculate the CV.
2.

Analyze the data to determine whether the actual cost to perform the work is more or less
than its Earned Value (EV).

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LESSON 12
3.

Determine if the EV is more or less than the Planned Value (PV), which indicates a
Schedule Variance (SV).

EVM
The project manager analyzes the information in the table and graph and determines
that the Actual Cost (AC) to perform the work is more than its Earned Value (EV).
This indicates a negative cost variance and a budget overrun. In addition, the EV is
less than the Planned Value (PV), which indicates a negative schedule variance.

Figure 12-6: Calculating EVM.

Activity

% Complete

100%

PV

AC

EV

CV

SPI

CPI

$6,000

$0.00

-$4,000

1.00

0.60

50%

$50,000 $44,000 $25,000

-$25,000

-$19,000

0.50

0.57

50%

$12,000

$5,000

$6,000

-$6,000

$1,000

0.50

1.20

25%

$16,000

$6,000

$4,000

-$12,000

-$2,000

0.25

0.67

0%

0%

$84,000 $65,000 $41,000

-$43,000

-$24,000

0.49

TOTAL

$6,000 $10,000

SV

0.63

The combination of both a negative SV and negative CV indicates that the project is
performing over budget and producing less work than scheduled. The project manager
uses this information to nd out the causes of the variances and determine the appropriate corrective action necessary to bring the cost and schedule performance back in
line with the baselines. He repeats the analysis at regular intervals to monitor the
results.

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Content related to schedule and costs has been dealt with separately as topics in this course. For
detailed information on Cost Variance (CV) and Cost Performance Index (CPI), refer to the Control
Project Costs topic.

How to Control the Project Schedule


Continually monitoring schedule performance and controlling changes to the approved project
schedule enables you to maintain the schedule baseline.
Guidelines:
To control the project schedule, follow these guidelines.

Develop and implement a schedule change control system. Make sure your system:

Is integrated with the projects integrated change control system.

Includes the paperwork, tracking systems, and approval levels necessary for
authorizing schedule changes.

Complies with any relevant contractual provisions when the project is done
under contract.

Complies with the guidelines specied in the schedule management plan.

Evaluate change requests by asking these questions:

What is the magnitude of the change when compared to the schedule


baseline?

What is the impact of the change on project cost and quality objectives?

What are the potential risks and benets of the change?

Use performance measurement techniques to compare actual schedule performance to planned performance.

Use schedule reports to monitor schedule performance.

Calculate SV and SPI to determine whether the project is ahead of or behind


schedule.

Analyze the results of your performance measurements by asking these questions:

What is the cause of the variance?

What is the magnitude of the variance? Is the activity that is causing the
variance on the schedules critical path? If so, this will indicate that your
project nish date will be pushed out.

Is it likely that the variance can be made up in the near future without corrective action or is corrective action necessary to bring the schedule
performance back in line with the baseline?

Identify and document corrective action to take to bring expected future project
performance in line with planned performance. Depending on the priorities of
your project, consider one or more of the following alternatives:

Fast-tracking

Crashing

Outsourcing

Resource leveling

Reducing project scope

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Depending upon the nature of the change, you may need to revise the cost, schedule, or quality performance baselines to reect the changes and to form a new
baseline against which to measure future performance. Notify project stakeholders
of any changes made to project baselines.

Use performance measurement techniques, including trend analysis, to monitor the


changes.

Are the changes being properly implemented?

Do the changes bring about the desired results?

Are new risks being introduced as a result of implementing the changes?

Document lessons learned during schedule control for use on future projects. The
documentation should include:

Causes of variances.

Performance baselines affected by the changes.

Rationale behind the recommended corrective action.

Any other lessons learned during schedule control.

Determining Schedule Performance Efficiency


The following table provides calculations to determine schedule performance efficiency:

Performance Measurement Technique

Calculation

Earned Value (EV)

EV = % complete x total budget of


work

Schedule Variance (SV)

SV = EV - PV

Cost Variance (CV)

CV = EV - AC

Cost Performance Index (CPI)

CPI = EV / AC

Schedule Performance Index (SPI)

SPI = EV / PV

Example: Controlling the Project Schedule for an Elementary Reading Course


Project
The project team producing an elementary reading course is four months into production. The performance reports indicate schedule performance problems. To get a better
picture, the project manager compares the actual work completed to the schedule
baseline and calculates the SPI as .80. This gure conrms the concern that the project
is behind schedule.
The project manager calls a core team meeting to determine the cause of the schedule
variance and to determine the magnitude of the variance. According to the multimedia
and technical leads, the major rework in the text-to-speech option in the glossary is
taking more time to implement than expected. It is taking valuable resources away
from other activities on the critical path.

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The team agrees that corrective action is necessary to bring the project back in line
with the original schedule baseline. Realizing that they still have to implement the
change to the text-to-speech and that the projects end date cannot be extended, the
team brainstorms other corrective action alternatives. They decide to recommend adding one graphic artist and one programmer to work on the text-to-speech issues for two
months at a total cost of $15,000.
After discussing their recommendation with the project sponsor, the core team submits
a change request to the CCB. The CCB approves the change request and the project
manager informs project stakeholders of the decision. The project manager carefully
monitors the situation and recalculates the SV after one month and two months. Trend
analysis shows that the corrective action was effective in bringing the schedule back in
line with the baseline.
The project manager documents the problem, the causes of the variance, the alternatives considered, the corrective action chosen, and the reason for the decision. In
addition, the project manager documents the results of the corrective action and les
the documentation in the project archives as lessons learned.

DISCOVERY ACTIVITY 12-1


Controlling the Project Schedule
Scenario:
The OGC Cincinnati office is undergoing minor renovations. It is eight weeks into the project
and your manager asks you whether or not the project is on schedule. The entire project is
scheduled to take 16 weeks at a total cost of $25,000.

1.

Match the EVM measure with its formula.

Schedule variance
Schedule performance
index
Cost variance
Cost performance index
2.

a. EV / PV
b. EV - PV
c. EV / AC
d. EV - AC

According to your cost baseline for the project, you planned to spend $15,000 by the
end of the eighth week. You collect reporting data for the eighth week and determine
that $12,000 worth of work has actually been completed. What actions should you
take with this information?
a) Bring it to the attention of the CCB with some possible solutions.
b) Use it to identify corrective action to take.
c) Use it to compare actual schedule performance to planned performance.
d) Bring it to the attention of project stakeholders.

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3.

The SV for the eighth week of your project is -$3,000. The SPI for this reporting period
is .80. What is your analysis of this data and the projects schedule performance to
date?

4.

Using performance measurement techniques, you have determined that the project is
behind schedule. What should you do with this information?

TOPIC B
Control Project Costs
You established a cost baseline for your project. Now that work results are being produced,
you need to monitor project costs as your project progresses. In this topic, you will focus on
the control cost process and use the cost baseline to control project costs.
Controlling cost performance is a lot like watching for smoke from a re tower. The earlier
you see the smoke, the easier it will be to put out the re. Effective cost control will allow you
to spot the warning signs early, measure the cost variance, and make the necessary adjustments
before cost overruns cause the project to go up in ames.

The Control Costs Process


Control costs is the process of monitoring cost performance and controlling changes to the cost
baseline, while inuencing the causes of changes. During this process, the project manager
(along with a CCB) monitors, coordinates, and implements changes to the projects cost
baseline and evaluates the impact of those changes on other performance baselines and the
original scope denition. Effective cost control is to analyze the relationship between the utilization of project funds to the actual expenditures made to the work that has been completed.

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Figure 12-7: The control costs process.

Control Costs Inputs


There are several inputs to successfully controlling costs.

Input

Description

Project management plan

Contains project documents such as the cost performance


baseline and cost management plan, which provide cost control
information.

Project funding requirements

All funding requirements are obtained from the cost baseline.


Any funding occurs in increments. The total amount of funds
includes the cost baseline plus the management contingency
reserve.

Work performance information

Information collected dealing with the status and cost of project


activities being performed. This information includes
deliverables completed and not completed, authorized and
incurred costs, and approximate estimates to complete project
work.

Organizational process assets

Includes cost control related policies, procedures, and guidelines, cost control tools, and monitoring and reporting methods
that are to be followed.

Control Costs Tools and Techniques


There are several tools and techniques that a manager can use relating to cost control.

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Tools and Techniques

Description

Earned value management

A technique that integrates scope, cost, and schedule to measure


performance of the project and its progress. The three parameters
that EVM considers for monitoring are Planned Value (PV),
Earned Value (EV), and Actual Cost (AC). Variances such as
schedule and cost variance and indices such as the schedule performance index and cost performance index from the approved
baseline will also be monitored.

Forecasting

An estimate or prediction of the projects future, based on past


and present knowledge. As the project progresses, forecasts get
generated, updated, and reissued based on work performance.
Work performance information is based on past performance and
anything that could affect the projects future.

To-Complete Performance Index


(TCPI)

Calculates the efficiency of cost performance on the project to


achieve the Budget at Completion (BAC) or the Estimate at
Completion (EAC). If it is not possible to complete the project
within the BAC, then an EAC (forecast of the total cost required)
is determined by the project manager.

Performance reviews

A comparison of cost performance over time, schedule activities


or work packages exceeding or going under budget, and the estimated project funds required to complete work in progress.

Variance analysis

Determines the cause and degree of variance comparative to the


cost baseline and decides on the corrective action that is required.
Variance decreases as project work nears completion.

Project management software

Used to examine the three parameters of EVM (Planned Value


[PV], Earned Value [EV], and Actual Cost [AC]), demonstrate
graphical trends, and forecast possible project results.

Further Reading on EVT


There is an increasing emphasis on the Earned Value Technique (EVT) within the eld
of project management. For further reading, you may want to investigate Project
Management: The Common Sense Approach by Lee R. Lambert and Erin Lambert.

Control Costs Outputs


Cost control results in several outputs.

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Output

Description

Work performance measurements

The calculated CV, SV, CPI, and SPI values for certain WBS
components including work packages and control accounts are
documented and communicated.

Budget forecasts

A calculated or organization-reported EAC value or a bottom-up


EAC value are documented and communicated to stakeholders.

Organizational process assets updates

Items that may need to be updated include causes of variances,


reasons as to why certain corrective actions are chosen, as well
as lessons learned from cost control.

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Output

Description

Change requests

Requested changes can occur from an analysis of project performance. Any changes identied may result in an increase or
decrease to the budget.

Project management plan updates

Elements of the project management plan that provide updates


on cost performance baseline and cost management plan.

Project document updates

Includes updated project documents such as the cost estimates


and basis of estimates.

Cost Variance (CV)


Denition:
Cost Variance (CV) is any difference between the earned value and the actual cost
incurred to complete that work. To calculate the CV, subtract the Actual Cost (AC)
from the EV. Actual costs are the costs incurred to accomplish the work to date. A
negative CV indicates that the project is performing over budget. A positive CV indicates that the project is performing below budget. When the CV is zero, it indicates
that the project is running as per the budget.
Example: Cost Variance for a Project
Suppose a project has an earned value of $200,000 for the fourth reporting period.
However, the project manager assesses the actual cost for the work by the fourth
period to be $240,000. The project manager calculates the CV by subtracting $240,000
(the AC) from $200,000 (the EV). The result is -$40,000.
The negative value suggests that the project has overrun the baseline budget by
$40,000. This graph shows these gures plotted to provide a visual representation of
the cost variance.

Figure 12-8: An illustration of Cost Variance (CV).

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The Cost Performance Index (CPI)
Denition:
Cost Performance Index (CPI) is a measurement of cost performance used to determine whether the project is over or under budget. To calculate CPI, divide the Earned
Value (EV) by the Actual Cost (AC); the formula is (CPI = EV / AC). A CPI of 1.0
means the project is right on budget. If the CPI is greater than 1.0, the project is performing under budget. If the CPI is less than 1.0, the project is over budget.
Its important to remember that the CV and CPI values do not take time performance into consideration. Therefore, they do not provide a complete picture of overall project performance.

Example: CPI for a Project


To calculate the CPI for the project in the previous example, divide $200,000 (the EV)
by $240,000 (the AC). The result is 0.83 or 83 percent. A performance index curve for
this project might look like this.

Figure 12-9: An illustration of the Cost Performance Index (CPI).

Performance Measurement Analysis Techniques


The cause of variance, magnitude of variance, and corrective action for a variance are all
important factors in cost control. Cost baseline, used in EVM, reviews the progress of a
project and impact of variations.
Several standard values for schedule activity, work package, and control account are involved
in the earned value technique, including:

Planned Value (PV)

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Earned Value (EV)

Actual Cost (AC)

Estimate to Complete (ETC) and Estimate at Completion (EAC)

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LESSON 12

Cost Variance (CV)

Schedule Variance (SV)

Cost Performance Index (CPI)

Schedule Performance Index (SPI)

Budget at Completion (BAC)

Performance Reporting Techniques


Performance reviews are meetings held to review schedule activity, work package, or cost
account status and progress, usually in concurrence with one or more performance reporting
techniques.

Performance Reporting Technique Description


Variance analysis

Comparing actual project performance to projected performance.


For the most part, cost and schedule variances are analyzed.
However, variances from project scope, resource, quality, and risk
are taken into consideration.

Trend analysis

Inspecting project performance over a period of time to determine


if performance is increasing or decreasing.

Earned value performance

Compares baseline plan to actual performance.

Budget at Completion (BAC) Calculations


The Budget at Completion (BAC) is the total budgeted cost of the project at completion.
Projects seldom run as per the plan and they are continuously updated. It is necessary to forecast the expected cost at completion. BAC is used as a base value factored with CPI to
calculate Estimate to Complete (ETC) and Estimate at Completion (EAC). The formula is:
BAC = total PV at completion.

Estimate to Complete (ETC) Calculations


The Estimate to Complete (ETC) forecasting technique, based on an updated, mid-project estimate that is more accurate and comprehensive, is independent for all outstanding work. It also
takes into consideration the performance and production of current resources.
ETC for all authorized work can also be calculated with respect to project schedule (time).

You can calculate ETC for cost using earned value with one of two formulas.

Formula

Description

ETC = (BAC - EV)

ETC is used when variances are determined to be


atypical and forecasts that similar variances will
not occur in the future.

ETC = (BAC - EV) / CPI

ETC is used when variances are determined to be


typical or expected.

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LESSON 12
Accuracy
One downfall for using ETC and EAC is that they are not accurate in determining the
remainder of work to be done in a project. The accuracy depends on accuracy of data
of work completed.

Estimate at Completion (EAC) Calculations


Estimate at Completion (EAC) is a forecast of total costs needed to complete the project; it is
used to predict and control cost problems.
EAC for all authorized work can be calculated with respect to project schedule (time).

EAC Method

Description

EAC = AC + ETC

EAC using a new estimate. This method requires


making a new ETC for all remaining project work
and adding that estimate to the ACs incurred to
date. Should be used when original estimating
assumptions are awed and conditions have
changed.

EAC = AC + BAC - EV

EAC using remaining budget. This method uses


the sum of the ACs and the BAC minus the EV.
Should be used when current cost variances are
atypical of future variances.

EAC = AC + [ (BAC - EV) / CPI ]


or
EAC = BAC / CPI

EAC using CPI. This method involves adding the


AC to the difference of the BAC and the EV
divided by the CPI. Should be used when current
variances are typical of future variances.

To-Complete Performance Index (TCPI)


The To-Complete Performance Index (TCPI) is an indicator of the usage of resources for the
remainder of the project. The TCPI value can be derived by dividing the budgeted cost of
remaining work by the remaining project budget to achieve either the Budget at Completion
(BAC) or the Estimate at Completion (EAC). If management decides that the BAC is not
achievable, a new EAC is created by the project manager.
TCPI based on BAC can be calculated using the equation: (BAC - EV) / (BAC - AC). The
TCPI based on EAC can be calculated using the equation: (BAC - EV) / (EAC - AC).
The TCPI value can be either greater or less than 1 when it is compared with the Cost Performance Index (CPI). If the TCPI value is greater than 1, then the project team should be
utilized carefully for the remainder of the project. But if the TCPI value is less than 1, then the
project team can be utilized more freely.
To-Schedule Performance Index (TSPI)
The To-Schedule Performance Index (TSPI) is an indicator of efficiency at which the
remaining time that is allocated for the project should be utilized by the project team.
The equation to evaluate TSPI is: (BAC - EV) / (BAC - PV).

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The TSPI value can either be greater or less than 1. If the value is less than 1, then it
indicates the required efficiency is less than 100% and therefore the project team can
work at a measured pace in utilizing the remaining project time. But if the TSPI value
happens to be greater than 1, then it indicates the required efficiency is more than
100% and therefore the project team should be careful in utilizing the remaining
project time and will have to work more efficiently.

How to Control Project Costs


Continually monitoring cost performance and controlling changes to the projects budget
enables you to maintain the cost baseline. Controlling project costs also helps avoid budget
problems that may jeopardize the successful completion of a project.
Guidelines:
To control cost performance, follow these guidelines:

Develop and implement a cost change control system. Make sure your system:

Is integrated with the projects integrated change control system.

Includes the paperwork, tracking systems, and approval levels necessary for
authorizing changes to the cost baseline.

Complies with any relevant contractual provisions when the project is done
under contract.

Complies with the guidelines specied in the cost management plan.

Evaluate change requests by asking these questions:

What is the magnitude of the change when compared to the cost baseline?

What is the impact of the change on project schedule and quality objectives?

What are the potential risks and benets of the change?

Use performance measurement techniques to compare actual cost performance to


planned performance.

Use performance reports to monitor cost performance.

Calculate CV and CPI to determine whether the project is performing over or


under budget.

Use earned value analysis and management to continually measure cost and
schedule performance and to assess the value of work performed to date.

Analyze the results of your performance measurements by asking these questions:

What is the cause of the variance?

What is the magnitude of the variance? Is the activity causing the variance
on the critical path?

Is it likely that the variance can be made up in the near future without corrective action, or is corrective action necessary to bring the cost performance
back in line with the baseline?

Identify and document corrective action to take to bring expected future cost performance in line with planned performance. Depending on the priorities of your
project, consider one or more of the following alternatives:

Re-check cost estimates to determine whether they are still valid. Avoid the
temptation to reduce estimates simply to make the cost performance look
better.

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LESSON 12

Identify alternate, cheaper sources for materials. For example, consider using
a lower-grade building material to keep the project costs on target.

Brainstorm ways to improve productivity. Consider using an efficiency expert


to identify areas where productivity could be bolstered with training or guidance.

Change the schedule baseline. When a schedule change is contemplated,


make sure it is done in communication with customers and other key stakeholders to determine the schedule exibility. If nishing on time is not as
important as nishing on budget, cost overruns can be corrected through
schedule changes.

Reduce project scope. One way to reduce scope is to prioritize the remaining
work and eliminate work with the lowest priority. Another option is to plan
for a Phase 2 project to cover unnished scope items. Reducing the project
scope must be done according to the integrated change control system and
with approval of the customer and the sponsoring organization.

Depending upon the nature of the change, you may need to revise the cost, schedule, or quality performance baselines to reect the changes and to form a new
baseline against which to measure future performance.

Review the cost management plan as you begin to monitor cost performance.
Follow the systematic procedures outlined in the cost management plan as
you identify the need for corrective action and baseline adjustments.

Notify project stakeholders of any changes made to project baselines.

Use performance measurement techniques, including trend analysis and EAC, to


monitor the changes.

Are the changes being properly implemented?

Do the changes bring about the desired results?

Are new risks being introduced as a result of implementing the changes?

Document lessons learned during cost control for use on future projects. The
documentation should include:

Causes of variances.

Performance baselines affected by the changes.

Rationale behind the recommended corrective action.

Any other lessons learned during cost control.

Determining Cost Performance


The following table provides calculations to determine cost performance efficiency.

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Cost Formulas

Calculation

Cost Variance (CV)

CV = EV - AC

Cost Performance Index (CPI)

CPI = EV / AC

Estimate to Complete (ETC)

ETC = BAC - EV or (BAC - EV) / CPI

Estimate at Completion (EAC)


using new estimate

EAC = AC + ETC

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LESSON 12
Cost Formulas

Calculation

Estimate at Completion (EAC)


using remaining budget

EAC = AC + BAC - EV

Estimate at Completion (EAC)


using CPI

EAC = AC + ( (BAC - EV) / CPI) or EAC = BAC / CPI

To-Complete Performance Index


(TCPI) based on BAC

TCPI = (BAC - EV) / (BAC - AC)

To-Complete Performance Index


(TCPI) based on EAC

TCPI = (BAC - EV) / (EAC - AC)

To-Schedule Performance Index


(TSPI)

(BAC - EV) / (BAC - PV)

Example: Cost Control for a Project


The project team for the preschoolers educational website has implemented the change
to the cost baseline required to bring the schedule back in line with the schedule
baseline after adding the added functionality. Ben, the project manager, continually
monitors the revised cost baseline by calculating the CV and CPI at regular reporting
intervals. Using EVM, Ben analyzes any variances to determine their cause and magnitude.
As of the eighth reporting period, only minor variances in cost performance occur.
These variances might be corrected by renegotiating contracts and by verifying the
estimates of work still to be done, resulting in lower estimates.
Trend analysis conducted at the sixth, seventh, and eighth reporting periods indicate
that the corrective actions were effective in maintaining the cost baseline. The project
manager documents the cost variances, their causes, corrective action, and the results
of the corrective action as lessons learned for future projects.

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LESSON 12

DISCOVERY ACTIVITY 12-2


Controlling Project Costs
Data Files:

PM_CostPerfRpt

Cost_Baseline

Before You Begin:


From the C:\085042Data\Monitoring and Controlling Project Schedule and Costs folder, open
the PM_CostPerfRpt and Cost_Baseline documents.
Scenario:
As the media campaign for the Seattle New Store project progresses, you ask each of the work
package owners to give you a cost performance report for the sixth reporting period. The rst
report you receive is the PM_CostPerfRpt document from the Public Meeting work package
owner. You compare the information received in the report against the original cost baseline
for the work package (Cost_Baseline document) to measure its cost performance to date. You
will work with the work package owners to calculate the EV, PV, CV, SPI, and SV for the
report.

1.

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Review the PM_CostPerfRpt document. What is the actual cost for the Public Meeting
Work Package in the 6th week reporting period?

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LESSON 12
2.

What is the total EV for the Public Meeting Work package in the 6th week reporting
period?

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LESSON 12
3.

According to the cost baseline, the PV up through the sixth reporting period is
$22,000. What is the CV for this work package?

4.

Which formula will allow you to calculate the Estimate at Completion (EAC) for the
work package?
a) EV / AC
b) EV AC
c) AC + [(BAC EV)/CPI]
d) EV PV

5.

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Based on the formula EV/AC, you determine that the CPI for this work package is 1.11.
When you take the CPI and CV into consideration, how is this work package performing?

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LESSON 12
6.

What is the SV for this work package?

7.

What is the SPI for this work package?

8.

Based on your analysis of the product costs, what courses of action might you take?
a) Find the cause of the variance.
b) Determine the appropriate corrective action to take.
c) Alert project stakeholders that the project is in crisis.
d) Document lessons learned.

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LESSON 12
Lesson 12 Follow-up
In this lesson, you monitored and controlled the project schedule and costs. Without controlling
schedule and costs, your project may exceed its promised deadline and go over budget. Monitoring and controlling project schedules and costs helps your organization maintain its
competitive advantage in the marketplace.

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1.

What performance measurement techniques will you use in the future to measure
schedule performance?

2.

How could using earned value management help you to control project costs on future
projects?

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LESSON 13

LESSON 13

Lesson Time
2 hour(s)

Monitoring and Controlling


Project Performance and
Quality
In this lesson, you will monitor and control project performance and quality.
You will:

Perform quality control.

Report project performance.

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LESSON 13
Introduction
As your project work continues, youve monitored the schedule and budget baselines. Other
important aspects of projects that need to be tracked and controlled are project performance
and quality. In this lesson, youll continue tracking project performance and control project
quality.
Meeting customers quality expectations requires a dedication to continuous improvement and
participation by all project team members. Likewise, tracking project performance requires
commitment from the project manager for a successful project outcome.

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Figure 13-1: The project management framework.

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LESSON 13

TOPIC A
Perform Quality Control
Your quality management plan describes how your project team will move forward. Now that
your project is well underway, you need to monitor the work results to ensure that they meet
the quality standards you dened in your quality management plan. In this topic, you will
focus on the perform quality control process and control project quality.
Companies face erce competition to minimize development time and bring products to market
before the competition. At the same time, organizations are faced with the challenge of staying
competitive by keeping customers costs low. As a result, quality is a component that permeates all aspects of project work. Effective quality control can streamline project work, saving
time and money while continuing to maintain customer and stakeholder satisfaction. Controlling quality ensures that your project meets or exceeds your customers quality requirements.

The Perform Quality Control Process


The perform quality control process involves monitoring project performance to determine if it
complies with relevant quality standards and identifying ways to eliminate causes of unacceptable performance. Quality control involves continually measuring, adjusting, and monitoring.
Its goal is to improve the work process and produce results that meet customer and stakeholder
specications and expectations. Quality control is normally performed by the quality control
department or a similar unit.

Figure 13-2: The perform quality control process.

Perform Quality Control Inputs


Quality control requires several inputs.

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Input

Description

Project management plan

Contains the quality management plan, which describes the


project management teams approach to implementing its quality policy. The quality management plan must include Quality
Control (QC), Quality Assurance (QA), and documentation on
process improvements.

Quality metrics

An actual value that describes the measurements for the quality


control process. Examples of quality metrics include defect
density, reliability, rate of failure, and test coverage.

Quality checklists

Job aids that prompt employees to perform activities according


to a consistent standard.

Work performance measurements

Measurements used to create the project activity metrics, which


maintain actual progress vs. planned progress. Some of the
metrics used are:
Planned vs. actual technical performance.

Defects found and defects originated.


Deliverables in progress and those completed.
Planned vs. actual schedule performance.
Planned vs. actual cost performance.

Approved change requests

In quality control, approved change requests can include modications to work methods and the schedule. All approved
changes need to be veried.

Deliverables

A distinctive product, result, or capability used to perform a


service that must be produced to complete a project, phase, or
process.

Organizational process assets

Represent formal and informal policies, procedures, plans,


guidelines, and knowledge from previous projects that can
inuence the perform quality control process.

Perform Quality Control Tools and Techniques


There are several tools and techniques for quality control.

Tools and Techniques

Description

Cause-and-effect diagrams

Illustrate how various factors might be associated with possible


problems. Possible causes can be identied by asking why and
how for each problem identied. Cause-and-effect diagrams are
also known as Ishikawa or shbone diagrams.

Control charts

Graphical display of the results or status of a process over time and


against established control limits. It helps track the behavior of quality control processes over time and determine if the variances in the
process are within acceptable limits.

Flowcharting

Flowcharting can assist the project teams effort to identify potential


quality problems, their associated effects on overall project quality
targets, improvement areas, and the possible improvement measures.

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Tools and Techniques

Description

Histogram

A bar chart of variables. Each column symbolizes an element of a


problem. The height of each column represents how frequently the
element occurs. By using the shape and width of the distribution,
causes of problems are identied.

Pareto chart

A histogram that shows the causes of problems in the order of their


severity.

Run chart

A line graph showing plotted data points in chronological order. It


could show trends in a process over time or improvements over
time. Trend analysis uses run charts. Trend analysis is a tool you
can use to communicate forecasting information based on the
projects current performance. It is also used to monitor technical
and cost and schedule performance.

Scatter diagram

A diagram showing a relationship between two variables. The diagram plots dependent versus independent variables. The more
closely the points form a diagonal line, the more closely they are
related.

Statistical sampling

Measures an entire population based on actual measurement of a


representative sample of that population.

Inspection

An official examination of work results to verify that they meet


requirements. The inspection may be conducted by an internal or
external inspection team.

Approved change requests review

Ensures that all change requests are reviewed and implemented as


approved during the perform integrated change control process.

Perform Quality Control Outputs


There are several outputs from quality control.

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Output

Description

Quality control measurements

The results of quality control activities that are documented in the format determined when planning for project quality. The results are fed
back to the QA process for use in re-evaluating and analyzing quality
standards and processes.

Validated changes

Reinspected, repaired items to be formally accepted or rejected.

Validated deliverables

QC needs to verify the accuracy of deliverables through quality control


processes.

Organizational process assets


updates

These include completed checklists and lessons learned documentation.


If checklists are used, they become part of the projects records, and
any lessons learned from QC should be documented and put in a database for the current project and for the entire organization to refer to.

Change requests

If any actions require a change in the process, a change request should


be submitted in compliance with the perform integrated change control
process.

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Output

Description

Project management plan


updates

Any changes in the quality management plan through QC processes are


documented in the project management plan. Any requested changes to
the project management plan and its subplans are reviewed through the
integrated change control process. Plans that may be subject to changes
in this process include the quality management plan and process
improvement plan.

Project document updates

Documents that may need to be updated include the quality standards,


quality management plan, quality baseline, and quality metrics.

Variance
Denition:
Variance is the quantiable deviance, or amount of departure, from the expected results
for any component of product and service being developed, including quality as well
as schedule, and cost. Variance can be extreme or almost undetectable; it may result
from many causes, such as problems with resource availability or from the skills of
personnel assigned to the project. Variance may be obvious the moment a product is
produced or may become obvious over time through use and exposure to environmental conditions. To control quality, you must recognize the difference between quality
variance within a normal range and variance that indicates a quality error.
Example: Schedule Variance in a Daily Flight
A daily ight from Chicago to New York City may typically arrive 10 to 20 minutes
late. Those minor uctuations in arrival time are schedule variances that may result
from different issues: mechanical breakdowns, human error, or weather-related delays.
Addressing the different variances for one ight can be difficult without evaluating the
entire system.

Causes of Variance
Denition:
Causes of variance in a process or item are the sources or reasons for deviations from
the expected standard. There are two main types: random causes and special causes.
Random or common, causes are those everyday occurrences that are always present in
project work; as such, they may be unavoidable. They may be either insignicant and
have little impact on the overall quality performance or they may have a dramatic
effect on quality. The corrective actions taken in response to random causes of variance
are typically long-term and generally involve overall changes to the process.
Special, or assignable, causes are unusual, sporadic occurrences; they are the result of
some unexpected circumstance and are typically not caused by a aw in the overall
production process. Like random causes, special causes of variance can also have a
dramatic effect on performance. By analyzing instances of the occurrences of special
variances, you may be able to isolate the cause and take corrective action to avoid the
negative effects on quality performance. The corrective actions taken in response to
special causes of variance are typically short-term and do not involve overall changes
to the process. Special causes do not occur frequently but it can sometimes be decided
not to act upon them as the cost of action may be much more than the benet.

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Example: Causes of Variance in the Metropolitan Bus Schedules
A metropolitan bus company is trying to improve customer satisfaction in one key
area: the buses consistently run late. Random causes of the schedule variances include
the weather and traffic conditions: these are unavoidable, everyday occurrences that
will have an impact on how closely the buses can meet their schedules. A special
cause of schedule variance is a minor traffic accident. This is an isolated, unexpected
issue that may have a dramatic effect on the buss schedule that day, but it does not
indicate a process aw.
Example: Random and Special Causes in an E-Learning Project
A language quality controller for an e-learning project identied a considerable number
of structural and grammatical errors in one of the lessons in the course. Generally, the
errors identied during a review are minor, which occur due to fatigue or other disturbances to the writer that are caused by emails and phone calls. These causes are called
random causes. But because the number of errors in this lesson were signicantly high,
the company decided to analyze the cause for this problem. Two major causes were
identied during the analysis: the keyboard of the computer was not functioning properly and the auto spelling correction option in the software was turned off. These are
called special causes.
Example: A Random Cause Generating Regular Defects in a Sheet Metal Developing Company
A sheet metal development company, which creates very thin sheets of aluminum,
observed that two sheets produced every 15 minutes had wave-form patterns on the
surface. After having analyzed the reasons, it was found that the factory was directly
above a subway line, and the train passed over the line every 15 minutes.

The Analyzing Variances Task


The analyzing variances task involves taking data concerning work results and measuring that
data against the specications and operational denitions included in the project plan. Any
variances must be analyzed to determine whether they are acceptable or if they merit corrective action to keep the performance within specications.

Tolerances
Denition:
Tolerances are the measurement values that determine if a product or service is acceptable or unacceptable. They are the standards against which data collected will be
analyzed. Tolerances are typically expressed in ranges. If the result of the test falls
within the range specied by the tolerance, it is acceptable. If not, it is considered
unacceptable. Tolerances are specied in the quality management plan.
Example: Tolerance Level for a Products Weight
The tolerance for a products weight may be 5.8 grams 0.2 grams. If a product
weighs more than 6.0 grams, or less than 5.6 grams, it is considered unacceptable
because it exceeds the tolerance and does not meet specication.

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The 6-Sigma Limit
Project managers use control charts to measure for instability because processes always have
some uctuation and variability. When measuring deviations, if there are six standard deviations between the process mean and the nearest specication limit dened in the control chart,
then no item will fail to meet the specication. This is termed as the 6-Sigma limit. In terms of
controlling processes, the 6-Sigma limit is signicant because it provides a generally accepted
guideline for monitoring quality and adjusting when necessary.
The 6-Sigma Process
6-Sigma has also evolved into a business management strategy that seeks to improve
the quality of process outputs by identifying and removing the causes of defects and
variability in processes. To achieve 6-Sigma, a process must not produce more than 3.4
defects per million opportunities.
The 3-Sigma Rule
The 3-Sigma rule, an empirical rule, states that for normal distribution almost all values lie within 3 standard deviations of mean.
The values in the normal distribution will exhibit deviation as follows:

About 68% of the values lie within 1 standard deviation of the mean.

About 95% of the values lie within 2 standard deviations of the mean.

About 99.7% of the values lie within 3 standard deviations of the mean.

Variability Indications
Measurements that exceed the range between the upper and lower control limits are considered
to be an indication of instability. The variability expressed is atypical for the process and may
be an indication of a special source of variance.
It is important to remember that, while control charts can effectively show variability, they
cannot indicate the source of the variability or show performance in relation to an expected
performance. The control chart shows only the capability of the process to produce similar
products. It does not show the conformity of that process to a customers specications.

Pareto Diagrams
Denition:
A Pareto diagram is a histogram that is used to rank causes of problems in a hierarchical format. The goal is to narrow down the primary causes of variance on a project,
and focus the energy and efforts into tackling the most signicant sources of variance.
The variables in the diagram are ordered by frequency of occurrence.
Example: An Example of a Pareto Diagram
A typical Pareto diagram is used to represent the data, which is rst organized in the
descending order of occurrence and then plotting the cumulative curve. The bars represent the number of failures for each of the causes (A through E). In this example,
approximately 72 percent of the total number of failures are due to causes A and B
(320 out of 440). The project team can easily see that they should focus most of their
corrective action efforts on those two causes.

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Figure 13-3: A Pareto diagram.


Pareto Analysis
The analysis used to develop Pareto diagrams is referred to as a Pareto analysis, after
Vilfredo Pareto, an Italian economist of the late 19th and early 20th century. In his
analysis, Vilfredo Pareto found that 80 percent of the countrys wealth was concentrated in the hands of 20% of the population.
During a Pareto analysis, data is collected in various forms, such as reports, inspections, and surveys. This data is then analyzed to isolate the major causes of project
variance and is assigned a frequency or percentage value. The resulting diagram is a
histogram that identies specic sources of variance and ranks them according to their
effect on the quality performance. Pareto diagrams can be very useful tools throughout
the entire project for prioritizing and focusing corrective actions. Comparative analysis
of Pareto diagrams at different points in the project can be an effective tool for determining and communicating the effect corrective actions have had on curtailing or
eliminating variability.

The 80/20 Rule


Pareto diagrams are based on Paretos law, also known as the 80/20 rule. The 80/20 rule is a
general guideline with many applications; in terms of controlling processes, it contends that a
relatively large number of problems or defects, typically 80 percent, are commonly due to a
relatively small number of causes, typically 20 percent.

Statistical Sampling
Denition:
Statistical sampling is a technique used to determine characteristics of an entire population based on actual measurement of a representative sample of that population.
Sampling is a way to determine if large batches of a product should be accepted or
rejected without having to test every single item produced. Its goal is to produce a process that does not require inspection of every item. The size of samples and the
frequency and cost of sampling must be determined when planning for project quality.
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Example: Statistical Sampling Through Polling
A common example of statistical sampling is polling. Polling organizations ask questions of a small, random sample of participants. The answers given by the sample
group are used to suggest how an entire group may feel regarding an issue.
Determining Sample Size
Sample size can affect the accuracy of results. Generally speaking, the larger the
sample size, the higher the likelihood the sample will truly represent the variability of
the population. In quality terms, the larger the sample size, the more condence you
can have that your measurements reect the quality level of the entire product population.
It is important that members of a team whose focus is quality control have a strong understanding of
statistics. Other members need only have a basic understanding of statistical concepts.

The Statistical Sampling Process


The statistical sampling process involves dividing sampling data into two categoriesattribute
and variableeach of which is gathered according to sampling plans. As corrective actions are
taken in response to analysis of statistical sampling and other quality control activities, and as
trend analysis is performed, defects and process variability should be reduced. The use of statistical sampling during quality control can reduce overall quality cost by helping to forecast
and prevent errors before they occur.

Figure 13-4: The process of statistically sampling the given data.

Attribute Sampling Data


Denition:
Attribute sampling data is data from the sample that is counted, such as the:

Number of employees participating in prot sharing.

Number of customer complaint calls.

Number of returned items.

Attribute sampling uses no scale. It simply tells you whether or not a standard has
been met. Implementing an attribute sampling plan is fairly simple. Team members
may be required to count the number of items that do not conform to a quality specication or that show evidence of a quality defect. If the number exceeds a certain limit,
the sample fails to meet quality specications.

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LESSON 13
Example: Attribute Sampling for a Random Sample of Widgets
A project team is given a sampling plan that involves taking a random sample of 500
widgets and counting the number of widgets that do not meet the relevant operational
denition. The plan states that there must be fewer than 10 defective widgets in order
for the sample to pass the inspection. The team inspects each of the widgets, compares
them to the standard specied by the operational denition, and determines that 30 of
the widgets do not meet the standard. The sample did not pass the inspection because
the number of defective widgets exceeded the minimum acceptance level of 10.
This is an example of attribute sampling because no scale is used. The test was a passor-fail inspection to determine whether the sample exceeded a certain acceptance level.

Variable Sampling Data


Denition:
Variable sampling data is data from the sample that is measured on a continuous scale,
such as:

Time

Temperature

Weight

For variable data, the compliance to specications is rated on a continuous scale. Measurements can fall between an upper and lower range. To implement a variable
sampling plan, you would collect a sample of product and take some specic measurement to determine if the sample meets quality specications. Variable samples typically
provide the same level of accuracy as attribute samples with much smaller sample
sizes.
Example: Variable Sampling by an Ice Cream Manufacturing Company
A company manufacturing premium ice cream would use variable sampling data to
ensure quality control. Not every batch of ice cream produced would be tested for
quality measurements, but testers would take measurements of random batches and
measure for avor, consistency, color, texture, visual appeal, and other internal markers
for quality.

How to Perform Quality Control


Monitoring and controlling project quality ensures that the quality complies with relevant quality standards. Meeting quality standards enhances the teams ability to deliver an overall
project performance that meets the project objectives.
Guidelines:
To effectively control project quality, follow these guidelines:

Conduct inspections to detect quality errors as project work is ongoing.

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Consult the quality management plan for the procedures and guidelines to
use during quality control.

Check work results against relevant operational denitions and checklists.


Document the results.

Use statistical sampling to determine whether large batches of a product


should be accepted or rejected based on the quality of the sample(s). Ensure

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that samples are chosen randomly and that the sample size is large enough to
demonstrate the variability of the entire group.

Use Pareto diagrams to focus corrective actions on the problems having the greatest effect on overall quality performance and to measure and monitor the effect of
corrective actions over time.

Use control charts to analyze and communicate the variability of a process or


project activity over time. As you analyze performance with control charts, you
must not only look for variability outside the control limits, but you should also
analyze patterns of data within control limits.

Identify ways to eliminate causes of unsatisfactory results in order to minimize


rework and bring nonconforming items into compliance. Use owcharts to identify redundancies, missed steps, or the source of quality performance problems.

Initiate process adjustments by implementing corrective or preventive actions necessary to bring the quality of work results to an acceptable level. Major
adjustments must be made according to the projects change control system.

Continue to monitor, measure, and adjust quality throughout the project life cycle.

Example: Performing Quality Control for the Arithmetic on a Stick Project


As the project team for the Arithmetic on a Stick project continues through production,
the team continually monitors work results by conducting online reviews of the completed lessons and documenting any problems in the projects database. During one of
the core teams meetings, the project manager does a quick trend analysis and notices
that there is an unusually high number of problems in the database for the fth lesson
when compared to the previous four lessons.
The project manager asks the quality control engineer to evaluate the problems to
determine which are generating the most problems. The quality control engineer does a
Pareto analysis and plots the results on a Pareto diagram. Since curriculum changes
and technical problems are generating most of the problems, the team decides to focus
on those two issues. Further analysis of the problems caused by technical problems
reveals that one technical problem was the cause of all of the trouble. The technical
lead was able to isolate the problem and resolve the issues.
The curriculum changes were not so easily resolved. A new curriculum developer had
been hired recently. The new curriculum developer was having difficulty understanding
the project teams development process and consistently changed lessons after they had
already been produced and programmed. This resulted in change requests for the art
director, as well as for the programmers. Intensive training sessions were suggested
and implemented.
Trend analyses conducted on the sixth, seventh, and eighth lessons indicated that the
corrective actions were effective in reducing the number of problems due to curriculum
changes and technical problems. Now the highest number of problems was due to curriculum and programming errors, so the team focused their attention on those issues.
As they moved through the remaining lessons, the overall number of problems in the
database signicantly declined, indicating an overall increase in project quality.

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DISCOVERY ACTIVITY 13-1


Performing Quality Control
Scenario:
You are managing the construction of the Seattle OGC New Store project. The HVAC contractors are completing the work for the installation of the heating and cooling activity. Your team
had developed operational denitions and checklists for this work, and you have provided
these to the lead quality control engineer. Historically, on similar projects, there has been no
more than an average variance of one degree between oors. The quality inspections reveal
that the second oor is three degrees cooler than the rst oor.

1.

Given that there is a significant variation in temperature between the first and second
floor, what should be done?
a) Report this information to the appropriate people, according to the projects change
control system.
b) Because of the potentially high re-work cost, finding a solution should be a top priority.
c) Initiate process adjustments.
d) Continue to monitor quality as the HVAC installation continues.

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2.

The quality management plan documented acceptability of the installation with a tolerance of a one degree variance between floors. What would you do to determine the
reasons for the variance in quality tests?

3.

After researching the cause of the variance, you discover that the testing was done by
one quality control engineer. You then meet with the contract supervisor to investigate the process. You discover that the duct work on the second floor was installed
over a weekend by a different, less experienced crew. What should your next step be?

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TOPIC B
Report on Project Performance
In order to ensure that your project meets stakeholder needs, you have created quality control
measurements and controlled its quality. Now that the project quality is being monitored, you
need to communicate with your stakeholders about how well your project is performing. In
this topic, youll examine the report performance process and report project performance.
Implementing control processes into your project work can make a tremendous difference in
your ability to communicate project performance to upper management, stakeholders, and customers, and to reassure those with a vested interest in project success that the work is on time
and within budget. Performance reports are really the heart of the entire monitoring and controlling process. Effective performance reporting enables youas well as your team members,
sponsors, stakeholders, and customersto make reasoned, informed, timely decisions regarding
project status.

The Report Performance Process


Report performance is the process of gathering and communicating information regarding the
current status of a project as well as projections for progress over time. During performance
reporting, information regarding the work being accomplished versus the baseline, and
resources being used, is collected, analyzed, and displayed in various report formats. This
helps the project management team to forecast project progress and performance.

Figure 13-5: The report performance process.

Report Performance Inputs


Project managers use several performance reporting inputs.

Input

Description

Project management plan

Project execution is compared to an approved project work


plan, and variations are measured for management control. This
includes scope, schedule, and cost restrictions, but may include
technical and quality constraints.

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Input

Description

Work performance information

Any information on performance results such as schedule


progress and costs incurred is collected and put into the performance reporting process.

Work performance measurements

The comparison of actual performance against planned performance. It is used to create the project activity metrics. The
metrics thus generated include planned versus actual schedule
performance, planned versus actual cost performance, and
planned versus actual technical performance.

Budget forecasts

Help estimate the budget required to complete the remaining


project work. Stakeholders will be given either a calculated
EAC and ETC value or a performing organization-reported
EAC and ETC value.

Organizational process assets

Assets such as report templates, policies, and organizationally


dened variance limits can impact the report performance process.

Report Performance Tools and Techniques


Several tools and techniques are used in performance reporting.

Tools and Techniques

Description

Variance analysis

The retrospective analysis of causes of variance between the baseline


and actual performance.

Forecasting methods

Used to predict the future performance of the project based on its


current performance.

Communication methods

Used to communicate project performance and progress.

Reporting systems

Tools used to collect, store, and distribute project information to


stakeholders. Information can be distributed through various formats
such as presentation and a spreadsheet analysis.

The Variance Analysis Process


Though the process of variance analysis may vary based on factors such as application
areas and standards used, the common steps involved are:

Verifying if the collected quality information is complete, consistent, and valid


when compared with other project information.

Identifying variances between the project baseline and the project outcome.

Evaluating the impact of the identied variances on project cost, schedule, performance, and scope.

Report Performance Outputs


Several outputs result from performance reporting.

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Output

Description

Performance reports

An arrangement and review of collected information in which


analysis results are compared to the performance baseline.
Techniques such as variance analysis and forecast data are
used to create performance reports.

Organizational process assets updates

Include lessons learned and report formats. Lessons learned


are documented to become part of the database for the current project and performing organization, and should include
causes of issues and reasoning behind corrective action chosen.

Change requests

Requested changes are generated as analysis of project performance takes place. Changes such as recommended
corrective and preventive actions are processed through the
perform integrated change control process.

Components of a Performance Report


Performance reports mainly serve the purpose of making the actual vs. baseline information with forecasted results available in a consolidated manner. It may be simple or
more detailed. A simple report may contain information on the project scope, time,
cost, and quality, whereas the detailed report may also contain components such as:

Inferences of the past analysis

Current risk status

Work completed

Work to be completed

Summary of approved changes

Variance analysis results

Forecasted results

Examples include: SV, CV, SPI, CPI, EAC, and ETC.

Forecasting Methods
Forecasting methods are classied into various categories.

Category

Description

Time series methods

Estimation of future outcomes is based on historical data.


Some of the methods under this category include earned value
and moving average.

Causal or econometric methods

Forecasting the factors that may inuence the identied variables, by combining economic theories and statistical
information. Some of the methods under this category include
regression analysis and econometrics.

Judgmental methods

Forecasting by intuitive methods and probability estimates.


Some of the methods under this category include composite
forecasts, Delphi method, and surveys.

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Benets of Creating Performance Reports
Some of the overall benets of creating performance reports include:

Analysis of the current status of the schedule and budget.

Feedback to team members and work package owners.

Communication with upper management and customers.

Early identication of variance.

Early implementation of corrective actions.

How to Report on Project Performance


Identifying variance to performance as early as possible helps the team pinpoint programmatic
and administrative problems that may need to be resolved and enhances the teams ability to
implement corrective actions early enough to make a difference. Final performance reports provide historical information that may improve the likelihood of success for future projects.
Guidelines:
To effectively report project performance, follow these guidelines:

Analyze work results against planned performance based on performance elements


dened during the planning processes.

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Involve the team members who are closest to the work in the data analysis.
They are the people who understand the work and can probably identify
appropriate corrective actions for resolving variances.

Use EVM techniques to assess cost and schedule progress against planned
performance.

Evaluate the results of corrective actions to determine whether they have produced the desired results.

Hold performance reviews to communicate and assess project status and/or


progress.

Keep meetings productive and concise by creating meeting rules that everyone clearly understands and agrees to follow.

Dene the start and stop times.

Prepare and distribute a written agenda.

Make sure the people presenting are ready and understand their role in the
meeting.

Consult your project management plans subsidiary plans for guidelines and procedures for reporting on the various aspects of project performance.

Consult the procurement management plan for guidelines and procedures for
analyzing and reporting contractor cost, schedule, and technical performance.

Consult the cost management plan for guidelines and procedures for analyzing and reporting project cost performance.

Consult the schedule management plan for guidelines and procedures for analyzing and reporting project schedule performance.

Consult the quality management plan for guidelines and procedures for analyzing and reporting project quality performance.

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Determine the type of report needed for the information being reported. Make
sure that the format of the report adequately provides the type of information and
level of detail required by various stakeholders. Refer to the communications
management plan for information regarding stakeholder needs.

Prepare performance reports that provide the required information in a format that
enhances understanding of the material. Formal reports should contain:

A cover page with the project name, project managers name, type of report,
and date of report.

A narrative description of the projects actual accomplishments for the reporting period as compared to the goals established for the period. The
description should include qualitative and quantitative terms if possible. In
addition, any changes implemented or anticipated should be described.

Interim performance reports should include a forecast of how the project is


expected to perform in the future.

End of project reports should include a brief description of major accomplishments, an evaluation of the projects performance (including in-house
staff and contractor performance), an explanation of any variances in the performance and project objectives, and any future plans for the project.

Appendices, which may include any supporting material that contributes to


an understanding of the project and its progress to date, such as charts,
tables, and samples.

If available, use standard formats for status, progress, and forecasting reports.
These standard formats should be specied in the communications management plan or as part of the PMIS.

Balance the cost, time, and logistics of preparing performance reports against the
benets gained by the reporting.

Measure and monitor performance the same way throughout the project life cycle
so that meaningful comparisons can be made.

Example: Reporting the Performance of a Construction Project


The project team for a construction project has completed the rst phase. Before moving on to phase two, the executive board asks the project manager to prepare a midproject report. The project manager assembles the team and discusses the requirements
of the report and explains its value in terms of future development for the remaining
work on the current project and for future projects.
The team takes a few days to evaluate the projects accomplishments against expected
performance and to discuss and document lessons learned. Because they have regularly
monitored and documented project progress and held performance review meetings,
they have solid data to evaluate.
Their mid-project report uses the standard format specied in the communications
management plan and consists of the following information as required by the plan: a
cover page, a narrative description of accomplishments as compared to established
goals, interim performance reports and end of project reports, and any appendices or
supporting materials. The comparison section also includes a table showing the earned
value information for phase one development.

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LESSON 13

DISCOVERY ACTIVITY 13-2


Reporting Project Performance
Scenario:
There were some unexpected delays in the OGCs Seattle New Store project due to the problems with the HVAC installation and other contractor problems. You and your project team
have minimized the impact of these issues; however, senior management is concerned as to
how the actual schedule and costs performance compare with their original baselines.

1.

You need to provide a progress report to senior management. What should your first
step be in gathering data for your report?
a) Hold performance reviews.
b) Consult subsidiary plans for guidelines on reporting project performance.
c) Prepare a professional performance report.
d) Include in the report EV measurements for SV and CV with appropriate action plans
to remedy any variances.

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2.

After you completed your analysis of work results, you held project deliverables performance reviews with project team members to assess project status. You have
gathered all relevant data necessary for completing your progress report. Given the
cost and schedule concerns of senior management, what type of report format should
you prepare?

3.

Since project baselines have shifted, one of the team leads for the project suggests
that you should alter the format of the progress report before handing it off to senior
management. She says that extensive enhancements to the graphic elements are necessary to truly express the major points of the report. Should you implement her
suggested changes?

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Lesson 13 Follow-up
In this lesson, you monitored and controlled quality and reported performance of the project.
Managing project quality ensures that the project meets your stakeholders quality requirements. Reporting project performance keeps the stakeholder informed of the project progress
and helps them make appropriate decisions regarding project status.
1.

What quality control methods have you used in the past? Were they effective? Why or
why not?

2.

What steps do you plan to take to ensure that your future performance reports are
effective?

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NOTES

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LESSON 14

Lesson Time
1 hour(s), 15 minutes

Monitoring and Controlling


Project Risks and
Procurements
In this lesson, you will monitor and control project risks and procurements.
You will:

Monitor and control project risk.

Administer project procurements.

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LESSON 14
Introduction
During project planning, you developed a risk management plan that describes how the project
team will respond to identied risks. Now that your project is in full swing, you need to continue to monitor project work and contracts for new and changing risks. In this lesson, youll
continue to monitor and control the project, focusing on project risk and procurements.
Monitoring and controlling project risks may involve choosing alternative strategies, executing
a contingency plan, or taking corrective actions to keep the project on track. If an assessed risk
changes during the projects life cycle, its important to analyze it quickly to determine if a
threat or opportunity may result. As the project manager, your command of the tools and techniques to monitor and control project risks and procurements will enhance your ability to
successfully complete your project.

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Figure 14-1: The project management framework.

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LESSON 14

TOPIC A
Monitor and Control Project Risks
In prior process groups, you developed a risk management plan and a risk response plan to
control project risks. During project execution, you will need to implement those plans. In this
topic, you will monitor and control project risks.
Youve identied the project risks, quantied and ranked them, and planned an appropriate
response to each risk. Thats just the beginning. When risk events occur, its up to you, as
project manager, to implement your risk plans in the face of predicted and unforeseen risks.
Effective project risk monitoring and control ensures that you respond in a reasoned manner.

The Monitor and Control Risks Process


The monitor and control risks process is the process of responding to identied and unforeseen
risks. It involves tracking identied risks, identifying new risks, implementing risk response
plans, and monitoring their effectiveness. During the monitor and control risks process, you
will constantly monitor your project for the introduction of new risks in addition to monitoring
triggers for the risks already identied.
When new risks surface, they must be documented and analyzed, and a response plan must be
selected using the risk analysis and response planning processes. As the project progresses,
risks change. Constant monitoring is essential. Risk monitoring and control is iterative and
ongoing, and takes place throughout the project life cycle.

Figure 14-2: The monitor and control risks process.

Monitor and Control Risks Inputs


Monitoring and controlling project risks includes several inputs.

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Input

Description

Risk register

Identies risks, risk owners, actions to respond to risks, characteristics of risks, and a watch list of risks of low priority.

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Input

Description

Project management plan

Contains the risk management plan, which includes risk tolerances, risk owners, protocols, human resources, time, and
other resources allocated for project risk management.

Work performance information

Items relating to risk monitoring and control such as deliverable status, corrective action, and performance reports.

Performance reports

Information on project work performance that may affect the


processes of risk management or the actual occurrence of risk.

Monitor and Control Risks Tools and Techniques


A project manager uses several tools and techniques to monitor and control project risk.

Tools and Techniques

Description

Risk reassessment

The risk register should be reassessed at project team status meetings. Tasks in risk assessment require the identication of new risks,
reassessment of current risks for their probability and impact, and
the closure of outdated risks. The extent of risk assessment at the
status meetings depends on how the project is owing compared to
its objectives. For example, if an unanticipated risk develops, it may
be necessary to have additional response planning.

Risk audit

Examines effectiveness of the teams risk response efforts. Risk


audits are performed as per the risk management plan schedules and
are conducted during project review meetings or in separate risk
audit meetings.

Variance and trend analysis

Project trends should be reviewed using data collected on performance. Results from trend analysis may forecast a difference of cost
and schedule from their initial targets. Any variation from the plan
may result in threats or lost opportunities on the project.

Technical performance measurement

A comparison of the projects technical accomplishments to the


planned accomplishments as outlined in the project plan. Any differences can help predict if the project scope will be achieved.

Reserve analysis

Makes a comparison of the amount of contingency reserves to the


remaining amount of risk to decide if the reserve is sufficient.

Status meetings

Project risk management should be on the to-do list at project status


meetings. The time it takes to address the issue depends on what
risks have been identied, their priority, and complexity of response.

Monitor and Control Risks Outputs


Monitoring and controlling project risk results in several outputs.

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LESSON 14
Output

Description

Risk register updates

Includes results from risk assessments, risk audits, and periodic


risk reviews that may include updates to probability, impact,
priority, response plans, ownership, and risks that are no longer
active; also includes results of project risks that can help in
future risk planning. This will complete the records of risk
management, and is part of the close project or phase process
and project closure documents.

Organizational process assets updates

Project risk management processes should be documented in


the organizational process assets to be references in future
projects. The probability and impact matrix, risk register, and
risk breakdown structure can be updated at project closeout.
Lessons learned from project risk management activities can be
added to the lessons learned database. Cost and project activity
length can be added to the organizations database.

Change requests

Anything that deviates from the project baseline results in


changes to the project management plan. These changes are
submitted through the perform integrated change control process as an output of the monitor and control risks process.
Approved changes become inputs to the direct and manage
project execution process and monitor and control risks process. Change requests can include recommended corrective
actions, namely contingency plans and workaround plans.
Change requests can also include recommended preventive
actions that are used to make sure the project is following the
guidelines of the project management plan.

Project management plan updates

The project management plan needs to be revised and reissued


if any approved changes have an effect on risk management
processes.

Project document updates

Various project documents that require updates include the


assumptions log, technical documentation, contract terms, and
the schedule and cost baselines.

The Project Risk Response Audit


A project risk response audit is the process of examining the teams ability to identify risks,
the effectiveness of risk response plans, and of the performance of risk owners. The audit may
be conducted by a third party, by the projects risk officer, or by other qualied personnel.
The auditor reviews the risk response plan and data concerning project work results to determine whether the planned responses to identied risks are producing the desired results in
terms of avoiding, transferring, or mitigating risk. In addition, the auditor evaluates the performance of the risk owner in implementing the response plan. The auditor documents the results
of the audit and makes recommendations for improvement in the projects risk management
efforts.

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Figure 14-3: Risk response audit for a project.

How to Monitor and Control Project Risks


Monitoring and controlling project risks ensures that appropriate responses to risk events are
implemented.
Guidelines:
To effectively monitor and control project risks, follow these guidelines:

When an event affects the project objectives, consult the risk response plan to
execute actions as mentioned in the risk response plan.

Monitor the environment for any new risks that may arise due to:

Changes in the project objectives. Any change to the overall cost, schedule,
or quality/performance level of your project will change your overall risk
picture.

Changes to scope. Whether the scope of the project increases or decreases,


the risk picture changes. For example, increasing the scope of the project
without assessing the impact on time or cost can spell disaster. Changes in
scope require iterating the risk management process.

Changes within the organization, such as restructuring within functional


departments that may mean some of the resources you were counting on will
no longer be available for assignment to the project.

Changes outside of the organization, such as technological changes, changes


in industry standards, economic or market changes, or legal/regulatory
changes.

Monitor the effectiveness of the risk response plan, as well as the contingency and
fallback plans laid out in the risk response plan. Make sure your monitoring is
done in accordance with the policies and procedures dened in the risk management plan.

Conduct project risk response audits to examine and document the effectiveness of the risk response plan and the performance of the risk owner.

Perform earned value analysis to monitor overall project performance against


the baselines. If the project is deviating signicantly from the baseline, reiterate the risk identication and analysis processes.

Conduct periodic project risk reviews that are part of the project schedule to
communicate risk response effectiveness and to identify new risks or triggers
that may require additional response planning.

Measure technical performance to determine whether variances are signicant


enough to warrant additional risk response planning.

If the response plans are not effective in reducing or eliminating risk, consider implementing the fallback plan.

Deal with unforeseen risks by systematically planning a reasoned response.

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LESSON 14

Develop workarounds for risks with low impact.

Perform additional response planning for risks with signicant impact on


project objectives.

Update project documentation as changes are indicated.

Keep the risk response plan up-to-date as risks occur and response plans are
changed or added.

Issue change requests in accordance with the integrated change control system.

Update performance baselines if the changes are signicant.

Update risk identication checklists to help manage risk in future projects.

Manage the contingency reserve so that the additional time, money, and resources
are utilized as planned.

Example: Monitoring and Controlling Project Risk for a Drivers Safety Video
As the project work for a drivers safety video nears completion, the parent organization announces a restructuring of the department. As part of the restructuring effort,
two of the projects resources, one graphic designer and one video producer, are transferred. The transfer of those resources will signicantly impact the project and may
cause some turbulence in the team.
In addition to their regular risk review meetings, the project manager calls an emergency core team meeting to develop a strategy for dealing with this new risk. The risk
officer and the project sponsor attend the emergency meeting, at which the group
brainstorms alternative strategies in response to the risk.
Since two other projects have been canceled as part of the organizations restructuring
plan, other graphic designers are now available. Those resources will be distributed
among the various other projects that had lost resources. The new team members will
need to be trained.
With the deadline looming, the project manager allocates a portion of the contingency
reserves to cover the additional expenses that will be incurred to complete the video
production, which had to be outsourced. This is a serious setback because four videos
still need to be written and produced.
The multimedia lead takes ownership of this new risk. He hires a seller to edit the videos using the in-house editing equipment. He collaborates on rewriting the scripts to
make use of stock footage rather than having to shoot new footage to produce the four
remaining videos. A risk response audit shows that the teams response plan for dealing with this unforeseen risk was effective in reducing its impact on project objectives.
The team updates the projects risk database to reect the actions taken and the results
of those actions.

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LESSON 14

DISCOVERY ACTIVITY 14-1


Monitoring and Controlling Project Risks
Scenario:
During the course of OGCs New Seattle Store project, you receive an email from the electrical contractor outlining a 3-week delay in the Install and Terminate Electrical Devices activity,
due to defective materials. The electrical contractors SOW states that if there is a potential
delay, all subcontractors must inform you in writing within 48 hours of the onset of the delay,
and the email meets this requirement. The project has already been signicantly delayed due to
severe weather conditions. Although your risk analysis included a schedule contingency for
weather conditions and the receipt of defective materials, this is a serious problem that threatens to further delay the project.

1.

What action should you take in regard to the material delay?


a) Monitor the environment for new risks.
b) Conduct a project risk response audit.
c) Update performance baselines.
d) Consult the risk response plan.

2.

You have developed a very robust risk response plan in the risk register. Based on the
vendor performance report, you notice that chances of delay have now become very
high (from an earlier rating of high). You now need to decide what would be your next
step.
a) Consult the risk response plan.
b) Follow the risk management process.
c) Implement the fallback plan.
d) Develop a workaround.

3.

The contractor suggests that it might ultimately be more cost-effective to buy materials from another contractor, although the initial cost of materials will be higher. Do
you think this is an effective solution?

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LESSON 14

TOPIC B
Administer Project Procurements
You selected a vendor to fulll your projects procurement requirements. Now you need to
ensure that the vendors performance meets the contract requirements. In this topic, you will
administer project procurements.
Whether or not you were involved in procurement negotiations, you must understand your
rights and responsibilities under the contract so that problems can be worked out with a minimum impact on project goals. Meanwhile, you need to be careful not to take actions that could
undermine your organizations legal position, should litigation be necessary later on.

The Administer Procurements Process


The administer procurements process is the process of managing the relationship with the
seller. During administer procurements, the project manager applies other project management
processes to the contractual relationship and integrates the coordination of the outputs from
these processes into the overall management of the project.
The other project management processes include:

Project plan execution to formally sanction the sellers work to begin at the appropriate
time.

Performance reporting to monitor seller cost, schedule, and technical performance.

Quality control to ensure that the quality of the sellers service or product meets contract
objectives.

Change control to ensure that changes to the contract are carefully managed and properly
approved.

Monitor and control the project risks to ensure that the risks are mitigated.

Figure 14-4: The administer procurements process.

Administer Procurements Inputs


Project managers use several inputs for the administer procurements process.

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Input

Description

Procurement documents

The instructions that you provide to prospective sellers so that


they can completely and accurately respond to your request.
These include the procurement SOW with description of the
goods or services to be purchased.

Project management plan

Describes every management step of the procurement process


starting with development and ending with closing the contract.

Contract

A mutually binding agreement that details the obligations of the


buyer and seller. One is given to each selected seller.

Performance reports

Performance evaluation documentation for providers includes


technical documentation and other deliverables that are provided
and meet the needs of the contract. Past performance records
when dealing with this vendor gure heavily in the decision
making for current and future vendor solicitation.

Approved change requests

Any changes to the current contract may include the procurement statement of work, price, and the description of products,
services, or results. All changes need to be in writing and
approved before implementation. However, any verbal, undocumented changes are not required to be processed or
implemented.

Work performance information

These include amount of costs incurred, how quality standards


are being met and followed, and invoices. Performance reports
show what deliverables have been completed and which still
need to be accomplished. Invoices must be submitted to request
payment. All documentation on invoices are established within
the contract.

Administer Procurements Tools and Techniques


A project manager uses several tools and techniques to administer procurements.

Tools and Techniques

Description

Contract change control system

A contract change control system is an offshoot of the overall


change control system, but dedicated specically to controlling
contract changes.

Procurement performance reviews

A review of the sellers performance on project scope, quality,


and the projects associated schedule and costs as compared to
the contract. It can include a review of documentation submitted
by the seller, inspections, or quality audits. The purpose of this
review is to identify strengths and weaknesses with project performance, and to monitor the progress of schedules and tasks.

Inspections and audits

Can be conducted during the project to identify weaknesses in


how the seller conducts work. This is outlined in the contract.
Some contracts allow buyer procurement personnel as part of
their inspection and audit teams.

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LESSON 14
Tools and Techniques

Description

Performance reporting

Performance reporting for administer procurements provides the


project management team with information about how the seller
is doing in regard to meeting the contractual obligations. The
contract performance reporting system is an offshoot of the overall project performance reporting system, but dedicated
specically to reporting contract performance.

Payment systems

Payments to the seller are made contingent on the acceptance of


the delivered goods or services, and on the receipt of a valid
invoice for the goods or services. Typically, invoices are sent to
the organizations Accounts Payable Department. They, in turn,
check with the project organization to verify that goods or services were delivered and accepted, and then authorize payment.

Claims administration

When buyers and sellers cannot agree on changes, these disputes


are referred to as claims or appeals. Claims are handled in accordance with contract terms, and are managed throughout the term
of the contract. If the buyer and seller do not resolve the claim, it
will be handled according to the dispute resolution procedures in
the contract. Contract clauses may include arbitration or litigation
and may be brought up after contract closure.

Records management system

Contains processes, and controls functions and automation tools.


It is used by the project manager to control procurement and contract documentation and records. This system is used to keep
track of and retrieve documents and correspondence.

Administer Procurements Outputs


Administer procurements results in several outputs.

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Output

Description

Procurement documentation

Includes the contract, schedules, and approved and unapproved


change requests. It can also include technical documentation,
deliverables, seller performance reports, warranties, nancial documents, and results of contract inspections.

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Output

Description

Organizational process assets


updates

There are several assets to update.


Correspondence: Contract terms and conditions often need
documentation of communications between the buyer and
seller. Some documentation may include warnings of bad performance and contract change requests or verications. A
complete written record of all communication between the
buyer and seller is given to both parties.
Payment schedules and requests: This is required if the
project has an external payment system. If an internal system is
used, the output would just be payments.
Seller performance evaluation documentation: Prepared by
the buyer to document the sellers ability to comply with the
contract, to indicate if the seller will be hired for future
projects, or to rate the quality of the sellers work on the
project. These documents can indicate early contract termination, or determine how contract penalties, fees, or incentives
are administered. Any results can be used in the qualied sellers list.

Change requests

Can include changes in project direction by the buyer or through a


change in seller actions. These changes can affect the project management plan and subsidiary plans, the project schedule, and the
procurement management plan. Any changes need to be identied
and documented in project correspondence.

Project management plan updates

The procurement management plan is modied to include


approved change requests affecting procurement management.
Each contract management plan is modied to include approved
change requests affecting contract administration. The baseline
schedule is modied to reect slippages that affect the overall
project performance and also the current expectations.
Further, updates to the project management plan include any
changes to the contracts, human resource requirements, and the
project scope or cost baselines.

The Duties of the Procurements Administrator


On a small project, the project manager may play the role of procurements administrator. On a
larger project, the project manager may delegate this task to one or more team members and
monitor them.
In either case, the procurements administrator has several duties:

Acting as contract compliance officer.

Interpreting contract specications and ensuring that its terms are met.

Monitoring seller performance.

Integrating sub-contracted elements.

Managing change requests.

Resolving disputes and managing payments.

Dealing with contract breach, early termination, and so forth.

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LESSON 14
Changes to Contract Terms
Either party can propose contract change requests for any of the contract terms, including
scope, cost, delivery date, or quality of goods or services.

Contract Change

Description

Administrative changes

These are non-substantive changes to the way the contract is administered. This is the most common type of contract change.
Administrative changes should be documented and written notication sent to the seller with a clear expectation that the seller will
approve and return the change document. Administrative changes
require no adjustment in payment.

Contract modication

This is a substantive change to the contract requirements such as a


new deadline or a change to the product requirements. Contract
modications should be documented and a formal change order
should be sent to the seller. Contract modications may result in
claims for payment adjustment.

Supplemental agreement

This is an additional agreement related to the contract but negotiated


separately. A supplemental agreement requires the signatures of both
buyer and seller. A separate payment schedule is attached for the
work in a supplemental agreement.

Constructive changes

These are changes that the seller may have caused through action or
inaction. As a result of constructive changes, a seller is required to
change the way the contract is fullled. The seller may claim a payment adjustment as a result of constructive changes.

Termination of contract

A contract may be terminated due to seller default or for customer


convenience. Defaults are typically due to non-performance such as
late deliveries, poor quality, or non-performance of some or all
project requirements. Termination due to customer convenience may
result due to major changes in the contract plans, through no fault of
the seller.

Legal Issues
Project managers should be familiar with some of the common legal issues related to procurement administration.

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Legal Issue

Description

Warranty

A promise, explicit or implied, that goods or services will meet a predetermined standard. The standard may cover features such as reliability,
tness for use, and safety.

Waiver

The giving up of a contract right, even inadvertently.

Breach of contract

Failure to meet some or all of the obligations of a contract. It may result


in damages paid to the injured party, litigation, or other ramications.

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LESSON 14
Types of Warranties
As a project manager, you may encounter several types of warranties.

Type of Warranty

Description

Express warranty

If the pre-determined standard for quality or performance is


specied, either in a formal warranty or in the manufacturers
description of the product, it is considered an express warranty.

Implied warranty

If the pre-determined standard for quality or performance exists


but is not specied, it is considered an implied warranty. This
type of warranty takes effect if the buyer depends on the sellers expertise when making a purchasing decision. If you
purchase items that are widely available on the market, it is
assumed that you are relying on the sellers expertise in determining that the goods are merchantable and t for a particular
purpose.
On the other hand, if you are a technical expert, and you
require an unusual modication to the product or you intend to
use the standard product in an unusual way, you wont be able
to claim implied warranties.
Similarly, if you provide detailed product specications and the
seller meets them, you wont be able to claim that the seller
breached an express warranty if the goods do not meet your
needs.

Warranties of merchantability

Implied warranties that require goods to be t for ordinary


usage. Any sale of an item is subject to warranties of merchantability. The sale of an item for use in a particular project would
mean that the item was also subject to warranty of tness if it
can be proven that the seller knew how it would be used.

Warranties of tness for purpose

Implied warranties that require goods to be t for the usage that


was intended by the buyer.

Types of Waivers
It is possible for a party to a contract to explicitly waive a contract right. However, project
managers should be particularly aware of the ways in which they can inadvertently waive their
contract rights. These include:

Accepting a product that fails to meet standards for quality or performance.

Accepting late deliveries.

Overlooking some other aspect of non-conformance to contractual obligations.

To protect against losses incurred by an inadvertent waiver of contract rights, some contracts
are written to specically exclude the possibility of waiving a specied right.

Breaches of Contract
Project managers may encounter different types of breaches of contracts.

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LESSON 14
Type of Breach

Description

Anticipatory breach

An unavoidable indication that the other party will not be able to produce
the performance necessary to fulll the contract.

Fundamental breach

A breach so serious that it negates the very foundation of the contract.

Material breach

A serious breach that prevents the injured party from beneting from the
contract. In a material breach, the injured party can claim damages, but is
no longer obligated to fulll any contract commitments.

Immaterial breach

The contract has breached in such a way that there is no resulting damage
to the injured party; since there are no damages, the injured party is not
entitled to receive compensation. This is also called a minor breach.

Legal Expertise
Project managers should have a general understanding of contracts and breaches of
contracts, but they are not expected to be legal experts. The best way to protect yourself, your project, and your organization is to make sure that your legal department has
reviewed and approved any contracts before you sign them. As a general guideline,
you should never sign a contract unless you are sure that you understand all of its
terms.
The Force Majeure Clause
Force majeure, or superior force, is a common clause added to contracts that addresses
the actions from both the parties when an extraordinary circumstance beyond the control of either party occurs. The extraordinary circumstances include war, strike, riot,
crime, or a natural disaster (a so-called Act of God that includes oods, earthquakes,
and storms) that prevent one or both parties from fullling their obligations under the
contract.
However, the force majeure clause is not intended to excuse negligence or other misconduct by the parties and the nonperformance is caused by the usual and natural
consequences.

How to Administer Project Procurements


Regardless of project size, the project manager is responsible for administering procurements
for the project. Experienced project managers always rely heavily on the contract administration expertise of their organizations procurement, purchasing, and legal departments. Effective
procurement administration ensures that the sellers performance meets contractual requirements and objectives.
Guidelines:
To administer procurements, follow these guidelines:

Index and store all contract correspondence for ease of retrieval.

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Develop and implement an effective contract change control system. The system
should be integrated with the projects overall change control system and should
include these elements:

Forms and paperwork required to request a contract change.

Contract performance-tracking mechanisms.

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LESSON 14

Procedures for submitting and approving change requests, including approval


levels based on cost or impact of change.

Procedures for reviewing and resolving contract disputes.

Evaluate the risk of each contract change request.

Document all contract changes and incorporate any effects of the changes into the
project plan.

Develop and implement an effective performance reporting system for the seller.
The performance reporting system should include these elements:

Baseline time, cost, and quality specications.

Actual time, cost, and quality specications.

Procedures for determining contract performance, including status reporting,


on-site visits, and product inspection.

Procedures for determining acceptance or non-acceptance of delivered goods


or services. These might include the options to accept the entire delivery,
reject the entire delivery, or accept part of a delivery.

Spell out in the contract any performance reporting specications to be imposed


on the seller.

Set performance milestones to monitor project progress.

Depending on your project, you might use partial deliveries, completion of


selected portions of the product, or preliminary versions of the nished product as milestones.

Make sure the milestones are arranged and agreed upon with the seller ahead
of time.

Negotiate a deadline for each milestone, as well as quality and completeness


specications for the milestone.

If work is performed at another site, conduct site visits to determine how the sellers work is progressing.

Be sensitive to the cost of site visits in terms of time and impact on vendor
relationships.

Schedule the visits up-front, set an agenda for each visit, and use only the
time required.

Submit approved invoices for payment in accordance with the contract and the
projects payment system.

Example: Administering a Contract for a Website Project


With his change request approved, Peter, a project manager, becomes responsible for
monitoring the graphic artists contract for his company website project. Peter lls out
a conversation log for each conversation he has with the artist about the project and
les the conversation logs in the sellers le.
Peter schedules meetings with the artist to monitor progress and to clarify expectations
if necessary. As partial deliverables are made according to pre-determined milestones,
he reviews them for quality before signing and submitting the artists invoices to the
Accounts Payable Department for payment. Peter places a copy of each invoice in the
sellers le.

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LESSON 14
As the project team gets closer to completing the project, they decide to add another
section to the website. This change to the project goes through the appropriate change
control system set up for the project. After being analyzed for its impact on project
cost, schedule, and quality, the change request is approved.
The additional section requires a modication to the contract for the design and production of the graphics for the new section. Peter negotiates the terms of the change
with the artist and submits a change request for the contract modication using the
change request form specied in the contract change control system.
This change request is also evaluated for its impact on project cost, schedule, and quality before being approved and signed. Peter submits the request for the contract
modication to the Legal Department, who incorporates the change and sends the
modied contract to the artist to sign and return. Peter then les the signed modication with the sellers le.
The sellers work goes smoothly with no legal issues. Eventually, the nal deliverable
is made and accepted and the seller submits her nal invoice for payment. Peter signs
and submits the invoice for payment and thanks the artist for a job well done.

DISCOVERY ACTIVITY 14-2


Administering a Contract
Scenario:
The OGC Training Roll-Out project is continuing through the execution processes. You have
selected InniTrain to develop the assessment and to deliver the project software training. You
have been asked to administer the contract. InniTrain has done training for OGC in the past,
with good results. However, since the Business Transformation Project kick-off is dependent on
the training being completed on time, you want to carefully monitor the work to stay ahead of
problems and take actions early to mitigate the risk of delays.

1.

The work done by InfiniTrain is scheduled to be completed in three phases. What


action can you take to ensure that these deadlines are met?
a) Set performance milestones.
b) Document contract changes.
c) Implement a contract change control system.
d) Index all contract correspondence.

2.

Your contact at InfiniTrain informs you that their primary project software instructor
has given her resignation. They have asked to push the training date out a week to get
another instructor up to speed. What action should you take?
a) Document contract changes.
b) Conduct an on-site visit.
c) Consult the contract change control system.
d) Negotiate a milestone deadline.

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3.

InfiniTrain has informed you that they have completed the beta verification of the
Assessment documents as specified in the contract. It is your responsibility as project
manager to verify that all feedback was incorporated correctly. Upon your review, you
notice that some of the alpha review feedback was not incorporated. What action
should you take?

Lesson 14 Follow-up
In this lesson, you monitored risks, controlled component processes, analyzed the administer
procurements process, and administered project procurements. As the project manager, you are
responsible for monitoring the risks facing your project, controlling them appropriately, and
executing the project contracts effectively so that you can successfully bring your project to its
conclusion.
1.

How will developing and implementing an effective performance reporting system help
you administer contracts on future projects?

2.

How have changes to the business environment affected your projects risk monitoring
and control efforts?

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NOTES

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LESSON 15

LESSON 15

Lesson Time
1 hour(s), 15 minutes

Closing the Project


In this lesson, you will close the project.
You will:

Close project procurements.

Close the project or phase.

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LESSON 15
Introduction
You have successfully completed your last project deliverable and approved your last invoice
for payment. You are almost done! But rst, you must properly close out the project. In this
lesson, you will focus on the closing process group, which is the nal project management
process group. You will close a project.
Unnished business, contracts not correctly closed out, and poor documentation can turn into
months of additional work and expenditures. The last thing you do on a project will be the rst
thing people remember about your efforts overall. Mastering the tools and techniques of effective project closure helps ensure that there are no loose ends that could unravel the good work
of your team and the success of your project.

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Figure 15-1: The project management framework.

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TOPIC A
Close Project Procurements
You and your project team have successfully carried out your project plan, produced work
results, and controlled the projects performance baselines. You also need to close any contracts with service providers and sellers who contracted for part of the project. In this topic,
youll examine the close procurements process and close the necessary contracts.
Incomplete or inaccurate project records indicate poor organizational skills. Although you may
never have to go back into your procurement les, other project managers in your organization
may want to use them as historical information for their projects. Properly closing a contract
ensures that contract records will serve as valuable information for future contracts and that
work completed under contract was accomplished completely and correctly.

The Close Procurements Process


The close procurements process is the process of completing each project procurement by
ensuring that contractual obligations have been met on both sides and resolving any outstanding issues. It involves verifying that work was done and delivered as specied, updating
contract records accordingly, and arranging for nal settlement of contract obligations. The
close procurements process supports the close project or phase process, as it involves verifying
if all the project deliverables have been accepted. Procurements are closed whenever contractual obligations are satised. The same process is used for contracts that end successfully and
those that are terminated early for some reason.

Figure 15-2: The close procurements process.

Close Procurements Inputs


Two inputs are necessary to begin the close procurements process.

486

Input

Description

Project management plan

Includes criteria for fulllment of procurement contracts (such as


outsourcing or equipment rental), and documentation as to
whether these contracts have been satised.

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Input

Description

Procurement documentation

Contains information about vendor performances on cost, scope,


quality, contract change notes, approved and rejected changes,
payment notications, and claims. These indexed documents are
acknowledged and validated for contract closure. The documentation is created when administering project procurements.

Close Procurements Tools and Techniques


Several tools and techniques are available to project managers for closing procurements.

Tools and Techniques

Description

Procurement audits

Evaluations of the effectiveness of the seller as well as the procurement process itself.

Negotiated settlements

The primary goal is to arrive at a nal equitable settlement of all


outstanding issues, claims, and disputes by negotiation. The parties may resort to Alternative Dispute Resolution (ADR), which
includes mediation and arbitration, if settlement cannot be
achieved through direct negotiations held between the parties.

Records management system

Part of the project management information system; indexes contract documents and correspondences, as well as assists in project
documentation archiving.

Close Procurements Outputs


There are two primary outputs of the close procurements process.

Output

Description

Closed procurements

Usually, the contract spells out the terms for contract acceptance and closure. At minimum, the seller should receive a
written notice of contract completion.

Organizational process assets updates

Updates to the organizations process assets might include:


Procurement le: An organized, indexed, up-to-date set
of records reecting what occurred during the contract.
Deliverable acceptance: Includes all formal documentation from the buyer that accepts or rejects deliverables.
Lessons learned documentation: Includes documentation of lessons learned, project experiences, and process
improvement recommendations.
The updated project les serve as a historical archive of the
project and act as an input to future contracting decisions or
as evidence in future litigation.

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Procurement Audits
Denition:
A procurement audit is a formal evaluation of both the sellers performance of the contract, and the effectiveness of the procurement process itself. The goal of the audit is to
establish a record that may be used to shape procurement practices in other contracts
for this project, or for other projects.
Example: Second Grade Phonics Textbook Sellers Evaluation
A project manager asked each of his core team members to evaluate the sellers they
had used during the course of the project for a new second grade phonics textbook. He
gave the team leads a checklist and asked them to answer each of the questions that
were relevant to the type of contract used. Randy, the multimedia lead, used over 50
freelance illustrators, video producers, audio producers, photographers, and animators
throughout the project. Randy developed a template to use for each seller.
This is an example of an effective procurement audit because it provides valuable
information regarding the sellers performance that will be helpful on future projects. It
also provides lessons learned information that will increase the freelance illustrator
database.

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Figure 15-3: A sample procurement audit document.

Elements of Procurement Audits


Procurement audits seek to answer several questions about the procurement process.

Were the sellers responses in bids or proposals useful in conducting pre-contract assessments for consistency and compliance with rules and standards?

Were the contract specications completed as specied, and were all terms and conditions
met?

Were the quality, timeliness, and cost acceptable?

Were the sellers project management, contract management, nancial management, and
communications management practices acceptable?

Was the seller able to accommodate requested changes?

Was the seller ensuring conformance during process audits?

Were the members of the sellers staff acceptable? Did any individuals merit special recognition?

Was there anyone you would not recommend for future assignments?

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Were there areas for improvements?

What were the lessons learned from this contract?

Procurement Audit Lessons Learned


The lessons learned from a procurement audit can be invaluable information for future contracts. For example, the contract structure or payment terms that seemed appropriate at the start
of the contract may have acted as disincentives to performance during the contract itself. By
including as much anecdotal detail in the lessons learned as possible, you help others in the
organization apply the learning to their situations.

How to Close Project Procurements


Procedure Reference: Close Procurements
To properly close project procurements:
1.

Ensure that all required products or services were provided by the seller.

2.

Make sure that any buyer-furnished property or information was returned to the
buyer.

3.

Settle any outstanding contracting issues. Are there any claims or investigations
pending on this contract?

4.

Conduct a procurement audit to identify successes and failures of the procurement


process and to evaluate the performance of the seller.

5.

Address any outstanding invoices and payments.

6.

Archive the complete contract le with the project archives.

7.

Provide the seller with formal written notice that the contract has been completed.

Special Issues in Contract Closeout


There are a number of special issues that may impact contract closeout.

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Issue

Description

Incomplete contract closeout

Contracts may be terminated early due to seller nonperformance, or through no fault of the seller
whatsoever.
If a project is shut down prematurely due to issues
within the customer or project organization, how does
that impact contract closeout? In this situation, the contract itself will probably provide guidance as to how to
deal with early termination.
For example, the contract may have a clause that
species that either side may withdraw from the contract with 30-days written notice to the other side.
During the 30-day notice period, the seller may continue working on the project, tying up loose ends,
taking receipt of material ordered for the project, and
so forth. Once the project has been terminated, the
project manager should take whatever steps are necessary to provide the appropriate written notice as
soon as possible, in order to start the termination
clock.
In addition, an explanatory call to the seller in
advance of the written notice is an expected courtesy. If the contract ties payment to specic
deliverables, the procurement audit should verify that
deliverables were received as specied, and that
invoices reect only those deliverables that were
received. Issues of time, cost, and quality are still
relevant.
Be sure to evaluate these issues based on the version
of the deliverable you are paying for, rather than for
the nal deliverable. For example, say the seller was
contracted to supply a beta version of the product in
January, and a nal version in March. The project is
canceled in February.
The product quality audit should be based on
whether it met the specications for a beta product,
not for a nal product.

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Issue

Description

Seller staff evaluations

In some cases, sellers will request that you participate


in evaluating their staff members who are participating
on your project.
In other cases, you may wish to send letters of commendation to a seller, in order to recognize the
performance of some of their staff members.
Your organization may have a policy that limits your
participation in evaluating the ongoing performance of
seller staff. You should consult this policy before providing any sort of written performance evaluation.
Most organizations allow letters of commendation that
recognize the contribution of particular seller staff
members. This practice is highly motivating to the
seller staff.
Usually, a copy is sent both to the staff member individually as well as to the seller organization.

DISCOVERY ACTIVITY 15-1


Closing a Contract
Data Files:

Tri-Mark_SOW

RTL_Quote

Before You Begin:


From the C:\085042Data\Closing the Project folder, open the Tri-Mark SOW and Project\RTL_
Quote documents.
Scenario:
The store sidewalk work package for the OGC Seattle New Store project is wrapping up.
According to the Tri-Mark_SOW document, the sidewalk is complete and the landscape architects plans have been returned. You receive a nal invoice from Rudison Technologies Ltd.
(RTL), the subcontractor for the concrete work, based on their quote for the job (as detailed in
the RTL_Quote document). You also receive a telephone call from the store manager, Justine,
who tells you there is excess concrete and other debris behind the store and a small crack in
the new sidewalk.

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1.

Based on the information you have, can you close out the contract with the subcontractor?
a) Yes, the contract has been fulfilled.
b) No, the contract has not been fulfilled.
c) You cannot determine this until a procurement audit has been completed.
d) You cannot determine this until the seller completes a staff evaluation.

2.

What would you do to resolve incorrect or unsatisfactory contract work in the situation
described in the scenario?

3.

RTL returned to the work site and resolved the outstanding contract issues and completed the cement work correctly and satisfactorily. Can you close out the contract?
Why or why not?

4.

Would you include a seller evaluation in your procurement audit? Why or why not?

TOPIC B
Close the Project or Phase
Administratively
You and your project team have successfully carried out your project plan, produced work
results, and controlled the projects performance baselines. It is time to tie up all the loose
ends and close your project or phase. In this topic, youll perform the administrative portion of
project or phase closure.
Ending a project or phase requires the same care and attention as starting the project or phase.
As a project manager, the way in which you end your project or phase says a great deal about
you to your stakeholders. Obtaining formal acceptance of your projects or phases nal product, service, or result ensures that the project or phase is properly closed.

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The Close Project or Phase Process
The close project or phase process involves closing out all project activities and formally ending the project or, in the case of multi-phase projects, closing out a specic project phase.
During this process, the project manager reviews all previous documents and the project management plan to ensure that all project work is complete, the objectives are met, and the
project can be considered to be closed. This process also establishes procedures that help validate and document deliverables, formalize acceptance of those deliverables, and document the
reasons for termination and any actions taken if a project has not been successfully completed.
The process includes activities required for closing the project or phase administratively.

Figure 15-4: The close project or phase process.

Close Project or Phase Inputs


Several inputs are necessary to initiate the close project or phase process.

Input

Description

Project management plan

Contains key information, including descriptions of the


deliverables and criteria for their delivery.

Accepted deliverables

Include deliverables that have met the acceptance criteria and


have been formally signed off by the customer.

Organizational process assets

Include existing guidelines or policies about project closure, historical information, and the lessons learned from previous
projects.

Close Project or Phase Tools and Techniques


Only one tool and technique is available to project managers while closing a project or phase.

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Tools and Techniques

Description

Expert judgment

Either internal (experienced managers) or external (consultants) persons


can provide expert guidance during the closing process.

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LESSON 15
Close Project or Phase Outputs
There are two main outputs of the close project or phase process.

Output

Description

Final product, service, or result tran- The official delivery and acceptance by the customer or sponsor.
sition
Ideally, this acceptance is documented in writing for storage in
the project archives.
Organizational process assets
updates

Updates to the organizations process assets include:


Project les: Documents resulting from project activities that
include project management plan, project calendars (scope,
cost, schedule, and project), risk registers, change management
documentation, planned risk response actions, and risk impact
documents.
Project or phase closure documents: Includes completion
and transition documents.
Historical information: Includes historical project documentation and lessons learned, which are transferred to the
organizations knowledge base for use by future projects or
phases.

Administrative Closure
Administrative closure involves verifying and documenting project results to formalize project
or phase completion. During the administrative closure process, the project team gathers and
updates project documentation and relevant records and reports. Project results are compared
against customer and stakeholder expectations and requirements. A properly completed administrative closure process ensures that the project or phase requirements were met and formal
acceptance was granted.

Project Records to Archive


During administrative closure, it may be benecial to archive selected project records:

The project management plan with its subsidiary plans and supporting detail.

Project performance records, audit reports, and nancial records.

Contract documentation.

Copies of all communications, status reports, meeting minutes, and change requests.

Relevant project databases.

Staff evaluations.

Lessons learned reports and the nal project report.

Formal acceptance documentation.

Outstanding Items
It may be helpful to construct a checklist of outstanding items that must be resolved,
addressed, or completed before the customer will accept the nal work results. Make
sure to include the actions taken to resolve any outstanding issues and any time frames
associated with completion.

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Lessons Learned Reports
Denition:
Lessons learned reports are documents that capture salient and helpful information
about the work done in a project or a project phase; they identify both the project
teams strengths and areas for improvement. They can be formal or informal, depending on the organizational norms or requirements. They are compiled for the benet of
future project teams, so that people can capitalize on the organizations knowledge
base about work that has already been done and avoid repeating mistakes and also
benet from ongoing organizational learning.
Example: Lessons Learned When Launching a New Product Line
After a particularly challenging project involving the launch of a new product line, the
project manager compiled a lessons learned report. The information came from several
sources, including a nal meeting with key team members and stakeholders, at which
the participants were asked about what went well on the project and what they would
do differently next time. The project manager documented their responses into a report
for future reference; it captured the challenges that had been overcome, suggestions
that were generated, and other lessons that had been learned.

Considerations of Lessons Learned


During administrative closure, project managers should take into account some considerations
of lessons learned.

Consideration

Description

Scheduling lessons learned

These include any relevant scheduling problems or issues. They


also document the management strategies that were implemented
to deal with schedule or resource constraints.

Conict management lessons learned These include any issues that arose within the team or between
the team and customers. They include documentation of the
nature and source of the conict as well as the impact that the
conict had on the project. The documentation should also
specify how management intervened in response to the conict.

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Sellers lessons learned

New seller experience and performance should be documented


and provided to the procurement department.

Customer lessons learned

If a customer is excessively litigious or unreasonable to work


with, that information should be conveyed to the sales and legal
departments as well as documented in the lessons learned repository.

Strategic lessons learned

Strategic lessons learned are those that typically impact some


aspect of the organizations project management methodology or
signicantly improve a template, form, or process. These address
the questions: Can we reuse this projects artifact to get more
done with the same resources and/or deliver work sooner?

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LESSON 15
Consideration

Description

Tactical lessons learned

Those that answer the question: If we were to do this type of


project again, what should we stop, start, and continue so that we
can execute awlessly? They focus on developing recommendations, reviewing recommendations with other managers in other
departments, developing implementation plans, and implementing
those plans.

Other aspects of lessons learned

Project managers should take into account scope, schedule, cost,


quality, and customer satisfaction, as well as any corrective
action taken in response to issues.

Closeout Meetings
Denition:
Closeout meetings are sessions held at the end of a project or phase; they involve discussing the work and capturing lessons learned. Closeout meetings may include
stakeholders, team members, project resources, and customers. They typically follow a
formal agenda and may require official minutes to be recorded. Not all organizations or
projects require closeout meetings. Some organizations require the minutes from closeout meetings to be completed in full, approved by management, and preserved in a
specic manner.
Varieties of Closeout Meetings
Some organizations require official closeout meetings so that they can obtain the customers formal project acceptance, while others use them as an opportunity to discuss
the project with the customers as a prelude to soliciting additional business. Other
organizations use closeout meetings for internal purposes, for the edication of the
staff and improvement of internal processes. From an organizational standpoint, good
endings lead to good beginnings on subsequent projects.
Example: Fire Safety Closeout Meetings
A project manager responsible for re safety equipment and inspections would hold a
closeout meeting at the conclusion of the inspection process. He would invite the
stakeholders, project team members, and representatives from the re marshals office.
They would review inspection documentation records; complete and sign inspection
certicates; review, approve, and sign the plans for evacuation procedures; and document the inspections and testing of re safety equipment. Those signed, official
documents would be led both with the re marshal and at the company in accordance
with re safety procedures.

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LESSON 15
How to Close the Project or Phase
Procedure Reference: Close a Project or Phase
Each phase of the project must be properly closed to ensure that valuable information
is safeguarded for future projects. To properly close a phase or project, follow these
steps:
1.

Some organizations and application areas have a project termination checklist that
may be useful when closing out a project or phase. You may nd it useful to prepare one if there is not one available. This helps to ensure that you are thorough
in your administrative closeout.

2.

Gather and organize performance measurement documentation, product documentation, and other relevant project records for ease of review by stakeholders.

3.

Release project resources.

4.

Update records to ensure that they reect nal specications. Be sure to update
the resource pool database to reect new skills and increased levels of prociency.

5.

Analyze project success and effectiveness and document lessons learned.

6.

Prepare lessons learned reports and a nal project report.

7.

Obtain project approval and formal project acceptance. Demonstrate to the customer or sponsor that the deliverables meet the dened acceptance criteria to
obtain formal acceptance of the phase or project. This may involve preparing an
end-of-project report or giving a presentation.

8.

Archive a complete set of indexed project records.

9.

Celebrate the success of the project with the team and other stakeholders.

DISCOVERY ACTIVITY 15-2


Closing a Project
Scenario:
Your good project planning and control has resulted in the OGC PM Training Roll-Out project
coming to a successful close. The nal project deliverable is complete. You have collected the
performance measurement reports and updated product documents and other relevant project
records for archiving. Before you can close your project, you need to obtain formal project
approval from the project sponsor. You have scheduled a meeting for the following afternoon.

1.

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Are your project records ready for review by the project sponsor? Why or why not?

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LESSON 15
2.

What document will you prepare before obtaining formal acceptance from your project
sponsor to officially complete the project?

3.

In this case what might constitute formal acceptance?

4.

What types of documentation or computer files should you store in the project
archives?

Lesson 15 Follow-up
In this lesson, you learned how to effectively close a project. Your efforts to create a smooth
and orderly closure will help shape stakeholders perceptions of the overall project. In addition,
effectively closing the project provides valuable lessons learned and input for your organizations future projects.
1.

What steps do you plan to take to improve the project closure process in the future?

2.

How will compiling a formal lessons learned report help you manage future projects
more effectively? Explain your ideas.

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Follow-up
In this course, you discovered how to manage projects by applying the generally recognized
project management knowledge and processes acknowledged by the PMI. You now have the
skills and knowledge you need to successfully manage projects in your organization by applying a standards-based approach to most projects, most of the time, across industry groups. You
can use these widely recognized tools and techniques on the job to effectively initiate, plan,
execute, control and monitor, and close projects across application areas and industries.
1.

How do you think that applying a standards-based approach to project management


will help you be successful in managing future projects?

2.

How is the planning process group helpful to you during project execution? What are
the areas that you would concentrate the most when planning for your project?

3.

How do you anticipate using the project management skills learned in this course to
your advantage in your current position?

Whats Next?
This course provided you with a solid foundation in the generally recognized good practices on
most projects, most of the time, across industries including Construction, Manufacturing, Education, Government, Engineering, Health Services, Consulting, and Information Technology. To
expand your breadth of knowledge, consider taking the Project+ course, which delves into the
unique challenges of managing IT projects and may help you to prepare for professional certication in CompTIA Project+.

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APPENDIX A

APPENDIX A

PMP Certification Mapping


Project Management Professional (PMP) Certication: Fourth Edition maps directly to the
objectives of the PMP Certication Exam and aligns to the Knowledge Areas and Project
Management Process Groups outlined in the PMBOK Guide, Fourth Edition. The following
table lists the project management tasks that will be assessed on the PMP Certication Exam
and where they are covered in this course.

Map to PMP Certication Objectives

Lesson & Topic

Initiating the Project


Conduct Project Selection Methods

2B

Dene Scope of Project

3C

Document Project Risks, Assumptions, and Constraints

7A, 7B

Perform Stakeholder Analysis

2E

Develop Project Charter

2D

Obtain Project Charter Approval

2D

Planning the Project


Record Detailed Customer Requirements, Constraints, and Assumptions

2D, 3B, 3C

Identify Project Team and Dene Roles and Responsibilities

9C

Create the WBS

3D, 4A, 4B, 4C, 4D

Develop Change Management Plan

11C

Identify Risks and Dene Risk Strategies

7A, 7B, 7C, 7D, 7E

Obtain Plan Approval

3A

Conduct Kick-off Meeting

9D

Executing the Project


Execute Tasks Dened in Project Plan

9A

Ensure Common Understanding and Set Expectations

9C

Implement the Procurement of Project Resources

8A, 8B, 8C, 10A,


10B, 10C

Manage Resource Allocation

6B

Implement Quality Management Plan

6A, 9B

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Map to PMP Certication Objectives

Lesson & Topic

Implement Approved Changes

9A

Implement Approved Actions and Workarounds

9A

Improve Team Performance

9D

Monitoring and Controlling the Project


Measure Project Performance

13A, 13B

Verify and Manage Changes to Project Scope, Schedule, and Costs

11A, 11C, 11E, 12A,


12B

Ensure Project Deliverables Conform to Quality Standards

13A

Monitor Status of Identied Risks

14A

Closing the Project


Formalize Final Acceptance for the Project

15B

Obtain Financial, Legal, and Administrative Closure

15A, 15B

Release Project Resources

15B

Communicate Lessons Learned

15B

Distribute Final Project Report

15B

Archive Project Records, Information, and Documents

15B

Measure Customer Satisfaction

15B

Professional and Social Responsibility

502

Ensure Personal Integrity and Professionalism

1B

Contribute to the Project Management Knowledge Base

1B

Enhance Personal Professional Competence

1B

Promote Interaction Among Team Members and Stakeholders

1B

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APPENDIX B

APPENDIX B

Updates to the PMBOK Fourth


Edition Guide
The release of the PMBOK Guide, Fourth Edition by the PMI continues to provide excellence
in the project management profession. This standard greatly focuses on maintaining consistency in the usage of process names and bringing clarity to the content that is easy to
comprehend and implement.
The following are the major differences between the third and fourth editions of the PMBOK
Guide.

The usage of verb-noun format for all the process names.

The decrease of 44 processes to 42 with few process changes.

Deleted two old processes: Develop Preliminary Scope Statement and Plan Scope.

Added two new processes: Collect Requirements and Identify Stakeholders.

Reorganized six processes as four in the Project Procurement Management knowledge area.

Combined the Plan Purchases and Acquisitions and Plan Contracting processes
as the Plan Procurements process.

Combined the Request Seller Responses and Select Sellers processes as the
Conduct Procurements process.

Changed the Contract Administration process to the Administer Procurements


process.

Changed the Contract Closure process to the Close Procurements process.

Renamed two processes.

Manage Stakeholders to Manage Stakeholder Expectations.

Close Project to Close Project or Phase.

Moved the Manage Project Team and Manage Stakeholder Expectations processes
from the Monitoring and Controlling process group to the Executing process group.

A differentiation between the project management plan and the project documents has
been provided.

A clear distinction between the elements of the project charter and project scope statement
is accommodated.

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A standardized approach is adopted for documenting inputs and outputs.

A clear distinction between the enterprise environmental factors and organizational process assets has been made throughout the processes.

A dened approach for discussing requested changes, preventive actions, corrective


actions, and defect repairs is employed.

A new appendix describing the key interpersonal skills necessary for a project manager is
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LESSON
LABS

LESSON LABS
Due to classroom setup constraints, some labs cannot be keyed in sequence immediately following their associated lesson. Your instructor will tell you whether your labs can be practiced
immediately following the lesson or whether they require separate setup from the main lesson
content. Lesson-level lab setup information is listed in the front of this manual in the course
setup section.

LESSON 1 LAB 1
Reviewing Professional Project Management
Activity Time:
10 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

What information and data will project managers use to guide their work in a specific
process?
a) Tools
b) Techniques
c) Inputs
d) Outputs

2.

Which process group involves defining the need for the project or phase and obtaining
a commitment to move forward?
a) Planning
b) Executing
c) Controlling
d) Initiating

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3.

Which process group involves developing a strategy and refining objectives?


a) Monitoring and controlling
b) Executing
c) Planning
d) Initiating

4.

Which knowledge area ensures that the project will satisfy the needs for which it was
undertaken?
a) Project integration management
b) Project scope management
c) Project quality management
d) Project communications management

5.

Which project management knowledge area includes schedule control?


a) Project scope management
b) Project time management
c) Project cost management
d) Project communications management

6.

What does the term progressive elaboration refer to?


a) Constantly changing project scope.
b) Gaining additional clarity and detail of project deliverables as the project moves
through the project life cycle.
c) Letting team members make scope changes without customer approval.
d) Tailored guidelines and criteria for organizational processes that satisfy specific
project needs.

7.

What are the values that are considered most important to the global project management community?
a) Respect, fairness, honesty, and compassion.
b) Fairness, honesty, compassion, and responsibility.
c) Honesty, compassion, responsibility, and respect.
d) Responsibility, respect, fairness, and honesty.

8.

What are the barriers that deter good teamwork?


a) Withholding information
b) Ineffective meetings
c) Uncontested ideas
d) Cultural diversity

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LESSON 2 LAB 1

LESSON
LABS

Reviewing Project Initiation


Activity Time:
20 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

Choose the component that should always be included in the project charter.
a) A breakdown of the functions and activities to be performed on the project.
b) A list of the project stakeholders and their areas of responsibilities.
c) A schedule of project activities.
d) A statement of project goals, via a project SOW, and authorization of the project
manager to use organizational resources on the project.

2.

Which one or more of these is a common reason for an organization to undertake a


new project?
a) Meeting a customers needs.
b) Gaining a competitive advantage in the market.
c) Identifying best practices.
d) Meeting regulatory requirements.

3.

What is the basic purpose of a feasibility study?


a) To determine the major activities within the project and break them down into component work packages.
b) To determine if the organization should do the project based on economic and/or
societal costs associated with what is being proposed.
c) To link the project to strategic goals.
d) To determine how to manage a project throughout its life cycle.

4.

Choose the component that a formal feasibility study is likely to contain.


a) Estimate of the time and cost for each activity in a project.
b) Estimate of the time and cost for each of a number of project alternatives.
c) Likelihood of the project to meet capital budgeting targets.
d) Rating of the relative priority of a number of projects.

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5.

Which are reasons that it is important for the project charter to be signed by a highly
placed person in the organization?
a) This indicates the relative importance and priority of the project within the organization.
b) This provides authority for the project manager to cross functional boundaries when
carrying out project plans and activities.
c) This provides a signed document, which indicates that the project team members can
start work on the project.
d) This provides greater credibility with people outside of the project who may be asked
to contribute resources or join the project team.

6.

Which is a quick and objective method for evaluating project proposals?


a) Screening system
b) Weighting system.
c) Team-based evaluation system
d) Capital budgeting system

7.

How will you categorize the use of standard organizational procedures and terminology
by all team members and suppliers?
a) A bad management practice because it stifles creativity.
b) A bad management practice because it dictates practices that may not be industry
standard best practices.
c) A good management practice because it helps establish the foundation and framework for a common project language.
d) A good management practice because it highlights the project managers absolute
authority over the project.

8.

Which approach documents an approach to increase the support and minimize negative impacts of stakeholders throughout the project life cycle?
a) Stakeholder analysis
b) Stakeholder management strategy
c) Stakeholder communications planning
d) Risk management planning

9.

What are the tools and techniques of the identify stakeholders process?
a) Project charter
b) Stakeholder analysis
c) Organizational process assets
d) Expert judgment

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LESSON 3 LAB 1

LESSON
LABS

Reviewing Project Work


Activity Time:
15 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

What is the item at the lowest level of a WBS?


a) Task
b) Sub-task
c) Work package
d) Cost account

2.

What is the purpose of the scope management plan?


a) List all of the tasks that will be included in the project.
b) Prevent scope creep by ensuring that all changes to a project plan be reviewed by a
review board.
c) Identify how the projects scope will be defined, verified, and controlled when
changes are proposed.
d) Archive all of the information in WBS, RBS, and PBS.

3.

What is meant by the code of accounts?


a) A numbering system used to define activities in the statement of work.
b) A numbering system that identifies the specific accounting category for each element
of project work.
c) A numbering system that rates activity durations for each work package.
d) A numbering system for analyzing cost based on expert opinion.

4.

What is the purpose of scope definition?


a) Create an overall strategy for approaching the project.
b) Define which tasks are included in a project and which tasks are not included.
c) Provide a common understanding of the projects major objectives by identifying
what is within scope and what is currently out of scope.
d) Define the quality parameters affecting project procurements.

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5.

What are the reasons that deliverables should be broken down into work packages during the development of the work breakdown structure?
a) In order to define the scope of the project.
b) In order to make the activities easier to manage.
c) In order to make costing easier.
d) In order to create activities that can be assigned to a single organizational unit.

6.

What is the main purpose of the work package decomposition process?


a) Document results of lessons learned.
b) Break down of deliverables into component activities.
c) Estimate costs and duration for each sub-project.
d) Allocate resources to each activity.

7.

Which component is a graphical representation of the deliverables included in the


project?
a) Resource assignment matrix.
b) Work breakdown structure.
c) Organizational breakdown structure.
d) Project schedule.

8.

Which elements are included in a project scope statement?


a) Detailed project risks.
b) Project justification and deliverables.
c) Project description and objectives.
d) Schedule and costs for the project.

9.

Which statement is true of WBS templates?


a) They are time savers for the project team.
b) They are usually not used, because no two projects are the same.
c) They are only useful for high technology projects.
d) They are used only when all of the work packages are identical to the project.

10. What does the WBS dictionary consist of?


a) Terms used by project managers.
b) Information about each work package in the WBS.
c) Whos who on the project team.
d) Details of the scope of the project.

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11. Which process involves defining and documenting the stakeholders needs and expectations to meet the project objectives?

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a) The define scope process.


b) The develop project management plan process.
c) The collect requirements process.
d) The create WBS process.
12. Which technique involves decision making methods such as Unanimity, Majority, Plurality, and Dictatorship?
a) Group decision making techniques
b) Facilitated workshops
c) Interviews
d) Questionnaires and surveys
13. Which document links the requirements to their origin and tracks them throughout the
project life cycle?
a) Requirements management plan
b) Stakeholder register
c) Requirements documentation
d) Requirements traceability matrix

LESSON 4 LAB 1
Reviewing Schedule Development
Activity Time:
30 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

Activity A has a start-to-start precedence relationship with Activity B; further, Activity


B has a two-day lag. If As duration is eight days, and Bs duration is five days, what is
the total amount of time it should take to complete both A and B?
a) 13 days
b) 8 days
c) 15 days
d) 5 days

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2.

Choose the tasks for which project schedules are required.


a) Sponsor reporting
b) Performance reporting
c) Customer reporting
d) Functional reporting

3.

What is meant by near-critical activity?


a) An activity that is on the critical path
b) An activity that may have higher risk to the project due to less risk mitigation than
activities on the critical path
c) An activity that has low total float
d) An activity that has the longest duration

4.

What would be the outcome in a finish-to-start precedence relationship with a one-day


lead?
a) The precedent activity can start one day before the subsequent activity starts.
b) The subsequent activity can start one day before the precedent activity is completed.
c) The subsequent activity cannot start until one day after the precedent activity finishes.
d) The subsequent activity must start within one day of when the precedent activity
starts.

5.

Which statements are true of the critical path?


a) It is used to analyze the schedule model.
b) It is the path with the longest total duration through the network.
c) It always has the least amount of total float.
d) It shows the shortest amount of time required for completing the project.

6.

Which is an example of an FS (finish-to-start) interactivity relationship?


a) Activity B cant finish until Activity A is completed.
b) Activity B cant finish until Activity A starts.
c) Activity B cant start until Activity A is completed.
d) Activity B cant start until Activity A starts.

7.

What is the most commonly used formula for three-point estimates?


a) [Optimistic time + 4(most likely time) + pessimistic time]/6
b) [Optimistic time + most likely time + pessimistic time]/6
c) [Optimistic time + most likely time + pessimistic time]/3
d) [Optimistic time + most likely time pessimistic time]/2

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8.

Activity A has a finish-to-finish precedence relationship with Activity B. If As duration


is two days, and Bs duration is eight days, what is the shortest total duration for completing both A and B?

LESSON
LABS

a) 10 days
b) 12 days
c) 6 days
d) 8 days
9.

Activity A has a start-to-start precedence relationship with Activity B, with a four-day


lag. If As duration is two days, and Bs duration is 12 days, what is the total amount of
time it will take to complete both A and B?
a) 18 days
b) 14 days
c) 16 days
d) 12 days

10. Who is eligible for estimating activity duration?


a) The persons most familiar with the work to be done in collaboration with the work
package owner.
b) The project manager working closely with the resource manager.
c) The project schedule manager and the projects resource calendar.
d) The project management team to make sure all voices are heard.
11. Choose the appropriate term that corresponds to analogous estimating.
a) Bottom-up estimating
b) Simulation
c) Form of expert judgment
d) Heuristics
12. What are the two schedule compression techniquesfast tracking and crashingused
for?
a) Planning activity sequence.
b) Shortening total project schedule duration.
c) Developing an activity schedule.
d) Estimating activity duration.
13. What task is related to the estimate activity resources planning process?
a) Developing cost estimates for each resource required for project work.
b) Apportioning resource cost estimates across all the work packages.
c) Documenting product requirements and identifying potential sources.
d) Estimating the type and quantities of the resources required to complete activities.

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14. Choose the most appropriate approach that you would take to shorten a project duration.
a) Change the project scope.
b) Crash as many activities as possible.
c) Crash all activities on the critical path.
d) Fast-track activities on the critical path.
15. What does the Precedence Diagram Method (PDM) show?
a) Resource allocation
b) Significant points in time
c) Task duration
d) Relationships
16. Choose the statements that are true of bottom-up estimating.
a) The most accurate estimating method.
b) The most challenging estimating method.
c) The most costly and time-consuming estimating method.
d) Used when enough historical information is present.
17. What are the disadvantages of bottom-up estimating?
a) Accurate historical data requirement
b) Timeliness
c) Accuracy
d) Cost-effectiveness
18. Choose the option that is true of milestone charts.
a) Display the scheduled start or completion of major deliverables.
b) Show inter-relationships.
c) Are excellent planning and scheduling tools.
d) Provide the project team with detail for decision making.
19. Which is not true for network diagrams?
a) They show dependencies among project activities.
b) They facilitate communications among all project stakeholders.
c) They have nodes that show the deliverables of the WBS.
d) They provide a highly effective visual for project planning and scheduling.

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20. In a PDM network, which formula would you use to calculate the slack for an activity?
a) Total project duration minus total duration on the critical path.

LESSON
LABS

b) Earliest time when the event can start, minus the latest time when the event can finish.
c) Earliest start date minus the earliest finish date for that activity.
d) Earliest time when the event can start, minus the latest time when the event can
start.
21. When a lead occurs in an activity, what is its effect upon other activities?
a) Delays a successor task.
b) Accelerates a successor task.
c) Delays a predecessor task.
d) Accelerates a predecessor task.
22. Choose the statements that are not true of a hammock activity.
a) Has an estimated duration different than the sum of its interdependent work packages.
b) Includes activities performed by different resources.
c) Includes activities that are non-sequential.
d) Spans across several activities in a work package.
23. When will a project completion date slip?
a) If total float = 0
b) If total float > 0
c) If total float < 0
d) If total float > 1
24. Choose the appropriate task a project manager needs to perform when leveling
resources on a project.
a) Manually determine where to adjust resources.
b) Extend the finish date.
c) Add resources.
d) Discuss a change in the project scope with the stakeholders.
25. When would you perform a forward and backward pass?
a) To determine early start and finish dates for each activity.
b) To identify the start and end dates of each activity on the critical path.
c) To calculate the theoretical time period within which an early refinement of the
schedule can occur.
d) Typically done without considering resource limitations.

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26. What is total float?


a) The amount of float on any network path.
b) The amount of time that an activity can be delayed without delaying the early start
of any immediately following activities.
c) Calculated by subtracting late start from late finish.
d) The amount of time on a critical network path that an activity can be delayed without delaying the completion date of the project.
27. Which technique involves overlapping project activities to shorten project duration?
a) Risk conversion
b) Fast-tracking
c) Parallel management
d) Synchronous manufacturing
28. When crashing an activity, which task should the project team focus on?
a) Accelerating performance of those tasks on the critical path.
b) Accelerating performance of as many tasks as possible.
c) Accelerating performance of non-critical tasks.
d) Accelerating performance by minimizing costs.
29. Which activity duration estimation technique uses optimistic, pessimistic, and most
likely calculations?
a) GERT
b) Gantt
c) Three-point estimates
d) CPM
30. Which element is drawn from the schedule network analysis and includes baseline
start and finish dates?
a) Activity list
b) Schedule baseline
c) WBS package
d) Summary activities

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LESSON 5 LAB 1

LESSON
LABS

Reviewing Cost and Budget Estimates


Activity Time:
5 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

Identify the sources from where you can obtain cost estimate information.
a) Trade organizations, vendors, and suppliers.
b) Past project experience and current project team members.
c) Project schedule.
d) Commercial databases.

2.

What should be included in a project cost baseline?


a) Estimates of the most likely project costs.
b) Management contingency reserves.
c) Unforeseen expenditures for the project.
d) Assumptions for the estimates.

3.

What step will a project manager take to help prevent cash flow problems?
a) Use the contingency reserves of other projects.
b) Make efforts to engage the finance department to put in place a cash flow forecast.
c) Make sure customers are financially stable.
d) Request additional funding from project sponsors.

4.

Which cost estimating method requires managers to use their experience, historical
information from similar projects, and expert judgment to determine a total project
cost or time estimate?
a) Analogous or top-down estimating
b) Parametric estimating
c) Bottom-up estimating
d) Revenue estimating

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5.

Which are inputs to the determine budgets process?


a) Activity cost estimates, Resource calendars, Funding limit reconciliation, and cost
aggregation.
b) Basis of estimates, scope baseline, resource calendars, and reserve analysis.
c) Activity cost estimates, scope baseline, project schedule, and contracts.
d) Activity cost estimates, scope baseline, project schedule, and cost performance
baseline.

6.

Which is a method of adjusting, spending, scheduling, and resource allocation in order


to bring expenditures into alignment with budgetary constraints?
a) Cost aggregation
b) Funding limit reconciliation
c) Reserve analysis
d) Activity cost estimation

7.

Which guidelines allow you as the project manager to reconcile the costs with the
funding that has been approved by the sponsor?
a) Map the project budget, scope statement, and schedule to the funding available.
b) Involve the project sponsor.
c) Consider adding in a contingency amount to accommodate the risk of incurring extra
expenses.
d) Partner formally with the companys financial decision makers.

LESSON 6 LAB 1
Reviewing Quality, Staffing, and Communications
Planning
Activity Time:
25 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

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1.

Which tool is consistently used to document the roles and responsibilities on a project?

LESSON
LABS

a) Role administration matrix


b) Responsibility assignment matrix
c) Responsibility and role hierarchy
d) Staffing management plan
2.

Which document shows the reporting structure within the project, as well as its relationship to the parent organization?
a) Resource staffing histogram
b) Organization chart
c) Responsibility assignment matrix
d) Staffing management plan

3.

When does common experience show that a learning curve becomes apparent?
a) As cumulative production time doubles, time and costs associated with that production increase randomly.
b) As cumulative production time decreases, time and costs associated with that production lower at a constant and predictable rate.
c) As the quantity of items produced increases, costs decrease at a predictable rate.
d) As cumulative production time doubles, time and costs associated with that production increase at a constant and predictable rate.

4.

On which concept is total quality management based?


a) Quality is an ongoing process rather than a one-time event.
b) Quality standards should be established universally in every industry.
c) Quality issues should be supervised and controlled by a quality management team.
d) Quality planning is the most integral part of the quality system.

5.

What is quality planning?


a) The process of identifying the quality standards that apply to the project and determining how to meet those standards.
b) The process of evaluating quality results and planning improvement strategies.
c) The process of systematically evaluating project quality.
d) The process of establishing a communications plan between stakeholders and work
package owners for quality updates.

6.

What are the uses of project benchmarking?


a) Compare project practices to those of other projects to develop performance measurements.
b) Identify potential problems and possible effects for those problems.
c) Determine marketing costs associated with a specific product.
d) Determine what product or services to offer and what features to include.

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7.

The communications management plan is the most important portion of the project
management plan for managing stakeholders. For what reason?
a) It keeps the stakeholder involved with the day-to-day management of the project.
b) It helps the project manager to understand stakeholder expectations for project
communications.
c) It gets stakeholders involved in the planning process.
d) It helps identify all stakeholder needs and objectives for the project.

8.

Which of these project factors is likely to prevent effective performance of the communications plan?
a) The virtual team will use the company intranet to transmit documents.
b) All client company meeting time has been set at no more than 30 minutes a week for
each employee.
c) The customer wants its technical manager to review project data monthly.
d) The team is co-located in a trailer behind the main plant.

9.

Which part of the communications management plan is concerned with collecting


information and getting it to the right stakeholders?
a) Information distribution
b) Feedback system management
c) Communications management
d) Communications systems planning

10. Which tasks are included in the cost of quality?


a) Cost of quality planning.
b) Cost of preventing conformance.
c) Cost of rework.
d) Cost of monitoring nonconformance.
11. Which statements are true about formal project recognition and rewards?
a) Documented in the communications management plan.
b) Documented in the human resource management plan.
c) Perceived by project team members as being tied to performance.
d) Addressed only at the end of the project.
12. At what points in the project should the quality audits or inspections take place?
a) At the end of every process cycle.
b) When each project activity starts.
c) At random intervals within a process cycle.
d) At random intervals over the course of the project.

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13. Why is the cost of quality used during quality assurance?


a) To determine the most effective approach when considering prevention, inspection,
and repair.

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b) To determine if the cost of the product will meet budget requirements.


c) To persuade management to invest in quality product methods.
d) To assess the cost of implementing quality improvements.
14. Who is the quality guru associated with breakthrough improvement?
a) Taguchi
b) Deming
c) Juran
d) Crosby
15. A team has 20 people on it. How many potential communication channels exist on this
team?
a) 19
b) 190
c) 20
d) 380
16. Which is true of using project intranets and home pages for communication?
a) Limited because only large organizations have access to these tools.
b) Ineffective as external project stakeholders cannot access them.
c) A security risk because there is no way to restrict access to them.
d) An effective way to provide a lot of information to a variety of users.
17. Which task is an example of a cost of nonconformance?
a) Training
b) Product design
c) Planning
d) Rework
18. Which tool is used to verify if the steps in a process are being followed?
a) Checklist
b) Trend analysis
c) Inspection
d) Performance review

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19. Which tool would you use for analyzing and communicating the relationships between
process steps?
a) Scatter diagram
b) Control chart
c) Flowchart
d) Trend analysis
20. Choose the factors to be considered when analyzing project trade-offs among cost,
time, and quality, where cost must be controlled in order to meet the cost baseline.
a) The impact on quality only.
b) The impact on schedule and quality.
c) The impact of additional risk that may be introduced.
d) The impact on schedule and scope.
21. In which organizational structure is an individual assigned to report to a single manager?
a) Weak matrix
b) Strong matrix
c) Functional structure
d) Projectized structure
22. Which project structure typically results in greater levels of technical depth and
breadth within the parent organization?
a) Weak matrix
b) Strong matrix
c) Functional structure
d) Divisional structure
23. Which is true of a matrix structure?
a) In a matrix structure, employees administrative, developmental, and performance
management are typically focused with their functional manager with proportional
performance and developmental input by project managers.
b) In a matrix structure, employees are typically assigned 50% of the time to functional
tasks and 50% of the time to project tasks.
c) In a matrix structure, employees are equally answerable to both functional and
project managers.
d) In a matrix structure, employees are answerable to the project manager, but report
both to the functional and project manager.

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24. Of the various organizational structure alternatives, for managing projects, which ideally has the fastest response time?

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a) Functional structure
b) Projectized structure
c) Weak matrix
d) Strong matrix

LESSON 7 LAB 1
Reviewing Analyzing Risks and Planning Risk Responses
Activity Time:
15 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

What is the purpose of a qualitative risk analysis?


a) Assess the impact and likelihood of the identified risks actually occurring.
b) Analyze numerically the probability of each risk.
c) Determine if the risk responses have been implemented as planned.
d) Select alternative strategies for dealing with risks.

2.

Which option best describes transference?


a) Reducing the probability of an adverse risk event to an acceptable level.
b) Changing the project plan to eliminate the risk.
c) Shifting responsibility for a response and possible impact of a risk to a third party.
d) Developing a contingency plan.

3.

What are the four main areas that project managers typically consider when discussing
risks?
a) Methods, materials, metrics, and people.
b) Initiation, planning, executing, and closing.
c) Time, cost, quality, and scope.
d) Design, supply chain, production, and marketing.

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4.

What do you call a specific occurrence that may impact the project in the future,
either positively or negatively?
a) Project risk
b) Risk factor
c) Risk-opportunity dichotomy
d) Expected value

5.

What are residual risks?


a) The same as secondary risks.
b) A direct result of implementing a risk response.
c) Those that remain after risk responses have been taken.
d) Those risks that have no impact on the project budget or schedule.

6.

During the projects life cycle, risk identification:


a) Is no longer needed during the closing phase of a project.
b) Is done during the implementation and planning phases only.
c) Is done during the planning phase only.
d) Should take place during each project phase.

7.

For what reasons are the network diagramming method and/or flowcharting used in
risk identification?
a) To determine the root cause of a project risk.
b) To show the effect of a particular risk on a project.
c) To indicate areas of the WBS that should be redrawn as a result of risk identification.
d) To identify all the possible risks for a project.

8.

For what reasons is the Delphi technique often used during risk identification?
a) It emphasizes the potential impact of risk by telling about incidents that illustrate
the consequences of ignoring the risk.
b) It ensures all stakeholder inputs are received and the risk process is not unduly influenced by a small number of persons.
c) It motivates stakeholders to invest in the risk identification process through the use
of anonymous input via questionnaires.
d) It identifies the overall project risks and focuses on a particular project segment or
work package.

9.

Which selection lists processes of risk management?


a) Risk management planning and risk recovery.
b) Qualitative risk analysis and quantitative risk analysis.
c) Risk documentation and risk monitoring.
d) Risk identification and risk avoidance.

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10. Jennifer is a publisher. In order to make sure that her writer delivers on time, she
inserts a penalty clause for late delivery into her writers contract. Which risk
response is Jennifer using?

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a) Risk avoidance
b) Risk mitigation
c) Risk acceptance
d) Risk transference
11. Which risk response can be categorized as either passive or active?
a) Risk avoidance
b) Risk mitigation
c) Risk acceptance
d) Risk transference
12. When is additional response development needed during risk response control?
a) When the organization is restructuring.
b) When the project objectives change.
c) When the contingency reserves are used up.
d) When the original risk response is not working as expected.

LESSON 8 LAB 1
Reviewing Planning Project Procurements
Activity Time:
5 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

Which statement best describes the Time and Materials contract?


a) The buyer pays the seller one fixed price.
b) The buyer pays the seller for time and expenses of project work.
c) The buyer pays the seller a fee, plus a percentage of profit.
d) The buyer pays the seller their allowable costs plus a fee.

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2.

In which contract does the buyer reimburse the sellers allowable costs (defined by the
contract) plus a fee?
a) Firm fixed price plus incentive contract.
b) Cost plus incentive fee contract.
c) Time and materials contract.
d) Cost plus fixed fee contract.

3.

In which contract does the buyer reimburse the sellers allowable costs (defined by the
contract) plus a predefined fee?
a) Firm fixed price plus incentive contract.
b) Cost plus incentive fee contract.
c) Time and materials contract.
d) Cost plus fixed fee contract.

4.

Which is used to evaluate each sellers proposal and make comparisons among different proposals?
a) Procurement documents
b) Procurement statements of work
c) Teaming agreements
d) Source selection criteria

5.

Which document provides a description of the work authorized to be performed by a


supplier?
a) Project plan
b) Procurement statement of work
c) Responsibility assignment matrix
d) Work breakdown system

6.

Which document includes the invitation for bid and request for proposal?
a) Procurement statements of work
b) Procurement document
c) Requirements documentation
d) Procurement management plan

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LESSON 9 LAB 1

LESSON
LABS

Reviewing the Project Work Execution


Activity Time:
20 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

When negotiating for resources, the project manager arranged for the loan of a particular technical expert by implicitly promising to raise the functional managers
visibility with executive stakeholders on the project. Which currency was the project
manager using?
a) Inspiration-related currency
b) Position-related currency
c) Relationship-related currency
d) Task-related currency

2.

Which of these tasks are examples for training a project team?


a) Feedback
b) Computer-based
c) Mentoring
d) Coaching

3.

What would be the important reasons behind the efforts taken by the project manager
to foster motivation?
a) To help the team work through a temporary setback.
b) To help the team to overcome a lack of confidence.
c) To accomplish early wins in the projects life cycle.
d) To ensure that there are no activities that have late start criteria.

4.

Which system notifies the work package owners when to begin work?
a) Project schedule
b) Status review system
c) Work authorization system
d) PMIS

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5.

What does a work authorization system ensure?


a) Work done is in line with the project goals.
b) What work to be done is clearly outlined.
c) Who is to do the work.
d) When the work is to begin and end is understood.

6.

Which element is a form of operational definition?


a) Metrics
b) Control limits
c) PCIs
d) COQ

7.

Which manual or automated tool and technique is used to collect, archive, and distribute project information on a project?
a) Project management information system
b) Communications plan
c) Project management enterprise software
d) Communications and feedback system

8.

Which information is contained within the work performance information?


a) Completed and incomplete deliverables.
b) Actual conformance to quality plan.
c) Intended performance details of the work to be completed.
d) ETC for scheduled activities that have started.

9.

What is quality assurance?


a) Conforming product specifications to customer requirements.
b) Strategizing how to create products that meet quality requirements.
c) A pattern of activities which ensure that the product meets quality requirements.
d) A set of tactics used to determine if goods meet quality requirements.

10. Which statements best describe project quality audit?


a) Contains an approved quality audit methodology.
b) Ensures that efficient or effective processes and procedures are used.
c) Contains future change recommendations.
d) Determines whether the project complies with organizational and project policies,
processes, and procedures.

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11. What does co-location mean?


a) That the team members are distributed geographically.

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b) That the team is located in one physical location.


c) That the team uses a war room.
d) That the team members work from home.
12. Which statement is true of version control?
a) Required so that team members do not over-write one anothers work.
b) Not a problem for project managers who use adequate backup systems.
c) Required to make sure everyone is working with the same, most recent document.
d) Required to maintain only the latest version of the document.
13. Which of these statements are true of a project management office?
a) A team that manages multiple projects concurrently.
b) The same as the office of the CEO.
c) A unit that centralizes and coordinates the management of projects.
d) An organization that may provide project support functions.
14. Which of these statements are true of quality audits?
a) Are only done at the end of the project.
b) Check the fitness of the projects output or the fitness of the quality plan.
c) Are done only once during the entire project life cycle.
d) Are best done at random intervals over the course of the project.
15. Why are quality audits performed?
a) To evaluate whether the project output is fit for the purpose it was intended.
b) To evaluate if best practices identified in the previous projects have been implemented.
c) To evaluate whether the quality management plan is still appropriate after quality
improvements have been made.
d) To evaluate if the quality assurance team members are qualified
e) To evaluate how statistical process control may be used to improve the capability of
a process.
16. What should you do when the quality assurance team suggests quality improvements in
your project?
a) Assess for risk to project success.
b) Subject them to trade-off analysis.
c) Ensure that the change does not affect the project scope.
d) Determine the cost of quality.

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17. On which idea is quality assurance based?


a) Creating a margin of error for product specifications.
b) Preventing problems, rather than fixing them.
c) Establishing upper and lower specifications for products.
d) Increasing production rates by providing training for quality control inspectors.

LESSON 10 LAB 1
Reviewing Managing Project Procurement
Activity Time:
10 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

What does the project manager do when requesting seller responses?


a) The project manager plans purchases.
b) The project manager solicits quotations.
c) The project manager selects a seller.
d) The project manager evaluates project progress.

2.

Which allows potential sellers to ask questions about the project and its requirements?
a) Advertised bids
b) Bidder conference
c) Sellers conference
d) Annual meeting

3.

Which is included on a qualified sellers list?


a) Sellers names
b) Procurement documents
c) Proposals
d) Advertised bids

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4.

Which provides a pass or fail mechanism for criteria critical to project success?
a) Weighted scorecard

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b) Expert judgment
c) Seller rating system
d) Screening system
5.

Which document sent to prospective sellers provides information regarding the


requirement specifications and needs of your project?
a) Procurement management plan
b) Project documents
c) Procurement document
d) Request for information

6.

Which is a legal contractual agreement signed between the organization and an external entity to form a partnership in a buyer-seller arrangement between them?
a) Procurement contract
b) Teaming agreement
c) Seller proposal
d) Purchase order

7.

Which are tools and techniques for the conduct procurement process?
a) Bidder conferences, SWOT analysis, independent estimates, expert judgment.
b) Procurement negotiations, advertising, contingent response strategies, proposal
evaluation techniques.
c) Independent estimates, make-or-buy decisions, qualified seller lists, source selection
criteria.
d) Bidder conferences, independent estimates, expert judgment, procurement negotiations.

8.

Which are outputs of the conduct procurement process?


a) Procurement contract award
b) Qualified seller list
c) Resource calendars
d) Selected sellers

9.

True or False? A procurement contract is a mutually binding agreement that details the
obligations of only the seller.
True
False

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10. Which output of the conduct procurement process lists the quantity, availability, and
utilization of project resources?
a) Project management plan
b) Procurement contract
c) Resource calendar
d) Seller proposal

LESSON 11 LAB 1
Reviewing Monitoring and Controlling Project Work
Activity Time:
15 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

What type of information is documented in the project management plan?


a) The information about project status, scheduled activities, and issues.
b) The processes of executing and controlling during the project.
c) The early stages of the planning phase of the project.
d) The potential changes to the project.

2.

What statements best describe inspections?


a) May also be referred to as product reviews, audits, or walkthroughs.
b) Involve comparing schedules and budgets to the actual project results.
c) Are examinations of change requests to verify that the objectives are met.
d) Are only effective if done at random intervals in a production process.

3.

Which statement best describes the project controlling process?


a) Is used strictly to control scope changes.
b) Is used by the project team throughout the project.
c) Is used only in the control phase of the project.
d) Is used to control changes made as a result of project planning and execution.

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4.

The control processes are repeated throughout the project life cycle. Therefore,
which term can be attributed to the control processes?

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LABS

a) Facilitative
b) Integrative
c) Core processes
d) Iterative
5.

What types of information do the performance reports provide you with?


a) Percentage of activity work completed to date.
b) Activities to be completed from the current date.
c) Activities completed to date.
d) Activities started to date.

6.

What is scope creep?


a) Reduction of project scope.
b) A type of residual risk.
c) Undocumented changes to the project scope.
d) An activity that needs to be included in the project schedule.

7.

Which documents are included in a projects scope baseline?


a) WBS dictionary
b) Work breakdown structure
c) Milestone list
d) Project charter

8.

What actions should be taken regarding issues relating to the customers installation
and support requirements?
a) Addressed if currently part of the projects scope.
b) Ascertained through a cut-over needs analysis.
c) Addressed as a separate project.
d) Addressed as a change to the current projects scope.

9.

What is the overall process of managing changes that affect the function or characteristics of the deliverable known as?
a) Managing by objective
b) Change control management
c) Managing by exception
d) Configuration management

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10. Which element is a collection of formal, documented procedures that defines the steps
by which the project may be changed?
a) Managing by objective
b) Change control system
c) Managing by exception
d) Configuration management
11. Who is responsible for ensuring that changes are processed through the integrated
change control process?
a) Project sponsor
b) President
c) Project manager
d) Functional manager
12. Which statements are true of change requests?
a) Must be documented.
b) Can come from anyone.
c) Will not affect the project scope.
d) Must be subjected to an integrated change control process.

LESSON 12 LAB 1
Reviewing Monitoring and Controlling Project Schedule
and Costs
Activity Time:
15 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

Which analytical tools are used to assess project progress and identify the magnitude
of cost, resource, and production variations?
a) Gantt chart review
b) Monte Carlo analysis
c) Project cost baseline audit
d) Earned value analysis

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2.

What does a Cost Performance Index (CPI) of 0.8 mean to the project?
a) Under-budget to date.

LESSON
LABS

b) Over-budget to date.
c) On budget.
d) Nothing; CPI values are always above 1.0.
3.

For what reasons are Gantt charts useful for reporting project progress?
a) They display schedule performance trends.
b) They are easy to read.
c) They are available in most project management software packages.
d) They provide detailed analysis for making adjustments.

4.

A project has a negative cost variance and an SPI less than 1.0. What does this mean to
the project?
a) It is over-budget and ahead of schedule.
b) It is under-budget and behind schedule.
c) It is over-budget and behind schedule.
d) It is under-budget and ahead of schedule.

5.

What is the purpose of trend analysis?


a) Forecast future project performance.
b) Improve variance reporting.
c) Create change requests.
d) Mitigate the harmful effects of scope creep.

6.

What is the essential first step in the control schedule process?


a) Making changes to the project schedule.
b) Computing the SPI.
c) Making sure schedule requirements are clear.
d) Determining the current status of the project schedule.

7.

What is the difference between the Earned Value (EV) and the Planned Value (PV)?
a) Cost variance.
b) Schedule variance.
c) Unearned value.
d) Actual cost

8.

What does a Schedule Performance Index (SPI) of 1.2 mean to the project?
a) Ahead of schedule.
b) According to schedule.
c) Behind schedule.
d) Nothing; SPI values are always below 1.0.

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LABS

9.

During the control schedule process, the project schedule serves what functions?
a) Schedule baseline.
b) Basis for measuring project performance.
c) Cost baseline.
d) Time management component of the project.

10. What is the Schedule Variance (SV) if the Planned Value (PV) is $275,000 and the
Earned Value (EV) is $300,000?
a) $25,000
b) - $25,000
c) $125,000
d) $575,000
11. What are the changes made to keep project activities on schedule called?
a) Corrective actions.
b) Change requests.
c) Performance measurements.
d) Schedule baselines.
12. How do you calculate the Cost Performance Index (CPI)?
a) Divide the Earned Value (EV) by the Actual Cost (AC).
b) Divide the Earned Value (EV) by the Planned Value (PV).
c) Subtract the Actual Cost (AC) from the Earned Value (EV).
d) Subtract the Planned Value (PV) from the Earned Value (EV).
13. Based on the performance measures indicated in the following table, what is the Cost
Variance (CV) for Case 3?

a) -1,000
b) 1,000
c) 2,000
d) -2,000

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14. Based on the performance measures indicated in the following table, what is the
Schedule Variance (SV) for Case 2?

LESSON
LABS

a) -1,000
b) 1,000
c) 2,000
d) -2,000
15. In the cost curve shown in the following figure, Height A represents:

a) Cost variance
b) Schedule variance
c) Earned value
d) Budget at Completion (BAC)

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LESSON 13 LAB 1
Reviewing Monitoring and Controlling Project
Performance and Quality
Activity Time:
15 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

Which reason causes variance to be sporadic, unusual, and difficult to predict?


a) Random causes
b) Common causes
c) Special causes
d) External causes

2.

What is the statistical range of variation for processes or products called?


a) Specification limits
b) Tolerances
c) Control limits
d) Quality standards

3.

500 rejected parts is an example of which sampling technique?


a) Attribute sampling
b) Variable sampling
c) Random sampling
d) Stratified sampling

4.

Which statement is true of the quality problems that are faced by organizations?
a) Originate on the shop floor because of waste and rework.
b) Could be avoided by management taking action on potential quality improvement
ideas.
c) Could be eliminated if supervisors monitored their work more closely.
d) Originate in the QA organization where the ultimate responsibility for quality rests.

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5.

A + or 3-sigma limit indicates approximately what percentage of the process output


will be within acceptable limits?

LESSON
LABS

a) 30.3
b) 80.3
c) 68.5
d) 99.7
6.

Which chart is ordered by frequency of categorized causes of poor quality performance?


a) A control chart
b) A fishbone diagram
c) A Pareto diagram
d) A trend analysis

7.

The graphic is an example of which diagram/chart?

a) A control chart
b) A fishbone diagram
c) A Pareto diagram
d) A cause-and-effect diagram
8.

What action is taken to bring a product or service into compliance with customer
specifications?
a) Scrap
b) Audit
c) Recall
d) Rework

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LABS

9.

The graphic is an example of which diagram/chart?

a) A control chart
b) A fishbone diagram
c) A Pareto diagram
d) A decision tree diagram
10. A Pareto diagram is a tool used to determine the relative impact each quality problem
has on project performance. Which statement best describes the philosophy of the
Pareto Principle?
a) In general, 80% of the quality problems can be justified as correctable using a costbenefit analysis. The remaining 20% are not financially worth fixing.
b) To achieve zero defects, all quality problems, including those that do not have a
direct cost, should be corrected.
c) The vast majority of defects are caused by a small percentage of the identifiable
problems. Improvement efforts therefore should be reserved for these vital few problems.
d) To minimize financial loss to the firm from quality problems, all problems that have a
measurable cost should be corrected.
11. Which technique is useful for identifying corrective action alternatives?
a) Changing the project scope.
b) Requesting additional funds immediately.
c) Holding a brainstorming session with the project team.
d) Leaving decision-making to the functional managers.
12. Which document should reflect the updates to project performance and control documents?
a) Project plan
b) Work breakdown structure
c) Change control plan
d) Cost baseline

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LESSON 14 LAB 1

LESSON
LABS

Reviewing Monitoring and Controlling Project Risks and


Procurements
Activity Time:
5 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

When a project is terminated before its scheduled completion date, which of these is
not a correct action?
a) You should halt further expenditures in an orderly way.
b) You should cancel vendor contracts.
c) You should identify and document reasons for termination.
d) You should work with the sponsor to identify status of complete and incomplete
deliverables.

2.

Which are inputs to administer procurements?


a) Work performance information
b) Contracts
c) Procurement performance reviews
d) Approved change requests

3.

Which are suitable contract performance milestones?


a) Partial deliveries of the requirements.
b) Deferred deliveries of the requirements.
c) Completion of selected portions of the project work.
d) Delivery of preliminary versions of the product.

4.

Which of these are true of supplier provided component surveillance?


a) Is illegal monitoring of a suppliers performance.
b) Is a good way to mitigate risk of supplier non-performance.
c) Is not a suitable acceptance procedure.
d) May include making site visits.

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LABS

5.

As a buyer, what is the purpose of an on-site visit to a supplier?


a) Assess the engagement of the workforce.
b) Determine if your suppliers employees are legal workers.
c) Determine contract performance.
d) Develop a change control system.

6.

Which statement is true of the contract change control system?


a) Belongs to the seller rather than the project organization.
b) Contains all of the forms, performance tracking, and procedural information needed
to deal with contract changes.
c) Does not feed information into the projects change control system.
d) Does not include procedures for reviewing and resolving contract disputes.

LESSON 15 LAB 1
Reviewing Project Closure
Activity Time:
15 minutes
Scenario:
In this lab, you will have an opportunity to review the PMP certication exam related information that was presented in this lesson.

1.

What is true of lessons learned during the project?


a) Should be documented only in the closeout report.
b) Should consist of only project data.
c) Should be documented throughout the project.
d) Should consist of only things that went well during project execution.

2.

Which process is concerned with obtaining formal stakeholder acceptance of completed project deliverables?
a) Project plan execution
b) Scope management
c) Scope verification
d) Quality assurance

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3.

Which activities are included in an orderly close-out process?


a) Formal acceptance by the customer.

LESSON
LABS

b) Project milestone review.


c) Closure of all contracts.
d) Administrative closure and final reporting.
4.

Which is true of a formal project handoff?


a) It is a bad idea because it embroils the project in the customers political intrigues.
b) It can positively shape perceptions of the product by highlighting product benefits.
c) It should only be held if the customer pays extra for this service.
d) It does not have a structured agenda for the handoff meetings.

5.

At what points does administrative closure occur in a project?


a) At the end of the project.
b) At the end of each project phase.
c) Upon delivery of pre-specified milestone deliverables.
d) On completion of the project scope definition.

6.

Which is true of project archives?


a) Should never contain computerized records, because they may not be retrievable in
later software.
b) Should include key information, such as baselines and performance data.
c) Should be handed to the sponsor at the end of the project.
d) Should be updated only at the end of the project.

7.

When can the contract close-out occur?


a) At the end of a project only.
b) Whenever a contract is completed and accepted.
c) At the end of a project only, unless the project is terminated early.
d) Whenever the seller submits an invoice.

8.

What are the goals of contract close-out?


a) To arrange for final settlement of seller payments and claims.
b) To verify that work was done and delivered to specification.
c) To provide performance evaluation of seller staff.
d) To update contract records and documents.

9.

Which content categories should the final project report include?


a) Administrative performance and recommendations.
b) Project lessons learned information.
c) Project structure and recommendations.
d) Project management performance and recommendations.

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10. For what reasons is publishing a project close-out schedule a good idea?
a) It helps keep people motivated by imposing a deadline.
b) It provides a sense of order in a time of fluctuating team membership.
c) It helps team members who are leaving to understand what they must accomplish or
hand off before they can move to a different position.
d) It provides stakeholders with information on the status of the project.
11. Which is the output of the close project or phase process?
a) Project management plan updates.
b) Final product, service, or result transition.
c) Contract closure.
d) Work performance information.

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SOLUTIONS

SOLUTIONS
Lesson 1
Activity 1-1
1.

Upon review of the document, at which point in the project management process are
you?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling
e) Closing

2.

3.

Match each stakeholder with the appropriate responsibility.

Sponsors

a.

Customers/users

b.

d
b

Project managers
Project team

c.
d.

Operations managers

e.

The PMO

f.

Supervises and coordinates the management of all projects in an


organization.
Performs project work and might not
be involved in the management side
of the project.
Denes needs for the project output.
Keeps the sponsor and the stakeholders informed.
Signs and publishes the project charter.
Manages the core business area of the
organization.

Based on the OGC Business Transformation Scenario Overview document, who are the
appropriate stakeholders for the Business Transformation program? Choose all that
apply.
a) Senior executives
b) Venture capital principals
c) CEOs and CFOs
d) Program IT staff
e) OGC travel

4.

Which project management process will you apply to refine program objectives and
the courses of action the project team will take to meet program objectives?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling

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SOLUTIONS
e) Closing
5.

Which project management process group will you apply to regularly measure progress
and identify variances from the project management plan?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling
e) Closing

6.

Which project management process group will you apply to integrate people and other
resources to fulfill the project management plan for the program?
a) Initiating
b) Planning
c) Executing
d) Monitoring and controlling
e) Closing

7.

True or False? OGC follows an overlapping phase-to-phase relationship in the current


program.
True
False

Activity 1-2
1.

Which statement is not a responsibility of a PMO?


a) To plan and execute projects and subprojects based on the overall business objectives.
b) To primarily approve and reject projects that do not support business goals.
c) To audit projects for compliance to project management processes and metrics.
d) To ensure that all of the projects included in the portfolio are aligned with the business strategic objectives and priorities.

2.

Who provides the software, templates, and standardized policies for a project?
a) Stakeholders
b) Human resources
c) Project Management Office (PMO)
d) Project budget

3.

True or False? Based on the scenario, OGC is using specific criteria to determine which
projects will be included in the portfolio.
True
False

4.

Which statement best describes a program?


a) A set of repetitive ongoing tasks.
b) A set of related projects that have a common objective.

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c) A collection of projects that are grouped to achieve the strategic business objectives
of an organization.
d) A temporary endeavor that is undertaken to create a unique product, service, or
result.
5.

Which tasks produce the same outcome every time they are performed?
a) Programs
b) Projects
c) Portfolios
d) Operations

Activity 1-3
1.

Based on the scenario, what unethical behavior has been described?


Funds have been allocated to potentially non-existent contractors. In the PMI Code of
Ethics and Professional Conduct, the guidelines for Upholding Responsibilities to the Profession clearly states to disclose to clients, customers, owners, or contractors significant
circumstances that could be construed as a conflict of interest or an appearance of impropriety.

2.

Within the context of your organization, what steps would you take next and within
what time frame?
Once you are sure of your facts you should inform your manager. You dont want your
manager to be surprised by bad news. Gradually escalate the issue following the projects
organizational structure. Continued escalation should occur if there is no substantive,
timely action at any given step in the process that produces clear observable results.

3.

What would you expect your manager, the overall program manager, to do next and in
what time frame?
Including the next level of management during a two to three week investigation, if a
determination of unethical behavior has been substantiated, the management should be
expected to engage people from the finance and legal departments.

4.

In a general fashion, outline what your organization has in place that might facilitate
the resolution of this problem.
Many organizations have specific financial controls that project managers must follow.

5.

What would you change in your organization to prevent the above scenario from
occurring?
Engage the CFO and CEO to rapidly put in place a set of controls that are highly integrated within the organizations core financial processes and controls. Develop and
deliver the training in how to implement the controls for all current and future projects.
Make it clear to the project management community that this is nonnegotiable. Establish
irregular but frequent audits for the next several quarters until the new processes and
behaviors have been integrated into the organizations operation and culture.

Activity 1-4
1.

One of your team members, a shy person, values working quietly on projects and
appreciates an ordered and secure work environment. Which assignment do you think
would be most motivating for this person?
a) An assignment with frequent changes and interruptions.

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b) An assignment to lead a new team.
c) An assignment to work on independent research.
d) An assignment to represent the company in the public eye.
2.

You have directed one of your team members to complete a task, and he has tried to
take your directions and work on the project independently. Once the job is completed, you are disappointed to find that it was not done the way you had envisioned
it. As a manager, which response would you consider most appropriate?
a) I guess I did not adequately explain to you what I had in mind. Let me try to explain
it better.
b) I feel very disappointed that you did not do what I specifically asked you to do.
c) If you are not willing to follow my directions exactly, I will find someone who is.
d) I guess if I want something done right, I have to do it myself.

3.

Tom is a manager who maintains an optimistic outlook and lifts employees spirits with
his unique sense of humor. The employees feel that Tom listens to their concerns and
looks out for them in an ever-changing organization. As a result of this, his employees
want to work harder. This results in Toms team having one of the highest productivity
rates in the organization. His employees morale is usually fairly high, and they feel
like they can have fun occasionally on the job. Tom appreciates how much work the
team processes daily. Based on this scenario, what interpersonal skill is Tom displaying?
a) Communications skills
b) Decision making skills
c) Team building skills
d) Influencing skills

4.

You are leading a team that is contemplating instituting new work processes to help
improve productivity. Your productivity has fallen off, deadlines are not being met,
and the team members are complaining about a lack of resources as well as being
overworked. The management has blamed the employees work habits and inefficiency, while employees have complained about managements failed leadership and
general myopia. What is the most important decision you will make while tackling your
teams problems?
a) Develop an individual strategy to deal with each problem.
b) Search for an underlying cause of problems.
c) Avoid involving individuals from outside your immediate team.
d) Always assume that the cause of your problem was a major change.

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Lesson 1 Follow-up
Lesson 1 Lab 1
1.

What information and data will project managers use to guide their work in a specific
process?
a) Tools
b) Techniques
c) Inputs
d) Outputs

2.

Which process group involves defining the need for the project or phase and obtaining
a commitment to move forward?
a) Planning
b) Executing
c) Controlling
d) Initiating

3.

Which process group involves developing a strategy and refining objectives?


a) Monitoring and controlling
b) Executing
c) Planning
d) Initiating

4.

Which knowledge area ensures that the project will satisfy the needs for which it was
undertaken?
a) Project integration management
b) Project scope management
c) Project quality management
d) Project communications management

5.

Which project management knowledge area includes schedule control?


a) Project scope management
b) Project time management
c) Project cost management
d) Project communications management

6.

What does the term progressive elaboration refer to?


a) Constantly changing project scope.
b) Gaining additional clarity and detail of project deliverables as the project moves
through the project life cycle.
c) Letting team members make scope changes without customer approval.
d) Tailored guidelines and criteria for organizational processes that satisfy specific
project needs.

7.

What are the values that are considered most important to the global project management community?

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a) Respect, fairness, honesty, and compassion.
b) Fairness, honesty, compassion, and responsibility.
c) Honesty, compassion, responsibility, and respect.
d) Responsibility, respect, fairness, and honesty.
8.

What are the barriers that deter good teamwork?


a) Withholding information
b) Ineffective meetings
c) Uncontested ideas
d) Cultural diversity

Lesson 2
Activity 2-1
1.

Based on the scenario, who is responsible for portfolio management within the organization?
a) Project managers
b) Project sponsors
c) Stakeholders
d) Senior management

2.

How would you describe portfolio management?


A collection of projects and programs that are grouped together to facilitate effective
management of that work to meet strategic business objectives.

3.

Who is responsible for a group of similar projects?


a) Program manager
b) Project manager
c) Operations manager
d) Portfolio manager

Activity 2-2
1.

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2.

Decision tree

a.

Criteria proling

b.

Weighted factor

c.

Q-sorting

d.

Delphi technique

e.

A type of screening system decision


model that uses a branch diagram to
choose among two different alternatives.
A decision model using groups of
people to rate the relative priority of
a number of alternatives.
A group technique that extracts and
summarizes anonymous group input
to choose among various alternatives.
A decision model that applies a multiplier based on importance to each
criterion, which is factored into the
scoring.
A decision model used to evaluate
and score alternatives on each criterion.

Choose the option to which the OGCs project selection criteria should be linked.
a) Their strategic objectives
b) Their cost-benefit analysis
c) Their feasibility analysis
d) Root cause analysis

3.

In OGCs decision-making methodology, there are 10 weighted project criteria that


yield a score which determines the projects priority. One of those criteria is purely
subjective for those times when an emphasis on go-with-your-gut is appropriate. The
resulting statistics are fed back to the participants along with a summary of the
groups reasoning. Participants can then revise their rating using a zero-to-ten scale.
The process repeats until some pre-determined score is reached. Which combination
of scoring and rating systems is being used?
a) Decision tree and weighted factor
b) Decision tree and Q-sorting
c) Weighted factor and Q-sorting
d) Weighted factor and Delphi technique

4.

You have moved into the feasibility analysis and cost-benefit analysis of project selection. One project budgeted for $100,000 came out of the selection process. This is the
company-wide training initiative to be implemented for all project managers to adhere
to PMO project management standards and guidelines. The intent of the training is to
ensure that each member of the project management team understands the scope,
time, and costs in managing competing project requirements. The program will include
specific technology training in the use of a software tool that OGC recently purchased
that totaled $20,000 so that managers can create, manage, and track their projects.
Currently only 10% of the project managers are using the software. One senior manager is questioning the need for the budget to be as high as $100,000. What are your
justifications for the allotted budget? What are the benefits?
The justifications include: 1 There will be a higher return on software investment by
increasing efficiencies in team members use of the tool. 2 Compare the cost of the
software with the current 10% usage of the managers in the company. 3 Knowledge of
this tool will ultimately provide better reporting on the status of each individual subproject to the overall business transformation project.The benefits include: 1
Consistency can be maintained across all projects that are included in the portfolio. 2
Provides an opportunity for all managers at all levels in identifying what is involved in
managing competing project requirements. 3 Provides reinforcement of the companys
strategic objective before project initiation.

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Activity 2-3
1.

What might be a logical first step in preparing the SOW?


a) Verify if you should use the standard OGC SOW format.
b) Present the information in a logical sequence.
c) Provide a description of the project completion criteria.
d) List every person or work group that will perform actual work on the project.

2.

Based on the scenario, which one or more of the following should be included in the
SOW?
a) A clear description of what is required for the internal and external training.
b) The specifications as to how both the internal and external training will be produced
and methods for ensuring that the specifications have been met.
c) A detailed breakdown of all deliverables that will be required to complete the
project.
d) A list of the human resources or work groups that will perform actual work for the
training project.
e) The estimated date of completion for both the internal and external training classes.

3.

Yes or No? Based on the scenario, do you think that it will be necessary for OGC to create an additional external SOW for this training project?
Yes
No

Activity 2-4
1.

How would you describe the goals and objectives of this project?
All Business Transformation team members must provide consistency in developing
project schedules in order to efficiently manage the many projects that will fall under
the Business Transformation umbrella. Team members must be able to identify all new
internal processes that are the direct result of the Business Transformation acquisitions.

2.

How would you describe the projects impact to the organization?


The newly combined companies are depending on integrating project management best
practices and all project managers becoming proficient with a new scheduling and tracking software tool. Without these significantly enhanced skills, the business
transformation initiative will fail. The impact to the organization is extremely high and
cannot be overstated.

3.

Are there any assumptions that you would include? If so, describe them.
Since the company cannot provide the software training due to classroom and computer
limitations, it is expected that the company will need outside help from a training provider who has expertise with the project software and can manage the classroom
training. Internal training will be developed by the Business Transformation PMO team.

4.

Based on what you know at this point, how would you describe the primary
deliverables for this project?
Internal Trainingfor all new internal processes that are the direct result of the Business
Transformation acquisitions. External Trainingoutsourced training provider to conduct a
basic, intermediate, and advanced level of training on the project software.

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5.

Yes or No? At this time, are there any real constraints in the project charter?
Yes
No

Activity 2-5
1.

How would you approach ascertaining the total list of project stakeholders for the OGC
PM Training Roll-Out project?
Answers will vary, but may include: study the input documents, namely the project charter and the stakeholder register for the OGC Quality Plans Training project, to identify
the potential stakeholders of the project. The objectives, business need, assumptions,
and project description mentioned in the project charter are understood from the perspective of contributors in the organization. A dialog with the project sponsor will be of
great help. Document this information along with details of impact and support that
these stakeholders would have on the project.

2.

True or False? Members of the OGC PM Training Roll-Out project team are considered
to be stakeholders.
True
False

3.

How would you identify the positive and negative stakeholders of the project?
Answers will vary, but may include: you would perform a stakeholder analysis to identify
all potential stakeholders, analyze their potential impact or support to the project, and
assess how each stakeholder is likely to positively or negatively react or respond to various situations during the project life cycle. This would result in creating and documenting
a stakeholder management strategy for the project.

4.

Which statements are true of the stakeholder management strategy?


a) Identifies key stakeholders who can impact the project.
b) Describes the government and industry standards to be applied to stakeholder management.
c) Describes the level of participation for each identified stakeholder in the project.
d) Identifies the stakeholder groups and their management.

5.

How would you establish levels of stakeholders based upon their interest in the project
and the impact they can have on the project?
Answers will vary, but may include: you would perform a stakeholder analysis to identify
the various levels of stakeholders, use interviews to gain insight into their interest in the
project, assess their support and impact on the project, and categorize these stakeholders into various levels based on their interest and their impact on the project.

6.

What is the documentation needed for each level of stakeholder?


Answers will vary, but may include: you will document information relating to the stakeholders identification, their assessment, and their classification in the stakeholder
register. This information could include the stakeholder name, primary role or designation, their interest or objective, their influence, the communication strategy and mode,
and the artifacts or documents required for these stakeholders.

7.

Which documents can you use as a basis for your stakeholder register?
You can use the OGC Project Charter and the OGC Quality Plans Training Stakeholder Register as a basis for identifying stakeholder information.

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Lesson 2 Follow-up
Lesson 2 Lab 1
1.

Choose the component that should always be included in the project charter.
a) A breakdown of the functions and activities to be performed on the project.
b) A list of the project stakeholders and their areas of responsibilities.
c) A schedule of project activities.
d) A statement of project goals, via a project SOW, and authorization of the project
manager to use organizational resources on the project.

2.

Which one or more of these is a common reason for an organization to undertake a


new project?
a) Meeting a customers needs.
b) Gaining a competitive advantage in the market.
c) Identifying best practices.
d) Meeting regulatory requirements.

3.

What is the basic purpose of a feasibility study?


a) To determine the major activities within the project and break them down into component work packages.
b) To determine if the organization should do the project based on economic and/or
societal costs associated with what is being proposed.
c) To link the project to strategic goals.
d) To determine how to manage a project throughout its life cycle.

4.

Choose the component that a formal feasibility study is likely to contain.


a) Estimate of the time and cost for each activity in a project.
b) Estimate of the time and cost for each of a number of project alternatives.
c) Likelihood of the project to meet capital budgeting targets.
d) Rating of the relative priority of a number of projects.

5.

Which are reasons that it is important for the project charter to be signed by a highly
placed person in the organization?
a) This indicates the relative importance and priority of the project within the organization.
b) This provides authority for the project manager to cross functional boundaries when
carrying out project plans and activities.
c) This provides a signed document, which indicates that the project team members can
start work on the project.
d) This provides greater credibility with people outside of the project who may be asked
to contribute resources or join the project team.

6.

Which is a quick and objective method for evaluating project proposals?


a) Screening system
b) Weighting system.
c) Team-based evaluation system

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d) Capital budgeting system
7.

How will you categorize the use of standard organizational procedures and terminology
by all team members and suppliers?
a) A bad management practice because it stifles creativity.
b) A bad management practice because it dictates practices that may not be industry
standard best practices.
c) A good management practice because it helps establish the foundation and framework for a common project language.
d) A good management practice because it highlights the project managers absolute
authority over the project.

8.

Which approach documents an approach to increase the support and minimize negative impacts of stakeholders throughout the project life cycle?
a) Stakeholder analysis
b) Stakeholder management strategy
c) Stakeholder communications planning
d) Risk management planning

9.

What are the tools and techniques of the identify stakeholders process?
a) Project charter
b) Stakeholder analysis
c) Organizational process assets
d) Expert judgment

Lesson 3
Activity 3-1
1.

As you review the OGC Project Management Plan outline, identify the elements that
your organization requires, if any, for your project management plans.
Answers will vary, but may include: the table of contents, templates for making Revision
History, Deliverable Approval Authority Designations, and Project Team Roles and Responsibilities entries, Glossary, and Definitions.

2.

Match the project management plan input with the appropriate description.

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3.

Project charter

a.

Outputs from planning


processes

Enterprise environmental
factors

Organizational process
assets

This input uses baselines and subsidiary management plans that are
integrated to create or update the
project management plan.
b. This input uses existing processes
that may impact a projects success
such as policies, guidelines, or
knowledge gained from previous
projects.
c. This input includes factors that inuence the projects success, such as
anything from existing assets to external factors that should always be
considered during plan development.
d. This input authorizes and provides
vital information relating to the
project based on which the project
management plan is built.

Which subsidiary plan of the project management plan deals with closure of contracts?
a) Scope management plan
b) Procurement management plan
c) Process improvement plan
d) Communications management plan

Activity 3-2
1.

What would you do to identify the internal stakeholders for the OGC PM Training RollOut project?
Answers will vary, but may include: you will interview the sponsor, Vicky Morris, to identify the various internal stakeholders for the project. These internal stakeholders will
belong to departments such as Legal, Administration, and IT Infrastructure. You can
interview the supervisors of these departments to know the high level details of approximately 50 managers who will need to complete the training.

2.

Where would you start the process of finding the external stakeholders for the OGC PM
Training Roll-Out project?
Answers will vary, but may include: you will interview the sponsor, Vicky Morris, to identify the various external stakeholders of the project. Further, some of the internal
stakeholders you identify will most likely be in touch with the external stakeholders, and
can be of great help to you as you identify appropriate external stakeholders.

3.

Which is the method used to identify requirements by studying the individuals in their
work environment or while using the product?
a) Surveys
b) Facilitated workshops
c) Observations
d) The Delphi technique

4.

For the OGC PM Training Roll-Out project, which one or more of these tools and techniques could you use initially to identify the requirements of the stakeholders?
a) Interviews

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b) Focus groups
c) Facilitated workshops
d) Prototypes
5.

In which output document would you store the guidelines on requirements


prioritization along with product related metrics for the OGC PM Training Roll-Out
project?
a) Requirements documentation
b) Requirements traceability matrix
c) Requirements management plan
d) Idea/mind map

6.

Which documents can you use as a basis for your requirements documentation?
You can use the project charter and your notes from discussions with stakeholders given
in the scenario as a basis for the requirements documentation.

Activity 3-3
1.

Which documents can you use as a basis for your scope statement?
You can use the Requirements Documentation and the Project Charter as a basis for your
scope statement.

Activity 3-4
1.

When creating the WBS for the OGC Training Roll-Out, what types of reference materials and other inputs could you use?
You can reference the requirements documentation, project charter, project statement
of work, and the project scope statement. You should also determine if there is an existing WBS template that can be used.

2.

Based on the scenario, which work breakdown structure in Group 1 of the OGC Work
Breakdown document follows PMI recommendations for the OGC Training Roll-Out
project?
a) WBS A
b) WBS B
c) WBS C
d) WBS D

3.

As the project manager, you are asked to decompose the WBS deliverables. Which
activity would you perform during decomposition?
a) Assign unique ID numbers to each deliverable.
b) Break the deliverables down into smaller components.
c) Arrange the deliverables into categories, based on risk.
d) Organize the deliverables, based on which project team is responsible for their
completion.

4.

The scenario shows two deliverables that have been partially decomposed during a
recent meeting. Which of these activities are decomposed? Choose all that apply.
a) Assemble Internal Training

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b) Identify Resources
c) Needs Assessment
d) Determine External Training Provider
5.

In Group 2, which WBS would most resemble the inclusion of the decomposed
deliverables?
a) WBS A
b) WBS B
c) WBS C
d) WBS D

Activity 3-5
1.

Based on the scenario, develop the second-level work components for the WBS.

The second-level work components for the Warehouse Management System project will
look like this.
2.

Based on the points you recorded from the kick-off meeting and discussions with the
stakeholders, what work packages would you include in the Project Management work
component?

The work components for the Project Management work component will look like this. It
includes Project Planning, Schedule and Cost Management, Scope Management, Task Management, Project Communications, Human Resource Management, Space and Facilities
Management, Risk Management, Procurement Management, and Quality Management.

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3.

To the WBS you have created, add the subcomponents for the Software Design and
Development work component and their corresponding work packages.

Your WBS would now look like this. Software Design and Development work component
will include the Software Design, Software Build, and Unit Test subcomponents.
4.

Complete the remainder of the Warehouse Management System project WBS.

The completed work breakdown structure for the Warehouse Management System project
will look like this.

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Lesson 3 Follow-up
Lesson 3 Lab 1
1.

What is the item at the lowest level of a WBS?


a) Task
b) Sub-task
c) Work package
d) Cost account

2.

What is the purpose of the scope management plan?


a) List all of the tasks that will be included in the project.
b) Prevent scope creep by ensuring that all changes to a project plan be reviewed by a
review board.
c) Identify how the projects scope will be defined, verified, and controlled when
changes are proposed.
d) Archive all of the information in WBS, RBS, and PBS.

3.

What is meant by the code of accounts?


a) A numbering system used to define activities in the statement of work.
b) A numbering system that identifies the specific accounting category for each element
of project work.
c) A numbering system that rates activity durations for each work package.
d) A numbering system for analyzing cost based on expert opinion.

4.

What is the purpose of scope definition?


a) Create an overall strategy for approaching the project.
b) Define which tasks are included in a project and which tasks are not included.
c) Provide a common understanding of the projects major objectives by identifying
what is within scope and what is currently out of scope.
d) Define the quality parameters affecting project procurements.

5.

What are the reasons that deliverables should be broken down into work packages during the development of the work breakdown structure?
a) In order to define the scope of the project.
b) In order to make the activities easier to manage.
c) In order to make costing easier.
d) In order to create activities that can be assigned to a single organizational unit.

6.

What is the main purpose of the work package decomposition process?


a) Document results of lessons learned.
b) Break down of deliverables into component activities.
c) Estimate costs and duration for each sub-project.
d) Allocate resources to each activity.

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7.

Which component is a graphical representation of the deliverables included in the


project?
a) Resource assignment matrix.
b) Work breakdown structure.
c) Organizational breakdown structure.
d) Project schedule.

8.

Which elements are included in a project scope statement?


a) Detailed project risks.
b) Project justification and deliverables.
c) Project description and objectives.
d) Schedule and costs for the project.

9.

Which statement is true of WBS templates?


a) They are time savers for the project team.
b) They are usually not used, because no two projects are the same.
c) They are only useful for high technology projects.
d) They are used only when all of the work packages are identical to the project.

10. What does the WBS dictionary consist of?


a) Terms used by project managers.
b) Information about each work package in the WBS.
c) Whos who on the project team.
d) Details of the scope of the project.
11. Which process involves defining and documenting the stakeholders needs and expectations to meet the project objectives?
a) The define scope process.
b) The develop project management plan process.
c) The collect requirements process.
d) The create WBS process.
12. Which technique involves decision making methods such as Unanimity, Majority, Plurality, and Dictatorship?
a) Group decision making techniques
b) Facilitated workshops
c) Interviews
d) Questionnaires and surveys
13. Which document links the requirements to their origin and tracks them throughout the
project life cycle?
a) Requirements management plan
b) Stakeholder register
c) Requirements documentation
d) Requirements traceability matrix

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Lesson 4
Activity 4-1
1.

The first step in creating an activity list is to gather your resource materials. Which
items below will be helpful in creating your list?
a) Cost-benefit analysis
b) The WBS
c) The scope statement
d) Activity lists from similar projects

2.

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The completed activity list should look like this.

Activity 4-2
1.

During a recent meeting with your team, a decision was made to add five days
between identifying resources and defining roles and responsibilities due to other
commitments that some members of the team need to address in other projects. Will
this be a lag or lead relationship that you should account for? Please explain.
There will be a five day lag between identifying the resources and defining roles and
responsibilities.

2.

Referring to the OGC Activity List document, for the Assessing Needs activity, which of
the following activities are summary activities? Choose all that apply.

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a) Training Needs Review with Key Resources
b) Identify High-Level BT PM Needs
c) Training Needs Review with PMO Steering Committee
d) Review Current Documentation for Deficiencies
3.

Referring to the OGC Activity List document, draw your network diagram for WBS
TRN0001, Assembling Internal Training Team. Make sure that all the required activities
are included in your network diagram. Make sure your diagram shows the sequence
constraints from left to right. Check to make sure the activities that are connected by
arrows correctly indicate their precedence relationship. Include inside each node the
WBS Code, duration, and lag or lead time.

The completed network diagram should look like this.

Activity 4-3
1.

What are some additional factors that you would consider when identifying the
resources to fill the identified roles?
Answers will vary, but may include: resource availability, reporting structure, experience, and costs.

2.

What are some things that you would consider when determining the software training
vendor?
Answers will vary, but may include: OGCs organizational policies that could affect
resource acquisition and usage, availability, industry expertise, travel distance, and
costs.

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3.

As the project manager, what factors would you consider to make a decision on
whether to outsource development of the internal training content?
Answers will vary, but may include: verifying the project scope statement and considering
resource availability, resource experience, costs, and time for development.

4.

What other types of resources, other than people, would you list for this project?
Answers will vary, but may include: availability of an internal classroom(s) to accommodate the number of people to be trained, an in-house expert, and IT support. Materials.
Necessary equipment, such as computers, software, and overhead projector and possibly
an external copy center.

Activity 4-4
1.

For the summary task, Resources Identification, the team members explained that,
based on past experience, they would need a week to complete the interviews, if all
of the managers were available during that week. When asked how many hours they
expected to work during the week, they responded with 10 hours. Based on their
response to this question, what will the elapsed time be for these activities?
a) 10 hours
b) One week
c) 50 hours
d) A day and a half

2.

When the team members determined how long they thought it would take to complete
the manager interviews, what type of duration estimating technique were they probably using?
a) Parametric estimating
b) Analogous estimating
c) Reserve analysis
d) Expert judgment

3.

In the Estimating Activity Duration document, what will be the total duration for the
summary activity, Training Needs Review with Key Resources?
a) 1 day
b) 2 days
c) 4 days
d) 11 days

4.

Do you find it helpful in the activity list to have milestones represented with zero
duration? Why or why not?
Answers may vary, but may include: yes, it is helpful, because a zero duration activity
will immediately indicate a milestone. A milestone indicates a significant event that does
not need time for completion, but should be tracked for completion.

Activity 4-5
1.

What other inputs will you need to have available before developing the project schedule?
a) Resource calendars
b) Schedule baseline

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c) Project scope statement
d) Specific milestone dates that must be met
2.

Use the supplied table to draft the project schedule for the work package, WBS
TRN0001, Assembling Internal Training Team.

The completed project schedule should look like this.

Activity 4-6
1.

Perform a forward pass to determine the Early Start (ES) and Early Finish (EF) for each
activity. Enter your answers in the appropriate place in the network diagram. What is
the ES for activity TRN1.1, Identify Team Lead?
The ES for the first activity is assumed to be zero.

2.

What is the EF for activity TRN1.1?


The EF is 1. The EF for the first activity is the same as its duration.

3.

What is the ES for activity TRN1.2.1, Human Resources?


The ES is 6, because the relationship with its predecessor is FS with a five-day lag.

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4.

What is the EF for activity TRN1.2.1, Human Resources?


The EF is 11, its ES + duration.

5.

Calculate the ES and EF for the remaining activities. Why is the ES for activities
TRN1.2.3 and TRN1.2.4 the same as the ES for TRN1.2.2?
They all have the same relationship with the predecessor activity TRN0001.2.1.

6.

Determine the float for this network. Which activities have total float in this network?
Activity TRN2.1.1.1, Identify High-level BT PM Needs, has 4.25 days of float.

7.

What is the critical path?


Critical path = 1.1 + five-day lag +1.2.1 / 1.2.2 / 1.2.3 / 1.2.4 + 1.3 + 1.4 + 2.1.2.1 + 2.2.1
+ 2.2.2 + 2.2.3 + 2.2.4 + 2.2.5 = 17.25
Other path = 1.1 + five-day lag +1.2.1 / 1.2.2 / 1.2.3 / 1.2.4 + 1.3 + 1.4 + 2.1.1.1 + 2.2.5
= 13

Activity 4-7
1.

Which activity has the highest crash cost per week? Which has the lowest?

Activity A has the highest crash cost per week ($6,000 per week). D has the lowest ($250
per week).
2.

Which activities are on the critical path for this project?


Activities A, B, C, F, and G are on the critical path.

3.

What is the project duration under normal conditions?


Project duration is 50 weeks under normal conditions.

4.

Which activities are the best candidates for crashing, and in what sequence?
Consider crashing in the sequence G, B, F, C, and then A. G or B will compress the schedule by 2 weeks, at a cost of $1,000 per week; F will compress the schedule by 7 weeks at
a cost of $2,000 per week; C will compress the schedule by 1 week at a cost of $2,000 per
week; A will compress the schedule by 3 weeks at a cost of $6,000 per week. Carefully
examine any possible crashing because another network path might emerge as the critical
path.

5.

Plot the slope for crashing each activity on the critical path. Use the graph to make
your plots.

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The result should look like this.


6.

Which activity is the best candidate for crashing? Why?


Activity B or Activity G. This is because the best candidates are those with the flattest
slope, meaning they incur the least cost per incremental unit of time saved.

7.

If you crashed all the activities identified on the original critical path, what would happen to the duration for that network path?
It would go from 50 weeks (normal) to 35 weeks (10 + 4 + 5 + 13 + 3), a net decrease of 15
weeks.

8.

If you crashed all activities identified on the original critical path, what would happen
to the total project cost?
It would increase from $92,000 to $130,000, a net increase of $38,000.

9.

What would happen to the total project cost if you decided to crash every activity in
the project?
Total project cost would increase to $137,000.

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10. What other factors would you need to consider when deciding whether to crash this
schedule?
Answers will vary, but may include: consider resource allocation under normal and crash
conditions. Consider also the possible quality and risk implications of compressing the
duration of each of those activities.
11. What should you do if the normal time and the crash time for an activity are the same?
Nothing. You cant crash that activity.

Activity 4-8
1.

What should be done before establishing the schedule baseline?


a) Distribute the stakeholder register templates to the project management team for
approval.
b) Distribute the procurement documents to the appropriate stakeholders and project
team for approval.
c) Distribute the project management plan to the appropriate stakeholders and project
management team for an in-depth review, then after revising, obtain approval by the
project sponsor.
d) Distribute the project charter to the appropriate stakeholders and project management team for approval.

2.

How would you describe the difference between the draft schedule and the schedule
baseline?
Answers will vary, but may include: the draft schedule evolves through the planning
cycle. However, once the draft schedule is committed to by the project stakeholders, the
scheduled activities start and finish dates, durations, and calculated work are set in the
schedule baseline data, which can be used as a comparison once the project is underway.

3.

Which tasks will you be able to do once the schedule baseline has been established and
project execution has begun?
a) You will be able to determine project or activity slippage.
b) You will be able to determine a variance in the start and finish dates for the project.
c) You will be able to determine if resources are over-allocated.
d) You will be able to determine if the amount of scheduled work for each work package has changed.

4.

True or False? When the schedule baseline is first saved, the schedule variance for
each activity should be equal to zero.
True
False

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Lesson 4 Follow-up
Lesson 4 Lab 1
1.

Activity A has a start-to-start precedence relationship with Activity B; further, Activity


B has a two-day lag. If As duration is eight days, and Bs duration is five days, what is
the total amount of time it should take to complete both A and B?
a) 13 days
b) 8 days
c) 15 days
d) 5 days

2.

Choose the tasks for which project schedules are required.


a) Sponsor reporting
b) Performance reporting
c) Customer reporting
d) Functional reporting

3.

What is meant by near-critical activity?


a) An activity that is on the critical path
b) An activity that may have higher risk to the project due to less risk mitigation than
activities on the critical path
c) An activity that has low total float
d) An activity that has the longest duration

4.

What would be the outcome in a finish-to-start precedence relationship with a one-day


lead?
a) The precedent activity can start one day before the subsequent activity starts.
b) The subsequent activity can start one day before the precedent activity is completed.
c) The subsequent activity cannot start until one day after the precedent activity finishes.
d) The subsequent activity must start within one day of when the precedent activity
starts.

5.

Which statements are true of the critical path?


a) It is used to analyze the schedule model.
b) It is the path with the longest total duration through the network.
c) It always has the least amount of total float.
d) It shows the shortest amount of time required for completing the project.

6.

Which is an example of an FS (finish-to-start) interactivity relationship?


a) Activity B cant finish until Activity A is completed.
b) Activity B cant finish until Activity A starts.
c) Activity B cant start until Activity A is completed.
d) Activity B cant start until Activity A starts.

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7.

What is the most commonly used formula for three-point estimates?


a) [Optimistic time + 4(most likely time) + pessimistic time]/6
b) [Optimistic time + most likely time + pessimistic time]/6
c) [Optimistic time + most likely time + pessimistic time]/3
d) [Optimistic time + most likely time pessimistic time]/2

8.

Activity A has a finish-to-finish precedence relationship with Activity B. If As duration


is two days, and Bs duration is eight days, what is the shortest total duration for completing both A and B?
a) 10 days
b) 12 days
c) 6 days
d) 8 days

9.

Activity A has a start-to-start precedence relationship with Activity B, with a four-day


lag. If As duration is two days, and Bs duration is 12 days, what is the total amount of
time it will take to complete both A and B?
a) 18 days
b) 14 days
c) 16 days
d) 12 days

10. Who is eligible for estimating activity duration?


a) The persons most familiar with the work to be done in collaboration with the work
package owner.
b) The project manager working closely with the resource manager.
c) The project schedule manager and the projects resource calendar.
d) The project management team to make sure all voices are heard.
11. Choose the appropriate term that corresponds to analogous estimating.
a) Bottom-up estimating
b) Simulation
c) Form of expert judgment
d) Heuristics
12. What are the two schedule compression techniquesfast tracking and crashingused
for?
a) Planning activity sequence.
b) Shortening total project schedule duration.
c) Developing an activity schedule.
d) Estimating activity duration.
13. What task is related to the estimate activity resources planning process?
a) Developing cost estimates for each resource required for project work.
b) Apportioning resource cost estimates across all the work packages.
c) Documenting product requirements and identifying potential sources.
d) Estimating the type and quantities of the resources required to complete activities.

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14. Choose the most appropriate approach that you would take to shorten a project duration.
a) Change the project scope.
b) Crash as many activities as possible.
c) Crash all activities on the critical path.
d) Fast-track activities on the critical path.
15. What does the Precedence Diagram Method (PDM) show?
a) Resource allocation
b) Significant points in time
c) Task duration
d) Relationships
16. Choose the statements that are true of bottom-up estimating.
a) The most accurate estimating method.
b) The most challenging estimating method.
c) The most costly and time-consuming estimating method.
d) Used when enough historical information is present.
17. What are the disadvantages of bottom-up estimating?
a) Accurate historical data requirement
b) Timeliness
c) Accuracy
d) Cost-effectiveness
18. Choose the option that is true of milestone charts.
a) Display the scheduled start or completion of major deliverables.
b) Show inter-relationships.
c) Are excellent planning and scheduling tools.
d) Provide the project team with detail for decision making.
19. Which is not true for network diagrams?
a) They show dependencies among project activities.
b) They facilitate communications among all project stakeholders.
c) They have nodes that show the deliverables of the WBS.
d) They provide a highly effective visual for project planning and scheduling.
20. In a PDM network, which formula would you use to calculate the slack for an activity?
a) Total project duration minus total duration on the critical path.
b) Earliest time when the event can start, minus the latest time when the event can finish.
c) Earliest start date minus the earliest finish date for that activity.
d) Earliest time when the event can start, minus the latest time when the event can
start.
21. When a lead occurs in an activity, what is its effect upon other activities?

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a) Delays a successor task.
b) Accelerates a successor task.
c) Delays a predecessor task.
d) Accelerates a predecessor task.
22. Choose the statements that are not true of a hammock activity.
a) Has an estimated duration different than the sum of its interdependent work packages.
b) Includes activities performed by different resources.
c) Includes activities that are non-sequential.
d) Spans across several activities in a work package.
23. When will a project completion date slip?
a) If total float = 0
b) If total float > 0
c) If total float < 0
d) If total float > 1
24. Choose the appropriate task a project manager needs to perform when leveling
resources on a project.
a) Manually determine where to adjust resources.
b) Extend the finish date.
c) Add resources.
d) Discuss a change in the project scope with the stakeholders.
25. When would you perform a forward and backward pass?
a) To determine early start and finish dates for each activity.
b) To identify the start and end dates of each activity on the critical path.
c) To calculate the theoretical time period within which an early refinement of the
schedule can occur.
d) Typically done without considering resource limitations.
26. What is total float?
a) The amount of float on any network path.
b) The amount of time that an activity can be delayed without delaying the early start
of any immediately following activities.
c) Calculated by subtracting late start from late finish.
d) The amount of time on a critical network path that an activity can be delayed without delaying the completion date of the project.
27. Which technique involves overlapping project activities to shorten project duration?
a) Risk conversion
b) Fast-tracking
c) Parallel management
d) Synchronous manufacturing
28. When crashing an activity, which task should the project team focus on?

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a) Accelerating performance of those tasks on the critical path.
b) Accelerating performance of as many tasks as possible.
c) Accelerating performance of non-critical tasks.
d) Accelerating performance by minimizing costs.
29. Which activity duration estimation technique uses optimistic, pessimistic, and most
likely calculations?
a) GERT
b) Gantt
c) Three-point estimates
d) CPM
30. Which element is drawn from the schedule network analysis and includes baseline
start and finish dates?
a) Activity list
b) Schedule baseline
c) WBS package
d) Summary activities

Lesson 5
Activity 5-1
1.

Which estimating technique was used to come up with the $63,000 allocation to the
Media Campaign deliverable? Why?
Analogous estimating was used to come up with $63,000 because you used historical information based on similar previous projects to allocate a portion of the $100 million total
project budget (top-down).

2.

How would you describe the level of accuracy for the $63,000 estimate?
Since one OGC store is very much like any other OGC store, it may have originated as an
appropriation, in which case, budgetary estimation may have been used with an accuracy
of -10 percent to +25 percent. It could also have been an approximate estimate, since it
lacks the detail required for high accuracy, with an accuracy of 15 percent.

3.

What was the impact of involving the work package owners in preparing the cost estimates? Why?
The work package owners are closest to the work and have a better understanding of the
work, so their cost estimates can be expected to be more accurate.

4.

Which estimating technique was used when you asked the work package owners for
their estimates?
Bottom-up estimating was used.

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5.

What technique would you use to estimate the Conduct Planning Meetings activity?
Why?
Use parametric modeling because you can use mathematical models to develop the estimate.

6.

What are the benefits of the parametric modeling technique?


The parametric model is reliable and can provide a high level of accuracy. However, the
information that forms the parameters must be accurate, quantifiable, and scalable.

7.

What is the estimated cost of the Conduct Planning Meetings activity?


The four 2-hour planning meetings involving 10 in-house people at $80 an hour will cost
$9,600 (4 x 2 x 15 x $80), and the two catered lunches for the 15 people at $15 per person
will cost a total of $450 (2 x 15 x $15). So the total cost of the Conduct Planning Meetings
activity is $10,050.

8.

Are there activities in the work package for which you will use more than one estimating technique? Why?
The Arrange Staffing activity uses analogous estimating for the air travel and parametric
modeling for the other costs. The Hold Event activity uses analogous estimating for the
labor and equipment that will be provided by the cable station and parametric modeling
for the other costs.

9.

Using the information in Public Meeting Estimate document, estimate the cost of each
of the activities.
The breakdown is: 1.1.4.2.1: $10,050; 1.1.4.2.2: $4,950 to $5,540; 1.1.4.2.3: $6,700;
1.1.4.2.4: $7,800 to $8,300; 1.1.4.2.5: $2,000.

10. What is your total cost estimate for the Public Meeting work package?
The total cost estimate should be $32,500 to $33,590.
11. What is the level of your cost estimate now?
You now have a definitive (control or detailed) estimate that has an accuracy of -5% to
+10%.
12. Do you need to take any action regarding your preliminary estimate of $63,000 for the
Media Campaign deliverable? If so, what action should you take?
Because the more accurate estimate for the public meeting exceeds the initial assumption of $30,000, your overall estimate is $2,500 to $3,590 more than $63,000, so you need
to take some action. You can adjust your earlier estimate and try to reconcile the deficit
with one of the other major deliverables; you can work with the work package owners of
this deliverable to try to get the costs down to below $63,000; or you can go back for
more funding.

Activity 5-2
1.

Do you have all the necessary inputs to establish a cost baseline?


Yes, you have the WBS with cost codes assigned, the project schedule with at least start
and finish dates for each activity, and cost estimates.

2.

During what time period will the Public Meeting activities take place?
All activities will take place over a 10-week period.

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3.

What cost assignment method will you choose to allocate funds? Why?
Answers will vary, but might include the Percentage Complete rule, since the milestones
are clearly defined and can be easily reported on; or the 0/100 percent rule, where no
credit is given until the work is complete.

4.

What are the weekly cost estimates for the activities in the Public Meeting work package? Refer to the Cost Estimates Per Week chart given below to estimate costs per
week and round up to the nearest thousand.

The allocation of costs will look similar to this table.


5.

Will you include a contingency amount?


No, since this is a relatively low-risk work package.

6.

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Based on how the costs were allocated, the answers will look similar to this graph, which
plots the S-curve based on the previous Estimated Cost Per Week table.

Activity 5-3
1.

The project scope statement specifies a specific number of ads to be placed in the
newspaper in the weeks leading up to the grand opening. You have researched the
cost of ad space and you know that the sponsors requirements will exceed the funding
commitment. How would you proceed?
Answers will vary, but could include: you could approach the sponsor with a cost breakdown for the ad placement and suggest placing fewer ads. Come up with solutions such as
spend less per ad, place smaller ads, purchase black and white ads instead of full color,
and approach the advertising agency about cost savings. You might also consult with a
subject matter expert, such as someone in the marketing department, who can speak
directly to the sponsor in this matter.

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2.

Assume that you have no background in advertising or marketing. How could you go
about generating alternative ideas to suggest regarding less expensive advertising
options so that you can deliver the desired results within budget?
Answers will vary, but could include: you could consult with your companys public relations department for suggestions of cost saving efforts. You might consider implementing
a partnership with a local university by offering a marketing internship program to university students, thereby gaining extra help at little or no additional cost.

3.

You need to partner formally with your companys financial decision makers regarding
the costs of this project. Given the above scenario, what steps would you take to further this goal?
Answers will vary, but could include: you could ask your financial decision makers for a
meeting, bring documentation regarding advertising costs and budget, and ask for their
help in identifying additional sources of revenue. It is possible that they might choose to
increase the funding commitment. However, keep in mind that the forecasted cost variance should be a guideline for how elaborate an escalation should be.

4.

The advertising agency that has been contracted to produce the ads for the Seattle
stores grand opening has unexpectedly gone over budget. You receive an invoice that
exceeds their original estimate. How would you proceed?
Answers will vary, but could include: you could meet with the agency to determine why
they went over budget and whether they did anything that was beyond the scope that had
been agreed to. You could ask the advertising agency to work with you to identify savings
elsewhere, such as a discount on future work so that you can recoup some of your losses.
You could alert the sponsor regarding the cost overrun so that changes could be made to
the scope of the project.

Lesson 5 Follow-up
Lesson 5 Lab 1
1.

Identify the sources from where you can obtain cost estimate information.
a) Trade organizations, vendors, and suppliers.
b) Past project experience and current project team members.
c) Project schedule.
d) Commercial databases.

2.

What should be included in a project cost baseline?


a) Estimates of the most likely project costs.
b) Management contingency reserves.
c) Unforeseen expenditures for the project.
d) Assumptions for the estimates.

3.

What step will a project manager take to help prevent cash flow problems?
a) Use the contingency reserves of other projects.
b) Make efforts to engage the finance department to put in place a cash flow forecast.
c) Make sure customers are financially stable.
d) Request additional funding from project sponsors.

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4.

Which cost estimating method requires managers to use their experience, historical
information from similar projects, and expert judgment to determine a total project
cost or time estimate?
a) Analogous or top-down estimating
b) Parametric estimating
c) Bottom-up estimating
d) Revenue estimating

5.

Which are inputs to the determine budgets process?


a) Activity cost estimates, Resource calendars, Funding limit reconciliation, and cost
aggregation.
b) Basis of estimates, scope baseline, resource calendars, and reserve analysis.
c) Activity cost estimates, scope baseline, project schedule, and contracts.
d) Activity cost estimates, scope baseline, project schedule, and cost performance
baseline.

6.

Which is a method of adjusting, spending, scheduling, and resource allocation in order


to bring expenditures into alignment with budgetary constraints?
a) Cost aggregation
b) Funding limit reconciliation
c) Reserve analysis
d) Activity cost estimation

7.

Which guidelines allow you as the project manager to reconcile the costs with the
funding that has been approved by the sponsor?
a) Map the project budget, scope statement, and schedule to the funding available.
b) Involve the project sponsor.
c) Consider adding in a contingency amount to accommodate the risk of incurring extra
expenses.
d) Partner formally with the companys financial decision makers.

Lesson 6
Activity 6-1
1.

Based on the scenario, which documents would you have used to identify the primary
project objectives for this project quality plan?
a) OGC quality policies and procedures
b) Project scope statement
c) Process improvement plan
d) Project management plan

2.

True or False? The process improvement plan helps remove activities that do not contribute to producing products of required quality.
True

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False
3.

Which tool can be used to monitor repetitive activities and help identify if the project
management processes are under control?
a) Benchmarking
b) Control charts
c) Flowcharting
d) Cost-benefit analysis

4.

The PMO has identified a list of objectives for all project managers in the use of the
software. What would you include in your quality plan that will address the level of
quality achieved by each project manager?
Answers will vary, but may include: the assessment is a form of benchmarking. A checklist
could be used as a helpful tool. Knowledge gaps can be identified and the follow-up support from the training provider can address these gaps to get each manager to the
appropriate 75% or above.

5.

The PMO has provided a complete list of activities as expected improvements after
training. What could your team use as a way to determine the degree of improvement
after training?
Answers will vary, but may include: the post-assessment evaluations taken by each
project manager will assess their level of knowledge and the regularly scheduled PMO
conducted project reviews and audits will evaluate whether the managers have incorporated what they have learned.

6.

What are some ways that you could identify the level of quality of the vendor instructor?
Answers will vary, but may include: ask that the training vendor provide evaluations from
previous classes taught by the instructor in the use of the software at all three levels of
training. Ask for a resume from the instructor. If resources were available, you could
observe the instructor in front of a classroom.

7.

How will you measure the quality of support after training?


Answers will vary, but may include: using evaluations where project managers provide
feedback at a statistically valid rate.

Activity 6-2
1.

Which step would be the logical first step in documenting the roles, responsibilities,
and reporting relationships of project team members?
a) Create a RAM to document the roles and responsibilities for key project stakeholders.
b) Create an organization chart to organize the team members into a hierarchy.
c) Consider the competencies of expected staff members and how they affect the
projects reporting relationships or roles and responsibility assignments.
d) Examine the staffing requirements of the project.

2.

After examining the staffing requirements of the project, your next step is to list possible constraints that would affect the organizational planning. Which options would
you include as constraints for this project?
a) The project includes resources from several different OGC buildings.
b) The project includes resources from outside the organization.

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c) The project requires resources that are assigned to another project that may not be
released.
d) The project includes some resources that are new hires.
3.

Which item would you include in your documentation of the reporting relationships on
this project?
a) The training quality requirements.
b) The number of years of experience of each project manager.
c) The training instructor and manager will not only report to their management but will
also be responsible for several deliverables in your project.
d) The training and assessment costs.

4.

You have reviewed the Staffing Management Plan; to your surprise, it appears that
there are now staffing gaps due to resource reassignments. What could you do to
address this problem?
Answers will vary, but may include: one of the first things would be to develop some
rough choices for the project sponsor in terms of acquiring new resources and lead times
to fill these staffing gaps. Typically, this is where the budget and schedule get their first
exercise.

5.

At the conclusion of documenting project roles and reporting relationships, what key
documents would you create and distribute to project team members?
a) The project charter and a RAM.
b) An organization chart and a RAM.
c) The company quality policy and a RAM.
d) A cost-benefit analysis and a RAM.

Activity 6-3
1.

Which item should you use to determine the communications needs of your project
stakeholders?
a) Research material
b) Stakeholder analysis data
c) Project report deadlines
d) Executive board schedule

2.

Given the scenario, what would be a good technology for enhancing team member
interactions and building relationships through the life of the project?
a) Team building event at project kick-off.
b) Project team threaded discussion board.
c) Use email and databases to collect and store information.
d) High quality virtual teleconferencing on a semi weekly or weekly basis.

3.

Given the scenario, what would be a good primary communication technology for
exchanging project information?
a) Phone exchange with email confirmation
b) Weekly face to face meetings
c) Voice mail
d) Video conferencing

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4.

After integrating the communications management plan into the overall project plan,
what would be the next logical step?
a) Determining whether there will be changes to the proposed technology before the
project is over.
b) Creating a schedule for the production of each type of communication.
c) Distributing the plan to all the stakeholders.
d) Creating a description of stakeholder communication requirements.

Lesson 6 Follow-up
Lesson 6 Lab 1
1.

Which tool is consistently used to document the roles and responsibilities on a project?
a) Role administration matrix
b) Responsibility assignment matrix
c) Responsibility and role hierarchy
d) Staffing management plan

2.

Which document shows the reporting structure within the project, as well as its relationship to the parent organization?
a) Resource staffing histogram
b) Organization chart
c) Responsibility assignment matrix
d) Staffing management plan

3.

When does common experience show that a learning curve becomes apparent?
a) As cumulative production time doubles, time and costs associated with that production increase randomly.
b) As cumulative production time decreases, time and costs associated with that production lower at a constant and predictable rate.
c) As the quantity of items produced increases, costs decrease at a predictable rate.
d) As cumulative production time doubles, time and costs associated with that production increase at a constant and predictable rate.

4.

On which concept is total quality management based?


a) Quality is an ongoing process rather than a one-time event.
b) Quality standards should be established universally in every industry.
c) Quality issues should be supervised and controlled by a quality management team.
d) Quality planning is the most integral part of the quality system.

5.

What is quality planning?


a) The process of identifying the quality standards that apply to the project and determining how to meet those standards.
b) The process of evaluating quality results and planning improvement strategies.

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c) The process of systematically evaluating project quality.
d) The process of establishing a communications plan between stakeholders and work
package owners for quality updates.
6.

What are the uses of project benchmarking?


a) Compare project practices to those of other projects to develop performance measurements.
b) Identify potential problems and possible effects for those problems.
c) Determine marketing costs associated with a specific product.
d) Determine what product or services to offer and what features to include.

7.

The communications management plan is the most important portion of the project
management plan for managing stakeholders. For what reason?
a) It keeps the stakeholder involved with the day-to-day management of the project.
b) It helps the project manager to understand stakeholder expectations for project
communications.
c) It gets stakeholders involved in the planning process.
d) It helps identify all stakeholder needs and objectives for the project.

8.

Which of these project factors is likely to prevent effective performance of the communications plan?
a) The virtual team will use the company intranet to transmit documents.
b) All client company meeting time has been set at no more than 30 minutes a week for
each employee.
c) The customer wants its technical manager to review project data monthly.
d) The team is co-located in a trailer behind the main plant.

9.

Which part of the communications management plan is concerned with collecting


information and getting it to the right stakeholders?
a) Information distribution
b) Feedback system management
c) Communications management
d) Communications systems planning

10. Which tasks are included in the cost of quality?


a) Cost of quality planning.
b) Cost of preventing conformance.
c) Cost of rework.
d) Cost of monitoring nonconformance.
11. Which statements are true about formal project recognition and rewards?
a) Documented in the communications management plan.
b) Documented in the human resource management plan.
c) Perceived by project team members as being tied to performance.
d) Addressed only at the end of the project.
12. At what points in the project should the quality audits or inspections take place?
a) At the end of every process cycle.

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b) When each project activity starts.
c) At random intervals within a process cycle.
d) At random intervals over the course of the project.
13. Why is the cost of quality used during quality assurance?
a) To determine the most effective approach when considering prevention, inspection,
and repair.
b) To determine if the cost of the product will meet budget requirements.
c) To persuade management to invest in quality product methods.
d) To assess the cost of implementing quality improvements.
14. Who is the quality guru associated with breakthrough improvement?
a) Taguchi
b) Deming
c) Juran
d) Crosby
15. A team has 20 people on it. How many potential communication channels exist on this
team?
a) 19
b) 190
c) 20
d) 380
16. Which is true of using project intranets and home pages for communication?
a) Limited because only large organizations have access to these tools.
b) Ineffective as external project stakeholders cannot access them.
c) A security risk because there is no way to restrict access to them.
d) An effective way to provide a lot of information to a variety of users.
17. Which task is an example of a cost of nonconformance?
a) Training
b) Product design
c) Planning
d) Rework
18. Which tool is used to verify if the steps in a process are being followed?
a) Checklist
b) Trend analysis
c) Inspection
d) Performance review
19. Which tool would you use for analyzing and communicating the relationships between
process steps?
a) Scatter diagram
b) Control chart

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c) Flowchart
d) Trend analysis
20. Choose the factors to be considered when analyzing project trade-offs among cost,
time, and quality, where cost must be controlled in order to meet the cost baseline.
a) The impact on quality only.
b) The impact on schedule and quality.
c) The impact of additional risk that may be introduced.
d) The impact on schedule and scope.
21. In which organizational structure is an individual assigned to report to a single manager?
a) Weak matrix
b) Strong matrix
c) Functional structure
d) Projectized structure
22. Which project structure typically results in greater levels of technical depth and
breadth within the parent organization?
a) Weak matrix
b) Strong matrix
c) Functional structure
d) Divisional structure
23. Which is true of a matrix structure?
a) In a matrix structure, employees administrative, developmental, and performance
management are typically focused with their functional manager with proportional
performance and developmental input by project managers.
b) In a matrix structure, employees are typically assigned 50% of the time to functional
tasks and 50% of the time to project tasks.
c) In a matrix structure, employees are equally answerable to both functional and
project managers.
d) In a matrix structure, employees are answerable to the project manager, but report
both to the functional and project manager.
24. Of the various organizational structure alternatives, for managing projects, which ideally has the fastest response time?
a) Functional structure
b) Projectized structure
c) Weak matrix
d) Strong matrix

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Lesson 7
Activity 7-1
1.

During your project review, you determine that a risk officer is needed to handle risk
management activities. Which activities would you assign to this person?
a) Develop response strategies.
b) Confirm and articulate the risks probability and impact to the business strategy.
c) Coordinate risk identification and analysis activities.
d) Assign roles and responsibilities to each team member.

2.

With your planning meetings started and budget decided, your team begins the task of
determining how to identify risks. Which is the first place to look for risk planning?
a) Other project risk management policies
b) The organizations risk management policy
c) The project scope statement
d) The organizations quality policy

3.

The risk management plan for your OGC PM Training Roll-Out project uses a probability
scale to define the probability of occurrence of a risk listed in the risk register. Which
is the probability scale defined for the project?
a) 1, 3, 5, 7, 9, 11
b) 0.1, 0.3, 0.5, 0.7, 0.9
c) 2, 4, 6, 8, 10, 12
d) 1.1, 1.3, 1.5, 1.7, 1.9

4.

Which additional factor should you consider when developing your risk management
plan?
a) Job descriptions
b) Geography of the project team
c) Thresholds
d) Communication technology

5.

You have integrated specific risk related activities and deliverables into the projects
schedule and documented how to track risk response efforts in your risk management
plan. Which task should you perform to complete the risk management plan?
a) Determine how to document lessons learned for future projects.
b) Determine the necessary budget.
c) Make sure that roles and responsibilities are clearly understood by the team and
other stakeholders.
d) Create a payoff matrix.

6.

Which section of the risk management plan highlights the risk priority areas for the
project?
a) Methodology
b) Probability and Impact Matrix
c) Roles and Responsibilities

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d) Frequency of Updating Risk Registers
7.

True or False? As per the OGC Risk Management Plan, the OGC PM Training Roll-Out
project requires a quantitative risk analysis to be performed to assess the risk exposure events of your project.
True
False

Activity 7-2
1.

To identify risks for this project, you and your project team will meet as a group to
identify and examine as many of the strengths and weaknesses within OGC that can
potentially impact the project as you can, as well as any opportunities or threats that
may be imposed by the external training provider. Which information-gathering techniques will you use?
a) Brainstorming
b) Interviewing
c) Delphi technique
d) SWOT analysis

2.

There is a new upgrade to the project management software with enhancements to


the project tracking and communications features. This upgrade is mandatory in a
networked environment and therefore, when available, will be required by OGC. In
what risk category should your team place this risk?
a) Technical, quality, or performance risks
b) Project management
c) Organizational
d) External

3.

What is the trigger for the software upgrade risk that has been identified?
a) The enhancements to the project tracking and communications software.
b) The IT department scheduling the software upgrade.
c) The impact the upgrade will have on the PM Training Roll-Out project by narrowing
the RFPs sent to external training providers.
d) The potential increase to the total costs of training that the upgrade will cause.

Activity 7-3
1.

Based on the OGC Risk Event Impact Scale, which of the risks should receive the highest priority for this project?

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a) IT might not approve project management software upgrade.


b) Temporary loss of a team member.
c) Change in organizational requirements to use external training.
d) RFPs do not meet OGC specifications for training, i.e., dates and costs.
2.

Based on OGCs risk event impact scale, the risk event impact is 2.5. How is the risk
impact for this project best described?
a) Between Very Low to Low
b) Between Low to Moderate
c) Between Moderate to High
d) Between High to Very High

3.

588

You need to enter the risk factors into the risk register for the work activity, Obtain
External Training Provider. In the Risk Register document, list the risk probability rating for each task.

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SOLUTIONS

The risk probability rating for each task:

4.

For each risk that is identified, provide an impact rating for the work activity, Obtain
External Training Provider. In the Risk Register document, list the risk impact rating
for each task.

The risk impact rating for each task:

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Activity 7-4
1.

Which analysis technique was used in the Analyzing Project Risk image to determine
the most cost-effective choice of a training provider?
a) Delphi
b) Diagrammatic
c) Simulation
d) Decision tree

2.

What is the probability that Vendor 1 will complete the project on time?
a) 70 percent
b) 60 percent
c) 50 percent
d) 40 percent

3.

What is the probability that Vendor 2 will run over the allotted time for the project?
a) 40 percent
b) 50 percent
c) 60 percent
d) 70 percent

4.

What is Vendor 3s expected monetary value?


a) $0
b) $200
c) $1,700
d) $10,300

5.

Your team combines the EMV at the end of each vendors network end-points to arrive
at a net proceed for each vendor. You want to choose the vendor bid with the most
economic advantage for OGC. Based on this number, which vendor should your team
choose?
a) Vendor 1
b) Vendor 2
c) Vendor 3
d) Vendor 1 and Vendor 3

Activity 7-5
1.

The first risk has possible positive outcomes. Which risk response strategy should you
employ?
a) Risk avoidance
b) Risk enhancement
c) Risk mitigation
d) Risk sharing

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2.

What response do you have regarding the risk of a potential project software upgrade
during the project life cycle?
If the software meets the approval of the IT department, you may want to include a provision to obtain a beta version of the software. You may choose to add more people who
can be trained on the upgrade and they can train others. You may choose to have a pilot
group work with the software.

3.

The change in organizational requirements due to the resignation of Vicky Morris has
possible negative outcomes to the project, but you have determined there is no way to
avoid the scenario completely. Which risk response strategy should you employ?
a) Risk avoidance
b) Risk enhancement
c) Risk mitigation
d) Risk exploitation

4.

You determine that instructor illness cannot be avoided. Which risk response strategy
should you employ?
a) Risk enhancement
b) Risk exploitation
c) Risk acceptance with a contingency plan
d) Risk acceptance without a contingency plan

5.

What are some ways you would respond to the potential risk of instructor illness during the training?
Answers will vary, but may include: include in the vendor contract the availability of a
backup instructor.

Lesson 7 Follow-up
Lesson 7 Lab 1
1.

What is the purpose of a qualitative risk analysis?


a) Assess the impact and likelihood of the identified risks actually occurring.
b) Analyze numerically the probability of each risk.
c) Determine if the risk responses have been implemented as planned.
d) Select alternative strategies for dealing with risks.

2.

Which option best describes transference?


a) Reducing the probability of an adverse risk event to an acceptable level.
b) Changing the project plan to eliminate the risk.
c) Shifting responsibility for a response and possible impact of a risk to a third party.
d) Developing a contingency plan.

3.

What are the four main areas that project managers typically consider when discussing
risks?
a) Methods, materials, metrics, and people.

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b) Initiation, planning, executing, and closing.
c) Time, cost, quality, and scope.
d) Design, supply chain, production, and marketing.
4.

What do you call a specific occurrence that may impact the project in the future,
either positively or negatively?
a) Project risk
b) Risk factor
c) Risk-opportunity dichotomy
d) Expected value

5.

What are residual risks?


a) The same as secondary risks.
b) A direct result of implementing a risk response.
c) Those that remain after risk responses have been taken.
d) Those risks that have no impact on the project budget or schedule.

6.

During the projects life cycle, risk identification:


a) Is no longer needed during the closing phase of a project.
b) Is done during the implementation and planning phases only.
c) Is done during the planning phase only.
d) Should take place during each project phase.

7.

For what reasons are the network diagramming method and/or flowcharting used in
risk identification?
a) To determine the root cause of a project risk.
b) To show the effect of a particular risk on a project.
c) To indicate areas of the WBS that should be redrawn as a result of risk identification.
d) To identify all the possible risks for a project.

8.

For what reasons is the Delphi technique often used during risk identification?
a) It emphasizes the potential impact of risk by telling about incidents that illustrate
the consequences of ignoring the risk.
b) It ensures all stakeholder inputs are received and the risk process is not unduly influenced by a small number of persons.
c) It motivates stakeholders to invest in the risk identification process through the use
of anonymous input via questionnaires.
d) It identifies the overall project risks and focuses on a particular project segment or
work package.

9.

Which selection lists processes of risk management?


a) Risk management planning and risk recovery.
b) Qualitative risk analysis and quantitative risk analysis.
c) Risk documentation and risk monitoring.
d) Risk identification and risk avoidance.

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10. Jennifer is a publisher. In order to make sure that her writer delivers on time, she
inserts a penalty clause for late delivery into her writers contract. Which risk
response is Jennifer using?
a) Risk avoidance
b) Risk mitigation
c) Risk acceptance
d) Risk transference
11. Which risk response can be categorized as either passive or active?
a) Risk avoidance
b) Risk mitigation
c) Risk acceptance
d) Risk transference
12. When is additional response development needed during risk response control?
a) When the organization is restructuring.
b) When the project objectives change.
c) When the contingency reserves are used up.
d) When the original risk response is not working as expected.

Lesson 8
Activity 8-1
1.

In the OGC Procurement Management Plan, who is authorized by OGC to enter a prescribed contract with the external training provider?
a) Project sponsor
b) Project manager
c) Procurement manager
d) Operations manager

2.

In the OGC Procurement Management Plan, which of these job tasks are defined for
the solicitation process of the project?
a) Characteristics of project requirements are to be documented in a procurement
statement of work.
b) A Request for Proposal (RFP) will be sent to prospective sellers.
c) Provide necessary electronic and paper documentation and source files.
d) Evaluation criteria are to be determined to evaluate proposals from sellers.

3.

Which of OGCs plan procurements inputs contains information about the time frame
for each project deliverable?
a) Requirements documentation
b) Scope baseline
c) Project schedule

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d) Activity resource requirements
4.

5.

Match the plan procurement inputs with their descriptions.

Risk-related contract decisions

Teaming agreements

Activity resource requirements

Enterprise environmental
factors

Organizational process
assets

a.

Factors that can inuence the plan


procurements process such as market
conditions and supplier information.
b. Factors that can inuence the plan
procurements process such as policies, procedures, guidelines, and
management systems.
c. Contracts between the organization
and one or more external entities to
work together.
d. Include details of the agreements that
are prepared to specify each partys
responsibility for specic risks in the
project.
e. Include information on the specic
activity resource needs of the project.

Which section in the OGC Procurement Management Plan refers to the parameters to
choose sellers?
a) Contract Type
b) Procurement Description
c) Procurement Responsibility
d) Source Selection

Activity 8-2
1.

In the OGC Procurement SOW document, which components define the specifics of the
work being procured?
The description of the work, the Seller/Trainer Responsibilities list, and exhibits A and B
define the work being procured.

2.

Were there any inconsistencies used in the document that might be confusing?
Answers will vary, but may include: Seller and Training Provider are being used interchangeably, and using two terms in this way is confusing.

3.

Does the OGC Procurement SOW include any collateral services to be provided by the
client?
The follow-up support would be considered a collateral service in this contract.

4.

Does the OGC Procurement SOW describe when, where, and how delivery is required?
The work schedule describes when the work will be delivered. The Seller/Training responsibilities list that the seller must provide a classroom and instructor to accommodate nine
managers. Exhibits A and B describe in detail how delivery is required for both the assessment and training.

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5.

Does the OGC Procurement SOW provide specifications on how the assessment must be
produced and methods for ensuring that the specifications have been met?
Under OGC Responsibilities, it states: OGC will provide all necessary electronic and paper
documentation, source files, and imagery required or requested by Seller, which is pertinent to the work requested. The Lead Contact will review and validate the pre- and postassessment content prior to supplying it to Seller. Seller will need to receive this prior to
the project kick-off. Also, Exhibit B describes the assessment review process.

Activity 8-3
1.

Based on the scenario, what would be a logical first step in creating the procurement
document?
a) Determine how you want training sellers to respond.
b) Define the training specifications.
c) Determine the most appropriate procurement document to use.
d) Examine the project SOW and make any necessary changes.

2.

The assessment development, the project software training needs, delivery of the
training, and costs will be the determining factors in your choice of training providers.
What type of procurement document would be most appropriate to use in this situation?
a) Request for quotation
b) Request for proposal
c) Request for bid
d) Invitation for bid

3.

From the C:\085042Data\Planning Project Procurements folder, open the OGC Procurement SOW and Procurement document. Which criterion for evaluating training
sellers is subjective?
a) Seller must provide an instructor with a minimum 3 years of project management
software training.
b) Seller must be creative and flexible about changes made to the design of the assessment documents, even in late production phases.
c) Seller must have a minimum 20 years of collective training experience on staff.
d) Seller must have produced at least three projects of similar scope in the last 10
years.

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Lesson 8 Follow-up
Lesson 8 Lab 1
1.

Which statement best describes the Time and Materials contract?


a) The buyer pays the seller one fixed price.
b) The buyer pays the seller for time and expenses of project work.
c) The buyer pays the seller a fee, plus a percentage of profit.
d) The buyer pays the seller their allowable costs plus a fee.

2.

In which contract does the buyer reimburse the sellers allowable costs (defined by the
contract) plus a fee?
a) Firm fixed price plus incentive contract.
b) Cost plus incentive fee contract.
c) Time and materials contract.
d) Cost plus fixed fee contract.

3.

In which contract does the buyer reimburse the sellers allowable costs (defined by the
contract) plus a predefined fee?
a) Firm fixed price plus incentive contract.
b) Cost plus incentive fee contract.
c) Time and materials contract.
d) Cost plus fixed fee contract.

4.

Which is used to evaluate each sellers proposal and make comparisons among different proposals?
a) Procurement documents
b) Procurement statements of work
c) Teaming agreements
d) Source selection criteria

5.

Which document provides a description of the work authorized to be performed by a


supplier?
a) Project plan
b) Procurement statement of work
c) Responsibility assignment matrix
d) Work breakdown system

6.

Which document includes the invitation for bid and request for proposal?
a) Procurement statements of work
b) Procurement document
c) Requirements documentation
d) Procurement management plan

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Lesson 9
Activity 9-1
1.

You need to assist the systems analyst in the creation of a PMIS that is workable for
your project. In order to design an effective PMIS, what are the inputs that a systems
analyst should know about the project that the PMIS will manage?
a) What people will have access to the information?
b) When will the information be needed?
c) Who will incorporate the information into the system?
d) Who is the customer?

2.

As the project manager, you have made sure all organizational policies and procedures
were followed, and the contract training vendor is familiar with their responsibilities.
What would you do next?
a) Call a meeting with the project sponsor so she can commence work.
b) Issue work authorization.
c) Work with a systems analyst to create a PMIS.
d) Collect work performance information.

3.

An activity did not start on its scheduled date. The responsible team, Team 1, claimed
that they could not start the activity because its predecessor activity did not show a
completion date in the latest status report. Team 2 claimed that they had completed
the activity on time and had followed the appropriate procedure for updating its
completion status. What are some things you would do to investigate why the status
report was not up to date?
Review the status for the activities in the PMIS since it is the central point of data collection for activity status. If you discover that the completion status for the activity is not
reflected in the system, alert the PMIS technical experts so that the cause can be identified. Along with the current system for activity updates, you may also ask that resources
communicate on a weekly basis their activity progress through a quick email or phone call
until the original system is proven.

Activity 9-2
1.

The manager of quality assurance has asked you about your quality management plan.
Which feature might he find problematic?
a) Scheduled and random quality inspections will take place, which will be conducted
by an internal quality assurance engineer, as well as by the city.
b) Any corrective actions that a project manager feels will improve the effectiveness or
efficiency.
c) Operational definitions were defined for measuring the quality of the construction
work.
d) Occurrence of scheduled and random quality inspections during the course of the
project.

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2.

As construction gets underway, random inspection results of completed construction


elements are unexpectedly negative. What sort of quality activities should be taking
place?
Perform a random or scheduled quality audit to evaluate the quality management plan,
quality testing procedures, and measurement criteria for inconsistencies in the way that
the quality plan and operational definitions are being carried out.

3.

The stakeholders are questioning the amount of resources dedicated to quality assurance. How can you demonstrate to them that the benefits of quality assurance
outweigh the cost?
a) Perform benchmarking to compare project practices to other projects to generate
ideas for improvement.
b) Conduct an array of experiments to identify which factors may be influencing specific
variables.
c) Use flowcharts to see how systems relate and how various factors might be linked to
problems or effects.
d) Document the identified corrective actions so that their effect on project quality,
cost, and schedule can be monitored during quality control.

Activity 9-3
1.

Three members of your project team have to be allocated to you on a part-time, 50


percent basis from the IT department. What would be your first step in acquiring these
resources for the project team?
Answers will vary, but may include: form good relationships with the functional manager
in order to identify and acquire resources, resolve problems, and manage team members.
Discuss the specific time frames that you will need for those people.

2.

The functional manager of the IT department informs you that, based on the time
frame for your project, two of the resources that are available are new hires who have
not worked earlier in a project on their own at this point. What should you do?
Ask the functional manager if a senior member of his team can serve as a mentor to the
new hires, at least throughout the beginning phases of the project. Verify that the
assigned resources will be able to perform the work required. Discuss who will be responsible for training the new hires. Learning to negotiate effectively with functional
managers is a crucial part of the team acquisition process.

3.

During the first meeting of the new project team, some confusion arises between two
team members about their roles and responsibilities. Since this conversation is not
appropriate in this forum, how might you respond?
Answers will vary, but may include: as the project manager, you should identify the
issue, table it, and use the human resource plan, which was developed for the project
and clearly documents the roles and responsibilities and organizational structure. The
two resources will be informed and once again be made aware of it. This sets the expectation that working the problem should be the focus, not arguing the problem.

Activity 9-4
1.

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2.

Forming

a.

Storming

b.

Norming

c.

Performing

d.

Adjourning

e.

Team members complete their


assigned project work and shift to the
next project or task.
Team members begin to assert themselves and conict management
approaches are used to help the team
work through problems.
Team members make initial judgments about the skills and personal
qualities of their teammates, as well
as worry about how they personally
will be viewed by the rest of the
team.
Team members begin to work productively, without worrying about
personal acceptance or control issues.
Team members collaborate easily,
communicate freely, work at optimum
productivity, and solve their own conict problems.

You notice that Rachel, a team member, has consistently met her deliverable deadlines and is always on time with her status reports. She actively participates in
brainstorming sessions and makes valuable contributions to the discussions. When
required, she has gone beyond her responsibilities and has helped her project manager
facilitate brainstorming meetings and discussion sessions. How should you respond?
Consider publicly recognizing her in a team meeting to reinforce the desirable behaviors.
The team may congratulate her and it may give everyone motivation to go the extra mile
when needed to meet aggressive deadlines.
It is also advisable to provide positive input to her functional manager for her performance appraisal. This will also boost her motivation to go the extra mile, and might lead
to a raise.

3.

One of your junior team members, who is assigned to gather information from managers through an interview process, has confided in you that he is not comfortable during
the interviews. He feels that the managers seem impatient with the questions he is
asking. The other junior team members assigned to interviews have not had any problems. What are some things you would do to address this issue?
Answers will vary, but may include: as a project manager, you can talk to the team member about certain aspects of his voice, such as intonation, and his communication style,
such as nonverbal cues. You need to identify if the team member has a problem in any of
these aspects, which might create a negative impression while interviewing the managers.

Activity 9-5
1.

Given the masonry supervisors email about the conflict between the plumbing and tile
contractors, what should you do?
a) Confirm their inability to get along and its probable impact on the team. Responding
to alleged interpersonal conflict from second hand sources is almost always a mistake.
b) Wait for results of the weekly masonry work progress report.
c) Provide constructive feedback to the contractors.
d) Consider offering an online conflict resolution course for the contractors.

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2.

In speaking with the contractors, you discover that the tile contractor feels that the
plumber is spending too much time at lunch and on breaks, which causes him to work
past 6:00 each day. The plumber responds that he takes a normal lunch break. What
can you to do resolve this situation?
To help resolve this conflict, you can review the expected ground rules that were set at
the beginning of the project based on the communications management plan. Confirm the
amount of time that should be used for lunch and breaks and verify the facts of the
breaks being taken. Remind the plumber of the teams ground rules and schedule expectations, as well as his responsibilities on the project. Document the incident and monitor
the situation as the contractors continue to work together to complete the project.

3.

The roofing team has been working effectively, meeting all deadlines and experiencing
no personnel problems. What approach should you take when monitoring this team?
Give positive feedback. Providing constructive feedback to team members on a frequent
basis enables the team members to know that they are on track. Speaking to team members one-on-one is an excellent way to maintain communication and monitor progress.

Activity 9-6
1.

An automated information retrieval system will provide stakeholders with access to


project information via the intranet. What, if any, concerns do you have with relying
on this type of distribution of project information to stakeholders?
Answers will vary, but may include: while this may be a good method for making information available to stakeholders in an efficient manner, the information is left up to the
stakeholders to interpret. One-on-one meetings would still be necessary to provide an
overview of how the information reflects the reality of the project status. Also, the
information must be carefully screened for accuracy. Consider the importance of version
control; they should be able to share information without losing earlier versions of the
material. Consider whether only selected people should have the ability to modify the
content.

2.

As people strive to meet their deadlines, reporting the status of activities can become
a low priority. This is a problem when you are trying to distribute up-to-date information on the status of the project. What are some things that you could do to make sure
that people report accurate and timely information to you?
Answers may vary, but may include: schedule weekly project status meetings or meet
with resource groups on an individual basis. If they are using the same document to
report their status, you may consider implementing a date and time stamp for version
control.

3.

You are asked by your manager to provide the senior executives your projects
progress to date. Which information distribution methods would be most appropriate
in this situation?
a) Send an email announcing that a report is posted on the intranet site.
b) Make a telephone call to schedule one-on-one meetings with each executive.
c) Send an email based on status notes that you took over the phone while communicating with team members.
d) Make a presentation to the senior executives and highlight the important points in
the report.

Activity 9-7
1.

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a) Follow processes outlined in the communications plan.
b) Take corrective action.
c) Conduct a face-to-face meeting with a clear agenda targeting their specific concerns.
d) Document lessons learned.
2.

Two stakeholders are out of town on a business trip and are available sporadically.
Another has an extremely busy schedule and cant squeeze another lengthy meeting
into his day. You know it is important to have face-to-face interaction with each stakeholder. How can you accommodate their needs? Check all that apply.
a) Use video conferencing.
b) Send a memo via email.
c) Use an instant messaging service.
d) Hold a brief summarization meeting.

3.

During the face-to-face meeting with project stakeholders, you offer a recap of some
contractor changes that occurred. It became necessary to add another electrical contractor to the team, which resulted in changes to the project cost baseline. While you
are talking about this issue, you notice that one of the project stakeholders continually
looks down at the floor and rapidly taps her pen against the table. What does her
behavior indicate?
Assessing body language provides the project manager with an opportunity to determine
if the stakeholder is pleased or not with the projects progress. Based on her body language, you can determine that the project stakeholder is uncomfortable with the
information you are providing to the group. Draw her into a conversation to determine
what aspect of the information is unsettling to her. Her answer will tell you if there are
outstanding issues to address in regards to project cost baselines, or any other issue that
may be of concern to her.

Lesson 9 Follow-up
Lesson 9 Lab 1
1.

When negotiating for resources, the project manager arranged for the loan of a particular technical expert by implicitly promising to raise the functional managers
visibility with executive stakeholders on the project. Which currency was the project
manager using?
a) Inspiration-related currency
b) Position-related currency
c) Relationship-related currency
d) Task-related currency

2.

Which of these tasks are examples for training a project team?


a) Feedback
b) Computer-based
c) Mentoring
d) Coaching

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3.

What would be the important reasons behind the efforts taken by the project manager
to foster motivation?
a) To help the team work through a temporary setback.
b) To help the team to overcome a lack of confidence.
c) To accomplish early wins in the projects life cycle.
d) To ensure that there are no activities that have late start criteria.

4.

Which system notifies the work package owners when to begin work?
a) Project schedule
b) Status review system
c) Work authorization system
d) PMIS

5.

What does a work authorization system ensure?


a) Work done is in line with the project goals.
b) What work to be done is clearly outlined.
c) Who is to do the work.
d) When the work is to begin and end is understood.

6.

Which element is a form of operational definition?


a) Metrics
b) Control limits
c) PCIs
d) COQ

7.

Which manual or automated tool and technique is used to collect, archive, and distribute project information on a project?
a) Project management information system
b) Communications plan
c) Project management enterprise software
d) Communications and feedback system

8.

Which information is contained within the work performance information?


a) Completed and incomplete deliverables.
b) Actual conformance to quality plan.
c) Intended performance details of the work to be completed.
d) ETC for scheduled activities that have started.

9.

What is quality assurance?


a) Conforming product specifications to customer requirements.
b) Strategizing how to create products that meet quality requirements.
c) A pattern of activities which ensure that the product meets quality requirements.
d) A set of tactics used to determine if goods meet quality requirements.

10. Which statements best describe project quality audit?


a) Contains an approved quality audit methodology.

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b) Ensures that efficient or effective processes and procedures are used.
c) Contains future change recommendations.
d) Determines whether the project complies with organizational and project policies,
processes, and procedures.
11. What does co-location mean?
a) That the team members are distributed geographically.
b) That the team is located in one physical location.
c) That the team uses a war room.
d) That the team members work from home.
12. Which statement is true of version control?
a) Required so that team members do not over-write one anothers work.
b) Not a problem for project managers who use adequate backup systems.
c) Required to make sure everyone is working with the same, most recent document.
d) Required to maintain only the latest version of the document.
13. Which of these statements are true of a project management office?
a) A team that manages multiple projects concurrently.
b) The same as the office of the CEO.
c) A unit that centralizes and coordinates the management of projects.
d) An organization that may provide project support functions.
14. Which of these statements are true of quality audits?
a) Are only done at the end of the project.
b) Check the fitness of the projects output or the fitness of the quality plan.
c) Are done only once during the entire project life cycle.
d) Are best done at random intervals over the course of the project.
15. Why are quality audits performed?
a) To evaluate whether the project output is fit for the purpose it was intended.
b) To evaluate if best practices identified in the previous projects have been implemented.
c) To evaluate whether the quality management plan is still appropriate after quality
improvements have been made.
d) To evaluate if the quality assurance team members are qualified
e) To evaluate how statistical process control may be used to improve the capability of
a process.
16. What should you do when the quality assurance team suggests quality improvements in
your project?
a) Assess for risk to project success.
b) Subject them to trade-off analysis.
c) Ensure that the change does not affect the project scope.
d) Determine the cost of quality.
17. On which idea is quality assurance based?

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a) Creating a margin of error for product specifications.
b) Preventing problems, rather than fixing them.
c) Establishing upper and lower specifications for products.
d) Increasing production rates by providing training for quality control inspectors.

Lesson 10
Activity 10-1
1.

You have a list of 10 potential sellers and have to narrow the list down to a more manageable number of candidates. What will be the process to create a short list of
sellers that you will consider?
Based on the qualified sellers list, which lists sellers from previous projects who have
been pre-screened for their qualifications and their track record of performance, you can
narrow down the potential sellers to a more manageable number of candidates and create a short list of the sellers.

2.

You now have a short list of sellers. Name some of the selection criteria you might use
in finalizing the selection of the seller.
Some of the possible selection criteria might be, but are not limited to:
Priceremembering to re-examine the very high or very low responses as the seller may
not have fully understood what was being requested.
Working relationshipsif your company has done business with a seller, are there positive or negative comments recorded regarding the work relationship?
Prohibited bidderdoes your company have a list of sellers that are no longer acceptable for use as a subcontractor? Are there relatives or close friends of executives who
have some association with the bidder? This needs to be examined closely for a potential
conflict of interest and a seller may have to be deemed unsuitable.
Product scalabilitycheck with technical experts in your company on the scalability of
the solution suggested by the seller.
Product maintainabilitycheck on the maintainability of the solution suggested by the
seller.
Product support commitmentevaluate whether the seller provides for adequate operational support for the product.

3.

Included in the contract should be performance criteria, on both schedule and costs,
expected of the subcontractor. What is some of the information that you would want
to see in the way of performance reporting by the subcontractor?
Answers may vary, but may include: milestone or deliverable tracking to show compliance
to requested schedule and cost constraints. You could also include test reports, test data
documentation, and certification requirements to ensure product quality requirements
are met.

4.

Why might you hold a bidder conference in this situation?


To ensure that all the sellers have common understanding about the technical aspects of
the RFP and the related process, including the required forms and the submission process.

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Activity 10-2
1.

What do you think would be the most appropriate method of finding qualified training
providers for the OGC PM Training Roll-Out project?
Answers will vary, but may include: OGC may have a list of training providers that the
company has used in the past.

2.

There are only two local training providers in a 20 mile radius of OGC. You decide to
expand your seller list outside of your local area. What methods would you use to do
this?
Answers will vary, but may include: perform an Internet search, review professional journals, and contact the project software sales representative. Once you compile your short
list, you might consider asking them for references.

3.

Based on the scenario, would you conduct a bidder conference? Why or why not?
Answers will vary, but may include: based on the initial feedback and queries that you
get from various sellers in response to your RFP, you may decide to conduct a bidder conference to allow prospective sellers to ask questions and to get clarification about the
deliverables and the procurement requirements for preparing their responses. However,
if the proposals from various sellers indicate a proper understanding of the requirements,
you would not require a bidder conference, as this incurs additional costs, time, and
effort that need not be expended.

Activity 10-3
1.

To find a qualified seller you decide to use a weighted system. What would be your
first step?
a) Assign a numerical weighting factor to each evaluation criterion.
b) Score each prospective seller based on the rating scale for criteria.
c) Select the seller with the highest score.
d) Develop a rating scale for scoring the criteria.

2.

For each evaluation criterion, you have specified a rating scale. What should you do
next?
a) Add the scores of the scale.
b) Select the highest rated score.
c) Score each prospective seller on each criterion using the rating scale.
d) Multiply the sellers score by the weighting factor for each criterion or sum of the criteria in a category.

3.

You have selected a seller. You and the procurement manager are meeting with the
seller to negotiate the contract. The procurement manager asks the seller if they will
use an in-house instructor or outside contractor for the project software training.
Which part of the negotiating phase are they engaged in?
a) The introduction stage
b) The probing stage
c) The bargaining stage
d) The agreement stage

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4.

From the C:085042Data\Managing Project Procurement folder, open the OGC Seller
Proposal Notes and Blank OGC Seller Scoring Sheet documents. Based on the scenario
and the seller notes provided, complete the seller scoring sheet.
Enter your rating for each sellers selection criteria. Using the Weighting Factor provided,
calculate the Score for each criterion (multiply the Rating by the Weighting Factor). Once
you are done with the calculation of the scores for all sellers, calculate the Total Score
for each seller.

5.

Compare your Blank OGC Seller Scoring Sheet document with the Completed OGC
Seller Scoring Sheet document in the C:\085042Data\Managing Project Procurement\
Solutions folder.
Ratings for each seller are determined by predetermined selection criteria and the evaluation of the seller proposals that were received from different sellers. Scores were
calculated based on the weighting factors and totals for scores were calculated for each
seller. You have performed a quantitative evaluation of the seller proposals.

6.

Based on your quantitative evaluation of the seller proposals, which seller would you
choose for your project?
Answers will vary, but may include: based on the total scores that you calculated using
the weighting system, you now possess a quantitative evaluation of each seller. The final
total scores will serve as an objective parameter in the comparison and selection of the
seller for your project. In this case, based on the total scores, you may select Rudison
Technologies Ltd. as they posted a score of 390, which is the highest score among the
three sellers.

Lesson 10 Follow-up
Lesson 10 Lab 1
1.

What does the project manager do when requesting seller responses?


a) The project manager plans purchases.
b) The project manager solicits quotations.
c) The project manager selects a seller.
d) The project manager evaluates project progress.

2.

Which allows potential sellers to ask questions about the project and its requirements?
a) Advertised bids
b) Bidder conference
c) Sellers conference
d) Annual meeting

3.

Which is included on a qualified sellers list?


a) Sellers names
b) Procurement documents
c) Proposals
d) Advertised bids

4.

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SOLUTIONS
a) Weighted scorecard
b) Expert judgment
c) Seller rating system
d) Screening system
5.

Which document sent to prospective sellers provides information regarding the


requirement specifications and needs of your project?
a) Procurement management plan
b) Project documents
c) Procurement document
d) Request for information

6.

Which is a legal contractual agreement signed between the organization and an external entity to form a partnership in a buyer-seller arrangement between them?
a) Procurement contract
b) Teaming agreement
c) Seller proposal
d) Purchase order

7.

Which are tools and techniques for the conduct procurement process?
a) Bidder conferences, SWOT analysis, independent estimates, expert judgment.
b) Procurement negotiations, advertising, contingent response strategies, proposal
evaluation techniques.
c) Independent estimates, make-or-buy decisions, qualified seller lists, source selection
criteria.
d) Bidder conferences, independent estimates, expert judgment, procurement negotiations.

8.

Which are outputs of the conduct procurement process?


a) Procurement contract award
b) Qualified seller list
c) Resource calendars
d) Selected sellers

9.

True or False? A procurement contract is a mutually binding agreement that details the
obligations of only the seller.
True
False

10. Which output of the conduct procurement process lists the quantity, availability, and
utilization of project resources?
a) Project management plan
b) Procurement contract
c) Resource calendar
d) Seller proposal

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Lesson 11
Activity 11-1
1.

What can you do, as the project manager, to mitigate the negative effects of a staffing
change?
a) Put the project on hold until Sarah returns from sick leave.
b) Rebuild the schedule to include additional time for Kevin to complete his tasks.
c) Closely monitor Kevins work to assess any possible risk.
d) Discuss with the team the impending change and that the team can expect to go
through the team development stages again.

2.

Kevin missed an important deadline. What action can you take to help Kevin get back
on schedule?
You might recommend that another instructional designer be brought in to assist him.
Once youve determined that project performance is not meeting the project plan, it
becomes necessary to recommend corrective action. A change in head count will have an
impact on cost and scheduling, and will require the monitoring of changes as they occur.

3.

After he has been given extra help, Kevin manages to meet his next important deadline. What should be your next action as project manager?
a) Keep a private log for your own reference, detailing changes that have been made to
the project.
b) Update recent cost and schedule changes that have resulted from recent changes.
c) Ask Kevin to closely monitor changes to the projects cost and schedule.
d) Ask Kevin to let you know if he has any further problems as the project progresses.

Activity 11-2
1.

Who will you involve in the change control process for the PM Training Roll-Out project
and what is their role in the change control process?
The change control process should involve the OGC selected senior executives and strategic planning individuals who are the key stakeholders. Their role will be to identify what
will be considered a significant enough change from each baseline to require management
approval. You should also include the PMO.

2.

The IT department informs you that the project software upgrade will have a significant delay in delivery. In the risk register, you accounted for a delay due to the
software upgrade, but this delay is much longer than originally anticipated. What
action should you take first?
a) Coordinate changes across knowledge areas.
b) Document the change request in a change control system.
c) Update the project plan to reflect changes.
d) Bring the information to the stakeholders for evaluation and approval.
e) Identify corrective action to take to resolve the problem.

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3.

The procurement manager contacted the software vendor and was able to secure a
beta version of the project software. The beta version may have some minor bugs, but
it will be available in time for the training. Based on your change control process, what
further action, if any, should you take?
You should document the problems regarding the beta version and its flaws, the actions
taken to work within these issues, and the reasoning behind your decision to use the beta
version of the software.

Activity 11-3
1.

The internal team responsible for assembling documentation for the training vendor
cannot meet their contracted deliverable of March 25. What actions should you take?
a) Identify required corrective action to resolve the problem.
b) Update the project plan to reflect these changes.
c) Recommend corrective actions to the CCB.
d) Use configuration management to document and control changes to the original vendor contract.

2.

What are the tasks that you should consider when determining appropriate corrective
actions?
a) Record how corrective actions should be tracked.
b) Identify alternative options available.
c) Determine the source of the problem and its severity.
d) Review the project plan and objectives.

3.

OGCs change control process states, The PMO, upon receipt of change request decisions, records the information in a database to track all change request patterns.
What benefits do you see in tracking change request patterns?
Answers will vary, but may include: it may be helpful to see a breakdown as to how many
change requests were due to contractual agreements. They will be able to do research to
find other projects that have had similar change requests and patterns.

Activity 11-4
1.

Your team has been designing a plan that calls for testing and verification of the
assessment questions. The team has determined the criteria for acceptability for each
assessment question. What should be your next step in the inspection process?
a) Establish the scope of the review.
b) Determine the methodology of the review.
c) Conduct the review.
d) Prepare a review report for stakeholders.

2.

Your team has decided to use a checklist and job aid in combination for the assessment review. Before beginning the actual review, what else would you consider doing?
Before you begin the review, you should first gather all relevant scope documentation,
including the WBS, scope statement, and requirements documentation. You should also
communicate with the team members who will participate in the test, so they can prepare for the review.

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3.

The draft assessments have passed the inspection. What should be included in your
review report, and why?
1. The project baseline and status comparison. This part of the report compares baseline
specifications, schedules, and budgets to the actual project results. 2. Overall project
status. This part of the report discusses whether or not the project as a whole is on track
with the project plan. 3. Change recommendations. Recommending changes would be necessary if the review indicated that the product specification, scope, schedule, or budget
goals would not be met. 4. Scope and methodology of the inspection. This part of the
report explains the purpose and details of the review.

4.

You receive formal approval for the assessments. How will you inform stakeholders?
Provide written documentation to project stakeholders indicating formal acceptance in
accordance with the communications management plan.

Activity 11-5
1.

2.

You have various inputs available to manage a scope change, such as the one in the
scenario. Match the input with its description.

Conguration management plan

Work performance information

Requirements documentation

Requirements traceability
matrix

a.

Periodically collected information


about project activities that are being
performed to accomplish the project
work.
b. Provides information on elements that
can be congured, those that undergo
formal change control, and the process of controlling such changes.
c. Links project requirements to the
business and project objectives and
ensures that the requirements add
business value to the project.
d. Documents how each project requirement meets the overall business need
of the project.

A scope change request recommending additional test documentation has been submitted to the CCB for analysis. This change might impact the project finish date. What
should be done first with this request?
a) Evaluate the request.
b) Ensure that new specifications are detailed.
c) Monitor changes.
d) Identify corrective action to take.

3.

The CCB informs you that the additional costs for the workshop will be adjusted in the
project budget. However, the project finish date must remain the same. As the project
manager, what could you do to ensure that the project finishes on time?
Consider assigning additional resources to effort-driven activities on the critical path.

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Lesson 11 Follow-up
Lesson 11 Lab 1
1.

What type of information is documented in the project management plan?


a) The information about project status, scheduled activities, and issues.
b) The processes of executing and controlling during the project.
c) The early stages of the planning phase of the project.
d) The potential changes to the project.

2.

What statements best describe inspections?


a) May also be referred to as product reviews, audits, or walkthroughs.
b) Involve comparing schedules and budgets to the actual project results.
c) Are examinations of change requests to verify that the objectives are met.
d) Are only effective if done at random intervals in a production process.

3.

Which statement best describes the project controlling process?


a) Is used strictly to control scope changes.
b) Is used by the project team throughout the project.
c) Is used only in the control phase of the project.
d) Is used to control changes made as a result of project planning and execution.

4.

The control processes are repeated throughout the project life cycle. Therefore,
which term can be attributed to the control processes?
a) Facilitative
b) Integrative
c) Core processes
d) Iterative

5.

What types of information do the performance reports provide you with?


a) Percentage of activity work completed to date.
b) Activities to be completed from the current date.
c) Activities completed to date.
d) Activities started to date.

6.

What is scope creep?


a) Reduction of project scope.
b) A type of residual risk.
c) Undocumented changes to the project scope.
d) An activity that needs to be included in the project schedule.

7.

Which documents are included in a projects scope baseline?


a) WBS dictionary
b) Work breakdown structure
c) Milestone list

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d) Project charter
8.

What actions should be taken regarding issues relating to the customers installation
and support requirements?
a) Addressed if currently part of the projects scope.
b) Ascertained through a cut-over needs analysis.
c) Addressed as a separate project.
d) Addressed as a change to the current projects scope.

9.

What is the overall process of managing changes that affect the function or characteristics of the deliverable known as?
a) Managing by objective
b) Change control management
c) Managing by exception
d) Configuration management

10. Which element is a collection of formal, documented procedures that defines the steps
by which the project may be changed?
a) Managing by objective
b) Change control system
c) Managing by exception
d) Configuration management
11. Who is responsible for ensuring that changes are processed through the integrated
change control process?
a) Project sponsor
b) President
c) Project manager
d) Functional manager
12. Which statements are true of change requests?
a) Must be documented.
b) Can come from anyone.
c) Will not affect the project scope.
d) Must be subjected to an integrated change control process.

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Lesson 12
Activity 12-1
1.

Match the EVM measure with its formula.

b
a

Schedule variance
Schedule performance
index
Cost variance
Cost performance index

d
c
2.

a. EV / PV
b. EV - PV
c. EV / AC
d. EV - AC

According to your cost baseline for the project, you planned to spend $15,000 by the
end of the eighth week. You collect reporting data for the eighth week and determine
that $12,000 worth of work has actually been completed. What actions should you
take with this information?
a) Bring it to the attention of the CCB with some possible solutions.
b) Use it to identify corrective action to take.
c) Use it to compare actual schedule performance to planned performance.
d) Bring it to the attention of project stakeholders.

3.

The SV for the eighth week of your project is -$3,000. The SPI for this reporting period
is .80. What is your analysis of this data and the projects schedule performance to
date?
A negative SV indicates that the project is currently behind schedule. An SPI number less
than 1.0 also indicates that the project is behind schedule. You need to determine the
cause of the variance and whether the activity that is behind schedule is on the critical
path. You may consider talking to your resources to identify the source of the problem.
You may have to change the schedule dates as well.

4.

Using performance measurement techniques, you have determined that the project is
behind schedule. What should you do with this information?
Now that you know the project is behind schedule, you need to determine what activity is
causing the problem. Once the activity has been identified, you must then determine
whether it is on the critical path. If it is on the critical path, you most likely will have to
take corrective action, such as fast-tracking, compression, or resource leveling to meet
your milestone dates and your project deliverable deadline. Remember to analyze the
impact of your corrective action on project cost and quality performance baselines. You
should continue to carefully monitor the schedule performance to check the effectiveness
of your corrective action.

Activity 12-2
1.

Review the PM_CostPerfRpt document. What is the actual cost for the Public Meeting
Work Package in the 6th week reporting period?
$16,000 (You can calculate this figure by adding up the amount that has been spent so far
on activities: $4,500 + $7,000 + $4,000 + $500.)

2.

What is the total EV for the Public Meeting Work package in the 6th week reporting
period?

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The total EV is $21,600.


3.

614

According to the cost baseline, the PV up through the sixth reporting period is
$22,000. What is the CV for this work package?

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SOLUTIONS

CV = +$5,600
4.

Which formula will allow you to calculate the Estimate at Completion (EAC) for the
work package?
a) EV / AC
b) EV AC
c) AC + [(BAC EV)/CPI]
d) EV PV

5.

Based on the formula EV/AC, you determine that the CPI for this work package is 1.11.
When you take the CPI and CV into consideration, how is this work package performing?
A CPI greater than 1.0 and a positive CV indicates the work package is performing better
than anticipated when compared against the budget.

6.

What is the SV for this work package?

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SV = -$400
7.

What is the SPI for this work package?


SPI = EV/PV. The SPI is 0.98, which is less than 1.0 and indicates some work on the schedule needs to be done.

8.

Based on your analysis of the product costs, what courses of action might you take?
a) Find the cause of the variance.
b) Determine the appropriate corrective action to take.
c) Alert project stakeholders that the project is in crisis.
d) Document lessons learned.

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Lesson 12 Follow-up
Lesson 12 Lab 1
1.

Which analytical tools are used to assess project progress and identify the magnitude
of cost, resource, and production variations?
a) Gantt chart review
b) Monte Carlo analysis
c) Project cost baseline audit
d) Earned value analysis

2.

What does a Cost Performance Index (CPI) of 0.8 mean to the project?
a) Under-budget to date.
b) Over-budget to date.
c) On budget.
d) Nothing; CPI values are always above 1.0.

3.

For what reasons are Gantt charts useful for reporting project progress?
a) They display schedule performance trends.
b) They are easy to read.
c) They are available in most project management software packages.
d) They provide detailed analysis for making adjustments.

4.

A project has a negative cost variance and an SPI less than 1.0. What does this mean to
the project?
a) It is over-budget and ahead of schedule.
b) It is under-budget and behind schedule.
c) It is over-budget and behind schedule.
d) It is under-budget and ahead of schedule.

5.

What is the purpose of trend analysis?


a) Forecast future project performance.
b) Improve variance reporting.
c) Create change requests.
d) Mitigate the harmful effects of scope creep.

6.

What is the essential first step in the control schedule process?


a) Making changes to the project schedule.
b) Computing the SPI.
c) Making sure schedule requirements are clear.
d) Determining the current status of the project schedule.

7.

What is the difference between the Earned Value (EV) and the Planned Value (PV)?
a) Cost variance.
b) Schedule variance.

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c) Unearned value.
d) Actual cost
8.

What does a Schedule Performance Index (SPI) of 1.2 mean to the project?
a) Ahead of schedule.
b) According to schedule.
c) Behind schedule.
d) Nothing; SPI values are always below 1.0.

9.

During the control schedule process, the project schedule serves what functions?
a) Schedule baseline.
b) Basis for measuring project performance.
c) Cost baseline.
d) Time management component of the project.

10. What is the Schedule Variance (SV) if the Planned Value (PV) is $275,000 and the
Earned Value (EV) is $300,000?
a) $25,000
b) - $25,000
c) $125,000
d) $575,000
11. What are the changes made to keep project activities on schedule called?
a) Corrective actions.
b) Change requests.
c) Performance measurements.
d) Schedule baselines.
12. How do you calculate the Cost Performance Index (CPI)?
a) Divide the Earned Value (EV) by the Actual Cost (AC).
b) Divide the Earned Value (EV) by the Planned Value (PV).
c) Subtract the Actual Cost (AC) from the Earned Value (EV).
d) Subtract the Planned Value (PV) from the Earned Value (EV).
13. Based on the performance measures indicated in the following table, what is the Cost
Variance (CV) for Case 3?

a) -1,000
b) 1,000
c) 2,000

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SOLUTIONS
d) -2,000
14. Based on the performance measures indicated in the following table, what is the
Schedule Variance (SV) for Case 2?

a) -1,000
b) 1,000
c) 2,000
d) -2,000
15. In the cost curve shown in the following figure, Height A represents:

a) Cost variance
b) Schedule variance
c) Earned value
d) Budget at Completion (BAC)

Lesson 13
Activity 13-1
1.

Given that there is a significant variation in temperature between the first and second
floor, what should be done?
a) Report this information to the appropriate people, according to the projects change
control system.
b) Because of the potentially high re-work cost, finding a solution should be a top priority.
c) Initiate process adjustments.

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d) Continue to monitor quality as the HVAC installation continues.
2.

The quality management plan documented acceptability of the installation with a tolerance of a one degree variance between floors. What would you do to determine the
reasons for the variance in quality tests?
You will need to determine the source of the variability so that appropriate corrective
action can be taken. Take a closer look at how the HVAC installation is being distributed
among the contractors. Also consider how the quality testing is being done. Is the same
quality control engineer inspecting all of the floors?

3.

After researching the cause of the variance, you discover that the testing was done by
one quality control engineer. You then meet with the contract supervisor to investigate the process. You discover that the duct work on the second floor was installed
over a weekend by a different, less experienced crew. What should your next step be?
Recommend corrective action to the supervisor to bring in the first floor crew to troubleshoot the variance between floors. It is important that you consider the impact any
corrective action may have on the project budget and schedule. Major adjustments must
be made according to the projects change control system.

Activity 13-2
1.

You need to provide a progress report to senior management. What should your first
step be in gathering data for your report?
a) Hold performance reviews.
b) Consult subsidiary plans for guidelines on reporting project performance.
c) Prepare a professional performance report.
d) Include in the report EV measurements for SV and CV with appropriate action plans
to remedy any variances.

2.

After you completed your analysis of work results, you held project deliverables performance reviews with project team members to assess project status. You have
gathered all relevant data necessary for completing your progress report. Given the
cost and schedule concerns of senior management, what type of report format should
you prepare?
The format of the report you prepare should provide the type of information and the
level of detail required by senior management. As a guide, consult your project management plans subsidiary plans for guidelines and procedures for reporting on cost and
scheduling performance, as these represent managements primary concerns.

3.

Since project baselines have shifted, one of the team leads for the project suggests
that you should alter the format of the progress report before handing it off to senior
management. She says that extensive enhancements to the graphic elements are necessary to truly express the major points of the report. Should you implement her
suggested changes?
No. When you create a progress report, it is important to weigh the time, expense, and
effort it would take to produce the report against the benefits of the report. The suggestions of the team lead are primarily cosmetic, and will take additional time, money, and
manpower to implement. It is not in your best interest to change the progress report.

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SOLUTIONS

Lesson 13 Follow-up
Lesson 13 Lab 1
1.

Which reason causes variance to be sporadic, unusual, and difficult to predict?


a) Random causes
b) Common causes
c) Special causes
d) External causes

2.

What is the statistical range of variation for processes or products called?


a) Specification limits
b) Tolerances
c) Control limits
d) Quality standards

3.

500 rejected parts is an example of which sampling technique?


a) Attribute sampling
b) Variable sampling
c) Random sampling
d) Stratified sampling

4.

Which statement is true of the quality problems that are faced by organizations?
a) Originate on the shop floor because of waste and rework.
b) Could be avoided by management taking action on potential quality improvement
ideas.
c) Could be eliminated if supervisors monitored their work more closely.
d) Originate in the QA organization where the ultimate responsibility for quality rests.

5.

A + or 3-sigma limit indicates approximately what percentage of the process output


will be within acceptable limits?
a) 30.3
b) 80.3
c) 68.5
d) 99.7

6.

Which chart is ordered by frequency of categorized causes of poor quality performance?


a) A control chart
b) A fishbone diagram
c) A Pareto diagram
d) A trend analysis

7.

The graphic is an example of which diagram/chart?

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a) A control chart
b) A fishbone diagram
c) A Pareto diagram
d) A cause-and-effect diagram
8.

What action is taken to bring a product or service into compliance with customer
specifications?
a) Scrap
b) Audit
c) Recall
d) Rework

9.

The graphic is an example of which diagram/chart?

a) A control chart
b) A fishbone diagram
c) A Pareto diagram
d) A decision tree diagram
10. A Pareto diagram is a tool used to determine the relative impact each quality problem
has on project performance. Which statement best describes the philosophy of the
Pareto Principle?
a) In general, 80% of the quality problems can be justified as correctable using a costbenefit analysis. The remaining 20% are not financially worth fixing.
b) To achieve zero defects, all quality problems, including those that do not have a
direct cost, should be corrected.
c) The vast majority of defects are caused by a small percentage of the identifiable
problems. Improvement efforts therefore should be reserved for these vital few problems.
d) To minimize financial loss to the firm from quality problems, all problems that have a
measurable cost should be corrected.

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SOLUTIONS
11. Which technique is useful for identifying corrective action alternatives?
a) Changing the project scope.
b) Requesting additional funds immediately.
c) Holding a brainstorming session with the project team.
d) Leaving decision-making to the functional managers.
12. Which document should reflect the updates to project performance and control documents?
a) Project plan
b) Work breakdown structure
c) Change control plan
d) Cost baseline

Lesson 14
Activity 14-1
1.

What action should you take in regard to the material delay?


a) Monitor the environment for new risks.
b) Conduct a project risk response audit.
c) Update performance baselines.
d) Consult the risk response plan.

2.

You have developed a very robust risk response plan in the risk register. Based on the
vendor performance report, you notice that chances of delay have now become very
high (from an earlier rating of high). You now need to decide what would be your next
step.
a) Consult the risk response plan.
b) Follow the risk management process.
c) Implement the fallback plan.
d) Develop a workaround.

3.

The contractor suggests that it might ultimately be more cost-effective to buy materials from another contractor, although the initial cost of materials will be higher. Do
you think this is an effective solution?
Answers will vary, but may include: although the cost of materials will be higher when
purchased in this manner, the cost of the schedule delay might even be more expensive.
By buying materials right away, you will forestall any additional work delays.

Activity 14-2
1.

The work done by InfiniTrain is scheduled to be completed in three phases. What


action can you take to ensure that these deadlines are met?
a) Set performance milestones.
b) Document contract changes.

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SOLUTIONS
c) Implement a contract change control system.
d) Index all contract correspondence.
2.

Your contact at InfiniTrain informs you that their primary project software instructor
has given her resignation. They have asked to push the training date out a week to get
another instructor up to speed. What action should you take?
a) Document contract changes.
b) Conduct an on-site visit.
c) Consult the contract change control system.
d) Negotiate a milestone deadline.

3.

InfiniTrain has informed you that they have completed the beta verification of the
Assessment documents as specified in the contract. It is your responsibility as project
manager to verify that all feedback was incorporated correctly. Upon your review, you
notice that some of the alpha review feedback was not incorporated. What action
should you take?
You might review your contract with InfiniTrain for guidance on the timelines and deadlines for completing the various work phases. Consult the performance reporting system
to determine how to handle this problem. The procedure for determining acceptance or
non-acceptance of the assessment documents is documented in the performance reporting
system.

Lesson 14 Follow-up
Lesson 14 Lab 1
1.

When a project is terminated before its scheduled completion date, which of these is
not a correct action?
a) You should halt further expenditures in an orderly way.
b) You should cancel vendor contracts.
c) You should identify and document reasons for termination.
d) You should work with the sponsor to identify status of complete and incomplete
deliverables.

2.

Which are inputs to administer procurements?


a) Work performance information
b) Contracts
c) Procurement performance reviews
d) Approved change requests

3.

Which are suitable contract performance milestones?


a) Partial deliveries of the requirements.
b) Deferred deliveries of the requirements.
c) Completion of selected portions of the project work.
d) Delivery of preliminary versions of the product.

4.

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SOLUTIONS
a) Is illegal monitoring of a suppliers performance.
b) Is a good way to mitigate risk of supplier non-performance.
c) Is not a suitable acceptance procedure.
d) May include making site visits.
5.

As a buyer, what is the purpose of an on-site visit to a supplier?


a) Assess the engagement of the workforce.
b) Determine if your suppliers employees are legal workers.
c) Determine contract performance.
d) Develop a change control system.

6.

Which statement is true of the contract change control system?


a) Belongs to the seller rather than the project organization.
b) Contains all of the forms, performance tracking, and procedural information needed
to deal with contract changes.
c) Does not feed information into the projects change control system.
d) Does not include procedures for reviewing and resolving contract disputes.

Lesson 15
Activity 15-1
1.

Based on the information you have, can you close out the contract with the subcontractor?
a) Yes, the contract has been fulfilled.
b) No, the contract has not been fulfilled.
c) You cannot determine this until a procurement audit has been completed.
d) You cannot determine this until the seller completes a staff evaluation.

2.

What would you do to resolve incorrect or unsatisfactory contract work in the situation
described in the scenario?
Answers will vary, but may include: make arrangements to meet the subcontractor at the
work site to evaluate what outstanding work is required to finish the job correctly and
satisfactorily; call the subcontractor and direct him to return to the work site, clean up
the debris, and repair the crack in the sidewalk; or conduct a procurement audit to
ensure that the contract work was properly completed.

3.

RTL returned to the work site and resolved the outstanding contract issues and completed the cement work correctly and satisfactorily. Can you close out the contract?
Why or why not?
Yes. This contract can be closed out because the seller resolved the outstanding contract
issues and completed the cement work correctly and satisfactorily.

4.

Would you include a seller evaluation in your procurement audit? Why or why not?
Yes, because it is important to document the sellers performance for use in future similar procurements.

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SOLUTIONS
Activity 15-2
1.

Are your project records ready for review by the project sponsor? Why or why not?
Yes, because you have collected performance measurement and product documentation
as well as other relevant project records to archive.

2.

What document will you prepare before obtaining formal acceptance from your project
sponsor to officially complete the project?
You should prepare a final project report. You should also complete a lessons learned
report.

3.

In this case what might constitute formal acceptance?


Answers will vary, but may include: a formal presentation to stakeholders followed by a
memo from the project sponsor that the project is complete. Formal acceptance documentation should be distributed to the appropriate stakeholders and stored with the
project archives. If the customer were external, you might also need to receive their formal acceptance in writing.

4.

What types of documentation or computer files should you store in the project
archives?
Answers will vary, but may include: the project plan, project performance records, contract records, names of team members, or financial records.

Lesson 15 Follow-up
Lesson 15 Lab 1
1.

What is true of lessons learned during the project?


a) Should be documented only in the closeout report.
b) Should consist of only project data.
c) Should be documented throughout the project.
d) Should consist of only things that went well during project execution.

2.

Which process is concerned with obtaining formal stakeholder acceptance of completed project deliverables?
a) Project plan execution
b) Scope management
c) Scope verification
d) Quality assurance

3.

Which activities are included in an orderly close-out process?


a) Formal acceptance by the customer.
b) Project milestone review.
c) Closure of all contracts.
d) Administrative closure and final reporting.

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SOLUTIONS
4.

Which is true of a formal project handoff?


a) It is a bad idea because it embroils the project in the customers political intrigues.
b) It can positively shape perceptions of the product by highlighting product benefits.
c) It should only be held if the customer pays extra for this service.
d) It does not have a structured agenda for the handoff meetings.

5.

At what points does administrative closure occur in a project?


a) At the end of the project.
b) At the end of each project phase.
c) Upon delivery of pre-specified milestone deliverables.
d) On completion of the project scope definition.

6.

Which is true of project archives?


a) Should never contain computerized records, because they may not be retrievable in
later software.
b) Should include key information, such as baselines and performance data.
c) Should be handed to the sponsor at the end of the project.
d) Should be updated only at the end of the project.

7.

When can the contract close-out occur?


a) At the end of a project only.
b) Whenever a contract is completed and accepted.
c) At the end of a project only, unless the project is terminated early.
d) Whenever the seller submits an invoice.

8.

What are the goals of contract close-out?


a) To arrange for final settlement of seller payments and claims.
b) To verify that work was done and delivered to specification.
c) To provide performance evaluation of seller staff.
d) To update contract records and documents.

9.

Which content categories should the final project report include?


a) Administrative performance and recommendations.
b) Project lessons learned information.
c) Project structure and recommendations.
d) Project management performance and recommendations.

10. For what reasons is publishing a project close-out schedule a good idea?
a) It helps keep people motivated by imposing a deadline.
b) It provides a sense of order in a time of fluctuating team membership.
c) It helps team members who are leaving to understand what they must accomplish or
hand off before they can move to a different position.
d) It provides stakeholders with information on the status of the project.
11. Which is the output of the close project or phase process?
a) Project management plan updates.

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b) Final product, service, or result transition.
c) Contract closure.
d) Work performance information.

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INDEX

INDEX
6-Sigma limit, 449
8/80 rule, 110
80/20 rule, 450

A
AC, 418, 429
acquire project team process, 329
inputs, 330
outputs, 332
tools and techniques, 331
activities on the critical path
See: critical activities
activity dependencies, 118
common types, 118
activity durations
estimating, 136
activity resources
estimating, 131
Actual Cost
See: AC
administer procurements process, 472
inputs, 472
outputs, 474
tools and techniques, 473
administrative closure, 495
aggregated cost, 184
Agile project management, 41
alternatives identication, 90
analogous estimating, 135, 177
analyzing variances task, 448
anticipatory breach, 478
APT, 7
assumptions, 86
attribute sampling data, 451
audit, 401
Autonomous Project Teams
See: APT
average, 269

B
BAC, 431
baseline
estimating, 187
baselines, 166
establishing, 167
benchmarking, 209
bottom-up estimating, 178
breaches of contracts, 476, 477
Budget at Completion
See: BAC
business cases, 56
components, 56
business requirements, 43
business risks, 237
types, 237

C
capital budgeting, 45
cause-and-effect diagram, 207
CCB, 388
Change Control Board
See: CCB
change control systems, 388, 391
change management
advantages, 396
checklists, 205
close procurements process, 486
inputs, 486
outputs, 487
tools and techniques, 487
close project or phase process, 494
inputs, 494
outputs, 495
tools and techniques, 494
closeout meetings, 497
co-location, 339
code of accounts, 96
collect requirements process, 77

Index

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INDEX
inputs, 77
outputs, 78
tools and techniques, 77
common estimate types, 176
common performance reporting techniques, 431
communication skills, 31
communications management plans, 225
creating, 230
communications requirements, 228
communications requirements analysis, 228
communications technology, 228
conditional branches, 123
conditional diagramming method, 123
conduct procurements process, 364
inputs, 364
outputs, 366
tools and techniques, 365
conguration management, 390
conict
causes, 346
conict management, 346
approaches, 346
constraints, 86
contingency allowances, 186
contingency plans, 281
contingency reserves, 282
contract change requests, 476
contracts, 304
common types of, 305
components of, 304
control charts, 207, 449
control cost process, 426
inputs, 427
outputs, 428
tools and techniques, 427
control schedule process, 414
inputs, 414
outputs, 415
tools and techniques, 415
control scope process, 403
inputs, 404
outputs, 405
tools and techniques, 405
cost assignment methods, 187
cost baseline, 183
cost of quality, 204
Cost Performance Index
See: CPI

630

Cost Plus Award Fee Contracts


See: CPAF
Cost Plus Fixed Fee Contracts
See: CPFF
Cost Plus Incentive Fee Contracts
See: CPIF
Cost Variance
See: CV
cost-benet analysis, 47
cost-reimbursable contracts, 306
CPAF, 306
CPFF, 306
CPI, 430
CPIF, 306
CPM, 147
crash cost plotting methods, 161
crashing, 160
create WBS process, 94
inputs, 95
outputs, 96
tools and techniques, 95
critical activities, 155
critical chain method, 147
critical path, 143
identifying, 156
Critical Path Method
See: CPM
cultural awareness, 32
CV, 429

D
decision making skills, 31
decision making under risk, 272
decision tree analysis, 273
dene activities
how to, 112
dene activities process, 110
inputs, 110
outputs, 111
tools and techniques, 111
dene scope process, 88
inputs, 88
outputs, 89
tools and techniques, 89
deliverables, 108
ensuring completion, 402
Design of Experiments
See: DOE
determine budget process, 184

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INDEX
inputs, 184
outputs, 185
tools and techniques, 185
develop human resource plan process, 213
inputs, 214
outputs, 215
tools and techniques, 214
develop project charter, 54
inputs, 55
tools and techniques, 55
develop project charter process
outputs, 56
develop project management plan process, 73
develop project management plans
inputs, 74
outputs, 75
tools and techniques, 74
develop project team process, 335
inputs, 336
outputs, 337
tools and techniques, 336
develop schedule process, 140
inputs, 140
outputs, 142
tools and techniques, 141
direct and manage project execution process,
316
inputs, 316
outputs, 317
tools and techniques, 317
discounted cash ow, 45
distribute information process, 350
inputs, 351
outputs, 352
tools and techniques, 352
DOE, 209

E
EAC, 432
Earned Value
See: EV
Earned Value Management
See: EVM
effect-based risk classication, 241
effort, 134
elapsed time, 134
EMV analysis, 273
enterprise environmental factors, 19
estimate activity durations process, 134

inputs, 134
outputs, 136
tools and techniques, 135
estimate activity resources process, 128
inputs, 129
outputs, 130
tools and techniques, 129
Estimate at Completion
See: EAC
estimate costs process, 174
inputs, 175
outputs, 176
tools and techniques, 175
Estimate to Complete
See: ETC
ETC, 431
EV, 417
EVM, 416
calculating, 421
measures, 418
variables, 416
Expected Monetary Value analysis
See: EMV analysis
expert judgment, 135
express warranty, 477

F
facilitated workshops, 79
fast tracking, 160
feasibility analysis, 46
FF, 119
FFP, 305
Finish-to-Finish
See: FF
Finish-to-Start
See: FS
Firm Fixed Price Contracts
See: FFP
Fixed Price Incentive Fee Contracts
See: FPIF
Fixed Price with Economic Price Adjustment
Contracts
See: FP-EPA
xed-price contracts, 305
oat, 144
owcharts, 206
force majeure, 478
forecasting methods, 457
formal acceptance of project work, 396

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INDEX
FP-EPA, 305
FPIF, 305
free oat, 145
FS, 119
fundamental breach, 478
funding and costs
reconciling, 191
funding limit reconciliation, 186

G
GERT, 123
Graphical Evaluation Review Technique
See: GERT
group creativity techniques, 79
group decision making techniques, 80
group interactions, 16

I
identify risks process, 248
inputs, 249
outputs, 250
tools and techniques, 250
identify stakeholders process, 60
inputs, 61
outputs, 62
tools and techniques, 61
IFB, 304
immaterial breach, 478
impact scale, 242
implied warranty, 477
inuencing skills, 31
information-gathering techniques, 251
inputs, 16
inspection, 401
inspection reports
components, 401
insurable risks, 237
types, 237
integrated change control, 388
interpersonal skills, 28
Invitation for Bid
See: IFB
ISO 9000 Series, 204

M
make-or-buy analysis, 299
what to consider, 299
manage project team process, 343
inputs, 344
outputs, 345
tools and techniques, 344
manage stakeholder expectations process, 355
inputs, 355
outputs, 357
tools and techniques, 356
material breach, 478
mean, 269
median, 269
monitor and control project work process, 384
inputs, 385
outputs, 386
tools and techniques, 385
monitor and control risks process, 466
inputs, 466
outputs, 467
tools and techniques, 467
monitoring and controlling project work, 386
Monte Carlo analysis, 274
motivation skills, 30
motivational techniques, 31

knowledge areas, 17

negative risk strategies, 280


negotiation, 32
NEH programs, 38
Net Present Value
See: NPV
NPV, 45

lags, 119
LCL, 207

objective probability, 270


ongoing risk assessment process, 260

632

leadership, 28
leads, 120
lease, rent, or buy decision, 299
legal issues, 476
lessons learned reports, 496
lessons learned considerations, 496
levels of uncertainty, 243
linear presentation, 5
loops, 123
lower control limit
See: LCL

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INDEX
operations, 7
operations management, 41
organization charts, 216
organizational culture, 15
organizational process assets, 19
organizational structure, 215
types, 216
organizations
cultures, 14
outputs, 16
outsourcing, 298

P
parametric estimating, 135, 178
Pareto analysis, 450
Pareto diagram, 449
payback period, 45
PDF, 269
normal distribution, 270
triangular distribution, 271
uniform distribution, 270
PDM, 122
creating, 125
perform integrated change control process, 393
inputs, 394
outputs, 395
tools and techniques, 395
perform qualitative risk analysis process, 256
inputs, 256
outputs, 257
tools and techniques, 257
perform quality assurance process, 323
inputs, 324
outputs, 326
tools and techniques, 325
perform quality control process, 444
inputs, 444
outputs, 446
tools and techniques, 445
perform quantitative risk analysis process, 265
inputs, 265
outputs, 266
tools and techniques, 266
performance appraisals, 347
performance measurement analysis techniques,
430
performance reports
creating, 458
plan communications process, 225

inputs, 226
outputs, 227
tools and techniques, 226
plan procurements process, 290
inputs, 291
outputs, 292
tools and techniques, 292
plan quality process, 198
inputs, 199
outputs, 200
tools and techniques, 199
plan risk management process, 238
components, 240
inputs, 238
outputs, 239
tools and techniques, 239
plan risk responses process, 278
inputs, 279
outputs, 279
tools and techniques, 279
Planned Value
See: PV
PMBOK Guide Fourth Edition, 5
PMI Code of Ethics and Professional Conduct,
23
PMIS, 318
problems, 318
PMO, 7
PMP Certication, 5
Point of Total Assumption
See: PTA
political skills, 32
portfolio management, 38
portfolios, 6
positive risk strategies, 281
Precedence Diagramming Method
See: PDM
precedence relationships, 118
types, 119
predecessor activities, 118
probability, 268
probability and impact risk rating matrix, 258
Probability Density Function
See: PDF
probability distribution, 269
probability scales, 242
process control structure, 390
process owcharts, 206
process improvement plan, 201

Index

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INDEX
process improvement planning, 201
process mean, 207
processes, 15
groups of, 16
procurement audits, 488
elements of, 489
lessons learned, 490
procurement documents, 303
preparing, 308
types, 303
procurement management plan, 293
creating, 294
procurement negotiations, 375
procurement SOW, 297
procurement statement of work
preparing, 300
procurements administrator, 475
product analysis, 89
product review, 401
professional responsibilities, 24
social, 25
to customers and the public, 25
program management, 38
programs, 5
progressive elaboration, 14
project changes, 389
project charters, 54
creating, 57
project costs
controlling, 433
estimating, 179
project deliverables, 86
project execution direction and management,
320
project governance, 12
project information
distributing, 352
project interfaces, 218
project life cycle, 11
general characteristics, 12
governance activities, 13
project management, 5
project management and operations management,
41
Project Management Information System
See: PMIS
Project Management Office
See: PMO
project management plans, 72

634

project management processes, 15


project managers
responsibilities, 5
project objectives, 90
project performance
reporting on, 458
project phases, 11
project procurements
administering, 478
properly closing, 490
project records
archiving, 495
project resources, 128
project risk
monitoring and controlling, 469
project risk management process, 236
project risk ranking, 267
project risk response audit, 468
project schedule network diagrams, 121
project schedules, 139
compressing, 162
controlling, 423
developing, 151
project scope
controlling, 406
project scope statements, 86
project selection, 43
criteria, 43
project selection decision models, 44
project selection methods, 44
project sellers
determining, 376
project stakeholders, 8
identifying, 64
types, 8
project statement of work
See: SOW
project teams
acquiring, 333
developing, 340
managing, 347
projects, 4
closing, 498
phases, 13
PTA, 306
PV, 417

Q
qualied sellers, 367

Project Management Professional (PMP) Certication - Fourth Edition


Copyright Element K Corporation

INDEX
qualitative criteria, 43
qualitative risk analysis, 255
performing, 260
quality assurance plans, 323
executing, 327
quality audits, 326
topics included in, 326
quality control
performing, 452
quality management plans, 198
creating, 210
quantitative analysis methods, 273
quantitative criteria, 43
quantitative risk analysis, 265
performing, 275

R
RAM, 215, 219
random causes, 447
rating systems
criteria proling, 45
decision tree, 45
Delphi technique, 46
Q-sorting, 45
weighted factor, 45
RBS, 241
regulations, 203
relationships, 39
relative authority, 218
report performance process, 455
inputs, 455
outputs, 456
tools and techniques, 456
Request for Bid
RFB, 304
Request for Information
See: RFI
Request for Proposal
See: RFP
Request for Quotation
RFQ, 304
requirements documentation, 80
requirements management plan, 81
requirements traceability matrix, 82
reserve analysis, 135
resource leveling, 148
Responsibility Assignment Matrix
See: RAM
reward and recognition systems, 339

rewarding individual performance, 340


RFB, 304
RFI, 304
RFP, 304
risk analysis, 243
Risk Breakdown Structure
See: RBS
risk categories, 252
risk data quality assessment, 258
risk management plans, 238
creating, 244
risk registers, 252
components, 259
risk response plans
developing, 282
risk tolerance, 244
levels, 244
risk-related contract decisions, 293
risks, 236
risks and triggers
identifying, 253

S
schedule compression, 159
schedule control chart, 419
schedule formats, 148
schedule management plans, 130
schedule network analysis, 146
Schedule Performance Index
See: SPI
schedule performance measurement, 418
Schedule Variance
See: SV
scope creep, 30
scope statements, 86
components, 87
creating, 91
sellers
obtaining resources from, 371
sensitivity analysis, 273
sequence activities process, 116
inputs, 116
outputs, 117
tools and techniques, 117
SF, 119
simulations, 274
source selection criteria, 307
source-based risk classication, 242
SOW, 49

Index

635
Copyright Element K Corporation

INDEX
how to prepare, 50
special causes, 447
specications, 298
SPI, 420
trend analysis, 421
SS, 119
staffing management plans, 221
components, 221
documenting, 222
stakeholder analysis, 62
stakeholder analysis matrix, 63
stakeholder expectations
managing, 357
stakeholder management strategy, 64
stakeholder registers, 63
stakeholder requirements
documenting, 82
standard deviation, 269
standard schedule diagramming notations, 142
standards, 203
Start-to-Finish
See: SF
Start-to-Start
See: SS
statement of work
See: SOW
statistical sampling, 450
statistical sampling process, 451
subjective probability, 270
subprojects, 4
successor activities, 118
summary activities, 123
SV, 420
system dynamic models, 123
system owcharts, 206

T
tailoring, 15
TCPI, 432
team building, 30
team development stages, 337
team-building activities, 339
teaming agreement, 293
term contract, 376
three-point estimates, 135
Time and Material (T&M) contracts, 306
To-Complete Performance Index
See: TCPI
tolerances, 448

636

tools and techniques, 16


top-down estimating, 177
total oat, 144
Total Quality Management
See: TQM
TQM, 202
training, 338
triggers, 248

U
UCL, 207
upper control limit
See: UCL

V
variable sampling data, 452
variance, 447
causes, 447
verify scope process, 399
inputs, 400
outputs, 400
tools and techniques, 400
virtual teams, 332

W
waivers, 476
types, 477
walkthrough, 401
warranties of tness for purpose, 477
warranties of merchantability, 477
warranty, 476
WBS, 93
developing, 96
WBS dictionary, 96
weighting systems, 374
what-if scenario analysis, 148
work authorization system, 319
Work Breakdown Structure
See: WBS
work packages, 93, 109
work performance information, 320

Project Management Professional (PMP) Certication - Fourth Edition


Copyright Element K Corporation

Copyright Element K Corporation

Copyright Element K Corporation

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