PMI Project Management Principles

A Point of Reference
(based on the 5th Edition PMBOK® Guide)

By Tom Tiede
Agenda
This material will cover the following project management topics:

• What is PMI and the PMP? • Project Management Terms, such as:
• Why PMI Project Management Principles are o Triple Constraint
Useful to Know o Project Charter
• A Few Basic PMI Definitions o Project Management Plan
• Five Process Groups o Work Breakdown Structure (WBS)
o Initiating o Predecessor Relationships
o Planning o Earned Value Management
o Executing o Gold Plating
o Monitoring and Controlling o Responsibilities Assignment Matrix
o Closing o Forming, Storming, Norming, Performing,
• Ten Knowledge Areas Adjourning
o Integration o Communication Noise
o Scope o Risk Probability and Impact Matrix
o Time o Contract Type
o Cost o Stakeholder Power vs. Interest Grid
o Quality • Code of Ethics and Professional Conduct
o Human Resources o Honor
o Communication o Responsibility
o Risk o Respect
o Procurement o Fairness
o Stakeholders o Honesty

2
What is PMI and the PMP?
The Project Management Institute (PMI) is the world’s largest
membership association for the advocacy of Project and Program
management.
• Over 400,000 current members across 180 countries
• Over 600,000 PMI certification holders
• Their most widely recognized certification is the PMP (Project Management
Professional). The PMP credential recognizes your:
o Experience,
o Education, and
o Competency to lead and manage projects
• Earning the PMP credential requires:
o A bachelor’s degree and 4,500 hours of documented project management experience, or a
secondary degree and 7,500 hours of documented project management experience
o 35 hours of certified project management training
o Passing the certification exam
• Regardless of your inclination to pursue PMP certification, PMI project management
principles apply to your role as a project leader or stakeholder
The purpose of this material is to share a few PMI project management
principles that apply to your role as a project leader or stakeholder
3
Why Is This Useful to Know?
Leveraging prescribed PMI project management principles reduces the
risk and impact of costly project omissions, changes, and errors.

Cost of Resolving Project Omissions, Changes, or Errors

(Illustrative)

Project Project Project Project

Initiation Planning Execution Closure

The PMI approach places great emphasis on project initiation and planning when
requirements are clearly defined and agreed upon and the full scope of the project is planned

4
Let’s Start with a Few PMI Definitions
A few basic definitions:

• PMBOK ® - the Project Management Book of Knowledge

from which PMI defines terms, standards, and good practices Portfolio
• Portfolio – Projects, programs, and operations managed as
a group to achieve strategic objectives Programs
• Program - A group of projects and program activities
managed in a coordinated way
• Project – a temporary endeavor undertaken to create a
Projects
unique product, service, or result
• Project Management – the application of knowledge,
skills, tools, and techniques to project management activities
to meet project requirements
• Project Manager – the person authorized by the
performing organization to direct the team accountable for
Time Cost
realizing project objectives
• Project Stakeholder – includes all project team members
Quality
and anyone impacted by or impacting the project
• Triple Constraint – the foundation of project management
is balancing scope, time, and cost. Quality is at the center of
the triple constraint Scope

5
 Project Management Process Groups
A process group is a logical grouping of activities, inputs, tools,
techniques, and outputs required for any type of project.
Monitoring
Process
Groups

Initiating Planning Executing & Closing

Controlling
Define a new project or Develop an integrated Complete the work and Track and review Finalize all activities
Activities

new phase, identify project management satisfy project project progress and and formally close the
stakeholders, and plan to attain project objectives performance; manage project or phase
obtain authorization objectives variance and change

“Authorize the Work” “Plan the Work” “Work the Plan” “Control the Plan” “End the Work”
• Project Charter • Project Mgt. Plans & • Project Deliverables • Change Logs • Final Product,
• Stakeholder Register Related Documents • Work Performance • Approved Change Service, or Result
- Scope Data Requests (i.e. purpose of
- Requirements • Team Performance • Work Performance project)
- Schedule
Outputs

Assessments Information • Closed Procurement

- Cost
Key

• Project • Schedule Forecasts (e.g. formal signature

- Quality
Communications (e.g. • Cost Forecasts of acceptance)
- Human Resources
status reports) • Updates to Project
- Communication
- Risk • Selected Suppliers & Plan
- Procurement Agreements • Quality Control
- Change • Change Requests Measurements
- Stakeholders • Issue Log • Verified Deliverable
• Accepted Deliverables

6
Applying Project Management Process Groups
The five process groups overlap and follow a basic cycle of “plan, do,
check, act” until project closure.
Process Group Overlap
Executing

Planning
Closing
Initiating Monitoring & Controlling

Time

“Plan, Do, Check, Act”

Initiating
No

No
Monitoring & Change Complete
Planning Executing
Controlling ? ?

Yes Yes

Closing

7
Knowledge Areas
A project manager is responsible for applying and managing the following
ten knowledge areas:
Identify, define, combine, unify and coordinate activities within the Project Management Process
Integration Groups

Scope Ensure the project includes all work required to complete the project successfully

Time Manage the timely completion of the project

Manage the planning, estimating, budgeting, financing, funding, monitoring, and controlling of
Cost cost to enable the project to be completed within the approved budget

Determine quality policies , objectives, and responsibilities so that the project will satisfy the needs
Quality for which it was undertaken

Organize, manage, and lead the project team, including the identification of roles, responsibilities,
Human Resources required skills, and reporting relationships

Ensure timely and appropriate planning, collection, creation, distribution, storage, retrieval,
Communication management, control, monitoring and disposition of project information

Identify and assess risks, plan responses, and control risk to increase the likelihood and impact of
Risk positive events and decrease the likelihood and impact of negative events on the project

Purchase or acquire and control products, services, or results needed from outside the project
Procurement team

Identify people, groups, or organizations that could impact or be impacted by the project; analyze
Stakeholders expectations, and develop strategies to engage stakeholders in decisions and activities

8
Knowledge Areas & Process Groups
Activity within each knowledge area is applied based on the appropriate
process group.
Process Groups

Knowledge Areas Monitoring &

Initiating Planning Executing Closing
(Below) Controlling

Integration Applicable Applicable Applicable Applicable Applicable

Scope Applicable Applicable

Time Applicable Applicable

Cost Applicable Applicable

Quality Applicable Applicable Applicable

Human Resources Applicable Applicable

Communication Applicable Applicable Applicable

Risk Applicable Applicable

Procurement Applicable Applicable Applicable Applicable

Stakeholders Applicable Applicable Applicable Applicable

Each shaded intersection has defined activities, inputs,

tools & techniques, and outputs 9
 1. Integration Management - Process Activities
Integration management connects all of the knowledge areas together
from beginning (project initiation) to end (project closure).
Devel op
Project Charter
Develop a document that formally
Project Charter
authorizes the project

Project SOW Lead and perform the work to

Busi ness Case
accomplish project objectives
Devel op
Agreements Project Mgt. Plan
Project Mgt. Plan

Define, prepare, Track, review, and report progress

coordinate and Direct & Manage to meet performance objectives
Change Requests
Project Work
integrate all
subsidiary plans into Review all change requests,
a comprehensive Project Documents,
Deliverables, & Updates
approve changes, and manage
plan Work Performance
Data
Monitor & Control
Project Work
Reports changes to deliverables and the
Change Requests
project management plan

Updates
Perform
Approved Change Log
Integrated Change
Change Requests Approved Change
Control
Requests

Project Management
Plan Updates

Key: Close Final Product

Initiating
Project or Phase Service, or Results
Finalize all activities across all
Planning
Executing Process Groups to formally
Monitoring & Controlling complete the project or phase
Closing
Note, additional inputs, outputs, tools and techniques not depicted may apply
10
Project Charter
A project charter formally authorizes the project and the project manager
to apply resources to project activities. Per PMI, without a charter, there
is no project.

• A typical charter will identify: Project Charter

o Business need or justification
o Scope (high level)
o Objectives (such as the intended product, service, or result)
o Requirements (high level)
o Risks (high level)
o Assumptions and constraints
o Stakeholders (primary)
o Timing (anticipated)
o Costs (anticipated)
• The charter must be signed by someone who can invest authority for the project
(typically senior management or a sponsor)

11
Project Management Plan
The project management plan is the collection of all plans and related
documents pertaining to planning, executing, monitoring, controlling, and
closing the project.

Procurement

Communication Change

Quality Scope

Project
Management
Schedule Cost
Plan

Process
Configuration
Improvement

Stakeholders Risk

12
 2. Scope Management - Process Activities
Scope

This area includes collecting requirements, defining scope, creating the

work breakdown structure (WBS), and validating and controlling scope.

Plan Scope Mgt;. Plan Create a plan that documents how

Scope Management Reqs Mgt. Plan
the project scope will be defined,
validated, and controlled

Project Charter Reqs Documentation

Collect
Reqs Traceability
Requirements
Matrix

Subdivide project
Determine, Workshops
deliverables into
document, and Interviews
Define Project Scope smaller, more
Benchmarking
manage Context
Scope Statement
manageable Monitor
components
Diagrams
stakeholder Updates
status of the
needs and Develop a project scope
requirements to detailed Project Documents Create
Scope Baseline
(Scope Baseline, WBS,
and manage
meet objectives description of
WBS
WBS Di ctionary) changes to
the project the scope
and product baseline
Deco mposition Validate
Change Requests Accepted Deliverables
of Work Scope

Key: Gain formal

Initiating acceptance of Inspection
Control
Change Requests
Planning completed project
Scope

Executing
Monitoring & Controlling
deliverables
Closing
Project Scope is the work performed to deliver a product, service,
or result that satisfies specified features and functions 13
Note, additional inputs, outputs, tools and techniques not depicted may apply
Work Breakdown Structure (WBS)
The WBS is the decomposition of the work to be performed. The output is
called the Scope Baseline.
Scope Baseline:
• Scope Statement – description of project scope, major deliverables, assumptions, and
constraints
• WBS – hierarchical decomposition of the total scope of work
• WBS Dictionary – provides details regarding the deliverables, activities, and scheduling
information of each component of the WBS
Illustrative WBS
Project Title

Break down the

Control
work into the Deliverable 1 Deliverable 2 Used when
Account
smallest level for insufficient detail is
which cost and time available at the
can be assessed and Work Work Planning work package level
Packages Packages Packages
administered

Work
Packages

14
 3. Time Management – Process Activities
Time management includes all activity related to developing and
managing the project schedule.
Establish the policies,
procedures, and
Define and document specific
Plan

documentation for planning,

Schedule Schedule Mgt. Plan

actions to be performed to
Management

developing, managing,
produce project deliverables
executing, and controlling
Project Charter Define Activity List the project schedule
Activities Milestone List

Exp. Judgment
Scope Baseline Deco mposition Sequence Project Schedule
Rolling Wave Activities Network Diagrams
Planning

Identify and document

relationships among project PDM
Dependencies
Estimate
Activity Resources
Activity Resource
Requirements Monitor the
activities
Leads/Lags RBS
status of project
activities to
Estimate the type and quantities of update project
material, human resources, or suppliers
Exp. Judgment
progress and
Estimate Activity Duration
Bottom Up
Activity Durations Estimates
required to perform each activity
PMIS
manage
changes to the
Estimate the number of work periods Exp. Judgment
Analogo us Schedule Baseline schedule
needed to complete individual activities Parametric
3 Point
Develop
Schedule
Project Schedule
Project Calendars baseline to
Key: with estimated resources achieve the plan
Reserve Anal.

Initiating
Planning Analyze activity sequences, durations, Critical Path
Executing resource requirements, and schedule
Compression
Resource
Control
Schedule Forecasts
Monitoring & Controlling
Schedule
Optimization

Closing
constraints to create the project schedule PMIS

Note, additional inputs, outputs, tools and techniques not depicted may apply
15
Time (Schedule) Management Terms
Below are a few of many terms project managers should know when
developing and managing a project schedule.
PMI Terms Descriptions
3-Pt. Estimating Based on estimated Pessimistic (P), Optimistic (O), and Most Likely (M) durations
Analogous Estimating High level, top down estimate based on similar projects (usually by a SME - subject matter expert)
Bottom-Up Estimating Estimate at the lowest level of the WBS (level 3) and then roll up for the total project estimate
Parametric Estimating Based on an existing, comparable parameter (e.g. $/ft. in the same neighborhood)
Reserve Analysis Contingency (buffer based on known risk) & include in project budget or Managerial (buffer based on unknown risks)
Rolling Wave Planning An iterative technique used when future details aren't known; near term is planned in detail; future is higher level
Finish to Start (FS) Finish to Finish (FF) Start to Start (SS) Start to Finish (SF)
Rare, A starts before B
Default relationship; B cannot B cannot finish until A is finishes (e.g. when replacing
B cannot start until A starts
start until A is finished finished an old system B with a new
Predecessor
system A)
Relationships
A A A
A B
B B B

Free Slack The latest an activity can start without delaying next activities
Total Slack The latest an activity can start without delaying project finish date
Float Often referred to as the same as Slack
Lag Lag (a delay) = the successor must wait due to some delay after the predecessor is complete
Lead Lead (an accelerant) = the successor can begin before the predecessor is complete
Schedule Compression Crashing or fast tracking the schedule to adjust the schedule to align with the plan
Fast Tracking Compression technique based on overlapping sequential activities (risky)
Resource Leveling Adjusting peaks and valleys to create a level usage of resources
Resource Smoothing Adjusting peaks and valleys to create a level usage of resources AND also accounts for individual resource limitations

16
 4. Cost Management – Process Activities
This area includes defining how project costs will be managed, estimating
activity costs, determining the budget, and controlling costs.
Establish the
policies, Plan
Cost Management
Cost Mgt. Plan
procedures, and
documentation
for planning,
managing, IRR
expending, and NPV
Estimate Activity Cost Estimates
ROI
controlling Opportunity $
Costs Basis of Estimates

project costs Payback

Develop an approximation Analogo us

of the monetary resources Parametric
Determine
Cost Baseline
Bottom Up Project Funding
needed to complete 3 Point
Budget
Requirements
project activities Reserve

Aggregate estimated costs of Exp. Judgment

Work Performance Info
individual activities or work Aggregation
Control Cost Forecasts
Reserve
packages to establish an Analysis
Costs Change Requests
Updates
authorized cost baseline Funding LImits
Key:
Initiating
Monitor the status of the Earned Value
Planning TCPI
Executing project to update project Forecasting
Monitoring & Controlling costs and manage changes to PMIS
Closing the cost baseline Reserve Anal.

Note, additional inputs, outputs, tools and techniques not depicted may apply
17
Earned Value Management (EVM)
EVM is a means of measuring project cost and schedule vs. the plan.

Estimate to Complete (ETC) = cost to complete Estimate at Completion (EAC) =

the project based on current spending efficiency current projected final cost based on
current spending efficiency
ETC EAC

Variance at Completion (VAC)

Dollars BAC
Budget at Completion (BAC) = total
project budget

Cost Baseline (“S” Curve)

Approved Time-Phased Budget
Actual Cost (AC) AC
at point in time
Cost Variance Cost Performance (CPI) = EV/AC
PV
Schedule Variance (CV)
Schedule Performance (SPI) = EV/PV
(SV)
EV

Earned Value (EV) = budgeted cost for work actually completed

Planned Value (PV) = budgeted cost for work scheduled

Time
Point in Time

18
5. Quality Management – Process Activities
Quality management includes identifying quality requirements and
standards, auditing requirements and control measurements, assessing
quality performance, and recommending changes, when needed.

Quality Mgt. Plan

Identify quality requirements Process Improvement
Plan
and/or standards for the Quality
Plan
project and its deliverables, Management
Quality Metrics
Quality Checklists
and document how the project
will demonstrate compliance
Cost/Benefit
Cost of Quality
Perform
7 Basic Tools
Quality Assurance
Benchmarking
Sampling

Measurements

Audit the quality requirements Quality Audits

Updates
and the results from quality Controls
Control Verified Deliverables
Charts
control measurements to ensure Process
Quality QC Measures
appropriate standards and Analysis
Validated Changes

operational definitions are used

Key: Monitor and record results of

Initiating quality activities to assess
Planning performance and recommend
Executing
necessary changes
Monitoring & Controlling
Closing

19
Quality Management Philosophies and Principles
PMI quality management principles are based on a few popular
philosophies.
Quality Philosophies: Quality Principles:
• Total Quality Management (Deming) – • Define and satisfy customer needs
proactive approach with statistical analysis
• Prevent rather than inspect
• Zero Defects (Crosby) – Do it right the first time
• Be proactive rather reactive
• Fitness for Use (Juran) – Satisfy customer
needs • Validate project processes
• Continuous Improvement (Kaizen) – proactive • Measure against approved
approach to process improvement standards
• Gold Plating – unacceptable practice of • Continually improve
providing more than requested • Take accountability
• Cost of Quality – cost of conforming is less than
cost of non-conforming
• Design of Experiments – isolate factors that
influence results
• 6 Sigma – strive for 99.9997% error free
• ISO 9000 – document what you do; do what you
document

20
 Quality Management Tools and Terms
Project managers should be familiar with common quality management
tools and terms.
Tools
1. Cause and Effect Diagrams
2. Flowcharts
3. Checksheets
4. Pareto Diagrams
5. Histograms
6. Control Charts
7. Scatter Diagrams
Terms
Benchmarking
Design of Experiments
Statistical Sampling
Quality Audits
Process Analysis
Inspection
85/15 Rule
80/20 Rule
Rule of 7
Mean Time Before Failure
Mean Time to Repair
Grade vs. Quality
Upper Control Limit
Lower Control Limit
Upper Specification Limit
Lower Specification Limit
Description
Fishbone (Ishikawa) diagram
Basic flow chart or GERT diagram with feedback loop
Check list (e.g. pre-flight list to ensure you are "cockpit ready" before taking flight)
Cumulative histogram (e.g. 80/20 rule)
Depiction of volume or frequency of occurrences of several events
Depiction of process output over time with UCL & LCL at 3 sigma from mean
Depicts pattern of results across two variables
Description
Comparing actual or planned processes to comparable projects to identify best practices
Variable based analysis (freeze all variables but one and assess outcome)
Using a % of the population and extrapolating the results within an acceptable confidence level
Identify best practices; identify gaps; share best practices; offer assistance to improve; highlight lessons learned
Assess process, identify root causes, alleviate root causes
Examination of work product and comparison to documented standards (e.g. reviews, audits)
85% of quality relates to mgt.; 15% is worker related
80% of problems come from 20% of the issues
Must have 7 consecutive data points above or below mean to consider process "out of control"
MTBF, example quality metric
MTTR, example quality metric
Not the same; you can have a lower grade product with high quality and vice versa (e.g. automobile models)
UCL = 3 sigma above mean (average)
LCL = 3 sigma below mean (average)
USL is customer established and can be above or below UCL
USL is customer established and can be above or below LCL
21
 6. Human Resource Management - Process Activities
Human resource management consists of planning, acquiring, developing,
and managing the project team.

Define roles, Plan

HR Mgt. Plan
responsibilities, HR Management

required skills,
and reporting
relationships Org Charts
Job Descriptions Project Staff
Acquire
Org. Theory Assignments
Project Team
Resource Calendars
Track team member
performance, provide
Confirm availability Pre- feedback, resolve issues,
and obtain the Assignment
Acquisition
Develop
Project Team
Team Performance
Assessments and manage changes to
necessary team Negotiation the team to optimize team
performance
Improve competencies, Training
Team Building
team interaction, the Ground Rules
Manage
Project Team
Change Requests
Updates
Recognition
team environment, and Rewards
enhance project team
Key: performance Observations
Initiating Conversations
Planning Conflict Mgt.
Executing Performance
Monitoring & Controlling Appraisals
Closing
Note, additional inputs, outputs, tools and techniques not depicted may apply
22
Roles and Responsibilities
Responsibility assignment matrix (RAM) charts such as a “RACI” let each
team member know who is responsible for each activity and deliverable.

RACI Person
Activity Ann Ben Carlos Denny
Develop Schedule A R I I
Collect Requirements I A R C

Develop Test Plan I A R C

Develop Training Plan A C I R

• (R) Responsible - those who do the work

• (A) Accountable - The one who:
o Is ultimately answerable for the completion of the deliverable
o Delegates the work to those responsible
o Approves the work that the responsible person provides
• (C) Consulted – those whose opinions are sought (typically subject matter experts); typically this is a two
way communication
• (I) Informed – those who are kept up-to-date on progress; typically this is a one way communication

23
Project Life Cycle - Team Building & Leadership Styles
Project managers should be aware of typical team building dynamics and
situational leadership styles across a project life cycle.

Team Building: Forming Storming Norming Performing Adjourning

Leadership Style: Directing Coaching Facilitating Supporting
Initiating Closing
Time
Project Life Cycle

Team Building Stages Situational Leadership Styles

• Forming – creating the team
• Storming – team chaos as people start
working with one another
• Norming – team behavior starts to
normalize
• Performing – team performs as a unit
• Adjourning – team completes work
and disbands
• Directing – provide specific, clear
instructions and closely supervise
• Coaching – solicit input, offer rationale
and examples
• Facilitating –maintain team progress;
delegate day-to-day control
• Supporting – support and motivate
the team to complete objectives

24
Conflict Management
Conflict is inevitable. A project manager should be aware of typical
sources of project conflict and recommended techniques to resolve them.

Sources of Conflict Conflict Resolution Techniques

Higher Recommended:
• Scheduling Priorities 1. Collaborate/Problem Solve
• Scarce Resources 2. Compromise/Reconcile
Probability • Personal Work Styles 3. Force/Direct
of Conflict
• Methodology/Details
• Cost/Budget Not Recommended:
• Personalities 1. Smooth/Accommodate
Lower 2. Withdraw/Avoid

25
 7. Communication Management - Process Activities
Roughly 90% of a project manager’s job is communication.

Develop a Plan
communication Communication
Communciation
Mgt. Plan
approach based Management
on stakeholder’s
informational
needs Req. Analysis
Technology
Models
Manage
Project Communications
Monitor and control
Methods
Communications communication
Meetings throughout the entire
project life cycle
Create, collect,
distribute, store, Models
Work Performance
Method Control
and retrieve Systems Communications
Information
Change Requests
information Reporting

Key:
Exp. Judgment
Initiating
Systems
Planning
Meetings
Executing
Monitoring & Controlling
Closing
Note, additional inputs, outputs, tools and techniques not depicted may apply
26
Communication Management
Project managers should be aware of the basics of effective
communication across the broad stakeholder community.

Communication Methods Communication Model

• Interactive – between two people Noise
Transmit
• Push – send to specific recipients Sender/Encode Decode/Receiver
• Pull – recipient actively seeks information
Noise Acknowledgement
Response

Communication Types Communication Paths

• Active listening – receiver verifies correct
interpretation
• Effective listening – receiver observes visual
and vocal cues N N • # of Communication Paths
• Feedback – sender receives feedback from equals [N x (N-1)]/2
receiver • N equals # of Stakeholders
• Nonverbal - ~55% of communication (e.g. • Example: [4 x (4-1)]/2 = 6
body and facial language) N N
• Para-lingual – Voice characteristics

27
 8. Risk Management – Process Activities
Risks are possible events that could impact the project in a positive (an
opportunity) or negative (a threat) way.
Plan
Risk Mgt. Plan
Risk Management

Define how to
conduct risk
management
Identify Risk Register
activities Risks (Risks & Triggers)

Determine and document the

characteristics of risk which Perform
Qualitative Analysis
may affect the project
Updates
Develop options
Prioritize risks for further analysis or and actions to
action by assessing their probability of
Project Documents Perform
Quantitative enhance
occurrence and impact
Analysis
opportunities and
reduce threats to
project objectives
Updates

Analyze the effect of Plan

Risk Response
identified risks on overall
Key: project objectives
Initiating Updates

Planning
Control
Executing Updates
Risks
Monitoring & Controlling
Closing Implement risk response plans, track identified
risks, monitor residual risks, identify new risks,
Note, additional inputs, outputs, tools and
and evaluate risk process effectiveness 28
techniques not depicted may apply
Risk Probability and Impact Matrix
A probability and impact matrix can be used to evaluate the impact of a
risk and the probability of its occurrence.

Probability and Impact Matrix

Positive Risk Responses
High
• Share – split the responsibility
and benefit to maximize the
Probability of opportunity
• Exploit – take steps to ensure
Occurrence success
• Enhance – improve the size of
Moderate the risk event and impact
• Accept – do nothing
Negative Risk Responses
• Avoid – get rid of the potential
problem
• Transfer – re-assign to another
party
• Mitigate – minimize the bad
Low Moderate High characteristics of the risk
• Accept – do nothing
Level of Impact

The higher the combined probability and impact of the risk

event the greater the need to develop a risk response plan
29
Risk Management
Project managers should be aware of risk management terms.

Risk Management Terms

• Monte Carlo – simulation of possible outcomes
• Risk Breakdown Structure – breakdown by category (e.g. internal, external, technology,
organizational, etc.)
• Risk Trigger – an indicator that an event “could” occur
• SWOT Analysis – strengths, weaknesses, opportunities, and threats
• Expected Monetary Value (EMV) – summation of probability x impact of alternative decisions (…not
to be confused with EVM – earned value management)
• Contingency Reserves – for known risks (include in budget and schedule)
• Management Reserves – for unknown risks (excluded from baselines for budget and schedule)
• Residual Risk – risk remaining after risk response
• Secondary Risk – potential risk as a result of risk response
• Workaround – “wing it” response when other risk response plans don’t work
• Types of Risk Tolerance
o Averse – Avoids risk
o Seeker – Seeks risk
o Neutral – Middle ground

30
 9. Procurement Management – Process Activities
Procurement management includes planning, selecting, contracting,
controlling, and closing outsourced products and services.
Procurement Mgt. Plan
Document Plan
SOW
Procurement Obtain seller response,
RFPs
project Procurement Mgt.
Selection Criteria
Mgt. Plan
select a seller, and
procurement Make Buy Decision
award a contract
decisions,
specify the Selected Suppliers
approach, and Seller Proposals Conduct
Procurements
Agreements Complete each project
identify Resource Calendars
procurement, including
potential sellers finalizing open claims,
Exp. Judgment
updating records to
Exp. Judgment
Make Buy
Bidder Conf. Control
Work Performance Info
Updates
reflect final results, and
archiving information
Ind. Estimates Procurements
Analysis Change Requests
Advertising

Manage procurement Inspect/Audits

Reporting
relationship, monitor contract A/P Systems
Close
Procurements
Closed Procurements
OPA Udpates
performance, and make changes Claims Admin.
Records Mgt.

Key: and corrections as appropriate

Initiating
Planning Audits
Executing Negotiations
Monitoring & Controlling Record Mgt.
Closing
Note, additional inputs, outputs, tools and techniques not depicted may apply
31
Contract Types
Project managers should be aware of the benefits and risks of different
contract types from a buyer’s perspective and a seller’s perspective.
Low Buyer’s Risk High

FFP FPIF FP EPA T&M PO CPFF CPIF CPAF CPPC

High Seller’s Risk Low

• (FFP) Firm Fixed Price – allows buyer to budget fixed price; requires seller to detail scope and accurately
estimate price; very common
• (FFIF) Fixed Price Incentive Fee – includes incentive to motivate seller to produce at greater speed
• (FF EPA) Fixed Price Economic Price Adjustment – compensates for year to year economic changes
• (T&M) Time and Materials – typically used for smaller initiatives
• (PO) Purchase Order – typically used for commodity items
• (CPFF) Cost Plus Fixed Fee – typically variable costs are cost-plus and predictable costs are fixed fee
• (CPIF) Cost Plus Incentive Fee – actual costs plus incentive to motivate seller to produce at greater speed
• (CPAF) Cost Plus Award Fee – actual costs plus award based on customer satisfaction with agreed criteria
• (CPPC) Cost Plus Percent of Cost – actual cost plus % of actual; the higher the cost, the higher the fees

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 Procurement Terms
Project managers should be familiar with additional procurement terms
in the table below:
Terms Description
Make or Buy Analysis Is it more practical to insource or outsource (based on a cost comparison between the two)?
Bidder Conference Prior to bid submission, offers opportunities for prospective sellers to obtain requirements clarification from buyer
Independent Estimates Used to validate proposal information
Contract (CCOLA) Must have 5 Components: Capacity, Consideration, Offer, Legal Purpose, Acceptance
Point at which seller is responsible for all cost overruns; PTA = (Ceiling Price - Target Price)/Buyer Share + Target
Point of Total Assumption
Cost
Ceiling Price % of Target Cost (e.g. Ceiling = 140% of target cost)
Target Cost Expected cost of work in the contract
Target Price Equals Target Cost + Target Profit
Share Ratio Ratio of split between buyer and seller of cost savings or overruns (e.g. 70/30)
RFP Request for Proposal, typically used for higher priced, customized services or products
RFQ Request for Quote, typically used for small dollar commodity type products
IFB Invitation to Bid, used for government sealed bids (similar to RFP)
Design Scope of Work (SOW) Buyer provides exact details; generally results in fixed price contract
Functional Scope of Work (SOW) Buyer provides functionality needed; generally results in cost plus contract
Sole Source Go direct to a supplier without any available competition (e.g. supplier holds the patent)
Single Source Go direct to a supplier although competitors are available (e.g. "preferred supplier")
Negotiation PMI prefers "win/win" negotiation approach
Standard Terms & Conditions Typical common (non-negotiable) contract items with a tight range or parameters
Special Provisions Typically added to account for changes to standard terms and conditions
Claims Administration Means of administering contested changes or disagreements regarding compensation
ADR Alternative dispute resolution (e.g. arbitration) used when claims cannot be negotiated between buyer and seller

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 10. Stakeholder Management – Process Activities
It is critical to project success to identify stakeholders, address their
requirements, meet their expectations, and foster their engagement.
Key:
Identify the people, Identify Initiating
groups, or Stakeholders
Stakeholder Register Planning
Executing
organizations that Monitoring & Controlling
could impact or be Closing
impacted by the Exp. Judgment
decision, activity, or Stakeholder Plan
Analysis Stakeholder Stakeholder Mgt. Plan
outcome of the (Power/ Management Monitor overall
project. Interest)
project stakeholder
relationships and
adjust strategies and
Stakeholder
Develop appropriate management Engagement Matrix Manage Issue Log
strategies to effectively engage (Unaware, Neutral, Stakeholder Change Requests plans for engaging
Resistance, Leading)
stakeholders throughout the project
Engagement Updates
stakeholders
life cycle based on their needs and
potential impact on project success
Interpersonal
Control Work Performance Info
Skills
Stakeholder Change Requests
Communicate and work with stakeholders to meet Management
Engagement Updates
Skills
their needs and expectations, address issues as
they occur, and foster appropriate stakeholder
engagement throughout the project life cycle

Note, additional inputs, outputs, tools and techniques not depicted may apply
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Stakeholder Power vs. Interest Grid
All stakeholders are different and, therefore, need to be managed
differently based on their relative authority (power) and level of concern
(interest).
Stakeholder
High Power vs. Interest Grid

Power
Keep Satisfied Manage Closely

Moderate

Monitor Keep Informed

Low Moderate High

Interest

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PMI Code of Ethics and Professional Conduct
All PMI members must agree to adhere to a high personal standard of
ethical and professional behavior.
Tenets of Code:
1. Honor
o Do what is right and honorable
o Set high standards for yourself and aspire to meet those standards is all aspects of life
2. Responsibility – Take ownership of:
o The decisions you make or fail to make
o The actions you take or fail to take
o The consequences that result
3. Respect
o Show high regard for yourself, others, and the resources (e.g. people, money, reputation,
safety) entrusted to you
o Engender trust confidence, performance excellence, and mutual cooperation in an environment
of diverse perspectives and views
4. Fairness
o Make decisions and act impartially and objectively
o Conduct yourself in a way free from competing self interest, prejudice, and favoritism
5. Honesty
o Understand the truth
o Act in a truthful manner both in your communication and in your conduct

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Summary
This material covered the following project management topics:

• What is PMI and the PMP? • Project Management Terms, such as:
• Why PMI Project Management Principles are o Triple Constraint
Useful to Know o Project Charter
• A Few Basic PMI Definitions o Project Management Plan
• Five Process Groups o Work Breakdown Structure (WBS)
o Initiating o Predecessor Relationships
o Planning o Earned Value Management
o Executing o Gold Plating
o Monitoring and Controlling o Responsibilities Assignment Matrix
o Closing o Forming, Storming, Norming, Performing,
• Ten Knowledge Areas Adjourning
o Integration o Communication Noise
o Scope o Risk Probability and Impact Matrix
o Time o Contract Type
o Cost o Stakeholder Power vs. Interest Grid
o Quality • Code of Ethics and Professional Conduct
o Human Resources o Honor
o Communication o Responsibility
o Risk o Respect
o Procurement o Fairness
o Stakeholders o Honesty

Thank you for taking the time to review this material! 37