PMP Project Managemen Professiona Study Guide

PMP: Project Management Professional Study Guide
PMP: Project Management Professional

Study Guide
by Kim Heldman
Sybex 2002
Chapter 1: What Is a Project?
Overview
Congratulations on your decision to study for and take the Project Management Institute (PMI!"s
Project Management Professional (PMP! certification e#am$ %his &ook 'as 'ritten 'ith you in
mind$ %he focus and content of this &ook re(ol(e hea(ily around the information contained in A
Guide to the Project Management Body of Knowledge (PMBOK)$ I 'ill refer to the Guide to the
PMBOK throughout this &ook and ela&orate on those areas that appear on the test$ )eep in mind
that the test co(ers all the project management processes* so don"t skip anything in your study
time$
+hen possi&le* I"ll pass on hints and study tips that I collected 'hile studying for the e#am
myself$ ,our first tip is to familiari-e yourself 'ith the terminology used in the Guide to the
PMBOK$ PMI has 'orked hard to de(elop and define standard project management terms* and
these terms are used interchangea&ly among industries$ .or e#ample* resource planning means
the same thing to someone 'orking in construction* information technology* or
telecommunications$ ,ou"ll find Guide to the PMBOK terms e#plained throughout this &ook$ /(en
if you are an e#perienced project manager* you might find that PMI uses specific terms for things
that you call &y another name$ 0o* step one is to get familiar 'ith the terminology$
%his chapter lays the foundation for &uilding and managing your project$ +e"ll address project
and project management definitions as 'ell as organi-ational structures$ 1ood luck2
Is It a Project?
%he 3P of marketing approaches you 'ith a fa&ulous idea$ 4.a&ulous5 &ecause he"s the &ig &oss
and &ecause he thought it up$ 6e 'ants to set up kiosks in local grocery stores as mini offices$
%hese offices 'ill offer customers the a&ility to sign up for ne' 'ireless phone ser(ices* make
their 'ireless phone &ill payments* and purchase e7uipment and accessories$ 6e &elie(es that
the e#posure in grocery stores 'ill increase a'areness of the company"s offerings$ 8fter all*
e(eryone has to eat* right9 6e told you that the &oard of directors has already cleared the project
and he"ll dedicate as many resources to this as he can$ 6e 'ants the ne' kiosks in place in 12
stores &y the end of ne#t year$ %he &est ne's is he"s assigned you to head up this project$
,our first 7uestion should &e* 4Is it a project95 %his may seem elementary* &ut confusing projects
'ith ongoing operations happens often$ 8ccording to the Guide to the PMBOK, page :* 4;a
project is a temporary endea(or undertaken to create a uni7ue product* ser(ice or result$5
Note <uotations from the Guide to the PMBOK are cited in the te#t 'ith the follo'ing
a&&re(iation: Guide to the PMBOK Project Management Institute* A Guide to
the Project Management Body of Knowledge (PMBOK! Guide) 2000 /dition*
Project Management Institute* Inc$* 2000$
Projects are temporary in nature* 'hile operations are ongoing$ Projects ha(e definiti(e start
dates and definiti(e end dates$ %he project is completed 'hen the goals and o&jecti(es of the
project are accomplished$ 0ometimes projects end 'hen it"s determined that the goals and
o&jecti(es cannot &e accomplished and the project is canceled$ =perations in(ol(e 'ork that is
continuous 'ithout an ending date and often repeat the same process$
Projects e#ist to &ring a&out a product or ser(ice that hasn"t e#isted &efore$ In this sense* a
project is uni7ue$ 6o'e(er* don"t get confused &y the term uni"ue$ .or e#ample* .ord Motor
Company is in the &usiness of designing and assem&ling cars$ /ach model that .ord designs and
produces can &e considered a project$ %he models differ from each other in their features and are
marketed to people 'ith (arious needs$ 8n 0>3 ser(es a different purpose and clientele than a
lu#ury model$ %he design and marketing of these t'o models are uni7ue projects$ %he actual
assem&ly of the cars can &e considered an operation?a repetiti(e process that is follo'ed for
most makes and models$
@etermining the characteristics and features of the different car models is carried out through
'hat the Guide to the PMBOK terms as progressi#e ela$oration$ %his means throughout the
project* specific incremental steps are taken to e#amine the needs and re7uirements of the
product of the project (the 0>3* for e#ample! and to fulfill the o&jecti(es$ %hese needs are
e#amined in detail and continually monitored and updated throughout the project$
8 project is successful 'hen it meets or e#ceeds the e#pectations of the stakeholders$
%ta&eholders are those folks 'ith a (ested interest in your project$ %hey are the people 'ho ha(e
something to either gain or lose as a result of the project$ %he project sponsor* generally an
e#ecuti(e in the organi-ation 'ith the authority to assign resources and enforce decisions
regarding the project* is a stakeholder$ %he customer is a stakeholder as are contractors and
suppliers$ %he project manager and the managers from other departments in the organi-ation are
stakeholders as 'ell$ It"s important to identify all the stakeholders in your project up front$ If you
lea(e out an important stakeholder or their department"s function and don"t disco(er the error until
'ell into the project* it could &e a project killer$
.igure 1$1 sho's a sample listing of the kinds of stakeholders in(ol(ed on a typical project$
Figure 1.1: Project stakeholders
Many times* stakeholders ha(e conflicting interests$ It"s the project manager"s responsi&ility to
understand these conflicts* and try to resol(e them$ Ae certain to identify and meet 'ith all key
stakeholders early in the project to understand all their needs and constraints$ +hen in dou&t*
stakeholder conflicts should al'ays &e resol(ed in fa(or of the customer$
+e"(e just learned that a project has se(eral characteristics:
Projects are uni7ue$
Projects are temporary in nature and ha(e a definite &eginning and ending date$
Projects are completed 'hen the project goals are achie(ed$
8 successful project is one that meets or e#ceeds the e#pectations of your stakeholders$
>sing these criteria* let"s e#amine the assignment from the 3P of marketing to determine if it is a
project:
Is it unique? ,es* &ecause the kiosks don"t e#ist in the local grocery stores$ %his is a ne' 'ay of
offering the company"s ser(ices to its customer &ase$ +hile the ser(ice the company is offering
isn"t ne'* the 'ay they are presenting their ser(ices is$
Does the project have a limite time !rame? ,es* the start date of this project is today* and the
end date is the end of ne#t year$ It is a temporary endea(or$
Is there a wa" to etermine when the project is complete? ,es* the kiosks 'ill &e installed*
and ser(ices 'ill &e offered from them$ =nce all of the kiosks are intact and operating* the project
'ill come to a close$
Is there a wa" to etermine sta#eholer satis!action? ,es* the e#pectations of the
stakeholders 'ill &e documented in the form of re7uirements during the planning processes$
%hese re7uirements 'ill &e compared to the finished product to determine if it meets the
e#pectations of the stakeholder$
6ouston* 'e ha(e a project$
What Is Project $anagement?
,ou"(e determined that you indeed ha(e a project$ +hat no'9 %he notes you scratched out on
the &ack of a napkin at coffee &reak might get you started* &ut that"s not e#actly good project
management practice$
+e ha(e all 'itnessed this scenario?an assignment is made and the project team jumps directly
into the project* &usying themsel(es 'ith &uilding the product or ser(ice re7uested$ =ften* careful
thought is not gi(en to the projectBplanning process$ I"m sure you"(e heard coB'orkers toss
around statements like* 4%hat 'ould &e a 'aste of (alua&le time5 or 4+hy plan 'hen you can just
start &uilding95 Project progress is rarely measured against the customer re7uirements$ In the
end* the deli(ered product or ser(ice doesn"t meet the e#pectations of the customer2 %his is a
frustrating e#perience for all those in(ol(ed$ >nfortunately* many projects follo' this poorly
constructed path$
Project management is a process that in(ol(es se(eral things including planning* putting the
project plan into action* and measuring progress and performance$ Planning is one of the most
important functions you"ll perform during the course of a project$ It sets the standard for the rest of
the project"s life and is used to track future project performance$ Aefore 'e &egin the planning
process* 'e"ll need to look at some of the skills needed to perform project management functions
and some of the constraints found on all projects$
Project %onstraints
In my organi-ation* and I"m sure the same is true in yours* there are far more project re7uests
than 'e ha(e resources to 'ork on them$ In this case* resources are a constraint$ ,ou"ll find a
similar phenomenon occurs on indi(idual projects as 'ell$ /(ery project must 'ork 'ithin the
triple constraint com&ination of time* money* and 7uality$ =ne or t'o of the triple constraints*
sometimes all three* are limited$ ,ou might 'ork on projects 'here you ha(e an almost unlimited
&udget (don"t 'e 'ish!* &ut time is the limitation$ ,ou can ha(e all the money and people you
need to accomplish your project* &ut you need to complete the project in 2: months$ %he
computerBprogramming changes re7uired for the year 2000 are an e#ample of a timeBconstrained
project &ecause mo(ing the date 'asn"t an option$
=ther projects might present the opposite scenario$ ,ou ha(e all the time you need to complete
the project* &ut the &udget is fi#ed$ 0till other projects may incorporate t'o or three of the
constraints$ 1o(ernment agencies are notorious for starting projects that ha(e at least t'o and
sometimes all three constraints$ .or e#ample* ne' ta# la' legislation is passed that impacts the
computer programming* re7uiring ne' programs to calculate and track the ta# changes$ %ypically*
a due date is gi(en 'hen the ta# la' takes effect* and the organi-ation responsi&le is re7uired to
implement the changes 'ith no additions to &udget or staff$ In other 'ords* they are told to use
e#isting resources to accomplish the goals of the project$ %he specific re7uirements of the project
are such that 7uality cannot &e fudged to try to meet the time deadline$
8s a project manager* one of your &iggest jo&s is to &alance the triple constraints 'hile meeting
or e#ceeding the e#pectations of your stakeholders$ In most projects* you 'ill usually &e faced
'ith &alancing only one or t'o of the triple constraints$ .or e#ample* if the project goal is a highB
7uality proBduct* the saying goes* 4I can gi(e it to you fast or I can gi(e to you cheap* &ut I can"t
gi(e it to you fast and cheap$5
&ools an &echniques
Project management &rings together a set of tools and techni7ues* performed &y people* to
descri&e* organi-e* and monitor the 'ork of project acti(ities$ Project managers are the people
responsi&le for managing the project processes and applying the tools and techni7ues used to
carry out the project acti(ities$ %here are many ad(antages to organi-ing projects and teams 'ho
utili-e these techni7ues$ +e"ll &e e#amining these ad(antages inBdepth throughout the remainder
of this &ook$
Programs are groups of projects that are managed using the same techni7ues in a coordinated
fashion$ 0ometimes* programs include aspects of ongoing operations as 'ell$ %his 'ould &e the
case 'here a (ery large program e#ists 'ith many su&projects under it?for e#ample* &uilding a
ne' shopping mall$ Many su&projects e#ist underneath this program such as e#ca(ation*
construction* interior design* store placement* marketing* facilities management* etc$ /ach of the
su&projects is really a project unto itself$ /ach has its o'n project manager* 'ho reports to a
project manager 'ith responsi&ility o(er se(eral of the areas* 'ho in turn reports to the head
project manager o(er the entire program$ 8fter the structure itself is &uilt* the management of the
facility is considered the ongoing operations part of this program$
Project management in(ol(es many skills and techni7ues$ 8ccording to the Guide to the PMBOK,
page C* 4Project management is the application of kno'ledge* skills* tools* and techni7ues to
project acti(ities to meet project re7uirements$5 It is the responsi&ility of the project manager to
ensure project management techni7ues are applied and follo'ed$
De!ining '#ills (ver" )oo Project $anager Nees
Many times* organi-ations 'ill knight their technical e#perts as project managers$ %he skill and
e#pertise that made them stars in their technical fields are mistakenly thought to translate into
project management skills$ %his is not necessarily so$
Project managers are generalists 'ith many skills in their repertoire$ %hey are pro&lem sol(ers
'ho 'ear many hats$ Project managers might indeed possess technical skills* &ut technical skills
are not a prere7uisite to project management$ ,our project team 'ill ha(e technical e#perts* and
they are the people 'hom the project manager 'ill rely on for technical details$ I ha(e seen
project managers 'ith many years e#perience in the construction industry successfully manage
multiBmillion dollar information technology projects$ %his is &ecause project management
techni7ues apply across industries and across projects$ >nderstanding and applying good project
management techni7ues* along 'ith a solid understanding of general management skills* are
career &uilders for all aspiring project managers$
Project $anager*s &ool +ag
Project managers ha(e &een likened to smallB&usiness o'ners$ %hey need to kno' a little &it
a&out e(ery aspect of management$ %he (arious skills in a project manager"s tool &ag can &e
&roken out in a more or less declining scale of importance$ Det"s discuss each of the skills in a &it
more detail$
%ommunication '#ills
=ne of the single most important characteristics of a firstBrate project manager is e#cellent
communication skills$ +ritten and oral communications are the &ack&one of all successful
projects$ Many forms of communication 'ill e#ist during the life of your project$ 8s the creator or
manager of most of the project communication (project documents* meeting updates* status
reports* etc$!* it"s your jo& to ensure that the information is e#plicit* clear* and complete so that
your audience 'ill ha(e no trou&le understanding 'hat has &een communicated$ =nce the
information has &een distri&uted* it is the responsi&ility of the person recei(ing the information to
make sure they understand it$
Note %here are many forms of communication and communication styles* 'hich 'e
'ill co(er in more depth in Chapter E* 4@e(eloping the Project %eam$5
Organi,ational '#ills
=rgani-ational and planning skills are pro&a&ly the second most important skills a project
manager can possess$ =rgani-ation takes on many forms$ 8s project manager* you"ll ha(e
project documentation* re7uirements information* memos* project reports* personnel records*
(endor 7uotes* contracts* and much more to track and &e a&le to locate in a moment"s notice$
,ou 'ill also ha(e to organi-e meetings* put together teams* and perhaps manage and organi-e
media release schedules depending on your project$
Closely associated 'ith organi-ational skills are time management skills$ %ake some time to
attend a time management class if you"(e ne(er attended one$ %hey ha(e some great tips and
techni7ues to help you prioriti-e pro&lems and interruptions* prioriti-e your day* and manage your
time$
Planning is discussed e#tensi(ely throughout the course of this &ook$ %here isn"t any aspect of
project management that doesn"t first in(ol(e planning$ Planning skills go hand in hand 'ith
organi-ational skills$ Com&ining these t'o 'ith e#cellent communication skills is almost a sure
guarantee of your success in the project management field$
+ugeting '#ills
Project managers esta&lish and manage &udgets and therefore need some kno'ledge of finance
and accounting principles$ /specially important in this skill area is the a&ility to perform cost
estimates for project &udgeting$ %here are different methods a(aila&le to determine the project
costs$ %hey range from estimating indi(idual acti(ities and rolling the estimates up* to estimating
the project"s cost in one &ig chunk$ %hese methods 'ill &e discussed more fully in later chapters$
8fter a &udget is determined* you can start spending$ %his sounds more e#citing than it actually
is$ Feading and understanding (endor 7uotes* preparing or o(erseeing purchase orders* and
reconciling in(oices are &udgeting skills that 'ill &e used &y the project manager on most
projects$ %hese costs 'ill &e linked &ack to project acti(ities and e#pense items in the project"s
&udget$
Pro-lem 'olving
0ho' me a project and I"ll sho' you pro&lems$ 8ll projects* in fact much of e(eryday life* ha(e
some pro&lems$ Isn"t that 'hat they say &uilds character9 Aut I digress$
Pro&lem sol(ing is really a t'ofold process$ .irst* you must define the pro&lem$ =ften 'hen
defining pro&lems* 'e end up just descri&ing the symptoms instead of really getting to the heart
of 'hat the pro&lem is$ %o a(oid that* ask yourself 7uestions like* 4Is it an internal or e#ternal
pro&lem95 or 4Is it a technical pro&lem95 or 48re there interpersonal pro&lems &et'een team
mem&ers9 Is it managerial95 %hese kinds of 7uestions 'ill help you to get to the meat of the
pro&lem$
Ge#t* after the pro&lem has &een defined* you ha(e some decisions to make$ It 'ill take a little
time to e#amine and analy-e the pro&lem* the situation causing it* and the solution alternati(es
a(aila&le$ 8fter this analysis* the project manager 'ill determine the &est course of action to take
and implement the decision$
Negotiation an In!luencing
/ffecti(e pro&lem sol(ing re7uires negotiation and influencing skills$ +e all utili-e negotiation
skills in one form or another e(ery day$ .or e#ample* on a nightly &asis I am asked* 46oney* 'hat
do you 'ant for dinner95 %hen the negotiations &egin* and the fried chicken (ersus s'ordfish
discussion commences$ 0imply put* negotiating is 'orking 'ith others to come to agreement$
Gegotiation on projects 'ill &e necessary in almost e(ery area from scope definition* to &udgets*
contracts* resource assignments* and more$
Influencing is really con(incing the other party that s'ordfish is a &etter choice than fried chicken
e(en if that is 'hat they 'ant$ In other 'ords* it"s the a&ility to get people to do things they
'ouldn"t do other'ise$ It"s also the a&ility to change minds and the course of e(ents* and to
influence outcomes$
%hese skills 'ill &e utili-ed in all areas of project management$ 0tart practicing no' &ecause*
guaranteed* you"ll need these skills on your ne#t project$
.eaing
'eadership and management are not synonymous terms$ Deaders impart (ision* gain consensus
for strategic goals* esta&lish direction* and inspire and moti(ate others$ Managers focus on
results and are concerned 'ith getting the jo& done according to the re7uirements$ /(en though
leaders and managers are not the same* project managers must e#hi&it the characteristics of
&oth during different times on the project$ >nderstanding 'hen to s'itch from leadership to
management and then &ack again is a finely tuned and necessary talent$
&eam +uiling an /uman 0esources
Project managers 'ill rely hea(ily on team &uilding and human resource management skills$
%eams are often formed 'ith people from different parts of the organi-ation$ %hese people may or
may not ha(e 'orked together &efore?so there may &e some component of teamB&uilding
ground'ork that 'ill in(ol(e the project manager$ %he project manager 'ill set the tone for the
project team and 'ill help them 'ork through the (arious teamBforming stages to &ecome fully
functional$ %he project manager may take on a (ariety of roles during this initial teamB&uilding
process$
8n interesting ca(eat to the teamB&uilding role is that project managers many times are
responsi&le for moti(ating team mem&ers 'ho are not their direct reports$ %his has its o'n set of
challenges and dilemmas$ =ne 'ay to help this situation is to ask the functional manager to allo'
you to participate in your project team mem&ers" performance re(ie's$ >se the negotiation and
influencing skills I talked a&out earlier to make sure you"re part of this process$
1 $ile Wie an an Inch Deep
Project managers are an interesting &unch$ %hey kno' a little &it a&out a lot of things and are
e#cellent communicators$ =r* as one person said* he"s 4a mile 'ide and an inch deep$5 %hey ha(e
the a&ility to moti(ate people* e(en those 'ho ha(e no reason to &e loyal to the project* and they
can make the hardBline calls 'hen necessary$ Project managers can get caught in sticky
situations that occasionally re7uire making decisions that are good for the company (or the
customer! &ut aren"t good for certain stakeholders$ %hese offended stakeholders 'ill then drag
their feet* and the project manager has to play the hea(y in order to moti(ate and gain their
cooperation again$ 0ome organi-ations hire contract project managers to run their large*
companyBaltering projects just &ecause they don"t 'ant to &urn out a key employee in this role$
.ortunately* that doesn"t happen often$
Go' that you"(e &een properly introduced to some of the skills you need in your tool kit* you"ll
kno' to &e prepared to communicate* sol(e pro&lems* lead* and negotiate your 'ay through your
ne#t project$
2nerstaning Organi,ational 'tructures
Hust as projects are uni7ue* so are the organi-ations in 'hich they"re carried out$ %he key to
determining the type of organi-ation you 'ork in is &y measuring ho' much authority senior
management is 'illing to delegate to project managers$ +hile uni7ueness a&ounds in &usiness
cultures* all organi-ations are structured in one of three 'ays: functional* projecti-ed* or matri#$
3ariations and com&inations e#ist among these three structures* such as a projecti-ed structure
'ithin a functional organi-ation* and 'eak matri#* &alanced matri#* and strong matri#
organi-ations$
It pays to kno' and understand the organi-ational structure and the culture of the entity you"re
'orking 'ith$ Companies 'ith aggressi(e cultures that are comforta&le in a leadingBedge position
'ithin their industry are highly likely to take on risky projects$ Project managers 'ho are 'illing to
suggest ne' ideas and projects that ha(e ne(er &een undertaken &efore are likely to recei(e a
'arm reception in this kind of en(ironment$ Con(ersely* organi-ational cultures that are risk
a(erse and prefer the follo'BtheBleader position 'ithin their industry are highly unlikely to take on
risky endea(ors$ Project managers 'ith riskBinclined* aggressi(e styles are likely to recei(e a cool
reception in a culture like this$
%he le(el of authority the project manager enjoys is denoted &y the organi-ational structure$ .or
e#ample* a project manager 'ithin a functional organi-ation has little to no formal authority$ 8nd
their title may not &e project manager* &ut instead they"re called a project leader* project
coordinator* or perhaps project e#peditor$
Det"s take a look at each of these organi-ations indi(idually to &etter understand ho' the project
management role 'orks in each one$
Functional Organi,ations
%he most common type of organi-ation is the functional organi(ation$ Chances are you 'ork in
this type of organi-ation$ %his is pro&a&ly the oldest style of organi-ation and is therefore kno'n
as the traditional approach to organi-ing &usinesses$
.unctional organi-ations are centered on specialties and grouped &y functionI hence the term
functional organi(ation$ 8s an e#ample* the organi-ation might ha(e a human resources
department* finance department* marketing department* etc$ %he 'ork in these departments is
speciali-ed and re7uires people 'ho ha(e the skills sets and e#periences in these speciali-ed
functions to perform specific duties for the department$ .igure 1$2 sho's a typical org chart for a
functional organi-ation$
Figure 1.3: .unctional org chart
,ou can see that this type of organi-ation is set up to &e a hierarchy$ 0taff personnel report to
managers 'ho report to department heads 'ho report to (ice presidents 'ho report to the C/=$
In other 'ords* each employee reports to only one manager* and ultimately* one person at the top
is in charge$ Many companies today* as 'ell as go(ernmental agencies* are structured in a
hierarchical fashion$ In organi-ations like this* &e a'are of the chain of command$ 8 strict chain of
command may e#ist* and the corporate culture might dictate that you follo' it$ Foughly translated:
)on*t tal& to the $ig $oss without first tal&ing to your $oss who tal&s to their $oss who tal&s to the
$ig $oss$ +ise project managers should determine if there is a chain of command* ho' strictly it"s
enforced* and ho' the chain is linked &efore (enturing outside of it$
/ach department or group in a functional organi-ation is managed independently and has a
limited span of control$ Marketing doesn"t run the finance department or their projects* for
e#ample$ %he marketing department is concerned 'ith their o'n functions and projects$ If it 'ere
necessary for the marketing department to get input from the finance department on a project* the
marketing team mem&ers 'ould follo' the chain of command$ 8 marketing manager 'ould speak
to a manager in finance to get the needed information and then pass it &ack do'n to the project
team$
Commonalities e#ist among the personnel assigned to the (arious departments in a functional
organi-ation$ In theory* people 'ith similar skills and e#periences are easier to manage as a
group$ Instead of scattering them throughout the organi-ation* it is more efficient to keep them
functioning together$ +ork assignments are easily distri&uted to those 'ho are &est suited for the
task 'hen e(eryone 'ith the same skill 'orks together$ 8long these lines* 'orkers in functional
organi-ations speciali-e in an area of e#pertise? finance* for instance?and then &ecome (ery
good at their specialty$ >sually* the super(isors and managers of these 'orkers are e#perienced
in the area they super(ise and are a&le to recommend training and career enrichment acti(ities
for their employees$
%here is a clear up'ard career path for people in a functional organi-ation$ 8n assistant &udget
analyst may &e promoted to a &udget analyst and then e(entually to a department manager o(er
many &udget analysts$
.unctional organi-ations ha(e their disad(antages$ If this is the kind of organi-ation you 'ork in*
you pro&a&ly ha(e e#perienced some of them$
=ne of the greatest disad(antages for the project manager is that they ha(e little to no formal
authority$ %his does not mean that project manaBgers in functional organi-ations are doomed to
failure$ Many projects are undertaken and successfully completed 'ithin this type of organi-ation$
1ood communication* interpersonal* and influencing skills on the part of the project manager are
re7uired to &ring a&out a successful project under this structure$
In a functional organi-ation* the (ice president or senior department manager is usually the one
responsi&le for projects$ %he title of project manager denotes authority* and in a functional
structure* that authority rests 'ith the 3P$
Projects are typically undertaken in a di(ided approach in a functional organi-ation$ .or e#ample*
the marketing department 'ill 'ork on their portion of the project and then hand it off to the
manufacturing department to complete their part of the project and so on$ %he 'ork the marketing
department does is considered a marketing project* 'hile the 'ork the manuBfacturing
department does is considered a manufacturing project$
0ome projects re7uire project team mem&ers from different departments to 'ork together at the
same time on (arious aspects of the project$ Project team mem&ers in this structure 'ill more
than likely remain loyal to their functional manager$ %he functional manager is responsi&le for
their performance re(ie's* and their career opportunities lie 'ithin the functional department?not
'ithin the project team$ /#hi&iting leadership skills &y forming a common (ision regarding the
project and the a&ility to moti(ate people to 'ork to'ard that (ision are great skills to e#ercise in
this situation$ 8s pre(iously mentioned* it also doesn"t hurt to ha(e the project manager 'ork 'ith
the functional manager in contri&uting to the employee"s performance re(ie'$
Competition for resources and project priorities can &ecome fierce 'hen multiple projects are
undertaken 'ithin a functional organi-ation$ .or e#ample* in my organi-ation* it"s common to ha(e
competing project re7uests from three or more departments all (ying for the same resources$
%hro'n into the heap is the re7uirement to make mandated ta# la' changes* 'hich automatically
usurps all other priorities$ %his sometimes causes frustration and political infighting$ =ne
department thinks their project is more important than another and 'ill do anything to get that
project pushed ahead of the others$ 8gain* it takes great skill and diplomatic a&ilities to keep
projects on track and functioning smoothly$ In a later chapter* 'e"ll discuss the importance of
gaining stakeholder &uyBin* prioriti-ation* and communication distri&ution to a(ert some of these
pro&lems$
.unctional organi-ations are the most common form of organi-ation$ Project managers ha(e little
authority in these organi-ations* &ut 'ith the right skills* they can successfully accomplish many
projects$ %a&le 1$1 highlights the ad(antages and disad(antages of this type of organi-ation$
&a-le 1.1: Functional Organi,ations
1vantages Disavantages
/nduring organi-ational structure$ Project manager has little to no formal
authority$
Clear career path 'ith separation of functions
allo'ing specialty skills to flourish$
Multiple projects compete for limited
resources and priority$
/mployees ha(e one super(isor 'ith a clear
chain of command$
Project team mem&ers are loyal to the
functional manager$
Projecti,e Organi,ations
Projecti(ed organi(ations are nearly the opposite of functional organi-ations$ %he focus of this
type of organi-ation is the project itself$ %he idea &ehind a projecti-ed organi-ation is to de(elop
loyalty to the project* not to a functional manager$
.igure 1$J sho's a typical org chart for a projecti-ed organi-ation$
Figure 1.4: Projecti-ed org chart
=rgani-ational resources are dedicated to projects and project 'ork in purely projecti-ed
organi-ations$ Project managers almost al'ays ha(e ultimate authority o(er the project in this
structure and report directly to the C/=$ In a purely projecti-ed organi-ation* supporting
departments like human resources and accounting might report directly to the project manager as
'ell$ Project managers are responsi&le for making decisions regarding the project and ac7uiring
and assigning resources$ %hey ha(e the authority to choose and assign resources from other
areas in the organi-ation or to hire them from outside if needed$ 6o'e(er* project managers in all
organi-ational structures are limited &y the triple constraints$ .or e#ample* if the &udget doesn"t
e#ist to hire additional resources* the project manager 'ill ha(e to come up 'ith alternati(es to
sol(e this pro&lem$
%eams are formed and often collocated, 'hich means that team mem&ers physically 'ork at the
same location$ Project team mem&ers report to the project manager* not a functional or
departmental manager$ =ne o&(ious dra'&ack to a projecti-ed organi-ation is that project team
mem&ers may find themsel(es out of 'ork at the end of the project$ 8n e#ample of this might &e a
consultant 'ho 'orks on a project until completion and then is put on the &ench or let go at the
end of the project$ 0ome inefficiency e#ists in this kind of organi-ation 'hen it comes to resource
utili-ation$ If you ha(e a situation 'here you need a highly speciali-ed skill at certain times
throughout the project* the resource you"re using to perform this function might &e idle during
other times in the project$
&he 0eal Worl 'cenario5&he Projecti,e )raphic 1rtist
,ou"(e &een appointed project manager for your company"s 'e&site design and implementation$
,ou"re 'orking in a projecti-ed organi-ation* so you ha(e the authority to ac7uire and assign
resources$ ,ou put together your team including programmers* technical 'riters* testers* and
&usiness analysts$ @e&&ie* a highly 7ualified graphic arts designer* is also part of your team$
@e&&ie"s speciali-ed graphic arts skills are needed only at certain times throughout the project$
+hen she has completed the graphics design portion of the screen she"s 'orking on* there isn"t
anything else for her to do until the ne#t page is ready$ @epending on ho' in(ol(ed the project is
and ho' the 'ork is structured* days or 'eeks might pass &efore @e&&ie"s skills are needed$ %his
is 'here the inefficiency occurs in a purely projecti-ed organi-ation$ %he project manager 'ill
ha(e to find other duties that @e&&ie can perform during these do'ntimes$ It"s not practical to let
her go and then hire her &ack 'hen she"s needed again$
In this situation* you might assign @e&&ie to other project duties 'hen she"s not 'orking on
graphics design$ Perhaps she can edit the te#t for the 'e& pages or assist 'ith the design of the
upcoming marketing campaign$ ,ou might also share @e&&ie"s time 'ith another project manager
in the organi-ation$
@uring the planning process* you 'ill disco(er the skills and a&ilities of all your team mem&ers so
that you can plan their schedule accordingly and eliminate idle time$
Projecti-ed structures can coe#ist 'ithin functional organi-ations$ In the case of a highBprofile*
critical project* for instance* the functional organi-ation might appoint a special project team to
'ork only on that project$ %he team is structured outside the &ounds of the functional
organi-ation* and the project manager has ultimate authority for the project$ %his is a 'orka&le
project management approach and ensures open communication &et'een project manager and
team mem&ers$ 8t the end of the project* the project team is dissol(ed* and the project mem&ers
return to their functional areas to resume their usual duties$
In summary* projecti-ed organi-ations are identified se(eral 'ays:
Project managers ha(e ultimate authority o(er the project$
%he focus of the organi-ation is the project$
%he organi-ation"s resources are focused on projects and project 'ork$
%eam mem&ers are collocated$
Doyalties are formed to the project* not to a functional manager$
$atri6 Organi,ations
Matri+ organi(ations came a&out to minimi-e the differences &et'een* and take ad(antage of* the
strengths and 'eaknesses of functional and projecti-ed organi-ations$ %he idea at play here is
that the &est of &oth organi-ational structures can &e reali-ed &y com&ining them into one$ %he
project o&jecti(es are fulfilled* and good project management techni7ues are utili-ed 'hile still
maintaining a hierarchical structure in the organi-ation$
/mployees in a matri# organi-ation report to one functional manager and at least one project
manager$ It"s possi&le that employees could report to multiple project managers if they are
'orking on multiple projects at one time$ .unctional managers pick up the administrati(e portion
of the duties and assign employees to projects$ %hey also monitor the 'ork of their employees on
the (arious projects$ Project managers are responsi&le for e#ecuting the project and gi(ing out
'ork assignments &ased on project acti(ities$ Project managers and functional managers share
the responsi&ility of performance re(ie's for the employee$ In a nutshell* functional managers
assign employees to projects* 'hile project managers assign tasks associated 'ith the project$
Matri# organi-ations allo' project managers to focus on the project and project 'ork just like in a
projecti-ed organi-ation$ %he project team is free to focus on the project o&jecti(es 'ithout
distractions from the functional department$
Project managers should take care 'hen 'orking up acti(ity and project estimates for the project
in a matri# organi-ation$ %he estimates should &e gi(en to the functional managers for input
&efore pu&lishing$ %he functional manager is the one in charge of assigning or freeing up
resources to 'ork on projects$ If the project manager is counting on a certain employee to 'ork
on the project at a certain time* the project manager should determine their a(aila&ility up front
'ith the functional manager$ Project estimates might ha(e to &e modified if it"s disco(ered that the
employee they 'ere counting on is not a(aila&le 'hen needed$
8s 'e"(e discussed* a lot of communication and negotiation takes place &et'een the project
manager and the functional manager$ %his calls for a &alance of po'er &et'een the t'o* or one
'ill dominate the other$
In a strong matri# organi-ation* the &alance of po'er rests 'ith the project manager$ %hey ha(e
the a&ility to strongBarm the functional managers into gi(ing up their &est resources for projects$
0ometimes* more resources than necessary are assem&led for the project* and then project
managers negotiate these resources among themsel(es* cutting out the functional manager
altogether* as you can see in .igure 1$:$
Figure 1.7: 0trong matri# org chart
=n the other end of the spectrum is the 'eak matri# (see .igure 1$K!$ 8s you 'ould suspect* the
functional managers ha(e all the po'er in this structure$ Project managers are really project
coordinators or e#peditors 'ith partBtime responsi&ilities on projects in a 'eak matri#
organi-ation$ Project managers ha(e little to no authority* just like in the functional organi-ation$
=n the other hand* the functional managers ha(e a lot of authority and make all the 'ork
assignments$ %he project manager simply e#pedites the project$
Figure 1.8: +eak matri# org chart
In &et'een the 'eak matri# and the strong matri# is an organi-ational structure called the
&alanced matri# (see .igure 1$C!$ %he features of the &alanced matri# are 'hat 'e"(e &een
discussing throughout this section$ %he po'er is &alanced &et'een project managers and
functional managers$ /ach manager has responsi&ility for their parts of the project or
organi-ation* and employees get assigned to projects &ased on the needs of the project* not the
strength or 'eakness of the manager"s position$
Figure 1.9: Aalanced matri# org chart
Matri# organi-ations ha(e su&tle differences* and it"s important to understand their differences for
the e#am$ %he easiest 'ay to remem&er them is that the 'eak matri# has many of the same
characteristics as the functional organi-ation* 'hile the strong matri# has many of the same
characteristics as the projecti-ed organi-ation$ %he &alanced matri# is e#actly that?a &alance
&et'een 'eak and strong 'here the project manager shares authority and responsi&ility 'ith the
functional manager$ %a&le 1$2 compares all three structures$
&a-le 1.3: %omparing $atri6 'tructures

Wea# $atri6 +alance $atri6 'trong $atri6
Project $anager*s
&itle:
Project coordinator*
project leader* or
project e#peditor
Project manager Project manager
Project $anager*s
Focus:
0plit focus &et'een
project and
functional
responsi&ilities
Projects and
project 'ork
Projects and project
'ork
Project $anager*s
Power:
Minimal authority
and po'er
Aalance of
authority and
po'er
.ull authority and
po'er
Project $anager*s
&ime:
Part time on
projects
.ull time on
projects
.ull time on
projects
Organi,ation 't"le: Most like functional
organi-ation
Alend of &oth 'eak
and strong matri#
Most like a
projecti-ed
organi-ation
Project $anager
0eports to:
.unctional manager 8 functional
manager* &ut
shares authority
and po'er
Manager of project
managers
Most organi-ations today use some com&ination of the organi-ational structures descri&ed here$
It"s rare that an organi-ation 'ould &e purely functional or purely projecti-ed$ .or e#ample* the
functional organi-ation 'ill often use a projecti-ed en(ironment for critical projects* 'hile keeping
the hierarchical acti(ities of the organi-ation intact$
=rgani-ations are uni7ue* as are the projects they undertake$ >nderstanding the organi-ational
structure 'ill help you* as a project manager* 'ith the cultural influences and communication
a(enues that e#ist in the organi-ation to gain cooperation and successfully &ring your projects to
a close$

2nerstaning Project .i!e %"cles an Project $anagement
Processes
Project life cycles are similar to the life cycle that parents e#perience raising their children to
adulthood$ Children start out as infants and generate lots of e#citement 'here(er they go$
6o'e(er* not much is kno'n a&out them at first$ 0o 'e study them as they gro' and assess their
needs$ =(er time* they mature and gro' (and cost a lot of money in the process!* until one day
the parents" jo& is done$
Projects start out just like this and progress along a similar path$ 0omeone comes up 'ith a great
idea for a project and acti(ely solicits support for the project$ %he project* after &eing appro(ed*
progresses through the intermediate phases to the ending phase* 'here the project is completed
and closed out$
Project .i!e %"cles an Phases
8ll projects are di(ided into phases* and all projects* large or small* ha(e a similar life cycle
structure$ 8t a minimum* a project 'ill ha(e a &eginning or initiation phase* an intermediate phase
or phases* and an ending phase$ %he num&er of phases depends on the project comple#ity and
its industry$ 8ll the collecti(e phases the project progresses through in concert are called the
project life cycle$
%he end of each phase allo's the project manager* stakeholders* and project sponsor the
opportunity to determine if the project should continue to the ne#t phase$ Project phases e(ol(e
through the life cycle in a series of 4handoffs$5 %he end of one phase typically marks the
&eginning of the ne#t$ .or e#ample* in the construction industry* feasi&ility studies often take
place in the &eginning phase of a project$ %he purpose of the feasi&ility study might &e to
determine if the project is 'orth undertaking and 'hether the project 'ill &e profita&le for the
construction company$ %he completion and appro(al of the feasi&ility study trigger the &eginning
of the planning and design phase$
,ou 'ill recogni-e phase completion &ecause each phase has a specific deli#era$le* or multiple
deli(era&les* that marks the end of the phase$ 8 deli(era&le is an output that must &e produced to
&ring the phase or project to completion$ @eli(era&les are tangi&le and can &e measured and
easily pro(ed$ .or instance* a hypothetical deli(era&le produced in the &eginning phase of our
construction industry e#ample 'ould &e the feasi&ility study$ @eli(era&les might also include
things like design documents* project &udgets* &lueprints* project schedules* prototypes* etc$ %his
analysis allo's those in(ol(ed the opportunity to determine if the project should continue to the
ne#t phase$ %he feasi&ility study might sho' that en(ironmental impacts of an enormous nature
'ould result if the construction project 'ere undertaken at the proposed location$ Aased on this
information* a go or noBgo decision can &e made at the end of this phase$ %he end of a phase
also gi(es the project manager the a&ility to disco(er* address* and take correcti(e action against
errors disco(ered during the phase$
%here are times 'hen phases are o(erlapped to shorten or compress the project schedule$ %he
Guide to the PMBOK terms this fast trac&ing$ .ast tracking means that a later phase is started
prior to completing and appro(ing the phase* or phases* that come &efore it$
8ll projects follo' the life cycle pattern and* as a result* ha(e the follo'ing things in common$ In
the &eginning phase* 'hich is 'here the Initiation process occurs* costs are lo'* and there are
fe' team mem&ers assigned to the project$ 8s the project progresses* costs and staffing
increases and then tapers off at the closing phase$ %he potential that the project 'ill come to a
successful ending is lo'est at the &eginning of the project 'ith an increasing chance for success
as the project progresses through the life cycle stages$ Fisk is highest at the &eginning of the
project and gradually decreases the closer the project comes to completion$ 8nd stakeholders
ha(e the greatest chance of influencing the project in the &eginning phases and less and less
influence as the project progresses$
%o gi(e you a &etter idea of 'hen certain characteristics influence a project* refer to %a&le 1$J$ 8
recap of the impacts in the &eginning life cycle phase is sho'n here$
&a-le 1.4: %haracteristics o! the Initiation Process
.ow Impact:Pro-a-ilit" /igh Impact:Pro-a-ilit"
Costs Fisk
0taffing le(els 0takeholder influence
Chance for successful completion

Project $anagement Processes
Project management processes* according to the Guide to the PMBOK* organi-e and descri&e
the 'ork of the project$ %hese processes are performed &y people and* much like the project
phases* are interrelated and dependent on one another$ .or e#ample* it 'ould &e difficult to
identify specific project acti(ities 'ithout first ha(ing an understanding of the project re7uirements$
P$I Process )roups
%he Guide to the PMBOK documents fi(e process groups in the project management process:
Initiation* Planning* /#ecuting* Controlling* and Closing$ +e"ll look at an o(er(ie' of each process
here and go into more detail in later chapters$
Initiation
%he Initiation process* as its name implies* occurs at the &eginning of the project or phase$
Initiation ackno'ledges that a project* or the ne#t project phase* should &egin$ Initiation grants the
appro(al to commit the organi-ation"s resources to 'orking on the project or phase$
Planning
Planning is the process of formulating and re(ising planning documents to &e used throughout
the remainder of the project$ %his process group is 'here the project re7uirements are fleshed
out and stakeholders are identified$ Planning has more processes than any of the other project
management processes$ %he /#ecuting* Controlling* and Closing process groups all rely on the
Planning process group and the documentation produced during the Planning processes in order
to carry out their functions$ Project managers 'ill perform fre7uent iterations of the Planning
processes prior to project completion$ Projects are uni7ue* and as such ha(e ne(er &een done
&efore$ %herefore* Planning must encompass all areas of project management and consider
&udgets* acti(ity definition* scope planning* schedule de(elopment* risk identification* staff
ac7uisition* procurement planning* and more$ %he greatest conflicts a project manger 'ill
encounter in this process group are project prioriti-ation issues$
(6ecuting
%he /#ecuting process group in(ol(es putting the project plans into action$ It"s here that the
project manager 'ill coordinate and direct project resources to meet the o&jecti(es of the project
plan$ %he /#ecuting process keeps the project plan on track and ensures that future e#ecution of
project plans stays in line 'ith project o&jecti(es$ %he /#ecuting process group 'ill utili-e the
most project time and resources$ Costs are usually highest during the /#ecuting process$ Project
managers 'ill e#perience the greatest conflicts o(er schedules in this phase$
%ontrolling
%he Controlling process group is 'here project performance measurements are taken and
analy-ed to determine if the project is staying true to the project plan$ If it"s disco(ered that
(ariances e#ist* correcti(e action is taken to get the project acti(ities aligned 'ith the project plan$
%his might re7uire additional passes through the Planning process to realign to the project
o&jecti(es$
%losing
%he Closing process group is pro&a&ly the most often skipped process in project management$
=nce the project o&jecti(es ha(e &een met* most of us are ready to mo(e on to the ne#t project$
6o'e(er* Closing is important as all the project information is gathered no' and stored for future
reference$ %he documentation collected during Closing processes can &e re(ie'ed and utili-ed to
a(ert potential pro&lems on future projects$ Contract closeout occurs here* and formal acceptance
and appro(al are o&tained from project stakeholders$
&he Process Flow
%he fi(e process groups are iterati#e and should not &e thought of as oneBtime processes$ %hese
processes 'ill &e re(isited throughout the project life cycle se(eral times as the project is refined$
PMI calls this process of going &ack through the process groups an iterati#e process$ %he
completion of each process allo's the project manager and stakeholders to ree#amine the
&usiness needs of the project and determine if the project is satisfying those needs$ 8nd it is
another opportunity to make a go or noBgo decision$
.igure 1$L sho's the fi(e process groups in a typical project life cycle$ )eep in mind that during
phases of a project* the Closing phase can pro(ide input to the Initiation phase$ .or e#ample*
once the feasi&ility study 'e discussed earlier is accepted or closed* it &ecomes input to the
Initiation phase of design and planning$
Figure 1.;: Project management process groups
It"s important to understand the flo' of these processes for the e#am$ If you remem&er the
processes and their inputs and outputs* it 'ill help you 'hen you"re trying to decipher an e#am
7uestion$ 0ometimes just understanding 'hich process the 7uestion is asking a&out 'ill help you
determine the ans'er$ =ne trick you could use to memori-e these processes is to remem&er
syrup of ipecac$ (,ou pro&a&ly ha(e some of this poison antidote in your medicine ca&inet at
home$! +hen you sound out the first initial of each of the processes* it sounds like 4ipecac5?
IP/CC (Initiation* Planning* /#ecuting* Controlling* and Closing!$
Processes e#ist 'ithin most of the process groups$ .or e#ample* the Closing life cycle process
group consists of t'o processes* Contract Closeout and 8dministrati(e Closure$ /ach process
takes inputs and uses them in conjunction 'ith (arious tools and techni7ues to produce outputs$
It"s outside the scope of this &ook to list all the inputs* tools and techni7ues* and outputs for each
process in each life cycle phase$ ,ou"ll find these detailed in the Guide to the PMBOK* and I
highly recommend you get familiar 'ith them$ %here are test 7uestions regarding inputs* tools and
techni7ues* and outputs$ =ne 'ay to keep them all straight is to remem&er tools and techni7ues
usually re7uire action of some sort* &e it measuring* applying some skill or techni7ue* planning* or
using e#pert judgment$ =utputs are usually in the form of a deli(era&le$ Femem&er that a
deli(era&le is characteri-ed 'ith results or outcomes that can &e measured* are tangi&le* and are
pro(a&le$ Dast &ut not least* outputs from one process sometimes ser(e as inputs to another
process$
(sta-lishing the Project $anagement O!!ice
%he concept of a project management office* sometimes referred to as the PM=* has &een
around for se(eral years$ ,ou 'on"t need to kno' anything a&out PM=s for the e#am$ 6o'e(er*
in practice* you"ll find many organi-ations are esta&lishing PM=s in many different forms$ %he
purposes of esta&lishing a PM=* and its &enefits* are many$ %he most common reason a
company starts a project management office is to esta&lish and maintain procedures and
standards for project management methodologies to &e used throughout the organi-ation$ In
some organi-ations* project managers might 'ork directly for the PM= and are assigned from
this office to projects as they are initiated$ %he PM=* depending on its si-e and function*
sometimes has e#perts a(aila&le that assist project managers in project planning* estimating* and
&usiness assumption (erification tasks$ %hey ser(e as mentors to juniorBle(el project managers
and act as consultants to the senior project managers$
%he PM= takes responsi&ility for maintaining and archi(ing project documentation$ 8ll project
documentation and information is collected and tracked &y the PM= for future reference$ %his
office compares project goals 'ith project progress and gi(es feed&ack to the project teams$ %his
office also measures the project performance of acti(e projects and suggests correcti(e actions$
%he PM= e(aluates completed projects for their adherence to the triple constraints and asks the
follo'ing: @id the project meet the time frames esta&lished* did it stay 'ithin &udget* and 'as the
7uality accepta&le9
Project management offices are &ecoming more common in organi-ations today* if for no other
reason* simply to ser(e as a collection point for project documentation$ 0ome PM=s are fairly
sophisticated and prescri&e the standards and methodologies to &e used in all project phases
across the enterprise$ 0till others pro(ide all these functions and also offer project management
consulting ser(ices$ 6o'e(er* the esta&lishment of a PM= is not re7uired in order for you to apply
good project management practices to your ne#t project$
'ummar"
Phe'* 'e co(ered a lot of ground in this chapter$ +e learned that projects e#ist to &ring a&out a
uni7ue product or ser(ice$ Projects are temporary in nature and ha(e definite &eginning and
ending dates$
0takeholders are those people or organi-ations that ha(e a (ested interest in the outcome of the
project$ 0takeholders include people like the project sponsor* the customer* key management
personnel* the project manager* contractors* suppliers* and more$ Projects are considered
complete 'hen the project meets or e#ceeds the e#pectations of the stakeholders$
Project management is a discipline that &rings together a set of tools and techni7ues to descri&e*
organi-e* and monitor the 'ork of project acti(ities$ Project managers are the ones responsi&le
for carrying out these acti(ities$
/(ery project must 'ork 'ithin constraints$ %he primary constraints that 'ill affect all projects are
the triple constraints of &udget* time* and 7uality$
Project managers ha(e a 'ide (ariety of skills$ Got only should they &e (ersed in the field they"re
'orking in* &ut in general management skills as 'ell$ Communication is the most important skill a
project manager 'ill use in the course of a project$
=rgani-ational structures come in (ariations of three forms: functional* projecti-ed* and matri#
organi-ations$ .unctional organi-ations are traditional 'ith hierarchical reporting structures$
Project managers ha(e little to no authority in this organi-ation$ Projecti-ed organi-ations are
structured around project 'ork* and staff personnel report to project managers$ Project managers
ha(e full authority in this organi-ational structure$ Matri# organBi-ations are a com&ination of the
functional and projecti-ed$ 8 project manager"s authority (aries depending on the structure of the
matri#* &e it a 'eak matri#* &alanced matri#* or strong matri#$
Projects progress along a life cycle path$ %he life cycle consists of phases* and the Guide to the
PMBOK process groups are performed throughout the project"s life cycle$ %he Guide to the
PMBOK process groups are Initiation* Planning* /#ecuting* Controlling* and Closing$
Project management offices are a 'ay to organi-e and esta&lish standards for project
management techni7ues 'ithin an organi-ation$ %hey can also ser(e as a project li&rary* housing
project documentation for future reference$
(6am (ssentials
+e a-le to escri-e the i!!erence -etween projects an operations. 8 project is temporary
in nature 'ith a definite &eginning and ending date$ =perations are ongoing$
+e a-le to enote some o! the s#ills ever" goo project manager shoul
possess. Communication* &udgeting* organi-ational* pro&lem sol(ing* negotiation and
influencing* leading* and team &uilding$
+e a-le to i!!erentiate the i!!erent organi,ational structures. =rgani-ations are usually
structured in some com&ination of the follo'ing: functional* projecti-ed* and matri# (including
'eak matri#* &alanced matri#* and strong matri#!$
+e a-le to name the !ive project management processes. Initiation* Planning* /#ecuting*
Controlling* and Closing$
<e" &erms
+e"(e learned a lot of ne' key 'ords in this chapter$ PMI has 'orked hard to de(elop and define
standard project management terms that apply across industries$ 6ere is a list of some of the
terms 'e came across in this chapter:
collocation project life cycle
deli(era&le project management
fast tracking project management office (PM=!
functional organi-ation project manager
iterati(e project sponsor
matri# organi-ation projecti-ed organi-ation
program project
progressi(e ela&oration stakeholder
0eview =uestions
1. +hich organi-ation has set the de facto standards for project management
techni7ues9
8$ PMA=)
A$ PM=
C$ PMI
@$ PM8
3. %he 3P of marketing approaches you and re7uests that you change the (isitor logon
screen on the company"s 'e&site to include a username 'ith at least si# characters$
%his is considered:
8$ Project initiation
A$ =ngoing operations
C$ 8 project
@$ Project e#ecution
4. ,our company manufactures small kitchen appliances$ %hey are introducing a ne'
product line of appliances in designer colors 'ith distincti(e features for kitchens in
small spaces$ %hese ne' products 'ill &e offered indefinitely starting 'ith the spring
catalog release$ +hich of the follo'ing is true9
8$ %his is a project &ecause this ne' product line has ne(er &een manufactured
and sold &y this company &efore$
A$ %his is an ongoing operation &ecause the company is in the &usiness of
manufacturing kitchen appliances$ Introducing designer colors and features is
simply a ne' t'ist on an e#isting process$
C$ %his is an ongoing operation &ecause the ne' product line 'ill &e sold
indefinitely$ It"s not temporary$
@$ %his is not a project or an ongoing operation$ %his is a ne' product
introduction not affecting ongoing operations$
7. ,our company manufactures small kitchen appliances$ %hey are introducing a ne'
product line of appliances in designer colors 'ith distincti(e features for kitchens in
small spaces$ %hese ne' products 'ill &e offered indefinitely starting 'ith the spring
catalog release$ In order to determine the characteristics and features of the ne'
product line* you 'ill ha(e to perform 'hich of the follo'ing9
8$ .ast tracking
A$ Consulting 'ith the stakeholders
C$ Planning the project life cycle
@$ Progressi(e ela&oration
8. 8 project is considered successful 'hen:
8$ %he product of the project has &een manufactured$
A$ %he project sponsor announces the completion of the project$
C$ %he product of the project is turned o(er to the operations area to handle the
ongoing aspects of the project$
@$ %he project meets or e#ceeds the e#pectations of the stakeholders$
9. %he 3P of customer ser(ice has e#pressed concern o(er a project you"re in(ol(ed in$
6is specific concern is that if the project is implemented as planned* he"ll ha(e to
purchase additional e7uipment to staff his customer ser(ice center$ %he cost is
su&stantial and 'as not taken into consideration in the project &udget$ %he project
sponsor insists that the project must go for'ard as originally planned or the customer
'ill suffer$ +hich of the follo'ing is true9
8$ %he 3P of customer ser(ice is correct$ 0ince the cost 'as not taken into
account at the &eginning of the project* the project should not go for'ard as
planned$ Project initiation should &e re(isited to e#amine the project plan and
determine ho' changes can &e made to accommodate customer ser(ice$
A$ %he conflict should &e resol(ed in fa(or of the customer$
C$ %he conflict should &e resol(ed in fa(or of the project sponsor$
@$ %he conflict should &e resol(ed in fa(or of the 3P of customer ser(ice$
;. +hich of the follo'ing &rings together a set of tools and techni7ues used to descri&e*
organi-e* and monitor the 'ork of project acti(ities9
8$ Project managers
A$ Guide to the PMBOK
C$ Project management
@$ 0takeholders
>. +hat are the triple constraints9
8$ %ime* schedules* and 7uality
A$ %ime* a(aila&ility* and 7uality
C$ %ime* money* and schedules
@$ %ime* money* and 7uality
?. ,ou are the project manager for a large construction project$ %he project o&jecti(e is to
construct a set of out&uildings to house the =lympic support team that 'ill &e arri(ing
in your city 1E months from the project start date$ ,ou"(e &een gi(en a &udget of M12
million to complete this project$ Fesources are easily attained$ +hich of the triple
constraints is the primary constraint for this project9
8$ %ime* &ecause the date cannot &e mo(ed
A$ Money* &ecause the &udget is set at M12 million
C$ Fesources* &ecause they"re not fi#ed
@$ <uality* &ecause the &uildings ha(e to &e functional and safe
1@. ,ou are the project manager for a large construction project$ %he project o&jecti(e is to
construct a set of out&uildings to house the =lympic support team that 'ill &e arri(ing
in your city 1E months from the project start date$ Fesources are not readily a(aila&le
as they are currently assigned to other projects$ Hack* an e#pert crane operator* is
needed for this project t'o months from today$ +hich of the follo'ing skills 'ill you
use to get Hack assigned to your project9
8$ Gegotiation and influencing skills
A$ Communication and organi-ational skills
C$ Communication skills
@$ Pro&lemBsol(ing skills
11. ,ou are a project manager 'ith technical e#pertise in the pharmaceutical industry$
,ou"(e decided to try your hand at project management in the entertainment industry$
+hich of the follo'ing is true9
8$ ,ou 'ill likely &e successful &ecause communication skills are your strong
suit$ ,ou anticipate ha(ing technical e#perts on your project team to address
industry specifics that you"re not familiar 'ith$
A$ ,ou 'ill likely &e successful &ecause your organi-ational skills are e#cellent$
,ou anticipate ha(ing technical e#perts on your project team to address
industry specifics that you"re not familiar 'ith$
C$ ,ou 'ill pro&a&ly &e successful &ecause you ha(e a friend in the
entertainment industry that has &riefed you on all the important aspects of this
project that you"ll need to kno'$ ,ou anticipate ha(ing technical e#perts on your
project team to address industry specifics that you"re not familiar 'ith$
@$ ,ou 'ill pro&a&ly not &e successful &ecause you ha(e little kno'ledge of the
entertainment industry e(en though you anticipate ha(ing technical e#perts on
your project team to address industry specifics that you"re not familiar 'ith$
13. ,ou are managing a project to install a ne' postage soft'are system that 'ill
automatically print la&els and administer postage for certified mailings* o(ernight
packages* and other special mailing needs$ ,ou"(e attempted to gain the cooperation
of the &usiness analyst 'orking on this project and need some ans'ers$ 0he is elusi(e
and tells you that this project is not her top priority$ %o a(oid situations like this in the
future* you should:
8$ /sta&lish the &usiness analyst"s duties 'ell ahead of due dates and tell her
you"ll &e reporting on her performance to her functional manager$
A$ /sta&lish the &usiness analyst"s duties 'ell ahead of due dates and tell her
you are e#pecting her to meet these e#pectations &ecause the customer is
counting on the project meeting due dates to sa(e significant costs on their
annual mailings$
C$ Gegotiate 'ith the &usiness analyst"s functional manager during the planning
process to esta&lish e#pectations and re7uest to participate in the &usiness
analyst"s annual performance re(ie'$
@$ Gegotiate 'ith the &usiness analyst"s functional manager during the planning
process to esta&lish e#pectations and inform the functional manager of the
re7uirements of the project$ 8greement from the functional manager 'ill assure
the cooperation of the &usiness analyst$
14. %he amount of authority a project manager possesses can &e related to:
8$ %he project manager"s communication skills
A$ %he organi-ational structure
C$ %he amount of authority the manager of the project manager possesses
@$ %he project manager"s influencing skills
17. +hat is one of the ad(antages of a functional structure9
8$ 8ll employees report to one manager and ha(e a clear chain of command$
A$ 8ll employees report to t'o or more managers* &ut project team mem&ers
sho' loyalty to functional managers$
C$ %he organi-ation is focused on projects and project 'ork$
@$ %eams are collocated$
18. ,ou ha(e &een assigned to a project in 'hich the o&jecti(es are to direct customer
calls to an Interacti(e 3oice Fesponse system &efore &eing connected to a li(e agent$
,ou are in charge of the media communications for this project$ ,ou report to the
project manager in charge of this project and the 3P of marketing* 'ho share
responsi&ility for this project$ +hich organi-ational structure do you 'ork in9
8$ .unctional organi-ation
A$ +eak matri# organi-ation
C$ Projecti-ed organi-ation
@$ Aalanced matri# organi-ation
19. ,ou ha(e &een assigned to a project in 'hich the o&jecti(es are to e#pand three miles
of the northBsouth high'ay through your city &y t'o lanes in each direction$ ,ou are in
charge of the demolition phase of this project* and you report to the project manager in
charge of this project$ ,ou ha(e &een hired on contract and 'ill &e released at the
completion of the demolition phase$ +hat type of organi-ational structure does this
represent9
8$ .unctional organi-ation
A$ +eak matri# organi-ation
C$ Projecti-ed organi-ation
@$ Aalanced matri# organi-ation
1;. +hat are the fi(e project management process groups* in order9
8$ Initiation* /#ecuting* Planning* Controlling* and Closing
A$ Initiation* Controlling* Planning* /#ecuting* and Closing
C$ Initiation* Planning* Controlling* /#ecuting* and Closing
@$ Initiation* Planning* /#ecuting* Controlling* and Closing
1>. ,ou ha(e &een assigned to a project in 'hich the o&jecti(es are to e#pand three miles
of the northBsouth high'ay through your city &y t'o lanes in each direction$ ,ou are
interested in implementing a ne' project process called designB&uild in order to speed
up the project schedule$ %he idea is that the construction team 'ill 'ork on the first
mile of the high'ay reconstruction at the same time the design team is coming up 'ith
plans for the third mile of the reconstruction rather than completing all design &efore
any construction &egins$ %his is an e#ample of:
8$ Managing the projects as a program
A$ .ast tracking
C$ Progressi(e ela&oration
@$ Collocation
1?. @uring 'hich project management process are risk and stakeholder"s a&ility to
influence project outcomes the highest at the &eginning of the process9
8$ Planning
A$ /#ecuting
C$ Initiation
@$ Controlling
3@. ,ou are a project manager 'orking on gathering re7uirements and esta&lishing
estimates for the project$ +hich process group are you in9
8$ Planning
A$ /#ecuting
C$ Initiation
@$ Controlling
1nswers
1. C %he Project Management Institute (PMI! is the industryBrecogni-ed standard for project
management practices$
3. A Projects e#ist to create a uni7ue product or ser(ice$ %he logon screen in this 7uestion is
not a uni7ue product$ 8 minor change has &een re7uested* indicating this is an ongoing
operation function$ 0ome of the criteria for projects are that they are uni7ue* temporary 'ith
definiti(e start and end dates* and considered complete 'hen the project goals are achie(ed$
4. 8 %his is a project$ %he product line is ne'* 'hich implies this is a uni7ue product?it hasn"t
&een done &efore$ +e can discern a definite start and end date &y the fact that the ne'
appliances must &e ready &y the spring catalog release$
7. @ Progressi(e ela&oration is the process of determining the characteristics and features of
the product of the project$ Progressi(e ela&oration is carried out in steps in detailed fashion$
8. @ 8 project is considered successful 'hen stakeholder needs and e#pectations are met or
e#ceeded$
9. A Conflicts &et'een stakeholders should al'ays &e resol(ed in fa(or of the customer$ %his
7uestion emphasi-es the importance of identifying your stakeholders and their needs as early
as possi&le in the project$ +e"ll discuss this more in later chapters$
;. C Project management &rings together a set of tools and techni7ues to organi-e project
acti(ities$ Project managers are the ones responsi&le for managing the project processes$
>. @ %he triple constraints that dri(e all projects are time* money* and 7uality$
?. 8 %he primary constraint on this project is time &ecause the date a&solutely cannot mo(e$
%he =lympics are scheduled to &egin on a certain date* and this can"t &e changed$ %he
&udget is also a constraint &ecause it"s set at M12 million* &ut in this e#ample* it 'ould &e a
secondary constraint$ It"s important that the project manager understands the priority of the
constraints and manages to them$
1@. 8 Gegotiation and influencing skills are needed to con(ince Hack"s &oss and come to
agreement concerning his assignment$
11. 8 Project management processes span industries$ 8 project manager can take these skills
across industries and apply them successfully$ %echnical e#perience in the industry doesn"t
hurt* &ut it"s not re7uired$ %he most important skill any project manager can ha(e is
communication skills$ Poor communication skills might lead to an unsuccessful conclusion no
matter ho' strong the project manager"s other skills are$
13. C Gegotiate 'ith the functional manager to participate in the &usiness analyst"s annual
performance re(ie'$
14. A %he le(el of authority the project manager has is determined &y the organi-ational
structure$ .or instance* in a functional organi-ation* the project manager has little to no
authority* &ut in a projecti-ed structure* the project manager has full authority$
17. 8 8n ad(antage for employees in a functional organi-ation is that they ha(e only one
super(isor and a clear chain of command e#ists$
18. @ /mployees in a &alanced matri# often report to t'o or more managers$ .unctional
managers and project managers share authority and responsi&ility for projects$ %here is a
&alance of po'er &et'een the functional managers and project managers$
19. C Projecti-ed organi-ations are focused on the project itself$ =ne issue 'ith this type of
structure is determining 'hat to do 'ith project team mem&ers 'hen they are not acti(ely
in(ol(ed on the project$ =ne alternati(e is to release them 'hen they are no longer needed$
1;. @ Femem&er the acronym that sounds like syrup of ipecac: IP/CC$
1>. A .ast tracking is starting a ne' phase &efore the phase you"re 'orking on is completed$
%his compresses the project schedule* and the project is completed sooner as a result$
1?. C %he Initiation process is 'here stakeholders ha(e the greatest a&ility to influence
outcomes of the project$ Fisk is highest during this stage &ecause of the high degree of
unkno'n factors$
3@. 8 %he Planning process is 'here re7uirements are fleshed out* stakeholders are identified*
and estimates on project costs and time are made$
Chapter 2: Initiating the Project
P$P (6am %ontent !rom the Project Initiation Per!ormance Domain %overe in &his
%hapter:
1$ @etermine Project 1oals$
2$ @etermine @eli(era&les$
J$ @etermine Process =utputs$
:$ @ocument Constraints$
K$ @ocument 8ssumptions$
Overview
Go' that you"re fully armed 'ith a detailed o(er(ie' of project management* you can easily
determine if your ne#t assignment really is a project or an ongoing operation$ ,ou"(e also learned
some of the &asics of good project management techni7ues and the kno'ledge areas 'here you
might need specific e#pertise$ +e"re going to start putting those techni7ues into practice in the
Initiation process$ 8nd* as you"(e pro&a&ly already guessed* 'e"ll &e using some of the general
management skills 'e outlined in Chapter 1 also$
=ne of the first skills you are going to put to use 'ill &e your communication skills$ 8re you
surprised9 =f course you"re not$ It all starts 'ith communication$ ,ou can"t start defining the
project until you"(e first talked to the project sponsor* key stakeholders* and management
personnel$ 8ll good project managers ha(e honed their communication skills to a nice sharp
edge$
,ou"ll remem&er from Chapter 1 that project Initiation is the first process in a project life cycle$ ,ou
can think of it as the official project kickoff$ Initiation ackno'ledges that the project* or the ne#t
phase in an acti(e project* should &egin$ Initiation then culminates in the pu&lication of a project
charter$ +e"ll discuss project charters in Chapter J in more depth$ Aut 'e"(e got 'ork to do
&efore 'e"re ready to produce the project charter* so 'e"ll 'rap up this chapter 'ith a discussion
of the preliminary elements of a charter document$
+e 'ill also talk a&out project Initiation and introduce some of the things that make up this
process$ Aut &efore 'e di(e into Initiation* 'e"ll first take a look at 'hat PMI calls the Project
Management )no'ledge 8reas$ )no'ledge areas are a collection of processes that share similar
themes and* therefore* &enefit from the e#pertise of specific kno'ledge and skills in each of these
areas$
8t the end of this chapter* 'e"ll introduce a case study that 'ill illustrate the main points of the
chapter$ +e"ll take this case study 'ith us from chapter to chapter and &egin &uilding a project
from each of things 'e learned$
&he Project $anagement <nowlege 1reas
8ccording to the Guide to the PMBOK* project Initiation* as 'e"(e discussed* is the first project
management process group in the life cycle of a project$ In addition to the project process groups*
the Guide to the PMBOK classifies the processes that make up each project management
process group into nine Project Management Knowledge Areas$ %hese groupings* or kno'Bledge
areas* &ring together processes that ha(e things in common$ .or e#ample* Project Cost
Management in(ol(es all aspects of the &udgeting process* as you 'ould suspect* such as
Fesource Planning* Cost /stimating* Cost Audgeting* and Cost Control$ %hese processes &elong
to different project management process groups* &ut &ecause they all in(ol(e costs and
&udgeting* they share many aspects in common$
2nerstaning the Project $anagement <nowlege 1reas
Det"s take a closer look at each area so 'e really understand ho' their role 'orks 'ith the
process groups$ Included in each of the follo'ing su&sections is a figure that illustrates the
kno'ledge area* the processes that make up each kno'ledge area* and the project management
process groups that each process &elongs to$ %his 'ill help you to see the &ig picture in terms of
process groups (ersus kno'ledge areas$ +e 'ill &e discussing each of the processes in the
(arious kno'ledge areas throughout the &ook* &ut for no'* let"s take a highBle(el look at each of
them$
Project Integration $anagement
Project ,ntegration Management (see .igure 2$1! is comprised of three processes: Project Plan
@e(elopment* Project Plan /#ecution* and Integrated Change Control$
%he Project Integration kno'ledge area is concerned 'ith coordinating all aspects of the project
plan and is highly interacti(e$ Project planning* project e#ecution* and change control occur
throughout the project and are repeated continuously 'hile 'orking on the project$ Project
planning and e#ecution in(ol(e 'eighing the o&jecti(es of the project against alternati(es to &ring
the project to a successful completion$ Change control impacts the project plan* 'hich in turn
impacts e#ecution* so you can see that these three processes are (ery tightly linked$ %he
processes in this area also interact 'ith other processes in the remaining kno'ledge areas$
Figure 3.1: Project Integration Management
Project 'cope $anagement
Project %cope Management (see .igure 2$2! has fi(e processes: Initiation* 0cope Planning*
0cope @efinition* 0cope 3erification* and 0cope Change Control$
Project 0cope Management is concerned 'ith the 'ork of the project$ 8ll of the processes
in(ol(ed 'ith the 'ork of the project* and only the 'ork that is re7uired to complete the project*
are found in this kno'ledge area$ +e"ll talk a&out Initiation in more detail in the remainder of this
chapter$ 0cope Planning* 0cope @efinition* 0cope 3erification* and 0cope Change Control
in(ol(e detailing the re7uirements of the product of the project and the acti(ities that 'ill
e(entually comprise the project plan* (erifying those details using measurement techni7ues* and
controlling changes to these processes$
Figure 3.3: Project 0cope Management
Project &ime $anagement
%he Project -ime Management kno'ledge area (see .igure 2$J! also has fi(e processes: 8cti(ity
@efinition* 8cti(ity 0e7uencing* 8cti(ity @uration /stimating* 0chedule @e(elopment* and
0chedule Control$
%his kno'ledge area is concerned 'ith estimating the duration of the project plan acti(ities*
de(ising a project schedule* and monitoring and controlling de(iations from the schedule$
Collecti(ely* this kno'ledge area deals 'ith completing the project in a timely manner$
In many cases* all of the acti(ity processes descri&ed here along 'ith schedule de(elopment are
completed as one acti(ity$ 0ometimes* only one person is needed to complete these fi(e
processes* and they"re all 'orked on at the same time$ %ime management is an important aspect
of project management as it concerns keeping the project acti(ities on track and monitoring those
acti(ities against the project plan to assure the project is completed on time$
Figure 3.4: Project %ime Management
Project %ost $anagement
8s its name implies* the Project .ost Management kno'ledge area (see .igure 2$:! centers
around costs and &udgets$ %he processes that make up this kno'ledge area are as follo's:
Fesource Planning* Cost /stimating* Cost Audgeting* and Cost Control$
%he acti(ities in the Project Cost Management kno'ledge area esta&lish estimates for costs and
resources and keep 'atch o(er those costs to ensure that the project stays 'ithin the appro(ed
&udget$ @epending on the comple#ity of the project* these processes might need the in(ol(ement
of more than one person$ .or e#ample* the finance person might not ha(e e#pertise in the
Fesource Planning area* so the project manager 'ill need to &ring in a staff mem&er 'ith those
skills to complete the Fesource Planning process$
Figure 3.7: Project Cost Management
Project =ualit" $anagement
%he Project /uality Management kno'ledge area (see .igure 2$K! assures that the project meets
the re7uirements that the project 'as undertaken to produce$ %hese processes measure o(erall
performance* and monitor project results and compare them to the 7uality standards set out in the
projectBplanning process to assure that the customer 'ill recei(e the product or ser(ice they
thought they purchased$
Project <uality Management is composed of the follo'ing three processes: <uality Planning*
<uality 8ssurance* and <uality Control$
Figure 3.8: Project <uality Management
Project /uman 0esource $anagement
Project 0uman 1esource Management (see .igure 2$C! in(ol(es all aspects of people
management and personal interaction including leading* coaching* dealing 'ith conflict* and
more$ 0ome of the project participants 'hom you"ll get to practice these skills on include
stakeholders* team mem&ers* and customers$ /ach re7uires the use of different communication
styles* leadership skills* and teamB&uilding skills$ 8 good project manager kno's 'hen to enact
certain skills and communication styles &ased on the situation$
%he Project 6uman Fesource kno'ledge area contains the follo'ing processes: =rgani-ational
Planning* 0taff 8c7uisition* and %eam @e(elopment$
Figure 3.9: Project 6uman Fesource Management
Project %ommunications $anagement
%he processes that make up the Project .ommunications Management kno'ledge area (see
.igure 2$L! are as follo's: Communications Planning* Information @istri&ution* Performance
Feporting* and 8dministrati(e Closure$
%he processes in the Project Communications kno'ledge area are related to general
communication skills &ut aren"t the same thing$ Communication skills are considered general
management skills that the project manager utili-es on a daily &asis$ %he processes in the
Communications kno'ledge area seek to ensure that all project information including project
plans* risk assessments* meeting notes* and more is collected and documented$ %hese
processes also ensure information is distri&uted and shared 'ith appropriate stakeholders and
project mem&ers$ 8t project close* the information is archi(ed and used as a reference for future
projects$ %his is referred to as historical information in se(eral project processes$
Figure 3.;: Project Communications Management
Project 0is# $anagement
Project 1is& Management (see .igure 2$E! contains si# processes: Fisk Management Planning*
Fisk Identification* <ualitati(e Fisk 8nalysis* <uantitati(e Fisk 8nalysis* Fisk Fesponse Planning*
and Fisk Monitoring and Control$
8s the name of this kno'ledge area implies* these processes are concerned 'ith identifying and
planning for potential risks that may impact the project$ =rgani-ations 'ill often com&ine se(eral
of these processes into one step$ .or e#ample* Fisk Identification* <ualitati(e Fisk 8nalysis* and
<uantitati(e Fisk 8nalysis might &e performed at the same time$ %he important thing a&out this
process is that you should stri(e to identify all the risks and de(elop responses for those 'ith the
greatest conse7uences to the project o&jecti(es$
Figure 3.>: Project Fisk Management
Project Procurement $anagement
%he Project Procurement Management kno'ledge area (see .igure 2$N! includes the processes
in(ol(ed 'ith purchasing goods or ser(ices from e#ternal (endors* contractors* and suppliers$
+hen discussing the Procurement Management processes* it"s assumed that the discussion is
taking place from the perspecti(e of the &uyer$ 8s the project manager* you 'ould &e the &uyer
purchasing the goods or ser(ices from a supplier or contractor* so these processes should &e
e#amined from that perspecti(e$
%he processes in the Project Procurement Management kno'ledge area are as follo's:
Procurement Planning* 0olicitation Planning* 0olicitation* 0ource 0election* Contract
8dministration* and Contract Closeout$
%he PMP e#am 'ill most likely ha(e a 7uestion or t'o regarding the processes that make up a
kno'ledge area$ Femem&er that kno'ledge areas &ring together processes &y commonalities*
so thinking a&out the kno'ledge area itself should tip you off to the processes that &elong to it$
Projects are e#ecuted in process group order* &ut the kno'ledge areas allo' a project manager
to think a&out groups of processes that re7uire specific skills$ %his makes the jo& of assigning
resources easier &ecause team mem&ers 'ith specific skills might &e a&le to 'ork on and
complete se(eral processes at once$
Figure 3.?: Project Procurement Management
%he remainder of this &ook 'ill deal 'ith processes and process groups as they occur in life cycle
order (i$e$* Initiation* Planning* /#ecuting* Controlling* and Closing! as this is the 'ay you 'ill
encounter and manage them during a project$
De!ining the Project Initiation Process
,our company"s 7uarterly meeting is scheduled for today$ ,ou take your seat* and each of the
department heads gets up and starts gi(ing their usual 4ain"t this great5 rahBrah speech one after
the other$ ,ou &arely notice that the C/= takes the stage$ 6e starts out his part of the program
pretty much the same 'ay the department heads did$ 0uddenly* your daydreaming trance is
shattered 'hen you hear the C/= say* 4;and the ne' phone system 'ill &e installed &y
%hanksgi(ing$5
+ait a minute$ ,ou 'ork in the telecom department and ha(en"t heard a 'ord a&out this project
until today$ ,ou also ha(e a funny feeling that you"(e &een elected to manage this project$ It"s
ama-ing ho' good communication skills are so important for project managers &ut not;'ell* 'e
'on"t go there$
Project Initiation
Project ,nitiation is the formal recognition that a project should &egin and resources should &e
committed to the project$ >nfortunately* many projects are initiated the 'ay our C/= did in this
e#ample$ /ach of us* at one time or another* has e#perienced &eing handed a project 'ith little to
no information and told to 4make it happen$5 %he ne' phone system scenario is an e#cellent
e#ample of ho' not to initiate a project$
%aking one step &ack from Initiation leads us to ask* 46o' do projects come a&out in the first
place9 @o C/=s just make them up like in this e#ample95 /(en though our C/= announced this
ne' project at the company meeting 'ith no fore'arning* there is no dou&t it came a&out as a
result of a legitimate need$ Aelie(e it or not* C/=s don"t just dream projects up to gi(e us all
something to do$ %hey"re concerned a&out the future of the company and the needs of the
&usiness and its customers$
%he &usiness itself might dri(e the need for a project* customers might demand changes to
products* or legal re7uirements may create the need for a ne' project$ 8ccording to the Guide to
the PMBOK* projects come a&out as a result of one of si# needs or demands$
Nees an Demans
=rgani-ations e#ist to generate profits or ser(e the pu&lic$ %o stay competiti(e* organi-ations are
al'ays e#amining ne' 'ays of creating &usiness* &etter 'ays of gaining efficiencies* or &etter
'ays to ser(e their customers$ 0ometimes la's are passed to force organi-ations to make their
products safer or to protect the en(ironment$ Projects result from all of these needs$ Most projects
'ill fit one of the si# needs or demands descri&ed &elo'$ It is those needs andOor demands that
dictate the germination of a project$ In the follo'ing sections* let"s take a closer look at each of
these areas$
$ar#eting Deman
%he demands of the marketplace can dri(e the need for a project$ .or e#ample* a &ank initiates a
project to offer customers the a&ility to apply for mortgage loans o(er the Internet due to a drop in
interest rates and an increase in demand for refinances and ne' home loans$
+usiness Nee
%he ne' phone system 'e talked a&out earlier that 'as announced at the 7uarterly meeting
came a&out as a result of a &usiness need$ %he C/=* on ad(ice from his staff* 'as ad(ised that
call (olumes 'ere ma#ed on the e#isting system$ +ithout a ne' system* customer ser(ice
response times 'ould suffer* and that 'ould e(entually affect the &ottom line$
%ustomer 0equest
Customer re7uests run the gamut$ 1enerally speaking* most companies ha(e customers* and
their re7uests can dri(e ne' projects$ Customers can &e internal or e#ternal to the organi-ation$
1o(ernment agencies don"t ha(e e#ternal customers per se ('e"re capti(e customers at any
rate!* &ut there are internal customers 'ithin departments and across agencies$
Perhaps you 'ork for a company that sells remittanceBprocessing e7uipment and you"(e just
landed a contract 'ith a local utility company$ %his project is dri(en &y the need of the utility
company to automate their process* or upgrade their e#isting process$ %he utility company"s
re7uest to purchase your e7uipment and consulting ser(ices is the project dri(er$
&echnological 1vance
@o you happen to o'n one of those electronic personal digital assistants9 %hey keep names and
addresses handy and usually come 'ith a calendar and a toBdo list of some kind$ I couldn"t li(e
'ithout mine$ 6o'e(er* there is al'ays a ne'er* &etter (ersion coming to market$ %he
introduction of satellite communications no' allo's these little de(ices to connect to the +e& or
get eBmail almost any'here in the 'orld$ %he introduction of the satellite communications a&ility is
an e#ample of a technological ad(ance$ @ue to this introduction* electronics manufacturers
re(amped their products to take ad(antage of this ne' technology$
.egal 0equirement
Pri(ate industry as 'ell as go(ernment agencies generate ne' projects as a result of la's
passed e(ery legislati(e season$ .or e#ample* ne' sales ta# la's might re7uire modifications or
ne' programming to the e#isting sales ta# system$ %he re7uirement that food la&els appear on
e(ery package descri&ing the ingredients and the recommended daily allo'ances of certain
(itamins is another e#ample of a project dri(en &y legal re7uirements$
'ocial Nee
%he last need is a result of social demands$ .or e#ample* perhaps a de(eloping country is
e#periencing a fastBspreading disease that"s infecting large portions of the population$ Medical
supplies and facilities are needed to (accinate and cure those infected 'ith the disease$ 8nother
e#ample might include cleaning up 'aste products from the 'ater supply of manufacturing plants
prior to putting the 'ater &ack into a local ri(er or stream to pre(ent contamination$
Project Initiation Process
Initiation is part of the Project 0cope Management kno'ledge area$ 8s 'e"(e learned* this
kno'ledge area deals 'ith identifying a project* the stakeholders* and the project re7uirements$
%he Initiation process lays the ground'ork for the Planning process group that follo's Initiation$ 8
high percentage of projects fail due to poor planning or no planning$ Properly planning your
project up front dramatically increases the project"s chance for success$ 0ince Initiation is the
foundation of Planning* the importance of Initiation is self e(ident$
%he project Initiation process has se(eral inputs: product description* strategic plan* project
selection criteria* and historical information$ /ach of these inputs is processed using tools and
techni7ues to produce the final outputs* one of 'hich is the project charter$ Go'* 'e"ll e#amine
each of these inputs in a &it more detail$
Prouct Description
8s you might deduce* the product description descri&es the product$ %he product description
should &e documented and should clearly outline the characteristics of the product or ser(ice$
%his description should also include the &usiness need that"s dri(ing the reason for the project$
Product descriptions contain less detail in the early phases of a project and more detail as the
project progresses$ Product details are progressi(ely ela&orated to come up 'ith the final product
description$ It 'ill contain the greatest amount of detail at the project /#ecution process$
+hen a project is performed under contract* typically the &uyer of the product or ser(ice 'ill
pro(ide the product description to the (endor or contractor$ %he product description ser(es as a
statement of 'ork 'hen the project is contracted to a (endor$ 8 statement of 'ork descri&es the
product or ser(ice in enough detail so that the (endor can accurately price the contract and
satisfactorily fulfill the re7uirements of the project$ %he statement of 'ork is co(ered in more detail
in Chapter C$
'trategic Plan
Part of the responsi&ility of a project manager during the Initiation process is to take into
consideration the company"s strategic plan$ Perhaps the strategic plan states that one of the
company goals is to &uild 1K ne' stores &y the end of the fiscal year$ If the project your company
is considering undertaking is to install a ne' human resources soft'are system* it 'ould make
sense to 'rite the re7uirements for your project 'ith the 1K ne' stores in mind$ ,our
management team 'ill refer to the strategic plan 'hen choosing 'hich ne' projects to initiate
and 'hich ones to drop depending on their relationship to the strategic (ision of the company$
Project 'election %riteria
Project selection in(ol(es making determinations regarding 'hich projects to accept or reject
&ased on criteria such as financial data* sales potential in the marketplace* etc$ %his su&ject 'ill
&e dealt 'ith more thoroughly in Chapter J$
/istorical In!ormation
6istorical information can &e (ery useful to project managers and to stakeholders$ +hen you"re
e(aluating ne' projects* historical information a&out pre(ious projects of a similar nature can &e
(ery handy in determining if the ne' project should &e accepted and initiated$ 6istorical
information on an acti(e project gathered and documented during the project can &e e#amined to
assist in determining 'hether the project should proceed to the ne#t phase$ 6istorical information
'ill help you in determining project goals* 'ith estimating acti(ities* and during the projectB
planning processes$ ,ou"ll find that historical information is an input to se(eral processes $
Developing a Project Overview
=ne of the first steps a project manager 'ill take in the Initiation process is to de(elop a project
o(er(ie'$ 0ome organi-ations call this a project concept document$ %he four inputs descri&ed in
the last section 'ill help to outline the project o(er(ie' and 'ill &e used again 'hen formulating
the final project charter$
It should &e noted that the Guide to the PMBOK holds the (ie' that a project manager is
identified and assigned at the completion of the Initiation process$ +hile sometimes that"s true* in
practice it"s common that the project manager is in(ol(ed at the &eginning of the Initiation process
and assists 'ith the project o(er(ie' and informationBgathering tasks$
8t the completion of the Initiation process* the organi-ation has committed to fund the project and
pro(ide the necessary resources to carry it out* or has killed the project$ %he project has the
lo'est pro&a&ility of succeeding during Initiation$ %hat"s &ecause no action has &een taken
regarding project acti(ities$ In other 'ords* you ha(en"t actually &egun to produce the product of
the project$ <uite a &it of 'ork 'ill ha(e gone into the project at this stage* &ut most of it regards
the o(er(ie' of the project and the &usiness justification for the project$ %he stakeholders ha(e
greatest a&ility to influence project outcome at this stage &ecause nothing has &een cast in stone
yet$ %here is still time for them to negotiate re7uirements and deli(era&les$ Fisk is highest during
Initiation &ecause any num&er of things can happen &et'een no' and the time the project is
completed$ %he project might not &e appro(ed* the funding might not &e appro(ed* the strategic
direction of the company could change and the project no longer fits in 'ith the ne' (ision* the
customer could change her mind* etc$ %his list could &ecome 7uite lengthy$
Project failure can &e controlled and minimi-ed &y accurately applying project management
techni7ues to your project and &y proper planning$
0eal Worl 'cenario5&he DietA%ola $ar#eting Opportunit"
/li-a&eth is the project manager for a large soft drink &e(erage company located in %allahassee*
.lorida$ =ne sunny morning* Foger Aruist* the marketing (ice president* pays her a (isit$
4I asked your &oss if it 'as okay to directly talk to you a&out this project?she said it 'ould &e
fine*5 he starts$ 48s you"(e pro&a&ly heard* 'e"re test marketing a ne' dietBcola opportunity that
'e thought 'ould &e a &ig seller$ Dong story short* I had lunch the other day 'ith a friend of mine
from the clu&$ 6e ordered his usual diet cola &ut re7uested three slices of lemon 'ith it$ I stared
at him 'hile he s7uee-ed those lemons into his diet and dunked the last rind into the mi#$ +ell* I
ha(e to tell you the taste is fa&ulous2
4+e"(e toyed around 'ith the e#act lemonBtoBcola mi#ture in the la& and ha(e come up 'ith 'hat
'e think is the optimum mi# that results in the tastiness factor 'e"re looking for$
4+e"(e 'orked together* and I kno' your 'ork is topBnotch$ +hat 'e"d like for you to do is put
together a project that test markets our ne' soda in three test areas$ +e 'ant to target markets
that utili-e a lot of diet soda$ +e think the &est places to target 'ould &e @en(er* Das 3egas* and
the 0eattle area$
4+e 'ant a project plan that details the distri&utors 'e"ll send the soda to and ho' 'e"ll o&tain
the demographics 'e"re looking for$ My department 'ill supply you 'ith the marketing profiles
and plans you need to implement in your project plan$ +e"d also like a page added to the
company"s 'e&site that talks a&out the ne' &e(erage$ %he project should also include key
players from the Gational 0oft @rink 8ssociation and ha(e a large* splashy intro on their 'e&site
as 'ell$ ,ou can (isit their site at www.nsda.org$P
8s a project manager* you 'ill often ha(e projects presented to you that are &arely past the &igB
picture stage$ Foger has a good idea of ho' he 'ants to test market this ne' product* &ut many
other processes must come into play here such as planning* &udgeting* risk assessment*
reporting* and so on$ 8 lot of energy is focused on the (ision of the project and the 'ants and
needs of the stakeholders$ It"s your jo& to take the (ision* e#amine the needs of all the
stakeholders including Foger"s* and &ring the (ision to fruition$
Determining the Project )oals
0e(eral terms are tossed a&out and sometimes used interchangea&ly 'hen talking a&out
projects$ %hey are 'ords such as goals (sometimes called o&jecti(es!* re7uirements* and
deli(era&les$ %heir meanings are sometimes &lurred together* &ut there is some differentiation
&et'een these terms$ 1oals and o&jecti(es are the purpose for undertaking the project* and they
descri&e the final result of the project$ 4Increase 'arehouse space to house the ne' product line
for distri&ution5 or 4pro(ide faster turnaround times on loan application ser(ices5 are &oth
e#amples of goals$ In other 'ords* the purpose for the project is to do something or accomplish
something?a goal$
Project )oals
1oals descri&e the what it is you"re trying to do* accomplish* or produce$ 1oals and o&jecti(es
should &e stated in tangi&le terms$ If your goal is to increase 'arehouse space* it 'ould &e &etter
to say the goal is to &uild four ne' 'arehouses$ @escri&ing the num&er of ne' 'arehouses to &e
&uilt is specific and tangi&le$ .or that reason* 'e"ll kno' the project is completed 'hen this goal is
met$ %he goal of offering faster loan appro(als might &e &etter stated that the company 'ill
pro(ide loan applications o(er the Internet to speed the application process$
%here"s no hard and fast rule here$ 1oals and o&jecti(es can &e com&ined and simply called
goals$ +hat"s important is that you come a'ay understanding 'hat the end purpose of the project
is and ho' to identify 'hen it"s &een accomplished$
,ou"(e pro&a&ly seen this acronym regarding goal setting a do-en times* &ut it"s 'orth repeating$
1oals should follo' the 0M8F% rule:
'5'peci!ic 1oals should &e specific and 'ritten in clear* concise* understanda&le terms$
$5$easura-le 1oals should &e measura&le$
151ccurate 1oals should &e accurate and should descri&e precisely 'hat"s re7uired$
050ealistic an tangi-le 1oals that are impossi&le to accomplish are not realistic and not
attaina&le$ 1oals must &e centered in reality$ It"s not likely you and I 'ill &e sending up rocket
ships full of chocolate candies to sell to tourists (isiting the moon anytime soon$
&5&ime -oun 1oals should ha(e a time frame 'ith an end date assigned to them$
6mm* this all sounds familiar$ It seems there are some similarities &et'een goal setting and ho'
'e descri&e and document projects$ Det"s look at that acronym again from a project perspecti(e:
'5'peci!ic %he project goals are specific and stated in clear* concise* understanda&le terms
and are documented in the project charter and scope statement$ Projects e#ist to &ring a&out a
uni7ue* specific product or ser(ice that hasn"t e#isted &efore$
$5$easura-le %he deli(era&les of the project or project phase are measura&le against
(erifia&le outcomes or results$
151ccurate %he (erification and measurement of re7uirements and deli(era&les are used to
determine accuracy and also to ascertain if the project is on track according to the project plan$
050ealistic an tangi-le Projects are uni7ue and produce tangi&le products or ser(ices$ %he
triple constraints of any project help to define realistic goals and realistic re7uirements &ased on
the limitations the constraints put on the project$
&5&ime -oun Projects are performed in specific time frames 'ith a definite &eginning and
definite end date$
Project 0equirements
1e"uirements are not the same as goals and o&jecti(es$ Fe7uirements are specifications of the
goal or deli(era&les$ Fe7uirements help ans'er the 7uestion* 46o' 'ill 'e kno' it"s successful95
Fe7uirements are the specifications or necessary prere7uisites that make up the product or
ser(ice you"re producing$ Det"s say you"re &uilding those four 'arehouses$ 0ome of the
re7uirements might &e the s7uare footage of each &uilding* the num&er of loading docks* the
location of the 'arehouses* etc$
Project Delivera-les
@eli(era&les are measura&le outcomes* measura&le results* or specific items that must &e
produced to consider the project or project phase completed$ @eli(era&les* like goals* must &e
specific and (erifia&le$ 8 manufacturing unit that is part of a larger project might &e re7uired to
produce 'idgets 'ith a JBinch diameter$ %hese 'ill in turn &e assem&led into the final product$
%his deli(era&le is specific and measura&le$ 6o'e(er* if the deli(era&le 'as not documented or
not communicated to the manager responsi&le for the manufacturing unit* there could &e a
disaster 'aiting to happen$ If they deli(er 2Binch 'idgets instead of the re7uired JBinch (ersion* it
'ould thro' the entire project off schedule or* perhaps* cause the project to fail$ %his could &e a
careerBlimiting mo(e for the project manager &ecause it"s the project manager"s responsi&ility to
document deli(era&les and monitor the progress of those deli(era&les throughout the project or
project phase$
8 project phase can ha(e multiple deli(era&les$ 8s in the e#ample a&o(e* if you are assem&ling a
ne' product 'ith many parts* each of the parts could &e considered independent deli(era&les$
%he &ottom line is this: Go matter ho' 'ell you apply your project skills* if the 'rong deli(era&les
are produced or the project is managed to the 'rong goals* you 'ill ha(e an unsuccessful project
on your hands$
'ta#eholers
Go' 'e"re ready to identify and talk to those stakeholders a&out the project and get more
specifics regarding the goals and deli(era&les of the project$ =ur o&jecti(e at this point is to
compile a project o(er(ie'* or project definition$ %he o(er(ie' 'ill ha(e enough information to
descri&e the project* the &usiness re7uirements* the project"s o&jecti(es* and ho' 'e"ll recogni-e
'hen the project is successfully completed$
%hink of stakeholders and project participants as a highly polished orchestra$ /ach participant
has a part to play$ 0ome play more than others$ 8nd alas* some play their parts &etter than
others$ 8n integral part of project management is getting to kno' your stakeholders and the parts
they play$ ,ou"ll remem&er from Chapter 1 that stakeholders are those people or organi-ations
'ho ha(e a (ested interest in the outcome of the project$ %hey ha(e something to either gain or
lose as a result of the project$ 8ccording to the Guide to the PMBOK* stakeholders are officially
identified in the Planning process$ In practice* key stakeholders 'ill ha(e to &e contacted early on
to get their input for the project o(er(ie'* goals* and deli(era&les$
Identifying key stakeholders at this point should &e fairly easy$ 0takeholders might include the
project sponsor* the customer ('ho might &e one in the same as the project sponsor!* the project
manager* project team mem&ers* management personnel* contractors* suppliers* etc$
0takeholders can &e internal or e#ternal to the organi-ation$ =ne 'ay to unco(er stakeholders
'hom you might not ha(e thought a&out right at the start is to ask kno'n stakeholders if they"re
a'are of anyone else that might &e impacted &y this project$ 8sk team mem&ers if they"re a'are
of stakeholders 'ho ha(en"t &een identified$ 0takeholders might come to the forefront once you
start unco(ering some of the goals and deli(era&les of the project also$
@on"t forget important stakeholders$ %hat could &e a project killer$ Dea(ing out an important
stakeholder* or one 'hose &usiness processes 'eren"t considered during project Initiation and
Planning* could spell disaster for your project$ Got to mention it could &e another one of those
careerBlimiting mo(es for the project manager$
It"s important for the project manager to understand each stakeholder"s role in the project and
their role in the organi-ation$ 1et to kno' them and their interests$ @etermine the relationship
structure among the (arious stakeholders$ 0tart culti(ating partnerships 'ith these stakeholders
no' as it"s going to get pretty co-y during the course of your project$ If you esta&lish good
'orking relationships up front and learn a little a&out their &usiness concerns and needs* it might
&e easier to negotiate or moti(ate them later on 'hen you ha(e a pressing issue that needs
action$ )no'ing 'hich stakeholders 'ork 'ell together and 'hich don"t can also help you in the
future$ =ne stakeholder may ha(e the authority or influence to t'ist the arm of another*
figurati(ely speaking of course$ =r con(ersely* you might kno' of t'o stakeholders 'ho act like
oil and 'ater 'hen put into the same room together$ %his can &e (alua&le information to keep
under your hat for future reference$
%ommunicating with 'ta#eholers
Go' those finely honed communication skills are going to come in handy$ In order to determine
the specific goals of your project* you"ll 'ant to meet 'ith each of the key stakeholders and
document their ideas of the project goals$ It"s also a good idea at this point to gain an
understanding of their needs and concerns regarding the project$ 8sk them 'hy the project is
needed$ 8sk 'hat &usiness process the project 'ill change* enhance* or replace$ Perhaps the
e#isting &usiness processes* and the systems that support them* are so old that little
documentation e#ists for them$ @etermine if there is a critical &usiness need for this project or if
it"s a 4nice to ha(e5 as 'e say around our office$ +hat 'ill &e the result of this project9 +ill
customer ser(ice &e impro(ed* or sales increased9 .ind out 'hat pre(ents the stakeholders
today from achie(ing the results they hope the project 'ill accomplish$ 8sk a&out the deli(era&les
and ho' they can &e (erified and measured$ 8nd al'ays ask the stakeholder ho' they 'ill kno'
that the project 'as completed successfully$
Femem&er that the definition of a successful project is one that meets or e#ceeds stakeholders"
e#pectations$ >nderstand and document those e#pectations and you"re off to a good start$ +e"ll
talk a&out managing to those e#pectations in a later chapter$
=ne 'ay to help identify project goals is to talk a&out 'hat is not included in a project$ .or
e#ample* let"s say you"re 'orking on a high'ay project to create a ne' onBramp from a do'nto'n
city street$ %he goal of this project is to ha(e a ne' onBramp constructed and ready for traffic in 1E
months from the project start date$ 0pecifically e#cluded from this project is the demolition of a
deteriorating &ridge adjacent to the ne' onBramp$ Make sure you state this in the project
o(er(ie'$
&he Project Overview Document
%he project o(er(ie' document is a highBle(el look at the project goals and deli(era&les$ It ser(es
the purpose of capturing the intended outcome of the project and its deli(era&les$ It 'ill pro(ide a
&rief &ackground of the project and descri&e the &usiness opportunity the company is attempting
to capitali-e on$ It 'ill also descri&e the &usiness o&jecti(es the project should meet$ %he
o(er(ie' lays the ground'ork for future consensus on deli(era&les and project e#pectations$
0ome organi-ations 'ill re7uire a feasi&ility study at this point in the project$ 2easi$ility studies
are undertaken for se(eral reasons$ =ne is to determine if the project is a (ia&le project$ %hey"ll
also determine the pro&a&ility of the project succeeding$ .easi&ility studies can also e#amine the
(ia&ility of the product of the project$ .or e#ample* the study might ask* 4+ill the ne' lemonB
fla(ored soda &e a hit9 =r* is it marketa&le95 %he study might also look at the technical issues
related to the project and determine if the technology proposed is feasi&le* relia&le* and easily
assimilated into the organi-ation"s e#isting technology structure$
%he group of people conducting the feasi&ility study should not &e the same ones 'ho 'ill 'ork
on the project$ Project team mem&ers may ha(e &uiltBin &iases to'ard the project and 'ill tend to
influence the feasi&ility outcome to'ard those &iases$
0eal Worl 'cenario5&he Interactive Boice 0esponse &a6AFiling '"stem
Hason* 0am* and )ate are 'e& programmers 'orking for the @epartment of Fe(enue in the 0tate
of Aliss$ Fon* their manager* approaches them one day 'ith an idea$
4%eam* &usiness unit managers are thinking it 'ould &e a great idea to offer ta#payers the a&ility
to file their income ta# o(er the telephone$ +e already offer them the a&ility to file on the Internet*
thanks to all your efforts on that project last year$ It"s &een a fa&ulous success$ Go other state has
had the success that Aliss has had 'ith our Internet system$
4)ate* I kno' you"(e had pre(ious e#perience 'ith I3F technology* &ut I"m not sure a&out you
guys* so this is ne' territory for us$ I"d like to hear 'hat each of you thinks a&out this project$5
Hason speaks up first$ 4I think it"s a great idea$ ,ou kno' me* I"m al'ays up for learning ne'
things* especially 'hen it comes to programming$ +hen can 'e start95
0am echoes Hason"s comments$
4%his technology is pretty sophisticated*5 )ate says$ 4Hason and 0am are e#cellent coders and
could 'ork on the programming side of things* &ut I 'ould ha(e to pick up the telephony piece on
my o'n$ 8fter 'e"re up and running* 'e could go o(er the telephony portions step &y step so
Hason and 0am can help me support it going for'ard$ I"d really like to take on this project$ It
'ould &e good for the team and good for the department$5
Fon thinks for a minute$ 4I think a feasi&ility study is in order$ %he senior director o(er the ta#
&usiness unit doesn"t kno' if this project is cost justified and has some concerns a&out its life
span$ Dooks like 'e might ha(e some technical issues to deal 'ith on our side* and I don"t 'ant
)ate going it alone 'ithout first e#amining all the impacts$5
Go' that 'e"(e fleshed out the project goals and ha(e a highBle(el (ie' of the deli(era&les* it"s
time for the ne#t step$ Aut ne(er fear* 'e"ll &e re(ie'ing goals and refining deli(era&les o(er the
ne#t fe' chapters$ +e"ll also &e using them to help formulate re7uirements and project estimates$
Aut 'e"re getting ahead of oursel(es$ +e need to constrain this chapter to the topic at hand$
+hich &rings up the ne#t topic?project constraints$
Ienti!"ing the Project %onstraints
+e introduced the triple constraints in Chapter 1$ %hey are time* &udget* and 7uality$ 8ll project
managers ha(e to deal 'ith these constraints in all projects$ Go project manager I kno' has e(er
&een gi(en unlimited funding and unlimited time to produce a perfect product$ In reality* if 'e
'ere gi(en unlimited funding and unlimited time* some of us pro&a&ly 'ouldn"t accomplish much$
%his is especially true for all of you out there 'ho are the perfectionist types$ Hust t'eak this and
then t'eak that* it 'ill &e perfect ne#t iteration;I kno' &ecause I"m one of you2
.onstraints are one of the outputs of the Initiation process$ Constraints are anything that either
restricts the actions of the project team or dictates the actions of the project team$ Constraints put
you in a &o#$ (I hope you"re not claustropho&ic$! 8s a project manager* you ha(e to manage to the
project constraints* 'hich sometimes re7uires creati(ity$ Dike most disciplines* project
management is as much art as it is science$
&"pes o! %onstraints
8s I said* time can &e a project constraint$ %his usually comes in the form of an enforced
deadline* commonly kno'n as the 4make it happen no'5 scenario$ If you are in charge of the
company"s holiday &ash scheduled for @ecem&er 10* your project is time constrained$ =nce the
in(itations are out and the hall has &een rented* you can"t mo(e the date$ 8ll acti(ities on this
project are dri(en &y the due date$
Audgets are another one of the triple constraints$ Audgets limit the project team"s a&ility to o&tain
resources and might potentially limit the scope of the project$ .or e#ample* component Q cannot
&e part of this project &ecause the &udget doesn"t support it$
<uality 'ould typically &e restricted &y the specifications of the product or ser(ice$ %hose JBinch
'idgets 'e talked a&out earlier could &e considered a 7uality constraint$ Most of the time* if
7uality is a constraint* one of the other constraints? time or &udget?has to ha(e some gi(e$ ,ou
can"t produce high 7uality on a restricted &udget and 'ithin a tightly restricted time schedule$ =f
course* there are e#ceptions* &ut only in the mo(ies$
0chedule constraints can cause interesting dilemmas for the project manager$ .or e#ample* say
you"re the project manager in charge of &uilding a ne' foot&all stadium in your city$ %he
construction of the stadium 'ill re7uire the use of cranes?and crane operators?at certain times
during the project$ If crane operators are not a(aila&le 'hen your project plan calls for them* you"ll
ha(e to make schedule adjustments so that the crane operators can come in at the right time$
%echnology is a mar(elous thing$ In fact* ho' did humans sur(i(e prior to the in(ention of
computers and cell phones9 %echnology certainly can &e mar(elous* &ut it can also &e a project
constraint$ .or e#ample* your project might re7uire the use of &randBne' technology that is still so
ne' it"s not &een released on a 'ideBscale &asis$ =ne impact might &e that the project 'ill take
an additional si# months &ecause e#isting technologies need to &e used instead of the ne'
technology$
@irecti(es from management can &e constraints as 'ell$ If you"(e ne(er e#perienced a directi(e
from management* you"re not 'orking in the real 'orld$ 8nd* 'hen performing 'ork on contract*
the pro(isions of the contract can &e constraints$
$anaging %onstraints
Constraints* particularly the triple constraints* can &e used to help dri(e out the goals of the
project$ If it"s difficult to discern 'hich constraint is the primary constraint* ask the project sponsor
something like this* 4Ms$ 0ponsor* if you could only ha(e one of these t'o alternati(es* 'hich
'ould you choose9 %he project is deli(ered on the date you"(e stated* or the 7uality is
manufactured to the e#act specifications you"(e gi(en$5 If Ms$ 0ponsor replies 'ith the 7uality
response* you kno' your primary constraint is 7uality$ If push comes to sho(e during the project
Planning process* time might ha(e to gi(e &ecause 7uality cannot$
Ae sure to document your constraints$ Constraints and assumptions* 'hich 'e"ll talk a&out in the
ne#t section* are used as inputs to other project processes$
,ou"ll 'ant to understand 'hat the primary constraint is on the project$ If you assume the primary
constraint is &udget 'hen in actuality the primary constraint is time* in the immortal 'ords of t'oB
yearBolds 'orld'ide* 4>hBoh$5 >nderstanding the constraints and 'hich one carries the most
importance 'ill help you out later on in the project Planning process 'ith things like scope
planning* scheduling* estimating* and project plan de(elopment$ %hat"s assuming your project
gets to the project Planning process$ +hich &rings us to the ne#t topic* project assumptions$
Ienti!"ing the Project 1ssumptions
,ou"(e pro&a&ly heard the old saying a&out the 'ord assume;something a&out 'hat it makes
out of 4u5 and 4me$5 In the case of project management* ho'e(er* thro' this old saying out the
'indo' &ecause it"s not true$
It"s essential to understand and document the assumptions you"re making* and your stakeholders
are making* a&out the project$ It"s also important to find out as many of the assumptions as you
can up front$ Projects can fail* sometimes after lots of progress has &een made on the project*
&ecause an important assumption 'as forgotten or the assumption 'as incorrect$
Assumptions are an output of the Initiation process and 'ill &e used as inputs to other processes
later in the project$
Documenting Cour 1ssumptions
Det"s say you make plans to meet your &uddy for lunch on .riday at 11:J0 at your fa(orite spot$
+hen .riday rolls around* you assume he"s going to sho' up* &arring any catastrophes &et'een
the office and the restaurant$ Project assumptions 'ork the same 'ay$ .or planning purposes*
you presume the e(ent or thing you"(e made the assumptions a&out is true* real* or certain$ .or
e#ample* you might assume that key resources 'ill &e a(aila&le 'hen needed on the project$
@ocument that assumption$ If Gancy is the one and only resource 'ho can perform a specific
task at a certain point in the project* document your assumption that Gancy 'ill &e a(aila&le and
run it &y her manager$ If Gancy happens to &e on a plane for 6elsinki at the time you thought she
'as going to &e 'orking on the project* you could ha(e a real pro&lem on your hands$
=ther assumptions could &e things such as (endor deli(ery times* product a(aila&ility* contractor
a(aila&ility* the accuracy of the project plan* the assumption that key project mem&ers 'ill
perform ade7uately* contract signing dates* project start dates* and project phase start dates$ %his
is not an e#hausti(e list &ut should get you thinking in the right direction$ 8s you inter(ie' your
stakeholders* ask them a&out their assumptions and document them$ >se &rainstorming
e#ercises 'ith your team and other project participants to come up 'ith additional assumptions$
%ry to (alidate your assumptions 'hene(er possi&le$ +hen discussing assumptions 'ith (endors*
make them put it in 'riting$ In fact* if the ser(ices or goods you"re e#pecting to &e deli(ered &y
your suppliers are critical to the project* include a clause in the contract to assure a contingency
plan in case they fail to perform$ .or e#ample* if you"re e#pecting 200 PCs to &e deli(ered*
configured* and installed &y a certain date* re7uire the (endor to pay the cost of rental e7uipment
in the e(ent they can"t deli(er on the promised due date$
Femem&er* 'hen assumptions are incorrect or not documented* it could cause pro&lems half'ay
through the project and might e(en &e a project killer$
&he <itchen /eaven Project %ase 'tu"
%his chapter 'ill introduce a case study that 'e"ll follo' throughout the remainder of the &ook$
,ou"ll find an updated case study closing out e(ery chapter$ %hey"re designed to sho' you ho' a
project manager might apply the material co(ered in the chapter to a realBlife project$ 8s happens
in real life* not e(ery detail of e(ery process is follo'ed during all projects$ Femem&er that the
processes from the Guide to the PMBOK that 'e"ll co(er in the remaining chapters are project
management guidelines$ ,ou 'ill often com&ine processes during your projects* 'hich allo's you
to perform se(eral steps at once$ %he case studies 'ill present situations or processes that you
might find during your projects and descri&e ho' one project manager resol(es them$
Project %ase 'tu": New <itchen /eaven 0etail 'tore
,ou are a project manager for )itchen 6ea(en* a chain of retail stores speciali-ing in kitchen
utensils* cook'are* dishes* small appliances* and some gourmet food stuffs such as &ottled
sauces and spices$ ,ou"re fairly ne' to the position* ha(ing &een hired to replace a PM 'ho
recently retired$
)itchen 6ea(en currently o'ns :N stores in J: states and Canada$ %he 'orld head7uarters for
)itchen 6ea(en is in @en(er* Colorado$ Counting fullBtime and partBtime employees* the company
employs 1K00 people* 200 of 'hom 'ork in the head7uarters office$
%he company has yearly earnings of M200 million 'ith a(erage profits on earnings of MJ0 million$
%he company is pu&licly held under the )63G ticker* and stock is currently at M1L$K0Oshare 'ith a
priceBtoBearnings ratio of 1K$E$
%he company"s mission statement reads this 'ay: 41reat gadgets for people interested in great
food$5
Fecently the (ice president of marketing came to pay you a (isit$ @irk Perrier is a (ery nice man*
'ell dressed* 'ith the formal air that you 'ould suspect a person in his capacity might ha(e$ 6e
shakes your hand and gi(es you a fresh* toothy smile$
4,ou may not ha(e heard* &ut 'e"(e decided to go for'ard 'ith our K0th store opening2 0ales are
up* and our ne' line of ceramic cook'are is a hot seller* no pun intended$ I don"t kno' if you"re
familiar 'ith our store philoBsophy* so let me take a moment to e#plain it$ +e like to place our
stores in neigh&orhoods that are some'hat affluent$ +e don"t seek out the 'ealthy shoppers* nor
do 'e place our shops in areas 'here only the 'ealthy tra(el$ Aut the plain fact is that most of
our shoppers ha(e incomes of o(er MK0*000 a year$ +e make an effort to place our stores in
areas 'here those folks normally shop$
48lso* unlike some of our competitors 'ho like to maintain a hoity3toity store persona* 'e"re more
interested in targeting the nongourmet customer* one 'ho"s interested in cooking &ut 'on"t &e
making Peking duck$ 0o* the stores are up&eat* and con(ey a little &it of country am&iance?kind
of a laidB&ack feel* if you 'ill$
4=ur ne#t store is going to &e right here in our home area?Colorado 0prings$ +e ha(e a store in
Aoulder and one in @en(er in the Cherry Creek area* &ut none do'n south$ Aecause this is going
to &e our K0th store* 'e plan on ha(ing a K0th grandBopening cele&ration 'ith the kind of
surprises and acti(ities you might e#pect for such a nota&le opening$
4=ur stores generally occupy from 2000 to :000 s7uare feet of retail space* and 'e typically use
local contractors for the &uildBout$ 8 store &uildBout usually takes 120 days from the date the
property has &een procured until the doors open to the pu&lic$ I can gi(e you our last opening"s
project plan so you ha(e a feel for 'hat happens$ ,our jo& 'ill &e to procure the property*
negotiate the lease* procure the shel(ing and associated store furnishings* get a contractor on the
jo&* and prepare the K0th store festi(ities$ My marketing folks 'ill assist you 'ith that last part$
4,ou ha(e si# months to complete the project$ 8ny 7uestions95
,ou take in a deep &reath and collect your thoughts$ @irk has just gi(en you a lot of information
'ith hardly a pause in &et'een thoughts$ 8 fe' initial things drift through your head 'hile you"re
reaching for your note&ook$
,ou 'ork in a functional organi-ation 'ith a separate projecti-ed department responsi&le for
carrying out projects of this nature$ ,ou"(e &een 'ith the company long enough to kno' that @irk
is high up there in the e#ecuti(e ranks and carries the authority and the po'er to make things
happen$ %herefore* @irk is the perfect candidate for project sponsor$
,ou gra& your note&ook and start documenting some of the things @irk talked a&out* clarifying
'ith him as you 'rite:
%he project goal is to open a ne' store in Colorado 0prings si# months from today$
%he store should &e located in an affluent area$
%he store 'ill carry the full line of products from utensils to gourmet food items$
%he grand opening 'ill &e accompanied &y lots of fanfare &ecause this is the K0th store
opening$
,ou ha(e a 7uestion or t'o for @irk$ %he first is* 4+ho are some of the other key stakeholders
'hom I should speak 'ith95
4%here"s Hake Peterson o(er facilities$ 6e"s in charge of store furnishings* shel(ing* things like
that$ 8ny supplies for the stores that aren"t retail products$ 6e can help out 'ith store &uildBouts*
too$ 6e super(ised our last eight stores and did a terrific jo&$
4Ficardo Famire- heads up our information technology area$ @on"t tell him I said this* &ut I"m not
(ery technical myself and don"t really kno' 'hat you"re going to need from Ficardo$ I do kno' he
takes care of 'iring and installing the pointBofBsale terminals* &ut you"ll ha(e to get 'ith Ficardo
for all the other details$5
48nyone else95 you ask$
4,ou should also talk to Hill =(erstreet* the director in charge of retail products$ 0he can help 'ith
the initial store stocking* and once the store is open* her group 'ill take o(er the ongoing
operations$ 8ll the district managers report to Hill$ 5
41reat* thanks$ Go' another 7uestion*5 you say$ 4Is time the dri(er on this project9 Is there a
special reason it has to open;let"s see I"m coming up 'ith the date of .e&ruary 1st95
4,es* 'e 'ant the store open the first 'eek in .e&ruary$ /arly .e&ruary is 'hen the 1arden and
6ome 0ho' conference hits the 0prings area$ +e"ll ha(e a trade sho' &ooth there$ +e kno'
from e#perience in other areas that our stores generally see a surge in sales during this month as
a result of the trade sho'$ It"s a great 'ay to get a lot of ad(ertising out there and let folks kno'
'here 'e"re located$5
4%ell me* @irk* is there a &udget set for this project yet95
4+e ha(en"t set a hard figure*5 @irk replies$ 4Aut again* from past e#perience 'e kno' it takes
any'here from M1$K to M2 million to open a ne' store$ 8nd 'e don"t 'ant to forget the &ig &ash at
grand opening$5
,ou thank @irk and tell him you"re going to contact Hake* Ficardo* and Hill to ask them a fe'
7uestions a&out the project goals$
@irk concludes 'ith* 4.eel free to come to me 'ith 7uestions or concerns at any time$5
,ou document 'hat you"(e learned so far in your project o(er(ie' document$ ,ou decide to eB
mail a summary of your notes to Hake* Ficardo* and Hill for their re(ie' &efore meeting 'ith them
personally$
Project %ase 'tu" %hec#list
Project )oal: %o open a ne' store in Colorado 0prings si# months from today$
Deman: Company data concludes that the )itchen 6ea(en consumers ha(e incomes of o(er
MK0*000 a year$ %he Colorado 0prings area is home to a large num&er of people 'ith that
income$ Currently* there is not a )itchen 6ea(en there* &ut there appears to &e a demand for
one$
Project 'ponsor: @irk Perrier* 3P of marketing$
'ta#eholers: Hake Peterson* Ficardo Famire-* and Hill =(erstreet$
Organi,ational 'tructure: .unctional organi-ation 'ith a separate projecti-ed department$
%onstraints: %ime$
1ssumptions:
8 store &uildBout usually takes 120 days$
Hill =(erstreet 'ill help 'ith the initial store stocking$
Hake Peterson 'ill super(ise o(er facilities and store &uildBouts as 'ell$
Ficardo Famire- 'ill pro(ide I% details$
%he &udget for the project 'ill &e any'here from M1$K to M2 million$
'ummar"
+e started out this chapter 'ith a discussion of the nine Project Management )no'ledge 8reas
from the Guide to the PMBOK$ )no'ledge areas &ring together the project processes that ha(e
things in common$ %his allo's the project manager the opportunity to assign resources 'ith
specific skills to multiple project processes$ 0ometimes these resources might &e a&le to com&ine
project processes and perform them as one acti(ity$
Projects come a&out as a result of one of si# needs or demands* according to the Guide to the
PMBOK marketing demand* &usiness need* customer re7uests* technological ad(ances* legal
re7uirements* and social needs$
Project Initiation is the first process in a project"s life cycle$ Initiation is the formal recognition that
a project* or project phase* should &egin and commits the organi-ation to dedicate resources to
the project$
%he Initiation process has four inputs: product description* strategic plan* project selection criteria*
and historical information$ %hese inputs are de(eloped using tools and techni7ues of the Initiation
process to produce the final outputs$
Project managers* according to the Guide to the PMBOK* are not identified and assigned until the
completion of the Initiation process$ In reality* project managers usually are identified at the
&eginning of the Initiation process$
%he project goal is the purpose for undertaking the project$ 1oals should &e 0M8F%: specific*
measura&le* accurate* realistic* and time &ound$ Projects can also &e defined using the 0M8F%
acronym$ Inter(ie' stakeholders to determine project goals and &egin to understand deli(era&les
of the project$
1et to kno' your stakeholders so that you understand the parts they play and ho' much
authority they ha(e$ It doesn"t hurt to also get familiar 'ith their position in the organi-ation* ho'
much po'er they ha(e* and ho' they interact 'ith other stakeholders$
Constraints can restrict or dictate the actions of the project team$ Constraints usually in(ol(e time*
&udget* and 7uality &ut can also include schedules* technology* and more$ @ocument your
constraints as they"ll &e used as inputs to future project processes$
%hro' out that old saying a&out assumptions and document these as 'ell$
(6am (ssentials
+e a-le to name the nine Project $anagement <nowlege 1reas. Project Integration
Management* Project 0cope Management* Project %ime Management* Project Cost
Management* Project <uality Management* Project 6uman Fesource Management* Project
Communications Management* Project Fisk Management* and Project Procurement
Management$
+e a-le to istinguish -etween the si6 nees or emans that -ring a-out project
creation. Marketing demand* &usiness need* customer re7uests* technological ad(ances* legal
re7uirements* and social needs$
+e a-le to enote the project Initiation inputs. Product description* strategic plan* project
selection criteria* and historical information$
+e a-le to ienti!" the purpose !or the project Initiation process. %o recogni-e the e#istence
of a ne' project or project phase* and to commit resources to &egin the project or project phase$
+e a-le to e!ine project constraints an assumptions. Project constraints limit the options of
the project team and restrict their actions$ 0ometimes constraints dictate actions$ %ime* &udget*
and 7uality are the most common constraints$ 8ssumptions are conditions that are presumed to
&e true or real$
<e" &erms
Aefore you take the e#am* &e certain you are familiar 'ith the follo'ing terms:
assumption Project
Management
)no'ledge 8reas
constraint Project Procurement
Management
feasi&ility study Project <uality
Management
Initiation Project Fisk
Management
Project
Communications
Management
Project 0cope
Management
Project Cost
Management
Project %ime
Management
Project 6uman
Fesource Management
re7uirement
Project Integration
Management
0eview =uestions
1. %he Project Integration Management kno'ledge area is made up of 'hich of the
follo'ing processes9
8$ Initiation* Project Plan @e(elopment* and Integrated Change Control
A$ Project Plan @e(elopment* Project Plan /#ecution* and Integrated Change
Control
C$ Project Plan @e(elopment* Initiation* and 0cope Planning
@$ Initiation* 0cope Planning* and Integrated Change Control
3. +hen a project is &eing performed under contract* the product description is pro(ided
&y 'hich of the follo'ing9
8$ %he &uyer
A$ %he project sponsor
C$ %he project manager
@$ %he contractor
4. ,ou are the project manager for .un @ays (acation packages$ ,our ne' project
assignment is to head up the .un @ays resort opening in 8ustin* %e#as$ ,ou are
estimating the duration of the project plan acti(ities* de(ising the project schedule* and
monitoring and controlling de(iations from the schedule$ +hich of the Project
Management )no'ledge 8reas are you 'orking in9
8$ Project 0cope
A$ Project <uality
C$ Project Integration
@$ Project %ime
7. %he Project 6uman Fesource Management kno'ledge area contains 'hich of the
follo'ing processes9
8$ 0taff 8c7uisition* %eam @e(elopment* and Fesource Planning
A$ 0taff 8c7uisition* %eam @e(elopment* and Performance Feporting
C$ =rgani-ational Planning* 0taff 8c7uisition* and %eam @e(elopment
@$ =rgani-ation Planning* %eam @e(elopment* and Fesource Planning
8. ,our company is going to introduce a ne' ser(ice called Phone 6ome$ %his ser(ice
'ill allo' you to speak the name of the person you 'ant to call into your cellular
phone$ %o call home* you 'ould simply speak the 'ord home into the phone* and it 'ill
dial that num&er for you$ ,our company is taking ad(antage of the progress that has
&een made recently 'ith (oice recognition soft'are$ Initial projections sho' that
market demand is (ery high for this product$ %his project came a&out as a result of
'hich of the follo'ing9
8$ Marketing demand
A$ Customer re7uest
C$ Ausiness need
@$ %echnological ad(ance
9. ,ou are a project manager for the information technology di(ision of a local satellite %3
&roadcasting company$ %his spring* the chief information officer for your company
ga(e you the project to con(ert and upgrade all the PCs in the department to the latest
release of a specific desktop application$ Prior to this con(ersion* all manner of
desktop soft'are e#isted on machines throughout the company and had caused
increasing pro&lems 'ith sharing files and information across the company$ 8 lot of
unproducti(e hours 'ere spent typing information into se(eral formats$ %his project
came a&out as a result of 'hich of the follo'ing9
8$ %echnological ad(ance
A$ Ausiness need
C$ Customer re7uest
@$ Degal re7uirement
;. +hat are the inputs to the Initiation process9
8$ Product description* strategic plan* project selection criteria* and historical
information
A$ Product description* strategic plan* project o(er(ie' document* and historical
information
C$ 0trategic plan* project o(er(ie' document* feasi&ility study* and historical
information
@$ Product description* strategic plan* constraints* and assumptions
>. ,ou 'ork for a large manufacturing plant$ ,ou"re 'orking on a ne' project for an
o(erseas product release$ %his is the company"s first e#perience in the o(erseas
market* and they hope to make a &ig splash 'ith the introduction of this product$ %he
project entails producing your product in a concentrated formula and packaging it in
smaller containers than the >$0$ product uses$ 8 ne' machine is needed in order to
mi# the first set of ingredients in the concentrated formula$ +hich of the follo'ing is
true9
8$ %he ne' machine* the concentrated formula* and the smaller package are
each project constraints$
A$ %he ne' machine* the concentrated formula* and the smaller package
description must &e incorporated into the product description document$
C$ %he ne' machine* the concentrated formula* and the smaller package are
each project assumptions$
@$ %he ne' machine* the concentrated formula* and the smaller package are
each considered deli(era&les$
?. ,ou 'ork for a large manufacturing plant$ ,ou"re in the Initiation process of a ne'
project for an o(erseas product release$ %his is the company"s first e#perience in the
o(erseas market* and they hope to make a &ig splash 'ith the introduction of this
product$ %he project entails producing your product in a concentrated formula and
packaging it in smaller containers than the >$0$ product uses$ 8 ne' machine is
needed in order to mi# the first set of ingredients in the concentrated formula$ +hich of
the follo'ing actions should the project manager take9
8$ %he project manager should document the project"s goals and kno'n
deli(era&les in a highBle(el o(er(ie' document and recommend the project
proceed$
A$ %he project manager should document the project"s goals and kno'n
deli(era&les in a highBle(el o(er(ie' document and assume the project is a go$
C$ %he project manager should document the project"s goals and kno'n
deli(era&les in a highBle(el o(er(ie' document and recommend a feasi&ility
study &e performed$
@$ %he project manager should document the project"s goals and kno'n
deli(era&les in a highBle(el o(er(ie' document and deli(er it to the
stakeholders$
1@. +hat are the Initiation process outputs9
8$ Project charter* identification and assignment of project manager* constraints*
and project o(er(ie' documents
A$ Project charter* project o(er(ie'* feasi&ility study* and constraints
C$ Project charter* identification and assignment of project manager* constraints*
and assumptions
@$ Identification and assignment of project manager* project o(er(ie'*
constraints* and assumptions
11. %he purpose of the Initiation process is to:
8$ .ormally recogni-e the e#istence of a project or project phase
A$ .ormally recogni-e the need that &rought a&out the project &e it marketing
demand* customer re7uests* &usiness need* technological ad(ances* or legal
re7uirements
C$ .ormally recogni-e the stakeholders of the project and identify them in the
project charter
@$ .ormally recogni-e the project sponsor and document his or her project goals
13. ,our nonprofit organi-ation is preparing to host its first annual K) runO'alk in City Park$
,ou 'orked on a similar project for the organi-ation t'o years ago 'hen it coBhosted
the 10) run through =(erland Pass$ +hich of the Initiation process inputs might &e
helpful to you on your ne' project9
8$ %he strategic plan* &ecause you"ll 'ant to make sure the project reflects the
o(erall strategic direction of the organi-ation$
A$ 6istorical information on the 10) run project$ ,ou might &e a&le to gather
helpful project information since this ne' project is similar in nature$
C$ %he product description* 'hich 'ould descri&e all the details of the runO 'alk
program$
@$ 6istorical information from the recent &lood dri(e project$
14. +hich of the follo'ing is true regarding product descriptions9
8$ %he product description is an output of the Initiation process$ It descri&es the
characteristics of the product or ser(ice$
A$ %he product description is an output of the Initiation process$ It descri&es the
characteristics of the product or ser(ice and contains less detail in the early
phases of the project$
C$ %he product description is an input of the Initiation process$ It descri&es the
characteristics of the product or ser(ice and contains a lot of detail in the early
phases of the project$
@$ %he product description is an input of the Initiation process$ It descri&es the
characteristics of the product or ser(ice$
17. @eli(era&les can &e descri&ed as:
8$ %he purpose for undertaking the project
A$ %he (erifia&le results of products or ser(ices that must &e produced to
consider the project complete
C$ %he specifications regarding the goals of the project that must &e produced to
consider the project complete
@$ %he measura&le outcomes of the project goals
18. ,ou are a project manager 'orking on a ne' soft'are product your company plans to
market to &usinesses$ %he project sponsor told you that the project must &e completed
&y 0eptem&er 1$ %he company plans to demo the ne' soft'are product at a trade
sho' in late 0eptem&er and therefore needs the project completed in time for the
trade sho'$ 6o'e(er* the sponsor has also told you that the &udget is fi#ed at MEK*000
and cannot &e increased &y e(en M10 due to o(erall &udget cuts this year$ ,ou must
complete the project 'ithin the gi(en time frame and &udget$ +hich of the follo'ing is
the primary constraint for this project9
8$ Audget
A$ <uality
C$ %ime
@$ 0chedule
19. ,ou are a project manager for a documentary film company$ In light of a recent
national tragedy* the company president 'ants to get a ne' documentary on the
rescue efforts of the heroic firefighters to air as soon as possi&le$ 0he"s looking to you
to make this documentary the &est that"s e(er &een produced in the history of this
company$ 0he guarantees you free rein to use 'hate(er resources you need to get
this project done 7uickly$ 6o'e(er* the &est photographer in the company is currently
'orking on another assignment$ +hich of the follo'ing is true9
8$ %he primary constraint is time &ecause the president 'ants the film done
7uickly$ 0he told you to get it to air as soon as possi&le$
A$ Fesources are the primary constraint$ /(en though the president has gi(en
you free rein on resource use* you assume she didn"t mean those acti(ely
assigned to projects$
C$ %he schedule is the primary constraint$ /(en though the president has gi(en
you free rein on resource use* you assume she didn"t mean those acti(ely
assigned to projects$ %he photographer 'on"t &e finished for another three
'eeks on his current assignment* so schedule adjustments 'ill ha(e to &e
made$
@$ %he primary constraint is 7uality &ecause the president 'ants this to &e the
&est film e(er produced &y this company$ 0he"s gi(en you free rein to use
'hate(er resources needed to get the jo& done$
1;. +hat limits the options of the project team9
8$ %echnology
A$ Constraints
C$ @eli(era&les
@$ 8ssumptions
1>. ,our project depends on a key deli(era&le from a (endor you"(e used se(eral times
&efore 'ith great success$ ,ou"re counting on the deli(ery to arri(e on Hune 1$ %his is
an e#ample of:
8$ Constraint
A$ =&jecti(e
C$ 8ssumption
@$ 1oal
1?. 6allo'een is approaching fast$ ,our market research sho's that the little yello' chicks
and pink &unny marshmallo' candies are the &estBselling candy at /aster time*
outselling all other types of candies$ %his prompts the company to introduce a ne'
(ersion of marshmallo' candies 'ith 6allo'een themes this season$ +hich of the
follo'ing is true9
8$ %his project came a&out due to customer re7uest* and the primary constraint
is time$
A$ %his project came a&out due to market demand* and the primary constraint is
time$
C$ %his project came a&out due to market demand* and the primary constraint is
7uality$
@$ %his project came a&out due to customer re7uest* and the primary constraint
is 7uality$
3@. ,our company pro(ides ans'ering ser(ices for se(eral major catalog retailers$ %he
num&er of calls coming into the ser(ice center per month has continued to increase
o(er the past 1E months$ %he phone system is approaching the ma#imum load limits
and needs to &e upgraded$ ,ou"(e &een assigned to head up the upgrade project$
Aased on the company"s e#perience 'ith the (endor 'ho 'orked on the last phone
upgrade project* you"re confident they"ll &e a&le to assist you 'ith this project as 'ell$
8$ ,ou"(e made an assumption a&out (endor a(aila&ility and e#pertise$ %he
project came a&out due to a &usiness need$
A$ 3endor a(aila&ility and e#pertise are constraints$ %he project came a&out due
to a &usiness need$
C$ ,ou"(e made an assumption a&out (endor a(aila&ility and e#pertise$ %he
project came a&out due to a marketing demand$
@$ 3endor a(aila&ility and e#pertise are constraints$ %he project came a&out due
to a marketing demand$
1nswers
1. A Project Integration is made up of Project Plan @e(elopment* Project Plan /#ecution* and
Integrated Change Control
3. 8 %he &uyer pro(ides product descriptions 'hen projects are performed under contract$
4. @ Project %ime Management in(ol(es the follo'ing processes: 8cti(ity @efinition* 8cti(ity
0e7uencing* 8cti(ity @uration /stimating* 0chedule @e(elopment* and 0chedule Control$
7. C %he 6uman Fesources kno'ledge area in(ol(es managing people and relationships$ It
includes =rgani-ational Planning* 0taff 8c7uisition* and %eam @e(elopment$ Femem&er that
Fesource Planning is part of the Project Cost Management )no'ledge area* not 6uman
Fesource Management$
8. @ %he correct ans'er is technological ad(ance$ Marketing demand is high for the ser(ice*
&ut the ser(ice did not come a&out as a result of customers asking for itI rather* it came to
market &ecause of the ad(ances in technology$
9. A %his came a&out due to a &usiness need$ 0taff mem&ers 'ere spending unproducti(e
hours producing the same information* thus causing the company a loss$ %he time the
employees spent retyping information that 'as already 'ritten could ha(e &een spent doing
something more producti(e$
;. 8 Initiation has four process inputs$ Constraints and assumptions are outputs of the Initiation
process$
>. @ @eli(era&les are tangi&le* (erifia&le outcomes or items that must &e produced in order to
complete the project or project phase$ %hese items 'ouldn"t &e considered goals &ecause the
goal of the project is to &reak into the o(erseas market 'ith a successful product re(amped
for that audience$
?. C %he most correct ans'er is to perform a feasi&ility study$ 0ince this project is taking the
company into a ne'* unkno'n market* there"s lots of potential for error and failure$ 8 feasi&ility
study 'ould help the stakeholders determine if the project is (ia&le and cost effecti(e* and
'hether it has a high potential for success$
1@. C Project Initiation outputs are the project charter* identification and assignment of the
project manager* constraints* and assumptions$ Femem&er for the test that project managers
aren"t officially assigned until the end of Initiation (as an output! &ut in reality are often times
assigned at the &eginning of the Initiation process$
11. 8 Initiation formally recogni-es the e#istence of a project$ 0takeholders might &e identified in
the Initiation process &ut according to the Guide to the PMBOK are officially identified during
the Planning process$
13. A 6istorical information on projects of a similar nature can &e (ery helpful 'hen initiating
ne' projects$ %hey can help in formulating project deli(era&les and identifying constraints and
assumptions* and 'ill &e helpful further on in the project Planning process as 'ell$
14. @ Product descriptions are inputs to Initiation and contain less detail in the &eginning phases
of a project and more detail as the project progresses$
17. A @eli(era&les are measura&le or (erifia&le results or specific items that must &e produced
in order to consider the project complete$
18. C %he primary constraint is time$ 0ince the trade sho' demos depend on project completion
and the trade sho' is in late 0eptem&er* the date cannot &e mo(ed$ %he &udget is the
secondary constraint in this e#ample$
19. @ %he primary constraint is 7uality$ If you made the assumption as stated in selection A* you
assumed incorrectly$ Clarify these assumptions 'ith your stakeholders and project sponsors$
%his applies to option C as 'ell$
1;. A Constraints restrict the actions of the project team$
1>. C %his is an e#ample of an assumption$ ,ou"(e used this (endor &efore and not had any
pro&lems$ ,ou"re assuming there 'ill &e no pro&lems 'ith this deli(ery &ased on your past
e#perience$
1?. A Market research sho's the demand for the candies is e#tremely high during the /aster
season$ It"s highly likely sales 'ould &e high during the 6allo'een season as 'ell$ %ime is the
constraint as 6allo'een is dri(en &y a hard date$
3@. 8 %he project came a&out due to a &usiness need$ %he phones ha(e to &e ans'ered as
that"s the core &usiness$ >pgrading the system to handle more (olume is a &usiness need$ 8n
assumption has &een made regarding (endor a(aila&ility$ 8l'ays (alidate your assumptions$
Chapter J: %reating a Project %harter
P$P (6am %ontent !rom the Project Initiation Per!ormance Domain %overe in &his
%hapter:
C$ @efine 0trategy$
L$ Identify Performance Criteria$
E$ @etermine Fesource Fe7uirements$
N$ @efine Audget$
10$ Produce .ormal @ocumentation$
%he second half of Chapter 2 started us on the journey into the project life cycle processes 'ith
an introduction to project Initiation$ +e"(e already learned ho' to identify and document the goals
of the project$ 8nd 'e talked a&out project deli(era&les* constraints* and assumptions$ %his
chapter formally recogni-es the launching of the project 'ith the creation of a project charter$
+e"ll conclude the project Initiation process 'ith this chapter and &egin the Planning process in
Chapter :$ +e"ll discuss one more input to the Initiation process and the tools and techni7ues of
project Initiation* and then finish up the chapter 'ith documenting the project charter$ %he primary
goal of the Initiation process is to produce the project charter$
2sing Project 'election $ethoologies
Project selection methodologies 'ill (ary depending on the company* the people ser(ing on the
selection committee* the criteria used* and the project$ 0ometimes selection criteria and
methodologies 'ill &e purely financial* sometimes purely marketing* and sometimes they"ll &e
&ased on pu&lic perception or political perception* or some com&ination of all of these and more$
+e"ll look at project selection criteria* 'hich is ho' projects are selected and prioriti-ed$ %hen
'e"ll finish up 'ith project selection methods* 'hich calculate measura&le differences &et'een
projects and determine the tangi&le &enefits to the company of choosing or not choosing the
project$
De!ining Project 'election %riteria
Most organi-ations ha(e a formal* or at least semiformal* process to select and prioriti-e projects$
In my organi-ation* a steering committee is responsi&le for project re(ie'* selection* and
prioriti-ation$ 8 steering committee is a group of folks comprised of senior managers and
sometimes midle(el managers 'ho represent each of the functional areas in the organi-ation$
6ere"s ho' our process 'orks$ %he steering committee re7uests project ideas from the &usiness
staff prior to the &eginning of the fiscal year$ %hese project ideas need to &e de(eloped into a
project o(er(ie'* or project concept document* like 'e discussed in Chapter 1$ %hese project
o(er(ie' documents contain the project goals* a description of the deli(era&les* the &usiness
justification for the project* a desired implementation date* 'hat the organi-ation stands to gain
from implementing the project* a list of the functional &usiness areas affected &y the project* and
if applica&le a &enefitOcost analysis ('e"ll talk a&out that in a &it!$
8 special steering committee meeting is called to re(ie' the projects* and a determination is
made on each project as to 'hether it 'ill &e included on the upcoming list of projects for the ne'
year$ =nce the noBgo projects ha(e &een 'eeded out* the remaining projects are prioriti-ed
according to their importance and &enefit to the organi-ation$ %he projects are documented on an
official project list* and progress is reported on the acti(e projects at the regular monthly steering
committee meetings$
In theory* it"s a great idea$ In practice* it 'orks only moderately 'ell$ Priorities can and do change
throughout the year$ Ge' projects come up that 'eren"t originally su&mitted during the call for
projects that must &e added to the list$ Feprioriti-ation &egins ane'* and resource alignment and
assignments are shuffled$ Aut again* 'e"re getting ahead of oursel(es$ Hust &e a'are that
organi-ations usually ha(e a process to recogni-e and screen project re7uests* accept or reject
those re7uests &ased on some selection criteria* and prioriti-e the projects &ased on some
criteria$
Darge* comple# projects may &e su&ject to further re(ie' (ia a feasi&ility study &efore a decision
can &e made to accept the project$ ,ou 'ill recall that feasi&ility studies determine the (ia&ility of
the project and help the company determine if the product or ser(ice of the project is marketa&le*
profita&le* safe* and doa&le$
+hat"s the criteria9 .unny you should ask$ Project selection criteria is an input to the project
Initiation process$ 8ccording to the Guide to the PMBOK* project selection criteria is concerned
'ith the product of the project$ In other 'ords* selection criteria is concerned 'ith 'hat the
product or ser(ice of the project 'ill produce and ho' it 'ill &enefit the company$ 0election
criteria concerns e(ery area of &usiness from marketing to finance to information technology to
human resources$ It can &e su&jecti(e or o&jecti(e$ Criteria for judging project selection could
include financial measurements$ .or e#ample* the selection criteria might dictate that projects
must increase profits &y a certain percentage in order to &e considered$ /7ually* project selection
criteria might include the criteria that an increase in market share or an increase in the pu&lic
a'areness of the company or product 'ill &e enjoyed as a result of this project$ %here aren"t any
rules for project selection as the components of selection criteria are up to the company* steering
committee* or project re(ie' committee to determine$
Predetermined selection criteria* such as mentioned a&o(e* is one aspect of project selection* &ut
so is the indi(idual opinion* and po'er* of selection committee mem&ers$ @on"t underestimate the
importance of the authority* political standing* and indi(idual aspirations of selection committee
mem&ers$ %hose committee mem&ers 'ho happen to carry a lot of 'eight in company circles* so
to speak* are likely to get their projects appro(ed just on the fact that they are 'ho they are$ %his
is sometimes ho' project selection 'orks in my organi-ation$ 6o' a&out yours9
Descri-ing Project 'election $ethos
Project selection criteria* as 'e just discussed* is an input to the Initiation process$ Project
selection methods are a techni7ue used during the Initiation process to pick one project o(er
another or to measure one particular project"s &enefit to the organi-ation$ 0election criteria differs
from selection methods in that selection criteria is concerned 'ith the product of the project and
selection methods measure the &enefits of the project* or they compare the measura&le &enefits
of one project against another$
8ccording to the Guide to the PMBOK* there are t'o categories of selection methods: &enefit
measurement methods and constrained optimi-ation methods$ +e"ll discuss constrained
optimi-ation methods first$
.or the purposes of the e#am* all you need to understand a&out constrained optimi-ation
methods is they are mathematical models that use linear* dynamic* integer* nonlinear* andOor
multio&jecti(e programming in the form of algorithms?or in other 'ords* a specific set of steps to
sol(e a particular pro&lem$ %hese are complicated mathematical formulas and algorithms that are
&eyond the scope of this &ook and re7uire an engineering* statistical* or mathematical
&ackground to fully understand$ Projects of enormous comple#ity 'ould use techni7ues such as
these to make decisions regarding projects$ %he (ast majority of project selection techni7ues 'ill
use the &enefit measurement methods to make project selection decisions$
Aenefit measurement methods employ (arious forms of analysis and comparati(e approaches to
make project selections$ =ne common form of analyBsis is the &enefitOcost analysis$ %his
compares the financial &enefits to the company of performing the project to the costs of
implementing the project$ =&(iously* a sound project choice is one 'here the costs to implement
or produce the product of the project are less than the financial &enefits$ 6o' much less is an
indi(idual decision$ 0ome companies are comforta&le 'ith a small margin* others 'ith a much
larger margin &et'een the t'o figures$
+hen e#amining costs for the &enefitOcost analysis* include the costs to produce the product or
ser(ice* costs to take the product to market* and ongoing operational support costs$ .or e#ample*
let"s say your company is considering 'riting and marketing a data&ase soft'are product that 'ill
allo' &anks to dissect their customer &ase* determine 'hich types of customers &uy 'hich types
of products* and then market more effecti(ely to those customers$ 0ome of the costs you 'ill take
into account are the costs to de(elop the soft'are such as programmer costs* hard'are costs*
testing costs* etcI marketing costs such as ad(ertising* tra(eling costs to perform demos at
potential customer sites* etc$I and ongoing costs such as ha(ing a customer support staff
a(aila&le during &usiness hours to assist customers 'ith product 7uestions and pro&lems$
Det"s say the cost to produce this soft'are plus the ongoing support costs total MK million$ Initial
projections look like demand for this product is high$ =(er a JByear period* the potential life of the
soft'are in its proposed form* projected re(enues are M12 million$ %aking only the financial
information into account* the &enefits out'eigh the costs of this project$ %his project should
recei(e a go recommendation$
Projects of significant cost or comple#ity usually take into account more than one &enefit
measurement method 'hen making go or noBgo decisions* or deciding on one project o(er
another$ )eep in mind that selection methods can take su&jecti(e matter into account as 'ell?
the project is a go &ecause it"s the ne' C/="s pet projectI nothing else needs to &e said$
8nother project selection techni7ue in the &enefit measurement category is a scoring model* or
'eighted scoring model$ My organi-ation uses 'eighted scoring models to not only choose
&et'een projects* &ut also as a method to choose &et'een competing &ids on outsourced
projects$
+eighted scoring models are 7uite simple$ %he project selection committee should decide on the
criteria that 'ill &e used on the scoring model?for e#ample* profit potential* marketa&ility of the
product or ser(ice* the a&ility of the company to 7uickly and easily produce the product or ser(ice*
and so on$ /ach of these criteria is assigned a 'eight* depending on the importance of the criteria
to the project committee$ More important criteria should carry a higher 'eight than the less
important criteria$
%hen* each project is rated on a scale from 1 to K (or some such assignment! 'ith the higher
num&er &eing the more desira&le outcome to the company and the lo'er num&er ha(ing the
opposite effect$ %his rating is then multiplied &y the 'eight of the criteria factor and added to other
'eighted criteria scores for a total 'eighted score$ Det"s look at an e#ample that &rings this
together (see %a&le J$1!$
&a-le 4.1: Weighte 'coring $oel
%riteria Weight Project 1
'coreD
Project +
'coreD
Project %
'coreD
Profit potential K K K J
Marketa&ility J : J :
/ase to produceO support 1 : J 2
+eighted score ? :1 JL 2N
RK S highest$
In this e#ample* Project 8 is the o&(ious choice$
%he remaining &enefit measurement methods in(ol(e a (ariety of cash flo' analysis techni7ues
including pay&ack period* discounted cash flo's* net present (alue* and internal rate of return$
+e"ll look at each of these techni7ues indi(idually and pro(ide you 'ith a crash course on their
meanings and calculations$
Pa"-ac# Perio
%he pay$ac& period is the length of time it takes the company to recoup the initial costs of
producing the product or ser(ice of the project$ %his method compares the initial in(estment to the
cash inflo's e#pected o(er the life of the product or ser(ice$ .or e#ample* say the initial
in(estment on our project is M200*000 'ith e#pected cash inflo's of M2K*000 per 7uarter e(ery
7uarter for the first 2 years* and MK0*000 per 7uarter from thereon$ %he pay&ack period is 2 years
and can &e calculated as follo's:
Cash inflo's S M2K*000 T : (7uarters in a year! S M100*000Oyear total inflo'
,ear 1 inflo's S M100*000
,ear 2 inflo's S M100*000
%otal S M200*000
Pay&ack is reached in 2 years$
%he fact that inflo's are MK0*000 per 7uarter starting in year J makes no difference as pay&ack is
reached in 2 years$
Pay&ack period is the least precise of all the cash flo' calculations$ %hat"s &ecause pay&ack
period does not consider the (alue of the cash inflo's made in later years* commonly called the
time #alue of money$ .or e#ample* if you had a project 'ith a KByear pay&ack period* the cash
inflo's in year K 'ould &e 'orth less than they 'ould &e 'ere 'e to recei(e them today$ %he ne#t
section 'ill e#plain this idea more fully$
Discounte %ash Flows
8s I just stated* money recei(ed in the future is 'orth less than money recei(ed today$ %he
reason for that is the time (alue of money$ If I &orro'ed M2000 from you today and promised to
pay it &ack in J years* you 'ould e#pect me to pay interest in addition to the original amount
&orro'ed$ =kay* if you 'ere a family mem&er or really close friend may&e you 'ouldn"t* &ut
ordinarily this is the 'ay it 'orks$ ,ou 'ould ha(e had the use of the M2000 had you not lent it to
me$ If you had in(ested the money (@oes this &ring &ack memories of your mom telling you to
sa(e your money9!* you"d recei(e a return on that money$ %herefore* the future (alue of the
M2000 you lent me today is M2J1K$2K in J years from no' at K percent interest per year$ 6ere"s
the formula for future (alue calculations:
.3 S P3 (1 U i!
n

In /nglish* this formula says the future (alue (.3! of the in(estment e7uals the present (alue (P3!
times (1 plus the interest rate! times the num&er of time periods the interest is paid$ Det"s plug in
our num&ers:
.3 S 2000 (1$0K!
J

.3 S 2000 (1$1KLC2K!
.3 S M2J1K$2K
%he discounted cash flow techni7ue compares the (alue of the future cash flo's of the project to
today"s dollars$ In order to calculate discounted cash flo's* 'e need to kno' the (alue of the
in(estment in today"s terms* or the present (alue (P3!$ P3 is calculated as follo's:
P3 S .3 V (1 U i!
n

%his is the re(erse of the .3 formula 'e talked a&out earlier$ 0o* if 'e asked the 7uestion 'hat is
M2J1K$2K in J years from no' 'orth today gi(en a K percent interest rate* 'e"d used the formula
a&o(e$ Det"s try it$
P3 S M2J1K$2K V (1 U $0K!
J

P3 S M2J1K$2K V 1$1KLC2K
P3 S 2000
M2J1K$2K in J years from no' is 'orth M2000 today$
@iscounted cash flo' is calculated just like this for the projects you"re comparing for selection
purposes$ 8pply the P3 formula to the projects you"re considering and then compare the
discounted cash flo's of all the projects against each other to make a selection$ 6ere is an
e#ample comparison of t'o projects using this techni7ue:
Project 8 is e#pected to make M100*000 in 2 years$
Project A is e#pected to make M120*000 in J years$
If the cost of capital is 12 percent* 'hich project should you choose9
>sing the P3 formula a&o(e* calculate each project"s 'orth$
%he P3 of Project 8 S MLN*L1N$
%he P3 of Project A S MEK*:1:$
Project A is the project that 'ill return the highest in(estment to the company and should &e
chosen o(er Project 8$
Net Present Balue
Projects generally &egin 'ith a company in(esting some amount of money into the project to
complete and accomplish its goals$ In return* the company e#pects to recei(e re(enues* or cash
inflo's* from the resulting project$ 4et present #alue (4P5) allo's you to calculate an accurate
(alue for the project$ %he mathematical formula for GP3 is complicated* and you do not need to
memori-e it in that form for the test$ 6o'e(er* you do need to kno' ho' to calculate GP3 for the
e#am$ I"(e gi(en you some e#amples of a less complicated 'ay to perform this calculation in
%a&les J$2 and J$J using the formulas you"(e already seen$
Get present (alue 'orks like discounted cash flo's in that you &ring the (alue of future monies
recei(ed into today"s dollars$ +ith GP3* you e(aluate the cash inflo's using the discounted cash
flo' techni7ue applied to each period the inflo's are e#pected instead of in one sum$ %he total
present (alue of the cash flo's is then deducted from your initial in(estment to determine GP3$
GP3 assumes that cash inflo's are rein(ested at the cost of capital$
6ere"s the rule* if the GP3 calculation is greater than -ero* accept the project$ If the GP3
calculation is less than -ero* reject the project$
Dook at the e#ample &elo' of t'o projects (see %a&les J$2 and J$J!$ Project 8 and Project A ha(e
total cash inflo's that are the same at the end of the project* &ut the amount of inflo's at each
period differs for each project$ +e"ll stick 'ith a 12 percent cost of capital$ Gote that the P3
calculations 'ere rounded to t'o decimal places$
&a-le 4.3: Project 1
Cear In!lows PB
1 10*000 E*N2N
2 1K*000 11*NC2
J K*000 J*KKN
%otal J0*000 2:*:K0
Dess in(estment ? 2:*000
NPB ? 78@
&a-le 4.4: Project +
Cear In!lows PB
1 L*000 C*2K0
2 1J*000 10*JCL
J 10*000 L*11E
%otal J0*000 2J*LJK
Dess in(estment ? 2:*000
NPB ? W398X
Project 8 has an GP3 greater than -ero and should &e accepted$ Project A has an GP3 less than
-ero and should &e rejected$ +hen you get a positi(e (alue for GP3* it means that the project 'ill
earn a return at least e7ual to or greater than the cost of capital$
8nother note on GP3 calculations: Projects 'ith high returns early in the project are &etter
projects than projects 'ith lo'er returns early in the project$ In our e#ample a&o(e* Project 8 fits
this criteria also$
Internal 0ate o! 0eturn
%he internal rate of return (,11) is the most difficult e7uation of all the cash flo' techni7ues 'e"(e
discussed$ It is a complicated formula and should &e performed on a financial calculator or
computer$ IFF can &e figured manually* &ut it"s a trialBandBerror approach to get to the ans'er$
%echnically speaking* IFF is the discount rate 'hen the present (alue of the cash inflo's e7uals
the original in(estment$ Projects 'ith higher IFF (alues are generally considered &etter than
projects 'ith lo' IFF (alues$
.or the e#am* you need to kno' that IFF is the discount rate 'hen GP3 e7uals -ero* IFF
assumes that cash inflo's are rein(ested at the IFF (alue* and you should choose projects 'ith
the highest IFF (alue$
Project 'election $ethos
=ne* t'o* or se(eral of these methods can &e used alone or in com&ination to come up 'ith a
selection decision$ Femem&er that pay&ack period is the least precise* GP3 is the most
conser(ati(e approach* and GP3 and IFF 'ill generally &ring you to the same acceptOreject
conclusion$
Project selection methods* and particularly the &enefit measurement methods* can &e used to
e(aluate multiple projects or a single project$ ,ou might &e 'eighing one project against another*
or simply considering if the project you"re proposing is 'orth doing$ Constrained optimi-ation
methods and &enefit measurement methods are often called decision models$ .or the e#am*
remem&er that decision models are used as project selection methods (tools and techni7ues! not
as project selection criteria (input!$ 8lso note that the financial &enefit measurement methods and
the &enefitOcost methods can &e used for project justification* 'hich 'e 'ill discuss in Chapter :$
I"ll refer you &ack to this section to re(ie' these methods 'hen 'e get to project justification in
the ne#t chapter$
/#pert judgment is the last tool and techni7ue in the Initiation process$ %he concept &ehind e#pert
judgment is to rely on indi(iduals* or groups of people* 'ho ha(e training* speciali-ed kno'ledge*
or skills in the areas you"re assessing$ In the case of project Initiation* e#pert judgment 'ould &e
helpful in assessing the inputs to the Initiation process?i$e$* product descriptions* strategic plan*
project selection criteria* and historical information$ .or e#ample* as the project manager* you
might rely on the e#pertise of your e#ecuti(e committee to determine ho' the proposed project
gels 'ith the strategic plan$ =r* you might rely on team mem&ers 'ho ha(e participated on similar
projects in the past to make recommendations regarding the proposed project$
/#pert judgment is a tool and techni7ue used in many other planning processes as 'ell$
8ccording to the Guide to the PMBOK* e#perts might &e found in other departments 'ithin the
organi-ation* e#ternal or internal consultants* professional and technical associations* or industry
groups$
0eal Worl 'cenario5Fun Da"s Bacation 0esorts
Herry is project manager for .un @ays 3acation Fesorts$ 6e is 'orking on three different project
proposals to present to the e#ecuti(e steering committee for re(ie'$ 8s part of the informationB
gathering process* Herry attends the (arious resorts pretending to &e a guest$ %his gi(es him a
feel for 'hat .un @ays guests e#perience on their (acations* and it &etter prepares him to present
project particulars and alternati(es$
Herry has prepared the project o(er(ie's for three projects and called upon the e#perts in
marketing to help him out 'ith the projected re(enue figures$ 6e 'orks up the num&ers and finds
the follo'ing:
Project 8?pay&ack period S K yearsI IFF S JE percent
Project A?pay&ack period S J$K yearsI IFF S 2J percent
Project C?pay&ack period S 2 yearsI IFF S 2J percent
.unding e#ists for only one of the projects$ Herry recommends Project 8 and predicts this is the
project the steering committee 'ill choose since the projects are mutually e#clusi(e$
Herry"s turn to present comes up at the steering committee$ Det"s listen in on the action$
48nd* on top of all the &enefits I"(e just descri&ed* Project 8 pro(ides an IFF of JE percent* a full
1K percent higher than the other t'o projects 'e discussed$ I recommend the committee choose
Project 8$5
4%hank you Herry*5 Colleen says$ 41ood presentation$5 Colleen is the e#eBcuti(e chairperson of
the steering committee and has the authority to &reak ties or make final decisions 'hen the
committee can"t seem to agree$
46o'e(er* here at .un @ays 'e like to ha(e our fun sooner rather than later$5 Chuckles ensue
from the steering committee$ %hey"(e all heard this &efore$ 4I do agree that a JE percent IFF is a
terrific return* &ut the pay&ack is just too far out into the future$ %here are too many risks and
unkno'ns for us to take on a project 'ith a pay&ack period this long$ 8s you kno'* our industry is
directly impacted &y the health of the economy$ 8nything can happen in K years" time$ I think
'e"re much &etter off going 'ith Project C$ I recommend 'e accept Project C$ Committee
mem&ers* do you ha(e anything to add95
Ienti!"ing the Project*s Initial 0equirements
+e"re close to 'rapping up the Initiation phase 'ith the pu&lication of the project charter$ Aut
'e"(e got one more stop to make &efore 'e get to the project charter$ %his section co(ers project
re7uirements?not like the re7uirements of the product of the project 'e talked a&out in Chapter
2$ %hese re7uirements are resource re7uirements and &udget re7uirements needed to perform
the 'ork of the project$ %his is the last piece of information you"ll gather &efore 'riting the project
charter$
Most selection committees 'ill 'ant to ha(e some feel for the impact the project 'ill ha(e on the
organi-ation in terms of resources and costs$ +e 'ill del(e much deeper into these t'o topics in
Chapter K* 'here 'e"ll talk at length a&out estimation techni7ues$ .or no'* let"s do an o(er(ie' of
each of these areas$
Note .or more information on estimation techni7ues* please see Chapter K*
4Fesource Planning and /stimating$5
De!ining 0esource 0equirements
It"s forecasted to &e a great summer day* one of those perfect hiking or &iking kind of days$ ,ou
and a couple of friends decide a hike is just 'hat you need and think it"d &e fun to &ring along a
light lunch$ .irst* you dig out those old hiking &oots you"(e had since college from the depths of
the closet and &lo' the dust off them$ ,our feet are protected* no' 'hat a&out that lunch9 ,ou
poke through the fridge and pull out some aged cheese* a fat &unch of red grapes* a loaf of crusty
&aguette* and a good &ottle of 0hira-$ ,ou"ll need glasses and a 'ine opener too$ Ge#t* you pull
out that daypack you ordered from that outdoorsy catalog &ecause it looked so cool and you
kne' it 'ould come in handy one day$ 0unscreen and may&e some chocolate sand'ich cookies
for your friends top off the loaded daypack$ ,ou"re all set$ 8ll you need no' is to meet up 'ith the
friends* pile into the car* and dri(e to the trailhead$
If 'e think of the hike as our project?I"m using the term loosely in this case? the resources can
&e considered the &oots* food* glasses* 'ine opener* sunscreen* and daypack$ 8dd your friends
in the mi# and the car to dri(e you to the trailhead and you"(e identified all the resources you"re
going to need for this project$ =h* a trail map might &e handy too$
%his is e#actly ho' resource identification 'orks on projects$ 8fter you"(e identified the project
goals and the project deli(era&les* you should ha(e a fairly easy time of identifying the kinds of
resources you"re going to need to complete the project$ %hese 'ill (ary from project to project$
=ne kno'n resource entity is human resources$ 8ll projects 'ill need some human effort and
inter(ention to carry out the project$ 8lso consider things like e7uipment* materials* hard'are*
soft'are* telephones* office space* tra(el arrangements* contractors* desks* net'ork connections*
etc$
0ome of these things may sound tri(ial* &ut consider the o(erall impact to the organi-ation 'hen
determining 'hat resources are needed$ .or e#ample* if you"re 'orking on a large construction
project and need to temporarily house the design team* they 'ill need office furniture* telephones*
PCs* design soft'are* and net'ork connections$ %elephones and net'ork connections might
re7uire ne' lines* 'hich take time and money to install$
My organi-ation once engaged contractors to 'ork on a project 'ithout considering office space*
telephone lines* or net'ork connections$ %he contractors sho'ed up for 'ork as planned and had
no place to sit$ +e set up ta&les in the hall'ay for them and had the net'ork team run long
ca&les taped do'n to the floor out to their PCs on the ta&les until the project 'as o(er$ 8nd* they
used their o'n cell phones for telephones$ %he project manager didn"t do an ade7uate jo& of
determining resource needs for this project$ >nfortunately for this project manager* the contractor
office space turned out to &e the least important of the resource re7uirements he 4didn"t think
a&out$5
,ou 'ill also 'ant to detail the type of human resources you"re going to need for your project$
@oes your project re7uire specific skills9 If so* note the skills needed$ If they cannot &e o&tained
internally* you 'ill ha(e to consider contractor help and factor that into the project costs$ @oes
your project re7uire the help of staff from other areas of the organi-ation9 8gain* if so* document
this$ Ariefly descri&e the roles and responsi&ilities of the key project team mem&ers* or key
resources needed for the project$ Include this information in the project charter$
8t this stage* you don"t need e(ery nittyBgritty detail$ ,ou"re looking for the &ig hitters that 'ill take
time* money* or people 'ith speciali-ed skills to implement$ %hese are the kinds of resources the
selection committee 'ill 'ant to kno' a&out$
Determining the Initial +uget
Identifying the initial &udget is a lot like identifying the initial resource re7uirements$ 8gain* the
selection committee is looking for the major impacts to the organi-ation regarding the costs of
performing the project and purchasing necessary e7uipment or ser(ices to carry out project
acti(ities$ 8 project &udget needs to &e esta&lished once the project is initiated so that project
costs can &e attri&uted directly to it$
+rea#ing Down Project %osts
Project costs can &e &roken do'n into roughly three areas$ 6uman resource costs* resource or
project costs* and administrati(e costs$ %he responsi&ility for determining these costs rests on
either the project manager or a finance manager in a functional organi-ation$ 0ometimes the
&udget is predetermined &y the e#ecuti(e management staff and you"re told 'hat it is and ha(e to
'ork 'ith 'hat you"re gi(en$
+hen you are the one responsi&le for determining the initial &udget* there are a couple of places
you can look that 'ill help you 'ith estimating project costs$ =ne of the first places to consider is
pre(ious projects that are similar in scope to your project$ Fe(ie' the project documents from
similar projects and use their total costs to gi(e you a starting place$ .rom there* you can make
adjustments to your ne' &udget according to the differences in scope and detail of the ne'
project (ersus the one you"re using as a reference$
,ou can also talk 'ith key team mem&ers* key stakeholders* or others 'ith e#perience on similar
projects and ask them 'hat projects of this type ha(e cost in the past$ %hey"re also good folks to
run your initial &udget figures &y &efore making them pu&lic$ +e"ll talk more a&out costBestimating
techni7ues in Chapter K$
/uman 0esource %osts
6uman resource* or personnel costs* can &e one of your &iggest e#penses depending on the kind
of project you"re 'orking on$ 8ny project that is la&or intensi(e* or re7uires highly speciali-ed
skills or kno'ledge* 'ill likely ha(e high personnel costs$
0esource or Project %osts
%he project itself 'ill ha(e resource e#penses directly related to the project$ %hese are costs that
are specific to the project* not the dayBtoBday operation e#penses that 'e"ll co(er in a minute$
%hese resource costs might &e things like tra(el e#pense related to the project* longBdistance
phone &ills* speciali-ed talent hired for certain portions of the project* (endor fees* e7uipment
purchases* hard'are purchases* etc$ 8gain* depending on the kind of project you"re 'orking on*
resource e#penses can &e 7uite high as 'ell$ %he construction of a ne' theme hotel on the Das
3egas strip* for e#ample* could run into the tens of millions of dollars in material resources alone*
let alone the human resource costs to design* construct* and &uild the hotel$
1ministrative %osts
8dministrati(e costs are the dayBtoBday type costs that keep the organi-ation running* &ut are not
directly related to the project$ .or e#ample* office e7uipment* local phone charges* leases (unless
office space or &uilding space 'as leased specifically to house project mem&ers* in 'hich case
this e#pense 'ould &e a resource e#pense charged against the project!* heat and lights* support
personnel* etc$
%he project manager 'ill 'ant to identify the major e#penses of the project and ha(e some
general thoughts a&out project costs to share 'ith the selection committee$ %he project &udget
'ill &e further defined once ade7uate estimating can &e completed* and at that time* the final
project &udget can &e su&mitted for appro(al$
Formali,ing an Pu-lishing the Project %harter
+e"(e co(ered a lot of material &efore finally getting to this point* formali-ing and pu&lishing the
project charter$ %hat"s &ecause as you"(e seen* a lot of information goes into the project charter$
%his document is the foundation for the remaining project acti(ity planning* e#ecution* and control
processes$ )eep in mind if your project is performed under contract* the contract itself can ser(e
as the project charter$
%he project charter is the official* 'ritten ackno'ledgment and recognition that a project e#ists$
It"s issued &y senior management and gi(es the project manager authority to assign
organi-ational resources to the 'ork of the project$ It is usually the first official document of the
project once acceptance of the project has &een granted$ 1ood project charters that are 'ell
documented 'ill address many of the 7uestions your stakeholders are likely to ha(e up front$ If
your charter is good* you"ll a(oid a lot of issues early on$
Pulling the Project %harter &ogether
In order to create a useful and 'ellBdocumented project charter* you 'ill start 'ith including a
staple group of components$ %he project charter should include an o(er(ie' of the project* its
goals and o&jecti(es* the project deli(era&les* the &usiness case or need for the project* resource
and cost estimates* and a feasi&ility study if one 'as performed$ %he charter should descri&e the
preliminary roles and responsi&ilities of the project manager* project staff* project sponsor* and
e#ecuti(e management$ +e ha(e co(ered most of these items in depth$ Creating the project
charter is a matter of incorporating all the information 'e"(e gathered so far* as outlined a&o(e*
and putting it in the document$ 6o'e(er* 'e"(e only touched on roles and responsi&ilities of key
project mem&ers* so let"s take a closer look at this area and then 'rap up 'ith some final notes
on project charters$
Project $anager
%he project manager is the person 'ho 'ill assume responsi&ility for the success of the project$
%he project manager"s primary responsi&ilities are project planning and then e#ecuting and
managing the project plan$ %he o(ersight of the project charter and project plan assures the
project manager that e(eryone kno's and understands 'hat"s e#pected of them and 'hat
constitutes a successful project$ %he project charter and project plan pro(ide for smooth pro&lem
resolution as the project goals and o&jecti(es* deli(era&les* and tasks are detailed in these
documents$
%he project charter identifies the project manager and descri&es the authority the project
manager has in carrying out the project$
Project managers 'ill &e responsi&le for setting the standards and policies for the projects they
'ork on$ 8s a project manager* it is your jo& to esta&lish and communicate the project procedures
to the project team and stakeholders$
Project managers 'ill identify acti(ities and tasks* resource re7uirements* project costs* project
re7uirements* performance measures* and more$ Communication and documentation must
&ecome the project manager"s &est friends$ )eeping stakeholders* the project sponsor* the
project team* and all other interested parties informed is 4jo& one*5 as the famous car
manufacturer"s ads say$
Project 'ponsor
6a(e you e(er attended a conference or e(ent that 'as put on &y a sponsor9 In the information
technology field* conferences and seminars are often sponsored &y soft'are de(elopment
companies$ %he sponsor pays for the e(ent* the facilities* and the goodies* and pro(ides an
opportunity for (endors to display their 'ares$ In return* the sponsor comes out looking like a
'inner?&ecause they really are footing the &ill for all this fun* the sponsor gets to call the shots
on conference content* and they get the prime spots for discussing their particular soft'are
solutions$ 8nd last &ut not least* they usually are the keynote speaker and get to present their
information to a capti(e audience$
Project sponsors are similar to this in that they rally support from stakeholders and the e#ecuti(e
management team for the project$ %he project sponsor is usually an e#ecuti(e in the organi-ation
'ho has the po'er and authority to make decisions and settle disputes or conflicts regarding the
project$ %he sponsor takes the project to the limelight* so to speak* and gets to call the shots
regarding project outcomes$
0ponsors are acti(ely in(ol(ed in the Initiation and Planning phases of the project and tend to
ha(e less in(ol(ement during the /#ecution and Controlling phases$ It"s up to the project
manager to keep the project sponsor informed of all project acti(ities* project progress* and any
conflicts or issues that arise$ %he sponsor is the one 'ith the authority to resol(e conflict and set
priorities 'hen these things can"t &e dealt 'ith any other 'ay$
Project %hampion
%he project champion is another strong project supporter$ >nlike the sponsor* the project
champion doesn"t necessarily ha(e a lot of authority or e#ecuti(e po'ers$ %he champion helps
focus attention on the project from a technical perspecti(e$ %he project champion is usually
someone 'ith a great deal of technical e#pertise or industry kno'ledge regarding the project$
%hey can lend credi&ility to the (ia&ility of the project and to the skills and a&ilities of the key
project team mem&ers to carry out project acti(ities$ 0ometimes* the project manager may act as
project champion$
Functional $anagers
+e co(ered functional managers in Chapter 2$ 8s a reminder* 'e"ll mention them here again
&riefly as project managers must 'ork 'ith and gain the support of functional managers in order
to complete the project$ .unctional managers fulfill the administrati(e duties of the organi-ation*
pro(ide and assign staff mem&ers to projects* and conduct performance re(ie's for their staff$
%he Guide to the PMBOK states that a manager 'ho is e#ternal to the project should pu&lish the
charter$ In practice* my e#perience has &een that the project charter is pu&lished under the name
of the project sponsor$ %he charter can &e 'ritten &y the project manager in either case* and
usually is* &ut the project manager"s name is not the name on the project charter document$ .or
the e#am* remem&er that the charter is pu&lished &y a manager e#ternal to the project$
Project %harter 'ignAO!!
%he project charter isn"t complete until you"(e recei(ed signBoff from the project sponsor* senior
management* and key stakeholders$ 0ignBoff indicates that the document has &een read &y those
signing it (let"s hope so any'ay! and that they agree 'ith its contents and are on &oard 'ith the
project$ It also in(ol(es the major players right from the &eginning and hopefully 'ins their
continued participation in the project going for'ard$ %his is important &ecause the charter states
the project goals and deli(era&les* and the time* resources* and costs needed to meet those
goals$ If someone has a pro&lem 'ith them* no' is the time to raise the red flag$ 0igning the
project charter document is the e7ui(alent of agreeing to and endorsing the project$ %his doesn"t
mean that the project charter is set in stone* ho'e(er$ Project charters 'ill change throughout the
course of the project$ 8s more details are unco(ered and outlined and as the Planning process
&egins* more project issues 'ill come to light$ %his is part of the iterati(e process of project
management and is to &e e#pected$ %he charter 'ill occasionally &e re(ised to reflect these ne'
details* project plans 'ill &e re(ised* and project e#ecution 'ill change to incorporate the ne'
information or direction$
8ccording to the Guide to the PMBOK* the project manager is assigned to the project as an
output of the Initiation process$ %he project charter usually names the project manager$ 8nd the
signed project charter gi(es the project manager the authority to assign resources to the project
and mo(e on to the Planning process$
/(eryone mentioned here?the project manager* the project sponsor* the project champion* the
functional managers* the stakeholders* the clients* and anyone else impacted &y the project?
should recei(e a copy of the 'ritten project charter$ If you"(e done a good jo& 'ith the project
charter* and it"s &een agreed to and signed off &y the project sponsor and stakeholders* you"(e
made your jo& of producing a scope statement* co(ered in Chapter :* much easier$
,ou re(ie' your notes and reread the project charter you"(e prepared for the )itchen 6ea(en
retail store one last time &efore looking for @irk$ +hen you sa' him last* he pointed you in the
direction of three of the project stakeholders: Hake Peterson* Hill =(erstreet* and Ficardo
Famire-$ 8fter your meetings 'ith Hake and then Hill* you 'ere &etter a&le to refine the project
o(er(ie' and deli(era&les$
,ou finally run across @irk in a hall'ay near the e#ecuti(e 'ashroom$
4@irk* I"m glad I caught you$ I"d like to go o(er the project charter 'ith you &efore the kickBoff
meeting tomorro'$ @o you ha(e a fe' minutes95
40ure*5 @irk says to you$ 4Det"s ha(e it$5
4%he project charter states the project goal* 'hich of course is to open the K0th )itchen 6ea(en
store in Colorado 0prings$ I also documented the deli(era&les* many of 'hich 'e talked a&out
last time 'e met$
4+hen I met 'ith Hake* he confirmed it takes 120 days to do the store &uildBout$ %hat includes
ha(ing the shel(es set up and in place* ready to stock 'ith in(entory$5
@irk asks if Hake told you a&out his store location idea$
4,es* Hake ga(e me a contact name* and I"(e left her a (oice mail$ %he sooner 'e can get that
lease signed the &etter$ It takes Hake 120 days to do the &uildBout* and Hill said she needs 2
'eeks lead time to order the initial in(entory and stock the shel(es$ %hat puts us pretty close to
our .e&ruary 1st deadline counting the time to get the lease papers signed$5
40ounds good so far*5 @irk replies$ 4+hat else95
4I included an updated description of the products and ser(ices the ne' store 'ill offer* &ased on
the documentation that 'as 'ritten from the last store opening$ Hill re(ie'ed the updates to the
description* so 'e should &e in the clear there$ %he store 'ill include some ne' lines that 'e"(e
decided to take on?cook'are from famous chefs* that kind of thing$
4%he project charter also outlines your role as the project sponsor* my role as project manager*
and our e#pectations of the project staff$ Hake has already made contact 'ith a general contractor
in the 0prings* and he is ready to roll once 'e"(e signed the lease$5
,ou add* 4I"m using your estimate of M2 million as our initial &udget re7uest$ Aased on projected
inflo's* I"(e calculated a pay&ack period of 1C months 'ith an IFF of 22 percent$5
4%hat"s impressi(e*5 replies @irk$ 4/(en &etter than our Phoeni# store$ If I recall* the pay&ack
period there 'as just o(er 2 years$ Det"s hope those num&ers hold true$5
4I think they"re relia&le figures$ Hill sho'ed me her data &ased on recent store openings in similarB
si-ed cities$ 8nd 'e factored in the economic conditions of the Colorado 0prings area$ 0ince
they"re on a gro'th pattern* 'e think the timing is perfect$
4=ne more thing* @irk$ 0ince 'e"re including the &ig &ash at grand opening as part of the
deli(era&les* I talked to some of your folks in marketing to get some ideas$ %hey are thinking 'e
should ha(e some great gi(ea'ays as door pri-es and that 'e 'ill 'ant to cater in the food$ %hey
also thought ha(ing some li(e cooking demonstrations 'ith some local chefs 'ould &e a good
attraction$5
40o 'hat"s ne#t95 @irk asks$
48s you kno'* the project kickoff is scheduled for tomorro'$ +hat I"ll need then is for you to talk
a&out the project and the goals* the commitment you"ll need from the management team to
support this project* and introduce me as the project manager$ I"(e already for'arded a copy of
the project charter to the meeting attendees so that they can re(ie' it &efore the meeting$ 8nd* I
included a list of the assumptions 'e"(e made so far as an appendi# to the charter$ Dastly* I"ll
need you to ask e(eryone present to sign a copy of the project charter$5
40ounds like you"(e co(ered e(erything*5 @irk says$ 4I don"t anticipate any pro&lems tomorro' as
e(eryone is looking for'ard to this store opening$5
Pay&ack period calculated at 1C months
IFF calculated at 22 percent
Met 'ith stakeholders to determine highBle(el list of deli(era&les:
Project store opening on .e& 1
AuildBout of storefront
Fetail product line deli(ered 2 'eeks prior to grand opening
1randBopening party 'ith cooking demos
Created project charter* 'hich contains:
=(er(ie' of project goals and o&jecti(es
Dist of deli(era&les
Ausiness case for the project
Initial completion date of .e& 1
Initial &udget of M2 million
@efinition of roles of project sponsor and project manager
)ickoff meeting set up to discuss charter and o&tain signBoff
'ummar"
+e"re 'ell on our 'ay to a successful project$ +e"(e finished up the Initiation process in this
chapter and 'ill &egin the Planning process in the ne#t chapter$
+e learned a&out one more input to the Initiation process* 'hich is project selection criteria$
0election criteria is defined &y a selection committee* or steering committee* to make
determinations as to ho' projects get selected and prioriti-ed$
Project selection methods* on the other hand* are a tool and techni7ue in the Initiation process$
0election methods include decision models in the form of &enefit measurement methods and
constrained optimi-ation methods$ %he constrained optimi-ation methods utili-e mathematical
models$ Aenefit measurement methods come in the form of &enefitOcost analyses* scoring
models* and economic analyses$ %hese are primarily comparati(e approaches$ Aesides
&enefitOcost analysis* the most commonly used form of &enefit measurement methods is cash
flo' analysis$
8nalysis of cash flo's includes pay&ack period* discounted cash flo's* net present (alue (GP3!*
and internal rate of return (IFF!$ %hese last three methods are concerned 'ith the time (alue of
money?or in other 'ords* con(erting future dollars into today"s (alue$ 1enerally* projects 'ith a
shorter pay&ack period are desired o(er longer pay&ack periods$ Projects that ha(e an GP3
greater than -ero should &e accepted$ 8nd projects 'ith the highest IFF (alue are considered a
&etter &enefit to the organi-ation than projects 'ith lo' IFF (alues$
/#pert judgment is considered a tool and techni7ue of Initiation$ /#perts usually ha(e speciali-ed
kno'ledge or skills and could include staff from other departments in the company* e#ternal or
internal consultants* and mem&ers of professional and technical associations or industry groups$
Initial project re7uirements should &e included in the project charter$ Fesources* personnel*
&udgets* and costs should &e outlined to gi(e the selection committee some o(erall idea of
project costs$
%he project charter is the official ackno'ledgment and recognition that the project e#ists$ It
appoints the project manager and outlines their authority$ It contains an o(er(ie' of the project*
and the project"s goals and o&jecti(es$ %he charter should &e signed &y the project sponsor*
stakeholders* and other key management mem&ers and then pu&lished and distri&uted to all
interested parties$
%he case study project charter 'ill include all the elements talked a&out in this chapter$ It"s a
formali-ed document that represents the things you"(e mentioned here to @irk$ Fecall that a
charter is the document that authori-es the project to go for'ard$ 8s such* it has to &e
comprehensi(e and include details such as the project goals and deli(era&les* resource needs*
the &usiness need for the product of the project* the project sponsor* roles and responsi&ilities of
other project mem&ers* projected &udget* and other items that are rele(ant to managers 'ho
must authori-e and endorse the project$
(6am (ssentials
+e a-le to e!ine ecision moels. @ecision models are project selection methods that are a
tool and techni7ue in the Initiation process$ @ecision models include &enefit measurement
methods and constrained optimi-ation methods$
+e a-le to escri-e an calculate pa"-ac# perio. Pay&ack period is the amount of time it 'ill
take the company to recoup its initial in(estment in the product of the project$ It"s calculated &y
adding up the e#pected cash inflo's and comparing them to the initial in(estment to determine
ho' many periods it takes for the cash inflo's to e7ual the initial in(estment$
+e a-le to enote the ecision criteria !or NPB an I00. Projects 'ith an GP3 greater than
-ero should &e accepted* and those 'ith an GP3 less than -ero should &e rejected$ Projects 'ith
high IFF (alues should &e accepted o(er projects 'ith lo'er IFF (alues$ IFF is the discount rate
'hen GP3 is e7ual to -ero* and IFF assumes rein(estment at the IFF rate$
+e a-le to escri-e the importance o! the project charter. %he project charter is the
document that officially recogni-es and ackno'ledges that a project e#ists$ It dedicates the
organi-ation"s resources to the project* names the project manager* and descri&es the goals and
deli(era&les of the project$
+e a-le to escri-e the importance o! signAo!! o! the project charter. 0ignBoff assures all
parties ha(e read the charter* agree to its contents* and endorse the project$ Participation early
on &y the key stakeholders 'ill likely ensure their participation in the project as it progresses$
<e" &erms
discounted
cash flo'
pay&ack period
internal rate
of return
(IFF!
project charter
net present
(alue (GP3!

0eview =uestions
1. +hat are the tools and techni7ues used in the Initiation process9
8$ Project selection criteria* historical information* e#pert judgment
A$ Project selection methods* historical information* e#pert judgment
C$ Project selection criteria* e#pert judgment
@$ Project selection methods* e#pert judgment
3. Comparati(e methods* scoring methods* and economic and cash flo' analysis are all
part of 'hich of the follo'ing9
8$ Aenefit measurement methods* 'hich are a tool and techni7ue in Initiation
A$ Constrained optimi-ation methods* 'hich are a tool and techni7ue in Initiation
C$ Aenefit measurement methods* 'hich are an input to Initiation
@$ @ecision models* 'hich are an output of Initiation
4. ,ou are the project manager for the Date Gight 0mooth Ha-- Clu& chain* 'ith stores in
12 states$ 0mooth Ha-- is considering opening a ne' clu& in 8ri-ona or Ge(ada$ ,ou
ha(e deri(ed the follo'ing information:
Project 8ri-ona: Pay&ack period is 1E months* and the GP3 is 2K0$
Project Ge(ada: Pay&ack period is 2: months* and the GP3 is J00$
+hich project 'ould you recommend to the selection committee9
8$ Project 8ri-ona &ecause the pay&ack period is shorter than Project Ge(ada
A$ Project Ge(ada &ecause the GP3 is a positi(e num&er
C$ Project 8ri-ona &ecause the GP3 is a negati(e num&er
@$ Project Ge(ada &ecause the GP3 is a higher num&er than Project 8ri-ona"s
GP3
7. ,ou are the project manager for the Date Gight 0mooth Ha-- Clu& chain* 'ith stores in
12 states$ 0mooth Ha-- is considering opening a ne' clu& in )ansas City or 0pokane$
,ou ha(e deri(ed the follo'ing information:
Project )ansas City: %he pay&ack period is 2L months* and the IFF is JK percent$
Project 0pokane: %he pay&ack period is 2K months* and the IFF is J2 percent$
+hich project 'ould you recommend to the selection committee9
8$ Project 0pokane &ecause the pay&ack period is shortest
A$ Project )ansas City &ecause the IFF is highest
C$ Project 0pokane &ecause the IFF is lo'est
@$ Project )ansas City &ecause the pay&ack period is longest
8. +hich of the follo'ing is true regarding GP39
8$ GP3 assumes rein(estment at the cost of capital$
A$ GP3 decisions should &e made &ased on the highest (alue for all of the
selections$
C$ GP3 assumes rein(estment at the pre(ailing rate$
@$ GP3 assumes rein(estment at the GP3 rate$
9. ,ou are the project manager for Insomniacs International$ 0ince you don"t sleep
much* you get a lot of project 'ork done$ ,ou"re considering recommending a
project that costs MKLK*000* and e#pected inflo's are M2K*000 per 7uarter for the
first 2 years* and then MLK*000 per 7uarter thereafter$ +hat is the pay&ack period9
8$ :0 months
A$ JE months
C$ JN months
@$ :1 months
;. +hich of the follo'ing is true regarding IFF9
8$ IFF assumes rein(estment at the cost of capital$
A$ IFF is the discount rate 'hen GP3 is greater than -ero$
C$ IFF is a constrained optimi-ation method$
@$ IFF is the discount rate 'hen GP3 is e7ual to -ero$
>. Mathematical models using linear* dynamic* integer* or algorithm models are
considered:
8$ Project selection criteria
A$ 8 form of e#pert judgment
C$ Project selection methods
@$ 8 form of historical information
?. ,ou are the ne'ly appointed project manager for a pharmaceutical company$ ,our
company has asked you to head up a project to research a ne' children"s
medication$ ,ou"(e identified the la& e7uipment you"ll need* the soft'are needed
to perform analysis and measurements* and the skill le(el and types of the
technicians and researchers for this project$ +hich of the follo'ing is true9
8$ %he project manager and resources ha(e &een identified as part of the
outputs of the Initiation process* and this information can &e found in the
project charter$
A$ %he resources and project manager ha(e &een identified as an input to the
project Initiation phase$ .urther information is needed to produce the
project charter* 'hich 'ill include the resources and project manager$
C$ %he project manager and resources ha(e &een identified as part of the
project selection process$ %he selection committee re7uires resource
information to make a final decision$
@$ %he resources and project manager ha(e &een identified as a result of a
tool and techni7ue in the Initiation process$
1@. ,our selection committee meets on a semiannual &asis$ %hey"(e determined that
projects must meet or e#ceed a specific profit limit in order to &e accepted and
prioriti-ed on the project list$ +hich of the follo'ing is true9
8$ %he selection committee has defined project selection criteria* 'hich is a
tool and techni7ue of Initiation$
A$ %he selection committee has defined project selection methods* 'hich is a
tool and techni7ue of Initiation$
C$ %he selection committee has defined project selection methods* 'hich are
an input to Initiation$
@$ %he selection committee has defined project selection criteria* 'hich is an
input to Initiation$
11. +hat are the Initiation process outputs9
8$ Project charter* historical information* and project manager identification
and assignment
A$ Project charter* project manager identification and assignment* constraints*
and assumptions
C$ Project charter* historical information* constraints* and assumptions
@$ Project charter* constraints* and assumptions
13. Fu&y is an administrati(e assistant 'ith another department$ 6er manager has
agreed to loan Fu&y"s ser(ices to you on a partBtime &asis during your current
project$ Fu&y is putting together the cost projections you"(e gathered so far$ ,ou
'ant to include these costs in the project charter$ Fu&y is formatting this
information for you into a spreadsheet package and is printing copies$ +hich of
the follo'ing is true9
8$ 8ll of the costs* including Fu&y"s time* are charged to the project$
A$ 8ll of the costs Fu&y is typing into the spreadsheet are project costs$
Fu&y"s time is not directly related to the project and should not &e included$
C$ %he project costs* including Fu&y"s time* should &e included in the project
charter$
@$ %he project costs* e#cluding Fu&y"s time* should &e considered project
constraints$
14. ,our project selection committee used a 'eighted scoring model and found that
Project A* 'ith a score of K:* should &e chosen o(er the other competing projects$
8$ +eighted scoring models are a &enefit measurement method* 'hich is a
A$ +eighted scoring models are a constrained optimi-ation method* 'hich is
an output of the Initiation process$
C$ +eighted scoring models are a constrained optimi-ation method* 'hich is a
@$ +eighted scoring models are a &enefit measurement method* 'hich is an
output of the Initiation process$
17. ,our selection committee is de&ating &et'een t'o projects$ Project 8 has a
pay&ack period of 1E months$ Project A has a cost of M12K*000 'ith e#pected
cash inflo's of MK0*000 the first year and M2K*000 per 7uarter after that$ +hich
project should you recommend9
8$ /ither Project 8 or Project A &ecause the pay&ack periods are e7ual
A$ Project 8 &ecause Project A"s pay&ack period is 21 months
C$ Project 8 &ecause Project A"s pay&ack period is 2: months
@$ Project 8 &ecause Project A"s pay&ack period is 20 months
18. +hich of the follo'ing is true9
8$ @iscounted cash flo' analysis is the least precise of the cash flo'
techni7ues as it does not consider the time (alue of money$
A$ GP3 is the least precise of the cash flo' analysis techni7ues as it assumes
rein(estment at the discount rate$
C$ Pay&ack period is the least precise of the cash flo' analysis techni7ues as
it does not consider the time (alue of money$
@$ IFF is the least precise of the cash flo' analysis techni7ues &ecause it
assumes rein(estment at the cost of capital$
19. Project selection criteria might include:
8$ Aenefit measurement methods
A$ Constrained optimi-ation analysis
C$ GP3 calculations
@$ Potential market share or increased pu&lic perception
1;. ,ou are a project manager for Yippy %ees$ ,our selection committee has just
chosen a project you recommended for implementation$ ,our project is to
manufacture a line of miniature stuffed &ears that 'ill &e attached to your
company"s trendy %Bshirts$ %he &ears 'ill &e 'earing the same %Bshirt design as
the shirt they"re attached to$ ,our project sponsor thinks you"(e really impressed
the &ig &oss and 'ants you to skip to the manufacturing process right a'ay$ +hat
is your response9
8$ %o agree 'ith the project sponsor &ecause they are your &oss* and they
ha(e a lot of authority and po'er in the company$
A$ %o re7uire that a preliminary &udget &e esta&lished and a resource list &e
put together to alert other managers of the re7uirements of this project$
%his should &e pu&lished and signed &y the other managers 'ho are
impacted &y this project$
C$ %o re7uire a project charter &e pu&lished and signed off on &y all
stakeholders &efore proceeding$
@$ %o re7uire a project charter &e 'ritten to include the resources needed*
&udget* and project manager"s authority$ %he project manager is the only
one 'ho needs to see this document as other documents 'ill &e distri&uted
later that contain the same detail as the charter$
1>. +hich of the follo'ing is true regarding the project charter9
8$ %he project charter should &e pu&lished under the name of a manager
e#ternal to the project$
A$ %he project charter should &e pu&lished under the project sponsor"s name$
C$ %he project charter should &e pu&lished under the name of the project
manager$
@$ %he project charter should &e pu&lished under the name of the project
champion$
1?. ,ou are the project manager for Yippy %ees$ ,our company has decided to
outsource the manufacturing of miniature &ears to &e attached to your trendy %B
shirts$ +hich of the follo'ing is true9
8$ 8 good product description is all that"s re7uired$ %he project manager 'ill
supply this to the (endor$
A$ %he contract can ser(e as the project charter$ %he product description 'ill
&e included in the contract$
C$ %he project manager should 'rite the project charter &ecause the project
manager 'ill &e managing the (endor portion of this project as 'ell$
@$ %he (endor should 'rite the project charter as they are responsi&le for
manufacturing the &ears$
3@. %he project charter:
8$ Includes a product description* descri&es the &usiness need of the project*
and is pu&lished &y the project manager
A$ Includes a product description* descri&es the &usiness need of the project*
and is pu&lished &y the project sponsor
C$ Includes the contract 'hen the project is performed &y a (endor and is
pu&lished &y a manager e#ternal to the project
@$ Includes a product description* descri&es the &usiness need of the project*
and is pu&lished &y a manager e#ternal to the project
1nswers
1. @ %he tools and techni7ues in the Initiation process are project selection methods and e#pert
judgment$
3. 8 Aenefit measurement methods include comparati(e methods* scoring models* and cash
flo' analysis* 'hich are all part of the project selection method tools and techni7ues in
Initiation$
4. A Projects 'ith GP3 greater than -ero should &e gi(en an accept recommendation$
7. A Projects 'ith the highest IFF (alue are fa(ored o(er projects 'ith lo'er IFF (alues$
8. 8 Get present (alue assumes rein(estment is made at the cost of capital$
9. C ,ear 1 and 2 inflo's are each M100*000 for a total of M200*000$ ,ear J inflo's are an
additional MJ00*000$ 8dd one more 7uarter to this total and the MKLK*000 is reached in J
years and J months* or JN months$
;. @ IFF assumes rein(estment at the IFF rate and is the discount rate 'hen GP3 is e7ual to
-ero$
>. C Mathematical models are part of the constrained optimi-ation methods used as a project
selection method techni7ue$
?. 8 Initiation outputs include the project charter and identification and assignment of the
project manager$ Fesource needs are detailed in the project charter$
1@. @ Project selection criteria can &e o&jecti(e or su&jecti(e$ 0election criteria is an input to the
Initiation process$ Project selection methods use decision models to assist 'ith project
selection and are a tool and techni7ue of the Initiation process$
11. A =utputs to Initiation include the project charter* project manager identification and
assignment (e(en though this might &e stated in the charter* this is still a specific output of
Initiation!* constraints* and assumptions$
13. A Project costs are those costs directly related to the project$ Fu&y is part time on the project
and 'orks for the organi-ation* not the project manager$ %herefore* her time is not counted in
the initial &udget projections$
14. 8 Aenefit measurement methods include comparati(e methods and scoring models* among
others* to make project selections$
17. A Project A has a pay&ack period of 21 months$ MK0*000 is recei(ed in the first 12 months
'ith another MLK*000 coming in o(er each of the ne#t J 7uarters* or N months$
18. C Pay&ack period does not consider the time (alue of money and is therefore the least
precise of all the cash flo' analysis techni7ues$
19. @ Project selection criteria includes su&jecti(e information such as potential market share$
=&jecti(e material can &e considered in project selection criteria* &ut the other ans'ers listed
here are specific project selection methods$
1;. C %he project should &e kicked off 'ith a project charter outlining the project goals*
deli(era&les* resources* &udget* and roles and responsi&ilities of the project team$ %his
assures e(eryone is 'orking from the same assumptions and 'ith the same goals in mind$
1>. 8 8ccording to the Guide to the PMBOK* the project charter should &e pu&lished &y a
manager e#ternal to the project &ut 'ith sufficient po'er and authority to carry it off$
1?. A +hen a project is performed under contract* the contract can ser(e as the project charter$
Project charters al'ays include product descriptions$
3@. @ Project charters* according the Guide to the PMBOK* must at least include the product
description and the &usiness need for the product or ser(ice of the project$ Charters are
pu&lished &y managers e#ternal to the project according to the Guide to the PMBOK &ut in
practice are often pu&lished &y the project sponsor$
Chapter :: %reating the 'cope 'tatement an W+'
P$P (6am %ontent !rom the Project Planning Per!ormance Domain %overe in &his
%hapter:
1$ Fefine Project$
2$ Create +A0$
Overview
1reat jo&2 ,ou"(e successfully completed the project Initiation process and pu&lished the project
charter$ %he project is officially under 'ay$ 0takeholders ha(e &een informed* there is
management &uyBin on the project* the project manager has &een assigned* and the project goals
and deli(era&les ha(e &een identified$ 8 solid foundation for the Planning process is in place$
%his chapter 'ill &egin the Planning process of the project$ +e 'ill continue discussing the
Planning processes through Chapter L$ Planning is a significant acti(ity in any project and* if done
correctly* 'ill go a long 'ay to'ard ensuring project success$
+e 'ill &egin this chapter &y taking one more look at project goals and deli(era&les$
Fe7uirements definition 'ill &e deri(ed from these and documented in the scope statement$ +e"ll
discuss the scope management plan and all it entails* and then &egin the scheduleBplanning
acti(ities &y descri&ing the +A0$ %he +A0 is not a ne' +orld Aase&all 0eries as some 'ould
hopeI rather it"s the 'ork &reakdo'n structure$
%his chapter 'ill 'rap up 'ith a short discussion of the Communications Planning process$ +e"(e
talked a lot a&out documentation so far* and 'e 'ill discuss it more in this chapter$
@ocumentation is something you 'ill do throughout the remainder of the project* and the
Communications Planning process details ho' to collect information* ho' to store it* and 'hen
and ho' to distri&ute it to stakeholders$
'coping Out the Project
%cope Planning is the first process in the Planning process group$ %he scope statement* 'hich is
an output of 0cope Planning* 'ill &ecome an input into the second Planning process* 'hich is
0cope @efinition$ +e"ll get to 0cope @efinition later in this chapter$
,ou"(e most likely disco(ered &y no' that 'e"(e done a lot of documentation$ +ell* the
documentation e#ercises don"t stop 'ith the project charter$ @ocumentation should &ecome the
mantra of all good project managers$ 4Is that documented95 should &e an e(er present 7uestion
on the mind of the project manager$ @ocumentation can sa(e your &acon* so to speak* later in the
project$ Go' you"(e pro&a&ly guessed that 'e"re going to mo(e into another area of
documentation* and you"re right$ Aut first* let"s talk a&out some of the elements of 0cope Planning
&efore 'e get to the documenting part$
0cope Planning* like all other processes* has inputs* tools and techni7ues* and outputs$ %he
primary purpose of 0cope Planning is t'ofold: to produce the scope statement and the scope
management plan$ +e"ll deal 'ith each of these documents in more detail after 'e look at the
inputs and tools and techni7ues used to produce these t'o documents$
%he inputs to 0cope Planning are items you are already familiar 'ith: the product description*
project charter* project constraints* and project assumptions$ If you"(e read the pre(ious chapters*
you"re up to speed on these elements$
+e also ha(e already discussed t'o of the tools and techni7ues of 0cope Planning: &enefitOcost
analysis and e#pert judgment$ ,ou"ll remem&er from Chapter J that &enefitOcost analysis (also
called cost &enefit analysis! is comparing the costs of the project to the e#pected &enefits of the
project$ AenefitOcost might include cash flo' analysis and economic analysis$ %hese techni7ues
determine a project"s profita&ility and (ia&ility and may also &e used as selection criteria$ /#pert
judgment is relying on people or groups 'ith specific skills* kno'ledge* or training to help assess
the process inputs$
%'o techni7ues remain for the 0cope Planning process: product analysis and alternati(es
identification$
Product analysis goes hand in hand 'ith the product description$ Product analysis is simply a
deeper understanding of the product or ser(ice of the project$ 8ccording to the Guide to the
PMBOK* this goes further than product description in that product analysis might include
performing (alue analyBsis* function analysis* systemsBengineering techni7ues* or (alueB
engineering techni7ues to further define the product or ser(ice$ It"s &eyond the scope of this &ook
to go into these analysis techni7ues$ .or e#am purposes* you just need to kno' that product
analysis is a tool and techni7ue of 0cope Planning$
8lternati(es identification is a techni7ue used to disco(er different methods or 'ays of
accomplishing the project$ .or e#ample* &rainstorming might &e used to disco(er alternati(e 'ays
of implementing one of the project o&jecti(es$ Perhaps the project"s &udget doesn"t allo' for a
portion of the project that the stakeholders really think needs to &e included$ Arainstorming might
unco(er an alternati(e that 'ould allo' the needed portion to &e accomplished$
+e ha(e our inputs at hand and ha(e used the tools and techni7ues descri&ed to analy-e these
inputs$ Go' 'e"re ready to document them in the scope statement$
Writing the 'cope 'tatement
=ne of the project manager"s primary goals is to accurately document the deli(era&les and
re7uirements of the project* and then manage the project so that they are produced according to
the agreedBupon criteria$ @eli(era&les descri&e the components of the goals and o&jecti(es in a
7uantifia&le 'ay$
=&jecti(es and deli(era&les are sometimes referred to as critical success factors$ Critical success
factors are those elements that must &e completed in order for the project to &e considered
complete$ .or e#ample* if you"re &uilding a &ridge* one of the deli(era&les might &e to produce a
specific num&er of trusses that 'ill &e used to help support the &ridge$ +ithout the trusses* the
&ridge couldn"t &e completedI in fact* the &ridge might not stand 'ithout them$ %he trusses* in this
case* are a critical success factor$ Got all deli(era&les are necessarily critical success factors* &ut
many of them 'ill fall into this category and should &e documented as such$
8t this point* the project manager needs to disco(er and document all of the re7uirements of the
project$ Fe7uirements descri&e the characteristics of the deli(era&le$ 0ome of the re7uirements
of the deli(era&le from our &ridge e#ample might &e that the trusses are constructed of a specific
kind of steel* or steel ca&le* or they must &e a certain color and of a certain height or cur(ature*
etc$
8gain the project manager needs to pull those communications skills out of her tool &ag and use
them to inter(ie' stakeholders and &usiness process o'ners a&out the project re7uirements$
Ausiness process o'ners are those people 'ho are e#perts in their particular area of the
&usiness$ %hey are in(alua&le resources to the project manager$ %hey are usually the midle(el
managers and line managers 'ho still ha(e their fingers in the dayBtoBday portion of the &usiness$
.or e#ample* it takes many e#perts in (arious areas to produce and market a great &ottle of &eer$
%here are machinists 'hose specialty is regulating and keeping the stainless steel and copper
drums in top 'orking order$ %here are chemists 'ho sometimes daily check and adjust the secret
formulas &re'ing in the (ats$ 1raphic artists must de(elop colorful and interesting la&els and
cartons to attract the attention of those thirsty patrons$ 8nd of course* those great %3
commercials ad(ertising the tasty &re' are produced &y yet another set of &usiness e#perts$
%hese are the kinds of people you"ll 'ant to inter(ie'$ 0ometimes getting the &usiness process
o'ners and stakeholders ('ho could &e one and the same depending on the project! together in
a meeting room and &rainstorming the re7uirements 'ill produce terrific results$ @epending on
the si-e of the project* this isn"t al'ays possi&le* &ut the idea holds true$ Inter(ie' your
stakeholders and &usiness e#perts to get at the re7uirements and then document them in the
scope statement$
Wh" Do Cou Nee a 'cope 'tatement?
%he purpose of the scope statement is to document the project goals* deli(era&les* and
re7uirements so that they can &e used as a &aseline for future project decisions$ 8 lot of 'ork
regarding the scope statement has already &een accomplished &y producing the project charter$
%he charter is used as an input to the scope statement and already contains the project goals and
major project deli(era&les$ If the project charter 'as 'ritten 'ell* it"s simply a matter of
transferring the goals and deli(era&les information from the charter to the scope statement$
%he scope statement is the &aseline for the project* as mentioned a&o(e$ %his means if 7uestions
arise or changes are proposed later in the project* they can &e compared to 'hat"s documented
in the scope statement$ In this 'ay* the scope statement esta&lishes a common understanding
among the stakeholders and project team mem&ers regarding project re7uirements and
deli(era&les$ %he criteria outlined in the scope statement 'ill also &e used to determine if the
project 'as completed successfully$
'cope 'tatement %omponents
8ccording to the Guide to the PMBOK* the scope statement should include all of the follo'ing:
project justification* project product* project deli(era&les* and project o&jecti(es$ If details
surrounding these are spelled out in other documents* you don"t ha(e to reBenter all the
information into the scope statement$ 0imply reference the other document in the scope
statement so readers kno' 'here to find it$ Det"s do a 7uick recap of each of the elements in the
project scope$
Project Eusti!ication
%his descri&es the &usiness need of the project$ If the &usiness need* or &usiness case* 'as
'ritten as part of the project charter* reference it in the scope statement$ Project justification also
includes the cost &enefit and cash flo' analysis used to determine the projected profita&ility of the
project$ 0ee Chapter J for details on these techni7ues$
Project Prouct
%his is the product description 'e talked a&out in Chapter J$ If the product description is
contained in the project charter* just reference the project charter in the scope statement$
Note If you think you might need a refresher on product description* take a minute to
jog your memory &y re(ie'ing the rele(ant section in Chapter J$
Project Delivera-les
%he Guide to the PMBOK descri&es these as the major deli(era&les of a project and all the
su&components that make up the deli(era&les$ %he completion of these deli(era&les signals
project completion$ .or e#ample* our project goal or o&jecti(e might &e to produce a ne' &ottle of
&eer for the holidays$ =ne major deli(era&le is the holiday cartons to hold the &ottles$ %he
su&components to produce this major deli(era&le might &e the carton design* photographs* color
choices* and so on$
Project O-jectives
=&jecti(es al'ays in(ol(e the triple constraints: time* cost* and 7uality$ In the case of goals and
o&jecti(es* the triple constraints are used as measurements to determine project satisfaction and
completion$
,ou"ll remem&er from Chapter J that o&jecti(es* or goals* are specific* measura&le* and timely$
Continuing 'ith our holiday &eer e#ample* the o&jecti(e of this project 'ould &e properly stated
this 'ay according to the Guide to the PMBOK Aeer Auddies* Inc$ 'ill produce t'o million cases
of holiday &eer to &e shipped to our distri&utors &y =cto&er J0 at a cost of M1$K million or less$
%he o&jecti(e criteria are clearly stated* and fulfillment of the project o&jecti(e* or goal* is easily
measured$ 0takeholders 'ill kno' the o&jecti(e is met 'hen the t'o million cases are produced
and shipped &y the due date 'ithin the &udget constraint$
%he Guide to the PMBOK states that o&jecti(es are sometimes called critical success factors$ In
practice* deli(era&les are sometimes referred to as critical success factors as 'ell$
+eing %lear an %oncise
It"s important that the project o&jecti(es* deli(era&les* and re7uirements are clearly and concisely
stated in the scope statement so there are no misunderstandings later on$ 4Producing a special
run of holiday &eer5 is not the same as 4producing t'o million cases of holiday &eer &y =cto&er
J0$5 %he former statement can &e interpreted different 'ays &y the project sponsor and project
manager$ ,ou"d ha(e to put real effort into misunderstanding the latter statement$
%he scope statement should contain a comprehensi(e listing of all the project re7uirements$ %his
is important &ecause this document forms the &asis for agreement &et'een the stakeholders and
project team from this point for'ard$ ,ou"ll 'ant to &e certain you ha(e not missed anything 'hen
'riting the scope statement$ Fun the draft &y some of the key stakeholders and project team
mem&ers &efore pu&lishing it to see if they think anything is missing$ ,ou"re going to use this
document to determine if the project has &een successfully completed &y comparing 'hat"s &een
deli(ered to 'hat"s descri&ed here* so you 'ant to &e sure you"(e co(ered e(erything$
Hust like the project charter* the scope statement should &e pu&lished and distri&uted to the
stakeholders* key management personnel* and project team mem&ers$ ,ou 'ill also 'ant a
formal signBoff procedure for the scope statement$ +hen stakeholders sign off and agree to the
scope statement* they"re agreeing to the deli(era&les and re7uirements of the project$ 8nd* as
'ith the project charter* their agreement and endorsement of the project re7uirements and
deli(era&les 'ill likely sustain their participation and cooperation throughout the rest of the
project$ %hat doesn"t mean they"ll agree to e(erything as the project progresses* &ut it does mean
the stakeholders are informed and 'ill likely remain acti(e project participants$
%he follo'ing may seem o&(ious* &ut 'e"ll note it any'ay: =&jecti(es* deli(era&les* and
re7uirements not specifically included in the scope statement are e#plicitly e#cluded from the
project$ ,our scope statement could ha(e a section for e#clusions so that e(eryone kno's in
ad(ance 'hat isn"t going to &e included in the project$
%upporting detail is an output of the 0cope Planning process and directly references the
information you"(e assem&led for the scope statement$ 0upporting detail should &e documented
and should include the project constraints* assumptions* and any other information not
specifically documented in the scope statement$ ,ou could list the deli(era&les and re7uirements
that are e#cluded from the project here* unless they 'ere already noted in the scope statement$
%his document* like the scope statement* 'ill &e referenced in future Planning processes* so
keep it handy$
+e"re making progress$ +e"(e co(ered t'o of the three 0cope Planning process outputs: the
scope statement and supporting detail$ 8ll the deli(era&les and re7uirements ha(e no' &een
documented along 'ith measura&le or 7uantifia&le criteria for each$ 0takeholders ha(e appro(ed
and signed off on them* and the scope statement has &een pu&lished and distri&uted$ 6o'e(er*
like other projectBplanning documents* the scope statement is not cast in stone$ %he scope
statement can and pro&a&ly 'ill change as the project progresses$ Changes to the project scope
should &e noted and the scope statement modified to incorporate these changes$ Changes are
managed according to the scope management plan* 'hich 'e"ll discuss in the ne#t section$
0eal Worl 'cenario5$ountain 'treams 'ervices
Maria 0anche- is the C/= of Mountain 0treams 0er(ices$ 0he recently accepted a prestigious
industry a'ard on &ehalf of the company$ Maria kno's that 'ithout the dedication and support of
her employees* Mountain 0treams 0er(ices 'ouldn"t ha(e achie(ed this great milestone$
Maria 'ants to host a reception for the employees and their guests in recognition of all their hard
'ork and contri&utions to the company$ Maria has appointed you to arrange the reception$
%he reception is scheduled for 8pril 12* and Maria has gi(en you a &udget of M12K per person$
%he company employs 200 people$ %he reception should &e semiformal$
,ou"(e documented the deli(era&les as follo's:
Docation selection
.ood and &e(erage menu
In(itations
/ntertainment
Insurance co(erage
@ecorations
Photographer
8genda
In addition to the deli(era&les* you 'ant to go o(er the follo'ing re7uirements 'ith Maria to &e
certain you &oth are in agreement:
%he location should &e some'here in the do'nto'n area$
/mployees are encouraged to &ring one guest* &ut no children$
%here 'ill &e an open &ar paid for &y Maria$
%he agenda 'ill include a speech &y Maria follo'ed &y the distri&ution of &onus checks to
e(ery employee?this is to &e kept secret until the reception$
%he decorations should include goldBtrimmed fountain pens 'ith the company logo at
e(ery place setting for the attendees to keep$
=nce you"(e documented all the particulars* you ask to speak 'ith Maria to go o(er this scope
statement and get her agreement &efore proceeding 'ith the project plan and task assignments$
Pu-lishing the 'cope $anagement Plan
Change is ine(ita&le$ =ne thing you and I kno' for certain is that changes are going to occur on
your ne#t project$ Change isn"t something to &e dreaded* &ut it is something to &e managed$ %he
scope management plan helps the project manager do just that$ %his plan is an important
supplementary document to the project plan as it descri&es ho' changes to the project scope 'ill
&e incorporated into the project$ It also defines the process of ho' to go a&out re7uesting a
change$
%he scope management plan should &e 'ritten and distri&uted at roughly the same time the
scope statement is pu&lished$ If you get the scope management plan in the hands of the
stakeholders early on* it 'ill hopefully eliminBate 7uestions a&out scope changes later in the
project$
%he purpose of the scope management plan* according to the Guide to the PMBOK* is to analy-e
the relia&ility and sta&ility of the project scope$ In other 'ords* it e#amines the likelihood that
scope change 'ill occur (meaning changes to goals* deli(era&les* or re7uirements!$ %he plan
ans'ers the 7uestions* 48re a lot of changes e#pected95 and 46o' dramatic 'ill the changes
&e95 %his is determined &y the comple#ity of the project you"re 'orking on$ %he e#ample of the
employee reception at the end of the last section pro&a&ly 'on"t ha(e a lot of change &ecause
the project is small and the deli(era&les and re7uirements are simple and (ery clear$
&he 'cope $anagement %hange Process
8ccording to the Guide to the PMBOK* the scope management change process can &e formal or
informal$ I 'ould agree that for small* uncomplicated projects 'ith one or t'o stakeholders* an
informal process 'ill 'ork 'ell$ Darge or comple# projects should al'ays ha(e a scope
management plan$ In either case* it"s &een my e#perience 'hether the process is formal or
informal* all change re7uests should &e put in 'riting$ 0takeholders and project managers can
sometimes ha(e foggy memories$ 8nd 'hat you think you said might not &e 'hat the stakeholder
heard and (ice (ersa$ @ocumenting the change re7uest eliminates these issues$
6mm* ha(e 'e talked a&out documentation9
8ll changes should &e re7uested in 'riting on a formal change re7uest form* and the impact of
the changes noted$ Changes 'ill usually impact one* if not all* of the triple constraints$ Aut for
no'* all 'e need to kno' is the kind of change re7uested and ha(e a highBle(el understanding of
its impact on time* cost* or 7uality$ %hese changes should &e logged and tracked throughout the
course of the project$ 0ome changes 'ill not &e appro(ed &ut might need to &e incorporated into
the ne#t product release or project$ If you log and file these change re7uests 'ith the project
information* they 'ill help you define the re7uirements for the ne#t project$ In a later chapter* 'e"ll
discuss the process for change appro(al and communication of the change$
.or the e#am* remem&er that the scope management plan is a document that identifies ho'
project scope 'ill &e managed and ho' those changes 'ill &e incorporated into the project$ It
assesses the pro&a&ility of scope changes* their fre7uency* and their impact$ .ormali-ing this
process for large or comple# projects is highly recommended$
Formulating the 'cope De!inition
Go' 'e"re getting to the meat of the project Planning process$ +e"(e identified and documented
all the project deli(era&les and re7uirements* and 'e"re ready to further &reak these do'n into
project 'ork$ In the %cope )efinition process* the project deli(era&les are &roken do'n into
smaller* managea&le components so that 'e can plan project tasks and acti(ities$ %his
su&di(iding of deli(era&les into smaller components is the purpose of the 0cope @efinition
process$ %he Guide to the PMBOK calls this decomposition$ +e can take this one step further &y
&reaking the smaller components do'n e(en further into 'hat the Guide to the PMBOK terms
'ork packages$ +e"ll co(er 'ork packages in a later section$
%his &reakingBdo'n process 'ill accomplish se(eral things for us* one of 'hich is impro(ing
estimates$ It"s easier to estimate the costs* time* and resources needed for indi(idual 'ork
components than it is to estimate them for a 'hole &ody of 'ork or deli(era&le$ >sing smaller
components also makes it easier to assign performance measures and controls$ %hese gi(e us a
&aseline to compare against throughout the project or phase$ 8nd finally* assigning resources and
responsi&ility for the components of 'ork makes &etter sense as se(eral resources 'ith different
skills might &e needed to complete one deli(era&le$ Areaking them do'n assures that
assignment* and the responsi&ility for that assignment* goes to the proper parties$
%he 0cope @efinition process has fi(e inputs that 'e"(e already co(ered else'here$ %hey are the
scope statement* project constraints* assumptions* other Planning process outputs* and historical
information$
%he tools and techni7ues of 0cope @efinition are the 'ork &reakdo'n structure templates and
decomposition$ %hese tools 'ork together to create the 'ork &reakdo'n structure (+A0!* 'hich
'e"ll look at ne#t$
%reating the Wor# +rea#own 'tructure
6a(e you e(er mapped out a family tree9 8 wor& $rea&down structure is (ery similar to a family
tree$ It maps out the deli(era&les of the project 'ith su&deli(era&les and acti(ities stemming from
each major deli(era&le in a tree format$ %he Guide to the PMBOK* pages KN and C0* descri&es a
+A0 this 'ay: 48 +A0 is a deli(era&leBoriented grouping of project components that organi-es
and defines the total scope of the projectI 'ork not included in the +A0 is outside the scope of
the project$5 0imply put* a +A0 is a deli(era&lesBoriented hierarchy that defines the 'ork of the
project$
%he +A0 'ill &e used throughout many of the remaining Planning processes and is an important
part of project planning$ 8s you pro&a&ly ha(e concluded* e(erything 'e"(e done so far &uilds on
the pre(ious step$ %he project charter outlines the project goals and major deli(era&les$ %he
scope statement further refines these deli(era&les into an e#hausti(e list$ Go'* that
comprehensi(e list of deli(era&les is going to &e used to &uild the frame'ork of the +A0$
%he importance and accuracy of the 'ork you"(e done up to this point can"t &e stressed enough$
,our +A0 'ill only &e as accurate as your list of deli(era&les$ %he deli(era&les 'ill &ecome the
groupings that 'ill form the higher le(els of the +A0 from 'hich acti(ities 'ill &e deri(ed$
%he +A0 should detail the full scope of 'ork needed to complete the project$ %his &reakdo'n 'ill
smooth the 'ay for estimating project cost and time* scheduling resources* and determining
7uality controls later in the Planning process$ Project progress 'ill &e &ased on the estimates and
measurements assigned to the +A0 segments$ 0o again* accuracy and completeness are
re7uired 'hen composing your +A0$
%onstructing the W+'
%here is no 4right5 'ay to construct a +A0$ In practice* the tree structure is used 7uite often$
(%his structure also resem&les an organi-ation chart$! Aut a +A0 could &e composed in outline
form as 'ell?the choice is yours$ %he organi-ation of the content in the +A0 is consistent no
matter 'hich form you use$ Its content is defined &y a series of le(els$ %hese le(els are often in
se7uential order* &ut they don"t ha(e to &e$ %he +A0 defines the 'ork that needs to &e done$ %he
se7uential ordering of those tasks takes place in a later step* although in practice* you"ll pro&a&ly
com&ine these steps$ +e"ll look at the +A0 content ne#t$
2nerstaning the Barious W+' .evels
8lthough the project manager is free to determine the num&er of le(els in the +A0 &ased on the
comple#ity of the project* the highest le(el of the +A0* le(el one* is considered the project itself$
%his is follo'ed &y the deli(era&les* 'hich might &e follo'ed &y more deli(era&les follo'ed &y
acti(ities and so on$ /ach of these &reakouts is called a le(el in the +A0 'ith the project itself as
le(el one* the deli(era&les as le(el t'o* and so on$ %he easiest 'ay to descri&e this process is
'ith an e#ample$ Det"s suppose you 'ork for a soft'are company that pu&lishes children"s
games$ ,ou"re the project manager for the ne' Ailly Ao&"s Aassoon game* 'hich teaches
children a&out music* musical rhythm* and &eginning sight reading$ %he first le(el of our +A0 is
the project nameI it appears at the top of the +A0* as sho'n in .igure :$1$
%he ne#t le(el should descri&e the major deli(era&les for the project$ In our e#ample* some of the
deli(era&les might &e re7uirements definition* design specifications* and programming$ %his isn"t
an e#hausti(e list of deli(era&lesI in practice* you 'ould go on to place all of your major
deli(era&les into the +A0 as le(el t'o content$ .or illustration purposes* 'e"ll just look at a slice
of the +A0 for this project$ .igure :$1 sho's the +A0 'ith le(el one and le(el t'o detail added$
Figure 7.1: +A0 le(els one and t'o
De(el three content might &e deli(era&les that are further &roken out from the major deli(era&les
of le(el t'o* or it might &e acti(ities that contri&ute to the deli(era&le$ =ur soft'are e#ample
sho's further deli(era&les as le(el three content$ 0ee .igure :$2 for an illustration of the +A0 so
far$
Figure 7.3: +A0 le(els one* t'o* and three
%he goal here is to e(entually &reak the 'ork out to the point 'here responsi&ility and
accounta&ility can &e assigned to a specific person or team of people for each unit of 'ork$ %he
higher le(els of the +A0 contain the deli(era&les and use nouns as their descriptors$ Feaching
'ay &ack to my grade school /nglish* I recall that a noun is a person* place* or thing$ In our
e#ample* the deli(era&les in le(el t'o and three are descri&ed using nouns$ %he acti(ity le(el*
le(el four in our e#ample in .igure :$J* is descri&ed using (er&s* or action 'ords$ 0ome of the
(er&s used in le(el four are define* design* determine* etc$ %here are many more acti(ities that
'ould go 'ith these deli(era&les* &ut for the sake of illustration* 'e"(e listed just a fe' for each
deli(era&le to gi(e you an idea of ho' the +A0 is constructed$
,ou can see from our illustrations ho' a poor scope definition* or inadeB7uate list of deli(era&les*
'ill lead to a poorly constructed +A0$ Got only 'ill this make the +A0 look sickly* &ut the project
itself 'ill suffer and might e(en succum& to the dreaded premature project demise$ %he final cost
of the project 'ill &e higher than estimated* and lots of re'ork (translate as late nights and
'eekends! 'ill &e needed to account for the missing 'ork not listed on the +A0$ ,ou can
construct a good +A0 and maintain a healthy project &y taking the time to document all the
deli(era&les during the 0cope Planning process$
Figure 7.4: +A0 le(els one* t'o* three* and four
+ork &reakdo'n structures can &e constructed using +A0 templates or the +A0 from a similar
completed project$ 8 &it earlier* 'e mentioned that +A0 templates are a tool and techni7ue in the
0cope @efinition process$ +hile e(ery project is uni7ue* many companies repeat the same kind
of projects o(er and o(er$ %he deli(era&les are similar from project to project* and they generally
follo' a consistent path$ %he +A0 templates can &e used in a case like this as a tool to simplify
the +A0 process* sa(ing the project manager time$
+e also mentioned that decomposition is a tool and techni7ue of the 0cope @efinition process$
%his is the &reaking do'n of the deli(era&les into smaller* managea&le components* as our
illustrations ha(e sho'n$
Darge* comple# projects are often composed of se(eral su&projects that collecti(ely make up the
main project$ %he +A0 for a project such as this 'ould sho' the su&projects as le(el t'o detail$
%hese su&projects 'ould then list their major deli(era&les as le(el three content* perhaps more
deli(era&les as le(el four* and acti(ities as le(el fi(e and so on$
2nique W+' Ienti!iers
/ach element at each le(el of the +A0 should &e assigned a uni7ue identifier according to the
Guide to the PMBOK$ %his uni7ue identifier is typically a num&er* and it"s used to track the cost of
the +A0 element$ %hese num&ers are usually associated 'ith the corporation"s financial system
chart of accounts$ Collecti(ely* these numeric identifiers are kno'n as the code of accounts* also
called a chart of accounts$ %he num&ering scheme for the re7uirements definition &ranch of the
+A0 might look something like this:
10 Fe7uirements @efinition
10B1 1ame Fe7uirements
10B1B1 @efine Characters
10B1B2 @efine Instruments
10B2 0oft'are Fe7uirements
10B2B1 @etermine Danguage
10B2B2 @efine 0ystems
0eal Worl 'cenario5&he .incoln 'treet O!!ice +uiling
.lagship International has just purchased a ne' &uilding to house their gro'ing staff$ %hey
consider themsel(es (ery lucky to ha(e 'on the &id on the property located in a prime section of
the do'nto'n area$ %he &uilding is a historic &uilding and is in need of some repairs and
upgrades to make it suita&le for office space$ Constructing the reno(ations 'ill re7uire special
handling and care as outlined in the 0istorical %ociety Building 1e#isions Guide$
8lfredo Magginetti is the project manager assigned to the reno(ation project$ 8lfredo has already
gathered the deli(era&les for this project$ In so doing* he"s disco(ered that he 'ill not &e a&le to
manage all the 'ork himself$ 6e 'ill need se(eral su&project managers 'orking on indi(idual
deli(era&les all reporting to him$ 8lfredo calls a meeting 'ith the other project managers to deli(er
the +A0$ Det"s ea(esdrop on the meeting$
48s you all kno'* 'e"re planning to mo(e into the Dincoln 0treet &uilding &y Go(em&er 1st$ %here
is 7uite a &it of 'ork to do &et'een no' and then* and I"m enlisting each of you to manage a
segment of this project$ %ake a look at this +A0$5
8 portion of the +A0 8lfredo constructed looks like this:
.incoln 'treet +uiling 0enovation
1$0 .acility 0afety
1$1 0prinkler 0ystem

1$2 /le(ators

1$J /mergency /(acuation Plans
2$0 8s&estos 8&atement
2$1 Inspection and Identification

2$2 Plans for Femo(al
J$0 =ffice 0pace
J$1 Auilding .loor Plans

J$2 Plans for =ffice 0pace 8llocation

J$J Plans for Areak Foom .acilities

J$: Plans for /mployee +orkout Foom
8lfredo continues* 4I"m going to manage the .acility 0afety project$ 8drian* I"d like you to take the
8s&estos 8&atement project* and =rlando* you"re responsi&le for the =ffice 0pace project$5
48lfredo*5 8drian says$ 48s&estos a&atement is going to take contractors and speciali-ed
e7uipment$ +e don"t ha(e staff to do these tasks$5
4I understand$ ,ou"ll need to take charge of securing the contractor to handle this$ ,ou"re
responsi&ility 'ill &e to manage the contractor and keep them on schedule*5 8lfredo ans'ers$
=rlando reminds 8lfredo that he"s missed a deli(era&le on the +A0$ 4Part of the =ffice 0pace
project needs to include the net'ork communications and telecommunications e7uipment rooms$
I don"t see that on here$5
41ood point* =rlando*5 8lfredo says$ 4%he le(el three and four elements of this +A0 are not
complete$ /ach of you has &een assigned to the su&project le(el* or le(el t'o$ ,our first
assignment is to meet &ack here in 2 'eeks 'ith your +A0 &roken do'n to the acti(ity le(el for
each of your projects$ 8nd I"d like to see some ideas a&out the staff assignments you"d make at
the acti(ity le(el and ho' long you think these acti(ities 'ill take$ +e"ll refine those after 'e meet
ne#t$5
De!ining Wor# Pac#ages
8s mentioned* the project manager is free to determine the num&er of le(els in the +A0 &ased
on the comple#ity of the project$ ,ou need to include enough le(els to accurately estimate project
time and costs &ut not so many le(els that it"s difficult to distinguish &et'een the acti(ities$
Fegardless of the num&er of le(els in a +A0* the lo'est le(el in a +A0 is called a wor& pac&age$
+ork packages are the tasks that can &e easily assigned to one person* or team of people* 'ith
clear accounta&ility and responsi&ility for completing the assignment$ 8ssignments are easily
made at the 'ork package le(elI ho'e(er* assignments can &e made at any le(el in the +A0 as
in the 6istorical Auilding scenario$ %he 'ork package le(el is 'here time estimates* cost
estimates* and resource estimates are determined$
Incluing 1ctivities
%here is some contro(ersy among project managers o(er 'hether acti(ities should &e listed on
the +A0$ %here isn"t a rule in the Guide to the PMBOK regarding thisI it"s up to the project
manager to determine ho' far to &reak the deli(era&les do'n and 'hether to include acti(ities$ In
practice* I often include acti(ities on my 'ork &reakdo'n structure as it facilitates other Planning
processes later on$ In this case* the acti(ities are the 'ork package le(el$ 6o'e(er* you should
reali-e that large* comple# projects 'ill not likely list acti(ities on the +A0$ Darge projects made
up of a series of smaller su&projects 'ill likely &reak the project do'n to a 'ork package le(el$ In
this case* the 'ork package is a collection of related tasks$ %he 'ork packages can then &e
assigned to indi(idual managers 'ho 'ill in turn &reak them do'n into acti(ities during the 8cti(ity
@efinition process later in the Planning process$
%his may seem selfBe(ident* &ut 'ork elements not sho'n on the +A0 are not included in the
project$ %he same holds true for the scope statement?if the deli(era&le isn"t noted there* it isn"t
part of the project$
%he Guide to the PMBOK mentions a +A0 dictionary$ %his contains a description of the 'ork
package le(el and details regarding the acti(ities 'ithin the 'ork package$ Information such as
costs* &udgets* resource assignments* and acti(ity descriptions 'ould &e found in the +A0
dictionary$
Noting $ilestones
%here"s one last thing I should mention regarding the +A0$ 0ome project managers choose to
note milestones on their +A0$ 8 milestone is a major accomplishment in a project$ %he
completion of a deli(era&le could &e a milestone* for e#ample$ Milestones are like checkpoints
along the 'ay in the project to help determine progress$ In most cases* the higher le(els of the
+A0 can &e flagged as milestones$ %he higher le(els indicate major accomplishments on the
project$ .or e#ample* 8s&estos 8&atement in the 4Dincoln 0treet Auilding Feno(ation5 e#ample is
a major accomplishment that could &e considered a milestone$ %he project 'ould not &e
considered successful or complete if this milestone 'as not met$ 0ometimes critical acti(ities can
&e flagged as milestones as 'ell$ +e"ll talk more a&out milestones in a later chapter$
'cope 'tatement 2pates
Many times* you"ll find 'hen you"re creating the +A0 that deli(era&les might need further
definition or refining$ 8s you 'ork through the decomposition process* you might disco(er ne'
deli(era&les that 'eren"t thought of during the 0cope Planning process$ %hese changes should
&e reflected in the scope statement$ 0cope statement updates are the output of the 0cope
@efinition process that allo' you to do just that$
%ommunicating with 'ta#eholers
+e"(e talked a good deal a&out documentation so far* and this topic 'ill continue to come up
throughout the remainder of the &ook$ @ocumentation is only one side of the e7uation though?
communication is the other$ ,ou need to kno' 'ho gets 'hat information and 'hen$ %he
.ommunications Planning process determines the communication needs of the stakeholders$
%he communications management plan* 'hich is the only output of this process* documents the
types of information needs the stakeholders ha(e* 'hen the information should &e distri&uted*
and ho' the information 'ill &e deli(ered$
%he type of information you 'ill typically communicate includes status reports* status re(ie'
meetings* scope statements and scope statement updates* project &aseline information*
performance measures* project acceptance* and so on$ +e"ll co(er all of these topics in the
remaining chapters of this &ook$ +hat"s important to kno' no' is that the information needs of
the stakeholders should &e determined early on in the Planning process so that as you de(elop
more management plans* risk assessments* and so on* you kno' 'ho gets 'hat information and
ho' it should &e deli(ered$
%he information that 'ill &e shared 'ith stakeholders and the distri&ution methods are &ased on
the needs of the stakeholders* the project comple#ity* and the organi-ational policies$ 0ome
communications may &e informal?a chat &y the 'atercooler* for instance?'hile other
communications are 'ritten and a copy is filed 'ith the project files$
%he communications management plan documents ho' to collect* store* file* and make
corrections or updates to pre(iously pu&lished material$ It also discusses the timing of the
communication$ %he communications management plan descri&es ho' stakeholders can access
project information &et'een pu&lished dates as 'ell$ ,ou might consider setting up an intranet
site for your project and posting the appropriate project documentation there for the stakeholders
to access anytime they 'ish$
+e 'ill discuss communication methods in more depth in Chapter E$
,ou"re just finishing your phone con(ersation 'ith Hill and see @irk headed to'ard your office$
%he realtor has found a great location* and you and Hill ha(e set up a time to take a tour later this
'eek$
@irk 'alks in* crosses his arms o(er his chest* and stands ne#t to your desk 'ith an 4I"m here for
ans'ers5 look$ 4%hought I"d drop &y and see if you ha(e signed a lease and gotten Hake started
on that &uildBout yet$5
4I just got off the phone 'ith Hill*5 you reply$ 4+e set up a time to tour a location the end of this
'eek$5
4+hat"s &een the holdup95 @irk asks$ 4I thought 'e"d &e ready to start the &uildBout a&out no'$5
4I"(e &een 'orking on the project plans$5
4Project plans*5 @irk interrupts$ 4+e already ha(e a plan$ %hat charter thing you dre' up last 'eek
spelled things out pretty clearly$5
4%he charter 'as the project kickBoff* and I agree it did include all the deli(era&les$ 6o'e(er* it"s
not detailed enough to start mapping out the project plans$ I 'rote a scope statement that further
details the project deli(era&les and other project information$ I"(e already for'arded that to you$
I"(e also dra'n up a 'ork &reakdo'n structure 'ith all the deli(era&les sho'n in a tree structure
that I"d like to go o(er 'ith you &efore sho'ing it to the project team$5
4+e aren"t &uilding trees* 'e"re &uilding a ne' store$ I don"t understand 'hy you"re 'asting all
this time planning$ +e all kno' 'hat the goals are$5
4@irk*5 you reply$ 4If 'e put the right amount of effort and time into the planning stage* the
e#ecution stage should go pretty smoothly$ Planning is pro&a&ly one of the most important things
'e can do on this project$ If 'e don"t plan correctly* 'e might miss something (ery important that
could delay the store opening$ %hat date is pretty firm* I thought$5
4,es the date is firm$ Aut I don"t see ho' 'e could miss anything$ ,ou and I ha(e met se(eral
times* and I kno' you"(e met 'ith Hill and Hake$ %hey"re the other key players on this$5
4,ou"re right* I ha(e met 'ith Hill and Hake$ 8nd that"s a perfect e#ample of 'hy 'e need to plan$
+hen I met 'ith Hill* she told me ho' all the store"s data is communicated (ia a satellite net'ork
connection on a nightly &asis$ %hat means 'e need to in(ol(e the I% group$5 ,ou glance do'n at
your notes$ 4Ficardo Famire- heads up I%$ I spoke 'ith him last 'eek a&out his deli(era&les* and
I"(e included his group as a su&project on the 'ork &reakdo'n structure$5
4=h*5 @irk replies$ 4I forgot a&out I%$ ,ou"re right* that"s an important part of the project* and 'e
can"t lea(e them out$ =kay* I"m &eginning to see 'hy you"re taking planning seriously$ Det"s ha(e
a look at this 'ork &reakdo'n structure$5
,ou hand @irk a copy of the +A0$ 8 partial (ersion is sho'n here$
Inter(ie'ed project stakeholders and &usiness process o'ners for further definition of
deli(era&les
Created project scope statement* 'hich includes:
Project justification?the &usiness need$
Project product?the product description$
Project deli(era&les?clear and concise deli(era&les$
Project o&jecti(es?including constraints$ =&jecti(es are specific* measura&le* and timely$
@ecomposed deli(era&les into a +A0
+A0 includes:
De(el one is the project$
De(el t'o is su&projects or deli(era&les$
De(el three is deli(era&les or acti(ities$
Femaining le(els are acti(ities$
Dast le(el of +A0 is the 'ork package le(el 'here time and cost estimates can &e
defined in the ne#t process$
'ummar"
%his chapter started us on the road to project Planning (ia the 0cope Planning process and the
0cope @efinition process$ 0cope Planning is 'here 'e produced the scope statement* 'hich
descri&es the project goals* deli(era&les* and re7uirements$ %he scope statement forms the
&aseline 'e"ll use to 'eigh future project decisions$ %he scope statement must contain an
e#hausti(e list of project deli(era&les that 'ill &e used in future Planning processes$
Measurement criteria agreed upon &y the stakeholders and project manager are associated 'ith
these deli(era&les and documented in the scope statement to track project progress$
%he deli(era&les* re7uirements* and measurement criteria should &e spelled out clearly and
concisely in the scope statement to a(oid any misunderstandings later in the project$ .ormal
acceptance of the scope statement is re7uired &y the stakeholders and project manager$
8cceptance is usually accompanied &y signBoffs on the document indicating that it has &een read
and the signing party agrees 'ith the deli(era&les and re7uirements of the project$
%he purpose of the scope management plan is to analy-e the relia&ility and sta&ility of the project
scope$ %he scope management plan documents the process to manage project scope and
changes to the scope$
%he 0cope @efinition process is concerned 'ith decomposition and the production of a 'ork
&reakdo'n structure$ @ecomposition is &reaking do'n deli(era&les into managea&le pieces of
'ork* 'hich might &e further &roken do'n into acti(ities$
8 'ork &reakdo'n structure (+A0! is a deli(era&lesBoriented group of project essentials$ %he
highest le(els of the +A0 are descri&ed using nouns* and the lo'est le(els are descri&ed 'ith
(er&s$ /ach element in the +A0 has its o'n set of o&jecti(es and deli(era&les that must &e met
in order to fulfill the deli(era&les of the ne#t highest le(el* and ultimately the project itself$ In this
'ay* the +A0 (alidates the completeness of the 'ork$
%he lo'est le(el of the +A0 is kno'n as 'ork packages$ %his &reakdo'n allo's the project
manager to determine cost estimates* time estimates* resource assignments* and 7uality
controls$
(6am (ssentials
+e a-le to name the 'cope Planning outputs. %he scope statement* supporting detail* and
scope management plan$
2nerstan the purpose o! the scope statement. %he scope statement ser(es as a &aseline
for future project decisions$ %he project o&jecti(es and deli(era&les and their 7uantifia&le
measurements are documented in the scope statement and are used &y the project manager and
the stakeholders to determine if the project 'as completed successfully$
+e a-le to name the 'cope De!inition tools an techniques an outputs. %he tools and
techni7ues from 0cope @efinition are decomposition and +A0 templates$ @ecomposition is
&reaking the deli(era&les do'n into 'orka&le* managea&le units of 'ork$ %he outputs are the
'ork &reakdo'n structure and scope statement updates$
+e a-le to escri-e the purpose o! the scope management plan. %he scope management
plan descri&es ho' scope changes 'ill &e handled during the project and ho' to re7uest
changes$ It details ho' likely it is that scope changes 'ill occur* their fre7uency* and their impact$
+e a-le to e!ine a W+' an its components. %he +A0 is a deli(era&lesBoriented hierarchy$ It
uses the deli(era&les from the scope statement or similar documents and decomposes them into
logical* managea&le units of 'ork$ De(el one is the project le(el* le(el t'o is the major deli(era&le
le(el or su&project le(el* and so on$ %he lo'est le(el of any +A0 is called a 'ork package$
+e a-le to escri-e the purpose o! the communications management plan. %he
communications management plan determines the communication needs of the stakeholders$ It
documents 'hat information 'ill &e distri&uted* ho' it 'ill &e distri&uted* to 'hom* and the timing
of the distri&ution$ It also documents ho' to collect* store* file* and make corrections to pre(iously
pu&lished material$
<e" &erms
code of accounts 0cope Planning
communications
management plan
scope statement
Communications
Planning
supporting detail
decomposition 'ork &reakdo'n
structure (+A0!
0cope @efinition 'ork package
scope
management plan

0eview =uestions
1. ,ou are a project manager for Daredo Pioneer"s %ra(eling Fodeo 0ho'$ ,ou"re
heading up a project to promote a ne' line of sou(enirs to &e sold at the sho's$ ,ou
need to gather the inputs to 'rite the scope statement$ ,ou gather 'hich of the
follo'ing9
8$ Project charter* product description* assumptions* and constraints
A$ Project charter* product analysis* and cost &enefit analysis
C$ Product description* product analysis* and project charter
@$ Product description* assumptions* constraints* and product analysis
3. ,ou are a project manager for Daredo Pioneer"s %ra(eling Fodeo 0ho'$ ,ou"re
heading up a project to promote a ne' line of sou(enirs to &e sold at the sho's$
,ou"re ready to 'rite the scope statement* and you kno' it should contain 'hich of the
follo'ing9
8$ Project justification* &enefitOcost analysis* project deli(era&les* and product
analysis
A$ Product analysis* project product* and project deli(era&les
C$ Project justification* project product* project deli(era&les* and project
o&jecti(es
@$ Product analysis* project deli(era&les* &enefitOcost analysis* and project
o&jecti(es
4. +hich of the follo'ing is true regarding the scope statement9
8$ It descri&es ho' to make changes to project scope$
A$ A$It descri&es project deli(era&les and ser(es as a &aseline for future project
decisions$
C$ C$It assesses the sta&ility of the project scope and is a &aseline for future
project decisions$
@$ It assesses the relia&ility of the project scope and descri&es the fre7uency of
changes and their impacts$
7. ,ou are a project manager for an agricultural supply company$ ,ou ha(e just
completed and o&tained signBoff on the scope statement for your ne' Gatural Aug
Austers project$ 8 key stakeholder has informed you that a deli(era&le is missing from
the scope statement$ %his deli(era&le is a critical success factor$ ,ou should do 'hich
of the follo'ing9
8$ Inform the stakeholder that 'ork not stated in the scope statement is e#cluded
from the project$
A$ Modify the scope statement to reflect the ne' deli(era&le$
C$ Inform the stakeholder that this deli(era&le can &e included in the ne#t project
since signBoff has already &een o&tained$
@$ Modify the scope statement after an appro(ed change re7uest has &een
recei(ed from the stakeholder$
8. ,ou are a project manager responsi&le for the construction of a ne' office comple#$
,ou are taking o(er for a project manager 'ho recently left the company$ %he prior
project manager completed the project charter and the scope statement for this
project$ In your inter(ie's 'ith some key stakeholders* you conclude that the scope
statement 'as poorly constructed$ ,ou kno' all of the follo'ing are true e#cept:
8$ It 'ill &e difficult to assess future project decisions from this scope statement$
A$ It 'ill &e difficult to decompose the deli(era&les from this scope statement$
C$ It 'ill &e difficult to assess cost and time estimates from this scope statement$
@$ It 'ill &e difficult to create an accurate +A0 from this scope statement$
9. ,ou are a project manager responsi&le for the construction of a ne' office comple#$
,ou are taking o(er for a project manager 'ho recently left the company$ %he prior
project manager completed the scope statement and scope management plan for this
project$ In your inter(ie's 'ith some key stakeholders* you conclude 'hich of the
follo'ing9
8$ %hey understand that the scope statement assesses the sta&ility of the project
scope and outlines ho' to incorporate scope changes into the project$
A$ %hey understand that the scope management plan assesses the sta&ility of
the project scope and outlines ho' to incorporate scope changes into the
project$
C$ %hey understand that the scope management plan is deli(era&les oriented
and cost estimates can &e easily deri(ed it$
@$ %hey understand that the scope statement is deli(era&les oriented and cost
estimates can &e easily deri(ed from it$
;. 8ll of the follo'ing are true a&out decomposition e#cept:
8$ It"s an output of the 0cope @efinition process$
A$ It"s a tool and techni7ue of the 0cope @efinition process$
C$ It is used to create a +A0$
@$ It su&di(ides the major deli(era&les into smaller components$
>. ,our company has asked you to &e the project manager for the product introduction of
their ne' @esk%op Fock media system$ ,ou recently pu&lished a document that
esta&lishes the scope &aseline$ +hich of the follo'ing is true9
8$ %his is the scope statement* 'hich is an output of the 0cope Planning
process$
A$ %his is the scope statement* 'hich is an output of the 0cope @efinition
process$
C$ %his is the scope statement* 'hich is a tool and techni7ue of the 0cope
@efinition process$
@$ %his is the scope management plan* 'hich is an output of the 0cope @efinition
process$
?. +hat are the outputs of the 0cope Planning process9
8$ Product analysis* scope statement* and scope management plan
A$ 0cope statement* scope management plan* and +A0
C$ 0cope statement* supporting detail* and +A0
@$ 0cope statement* supporting detail* and scope management plan
1@. ,our company has asked you to &e the project manager for the product introduction of
their ne' @esk%op Fock media system$ ,ou recently pu&lished the scope statement
and the supporting detail$ %he supporting detail contains all of the follo'ing e#cept:
8$ Constraints
A$ =ther project information not noted in the scope statement
C$ Code of accounts
@$ 8ssumptions
11. ,ou are a project manager for 1iraffe /nterprises$ ,ou"(e recently taken o(er for a
project manager 'ho lied a&out his PMI certification and 'as su&se7uently fired$
>nfortunately* he did a poor jo& of 0cope @efinition$ ,ou kno' if you don"t correct this*
one of the follo'ing could happen:
8$ %he stakeholders 'ill re7uire o(ertime from the project team to keep the
project on schedule$
A$ %he +A0 'ill ad(ersely affect the deli(era&le &reakdo'ns* and costs 'ill
increase$
C$ %he scope management plan 'ill re7uire changes$
@$ %he project costs could increase* there might &e re'ork* and schedule delays
may result$
13. 0cope definition is necessary for all of the follo'ing reasons e#cept:
8$ %o su&di(ide project deli(era&les into smaller components
A$ %o assess the sta&ility of the project scope
C$ %o facilitate time and cost estimates
@$ %o facilitate responsi&ility and assignment
14. ,ou are 'orking on a project that is similar in scope to a project performed last year &y
your company$ ,ou might consider 'hich of the follo'ing9
8$ >sing the pre(ious project"s alternati(es identification as a template
A$ Feusing the pre(ious project"s &enefitOcost analysis as justification for this
project
C$ >sing the pre(ious project"s +A0 as a template
@$ Feusing the pre(ious project"s product description 'hen 'riting the scope
statement
17. ,our company* )ick %hat Aall 0ports* has appointed you project manager for their ne'
Cricket product line introduction$ %his is a national effort* and all the retail stores
across the country need to ha(e the ne' products on the shel(es &efore the media
ad(ertising &lit- &egins$ %he product line in(ol(es three ne' products* some 'ith
multiple deli(era&les$ ,ou are ready to create the +A0$ +hich of the follo'ing is true9
8$ %he +A0 should include the three ne' products and the ad(ertising campaign
as le(el t'o deli(era&les$
A$ %he +A0 should include the three ne' products as le(el t'o deli(era&les$
C$ %he +A0 should include the three ne' products as le(el t'o deli(era&les and
the ad(ertising campaign as a le(el three deli(era&le$
@$ %he +A0 should include the three ne' products and the ad(ertising campaign
as le(el three deli(era&les$
18. ,our company* )ick %hat Aall 0ports* has appointed you project manager for their ne'
Cricket product line introduction$ %his is a national effort* and all the retail stores
across the country need to ha(e the ne' products on the shel(es &efore the media
ad(ertising &lit- &egins$ %he product line in(ol(es three ne' products* some 'ith
multiple deli(era&les$ %he 0cope @efinition process is no' complete$ +hich of the
follo'ing is true9
8$ %he +A0 template* an output of the 0cope @efinition process* 'as used from
the pre(ious project to create the +A0 for this project$ %he +A0 encompasses
the major deli(era&les for the project$
A$ %he +A0 template from the pre(ious project* an output from the 0cope
Planning process* 'as used to create the +A0 for this project$ %he +A0
encompasses the major deli(era&les for the project$
C$ %he +A0* an output of the 0cope Planning process* has &een created* and it
encompasses the full scope of 'ork for the project$
@$ %he +A0* an output of the 0cope @efinition process* has &een created* and it
encompasses the full scope of 'ork for the project$
19. 8ll of the follo'ing are true regarding the +A0 e#cept:
8$ It is a deli(era&lesBoriented grouping of project deli(era&les and elements$
A$ It defines and organi-es the 'ork of the project in a hierarchical form$
C$ It pro(ides a frame'ork for the 'ork of the project* and 'ork not sho'n on the
+A0 is not included in the project$
@$ It defines all the deli(era&les of the project* &ut the acti(ities le(el should not
&e listed on the +A0$
1;. ,ou are the project manager for Ducky 0tars nightclu&s$ %hey speciali-e in li(e country
and 'estern &and performances$ ,our ne'est project is in the Planning process$
,ou"(e pu&lished the scope statement and scope management plan$ %he document
that descri&es 'ho 'ill recei(e copies of this information as 'ell as future project
information* ho' it should &e distri&uted* and ho' the information should &e stored
and filed is 'hich of the follo'ing9
8$ 0cope management plan
A$ Communications management plan
C$ Information distri&ution plan
@$ Project charter
1>. ,ou are the project manager for Ducky 0tars nightclu&s$ %hey speciali-e in li(e country
and 'estern &and performances$ ,our ne'est project is in the Planning process$ ,ou
are 'orking on the +A0$ %he finance manager has gi(en you a num&ering system to
assign to the +A0$ +hich of the follo'ing is true9
8$ %he num&ering system is a uni7ue identifier kno'n as the code of accounts*
'hich is used to track the costs of the +A0 elements$
A$ %he num&ering system is a uni7ue identifier kno'n as the +A0 dictionary*
'hich is used to track the descriptions of indi(idual 'ork elements$
C$ %he num&ering system is a uni7ue identifier kno'n as the code of accounts*
'hich is used to track time and resource assignments for indi(idual 'ork
elements$
@$ %he num&ering system is a uni7ue identifier kno'n as the +A0 dictionary*
'hich is used to assign 7uality control codes to the indi(idual 'ork elements$
1?. ,ou"(e constructed the +A0 for your recent project$ De(el t'o assignments ha(e &een
made* and you"(e re7uested that the su&project managers report &ack to you in J
'eeks 'ith each of their indi(idual +A0s constructed$ 8ll of the follo'ing are true
e#cept:
8$ %he 'ork package le(el facilitates resource assignments$
A$ %he 'ork package le(el is the lo'est le(el in the +A0$
C$ %he 'ork package le(el defines the agreedBupon deli(era&les$
@$ %he 'ork package le(el facilitates cost and time estimates$
3@. %he grouping of project elements &y deli(era&les is kno'n as 'hat9
8$ %he code of accounts
A$ %he 'ork package
C$ %he 'ork &reakdo'n structure
@$ %he 'ork &reakdo'n dictionary
1nswers
1. 8 %he inputs of the 0cope Planning process are product description* project charter*
constraints* and assumptions$
3. C %he scope statement includes all of the follo'ing: project justification* project product*
project deli(era&les* and project o&jecti(es according to the Guide to the PMBOK$
4. A %he scope statement descri&es the project deli(era&les* re7uirements* and o&jecti(es$ It
ser(es as a &aseline for future project decisions$
7. @ %he scope statement 'ill change throughout the project as change re7uests are recei(ed
and appro(ed$ Project managers must &e certain to seek out all deli(era&les &efore pu&lishing
the scope statement to pre(ent situations like this$
8. C Cost estimates* time estimates* and 7uality controls are deri(ed from the +A0 in the
0cope @efinition process* not from the scope statement* 'hich is an output of the 0cope
Planning process$
9. A %he scope management plan assesses the sta&ility and relia&ility of the project scope and
addresses ho' fre7uently scope changes 'ill occur and 'hat their impacts might &e$ %he
scope management plan outlines the method for re7uesting changes to the project scope and
for incorporating those changes into the project$
;. 8 @ecomposition su&di(ides the major deli(era&les into smaller components$ It is a tool and
techni7ue of 0cope @efinition* along 'ith +A0 templates* and this process is used to create a
+A0$
>. 8 %he scope statement esta&lishes the &aseline for the project$ %he scope statement is an
output of the 0cope Planning process$
?. @ %he outputs of the 0cope Planning process are the scope statement* supporting detail*
and the scope management plan$
1@. C %he code of accounts is assigned to the elements in the +A0$
11. @ 0election 8 might seem like a correct ans'er* &ut selection @ is a more correct ans'er$
+e don"t ha(e enough information to determine if stakeholders 'ill re7uire o(ertime$ +e do
kno' that poor 0cope @efinition leads to cost increases* re'ork* schedule delays* and poor
morale$
13. A %he scope management plan assesses the sta&ility of the project scope$
14. C +A0s from pre(ious projects can &e used as templates on projects that are producing
similar products or ser(ices$ 0ome companies 'rite +A0 templates to &e used for projects of
similar scope$
17. 8 De(el one of the +A0 is the project itself$ %here are three ne' products plus the
ad(ertising campaign$ /ach of these is a su&project under le(el one$
18. @ %he +A0 details the entire scope of the project and includes all deli(era&les$ It is an
output of the 0cope @efinition process$
19. @ It is up to the project manager to determine ho' many le(els to detail on the +A0$ 0mall
projects can easily sho' acti(ities on the +A0$
1;. A %he communications management plan documents 'hat information 'ill &e distri&uted*
ho' it 'ill &e distri&uted* to 'hom* and the timing of the distri&ution$ It also documents ho' to
collect* store* file* and make corrections to pre(iously pu&lished material$
1>. 8 /ach element in the +A0 is assigned a uni7ue identifier$ %hese are collecti(ely kno'n as
the code of accounts$ %ypically* these codes are associated 'ith a corporate chart of accounts
and are used to track the costs of the indi(idual 'ork elements in the +A0$
1?. C %he 'ork package le(el is the lo'est le(el in the +A0 and facilitates resource assignment
and cost and time estimates$ %he agreedBupon deli(era&les in selection C 'ould &e higher
le(els in the +A0$
3@. C %he +A0 is the deli(era&lesBoriented hierarchy of project 'ork$
Chapter K: 0esource Planning an (stimating
%hapter:
J$ @e(elop Fesource Management Plan$
:$ Fefine %ime and Cost /stimates$
6old on to your hats2 +e"re going to co(er a lot of material in this chapter* &ut it 'ill go fast* I
promise$ +e"ll start out 'ith a section on Fesource Planning* =rgani-ational Planning* and 0taff
8c7uisition$ %hese particular processes don"t get hea(y co(erage on the e#am* so 'e"ll just touch
on the important points for each of these topics$ Ae sure to study the inputs* tools and techni7ues*
and outputs for each of these processes so you understand 'hich ones go 'ith 'hich process$
+e 'on"t &e a&le to go into much depth on the inputs and outputs* &ut 'e"ll note the ones that
are potential e#am 7uestions$ Many of them are self e#planatory$
+e"ll spend the majority of our time in this chapter looking at the time and cost estimating
techni7ues$ ,ou"ll find se(eral e#am 7uestions on these areas* so spend some time
understanding and memori-ing the tools and techni7ues in all of these processes$
Developing a 0esource $anagement Plan
8ll projects re7uire resources* from the smallest to the largest$ 1esources in this case does not
mean just peopleI it means all the physical resources re7uired to complete the project$ %his
includes people* e7uipment* supplies* materials* soft'are* hard'are?and the list goes on
depending on the project you"re 'orking on$ 1esource Planning is the process of determining
'hat physical resources are needed* and in 'hat 7uantity* to perform project acti(ities$
@e(eloping a resource management plan encompasses se(eral processes including Fesource
Planning* =rgani-ational Planning* 0taff 8c7uisition* 0olicitation Planning* and Procurement
Planning$ %he com&ined outputs from these processes 'ill comprise your resource management
plan$ +e"ll co(er 0olicitation Planning and Procurement Planning in the ne#t chapter$
0esource Inputs
%he Fesource Planning process has se(eral inputs you are already familiar 'ith* one of 'hich is
the +A0$ %hree inputs are ne' to this processI they are the resource pool description*
organi-ational policies* and acti(ity duration estimates$
%he resource pool description lists the types of resources that might &e needed for the project$
.or e#ample* if you are 'orking on a project that re7uires the use of speciali-ed e7uipment during
the course of the project* the resource pool description should contain the details concerning this
resource* and the specific kno'ledge or skills needed to use the e7uipment$ %he same is true for
human resources$ 0uppose you need an e#pert in thermodynamics in one or se(eral phases of
your project$ %he resource pool description should list this specific resource re7uirement$ Dist all
the materials* e7uipment* skills* or special talents you might need during any part of your project
in this document$
=rgani-ational policies regarding materials purchases* hiring processes* leases* (endor
relationships* and so on should &e taken into consideration 'hen performing Fesource Planning$
@on"t confuse this input 'ith the =rgani-ational Planning process* 'hich 'e"ll discuss in the ne#t
section$ =rgani-ational policies in this case are merely ho' the company handles o&taining
supplies and resources$ 8re there policies and procedures in place that should &e follo'ed9 If so*
you should take note of the procedures and adhere to them 'hen ordering supplies* hiring staff*
and so on$
8cti(ity duration estimates are an estimate of the num&er of 'ork periods needed to complete the
acti(ities listed on the +A0$ %hey are an output of the 8cti(ity @uration /stimating process$ +e"ll
co(er this process in more detail a little later in this chapter$
Documenting 0esource 0equirements
%he resource pool description and organi-ational policies* along 'ith the other inputs and tools
and techni7ues in this process* 'ill &e used to produce the resource re7uirements output$ %he
resource re7uirements document is a detailed description of the kinds of resources needed for
the project and the 7uantity needed of each resource$ Fesource needs and resource 7uantity
should &e listed for each element in the +A0$
0taffing re7uirements are a su&set of resource re7uirements$ Femem&er that the resource
re7uirements document details for all the resources re7uired for the project* not just staffing
resources$ %he staffing re7uirements list should identify the kinds of skills re7uired and the
indi(iduals or groups 'ho might pro(ide these skills to the project$ %he staffing re7uirements list
should also document the time frames during the project 'hen these skills 'ill &e needed$ .or
e#ample* the thermodynamics e#pert might &e needed only during the design phase* so &e
certain to note 'here and 'hen on the +A0 this e#pert is needed$
8 strange thing happens here$ Fesource re7uirements &ecome an input to other Planning
processes$ Aut so do staffing re7uirements* 'hich are a su&set of resource re7uirements$ %his is
the only process 'here an output is split into t'o pieces and each piece &ecomes an input to
other processes$
Developing an Organi,ational Plan
%he =rgani-ational Planning process focuses on the human resources aspect of project planning$
Its purpose is to document the roles and responsi&ilities of indi(iduals or groups for (arious
project elements and then document the reporting relationships for each$ Communications
Planning goes hand in hand 'ith =rgani-ational Planning as the organi-ational structure 'ill
affect the 'ay communications are carried out among project participants and the project
interfaces$
=rgani-ational Planning has three inputs: project interfaces* staffing re7uirements* and
constraints$ +e co(ered staffing re7uirements in the last section and don"t need to add anything
here$ Constraints 'ere co(ered in pre(ious chapters* &ut there is some ne' information to
introduce after 'e define project interfaces$
Project Inter!aces
%he Guide to the PMBOK identifies three categories of project interfaces: organi-ational
interfaces* technical interfaces* and interpersonal interfaces$ /ach of these defines the type of
reporting relationships that e#ist among the different categories$
Organi(ational interfaces deal 'ith the types of reporting relationships that e#ist 'ithin an
organi-ation"s structure &e it functional* matri#* or projecti-ed$ %he reporting relationships in the
organi-ation might &e formal or informal* and as the project manager* you should take these into
consideration 'hen outlining the project plan$
%he same is true for technical interfaces* 'hich deal 'ith the reporting relationships that e#ist
'ithin the technical areas of an organi-ation$ ,ou should consider the technical interfaces &oth
'ithin the project itself and &et'een the project process groups during handBoff$
,nterpersonal interfaces deal 'ith the relationships that e#ist among project team mem&ers and
among other project participants$ 8ll projects fall into the interpersonal interfaces and
organi-ational interfaces categories$ +hether technical interfaces affect the project depends on
the project itself$
%he project manager should &e a'are of these project interfaces and* for purposes of the e#am*
remem&er that organi-ational interfaces are the most difficult project interfaces to deal 'ith$
%onstraints
%his topic seems to come up a lot* so you pro&a&ly remem&er that constraints are things that limit
the options a(aila&le to the project team$ %hese typically in(ol(e time* costs* or 7uality$ 6o'e(er*
there are a fe' ne' constraints regarding project team organi-ations highlighted in the Guide to
the PMBOK that you should kno'$
Organi,ational 'tructures
=rgani-ational structures can &e a constraint$ .or e#ample* a strong matri# structure pro(ides the
project manager 'ith much more authority and po'er than the 'eak matri# structure$
%ollective +argaining 1greements
Collecti(e &argaining agreements 'ith unions and contractual o&ligations 'ith other organi-ed
employee associations or groups may re7uire speciali-ed reporting relationships and are
considered constraints$
&eam Pre!erences
Preferences of the project management team might &e a constraint$ 0uccess 'ith certain
organi-ational structures in the past might lead team mem&ers to prefer one type of team or
organi-ational structure o(er another$
'ta!!ing 1ssignments
%he organi-ation of the project team 'ill likely &e influenced &y the skills and kno'ledge of the
project team mem&ers 'ho 'ill ser(e on the team$ %his constraint is called e+pected staff
assignments$
%he outputs of this process are concerned 'ith identifying resources* documenting their
responsi&ilities* and determining 'hen and ho' they come on and off the project$ ,ou"ll need to
consider the project interfaces and constraints 'e talked a&out 'hen determining project roles
and reporting relationships$ 8s an e#ample* collecti(e &argaining agreements might re7uire you to
set up your reporting relationships a specific 'ay* and indi(idual assignments 'ill &e made &ased
on the skills of the project team mem&ers$
1ssigning 0esources
%he tools and techni7ues of =rgani-ational Planning are used to help produce the follo'ing
outputs: roles and responsi&ility assignment* staffing management plan* organi-ation chart* and
supporting detail$ +e"ll look at each of these ne#t$
0oles an 0esponsi-ilit" 1ssignment
Project roles in this conte#t refer to the project manager* project team mem&ers* and
stakeholders$ %he roles and responsi&ilities for this process are tied to the project scope and
+A0$ Many times a project manger 'ill use a 1esponsi$ility Assignment Matri+ (1AM) to
graphically display this information$ 8 F8M is usually depicted as a chart 'ith resource names
listed in each ro' (for e#ample* programmers* testers* trainers* etc$! and +A0 elements as the
columns 'ith indicators in the intersections 'here the resources are needed$ 6o'e(er* the le(el
of detail is up to you$ =ne F8M might &e de(eloped for the le(el t'o +A0 elements on a
comple# project 'ith more F8Ms su&se7uently produced for the additional +A0 le(els$ =r a
F8M might &e constructed 'ith le(el three elements only$ %a&le K$1 sho's a sample F8M for a
soft'are de(elopment team$
&a-le 8.1: 'ample 01$

1ctivit" 1 1ctivit" + 1ctivit" %
Programmers Q Q

%esters Q Q

%rainers

Q Q
'ta!!ing $anagement Plan
%his plan documents ho' and 'hen people resources are introduced to the project and later
released$ 8gain* the le(el and amount of detail contained in this plan are up to you$ Gote that
many staffing management plans make use of a resource histogram$ %his is usually dra'n in
chart form 'ith project time along the hori-ontal a#is and hours needed along the (ertical a#is$
%he e#ample histogram &elo' sho's the hours needed for an asphalt cre' on a construction
project$
Organi,ation %hart
%he organi-ation chart is just like the org charts you"(e seen do-ens of times &efore$ It sho's the
reporting relationships of the project mem&ers$ 8n organi(ational $rea&down structure (OB%)
relates +A0 elements* usually the 'ork package le(el for (ery large projects* to the
organi-ational unit that"s responsi&le for completing the 'ork$
'upporting Detail
Information that further descri&es the organi-ation and impacts to the organi-ational units due to
'ork re7uests is considered supporting detail$ Ho& descriptions and training needs are other
e#amples of information gathered for this output$
%his process ensures roles and responsi&ilities are clearly outlined and that reporting structures
are documented and communicated to all project participants$ %his process is completed early on
in project Planning and should &e re(ie'ed regularly throughout the project to assure accuracy
and document changes that are needed as project circumstances change$
1cquiring 'ta!!
%he %taff Ac"uisition process in(ol(es attaining and assigning human resources to the project$
Project staff may come from inside the company or outside the company in the form of fullBtime
employees hired specifically for the project* or as contract help$ In any case* it"s your jo& as
project manager to ensure that resources are a(aila&le and skilled in the project acti(ities they"re
assigned to$
%he 0taff 8c7uisition process inputs are as follo's: the staffing management plan that 'as
produced as an output to =rgani-ational Planning* staffing pool description* and recruitment
practices$ Fecruitment practices are a matter of making certain you consult any organi-ational
procedures or policies currently in place 'hen hiring staff$
'ta!!ing Pool Description
0ome project acti(ities may re7uire special skills or kno'ledge in order to &e completed$ %he
staffing pool description in(ol(es taking this information into account as 'ell as personal interests*
characteristics* and a(aila&ility of potential team mem&ers &efore making assignments$ .or
e#ample* you 'ill 'ant to consider pre(ious e#perience of the staff mem&er you"re thinking of
assigning to a specific acti(ity$ 6a(e they performed this function &efore9 @o they ha(e the
e#perience necessary for the le(el of comple#ity this project acti(ity calls for9
Personal interests and personal characteristics play a &ig role as 'ell$ If the person you"re
thinking of just isn"t interested in the project* they aren"t likely to perform at their &est$ If you can*
think a&out assigning someone else in a case like this$ >nfortunately* some people just don"t play
'ell 'ith others$ +hen you"re assigning staff* if at all possi&le* don"t put the only t'o people in the
'hole company 'ho can"t get along together on the same project$ If the staff mem&er you need
has a skill no one else has or they can perform a function like no one else can* you might not
ha(e a choice$ In this case* you"ll ha(e to employ other techni7ues to keep the team cohesi(e
and 'orking 'ell together despite the notBsoBfriendly characteristics of the (ital team mem&er$
=ne final consideration: Check on the a(aila&ility of key team mem&ers$ If the team mem&er you
must ha(e for the acti(ity scheduled in .e&ruary is on her honeymoon* you pro&a&ly aren"t going
to 'in the toss$
Negotiating !or &eam $em-ers
Gegotiation* preassignment* and procurement are tools and techni7ues of the 0taff 8c7uisition
process$ 8s the project manager* you 'ill use the negotiation techni7ue 7uite a lot$ ,ou"ll ha(e to
negotiate 'ith functional managers and other organi-ational department managers for resources
for your project and for the timing of those resources$
Preassignment happens 'hen the project is put out for &id and specific team mem&ers are
promised as part of the proposal* or 'hen internal project team mem&ers are promised and
assigned as a condition of the project$ %his should &e spelled out in the project charter in this
case$ Procurement is the process of hiring indi(iduals or teams of people for certain project
acti(ities either as fullBtime employees or as contract help during the course of the project or
project phase$
1ssigning Project 'ta!!
8fter determining the staffing pool description* re(ie'ing recruitment practices* and negotiating
for staff* project team mem&ers are assigned to project acti(ities* and a project team directory is
pu&lished listing the names of all project team mem&ers and stakeholders$ %he resulting outputs
of the 0taff 8c7uisition process are as follo's: assignment of project staff and project team
directory$
Go' that 'e kno' 'hat the project acti(ities are and 'hat resources are needed to perform these
acti(ities* 'e"ll need to perform time and cost estimates for these acti(ities$ +e"re 'orking to'ard
the de(elopment of the project schedule 'here 'e determine actual start and stop dates for
acti(ities* &ut 'e ha(e se(eral processes to complete &efore 'e get there$
0eal Worl 'cenario5&he Onl" %aniate
46ey* did you hear95 your friend 0tory asks$ 4Foger has &een assigned to the project team$5
4=(er my dead &ody*5 you reply as you push a'ay from your computer screen$ ,ou head straight
for the project manager"s office and don"t 'ait for a response from 0tory$
8nn seats the phone into the cradle just as you 'alk through the door$ .ortunately for you* 8nn"s
door is al'ays open and she 'elcomes dropBins$
40eems like something is on your mind*5 8nn says$ 4+hat can I help 'ith95
40tory just told me that Foger has &een assigned to the project team$ I can"t 'ork 'ith Foger$
6e"s arrogant and doesn"t respect anyone"s 'ork &ut his o'n$ 6e &elittles me in front of others*
and I don"t deser(e that$ I 'rite good code* and I don"t need Foger looking o(er my shoulder$ I
'ant to &e on this team* &ut not if Foger is part of it$5
8nn thinks for a minute and replies* 4I 'ant you to ha(e the opportunity to 'ork on this projectI it"s
a great opportunity for you$ Aut there isn"t anyone else 'ho can 'ork on the analysis phase of
this project e#cept Foger$ 6e"s the only one left 'ho has a solid understanding of the mainframe
legacy code$ >nfortunately* those old programs 'ere ne(er documented 'ell* and they"(e
e(ol(ed o(er the years into programs on top of programs$ +ithout Foger"s e#pertise of the
e#isting system* 'e"d &lo' the &udget and time estimates already esta&lished for this project$
+hat 'ould you say to a meeting 'ith you and Foger and me to talk a&out these issues and see
if 'e can"t 'ork this out95
&ime (stimating &echniques
/stimating the duration of project acti(ities in(ol(es identifying the acti(ities and se7uencing them
in the correct order$ %hen* time estimates are assigned as &aseline measurements and used to
track project acti(ities to ensure the project is completed on time$
)eep in mind that for purposes of the e#am* 8cti(ity @efinition* 8cti(ity 0e7uencing* 8cti(ity
@uration /stimating* and 0chedule @e(elopment are separate processes each 'ith inputs* tools
and techni7ues* and outputs$ In practice* especially for smallB to mediumBsi-ed projects* these
processes are condensed into one function or step$ +e"ll take a look at each of the acti(ityB
related processes no'* and 'e"ll co(er 0chedule @e(elopment in Chapter L$
2nerstaning the 1ctivit" De!inition Process
%he Acti#ity )efinition process is a further &reakdo'n of the 'ork package elements of the +A0$
%his step is necessary 'hen you are 'orking 'ith large projects 'here the original +A0 goes to
only le(el t'o or le(el three elements$ 8t this point* le(el t'o or three is then assigned to
su&project managers to further &reak do'n and identify indi(idual acti(ities$ In practice* many
times 8cti(ity @efinition might &e accomplished during the construction of the +A0* and the
acti(ities themsel(es are the 'ork package le(el$
%his process produces an output called an acti#ity list, 'hich is an e#tension of the +A0$ %he
acti(ity list should contain all the acti(ities of the project 'ith a description of each acti(ity so that
team mem&ers understand 'hat the 'ork is and ho' it is to &e completed$ =nce the acti(ity list is
completed* the +A0 might need to &e updated$ %his is the second output in this process$
%he e#am may ha(e a 7uestion or t'o regarding the acti(ity list$ 8ll of the other inputs and tools
and techni7ues in 8cti(ity @efinition ha(e &een co(ered in pre(ious chapters$
2nerstaning the 1ctivit" 'equencing Process
+e"(e identified the acti(ities and no' need to se7uence them in a logical order and find out if
dependencies e#ist among the acti(ities$ 6ere"s a classic e#ample$ Det"s say you"re going to paint
your house* &ut unfortunately* it"s fallen into a little disrepair$ %he old paint is peeling and chipping
and 'ill need to &e scraped &efore a coat of primer can &e sprayed on the house$ 8fter the primer
dries* then the painting can commence$ In this e#ample* the primer acti(ity depends on the
scraping$ ,ou can"t?okay* you shouldn*t?prime the house &efore scraping off the peeling paint$
%he painting acti(ity depends on the primer acti(ity in the same 'ay$ ,ou really shouldn"t start
painting until the primer has dried$
@uring Acti#ity %e"uencing* you 'ill use a host of inputs and tools and techni7ues to produce the
final outputs* a project net'ork diagram* and acti(ity list updates$ +e"re going to look at three of
the inputs* and 'e"ll e#amine all of the tools and techni7ues needed for this process$ %he
remaining inputs ha(e &een discussed pre(iously$
Depenencies
%hree of the inputs to 8cti(ity 0e7uencing are as follo's: mandatory dependencies* discretionary
dependencies* and e#ternal dependencies$ @ependencies are just like 'e descri&ed in the
houseBpainting e#ample$ Aut as you"(e pro&a&ly guessed* the Guide to the PMBOK defines
dependencies differently depending on their characteristics:
$anator" Depenencies
Mandatory dependencies* also kno'n as hard logic or hard dependencies* are defined &y the
type of 'ork &eing performed$ %he scraping* primer* painting se7uences are e#amples of
mandatory dependencies$ %he nature of the 'ork itself dictates the order the acti(ities should &e
performed in$
Discretionar" Depenencies
@iscretionary dependencies are delineated &y the project management team$ @iscretionary
dependencies are also kno'n as preferred logic* soft logic* or preferential logic$ %hese are
usually process or procedure dri(en* or 4&est practices5 techni7ues &ased on past e#perience$
.or e#ample* past e#perience on houseBpainting projects has sho'n that all trim 'ork should &e
hand painted 'hile the &ulk of the main painting 'ork should &e done 'ith a sprayer$
(6ternal Depenencies
/#ternal dependencies are* 'ell* e#ternal to the project$ %he 'eather forecast might &e an
e#ternal dependency in the painting e#ample &ecause you 'ouldn"t 'ant to start painting prior to
a rain storm$
=nce 'e"(e identified the dependencies and assem&led all the other inputs for the 8cti(ity
0e7uencing process* 'e"ll take this information and produce a diagram* or schematic display* of
the project acti(ities$ %he project net'ork diagram sho's the dependencies* or logical
relationships* that e#ist among the acti(ities$ +e can use one of se(eral tools and techni7ues to
produce this output$ +e"ll e#amine each in detail &elo'$
Preceence Diagramming $etho FPD$G
%he precedence diagramming method (P)M) is 'hat most project management soft'are
programs use today$ Precedence diagrams connect acti(ities 'ith arro's that sho'
dependencies &et'een the acti(ities$ %his method is also called acti#ity on node (AO4)$
%he acti(ity information is 'ritten on the nodes 'ith arro's connecting the nodes* or dependent
acti(ities$ %he nodes are sho'n as rectangles* and you are free to put as much information a&out
the acti(ity on the node as you"d like$ %he minimum information that should &e displayed on the
node is the acti(ity name$ 0ometimes the nodes are displayed 'ith acti(ity name* acti(ity num&er*
start and stop dates* due dates* slack time* and so on$ (+e"ll co(er slack time in a later chapter$!
.or the e#am* remem&er that the P@M uses only one time estimate to determine duration$
%he e#ample &elo' sho's a P@M* or 8=G* of the houseBpainting e#ample$
%he P@M is further defined &y four types of logical relationships6 -he Guide to the PMBOK calls
these dependencies or precedence relationships$ ,ou may already &e familiar 'ith these if you"(e
used Microsoft Project* or some other similar project management soft'are program$ %he four
dependencies are as follo's:
Finish to start FF'G %his is the most fre7uently used logical relationship$ %his relationship says
that the independent* or from acti(ity* must finish &efore the dependent* or to acti(ity* can start$
'tart to !inish F'FG %he start to finish relationship says that the independent acti(ity must start
&efore the dependent acti(ity can finish$ %his logical relationship is seldom used$
Finish to !inish FFFG %his relationship says that the independent acti(ity must finish &efore the
dependent acti(ity finishes$
'tart to start F''G: I think you"re getting the hang of this$ %his relationship says that the
independent acti(ity must start &efore the dependent acti(ity can start$
)eep these logical relationships in mind 'hen constructing your project net'ork diagram$
Femem&er that finish to start is the most commonly used logical relationship$
1rrow Diagramming $etho F1D$G
%he arrow diagramming method (A)M) is (isually the opposite of the P@M$ %he arro'
diagramming method places acti(ities on the arro's* 'hich are connected to dependent acti(ities
'ith nodes$ %his method is also called acti#ity on arrow (AOA)$ %his method is seldom used
today$ .or the record* 8=8 allo's for more than one time estimate to determine duration$ %he
e#ample &elo' sho's the 8=8 method applied to our houseBpainting e#ample$
%onitional Diagramming $ethos
%he only thing you need to kno' regarding conditional diagramming methods* such as the
1raphical /(aluation and Fe(ie' %echni7ue (1/F%! and 0ystem @ynamics models* is that they
allo' for nonse7uential acti(ities such as loops and conditional &ranches$ P@M and 8@M do not
allo' loops or conditional &ranches$ +e 'ill co(er 1/F% in more depth in a later chapter$
Networ# &emplates
%hese templates are like the templates 'e"(e talked a&out in other processes$ Perhaps the
project you"re 'orking on is similar to a project that"s &een completed in the past$ ,ou can use a
pre(ious project net'ork diagram as a template for the current project$
I recommend you memori-e the graphic &elo' to help remem&er the tools and techni7ues of the
8cti(ity 0e7uencing process and their characteristics for the e#am$ %his may look a little strange*
&ut I think it 'ill 'ork for you no' that you understand 'hat each of these diagramming methods
is a&out$ %his is information you need to kno' for the e#am$ If this graphic isn"t useful for you*
come up 'ith your o'n mnemonic or sample that 'ill help you remem&er 'hich of these is 'hich$
@on"t say I didn"t 'arn you$
%he outputs of 8cti(ity 0e7uencing are the project net'ork diagram and acti(ity list updates$
+e"(e just spent a good deal of time descri&ing the different types of project net'ork diagrams
you can construct using P@M or 8@M techni7ues$ )eep in mind that the construction of these
net'ork diagrams might &ring acti(ities to light that you missed 'hen defining your acti(ity list* or
it might make you &reak an acti(ity do'n into t'o acti(ities in places 'here you thought one
acti(ity might 'ork$ If this is the case* you 'ill produce acti(ity list updates &ased on this ne'
information$
+e"re sailing right along$ =ne more acti(ity process remains* and then 'e"(e completed the time
estimating segment of this chapter$
(stimating 1ctivit" Durations
%he Acti#ity )uration 7stimating process takes the acti(ities defined in the +A0 and acti(ity list
and assesses the num&er of 'ork periods needed to complete these acti(ities$ +ork periods are
usually e#pressed in hours or days$ 6o'e(er* larger projects might e#press duration in 'eeks or
months$
)eep in mind that 'hen you"re estimating acti(ity duration* you are estimating the length of time
the acti(ity 'ill take to complete* including any elapsed time needed from the &eginning to the
ending of the acti(ity$ .or e#ample* let"s look at the houseBpainting project$ +e estimate that it 'ill
take three days* including drying time* to prime the house$ Go'* let"s say priming is scheduled to
&egin on 0aturday* &ut our cre' doesn"t 'ork on 0unday$ %he acti(ity duration in this case is four
days* 'hich includes the three days to prime and dry plus the 0unday the cre' doesn"t 'ork$
Most project management soft'are programs 'ill handle this kind of situation automatically$
8cti(ity @uration /stimating is performed using the follo'ing tools and techni7ues$
(6pert Eugment
8cti(ities are most accurately estimated &y the staff mem&ers 'ho 'ill perform the acti(ities$ In
this case* e#pert judgment is used &y team mem&ers &ecause of their e#perience 'ith similar
acti(ities in the past$ ,ou should &e careful 'ith these estimates* though* as they are su&ject to
&ias and aren"t &ased on any scientific means$ It"s good practice to com&ine e#pert judgment 'ith
historical information and use as many e#perts as you can$
1nalogous (stimating
Analogous estimating* also called top3down estimating* is a form of e#pert judgment$ +ith this
techni7ue* you 'ill use the actual duration of a similar acti(ity completed on a pre(ious project to
determine the duration of the current acti(ity? pro(ided the information 'as documented and
stored 'ith the project information on the pre(ious project$ %his techni7ue is most useful 'hen the
pre(ious acti(ities you"re comparing are truly similar to the acti(ity you"re estimating and don"t just
appear to &e similar$ 8nd you 'ant the folks 'ho are 'orking on the estimate to ha(e e#perience
'ith these acti(ities$
%opBdo'n estimating techni7ues are also used to estimate total project duration$ %he &est 'ay to
think a&out topBdo'n techni7ues is to look at the estimate as a 'hole$ %hink a&out &eing on a
mountaintop 'here you can see the 'hole picture as one rather than all the indi(idual items that
make up the picture$ .or instance* let"s go &ack to our houseBpainting e#ample$ ,ou 'ould
compare a pre(ious houseBpainting project to the current houseBpainting project 'here the
houses are of similar si-e and the paint you"re using is the same 7uality$ %he first houseBpainting
project can &e used to estimate the project duration for the second houseBpainting project
&ecause of the similarities in the project$
%opBdo'n techni7ues are useful 'hen you"re early on in the project Planning process and are
only just &eginning to flesh out all the details of the project$ 0ometimes during the project
selection process* the selection committee may 'ant an idea of the project"s duration$ ,ou can
deri(e a project estimate at this stage &y using topBdo'n techni7ues$
=ualitativel" +ase Durations
%he &est 'ay to descri&e the meaning of 7ualitati(ely &ased durations is 'ith an e#ample$
0uppose you are 'orking on a companyB'ide net'ork upgrade project$ %his re7uires you to run
ne' ca&le to the s'itches on e(ery floor in the &uilding$ <ualitati(ely &ased durations can &e
used to determine acti(ity duration estimates &y taking a kno'n element?in this case* the
amount of ca&le needed?and multiplying it &y the amount of time it takes to install a unit of ca&le
to come up 'ith an estimate$ In other 'ords* suppose 'e ha(e 10*000 meters of ne' ca&le to
run$ +e kno' from past e#perience it takes 1 hour to install 100 meters$ >sing this measurement*
'e can make a 7ualitati(ely &ased estimate for this acti(ity of 100 hours to run the ne' ca&le$
%herefore* the ca&le acti(ity duration estimate is 100 hours$
0eserve &ime F%ontingenc"G
Feser(e time* also called $uffer or contingency time in the Guide to the PMBOK* means adding a
portion of time to the acti(ity to account for schedule risk$ ,ou might choose to add a percentage
of time or a set num&er of 'ork periods to the acti(ity or the o(erall schedule$ .or e#ample* 'e
kno' it 'ill take 100 hours to run ne' ca&le &ased on the 7ualitati(e estimate 'e came up 'ith
earlier$ +e also kno' that sometimes 'e hit pro&lem areas 'hen running the ca&le$ %o make
sure 'e don"t impact the project schedule* 'e &uild in a reser(e time of 10 percent of our original
estimate to account for the pro&lems 'e might encounter$ %his &rings our acti(ity duration
estimate to 110 hours for this acti(ity$
0eal Worl 'cenario5Desert 'tate 2niversit" FD'2G
@0> has hired a contract agency to create their ne' registration 'e&site$ %he 'e&site 'ill allo'
students in good academic standing to register for classes o(er the Internet$ ,ou ha(e &een
appointed the project manager for the @0> side of this project$ ,ou"ll &e 'orking 'ith 6enry Du
from +e& 0ites International to complete this project$
6enry has gi(en you an acti(ity list and asked for time estimates that he can plug into the project
plan$
,our first stop is Him Mahoney"s desk$ 6e"s the e#pert on the mainframe registration system and
'ill &e 'riting the interface programs to accept registration data from the ne' 'e&site$ Him 'ill
also create the do'nload that the Internet program 'ill use to (erify students" academic standing$
Him has created other programs just like this in the past$ 6is e#pertise and judgment are (ery
relia&le$
%he ne#t stop is 1loria 0till'ater$ 0he"s the ne' team leader o(er the testing group$ 1loria has
&een 'ith @0> for only one month$ 0ince she has no e#perience 'orking 'ith @0> data and staff
mem&ers* she tells you she"ll get &ack to you 'ithin a 'eek 'ith estimates for the testing
acti(ities$ 0he plans to read through the project &inders of some similar projects and &ase her
estimates against the historical information on similar projects$ 0he"ll run the estimates &y her
lead tester &efore gi(ing them to you$
%ost (stimating &echniques
+e no' ha(e an e#hausti(e &reakdo'n of project acti(ities* and 'e ha(e some pretty good
duration estimates$ Go' the 7uestion that"s fore(er on the mind of the e#ecuti(e management
staff: 6o' much is it going to cost9 %he purpose of the Cost /stimating process is to ans'er that
7uestion$
/(ery project has a &udget* and part of completing a project successfully is completing it 'ithin
the appro(ed &udget$ 0ometimes project managers are not responsi&le for the &udget portion of
the project$ %his function is assigned instead to a functional manager 'ho is responsi&le for
tracking and reporting all the project costs$ I &elie(e project mangers 'ill ha(e more and more
responsi&ility in this area as the project management discipline e(ol(es$ )eep in mind that if you*
as the project manager* don"t ha(e responsi&ility for the project &udget* your performance
e(aluation for the project should not include &udget or cost measurements$
1ccurac" in %ost (stimating
8s 'ith time estimates* the +A0 is the key to determining accurate cost estimates$ %he .ost
7stimating process de(elops a cost estimate for the resources re7uired for each acti(ity outlined
in the +A0$ %his includes 'eighing alternati(e options and e#amining tradeBoffs$ .or e#ample*
many times soft'are de(elopment projects take on a life of their o'n$ %he re7uested project
completion dates are unrealisticI ho'e(er* the project team commits to completing the project on
time and on &udget any'ay$ 6o' do they do this9 Ay cutting things like design* analysis* and
documentation$ In the end* the project might get completed on time and on &udget* &ut 'as it
really9 %he costs associated 'ith the e#tended support period due to a lack of design and
documentation and the hours needed &y the soft'are programmers to fi# the reported &ugs aren"t
included in the original cost of the project (&ut they should ha(e &een!$ %herefore* the costs
actually e#ceed 'hat 'as &udgeted$ ,ou should e#amine tradeBoffs such as these 'hen
determining cost estimates$
+hen you are determining cost estimates* &e certain to include all the costs of the project o(er its
entire life cycle$ Include 'arranty periods and ongoing costs in your estimates$ 8s in the e#ample
a&o(e* soft'are projects often ha(e 'arranty periods that guarantee &ug fi#es or pro&lem
resolution 'ithin a certain time frame$ %his is a legitimate cost that should &e included in your
estimates$
=ne more note: @on"t confuse pricing 'ith Cost /stimating$ If you are 'orking for a company that
performs I% ser(ices on contract* for e#ample* the price you 'ill charge for your ser(ices is not
the same thing as the costs to perform the project$ %he costs are centered around the resources
needed to produce the product or ser(ice of the project$ %he price your company might charge for
the ser(ice includes not only these costs* &ut a profit margin as 'ell$
%ost (stimating Inputs
,ou are already familiar 'ith most of the Cost /stimating inputs$ %'o that 'e ha(en"t seen &efore
are the resource rates and the chart of accounts$
Fesource rates are the unit cost of the resources you"re considering$ If you"re hiring contract Ha(a
coders* their unit cost might &e M1JK per hour$ %o determine the estimate* you multiply the
num&er of hours needed* 'hich 'as estimated during the 8cti(ity @uration /stimating process* &y
the num&er of resources needed$ If your project re7uires certain materials or e7uipment* use the
unit cost to calculate the appropriate estimate$ +hen unit costs are not kno'n* you might need to
estimate them as 'ell$
Ae certain to estimate all the resources you"re going to need for the project$ %his includes staff
'ages* contractor costs if applica&le* materials* supplies* e7uipment* hard'are* soft'are tools*
design tools* and so on$
8 chart of accounts is the coding system used &y the finance department to record transactions in
the company"s general ledger$ %he chart of accounts is 'here the project costs 'ill &e tracked$
%he code of accounts 'e talked a&out in association 'ith the +A0 comes from the chart of
accounts$
%ost (stimating &ools
Cost /stimating has fi(e tools and techni7ues used to deri(e estimates: analogous estimating*
parametric modeling* &ottomBup estimating* computeri-ed tools* and other Cost /stimating
methods$ +e"ll look at each of these ne#t$
1nalogous (stimating
+e talked a&out this process in the time estimating section earlier in this chapter$ %he information
relayed there applies to Cost /stimating as 'ell$ Femem&er that analogous estimating is a topB
do'n estimating techni7ue and is a form of e#pert judgment$ It is a less accurate techni7ue than
the others 'e"ll look at$
Parametric $oeling
Parametric modeling is a mathematical model that uses parameters* or project characteristics* to
forecast project costs$ %he idea here is to find a parameter* or multiple parameters* that changes
proportionately 'ith project costs and then plug that into the model to come up 'ith a total project
cost$ In order to use this techni7ue* there must &e a pattern that e#ists in the 'ork so that you can
use an estimate from that 'ork element to deri(e the total project estimate$
.or e#ample* 'e might kno' from past e#perience that it costs M2LK per s7uare foot to &uild an
office &uilding$ %he M2LK &ecomes the parameter that 'e use in the parametric model to come up
'ith an estimate of total project cost$ If you"re using multiple parameters* each parameter is also
assigned a 'eight that is included in the calculations$ %his allo's for cost estimates to &e
calculated simultaneously$
Parametric modeling is similar to analogous estimating &ecause it estimates the cost of the entire
project (topBdo'n!$ It is more accurate 'hen historical information is used to help construct the
model and 'hen the parameters are easily 7uantified$
+ottomAup (stimating
%he $ottom3up estimating techni7ue is the opposite of topBdo'n estimating$ 6ere you 'ill
estimate e(ery acti(ity or 'ork item indi(idually and then roll up that estimate* or add them all
together* to come up 'ith a total project estimate$ %his is a (ery accurate means of estimating*
pro(ided the estimates at the 'ork package le(el are accurate$ 6o'e(er* it takes a considera&le
amount of time to perform &ottomBup estimating as e(ery 'ork package must &e assessed and
estimated accurately to &e included in the &ottomBup calculation$
,ou 'ouldn"t choose this techni7ue to pro(ide a cost estimate for the project in the Initiation stage
if one 'ere re7uested as you don"t ha(e enough information at that stage to use the &ottomBup
techni7ue$ Instead* use the topBdo'n estimation techni7ue 'hen a project cost estimate is
needed early on in the project selection stage$
%omputeri,e &ools
Project management soft'are can &e a useful tool in Cost /stimating as are spreadsheet
programs$ >sing soft'are can make the jo& of Cost /stimating easy and fast$
Other %ost (stimating $ethos
%he first four tools and techni7ues descri&ed in this section are the primary methods you"ll use to
calculate cost estimates$ ,ou may also use other techni7ues or methods$ .or e#ample* 'hen
your project is performed under contract or you need to procure resources under contract* you
might analy-e (endor &ids to determine cost estimates for these acti(ities$ Make certain to
document the Cost /stimating method you used in the supporting detail output of this process$
Documenting the %ost (stimates
=&(iously* one of the outputs of the Cost /stimating process is the cost estimates$ %hese are
7uantitati(e amounts* usually stated in dollars* that reflect the cost of the resources needed to
complete the project acti(ities$ %he tools and techni7ues 'e just descri&ed help us deri(e these
estimates$
0upporting detail and the cost management plan are the remaining t'o Cost /stimating outputs$
0upporting detail is just as 'e"(e seen in other processes$ 8ny information that supports ho' the
estimates 'ere de(eloped* 'hat assumptions 'ere made during the Cost /stimating process*
and any other details you think need to &e documented go here$
Cost (ariances 'ill occur* and estimates 'ill &e refined* as you get further into your project$ 8s
you"(e pro&a&ly suspected* there is a plan that defines ho' these cost (ariances should &e
managed$ %hat plan is called the cost management plan and is the last output of the Cost
/stimating process$ ,our cost management plan should define ho' changes to cost estimates* or
changes in resource unit costs* 'ill &e reflected in the project &udget$ Changes or (ariances 'ith
a significant impact should &e communicated to the project sponsor and stakeholders$ %he cost
management plan should define ho' and 'hen this notification process 'orks as 'ell$
Cost /stimating uses se(eral techni7ues to make an accurate assessment of the project costs$ In
practice* using a com&ination of techni7ues is your &est &et to come up 'ith the most relia&le
cost estimates$ %he Cost /stimating output 'ill &ecome an input to the Cost Audgeting process*
'hich allo's us to esta&lish a &aseline for project costs to track against$
4%hanks e(eryone for your timely responses$ I"ll look o(er the acti(ity lists and estimates you"(e
assigned and start 'orking on the project plan$5 %he meeting adjourns* and you head &ack to
your office to re(ie' the estimates and resource assignments$ ,ou"d like to get the project
schedule constructed soon and go o(er it 'ith @irk$ %his information is the first cut at the project
schedule$
Ficardo Famire- from the I% department has outlined his acti(ity list and estimates$ 6e reminds
you that data is sent from each store o(er a %1 connection* not o(er satellite as Hill told you
originally$ Ficardo"s estimates are as follo's$ 6e"s also taken the trou&le to 'rite them in
se7uential order$
1$ Procure the %1 connection$ %his takes J0 to :K days and 'ill ha(e onBgoing costs of MJ00
per month$ %his can &e done concurrently 'ith the other acti(ities &elo'$ Ficardo 'ill
handle this acti(ity$
2$ Fun /thernet ca&le throughout the &uilding$ %his acti(ity depends on the lease &eing
signed and must finish &efore the &uildBout can start$ /stimated time to complete is 1C
hours using 7ualitati(ely &ased estimates$ Ficardo has one person on staff 'ho can
complete this speciali-ed acti(ity$ 6is first a(aila&le date is =cto&er K$
J$ Purchase the router* s'itch* ser(er* and rack for the e7uipment room and four pointBofB
ser(ice terminals$ /stimated costs are M1L*000$ @eli(ery time is 2 'eeks$ Ficardo 'ill do
this acti(ity$
:$ Install router and test connection$ %esting depends on the %1 installation at demarcation$
%ime estimate to install is E hours$ Ficardo"s staff 'ill do this acti(ity$
K$ Install s'itch$ Aased on past e#perience* time estimate to install is 2 hours$ Ficardo"s
staff 'ill do this acti(ity$
C$ Install ser(er and test$ %esting depends on the %1 connection installation$ Aased on past
e#perience* time estimate to install is C hours$ Ficardo"s staff 'ill do this acti(ity$
L$ +e& team to add the ne' store location and phone num&er to the lookBup function on the
Internet site$ %ime estimate is E hours$ Ficardo 'ill assign his applicationsBprogramming
manager to this acti(ity$ %his acti(ity depends on the lease &eing signed$
Hake and Hill ha(e each 'ritten similar lists 'ith estimates and resource assignments$ ,ou &egin
to align all the acti(ities in se7uential order and disco(er a pro&lem$ Hill needs 10 days to stock
shel(es and train employees* meaning that the &uildBout must &e finished &y Hanuary 1:$ AuildB
out takes appro#imately 120 days and therefore must start &y 0eptem&er 1N$ %he pro&lem is that
Ficardo"s /thernet ca&le e#pert isn"t a(aila&le until =cto&er K* and he needs t'o days to
complete the ca&ling$ %his pushes out the &uildBout start date &y almost 2 'eeks* 'hich means
the project completion date* or storeBopening date* is delayed &y 2 'eeks$
8fter gathering more information from Ficardo* you head to @irk"s office$
40o* @irk*5 you conclude after filling him in on all the details$ 4+e ha(e t'o options$ 6ire a
contractor to perform the ca&le run since Ficardo"s person isn"t a(aila&le* or push the store
opening out &y 2 'eeks$5
@irk asks* 46o' much 'ill the contractor charge to run the ca&le* and are they a(aila&le 'ithin the
time frame you need95
4,es* they are a(aila&le* and I"(e already re7uested Ficardo &ook the 'eek of 0eptem&er 1Lth to
hold this option open for us$ %hey"(e 7uoted a price of M10*000$5
4=kay* let"s &ring in the contractor$ M10*000 isn"t going to &reak the &udget at this point$ 6o' is
that planning coming any'ay9 0igned a lease yet95
4,es* 'e"(e signed the lease$ Hake has &een meeting 'ith 1ome- construction on the &uildBout$
+e"(e used 1ome- on three out of the last fi(e ne' stores and ha(e had good luck 'ith them$5
8cti(ity @efinition
8cti(ity 0e7uencing
8cti(ity @uration /stimating
/#pert judgment
<ualitati(ely &ased estimates
Cost /stimating
=ther Cost /stimating methods?(endor &ids
'ummar"
%he Fesource Planning process considers all the resources needed and the 7uantity of resources
needed to perform project acti(ities$ %his information is tied to the +A0 elements and is detailed
in the resource re7uirements document$
0taffing re7uirements are a su&set of the resource re7uirements output$ 0taffing re7uirements are
concerned 'ith the human resource aspect of the resource plan and detail special skills or
kno'ledge that might &e needed for a project acti(ity$
=rgani-ational planning identifies and assigns roles and responsi&ilities and reporting
relationships$ Many times the roles and responsi&ilities assignments are depicted in a
Fesponsi&ility 8ssignment Matri# (F8M!$ %he staffing management plan descri&es ho' and 'hen
project team mem&ers 'ill &e &rought on and off the project and is an output of the
=rgani-ational Planning process$
%he 0taff 8c7uisition process details staff assignments and pu&lishes the project team directory$
@uration estimates are produced as a result of the 8cti(ity @uration /stimating process$ Prior to
this process* acti(ities must &e identified and se7uenced in logical order$ 8cti(ity 0e7uencing is
performed using P@M* 'hich is an acti(ity on node (8=G! method* or 8@M* 'hich is an acti(ity
on arro' (8=8! method?or 'ith conditional diagramming or net'ork templates$ 8@M is seldom
used today$
8cti(ity duration estimates document the num&er of 'ork periods needed for each acti(ity
including their elapsed time$ 8nalogous estimating* also called topBdo'n estimating* is one 'ay to
determine acti(ity duration estimates$ %opBdo'n techni7ues can also &e used to estimate project
durations and total project costs$ <ualitati(ely &ased durations multiply a kno'n element? like
the 7uantity of materials needed?&y the time it takes to install or complete one unit of materials$
%he result is a total estimate for the acti(ity$ Feser(e time takes schedule risk into consideration
&y adding an additional percentage of time or another 'ork period to the estimate just in case you
run into trou&le$
%he Cost /stimating process determines ho' much the project resources 'ill cost* 'hich is
usually stated in dollars$ %he cost management plan outlines ho' costs 'ill &e managed
throughout the project$ 8nalogous estimating is one techni7ue that can &e used to determine cost
estimates$ 8nother estimating techni7ue is parametric modeling$ %his is a mathematical model
that forecasts project costs$ AottomBup estimating can &e used for project cost estimates$ %his
in(ol(es estimating the cost of each 'ork package and then rolling these up to come up 'ith a
total cost$
(6am (ssentials
+e a-le to ienti!" the tools an techniques o! 1ctivit" 'equencing. Precedence
diagramming method (P@M!* arro' diagramming method (8@M!* conditional diagramming
method* and net'ork templates$
+e a-le to iscuss the i!!erence -etween PD$ an 1D$. P@M uses acti(ity on node (8=G!
diagrams* and 8@M uses acti(ity on arro' (8=8! diagrams$
+e a-le to name the tools an techniques o! 1ctivit" Duration (stimating. /#pert judgment*
analogous estimating* 7ualitati(ely &ased durations* and reser(e time$
+e a-le to ienti!" the tools an techniques o! %ost (stimating. 8nalogous estimating*
parametric modeling* &ottomBup estimating* computeri-ed tools* and other Cost /stimating
methods$
+e a-le to e!ine the i!!erence -etween analogous estimating an -ottomAup
estimating. 8nalogous estimating is a topBdo'n techni7ue that uses e#pert judgment and
historical information$ AottomBup performs estimates for each 'ork item and rolls them up to a
total$
<e" &erms
8cti(ity @efinition Cost /stimating
8cti(ity @uration
/stimating
logical relationship
acti(ity list organi-ational
&reakdo'n structure
(=A0!
acti(ity on arro'
(8=8!
Parametric modeling
acti(ity on node
(8=G!
precedence
diagramming method
(P@M!
8cti(ity 0e7uencing resource histogram
analogous
estimating
Fesource Planning
arro' diagramming
method (8@M!
Fesponsi&ility
8ssignment Matri#
(F8M!
&ottomBup
estimating
0taff 8c7uisition
0eview =uestions
1. +hich of the follo'ing is true regarding the Fesource Planning process9
8$ Fesource Planning in(ol(es the human resource aspect of planning only* and
its output is staffing re7uirements$
A$ Fesource Planning in(ol(es the human resource aspect of planning only* and
its output is resource re7uirements$
C$ Fesource Planning encompasses all the physical resources needed for the
project* and its output is staffing re7uirements$
@$ Fesource Planning encompasses all the physical resources needed for the
project* and its output is resource re7uirements$
3. 0ally is a project manager 'orking on the Fesource Planning process$ 0he should
consider all of the follo'ing 'hen de(eloping the resource re7uirements output e#cept:
8$ +A0
A$ 0upply purchase policies
C$ Fesource rates
@$ 0pecial kno'ledge and talents
4. +hich of the follo'ing are constraints that you might find during the =rgani-ational
Planning process9
8$ =rgani-ational structure* e#pected staff assignments* collecti(e &argaining
agreements* and project management team preferences
A$ =rgani-ational structure* organi-ational interfaces* technical interfaces* and
interpersonal interfaces
C$ =rgani-ational interfaces* e#pected staff assignments* collecti(e &argaining
agreements* and project management team preferences
@$ =rgani-ational interfaces* technical interfaces* and interpersonal interfaces
7. ,ou are the project manager for a scheduled (ersion release of your company"s
soft'are tracking product$ ,ou ha(e linked the +A0 and project scope definition and
assigned roles and responsi&ilities$ ,ou might 'ant to display the roles and
responsi&ilities in 'hich of the follo'ing9
8$ F@M
A$ P@M
C$ 8=8
@$ F8M
8. +hich of the follo'ing is true regarding the staffing management plan9
8$ It details the resource re7uirements and the 7uantity of resources needed for
project acti(ities$ It is an output of the Fesource Planning process$
A$ It details ho' and 'hen staff resources 'ill &e &rought on and off the project$ It
is an output of the =rgani-ational Planning process$
C$ It details ho' and 'hen staff resources 'ill &e &rought on and off the project$ It
is an output of the Fesource Planning process$
@$ It details the resource re7uirements and the 7uantity of resources needed for
project acti(ities$ It is an output of the =rgani-ational Planning process$
9. 8ll of the follo'ing descri&e the acti(ity list e#cept:
8$ It"s an e#tension of the +A0$
A$ It includes all acti(ities of the project$
C$ It descri&es the +A0 updates$
@$ It includes a description of project acti(ities$
;. ,ou are the project manager for @esign ,our +e& 0ite* Inc$ ,our company is designing
the 'e&site for a national grocery store chain$ ,ou ha(e your acti(ity list in hand and
are ready to diagram the acti(ity dependencies using the P@M techni7ue$ ,ou kno'
that:
8$ P@M uses 8=G diagramming methods$
A$ P@M uses 8=8 diagramming methods$
C$ P@M uses 8@M diagramming methods$
@$ P@M uses P@M diagramming methods$
>. ,ou are the project manager for @esign ,our +e& 0ite* Inc$ ,our company is designing
the 'e&site for a national grocery store chain$ ,ou ha(e your acti(ity list in hand and
se(eral time estimates and are ready to diagram the acti(ity dependencies$ ,ou should
use 'hich of the follo'ing9
8$ P@M techni7ues
A$ P@M or 8@M techni7ues
C$ 8=G techni7ues
@$ 8@M techni7ues
?. 8ll of the follo'ing are true regarding the tools and techni7ues of 8cti(ity 0e7uencing
e#cept:
8$ 1/F% uses analogous methods$
A$ 1/F% allo's for loops$
C$ 1/F% is a conditional diagramming method$
@$ 1/F% allo's for conditional &ranches$
1@. ,ou are the project manager for Changing %ides (ideo games$ ,ou ha(e produced a
project net'ork diagram and ha(e updated the acti(ity list$ +hich process ha(e you
just finished9
8$ %he 8cti(ity 0e7uencing process* 'hich identifies all the specific acti(ities of
the project
A$ %he 8cti(ity 0e7uencing process* 'hich identifies all the acti(ity dependencies
C$ %he 8cti(ity @uration /stimating process* 'hich diagrams project net'ork time
estimates
@$ %he 8cti(ity @uration /stimating process* 'hich identifies all the dependent
acti(ities of the project
11. ,ou are the project manager for Changing %ides (ideo games$ ,ou ha(e gathered the
inputs for the 8cti(ity @uration /stimating process$ ,ou 'ill employ 'hich tools and
techni7ues to produce the outputs for this process9
8$ 8cti(ity list* analogous estimating* 7ualitati(ely &ased durations* and
alternati(es identification
A$ 8cti(ity list* analogous estimating* e#pert judgment* and 7ualitati(ely &ased
durations
C$ /#pert judgment* analogous estimating* 7ualitati(ely &ased durations* and
reser(e time
@$ /#pert judgment* alternati(es identification* 7ualitati(ely &ased durations* and
reser(e time
13. 8s project manager* you kno' that all of the follo'ing are true concerning analogous
estimating techni7ues e#cept:
8$ It"s a 7ualitati(ely &ased estimating techni7ue$
A$ It"s a topBdo'n estimating techni7ue$
C$ It"s a tool and techni7ue of 8cti(ity @uration /stimating and Cost /stimating$
@$ It"s a form of e#pert judgment$
14. ,ou ha(e &een hired as a contract project manager for 1rape(ine 3ineyards$
1rape(ine 'ants you to design an Internet 'ine clu& for their customers$ Customers
must preregister &efore &eing allo'ed to order 'ine o(er the Internet so that legal age
can &e esta&lished$ ,ou kno' that the module to (erify preregistration must &e 'ritten
and tested using data from 1rape(ine"s e#isting data&ase$ %his ne' module cannot &e
tested until the data from the e#isting system is loaded$ %his is an e#ample of 'hich of
the follo'ing9
8$ Preferential logic
A$ 0oft logic
C$ @iscretionary dependency
@$ 6ard logic
17. ,ou ha(e &een hired as a contract project manger for 1rape(ine 3ineyards$ 1rape(ine
'ants you to design an Internet 'ine clu& for their customers$ =ne of the acti(ities for
this project is the installation and testing of se(eral ne' ser(ers$ ,ou kno' from past
e#perience it takes a&out 1C hours per ser(er to accomplish this task$ 0ince you"re
installing 10 ne' ser(ers* you estimate this acti(ity to take 1C0 hours$ +hich of the
estimating techni7ues ha(e you used9
8$ 8nalogous estimating
A$ AottomBup estimating
C$ <ualitati(ely &ased durations
@$ Feser(e time
18. ,our project sponsor has re7uested a cost estimate for the project$ 0he 'ould like the
cost estimate to &e as accurate as possi&le as this might &e her one and only chance
to secure the &udget for this project due to recent cuts in special projects$ ,ou decide:
8$ %o use analogous estimating techni7ues
A$ %o use &ottomBup estimating techni7ues
C$ %o use topBdo'n estimating techni7ues
@$ %o use e#pert judgment techni7ues
19. ,our project sponsor has re7uested a cost estimate for the project you"re 'orking on$
%his project is similar in scope to a project you 'orked on last year$ 0he 'ould like to
get the cost estimates as soon as possi&le$ 8ccuracy is not her primary concern right
no'$ 0he needs a &all park figure &y tomorro'$ ,ou decide to use:
8$ 8nalogous estimating techni7ues
A$ AottomBup estimating techni7ues
C$ Parametric modeling techni7ues
@$ Computeri-ed modeling techni7ues
1;. 8ll of the follo'ing are true regarding parametric modeling e#cept:
8$ It"s a form of topBdo'n estimating$
A$ It"s a mathematical model$
C$ It"s a tool used to estimate project costs$
@$ It"s a tool used to estimate project time$
1>. ,our project"s primary constraint is 7uality$ In order to make certain the project team
mem&ers don"t feel too pressed for time and to a(oid schedule risk* you decide to use
'hich of the follo'ing acti(ity estimating tools9
8$ /#pert judgment
A$ <ualitati(ely &ased durations
C$ Feser(e time
@$ 8nalogous estimating
1?. ,ou are the project manager for AA %ops* a nation'ide toy store chain$ ,ou are
'orking on estimates for your latest project and ha(e gathered se(eral (aria&les for
your model$ ,ou"(e determined the follo'ing:
8$ Parametric modeling is a topBdo'n techni7ue that uses (aria&les to produce
time estimates$
A$ Parametric modeling is a mathematical formula that uses (aria&les to produce
cost estimates$
C$ Contingency estimating is a topBdo'n techni7ue that uses (aria&les to
produce cost estimates$
@$ Contingency estimating is a mathematical model that uses (aria&les to
produce time estimates$
3@. +hich logical relationship does the P@M use most often9
8$ 0tart to finish
A$ 0tart to start
C$ .inish to finish
@$ .inish to start
1nswers
1. @ Fesource Planning is the process that determines all the physical resources needed for
the project and 'hat 7uantities of resources are needed$ %he output is resource re7uirements$
3. C Fesource rates are an input to Cost /stimating$ 0upply purchase policies 'ould &e found
in the organi-ational policies input* 'hich the project manager should consider 'hen 'riting
the resource re7uirements$
4. 8 Constraints can &e anything that limits the option of the project team$ =rgani-ational
structure* collecti(e &argaining agreements* preferences of the project management team*
and e#pected staff assignments are all constraints that might &e encountered during this
process$
7. @ %he Fesponsi&ility 8ssignment Matri# (F8M! links project roles and responsi&ilities 'ith
project acti(ities$
8. A %he staffing management plan details ho' and 'hen human resources 'ill &e added to
and taken off the project$ It is an output of =rgani-ational Planning$
9. C %he acti(ity list is produced as an e#tension of the +A0 and includes all the project
acti(ities 'ith descriptions of the acti(ities$ %he acti(ity list and the +A0 updates are an
output to the 8cti(ity @efinition process$
;. 8 Precedence diagramming methods are also kno'n as acti(ity on node diagramming
methods$
>. @ P@M uses one time estimate to determine duration* 'hile 8@M can use more than one
time estimate$
?. 8 1/F% is a conditional diagramming method that allo's for loops and conditional &ranches$
1@. A %he 8cti(ity 0e7uencing process produces net'ork diagrams and updates to the acti(ity
list$ %he purpose of this process is to identify all acti(ity dependencies$
11. C %he tools and techni7ues for 8cti(ity @uration /stimating are e#pert judgment* analogous
estimating* 7ualitati(ely &ased durations* and reser(e time$
13. 8 8nalogous estimating is not a 7ualitati(ely &ased techni7ue$ It is a topBdo'n estimating
techni7ue that considers pre(ious similar acti(ities 'hen calculating estimates$
14. @ %his is an e#ample of a mandatory dependency* also kno'n as hard logic$ Mandatory
dependencies are inherent in the nature of the 'ork$ @iscretionary dependencies* also called
preferred logic* preferential logic* and soft logic* are defined &y the project management team$
17. C <ualitati(ely &ased durations multiply a kno'n element?like the 7uantity of materials
needed?&y the time it takes to install or complete one unit of materials$ %he result is a total
estimate for the acti(ity$ In this case* 10 ser(ers multiplied &y 1C hours per ser(er gi(es us a
1C0Bhour total duration estimate$
18. A AottomBup techni7ues are the most time consuming and the most accurate estimates you
can use$ +ith &ottomBup* each 'ork item is estimated and rolled up to a project total$
19. 8 8nalogous* or topBdo'n* estimating techni7ues are a form of e#pert judgment$ 0ince this
project is similar to another recent project* you can use the cost estimates from the pre(ious
project to help you 7uickly determine estimates for the current project$
1;. @ Parametric modeling is a Cost /stimating techni7ue$
1>. C Feser(e time takes schedule risk into consideration and adds a percentage of time or
additional 'ork periods to the estimate to pre(ent schedule delays$
1?. A Parametric modeling uses (aria&les* or parameters* to produce cost estimates$
Contingencies are also kno'n as reser(e time and are used in the 8cti(ity @uration
/stimating process$
3@. @ .inish to start is the most commonly used logical relationship in P@M and most project
management soft'are packages
Chapter C: (sta-lishing Project Planning %ontrols
%hapter:
K$ /sta&lish Project Controls$
Overview
/ach of the project Planning processes 'e"(e discussed so far* along 'ith 'hat 'e"ll co(er here
and in Chapter L* 'ill culminate in the final output of the project Planning process* 'hich is the
project plan$ %he /#ecution and Controlling process groups depend on the project plan to
measure and track project performance$ In order to measure performance* se(eral more plans
need to &e put into place including a 7uality plan* a risk response plan* and a procurement plan$
+e"ll co(er each of these in the upcoming sections of this chapter$
+e ha(e a lot of material to co(er in this chapter including se(eral processes on risk
management$ I recommend you study the inputs* tools and techni7ues* and outputs of the risk
processes from the Guide to the PMBOK as 'e 'ill not &e a&le to co(er all of them here$ Most of
these processes ha(e multiple inputs* many of 'hich 'ere co(ered pre(iously or are self
e#planatory$ %he e#am puts the most emphasis on the tools and techni7ues of these processes*
&ut study the inputs and outputs as 'ell$
%his chapter 'ill co(er <uality Planning* Fisk Management Planning* Fisk Identification*
<ualitati(e Fisk 8nalysis* <uantitati(e Fisk 8nalysis* Fisk Fesponse Planning* 0olicitation
Planning* and Procurement Planning$
Ienti!"ing =ualit" 'tanars
<uality is one of the triple constraints found in all projects$ It"s the third leg to the successful
completion of a project and more typically defines 'hether stakeholder e#pectations 'ere met$
Aeing on time and on &udget is one thing?if you deli(er the 'rong product or an inferior product*
on time and on &udget suddenly don"t mean much$ Femem&er those careerBlimiting mo(es 'e
talked a&out in a pre(ious chapter9 %his could &e one of them if you don"t plan and monitor
7uality properly on your project$
/uality Planning is a process that is concerned 'ith targeting 7uality standards that are rele(ant
to the project at hand and de(ising a plan to meet those standards$ %he 7uality management plan
is an output of this process$ It descri&es ho' the 7uality policy 'ill &e implemented &y the project
management team during the course of the project$
%he <uality Management kno'ledge area* 'hich includes <uality Planning* <uality 8ssurance*
and <uality Control* in(ol(es the 7uality management of the project as 'ell as the 7uality aspects
of the product or ser(ice the project 'as undertaken to produce$ +e"ll discuss <uality 8ssurance
and <uality Control in later chapters$ =ur focus in this chapter is <uality Planning$
=ualit" Inputs
%he <uality Planning process has se(eral inputs: 7uality policy* scope statement* product
description* standards and regulations* and other process outputs$ +e"ll look at t'o of these
inputs no'$
=ualit" Polic"
%he 7uality policy is a guideline pu&lished &y e#ecuti(e management that descri&es 'hat 7uality
policies should &e adopted for projects the company undertakes$ It"s up to the project manager to
understand this policy and incorporate any predetermined company guidelines into the 7uality
plan$ If a 7uality policy does not e#ist* it"s up to the project management team to create one for
the project$
'tanars an 0egulations
8s 'ith the 7uality policy* the project manager should consider any standards or regulations that
e#ist concerning the 'ork of the project 'hen 'riting the 7uality plan$ 8 standard is defined &y the
Guide to the PMBOK as something that"s appro(ed &y a recogni-ed &ody and that employs rules*
guidelines* or characteristics that should &e follo'ed$ .or e#ample* the 8mericans 'ith
@isa&ilities 8ct (8@8! has esta&lished standards for 'e& page designers that outline alternati(e
(ie'ing options of 'e& pages for people 'ith disa&ilities$ PMI guidelines regarding project
management are another e#ample of standards$
0tandards aren"t mandatory* &ut it"s a good idea to follo' them$ If your project creates a soft'are
product that ignores standard protocols* your customers 'on"t &e a&le to use it$
0tandards can &e set &y the organi-ation* &y independent &odies or organBi-ations such as the
International =rgani-ation for 0tandardi-ation (I0=!* and so on$
8 regulation is mandatory$ Fegulations are almost al'ays imposed &y go(ernments or institutions
like the 8merican Medical 8ssociation$ 6o'e(er* organi-ations may ha(e their o'n selfBimposed
regulations that you should &e a'are of as 'ell$ Fegulations re7uire strict adherence* particularly
in the case of go(ernmentBimposed regulations* or stiff penalties and fines could result?may&e
e(en jail time if the offense is serious enough$ 6mm* might &e tough to practice project
management from &ehind &ars;not a recommended career mo(e$
If possi&le* it"s a good idea to include information from the 7uality policy and any standards and
regulations that affect the project in the 7uality management plan$ If it"s not possi&le to include
this information in the 7uality management plan* then at least make reference to the information
and 'here it can &e found$ It"s the project manager"s responsi&ility to &e certain all stakeholders
are a'are of and understand the policy issues and standards or regulations that might impact the
project$
%he remaining inputs to <uality Planning ha(e &een co(ered in pre(ious chapters$ =ne note
regarding the 4other process outputs5 input: Contracts might ha(e certain pro(isions for 7uality
re7uirements that you should account for in the 7uality management plan$ %his 'ill &e disco(ered
during the Procurement Planning process$ %herefore* this 4other output5 from Procurement
Planning &ecomes an input to <uality Planning$
%ost o! =ualit"
%he cost of 7uality must &e measured in order to &e certain the product or ser(ice meets
stakeholders" e#pectations$ %hree people in particular are responsi&le for the rise of the 7uality
management mo(ement and the theories &ehind the cost of 7uality$ %hey are Philip A$ Cros&y*
Hoseph M$ Huran* and +$ /d'ards @eming$ /ach of these men de(eloped steps or points that led
to commonly accepted 7uality processes that 'e use today$
Philip +. %ros-"
Philip A$ Cros&y de(ised the (ero defects practice* 'hich means* &asically* do it right the first
time$ (@idn"t your dad used to tell you this9! Cros&y says that costs 'ill increase 'hen 7uality
planning isn"t performed up front* 'hich means you"ll ha(e to engage in re'ork* thus affecting
producti(ity$ Pre(ention is the key to Cros&y"s theory$ If you pre(ent the defect from occurring in
the first place* costs are lo'er* conformance to re7uirements is easily met* and the cost
measurement for 7uality &ecomes the cost of nonconformance rather than the cost of re'ork$
Eoseph $. Euran
Hoseph M$ Huran is noted for his fitness for use premise$ 0imply put* this means stakeholders" and
customers" e#pectations are met or e#ceeded$ %his says that conformance to specifications?
meaning the product of the project that 'as produced is 'hat the project set out to produce?is
met or e#ceeded$ 8nd* fitness for use specifically reflects the customers" or stakeholders" (ie' of
7uality$ .itness for use ans'ers the 7uestions* 4@id the product or ser(ice produced meet the
7uality e#pectation*5 4@id it satisfy a real need*5 and 4Is it relia&le and safe95
Huran also proposed that there could &e grades of 7uality$ 6o'e(er* you should not confuse
grade 'ith 7uality$ Do' 7uality is usually not an accepta&le conditionI ho'e(er* lo' grade might
&e$ .or e#ample* your ne' @ad"s @ollars Credit Card soft'are tracking system might &e of high
7uality* meaning there are no &ugs and the product performs as ad(ertised* &ut of lo' grade*
meaning there are fe' features$ ,ou"ll almost al'ays 'ant to stri(e for high 7uality* regardless of
the accepta&le grade le(el$
W. (wars Deming
+$ /d'ards @eming suggested that as much as EK percent of the cost of 7uality is a
management pro&lem$ =nce the 7uality issue has hit the floor* or the 'orker le(el* the 'orkers
ha(e little control$ .or e#ample* if you"re constructing a ne' high'ay and the management team
that &id on the project proposed using inferiorBgrade asphalt* the 'orkers laying the asphalt ha(e
little control o(er its 7uality$ %hey"re at the mercy of the management team that purchased the
supplies$
@eming also proposed that 'orkers cannot figure out 7uality on their o'n* and thus cannot
perform at their &est$ 6e &elie(ed that 'orkers need to &e sho'n 'hat accepta&le 7uality is* and
that they need to &e made to understand that 7uality and continuous impro(ement are necessary
elements of any organi-ation* or project in our case$
<ai,en 1pproach
%he )ai-en approach is a 7uality techni7ue from Hapan$ In fact* Kai(en means continuous
impro(ement in Hapanese$ +ith this techni7ue* all project team mem&ers and managers should
&e constantly 'atching for 7uality impro(ement opportunities$ %he )ai-en approach states that
you should impro(e the 7uality of the people first* then the 7uality of the products or ser(ice$
=ualit" Planning &ools
<uality Planning has fi(e tools and techni7ues used to help construct the 7uality management
plan$ I recommend you understand each of these tools and techni7ues and its purpose for the
e#am$ Det"s take a look at the tools and techni7ues$
+ene!it:%ost 1nal"sis
,ou"(e seen this techni7ue &efore$ In the case of 7uality management* you"ll 'ant to consider the
tradeBoffs of the cost of 7uality$ 8s mentioned earlier* it"s cheaper and more efficient to pre(ent
defects in the first place than to ha(e to spend time and money fi#ing them later$ 8ccording to the
Guide to the PMBOK* the &enefits of meeting 7uality re7uirements are as follo's:
0takeholder satisfaction is increased$
Costs are lo'er$
Producti(ity is higher$
%here is less re'ork$
+enchmar#ing
Benchmar&ing is a process of comparing pre(ious similar acti(ities to the current project acti(ities
to pro(ide a standard to measure performance against$ %his comparison 'ill also help you deri(e
ideas for 7uality impro(ements on the current project$ .or e#ample* if your current printer can
produce E pages per minute and you"re considering a ne' printer that produces 1: pages per
minute* the &enchmark is E pages per minute$
Flowcharting
2lowcharts are diagrams that sho' the logical steps that must &e performed in order to
accomplish an o&jecti(e$ %hey can also sho' ho' the indi(idual elements of a system interrelate$
In the case of 7uality management planning* t'o types of flo'charts are commonly used$ %hey
are causeBandBeffect diagrams and system or process flo'charts$
.ause3and3effect diagrams sho' the relationship &et'een the effects of pro&lems and their
causes$ %his diagram depicts e(ery potential cause and su&cause of a pro&lem and the effect
that each proposed solution 'ill ha(e on the pro&lem$ %his diagram is also called a fish&one
diagram* or Ishika'a diagram after its de(eloper )aoru Ishika'a$ .igure C$1 sho's an e#ample
causeBandBeffect diagram$
Figure 9.1: CauseBandBeffect diagram
%he system or process flo'chart sho's the logical steps needed to accomplish an o&jecti(e and
the interrelation of indi(idual elements of a system$
Design o! (6periments
.or e#am purposes* you need to kno' that design of e+periments is an analytical techni7ue that
identifies the elements* or (aria&les* that 'ill ha(e the greatest effect on o(erall project outcomes$
%his techni7ue is used most often concerning the product of the project &ut can also &e applied to
project management processes$ %his process designs and sets up e#periments to determine the
ideal solution for a pro&lem using a limited num&er of sample cases$
%ost o! =ualit"
%he cost of "uality here refers to the costs to produce the product or ser(ice of the project
according to the 7uality standards$ %hese costs include all the 'ork necessary to meet the
product re7uirements 'hether the 'ork 'as planned or unplanned$
%here are three costs associated 'ith the cost of 7uality: pre(ention costsI appraisal costsI and
failure costs* 'hich consist of internal and e#ternal costs$
Prevention %osts
Pre(ention means keeping defects out of the hands of customers$ Pre#ention costs are the costs
associated 'ith satisfying customer re7uirements &y producing a product 'ithout defects$ %hese
costs are manifested early on in the process and include things like 7uality planning* training*
design re(ie'* and contractor and supplier costs$
1ppraisal %osts
Appraisal costs are the costs e#pended to e#amine the product or process and make certain the
re7uirements are &eing met$ 8ppraisal costs might include costs associated 'ith things like
inspections and testing$
Failure %osts
2ailure costs are 'hat it costs 'hen things don"t go according to plan$ %here are t'o types of
failure costs* internal and e#ternal$
Internal failure costs result 'hen customer re7uirements are not satisfied 'hile the product is still
in the control of the organi-ation$ Internal failure costs may include correcti(e action* re'ork*
scrapping* and do'ntime$
/#ternal failure costs occur 'hen the product has reached the customer and they determine that
their re7uirements ha(e not &een met$ Costs associated 'ith e#ternal failure costs may include
inspections at the customer site* returns* and customer ser(ice costs$
=ualit" $anagement Plan
<uality Planning uses many techni7ues to determine the areas of 7uality impro(ement that can
&e implemented* controlled* and measured throughout the rest of the project$ %he "uality
management plan descri&es ho' the project management team 'ill enact the 7uality policy$ It
also documents the resources needed to carry out the 7uality plan* the responsi&ilities of the
project team in implementing 7uality* and all the processes and procedures the project team and
organi-ation use to satisfy 7uality re7uirements$
%he 7uality management plan is 'ritten &y the project manager in cooperation 'ith the project
staff$ ,ou 'ill assign 7uality actions to the acti(ities listed on the +A0$ Isn"t that +A0 a handy
thing9 %he 7uality plan should then document the 7uality actions associated 'ith the +A0
acti(ities$ Dater in the <uality Control process* measurements 'ill &e taken to determine if 7uality
to date is on track 'ith the 7uality standards outlined in the 7uality management plan$
Operational De!initions
Operational definitions are an output of the <uality Planning process$ %hey are sometimes called
metrics* and their purpose is to specifically descri&e 'hat is &eing measured and ho' it 'ill &e
measured according to the <uality Control plan and process$
%hec#lists
If you"re like me* you start your day at the office 'ith a &ig toBdo list that has so many items on it
you 'on"t &e a&le to finish them all$ Ge(ertheless* you faithfully 'rite the list e(ery day and check
off the things that you accomplish throughout the day$ .hec&lists are like this in that they pro(ide
a means to determine if the re7uired steps in a process ha(e &een follo'ed$ 8s each step is
completed* it"s checked off the list$ Checklists can &e acti(ity specific or industry specific* and
might &e (ery comple# or easy to follo'$ 0ometimes* organi-ations may ha(e standard checklists
they use for projects$ ,ou might also &e a&le to o&tain checklists from professional associations$
Checklists are an output of <uality Planning$ Femem&er that checklists are an output of this
process &ut are a tool and techni7ue of the Fisk Identification process* and are an input to <uality
Control$ Many times* outputs of one process &ecome inputs to another* so that isn"t unusual$
6o'e(er* I &elie(e this is the only case 'here an inputOoutput is also a tool and techni7ue in
another process$
Inputs to Other Processes
<uality Planning finishes up its outputs 'ith inputs to other processes$ In the process of
identifying <uality Planning measurements and controls* you might &e alerted to other Planning
processes that need to &e t'eaked in order to comply 'ith the ne' information you"(e
disco(ered$
<uality is an important planning and measuring tool$ +e"ll re(isit 7uality during the /#ecution and
Controlling processes 'here 'e get into 7uality measurements and controls$ Aut for no'* let"s
mo(e on to defining project risks$
0eal Worl 'cenario5%an" Wor#s
Huliette +alters is a contract project manager for Candy +orks$ %hey"(e introduced a ne' line of
hard candy drops in (arious e#otic fla(ors: caffe latte* hot &uttered popcorn* and jalapeZo spice*
just to name a fe'$
Huliette is 'riting the 7uality management plan for this project$ 8fter inter(ie'ing stakeholders and
key team mem&ers* she"s found se(eral 7uality factors of importance to the organi-ation$ <uality
'ill &e measured &y:
%an" si,e /ach piece should measure J mm$
1ppearance Go (isi&le cracks or &reaks should appear in the candy$
Flavor .la(or must &e distinguisha&le 'hen taste tested$
Num-er prouce N000 pieces per 'eek is the production target$ %he current machine has
&een &enchmarked at N200 candies per 'eek$
Intensit" o! color %here should &e no opa7ueness in the darker colors$
Wrappers Properly fitting 'rappers co(er the candies* folding o(er t'ice in &ack* and t'isted on
each side$ %here is a different 'rapper for each fla(or of candy* 'hich must &e matched e#actly$
%he candy is cooked and then pulled into a long cylinder shape roughly C feet long and 2 feet in
diameter$ %his cylinder is fed into the machine that molds and cuts the candy into drops$ %he
cylinders (ary a little in si-e &ecause they"re hand stretched &y e#pert candy makers prior to
feeding them into the drop maker machine$ 8s a result* the end of one fla(or &atch* the caffe latte
fla(or* and the &eginning of the ne#t &atch* the hot &uttered popcorn fla(or* merge$ %his means
the drops that fall into the collection &ins are intermingled during the last run of the first fla(or
&atch$ In other 'ords* the last &in of the caffe latte fla(or run has some hot &uttered popcorn
drops mi#ed in$ 8nd* there isn"t a 'ay to separate the drops once they"(e hit the &in$ .rom here*
the drops go on to the candyB'rapping machine 'here &rightly colored 'rappers are matched to
the candy fla(or$ 8ccording to the 7uality plan* hot &uttered popcorn drops cannot &e 'rapped as
caffe latte drops$ Huliette ponders 'hat to do$
8s she tosses and turns that night thinking a&out the pro&lem* it occurs to her to present this
pro&lem as an opportunity to the company rather than as a pro&lem$ In order to keep production
in the N000 candies per 'eek category* the machines can"t &e stopped e(ery time a ne' &atch is
introduced$ 0o Huliette comes up 'ith the idea to 'rap candies from the intermi#ed &ins 'ith
'rappers that say 4mystery fla(or$5 %his 'ay* production keeps pace 'ith the plan* and the
'rapperOfla(or 7uality pro&lem is mitigated$
0is# Planning
/(ery one of us takes risks on a daily &asis$ Hust getting out of &ed in the morning is a risk$ ,ou
might stu& your toe in the dark on the 'ay to the light s'itch or trip o(er the dog and &reak a leg$
%hese things don"t usually happen* &ut the possi&ility e#ists$ %he same is true for your project$
Fisk e#ists on all projects* and the potential that a particular risk 'ill occur depends on the nature
of the risk$
Fisk* like much of the information gathered during other Planning processes* 'ill change as the
project progresses and should &e monitored throughout the project$ 8s you get close to a risk
e(ent* that"s the time to reassess your original assumptions a&out the risk and your plans to deal
'ith the risk and to make any adjustments as re7uired$
=ne consideration to take into account 'hen assessing risk is risk tolerance$ 0takeholder risk
tolerance is one of the inputs in the Fisk Management Planning process$ =rgani-ations and
stakeholders* as 'ell as indi(iduals* all ha(e different tolerances for risk$ =ne organi-ation might
&elie(e that the risk of a potential 1L percent cost o(errun is high* 'hile another might think it"s
lo'$ It"s important for the project manager to understand the tolerance le(el the organi-ation and
the stakeholders ha(e for risk &efore e(aluating and ranking risk$
@uring the riskBplanning process* 'e"ll look at Fisk Management Planning* Fisk Identification*
<ualitati(e Fisk 8nalysis* <uantitati(e Fisk 8nalysis* and Fisk Fesponse Planning$ 8t this stage*
'e need to identify all potential risks that e#ist for our project* and 'e need to understand the
pro&a&ility of risk occurrence$ +e also 'ant to kno' 'hat the impact to the project or product
outcome 'ill &e if the risk does happen$ Got all risk is &ad* and not all risks ha(e negati(e
impacts* &ut you need to kno' a&out them ne(ertheless$ 8ll risks are caused &y something and
therefore ha(e conse7uences$ %hose conse7uences 'ill likely impact one or more of the triple
constraints$
%he idea &ehind risk planning is that you identify all the risks and then e(aluate and 7uantify the
risks to come up 'ith a plan to deal 'ith or a(ert them$
0is# $anagement Planning
Fisks come a&out for many reasons$ 0ome are internal to the project* and some are e#ternal$
%he project en(ironment* the planning process* the project management process* inade7uate
resources* and so on can all contri&ute to risk$ 0ome risks you"ll kno' a&out in ad(ance and plan
for during this processI others 'ill occur unannounced during the project$ %he 1is& Management
Planning process determines ho' you"ll plan for risks on your project$
Fisks associated 'ith the project generally concern the project o&jecti(es* 'hich in turn impact
time* costs* or 7uality* or any com&ination of the three$ %he purpose for Fisk Management
Planning is to create a ris& management plan* 'hich descri&es ho' you 'ill define* monitor* and
control risks throughout the project$ %he risk management plan &ecomes part of the project plan
at the conclusion of the Planning process$
0is# $anagement Plan
%he risk management plan is the only output of this process$ %he risk management plan details
ho' risk management processes 'ill &e implemented* monitored* and controlled throughout the
life of the project$ It details ho' you 'ill manage risks &ut does not attempt to define responses to
indi(idual risks$ In the risk response plan* indi(idual risk responses are discussed$ +e"ll talk a&out
that a little later in this section$
8ccording to the Guide to the PMBOK* the risk management plan might include a description of
the methodology you"ll use to perform risk management$ Foles and responsi&ilities are included
in the document and descri&e the team of people 'ho are responsi&le for managing the identified
risks and their responses$ %hese teams are usually not the project team$ Fisk analysis should &e
un&iased* 'hich may not &e possi&le 'hen project team mem&ers are in(ol(ed$
%he &udget for risk management is included in the plan as 'ell$ <ualitati(e and 7uantitati(e
scoring interpretation methods are descri&ed in the plan including thresholds for risk$ +e"ll co(er
these topics later in this section$
%he plan also descri&es the timing of risk management processes and the criteria that esta&lish
risk thresholds$ 8nd the plan also descri&es ho' the risk management information 'ill &e
maintained and updated* reported to project participants* and documented for future reference$
It"s (ery important to spend time de(eloping this plan as the risk management plan is an input to
e(ery other riskBplanning process$ It is also an input to the Fisk Monitoring and Control process*
'hich 'e"ll co(er in another chapter$
Ienti!"ing Potential 0is#
%he 1is& ,dentification process in(ol(es identifying all the risks that might impact the project*
documenting them* and documenting their characteristics$ Fisk Identification should occur o(er
the course of se(eral steps$ ,ou can include all project team mem&ers* stakeholders* su&ject
matter e#perts* users* and anyone else 'hom you think may help in the Fisk Identification
process$ Perhaps in the first round of Fisk Identification* you include just the project team and
then &ring in the stakeholders or risk management team to further flesh out risks during the
second round of identification$
Fisks may or may not ad(ersely affect the project$ 6o'e(er* all risk e(ents and their
conse7uences should &e identified$ 6ere"s a partial list to get you thinking a&out 'here risk may
&e found:
AudgetsOfunding
0chedules
0cope or re7uirements changes
%echnical issues
Personnel issues
6ard'are
Contracts
Political concerns
Ausiness risk
Degal risk
/n(ironmental risk
%his is &y no means an e#hausti(e list$ Feali-e that risk is lurking almost any'here on your
project$ It"s your jo& to disco(er all the possi&le risks using the tools and techni7ues of this
process and document the risks$
Ienti!"ing 0is# Inputs
%he inputs to this process include the risk management plan* project Planning outputs* risk
categories* and historical information$ %ake note of the input titled 4project Planning outputs5 as
they include the project charter* the +A0* your cost and time estimates* assumptions and
constraints* and the procurement plan$ +e"ll discuss the procurement plan later in this chapter$
Fisk categories in(ol(e either industry or application areas$ 8ccording to the Guide to the
PMBOK* the risk categories may include technical* 7uality* or performance risksI project
management risksI organi-ational risksI and e#ternal risks$
%he historical information input here refers to pre(ious project e#periences (ia the project files
andOor pu&lished information like commercial data&ases or academic research that might e#ist for
your application areas$ Project team kno'ledge is another form of historical information$
&ools an &echniques 2se to Ienti!" 0is#
%his process is undertaken using fi(e tools and techni7ues: documentation re(ie's* informationB
gathering techni7ues* checklists* assumptions analysis* and diagramming techni7ues$
@ocumentation re(ie's in(ol(e re(ie'ing project plans* assumptions* and historical information
regarding pre(ious projects$
Information gathering includes se(eral techni7ues like &rainstorming* the @elphi techni7ue*
inter(ie'ing* and strength and 'eakness analysis$ +e"ll take a &rief look at each$
+rainstorming
%his is pro&a&ly the most often used techni7ue of Fisk Identification$ ,ou"(e pro&a&ly used this
techni7ue many times for many purposes$ Brainstorming in(ol(es getting su&ject matter e#perts*
team mem&ers* risk management team mem&ers* and anyone else 'ho might &enefit the
process in a room and asking them to start identifying possi&le risk e(ents$ %he trick here is that
one person"s idea might spa'n another idea and so on* so that &y the end of the session you"(e
identified all the possi&le risks$
Delphi &echnique
%he )elphi techni"ue is a lot like &rainstorming only the people participating in the meeting don"t
necessarily kno' each other$ In fact* the people participating in this techni7ue don"t all ha(e to &e
located in the same place and can participate anonymously$ ,ou can use eBmail to facilitate this
techni7ue (ery easily$
+hat you do is assem&le your e#perts* &oth from inside and outside the company* and ask them
(ia a 7uestionnaire to identify potential risks$ %hey in turn send their responses &ack to you (or
the facilitator of this process!$ 8ll the responses are organi-ed &y content and sent &ack to the
@elphi mem&ers for further input* additions* or comments$ %he participants then send their
comments &ack one more time* and a final list of risks is compiled &y the facilitator$
%he @elphi techni7ue is a great tool that allo's consensus to &e reached (ery 7uickly$ It also
helps pre(ent one person from unduly influencing the others in the group and thus pre(ents &ias
in the outcome &ecause the participants are usually anonymous and don"t necessarily kno' ho'
others in the group responded$
Nominal )roup &echnique
8nother techni7ue that is similar to the @elphi techni7ue is the nominal group techni"ue$ It isn"t a
named tool and techni7ue of this process &ut is a techni7ue you might find useful$
%his techni7ue re7uires the participants to &e together in the same room$ /ach participant has
paper and pencil in front of them* and they are asked to 'rite do'n 'hat risks they think the
project faces$ 0tickyB&acked notes are a good 'ay to do this$ /ach piece of paper should contain
only one risk$ %he papers are gi(en to the facilitator* 'ho sticks them up to the 'all or a 'hite
&oard$ %he panel is then asked to re(ie' all the risks posted on the &oardI rank them and
prioriti-e them* in 'ritingI and su&mit the ranking to the facilitator$ =nce this is done* you should
ha(e a complete list of risks$
Interviewing
,nter#iews are 7uestionBandBans'er sessions held 'ith others including other project managers*
su&ject matter e#perts* stakeholders* customers* the management team* project team mem&ers*
and users$ %hese folks pro(ide you 'ith possi&le risks &ased on their past e#periences 'ith
similar projects$
%his techni7ue in(ol(es inter(ie'ing those folks 'ith pre(ious e#perience on projects similar to
yours* or those 'ith speciali-ed kno'ledge or industry e#pertise$ 8sk them to tell you a&out any
risks that they"(e e#perienced or that they think may happen on your project$ 0ho' them the
+A0 and your list of assumptions to help get them started thinking in the right direction$
%hec#lists
.hec&lists used during Fisk Identification are usually de(eloped &ased on historical information
and pre(ious project team e#perience$ If you typically 'ork on projects that are similar in nature*
&egin to compile a list of risks$ ,ou can then con(ert this to a checklist that 'ill allo' you to
identify risks on future projects 7uickly and easily$ 6o'e(er* don"t rely solely on checklists for Fisk
Identification as you might miss important risks$
1ssumptions 1nal"sis
%his is a matter of identifying and documenting the assumptions you"(e made regarding the
project and then using them as a jumpingBoff point to further identify risks$
Diagramming &echniques
CauseBandBeffect diagrams and flo'charts are usa&le in the Fisk Identification process as 'ell as
the <uality Planning process$ +e discussed these diagramming techni7ues earlier in this chapter$
8 third diagramming techni7ue used during Fisk Identification is called influence diagrams$ %hese
typically sho' the causes of pro&lems and the order of occurrence o(er time$
/ach of these techni7ues pro(ides a 'ay for you to help identify project risks$ It"s important that
you identify all the risks early on$ %he &etter jo& you do of identifying the project"s risks at the
Planning stage* the &etter your risk response plan 'ill look$ Fisk Identification is not an area of
project Planning that you should skip$
0is# Ienti!ication Outputs
%he outputs of the Fisk Identification process include risks* triggers* and inputs to other
processes$
Fisks are all the potential e(ents and their su&se7uent conse7uences that could occur* as 'e"(e
discussed in this section$ =nce you"(e identified all the potential risks* you might 'ant to log them
in a risk data&ase or tracking system to organi-e them and keep a close eye on their status$ %his
can easily &e done in spreadsheet format or 'hate(er means you choose$ Dist the risks and
assign each risk a tracking num&er$ %his gi(es you a means to track the risks* their occurrence*
and the responses implemented$ +e"ll talk more a&out risk data&ases in the Fisk Monitoring and
Control process in Chapter 10$
&riggers
If you"(e e(er suffered from a hay fe(er attack* you can"t mistake the itchy* runny nose and
scratchy throat that can come on suddenly and send you into a snee-ing fren-y$ Fisk symptoms*
also kno'n as triggers* 'ork the same 'ay$ Ae on the alert for symptoms that might signal a risk
e(ent is a&out to occur$
If you"re planning to host an outdoor gathering and rain clouds start rolling in from the north on
the morning of the acti(ity* you pro&a&ly ha(e a risk e(ent 'aiting to happen$ 8 key team mem&er
hinting a&out jo& hunting is a 'arning sign that they may &e thinking of lea(ing* 'hich in turn can
cause schedule delays* increased costs* etc$ %his is another e#ample of a trigger$
Inputs to other processes may occur as a result of the risks you"(e identified and can include
schedule updates* modifications to the +A0* cost re(isions* and other process updates$
=ualitative 0is# 1nal"sis
/ualitati#e 1is& Analysis in(ol(es determining 'hat impact the identified risks 'ill ha(e on the
project and the pro&a&ility they"ll occur$ It also puts the risks in priority order according to their
effect on the project o&jecti(es$
<ualitati(e Fisk 8nalysis should &e performed throughout the project$ >sing <ualitati(e Fisk
8nalysis methods allo's you to determine the pro&a&ility a risk 'ill occur and to e(aluate its
conse7uences$ %his techni7ue depends on the project type* data precision* and the scales of
pro&a&ility and impact$ +e"ll take a &rief look at these three inputs$ %he remaining inputs to this
process include the risk management plan* identified risks* project status* and assumptions$
=ualitative Inputs
%he input project type refers to the comple#ity of the project and 'hether you and the team ha(e
had e#perience 'ith projects of this kind$ If you"re 'orking on a project that is similar in si-e and
scope to others you"(e 'orked on* you"ll ha(e a much &etter understanding of the pro&a&ility of
the occurrence of risk e(ents and their conse7uences$ 6o'e(er* if you"re 'orking on a ne'
project that"s particularly detailed or you"re using ne' technology* you 'ill ha(e little information
on the pro&a&ility of risk e(ents$
@ata precision is concerned 'ith the relia&ility of the data used to identify and descri&e risks and
the le(el of understanding regarding their conse7uences$
0cales of pro&a&ility and impact are used to determine and measure risk pro&a&ility and the
effect of the risk on the project o&jecti(es$ +e"ll talk more a&out these scales in the tools and
techni7ues section ('hich comes ne#t!$
0is# Pro-a-ilit" 1nal"sis
%he <ualitati(e Fisk 8nalysis tools and techni7ues are primarily concerned 'ith disco(ering the
pro&a&ility of a risk e(ent and determining the impact the risk 'ill ha(e if it does occur$ %he
outputs of this process 'ill prioriti-e the risks you"(e scored here using these tools and
techni7ues to determine 'hich ones should recei(e further Fisk Fesponse Planning$ 8ll of the
information you gather regarding risks and pro&a&ility needs to &e as accurate as possi&le$ It"s
also important that you gather un&iased information so that you don"t unintentionally o(erlook
risks 'ith great potential or conse7uences$
%he purpose of this process is to determine risk e(ent pro&a&ility and risk impact$ ,ou"ll use the
tools and techni7ues of this process to esta&lish risk scores$ %he tools and techni7ues include
risk pro&a&ility and impact* pro&a&ilityOimpact risk rating matri#* project assumptions testing* and
data precision ranking$
0is# Pro-a-ilit" an Impact
%his tool and techni7ue assigns pro&a&ility to the risk e(ents you"(e identified and determines
their effect on project o&jecti(es$
@uring <ualitati(e Fisk 8nalysis* you 'ill simply assign a high* medium* or lo' (alue* or some
similar com&ination* to the risk$ .or e#ample* may&e you"(e identified the departure of a key team
mem&er as a potential risk for the project$ @epending on ho' familiar you are 'ith the situation*
you may kno' that this pro&a&ility is (ery likely and the conse7uences 'ould ha(e significant
impact$ If so* assign a high pro&a&ility to this risk$ If the key team mem&er is happy 'ith the
company and 'ouldn"t dream of lea(ing sa(e for e#treme circumstances* assign this risk a lo'
pro&a&ility$
%hese assignments include the pro&a&ility of the risk occurring and the se(erity of the impact
should it occur$ %he ne#t techni7ue deals 'ith this issue more fully$
Pro-a-ilit":Impact 0is# 0ating $atri6
8 pro&a&ility matri# might &e as simple as listing your risks and assigning a high* medium* or lo'
(alue to them$ %his is called an ordinal scale as the (alues are rank ordered from high to lo'$ In
practice* ordinal (alues may also include ranking &y position$ In other 'ords* the risks are listed in
rank order as the first* the second* the third* and so on$
8nother matri# format is sho'n as a com&ination of the pro&a&ility of the risk using a pro&a&ility
scale and the se(erity of the impact using an impact scale$
Pro$a$ility is the likelihood that an e(ent 'ill occur$ %he classic e#ample is flipping a coin$ %here
is a $K0 pro&a&ility of getting heads and a $K0 pro&a&ility of getting tails on the flip$ =ne thing to
note is that the pro&a&ility that an e(ent 'ill occur plus the pro&a&ility that the e(ent 'ill not occur
al'ays e7uals 1$0$ In our coinBflipping e#ample* there is a $K0 chance that 'e"ll get heads on the
flip$ %here is also* therefore* a $K0 chance 'e 'ill not get heads on the flip$ %he t'o responses
added together e7ual 1$0$ Pro$a$ility scales are al'ays e#pressed as a num&er &et'een 0$0*
'hich means there is no pro&a&ility of the e(ent occurring* and 1$0* 'hich means there is 100
percent certainty the risk 'ill occur$
%he se(erity of the risk impact* called an impact scale* is assigned as a cardinal (alue$ Cardinal
scales or (alues are actual numeric (alues assigned to the risk$
8ssessing the pro&a&ility and risk impact is typically accomplished using e#pert judgment and
inter(ie'ing techni7ues$ 0ome of the tools and techni7ues outlined in the Fisk Identification
process like &rainstorming* inter(ie'ing* and the @elphi techni7ue can &e used during this
process to determine pro&a&ility and impact$
0is# Impacts
8nother method to determine impact is to de(elop predefined measurements that descri&e 'hat
(alue to place on a risk e(ent depending on the project o&jecti(e or triple constraint it impacts$
.or e#ample* let"s say a risk e(ent impacting project costs has a medium chance of occurring$
,ou"(e predefined a medium impact to carry a (alue of 0$:$ .urther criteria say that a risk e(ent
that falls into the medium category for cost must increase cost &y 10 percent$ 8n e#ample chart is
sho'n in %a&le C$1$
&a-le 9.1: 0is# Impacts 0ating $atri6
%onstraints .owA
.ow
.ow $eium /igh /ighA
/igh

0$0K 0$20 0$:0 0$C0 0$E0
Cost Go sigB
nificant
impact
Dess than
C[
increase
L\12[
increase
1J\1E[
increase
More than
1E[
increase
%ime Go sigB
nificant
impact
Dess than
C[
increase
L\12[
increase
1J\1E[
increase
More than
1E[
increase
<uality Go sigB
nificant
impact
.e'
component
s impacted
0ignificant
impact
re7uiring
customer
appro(al to
proceed
>naccepta&le
7uality
Product
not
usa&le
,ou can use a chart like this to e(aluate and assign risk pro&a&ility and impact to your list of
identified risks$ %he criteria are determined at the &eginning of the project$ Dater* all the risks are
listed and prioriti-ed &ased on the risk ranking and other factors$ +e"ll get to that 'hen 'e
discuss the outputs of this process$
Pro-a-ilit":Impact $atri6
8 pro&a&ilityOimpact (PI! matri# is de(eloped to determine if risks should &e classified as high*
medium* or lo' risks$ %his is accomplished &y multiplying the risk pro&a&ility &y the risk impact to
determine an o(erall score$ %he threshold of risk &ased on high* medium* and lo' tolerances is
determined &y comparing the risk score &ased on the pro&a&ility le(el to the PI matri#$
8s an e#ample* 'e"(e determined that a cost risk e(ent has a 0$: pro&a&ility of occurring and a
0$2 impact on the project cost if it does occur$ %herefore* the o(erall score is as follo's: 0$: ( 0$2
S 0$0E$ 8 score of 0$0E for a pro&a&ility of 0$: is in the medium threshold* so this risk is assigned
a medium (alue$ 8gain* the (alues assigned to the risks 'ill determine ho' Fisk Fesponse
Planning is carried out for the risks later during the riskBplanning processes$
8 further e#ample of this is sho'n in the 40creen 0crapers* Inc$5 side&ar later in this section$
Project 1ssumptions &esting
%he important thing to note a&out this output is that all assumptions are tested against t'o things
according to the Guide to the PMBOK$ %he first is the strength of the assumption or the (alidity of
the assumption$ %he second is the conse7uences that may impact the project if the assumption
turns out to &e false$ 8ll assumptions that are true should &e e(aluated and scored just like the
risks you identified and scored earlier in this section$
Data Precision 0an#ing
%his in(ol(es determining the usefulness of the data gathered to e(aluate risk$ 8ccording to the
Guide to the PMBOK* data precision ranking looks at the 7uality of the data used* the a(aila&ility
of data regarding the risks* ho' 'ell the risk is understood* and the relia&ility and integrity of the
data$
0eal Worl 'cenario5'creen 'crapersH Inc.
0creen 0crapers is a soft'areBmanufacturing company that produces a soft'are product that
looks at your mainframe screens* commonly called green screens* and con(erts them to &ro'serB
&ased screens$ %he &ro'serB&ased screens look like any other +indo'sBcompati&le screens 'ith
&uttons* scroll &ars* and dropBdo'n lists$
0creen 0crapers de(ised this product for companies that use mainframe programs to update and
store data &ecause many of the entryBle(el 'orkers &eginning their careers today are not familiar
'ith green screens$ %hey"re cum&ersome and difficult to learn* and no consistency e#ists from
screen to screen or program to program$ 8n .K key in one program might mean go &ack one
page* 'hile an .K key in another program might mean clear the screen$ Ge' users are easily
confused* make a lot of mistakes* and ha(e to 'rite ta&lets full of notes on ho' to na(igate all the
screens$
,our company has purchased the 0creen 0craper product and has appointed you the project
manager o(er the installation$ %here are lots of issues to address on this project* and you"(e
made great head'ay$ ,ou"re no' at the risk identification and 7uantification stage$ ,ou decide to
use the @elphi techni7ue to assist you in identifying risk and assigning pro&a&ility and impact
rankings$ %here are some e#perts a(aila&le in your company 'ho can ser(e on the @elphi panel*
as 'ell as some folks in industry organi-ations you &elong to outside the company$
,ou assem&le the group* and set up a summary of the project and send it out (ia eBmail
re7uesting responses to your 7uestions a&out risk$ 8fter the first pass* you compile the list of risks
as follo's (this list is an e#ample and isn"t e#hausti(e as your list 'ill &e project specific!:
3endor (ia&ility?'ill they stay in &usiness9
3endor responsi(eness 'ith pro&lems after implementation
0oft'are compati&ility risks 'ith e#isting systems
6ard'are compati&ility risk
Connection to the mainframe risk
%raining I% staff mem&ers to maintain the product
,ou send this list &ack to the @elphi mem&ers and ask them to assign a pro&a&ility of highBhigh*
high* medium* lo'* or lo'Blo' and an impact le(el of 0$0\1$0 to each risk$ %he @elphi mem&ers
assign pro&a&ility &ased on a pro&a&ility scale designed &y the risk management team$
%he (alues of the pro&a&ility scale are as follo's: 6ighBhigh is 0$E* high is 0$C* medium is 0$:* lo'
is 0$2* and lo'Blo' is 0$0K$
%he PI matri# inde# sho's the pro&a&ility assignment thresholds listed in %a&le C$2 (follo'ing this
side&ar!$ %he ta&le is populated &y multiplying the risk e(ent pro&a&ility times the impact (alues
of 0$0K* 0$2* 0$:* 0$C* and 0$E$ %he ta&le is read &ased on the pro&a&ility of the risk occurring$ .or
e#ample* if the risk e(ent has a 0$E pro&a&ility of occurring and the risk score is 0$1C* the risk
'ould recei(e an o(erall medium rating$
%he completed risk list and their rankings that you recei(ed from the @elphi mem&ers looks like
%a&le C$J (follo'ing this side&ar!$
Aased on the PI matri# thresholds* the project risks are assigned the follo'ing o(erall
pro&a&ilities:
3endor (ia&ility S high
3endor responsi(eness S lo'
0oft'are compati&ility S medium
6ard'are compati&ility S medium
Mainframe connection S high
%raining S lo'
&a-le 9.3: PI $atri6 !or 'creen 'crapersH Inc.
Pro-a-ilit" 0is# 'cores FPro-a-ilit" I ImpactGD
$E 689 6:; .32 .48 .64
$C 68< 6:= 6=9 .36 .48
$: $02 68> 6:; 6=9 .32
$2 $01 $0: $0E 6:= 6:;
R%he legend for the PI matri# is as follo's: no formatting S lo' assignmentI italics S medium
assignmentI bold italics S high assignment$
&a-le 9.4: 0is# Impacts 0ating $atri6 !or 'creen 'crapersH Inc.
0is# Pro-a-ilit" Impact 0is# 'cores
3endor (ia&ility $: $E $J2
3endor responsi(eness $2 $K $10
0oft'are compati&ility $: $: $1C
6ard'are compati&ility $: $J $12
Mainframe connection $E $E $C:
%raining $2 $J $0C
0is# 0an#ing
%he outputs of this process include o(erall risk ranking for the project* list of prioriti-ed risks* list of
risks for additional analysis and management* and trends in <ualitati(e Fisk 8nalysis results$
%he goal here is to rank all of the risks* prioriti-e them* and perform more analysis on the risks
'ith high priority$ Det"s look at the first three outputs indi(idually$
Overall 0is# 0an#ing !or the Project
%his output compares the list of risks and their o(erall rankings to other similar projects$ ,ou can
use the o(erall risk scores of the current project as a gauge to determine if it has more or less risk
than projects of similar si-e and scope$ =(erall risk score comparisons are also used to help
determine if further analysis should &e performed regarding the project and to make go or noBgo
decisions a&out the project or project phase$ .or e#ample* suppose the project you"re considering
has an o(erall risk score that"s significantly higher than a pre(ious project of a similar nature$ ,ou
could consider doing further &enefitOcost analysis and re(isit some of the project justification
techni7ues to determine if the project is 'orth pursuing$ 8 relati(ely high risk score could also
indicate that you need to assign more resources to the highBrisk areas or perhaps that the project
needs to &e canceled$
.ist o! Prioriti,e 0is#s
8s the title implies* the risks you"(e identified and scored during this process are no' listed in
priority order$ Priority is determined using the risk scores including pro&a&ility and impact and
other criteria* 'hich might include the timing of the risk e(ent* the +A0 le(el impacted* and so on$
.ist o! 0is#s !or 1itional 1nal"sis an $anagement
%his output e#amines the risks and their scores to determine 'hich ones should recei(e further
analysis$ %hose risks 'ith scores of highBhigh or high* for e#ample* might need further re(ie' and
action &y the risk management team$
=uanti!"ing 0is#
/uantitati#e 1is& Analysis looks at the risks you"(e identified and assigns numeric pro&a&ilities to
each risk$ <uantitati(e Fisk 8nalysis* like <ualitati(e Fisk 8nalysis* e#amines each risk and its
potential impact on the project o&jecti(es$ ,ou may choose to use &oth of these processes to
assess risk or only one of them depending on the comple#ity of the project and organi-ational
policy regarding risk planning$
<uantitati(e Fisk 8nalysis e(aluates the impacts of risk and 7uantifies the risk e#posure of the
project$ It determines any interactions among the risks and assesses the range of potential
project outcomes$ %his includes identifying realistic cost* schedule* and scope issues that need
attention$ %he focus here is to determine 'hich risks you should pay attention to and de(elop
responses for* and 'hich risks you can put on the &ack &urner$
+e"ll take a look at the tools and techni7ues of the <uantitati(e Fisk 8nalysis process* 'hich
include inter(ie'ing* sensiti(ity analysis* decision tree analysis* and simulation$
Interviewing
%his techni7ue is like the inter(ie'ing techni7ue 'e talked a&out in Fisk Identification$ Project
team mem&ers* stakeholders* and su&ject matter e#perts are prime candidates for risk inter(ie's$
8sk them a&out their e#periences on past projects and a&out 'orking 'ith the types of
technology or processes you"ll use during this project$
Make certain you document the results of the inter(ie' and ho' the inter(ie'ees decided upon
the risk ranges and criteria they used to place risks in certain categories$ %his 'ill help you later in
de(eloping risk responses as 'ell$
.or the e#am* you should kno' that there are se(eral types of pro&a&ility distri&utions that are
useful in displaying risk information$ %he type of distri&ution you use determines the type of
information you should gather during the inter(ie'ing process$ It"s &eyond the scope of this &ook
to del(e into pro&a&ility distri&utions and calculations$ Femem&er that continuous pro&a&ility
distri&utions are commonly used in <uantitati(e Fisk 8nalysis$ 8ccording to the Guide to the
PMBOK* continuous pro&a&ility distri&utions include normal and log normal distri&utions* and
triangular* &eta* and uniform types$ 8lso remem&er that triangular distri&utions use estimates
&ased on pessimistic* most likely* and optimistic (alues$ %here is more information on this
estimating techni7ue in Chapter L$ Gormal and log normal distri&utions use mean and standard
de(iations$
'ensitivit" 1nal"sis
0ensiti(ity analysis is a 7uantitati(e method of analy-ing the potential impact of risk e(ents on the
project$ 0ensiti(ity analysis can also &e used to determine stakeholder risk tolerance le(els$
Decision &ree 1nal"sis
>nfortunately* this isn"t a tree outside your office door that produces 4yes5 and 4no5 lea(es that
you can pick to help you make a decision$ @ecision trees are diagrams that sho' the se7uence of
interrelated decisions and the e#pected results of choosing one alternati(e o(er the other$
%ypically* more than one choice or option is a(aila&le 'hen you"re faced 'ith a decision or* in this
case* potential outcomes from a risk e(ent$ %he a(aila&le choices are depicted in a tree form
starting at the left 'ith the risk decision and &ranching out to the right 'ith possi&le outcomes$
@ecision trees are usually used for risk e(ents associated 'ith time or cost$
.igure C$2 sho's a sample decision tree using e#pected (alue (/3! as one of its inputs$
Figure 9.3: @ecision tree
/#pected (alue is the anticipated impact of the decision$ %his e#ample sho's e#pected (alue in
dollars$ %he e#pected (alue of the decision is a result of the pro&a&ility of the risk e(ent multiplied
&y the impact$ Impact is sho'n in dollars in this e#ample$ %he s7uares represent decisions to &e
made* and the circles represent the points 'here risk e(ents may occur$
%he decision 'ith an e#pected (alue of M:200 is the correct decision to make as the resulting
outcome has the greatest (alue$
'imulation
Monte Carlo 8nalysis is a simulation techni7ue that helps you 7uantify risks associated 'ith the
project as a 'hole$ %he identified risks and their potential impacts to the project o&jecti(es are
e#amined from the perspecti(e of the 'hole project$ Monte Carlo 8nalysis is used to determine
potential outcomes &y simulating the project o(er and o(er multiple times$ Monte Carlo 8nalysis
can also &e used during the 0chedule @e(elopment process$
0imulation techni7ues are used to predict schedule or cost risks$ 0chedule simulations are
usually performed using the precedence diagramming method schedule* and cost risk simulation
typically uses the +A0 as its &asis$
.isting =uanti!ie 0is#s
%he outputs of the <uantitati(e Fisk 8nalysis process are prioriti-ed lists of 7uantified risks*
pro&a&ilistic analysis of the project* pro&a&ility of achie(ing the cost and time o&jecti(es* and
trends in <uantitati(e Fisk 8nalysis results$
%he prioriti-ed list in this process is similar to the list produced during the <ualitati(e Fisk
8nalysis process$ %he list of risks includes those that present the greatest risk to the project and
their impacts$ It also lists those risks 'ith the greatest opportunities to the project$
Pro&a&ilistic analysis of the project is the forecasted results of the project schedule and costs as
a result of the outcomes of risk analysis$ %hese results include projected completion dates and
costs along 'ith a confidence le(el associated 'ith each$ Confidence le(els descri&e the le(el of
confidence placed on the result$ 8s an e#ample* perhaps the projected schedule completion date
is Huly 12 and the confidence le(el is $EK$ %his says that 'e &elie(e the project 'ill finish on or
&efore Huly 12 and ha(e an EK percent le(el of confidence that this date is accurate$
>sing the tools and techni7ues of <uantitati(e Fisk 8nalysis 'ill also allo' you to assign a
pro&a&ility of achie(ing the cost and time o&jecti(es of the project$ %his output documents those
pro&a&ilities$
%rends in <uantitati(e Fisk 8nalysis 'ill likely appear as you repeat the risk analysis processes$
%his information is useful as you progress* making those risks 'ith the greatest threat to the
project more e(ident* 'hich allo's you the opportunity to perform further analysis or go on to
de(elop risk response plans$
0is# 0esponse Planning
1is& 1esponse Planning is a process of deciding 'hat steps to take to reduce threats and take
ad(antage of the opportunities disco(ered during the risk analysis processes$ %his process also
includes assigning departments or indi(idual staff mem&ers the responsi&ility of carrying out the
risk response plans you"ll outline in this process$
1enerally you"ll 'ant to de(elop risk response plans for those risks 'ith a com&ination of high
pro&a&ility of occurrence and significant impact to the project$ @e(eloping risk response plans for
risks of lo' se(erity or insignificant impact 'ould not &e efficient$
0e(eral strategies are used in this process to reduce or control risk$ It"s important that you choose
the right strategy for each risk so that the risk and its impacts are dealt 'ith effecti(ely$ 8fter
deciding on 'hich strategy to use* you"ll de(elop an action plan to put this strategy into play
should the risk e(ent occur$ ,ou may also choose to designate a secondary or &ackup strategy$
%he tools and techni7ues of this process include the follo'ing strategies: a(oidance*
transference* mitigation* and acceptance$
1voiance
1is& a#oidance in(ol(es a(oiding the risk altogether or eliminating the cause of the risk e(ent$
Det"s say you"re going to take a car trip from your home to a point E00 miles a'ay$ ,ou kno'*
&ecause your friends 'ho just took the same trip told you* that there is a long stretch of
construction on one of the high'ays you"re planning on using$ %o a(oid the risk of delay* you plan
the trip around the construction 'ork and use another high'ay for that stretch of dri(ing$ In this
'ay* you a(oid the risk of getting held up in construction traffic and arri(e at your destination on
time$
+ith risk a(oidance* you essentially eradicate the risk &y eliminating its cause$ 6ere"s another
e#ample: 0uppose your project 'as kicked off 'ithout ade7uate scope definition and
re7uirements gathering$ ,ou run a high pro&a&ility of e#periencing scope creep* or e(erBchanging
re7uirements* as the project progresses* thus impacting the project schedule$ ,ou can a(oid this
risk &y ade7uately documenting the project scope and re7uirements during the Planning process
and taking steps to monitor and control changes to scope so it doesn"t get out of hand$
Fisks that occur early in the project might easily &e a(oided &y impro(ing communications*
refining re7uirements* assigning additional resources to project acti(ities* refining the project
scope to a(oid risk e(ents* and so on$
&rans!erence
%he idea &ehind ris& transference is to transfer the risk and the conse7uences of that risk to a
third party$ %he risk hasn"t gone a'ay* &ut the responsi&ility for the management of that risk no'
rests 'ith another party$ Most companies aren"t 'illing to take on someone else"s risk 'ithout a
little cash thro'n in for good measure$ %his strategy 'ill impact the project &udget and should &e
included in the cost estimate e#ercises if you kno' you"re going to use it$
%ransfer of risk can occur in many forms$ Insurance is one form of risk transfer$ ,ou are pro&a&ly
familiar 'ith ho' insurance 'orks$ 8s an e#ample* you purchase car insurance so that if you
come upon an o&stacle in the road and there is no 'ay of a(oiding it* the cost to repair the
damage to the car is paid &y the insurance company$ =kay* minus the deducti&le and all the
calculations for the age of the car* the mileage* the color and make of the car* the 'eather
conditions the day you 'ere dri(ing?&ut 'e digress$
8nother method of risk transfer is contracting$ Contracting transfers specific risks to the (endor
depending on the 'ork re7uired &y the contract$ %he (endor accepts the responsi&ility for the cost
of failure$ 8gain* this doesn"t come 'ithout a price$ Contractors charge for their ser(ices* and
depending on the type of contract you negotiate* the cost might &e 7uite high$ .or e#ample* in a
firm fi#ed price contract* 'hich 'e"ll talk more a&out in the Procurement Planning section* the
(endor increases the cost of the contract to compensate for the le(el of risk they"re accepting$
6o'e(er* keep in mind that contracting isn"t a cureBall$ ,ou might just &e s'apping one risk for
another$ .or e#ample* say you hire a dri(er to go 'ith you on your road trip and their jo& is to do
all the dri(ing$ If the dri(er &ecomes ill or in some 'ay can"t fulfill their o&ligation* you aren"t going
to get to your destination on time$ ,ou"(e placed the risks associated 'ith the dri(e on the
contract dri(erI ho'e(er* you"(e taken on a risk of delay due to nonperformance* 'hich means
you"(e just s'apped one risk for another$ ,ou"ll ha(e to 'eigh your options in cases like this and
determine 'hich side of the risk coin your organi-ation can more readily accept$
=ther forms of transference include 'arranties* guarantees* and performance &onds$
$itigation
1is& mitigation attempts to reduce the impact of the risk e(ent &y reducing the pro&a&ility of risk
occurrence$ %his strategy is a lot like defensi(e dri(ing$ ,ou see an o&stacle in the road ahead*
sur(ey your options* and take the necessary steps to a(oid the o&stacle and proceed safely on
your journey$ 0eeing the o&stacle ahead (identifying risk! allo's you to reduce the threat &y
planning 'ays around it or planning 'ays to reduce its impact if the risk does occur$
8ccording to the Guide to the PMBOK* the purpose of mitigation is to reduce the pro&a&ility that a
risk 'ill occur and reduce the impact of the risk to a le(el 'here you can accept the risk and its
outcomes$
1cceptance
Acceptance means that you 'on"t make any plans to try to a(oid or mitigate the risk$ ,ou"re
'illing to accept the conse7uences of the risk should it occur$ Det"s re(isit our road trip e#ample$
,ou could plan the trip using the original route and just accept the risk of running into
construction$ If you get to that point and you"re delayed* you"ll just accept it$ %his is called passi(e
acceptance$ ,ou could also go ahead and make plans to take an alternate route* &ut not enact
those plans until you actually reach the construction and kno' for certain that it is going to
impede your progress$ %his is called acti(e acceptance$
%ontingenc" Planning
.ontingency planning is a lot like mitigation in that you plan alternati(es to deal 'ith the risks
should they occur$ .or e#ample* perhaps you ha(e identified the departure of a key team mem&er
as one of your project risks$ 8 contingency plan might &e to train one or t'o other team mem&ers
in the area of e#pertise needed so that if the key team mem&er lea(es* you ha(e someone else to
put in their place$
Contingency comes into play 'hen the risk e(ent occurs$ %his implies you need to plan for your
contingencies 'ell in ad(ance of the threat$ 8fter the risks ha(e &een identified and 7uantified*
contingency plans should &e de(eloped and kept at the ready$
Contingency allo'ances or reser(es are project funds that are held in reser(e to offset any
una(oida&le threats that might occur to project scope* schedule* cost o(erruns* or 7uality$
In practice* you"ll find that identifying risks* 7uantifying risks* and de(eloping responses for
potential threats may happen simultaneously$ In any case* you don"t 'ant to &e taken &y surprise*
and that"s the point of the risk processes$ If you kno' a&out potential risks early on* you can (ery
often mitigate or a(oid them altogether$
0is# 0esponse Planning Outputs
1is& 1esponse Planning has se(eral outputs including risk response plan* residual risks*
secondary risks* contractual agreements* contingency reser(e amounts needed* inputs to other
processes* and inputs to a re(ised project plan$ %he last four of these outputs are self
e#planatory$ Femem&er that you might need to re(isit other Planning processes after performing
Fisk Fesponse Planning to modify project plans as a result of risk responses$
Go' 'e"ll e#amine the first three outputs of this process$
0is# 0esponse Plan
%he ris& response plan descri&es the actions you"ll take should the identified risks occur$ It should
include all the identified risks* descriptions of the risks* and the area of the project in 'hich the
impact 'ill occur$ %he risk detail should also descri&e the causes of risk and ho' they"ll impact
the project o&jecti(es$
%he department or staff mem&ers responsi&le for risk management are documented here$ 8ll of
the results of the 7ualitati(e and 7uantitati(e processes and the details regarding risk strategies
(acceptance* a(oidance* and so on! are documented here as 'ell$
%he meat of this plan contains the responses to risks 'hether this includes one of the risk
strategies or a detailed action plan$ 8ll of the responses should document the time and cost
needed to implement the response$
%he contingency plans and reser(es are part of the risk response plan as 'ell$
0esiual 0is#s
8 residual ris& is a lefto(er risk so to speak$ 8fter you"(e implemented a risk response strategy?
say mitigation* for e#ample?some minor risk may still remain$ %he contingency reser(e is set up
to handle situations like this$
'econar" 0is#s
%econdary ris&s are risks that come a&out as a result of implementing a risk response$ %he
e#ample gi(en pre(iously 'here you transferred risk &y hiring a dri(er to take you to your
destination &ut they &ecame ill along the 'ay is an e#ample of a secondary risk$ %heir illness
delayed your arri(al time* 'hich is risk directly caused &y hiring the dri(er* or implementing a risk
response$ +hen planning for risk* identify and plan responses for secondary risks that could
occur as 'ell$
Fisks e#ist on all projects$ 8nd risk planning is an important part of the project Planning process$
Hust the act of identifying risks and planning responses can decrease their impact if they occur$
@on"t take the 4'hat I don"t kno' 'on"t hurt me5 approach to risk planning$ %his is definitely a
case 'here not kno'ing something can &e de(astating$ Fisks that are easily identified and ha(e
planned responses aren"t likely to kill projects or your career$ Fisks that you should ha(e kno'n
a&out &ut ignored could end up costing the organi-ation thousands or millions of dollars* causing
schedule delays* or ultimately killing the project$ %here could &e a personal cost as 'ell as cost
and schedule o(erruns due to poor planning on your part are not easily e#plained on your
resume$
2nerstaning Procurement Planning
Procurement Planning is a process of identifying 'hat goods or ser(ices you"re going to purchase
from outside of the organi-ation$ Part of 'hat you"ll accomplish in this process is determining
'hether you should purchase the goods or ser(ices* and if so* ho' much and 'hen$ )eep in
mind that 'e"re discussing the Procurement Planning process from the &uyer"s perspecti(e as
this is the approach the Guide to the PMBOK takes$
0ometimes* your entire project 'ill &e procured from a (endor$ In cases like these* the (endor 'ill
ha(e a project manager assigned to the project$ ,our organi-ation may choose to ha(e an
internal project manager assigned as 'ell to act as the conduit &et'een your company and the
(endor and to pro(ide information and monitor your organi-ation"s deli(era&les$ +hen this
happens* the (endor or contracting company is responsi&le for fulfilling all of the project
management processes as part of the contract$ In the case of an outsourced project* the seller?
also kno'n as the (endor* supplier* or contractor?manages the project* and the &uyer &ecomes
the stakeholder$
Procurement Planning has many inputs$ +e"(e co(ered some of them &efore* and the ones 'e
ha(en"t looked at are self e#planatory$ I recommend you study the inputs to this process on your
o'n$ %he e#am focuses primarBily on the tools and techni7ues and outputs of this process$ +e"ll
look at t'o of the tools and techni7ues no'$ /#pert judgment is also a tool and techni7ue in this
process* &ut 'e"(e already co(ered that ground$
$a#e or +u" 1nal"sis
%he main decision you"re trying to get to in make or &uy analysis is 'hether it"s more cost
effecti(e to &uy the products and ser(ices or more cost effecti(e for the organi-ation to produce
the goods and ser(ices needed for the project$
=ne of the things you should consider in make or &uy analysis is cost$ Costs should include &oth
direct costs?in other 'ords* the actual cost to purchase the product or ser(ice?and indirect
costs such as the salary of the manager o(erseeing the purchase process or ongoing
maintenance costs$
=ther considerations might include things like capacity issues* skills* a(aila&ility* and trade
secrets$ 0trict control might &e needed for a certain process and thus the process cannot &e
outsourced$ Perhaps your organi-ation has the skills inBhouse to complete the project* &ut their
current project list is so &acklogged that they can"t get to the ne' project for months so you need
to &ring in a (endor$
Make or &uy analysis concludes 'ith the decision to do one or the other$
%ontract &"pe 'election
8 contract is a compulsory agreement &et'een t'o or more parties and is constructed such that
one party gi(es something up (money! and the other party recei(es something (goods or
ser(ices! in return$ %here are different types of contracts for different purposes$ %he Guide to the
PMBOK di(ides contracts up into three categories$ +ithin each category are different types of
contracts$ +e"ll look at each$ %here is an e#am 7uestion or t'o regarding contract types* so
spend some time getting familiar 'ith them$
Fi6e Price or .ump 'um %ontracts
%hese contracts set a specific* firm price for the goods or ser(ices rendered$ %he &uyer and seller
agree on a 'ellBdefined deli(era&le for a set price$ In this kind of contract* the &iggest risk is
&orne &y the seller$ %he seller* or contractor* must take great strides to assure they"(e co(ered
their costs and 'ill make a comforta&le profit on the transaction$ %he seller assumes the risks of
increasing costs* nonperformance* or other pro&lems$ 6o'e(er* to counter these unforeseen
risks* the seller &uilds in the cost of the risk to the contract price$
.i#ed price contracts are usually used for projects that 'ill take a long time to complete and ha(e
a high (alue to the company$
Fi6e Price plus Incentive %ontracts
2i+ed price plus incenti#e contracts are another type of fi#ed price contract* &ut the difference
here is that the &uyer includes an incenti(e* or &onus* for early completion or for some other
agreedBupon performance criteria that"s e#ceeded according to contract specifications$ %he
criteria for early completion* or other performance enhancements* must &e spelled out in the
contract so &oth parties understand the terms and conditions$
8nother thing to note 'ith this type of contract is that some of the risk is &orne &y the &uyer as
opposed to the firm fi#ed price contract 'here all of the risk is &orne &y the seller$ %he &uyer
takes some risk* al&eit minimal* &y offering the incenti(e to get the 'ork done earlier* etc$ .or
e#ample* the &uyer really 'ould like the product deli(ered J0 days prior to 'hen the seller thinks
they can deli(er* so the &uyer assumes the risk for the early deli(ery (ia the incenti(e$
2nit Price %ontracts
%his type of contract is used 7uite often$ %he seller specifies a set amount for the goods or
ser(ices rendered &y some measurement$ .or e#ample* a contracting agency might charge you
M1JK per hour for a Ha(a programmer* or a leasing company may charge you M2000 per month
for the hard'are you"re renting during the testing phase of your project$ %hese rates are preset
and agreed upon &y the &uyer and seller ahead of time$
%ost 0eim-ursa-le %ontracts
%hese types of contracts are as the name implies$ %he costs associated 'ith producing the goods
or ser(ices are charged to the &uyer$ 8ll the costs the seller takes on during the project are
charged &ack to the &uyer* thus the seller is reim&ursed$
.ost reim$ursa$le contracts carry the highest risk to the &uyer as the total costs are uncertain$ 8s
pro&lems arise* the &uyer 'ill ha(e to shell out e(en more money to correct the pro&lems$ Cost
reim&ursa&le contracts are risky for the &uyer and ha(e a lot of uncertainty associated 'ith them$
Ae certain to audit your statements 'hen using a contract like this so that charges from some
other project the (endor is 'orking on don"t accidentally end up on your &ill$
Cost reim&ursa&le contracts are used 'hen there is a lot of uncertainty regarding the project*
'hen a large in(estment must &e made in the project 'ell &efore completion of the project* and
'hen there is a high amount of risk$
%ost plus Fi6e Fee
%he first type of cost reim&ursa&le contract is cost plus fi+ed fee (.P22)$ Cost plus contracts
charge &ack all project costs to the seller and include a fi#ed fee upon completion of the contract$
%his is ho' the seller makes money on the deal as the fi#ed fee portion is the seller"s profit$ %he
fee is al'ays firm in this kind of contract* &ut the costs are (aria&le$ %he seller doesn"t necessarily
ha(e a lot of moti(ation to control costs 'ith this type of contract as you can imagine$ 8nd the
only moti(ation to complete the project is dri(en &y the fi#ed fee portion of the contract$
%ost plus Incentive Fee
%he ne#t category of cost reim&ursa&le contract is cost plus incenti#e fee* also kno'n as cost
plus percentage of cost$ %his type of contract is just like the CP.. contract* only an incenti(e has
&een added for e#ceeding the performance criteria laid out in the contract$ %he 7ualification for
e#ceeded performance must &e 'ritten in the contract and agreed to &y &oth parties$ %he
incenti(e is calculated as a percentage of cost or &y some method that compares estimated
project costs to actual project costs$
%his type of contract is the riskiest of all contracts for the &uyer$ %here is no guarantee 'hat the
final costs 'ill &e* and since the profit to the seller is some percentage of the total cost* anything
goes$
&ime an $aterials F&J$G %ontracts
-ime and materials contracts are a cross &et'een the fi#ed price and cost reim&ursa&le contract$
%he full amount of the material costs is not kno'n at the time the contract is a'arded$ %his
resem&les a cost reim&ursa&le contract as the costs 'ill continue to gro' during the contract"s
life$
>nit rates may &e used in a time and materials contract to preset the rate of a technician or the
use of e7uipment* for e#ample$ %his is like the fi#ed price contract arrangement 'here unit prices
are preset ahead of time$
.or the e#am* I recommend understanding the difference &et'een a fi#ed price contract and a
cost reim&ursa&le contract* 'hen you should use each type of contract* and that risk to the &uyer
is highest on a cost reim&ursa&le contract$
Procurement Outputs
%here are only t'o outputs in this process$ %he first is the procurement management plan$ +e"(e
seen a lot of other outputs 'ith the 'ording* 4]]] management plan*5 so you"re pro&a&ly already
ahead of me on this one$ Aut hold the phone?let"s make sure 'e touch on the important points$
%he second output is the statement of 'ork$
Procurement $anagement Plan
%his plan details ho' the procurement process 'ill &e managed$ It defines the type of contract to
use* 'hat authority the project team has* if more than one contractor 'ill &e used* and ho' the
procurement process 'ill &e integrated 'ith other project processes$ %his document* like all the
other management plans* &ecomes a part of the project plan document that 'e"ll talk a&out in
Chapter L$
'tatement o! Wor#
8 statement of wor& (%O?) contains the details of the procurement item in clear* concise terms$ It
includes the project o&jecti(es* a description of the 'ork of the project* concise specifications of
the product or ser(ices re7uired* and a project schedule$
%he 0=+ may &e prepared &y either the &uyer or the seller$ Auyers might prepare the 0=+ and
gi(e it to the sellers 'ho* in turn* re'rite it so that they can price the 'ork out properly$ If the &uyer
does not kno' ho' to prepare a 0=+* the seller may prepare it for them and then gi(e it to the
&uyer to re(ie'$
%he seller uses the 0=+ to determine 'hether they are a&le to produce the goods or ser(ices as
specified in the 0=+$ It 'ouldn"t hurt to include a copy of the +A0 'ith the 0=+ as 'ell$ 8ny
information the seller can use to properly price the goods or ser(ices helps &oth sides understand
'hat"s needed and ho' it 'ill &e pro(ided$
Projects may re7uire some or all of the 'ork of the project to &e pro(ided &y a (endor$ %he
Procurement Planning process determines if goods or ser(ices should &e procured from outside
of the organi-ation?and if so* descri&es 'hat 'ill &e outsourced and 'hat kind of contract to use*
and documents the information in the 0=+ and procurement management plan$
'olicitation Planning
0olicitation Planning is the last process 'e"ll co(er in this chapter$ (I hear you cheering out there2!
+e"ll look at one tool and techni7ue and t'o of the outputs$
In %olicitation Planning* you prepare the documents you"ll use in the 0olicitation process$
0tandard forms are a tool used to facilitate the procurement process$ %hese are forms that are
standardi-ed for your organi-ation and for the types of goods or ser(ices typically procured &y the
organi-ation$ ,our organi-ation may or may not ha(e standard forms$ %hey are usually found in
organi-ations that 'rite a lot of contracts and procure a significant num&er of goods and ser(ices$
Procurement Documents
Procurement documents are an output of this process$ %hese documents are used to solicit
(endors to &id on your procurement needs$ ,ou"re pro&a&ly familiar 'ith some of the titles of
procurement documents$ %hey might &e called re7uest for proposal (F.P!* re7uest for
information (F.I!* in(itation for &id (I.A!* re7uest for 7uotation (F.<!* and so on$ Procurement
documents should clearly state the description of the 'ork re7uested* they could include the
0=+* and they should e#plain ho' (endors should respond$ 8ny special pro(isions or contractual
needs should &e spelled out as 'ell$ .or e#ample* many organi-ations ha(e data concerning
personal information like social security num&ers and account information on their systems$ %he
(endor 'ill ha(e access to this pri(ate information* and in order to ensure they maintain
confidentiality* you should re7uire they sign a nondisclosure agreement$
(valuation %riteria
7#aluation criteria is the last output 'e"ll discuss in this process$ %his refers to the method your
organi-ation 'ill use to choose a (endor from among the proposals you recei(e$ 0coring models
might &e used as 'ell as rating models* or purely su&jecti(e methods of selection might &e
utili-ed$ 8n e#ample 'eighted scoring method 'as sho'n in Chapter J under the 4@escri&ing
Project 0election Methods5 section$ %his method could easily &e used to score (endor proposals$
0ometimes* the e(aluation criteria is made pu&lic in the procurement process so that (endors
kno' e#actly 'hat you"re looking for$ %here are pros and cons to this approach$
Ficardo knocks on your office door and asks if you ha(e a fe' minutes to talk$ 4=f course*5 you
reply* and he takes a seat on one of the comfy chairs at the conference ta&le$ ,ou ha(e a feeling
this might take a 'hile$
4I think you should kno' that I"m concerned a&out the a(aila&ility of the %1 line$ I"(e already put in
the call to get us on the list &ecause* as I said last 'eek* there"s a J0B to :KBday lead time on
these orders$5
4+e"re only mid'ay through the Planning process$ @o you need to order the %1 so soon9 +e
don"t e(en kno' the store location yet*5 you say$
4/(en though they say lead time is J0 to :K days* I"(e 'aited as much as K or C months to get a
%1 installed in the past$ I kno' 'e"re really pushing for the early .e&ruary store opening* so I
thought I"d get the &all rolling no'$ +hat I need from you is the location address* and I"ll need that
pretty 7uick$5
4+e"re narro'ing do'n the choices &et'een a couple of properties* so I should ha(e that for you
'ithin the ne#t couple of 'eeks$ Is that soon enough95
4%he sooner the &etter*5 Ficardo replies$
41reat$ I"m glad you stopped &y* Ficardo$ I 'anted to talk 'ith you a&out risk any'ay* and you led
us right into the discussion$ Det me ask you* 'hat pro&a&ility 'ould you assign to the %1 line
installation happening C months from no'95
4I"d say the pro&a&ility for C months is lo'$ It"s more likely that if there is a delay* it 'ould &e 'ithin
a JB to :Bmonth time frame$5
4If they didn"t get to it for C months* 'ould it &e a sho'stopper9 In other 'ords* is there some
other 'ay 'e could transfer Hill"s data until the %1 did get installed95
40ure* there are other methods 'e could use$ Hill 'on"t 'ant to do that for (ery long* &ut there are
'orkarounds a(aila&le$5
41ood$ Go'* 'hat a&out the risk for contractor a(aila&ility and hard'are a(aila&ility and deli(ery
schedules95 you ask$
,ou and Ficardo go on to discuss the risks associated 'ith the I% tasks$ Dater* you ask Hill and
Hake the same kinds of 7uestions and compile a list of risks$ In addition* you re(ie' the project
information for the 8tlanta store opening* as it"s (ery similar in si-e and scope to this store* and
add those risks to your list as 'ell$ ,ou di(ide some of the risks into the follo'ing categories: I%*
.acilities* and Fetail$ 8 sample portion of your list appears &elo' 'ith o(erall assignments made
&ased on <ualitati(e Fisk 8nalysis and the PI matri#$
CategoryOFisk: I%
%1 line a(aila&ility and installation$ Fisk score: Do'
Contractor a(aila&ility for /thernet install$ Fisk score: Medium
P=0 and ser(er hard'are a(aila&ility$ Fisk score: Medium
CategoryOFisk: .acilities
@esira&le location in the right price range$ Fisk score: 6igh
Contractor a(aila&ility for &uildBout$ Fisk score: Do'
8(aila&ility of fi#tures and shel(ing$ Fisk score: Do'
CategoryOFisk: Fetail
Product a(aila&ility$ Fisk score: Medium
0hipment dates for product$ Fisk score: Medium
8fter e#amining the risks* you decide that response plans should &e de(eloped for the last t'o
items listed under the I% source* the first item under .acilities* and &oth of the risks listed under
Fetail$
Ficardo has already mitigated the %1 connection and installation risk &y signing up se(eral
months ahead of 'hen the install is needed$ %he contractor a(aila&ility can &e handled 'ith a
contingency plan that specifies a &ackup contractor should the first choice not &e a(aila&le$ .or
the P=0 terminals and hard'are* you decide to use the transfer strategy$ 8s part of the contract*
you"ll re7uire these (endors to deli(er on time* and if they cannot* they"ll &e re7uired to pro(ide
and pay for rental e7uipment until they can get your gear deli(ered$
%he .acilities risk and Fetail risks 'ill &e handled 'ith a com&ination of acceptance* contingency
plans* and mitigation$
,ou"(e calculated the e#pected (alue for se(eral potential risk e(ents$ %'o of them are detailed
here$
@esira&le location has an e#pected (alue of MLE0*000$ %he pro&a&ility of choosing an incorrect or
less than desira&le location is C0 percent$ %he potential loss in sales is the difference &et'een a
highBproducing store that generates M2$K million in sales per year (ersus an a(erage store that
generates M1$2 million in sales per year$
%he e#pected (alue of the product a(aila&ility e(ent is MK0*000$ %he pro&a&ility of the e(ent
occurring is :0 percent$ %he potential loss in sales is M12K*000 for not opening the store in
conjunction 'ith the 1arden and 6ome 0ho'$
)itchen 6ea(en has a file dra'er full of standard forms as they"(e opened se(eral retail stores
each year for the last J years$ ,ou"ll use these standard forms to secure the contracts 'ith the
(endors and order the retail items$
Fisk Management Planning
Fisk Identification
@ocumentation re(ie's
InformationBgathering techni7ues
<ualitati(e Fisk 8nalysis
Fisk pro&a&ility and impact
Pro&a&ilityOimpact risk rating
Dist of prioriti-ed risks
<uantitati(e Fisk 8nalysis
Inter(ie'ing
/#pected (alue
Fisk Fesponse Planning
8(oidance* transference* mitigation* and acceptance strategies
Fisk response plan
Procurement Planning
0tandard forms
0olicitation Planning
Procurement documents
'ummar"
Congratulations2 ,ou"(e completed another funBfilled* actionBpacked chapter$ +e co(ered a lot of
material in this chapter starting 'ith <uality Planning and riskBrelated planning* and ending up
'ith Procurement and 0olicitation Planning$
<uality Planning targets the 7uality standards that are rele(ant to your project$ ,ou need to
consider the cost of 7uality 'hen considering stakeholder needs$ %hree men led to the rise of the
cost of 7uality theories$ Cros&y is kno'n for his -ero defects theory* Huran for the fitness for use
theory* and @eming for contri&uting EK percent of cost of 7uality to the management team$ %he
)ai-en approach says that people should &e impro(ed first* then the 7uality of the products or
ser(ices$
.lo'charting is a tool and techni7ue in <uality Planning that diagrams the logical steps that must
&e performed to accomplish your o&jecti(e$ CauseBandBeffect diagrams sho' the relationship
&et'een the effects of 7uality pro&lems and their causes$ @esign of e#periments is an analytical
techni7ue that determines 'hat (aria&les ha(e the greatest effect on the project outcomes$
%he 7uality management plan outlines ho' the project team 'ill enact the 7uality policy$
Fisk is inherent in all projects$ %he Fisk Management Planning process determines ho' you 'ill
plan for risks on your project$ Its only output is the risk management plan* 'hich details ho' you
'ill manage risks$
%he Fisk Identification process seeks to identify and document the project risks using
&rainstorming* the @elphi techni7ue* inter(ie'ing* and checklists$
<ualitati(e Fisk 8nalysis and <uantitati(e Fisk 8nalysis in(ol(e e(aluating risks and assigning
pro&a&ility and impact factors to the risks$ Many tools and techni7ues are used during these
processes including risk pro&a&ility and impact* pro&a&ilityOimpact risk rating matri#* inter(ie'ing*
sensiti(ity analysis* decision tree analysis* and simulation$
8 pro&a&ilityOimpact risk matri# uses the com&ination of the pro&a&ility score multiplied &y the
impact (alue to determine the risk score and assignment$ %he threshold of risk &ased on high*
medium* and lo' tolerances is determined &y comparing the risk score &ased on the pro&a&ility
le(el to the PI matri#$
Monte Carlo simulation is a techni7ue used to 7uantify schedule or cost risks$ @ecision trees
graphically display decisions and their (arious choices and outcomes$
%he Fisk Fesponse Planning process is the last riskBplanning process and culminates 'ith the
risk response plan$ %he risk response plan details the strategies you"ll use to respond to risk and
assigns indi(iduals to manage each risk response$ Fisk response strategies include a(oidance*
mitigation* acceptance* and transfer$ Insurance and contracting are e#amples of transferring risk$
Contingency planning in(ol(es planning alternati(es to deal 'ith risk e(ents should they occur$
Part of the risk management plan should detail the contingency plans for highBpro&a&ility* highB
impact risk e(ents$
Procurement Planning in(ol(es performing analysis to determine if the goods and ser(ices
needed to perform the project should &e procured from a (endor or produced internally$ 0e(eral
types of contracts are considered during procurement$ %he risk impact 'ith fi#ed price contracts
typically rests on the seller* 'hile the risk impact 'ith cost reim&ursa&le contracts rests on the
&uyer$
%he procurement management plan details ho' the procurement process 'ill &e managed during
the course of the project$ 0olicitation Planning is a matter of preparing the documents you"ll use in
the 0olicitation process during the /#ecuting process of the project$
(6am (ssentials
+e a-le to ienti!" what prouces increase sta#eholer satis!actionH lower costsH higher
prouctivit"H an less rewor#. %hese are the &enefits of meeting 7uality re7uirements and are
disco(ered during &enefitOcost analysis in <uality Planning$
+e a-le to name the purpose o! 0is# Ienti!ication. %o identify all risks that may impact the
project* document them* and identify their characteristics$
+e a-le to e!ine the purpose o! =ualitative 0is# 1nal"sis. <ualitati(e Fisk 8nalysis
determines the impact the identified risks 'ill ha(e on the project and the pro&a&ility they"ll occur*
and puts the risks in priority order according to their effect on the project o&jecti(es$
+e a-le to e!ine the purpose o! the ris# response plan. It descri&es the actions to take
should the identified risks occur$ It should include all the identified risks* a description of the risks*
ho' they"ll impact the project o&jecti(es* and the people assigned to manage the risk responses$
+e a-le to name the purpose !or the Procurement Planning process. %o identify 'hich
project needs should &e o&tained from outside the organi-ation$
+e a-le to ienti!" the contract t"pes an their usage. >se fi#ed price contracts for longBterm
projects 'ith a high (alue to the company* and use cost reim&ursa&le contracts for projects 'ith
uncertainty and large in(estments early in the project life$ %ime and materials contracts are a
cross &et'een fi#ed and cost reim&ursa&le$
<e" &erms
&enchmarking 7uality
management
plan
causeBandBeffect
diagram
<uality
Planning
checklist <uantitati(e
Fisk 8nalysis
@elphi
%echni7ue
Fisk
Identification
flo'chart risk
management
plan
impact scale Fisk
Management
Planning
pro&a&ility scale Fisk
Fesponse
Planning
procurement
management
plan
0olicitation
Planning
Procurement
Planning
statement of
'ork (0=+!
<ualitati(e Fisk
8nalysis
0eview =uestions
1. +hat are the <uality Planning process outputs9
8$ <uality management plan* &enchmarking* checklists* e(aluation criteria
A$ <uality management plan* &enchmarking* operational definitions
C$ <uality management plan* checklists* inputs to other processes
@$ <uality management plan* operational definitions* checklists* inputs to other
processes
3. %hree people are responsi&le for esta&lishing cost of 7uality theories$ Cros&y and
Huran are t'o them* and their theories respecti(ely are:
8$ 1rades of 7uality* fitness for use
A$ .itness for use* -ero defects
C$ Yero defects* fitness for use
@$ Cost of 7uality* -ero defects
4. %he theory that EK percent of the cost of 7uality is a management pro&lem is attri&uted
to:
8$ @eming
A$ )ai-en
C$ Huran
@$ Cros&y
7. 8ll of the follo'ing are &enefits of meeting 7uality re7uirements e#cept:
8$ 8n increase in stakeholder satisfaction
A$ Dess re'ork
C$ Do' turno(er
@$ 6igher producti(ity
8. ,ou are a project manager for .ountain of ,outh 0pring +ater &ottlers$ ,ou are
installing a ne' accounting system and ha(e identified se(eral pro&lems and their
causes$ ,ou decide to use 'hich of the follo'ing flo'charts to diagram the pro&lems"
causes and effects9
8$ @ecision tree diagram
A$ .ish&one diagram
C$ Aenchmark diagram
@$ 0imulation tree diagram
9. ,ou are a project manager for .ountain of ,outh 0pring +ater &ottlers$ ,ou are
installing a ne' accounting system and ha(e identified se(eral pro&lems and their
causes$ ,ou decide to use 'hich of the follo'ing to identify the (aria&les that 'ill ha(e
the greatest effect on project outcomes9
8$ @esign of e#periments
A$ Aenchmarking
C$ AenefitOcost analysis
@$ .lo'charting
;. /ach of the follo'ing is true regarding the risk management plan e#cept:
8$ %he risk management plan is an output of the Fisk Management Planning
process$
A$ %he risk management plan includes a description of the responses to risks
and triggers$
C$ %he risk management plan includes thresholds* scoring and interpretation
methods* responsi&le parties* and &udgets$
@$ %he risk management plan is an input to all the remaining riskBplanning
processes$
>. InformationBgathering techni7ues used in the Fisk Identification process include all of
the follo'ing e#cept:
8$ Arainstorming
A$ @elphi techni7ue
C$ Inter(ie'ing
@$ )ai-en techni7ue
?. +hich of the follo'ing processes assess the likelihood of risk occurrences and their
conse7uences using numeric pro&a&ility assignments9
8$ <ualitati(e Fisk 8nalysis
A$ Fisk Identification
C$ <uantitati(e Fisk 8nalysis
@$ Fisk Fesponse Planning
1@. ,ou are the project manager for a ne' 'e&site for the local -oo$ ,ou need to perform
<ualitati(e Fisk 8nalysis$ +hen you"(e completed this process* you"ll produce all of
the follo'ing outputs e#cept:
8$ =(erall risk ranking for the project
A$ Dist of prioriti-ed risks
C$ Inputs to other processes
@$ Dist of risks for additional analysis and management
11. ,ou are the project manager for a ne' 'e&site for the local -oo$ ,ou need to perform
<uantitati(e Fisk 8nalysis$ ,ou"ll use all of the follo'ing tools and techni7ues to
accomplish this e#cept:
8$ @ata precision ranking
A$ 0ensiti(ity analysis
C$ @ecision tree analysis
@$ Inter(ie'ing
13. +hich of the follo'ing tools and techni7ues sho's the impacts of one decision o(er
another as 'ell as the pro&a&ility and cost of each risk along a logical path9
8$ 0imulation
A$ @ecision tree
C$ Pro&a&ilityOimpact risk matri#
@$ 0ensiti(ity analysis
14. +hich of the follo'ing descri&es the cost of 7uality associated 'ith scrapping* re'ork*
and do'ntime9
8$ Internal failure costs
A$ /#ternal failure costs
C$ Pre(ention costs
@$ 8ppraisal costs
17. ,our hard'are (endor left you (oicemail saying that a potential sno'storm in the
Mid'est might pre(ent your e7uipment from arri(ing on time$ 0he 'anted to gi(e you a
headsBup and asked that you return the call$ +hich of the follo'ing is true9
8$ %his is a secondary risk* 'hich is an output of Fisk Fesponse Planning$
A$ %his is a contingency plan* 'hich is an output of Fisk Fesponse Planning$
C$ %his is a risk* 'hich is an output of Fisk Identification$
@$ %his is a trigger* 'hich is an output of Fisk Identification$
18. ,ou are constructing a pro&a&ilityOimpact risk rating matri# for your project$ +hich of
the follo'ing is true9
8$ %he PI matri# multiplies the risk"s pro&a&ility &y the cost of the impact to
determine an e#pected (alue of the risk e(ent$
A$ %he PI matri# multiplies the risk"s pro&a&ility scales* 'hich fall &et'een 0$0
and 1$0* and the risk"s impact scales to determine a risk score$
C$ %he PI matri# multiplies the risk"s pro&a&ility &y the e#pected (alue of the risk
e(ent to determine the risk impact and assign a risk score &ased on a
predetermined threshold$
@$ %he PI matri# multiplies the risk"s pro&a&ility scales and the risk"s impact
scales* 'hich fall &et'een 0$0 and 1$0* to determine a risk score$
19. 8ll of the follo'ing strategies are tools and techni7ues of Fisk Fesponse Planning
used to reduce or control risk e#cept9
8$ Mitigation
A$ 0imulation
C$ 8(oidance
@$ 8cceptance
1;. ,our hard'are (endor left you (oicemail saying that a sno'storm in the Mid'est 'ill
pre(ent your e7uipment from arri(ing on time$ ,ou identified a risk response for this
risk and ha(e arranged for a local company to lease you the needed e7uipment until
yours arri(es$ %his is an e#ample of 'hich risk response strategy9
8$ %ransference
A$ 8cceptance
C$ Mitigation
@$ 8(oidance
1>. ,ou are the project manager for an upcoming outdoor concert e(ent$ ,ou"re 'orking
on the procurement plan for the computer soft'are program that 'ill control the
lighting and screen projections during the concert$ ,ou"re comparing the cost of
purchasing a soft'are product to the cost of your company programmers 'riting a
custom soft'are program$ ,ou are engaged in 'hich of the follo'ing9
8$ Procurement planning
A$ 0ensiti(ity analysis
C$ %ransference of risk
@$ Make or &uy analysis
1?. ,ou are the project manager for an outdoor concert e(ent scheduled for 1 year from
today$ ,ou"re 'orking on the procurement plan for the computer soft'are program that
'ill control the lighting and screen projections during the concert$ ,ou"(e decided to
contract 'ith a professional ser(ices company that speciali-es in 'riting custom
soft'are programs$ ,ou 'ant to minimi-e the risk to the organi-ation* so you"ll opt for
'hich contract type9
8$ .i#ed price plus incenti(e
A$ Cost plus fi#ed fee
C$ .i#ed price
@$ Cost plus incenti(e
3@. ,ou are the project manager for 6eart of %e#as casual clothing company$ %hey"re
introducing a ne' line of clothing called Alack 0heep Fanch +ear$ ,ou 'ill outsource
the production of this clothing line to a (endor$ %he (endor has re7uested a 0=+$ 8ll
of the follo'ing are true e#cept:
8$ %he 0=+ contains a description of the ne' clothing line$
A$ 8s the purchaser* you are re7uired to 'rite the 0=+$
C$ %he 0=+ contains the o&jecti(es of the project$
@$ %he (endor re7uires a 0=+ to determine if they can produce the clothing line
gi(en the (ery detailed specifications of this project$
1nswers
1. @ <uality Planning has four outputs: 7uality management plan* operational definitions*
checklists* and inputs to other processes$ Aenchmarking is a tool and techni7ue of this
process$
3. C Philip Cros&y de(ised the -ero defects theory* meaning do it right the first time$ Proper
<uality Planning leads to less re'ork and higher producti(ity$ Hoseph Huran"s fitness for use
says that stakeholders" and customers" e#pectations are met or e#ceeded$
4. 8 +$ /d'ards @eming conjectured that the cost of 7uality is a management pro&lem EK
percent of the time and that once the pro&lem trickles do'n to the 'orkers* it is outside their
control$
7. C %he &enefits of meeting 7uality re7uirements are increased stakeholder satisfaction* lo'er
costs* higher producti(ity* and less re'ork$
8. A %he causeBandBeffect flo'charts* also called fish&one diagrams or Ishika'a diagrams*
sho' the relationship &et'een the causes and effects of 7uality pro&lems$
9. 8 @esign of e#periments is an analytical techni7ue that identifies the elements or (aria&les
that 'ill ha(e the greatest effect on o(erall project outcomes$
;. A %he risk management plan details ho' risk management processes 'ill &e implemented*
monitored* and controlled throughout the life of the project$ %he risk management plan does
not include responses to risks or triggers$ Fesponses to risks are detailed in the Fisk
Fesponse Planning process$
>. @ %he )ai-en approach is a 7uality techni7ue that says project team mem&ers and
managers should al'ays &e on the lookout for 7uality impro(ement opportunities$
?. C <uantitati(e Fisk 8nalysis analy-es the pro&a&ility of risks and their conse7uences using
numeric pro&a&ility assignments$ <ualitati(e Fisk 8nalysis may use numeric pro&a&ility
analysis* &ut the Guide to the PMBOK distinguishes &et'een these t'o processes &y stating
that <uantitati(e Fisk 8nalysis analy-es pro&a&ility numerically$ %he <uantitati(e Fisk
8nalysis process e(aluates risk impacts and assesses the range of possi&le project results$
1@. C Inputs to other processes are an output of Fisk Identification and Fisk Fesponse Planning$
%he other output of <ualitati(e Fisk 8nalysis not listed here is trends in <ualitati(e Fisk
8nalysis results$
11. 8 @ata precision ranking is a tool and techni7ue of the <ualitati(e Fisk 8nalysis process$
%he remaining tool and techni7ue of <uantitati(e Fisk 8nalysis is simulation$
13. A @ecision trees allo' you to sho' the se7uence of choices and their outcomes in a tree
form starting 'ith the decision or risk e(ent at the left and each option &ranching out from
there to the right$ %his is a tool and techni7ue of the <uantitati(e Fisk 8nalysis process$
14. 8 Internal failure costs are costs associated 'ith not meeting the customer"s e#pectations
'hile you still had control o(er the product$ %his results in re'ork* scrapping* and do'ntime$
17. @ %he &est ans'er is @$ %riggers are also called risk symptoms* 'hich are an output of Fisk
Identification$ %riggers are 'arning signs of an impending risk$
18. A %he PI matri# multiplies the pro&a&ility?determined 'ith the risk"s pro&a&ility scales*
'hich fall &et'een 0$0 and 1$0?and impact* 'hich is determined 'ith impact scales* to
determine a risk score and assign a high* medium* or lo' designation to the risk &ased on a
predetermined threshold$
19. A %he tools and techni7ues of Fisk Fesponse Planning are a(oidance* transference*
mitigation* and acceptance$
1;. C Mitigation tries to reduce the impact of a risk e(ent should it occur$ Making plans to
arrange for the leased e7uipment reduces the conse7uences of the risk$
1>. @ Make or &uy analysis is determining 'hether it"s more cost effecti(e to purchase the goods
or ser(ices needed for the project or more cost effecti(e for the organi-ation to produce them
internally$
1?. C .i#ed price contracts ha(e the highest risk to the seller and the least amount of risk to the
&uyer$ 6o'e(er* the price the (endor charges for the product or ser(ice 'ill compensate for
the amount of risk they"re taking on$
3@. A %he 0=+ can &e 'ritten &y either the &uyer or the seller$ 0ometimes the &uyer 'ill 'rite
the 0=+* and the seller may modify it and send it &ack to the &uyer for (erification and
appro(al$
Chapter L: %reating the Project Plan
%hapter:
C$ @e(elop Project Plan$
L$ =&tain Plan 8ppro(al$
Overview
%he Planning process group has more processes than any other Guide to the PMBOK process
group$ 8s a result* a lot of time and effort goes into the Planning process of any project$ ,ou"ll find
on some projects you spend as much time planning the project as you do e#ecuting and
controlling the project$ %his isn"t a &ad thing$ %he &etter planning you do up front* the more likely
you"ll ha(e a successful project$ %he Planning* /#ecuting* and Controlling process groups
together account for almost L0 percent of the PMP e#am 7uestions* so you"ll 'ant to spend a&out
the same percentage of your study time on these areas$
+e"ll spend this chapter 'rapping up the remaining Planning processes and conclude 'ith a
discussion of the Project Plan @e(elopment process$ %his process takes the outputs of other
Planning processes and creates a project plan that"s used throughout project /#ecuting and
project Controlling processes to track project performance$ 8ll other processes in the Planning
process group ha(e to &e completed &efore 'orking on the Project Plan @e(elopment process$
+e"ll co(er 0chedule @e(elopment and Cost Audgeting in this chapter as 'ell and &egin the
/#ecuting process group in the ne#t chapter$
Developing the Project 'cheule
%he %chedule )e#elopment process is the heart of the Planning process group$ %his is 'here
you 'ill lay out the schedule for your project tasks* determine their start and finish dates* and
finali-e acti(ity se7uences and durations$ %his process* along 'ith 8cti(ity @uration /stimating
and Cost /stimating* is repeated se(eral times &efore you actually come up 'ith the project
schedule$ +e"ll learn later in this section that project management soft'are comes in (ery handy
during this process$ In fact* it is one of the tools and techni7ues of this process$
8lthough there are no e#am 7uestions regarding the order that processes are performed in* it
might help to understand that 0chedule @e(elopment cannot &e performed until all of the
follo'ing core processes of project Planning are completed: 0cope Planning* 0cope @efinition*
Fesource Planning* 8cti(ity @efinition* 8cti(ity 0e7uencing* 8cti(ity @uration /stimating* Fisk
Management Planning* and Cost /stimating$ 0chedule @e(elopment must &e completed prior to
the Cost Audgeting process* 'hich 'e"ll co(er later in this chapter$ Aoth of these processes then
feed the final Planning process* Project Plan @e(elopment$
'cheuling Inputs
0chedule @e(elopment has 10 inputs* L of 'hich are outputs from pre(ious Planning processes$
8s 'e"(e discussed* you can see ho' important it is to perform all of the Planning processes
accurately* as the information you deri(e from almost e(ery process is used some'here else in
Planning or in the later process groups$ ,our project schedule 'ill reflect the information you
kno' at this point in time$ If you ha(e incorrectly estimated acti(ity durations or didn"t identify the
right dependencies* for e#ample* your project schedule 'ill not &e correct$ It"s definitely 'orth the
time in(estment to correctly plan your project and come up 'ith accurate outputs for each of the
Planning processes$
%hree of the inputs to this process are ne': calendars* leads and lags* and acti(ity attri&utes$ 8
short description of each is gi(en ne#t$
%alenars
Calendars are di(ided into t'o types: project calendars and resource calendars$ Project
calendars concern all the resources in(ol(ed in the project* 'hile resource calendars look at
particular resources or groups of resources and their a(aila&ility$
.eas an .ags
Deads and lags are related to 8cti(ity 0e7uencing$ Femem&er that 8cti(ity 0e7uencing puts tasks
in logical order and determines if there are dependencies that e#ist among the acti(ities$ +e then
take these tasks and de(elop a net'ork diagram from them$ (+e discussed this in Chapter K if
you need a 7uick re(ie'$! Deads and lags come in 'hen there are delays &et'een dependent
and independent acti(ities$ 'ags re7uire the dependent acti(ity to ha(e time added either to the
start date or to the finish date of the acti(ity$ 'eads* con(ersely* re7uire time to &e su&tracted from
the start date or the finish date of the dependent acti(ity$ Dead time is not used as often as lag
time$
Det"s go &ack to the classic houseBpainting e#ample to put all this in perspecti(e$ In order to paint*
'e first need to scrape the peeling paint and then prime$ 6o'e(er* 'e can"t &egin painting until
the primer has dried$ 0o 'e shouldn"t schedule priming for Monday and painting for %uesday if 'e
need the primer to dry on %uesday$ %herefore* the priming acti(ity re7uires lag time* so 'e need
to add time to the end of this acti(ity to allo' for the drying time needed &efore 'e can start
painting$
Dead time 'orks just the opposite$ 0uppose* for this e#ample* 'e could start priming &efore the
scraping is finished$ May&e there are areas on the house that don"t re7uire scraping* so 'e don"t
really need to 'ait until the scraping acti(ity finishes to &egin the priming acti(ity$ Priming in this
e#ample has lead time su&tracted from the &eginning of the acti(ity so that this acti(ity &egins
prior to the finish of the pre(ious acti(ity$
1ctivit" 1ttri-utes
8cti(ity attri&utes are the characteristics of the acti(ity$ %hese might include a description of 'here
the acti(ity 'ill take place* 'ho 'ill perform the acti(ity* and 'hether the acti(ity is a summaryB
le(el acti(ity?le(el t'o or three on the +A0 perhaps?or a detailed acti(ity 'ith particular
specifications$
2nerstaning the &ools an &echniques o! 'cheule
Development
%he t'o primary outputs of 0chedule @e(elopment are the project schedule and the schedule
management plan$ ,ou can employ se(eral tools and techni7ues in order to produce these
outputs$ %he tools and techni7ues you choose 'ill depend on the comple#ity of the project$ .or
the e#am* ho'e(er* you"ll need to kno' them all$
%here are si# tools and techni7ues used in 0chedule @e(elopment$ 8 lot of information is packed
into some of these tools and techni7ues* and you 'ill 'ant to dedicate study time to each of them
for the e#am$ %he first tool and techni7ue* called mathematical analysis* includes se(eral
techni7ues* each of 'hich are thoroughly co(ered on the e#am$ 0o* let"s get to it2
$athematical 1nal"sis
Mathematical analysis includes three commonly kno'n techni7ues: Critical Path Method (CPM!*
1raphical /(aluation and Fe(ie' %echni7ue (1/F%!* and Program /(aluation and Fe(ie'
%echni7ue (P/F%!$ CPM and P/F% are (ery similar net'orkBplanning methods* and in some
organi-ations* CPM and P/F% are used synonymously$ +e"ll e#amine each of these techni7ues
momentarily$ )eep in mind that CPM and P/F% are methods to determine schedule durations
'ithout regard to resource a(aila&ility$
%ritical Path $etho
.ritical Path Method (.PM) calculates the earliest start date* earliest finish date* latest start date*
and latest finish date for each acti(ity$ %he critical path (.P) on any project is the longest full path$
8ny project acti(ity 'ith a float time that e7uals -ero is considered a critical path task$ +e 'ill
'alk through an e#ample to e#plain ho' all these dates and float times are calculated after a
short description of float time$
2loat time is also called slac& time* and you"ll see these terms used interchangea&ly$ %here are
t'o types of slack: total slack and free slack$ -otal slac& is the amount of time you can delay the
start of a task 'ithout delaying the ending of the project$ 2ree slac& is the amount of time you can
delay the start of a task 'ithout delaying the start of a successor task$
+e"ll calculate the CP for a sample project and illustrate ho' all the dates* the CP* and the float
times are deri(ed$
,ou are the project manager for a ne' soft'are project$ %he company you are 'orking for is
(enturing into the mo(ie rental &usiness o(er the +e&$ ,ou need to de(ise a soft'are system that
tracks all the information related to rentals and also supplies the management team 'ith reports
that 'ill help them make good &usiness decisions$ .or purposes of illustration* I"m sho'ing only a
limited portion of the tasks that you 'ould ha(e on a project like this$
+e"ll start our e#ample &y plugging information into %a&le L$1 (see &elo'! from the processes that
'e"(e already completed$ %he list of acti(ities comes from the 'ork package le(el of the +A0
and the acti(ity list compiled during the 8cti(ity @efinition process$ %he durations for each acti(ity
are listed in the column &y that title and 'ere deri(ed during the 8cti(ity @uration /stimating
process$ %he duration times are listed in days$ %he @ependency column lists the acti(ities that
re7uire a pre(ious acti(ity to finish &efore the current acti(ity can start$ +e"re using only finishB
start relationships$ .or e#ample* you"ll see that acti(ity num&er 2 and acti(ity num&er : each
depend on acti(ity 1 to finish &efore they can &egin$ %he dependency information came from the
8cti(ity 0e7uencing process$ Go'* 'e"ll proceed to calculating the dates$
Project @eli(era&les is the first acti(ity and* o&(iously* 'here the project starts$ %his acti(ity
&egins on 8pril 1$ Project @eli(era&les has a 12Bday duration$ 0o no' take 8pril 1 and add 12
days to this to come up 'ith an early finish date of 8pril 12$ +atch out* &ecause you need to
count day one* or 8pril 1* as a full 'ork day$ %he simplest 'ay to do this calculation is to take the
early start date* add the duration* and su&tract one$ %herefore* the early finish date for the first
acti(ity is 8pril 12$ Ay the 'ay* 'e are ignoring 'eekends and holidays for this e#ample$ 8cti(ity 2
depends on acti(ity 1* so it cannot start until acti(ity 1 has finished$ Its earliest start date is 8pril
1J$ 8dd the duration to this date minus one to come up 'ith the finish date$
,ou"ll notice that acti(ity : depends on acti(ity 1 finishing* so its earliest start date is also 8pril 1J$
Continue to calculate the remaining early start and early finish dates in the same manner$ %his
calculation is called a forward pass$
%o calculate the late start and late finish dates* you &egin 'ith the last acti(ity$ %he late finish for
acti(ity N is Huly 10$ 0ince the duration is only 1 day* Huly 10 is also the late start date$ ,ou kno'
that acti(ity E must finish &efore acti(ity N can &egin* so acti(ity E"s late finish date* Huly N* is 1 day
prior to acti(ity N"s late start date* Huly 10$ 0u&tract the duration of acti(ity E (J days! from Huly N
and add one to get the late start date of Huly L$ +e"re performing the opposite calculation that 'e
did for the for'ard pass$ %his calculation is called a $ac&ward pass, as you might ha(e guessed$
Continue calculating the late start and late finish through acti(ity :$
8cti(ity J adds a ne' t'ist$ 6ere"s ho' it 'orks$ 8cti(ity L cannot &egin until acti(ity J and acti(ity
C are completed$ Go other acti(ity depends on the completion of acti(ity J$ If acti(ity L"s late start
date is Hune 2N* acti(ity J"s late finish date must &e Hune 2E$ Hune 2E less E days plus one gi(es
us a late start date of Hune 21$ 8cti(ity J depends on acti(ity 2* so acti(ity 2 must &e completed
prior to &eginning acti(ity J$ Calculate these dates just like you did for acti(ities N through :$
8cti(ity 1 still remains$ 8cti(ity : cannot start until acti(ity 1 is completed$ If acti(ity :"s late start
date is 8pril 1J* the late finish date for acti(ity 1 must &e 8pril 12$ 0u&tract the duration of acti(ity
1 and add one to come up 'ith a late start date of 8pril 1$
8lternati(ely* the for'ard pass and &ack'ard pass can &e calculated &y saying the first task starts
on day -ero and then adding the duration to this$ 8s an e#ample* acti(ity num&er 1"s early start
date is 8pril 1* 'hich is day -ero$ 8dd 12 days to day -ero and you come up 'ith an early finish
date of 8pril 12$
%he calculation for floatOslack time is determined &y su&tracting the early start date from the late
start date$ If the float time e7uals -ero* the acti(ity is on the critical path$
%o determine the CP duration of the project* add up the duration of e(ery acti(ity 'ith -ero float$
,ou should come up 'ith 101 days* as 'e"re adding the duration for all acti(ities e#cept for
acti(ity 2 and acti(ity J$ 8 critical path task is any task that cannot &e changed 'ithout impacting
the project end date$ Ay definition* these are all tasks 'ith -ero float$
&a-le ;.1: %P$ %alculation
8nother 'ay to determine the critical path is &y looking at the net'ork diagram$ If the duration is
included 'ith the information on the node* or if start and end dates are gi(en* you simply calculate
the duration and then add up the duration of the longest path in the diagram to determine CP$
6o'e(er* this method is not as accurate as 'hat"s descri&ed in %a&le L$1$ 0ho'n in .igure L$1 is
the same project in diagram form$ @uration is printed in the topBright corner of each node$ 8dd up
the duration of each path to determine 'hich one is the critical path$
Figure ;.1: Critical path diagram
Femem&er that CP is al'ays the path 'ith the longest duration$ In the figure* path 1B2BJBLBEBN
e7uals J: days$ Path 1B:BKBCBLBEBN e7uals 101 daysI therefore this path is the critical path$
)raphical (valuation an 0eview &echnique
%he only thing you need to understand a&out the 1raphical /(aluation and Fe(ie' %echni7ue
(1/F%! for the e#am is that 1/F% allo's for conditional &ranching and looping* and pro&a&ilistic
treatment$ In practice* 1/F% is similar to P/F% e#cept that 1/F% allo's you to loop &ack
through a process or perform &ranching to sho' alternati(es$ .or e#ample* our soft'are project in
the CPM e#ample might re7uire unit testing of indi(idual modules &efore the entire program can
&e tested* and each module must pass its unit test$ If the unit test fails* 1/F% allo's you to depict
a looping condition so that you can come &ack through unit testing and then progress to the ne#t
acti(ity once the unit test is passed$
Program (valuation an 0eview &echnique
%he Program 7#aluation and 1e#iew -echni"ue (P71-) 'as de(eloped in the 1NK0s &y the
>nited 0tates Ga(y$ %hey 'ere 'orking on one of the most comple# engineering projects in
history at the time* the Polaris Missile Program* and needed a 'ay to manage the project and
forecast the project schedule 'ith a high degree of relia&ility$ P/F% 'as de(eloped to do just that$
P/F% and CPM are similar techni7ues$ %he difference is CPM uses the most likely duration to
determine project duration* 'hile P/F% uses 'hat"s called e#pected (alue (or the 'eighted
a(erage! to determine project duration$ 7+pected #alue is calculated using three time estimates
for acti(ity duration instead of one and then finding the 'eighted a(erage of the three time
estimates$ If 'e take this one step further and determine the standard de(iation of each acti(ity*
'e can assign a confidence factor to our project estimates$ +ithout getting too hea(ily in(ol(ed in
the mathematics of pro&a&ility* understand that for data that fits a &ell cur(e* 'hich is 'hat 'e"re
a&out to calculate 'ith the P/F% techni7ue* the follo'ing is true:
+ork 'ill finish 'ithin plus or minus three standard de(iations NN$LJ percent of the time$
+ork 'ill finish 'ithin plus or minus t'o standard de(iations NK$:: percent of the time$
+ork 'ill finish 'ithin plus or minus one standard de(iation CE$2C percent of the time$
%he three time estimates used to calculate e#pected (alue are the optimistic estimate* the
pessimistic estimate* and the most likely estimate$ 1oing &ack to our soft'are e#ample* let"s find
out 'hat these three time estimates might look like for the acti(ity called +rite Programs$ ,ou get
these estimates &y asking the lead programmer* or key team mem&er* to estimate the optimistic*
pessimistic* and most likely duration for the acti(ity &ased on their past e#perience$ =ther
historical information could &e used to determine these estimates as 'ell$ +e"ll say in this case
that 'e"re gi(en JE days for the optimistic time* KL days for the pessimistic* and :K days for the
most likely$ (Femem&er that :K days is 'hat 'e used to calculate CPM and 'as deri(ed from the
8cti(ity @uration /stimating process$!
%he formula to calculate e#pected (alue is as follo's:
^optimistic U pessimistic U (: T most likely!_ V C
%he e#pected (alue for the +rite Programs acti(ity is as follo's:
^JE U KL U (: T :K!_ V C S :K$EJ
%he formula for standard de(iation* 'hich helps us determine confidence le(el* is as follo's:
(pessimistic \ optimistic! V C
%he standard de(iation for our acti(ity is as follo's:
(KL \ JE! V C S J$1L
+e could say the follo'ing gi(en the information 'e no' ha(e:
%here is a CE$2C percent chance that the +rite Programs acti(ity 'ill &e completed
&et'een :2$CC days and :N days$
%here is a NK$:: percent chance that the +rite Programs acti(ity 'ill &e completed
&et'een JN$:N days and K2$1L days$
+e calculated the range of dates for the CE$2C percent chance &y adding and su&tracting one
standard de(iation* J$1L* from the e#pected (alue* :K$EJ$ %he NK$:: percent chance 'as
calculated &y multiplying the standard de(iation times t'o* 'hich e7uals C$J:* and adding and
su&tracting that result from the e#pected (alue to come up 'ith the least num&er of days and the
most num&er of days it 'ill take to finish the acti(ity$ 1enerally speaking* t'o standard de(iations*
or NK$:: percent* is a close enough estimate for most purposes$
%he higher the standard de(iation is for an acti(ity* the higher the risk$ 0ince standard de(iation
measures the difference &et'een the pessimistic and the optimistic times* a greater spread
&et'een the t'o* 'hich results in a higher num&er* indicates a greater risk$ Con(ersely* a lo'
standard de(iation means less risk$
Det"s &ring our ta&le of acti(ities &ack and plug in the e#pected (alues and the standard de(iation
for each (please see %a&le L$2!$
&a-le ;.3: P(0& %alculation
Go' 'e"ll look at the total project duration using P/F% and the standard de(iation to determine a
range of dates for project duration$ ,ou should add only the tasks that are on the critical path$
,ou"ll remem&er from the CPM e#ample that tasks 2 and J are not on the critical path* so their
e#pected (alue and standard de(iation calculations ha(e &een left &lank in this ta&le$ +hen 'e
add all the remaining tasks* the total e#pected (alue duration is 102$NN days* or 10J days
rounded to the nearest day$
,our ne#t logical conclusion might &e to add the 0tandard @e(iation column to get the standard
de(iation for the project$ >nfortunately* you cannot add up the standard de(iations &ecause you
'ill come out 'ith a num&er that is much too high$ %otaling the standard de(iations assumes that
all of the tasks 'ill run o(er schedule* and that"s not likely$ It is likely that a fe' tasks 'ill run o(er*
&ut not e(ery one of them$ 0o* no' you"re pro&a&ly 'ondering ho' to calculate the magic
num&er$
,ou might ha(e noticed an e#tra column at the right called 0@ 07uared$ %his is the standard
de(iation s7uared?or for those of you 'ith math pho&ias out there* the standard de(iation
multiplied &y itself$
=nce you ha(e calculated standard de(iation s7uared for each acti(ity* add up the s7uares for a
total of 1:$NE$ %here"s one more step and 'e"re done$ %ake the s7uare root of 1:$NE (you"ll need a
calculator! to come up 'ith J$EL$ %his is the standard de(iation you 'ill use to determine your
range of projected completion dates$ 6ere"s a recap of these last fe' calculations:
%otal e#pected (alue S 10J$00
0um of 0@ 07uared S 1:$NE
07uare root of 0@ 07uared S J$EL
+e can no' make the follo'ing predictions regarding our project:
%here is a CE$2C percent chance that the project 'ill &e completed &et'een NN$1J days
and 10C$EL days$
%here is a NK$:: percent chance that the project 'ill &e completed &et'een NK$2C days
and 110$L: days$
P/F% is used for (ery large* highly comple# projects$ P/F% is also a useful techni7ue to
determine project duration 'hen your acti(ity durations are uncertain$ .or the e#am* it"s
recommended that you kno' one standard de(iation gi(es you a NK percent (rounded! pro&a&ility
and t'o standard de(iations gi(es you a CE percent (rounded! pro&a&ility$ 8lso kno' ho' to
calculate the range of project duration dates &ased on the e#pected (alue and standard de(iation
calculation$ ,ou pro&a&ly don"t need to memori-e ho' to calculate the standard de(iation as I
&elie(e most of the 7uestions gi(e you this information$ ,ou should* ho'e(er* memori-e the
P/F% formula and kno' ho' it 'orks$ It 'ouldn"t hurt to go ahead and memori-e the standard
de(iation formula as 'ell?you ne(er kno' 'hat might sho' up on the e#am$
Duration %ompression
@uration compression takes on t'o forms according to the Guide to the PMBOK* crashing and
fast tracking$ Compression is simply shortening the project schedule to accomplish all the
acti(ities sooner than estimated$
0chedule compression might happen 'hen the project end date has &een predetermined and
after performing the CPM or P/F% techni7ues* you disco(er that the project is going to take
longer than the original promised date$ In our CPM e#ample* 'e calculated the end date to &e
Huly 10$ +hat if the project 'as undertaken and a Huly 2 date 'as promised9 %hat"s 'hen you"ll
need to employ crashing or fast tracking$
.rashing is a compression techni7ue that looks at cost and schedule tradeBoffs$ =ne of the things
you might do to crash the schedule is add resources* from either inside or outside the
organi-ation* to the critical path tasks$ It 'ouldn"t help you to add resources to noncritical path
tasks as these tasks don"t impact the schedule end date any'ay &ecause they ha(e float time$
,ou might also limit or reduce the project re7uirements$ 8sk stakeholders if the features or
functions are 4nice to ha(e5 or necessary$ ,ou might also try changing the se7uence of tasks$ %his
sometimes shortens the schedule* &ut isn"t al'ays possi&le$
Ae certain to check the critical path 'hen you"(e used the crashing techni7ue as crashing might
ha(e changed the critical path$ Crashing doesn"t al'ays come up 'ith a reasona&le result$ It 'ill
often increase the costs of the project as 'ell$ %he idea 'ith crashing is to try to gain the greatest
amount of schedule compression 'ith the least amount of cost$
+e talked a&out fast tracking in Chapter 1$ 2ast trac&ing is starting t'o tasks at the same time
that 'ere pre(iously scheduled to start se7uentially$ .ast tracking can increase project risk and
might cause the project team to ha(e to re'ork tasks$ 8s an e#ample* fast tracking is often
performed in o&jectBoriented programming$ %he programmers might &egin 'riting code on se(eral
modules at once* out of se7uential order* and prior to the completion of the design phase$
'imulation
Monte .arlo Analysis is a simulation techni7ue that produces a range of (alues for each acti(ity
'ith multiple duration possi&ilities$ Pro&a&ility durations are then chosen for each acti(ity* and the
simulation starts$ Monte Carlo 'ill run the possi&le acti(ity durations and schedule projections
many* many times to come up 'ith the schedule projections and their pro&a&ility* critical path
duration estimates* and float time$ .or the e#am* remem&er that Monte Carlo is a simulation
techni7ue that sho's the pro&a&ility of all the possi&le project completion dates$
0esource .eveling /euristics
/arlier I said that CPM and P/F% do not consider resource a(aila&ility$ Go' that you ha(e a
schedule of acti(ities* it"s time to plug in resources for those acti(ities and adjust the schedule
according to any resource constraints you disco(er$
Femem&er that you identified resources and ac7uired staff during the Fesource Planning and
0taff 8c7uisition processes* 'hich 'e discussed in Chapter K$ 0kill sets* pre(ious e#perience*
a(aila&ility* and personal interests 'ere documented during these processes* and staff 'as
assigned to the project$ 0taff mem&ers 'ere not assigned directly to tasks at that point* just to the
project itself$ =rgani-ational de(elopment descri&ed roles and responsi&ilities as they related to
scope definition and produced the staffing management plan* 'hich descri&es ho' to &ring
resources on and off the project$
Go' during 0chedule @e(elopment* resources are assigned to specific acti(ities$ >sually* you"ll
find that your initial schedule has periods of time 'ith more acti(ities than you ha(e resources to
'ork on them$ ,ou 'ill also find that it isn"t al'ays possi&le to assign 100 percent of your team
mem&ers" time to tasks$ 0ometimes your schedule 'ill sho' a team mem&er 'ho is o(er
allocated* meaning they"re assigned to more 'ork than they can physically perform in the gi(en
time period$ =ther times* they might not &e assigned enough 'ork to keep them &usy during the
time period$ %his pro&lem is easy to fi#$ ,ou can assign underBallocated resources to multiple
tasks to keep them &usy$
6a(ing o(erBallocated resources is a little more difficult pro&lem to resol(e$ 1esource le#eling
attempts to smooth out the resource assignments to get tasks completed 'ithout o(erloading the
indi(idual 'hile trying to keep the project on schedule$ %here are se(eral 'ays the project
manager can do this$ ,ou might delay the start of a task to match the a(aila&ility of a key team
mem&er$ =r you might adjust the resource assignments so that more tasks are gi(en to team
mem&ers 'ho are under allocated$ Perhaps you can split some tasks so that the team mem&er
'ith the pertinent kno'ledge or skill performs the critical part of the task and the noncritical part of
the task is gi(en to a less skilled team mem&er$ 8ll of these methods are forms of resource
le(eling$
1enerally speaking* resource le(eling of o(erBallocated team mem&ers 'ill e#tend the project end
date$ If you"re under a date constraint* you"ll ha(e to go &ack and re'ork the schedule after
assigning resources to keep the project on track 'ith the committed completion date$ %his might
include mo(ing key resources off of noncritical tasks and assigning them to critical path tasks or
adjusting assignments as pre(iously mentioned$ Feallocating those team mem&ers 'ith slack
time to critical path tasks to keep them on schedule is another option$
0eal Worl 'cenario5'unn" 'urgeonsH Inc.
)ate Ge'man is a project manager for 0unny 0urgeons* Inc$ 0unny 0urgeons is a soft'are
company that produces soft'are for handheld display de(ices for the medical profession$ %he
soft'are allo's surgeons to keep notes regarding patients* upcoming surgeries* and ideas a&out
ne' medicines and techni7ues to research$ )ate"s latest project is to 'rite an enhanced (ersion
of the patientBtracking program 'ith system integration capa&ilities to a 'ellBkno'n desktop
soft'are product used &y the medical industry$
%here has &een some recent turno(er in the programming department$ .ortunately* 0tephen* the
senior programmer 'ho led the de(elopment effort on the original (ersion of the patient tracker*
still 'orks for 0unny$ 6is e#pertise 'ith handheld technologies as 'ell as his kno'ledge of the
desktop soft'are product make him an in(alua&le resource for this project$
)ate disco(ered a pro&lem during the de(elopment of the project schedule$ 0tephen is o(er
allocated for three key acti(ities$ )ate decides to see 'hat his take is on the situation &efore
deciding 'hat to do$
0tephen* the eternal optimist programmer 'ho lo(es his jo& and does all &ut sleep in his office at
night* says he can easily complete all the acti(ities and that )ate shouldn"t gi(e it a second
thought$ 6e also suggests to )ate that )aren +ong* a junior programmer on his team* 'orked on
the last project 'ith him and might &e a&le to handle the noncritical path task on her o'n 'ith a
little direction from 0tephen$
)ate thinks &etter of the idea of o(er allocating her key project resource e(en if he does think he
can do the entire thing singleBhanded$ 0he decides to try some resource le(eling to see 'hat that
turns up$
)ate disco(ers that rearranging the order of acti(ities along 'ith assigning )aren to handle the
noncritical path acti(ity might &e a possi&le solution$ 6o'e(er* this scenario lengthens the project
&y a total of E days$ 0ince )ate kno's the primary constraint on this project is 7uality* she"s fairly
sure she can get &uyBoff from the project sponsor and stakeholders on the increased schedule
date$ 0he can also sell the resourceBle(eled schedule as a lo'Brisk option as opposed to
assigning 0tephen to all the acti(ities and keeping the project end date the same$ =(er allocating
resources can cause &urnout and stressBrelated illnesses* 'hich 'ill ultimately ha(e a negati(e
impact on the project schedule$
Project $anagement 'o!tware
1i(en the e#amples 'e"(e gone through on 0chedule @e(elopment and resource le(eling* you
pro&a&ly already ha(e concluded ho' much project management soft'are might help you 'ith
these processes$ Project management soft'are 'ill automate the mathematical calculations and
perform resource le(eling functions for you$ =&(iously* you can then print the schedule that"s
&een produced for final appro(al and ongoing updates$ It"s common practice to eBmail updated
schedules 'ith project notes so that stakeholders kno' 'hat acti(ities are completed and 'hich
ones remain to &e done$
It"s &eyond the scope of this &ook to go into all the (arious soft'are programs a(aila&le to project
managers$ 0uffice it to say that project management soft'are ranges from the (ery simple to the
(ery comple#$ %he le(el of sophistication and the types of project management techni7ues that
you"re in(ol(ed 'ith 'ill determine 'hich soft'are product you should choose$ Many project
managers that I kno' ha(e had great success 'ith Microsoft Project soft'are and use it
e#clusi(ely$ It contains a ro&ust set of features and reporting tools that 'ill ser(e most projects
'ell$
@on"t forget that you are the project manager and your good judgment should ne(er &e usurped
&y the recommendation of a soft'are product$ ,our finally tuned skills and e#perience 'ill tell you
if relationship issues &et'een team mem&ers might cause &igger pro&lems than 'hat the
resource le(eling function indicates$ Constraints and stakeholder e#pectations are difficult for a
soft'are package to factor in$ Fely on your e#pertise 'hen in dou&t$ If you don"t ha(e the
e#perience yet to make kno'ledgeB&ased decisions* seek out another project manager or a
senior stakeholder* manager* or team mem&er and ask them to confirm if you"re on the right track$
Project management soft'are is a 'onderful tool* &ut it is not a su&stitute for sound project
management practices or e#perience$
Proucing the 'cheule Development Outputs
%he 0chedule @e(elopment process has four outputs: project schedule* supporting detail*
schedule management plan* and resource re7uirements updates$ %he t'o primary outputs from
this process that 'ill carry for'ard throughout the rest of the project are the project schedule and
the schedule management plan$
Project 'cheule
%he purpose of the 0chedule @e(elopment process is to determine the start and finish dates for
your project acti(ities$ =ne of the primary outputs of this process is the project schedule* 'hich
details this information as 'ell as the resource assignments$
%he project schedule should &e appro(ed and signed off &y stakeholders and functional
managers$ %his assures you that they ha(e read the schedule* understand the dates and
resource commitments* and 'ill likely cooperate$ ,ou"ll also need to o&tain confirmation that
resources 'ill &e a(aila&le as outlined in the schedule 'hen you"re 'orking in a functional
organi-ation$ %he schedule cannot &e finali-ed until you recei(e appro(al and commitment for the
resource assignments outlined in the schedule$ 8ppro(al and finali-ation of the schedule should
&e completed prior to the end of the Project Plan @e(elopment process$
=nce the schedule is appro(ed* it 'ill &ecome your &aseline for the remainder of the project$
Project progress and task completion 'ill &e monitored and tracked against this original plan to
determine if the project is on course as planned$
%he schedule can &e displayed in a (ariety of 'ays* some of 'hich are (ariations on 'hat 'e"(e
already seen$ Get'ork diagrams* like the ones 'e talked a&out in Chapter K* 'ill 'ork as
schedule diagrams 'hen you add the start and finish dates to each acti(ity$ %hese diagrams
usually sho' the acti(ity dependencies and critical path$ .igure L$2 sho's a sample portion of a
net'ork diagram highlighting our programming acti(ities$
Figure ;.3: Get'ork diagram 'ith acti(ity dates
1antt charts are easy to read and commonly used to display schedule acti(ities$ @epending on
the soft'are you"re using to produce the 1antt chart* it might also sho' acti(ity se7uences*
acti(ity start and end dates* resource assignments* acti(ity dependencies* and the critical path$
.igure L$J is a simple e#ample that plots (arious acti(ities against time$ %hese acti(ities do not
relate to the acti(ities in the ta&les or other figures sho'n so far$
Figure ;.4: 1antt chart
Milestone charts are another 'ay to depict schedule information$ Milestones mark the completion
of major deli(era&les or some other key e(ent in the project$ .or e#ample* appro(al and signBoff
on project deli(era&les might &e considered a milestone$ =ther e#amples might &e completion of
a prototype* system testing* contract appro(al* and so on$
Milestone charts might sho' the key e(ents and their start or completion dates in a &ar chart form
similar to a 1antt chart$ =r they can &e 'ritten in a simple ta&le format 'ith milestones listed in
the ro's and e#pected schedule dates in one column and actual completion dates in another$ 8s
the milestones are met* the actual date column is filled in$ %his information can &e included 'ith
the project status reports$
$ilestone 'cheule Date 1ctual Date
0ign off on deli(era&les :O12 :O12
$ilestone 'cheule Date 1ctual Date
0ign off on hard'are test :O22 :O2K
Programming completed CO0C

%esting completed CO2E

8cceptance and signBoff LO10

Project closeout LO10

%imeBscaled net'ork diagrams are rarely used$ %hey com&ine the net'ork diagrams 'ith the &ar
chart format to display schedule information$
'upporting Detail
%he minimum amount of information in the supporting detail output is the project constraints and
assumptions$ =ther information that should &e documented &ut doesn"t necessarily fit into the
other categories 'ould get documented here$ 8l'ays err on the side of too much documentation*
rather than not enough$
,ou 'ill ha(e to &e the judge of 'hat other information to include here as it 'ill depend on the
nature of the project$ %he Guide to the PMBOK suggests that you might include resource
histograms$ %here is an e#ample resource histogram in Chapter K if you need to re(ie'$
Fesource histograms typically display hours needed on one a#is and period of time (months*
'eeks* days* years! on the other$ ,ou might also include alternati(e schedules or schedule
reser(es in this section$
'cheule $anagement Plan
%he schedule management plan should &e pu&lished and distri&uted along 'ith your other project
Planning documents$ Dike other management plan outputs* the schedule management plan
descri&es ho' schedule changes 'ill &e managed and is an important part of your o(erall project
plan$
0esource 0equirements 2pates
Fesource re7uirements are an output of the Fesource Planning process$ 8s a result of
scheduling acti(ities and le(eling resources* you may ha(e to make adjustments to the resource
re7uirements document$ 8s I"(e noted during some of the other Planning processes* project
planning and project management are an iterati(e process$ Farely is anything cast in cement$
,ou 'ill continue to re(isit processes throughout the project to refine and adjust$ /(entually*
processes do get put to &ed$ ,ou 'ouldn"t 'ant to come &ack to the Planning process at the
conclusion of the project* for e#ample* &ut keep in mind that the Planning* /#ecuting* and
Controlling process groups are iterati(e* and it"s not unusual to ha(e to re(ise processes 'ithin
these phases as you progress on the project$
In practice* 8cti(ity @efinition* 8cti(ity 0e7uencing* 8cti(ity @uration /stimating* and 0chedule
@e(elopment are easily completed at the same time 'ith the aid of good project management
soft'are$ 1antt charts* critical path* P/F% charts* resource allocation* acti(ity dependencies*
'hatBif analysis* and (arious reports are easily produced after plugging in your scheduling
information to most project management soft'are tools$ Fegardless of your methods* &e certain
to o&tain signBoff of the project schedule and pro(ide your stakeholders and project sponsor 'ith
regular updates$ 8nd keep your schedule handy?there 'ill likely &e changes and modifications
as you go$
(sta-lishing the %ost +uget +aseline
=ur ne#t step is to determine the cost &udget &aseline$ %he &udget 'ill &e used as a plan for
allocating costs and resources to project acti(ities$ %he 0chedule @e(elopment and Cost
/stimating processes must &e completed prior to 'orking on Cost Audgeting as their outputs
&ecome the inputs to this process$ %he inputs for Cost Audgeting are cost estimates* +A0* risk
management plan* and project schedule$
%he same tools and techni7ues 'e discussed for the Cost /stimating process in Chapter K are
used in the Cost Audgeting process$ 8 7uick reminder here of those tools and techni7ues
'ouldn"t hurt:
1nalogous estimating %his a topBdo'n techni7ue that uses historical information to determine
estimates and is a form of e#pert judgment$
Parametric moeling %his is a mathematical model used to estimate project costs$
+ottomAup estimating %his in(ol(es estimating the indi(idual costs of each acti(ity and then
rolling them up to come up 'ith a total project cost$
%omputeri,e tools %hese are used to perform the a&o(e estimating techni7ues automatically$
%he .ost Budgeting process assigns cost estimates to acti(ities and is used to measure the
(ariance and performance of the project throughout the remaining process groups$ %hus* it
ser(es as a &aseline for cost measurements as the cost $aseline is no' the e#pected cost for the
project$ Femem&er that costs are tied to the financial system through the chart of accounts* or
code of accounts* and are assigned to project acti(ities at the 'ork package le(el of the +A0$
%he cost &aseline can &e displayed graphically 'ith time increments on one a#is against dollars
e#pended on the other as sho'n in .igure L$:$ %he costs sho'n on this graph are cumulati(e
costs* meaning that 'hat 'e spent this period is added to 'hat 'as spent last period and then
charted$ Many (ariations of this graph e#ist sho'ing dollars &udgeted against dollars e#pended to
date and so on$ Cost &udgets can &e displayed using this type of graph as 'ell &y plotting the
sum of the estimated costs e#cepted per period$
Figure ;.7: Cost &aseline
.or the e#am* remem&er that cost &aselines are displayed as an 0Bcur(e$ %he reason for this is
that project spending starts out slo'ly and gradually increases o(er the project"s life until it
reaches a peak* then tapers off again as the project 'raps up$ Darge projects are difficult to graph
in this manner* as the timescale isn"t 'ide enough to accurately sho' fluctuations in spending$
%here are other methods that more accurately graph costs* 'hich 'e"ll look at in the Cost Control
process$
%he &udget should contain all the costs for all of the e#pected 'ork on the project$ ,ou 'ould
ha(e identified most of these costs in the Cost /stimating process$ 0chedule @e(elopment might
ha(e unco(ered additional acti(ities that need to &e added to the &udget as 'ell$
%he &udget should also contain appropriations for risk response$ +e co(ered se(eral categories
and tools of Fisk Fesponse Planning in Chapter C including a(oidance* mitigation* insurance* and
contingency plans$ 0ome of the &udget should &e allocated to each of these techni7ues that you
identified in your risk management plan$ 8dditionally* you"ll 'ant to set aside money for reser(es$
%his is for the unforeseen* unplanned risks that may occur$ /(en 'ith all of the time and effort 'e
spend on planning* une#pected things do crop up$ Aetter to ha(e the money set aside and not
need it than to need it and not ha(e it$
%he cost &aseline is the only output of the Cost Audgeting process$ +e"ll re(isit the cost &aseline
'hen 'e talk a&out the Cost Control process and e#amine different 'ays to measure costs$
Developing the Project Plan
+e"(e finally made it to Project Plan @e(elopment$ 8ll the 'ork 'e"(e done up to this point
culminates in this final Planning process$
Project Plan )e#elopment takes the outputs from all the other Planning processes and &rings
them together in a concise* logical format$ %his might end up &eing one main document 'ith
reference to other pertinent documents* or se(eral documents organi-ed in a logical fashion$ %he
project plan* 'hich is an output of this process* is used throughout the /#ecuting and Controlling
processes for decision making and guidance &ased on the original plan$
Project Plan @e(elopment has fi(e inputs that 'e"(e seen &efore$ %hey are other planning
outputs* historical information* organi-ational policies* constraints* and assumptions$ %he Guide
to the PMBOK points out that organi-ational policies should &e consulted 'hen de(eloping your
project plan$ 0ome policies might include things like 7uality management* personnel
administration* and financial controls according to the Guide to the PMBOK$
&ools an &echniques
%he tools and techni7ues of this process are all ne'$ %hey are project planning methodology*
stakeholder skills and kno'ledge* project management information system (PMI0!* and earned
(alue management (/3M!$ +e"ll descri&e each &elo'$
Project Planning $ethoolog"
+e"(e &een e#plaining and employing project planning methodology since the &eginning of the
first chapter$ %his is simply a formal* structured techni7ue that the project manager uses to help
de(elop the project plan$ It might in(ol(e using 'hat the Guide to the PMBOK calls hard tools like
Microsoft Project soft'are* or soft tools like paper templates or project meetings$ 0ome
organi-ations ha(e project management offices 'ith standardi-ed forms and templates that
project managers can use to facilitate the Planning process$
)eep in mind that Monte Carlo 8nalysis can &e used during this process as 'ell$ 0ince Planning
is such an iterati(e process* Monte Carlo comes in handy 'hen you"re looking at schedule risks*
project durations* and the like$
'ta#eholer '#ills an <nowlege
,es* stakeholders ha(e skills and kno'ledge that might &e helpful to the project manager during
project Planning$ Aelie(e it or not* and I"m positi(e you are not one of these types* there are
project managers 'ho think stakeholders ha(e no &usiness helping 'ith any aspect of the project
Planning* /#ecuting* or Controlling process groups$ I"m not certain ho' you 'ould end up 'ith a
successful project (as defined &y meeting or e#ceeding stakeholder e#pectations! 'hen
stakeholders ha(e not &een included in the project process groups$ @on"t let this happen to you$
8s the project manager* one of your most important jo&s is to create an open* communicati(e
atmosphere so that stakeholders are a&le to contri&ute to the process$
It"s important that stakeholders participate in the project Planning processes and sign off on the
final project plan$ %his assures you that stakeholders agree to* or at least kno'* the details
regarding project acti(ities* duration* acti(ity costs* risks* and &udgets* and ho' each of these
things impacts the project scope and their o'n departments and resources$ 0takeholders usually
ha(e less of a say in ho' the project is e#ecuted and controlled as the o&jecti(es and scope are
firmly defined &y then$ %his makes their cooperation and participation in the Planning processes
e(en more important$ @o e(erything you can to ensure stakeholders take the project seriously
and acti(ely solicit their input during Project Plan @e(elopment$
Project $anagement In!ormation '"stem FP$I'G
%his is an information system that stores all the information related to your project$ It allo's you to
gather information* incorporate it 'ith other project information* and produce reports for
distri&ution to stakeholders and team mem&ers$ %he information system is used from the
&eginning of the project through closeout$ )eep in mind that the information system could &e a
soft'are product or a com&ination of soft'are and a manual system$
8s the project manager* you need to &e certain that you"re managing the project* and not just
managing the project management information system$ It"s easy to get caught up in the soft'are
features and in the processes and planning logic and not pay attention to the project itself$ Ae
certain that the project is 'here your attention is and not just the soft'are or information system
you"re using to manage the soft'are$
(arne Balue $anagement F(B$G
/arned (alue management (/3M! is concerned 'ith measuring and reporting on the progress of
the project$ It incorporates the project schedule* scope* and resources as a 'hole to determine if
(ariances e#ist in the project$ /arned (alue analysis is a techni7ue used to calculate performance
measures that 'e"ll e#plore in more detail in Chapter N$
Project Plan Development Outputs
%his &rings us to the outputs of the Project Plan @e(elopment process* 'hich are the project plan
and supporting detail$ Det"s talk a little &it more a&out each of these$
Project Plan
%he project plan 'ill &e used as the guideline throughout the project /#ecuting and project
Controlling process groups$ ,ou"ll use the project plan to track and measure project performance
and to make future project decisions$
%he project plan encompasses e(erything 'e"(e talked a&out up to no' and is represented in a
formal document* or collection of documents$ %his document 'ill contain the project scope
statement* deli(era&les* assumptions* risks* +A0* milestones* acti(ity schedule* resources* and
more$ It &ecomes the &aseline you"ll use to measure and track progress against$ It"s also used to
control the components that tend to stray from the original plan and get them &ack in line$
%he project plan 'ill &e used as a communication and information tool for stakeholders* team
mem&ers* and the management team$ %hey 'ill use the project plan to re(ie' and gauge
progress as 'ell$
%he Guide to the PMBOK makes a point of the difference &et'een the project performance
measurement &aselines and the project plan$ %he project plan is the document* or assortment of
documents* that constitutes 'hat the project is* 'hat the project 'ill deli(er* and ho' all the
processes 'ill &e managed$ %here 'ill &e changes to the project plan throughout the remaining
process groups* and the document* or documents* 'ill need to &e updated to reflect those
changes$
%he performance measurement &aselines are the management controls in place that should
change only infre7uently$ /#amples of the performance measurement &aselines 'e"(e looked at
so far are Cost Audgeting &aselines and schedule &aselines$ %he project plan itself also &ecomes
a &aseline$ If changes in scope or schedule do occur after Planning is complete* there"s a
formali-ed process that you should go through to implement the changes* 'hich 'e"ll co(er in a
later chapter$
'upporting Detail
+e"(e seen this output &efore$ %he supporting detail for the Project Plan @e(elopment process
'ill include any information not pre(iously included in the other project Planning processes$
%echnical information such as design specifications might &e included here as 'ell$ Aack in
Chapter C* 'e talked a&out standards and policies$ If they"re applica&le to the project* you could
include the standards here or reference 'here they might &e found$ 8gain 'e"re &ack to our
project management mantra* 4@ocument* document* document$5 If you cannot find any other
logical place to put information that you kno' should &e included 'ith the project* put it in
supporting detail$ Dast &ut not least* don"t forget to include assumptions and constraints that 'ere
disco(ered during this phase of the Planning process$
@on"t forget that signBoff is an important part of this process$ ,our last step in the Planning
process group 'ill &e to o&tain signBoff of the project plan from stakeholders* the sponsor* and the
management team$
,ou"(e spent a couple of days 'orking on the project schedule in Microsoft Project 2000*
clarifying tasks and acti(ities 'ith Hake* Ficardo* and Hill$ ,ou decide that a 1antt chart 'ill 'ork
e#cellently for reporting status for this project$ 8 portion of your first draft of the 1antt chart sho's
the follo'ing at the end of the project:
%he detail &ehind the 1antt chart snapshot is sho'n &elo'$ %his is a limited amount of detail for
e#ample purposes$
,ou stare intensely at the pro&lem you see on the screen$ %he 1rand =pening task (num&er 1E!
is scheduled to occur 2 'eeks later than 'hen you need it2 1rand opening must happen .e&ruary
1 and 2* not .e&ruary 1K and 1C as the schedule sho's$ ,ou trace the pro&lem &ack and see that
1rand =pening depends on %rain 0tore Personnel* 'hich itself depends on se(eral other tasks
including 6ire 0tore Personnel* Install and %est 6ard'are* and AuildBout$ @igging deeper* &uildB
out can"t &egin until the /thernet ca&le is run throughout the &uilding$ Ficardo already set up the
time 'ith the contractor to run the ca&le 0eptem&er 1L$ %his date cannot mo(e* 'hich means
&uildBout cannot start any sooner than 0eptem&er 1N$
,ou pick up the phone and dial Hake"s num&er$ 4Hake*5 you say into the recei(er$ 4I"m 'orking on
the project schedule* and I ha(e some issues 'ith the 1ome- acti(ity$5
40hoot*5 Hake says$
41ome- Construction can"t start 'ork until the /thernet ca&le is run$ I"(e already confirmed 'ith
Ficardo that there is no negotiation on this$ Ficardo is hiring a contractor for this acti(ity* and the
earliest they can start is 0eptem&er 1L$ It takes them 2 days to run the ca&le* 'hich puts the start
date for &uildBout at 0eptem&er 1N$5
4Fight*5 Hake replies$ 4%hat"s just a&out 'hen 'e thought$ +hat"s the pro&lem95
4Hill 'ants to ha(e the &uildBout finished prior to hiring the store personnel$ @uring the last store
opening* those acti(ities o(erlapped* and she said it 'as unmanagea&le$ 0he 'ants to hire folks
and ha(e them stock the shel(es in preparation for store opening &ut doesn"t 'ant contractors in
there 'hile they"re doing it$ 8 0eptem&er 1N start date for 1ome- puts us at a finish date of
.e&ruary 12* 'hich is too late regardless of the pro&lem 'ith Hill$ 6ence* my 7uestion* is 120 days
to finish a &uildBout a firm estimate95
48l'ays?I"(e got this do'n to a science$ 1ome- has 'orked 'ith me on enough of these &uildB
outs that 'e can come 'ithin just a couple of days of this estimate either 'ay*5 Hake says$
,ou pick up your schedule detail and continue$ 4I"(e scheduled 1ome-"s resource calendar as
you told me originally$ 1ome- doesn"t 'ork 0undays and neither do 'e$ %heir holidays are Da&or
@ay* a couple of days at %hanksgi(ing* Christmas and Ge' ,ear"s* &ut this puts us too far out on
the schedule$ I kno' @irk 'on"t go for a later dateI he"s firm on the .e&ruary 1 opening$5
4I can"t change the 120 days$ 0ounds like you ha(e a pro&lem$5
4I need to crash the schedule*5 you say$ 4+hat 'ould the chances &e of 1ome- agreeing to split
the &uildBout tasks9 +e could hire a second contractor to come in and 'ork alongside 1ome-"s
cre' to speed up this task$ %hat 'ould shorten the duration to 100 days* 'hich means 'e could
meet the .e&ruary 1 date$5
4+on"t happen$ I kno' 1ome-$ %hey"re a &ig outfit and ha(e all their o'n cre's$ +e typically
'ork 'ith them e#clusi(ely$ If I &rought another contractor into the picture* I might ha(e a hard
time negotiating any kind of fa(ors 'ith them later if 'e get into a &ind$5
48lright*5 you say$ 46o' a&out this9 I"m making some changes to the resource calendar 'hile
'e"re talking$ +hat if 'e authori-e 1ome-"s cre' to 'ork si# 10Bhour days* 'hich still lea(es
them 'ith 0undays off* and 'e ask them to 'ork Da&or @ay and take only one day at each of the
other holidays instead of t'o95
%he detail sho'ing these changes is sho'n &elo'$
4I think 1ome- 'ould go for that$ ,ou reali-e it"s going to cost you95
4Project management is all a&out tradeBoffs$ +e can"t mo(e the start date* so chances are the
&udget might take a hit to accommodate schedule changes or risk$ .ortunately* I"m just no'
'rapping up the final cost &udget &aseline* so if you can get me the increased cost from 1ome-
soon* I"d appreciate it$ %his change 'ill keep us on track and resol(e Hill"s issues too$5
4I don"t think 1ome-"s cre' 'ill mind the o(ertime during the holiday season$ /(eryone can use a
little e#tra cash at that time of year* it seems$ I"ll ha(e the figures for you in a day or t'o$5
@e(eloping project schedule
Calendars
Dead and lag time
Critical path
@uration compression
Crashing
>tili-ing project management soft'are
Producing project schedule
Milestones
1antt chart
Fesource le(eling
Cost &aseline
.inali-ed project plan
'ummar"
1reat jo&* you"(e made it through the entire Planning process$ +e co(ered three processes in
this chapter: 0chedule @e(elopment* Cost Audgeting* and Project Plan @e(elopment$
0chedule @e(elopment is the process in 'hich you assign &eginning and ending dates to tasks
and determine their duration$ ,ou can use se(eral methods to do this including CPM* 1/F%* and
P/F%$ %he CPM calculates early start* early finish* late start* and late finish dates$ It also
determines float time$ 8ll tasks 'ith -ero float are critical path tasks$ %he critical path is the
longest path in the project$
1/F% allo's for conditional &ranching and loopingI CPM and P/F% do not$
P/F% calculates a 'eighted a(erage estimate for each acti(ity &y using the optimistic*
pessimistic* and most likely times and then determines (ariances* or standard de(iations* to come
up 'ith a total project duration 'ithin a gi(en confidence range$ CE$2C percent of the time* 'ork
'ill finish 'ithin plus or minus one standard de(iation$ NK$:: percent of the time* 'ork 'ill finish
'ithin plus or minus t'o standard de(iations$
0chedules sometimes need to &e compressed to meet promised dates or to shorten the schedule
times$ Crashing looks at cost and schedule tradeBoffs$ 8dding resources to critical path tasks and
limiting or reducing the project re7uirements or scope are 'ays to crash the schedule$ .ast
tracking in(ol(es &eginning t'o tasks that 'ere originally scheduled to start one after the other at
the same time$ .ast tracking increases project risk$
Monte Carlo 8nalysis can &e used in the 0chedule @e(elopment process to determine project
duration$
Fesource le(eling attempts to smooth out the schedule and properly allocate resources to critical
path tasks$ %his may re7uire updates to the resource management plan$
%he project schedule details the acti(ities in graphical form through the use of net'ork diagrams
'ith dates* 1antt charts* milestone charts* or timeBscaled net'ork diagrams$
%he schedule management plan details ho' the project schedule 'ill &e managed and ho'
changes 'ill &e incorporated into the project schedule$
%he Cost Audgeting &aseline 'ill &e used throughout the project to measure project e#penditures*
(ariance* and project performance$ %he cost &aseline is graphically displayed as an 0Bcur(e$
Project Plan @e(elopment is the last process in the Planning process group$ %he project plan is
used as a guideline throughout the project /#ecuting and Controlling processes to help make
future project decisions$ It"s also used to measure and track project performance$ %he project plan
might &e one document or se(eral documents stored together in an organi-ed* logical format$
(6am (ssentials
+e a-le to calculate the critical path. %he critical path is the acti(ities 'hose durations add up
to the longest full path utili-ing the for'ard pass* &ack'ard pass* and float calculations$
+e a-le to e!ine a critical path tas#. 8 critical path task is a project acti(ity 'ith -ero float$
+e a-le to escri-e an calculate P(0& uration estimates. %his is a 'eighted a(erage
techni7ue that uses three estimates: optimistic* pessimistic* and most likely$ %he formula is as
follo's: ^optimistic U pessimistic U (: T most likely!_ V C$
+e a-le to name the uration compression techniques. %hey are crashing and fast tracking$
+e a-le to escri-e the cost -aseline. %his is the e#pected cost of the project and is used to
measure performance$ It"s displayed as an 0Bcur(e$
<e" &erms
cost &aseline project plan
Cost Audgeting Project Plan
@e(elopment
critical path (CP! project schedule
Critical Path Method
(CPM!
resource le(eling
float time 0chedule @e(elopment
milestones slack time
Program /(aluation and
Fe(ie' %echni7ue (P/F%!

0eview =uestions
1. %he project schedule is used to determine all of the follo'ing e#cept:
8$ Cost estimates
A$ 8cti(ity start dates
C$ .loat times
@$ 8cti(ity end dates
3. ,ou are a project manager for Picture 0hades* Inc$ %hey manufacture 'indo' shades
for hotel chains that ha(e replicas of FenaissanceBera paintings on the inside of the
shades$ Picture 0hades is taking their product to the home market* and you"re
managing the ne' project$ %hey 'ill offer their products at retail stores as 'ell as on
their 'e&site$ ,ou"re de(eloping the project schedule for this undertaking and ha(e
determined the critical path$ +hich of the follo'ing is true9
8$ ,ou calculated the most likely start date and most likely finish dates* float time*
and 'eighted a(erage estimates$
A$ ,ou calculated the acti(ity dependency* and the optimistic and pessimistic
acti(ity duration estimates$
C$ ,ou calculated the early and late start dates* early and late finish dates* and
float times for all acti(ities$
@$ ,ou calculated the optimistic* pessimistic* and most likely duration times and
the float times for all acti(ities$
4. ,ou are a project manager for Picture 0hades* Inc$ %hey manufacture 'indo' shades
for hotel chains that ha(e replicas of FenaissanceBera paintings on the inside of the
shades$ Picture 0hades is taking their product to the home market* and you"re
managing the ne' project$ %hey 'ill offer their products at retail stores as 'ell as on
their 'e&site$ ,ou"re de(eloping the project schedule for this undertaking$ Dooking at
the graph &elo'* 'hich path is the critical path9
8$ 8BABCB/B6
A$ 8B@B/B6
C$ 8B.B1B6
@$ 8B.B1B/B6
7. >se the e#ample graphic sho'n &elo' to ans'er this 7uestion$ If the duration of
acti(ity A 'as changed to 10 days and the duration of actiB(ity 1 'as changed to N
days* 'hich of the follo'ing is the critical path9
8$ 8BABCB/B6
A$ 8B@B/B6
C$ 8B.B1B6
@$ 8B.B1B/B6
8. +hich of the follo'ing is true regarding the critical path9
8$ It should ne(er &e compressed$
A$ It allo's for looping and &ranching$
C$ %he critical path techni7ue is the same as P/F%$
@$ It"s the duration of all tasks 'ith -ero float$
9. 8ll of the follo'ing are tools and techni7ues of the 0chedule @e(elopment process
e#cept9
8$ CPM
A$ F8M
C$ 1/F%
@$ P/F%
;. ,ou are a project manager for a ne' soft'are de(elopment project$ ,ou ha(e a fe'
acti(ities that re7uire speciali-ed testing$ %he testing might need to &e repeated more
than once$ +hich of the follo'ing do you choose9
8$ %he 1raphical /(aluation and Fe(ie' %echni7ue &ecause it allo's for
conditional &ranching and looping for the testing acti(ity
A$ %he Critical Path Method &ecause it allo's for float time to &e calculated for
the testing acti(ity
C$ %he Program /(aluation and Fe(ie' %echni7ue &ecause it allo's for
conditional &ranching and looping for the testing acti(ity
@$ %he Program /(aluation and Fe(ie' %echni7ue &ecause it allo's for a
'eighted a(erage distri&ution* 'hich 'ill e(en out the time needed for the
testing acti(ity
>. ,ou are a project manager for Mo(e It Go' trucking company$ ,our company
speciali-es in mo(ing household goods across the city or across the country$ ,our
project in(ol(es upgrading the nation'ide computer net'ork for the company$ ,our
lead engineer has gi(en you the follo'ing estimates for a critical path acti(ity: C0 days
most likely* L2 days pessimistic* :E days optimistic$ +hat is the e#pected (alue* or
'eighted a(erage9
8$ K:
A$ CC
C$ C0
@$ J0
?. ,ou are a project manager for Mo(e It Go' trucking company$ ,our company
speciali-es in mo(ing household goods across the city or across the country$ ,our
project in(ol(es upgrading the nation'ide computer net'ork for the company$ ,our
lead engineer has gi(en you the follo'ing estimates for a critical path acti(ity: C0 days
most likely* L2 days pessimistic* :E days optimistic$ +hat is the standard de(iation9
8$ 22
A$ 20
C$ 2
@$ :
1@. If you kno' e#pected (alue is K00 and the standard de(iation is 12* you can say 'ith
appro#imately a NK percent confidence rating 'hich of the follo'ing9
8$ %he acti(ity 'ill take &et'een :EE and K12 days$
A$ %he acti(ity 'ill take &et'een :C: and KJC days$
C$ %he acti(ity 'ill take &et'een :N: and K0C days$
@$ %he acti(ity 'ill take &et'een :LC and K2: days$
11. If your e#pected (alue is 110 and the standard de(iation is 12* 'hich of the follo'ing is
true9
8$ %here is appro#imately a NN percent chance of completing this acti(ity
&et'een EC and 1J: days$
A$ %here is appro#imately a CE percent chance of completing this acti(ity
&et'een NE and 122 days$
C$ %here is appro#imately a NK percent chance of completing this acti(ity
&et'een NE and 122 days$
@$ %here is appro#imately a LK percent chance of completing this acti(ity
&et'een EC and 1J: days$
13. ,ou are the project manager 'orking on a research project for a ne' drug treatment$
,our preliminary project schedule runs past the due date for a federal grant
application$ %he manager of the F`@ department has agreed to release t'o resources
to 'ork on your project in order to meet the federal grant application date$ %his is an
e#ample of:
8$ Crashing
A$ .ast tracking
C$ Fesource le(eling
@$ 8djusting the resource calendar
14. ,ou are the project manager 'orking on a research project for a ne' drug treatment$
,our preliminary project schedule runs past the due date for a federal grant
application$ ,ou adjust the schedule and find that t'o acti(ities pre(iously scheduled to
start se7uentially can &e started at the same time$ %his is an e#ample of:
8$ Crashing
A$ .ast tracking
C$ Fesource le(eling
@$ 8djusting the resource calendar
17. ,ou are the project manager for Fi(era 1ourmet 8d(enture 3acations$ Fi(era
com&ines the 'onderful tastes of great gourmet food 'ith outdoor ad(enture acti(ities$
,our project in(ol(es installing a ne' human resources soft'are system$ Hason* the
data&ase analyst 'orking on this project* is o(er allocated$ +hich of the follo'ing is
true9
8$ ,ou should use resource re7uirements updates to determine a(aila&ility and
smooth out resource o(er allocation$
A$ ,ou should use crashing to resource le(el the critical path tasks$
C$ ,ou should use resource le(eling heuristics to smooth out resource
assignments$
@$ ,ou should use fast tracking to resource le(el the critical path tasks$
18. +hat is one of the pro&lems 'ith project management soft'are9
8$ %he project manager manages the soft'are instead of the project$
A$ Project duration calculations are sometimes appro#imate$
C$ ,ou cannot o(erride the project management soft'are decisions regarding
schedules$
@$ It"s e#pensi(e and difficult to use$
19. =&taining formal project plan appro(al and signBoff is important for all of the follo'ing
reasons e#cept:
8$ 0takeholders are a&le to recommend a project Planning methodology to follo'
throughout the remaining process groups$
A$ 0takeholders are a'are of the project details* 'hich makes them more likely
to participate in future project decisions$
C$ 0takeholders 'ill &e more likely to cooperate$
@$ 0takeholders are a'are of the specific details regarding project schedules*
&udgets* and risks$
1;. +hich of the follo'ing are the tools and techni7ues of the Cost Audgeting process9
8$ Project management information system* analogous estimating* &ottomBup
estimating* mathematical analysis
A$ 8nalogous estimating* &ottomBup estimating* mathematical analyBsis*
computeri-ed tools
C$ Project management soft'are* analogous estimating* &ottomBup estimating*
parametric modeling
@$ 8nalogous estimating* &ottomBup estimating* parametric modeling*
computeri-ed tools
1>. ,ou are the project manager for a custom homeB&uilding construction company$ ,ou
are 'orking on the model home project for the upcoming 0ho' 6omes %our$ %he
model home includes Internet connections in e(ery room and talking appliances$ ,ou
are 'orking on the cost &udget for this project$ +hich of the follo'ing is true9
8$ %his process assigns cost estimates to project acti(ities including risks and
contingency plans$
A$ %he cost &aseline 'ill &e used to measure (ariances and future project
performance$
C$ %his process assigns cost estimates for e#pected future period operating
costs$
@$ %he cost &aseline is the e#pected cost for the project$
1?. +hich of the follo'ing is displayed as an 0Bcur(e9
8$ 1antt
A$ Cost &aseline
C$ Critical path
@$ P/F%
3@. 8ll of the follo'ing are true regarding the project plan e#cept:
8$ 0ome of its inputs are outputs from other Planning processes$
A$ It"s used to guide the project /#ecuting and Controlling processes and is the
&aseline used to measure project performance$
C$ It consists of one document that should &e formally appro(ed and signed &y
stakeholders$
@$ It contains things like the +A0* project schedule* and resource assignments$
1nswers
1. 8 %he project schedule determines start and ending dates of acti(ities* determines float
times* generally sho's resource assignments* and details the acti(ity se7uences and
durations$
3. C %he CPM calculates a single early and late start date and a single early and late finish
date for each acti(ity$ =nce these dates are kno'n* float time is calculated for each acti(ity to
determine the critical path$ %he other ans'ers contain elements of P/F% calculations$
4. A %he only information you ha(e for this e#ample is acti(ity duration* therefore the critical
path is the path 'ith the longest duration$ Path 8B@B/B6 'ith a duration of J: days is the
critical path$
7. @ %he only information you ha(e for this e#ample is acti(ity duration* so you must calculate
the critical path &ased on the durations gi(en$ %he duration of 8BABCB/B6 increased &y J days
for a total of JK days$ %he duration of 8B.B1B6 and 8B.B1B/B6 each increased &y J days$ 8B.B
1B/B6 totals JC days and &ecomes the ne' critical path$
8. @ %he critical path is calculated &y adding together the durations of all the tasks 'ith -ero
float$ %he critical path can &e compressed using crashing techni7ues$
9. A 8 F8M is a Fesponsi&ility 8ssignment Matri# used in the =rgani-ational Planning process$
;. 8 1/F% is the only 0chedule @e(elopment tool that allo's for conditional &ranching and
looping$
>. C %he calculation for P/F% is the sum of optimistic time plus pessimistic time plus four times
the most likely time di(ided &y C$ %he calculation for this e#ample is as follo's: ^:E U L2 U (: T
C0!_ V C S C0$
?. @ %he standard de(iation is calculated &y su&tracting the optimistic time from the pessimistic
time and di(iding the result &y C$ %he calculation for this e#ample looks as follo's: (L2 \ :E! V
C S :
1@. @ %here is a NK percent pro&a&ility that the 'ork 'ill finish 'ithin plus or minus t'o standard
de(iations$ %he e#pected (alue is K00* and the standard de(iation times 2 is 2:* so the acti(ity
'ill take &et'een :LC and K2: days$
11. A 8 CE percent pro&a&ility is calculated using plus or minus one standard de(iation* a NK
percent pro&a&ility uses plus or minus t'o standard de(iations* and a NN percent pro&a&ility
uses plus or minus three standard de(iations$
13. 8 Crashing the schedule includes things like adding resources to the critical path tasks or
limiting project re7uirements$
14. A .ast tracking is starting t'o tasks at the same time that 'ere pre(iously scheduled to start
one after the other$
17. C Fesource le(eling heuristics attempt to smooth out resource assignments &y splitting
tasks* assigning underBallocated team mem&ers to more tasks* or delaying the start of tasks
to match team mem&ers" a(aila&ility$
18. 8 Project management soft'are is a (ery useful tool for the project manager* and it
automates project scheduling allo'ing for 'hatBif analysis and easy changes$ Aut if you focus
too much on the tool and ignore the project* the tool &ecomes a hindrance$
19. 8 0takeholders ordinarily 'ill not ha(e much say in the project Planning methodology used
&y the project manager$ %he methodology employed is usually determined &y either the
organi-ation* the project office* or the project manager$
1;. @ Cost Audgeting"s tools and techni7ues are the same tools and techni7ues of the Cost
/stimating process: analogous estimating* parametric modeling* &ottomBup estimating* and
computeri-ed tools$
1>. A .uture period operating costs are considered ongoing costs and are not part of project
costs$
1?. A %he cost &aseline is displayed as an 0Bcur(e &ecause of the 'ay project spending occurs$
0pending &egins slo'ly* picks up speed until the spending peak is reached* and then tapers
off as the project 'inds do'n$
3@. C %he project plan might &e one document or a collection of documents organi-ed in a
logical format$
Chapter E: Developing the Project &eam
P$P (6am %ontent !rom the Project (6ecution Per!ormance Domain %overe in &his
%hapter:
1$ Commit Fesources$
2$ Implement Fesources$
J$ Manage Progress$
:$ Communicate Progress$
Overview
%his chapter &egins the project /#ecuting process group$ +e"ll co(er three processes in the
project /#ecuting group including Project Plan /#ecution* %eam @e(elopment* and Information
@istri&ution$ ,ou"ll get a reprie(e in this chapter as there is only one math e7uation you need to
memori-e$
Project Plan /#ecution is the action process so to speak$ %his is 'here you"ll put the plans into
action and &egin 'orking on the project acti(ities$ /#ecution also in(ol(es keeping the project in
line 'ith the original project plan and &ringing 'ay'ard acti(ities &ack into alignment$
0e(eral things happen during the /#ecuting processes$ %he majority of the project &udget 'ill &e
spent during this process* and often the majority of the project time is e#pended here as 'ell$ %he
greatest conflicts you"ll see during the project /#ecuting process are schedule conflicts$ 8nd* the
product description 'ill &e finali-ed here and contain more detail than it did in the Planning
process$
Project Plan /#ecution is the only core process in the /#ecuting process group$ 8ll the other
processes 'e"ll discuss are facilitating processes to Project Plan /#ecution$ In other 'ords* the
facilitating processes assist you 'ith e#ecuting the project plan$
+e"ll start out this chapter 'ith the Project Plan /#ecution process and then discuss %eam
@e(elopment and communication processes$ %here are se(eral e#am 7uestions on e(ery
process 'ithin the /#ecuting process group$ ,ou"ll find the majority of 7uestions regard the
Project Plan /#ecution process* the %eam @e(elopment process* and the Contract 8dministration
process* 'hich 'e"ll talk a&out in the ne#t chapter$ @on"t skip studying the other processes*
ho'e(er* as roughly a 7uarter of the e#am 7uestions concern the entire /#ecuting process$ 8re
you ready to di(e into /#ecuting9 Det"s go$
(6ecuting the Project Plan
%he purpose of the Project Plan 7+ecution process is to carry out the project plan$ %his is 'here
your project comes to life and the 'ork of the project happens$ 8cti(ities are clarified* and the
'ork is authori-ed to &egin$ Fesources are committed and assigned to acti(ities* and the product
or ser(ice of the project is created$ =ne of the most difficult aspects of this process is
coordinating and integrating all the elements of the project$ %he largest portion of the project
&udget 'ill &e spent in Project Plan /#ecution$
(6ecuting Inputs
Project Plan /#ecution has fi(e inputs: project plan* supporting detail* organi-ational policies*
pre(enti(e action* and correcti(e action$ +e co(ered supporting detail earlier in this &ook* 'hich
included constraints and assumptions$ %here are a fe' ne' things to add to organi-ational
policies* so 'e"ll look at that one again along 'ith the others$
Project Plan
%he project plan is the output of the Planning process group* specifically the Project Plan
@e(elopment process$ %he important thing to note here is that all the management plans 'e
discussed during the Planning process?such as the scope management plan* the schedule
management plan* the resource management plan* and so on* plus the cost &udgeting &aseline
and the schedule &aseline?are used throughout the /#ecuting process to manage the project
and keep the performance of the project on track 'ith the project o&jecti(es$ If you don"t ha(e a
project plan* you"ll ha(e no 'ay of managing the process$ ,ou"ll find that e(en 'ith a plan* project
scope has a 'ay of changing$ 0takeholders and others tend to sneak in a fe' of the 4oh* I didn"t
understand that &efore5 statements and hope that they slide right &y you$ +ith that signed*
appro(ed plan in your files* you are allo'ed to gently remind them that they read and agreed to
the project plan and you"re sticking to it$ %hey can re7uest a formal change* &ut that"s another
topic* 'hich 'e"ll get to shortly$
Organi,ational Policies
It"s important for the project manager to understand organi-ational policies as they may impact
Project Plan /#ecution$ .or e#ample* the organi-ation may ha(e purchasing appro(al processes
that must &e follo'ed$ Perhaps orders for goods or ser(ices that e#ceed certain dollar amounts
need different le(els of appro(al$ 8s the project manager* you need to &e a'are of policies like
this so you"re certain you can e#ecute the project smoothly$ It"s (ery frustrating to find out after the
fact that you should ha(e follo'ed a certain process or policy* and no' &ecause you didn"t*
you"(e got schedule delays or 'orse$ ,ou could consider using the 4sin no'* ask forgi(eness
later5 techni7ue in e#treme emergencies* &ut you didn"t hear that from me$ Ay the 'ay* that"s not
an authori-ed PMI techni7ue$
%he project manager and the project team 'ill &e responsi&le for coordinating all the
organi-ational interfaces for the project including technical* human resource* purchasing* finance*
and so on$ It 'ill ser(e you 'ell to understand the policies and politics in(ol(ed in each of these
areas in your organi-ation$
Preventive 1ction
Pre(enti(e action in(ol(es anything that 'ill reduce the potential impacts of risk e(ents should
they occur$ Contingency plans and risk responses are e#amples of pre(enti(e action$ %hese and
other risk responses 'ere descri&ed in the Fisk Fesponse Planning process in Chapter C$
%orrective 1ction
In my organi-ation* a correcti(e action means an employee has &ig trou&le coming$ .ortunately*
this isn"t 'hat"s meant here$ Correcti(e actions are taken to get the anticipated future project
outcomes to align 'ith the project plan$ May&e you"(e disco(ered one of your programmers is
adding an unplanned feature to the soft'are project &ecause he"s friends 'ith the user$ ,ou"ll
ha(e to redirect him to the acti(ities assigned him originally to a(oid schedule delays$
Correcti(e actions are outputs of processes in the Controlling process group &ut ser(e as inputs
to the Project Plan /#ecution process$ .or the e#am* remem&er that the /#ecuting and
Controlling process results are inputs to each other$
+e"ll co(er correcti(e action again in the chapters that discuss the Controlling process$
$eetings an $ore
8s 'ith the Project Plan @e(elopment process* almost e(erything 'e"(e done to date is utili-ed
&y the Project Plan /#ecution process$ %he primary output here is 'ork results* meaning actually
producing the product or ser(ice 'e set out to produce$ +ithout ha(ing completed the prior
processes* 'e 'ouldn"t kno' 'hat the 'ork of the project should look like$ 0e(eral tools and
techni7ues are used to facilitate the 'ork results$ +e"ll look at all of them* 'ith the e#ception of
project management information system* 'hich 'e"(e co(ered pre(iously$
)eneral $anagement '#ills
+e co(ered some general management skills in an earlier chapter$ +hat"s important to note here
is that leadership* negotiation* and communications skills are especially useful during Project
Plan /#ecution$ ,ou might recall that leadership is a&out imparting (ision and rallying people
around that (ision$ Deaders moti(ate and inspire and are concerned 'ith strategic (ision$ Deaders
understand the difference &et'een po'er and politics$ Po'er is the a&ility to get people to do
'hat they 'ouldn"t do ordinarily* or the a&ility to influence &eha(ior$ Politics impart pressure to
conform regardless of 'hether the person agrees 'ith the decision$
=ne other thing to consider in this category is that you"re going to monitor other departments that
ha(e assignments on the project and manage their progress$ 8gain this implies that you"ll need
general kno'ledge management skills to understand 'hat the assignments entail and strong
leadership skills to influence the departments to stay on schedule$
Prouct '#ills an <nowlege
%he Fesource Planning process defined the skills that are re7uired of project team mem&ers* and
the 0taff 8c7uisition process pro(ided the resources for the project$ Product skills and kno'ledge
are also needed &y the project team mem&ers to understand the product or ser(ice of the project$
If your project is constructing a mass spectrometer and no one on your team kno's 'hat a mass
spectrometer looks like* you"(e got a pro&lem$ )ey team mem&ers should ha(e kno'ledge* skills*
and e#perience 'ith the products of the project$
Wor# 1uthori,ation '"stem
+ork authori-ation systems clarify and initiate the 'ork of each 'ork package$ %his is a formal
procedure that authori-es 'ork to &egin in the correct se7uence and at the right time$ +ork
authori-ation systems are usually 'ritten procedures defined &y the organi-ation$ %hey might
include eBmail\&ased or paperB&ased systems or e(en (er&al instructions* 'hich 'ork 'ell 'ith
smaller projects$ >sually* 'ork is authori-ed using a form that descri&es the task* the responsi&le
party* anticipated start and end dates* special instructions* and 'hate(er else is particular to the
acti(ity or project$ @epending on the organi-ational structure* the 'ork is assigned and authori-ed
&y either the project manager or the functional manager$
'tatus 0eview $eetings
0tatus re(ie' meetings are important functions of Project Plan /#ecution$ 0tatus meetings are a
'ay to formally e#change project information$ %hey can occur &et'een the project team and
project manager* the project manager and stakeholders* the project manager and users or
customers* the project manager and the management team* and so on$
%he purpose of the status meeting is to pro(ide updated information regarding the progress of the
project$ %hese are not sho'BandBtell meetings$ If you ha(e a prototype to demo* set up a different
time to do that$ 0tatus meetings are meant to e#change information and pro(ide project updates$
Fegular* timely status meetings pre(ent surprises do'n the road$ %hey alert the project manager
to potential risk e(ents and pro(ide the opportunity to disco(er and manage pro&lems &efore they
get to the uncontrolla&le stage$
%he project manager is usually the e#pediter of the status meeting$ 8s such* it"s your jo& to use
status meetings 'isely$ @on"t 'aste your team"s time or stakeholders" time either$ Gotify
attendees in 'riting of the meeting time and place$ Pu&lish an agenda prior to the meeting and
stick to the agenda during the meeting$ /(ery so often* summari-e 'hat"s &een discussed during
the meeting$ @on"t let side discussions lead you do'n ra&&it trails* and keep irrele(ant
con(ersations to a minimum$ It"s also good to pu&lish status meeting notes at the conclusion of
the meeting* especially if any action items resulted from the meeting$ %his 'ill gi(e you a
document trail and ser(es as a reminder to the meeting participants of 'hat actions need to &e
resol(ed and 'ho is responsi&le for the action item$
It"s important that project team mem&ers are honest 'ith the project manager and that the project
manager is in turn honest a&out 'hat they report$ 8 fe' years ago* a department in my agency
took on a project of gargantuan proportions and unfortunately didn"t employ good project
management techni7ues$ =ne of the &iggest pro&lems 'ith this project 'as that the project
manager did not listen to the highly skilled project team mem&ers$ %he team mem&ers 'arned of
pro&lems and set&acks* &ut the project manager didn"t 'ant to hear of it$ %he project manager
took their reports to &e of the 4Chicken Dittle5 ilk and refused to &elie(e the sky 'as falling$
>nfortunately* the sky was falling2 %he project manager* &ecause they didn"t &elie(e it* refused to
report the true status of the project to the stakeholders and o(ersight committees$ Millions of
dollars 'ere 'asted on a project that 'as doomed for failure* 'hile the project manager
continued to report that the project 'as on time and acti(ities 'ere completed 'hen in fact they
'ere not$
%here are hundreds of project stories like this* and I"ll &et you"(e got one or t'o from your
e#perience as 'ell$ @on"t let your project &ecome the ne#t &ad e#ample$ 8&o(e all* &e honest in
your reporting$ Go one likes &ad ne's* &ut &ad ne's deli(ered too late along 'ith millions of
dollars 'asted is a guaranteed career sho'stopper$
Organi,ational Proceures
%his is (ery similar to organi-ational policies* e#cept organi-ational policies are an input* and
organi-ational procedures are a tool and techni7ue of this process$
%he project manager should take organi-ational procedures into consideration 'hen doing the
'ork of the project$ May&e your finance department re7uires special re7uisitions for certain
purchases* or your human resources department might re7uire formal procedures for fullBtime as
'ell as contract personnel$ Ae a'are of policies like this ahead of time so that they don"t interfere
'ith the project /#ecuting process$
0esulting Outputs
+e"(e already touched on the outputs of this process$ =&(iously* the product or ser(ice of the
project is our end result$ %he Guide to the PMBOK calls this 'ork results$ %he second output 'e"ll
look at is change re7uests$
Wor# 0esults
@uring Project Plan /#ecution* you"ll gather and record information regarding the acti(ity
completion dates* milestone completions* the status of the deli(era&les* the 7uality of the
deli(era&les* costs* schedule progress and updates* and so on$ 8ll of this information gets used
during the Performance Feporting process* 'hich 'e"ll discuss during the Controlling process$
Project /#ecuting and Controlling are t'o processes that 'ork hand in hand$ 8s you gather the
information from 'ork results* you"ll measure the outputs and take correcti(e actions 'here
necessary$ %his means you"ll loop &ack through the /#ecuting process to put the corrections into
place$ %he Guide to the PMBOK &reaks these processes up for ease of e#planation* &ut in
practice* you"ll 'ork through se(eral of the /#ecuting and Controlling processes together$
%hange 0equests
8s a result of 'orking through acti(ities and producing your product or ser(ice* you 'ill ine(ita&ly
come upon things that need to &e changed$ %his might encompass schedule changes* scope
changes* or re7uirements or resource changes$ %he list really could go on$ ,our jo& as project
manager* if you choose to accept it ('asn"t that a mo(ie theme9!* is to collect the change
re7uests and make determinations on their impact to the project$ +e"ll discuss change re7uests
in the coming chapters$ Change re7uests are an output of this process and an output of the
Performance Feporting process in the Controlling process group$ Femem&er that /#ecuting and
Controlling outputs feed each other as inputs$
Project Plan /#ecution is the primary process* and the only core process* in the /#ecuting
process group$ %he 'ork of the project is performed here* and the project plan is put into action
and carried out$ %his process is 'here the project manager is like an orchestra conductor
signaling the instruments to &egin their acti(ities* monitoring 'hat should &e 'inding do'n* and
keeping that smile going to remind e(eryone that they should &e enjoying themsel(es$ I
recommend that you kno' the tools and techni7ues and the outputs of this process for the e#am$
Developing the Project &eam
Projects e#ist to create a uni7ue product or ser(ice 'ithin a limited time frame$ Projects are
performed &y people* and most projects re7uire more than one person to perform all of the
acti(ities$ If you"(e got more than one person 'orking on your project* you"(e got a team$ 8nd if
you"(e got a team* you"(e got a 'ide assortment of personalities* skills* needs* and issues in the
mi#$ Couple this 'ith partBtime team mem&ers* teams &ased in functional organi-ations 'hose
loyalty lies 'ith the functional manager* or teams &ased in matri# organi-ations that report to t'o
different managers and you could ha(e some real challenges on your hands$ 1ood luck$ =kay* I
'on"t lea(e you hanging like that$
-eam )e#elopment according to the Guide to the PMBOK* is a&out creating an open*
encouraging en(ironment for stakeholders to contri&ute as 'ell as de(eloping your team into an
effecti(e* functioning* coordinated group$ Projects are performed &y indi(iduals* and the &etter
they 'ork together* the smoother and the more efficient the e#ecution of the project 'ill &e$
%eam @e(elopment inputs include project staff* project plan* staffing management plan*
performance reports* and e#ternal feed&ack$ 8ll of the inputs ha(e &een discussed else'here
'ith the e#ception of e#ternal feed&ack$ /#ternal feed&ack* as it implies* is information relayed to
the project team from those outside of the project team regarding performance e#pectations$ %his
feed&ack might come from stakeholders* the management team* users* customers* etc$
%he tools and techni7ues of %eam @e(elopment include teamB&uilding acti(ities* general
management skills* re'ard and recognition systems* collocation* and training$ +e"ll co(er these
topics ne#t$ 8s I said earlier* there are a lot of e#am 7uestions regarding team &uilding* so dig out
all your fa(orite memori-ation techni7ues and put them to use$
Implementing &eam +uiling
Many times* project teams are made up of folks 'ho don"t kno' each other$ %hey aren"t
necessarily a'are of the project o&jecti(es and may not e(en 'ant to &e a part of the team$ %he
project manager may not ha(e 'orked 'ith the people assigned to the project team &efore either$
0ound like a recipe for disaster9 It"s not$ %housands of projects are started 'ith team mem&ers
and project managers 'ho don"t kno' each other and come to a successful completion$ 6o' is
that done9 It"s a result of the project manager"s teamB&uilding and communication skills$
%he project manager"s jo& is to &ring the team together* get them all headed in the right direction*
and pro(ide moti(ation* re'ard* and recognition to keep the team in tipBtop shape$ %his is done
using a (ariety of teamB&uilding techni7ues and e#ercises$ %eam &uilding is simply getting a
di(erse group of people to 'ork together in the most efficient and effecti(e manner possi&le$
%here are entire (olumes on this su&ject* and it"s &eyond the scope of this &ook to go into all the
teamB&uilding possi&ilities$ %he e#am tends to focus more on the theories &ehind team &uilding*
so that"s 'hat 'e"ll spend our time looking at$
8ll ne'ly formed teams go through four stages of de(elopment: forming* storming* norming* and
performing$ ,ou"(e pro&a&ly seen this else'here* &ut since these stages are on the e#am* you"ll
'ant to memori-e them$ Det"s take a &rief look at each of them$
Forming
%his one"s easy$ It"s the &eginning stage of team formation 'hen all the mem&ers are &rought
together* introduced* and told the o&jecti(es of the project$ %his is 'here team mem&ers learn
'hy they"re 'orking together$ @uring this stage* team mem&ers tend to &e formal and reser(ed
and take on an 4all &usiness5 approach$
'torming
%his stage is 'here the action &egins$ %eam mem&ers &ecome confrontational 'ith each other as
they"re (ying for position and control during this stage$ %hey"re 'orking through 'ho is going to
&e the top dog and jockeying for status$
Norming
Go' things &egin to calm do'n$ %eam mem&ers kno' each other fairly 'ell &y no'I they"re
comforta&le 'ith their position in the team and &egin to deal 'ith project pro&lems instead of
people pro&lems$ In this stage* they confront the project concerns and pro&lems instead of each
other$ @ecisions are made jointly at this stage* and team mem&ers e#hi&it affection and familiarity
'ith one another$
Per!orming
8hh* perfection$ +ell* almost* any'ay$ %his is 'here great teams end up$ %his stage is 'here the
team is producti(e and effecti(e$ %he le(el of trust among team mem&ers is high* and great things
are achie(ed$ %his is the mature de(elopment stage$
@ifferent teams progress through these stages at different rates$ +hen you ha(e to &ring ne'
team mem&ers on &oard for 'hate(er reason* the teamBforming stages start all o(er again$ It
doesn"t matter 'here the team is in the forming process?a ne' mem&er 'ill start the cycle o(er
again$
0eal Worl 'cenario5$icroA0o-otics 0esearch an Development
MicroBFo&otics is 'orking on a prototype microscopic ro&ot that"s inserted into inopera&le &rain
tumors$ %he ro&ot is controlled using a remote control joystick de(ice that allo's a trained &rain
surgeon to e#cise the &rain tumor$ ,ou are the project manager for this project and ha(e recently
assem&led your team$
,ou"(e got a di(erse group of highly skilled team mem&ers including medical doctors* medical
researchers* computer programmers* and &ioBmechanical engineers$
,ou"(e held a fe' project meetings and ha(e called the ne#t one to order$ %he agenda has &een
read* and you"re discussing the progress of one of the computer programs that controls the ro&ot$
4I did hear 'hat you said* 8miel*5 Goelle the &rain surgeon says$ 48nd it 'on"t 'ork like that$5
8miel is the lead computer programmer on the project$ 4Aut 'hen 'e met last 'eek* you said;5
Goelle interrupts* 46o' many &rain surgeries ha(e you performed9 .i# it or I"m off this team$5
,ou tell e(eryone to take fi(e$ It occurs to you that this really isn"t unusual &eha(ior$ 6ighly skilled
e#perts are sometimes difficult to manage* &ut all teams go through certain stages prior to hitting
the peak performance stage$ ,ou reali-e this team is in the storming stage and 'ill &enefit from
some teamB&uilding e#ercises$ 8 fe' offBsite teamB&uilding acti(ities is just 'hat the doctor
ordered$
&eam Focus
@id you e(er 'atch any of those old pirate mo(ies on lateBnight %39 Femem&er the scenes
'here the captain 'ent do'n into the &o'els of the ship to check on the teams of ro'ers9
Imagine your project team mem&ers are like those ro'ing teams$ If the mem&ers on the left are
ro'ing one 'ay and the mem&ers on the right are ro'ing another* you"re creating a lot of energy
and looking (ery &usy* &ut in the end you aren"t making any progress$ 8ll the team mem&ers need
to understand the direction you"re headed and 'ork to'ard that end$
It"s paramount that the team mem&ers kno' and understand the o&jecti(es of the project$ 8fter
all* that"s the reason they"(e &een &rought together in the first place$ )eep in mind that people
see and hear things from their o'n perspecti(e$ 8 room full of people attending a speech 'ill all
come a'ay 'ith something a little different &ecause 'hat 'as said speaks to their particular
situation in life at the time$ In other 'ords* their o'n perceptions filter 'hat they hear$ It"s your jo&
as project manager to make certain the team mem&ers understand the o&jecti(es and their
assignments correctly$ 8sk them to tell you in their o'n 'ords 'hat they &elie(e the project
o&jecti(es to &e$ %his is a great 'ay to kno' if you"(e got e(eryone on &oard$
(!!ective &eam %haracteristics
/ffecti(e teams are typically (ery energetic teams$ %heir enthusiasm is contagious* and it feeds
on itself$ %hey generate a lot of creati(ity and &ecome good pro&lem sol(ers$ %eams like this are
e(ery project manager"s dream$ In(esting yourself in team &uilding as 'ell as relationship
&uilding* especially 'hen you don"t think you ha(e the time to do so* 'ill &ring many &enefits$
6ere"s a sample of the &enefits:
Aetter conflict resolution
Commitment to the project
Commitment to the project team mem&ers and project manager
6igh jo& satisfaction
/nhanced communication
8 sense of &elonging and purpose
@ysfunctional teams 'ill typically produce the opposite results of the &enefits 'e just listed$
@ysfunctional teams don"t just happen &y themsel(es any more than great teams do$ 0ure*
sometimes you"re lucky enough to get the right com&ination of folks together right off the &at$ Aut
usually* team &uilding takes 'ork and dedication on the part of the project manager$ /(en in the
situations 'here you do get that dynamite com&ination of people* they 'ill &enefit from teamB
&uilding e#ercises and feed&ack$
>nfortunately* sour attitudes are just as contagious as enthusiasm$ +atch for these symptoms
among your team mem&ers and take action to correct the situation &efore the entire team is
affected:
Dack of moti(ation or 4don"t care5 attitudes
Project 'ork that isn"t satisfying
0tatus meetings that turn into 'hining sessions
Poor communication
Dack of respect and lack of trust for the project manager
)eep in mind that no amount of team &uilding 'ill make up for poor project planning or ineffecti(e
project management techni7ues$ Geglecting these things and thinking that your project team is
good enough to make up for the poor planning or poor techni7ues could spell doom for your
project$ 8nd &esides that* it"s not fair to your project team to put them in that position$
%ollocation
%eam mem&ers are often located in the same physical location?for e#ample* the same office
&uilding or office comple#$ %his is called collocation$ Collocation ena&les teams to function more
effecti(ely than if they"re spread out among different localities$ Many times on large projects* the
project manager 'ill make pro(isions in the project &udget to &ring the team together at the same
site$ It"s difficult* &ut not impossi&le* to manage project team mem&ers 'ho are not physically
located together$ =ne 'ay to achie(e collocation might &e to set aside a common meeting room*
sometimes called a 'ar room* for team mem&ers 'ho are located in different &uildings or across
to'n to meet and e#change information$
&raining
%raining is a matter of assessing your team"s skills and a&ilities* plus the project needs* and
pro(iding the training necessary for the team mem&ers to carry out their assigned acti(ities$
%raining can sometimes &e a re'ard as 'ell$ In the soft'are industry* programmers seek out
positions that offer training on the latest and greatest technologies* and they consider it a &enefit
or &onus to attend training on the company dollar and time$
$otivating the &eam
%eam &uilding starts 'ith project planning and doesn"t stop until the project is completed$ It
in(ol(es employing techni7ues to impro(e your team"s performance and keeping team mem&ers
moti(ated$ Moti(ation helps people 'ork more efficiently and produce &etter results$ If clear
e#pectations* clear procedures* and the right moti(ational tools are used* project teams 'ill e#cel$
Moti(ation can &e e#trinsic or intrinsic$ /#trinsic moti(ators are material things and might include
&onuses* the use of a company car* stock options* gift certificates* training opportunities* and so
on$
Intrinsic moti(ators are specific to the indi(idual$ 0ome people are just naturally dri(en to achie(e
?it"s part of their nature$ Cultural and religious influences are forms of intrinsic moti(ators as 'ell$
Fe'ard and recognition* 'hich 'e"ll look at ne#t* are e#amples of e#trinsic moti(ators$
0ewar an 0ecognition
Fe'ard and recognition systems are an important part of team interaction$ %hese are formal
'ays of recogni-ing and promoting desira&le &eha(ior$ Fe'ard and recognition should occur in
proportion to the achie(ement$ In other 'ords* appropriately link the re'ard to the performance$
%eam mem&ers should &e re'arded for going a&o(e and &eyond the call of duty$ Perhaps they
put in a significant amount of o(ertime to meet a project goal or spent nights roundBtheBclock
&a&ysitting illBperforming e7uipment$ %hese types of &eha(iors should get re'arded and formally
recogni-ed &y the project manager and the management team$ =n the other hand* if the illB
performing e7uipment 'as a direct result of mistakes made or if it happened &ecause of poor
planning* re'ards 'ould not &e appropriate in this case* o&(iously$
Fe'ards should &e linked to performance$ 8 project manager 'ho has responsi&ility for the
project &udget and the procurement process and keeps the costs in line 'ith the &udget should
get re'arded for this achie(ement$ If these functions are assigned to a functional manager in the
organi-ation* it 'ouldn"t &e appropriate to re'ard the project manager as they 'ere not the one
responsi&le for keeping the costs in line$
Consider indi(idual preferences and cultural differences as 'ell 'hen using re'ards and
recognitions$ 0ome people don"t like to &e recogni-ed in front of a groupI others thri(e on it$
0ome people appreciate an honest thankByou 'ith minimal fanfare* and others just 'on"t accept
indi(idual re'ards as their culture doesn"t allo' it$ )eep this in mind 'hen de(ising your re'ard
system$
0eal Wor 'cenario5+a#ers )i!t +as#ets
,ou"re a contract project manager for Aakers 1ift Aaskets$ %his company assem&les gift &askets
of all styles and shapes 'ith e(ery edi&le treat imagina&le$ %he company has recently
e#perienced e#plosi(e gro'th* and you"(e &een &rought on &oard to manage their ne' project$
%hey 'ant to offer 4pick your o'n5 &askets that allo' customers to pick the indi(idual items they
'ant included in the &asket$ 8nd* they"re introducing a ne' line of containers to choose from*
including things like miniature golf &ags* flo'erpots* ser(ing &o'ls* and the like$ %his means
changes to the catalog and the 'e&site to accommodate the ne' offerings$
%he deadline for this project is the dri(ing constraint$ %he 'e& changes 'on"t cause any pro&lems
'ith the deadline$ 6o'e(er* the catalog must go to press 7uickly to meet holiday mailing
deadlines* 'hich in turn are dri(ing the project deadline$
,our team put their heads together and came up 'ith an ingenious plan to meet the catalog
deadline$ It re7uired lots of o(ertime and some 'eekend 'ork on their part to pull it off* &ut they
met the date$
,ou decide this is a perfect opportunity to recogni-e and re'ard the team for their outstanding
efforts$ ,ou"(e arranged a slot on the agenda at the ne#t allBcompany meeting to &ring your team
up front and praise them for their cooperation and efforts to get the catalog to the printers on time$
,ou"ll also present each of them 'ith 2 days of paid time off and a gift certificate for a dinner 'ith
their family at an e#clusi(e restaurant in the city$
$otivational &heories
%here are many theories on moti(ation$ ,ou 'ill encounter 7uestions on these theories on the
e#am* so kno' their names and their primary points$
Moti(ational theories came a&out during the modern age$ Prior to today"s information and ser(ice
type jo&s and yesterday"s factory 'ork* the majority of people 'orked the land and &arely kept
enough food on the ta&le to feed their family$ Go one 'as concerned a&out moti(ation at 'ork$
,ou 'orked &ecause you 'ould star(e to death if you didn"t$ .ortunately* that isn"t the case today$
%oday 'e ha(e a ne' set of pro&lems in the 'orkplace$ +orkers in the >$0$ today aren"t
concerned 'ith star(ation?that need has &een replaced 'ith other needs like jo& satisfaction* a
sense of &elonging and commitment to the project* good 'orking conditions* and so on$
Moti(ational theories present ideas on 'hy people act the 'ay they do* and ho' 'e can influence
them to act in certain 'ays to get the results 'e 'ant$ 8gain* there are li&raries full of &ooks on
this topic$ +e"ll co(er four of them here$
$aslow*s /ierarch" o! Nees
,ou ha(e pro&a&ly seen this classic e#ample of moti(ational theory$ 8&raham Maslo'
hypothesi-ed that humans ha(e fi(e &asic needs arranged in hierarchical order$ %he first of those
needs are physical needs like the need for food* clothing* and shelter$ %he idea is these needs
must &e met &efore the person can mo(e to the ne#t le(el in the hierarchy* 'hich is safety and
security needs$ 6ere the concern is for the person"s physical 'elfare and the security of their
&elongings$ =nce that need is met* they progress to the ne#t le(el* and so on$ %he theory
suggests that once a lo'er le(el need has &een met* it no longer ser(es as a moti(ator and the
ne#t higher le(el &ecomes the dri(ing moti(ator in a person"s life$ Maslo' conjectures that
humans are al'ays in one state of need or another$ 6ere is a recap of each of the needs starting
'ith the highest le(el and 'orking do'n$
'el!Aactuali,ation Performing at your peak potential
'el!Aesteem nees 8ccomplishment* respect for self* capa&ility
'ocial nees 8 sense of &elonging* lo(e* acceptance* friendship
'a!et" an securit" nees ,our physical 'elfare and your &elongings
+asic ph"sical nees .ood* clothing* shelter
%he highest le(el of moti(ation in this theory is the state of selfBactuali-ation$ %he >nited 0tates
8rmy had a slogan a fe' years ago that I think encapsulates selfBactuali-ation (ery 'ellI it 'ent
something like this: 4Ae all you can &e$5 +hen all the physical* safety* social* and selfBesteem
needs ha(e &een met* a person reaches a state of independence 'here they"re a&le to e#press
themsel(es and perform at their peak$ %hey"ll do good 'ork just for the sake of doing good 'ork$
Fecognition and selfBesteem ha(e already &een fulfilled at lo'er le(elsI no' the need for &eing
the &est they can &e is reached$
/"giene &heor"
.redrick 6er-&erg came up 'ith the 6ygiene theory* also kno'n as the Moti(ationB6ygiene
theory$ 6e postulates that there are t'o factors that contri&ute to moti(ation: hygiene factors and
moti(ators$ 6ygiene factors deal 'ith 'ork en(ironment issues$ %he thing to remem&er a&out
hygiene factors is that they pre(ent dissatisfaction$ /#amples of hygiene factors are pay* &enefits*
the conditions of the 'ork en(ironment* and relationships 'ith peers and managers$ Pay is
considered a hygiene factor as 6er-&erg &elie(ed that o(er the long term* pay is not a moti(ator$
In other 'ords* &eing paid for the 'ork done pre(ents dissatisfaction &ut doesn"t necessarily &ring
satisfaction in and of itself$ 6e &elie(ed this to &e true as long as the pay system is e7uita&le$ If
t'o 'orkers performing the same functions ha(e large disparities in pay* then pay can &ecome a
moti(ator$
Moti(ators deal 'ith the su&stance of the 'ork itself and the satisfaction one deri(es from
performing the functions of the jo&$ Moti(ators lead to satisfaction$ %he a&ility to ad(ance* the
opportunity to learn ne' things* and the challenges in(ol(ed in the 'ork are all moti(ators
according to 6er-&erg$
.or the e#am* remem&er that 6er-&erg 'as the in(entor of the 6ygiene theory and that this
theory claims that hygiene factors pre(ent dissatisfaction 'hile moti(ators lead to satisfaction$
(6pectanc" &heor"
%he /#pectancy theory says that the e#pectation of a positi(e outcome dri(es moti(ation$ People
'ill &eha(e in certain 'ays if they think there 'ill &e good re'ards for doing so$ 8lso note that this
theory says the strength of the e#pectancy dri(es the &eha(ior$ In other 'ords* the e#pectation or
likelihood of the re'ard is linked to the &eha(ior$ .or e#ample* if you tell your 2ByearBold to put the
toys &ack in the toy &o# and you"ll gi(e her a cookie* chances are she"ll put the toys a'ay$ %his is
a reasona&le re'ard for a reasona&le action$ 6o'e(er* if you promise your project team
mem&ers (acations in 6a'aii if they get the project done early and they kno' there is no 'ay you
can deli(er that re'ard* there is little moti(ation to 'ork to'ard that re'ard$
%his theory also says that people &ecome 'hat you e#pect of them$ If you openly praise your
project team mem&ers and treat them like (alua&le contri&utors* you"ll likely ha(e a highB
performing team on your hands$ Con(ersely* 'hen you pu&licly critici-e people or let them kno'
that you ha(e lo' e#pectations regarding their performance* they"ll likely li(e up (or do'n as the
case may &e! to that e#pectation as 'ell$
1chievement &heor"
8chie(ement theory says that people are moti(ated &y the need for three things: achie(ement*
po'er* and affiliation$ %he achie(ement moti(ation is o&(iously the need to achie(e or succeed$
%he po'er moti(ation in(ol(es a desire for influencing the &eha(ior of others$ 8nd the need for
affiliation is relationship oriented$ +orkers 'ant to ha(e friendships 'ith their coB'orkers and a
sense of camaraderie 'ith their fello' team mem&ers$ %he strength of your team mem&ers"
desire for each of these 'ill dri(e their performance on (arious acti(ities$
+e"ll co(er t'o more theories in the leadership section* 'hich is ne#t$ %hese deal specifically 'ith
ho' leaders deal 'ith their project team mem&ers$
)etting to .eaership vs. $anagement
Deaders ha(e a knack for getting others to do 'hat needs done and rallying them around a (ision$
1ood leaders ha(e committed team mem&ers 'ho &elie(e in the (ision of the leader$ Deaders set
direction and time frames* and ha(e the a&ility to attract good talent to 'ork for them$
+e talked a&out leaders (ersus managers &ack in Chapter 1$ Deaders inspire a (ision and get
things done through others &y garnering loyalty* respect* and cooperation from team mem&ers$
%hey set the course and lead the 'ay$ Deaders are usually concerned a&out the &ig picture* so to
speak$ 1ood leaders are directi(e in their approach* &ut allo' for plenty of feed&ack and input$
1ood leaders commonly ha(e strong interpersonal skills and are 'ell respected$
Managers are generally task oriented* concerned 'ith things like plans* controls* &udgets*
policies* and procedures$ %hey"re generalists 'ith a &road &ase of planning and organi-ational
skills* and their primary goal is satisfying stakeholder needs$ %hey also posses moti(ational skills
and the a&ility to recogni-e and re'ard &eha(ior$
Project managers need to use the traits of &oth leaders and managers at different times during
the project$ =n (ery large projects* a project manager 'ill act more like a leader inspiring the
su&project managers to get on &oard 'ith the o&jecti(es$ =n small projects* project managers 'ill
act more like managers as they"re responsi&le for all the planning and coordinating functions$
%here are t'o theories that 'e"ll discuss regarding leadership$ %hey are Mc1regor"s %heory of Q
and , and the Contingency theory$ %hen 'e"ll end this section 'ith a discussion of the types of
po'er leaders use and the outputs of %eam @e(elopment$
&heor" K an &heor" C
%heory Q and %heory , attempt to e#plain ho' different managers deal 'ith their team mem&ers$
%heory Q managers &elie(e most people do not like 'ork and 'ill try to steer clear of itI they ha(e
little to no am&ition* need constant super(ision* and 'on"t actually perform the duties of their jo&
unless threatened$
8s a result* %heory Q managers are like dictators and impose (ery rigid controls o(er their people$
%hey &elie(e people are moti(ated only &y punishment* money* or position$ >nfortunately for
them* %heory Q managers unkno'ingly also su&scri&e to the /#pectancy theory$ If they e#pect
people to &e la-y and unproducti(e and treat them as such* their team mem&ers pro&a&ly 'ill &e
la-y and unproducti(e$
%heory , managers &elie(e people are interested in performing their &est gi(en the right
moti(ation and proper e#pectations$ %hese managers pro(ide support to their teams* are
concerned a&out their team mem&ers* and are good listeners$ %heory , managers &elie(e people
are creati(e and committed to the project goals* that they like responsi&ility and seek it out* and
that they are a&le to perform the functions of their positions 'ith limited super(ision$
%ontingenc" &heor"
%his theory &uilds on a com&ination of %heory , and the 6ygiene theory$ %he Contingency theory*
in a nutshell* says that people are moti(ated to achie(e le(els of competency and 'ill continue to
&e moti(ated &y this need e(en after competency is reached$
&he Power o! .eaers
Po'er is the a&ility to influence others to do 'hat you 'ant them to do$ %his can &e used in a
positi(e manner or a negati(e one$ Aut that old saying of your grandmother a&out attracting more
flies 'ith honey than (inegar still holds true today$
Deaders* managers* and project managers use po'er to con(ince others to do things a specific
'ay$ %he kind of po'er they use to accomplish this depends on their personality* their personal
(alues* and the company culture$
&"pes o! Power
%here are se(eral forms of po'er that a project manager might use$ +e"(e already talked a&out
re'ard po'er* 'hich is the a&ility to grant &onuses or incenti(e a'ards for a jo& 'ell done$ Det"s
look at a fe' more$
Punishment Power
Punishment* also kno'n as coerci(e or penalty po'er* is just the opposite of re'ard po'er$ %he
employee is threatened 'ith conse7uences if e#pectations are not met$
(6pert Power
/#pert po'er occurs 'hen the person &eing influenced &elie(es the manager* or the person
doing the influencing* is kno'ledgea&le on the su&ject or has special a&ilities that make them an
e#pert$ %he person goes along just &ecause they think the influencer kno's 'hat they"re doing
and it"s the &est thing for the situation$
.egitimate Power
Degitimate* or formal* po'er comes a&out as a result of the influencer"s position$ Aecause that
person is the project manager* or e#ecuti(e (ice president* or C/=* they ha(e the po'er to call
the shots and make decisions$
0e!erent Power
Feferent po'er is inferred to the influencer &y their su&ordinates$ Project team mem&ers 'ho
ha(e a great deal of respect and high regard for their project managers 'illingly go along 'ith
decisions made &y the project manager &ecause of referent po'er$
Punishment po'er should &e used as a last resort$ %here are times 'hen you"ll ha(e to use this
method* &ut hopefully much less often than the other three forms of po'er$ 0ometimes* you"ll
ha(e team mem&ers 'ho 'on"t li(e up to e#pectations and their performance suffers as a result$
%his is a case 'here punishment po'er is enacted to get the employee to correct their &eha(ior$
De!ining &eam Development Outputs
+e"re no' ready to close out the %eam @e(elopment process outputs$ %here are se(eral
7uestions regarding teamB&uilding and moti(ational techni7ues on the e#am* so it"s good you"(e
just spent the time learning all a&out them$
%he outputs to %eam @e(elopment are performance impro(ements and input to performance
appraisals$ %hese are pretty straightfor'ard$ 8s a result of positi(e teamB&uilding e#periences*
you"ll see indi(iduals impro(ing their skills* team &eha(iors and relationships impro(ing* conflict
resolutions going smoothly* and team mem&ers recommending 'ays to impro(e the 'ork of the
project$
Performance appraisals are typically annual affairs 'here managers let their employees kno'
'hat they think of their performance for the past year and rate them accordingly$ Project
managers should contri&ute to the performance appraisals of all project team mem&ers$ In
functional organi-ations* the functional manager is responsi&le for the performance appraisal$ If
project managers do not ha(e an e7ual say* or at least some say in the employee"s performance*
it 'ill cause the team mem&er to &e loyal to the functional manager and sho' little loyalty to the
project or project manager$
Project managers need to 'ear a lot of hats$ %his is one of the things that makes this jo& so
interesting$ ,ou need organi-ation and planning skills to plan the project$ ,ou need moti(ation
and sometimes disciplinary skills to e#ecute the project plans$ ,ou need to e#ercise leadership
and po'er 'here appropriate$ 8nd all the 'hile* you ha(e a host of relationships to manage*
including team mem&ers* stakeholders* managers* and customers$ It"s a great jo& and &rings
terrific satisfaction$
Developing )reat %ommunication '#ills
/(ery aspect of your jo& as a project manager 'ill in(ol(e communications$ It"s &een estimated
that project managers spend as much as N0 percent of their time communicating in one form or
another$ %herefore* communication skills are argua&ly the most important skills a project manager
can ha(e$ %hey are e(en more important than technical skills$ 1ood communication skills foster
an open* trusting en(ironment$ %he a&ility to communicate 'ell is a project manager"s &est asset$
+e talked a&out ho' important good communication skills are in Chapter 1$ In this section* 'e"ll
discuss the act of communication* listening &eha(iors* and conflict resolution$ ,ou"ll employ each
of these techni7ues 'ith your project team* stakeholders* customers* and management team$
In!ormation (6change
Communication is the process of e#changing information$ %here are three elements to all
communication: the sender* the message* and the recei(er$
%he sender is the person responsi&le for putting the information together in a clear and concise
manner$ %he information should &e complete and presented in a 'ay that the recei(er 'ill &e a&le
to correctly understand it$ Make your messages rele(ant to the recei(er$ Hunk mail is annoying*
and information that doesn"t pertain in any 'ay 'hatsoe(er to the recei(er is nothing more than
that$
%he message is the information &eing sent and recei(ed$ It might &e 'ritten* (er&al* nonB(er&al*
formal* informal* internal* e#ternal* hori-ontal* or (ertical$ 6ori-ontal communications are
messages sent and recei(ed to peers$ 3ertical communications are messages sent and recei(ed
do'n to su&ordinates and up to e#ecuti(e management$
Make your messages as simple as you can to get your point across$ @on"t complicate the
message 'ith unnecessary detail and technical jargon that others may not understand$ 8 simple
trick that helps clarify your messages* especially (er&al messages* is to repeat the key
information periodically$ Pu&lic speakers are taught that the &est 'ay to organi-e your speech is
to first tell the audience 'hat you"re going to tell themI second* tell themI and third* tell them 'hat
you just told them$
%he recei(er is the person the message is intended for$ %hey are responsi&le for understanding
the information correctly and making sure they"(e recei(ed all of the information$
)eep in mind that recei(ers filter the information they recei(e through their kno'ledge of the
su&ject* culture influences* language* emotions* attitudes* and geographic locations$ %he sender
should take these filters into consideration 'hen sending messages so that the recei(er 'ill
clearly understand the message that 'as sent$
$ethos o! In!ormation (6change
0enders* recei(ers* and messages are the elements of communication$ %he 'ay the sender
packages or encodes the information and transmits it* and the 'ay the recei(er unpacks or
decodes the message are the methods of communication e#change$
0enders encode messages$ /ncoding is a method of putting the information into a format the
recei(er 'ill understand$ Danguage* pictures* and sym&ols are 'ays to encode messages$
/ncoding formats the message for transmitting$
%ransmitting is the 'ay the information gets from the sender to the recei(er$ 0poken 'ords*
'ritten documentation* memos* eBmail* (oice mail* and so on are all transmitting methods$
@ecoding is 'hat the recei(er does 'ith the information 'hen they get it$ %hey con(ert it into an
understanda&le format$ >sually* this means they read the memo* listen to the speaker* etc$
Forms o! %ommunication
Communication occurs primarily in 'ritten or (er&al form$ 1ranted* 'e can point to something or
indicate 'hat you need 'ith motions* &ut usually 'e use the spoken or 'ritten 'ord to get our
message across$
3er&al communication is easier and less complicated than 'ritten communication* and it"s usually
a fast method of communication$ +ritten communication* on the other hand* is an e#cellent 'ay
to get across comple#* detailed messages$ @etailed instructions are &etter pro(ided in 'ritten
form as it pro(ides the reader the a&ility to go &ack o(er information they"re not 7uite sure a&out$
Aoth (er&al and 'ritten communications might take a formal or an informal approach$ 0peeches
or lectures are an e#ample of formal (er&al communications$ Most project status meetings take
more of a formal approach as do most 'ritten project status reports$ 1enerally speaking* the
project manager should take an informal approach 'hen communicating 'ith stakeholders and
project team mem&ers outside of the status meetings$ %his makes you appear more open and
friendly and easier to approach 'ith 7uestions and issues$
.ines o! %ommunication
Project communication 'ill al'ays in(ol(e more than one person* e(en on the tiniest of projects$
8s such* communication net'ork models ha(e &een de(ised to try to e#plain the relationships
&et'een people and the num&er or type of interactions needed &et'een project participants$
+hat you need to remem&er for the e#am is that net'ork models consist of nodes 'ith lines
connecting the nodes that indicate the num&er of lines of communication$ 0ee .igure E$1 for an
e#ample of a net'ork communication circle 'ith si# participants$
Figure >.1: Circular communication net'ork
%he nodes are the participants* and the lines sho' the connection &et'een them all$ ,ou"ll need
to kno' ho' to calculate the lines of communication 'hen you take the e#am$ ,ou could dra'
them out like this e#ample and count up the lines* &ut there"s an easier 'ay$ %he formula for
calculating the lines of communication is as follo's: ^num&er of participants T (num&er of
participants less one!_ di(ided &y t'o$ 6ere"s the calculation in math terms:
^n T (n \ 1!_ V 2
.igure E$1 sho's si# participants* so let"s plug that into our formula to determine the lines of
communication:
^C T (C \ 1!_ V 2 S 1K
I recommend you memori-e this formula &efore taking the e#am$
(!!ective .istening '#ills
+hat did you say9 =ften 'e think 'e"re listening 'hen 'e really aren"t$ In all fairness* 'e can
take in only so much information at one time$ Aut it"s important to perform acti(e listening 'hen
someone else is speaking$ 8s a project manager* you 'ill spend the majority of your time
communicating 'ith team mem&ers* stakeholders* customers* (endors* and others$ %his means
you should &e as good a listener as you are a communicator$
.istening &echniques
=ne of the things you can do to listen more acti(ely is to appear interested$ %his 'ill make the
speaker feel at ease and 'ill &enefit you as 'ell$ Ay acting interested* you &ecome interested and
there&y retain more of the information &eing presented$
Making eye contact 'ith the speaker is another effecti(e listening tool$ %his lets the speaker kno'
you are paying attention to 'hat they"re saying and are interested$
Put your speaker at ease &y letting them kno' &eforehand that you"re interested in 'hat they"re
going to talk a&out and that you"re looking for'ard to hearing 'hat they ha(e to say$ +hile they"re
speaking* nod your head* smile* or make comments 'hen and if appropriate to let the speaker
kno' you understand the message$ If you don"t understand something and are in the proper
setting* ask clarifying 7uestions$
8nother great trick that 'orks 'ell in lots of situations is to recap 'hat the speaker said in your
o'n 'ords and tell it &ack to them$ 0tart 'ith something like this* 4Det me make sure I understand
you correctly* you"re saying;5 and ask the speaker to confirm that you did understand them
correctly$
Hust like your mother al'ays said* it"s impolite to interrupt$ Interrupting is a 'ay of telling the
speaker that you aren"t really listening and you"re more interested in telling them 'hat you ha(e
to say than listening to them$ Interrupting gets the other person off track* they might forget their
point* and it may e(en make them angry$
Got to disagree 'ith mom* &ut there pro&a&ly are some occasions 'here interrupting is
appropriate$ 8s an e#ample* if you"re in a project status meeting and someone 'ants to take the
meeting off course* sometimes the only 'ay to get the meeting &ack on track is to interrupt them$
,ou can still do this politely$ 0tart first &y saying their name to get their attention$ %hen let them
kno' that you"d &e happy to talk 'ith them a&out their topic outside of the meeting or add it to the
agenda for the ne#t status meeting if it"s something e(eryone needs to hear$ 0orry* mom$
0esolving %on!licts
I said earlier in this chapter that if you ha(e more than one person 'orking on your project* you
ha(e a team$ 6ere"s another fact: If you ha(e more than one person 'orking on your project*
you"ll ha(e conflict$ I put conflict resolution in the communication section &ecause conflict
resolution in(ol(es communication* as 'e"ll see in a moment$
/(eryone has desires* needs* and goals$ Conflict comes into the picture 'hen the desires* needs*
or goals of one party are incompati&le 'ith the desires* needs* or goals of another party (or
parties!$ Conflict* simply* is the incompati&ility of goals and one party resisting or &locking the
attainment of those goals &y the other party$ %his doesn"t sound like a party2
%here are fi(e 'ays of resol(ing conflict that may sho' up on the e#am: forcing* smoothing*
compromise* confrontation* and 'ithdra'al$ /ach techni7ue 'ill not necessarily ha(e longBterm
&enefits$ %he smoothing and 'ithdra'al techni7ues ha(e temporary results and aren"t al'ays
good techni7ues to use to resol(e pro&lems$ .orcing* compromise* and confrontation techni7ues*
ho'e(er* tend to ha(e lasting effects$
Forcing
.orcing is just like it sounds$ =ne person forces a solution on the other parties$ %his is 'here the
&oss puts on the 4&ecause I"m the &oss and I said so5 hat$ +hile this is a permanent solution* it
isn"t necessarily the &est solution$ People 'ill go along 'ith it &ecause* 'ell* they"re forced to go
along 'ith it$ It doesn"t mean they agree 'ith the solution$ %his isn"t the &est techni7ue to use
'hen you"re trying to &uild a team$ %his is an e#ample of a 'inBlose conflict resolution techni7ue$
%he forcing party 'ins* and the losers are those 'ho are forced to go along 'ith the decision$
'moothing
0moothing does not lead to a permanent solution$ It"s a temporary 'ay to resol(e conflict 'here
someone attempts to make the conflict appear less important than it is$ /(eryone looks at each
other and scratches their head and 'onders 'hy they thought the conflict 'as such a &ig deal
any'ay$ 8s a result* a compromise is reached and e(eryone feels good a&out the solution until
they get &ack to their desk and start thinking a&out the issue again$ +hen they reali-e that the
conflict 'as smoothed o(er and really is more important than 'hat they 'ere led to &elie(e* they"ll
&e &ack at it and the conflict 'ill resurface$ %his is an e#ample of a loseBlose conflict resolution
techni7ue as neither side 'ins$
%ompromise
Compromise is achie(ed 'hen each of the parties in(ol(ed in the conflict gi(es up something to
reach a solution$ /(eryone in(ol(ed decides 'hat they 'ill gi(e on and 'hat they 'on"t gi(e on*
and e(entually through all the gi(e and take a solution is reached$ Geither side 'ins or loses in
this situation$ 8s a result* neither side is really gung ho on the decision that 'as reached$ %hey
'ill drag their feet and reluctantly trudge along$ If* ho'e(er* firm commitments are made &y &oth
parties to the resolution* then the solution &ecomes a permanent one$
%on!rontation
%his techni7ue is also called pro&lem sol(ing and is the &est 'ay to resol(e conflict$ 8 factBfinding
mission results in this scenario$ %he thinking here is that one right solution to a pro&lem e#ists
and the facts 'ill &ear out the solution$ =nce the facts are unco(ered* they"re presented to the
parties and the decision 'ill &e clear$ %hus the solution &ecomes a permanent one and the
conflict e#pires$ %his is the conflict resolution approach project mangers use most often and is an
e#ample of a 'inB'in conflict resolution techni7ue$
Withrawal
+ithdra'al ne(er results in resolution$ %his occurs 'hen one of the parties gets up and lea(es
and refuses to discuss the conflict$ It is pro&a&ly the 'orst of all the techni7ues as nothing gets
resol(ed$ %his is an e#ample of a loseBlose conflict resolution techni7ue$
)eep in mind that group si-e makes a difference 'hen you"re trying to resol(e conflict or make
decisions$ 1roups of K to 11 people ha(e &een sho'n to make the most accurate decisions$
>se communication* listening* and conflict resolution skills 'isely$ 8s a project manager* you"ll
find that your dayBtoBday acti(ities encompass these three areas the majority of the time$ Project
managers 'ith e#cellent communication skills can 'ork 'onders$ Communication 'on"t take the
place of proper planning and management techni7ues* &ut a project manager 'ho communicates
'ell 'ith their team and the stakeholders can make up for a lack of technical skills any day* hands
do'n$ If your team and your stakeholders trust you* and you can communicate the (ision and the
project goals and report on project status accurately and honestly* the 'orld is your oyster$
Distri-uting Project In!ormation
,nformation )istri$ution is concerned 'ith getting stakeholders information regarding the project
in a timely manner$ %his can come a&out in se(eral 'ays: status reports* project meetings* re(ie'
meetings* etc$ In the Information @istri&ution process* the communications management plan that
'as defined during the Communications Planning process is put into action$ Communication and
Information @istri&ution 'ork together to report the progress of the project team$
%he Information @istri&ution process inputs are 'ork results* communications management plan*
and project plan$ %hese ha(e all &een discussed pre(iously$ %he tools and techni7ues for this
process are communication skills* information retrie(al systems* and information distri&ution
methods$ +e co(ered communication skills in the last section* so 'e"ll skip ahead to the
information systems$
In!ormation 0etrieval '"stems
Fetrie(al systems are 'ays that information is stored and shared among project team mem&ers$
%hey include things like project management soft'are* manual filing systems* and electronic
data&ases$ @on"t confuse retrie(al systems 'ith distri&ution methods$ Femem&er that retrie(al
systems are 'ays for the project team to get at project information$
In!ormation Distri-ution $ethos
@istri&ution methods are 'ays of getting the project information to the project team or
stakeholders$ 8s the name implies* these are 'ays to distri&ute the information and might include
eBmail* hard copy* (oice mail* (ideoconferencing* etc$
Outputs o! In!ormation Distri-ution
%he first output of the Information @istri&ution process is project records$ %hese include* as you
might guess* memos* correspondence* and other documents concerning the project$ %he &est
place to keep information like this is in a project &inder or a set of project &inders* depending on
the si-e of the project$ %he project &inders are ordinary threeBring &inders 'here project
information gets filed$ %hey are maintained &y the project manager or project office* and contain
all information regarding the project$ %hese records ser(e as historical information once the
project is closed$
Project reports* the second output of this process* include the project status reports and minutes
from project meetings$ If you"re keeping an issues log* they 'ould &e included 'ith this as 'ell$
%he final output of this process is project presentations$ %hese in(ol(e presenting project
information to the stakeholders and other appropriate parties 'hen necessary$ %he presentations
might &e formal or informal and depend on the audience and the information &eing
communicated$
@irk Perrier logs on and finds the follo'ing eBmail addressed to all the stakeholders and project
team mem&ers from you$
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
Project Progress 0eport
Project Name )itchen 6ea(en Fetail 0tore
Project Num-er 0E1K01B1N10
Prepare -" Project Manager
Date 0eptem&er 20* 2001
'ection 1: 1ction Items
8ction Item 1: Call Ca&le 3endor?Fesponsi&le Party: FicardoI Fesolution @ate: NO 12
8ction Item 2: %1 Connection 0tatus?Fesponsi&le Party: FicardoI Fesolution @ate:
Pending
8ction Item J: AuildBout Aegins?Fesponsi&le Party: HakeI Fesolution @ate: Pending
'ection 3: 'cheule an 1ctual %ompletion Dates
0ign Dease?0cheduled: EO20O01I Completed: EO20O01
1ome- Contract 0igned?0cheduled: NO11O01I Completed: NO11O01
/thernet Ca&le Fun?0cheduled: NO1EO01I Completed: NO1EO01
AuildBout 0tarted?0cheduled: NO1NO01I Completed: =pen
'ection 4: 1ctivit" &hat Occurre in the Project &his Wee#
%he /thernet ca&le run 'as completed 'ithout a pro&lem$
1ome- construction started the &uildBout process$ %his task 'as fast tracked 'ith the /thernet
ca&le run as planned$
Hill made initial calls regarding retail products order$
'ection 7: Progress (6pecte &his 0eporting Perio Not %omplete
Gone$ Project is on track to date$
'ection 8: Progress (6pecte Ne6t 0eporting Perio
AuildBout 'ill continue$ Hake reports that 1ome- e#pects to ha(e electrical lines run and dry'all
started prior to the end of the ne#t reporting period$
Ficardo should ha(e a %1 update$ %here"s a slim possi&ility that the %1 connection 'ill ha(e
occurred &y ne#t reporting period$
'ection 9: Issues
+e had to start the &uildBout on the last day of the ca&le run (this is called fast tracking! to keep
the project on schedule$ Hake and Ficardo reported only minor pro&lems 'ith this arrangement in
that the contractors got into each other"s 'ay a time or t'o$ %his did not impact the completion of
the ca&le run as most of day t'o this team 'as in the &ack room and 1ome-"s cre' 'as in the
storefront area$
8 key mem&er of the 1ome- construction cre' 'as out last 'eek due to a family emergency$
1ome- assures us that it 'ill not impact the &uildBout schedule$ %hey replaced the team mem&er
'ith someone from another project so it appears so far that &uildBout is on schedule$
Ficardo is some'hat concerned a&out the %1 connection as the phone company 'on"t return his
calls in7uiring a&out status$ +e"re still ahead of the cur(e on this one as hard'are isn"t scheduled
to &egin testing until Hanuary 2J$ 6ard'are testing depends on the %1 connection$ %his is a
headsBup at this point* and 'e"ll carry this as an issue in the status report going for'ard until it"s
resol(ed$
=ne of the gourmet food item suppliers Hill uses regularly 'ent out of &usiness$ 0he is in the
process of tracking do'n a ne' supplier to pick up the slack for the e#isting stores and supply the
gourmet food products for the ne' store$
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
41ood jo& on the status*5 @irk says as you pick up the phone$ 4I 'as &eginning to 'onder 'hen
'e"d see some action on the project* &ut it looks like things are under 'ay$5
48 lot has happened in just the past 2 'eeks as you can see$ I"ll pu&lish these project status
updates t'ice a month in conjunction 'ith the regular project status meetings$ 0tarting in Hanuary*
I"ll pu&lish them once a 'eek until project completion$5
4)eep me posted on that %1 line$ %hat isn"t going to &e a sho'stopper* is it95
4+e ha(e a contingency plan in place*5 you reply$ 4+e talked a&out that last 'eek$5
4=kay$ I"ll see you at the project meeting .riday$5
40ee you then*5 you say$
Communication
0ender makes it clear and concise$
%here"s no unnecessary technical jargon$
.ormal 'ritten communication is pro(ided$
It"s the recei(er"s responsi&ility to understand information$
0tatus report is a (ertical and hori-ontal communication method$
Project Plan /#ecution
0tatus re(ie' meetings
+ork results
%eam @e(elopment
Information @istri&ution
Project information is deli(ered to stakeholders in a timely manner$
Information distri&ution method is status reports (ia eBmail and project meetings$
0tatus report is part of the project reports filed in the project &inder or file for future
reference as historical information$
'ummar"
%his chapter detailed three processes from the /#ecuting process group: Project Plan /#ecution*
%eam @e(elopment* and Information @istri&ution$
Project Plan /#ecution is 'here the project plans come to life$ 8cti(ities are authori-ed to &egin
using a 'ork authori-ation system* the product or ser(ice of the project is actually produced* and
status re(ie' meetings are held to inform stakeholders of project progress and updates$
%eam &uilding in(ol(es creating an open* in(iting atmosphere 'here stakeholders and project
team mem&ers 'ill &ecome efficient and cooperati(e teams increasing producti(ity during the
course of the project$ It"s the project manager"s jo& to &ring the team together into a functioning*
producti(e group$
%here are four stages of %eam @e(elopment: forming* storming* norming* and performing$ 8ll
groups proceed through these stages* and the introduction of a ne' team mem&er 'ill al'ays
start the process o(er again$
Collocation is physically placing team mem&ers together in the same location$ %his might also
include a common meeting room or gathering area 'here team mem&ers can meet and
colla&orate on the project$
0e(eral moti(ational theories e#ist including re'ard and recognition* Maslo'"s 6ierarchy of
Geeds* 6ygiene theory* /#pectancy theory* and 8chie(ement theory$ %hese theories conjecture
that moti(ation is dri(en &y needs* anticipation of e#pected outcomes* or needs for achie(ement*
po'er* or affiliation$ %he 6ygiene theory proposes that hygiene factors pre(ent dissatisfaction$
Deaders inspire (ision and rally people around common goals$ %heory Q leaders think most
people are moti(ated only through punishment* money* or position$ %heory , leaders think most
people 'ant to perform the &est jo& they can$ %he Contingency theory says that people naturally
'ant to achie(e le(els of competency and 'ill continue to &e moti(ated &y competency needs
e(en after competency is reached$
Deaders e#hi&it fi(e types of po'er: re'ard* punishment* e#pert* legitimate* and referent po'er$
Communication skills are the most important skills a project manager e#ercises$ People 'ho send
messages are responsi&le for making sure the message is clear* concise* and complete$
Fecei(ers are responsi&le for understanding the message correctly and making sure they"(e
recei(ed all of the information$
Distening skills put speakers at ease$ 0e(eral techni7ues tell your speaker you"re listening
attenti(ely including making eye contact* nodding* asking clarifying 7uestions* and limiting
interruptions$
Information @istri&ution is a matter of getting project information out to the stakeholders$
Information retrie(al systems generally store project information and include project management
soft'are* filing ca&inets* and electronic data&ases$ Information distri&ution methods are 'ays to
get the information to the stakeholders and include eBmail* paper* (oice mail* or
(ideoconferencing$
(6am (ssentials
+e a-le to ienti!" istinguishing characteristics o! Project Plan (6ecution. It"s the only
core process in the /#ecuting group* and the majority of the project &udget is spent during this
process$
+e a-le to name the !our stages o! group !ormation. .orming* storming* norming* and
performing$
+e a-le to e!ine $aslow*s highest level o! motivation. 0elfBactuali-ation occurs 'hen a
person performs at their peak and all lo'er le(el needs ha(e &een met$
+e a-le to name the !ive levels o! power. Fe'ard* punishment* e#pert* legitimate* and
referent$
+e a-le to i!!erentiate -etween seners an receivers o! in!ormation. 0enders are
responsi&le for clear* concise* complete messages* 'hile recei(ers are responsi&le for
understanding the message correctly$
+e a-le to ienti!" the !ive st"les o! con!lict resolution. .orcing* smoothing* compromise*
confrontation* and 'ithdra'al$
<e" &erms
collocation project record
Information @istri&ution %eam @e(elopment
Project Plan /#ecution

0eview =uestions
1. ,ou are a project manager for an international marketing firm$ ,ou are ready to assign
resources to your ne' project using a 'ork authori-ation system$ 8ll of the follo'ing
are true e#cept:
8$ +ork authori-ation systems clarify and initiate the 'ork for each 'ork
package$
A$ +ork authori-ation systems are 'ritten procedures defined &y the
organi-ation$
C$ +ork authori-ation systems are tools and techni7ues of the Project Plan
/#ecution process$
@$ +ork authori-ation systems are an output of the Project Plan /#ecution
process$
3. ,our project is progressing as planned$ %he project team has come up 'ith a demo
that the sales team 'ill use 'hen making presentations to perspecti(e clients$ ,ou 'ill
do 'hich of the follo'ing at your ne#t stakeholder project status meeting9
8$ Feport on the progress of the demo and note that it"s a completed task
A$ Pre(ie' the demo for stakeholders and o&tain their appro(al and signBoff
C$ Fe(ie' the technical documentation of the demo and o&tain appro(al and
signBoff
@$ Feport that the demo has &een noted as a completed task in the information
retrie(al system
4. 8ll of the follo'ing are tools and techni7ues of the Project Plan /#ecution process
e#cept:
8$ Project management information system
A$ +ork authori-ation system
C$ =rgani-ational policies
@$ 1eneral management skills
7. ,ou are a project manager for a gro'ing dairy farm$ %hey offer their organic dairy
products regionally and are e#panding their operations to the +est Coast$ %hey"re in
the process of purchasing and leasing dairy farms to get operations under 'ay$ ,ou
are in charge of the net'ork operations part of this project$ 8n important deadline is
approaching that depends on the successful completion of the testing phase$ ,ou"(e
detected some pro&lems 'ith your hard'are in the testing phase and disco(er that the
hard'are is not compati&le 'ith other net'ork e7uipment$ ,ou take correcti(e action
and e#change the hard'are for more compati&le e7uipment$ +hich of the follo'ing is
true9
8$ %his is not a correcti(e action as correcti(e action in(ol(es human resources*
not project resources$
A$ Correcti(e action is taken here to make sure the future project outcomes are
aligned 'ith the project plan$
C$ Correcti(e action is not necessary in this case as the future project outcomes
aren"t affected$
@$ Correcti(e action ser(es as the change re7uest to authori-e e#changing the
e7uipment$
8. ,ou are a project manager for a gro'ing dairy farm$ %hey offer their organic dairy
products regionally and are e#panding their operations to the +est Coast$ %hey"re in
the process of purchasing and leasing dairy farms to get operations under 'ay$ %he
su&project manager in charge of net'ork operations has reported some hard'are
pro&lems to you$ ,ou"re also ha(ing some other pro&lems coordinating and integrating
other elements of the project$ +hich of the follo'ing is true9
8$ ,ou are in the Project Plan /#ecution process$
A$ ,our project team doesn"t appear to ha(e the right skills and kno'ledge
needed to perform this project$
C$ ,ou are in the Information @istri&ution process$
@$ ,our project team could &enefit from some teamB&uilding e#ercises$
9. +hich of the follo'ing processes ser(e as inputs to each other9
8$ /#ecuting and Controlling
A$ Planning and /#ecuting
C$ Planning and Controlling
@$ /#ecuting and Initiation
;. ,ou are the project manager for a ca&le ser(ice pro(ider$ ,our team mem&ers are
amia&le 'ith each other and are careful to make project decisions jointly$ +hich of the
follo'ing is true9
8$ %hey are in the smoothing stage of %eam @e(elopment$
A$ %hey are in the norming stage of %eam @e(elopment$
C$ %hey are in the forming stage of %eam @e(elopment$
@$ %hey are in the forcing stage of %eam @e(elopment$
>. ,ou are the project manager for a ca&le ser(ice pro(ider$ ,our project team is
researching a ne' ser(ice offering$ %hey ha(e &een 'orking together for 7uite
sometime and are in the performing stage of %eam @e(elopment$ 8 ne' mem&er has
&een introduced to the team$ +hich of the follo'ing is true9
8$ %he %eam @e(elopment process 'ill start all o(er again 'ith the storming
stage$
A$ %he team 'ill continue in the performing stage$
C$ %he %eam @e(elopment process 'ill start all o(er again 'ith the forming
stage$
@$ %he team 'ill start all o(er again at the storming stage &ut 7uickly progress to
the performing stage$
?. ,ou are the project manager for a ca&le ser(ice pro(ider$ ,our project team is
researching a ne' ser(ice offering$ %hey ha(e &een 'orking together for 7uite some
time and are in the performing stage of %eam @e(elopment$ %his stage of %eam
@e(elopment is similar to 'hich of the follo'ing9
8$ 0moothing
A$ 8chie(ement theory
C$ 6ygiene theory
@$ 0elfBactuali-ation
1@. Fecei(ers in the communication model filter their information through all of the
follo'ing e#cept:
8$ Culture
A$ )no'ledge of su&ject
C$ Conflict
@$ Danguage
11. ,ou"(e promised your team t'o days of paid time off plus a 'eek"s training in the latest
technology of their choice if they complete their project ahead of schedule$ %his is an
e#ample of 'hich of the follo'ing9
8$ 8chie(ement theory
A$ /#pectancy theory
C$ Maslo'"s theory
@$ Contingency theory
13. +hat are the outputs of the %eam @e(elopment process9
8$ Performance impro(ements* input to performance appraisals
A$ Input to performance appraisals* re'ard and recognition systems
C$ Performance impro(ements* input to performance appraisals* performance
reports
@$ +ork results* input to performance appraisals* performance reports
14. ,our team is split &et'een t'o &uildings on either side of to'n$ 8s a result* the team
isn"t (ery cohesi(e &ecause the mem&ers don"t kno' each other (ery 'ell$ %he team is
still in the storming stage &ecause of the separation issues$ +hich of the follo'ing
should you consider9
8$ Correcti(e action
A$ Collocation
C$ %raining
@$ Conflict resolution
17. ,our project team is a close group all &usily 'orking on project acti(ities$ %hey"re close
to approaching the performing stage of %eam @e(elopment$ 8ll si# mem&ers must
communicate fre7uently 'ith each other$ 6o' many lines of communication are there9
8$ 12
A$ 1K
C$ 1E
@$ 1:
18. Project managers use this conflict resolution techni7ue most often:
8$ 0moothing
A$ Confronting
C$ Gorming
@$ .orcing
19. ,ou are the project manager for a 'e& de(elopment project$ ,ou hold regular project
status meetings and pu&lish status reports on a timely &asis$ ,ou kno' that
communication is one of your most important functions$ 8s such* all of the follo'ing
are true e#cept:
8$ 0enders are responsi&le for sending clear* concise* complete messages$
A$ Fecei(ers are responsi&le for understanding the message$
C$ Communication can &e (ertical or hori-ontal or &oth$
@$ /ffecti(e communication techni7ues include making eye contact* nodding* and
asking clarifying 7uestions$
1;. ,ou are a fa&ulous project manager* and your team thinks highly of you$ ,ou are 'ell
respected &y the stakeholders* management team* and project team$ +hen you make
decisions* others follo' your lead as a result of 'hich of the follo'ing9
8$ Feferent po'er
A$ /#pert po'er
C$ Degitimate po'er
@$ Punishment po'er
1>. %heory , managers &elie(e 'hich of the follo'ing9
8$ %hat people are moti(ated only &y money* po'er* or position
A$ %hat people 'ill perform their &est if they"re gi(en proper moti(ation and
e#pectations
C$ %hat people are moti(ated to achie(e a high le(el of competency
@$ %hat people are moti(ated &y e#pectation of good outcomes
1?. ,ou ha(e accumulated project information throughout the project and need to
distri&ute some important information you just recei(ed$ 8ll of the follo'ing are part of
information distri&ution methods e#cept:
8$ /lectronic mail
A$ 3ideoconferencing
C$ /lectronic data&ases
@$ 3oice mail
3@. ,ou kno' that the ne#t status meeting 'ill re7uire some discussion and a decision for
a pro&lem that has surfaced on the project$ In order to make the most accurate
decision* you kno' that the num&er of parBticipants in the meeting should &e limited to:
8$ 1 to K
A$ K to 11
C$ L to 1C
@$ 10 to 1E
1nswers
1. @ +ork authori-ation systems are a tool and techni7ue of the Project Plan /#ecution
process$ %hey formally initiate the 'ork of each 'ork package and clarify the assignments$
3. 8 0tatus meetings are to report on the progress of the project$ %hey are not for demos or
sho'BandBtell$ 8ns'er C is not correct as stakeholders are not concerned a&out the content of
the technical documentation$ %hey need to kno' that the technical documentation has &een
re(ie'ed &y a 7ualified technician and that the documentation task is accurate and complete$
4. C =rgani-ational policies are an input to this process$ =rgani-ational procedures are a tool
and techni7ue$
7. A Correcti(e action &rings anticipated future project outcomes &ack into alignment 'ith the
project plan$ 0ince there is an important deadline looming that depends on a positi(e outcome
of this test* the e7uipment is e#changed so that the project plan and project schedule are not
impacted$
8. 8 %he most difficult aspect of the Project Plan /#ecution process is coordinating and
integrating all the project elements$ %he clue to this 7uestion 'as the ne#tBtoBlast sentence*
'hich contained this 'ording$
9. 8 %he /#ecuting process group and Controlling process group ser(e as inputs to each other$
;. A %eams in the norming stage of %eam @e(elopment e#hi&it affection and familiarity 'ith one
another and make joint decisions$ 0moothing and forcing are conflict resolution techni7ues*
not %eam @e(elopment stages$
>. C %he introduction of a ne' team mem&er 'ill start the %eam @e(elopment process all o(er
again 'ith the forming stage* 'hich is the first stage of %eam @e(elopment$
?. @ %he performing stage is similar to Maslo'"s selfBactuali-ation$ %hey are &oth at the peak of
performance* concerned 'ith doing good and &eing the &est$
1@. C Fecei(ers filter information through cultural considerations* kno'ledge of the su&ject
matter* language a&ilities* geographic location* emotions* and attitudes$
11. A %he /#pectancy theory says that people are moti(ated &y the e#pectation of good
outcomes$ %he outcome must &e reasona&le and attaina&le$
13. 8 Performance impro(ements and input to performance appraisals are the %eam
@e(elopment outputs$
14. A Collocation 'ould &ring your team mem&ers together in the same location and allo' them
to function more efficiently as a team$ 8t a minimum* team mem&ers meeting in a common
room* such as a 'ar room* for all team meetings 'ould &ring the team closer together$
17. A %he formula to calculate lines of communication for this 7uestion is as follo's: ^C T (C \ 1!_
V 2 S 1K$
18. A Confronting is a pro&lemBsol(ing techni7ue that seeks to determine the facts and find
solutions &ased on the facts* and that results in a 'inB'in resolution for all parties$
19. @ Making eye contact* nodding* and asking clarifying 7uestions are good listening skills*
'hich are related to communication skills$
1;. 8 Feferent po'er is po'er that is inferred on a leader &y their su&Bordinates as a result of
the high le(el of respect for the leader$
1>. A %heory , managers &elie(e that people 'ill perform their &est if they"re pro(ided 'ith the
proper moti(ation and the right e#pectations$
1?. C /lectronic data&ases are a type of information retrie(al system* not a distri&ution method$
3@. A 1roup si-es of K to 11 participants make the most accurate decisions$

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