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DAY 1

PROJECT INTEGRATION MANAGEMENT

PMP Prep Integration

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AGENDA
Day 1 PMP Exam Prep Introduction Project Management Framework *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management DAY 2 Project SCOPE Management Project TIME Management Project COST Management Project QUALITY Management DAY 3 Project COMMUNICATION Management Project HUMAN RESOURCE Management Project RISK Management Project PROCUREMENT Management DAY 4 Professional & Social Responsibility REVISION & QUIZ

MAJOR PROJECT DOCUMENTS Before we begin Integration, let's summarize the


project's major documents:
ALL are formally approved

Major Project Documents - generated by the project


Project Charter formally authorizes a project or a phase and documents initial requirements that satisfy the stakeholders needs and expectations. (never changes) Project Management Plan documents the actions necessary to define, prepare, integrate, and coordinate all subsidiary management plans (changes a lot)

PMP Prep - Integration

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MAJOR PROJECT DOCUMENTS Other Project Documents (or Systems) Used by the Project
These systems could include tools, techniques, methodologies, resources (i.e. templates), procedures, documentation, tracking systems, approval levels, etc. Project Management Information System(PMIS) an information system, consisting of the tools and techniques used to gather, integrate, and disseminate the outputs of project management processes. It is used by project management team to support all aspects of the project from initiating through closing, and can include both manual and automated systems.

PMP Prep - Integration

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MAJOR PROJECT DOCUMENTS


Configuration Management System
It is a sub-system of the overall PMIS. It is a collection of formal documented procedures used to apply technical and administrative direction and surveillance to: - identify and document the functional and physical characteristics of a product, result, service, or component; - control any changes to such characteristics; - record & report each changes and its implementation status; and - support the audit of the products, results, or components to verify conformance to requirements - it includes the documentation, tracking systems, and defined approval levels necessary for authorizing and controlling changes.

Change Control System - is a collection of formal documented procedures that


define how deliverables and documentation are controlled, changed and approved In most application areas CCS is a subset of the configuration management system.

PMP Prep - Integration

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PROJECT INTEGRATION MANAGEMENT


WHAT DOES THE INTEGRATION KNOWLEDGE AREA DO? It's about the entire project - processes & activities needed to
identify, define, combine, unify, and coordinate the various processes and project management activities within the project management process groups Projects start and close here. Project plan is made here. Product, service or result is made here.

Coordinate all knowledge area processes


PMP Prep - Integration Slide 5

PROJECT INTEGRATION MANAGEMENT


The integrative nature of projects and project management can be understood by thinking of other types of activities performed while completing a project. Examples of some activities performed by the PM team are:
Analyze and understand the scope. This includes the project and product requirements, criteria, assumptions, constraints, and other influences related to a project, and how each will be managed or addressed within the project. Understand how to take the identified information and then transform it into a project management plan using a structured approach as described in PMBOK Guide. Perform activities to produce project deliverables. Measure and monitor all aspects of the projects progress and take appropriate action to meet project objectives.

PMP Prep Integration

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INTEGRATION PROCESSES
INTEGRATION PROCESS DEFINITIONS 4.1 Develop Project Charter that formally authorizes a project or a project phase. 4.2 Develop Project Management Plan the process of documenting the actions necessary to define, prepare, integrate, and coordinate all subsidiary plan. 4.3 Direct & Manage Project Execution the process of performing the work defined in the project management plan to achieve the projects objectives.

PMP Prep Integration

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INTEGRATION PROCESSES
4.5 Monitor & Control Project Work
The

process of tracking, reviewing, and regulating the progress to meet the performance objectives defined in the project management plan.

4.6 Perform Integrated Change Control


Review all change requests, approve changes, and manage changes to the deliverables, organizational process assets, project documents, and the project management plan.

4.7 Close Project or Phase


Finalize all activities across all Project Management Process Groups to formally complete the project or phase.

PMP Prep Integration

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INTEGRATION PROCESSES
PROCESSES BY PROCESS GROUP
Initiating Planning Executing Monitoring and controlling Closing

4.1 Develop Project Charter

4.3 Develop 4.4 Direct and 4.5 Monitor Project Manage and Control Management Project Project work Plan Execution 4.6 Perform Integrated Change Control

4.7 Close Project or Phase

PMP Prep Integration

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PROJECT CHARTER
What should a project charter address?
Project purpose or justification, Measurable project objectives and related success criteria,
High-level requirements, High-level project description, High-level risks, Summary milestone schedule, Summary budget, Project approval requirements, Assigned project manager, responsibility, and authority level, and Name and authority of the sponsor or other person(s) authorizing the project charter.
Formally authorizes a project (never changes)

PMP Prep Integration

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DEVELOP PROJECT CHARTER


Tools & Techniques
Expert judgement

Inputs
Project statement of work
Business Case Contract Enterprise environmental factor Organizational process assets

Outputs
Project Charter

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DEVELOP PROJECT CHARTERINPUTS


INPUTS
Contract (when applicable)
A contract from the customers acquiring organization is an input if the project is being done for an external customer.

Project Statement of Work


Narrative description of products or services to be supplied by the project For internal projects, the project initiator or sponsor provides the statement of work based on business needs, products or service requirements. For external projects, the SOW can be received from the customer as part of a bid document, for example, request for proposal, request for information, request for bid, or as part of a contract.

PMP Prep Integration

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DEVELOP PROJECT CHARTER-INPUTS


The SOW references:
Business need - an organizations business need can be based on needed training, market demand, technological advance, legal requirement, or governmental standard Product scope description documents the product requirements and characteristics of the product or service that the project will be undertaken to create Strategic plan -all projects should support the organization's strategic goals. The strategic plan of the performing organization should be considered as a factor when making project selection decisions.

PMP Prep Integration

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Business Case:

DEVELOP PROJECT CHARTER-INPUTS

Business case or similar document provides the necessary information from a business standpoint to determine whether or not the project is worth the required investment. Typically the business need and the cost-benefit analysis are contained in the business case to justify the project. For external project, the requesting organization or customer may write the business case. Business case is created as a result of one or more of the following: - Market demand - Organizational need - Customer request - Technological advance - Legal requirement - Ecological impacts - Social need
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PMP Prep Integration

DEVELOP PROJECT CHARTERINPUTS


Enterprise Environmental Factors
Governmental or industry standards Organization Infrastructure, and Marketplace conditions
These are examples and not specific to Project Charter an input to all knowledge areas

DEVELOP PROJECT CHARTERINPUTS


Organizational Process
Not specific to project Charter an input to all knowledge Assets areas

Organizational standard processes, policies, and standardized process


definitions for use in the organization; Templates (e.g. project charter template); and Historical information and lessons learned knowledge base.

Expert Judgement

DEVELOP PROJECT CHARTER- T & T

It is available from many sources, including: Other units within the organization, Consultants, Stakeholders, including customers or sponsors, Professional and technical associations, Industry groups, Subject matter experts, and Project management office (PMO)

PMP Prep Integration

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DEVELOP PROJECT CHARTER-T & T TOOLS & TECHNIQUES


Project Selection Methods
Mostly financial considerations are used. Project selection is generally the responsibility of Portfolio Managers, Steering Committees. In smaller companies, Presidents and VicePresidents

These methods generally fall into one of two broad categories:


Benefit measurement methods that are comparative approaches, scoring models, benefit contribution, or economic models. Mathematical models that use linear, nonlinear, dynamic, integer, or multi-objective programming algorithms

PMP Prep Integration

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DEVELOP PROJECT CHARTER-T & T


Weighted Scoring Model (benefit measurement method)
A systematic process for selecting projects based on criteria (example on next slide) First, decide on a list of criteria used for project selection Assign weights (percentages) to each so that they add up to 100% Assign scores to each for each project Multiply scores by weights to get total weighted scores for each project Highest weighted score wins

Note: Also used for selecting contractors/sellers (Procurement)

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DEVELOP PROJECT CHARTER-T & T

PMP Prep Integration

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DEVELOP PROJECT CHARTER- T&T


Other Benefit Measurement Methods:
Cash Flow Techniques a) Payback Period Length of time it will take to get back the initial investment
Time value of money is ignored here, i.e. no interest, so this is the least precise of the cash flow techniques

Example:
Initial Investment (P) = $200,000 Cash Inflow (C) =$25,000 I quarter for 3 years n = # of periods Payback period (n) = P/C= $ 200,000 I $25,000 = 8 quarters or two years

PMP Prep Integration

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DEVELOP PROJECT CHARTER- T&T


b) Discounted Cash Flow (or Net Present Value method)
Calculates the present worth of future money (called net present value)

Example -Which project is worth more?


Project X expects to make $250K 1 year from now Project Y expects to make $300K 2 years from now i= 12% (or 0.12)

Given this formula, calculate present value & pick one.


PV = FV/ (1 +i)n or FV = PV(1 +i)n Where FV is future value, PV is present value, n is number of periods , i is interest rate Project X, PV=250/1.12= 223.2 ; Project Y, PV=300/(1.12)2 = 239.2

Project Y is worth more.

PMP Prep Integration

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DEVELOP PROJECT CHARTER- T&T


Net Present Value
Calculates the expected net value of a project in today's money To do this, discount all anticipated cash inflows and outflows to the present day If Interest (i) = 12% & Initial Investment (P) = $20,000, what's the NPV of this? NPV=Total of all PVs-P

PMP Prep Integration

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DEVELOP PROJECT CHARTER- T&T


Question
You're managing a software project for a manufacturing company. A new computer, which costs $50,000 including shipping and installation, will speed up the development process and cause a gross savings of $100,000 after one year of purchase of the computer. Assuming an interest rate of 10% per annum, what's the NPV of the savings ? A. $90,000 B. $40,909 C. $45,555 D. $91,110

DEVELOP PROJECT CHARTER- T&T


Answer is B
You know: FV of the investment == $100,000 i = 10% or 0.1 n= 1 (year) P (initial investment) == $50,000 NPV =PVc - P (initial investment), we need all the PV's (in this problem only one). Since PV=FV/(1 +i)n Or, PV= $100,000/ (1 + 0.1 )1 = $90,909.09 ( is the present value ) Therefore, NPV = $90,909 -$50,000 == $40,909

PMP Prep Integration

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DEVELOP PROJECT CHARTER- T&T


Accounting Terms
Sunk Cost (Incurred Cost):
In project selection method, when comparing projects for continuity, costs already incurred should be considered as sunk costs and should not be taken in to account in any calculation

Opportunity Cost :
The cost of the opportunity that you picked What did you give up (your cost) for the project you selected? The amount you would have made if you picked the project with the next best NPV (expected value in today's money) Opportunity cost is always the second best alternative (doesn't take the third or subsequent projects into account)

PMP Prep - Integration

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DEVELOP PROJECT CHARTER- T&T


Internal Rate of Return (IRR)
IRR is the interest rate when NPV equals zero (0) Net present value of all cash inflows (revenue) and outflows (investments) are the same Choose projects with highest IRR

PMP Prep - Integration

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DEVELOP PROJECT CHARTER- T&T


Question
Four projects are being considered. A. NPV is negative, its IRR is 16%, and its payback period is 13 months. B. NPV is positive, its IRR is 14%, and its payback period is 2 months. C. NPV is negative, its IRR is 9%, and its payback period is 16 months. D. NPV is positive, its IRR is 16%, and its payback period is 18 months.

Which project should you choose if financial consideration is important?

PMP Prep - Integration

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DEVELOP PROJECT CHARTER- T&T


Answer is D.
If IRR is greater than 0 and NPV is positive, you shouldn't give payback period much consideration as its the least precise calculation. Don't select projects A or C with negative NPV. Project D has a higher IRR than Project B and should be chosen, even though Project B has a shorter payback period.

Consideration in order of priority: 1. IRR (highest positive) 2. NPV (highest positive) 3. Payback period (shortest)

PMP Prep - Integration

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DEVELOP PROJECT CHARTER- T&T


2. Project Management Methodology
Defines a set of project management process groups, their related processes and the related control functions that are consolidated and combined into a functioning unified whole.

3. Project Management Information System (PMIS) 4. Expert Judgment Expert judgment is often used to assess inputs used to make the
Project Charter Available from many sources, including: Other departments in your organization Consultants Stakeholders Professional or technical associations and industry groups, i.e. PMI

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DEVELOP PROJECT CHARTER OUTPUTS


OUTPUT

Project Charter

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INTEGRATION PROCESSES
PROCESSES BY PROCESS GROUP

Initiating

Planning

Executing

Monitoring and controlling

Closing

4.1 Develop Project Charter

4.2 Develop 4.3 Direct 4.4 Monitor Project and Manage and Control Management Project Project work Plan Execution

4.6 Close Project

4.5 Perform Integrated Change Control


PMP Prep Integration Slide 32

INTEGRATION PROCESSES
PROCESSES BY PROCESS GROUP

Initiating

Planning

Executing Monitoring and controlling

Closing

4.1 Develop Project Charter

4.2 Develop 4.3 Direct 4.4 Monitor Project and Manage and Control Management Project Project work Plan Execution

4.6 Close Project

4.5 Integrated Change Control


PMP Prep Integration Slide 38

PROJECT MANAGEMENT PLAN


Whats in a Project Management Plan?
Documents/defines 'how' a project is executed, monitored and
controlled Generally includes subsidiary management plans & other planning documents May be summary or detailed plan (changes often) Formally approved Updates are approved through the Integrated Change Control process and implemented in the Direct and Manage Project Execution process

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Specifically the plan includes:


Which processes have been selected Level of implementation of each of the processes (how thorough each should be) Which inputs, tools & techniques and outputs are to be used for each process How processes will be used, their dependencies & interactions How work will be executed How changes will be monitored & controlled How configuration management will be performed How baseline integrity will be maintained (i.e. approved budget or schedule ) Stakeholder communication needs & techniques to be used Project life cycle (if needed for phases) Key management reviews

PROJECT MANAGEMENT PLAN

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PROJECT MANAGEMENT PLAN


Subsidiary management plans (if required), such as: Scope Schedule Cost Quality Process Improvement (in Quality) Staffing Communication Risk Procurement

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PROJECT MANAGEMENT PLAN


Other components, such as:
Milestone list Resource calendar Schedule baseline Quality baseline Risk register

All these give explicit details of 'how' to produce the requirement(s)

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DEVELOP PROJECT MANAGEMENT PLAN


TOOLS &Techniques
Expert judgement

Inputs
Project Charter

Outputs
Project management Plan

Output from Planning processes Enterprise environmental factor Organizational process assets
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DEVELOP PROJECT MANAGEMENT PLAN


INPUTS
Project Charter
Output from Plannning Processes Enterprise Environmental Factors Organizational Process Assets

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DEVELOP PROJECT MANAGEMENT PLAN


TOOLS & TECHNIQUES

Expert Judgment

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DEVELOP PROJECT MANAGEMENT PLAN


OUTPUT
Project Management Plan

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INTEGRATION PROCESSES
PROCESSES BY PROCESS GROUP

Initiating

Planning

Executing Monitoring and controlling

Closing

4.1 Develop Project Charter

4.2 Develop 4.3 Direct 4.4 Monitor and Manage and Control Project Project Management Project work Execution Plan

4.6 Close Project

4.5 Integrated Change Control


PMP Prep Integration Slide 47

DIRECT AND MANAGE PROJECT EXECUTION


WHAT HAPPENS DURING PROJECT EXECUTION?
PM and the project team to perform multiple actions to execute the
project management plan to accomplish the work defined in the project scope statement. Some actions create the project's product, service or result while other actions manage the whole of the project in an integrated manner Some actions include: Perform activities to accomplish project objectives Expend effort and spend funds to accomplish project objectives Staff, train & manage project team members Obtain quotations, bids, offers, or proposals as appropriate Select sellers continued
PMP Prep - Integration Slide 48

DIRECT AND MANAGE PROJECT EXECUTION


Obtain, manage & use resources including materials, tools,
equipments and facilities Implement the planned methods and standards Create, control, verify & validate project deliverables Manage risks & implement risk response activities Manage sellers Adapt approved changes into project scope, plans & environment Establish & manage project communication channels both external & internal to the project team Collect project data and report cost, schedule, technical & quality progress, and status information to facilitate forecasting Collect & document lessons learned, and implement approved process improvement activities

PMP Prep - Integration

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DIRECT AND MANAGE PROJECT EXECUTION


TOOLS &Techniques
Expert judgement Project management Information system

Inputs
Project management plan

Outputs
Deliverables Work performance information Change requests Project management plan updates Project document updates

Approved change requests Enterprise Environmental factors Organisational process Assets

PMP Prep Integration

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DIRECT AND MANAGE PROJECT EXECUTION


INPUTS
Project Management Plan
that can influence the direct and manage project execution process include: Organizational, company or customer culture/structure, Infrastructure (existing facilities and capital equipment) Personnel administration(hiring and firing guidelines), stakeholder risk tolerances, Project management information system Organizational Process assets: standardized guidelines and work instructions, communication requirements defining allowed communication media, record retention, and security requirements, project files from prior projects(e.g. scope, cost, schedule etc), issue and defect management database containing historical issues and defect status, its control, resolutions and actions.

Enterprise Environmental factors : The enterprise environmental factors

Approved Change Request

DIRECT AND MANAGE PROJECT EXECUTION


They are documented, authorized changes to expand or contract project scope. They can also modify policies, project management plans, procedures, costs or budgets, or revise schedules. They are scheduled for implementation by the project team.

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DIRECT AND MANAGE PROJECT EXECUTION-T&T

TOOLS & TECHNIQUES


Expert Judgement Project Management Information System (PMIS)

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DIRECT AND MANAGE PROJECT EXECUTIONOUTPUT

OUTPUTS
Deliverables
Any unique & verifiable product, result or capability to perform a service that is identified in the project management planning documentation, and must be produced and provided to complete the project

Change Request
When issues are found while project work is being performed, change requests are issued which may modify project policies and procedures, project scope, project cost or budget, project schedule or quality. Other change requests cover needed preventive or corrective actions to forestall negative impacts later in the project. Request for a change can be direct or indirect, externally or internally initiated, can be optional or legally/contractually mandated.

PMP Prep - Integration

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DIRECT AND MANAGE PROJECT EXECUTIONOUTPUT OUTPUTS Work Performance Information


Information on status of project activities being performed to accomplish the project work. Includes: Schedule progress showing status information Deliverables that have been completed and those not completed Schedule activities that have started and those that have been finished Extent to which quality standards are being met Costs authorized and incurred Estimates to complete the schedule activities that have started Percent physically complete of the in-progress schedule activities Documented lessons learned posted to the lessons learned knowledge base Resource utilization detail
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DIRECT AND MANAGE PROJECT EXECUTIONOUTPUT Project Management updates


Elements of the project management plan that may be updated include: Requirements(Scope) management plan, Schedule management plan, cost management plan, human resource management plan, quality management plan, communications management plan, risk management plan, procurements management plan, project baselines

Project Document updates


Project documents that may be updated include but are not limited to: Requirements documents Projects log (issues, assumptions) Risk register and Stakeholder register
PMP Prep - Integration Slide 56

INTEGRATION PROCESSES
PROCESSES BY PROCESS GROUP

Initiating

Planning

Executing Monitoring and controlling

Closing

4.1 Develop Project Charter

4.2 Develop 4.3 Direct 4.4 Monitor Project and Manage and Control Project work Management Project Plan Execution

4.6 Close Project

4.5 Integrated Change Control


PMP Prep Integration Slide 57

MONITOR AND CONTROL PROJECT WORK

WHAT HAPPENS DURING MONITOR & CONTROL PROJECT WORK?

Monitor project processes associated with initiating, planning, executing &

closing. Corrective or preventive actions are taken to control the project performance. Monitoring is an aspect of project management performed throughout the project. This process is concerned with: Comparing actual project performance against the project management plan Assessing performance to determine whether any corrective or preventive actions are indicated, then recommending those actions as necessary Analyzing, tracking, and monitoring project risks to make sure the risks are identified, their status is reported, and that appropriate risk response plans are being executed Maintaining an accurate, timely information base concerning the projects product (s) and their associated documentation through project completion Providing information to support status reporting, progress measurement, and forecasting Providing forecasts to update current cost and current schedule information Monitoring implementation of approved changes when and as they occur

MONITOR AND CONTROL PROJECT WORK


TOOLS &Techniques
Expert judgement

Inputs
Project management plan

Outputs
Change Requests Project Management Plan updates Project documents updates

performance reports Enterprise environmental factors Organizational process assets

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MONITOR AND CONTROL PROJECT WORK - INPUTS INPUTS


Project Management Plan

Performance reports

Enterprise environmental factors

Organizational process assets


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MONITOR AND CONTROL PROJECT WORK T&T


TOOLS & TECHNIQUES

Expert Judgment

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MONITOR AND CONTROL PROJECT WORK - OUTPUTS


OUTPUTS
Change requests Recommended Corrective Actions
Corrective actions are recommended to bring expected future project performance into conformance with the project management plan Recommended Preventive Actions Preventive actions are recommended to reduce the probability of negative consequences associated with project risk Recommended Defect Repair Some defects, which are found during the quality inspection and audit process, are recommended for correction

Project Management plan updates Project Documents updates


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INTEGRATION PROCESSES
PROCESSES BY PROCESS GROUP

Initiating

Planning

Executing Monitoring and controlling

Closing

4.1 Develop Project Charter

4.2 Develop 4.3 Direct 4.4 Monitor Project and Manage and Control Management Project Project work Plan Execution

4.6 Close Project

4.5 Integrated Change Control

PMP Prep Integration

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INTEGRATED CHANGE CONTROL


WHAT HAPPENS DURING INTEGRATED CHANGE CONTROL? During the entire project, this process ensures that the project
management plan, project scope statement, and other deliverables must be maintained by carefully and continuously managing changes, either by rejecting changes or by approving changes so that those approved changes are incorporated into a revised baseline. ICC process includes the following: Identify if a change needs to occur or has occurred Influence the factors that circumvent ICC so that only approved changes are implemented Review, approve & then manage change requests Review and approve all recommended corrective and preventative actions Control & update scope, cost, budget, schedule & quality requirements, based on approved changes, by coordinating across entire project, i.e. a schedule change may affect risk

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INTEGRATED CHANGE CONTROL


Document impact of requested changes Validate defect repairs Control project quality (in a coordinated fashion) Some configuration management activities included here are: Configuration Identification -product details (to the level needed) are defined, verified & labeled; changes are managed & accountability is maintained Configuration Status Accounting -capturing, storing & accessing configuration information Configuration Verification & Auditing -compare performance &. functional requirements defined in the configuration documentation with reality Large organizations have Change Control Boards (CCB) to authorize changes (their roles & responsibilities should be clearly documented here)

PMP Prep Integration

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INTEGRATED CHANGE CONTROL


TOOLS &Techniques
Project management methodology Project management Information system Expert judgement

Inputs
Project management plan

Outputs
Approved change requests Rejected change requests Project management plan (updates) Project scope statement (updates) Requested changes Approved preventive actions Approved corrective actions Approved defect repair Validated defect repair Deliverables

Requested changes Work performance information Recommended preventive actions Recommended corrective actions Recommended defect repair Deliverables

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INTEGRATED CHANGE CONTROL-T&T


Project Management Plan Requested Changes Work Performance Information Recommended Preventive Actions Recommended Corrective Actions Recommended Defect Repair Deliverables Integrated Change Control (Monitorin g& Controlling ) Direct & Manage Project Implemented Executio Change Request n (Executi ng)

23 Differen t Process

Change Request

Approved change Req. Project Mgmt. plan updated Scope statement updated

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INTEGRATED CHANGE CONTROL-T&T


TOOLS & TECHNIQUES
Project Management Methodology It defines a process that aids a project management team in implementing ICC for the project Project Management Information System (PMIS) Expert Judgment

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INTEGRATED CHANGE CONTROLOUTPUT


OUTPUTS
Approved Change Requests Rejected Change Requests Project Management Plan (Updates) Project Scope Statement (Updates) Approved Corrective Actions Approved Preventive Actions Approved Defect Repair Validated Defect Repair Deliverables

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INTEGRATION PROCESSES
PROCESSES BY PROCESS GROUP

Initiating

Planning

Executing Monitoring and controlling

Closing

4.1 Develop Project Charter

4.3 Develop 4.4 Direct 4.5 Monitor Project and Manage and Control Management Project Project work Plan Execution

4.7 Close Project

4.2 Develop Preliminary Project Scope Statement


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4.6 Integrated Change Control

CLOSE PROJECT
WHAT HAPPENS DURING PROJECT CLOSURE?
Finalize all activities completed across all process groups to formally close the project or project phase Transfer completed or cancelled project as appropriate Establish procedures to coordinate activities needed to verify and document the project deliverables, to coordinate and interact to formalize acceptance of those deliverables by the customer or sponsor Investigate and document the reasons for actions taken if a project is terminated before completion

CLOSE PROJECT
PROCEDURES TO PERFORM CLOSURE ACTIVITIES
Administrative Closure Procedures
integrated activities needed to collect project records analyze project success or failure gather lessons learned archive project information for future use by organization

Contract Closure Procedures (from Procurement)


closing all contracts product verification (confirm if all work is completed correctly and satisfactorily) Administrative closure (update & archive contract records)

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CLOSE PROJECT
Tools &Techniques
Project management methodology Project management Information system Expert judgement

Inputs
Project management plan

Outputs
Administrative closure

Contract documentation Enterprise environmental factors Organizational process assets Work performance information Deliverables

procedure Contract closure procedure Final product, service or result Organizational process assets (updates)

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CLOSE PROJECT
INPUTS
Project Management Plan Contract Documentation
Includes contract itself, as well as changes to the contract and other documentation (such as the technical approach, product description, acceptance criteria)

Enterprise Environmental Factors e.g. government


regulations

Organizational Process Assets e.g. formal sign off forms Work Performance Information e.g. all invoices from procurement Deliverables
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CLOSE PROJECT-T&T
TOOLS & TECHNIQUES Project Management Methodology
Project Management Information System (PMIS) Expert Judgment

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CLOSE PROJECT OUTPUTS


OUTPUTS
Administrative Closure Procedure Contract Closure Procedure Final Product, Service, or Result
Formal acceptance/handover of the final product, service or result Receipt of formal statement that contract terms have been met

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CLOSE PROJECT OUTPUTS

Organizational Process Assets (updates)


Formal Acceptance Documentation
Formal confirmation from customer/sponsor that requirements & specifications of product, service or result have been met

Project Files
Documentation resulting from the projects activities

Project Closer Documents


Formal documentation indicating completion of project & transfer of completed project deliverables to others, such as an operations group

Historical Information
Historical information & lesson learned information are transferred to the lessons learned knowledge base for use by future projects
PMP Prep Integration Slide 77

SAMPLE EXAM QUESTION


Question
Which of the following describes configuration management? A. it ensures that the description of a projects product is correct & complete B. a set of tools, techniques, methodologies, resources & procedures used to manage products C. the set of procedures developed to ensure that the project design criteria are met D. a mechanism to record budget & schedule variances

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SAMPLE EXAM QUESTION


B is correct.
Configuration Management System -It's a collection of formal documented procedures used to apply technical and administrative direction and surveillance to: identify and document the functional and physical characteristics of a product, result, service, or component; control any changes to such characteristics; record and report each change and its implementation status; and support the audit of the products, results or components to verify conformance to requirements.

See PMBOK, p.354.


In other words -Procedures to manage (mostly control change) characteristics of something (like a procedure document, user guide)

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SAMPLE EXAM QUESTION


Question
Project A had an initial investment of $4 million, out of which $2 million has already been spent. A new Project B needs $1.5 million to complete and will meet the same objectives as Project A. Which project should you select? You can only pick one.

PMP Prep - Integration

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SAMPLE EXAM QUESTION


Answer
Choose Project B.
Project A has already spent $2 million (sunk cost). To complete, it needs $2 million more out of $4 million total. Project B needs $1.5 million to complete, which is less that the $2 million needed to complete Project A.

Therefore, selecting Project B is better because $l.5M is less than $2M.

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SAMPLE EXAM QUESTION


Question
Three projects are being considered: Project A has a NPV of $5 million Project B has a NPV of $3 million Project C has a NPV of $2 million What is the opportunity cost if Project A is selected? A -$5 million B -$3 million C -$2 million D -$0

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SAMPLE EXAM QUESTION


Answer
B - $3 million.
Opportunity cost is the cost of giving up the next best option. If you choose Project A, you loose the opportunity to make Project B's potential profit (NPV), which is $3 million.

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Questions?

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DAY DAY 1 2
CHAPTER 5

PROJECT SCOPE MANAGEMENT

PMP Prep Scope

Slide 1

AGENDA
Day 1 PMP Exam Prep Introduction Project Management Framework *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management DAY 2 Project SCOPE Management Project TIME Management Project COST Management Project QUALITY Management DAY 3 Project COMMUNICATION Management Project HUMAN RESOURCE Management Project RISK Management Project PROCUREMENT Management DAY 4 Professional & Social Responsibility REVISION & QUIZ

PROJECT SCOPE MANAGEMENT


What does the scope knowledge area do?
It includes the processes required to ensure that the project includes all the work required and only the work required to complete the project successfully. Managing the project scope is primarily concerned with defining and controlling what is and is not included in the project. Project Scope Management defines and controls all the of work included and not included in the plan. It Makes sure that every one agrees with the scope.

PROJECT SCOPE MANAGEMENT


Project Scope Management includes the following processes: Collect Requirements Define Scope Create WBS Verify Scope Control Scope

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PROJECT SCOPE MANAGEMENT


In the project context, the term scope can refer to: Product Scope - Features & functions that characterize a product, service or result, and/or Project Scope - Work that needs to be accomplished to deliver a product, service or result with the specified features and functions. The processes used to manage project scope, as well as the supporting tools and techniques, vary by application area and are usually defined as part of the project life cycle. Scope baseline includes 3 things: - Approved Detailed Project Scope statement - Associated work breakdown structure - WBS dictionary

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SCOPE PROCESSES
SCOPE PROCESS DEFINITIONS
5. 1 Collect Requirements - Collect Requirements is the process of defining and documenting stakeholders needs to meet the project objectives.
- The projects success is directly influenced by the care taken in capturing and managing project and product requirements. - Requirements include the quantified and documented needs and expectations of the sponsor, customer, and other stakeholders. - the requirements need to be elicited, analyzed, and recorded in enough detail to be measured once project execution begins. - Collecting requirements is defining and managing customer expectations. - Requirements become the foundation of the WBS. - Cost, schedule, and quality planning are all built upon these requirements. - The development of requirements begins with an analysis of the information contained in the project charter and stakeholder register.

SCOPE PROCESSES
5.2 Define Scope It is the process of developing a detailed description of the project and product. 5.3 Create WBS Subdivide major project deliverables into smaller, more manageable components 5.4 Verify Scope Formal acceptance of completed project deliverables, i.e. a signed document 5.5 Control Scope Control changes to the project scope

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SCOPE PROCESSES
Process by process group
Planning 5.1 Collect Requirements 5.2 Define Scope 5.3 Create WBS Monitoring and Controlling 5.4 Verify Scope 5.5 Control Scope

COLLECT REQUIREMENTS
WHAT HAPPENS IN COLLECT REQUIREMENTS?

The development of requirements begins with an analysis of the information contained in the project charter and stakeholder register.

The requirements are elicited, analyzed, and

recorded in enough detail to be measured once project execution begins.

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COLLECT REQUIREMENTS
TOOLS & TECHNIQUES Interviews
Focus groups Facilitated workshops Group creativity techniques Group decision making techniques Questionnaires and surveys observations Prototypes

INPUTS
Project charter Stakeholder register

OUTPUTS
Requirements documentation

Requirements Management Plan Requirements traceability matrix


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COLLECT REQUIREMENTS - INPUTS


INPUTS
1. 2. Project Charter Stakeholder Register
It is used to identify stakeholders that can provide information on detailed project and product requirements (Stakeholder register is described in Sec 10.1)

COLLECT REQUIREMENTS -T&T

COLLECT REQUIREMENTS T&T


TOOLS & TECHNIQUES 1. 2. Interviews Focus groups
Focus groups bring together prequalified stakeholders and subject matter experts to learn about their expectations and attitudes about a proposed product, service, or result. A trained moderator guides the group through an interactive discussion, designed to be more conversational than one-on-one interview. Facilitated Workshops Group Creativity Techniques - Brainstorming - Nominal group technique - The Delhi Technique - Idea/mind mapping - Affinity diagram

3. 4.

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COLLECT REQUIREMENTS T&T


TOOLS & TECHNIQUES
5. Group Decision Making Techniques - Unanimity - Majority - Plurality (the largest block in a group) - Dictatorship Questionnaires and Surveys Observations Prototypes Prototyping is a method of obtaining early feedback on requirements by providing a working model of the expected product before actually building it.

6. 7. 8.

COLLECT REQUIREMENTS OUTPUTS


OUTPUTS Requirements Documentation
(Read Sec. 5.1.3.1, page 109)

Requirements Management Plan


(Read Sec. 5.1.3.2, page 110)

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OUTPUTS Requirements Traceability Matrix

COLLECT REQUIREMENTS OUTPUTS

Traceability matrix is a table that links requirements to their origin and traces them throughout the project life cycle. It provides a structure for managing changes to the product scope. The process includes, but not limited to tracing: - Requirements to business needs, opportunities, goals, and objectives; - Requirements to project objectives; - Requirements to project scope/WBS deliverables; - Requirements to product design; - Requirements to product development; - Requirements to test strategy and test scenarios; and - High-level requirements to more detailed requirements

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SCOPE PROCESSES
Process by process group
Planning
5.1 Collect Requirements 5.2

Monitoring and Controlling


5.4 Verify Scope 5.5 Control Scope

Define Scope
5.3 Create WBS

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DEFINE SCOPE
What happens in Define Scope?
Define Scope is the process of developing a detailed description of
the project and product. The preparation of a detailed project scope statement is critical to project success and builds upon the major deliverables, assumptions, and constraints that are documented during project initiation. During planning, the project scope is defined and described with greater specificity as more information about the project is known. Existing risks, assumptions and constraints are analyzed for completeness

DEFINE SCOPE
TOOLS & TECHNIQUES Expert judgement
Product analysis Alternative identification Facilitated workshops

INPUTS
Project charter Requirements documentation Organizational process assets

OUTPUTS Project scope statement


Project document updates

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DEFINE SCOPE - INPUTS


INPUTS
Project Charter
High-level project description and product characteristics

Requirements documentation
Described in Sec. 5.1.3.1

Organizational process Assets

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DEFINE SCOPE T & T


TOOLS & TECHNIQUES
Expert Judgment Expert judgment is often used to analyze the information needed to develop the project scope statement. Product Analysis Differs by application area (translates product objectives into tangible deliverables and requirements). Includes techniques such as product breakdown, systems analysis, systems engineering , value engineering, and value analysis.

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DEFINE SCOPE T&T


Alternatives Identification Technique used to generate different approaches to execute & perform project work. Common techniques are brainstorming (group shares impulse ideas & gains ideas from each other) & lateral thinking (consider several points of view)

Facilitated Workshops Read Section 5.1.2.3

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DEFINE SCOPE - OUTPUTS


1) Project Scope Statement
It describes in detail the project deliverables & work required to create the deliverables. It defines what work will be performed & what work is excluded determines how well the PM team can control the overall project scope in turn can determine how well the PM team can plan, manage & control execution of the project It includes, either directly or by reference to other documents (must read page 115 of PMBOK thoroughly)

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DEFINE SCOPE - OUTPUTS


The detailed project scope statement includes, either directly, or by reference to other documents, the following:

Product scope description


Progressively elaborated characteristics of project's product, service or result described in the project charter and requirements documentation.

Product acceptance criteria


Process and criteria for accepting completed products

Project deliverables
Product or service of the project, and supplementary results, such as project management reports & documentation

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DEFINE SCOPE - OUTPUTS


Project exclusions
Generally identifies what is excluded as from the project (must state explicitly)

Project constraints
- Restriction or limitation of the project scope that limit teams option e.g. pre-defined budget; imposed dates or schedule milestones etc. - Projects performed under contract generally have contractual provisions

Project assumptions - Factors, that for planning purposes, are considered true, real or certain. - Generally involve a degree of risk

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DEFINE SCOPE - OUTPUTS


2) Project Document Updates
Documents that may be updated include, but not limited to : - Stakeholder register - Requirements documentation - Requirements traceability matrix

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DEFINE SCOPE - OUTPUTS


Question
My company is researching on clean energy on clean transportation. As the Project Manager, which of the following is a valid assumption? A. Project scope is to develop an alternative energy source or electric drive for Off-road vehicles. B. Project has to be completed in 24 months C. Cost of the project is $ 17m D. Gas will become a scarce commodity after 20 years

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DEFINE SCOPE - OUTPUTS


Answer : D
Assumptions are factors that are considered true, real or certain (PM needs to make assumptions at every stage of the project) Constraints are limitations or restrictions. (given in Project Charter)

D is the only assumption; all the others are constraints.

SCOPE PROCESSES
Process by process group
Planning
5.1 Collect Requirements 5.2 Define Scope 5.3

Monitoring and Controlling


5.4 Verify Scope 5.5 Control Scope

Create WBS
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CREATE WBS
WHAT'S A WORK BREAKDOWN STRUCTURE?
Deliverable-oriented hierarchy of decomposed work to be done by the project team. Organizes & defines the total scope of the project. Subdivides the project work into smaller, more manageable pieces of work. (refer to figure 5-7 in page117 of PMBOK)

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CREATE WBS
TOOLS & TECHNIQUES
Decomposition

INPUTS
Project scope statement Requirements documentation Organizational process assets

OUTPUTS
WBS WBS dictionary Scope baseline Project document updates

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CREATE WBS - INPUTS


INPUTS
Project Scope Statement Requirements Documentation Organizational Process Assets

CREATE WBS T&T


TOOLS & TECHNIQUES Decomposition Decomposition is sub-division of project deliverables into smaller, more
manageable components. Decomposition involves the following activities: Decomposition may not be possible for a deliverable or sub-project that will be accomplished far into the future. PM team waits until the deliverable or sub-project is clarified so the details of WBS can be developed. This technique is called Rolling Wave Planning. (Read page 118)

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CREATE WBS Definitions


Work Package a deliverable at lowest level of WBS with a group of activities, which are used in Activity Definition as schedulable tasks (may be further decomposed) Planning package Future deliverables or subprojects that cant be decomposed

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CREATE WBS
Decomposition process involves:
Identifying the deliverables and related work Structuring and organizing the WBS Decomposing the upper WBS levels into lower level detailed components. Develop & Assign identification codes to each WBS component (code of account) Verifying that the degree of decomposition of the work is necessary and sufficient

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APPROACHES TO DEVELOP WBS


Using guidelines: Some organizations, like the DOD, provide guidelines for preparing WBSs The analogy approach: It often helps to review WBSs of similar projects The top-down approach: Start with the largest items of the project and keep breaking them down The bottoms-up approach: Start with the detailed tasks and roll them up
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CREATE WBS
Sample Intranet WBS Organized by Product

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SAMPLE INTRANET WBS ORGANIZED BY PHASE

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CREATE WBS
Basic principles for creating a WBS:
1. A unit of work should appear at only one place in the WBS. 2. The work content of a WBS item is the sum of the WBS items below it. 3. A WBS item is the responsibility of only one individual, even though many people may be working on it. 4. The WBS must be consistent with the way in which work is actually going to be performed; it should serve the project team first and other purposes only if practical. 5. Project team members should be involved in developing the WBS to ensure consistency and buy-in. 6. Each WBS item must be documented to ensure accurate understanding of the scope of work included and not included in that item. 7. The WBS must be a flexible tool to accommodate inevitable changes while properly maintaining control of the work content in the project according to the scope statement.

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CREATE WBS - Definitions


Code of Accounts -Uniquely identifies each element (box) of the WBS MS Project, Visio etc. can generate Code of Accounts. Chart of Accounts -Coding structure used by the performing organization to report financial information by category, i.e. labour or supplies. It's generally as given in General Ledger. Control Account -A management control point placed in a WBS element where scope, cost & schedule can be tracked. Also used for planning when work packages are not planned yet. Documented in a Control Account Plan.

CREATE WBS- OUTPUTS


OUTPUTS Work Breakdown Structure
The WBS should not be confused with other break-down structure used to present project information. Some of them used in other application/knowledge areas include: Organizational Breakdown Structure (OBS): depiction of project by departments, units or teams Bill Of Material (BOM): tabulation of physical assemblies, subassemblies and components Risk Breakdown Structure (RBS): depiction of identified project risks arranged by risk category Resource Breakdown Structure (RBS): depiction of project resources by type

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CREATE WBS- OUTPUTS


WBS Dictionary
Document

that details each WBS component It includes: Code of account identifier a statement of work with defined deliverables Responsible organization List of schedule milestone It could include: Contract information Quality requirements Technical references List of associated activities/interdependencies Resources required Cost estimate

CREATE WBS- OUTPUTS


Scope Baseline - The approved detailed Project Scope Statement and its associated WBS & WBS Dictionary.

Project Document Updates

SCOPE PROCESSES
Process by process group
Planning
5.1 Collect Requirements 5.2 Define Scope 5.3 Create WBS

Monitoring and Controlling


5.4

Verify Scope
5.5 Control Scope

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VERIFY SCOPE
HOW DO WE VERIFY SCOPE?
Getting the stakeholders' formal acceptance of completed or updated
scope & deliverables, i.e. the WBS or the software you delivered If a project terminates early, project scope verification should be done next to establish & document the level & extent of completion. Scope verification is concerned with acceptance of deliverables, While quality control is concerned with quality of deliverables Quality control is generally performed before scope verification but can be performed in parallel as well It's unethical to ignore Scope Verification because it adds risk to meeting the customer's needs (see PMP Code of Conduct)

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VERIFY SCOPE
TOOLS & TECHNIQUES Inspection INPUTS Project scope
statement WBS dictionary Project scope management plan Deliverables

OUTPUTS Accepted deliverables Requested changes Recommended corrective actions

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VERIFY SCOPE - INPUTS


INPUTS
Project Scope Statement WBS Dictionary Project Scope Management Plan Deliverables - partially or fully completed & are an output of the Direct & Manage Project Execution

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VERIFY SCOPE T&T


TOOLS & TECHNIQUES
Inspection Measuring, examining, and verifying to determine whether work or deliverables meet requirements and product acceptance criteria. Inspections are also called reviews, product reviews, audits and walkthroughs.

VERIFY SCOPE - OUTPUTS


OUTPUTS
Accepted Deliverables Documents those completed deliverables that have been accepted. Documents those completed deliverables that have not been accepted, along with the reasons for non-acceptance. Includes supporting documentation received from customer or sponsor and acknowledging stakeholders acceptance of the projects deliverables. Requested Changes Recommended Corrective Actions
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SCOPE PROCESSES
Process by process group
Planning
5.1 Collect Requirements 5.2 Define Scope 5.3 Create WBS

Monitoring and Controlling


5.4 Verify Scope 5.5

Control Scope

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CONTROL SCOPE
WHAT HAPPENS DURING CONTROL SCOPE ? (Change is inevitable)
Influencing the factor that create project scope changes Controlling the impact of those changes Assures all requested changes and recommended corrective actions are processed through the project Integrated Change Control process Project scope control is used to manage the actual changes when they occur& integrated with other control processes Note: Uncontrolled changes are often referred to as project scope creep
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CONTROL SCOPE
TOOLS & TECHNIQUES Change control system Variance analysis Replanning Configuration management system OUTPUTS INPUTS Project scope statement Project scope statement (updates) Work breakdown structure WBS (updates) WBS dictionary WBS dictionary (updates) Project scope Scope baseline (updates) Requested changes management plan Recommended corrective action Performance reports Organizational process assets Approved change requests (updates) Work performance Project management Plan information (updates)
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CONTROL SCOPE - INPUTS


INPUTS
Project Scope Statement Work Breakdown Structure WBS Directory Project Scope Management Plan Performance Reports Performance reports provide information on project work performance, such as interim deliverables that have been completed Approved Change Requests Work Performance Information
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CONTROL SCOPE T&T


TOOLS & TECHNIQUES
Change Control System
Documented in project scope management plan, defines the procedures by which the project scope or product scope can be changed.

Variance Analysis
Project performance measurements are used to assess the magnitude of variation. Important aspects of scope control include determining cause of variance to scope baseline and deciding whether corrective action is required. Time & cost areas (to come) use a mathematical technique called earned value analysis.

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CONTROL SCOPE T&T


Re-planning
Approved change requests can require modifications to the: WBS WBS dictionary Project Scope Statement Project Scope Management Plan Other components of Project Management Plan

Configuration Management System Provides procedures for the status of the deliverables, and assures that requested changes to the project scope & product scope are thoroughly considered & documented before being processed through ICC process.

CONTROL SCOPE OUTPUTS


OUTPUTS
Project Scope Statement (updates) Work Breakdown Structure (updates) WBS Dictionary (Updates) Scope Baseline (Updates) Requested Changes Recommended Corrective Actions Organizational Process Assets (Updates) Project Management Plan (Updates) PMP Prep Scope Slide 55

SAMPLE EXAM QUESTION


Question
You're the project manager for an advertising campaign. The stakeholders, including the client, approved your completed WBS. Later, after some of the artwork has been printed, the client wants to add a registered trademark symbol, which will cost a considerable amount of money. The client says that your company's salesperson, prior to signoff on the WBS, promised this feature would be included. Who should pay for the change? A. Your company managing the project B. Both the client and your company should pay part of the cost C. The change should not be implemented D. The client

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SAMPLE EXAM QUESTION


Answer - D
Because signing of the WBS constitutes an agreement between your company managing the project and the client, the client should pay. Work that is not specified in the WBS is not part of the project scope. In reality, this is sometimes not the case. Companies will frequently do work that is outside the project scope in order to ensure the goodwill of the client. Also note that if the WBS had been done with a milestone deliverable for signing of the artwork before printing (scope verification), this could have been avoided.

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Questions?

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DAY 3

CHAPTER 6

PROJECT TIME MANAGEMENT

PMP Prep Time

Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction Management Project Management Framework Management *Introduction RESOURCE Management *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management PROCUREMENT Management Project SCOPE Management Responsibility

DAY 4
Project QUALITY Project RISK Project HUMAN

DAY 2

Project

DAY 5

Professional & Social

DAY 3
Project TIME Management Project COST Management

DAY 6
REVISION & QUIZ

WHAT DOES THE TIME MANAGEMENT AREA ATTAIN?

PROJECT TIME MANAGEMENT

Manages the project schedule to ensure timely completion of the project Utilizes the Schedule Management Plan from the Develop Project Management Plan process

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TIME PROCESSES
DEFINITIONS : TIME PROCESSES
6.1 Define Activities Identifying the specific actions to be performed to produce project deliverables (at the lowest level in the WBS, which is called the work package). 6.2 Sequence Activities Identifying & documenting relationships among the project activities. 6.3 Estimate Activity Resources Estimate the type & quantities of material, people, equipment, or supplies required to perform each activity.

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TIME PROCESSES
6.4 Estimate Activity Durations
Estimate the number of work periods needed to complete individual activities with estimated resources.

6.5 Develop Schedule


Analyze activity sequences, durations, resource requirements, and schedule constraints to create the project schedule. (The five processes above could be viewed as a single process in small projects)

6.6 Control Schedule


Monitor the status of the project to update project progress and managing changes to the schedule baseline.

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TIME PROCESSES
PLANNING MONITORING & CONTROLLING 6.6 Control Schedule

6.1 Define Activities


6.2 Sequence Activities 6.3 Estimate Activity Resources 6.4 Estimate Activity Durations 6.5 Develop Schedule

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DEFINE ACTIVITIES
WHAT HAPPENS IN DEFINE ACTIVITIES? Identifies the specific actions to be performed to produce the project deliverables. The
Create WBS process identifies the deliverables at the lowest level in the Work Breakdown Structure (WBS), the work package. Decompose the work packages into smaller components called activities that represent the work necessary to complete the work package. Differentiate between a work package and an activity? A work package is a deliverable as a result of work An activity is an action that produces a deliverable alone or together with other activities Activities provide a basis for estimating, scheduling, executing, and monitoring & controlling the project work. Implicit in this process is defining and planning the schedule activities such that the project objectives will be met.

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DEFINE ACTIVITIES
TOOLS & TECHNIQUES Decomposition
Rolling wave planning Templates Expert judgement

Scope baseline
Enterprise environmental factors Organizational process assets

OUTPUTS Activity list Activity attributes Milestone list

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DEFINE ACTIVITIES INPUTS


Scope Baseline
Enterprise Environmental Factors Organizational Process Assets
- Existing formal and informal activity planning-related policies, procedures, and guidelines, such as scheduling methodology, that are considered in developing the activity definitions, and - Lessons-learned knowledge base containing historical information regarding activities lists used by previous similar projects.

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DEFINE ACTIVITIES T&T


TOOLS & TECHNIQUES
Decomposition
Subdivides work packages into smaller, more manageable components called

activities. Activities represent the effort needed to complete a work package.

Rolling Wave Planning


Rolling wave planning is a form of progressive elaboration planning, where

Work in near term is planned in detail Work in future is planned at a higher level of WBS Therefore, work can exist at various levels of detail depending on where it is in the project life cycle. For example, during early strategic planning, when information is less defined, work packages may be decomposed to the milestone level. As more is known about the upcoming events in the near term it can be decomposed into activities.

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DEFINE ACTIVITIES T&T


Templates
A standard activity list or a portion of an activity from a
previous project is often used as a template for a new project. Templates are also used to identify typical schedule milestones.

Expert Judgment
Experts - experienced and skilled in developing detailed
project scope statements, the WBS, and project schedules can provide expertise in defining activities

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DEFINE ACTIVITIES OUTPUTS OUTPUTS


Activity List
The activity list is a comprehensive list of all schedule activities required on the project. The activity list includes the activity identifier and a scope of work description for each activity in sufficient detail to ensure that project team members understand what work is required to be completed.

Activity Attributes Multiple components associated with each activity that evolve over time. During the initial stages of the project they include: - Activity ID, WBS ID, and Activity Name and when completed may include - Activity codes, activity description - Predecessor activities, successor activities, logical relationships - Leads & lags - Resource requirements - Imposed dates, constraints & assumptions - Person or company responsible for executing the work - Geographic area or place where the work has to be performed - Activity type such as level of effort, discrete effort, and apportioned effort
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DEFINE ACTIVITIES OUTPUTS OUTPUTS


Activity Attributes (Contd.) Activity attributes are used for schedule development and for selecting, ordering, and sorting the planned schedule activities in various ways within reports. The number of attributes varies by application area. Milestone List A milestone is a significant point or event in the project. Its type that could be either: Mandatory (required by contract or law) Optional (based upon project requirements or historical information)

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TIME PROCESSES
PLANNING 6.1 Define Activities MONITORING & CONTROLLING 6.6 Control Schedule

6.2 Sequence Activities


6.3 Estimate Activity Resources 6.4 Estimate Activity Durations 6.5 Develop Schedule

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SEQUENCE ACTIVITIES
WHAT HAPPENS IN SEQUENCE ACTIVITIES?
Identifies & documents logical relationship among the project activities. Every activity and milestone except the first and last are connected to at least one predecessor and one successor. Defines precedence relationships and leads & lags to support development of a realistic & achievable project schedule. Sequencing can be performed by using project management software or by using manual or automated techniques.

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SEQUENCE ACTIVITIES
TOOLS & TECHNIQUES Precedence diagramming
method (PDM) Dependency determination Applying leads & lags Schedule network templates

Activity list Activity attributes Milestone list Project scope statement Organizational process assets

INPUTS

OUTPUTS
Project schedule network diagrams Project document updates

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SEQUENCE ACTIVITIES
INPUTS
Activity List Activity Attributes Milestone List Project Scope Statement Organizational Process Assets

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SEQUENCE ACTIVITIES
Tools &Techniques
1) Precedence

Diagramming Method (PDM)

Method of constructing a Project schedule network diagram that uses Rectangles or boxes (called nodes) to represent activities Arrows show dependencies This method is also called activity-on-node (AON)

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SEQUENCE ACTIVITIES T&T Types of Predecessor


Finish-to-Start Successor activity can not start until the predecessor activity
is completed Activity A Predecessor Activity B Successor e.g. Trouser can not be stitched till the linen is cut.

Finish-to-Finish Completion of successor activity depends upon

completion of predecessor activity. Hence two tasks must finish at the same time e.g. Wiring Inspection cant finish until House Wiring is completed. Predecessor Activity A Successor Activity B

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SEQUENCE ACTIVITIES T&T


Start-to-Start -Start of successor activity depends upon start of the
predecessor activity e.g. start canvassing only after candidature is announced by the Election Commission. Predecessor Activity A Successor Activity B

Start-to-Finish Completion of successor activity depends upon start of the


predecessor activity e.g. To pass PMP exams, you have to start reading PMBOK Predecessor Activity A Successor Activity B

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Read just for knowledge Arrow Diagramming Method (ADM)

SEQUENCE ACTIVITIES T&T

ADM uses arrows to represent activities & connects to nodes to show their dependencies Also called activity-on-arrow (AOA) Used in teaching Schedule Network Theory Uses only finish-to-start dependencies and is not as prevalent as PDM Can require "dummy" relationships (dummy activities) (broken lines) that have zero value for duration Uses more than one time estimate.

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2) Dependency Determination
Three types of dependencies are used

SEQUENCE ACTIVITIES T&T

Mandatory dependencies (sometimes called hard logic) Inherent in the nature of the work e.g. before basement 1st floor Discretionary dependencies (preferred, preferential or soft logic) Sometimes required in unusual aspect of the project PM team decides based on knowledge, best practices & exp. External dependencies Relationship between project & non-project activities, i.e. dependent on delivery of computers before the software development can start

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SEQUENCE ACTIVITIES T&T


3) Applying Leads & Lags
A lead allows the following activity start before the previous one is finished.
Start painting the bedroom before all the rooms are constructed. Lead is overlap between activities

A lag allows a delay in the next activity.


Staff joined but training to commence after 15 days (a lag of 15 days) Lag is waiting time between activities.

4) Schedule Network Templates

SEQUENCE ACTIVITIES T&T

Standardized project schedule network diagram templates can be used to expedite the preparation of networks Portions of a project schedule network diagram are often referred as sub network or fragment network Useful for identical deliverables, as in different floors of a multi-storied building

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SEQUENCE ACTIVITIES OUTPUTS


OUTPUTS
1) Project Schedule Network Diagrams
Schematic displays of project schedule activities and logical relationships among dependencies A short narrative describing the approach used to sequence the activities. Any unusual activity sequences within the network are fully described in the narrative (during schedule updates, you'll need to remember)

2) Project Document Updates


Project documents that may be updated include, but not limited to: Activity lists Activity attributes Risk register
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TIME PROCESSES
PLANNING 6.1 Define Activities 6.2 Sequence Activities 6.3 Estimate Activity Resources 6.4 Estimate Activity Durations 6.5 Develop Schedule MONITORING & CONTROLLING 6.6 Control Schedule

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ESTIMATE ACTIVITY RESOURCES


WHAT IS IN ESTIMATE ACTIVITY RESOURCES?

Estimate Activity Resources is the process of estimating the type and quantities of material, people, equipment, or supplies required to perform each activity. For example. a construction project team will need to be familiar with local building codes. Such knowledge is often readily available from local sellers. However, if the local labor pool lacks experience with unusual or specialized construction techniques, the additional cost for a consultant might be the most effective way to secure knowledge of the local building codes.

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ESTIMATE ACTIVITY RESOURCES


TOOLS & TECHNIQUES
Expert judgment Alternative analysis Published estimating data Bottom-up estimating Project management software

INPUTS
Activity list
Activity attributes Resource calendars Enterprise environmental factors Organizational process assets

Activity resource requirements Resource breakdown structure Project document updates

OUTPUTS

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ESTIMATE ACTIVITY RESOURCES - INPUTS


INPUTS
Activity List

Activity Attributes Resource Calendars The composite resource calendar includes the availability, capabilities, and skills of human resources
- Which resources (people, equipment, material) are potentially available. - Estimate resource types, i.e. senior vs. junior engineer at different phase of the project (e.g. during early phases of an Engineering Design Project-Junior engineer is fine but at later stages experienced engineers will be required). - Consider geographical location & when they will be available.

Enterprise Environmental Factors Organizational Process Assets

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ESTIMATE ACTIVITY RESOURCES T&T


Expert Judgment
Experts access the resource-related inputs in planning & estimating

Alternatives Analysis
Many schedule activities have alternative methods of accomplishment. They include: Using various levels of resource capability or skills Using different sizes or types of machines or tools, e.g. automated or manual Make-or-buy decisions regarding the resources (whether to outside contracting is cheaper than hiring)

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ESTIMATE ACTIVITY RESOURCES T&T


Published Estimating Data
Some companies publish production rate and unit cost of resources for different trades, material & equipment within countries, various info published by PMI for its members

Bottom-up Estimating
For accuracy, the work within schedule activity is decomposed into more detail Each activity is then totalled into overall project Schedule activities may or may not have dependencies between them that can affect the application and use of resources.

Project Management Software


Sophisticated software help plan, organize and manage resource pools & develop resource estimates.
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ESTIMATE ACTIVITY RESOURCES - OUTPUTS


Activity Resource Requirements
Identification & description of types & quantities of resources required for each schedule activity Added up to determine estimated resources for each work package Schedule activity forms basis of estimate & determines type, availability and quantity of resources used Schedule Development process determines when resources are needed

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ESTIMATE ACTIVITY RESOURCES - OUTPUTS


Resource Breakdown Structure (RBS)
Is hierarchical structure of identified resources by (i) Resource category, and (ii) Resource type

Project Document Updates


Activity list, Activity attributes, Resource calendars.

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TIME PROCESSES
PLANNING 6.1 Define Activities 6.2 Sequence Activities 6.3 Estimate Activity Resources 6.4 Estimate Activity Durations 6.5 Develop Schedule MONITORING & CONTROLLING 6.6 Control Schedule

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ESTIMATE ACTIVITY DURATIONS


WHAT IS THERE IN ESTIMATE ACTIVITY DURATION?
The process of approximating the number of work periods needed to complete individual activities with estimated resources. The process uses information on: Activity scope of work Required resource types, estimated resource quantities & resource calendars. The duration estimate is: progressively elaborated the process considers the quality & availability of the input data All data and assumption that support duration estimating are documented for each estimate of activity duration. Most project management software for scheduling will handle this situation by using a project calendar and alternative work-period resource calendars that are usually identified by resources that require specific work-periods. In addition to the sequencing logic, the activities will be performed according to the project calendar and appropriate resource calendars.
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ESTIMATE ACTIVITY DURATIONS


TOOLS & TECHNIQUES
Expert judgment Analogous estimating Parametric estimating Three-point estimates Reserve analysis

Activity list Activity attributes Activity resource requirements Resource calendars Project scope statement Enterprise environmental factors Organizational process assets

INPUTS

OUTPUTS
Activity duration estimates Project document updates

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ESTIMATE ACTIVITY DURATIONS - INPUTS


INPUTS
Activity List Activity Attributes Activity Resource Requirements Resource Calendars Project Scope Statement Enterprise Environmental Factors Organizational Process Assets
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ESTIMATE ACTIVITY DURATIONS T&T


Expert Judgment
Analogous Estimating
An estimate that's based on the duration of previous, similar schedule activity as the basis for estimating duration of a future schedule activity. It uses historical information & expert judgement. It is most reliable when the previous activities are similar in fact and not just in appearance, and the project team members preparing the estimates have the needed expertise (A form of a top-down estimate)

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ESTIMATE ACTIVITY DURATIONS T&T


Parametric Estimating
Estimates activity durations quantitatively by multiplying the quantity of work to be performed by the productivity rate. Basically uses some measurable parameter that changes the same way as cost does

Three Point Estimates


The accuracy of the activity estimate can be improved by considering estimation uncertainty and risk. This concept originated with the Program Evaluation and Review Technique (PERT). PERT uses three estimates to define an approximate range for an activitys duration: The three estimates are Optimistic, Pessimistic & Most Likely. PERT analysis calculates an Expected activity duration using a weighted average of the these three estimates: Weighted average = {Optimistic + (4* Most likely) + Pessimistic} / 6
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ESTIMATE ACTIVITY DURATIONS T&T


Reserve Analysis (read 6.4.2.5, page 151)
Project teams can choose to incorporate additional time referred to as contingency reserve or time reserves or buffers Can be applied to overall project schedule or at a point in the schedule as recognition of project risk They are planned provisions to mitigate the impact of variance in cost or schedule (takes care of risk in cost & time)

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ESTIMATE ACTIVITY DURATIONS OUTPUTS

OUTPUTS
Activity Duration Estimates
Quantitative assessments of the likely number of work periods required to complete a schedule activity Estimates should include some indication of the range of possible results, I.e. 2 weeks +/-2 days to indicate that schedule activity will take at least eight days and no more than 12 days (assume 5 day week)

Project Document Updates

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TIME PROCESSES
PLANNING 6.1 Define Activities 6.2 Sequence Activities 6.3 Estimate Activity Resources 6.4 Estimate Activity Durations MONITORING & CONTROLLING 6.6 Control Schedule

6.5 Develop Schedule

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DEVELOP SCHEDULE
HOW DO YOU DEVELOP A SCHEDULE ?
Develop Schedule is the process of analysing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule. Determine planned start & finish dates for all project activities Schedule development is iterative (repeats in cycles) & continues throughout the project to modify duration & resource estimates as the: Work progresses Project Management Plan changes the nature of risk events evolves The schedule baseline (developed at the beginning of the project) is used to track work progress and variance.

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DEVELOP SCHEDULE
TOOLS & TECHNIQUES
Schedule network analysis
Critical path method Critical chain method Resource levelling What-if scenario analysis Applying leads and lags Schedule compression Scheduling tool

Activity list Activity attributes Project schedule network diagrams Activity resource requirements Resource calendars Activity duration estimates Project scope statement Enterprise environmental factors Organizational process assets
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INPUTS

Project schedule Schedule baseline Schedule data Project document updates

OUTPUTS

DEVELOP SCHEDULE - INPUTS


INPUTS
Activity List Activity Attributes Project Schedule Network Diagrams Activity Resource Requirements Resource Calendars Activity Duration Estimates Project Scope Statement Enterprise Environmental Factors

Organizational Process Assets


e.g. Scheduling methodology, and project calendar

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DEVELOP SCHEDULE T&T


TOOLS & TECHNIQUES
1) Schedule Network Analysis
Generates the project schedule with early and late start and finish dates
using: Critical path method Critical chain method What-if analysis & resource levelling Schedule compression or analysis

2) Critical Path Method (CPM ) Read page 154-155


Series (or path) of activities through the network diagram that
determines the soonest time a project can finish Calculates the theoretical early start and finish dates, and late start and finish dates, for all activities without regard for any resource limitations, by performing a forward and backward pass analysis through the schedule network. longest path through the network diagram they have either zero or negative total float. Networks can have multiple near critical paths. the schedule activities on critical path are called critical activities
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DEVELOP SCHEDULE T&T


TOOLS & TECHNIQUES
3) Critical Chain Method (Read page 155) Critical chain is a schedule network analysis technique that modifies the project schedule to account for limited resources. The critical chain method adds duration buffers that are non-work schedule activities to manage uncertainty. One buffer, placed at the end of the critical chain, is known as the project buffer and protects the target finish date from slippage along the critical chain.

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DEVELOP SCHEDULE T&T


TOOLS & TECHNIQUES
4) Resource Levelling After using critical path to analyse your schedule, you may need to address: Resource usage that needs to be kept at a constant level, e.g. a technician utilized for
120 hours for one week is better utilized at 40 hours a week for 3 weeks Activities that need to be performed to meet specified delivery dates to address the situation where shared or critical required resources are only available at certain times and in limited quantities

Resource levelling often results in:


A longer project duration
Allocating scarce resources to critical path activities Using overtime or multiple shifts Methods to increase resource productivity like different technology or machines Can cause the original critical path to change A cost increase, but staff cost may decrease if overtime is eliminated

Produces a resource-limited or resource-constrained schedule Reverse resource allocation scheduling is done from project end.
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DEVELOP SCHEDULE T&T


TOOLS & TECHNIQUES
5) What-If Scenario Analysis

Creates a schedule model, then computes different scenarios (simulations) if X happens; assess the feasibility of the project schedule under adverse conditions. The most common technique is Monte Carlo Analysis (read Section 11.4.2.2)

6) Applying Leads and Lags 7) Schedule Compression

Shortens project schedule without changing the project scope to meet schedule
constraints, imposed dates, or other schedule objectives. Crashing addition of more resources on the critical path to complete the project earlier (generally increases cost). Fast tracking - activities or phases that normally would be done in sequence are performed in parallel; can require work to be performed without detailed info. & can increase risk.

8) Scheduling Tool Automated scheduling tools expedite the scheduling process by generating start and finish
dates based on the inputs of activities, network diagrams, resources and activity durations. A scheduling tool can be used in conjunction with other project mgmt. Software applications as well as manual methods.
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DEVELOP SCHEDULE T&T


Consider the following diagram of activities (time is given in days)
1. How many paths are on this network diagram? 2. How long is each path in days? 3. Which is the critical path? 4. What is the least amount of time needed to finish this project?

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DEVELOP SCHEDULE T&T


PERT (Problem)
What's the expected time to complete an activity given these times? Optimistic = 15 min. Most Likely =30 min. Pessimistic = 60 min. Weighted Average (Expected) Time using PERT calculations: {Optimistic + ( 4 x Most Likely) + Pessimistic} divided by 6 Answer: (15 + 120 + 60) /6 = 32.5 min

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DEVELOP SCHEDULE T&T

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DEVELOP SCHEDULE T&T


Schedule Exercise -Draw a network diagram based on this information to
answer these questions. Task A can start immediately & is estimated at 3 weeks Task B can start after Task A is completed & is estimated at 3 weeks Task C can start after Task A is completed & is estimated at 6 weeks Task D can start after Task B is completed & is estimated at 8 weeks Task E can start after Tasks C & 0 are finished & IS estimated at 4 weeks 1. How long is the critical path? 2. What's the float of Task C?_______ and Task B? 3, What's the total float (between all nodes) of the path with the longest float?

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DEVELOP SCHEDULE T&T

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DEVELOP SCHEDULE T&T


More Exercise Questions
4. If Task C changes to 10 weeks, how will the schedule dates be affected? 5. Task F, which is estimated at 11 weeks, has been added to the project. It must be completed before Task E & after Task C. The customer is concerned that this will add an additional 11 weeks to the elapsed time of the project. How many weeks will be added? (Assume question 4 above didn't happen.)

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DEVELOP SCHEDULE T&T


Exercise Answers 4 & 5
4. No effect. Task C is on a path with a 5 week total float so adding another 4 weeks will still leave 1 week of total float on its path. 5. Task F is added to a path with a 5 week float. Adding this 11 week activity will use up all 5 of the float weeks and delay the project by an additional 6 weeks. The critical path will move to the bottom with a 6 week float on the top path.

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DEVELOP SCHEDULE OUTPUTS


OUTPUTS
1) Project Schedule
Includes at least a planned start date & planned finish date for each schedule activity. Project Schedule can be presented in summary form, called master or milestone schedule, or presented in detail. More often presented graphically using following formats: Project Schedule Network Diagrams (These diagrams can be presented in the activity-on-node diagram format or in a time-scaled schedule network diagram format (see Figure 6-10, p.150), sometimes called a logic bar chart.
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DEVELOP SCHEDULE OUTPUTS


Milestone Charts

Bar chart with only scheduled start or completion dates of major deliverables and key external interfaces (see Fig. 6-14, p.158 top milestone schedule) In milestone chart activities have zero duration

Bar Charts
Gantt Charts with bars representing activities show activity start and end
dates & expected durations For control & management communication, more comprehensive summary activity, (see Fig. 6-14, p.158 middle summary schedule) sometime referred to as a hammock activity, is used between milestones or across multiple interdependent work packages

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DEVELOP SCHEDULE OUTPUTS


Project schedule network diagrams (see Fig. 6-7 and Fig. 6-14) 2) Schedule Baseline
Accepted & approved schedule

3) Schedule Data 4) Project Document Updates - Activity resource requirements - Activity attributes - Calendar - Risk register

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TIME PROCESSES
PLANNING 6.1 Define Activities 6.2 Sequence Activities 6.3 Estimate Activity Resources 6.4 Estimate Activity Durations 6.5 Develop Schedule MONITORING & CONTROLLING

6.6 Control Schedule

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CONTROL SCHEDULE
WHAT HAPPENS IN CONTROL SCHEDULE?
Schedule control is concerned with: Determining the current status of the project schedule Influencing the factors that create schedule changes Determining that the project schedule has changed Managing the actual changes as they occur

Schedule Control is a portion of Integrated Change Control process

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CONTROL SCHEDULE
TOOLS & TECHNIQUES
Performance reviews
Variance analysis Project management software Resource levelling What-if scenario analysis Adjusting leads and lags Schedule compression Scheduling tool

INPUTS
Project management plan Project schedule Work performance information Organizational process assets

OUTPUTS
Work performance measurements Organizational process assets updates Change requests Project management plan updates Project document updates

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CONTROL SCHEDULE - INPUTS


INPUTS
Project Management Plan
It describes how the schedule will be managed and controlled, for example: Format of your schedule; rules for use of MS Project How and how often is the schedule updated Rules for authorizing schedule changes Mechanisms for detecting schedule changes How is time estimating done The schedule baseline is used to compare with actual results to determine if a change, corrective action, or preventive action is necessary. Project Schedule Work Performance Information Organizational Process Assets
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CONTROL SCHEDULE T&T


Performance Reviews
Performance reviews measure, compare, and analyse schedule performance such as actual start and finish dates, percent complete, and remaining duration for work in progress. If earned value mgmt.(EVM) is utilized the schedule variance (SV) and schedule performance index (SPI) are used to assess the magnitude of schedule variations (read page 162)

Variance Analysis
Compare target vs. actual/forecast start and finished dates provides useful information for the detection of deviations and for the implementation of corrective actions in case of delays.

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CONTROL SCHEDULE T&T


Project Management Software Resource Leveling
What-If Scenario Analysis Adjusting Leads and Lags Schedule Compression Scheduling Tool

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CONTROL SCHEDULE OUTPUTS


OUTPUTS
Work Performance Measurements Organizational Process Assets Updates Change Requests Project Management Plan Updates
Project Document Updates

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SAMPLE EXAM QUESTION


Question 1
Mathematical analysis often produces a preliminary schedule that show peaks and valleys in the resource requirements. Resource levelling can take care of this and may result in all the following except: A. Increase project duration B. Increase in productivity by using different technologies and/or machinery C. Reduction in many project costs, but may not be human resource cost D. Utilization of weekends, extended hours or multiple shifts

Answer 1 C is the correct answer. See PMBOK, p.147

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SAMPLE EXAM QUESTION


Question 2
What is the length of the critical path? A. 12 B. 10 C. 11 D. 14
TASK Start A B C E D E END END
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Preceding Activity Start A Start C Start D B E

Estimate in Months 0 3 4 2 5 7 1 3 4

SAMPLE EXAM QUESTION

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SAMPLE EXAM QUESTION

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SAMPLE EXAM QUESTION

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Questions?

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DAY DAY 1 3
CHAPTER 7

PROJECT COST MANAGEMENT

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Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction Management Project Management Framework Management *Introduction RESOURCE Management *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management PROCUREMENT Management Project SCOPE Management Responsibility

DAY 4
Project QUALITY Project RISK Project HUMAN

DAY 2

Project

DAY 5

Professional & Social

DAY 3
Project TIME Management Project COST Management

DAY 6
REVISION & QUIZ

PROJECT COST MANAGEMENT


WHAT DOES THE COST KNOWLEDGE AREA INCLUDE? Processes involved in estimating, budgeting, and controlling costs so that the project can be completed within the approved budget. Primarily concerned with resource costs of schedule activities. The work involved in performing the three processes of Project Cost Mgmt. is preceded by a planning effort of the project mgmt. team. This planning effort is the part of the Develop Project Mgmt. Plan process, which produces a cost management plan that sets out the format and establishes the criteria for planning, structuring, estimating, budgeting, and controlling project costs.

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Slide 2

PROJECT COST MANAGEMENT


WHAT DOES THE COST KNOWLEDGE AREA INCLUDE? The cost management processes and their associated tools and techniques are usually selected during the project life cycle definition (read Sec. 2.1), and are documented in the cost mgmt. plan. Life Cycle Costing It is defined as the cost of using, maintaining & supporting the product, service or result of the project, but it's not part of the project's budget (will get many questions on life cycle costing). Uses the Cost Management Plan (which is a part of the Project Management Plan)

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PROJECT COST MANAGEMENT


Types of Costs : Let us illustrate using an example: Seminar
Fixed- rent of the seminar room is a fixed cost Variable cost of food to participants varies with number of participants Direct hiring of PA system for the seminar indirect cost of electricity of the venue is shared by all the other users

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COST PROCESSES
COST PROCESS DEFINITIONS
7.1 Estimate Costs
Develop cost approximations of all monetary resources needed to complete project activities.

7.2 Determine Budget


Aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

7.3 Control Costs


The process of monitoring the status of the project to update the project budget and managing changes to the cost baseline. In smaller projects, Cost Estimating & Cost Budgeting can be one single process
PMP Prep Cost Slide 5

COST PROCESSES
Processes by process group
Planning Monitoring and controlling 7.3 Control Costs

7.1 Estimate Costs


7.2 Determine Budget

ESTIMATE COSTS
HOW DO YOU ESTIMATE COSTS?
Get a cost approximation of the monetary resources needed to complete each schedule activity Resources should include: Labour & services Materials, equipment & facilities Information technology Inflation, cost contingency reserves Cost estimates are generally expressed in units of currency (or hours) Possible causes of variations should be considered (risk) Accuracy should increase as project progresses Some organizations have formally trained project cost estimators

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ESTIMATE COSTS
Salient Features:
Cost estimating includes identifying and considering various costing alternatives Cost estimates are expressed in units of currency Cost estimates are normally refined during the course of the project. The accuracy of a project estimate will increase as the project progresses through the project life cycle. A project in initial phase could have a rough order of magnitude (ROM) estimate in the range of -50 to +50%. Later in the project, as more info. Is known, estimates could narrow to a range -10 to +10%.

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ESTIMATE COSTS
TOOLS & TECHNIQUES Expert judgement Analogous estimating
Parametric estimating Bottom-up estimating Three-point estimates Reserve analysis Cost of quality Project management estimating software Vendor bid analysis

INPUTS
Scope baseline Project schedule Human resource plan Risk register Enterprise environmental factors Organizational process assets
PMP Prep Cost Slide 9

OUTPUTS Activity cost estimates Basis of estimates Project document updates

ESTIMATE COSTS INPUTS INPUTS


Scope Baseline
Scope statement Work breakdown structure WBS dictionary

Project Schedule
The type and quantity of resources and the amount of time which those resources are applied to complete the work of the project are major factors in determining the project cost. Schedule activity resources and their respective durations are used as key inputs to this process.

Human Resource Plan


The following are necessary components for developing the project cost estimates Project staffing attributes Personnel rates Related rewards/recognition

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ESTIMATE COSTS INPUTS INPUTS


Risk Register
The risk register should be reviewed to consider risk mitigation costs

Enterprise Environmental Factors


The cost estimating process considers Marketplace conditions Commercial databases

Organizational Process Assets


Cost estimating policies, procedures & guidelines Cost estimating templates Historical information Project files Project team knowledge Lesson learned

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ESTIMATE COSTS T&T


TOOLS & TECHNIQUES
Expert Judgment

Analogous Estimating
Using actual cost of previous, similar projects as the basis for costing current project. This method is less costly than other techniques, but is less accurate. Most reliable when previous projects are similar.

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ESTIMATE COSTS T&T


Parametric Estimating
Uses statistical relationship between historical data and other variables ( e.g. required labour hours, square footage in construction etc.)

Bottom-up Estimating
Estimating the cost of individual work packages or schedule activities with the lowest level of detail. This detailed cost is then summarized or "rolled up" to higher levels for reporting and tracking purposes. More accurate than Analogous Estimating.

Three-Point Estimates
PERT uses three estimates to define an approximate range for an activitys cost as under: {Optimistic + (4 * Most Likely) + Pessimistic} / 6

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ESTIMATE COSTS T&T


Reserve Analysis
Cost estimate may include Contingency Reserve (or contingency allowances) to account for cost uncertainty. PM's discretion to deal with anticipated, but not certain events ("known unknowns"). These events are part of the project scope and cost baselines. Contingency reserve may be a percentage of the estimated cost. A schedule reserve can be a zero duration activity.

Cost of Quality
Can also be used to prepare the schedule activity cost estimate (see section 8.1.2.2 Cost of Quality in PMBOK)

QualityCosts

Cost of Good Quality Apprai sal Costs


PMP Prep Cost

Cost of Poor Quality Internal Failure Costs External Faliure Cost

Preventi on Costs

Slide 14

ESTIMATE COSTS T&T


Project Management Estimating Software Cost estimating software applications, computerized spreadsheets, simulation and statistical tools are becoming more widely accepted to assist with cost estimating. Vendor Bid Analysis Analyse vendor bids to determine price of individual products.

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ESTIMATE COSTS OUTPUTS


Activity Cost Estimates
Quantitative (numerical) assessment of the likely costs of the resources required to complete schedule activities. This includes, but not limited to, labour, materials, equipment, services, facilities, information technology and special categories such as an inflation allowance or cost contingency reserve.

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Basis of Estimates

ESTIMATE COSTS OUTPUTS

- The amount and type of additional details supporting schedule activity cost estimate vary by application area. - Supporting detail for activity cost estimate vary by application area. Supporting detail for activity cost may include: Documentation of the basis of the estimate, Documentation of all assumptions made, Documentation of any known constraints, Range of estimates {e.g.$ 10K (-10% / + 10%) or between $9K and $11K} Indication of the confidence level of the final estimate

Project Document Updates


Project documents that may be updated include, but are not limited to, the risk register.

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COST PROCESSES
Processes by process group
Planning Monitoring and controlling 7.3 Control Costs

7.1 Estimate Costs 7.2 Determine Budget

DETERMINE BUDGET
WHAT HAPPENS IN DETERMINE BUDGET?
Aggregating the estimated costs of individual schedule activities or work packages to establish a total cost baseline for measuring performance. It establishes the Project's funding requirements. Remember that the project scope statement provides only the summary budget.

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DETERMINE BUDGET
TOOLS & TECHNIQUES Cost aggregation
Reserve analysis Expert judgment Historical relationship Funding limit reconciliation

Activity cost estimates Basis of estimates Scope baseline Project schedule Resource calendars Contracts Organizational process assets

INPUTS

Cost Performance baseline Project funding requirements Project document updates

OUTPUTS

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DETERMINE BUDGET - INPUTS


INPUTS
Activity cost estimates Basis of estimates Scope baseline Project Schedule Resource Calendars Contracts Organizational process assets

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DETERMINE BUDGET - T&T


TOOLS & TECHNIQUES
Cost Aggregation
Cost estimates of all activities in each work package are aggregated in accordance with the WBS. Total all work packages for higher component levels of WBS, such as control accounts & get the entire project total expected budget by period.

Reserve Analysis
Establishes contingency reserves, such as the management contingency reserve, that are allowance for unknown unknowns risks identified in risk register. PM needs approval for using such reserves. They are not part of project cost baseline, but are included in the budget for the project. Review your reserves through the project to ensure you have the right amount Contingency reserves (spare funds) allow for unplanned, but potentially required changes that may result from identified risks (to cost baseline) Management reserves account for "unknown unknowns": a) Included in performing organization's management budget b) Not included in project budget, cost baseline or earned value calculations
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DETERMINE BUDGET - T&T


Expert Judgement Historical Relationship
Any historical relationships that result in parametric estimates or analogous estimates involve the use of project characteristics (parameters) to develop mathematical models to predict total project costs. Such models can be simple (e.g., residential home construction is based on a certain cost per square foot of space) or complex (e.g., one model of software development costing uses multiple separate adjustment factors, each of which has numerous points within it).

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DETERMINE BUDGET T&T


Tools & Techniques

Funding Limit Reconciliation


The expenditure of funds should be reconciled with any funding limits on the commitment of funds for the project. A variance between funding limits and the planned expenditures will sometimes necessitate the rescheduling of work to level out the rate of expenditures. This can be accomplished by placing imposed date constraints for work into the project schedule.

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DETERMINE BUDGET OUTPUTS


OUTPUTS
Cost Performance Baseline
The cost baseline is an authorized time-phased budget at completion (BAC) used to measure, monitor, and control overall cost performance on the project . It is developed as a summation of the approved budgets by time period and is typically displayed in the form of an S-curve, as is illustrated in Figure 7-6 (page 178). In the earned value management technique the cost performance baseline is referred to as the performance measurement baseline (PMB)

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DETERMINE BUDGET OUTPUTS


OUTPUTS
Project Funding Requirements Get funding requirements, total & by period (e.g. annual or quarterly) and derived from cost baseline, which can exceed (usually by a margin) to allow for either early progress or cost overruns Funding usually occurs in incremental amounts, not continuous, appears as a step graph (see Figure 7-6, p.178) Total required funds is cost baseline plus management contingency reserve Project Document Plan Updates Risk register, Cost estimates, and Project schedule

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COST PROCESSES
Processes by process group
Planning Monitoring and controlling

7.1 Estimate Costs 7.2 Determine Budget

7.3 Control Costs

CONTROL COSTS
WHAT SHOULD YOU DO IN CONTROL COSTS?
Influencing the factors that create changes to the cost baseline, Ensure that all change requests are acted on in a timely manner, Manage the actual changes when and as they occur, Make sure that cost expenditures don't exceed authorized funding (by period & in total) for the project, Monitor cost performance to isolate and understand variances from approved cost baselines, Monitor work performance against funds expended, Prevent unapproved changes from being included in the reported cost or resource usage, Inform appropriate stakeholders of approved changes and associated cost, and Act to bring expected cost overruns within acceptable limits

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CONTROL COSTS
TOOLS & TECHNIQUES Earned value mgmt. Forecasting To-complete performance index Performance reviews Variance analysis Cost change control system Project management software

Project management plan Project funding requirements Work performance information Organizational process assets

INPUTS

OUTPUTS
Work performance measurements Budget forecasts Organizational process assets updates Change requests Project management plan updates Project document updates

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CONTROL COSTS - INPUTS


INPUTS
Project Management Plan - Cost Performance Baseline - Cost Mgmt. Plan Project Funding Requirements Work Performance Information Organizational Process Assets

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CONTROL COSTS - T&T


TOOLS & TECHNIQUES
Cost Change Control System Performance Measurement Analysis
An important part of cost control is to determine: - Cause of variance - Magnitude of a variance - Decide if variance requires corrective action Performance measurement techniques (called EVT) help to assess the magnitude of any variances that will invariably occur. Earned Value Technique (EVT) compares the value of the budgeted cost of work performed (earned) at the original allocated budget amount to both - the budgeted cost of work scheduled (planned) - to the actual cost of work performed (actual) This technique is especially useful for cost control, resource management & production .
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CONTROL COSTS - T&T


Earned Value Management
Earned value mgmt. (EVM) in its various forms is a commonly
used method of performance measurements. It integrates project scope, cost, and schedule measures to help the project mgmt. team assess and measure project performance and progress. It is a project mgmt. technique that requires the formation of an integrated baseline against which performance can be measured for the duration of the project. The principles of EVM can be applied to all projects, in any industry.

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CONTROL COSTS - T&T


Earned Value Management (Contd.) EVM) develops and monitors three key dimensions for each work
package and control account: - Planned Value (PV): budgeted cost for the work scheduled (in planned time) to be completed - Earned Value (EV): budgeted amount for work actually completed - Actual Cost (AC): actual money spent in finishing the work (actual cost)

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CONTROL COSTS - T&T


For example,
You've hired a man to paint your house. It should take 3 months & you'll pay him $2,700 ($900/mo.). Paint is estimated at $3,600. After, one month, he's completed 20% of the work, but used 40% of the paint, therefore the: PV = {( $2,700 + $3,600) / 3 } = $2,100 EV = 20% of $6,300 = $1,260 AC = $900 + 40% of $3,600 = $ 900 + $1,440 = $2,340

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CONTROL COSTS - T&T


EV= 1,260 PV= 2,100 (See Figure 7-9, p.183) AC=2,340

Cost Variance (CV) (sometimes called burn rate)


= EV - AC = $1,260 -$2,340 = -$1,080 (over budget) CV%=CV/EV (many a time asked in exam)

Schedule Variance (SV) = EV-PV


=$1,260 -$2,100 = -$840 (behind schedule) SV%=SV/PV (many a time asked in exam)

PMP Prep Cost

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CONTROL COSTS - T&T


EV= 1,260 PV= 2,100 AC=2,340 Cost Performance Index (CPI) -Cost efficiency ratio (cost trend analysis) CPI = EV / AC = $1,260/ $2,340 = 0.54 CPI < 1 -over budget CPI> 1 -under budget This is the ratio of what you expected to spend for the work you've earned (done) to what you really spent for it. Schedule Performance Index (SPI) -Schedule efficiency ratio (schedule trend) SPI = EV / PV = $1,260/ $2,100 = 0.6 SPI < 1 -behind schedule SPI > 1 ahead of schedule This is the ratio of what you planned on doing to what you really did.
PMP Prep Cost Slide 36

CONTROL COSTS - T&T

PMP Prep Cost

Slide 37

CONTROL COSTS - T&T


Forecasting: Predicts or estimates future values of Estimate to
Complete (ETC) and Estimate at Completion (EAC) The earned value technique parameters are: Budget At Completion (BAC) : total of all PV's (project's total cost baseline) = PVc (also called Cumulative Planned Value) Project Cost Variance (CV) - After project is complete, difference between budget at completion (total project budget) & actual amount spent CV = BAC- AC Variance at Completion (VAC) - Before project is complete, difference between budget at completion (total project budget) & estimate at completion (now that project is underway) VAC = BAC EAC

PMP Prep Cost

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CONTROL COSTS - T&T


Estimate to Complete (ETC) - Expected cost to finish all the
remaining work

ETC based on new estimate Revised (New) estimate for the work

remaining (uses standard estimating techniques) because original estimate was flawed, e.g. in a project installing the latest version of Primavera on 500 computers, the team though initially had expected current hardware would be okay, found that 20% of the computers require upgrading; thus a revised new estimate.

ETC based on atypical variances PM team expectations are that


similar variances will not occur in future. ETC = BAC-EV

ETC based on typical variances This approach is used when

current variances are seen as typical of future variances (is expected to occur in future as well). ETC = (BAC -EV)/ CPI (factors in CPI for trend)

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CONTROL COSTS - T&T


Estimate at Completion (EAC) - Most likely total cost of the project (or activity) based on performance to date (often called latest revised estimate) EAC using a new estimate - Actual costs to date plus new estimate for the remaining work. Used when original estimate was flawed or no longer relevant. EAC = AC + ETC (doesn't rely on original budget BAC) EAC using remaining budget - Similar variances not expected to occur in future (atypical) EAC =AC + BAC -EV EAC using CPI - Similar variances are expected to occur (is typical) EAC =AC +(BAC-EV)/CPI

CONTROL COSTS - T&T


To-complete Performance Index (TCPI) The to-complete performance index (TCPI) is the calculated projection of cost performance that must be achieved on the remaining work to meet a specified management goal, such as the BAC or the EAC. If it becomes obvious that the BAC is no longer viable, the project manager develops a forecasted estimate at completion (EAC). Once approved, the EAC effectively supersedes the BAC as the cost performance goal. Equation for the TCPI based on the BAC: TCPI = (BAC-EV) / (BAC-AC) The TCPI is conceptually displayed in Fig 7-10. The equation for the TCPI is shown in the lower left as the work remaining (defined as the BAC minus EV) divided by the funds remaining (which can be either the BAC minus the AC, or the EAC minus AC).

PMP Prep Cost

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CONTROL COSTS - T&T


To-complete Performance Index(TCPI) Contd.
If the cumulative CPI falls below the baseline plan (as shown in Fig.7-6), all future work of the project will need to immediately be performed in the range of the TCPI (BAC) (as reflected in the top line of Fig.7-6) to stay within the authorized BAC. Whether this level of performance is achievable is a judgment call based on a number of considerations, including risks, schedule, and technical performance. Once the mgmt. acknowledges that the BAC is no longer attainable, the project manager will prepare a new estimate at completion (EAC) for the work, and once approved, the project will work to the new EAC value. This level of performance is displayed as the TCPI (EAC) line. The equation for the TCPI based on the EAC:

TCPI = (BAC - EV) / (EAC AC)

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Slide 42

CONTROL COSTS - T&T


Performance Reviews
Compare cost performance over time, schedule activities or work packages overrunning & under running budget (planned value), and estimated funds needed to complete work in progress. If EVM is being used, the following information is determined: Variance analysis -Compares actual to planned or expected cost and schedule variances are the most frequently analyzed. Trend analysis - Examines performance over time to determine if performance is improving or deteriorating. Graphical analysis techniques are valuable for understanding performance to date and for comparison to future performance goals in the form of BAC versus EAC and completion dates. Earned value performance EVM compares the baseline plan to actual schedule and cost performance.

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Slide 43

CONTROL COSTS - T&T


Variance Analysis
Cost performance measurements (CV,CPI) are used to assess the magnitude of variation to the original cost baseline. Important aspects of project cost control include determining the cause and degree of variance relative to the cost performance baseline (section 7.2.3.1) and deciding whether corrective or preventive action is required. The % range of acceptable variances will tend to decrease as more work is accomplished. The larger % variances allowed at the start of the project can decrease as the project nears completion. .

Project Management Software


PMS is often used to monitor the three EVM dimensions (PV, EV, and AC), to display graphical trends, and to forecast a range of possible final results.

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CONTROL COSTS OUTPUTS OUTPUTS


Work Performance Measurements Budget Forecasts Organizational Process Assets Updates Change Requests Project Management Plan Updates - Cost performance baseline Project document Updates - Cost estimates - Basis of estimates

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Slide 45

DEPRECIATION
Straight Line Depreciation (SLD)
Equal amount of depreciation is taken out each period (year) Example below shows depreciation for 5 years where:
Depreciable value is $140,000 (purchase price) - $40,000 (salvage Value) = $100,000

Depreciation each year is $100,000 / 5 years = $20,000/year


Purchase Price Salvage Value Year Depreciati on Depreciated Balance

$ 140,000

$40,000

0 1 2 3 4

0 $20,000 $20,000 $20,000 $20,000


Slide 46

$100,000 $80,000 $60,000 $40,000 $20,000 0

PMP Prep Cost

$20,000

DEPRECIATION
Double Declining Balance (DDB)
Depreciation taken out each period (year) by double straight line depreciation Usually, applied on the initial purchase price (dont subtract salvage value) Example below shows depreciation for 5 years where:
Depreciation for 1st year is $140,000 / 5 years x 2 = $56,000 (or 40% of $140,000) Depreciation for 2nd year is $84,000 / 5 years x 2 = $33,600 (or 40% of $84,000)
Purchase Price Depreciation % Year Depreciation Depreciated Balance

$ 140,000 40% 40% 40% 40% 40%


PMP Prep Cost

0 1 2 3 4 5

0 $56,000 $33,600 $20,160 $12,096 $7,257


Slide 47

$140,000 $84,000 $50,400 $30,240 $18,144 $10,886 (Salvage)

DEPRECIATION
Sum of Years Digits Depreciation (SYD)
Accelerated depreciation amount taken out each period (year) based on years digits Example below shows depreciation for 5 years where sum of years digits = 1+2+3+4+5 = 15 Depreciation factor for 1st year is 5 (reverse order of years) / 15 (sum of years) Multiply factor by original balance to get depreciation for that year Depreciation for 1st year is 5/15 x $100,000 = $33,333, 2nd year is 4/15 x $100,000 = $26,667

Purchase Price $140,000

Salvage Depreciation Year Depreciatio Depreciate Value Factor n d Balance $40,000 5/15 4/15 3/15 2/15 1/15 0 1 2 3 4 5 0 $33,333 $26,667 $20,000 $13,000 $6,667 $100,000 $66,667 $40,000 $20,000 $6,667 0

Performance Measurement Baseline

CONTROL COSTS EARNED VALUE


Current

PV
January February March April May June July 0 2500 8000 13000 42000 62000 70000

EV
0 3600 8000 10000 38000

AC
0 6000 8000 8000 48000

PMP Prep Cost

Slide 49

From the last chart, we have these values and can make these calculations: PV $42,000 EV = $38,000 AC = $48,000

CONTROL COSTS - COST VARIANCE

Comparing original amount budgeted for work that's done (EV) to the amount spent to produce that work (AC), we can get cost variance (CV) as follows: CV (= EV -AC ) = $38,000 -$48,000 = -$10,000 (> spent than planned) Comparing original amount budgeted for work that's done (EV) to the amount budgeted for that work In the plan (PV), we can get schedule variance (SV) as follows: SV (= EV -PV ) = $38,000 -$42,000 = -$4,000 work than planned)
PMP Prep Cost Slide 50

CONTROL COSTS - OTHER CALCULATIONS


CPI ( = EV / AC ) = $38,000/ $48,000 = 0.79 $0.79 worth of work was done for each $1.00 spent SPI(= EV/PV) =$38,000/ $42,000 =0.90 $0.90 worth of work was done for each $1.00 worth of work planned ETC ( = BAC -EV) = $70,700 -$38,000 = $32,700 EAC ( = AC+BAC-EV) = $48,000 + $70,700 -$38,000 = $80,700 VAC ( = BAC -EAC) = $70,700-$80,700 =-$10,000 Project will exceed planned budget by $10,000

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Slide 51

CONTROL COSTS - SAMPLE COST PROBLEM


More Calculations (slight possibility that these will be on the exam) Calculate Given
BAC = $40K EV = $20K PV = $28K AC = $26K

% of work Scheduled % of Budget Spent % of Work Accomplished To Complete Performance Index (TCPI) CV% SV%

PMP Prep Cost

Slide 52

CONTROL COSTS - SAMPLE SOLUTION


More Calculations Answers % of Work Scheduled % of Budget Spent % of Work Accomplished TCPI PV/ BAC = $28K/ $40K = 0.7 or 70% AC/ BAC = $26K / $40K = 0.65 or 65% EV / BAC =$20K / $40K = 0.5 or 50% (BAC-EV)/( BAC - AC) = ($40K -$20K) / ( $40K -$26K) = 1.43 CV / EV =($20K -$26K ) / $20K =0.3 or 30% SV/ PV =( $20-$28)/$28K =0.28 or 28%

CV% SV%

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CONTROL COSTS - EARNED VALUE EXAMPLES


FOR BUDGET If CPI < 1 If CPI > 1 EV < AC EV > AC FOR SCHEDULE IF SPI < 1 IF SPI > 1 EV < PV EV > PV Behind Schedule Ahead of Schedule Over Budget Under Budget

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Slide 54

CONTROL COSTS - CASE 1


PV = $1,860 EV = $1,860 AC = $1,860

This is the ideal situation, Where everything goes According to plan

PMP Prep Cost

Slide 55

CASE 2 SCHEDULE PV = $1,900 EV = $1,500 AC = $1,700

CONTROL COSTS - CASE 2 SCHEDULE


Here we see $400 worth of work is behind schedule in being completed. We are 21% behind where we planned to be.

SV = EV-PV = -$400 SV% = SV/ PV = -0.21 or -21%

PMP Prep Cost

Slide 56

PV= $1,900 EV= $1,500 AC= $1,700

CONTROL COSTS - CASE 2 COST


Also, we see Actuals (AC) exceed Earned (EV) $1,500 worth of work was accomplished, However; it cost $1,700 to do so. We have a $200 cost overrun (13% over budget)

CV = EV-AC = -$200 CV% = CV I EV = -0.13 or -13%

PMP Prep Cost

Slide 57

CONTROL COSTS - CASE 2 INDICES


PV = $1,900 EV = $1,500 AC = $1,700

This means only 79 cents worth of work was done for each $1.00 of work planned, and only 88 cents worth of work was actually done for each $1.00 spent.

SPI = EV I PV = $0.79 CPI= EV I AC = $0.88 Case 2 is the worst case where all performance indicators are negative.

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CONTROL COSTS - CASE 3 INDICES


PV= $2,600 EV= $2,400 AC= $2,200

SV= -$200 SV% = - 8% SPI= 0.92

This is bad news. Our work efficiency is a bit low. We are getting only 92 cents of work done per dollar. We are behind schedule.

PMP Prep Cost

Slide 59

CONTROL COSTS CASE 3 INDICES


PV = $2,600 EV = $2,400 AC = $2,200 This is good news as we are under budget. We are getting $1.09 worth of work done for each $1.00 spent.

CV = $200 CV% = 8% CPI = 1.09 SPI = EV/PV = 2400/2600 = 0.92 Case 3 is under budget, but behind schedule.

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Questions?

PMP Prep Cost

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This page is Left Blank intentionally

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DAY 3

CHAPTER 10

PROJECT COMMUNICATIONS MANAGEMENT

PMP Prep Communications

Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction Management Project Management Framework Management *Introduction RESOURCE Management *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management PROCUREMENT Management Project SCOPE Management Responsibility

DAY 4
Project QUALITY Project RISK Project HUMAN

DAY 2

Project

DAY 5

Professional & Social

DAY 3
Project TIME Management Project COST Management

DAY 6
REVISION & QUIZ

PROJECT COMMUNICATIONS MANAGEMENT


WHAT DOES THE COMMUNICATIONS KNOWLEDGE AREA DO?
It employs the processes required to ensure timely and appropriate

generation, collection, distribution, storage retrieval, and ultimate disposition of project information These processes provide the critical links among people & information
that are necessary for successful communications. Project managers spend the majority of their time communicating with team members and other project stakeholders, whether they are internal or external to the organization. Effectively deals with stakeholders' information needs.
PMP Prep Communications Slide 2

COMMUNICATION SKILLS
COMMUNICATION SKILLS
Most communication skills are common for general mgmt. and project mgmt., such as, but not limited to: Listening actively and effectively, Questioning, probing ideas and situations to ensure better understanding, Educating to increase teams knowledge so that they can be more effective, Fact-finding to identify or confirm information, Setting and managing expectations, Persuading a person or organization to perform an action, Negotiating to achieve mutually acceptable agreements between parties, Resolving conflict to prevent disruptive impacts, and Summarizing, recaping, and identifying the next steps.
PMP Prep Communications Slide 3

COMMUNICATION MODELS
See Fig 10-8, p.255 for a basic two-person model of communications (how ideas or information are sent & received between two parties) Key components of model include: Encode: translate thoughts or ideas into a language that is understood by others Message & feedback-message: the output of encoding Medium: the method used to convey the message, e.g. email, fax Noise: anything that interferes with transmission and understanding of the message (e.g. distance) Decode: to translate the message back into meaningful thoughts or ideas Inherent in the model is an action to acknowledge a message. Acknowledgement means that the receiver signals receipt of the message, but not necessarily in agreement with the message. Another action is response to a message, which means that the receiver has decoded, understands, and is replying to the message. Sender is responsible for making information clear & complete so that the receiver can receive it correctly & confirming that it is understood properly Receiver is responsible for making sure that information is received in its entirety & correctly understood
PMP Prep Communications Slide 4

COMMUNICATION MODELS

COMMUNICATION METHODS
There are several communication methods used to share information among project stakeholders. These methods can be broadly classified into: Interactive communication Between two or more parties performing a multidirectional exchange of information. It is the most efficient way to ensure a common understanding by all participants on specified topics, and includes meetings, phone calls, video conferencing, etc. Push communication Sent to specific recipients who need to know the information. This ensures that the information is distributed but does not certify that it actually reached or was understood by the intended audience. Push communication includes letters, memos, reports, emails, faxes, voice mails, press releases etc. Pull communication Used for very large volumes of information, or for very large audiences, that requires the recipients to access the communication content at their own discretion. These methods include intranet sites, e-learning, and knowledge repositories, etc.
PMP Prep Communications Slide 5

COMMUNICATIONS PROCESS DEFINITIONS


10.1 Identify Stakeholders Identify all people or organizations impacted by the project, and documenting relevant information regarding their interests, involvement, and impact on project success. 10.2 Plan Communications The process of determining the project stakeholder information needs and defining a communication approach. 10.3 Distribute Information The process of making relevant information available to project stakeholders as planned. 10.4 Manage Stakeholders Expectations The process of communicating and working with stakeholders to meet their needs and addressing issues as they occur. 10.5 Report Performance The process of collecting and distributing performance information, including status reports, progress measurements, and forecasts.

COMMUNICATIONS PROCESS

COMMUNICATIONS PROCESSES
PROCESSES BY PROCESS GROUP
PLANNING EXECUTING INITIATING MONITORING & CONTROLLING 10.3 Report Performance

10.1 Identify Stakeholders

10.2 Plan Communications

10.2 Distribute Information 10.3 Manage Stakeholders Expectations

PMP Prep Communications

Slide 7

IDENTIFY STAKEHOLDERS
WHAT HAPPENS IN IDENTIFY STAKEHOLDERS?

It is the process of identifying all people or organizations impacted by the project, and documenting relevant information regarding their interests, involvement, and impact on project success

Project stakeholders are persons and organizations such as customers, sponsors, the performing organization, and the public that are actively involved in the project, or whose interests may be positively or negatively affected by the execution or completion of the project. They may also exert influence over the project and its deliverables. Stakeholders may be at different levels within the organization and may possess different authority levels, or may be external to the performing organization for the project (Section 2.3 identifies various types of project stakeholders.

IDENTIFY STAKEHOLDERS
TOOLS & TECHNIQUES
Stakeholder analysis Expert judgement

INPUTS
Project Charter Procurement documents Enterprise environmental factors Organizational process assets

OUTPUTS Stakeholder register


Stakeholder mgmt. strategy

PMP Prep Communications

Slide 9

IDENTIFY STAKEHOLDERS INPUTS


INPUTS
Project Charter Procurement Documents Enterprise Environmental Factors
i.e. company culture and structure, and Governmental or industry standards

Organizational Process Assets


i.e. stakeholder register templates, lessons learned from previous projects, and stakeholder registers from previous projects.

PMP Prep Communications

Slide 10

IDENTIFY STAKEHOLDERS T&T


TOOLS & TECHNIQUES
Stakeholder Analysis
Follows a number of steps (read page 248 to 250)

Expert Judgement

PMP Prep Communications

Slide 11

IDENTIFY STAKEHOLDERS OUTPUTS OUTPUTS


Stakeholder Register
This contains all details related to the identified stakeholders including, but not limited to: Identification information (Name, position, location, role in the project , contact info.) Assessment information (major requirements., main expectations, potential influence in the project, phase in the life cycle with the most interest; and Stakeholder classification (internal/external, supporter/neutral/resistor, etc.)

PMP Prep Communications

Slide 12

IDENTIFY STAKEHOLDERS OUTPUTS OUTPUTS


Stakeholder Management Strategy
The stakeholder management strategy defines an approach to increase the support and minimize negative impacts of stakeholders throughout the entire project life cycle. It includes elements such as: Key stakeholders who can significantly impact the project, Level of participation in the project desired for each identified stakeholder, and Stakeholder groups and their management (as groups) A common way of representing the stakeholder management strategy is a stakeholder analysis matrix. An example of a blank matrix with column headers is provided in Fig. 10-5 (page 251)

PMP Prep Communications

Slide 13

COMMUNICATION PROCESSES
INITIATING PLANNING EXECUTING

PROCESSES BY PROCESS GROUP


MONITORING & CONTROLLING 10.3 Report Performance

10.1 Identify Stakeholders

10.2 Plan Communications

10.2 Distribute Information 10.3 Manage Stakeholders Expectations

PMP Prep Communications

Slide 14

PLAN COMMUNICATIONS
WHAT HAPPENS IN PLAN COMMUNICATIONS? Plan communications is the process of determining the project
stakeholder information needs and defining a communication approach (see fig. 10-7, the Data Flow diagram) Who needs - what, when; how the needs will be fulfilled and by whom Identifying the information needs of the stakeholders and determining a suitable means of meeting those needs are important factors for project success.
Improper communication planning will lead to problems such as delay in message delivery, communication of sensitive information to the wrong audience, or lack of communication to some of the required stakeholders.

PMP Prep Communications

Slide 15

PLAN COMMUNICATIONS
TOOLS & TECHNIQUES
Communication requirement analysis Communication technology Communication models Communication methods

INPUTS
Stakeholder register Stakeholder management strategy Enterprise environmental factors Organizational process assets

OUTPUTS
Communications management plan Project document updates

PMP Prep Communications

Slide 16

PLAN COMMUNICATIONS INPUTS


INPUTS
Stakeholder Register
Section 10.1.3.1

Stakeholder Management Strategy


Section 10.1.3.2

Enterprise Environmental Factors Organizational Process Assets

PMP Prep Communications

Slide 17

TOOLS & TECHNIQUES COMMUNICATION REQUIREMENT S ANALYSIS

PLAN COMMUNICATIONS T&T

Determine total information needs of project stakeholders Combine the type & format of information needed with an analysis of the value of that information (e.g. all information that contributes to project success or prevents failure) Number of communication channels is, n ( n -1 ) / 2 (remember for exam) where n = number of stakeholders How many potential channels of communication are there in a project with 21 stakeholders? __________

PLAN COMMUNICATIONS T&T COMMUNICATIONS TECHNOLOGY


Methodologies used to transfer information among stakeholders can vary significantly, e.g. email, text messaging, etc.

Communications technology factors that can affect the project include: Urgency of the need for information Is project success dependent upon
having frequently updated information available on a moments notice, or would regularly issued written reports suffice? Availability of technology - Are existing systems appropriate, or do the project needs warrant change needed? Expected project staffing - Are proposed communications systems compatible with the experience & expertise of project participants, or is extensive training and learning required? Length of the project - Is the available technology likely to change before the project is over? Project environment - Does the team meet and operate on a face-to-face or in a virtual environment?

PLAN COMMUNICATIONS T&T


COMMUNICATION MODELS See Fig 10-8, p.255 for a basic two-person model of communications (how ideas or information are sent & received between two parties) Key components of model include: Encode: translate thoughts or ideas into a language that is understood by others Message & feedback-message: the output of encoding Medium: the method used to convey the message, e.g. email, fax Noise: anything that interferes with transmission and understanding of the message (e.g. distance) Decode: to translate the message back into meaningful thoughts or ideas Inherent in the model is an action to acknowledge a message. Acknowledgement means that the receiver signals receipt of the message, but not necessarily in agreement with the message. Another action is response to a message, which means that the receiver has decoded, understands, and is replying to the message. Sender is responsible for making information clear & complete so that the receiver can receive it correctly & confirming that it is understood properly Receiver is responsible for making sure that information is received in its entirety & correctly understood
PMP Prep Communications Slide 20

COMMUNICATION METHODS

PLAN COMMUNICATIONS T&T

There are several communication methods used to share information among project stakeholders. These methods can be broadly classified into: Interactive communication Between two or more parties performing a multidirectional exchange of information. It is the most efficient way to ensure a common understanding by all participants on specified topics, and includes meetings, phone calls, video conferencing, etc. Push communication Sent to specific recipients who need to know the information. This ensures that the information is distributed but does not certify that it actually reached or was understood by the intended audience. Push communication includes letters, memos, reports, emails, faxes, voice mails, press releases etc. Pull communication Used for very large volumes of information, or for very large audiences, that requires the recipients to access the communication content at their own discretion. These methods include intranet sites, e-learning, and knowledge repositories, etc.
PMP Prep Communications Slide 21

COMMUNICATION METHODS

PLAN COMMUNICATIONS T&T

There are several communication methods used to share information among project stakeholders. These methods can be broadly classified into: Interactive communication Between two or more parties performing a multidirectional exchange of information. It is the most efficient way to ensure a common understanding by all participants on specified topics, and includes meetings, phone calls, video conferencing, etc. Push communication Sent to specific recipients who need to know the information. This ensures that the information is distributed but does not certify that it actually reached or was understood by the intended audience. Push communication includes letters, memos, reports, emails, faxes, voice mails, press releases etc. Pull communication Used for very large volumes of information, or for very large audiences, that requires the recipients to access the communication content at their own discretion. These methods include intranet sites, e-learning, and knowledge repositories, etc.
PMP Prep Communications Slide 22

PLAN COMMUNICATIONS OUTPUTS


OUTPUTS COMMUNICATIONS MANAGEMENT PLAN is a subsidiary plan of the Project Management Plan that provides: Stakeholder communication requirements; Information to be communicated (includes format, content & level of detail); Reason for the distribution of that information; Time frame and frequency for the distribution of required information; Person responsible for communicating the information Person responsible for authorizing release of confidential information; Person/groups who will receive the information; Methods or technologies used to convey the information, such as memos, email, and/or press releases;

PMP Prep Communications

Slide 23

PLAN COMMUNICATIONS OUTPUTS


OUTPUTS
COMMUNICATIONS MANAGEMENT PLAN (contd.)

Resources allocated for communication activities, including time and budget; Escalation process identifying time frames & the management chain for escalation of issues; Method for updating and refining the communications management plan as project progresses and develops; Glossary of common terminology; Flow charts of the information flow in the project, workflows with possible sequence of authorization, list of reports, and meeting plans, etc.; and Communication constraints, usually derived from specific legislation or regulation, technology, and organizational policies, etc.

PLAN COMMUNICATIONS OUTPUTS


OUTPUTS Project Document Updates
Project documents that may be updated include but are not limited to: Project schedule Stakeholder register Stakeholder management strategy

COMMUNICATIONS PROCESSES
PROCESSES BY PROCESS GROUP
PLANNING EXECUTING INITIATING MONITORING & CONTROLLING 10.3 Report Performance

10.1 Identify Stakeholders

10.2 Plan Communications

10.2 Distribute Information 10.3 Manage Stakeholders Expectations

PMP Prep Communications

Slide 26

DISTRIBUTE INFORMATION
WHAT HAPPENS IN DISTRIBUTE INFORMATION?
Making information available to project stakeholders as planned (see Fig. 10-10, page 259, Data Flow Diagram It is performed throughout the entire project life cycle and in all management processes. The focus is mainly in the execution process, which includes implementing the communications management plan, as well as responding to unexpected requests for information.

PMP Prep Communications

Slide 27

DISTRIBUTE INFORMATION TOOLS & TECHNIQUES


Communications methods Information distribution tools

INPUTS
Project management plan Performance reports Organizational process assets

OUTPUTS
Organizational process assets updates) Requested changes

PMP Prep Communications

Slide 28

DISTRIBUTE INFORMATION - INPUTS


INPUTS
Project management plan
Section 10.2.3.1 contains the communications management plan.

Performance reports
Performance reports are used to distribute project performance and status information, should be made available prior to project meetings, and should be as precise and current as possible.

Organizational Process Assets


The organizational process assets that can influence the Distribute Information process include, but are not limited to - Policies, procedures, and guidelines regarding information distribution - Templates, and - Historical information and lessons learned

PMP Prep Communications

Slide 29

DISTRIBUTE INFORMATION T&T


Tools & Techniques Communications Methods
Individual and group meetings, video and audio conferences, computer chats, and other remote communications methods are used to distribute information.

Information Distribution Tools


Hard-copy document distribution, manual filing systems, press releases, and shared-access electronic databases; Electronic communication and conferencing tools, such as email, fax, voice mail, telephone, video and web conferencing, websites and web publishing; and Electronic tools for project management, such as web interfaces to scheduling and project mgmt. Software, meeting and virtual office support software, portals, and collaborative work mgmt. Tools.

PMP Prep Communications

Slide 30

DISTRIBUTE INFORMATION OUTPUTS


Outputs
Organization Process Assets Updates
Stakeholder notifications Project reports Project presentations Project records Feedback from stakeholders Lessons learned documentation

Requested Changes

PMP Prep Communications

Slide 31

COMMUNICATIONS PROCESSES
PROCESSES BY PROCESS GROUP
PLANNING EXECUTING 10.2 Distribute Information INITIATING MONITORING & CONTROLLING 10.3 Report Performance

10.1 10.2 Plan Identify Stakeholders Communications

10.3 Manage Stakeholders Expectations

PMP Prep Communications

Slide 32

MANAGE STAKEHOLDERS EXPECTATIONS


WHAT HAPPENS IN MANAGE STAKEHOLDERS EXPECTATIONS?
It is the process of communicating and working with stakeholders to meet their needs and addressing issues as they occur ( see Fig. 10-1.20, page 262, Data Flow Diagram)

It involves communication activities directed towards project stakeholders to influence their expectations, address concerns, and resolve issues (read page 261)

PMP Prep Communications

Slide 33

MANAGE STAKEHOLDERS EXPECTATIONS


TOOLS & TECHNIQUES
Communications methods Interpersonal skills Management skills

INPUTS
Stakeholder register Stakeholder mgmt. strategy Project management plan Issue log Change log Organizational process assets

OUTPUTS
Organizational process assets updates Change requests Project mgmt. plan updates Project document updates

PMP Prep Communications

Slide 34

MANAGE STAKEHOLDERS EXPECTATIONS - INPUTS

Inputs
Stakeholder register
Stakeholder management strategy
An understanding of stakeholder goals and objectives is used to determine a strategy to manage stakeholder expectations (see Section 10.1.3.2)

Project mgmt. plan Issue log


It is used to document and monitor the resolution of issues.

Change log
It is used to document changes that occur during a project. These changes and their impact to the project in terms of time, cost, and risk,

Organizational process assets


PMP Prep Communications Slide 35

MANAGE STAKEHOLDERS EXPECTATIONS - T&T

Tools & Techniques Communication Methods


Interpersonal Skills
Building trust, resolving conflict, active listening, and public speaking

Management Skills Issue log


Presentation skills, Negotiating, Writing skills, and public speaking

MANAGE STAKEHOLDERS EXPECTATIONS - OUTPUTS

Outputs Organizational Process Assets Updates


Change Requests Project Mgmt. Plan Updates Project Document Updates

PMP Prep Communications

Slide 37

COMMUNICATIONS PROCESSES
PROCESSES BY PROCESS GROUP
PLANNING EXECUTING 10.2 Distribute Information INITIATING MONITORING & CONTROLLING

10.1 10.2 Plan Identify Stakeholders Communications

10.3 Report Performance

10.3 Manage Stakeholders Expectations

PMP Prep Communications

Slide 38

REPORT PERFORMANCE

What Report Performance process do?


Report performance is the process of collecting and distributing performance information, including status reports, progress measurements, and forecasts (see Fig, 10-14, Data Flow Diagram) The process involves the periodic collection and analysis of baseline versus actual data to understand and communicate the project progress and performance as well as to forecast the project results. Performance reports need to provide information at an appropriate level for each audience.

PMP Prep Communications

Slide 39

REPORT PERFORMANCE
TOOLS & TECHNIQUES
Forecasting methods Communication methods Reporting systems

Variance analysis

INPUTS
Project management plan
Work performance information Work performance measurements Budget forecasts Quality control measurements Organizational process assets

OUTPUTS
Performance reports
Organizational process assets updates Change Requests

PMP Prep Communications

Slide 40

REPORT PERFORMANCE INPUTS INPUTS


Project Management Plan Work Performance Information e.g. completion status of the deliverables and what has been accomplished is collected as part of project execution, and is fed into the Performance Reporting process Work Performance Measurements Budget Forecasts Organizational Process Assets

REPORT PERFORMANCE T&T


TOOLS & TECHNIQUES
Variance Analysis
It is an after-the-fact look at what caused a difference between the baseline and the actual performance.

Forecasting Methods
It is the process of predicting future project performance based on actual performance to date. Forecasting methods may be classified in different categories: - Time series methods - Causal/econometric methods - Judgmental methods - Other methods (include simulation, probabilistic forecasting, and ensemble forecasting)
PMP Prep Communications Slide 42

REPORT PERFORMANCE T&T


Communication Methods
Exchange and analyze information about the project progress and performance. The project manager generally uses a push communication technique.

Reporting Systems
Standard tool for the project manager to capture, store, and distribute information to stakeholders.

PMP Prep Communications

Slide 43

REPORT PERFORMANCE OUTPUTS OUTPUTS


Performance Reports - Organize & summarize project performance information from all areas - Results of any analysis are compared with performance measurement baseline - Report should provide the status & progress information, and the level of detail required by various stakeholders, as documented in the communications management plan Common formats for performance reports include: Bar charts S-curves Histograms (bar graph where bar widths are proportional to variable classes & bar heights proportional to class frequencies) Tables Variance analysis Earned value analysis data is often included Forecast data See Fig. 10-15, page 271- Tabular Performance Report Sample
PMP Prep Communications Slide 44

REPORT PERFORMANCE OUTPUTS


Organizational Process Assets Updates Change Requests
- Analysis of project performance often generates change requests

PMP Prep Communications

Slide 45

SAMPLE EXAM QUESTION


Question
Some common formats of performance reports are: A.S-curves, histograms, WBS B.S-curves, precedence network diagrams, histograms C.Bar charts, S-curves, histograms D.Bar charts, earned value analysis, histograms

PMP Prep Communications

Slide 46

SAMPLE EXAM QUESTION


AnswerC is the correct answer.
A - WBS does not report performance. It is a deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. B - A precedence network diagram does not report performance. A network diagram presents the project schedule in a format that demonstrates logical relationships between project activities. D - Earned value analysis is a technique, not a report.

PMP Prep Communications

Slide 47

Questions?

PMP Prep Communications

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DAY 4

CHAPTER 8

PROJECT QUALITY MANAGEMENT

PMP Prep Quality

Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction Management Project Management Framework Management *Introduction RESOURCE Management *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management PROCUREMENT Management Project SCOPE Management Responsibility

DAY 4
Project QUALITY Project RISK Project HUMAN

DAY 2

Project

DAY 5

Professional & Social

DAY 3
Project TIME Management Project COST Management

DAY 6
REVISION & QUIZ

WHATS PROJECT QUALITY MANAGEMENT?


WHATS PROJECT QUALITY MANAGEMENT?
Project Quality Management processes include all the activities of the performing organization that determine quality policies, objectives, and responsibilities so that the project satisfy the needs for which it was undertaken. It implements the quality management system through the policy, procedures, and processes of quality planning, quality assurance, and quality control, with continuous process improvement activities conducted throughout, as appropriate.

PMP Prep Quality

Slide 2

PROJECT QUALITY MANAGEMENT?


WHAT DO THE QUALITY EXPERTS SAY ABOUT QUALITY? Quality is "the degree to which a set of characteristics fulfil requirements" Quality should be planned, designed & built-in as the integral part of the process.

QUALITY MANAGEMENT APPROACH


PMl's QUALITY MANAGEMENT APPROACH
1. Uses standards established by: a) International Organization for Standardization (ISO) b) Total Quality Management (TQM) c) Six Sigma Cost of Quality (COQ) d) Continuous Improvement 2. Addresses quality of the project & the product of the project 3. Because projects are temporary, the cost for product quality is often borne by the acquiring organization, especially defect prevention & appraisal.

ISO
PMP Prep - Quality

TQ M
Slide 4

COQ

Modern quality management complements project management. For example, both disciplines recognize the importance of: Customer Satisfaction: understanding, evaluating, defining, and managing combination of: conformance to requirements (the project must produce what it said it would produce), and fitness for use (the product or service must satisfy real needs) Prevention Over Inspection: The cost of preventing mistakes is generally much less than the cost of correcting them, as revealed by inspection Management Responsibility: Management must provide resources needed to meet quality levels and thus succeed Continuous Improvement: The plan-do-check-act cycle is the basis for quality improvement (as defined by Shewhart and modified by Deming)

QUALITY MANAGEMENT APPROACH

PMP Prep Quality

Slide 5

QUALITY VS GRADE
QUALITY versus GRADE Quality and Grade are not the same. Grade is a category (or rank) that distinguishes items having the same functional use but different technical characteristics, e.g. a product with lots of features and benefits is generally considered a high grade product, but still can be of poor quality. Quality is a degree measuring fitness for use, e.g. a high quality product will meet the specs and satisfy the real purpose, but may have limited features (or, grade). For example, software of high quality has no bugs, but may be low grade because it has limited features (such as Microsoft Calculator). Low quality is always a problem, low grade may not be. PM and his team are responsible for determining and delivering the required levels of both quality and grade.
PMP Prep Quality Slide 6

QUALITY PHILOSPHIES
QUALITY PHILOSOPHIES
W. Edwards Deming
Workers need to be shown what acceptable Quality is Quality is a Management problem Improve Leadership, drive out fear Improve constantly and forever (continuous improvement) Started the TQM movement

Dr. Joseph Juran


Fitness to Use/Conformance Quality & Grade Trilogy: Quality Improvement, Planning & Control

PMP Prep Quality

Slide 7

QUALITY PHILOSPHIES
Phillip Crosby
Quality is Free Right the First Time Prevention is the Key Zero Defects

Kaizen Method or Technologies


Continuous improvement in small increments (continuous improvement of people first, then products & services Overall improvement, in life at work, the well-being Kaizen is a Japanese word that means gradual continuous improvement

PMP Prep Quality

Slide 8

Whats A PMP? ISO


The International Organization for Standardization
ISO 9001 is a quality standard that checks on the systems used by an organization Quality Management System (QMS) is a systematic approach used to plan, manage and continually improve the quality of an organization's products or services. It's a framework that directs and ensures that controls are in place to achieve success in management of a business. See www.iso.org ISO 14001 defines Environment standard OHSAS 18001 defines Health & Safety standard

PMP Prep Quality

Slide 9

Whats A PMP? QUALITY PROCESSES


QUALITY PROCESS DEFINITIONS
8.1 Plan Quality The process of identifying quality requirements and/or standards for the project & product, and documenting how the project will demonstrate compliance. 8.2 Perform Quality Assurance The process of auditing the quality requirements and the results from quality control measurements to ensure appropriate quality standards and operational definitions are used 8.3 Perform Quality Control The process of monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes. See Figure 8-3, p.193 for plan quality data flow diagram
PMP Prep Quality Slide 10

QUALITY PROCESSES
PROCESSES BY PROCESS GROUP Planning 8.1 Plan Quality Executing Monitoring & Controlling

8.2 8.3 Perform Quality Perform Quality Assurance Control

PMP Prep Quality

Slide 11

PLAN QUALITY
WHAT YOU DO IN PLAN QUALITY?

The process of identifying quality requirements and/or standards for the project & product, and documenting how the project will demonstrate compliance.

Quality planning should be performed in parallel with the other project planning processes. For example, proposed changes in the product to meet identified quality standards may require cost or schedule adjustments and a detailed risk analysis of the impact to plans. The quality planning techniques discussed here are those most frequently used on projects. There are many others that may be useful on certain projects or in some application areas.

PLAN QUALITY
TOOLS & TECHNIQUES Cost-benefit analysis
Cost of Quality Control charts Benchmarking Design of experiments Statistical sampling Flowcharting Proprietary quality mgmt. methodologies Additional quality planning tools

Scope baseline Stakeholder register Cost performance baseline Schedule baseline Risk register Enterprise environmental factors Organizational process assets
PMP Prep Quality Slide 13

INPUTS

Quality management plan Quality metrics Quality checklists Process improvement plan Project document updates

OUTPUTS

PLAN QUALITY -INPUTS


INPUTS
1. Scope Baseline - Scope statement - WBS - WBS Dictionary Stakeholder Register It identifies stakeholders with a particular interest in, or impact on, quality. Cost Performance Baseline It documents the accepted schedule performance measures including start and finish dates. Schedule Baseline It documents the accepted schedule performance measures including start and finish dates
Slide 14

2.

3.

4.

PMP Prep Quality

PLAN QUALITY-INPUTS
INPUTS
5. Risk Register The risk register contains information on threats and opportunities that may impact quality requirements 6. Enterprise Environmental Factors Governmental agency regulations, rules, standards, and guidelines specific to the application area may affect the project 7. Organizational Process Assets Organizational quality policies, procedures and guidelines, historical databases and lessons learned from previous projects specific to the application area may affect the project

PMP Prep Quality

Slide 15

PLAN QUALITY T&T


TOOLS & TECHNIQUES
Cost-Benefit Analysis
Quality planning must consider cost-benefit tradeoffs. The primary benefit of meeting quality requirements is less rework, which means higher productivity, lower costs, and increased stakeholder satisfaction. The primary cost of meeting quality requirements is the expense associated with Project Quality Management activities.

PMP Prep Quality

Slide 16

PLAN QUALITY T&T

Cost of Quality (COQ)


Quality costs are the total costs incurred by investment in preventing non-conformance to requirements, appraising the product or service for conformance to requirements, and failing to meet requirements (rework). Failure cost are categorized into internal or external (Failure costs are also called cost of poor quality). Examples of : Cost of Conformance Prevention - training, surveys, using a quality system, planning, recruiting quality staff, etc. Appraisal - testing, inspecting, auditing, etc. Cost of non-conformance Internal - rework, rejects, etc. External - warranty, recall, repairs, handling complaints, legal issues, loss of goodwill, etc.

PMP Prep Quality

Slide 17

PLAN QUALITY T&T


Control Charts
Control charts are used to determine whether or not a process is stable or has predictable performance. They reflect the maximum and minimum values allowed. Control charts are used to monitor various types of output variables See Fig. 8-5 & Fig. 8-6(Page 196-197) Read thoroughly

PMP Prep Quality

Slide 18

PLAN QUALITY T&T


Benchmarking
Comparing actual or planned project practices to those of other projects to generate ideas for improvement and to provide a basis by which to measure performance Design of Experiments Statistical method that helps identify which factors may influence specific variables of a product or process under development or production. The most important aspect of this technique is that it provides a statistical framework for systematically changing all of the important factors For example, automotive designers use this technique to determine which combinations of suspensions and tires will produce the most desirable ride characteristics at a reasonable cost

PMP Prep Quality

Slide 19

PLAN QUALITY T&T


Statistical Sampling
Statistical sampling involves choosing part of a population of interest for inspection There is a substantial body of knowledge on statistical sampling. In some application areas it may be necessary for the PM team to be familiar with a variety of sampling techniques to assure the sample selected actually represents the population of interest.

Flowcharting
Graphical representation of a process showing the relationships
among process steps. Flowcharts show activities, decision points, and the order of processing See Fig. 8-7 in Page 199.

PMP Prep Quality

Slide 20

PLAN QUALITY T&T


Proprietary Quality Mgmt. Methodologies
These include Six Sigma, Lean Six Sigma, Quality Function Deployment, CMMI, etc.

Additional Quality Planning Tools


These include brainstorming, affinity diagrams, force field analysis*, nominal group techniques, matrix diagrams, and prioritisation matrices. * Identifies forces and factors, both restraining and driving, effecting the solution of an issue so that the positives can be reinforced and negatives reduced or eliminated.

PMP Prep Quality

Slide 21

PLAN QUALITY T&T


Quality Management Plan
Describes how the PM team will implement the performing organization's quality policy (Quality management plan is a component or a subsidiary plan of the project management plan). Provides input to the overall Project Management Plan and must address quality assurance, quality control and continuous process improvement for the project. Quality management plan may be formal or informal, highly detailed or broadly framed, based on the requirement of the project. Should include efforts at the front end of the project to ensure that earlier decisions (e.g. on concepts, designs, and tests) are correct These efforts should be performed through an independent peer review and not include persons that worked on the material being reviewed.

PMP Prep Quality

Slide 22

PLAN QUALITY OUTPUTS


Quality Metrics
A metric is an operational definition that describes, in very specific terms, what something is and how the quality control process measures it. Very specific (actual) measurable values to be met by a process, activity or work result. For example, it is not enough to say that meeting the planned schedule dates is a measurement of management quality. The PM team must also indicate whether every activity must start on time or only finish on time and whether individual activities will be measured, or only certain deliverables and if so, which ones. Quality metrics are used both in QA & QC processes.

Quality Checklists
Structured tool used by both QA and QC to verify a set of required steps have been performed (usually component specific)
PMP Prep Quality Slide 23

PLAN QUALITY T&T


Process Improvement Plan
It is subsidiary of the project management plan. Details the steps for analysing processes that will facilitate the identification of waste, error & non-value added activity, thus increasing customer value. Examples of such steps are: Process boundaries: describes the purpose, start, and end of processes, their inputs & outputs, data required and the owner and stakeholder of the processes. Process configuration: a flowchart of processes to facilitate analysis with interfaces identified Process metrics Targets for improved performance

PMP Prep Quality

Slide 24

PLAN QUALITY T&T


Project Document Updates
Project documents that may be updated include, but are not limited to: Stakeholder register, and Responsibility Assignment Matrix (Section 9.1.2.1)

QUALITY PROCESSES
PROCESSES BY PROCESS GROUP Planning
8.1 Plan Quality

Executing 8.2 Perform Quality Assurance

Monitoring & Controlling


8.3 Perform Quality Control

PMP Prep Quality

Slide 26

PERFORM QUALITY ASSURANCE


HOW SHOULD YOU PERFORM QUALITY ASSURANCE?
Quality assurance (QA) is application of planned, systematic quality activities to ensure the project will employ all processes needed to meet requirements QA uses the Process Improvement Plan to make project processes better A quality assurance department, or similar organization, often oversees quality assurance activities. QA also provides an umbrella for another important quality activity, continuous process improvement (CPI). CPI provides an iterative means for improving the quality of all processes (improves in small steps over time)
PMP Prep Quality Slide 27

PERFORM QUALITY ASSURANCE TOOLS &


TECHNIQUES
Plan Quality and Perform & Quality control tools & techniques Quality audits Process analysis

Project management plan Quality metrics Work performance information Quality control measurement

INPUTS

Organizational process assets updates Change requests Project management plan (updates) Project document updates

OUTPUTS

PMP Prep Quality

Slide 28

PERFORM QUALITY ASSURANCEINPUTS


INPUTS Project Management Plan Quality Metrics Work performance information Quality Control Measurements QC measurements are the results of quality control activities that is fed back to the QA process for use in re-evaluating and analysing the quality standards and processes of the performing organization

PMP Prep Quality

Slide 29

PERFORM QUALITY ASSURANCE-T&T TOOLS &TECHNIQUES


Plan Quality and Perform Quality Control tools and techniques Tools & techniques from Plan Quality and Perform Quality Control, discussed in Section 8.1.2 and Section 8.3.2 (can also be used for that Quality Assurance activities. Quality Audits A structured, independent review to determine whether project activities comply with organizational & project policies, processes, & procedures The objective of a quality audit is to identify inefficient and ineffective policies, processes, and procedures in use on the project. May be scheduled or at random May be carried out by properly trained in-house auditors or third parties Quality audits confirm that approved change requests, corrective actions, defect repairs & preventive actions are being implemented

PMP Prep Quality

Slide 30

PERFORM QUALITY ASSURANCE-T&T


Process Analysis
Follows the steps outlined in the Process Improvement Plan to identify needed improvements from an organizational and technical standpoint Examines problems & constraints experienced and non-valueadded activities identified during process operation Uses root cause analysis, a specific technique to analyse a problem/situation, determine the underlying causes that lead to it, and create preventive actions for similar problems

PERFORM QUALITY ASSURANCEOUTPUTS


OUTPUTS
Organizational

Process Assets Updates e.g. quality standards

Change Requests Project Management Plan Updates - Quality mgmt. plan - Schedule mgmt. plan - Cost mgmt. plan Project Document Updates - Quality audit reports - Training plans - Process documentation

PMP Prep Quality

Slide 32

QUALITY PROCESSES
PROCESSES BY PROCESS GROUP Planning Executing Monitoring & Controlling 8.3 Perform Quality Control

8.1 8.2 Quality Planning Perform Quality Assurance

PMP Prep Quality

Slide 33

PERFORM QUALITY CONTROL


HOW DO YOU PERFORM QUALITY CONTROL?
Use the Quality Management Plan to monitor specific project results to determine whether they comply with relevant quality standards (metrics) for both project & product quality Identify ways to eliminate causes of unsatisfactory results. It should be performed throughout the project QC is performed by a Quality Control Department The PM team should have a working knowledge of statistical quality control, especially sampling & probability

PERFORM QUALITY CONTROL TOOLS &


Cause and effect diagram
Control charts Flowcharting Histogram Pareto chart Run chart Scatter diagram Statistical sampling Inspection Approved change requests review

TECHNIQUES

Project management plan


Quality metrics Quality checklists Work performance information Approved change requests Deliverables Organizational process assets

INPUTS

Quality control measurements Validated changes Validated deliverables Organization process assets updates Change Requests Project management plan updates Project document updates

OUTPUTS

PMP Prep Quality

Slide 35

PERFORM QUALITY CONTROL


Know the difference between:
Prevention (keeping errors out of the process); Inspection (keeping errors out of the hands of the customer) Attribute sampling (result conforms, or it doesn't); Variables sampling ( the result is rated on a continuous scale that measures the degree of conformity); Statistical sampling (measures only a percentage of items, e.g. 5 out of every 100) Special causes (unusual events); Common or random causes (normal process variation) Tolerances (the result is acceptable if it falls within range specified by tolerance); Control limits (the process is in control if the result falls within the control limits)

PMP Prep Quality

Slide 36

PERFORM QUALITY CONTROL-INPUTS


INPUTS
Project Management Plan Quality Metrics Quality Checklists Work Performance Information Approved Change Requests Deliverables Organizational Process Assets

PMP Prep Quality

Slide 37

PERFORM QUALITY CONTROL-T&T


TOOLS & TECHNIQUES
Cause and Effect Diagram Also called Ishikawa (inventor) or fishbone diagrams Below is an example to show how various factors might be linked to potential problems or effects

PMP Prep Quality

Slide 38

PERFORM QUALITY CONTROL-T&T


Control Charts (See Figure 8-5 & 8-6, p.196-7)
Shows whether or not a process is stable or has predictable performance over a period of time Stable or Predictable normal (no action required) Out of control process is subject to special cause variation and (needs to be fixed) used for repetitive activities like manufacturing a graphic display of the interaction of process variables on a process ( Are the process variables within acceptable limits?)

PMP Prep Quality

Slide 39

PERFORM QUALITY CONTROL-T&T


A process is out of control if the values are: widely fluctuating values (outside the control limits set) suddenly jumps or shifts gradually increasing variation (trend)

Rule of Seven' which is when 7 values in a row are all below or all
above the mean or increase/decrease in direction For processes outside acceptable limits, the process should be adjusted ( the upper & lower limits are usually set at +/-3 sigma, where sigma is standard deviation)

PMP Prep Quality

Slide 40

Flowcharting

PERFORM QUALITY CONTROL-T&T

Helps to analyse how problem occur A flowchart is a graphical representation of a process There are many styles, but all flowcharts activities, decision points, and the order of processing See Figure 8-8, an example of a process flowchart for design reviews

PERFORM QUALITY CONTROL-T&T


Histogram
- A bar chart showing a distribution of variables - Each column represents an attribute or characteristic so that one can compare two or more things - Height of each column represents the frequency (or amount) of a characteristic

PMP Prep Quality

Slide 42

PERFORM QUALITY CONTROL-T&T


Pareto Chart
A Pareto chart is a specific type of histogram, ordered by frequency of occurrence The Pareto technique is used primarily to identify and evaluate nonconformities In Pareto diagrams, rank ordering is used to guide corrective action The project team should take action to fix that problem first, which are causing the greatest number of defects Pareto diagrams are conceptually related to Paretos Law, which holds that a small number of causes will typically produce a large majority of the problems or defects Pareto's Law is commonly referred as the 80/20 principle, where 80 percent of the problems are due to 20 percent of the causes

PERFORM QUALITY CONTROL-T&T

PMP Prep Quality

Slide 44

PERFORM QUALITY Run Chart CONTROL-T&T


A run chart shows the history and pattern of variation A run chart is a line graph that shows data points plotted in order in which they occur (over time) Run charts show trends in a process over time, variation over time, or declines or improvements in a process over time Trend analysis is performed using run charts Trend analysis is using mathematical techniques to forecast future outcomes based on historical results Trend analysis is often used to monitor technical performance; project cost & schedule performance.

Scatter Diagram
Shows the pattern of relationship between two variables This tool allows the quality team to study and identify the possible relationships between changes observed in two variables The closer the points are to a diagonal line, the more closely they're related
PMP Prep Quality Slide 45

Statistical Sampling
Involves

PERFORM QUALITY CONTROL-T&T

choosing part of a population of interest for inspection (For example, select 10 widgets at random out of 100)

Inspection Examination of a work product to determine if it conforms to standards Generally, the results of an inspection include measurements Inspection can be conducted at any level, for example, the results of a single activity can be inspected, or final product of the project can be inspected Inspections are also called reviews, peer reviews, audits, and walkthroughs Approved Change Requests Review All approved change requests should be reviewed to verify that they were implemented as approved.
PMP Prep Quality Slide 46

PERFORM QUALITY CONTROLOUTPUTS


OUTPUTS
Quality Control Measurements
Quality control measurements are documented results of quality control activities in the format specified during quality planning. Validated Changes Any changed or repaired items are inspected & will be either accepted or rejected before notification of the decision is provided. The rejected items may require rework.

PMP Prep Quality

Slide 47

PERFORM QUALITY CONTROLOUTPUTS


Validated Deliverables

Organizational Process Assets Updates


Completed checklists Lessons learned documentation, i.e. causes of variances, reasoning behind the corrective action chosen

Change Requests

Project Mgmt. Plan Updates Project Document Updates

PMP Prep Quality

Slide 48

STANDARD DEVIATIONSlide 1
Accuracy Measurement Standard deviations from the mean (or average): +/-1 (on both sides of the mean) = 68.3% : (1sigma) +/-2 =95.5% : (2 sigma) +/-3 =99.7% : (3 sigma) +/-6 =99.9% : (6 sigma)
Sigma and Standard Deviation are the same

PMP Prep Quality

Slide 49

STANDARD DEVIATIONSlide2
Formulas: Mean (u)/Average = (sum the data, and then divide by the number of items) = 31 / 6 = 5.17 Variance (a 2) - how spread out a distribution of data is (both sides of mean) =E ( ( x - u ) 2) -where x is, each sample data, i.e. 4.9 on the n -1 next slide and n is the number of samples (6) = 0.2334 6-1 =0.04668

PMP Prep Quality

Slide 50

STATISTICAL STANDARD DEVIATION

PMP Prep Quality

Slide 51

STATISTICAL STANDARD DEVIATION

PMP Prep Quality

Slide 52

SAMPLE EXAM QUESTION


Question All the following are true about 'Quality' and 'Grade' except: A. A low quality product may be of high grade B. A low grade product may be of high quality C. It is a problem if either the product is low grade or low quality D. Grade is a rank given to entities having the same functional use but different technical characteristics

SAMPLE EXAM QUESTION


The answer is C.
Quality is "the degree to which a set of inherent characteristics fulfil
requirements".

Grade is a category assigned to products or services having the same


functional use but different technical characteristics.

Low quality is always a problem, low grade may not be. PMBOK, p.18D.

PMP Prep Quality

Slide 54

Questions?

PMP Prep Quality

Slide 55

DAY 4

CHAPTER 9

PROJECT HUMAN RESOURCE MANAGEMENT

PMP Prep HR

Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction Project Management Framework *Introduction COMMUNICATION Management *Project Life Cycle & Organisation Project Management Processes

DAY 3
Project TIME Management Project COST Management Project

DAY 2
Project INTEGRATION Management Management Project SCOPE Management RESOURCE Management

DAY 4
Project QUALITY Project RISK Management Project HUMAN

DAY 5
PROCUREMENT Management Project Professional & Social

PROJECT HUMAN RESOURCE MANAGEMENT


WHAT DOES THE HUMAN RESOURCE KNOWLEDGE AREA DO?
Organize & manage the project team (also referred to as project staff) The project team comprises of the people who have assigned roles and responsibilities for completing the project (who report directly or indirectly to the Project Manager and perform the project work). Team members should be involved in much of the projects planning and decision-making. Early involvement of team members adds expertise during the planning process and strengthens commitment to the project. The Project Management Team is a subset of the project team and is responsible for project management activities such as planning, controlling, and closing. Project sponsor works with project management team , typically assisting with matters such as project funding , clarifying scope questions , and influencing other in order to benefit the project.

PMP Prep HR

Slide 2

HUMAN RESOURCE PROCESS DEFINITIONS

HUMAN RESOURCE PROCESSES

9.1 Develop Human Resource Plan Identifying & documenting project roles, responsibilities & reporting relationships, as well as creating the Staffing Management Plan 9.2 Acquire Project Team Obtain people needed to complete the project 9.3 Develop Project Team Improve competencies & interaction of team members to enhance project performance 9.4 Manage Project Team Track team member performance, provide feedback, resolve issues & coordinate changes to enhance project performance See Figure 9-3, p.218 for human resource plan data flow diagram
PMP Prep HR Slide 3

HUMAN RESOURCE PROCESSES


Processes by process group Planning 9.1 Develop Human Resource Plan Executing 9.2 Acquire Project Team 9.3 Develop Project Team 9.4 Manage Project Team

PMP Prep HR

Slide 4

DEVELOP HUMAN RESOURCE PLAN


WHAT DOES DEVELOP HUMAN RESOURCE PLAN DO?
Identifies & documents project roles, responsibilities, and required skills, reporting relationships, and Creates a staffing management plan can include how & when project team members will be acquired (the persons can be from inside or outside the performing org.) criteria for releasing them from the project Identification of training needs Plans for recognition & rewards Compliance considerations (e.g. labour laws), safety issues (e.g. workman's safety

DEVELOP HUMAN RESOURCE PLAN


TOOLS & TECHNIQUES
Organization charts & position descriptions Networking Organizational theory

INPUTS Activity resource


Enterprise environmental factors Organizational process assets

requirements

OUTPUTS
Human Resource Plan

PMP Prep HR

Slide 6

DEVELOP HUMAN RESOURCE PLAN - INPUTS


Activity Resource Requirements
The preliminary requirements regarding the required people and competencies for the project team members are progressively elaborated as part of human resource planning process (Section 6.3.3.1 of PMBOK)

PMP Prep HR

Slide 7

DEVELOP HUMAN RESOURCE PLAN - INPUTS


Enterprise Environmental Factors
The enterprise environmental factors (section 1.8) that can influence the Develop Human Resource Plan process include, but are not limited to: Organizational culture and structure, Existing human resources, Personnel administration policies, and Marketplace conditions

PMP Prep HR

Slide 8

DEVELOP HUMAN RESOURCE PLAN - INPUTS


Organizational Process Assets
Organizational

standard processes and policies and standardized role descriptions,

Templates for organizational charts and position descriptions, and Historical information on organizational structures that have worked in previous projects

PMP Prep HR

Slide 9

DEVELOP HUMAN RESOURCE PLAN T&T


TOOLS & TECHNIQUES Organization Charts & Position Descriptions
Used to ensure each work package has an unambiguous owner & that all team members have a clear understanding of their roles & responsibilities (See Figure 9-4, p.205 shows three different types of chart)

Hierarchical- type charts Organizational breakdown structure (OBS) - looks similar to WBS, Resource breakdown structure (RBS) another hierarchical chart
but is broken down by organisations existing departments, units or teams

broken down by types of resources, e.g. welders, graphic designers, etc. RBS can help tracking project costs, and can be aligned with the organizations accounting system (RBS can contain resource categories other than human resources).
PMP Prep HR Slide 10

DEVELOP HUMAN RESOURCE PLAN T&T


Matrix-based charts
Responsibility assignment matrix (RAM) is used to shows connections between work & people. See Figure 9-5, p.206, is a type of RAM called a RACI chart (responsible, accountable, consult, inform)

Text-oriented formats
Detailed job or position descriptions; documents that provide information such as responsibilities, authority, competencies, and qualifications; etc. Other sections of the project management plan Some responsibilities related to managing the project are listed and explained in other sections of the project management plan. For example, the risk register lists risk owners, the communication plan lists team members responsible for communication activities.

PMP Prep HR

Slide 11

DEVELOP HUMAN RESOURCE PLAN T&T


Networking
Informal interaction with others is an effective way to understand political & interpersonal factors that will impact the effectiveness of staffing options Include proactive correspondence, luncheon meetings, informal conversations, and trade conferences

Organizational Theory
Provides information regarding the ways people, teams & organizational units behave. Helps managing people & groups; includes motivational theories

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DEVELOP HUMAN RESOURCE PLAN OUTPUTS


OUTPUTS
Roles & Responsibilities
List include: Role the label describing the portion of a project for which a person is accountable; examples of project roles are business analyst, electrical engineer, testing coordinator, etc. Authority The right to apply project resources, make decisions & sign approvals (members work best with authority matching their responsibility) Responsibility The work that a project team member is expected to perform in order to complete the project activities Competency The skill & capacity needed to complete project activities

Project Organization Charts


Graphic display of project team members & their reporting relationships
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DEVELOP HUMAN RESOURCE PLAN OUTPUTS


Staffing Management Plan
Describes when & how human resource requirements will be met May be tied with Procurement processes Includes: Staff acquisition from internal/external contracted sources; need to work in a central location or can they work from distant locations, costs associated with each level of expertise , HR departments assistance to project management team, etc. Timetable - describes necessary time frames for project team members, either individually or collectively, as well as when acquisition activities such as recruiting should start. One tool for charting human resources is a resource histogram (see Fig 9-6)

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RESOURCE HISTOGRAM

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DEVELOP HUMAN RESOURCE PLAN OUTPUTS


Staffing Management Plan (contd.)
Staff Release plan - method & timing of releasing team members Training Needs If the team members to be assigned are not expected
to have the required competencies, a training plan can be developed as part of the project. The plan can also include ways to help team members obtain certifications that would support their ability to benefit the project

Recognition & rewards - criteria for recognition and rewards are


planned; awarded as part of the Develop Project Team process

Compliance - Government regulations, union contracts & HR policies Safety policies & procedures that protect team members from safety
hazards

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HUMAN RESOURCE PROCESSES


Processes by process group Planning
9.1 Develop Human Resource Plan

Executing 9.2 Acquire Project Team


9.3 Develop Project Team 9.4 Manage Project Team

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ACQUIRE PROJECT TEAM


HOW SHOULD YOU ACQUIRE YOUR PROJECT TEAM?
A project team can be acquired by: Pre-assignment (known in advance) Negotiation (staff assignments are negotiated on many projects inside the performing organization) Acquisition (from outside the performing organization) Virtual Teams (groups of people with a shared goal, placed at different locations) Project Manager may or may not have control over which members are selected

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ACQUIRE PROJECT TEAM


TOOLS & TECHNIQUES
Pre-assignment Negotiation Acquisition Virtual teams

INPUTS Project mgmt. plan


Enterprise environmental

OUTPUTS
Project Staff assignments Resource calendars Project management plan (updates)

factors Organizational process assets

ACQUIRE PROJECT TEAMINPUTS


INPUTS

Project Management Plan Enterprise Environmental Factors


Project team members are drawn from all available sources, both internal & external When PM team is able to influence or direct staff assignments, characteristics to consider include: Availability (Who is available & when they're available?) Ability (What competencies do they possess?) Experience (Do people have similar experience? Have they done it well? ) Interests (Are people interested in working on this project?) Cost (How much will each team member be paid?)

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ACQUIRE PROJECT TEAMINPUTS


Organizational Process Assets HR department (policies, guidelines, or procedures governing staff assignments)

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ACQUIRE PROJECT TEAMT&T


TOOLS & TECHNIQUES
Pre-Assignment
Specific people may be promised as part of a competitive proposal, if the project is dependent on expertise of particular persons. Some staff assignments are defined within the Project Charter

Negotiation
PM team uses their influencing skills to obtain staff members from within the performing organisation. May need to negotiate with Functional managers Other project management teams

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ACQUIRE PROJECT TEAMT&T


Acquisition Required services can be acquired from outside sources when the performing organization lacks in-house staff. Virtual Teams People with a shared goal who perform with little or no face to face meetings Benefit from e-mail & video conferencing; must plan communications carefully Virtual team format makes it possible to: Form teams from widespread geographic areas Add special expertise to a project team, even though the expert is not in the same geographic area Incorporate employees who work from home offices Form teams of people who work different shifts or hours Include people with mobility handicaps Move forward with projects otherwise ignored due to travel expenses
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ACQUIRE PROJECT TEAMOUTPUTS


OUTPUTS
Project Staff Assignments
Project is staffed when appropriate people are assigned to work on it Documentation can include a project team directory, memos to team members, and names inserted into other parts of project management plan (such as organization charts & schedules)

Resource Calendars
Documents the time periods (or calendar) each project team member can work on the project Creating a reliable final schedule depends on having a good understanding of each persons schedule conflicts, including vacation time and commitments to other projects

Project Management Plan (Updates)


Elements of project mgmt. plan that may be updated include, but are not limited to the human resources plan
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HUMAN RESOURCE PROCESSES


Processes by process group Planning 9.1 Develop Human Resource Plan Executing 9.2 Acquire Project Team

9.3 Develop Project Team


9.4 Manage Project Team

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DEVELOP PROJECT TEAM


HOW DO YOU DEVELOP YOUR PROJECT TEAM?
Improve the competencies and interaction of team members to enhance project performance. Objectives include: a) Improve skills of team members in order to increase their ability to complete project activities b) Improve feelings of trust & cohesiveness among team members so as to raise their productivity through greater team-work c) Develop the team early to realize greater benefits Examples of effective teamwork: Assisting each other when workloads are unbalanced Communicating in ways that fit individual preferences Sharing information & resources

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DEVELOP PROJECT TEAM


TOOLS & TECHNIQUES
Interpersonal skills Training Team Building Activities Ground Rules Co-location Recognition and rewards

INPUTS
Project staff assignments Project management plan Resource calendars

OUTPUTS Team Performance Assessment


Enterprise environmental factors updates

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DEVELOP PROJECT TEAMINPUTS


INPUTS
Project Staff Assignments Project Management Plan Resource Calendars

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DEVELOP PROJECT TEAMT&T TOOLS & TECHNIQUES


Interpersonal Skills
Interpersonal skills, sometimes known as "soft skills" are particularly important to team development. Understanding the sentiments of team members, anticipating their actions, acknowledging their concerns and following up on their issues can greatly reduce problems and increase cooperation. Skills such as: empathy, influence, creativity, group facilitation are valuable assets when managing the project team

Training
Activities designed to enhance the competencies of the project team members. Example of training methods include: Classroom, online, computer-based, on-the-job training from another project team member, mentoring, and coaching from other team members (Training includes diversity/cultural training as well)

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DEVELOP PROJECT TEAMT&T Team-Building Activities


Could be
a ten minute agenda item in a status review meeting an off-site, professionally facilitated experience designed to improve interpersonal relationships some group activities, although not specifically designed for team building, like developing a WBS (can increase team cohesiveness) Encourage informal communication & activities Team building strategies are particularly valuable when team members operate from remote locations Five stages of team development (explained later)

Ground Rules Establish clear expectations regarding acceptable behaviour by


project team members to decrease misunderstandings & increase productivity

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DEVELOP PROJECT TEAMT&T


Co-Location Placing many or all of the most active team members in the same physical location enhances their ability to perform as a team Can be temporary, only at strategically important times in the project Co-location strategy can include a meeting room ("war room") with electronic communication devices and other conveniences that enhance communication and a sense of community Recognition and Rewards The original plans concerning ways to reward people are developed during Human Resource Planning. Process involves recognizing & rewarding only desirable behaviour, e.g. need to work overtime because of poor planning should not be rewarded (undesirable behaviour) Win-lose (zero sum) rewards that only limited number of project team members can achieve, e.g. employee of the month etc. (can hurt team cohesiveness) Rewarding win-win behaviour that everyone can achieve tends to increase support among team members
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DEVELOP PROJECT TEAMOUTPUTS


OUTPUTS
Team Performance Assessment Informal or formal evaluation of a team's effectiveness can include indicators like: Improvements in skills that allow a person to perform assigned activities more effectively Improvement in competencies and sentiments that help team perform better as a group Reduced staff turnover rate Enterprise Environmental Factors Updates

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TYPES OF POWER
Power is the potential ability to influence behaviour to get people to do things they would not normally do.

Types of Power
Legitimate (Formal) -based on actual or perceived position e.g. boss or bosss spouse Coercive-based on fear of punishment (normally used as the last resort) Reward -based on reward possibility (great to use). To be effective, rewards should be based on activities & performance under a person's control. Must have a clear criteria with a planned system of evaluation. Must be awarded in public. Expert Exert power based on your expertise or knowledge (great to use) Referent - Ability to influence other through charisma
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STAGES OF TEAM DEVELOPMENT


Stages of Team development Forming Storming Norming Performing Adjourning Project Managers style to match the stage Directing Coaching Supporting Delegating Relieving

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TYPE OF ROLES PLAYED BY PROJECT TEAM MEMBERS


Supportive
Initiators Information Seekers Information Givers Encouragers Clarifiers Harmonizers Consensus Takers Gate Keepers

Destructive
Aggressor Dominator Devils Advocate Topic Jumper Recognition Seeker Withdrawer Blocker

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MANAGEMENT STYLES
Autocratic Management by authority vs Consensus
Good For
Mature, well-defined projects When quick decisions are needed

Weakness
Limits staff bye-in leading to low morale Possible arbitrary decision

Laissez-Faire Meaning to let do - Minimal or no interference by authority


Good For
Innovative projects Projects with high morale, selfmotivated staff promotes creativity
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Weakness
Confusion about project objectives Inability to make decisions

MASLOWS HIERARCHY OF NEED

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MANAGEMENT THEORIES
MANAGEMENT THEORIES
McGregor's Theory Theory X Workers viewed as inherently self-centred, lazy
Traditional view of management; top-down . Managers control & micromanage the workers Theory Y People will perform their best if they are properly motivated Workers viewed as willing & eager to accept responsibility Managers create environment that aids workers in achieving goals

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MANAGEMENT THEORIES

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MANAGEMENT THEORIES
HYGIENE FACTORS Absence of proper hygiene factors are linked to dissatisfaction
at the work-place. Examples of Hygiene factor are: company policies & job security pay, remuneration, salaries working conditions supervision

MOTIVATING FACTORS When they exist, team members have a good time at their place of
work. It includes, sense of achievement & recognition for things done opportunity for growth & advancement responsibility & stimulating work
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HUMAN RESOURCE PROCESSES


Processes by process group Planning 9.1 Develop Human Resource Plan Executing 9.2 Acquire Project Team 9.3 Develop Project Team

9.4 Manage Project Team

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MANAGE PROJECT TEAM


HOW SHOULD YOU MANAGE YOUR PROJECT TEAM? Track & appraise team member performance
Provide feedback Observe team behaviour, manage conflict & resolve issues Coordinate changes to enhance project performance As a result of managing the project team, staffing management plan is updated, change requests are submitted, issues are resolved, input is given to organizational performance appraisals, and lessons learned are added to the organizations database. Management of the project team is complicated when team members are accountable to both a functional manager and the project manager within a matrix organization Effective management of this dual reporting is often a critical success factor for the project, and is generally the responsibility of the project manager
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MANAGE PROJECT TEAM


TOOLS & TECHNIQUES
Observation & conversation Project performance appraisals Conflict management Issue log Interpersonal skills

INPUTS
Project staff assignments Project management plan Team performance assessment Work performance information Performance reports Organizational process assets

OUTPUTS
Enterprise environmental factors updates Organization process assets (updates) Change Requests Project management plan (updates)

FORMS OF COMMUNICATION Form of Characteristi Examples


Communicati on
Written Formal

cs
Precise
Project charter, Scope statement,

Transmitted project plan, WBS, project status through Complex issues medium Contract related communication of correspondence Written informal Emails, notes, memos, letters Regular communication with team member High degree of Presentations, Speeches Negotiations, conflict resolution flexibility Personal contact, group meetings or telephone Conversation with team members Project meetings

Oral Formal

Oral Informal

MANAGE PROJECT TEAM INPUTS


Project staff assignments Project Management Plan Team performance assessments Performance Reports Organizational Process Assets

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MANAGE PROJECT TEAM T&T


Observation and Conversation Stay in touch with the work & attitudes of project team members The PM team members monitors indicators such as :
progress toward project deliverables accomplishments that are source of pride for team members interpersonal issues

Issue Log As issues arise in course of managing the project team, a written log can document persons responsible for resolving specific issues by a target date

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MANAGE PROJECT TEAM T&T


TOOLS & TECHNIQUES
Project Performance Appraisals Need for formal or informal appraisals depends on length and
complexity of project, organizational policy, labour contract requirements, and the amount and quality of regular communication Evaluation information can be gathered from people who interact with project team members using 360-degree feedback principles (where feedback is provided to the person being evaluated from many sources, including superiors, peers & subordinates) Objectives for conducting performance appraisals include: Re-clarification of roles & responsibilities Structured time for team members receive positive feedback in what might otherwise be a hectic environment Discovery of unknown or unresolved issues Development of individual training plans Establishment of specific goals for future time period
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MANAGE PROJECT TEAM T&T


Conflict Management Successful conflict management results in greater productivity and positive working relationships Common sources of conflict include scarce resources, scheduling priorities & personal working styles Conflict reduction techniques include team ground rules, group norms, and solid project management practices, like communication planning & role definition Differences of opinion can be healthy, can lead to increased creativity and better decision-making, if managed properly When the differences become a negative factor: project team members are initially responsible for solving their own conflicts if escalates, then PM should help facilitate a satisfactory resolution conflicts should be addressed early, usually in private, using a direct & collaborative approach
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MANAGE PROJECT TEAM T&T


Conflict Resolution Techniques
Forcing (Win/lose) - one person forces solution on the other parties Smoothing (accommodating) (lose/lose) - attempts are made to make conflict appear less important than it is Compromise (negotiating) (neutral/neutral) - each party gives up something to reach a solution Withdrawal (avoiding) (lose/lose) - one party gives up & refuses to discuss the conflict, which is probably the worst technique Confrontation (collaboration/problem solving) (win/win) - the only true and best solution -a fact finding mission results in some possible solutions which are chosen from
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MANAGE PROJECT TEAM T&T


Issue Log
Issues arise in course of managing project team. A written log documents and helps monitor who is responsible for resolving specific issues by a target date. Issue resolution addresses obstacles that can block the team from achieving its goals.

Interpersonal Skills
Project managers uses combination of technical, human, and conceptual skills to analyze situations and interact appropriately with team members. This aids PM capitalizing on the strengths of all team members (read Appendix F in PMBOK).

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MANAGE PROJECT TEAM OUTPUTS OUTPUTS


Enterprise Environmental Factors Updates EEF that may require updates as a result of the Manage Project Team process include, but are not limited to: Input to organizational performance appraisals, and Personnel skill updates Organizational Process Assets (Updates) Organizational process assets that may require updates as a result of the Manage Project Team process include, but are not limited to: - Historical information and lessons learned documentation - Template, and - Organizational standard processes
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MANAGE PROJECT TEAM OUTPUTS


Change Requests
Staffing changes, whether by choice or by uncontrollable events

Project Management plan (Updates)


Updates to Staffing Management Plan they include new roles, training, reward decisions

HUMAN RESOURCE QUIZ


Quiz
You're the Project Manager for a one-year construction project. The project is a quarter done and your team consists of six sellers and 25 company employees. To understand who is responsible for what work, you would look at the: A. Resource histograms B. Bar chart C. Responsibility assignment matrix D. Project organization chart

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HUMAN RESOURCE QUIZ


Answer
C is the answer.
The responsibility assignment matrix maps who will do what work. The resource histogram show the number of resources used in each time period. The bar chart, in its pure form, shows only activity and calendar dates. An organizational chart shows who reports to whom.

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Questions?

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DAY 4 CHAPTER 11

PROJECT RISK MANAGEMENT

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AGENDA
Day 1
PMP Exam Prep Introduction Management Project Management Framework Management *Introduction RESOURCE Management *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management PROCUREMENT Management Project SCOPE Management Responsibility

DAY 4
Project QUALITY Project RISK Project HUMAN

DAY 2

Project

DAY 5

Professional & Social

DAY 3
Project TIME Management Project COST Management

DAY 6
REVISION & QUIZ

PROJECT RISK MANAGEMENT


WHAT DOES THE RISK KNOWLEDGE AREA DO?
Risk management planning, identification, analysis, responses, and monitoring & control on a project The objectives of Project Risk management are to increase the probability & impact of positive events (opportunities), and decrease the probability & impact of events adverse to the project (threats)

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PROJECT RISK MANAGEMENT


What is project risk? Uncertain event or condition that, if it occurs, has a positive or a negative
effect on at least one project objective (i.e. time, cost, scope, or quality) Positive effect is an opportunity Negative effect is a threat

Known risks Those that are identified and can be proactively managed & analyzed

Unknown risks (unknown knowns & unknown unknowns) Cannot be proactively managed

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Look for risks caused by things like poor project management, dependency on uncontrollable external resources, concurrent multiple projects, etc. Accept risks if they're in balance with a possible reward Communicate about risk information openly & honestly Provide risk responses in line with the organization's perceived balance between risk-taking &risk-avoidance To be successful, an organization should be committed to addressing the management of risk proactively & consistently throughout the project

PROJECT RISK MANAGEMENT

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RISK PROCESSES
RISK PROCESS DEFINITIONS
11.1 Plan Risk Management Process of deciding how to approach and conduct (plan & execute) the
risk management activities for a project.

11.2 Identify Risks Determine which threats/opportunities might affect the project &
document their details

11.3 Perform Qualitative Risk Analysis Assess each risk's chance of occurring & probable impact to get a
prioritized list of risks requiring more analysis or action

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RISK PROCESSES
11.4 Perform Quantitative Risk Analysis
Numerically analyze identified risks' effect on overall project objectives

11.5 Plan Risk Responses Analyze risks and make a plan of actions & options to enhance
opportunities & reduce threats to project objectives

11.6 Monitor & Control Risks


Track identified & residual risks, identify new risks, execute risk response plans & evaluate their effectiveness See Figure 11-20, p.309 for Risks data flow diagram

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RISK PROCESSES
Processes by process group Planning Monitoring and controlling 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses
PMP Prep Risk Slide 7

11.6 Monitor and Control Risks

PLAN RISK MANAGEMENT


HOW DO YOU PLAN FOR RISK?
Establish an agreed-upon approach for conducting risk management activities & evaluating risk Ensure that the level, type, and visibility of risk management are commensurate with both risk and importance of the project to the organization Provide sufficient resources and time for risk management activities Planning Risk management should be completed early during project planning, since it is crucial to successfully performing the other processes

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PLAN RISK MANAGEMENT


TOOLS & TECHNIQUES Planning meeting & analysis INPUTS
Project scope statement Cost mgmt. plan Schedule mgmt. plan Communications mgmt. plan Enterprise environmental factors Organizational process assets

OUTPUTS Risk management plan

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PLAN RISK MANAGEMENTINPUTS


INPUTS
Project Scope Statement (sec 5.2.3.1) Cost Management Plan (sec 7.0) Schedule Management Plan (sec 6.0) Communications Management Plan (sec 10.2.3.1)

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PLAN RISK MANAGEMENTINPUTS


Enterprise Environmental Factors
Attitudes towards risk and the risk tolerance of organizations and people involved in the project will influence the project management plan.

Organizational Process Assets


Organizations may have predefined approaches to risk management such as categories, common definitions of concepts & terms, standard templates, roles & responsibilities, and authority levels for decision- making.

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PLAN RISK MANAGEMENT -T & T


TOOLS & TECHNIQUES
Planning Meetings and Analysis Project teams hold planning meetings to develop the risk management
plan (attendees may include the project manager, selected project team members and stakeholders) Develop risk cost elements (e.g. contingency reserves) and schedule activities (e.g. risk status meetings or buffer time) for inclusion in the project budget and schedule Assign risk responsibilities Develop general organizational templates for risk categories and definitions (e.g. risk levels, types)

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PLAN RISK MANAGEMENT -OUTPUTS


Risk Management Plan
Describes how risk management will be structured & performed on the project It includes: Methodology defines the approaches, tools, & data sources that may be used to perform risk management on the project Roles & responsibilities - defines the lead, support, & risk management team membership for each type of activity in the risk management plan, assigns people to these roles, and clarifies their responsibilities Budgeting assigns resources & estimates costs needed for risk management for inclusion in the project cost baseline
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Timing Defines when & how often the risk management process will be performed throughout the project life cycle, and establishes risk management activities to be included in the project schedule.

PLAN RISK MANAGEMENTOUTPUTS

Risk categories Provides a structure that ensures a comprehensive process of systematically identifying risk to a consistent level of detail & contributes to the effectiveness and quality of Risk Identification An organization can use a previously prepared categorization of typical risks. A Risk Breakdown Structure (RBS) (not a Resource Breakdown Structure, which is also RBS) is one approach to providing such a structure (see fig.11-4, page 244) Revised stakeholders' tolerances - Stakeholders tolerances may be revised in risk management planning process
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PLAN RISK MANAGEMENTOUTPUTS


Definitions of risk probability & impact
The impact scale reflects significance of impact, either negative for threats or positive for opportunities, on each project objective if a risk occurs. Impact scales are specific to the objective potentially impacted, type & size of the project, organizations strategies and financial state, and the organizations sensitivity to particular impacts. See fig. 11-5 in page 281

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Relative scales (also called ordinal scale) for impact are rank ordered descriptors such as low, medium, high, very high reflecting impact in increasing order. Alternatively, numeric scales (also called cardinal scales) assign values to these impacts. The values may be Linear (e.g. 1, 3, 5, 7, 9) or, Non-linear (e.g. 1, 2,4, 8) non-linear scales may represent organizations desire to avoid high-impact threats or exploit high impact opportunities, even if they have relatively low probability

PLAN RISK MANAGEMENTOUTPUTS

Linear Risk Value total is 40 Risk impact- 1 2 3 4 Proj. Objective


Time Cost Scope Quality

Non-Linear Risk value is 63


Risk Impact- Proj. Objective

1 3

4 1

3 4

Time Cost

4 5 2 12 40

5 2

Scope Quality

3 8 8 Note: The figures in the box 9 probability of a risk impacting an3 are 20 objective

Probability & impact matrix

PLAN RISK MANAGEMENTOUTPUTS

Risks are prioritized by their potential impact on project multiplied by their possibility of occurring, e.g. 10% x $800 = $80 risk value See Figure 11-5, p.245 for a sample impact scale (relative & numerical) See Figure 11-8, p.252 for a Probability & Impact Matrix look-up table where you can look up your impact (bottom row) multiplied by your determined probability (left column) and get a rating which can be measured against other projects in your company

Reporting formats
Describes the content & format of risk register (list of risks with details)

Tracking
Documents how all facets of risk activities will be recorded for the benefit of current project, future needs, and lessons learned.
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RISK PROCESSES
Processes by process group Planning 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses Monitoring and controlling 11.6 Monitor and Control Risks

IDENTIFY RISKS
WHAT HAPPENS IN IDENTIFY RISKS? Identify Risks determines which risks might affect the project & documents their characteristics Participants in identify risk activities can include the following, where appropriate: project manager, project team members, risk management team (if assigned), risk experts from outside, customers, end-users, stakeholders, etc. All project personnel should be encouraged to identify risks. Identify risks - is an iterative process because: Risk events may happen, which may cause new risks Status of identified risks may change New risks may occur

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IDENTIFY RISKS TOOLS &


TECHNIQUES Documentation
reviews Information gathering techniques Checklist analysis Assumptions analysis Diagramming techniques SWOT analysis Expert judgement

INPUTS
Risk management plan Activity cost estimates Activity duration estimates Scope baseline Stakeholder register Cost mgmt. plan Schedule mgmt. plan Quality mgmt. plan Project documents Enterprise environmental factors Organizational process assets

OUTPUTS Risk register

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IDENTIFY RISKS - INPUTS


INPUTS Risk Management Plan
Activity cost estimates Activity time estimates Activity duration estimates Scope baseline Stakeholder register

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IDENTIFY RISKS - INPUTS


Cost mgmt. plan Schedule mgmt. plan Quality mgmt. plan Project documents Enterprise Environmental Factors Organizational Process Assets

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IDENTIFY RISKS T&T


TOOLS & TECHNIQUES
Documentation Reviews Structured review of project documentation including plans, assumptions, prior project files, and other information to ensure
Quality of the plans

Consistency between those plans and with the project requirements and assumptions

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IDENTIFY RISKS T&T


Information Gathering Techniques
Brainstorming -a group creativity technique to share impulsive ideas & get new ideas from each other to build on Delphi technique -experts take part in an anonymous questionnaire so as not to influence each other, then their ideas are shared for more input Interviewing -meeting a person to draw out facts & statements Root cause identification -examine underlying causes for a risk

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IDENTIFY RISKS T&T


Checklist Analysis Checklist are developed based on historical information & knowledge Impossible to build an exhaustive one Get sample checklists or Questionnaires commercially or from the internet Assumptions Analysis Are assumptions still valid? It identifies risks to the project from inaccuracy, inconsistency, or incompleteness of assumptions. Diagramming Techniques Cause-and-effect diagrams (also called Ishikawa or fishbone diagrams) System or process flow charts Influence diagrams (What affects What) It is a graphical representation of situation showing causal influences, time ordering of events, and other relationships among variables and outcomes.
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IDENTIFY RISKS T&T


SWOT Analysis
The technique examines the project from each of the SWOT (strengths, weaknesses, opportunities, and threats) perspectives to increase the breadth of identified risks by including internally generated risks SWOT analysis also examines the degree to which organizational strengths offset threats and opportunities that may serve to overcome weaknesses.

Expert Judgement

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IDENTIFY RISKS OUTPUTS


Risk Register
The primary outputs of Identify Risks are the initial entries into the risk register. The risk register ultimately contains the outcomes of the other risks mgmt. processes as they are conducted, resulting in an increase in the level and type of information contained in the risk register over time. The preparation of risk register begins with List of identified risks List of potential responses

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RISK PROCESSES
Processes by process group
Planning 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses Monitoring and controlling 11.6 Monitor and Control Risks

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QUALITATIVE RISK ANALYSIS


HOW DO YOU PERFORM QUALITATIVE RISK ANALYSIS?
Prioritize identified risks for further action, such as Quantitative Risk Analysis or Risk Response Planning Organizations can improve the projects performance effectively by focusing on high-priority risks Assess the priority of identified risks using their probability of occurring, the corresponding impact on project objectives if the risks do occur Also use factors such as time frame & risk tolerance of the project constraints of cost, schedule, scope & quality

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PERFORM QUALITATIVE RISK TOOLS & ANALYSIS TECHNIQUES


Risk probability and
impact assessment Probability and impact matrix Risk data quality assessment Risk categorization Risk urgency INPUTS assessment Risk register Expert judgement Risk management plan OUTPUTS Project scope statement Risk register Organizational process (updates) assets

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PERFORM QUALITATIVE RISK ANALYSIS-INPUTS


INPUTS
Risk Register Risk Management Plan Project Scope Statement Organizational Process Assets

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PERFORM QUALITATIVE RISK ANALYSIS - T&T


TOOLS & TECHNIQUES
Risk Probability & Impact Assessment

It investigates the likelihood that each specific risk will occur


Risk impact assessment investigates the potential effect on a project objective such as time, cost, scope, or quality, including both negative effect for threats and positive effects for opportunities. The level of probability for each risk and its impact on each objective is evaluated during the interview or meeting with experts or key stakeholders

Probability & Impact Matrix Risk Data Quality Assessment


Risk analysis requires accurate & unbiased data Examine the degree to which the data about the risk is useful Examine the degree to which the risk is understood Examine the risk data for accuracy, quality, reliability, & integrity

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PERFORM QUALITATIVE RISK ANALYSIS T&T


TOOLS & TECHNIQUES Risk Categorization
Risks to the project can be categorized by sources of risk (e.g. using the

RBS)

Risk Urgency Assessment


Risks requiring near-term responses may be considered more urgent to address.

Expert Judgement
Expert judgement is required to assess the probability and impact of each risk to determine its location in the matrix shown in Fig. 11-10 (page 293)

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RISK PROCESSES
Processes by process group
Planning 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses Monitoring and controlling 11.6 Monitor and Control Risks

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PERFORM QUANTITATIVE RISK ANALYSIS


HOW DO YOU PERFORM QUANTITATIVE RISK ANALYSIS?
Analyze priority risks (identified in Qualitative Risk Analysis) Analyzes the effect of those risk events and assigns a numerical (quantitative) rating to those risks It also presents a quantitative approach to making decisions in the presence of uncertainty The process uses techniques such as Monte Carlo simulation & decision tree analysis to: Quantify possible outcomes for the project and their probabilities Assess probability of achieving specific project objectives Identify risks requiring the most attention Identify cost, schedule & scope targets in the light of risk Make best decisions when conditions or outcomes are uncertain Experienced risk managers sometime perform it directly after Identify Risk

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PERFORM QUANTITATIVE RISK ANALYSIS TOOLS & TECHNIQUES


Data gathering &
representation techniques Quantitative risk analysis & modeling techniques Expert judgment

INPUTS Risk register


Risk mgmt. plan Cost mgmt. plan Schedule mgmt. plan Organizational process assets

OUTPUTS Risk register (updates)

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PERFORM QUANTITATIVE RISK ANALYSIS-INPUTS INPUTS


Risk Register Risk Management Plan Cost Management Plan Schedule Management Plan Organizational Process Assets

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PERFORM QUANTITATIVE RISK ANALYSIS T&T


TOOLS & TECHNIQUES
Data Gathering & Representation Techniques
Interviewing: - The info. needed depends upon type of probability distributions that will be used, e.g. three-point estimates for some commonly used distributions, and the mean & standard deviation for others - Documenting the rationale of the risk ranges is an important component of risk interview Probability distributions (beta and triangular) see Figure 11-14, p.298

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PERFORM QUANTITATIVE RISK ANALYSIS -T & T


Quantitative Risk Analysis & Modeling Techniques Commonly used techniques include: Sensitivity Analysis Which risks have the most potential impact on the project ( tornado diagram is used- will definitely get question in exam) Expected Monetary Value (EMV) Analysis Calculates average outcome from a group of conditional values when their future has events that may or may not occur (Will definitely get question in exam) Multiply each possible impact by its probability (risk value), uses decision tree Decision Tree diagram (see Fig. 11-15, page 299) Modeling & Simulation Models that translate uncertainties at a detailed level into their potential impact Typically uses Monte Carlo technique Better for cost or schedule risk than EMV because EMV is subject to misuse

PMP Prep Risk

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PERFORM QUANTITATIVE RISK ANALYSIS -T & T


Expert Judgement
It is required to identify potential cost and schedule impacts, to evaluate probability, and to define inputs (such as probability distributions) into the tools It also comes into play in the interpretation of the data. Experts should be able to identify the weaknesses of the tools as well as their relative strengths. Experts may determine when a specific tool may or may not be more appropriate given the organizations capabilities and culture.

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QUANTITATIVE RISK ANALYSIS OUTPUT


OUTPUT
Risk Register (updates) Probabilistic analysis of the project
Probability of achieving cost and time objectives Prioritized list of quantified risks Trends in quantitative risk analysis results

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RISK PROCESSES
Processes by process group
Planning 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses Monitoring and controlling 11.6 Monitor and Control Risks

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PLAN RISK RESPONSES


HOW DO YOU PLAN RISK RESPONSES?
Develop options & determine actions to enhance

opportunities and reduce threats Risk responses must be: Appropriate to the significance of the risk Cost effective Timely Realistic Within the project context Agreed upon by all parties involved Owned by a responsible person

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PLAN RISK RESPONSES


TOOLS & TECHNIQUES Strategies for negative
risks or threats Strategies for positive risks or opportunities Contingent response strategies OUTPUTS Expert judgement Risk register (updates) INPUTS Risk-related contract Risk register Risk management decisions plan Project management plan (updates) Project document updates
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PLAN RISK RESPONSES INPUTS


INPUTS
Risk Register Risk Management Plan

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PLAN RISK RESPONSES T&T


TOOLS & TECHNIQUES
Strategies for Negative Risks or Threats Avoid Changing the Project Management Plan to eliminate a potential
risk

For example: Avoid a scope risk by changing to a less "bleeding edge" technology,
e.g. TD bank lost three months on a project because of unproven software Avoid a cost risk by properly doing Activity Resource Estimating Avoid a resource risk by removing its requirement

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Transfer - To third party Generally involves payment to the party taking on the risk e.g. procurement of a critical item, For example: Transfer a scope risk by employing a contractor Transfer schedule risk by purchasing flood insurance for a New Orleans project Transfer a resource risk by purchasing on-site warranty

PLAN RISK RESPONSES T&T

Mitigate -Reduce impact of an adverse risk/or reduction in the probability For example: Mitigate a scope risk by building a prototype Mitigate a resource risk by cross-training a team member Mitigate a schedule risk by using a pool of temporary workers, e.g. Departmental Stores/Malls use lots of part-time workers Accept

PLAN RISK RESPONSES T&T

Used because it's seldom possible to eliminate all threats from a project Actively decide not to change project plan to deal with a risk Passive acceptance requires no action, leaving the project team to deal with the threats or opportunities as they occur Active acceptance establishes a contingency reserve or strategy

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PLAN RISK RESPONSES T&T


Strategies for Positive Risks or Opportunities
Exploit - Eliminates the uncertainty associated with a particular upside risk by making the opportunity will definitely happen e.g. hiring more talented resources to the project to reduce the completion time

"To take advantage of" or "To make best use of

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PLAN RISK RESPONSES T&T


Share - Share responsibility and accountability to get best chance of seizing an opportunity e.g. risk sharing partnerships or joint ventures Enhance - Modify the "size of an opportunity by increasing probability and/or positive impacts by identifying & maximizing key drivers. e.g. a sales opportunity may make a higher profit if a volume discount is offered Accept Accepting an opportunity is being willing to take advantage of it if it comes along, but not actively pursuing it.

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PLAN RISK RESPONSES T&T


Contingent Response Strategy
Respond only if certain event occurs and there's sufficient warning to implement the plan. Examples of events that trigger contingency response
missing intermediate milestones

cost of resource has gone down gaining high priority with a supplier should be defined and tracked

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PLAN RISK RESPONSES T&T


Expert Judgement
Input from knowledgeable parties pertaining to the actions be taken on a specific and defined risk.

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PLAN RISK RESPONSES OUTPUTS


Risk Register (Updates) The risk register is developed in Identify Risk, and is updated during Perform Qualitative Risk Analysis & Perform Quantitative Risk Analysis In Plan risk responses, appropriate responses are chosen, agreed upon, and included in the risk register Components of risk register (read page 305 & 306) a) Residual risks - risk that are expected to remain after planned responses have been taken as well as those that have been deliberately accepted b) Secondary risks -new risk that arise as a direct outcome of implementing a risk response.

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PLAN RISK RESPONSES OUTPUTS


Risk-Related Contractual Agreements Such as agreements for insurance, services, and other items as appropriate, can be prepared to specify each partys responsibility for specific risks, should they occur.

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PLAN RISK RESPONSES OUTPUTS


Project Mgmt. Plan (updates)
Schedule mgmt. plan Cost mgmt. plan Quality mgmt. plan Procurement mgmt. plan Human resource mgmt. plan Work breakdown structure Schedule baseline Cost performance baseline

Project Document (updates) Read page 307


Assumption log updates Technical documentation updates

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RISK PROCESSES
Processes by process group
Planning 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses
PMP Prep Risk Slide 56

Monitoring and controlling 11.6 Monitor and Control Risks

MONITOR AND CONTROL RISK


WHAT HAPPENS IN MONITOR AND CONTROL RISK?
Identify, analyze & plan for new or changed risks keep track of the identified risks and those on the watch list reanalyze existing risks Monitor trigger conditions for contingency plan Monitor residual & secondary risks Review the execution of risk responses while evaluating their effectiveness. Monitor & Control Risk process applies techniques, such as variance and trend analysis, which require the use of performance data generated during project execution

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MONITOR AND CONTROL RISK


Other purposes of Monitor & Control Risk are to determine if:
Mid-course correction needed to handle the risk appropriately Project assumptions are still valid Risk, as assessed, has changed from its prior state, with analysis of trends Proper risk management policies & procedures are being followed Contingency reserves of cost or schedule should be modified in line with the risk of the project Monitor & Control Risk can involve choosing alternative strategies, executing a contingency or fallback plan, taking corrective action & modifying the project management plan Receive periodic reports from risk response owner on the effectiveness of the plan, and any unanticipated effects.

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MONITOR AND CONTROL RISK TOOLS & TECHNIQUES


Risk reassessment
Risk audits Variance and trend analysis Technical performance measurement Reserve analysis INPUTS Status meetings

Risk register Risk management plan


Work performance information Performance reports
PMP Prep Scope

Risk register (updates)


Org. process assets (updates) Change Requests Project management plan (updates) Project document updates
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OUTPUTS

MONITOR AND CONTROL RISK INPUTS INPUTS


Risk Register Project Management Plan Work Performance Information Performance Reports

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MONITOR AND CONTROL RISK T&T


TOOLS & TECHNIQUES
Risk Reassessment Risk Monitoring & Control often requires identification of new risks & reassessment of risks Risk reassessment should be regularly scheduled & should be an agenda item at project team status meetings Risk Audits Examine & document the effectiveness of risk responses in dealing with identified risks and their root causes, as well as the effectiveness of the risk management process Variance and Trend Analysis Earned value analysis & trend analysis may be used to monitor overall project performance. Outcomes from these analyses may forecast potential deviation of the project at completion from cost and schedule targets Deviation from baseline plan may indicate the potential impact of threats or opportunities
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MONITOR AND CONTROL RISK T&T


Technical Performance Measurement Compares technical accomplishment during project execution to the plans schedule of technical achievement Reserve Analysis Compares the amount of contingency reserves remaining to the amount of risk remaining at any time in the project, to determine if the remaining reserve is adequate Status Meetings Risk management can be an agenda item in periodic status meetings to proactively manage risk

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MONITOR AND CONTROL RISK OUTPUTS


Risk Register (Updates) Organizational Process Assets (Updates) Change Requests Project Management Plan (Updates) Project Document (Updates)

(Read page 311 & 312)

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SAMPLE EXAM QUESTION


Exercise Give examples of three risks with a response plan for each. Schedule - _____________________________________________ ______________________________________________________ Cost - _________________________________________________ _______________________________________________________ Scope- _________________________________________________ _______________________________________________________

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SAMPLE EXAM QUESTION


Exercise Whats the difference between: Passive acceptance & active acceptance? ____________________ _______________________________________________________ Secondary & residual risks? ________________________________ _______________________________________________________ Management reserve & contingency reserve? _________________ _______________________________________________________

Questions?

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DAY DAY 1 5
CHAPTER 12

PROJECT PROCUREMENT MANAGEMENT

PMP Prep Procurement

Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction Management Project Management Framework Management *Introduction RESOURCE Management *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management PROCUREMENT Management Project SCOPE Management Responsibility

DAY 4
Project QUALITY Project RISK Project HUMAN

DAY 2

Project

DAY 5

Professional & Social

DAY 3
Project TIME Management Project COST Management

DAY 6
REVISION & QUIZ

PROJECT PROCUREMENT MANAGEMENT


WHAT DOES THE PROCUREMENT KNOWLEDGE AREA DO?
Purchases or acquires products, services or results needed to perform project work (internal or external to the performing organization) PMI uses the terms Buyer & Seller very often. Buyer is normally the performing organization. Sellers can be Contractors, Sub-contractors, Service providers, Suppliers/Vendors. Buyer can also be clients, customers, contractors, or purchasers. It is important to understand the situation/context and accordingly interpret who is a Buyer or Seller. A Seller may consider delivering you their own project (which may be a a subproject to you. If required, seek early assistance from Specialists in contracting, purchasing within the legal framework (so as to be fair to both).

PROJECT PROCUREMENT MANAGEMENT


Contracts
Contracts are formal. Also named as Agreements, Subcontracts, or
Purchase orders. Letters of intent are not considered as Contract. Contract is defined as an agreement between competent parties, for valid (effective, well-grounded, logical and producing desired results ) consideration, to accomplish a lawful purpose with clearly defined terms. Contracts are a method of transferring risk for a fees (a strategy used in Risk Response Planning). If internal to the Project Teams organization, a non-contractual formal agreement is prepared in form of an MOU (with other departments). PM team should prepare a tailor-made contract based on specific project needs. PM must know the contents of the contract & the purpose.
PMP Prep Procurement Slide 3

PROJECT PROCUREMENT MANAGEMENT


PROCUREMENT PROCESS DEFINITIONS
12.1 Plan Procurements
Make a Procurement Management Plan: that defines What, When & How to buy goods and services for the Project. Then, prepare a SOW defining the purchase needs.

12.2 Conduct Procurements


Document the requirements (for products, services & results from outside the project organization) Identify potential Sellers

12.3 Administer Procurements


Obtain Information, Quotes, Bids, Offers or Proposals

PROCUREMENT PROCESSES
Review the Offers; Select the best out of the potential Sellers; Negotiate a written Contract.

Manage the Contract & contract changes; the relationships between Buyer and Seller. Review & document the Seller performance. Manage contractual relationship with outside Buyer of the Project. 12.4 Close Procurements Complete & settle each contract See the Process flow diagram in page 273.

PMP Prep Procurement

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PROCUREMENT PROCESSES
Planning Executing Monitorin Closing g and controllin g
12.2 12.3 12.4 Conduct Administer Close Plan Procurement Procurement Procurement Procurement s s s s

12.1

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PLAN PROCUREMENTS
HOW DO WE PLAN PROCUREMENTS?
Identify which project needs that can best be: project needs which can be, must be, met by acquiring products, services or results outside the Project organization. accomplished by the project team during project execution. The process involves consideration of whether, how, what, how much & when to acquire. includes reviewing the risks involved in each make or buy decision. includes reviewing the type of contract planned to be used with respect to mitigating or transferring risks to the Seller.

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PLAN PROCUREMENTS
TOOLS & TECHNIQUES Make-or-buy analysis
Expert judgement Contract types

Scope baseline Requirements documentation Teaming agreements Risk register Risk-related contract decisions Activity resource requirements Project schedule Activity cost estimates Cost performance baseline Enterprise environmental factors Organizational Process assets

INPUTS

OUTPUTS Procurement management plan

Procurement statements of work Make-or-buy decisions Procurement documents Source selection criteria Change requests

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PLAN PROCUREMENTS
INPUTS
Enterprise Environmental Factors Marketplace conditions: what products, services & results are available, at what prices, under what terms & conditions. If the performing organization does not have a purchasing or contracting group, then project team will have to supply both resources & expertise to perform all procurement activities. Organizational Process Assets Formal & informal procurement-related policies, procedures, forms, guidelines & management systems that are considered in developing Procurement Management Plan & selecting contract types to be used. Existing organisation policies frequently constrain procurement decisions. Though many a times those policies are devised based on lessons learned from past projects.
PMP Prep Procurement Slide 9

PLAN PROCUREMENTS - INPUTS


Scope Baseline
The scope baseline describes the need, justification, requirements, and current boundaries for the project. It consists of the following components:

Scope statement : It contains the product scope description, service


description, the list of deliverables, and acceptance criteria, as well as important information regarding technical issues or concerns that could impact cost estimating. Examples of constraints are required delivery dates, available skilled resources, and organizational policies.

Work Breakdown Structure WBS Dictionary

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PLAN PROCUREMENTS INPUTS


Requirements Documentation
Requirements documentation may include: Important information about project requirements that is considered during planning procurements. Requirements with contractual and legal implications that may include health, safety, security, performance, environmental, insurance, intellectual property rights, equal employment opportunity, licenses, and permits all of which are considered when planning for procurements.

PLAN PROCUREMENTS INPUTS


Teaming Agreements: Legal contractual agreements between two or more entities to form a partnership or joint venture, or some other arrangement as defined by the parties. The agreement defines buyer-seller roles for each party. Whenever the new business opportunity ends, the teaming agreement also ends. When teaming agreement is in effect, the planning process for the project is significantly impacted. When teaming agreement is in place on a project, the roles of buyer and seller are predetermined, and such issues as scope of work, competition requirements, and other critical issues are generally predefined.

PLAN PROCUREMENTS INPUTS


Risk Register (Section 11.2.3.1) Risk-Related Contract Decisions
They include agreements including insurance, bonding, services, and other items as appropriate, that are prepared to specify each partys responsibility for specific risks.

Activity Resource Requirements (Section 6.3.3.1) Project Schedule Activity Cost Estimates
Cost estimates developed by the procuring activity are used to evaluate the reasonableness of the bids or proposals received from potential sellers

PLAN PROCUREMENTS INPUTS


Cost Performance Baseline (Section 7.2.3.1) Enterprise Environmental Factors
EEF that can influence the Plan Procurements process include, but are not limited to: Marketplace conditions; Products, services, and results that are available in the marketplace; Suppliers, including past performance or reputation; Typical terms and conditions for products, services, and results or for the specific industry; and Unique local requirements.

PLAN PROCUREMENTS INPUTS


Organizational Process Assets
OPA that influence the Plan Procurement process include, but are not limited to: Formal Procurement policies, procedures, and guidelines. Management systems that are considered in developing the procurement management plan and selecting the contract types to be used. An established multi-tier supplier system of prequalified sellers based on prior experience.

PLAN PROCUREMENTS -T&T


TOOLS & TECHNIQUES Expert Judgment Make or Buy Analysis
Price is not the only consideration. Also consider: Exposure of proprietary information Difficulty in defining deliverables and communicating externally Is this work your core competency? Work you want to do in parallel Amount of change contemplated Time to manage several procurement processes/find sellers Skills available within your team/company and their moral if you outsource Special resource requirement-time duration for training, learning curve etc.

PLAN PROCUREMENTS -T&T


Questions on Make or Buy decisions: can include buy or lease
questions like this. It costs $300/day to lease an item. It would cost $2000 plus $100/day on maintenance to buy it. When will lease and purchase costs be equal (in Days)? Lease cost = $300/day Investment =$2000 + $100/day D = # of days when purchase & lease costs will be equal
$300D =$2000 + $100D ( No. of days) $300D -$100D = $2000 + $100D -$100D (subtract $100D from both sides) $200D = $2000 D = 10 i.e. 10 days

PLAN PROCUREMENTS -T&T

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CONTRACT TYPES
Contract Types
FIXED-PRICE (FP) CONTRACTS Firm Fixed Price Contracts (FFP) Seller to complete the job within a fixed total price. The Product has to be well defined ( both seller & buyer are at risk ) Fixed Price Plus Incentive Fee -FPIF Seller completes within a fixed total price, plus an extra incentive for meeting or exceeding certain objectives e.g. fixed price of $100,000 + $25,000 for completing by a target date

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CONTRACT TYPES
Fixed Price Incentive Fee Contracts (FPIF) Incentive is based on sellers performance tied to achieving agreed to metrics. Typically such financial incentives are related to cost, schedule, or technical performance of the seller In FPIF contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller, who is obligated to complete the work.

CONTRACT TYPES
Fixed price with Economic Price Adjustment Contracts (FP-EPA)
The contract type is used whenever the sellers performance period spans a considerable period of years, as is desired with many long-term relationships. It is Fixed price contract, but with a special provision allowing for pre-defined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases (or decreases) for specific commodities. The EPA clause must relate to some reliable financial index which is used to precisely adjust the final price. The FP-EPA contract is intended to protect both buyer and seller from external conditions beyond their control.

CONTRACT TYPES
COST-REIMBURSABLE (CR) CONTRACTS
Involves

payment (reimbursement) to the seller for seller's actual costs, plus a fee typically representing seller profit May also include financial incentive clauses whenever the seller exceeds, or falls below, defined objectives such as costs, schedule, or technical performance targets. Three or more common types in use are as given below: Cost Plus Fixed Fee CPFF Buyer pays all costs plus a fixed fee Cost over runs will not increase the fixed fee e.g. cost of $100,000 + fixed fee of $15,000 (as profit)

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CONTRACT TYPES
Cost Plus Incentive Fee -CPIF Buyer pays all costs plus an incentive to beat some criteria Criteria might be a cost or time target with a certain formula e.g. cost of $100,000 + a pre-determined fee $5000 as incentive for early delivery

Cost Plus Award Fee contracts (CPAF) The seller is reimbursed for all legitimate costs, but the majority of the fee is only earned based on the satisfaction of certain broad subjective performance criteria defined and incorporated into the contract. The determination of fee is based solely on the subjective determination of seller performance by the buyer, and is generally not subject to appeals.
PMP Prep Procurement Slide 17

CONTRACT TYPES
TIME & MATERIAL (T&M) CONTRACTS
Hybrid type of contractual agreement that contains aspects of both cost-reimbursable & fixed-price contracts. The full value of the agreement and the exact quantity of items to be delivered is not known when the agreement is made (like a cost reimbursement contract) Based upon unit rates or hourly rates as preset by the Buyer & Seller for a specific resource category (like a fixed-price contract)

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CONTRACT TYPES
Question
Contract cost is estimated to be $210,000 and a fee of $10 ,000 is offered to the supplier for completing the contract on or before time. If the contractor beats the cost, both the buyer and the seller will share the savings at 40:60 ratio. If the actual cost of the work comes out to $180,000, what will the Seller get if the contract is completed before time?

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CONTRACT TYPES
ANSWER:
Target cost" $210,000 Seller's fee" $10,000 Sharing ratio = 40% buyer / 60% seller seller Actual cost" $180,000 Cost savings = $210,000 -$180,000 = $30,000 Seller's profit = $10,000 + ( $30,000 X 60% ) = $28,000 Final price to buyer = $180,000 + $28,000 = $208,000

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CONTRACT TYPES

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CONTRACT TYPES
Spectrum of Risk
Contract type should be chosen based on the degree of risk (do you
know what will it cost to deliver?) Risk increases if scope is not well defined. So defining the scope better will get you a better contract with less risk for all. Risk can affect any/or all of them - time, cost, quality & scope

Contracts - buyer on high risk


Buyer pays for what it costs to deliver If costs go up, buyer's price increases, but seller's costs are always covered.

Contracts - seller on high risk


Buyer pays for agreed price no matter what it costs to deliver If costs go up, seller has to absorb them, but buyer has fixed price & isn't affected.

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PROCUREMENT DOCUMENTS
Procurement Documents
RFP (Request for Proposal or Request for Tender) - requests a price and details on how the work will be carried out, time frame, who will do it, biography of the team, company experience, etc. IFB (Invitation for Bid or Request for Bid) -requests one price for all the work. Request for Quote (RFQ) -requests a price quote per item, on hourly or per unit basis.

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PLAN PROCUREMENTS OUTPUTS


Procurement Management Plan
Describes how the procurement processes will be managed from developing procurement documentation through contract closure The procurement management plan can include guidance for: Types of contracts to be used; Risk management issues; Whether independent estimates will be used and if they are needed as evaluation criteria; Those actions the PM team can take unilaterally, if the performing organization has a prescribed procurement, contracting, or purchasing department; Standardized procurement documents, if they are needed;
PMP Prep Procurement Slide 24

PLAN PROCUREMENTS OUTPUTS


Procurement Management Plan (Contd.)
Managing multiple suppliers; Coordinating procurement with other project aspects, such as scheduling and performance reporting; Handling the required lead times Handling the make-or-buy decisions, etc.

PLAN PROCUREMENTS OUTPUTS


Procurement Statements of Work
Describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the item. Written to be clear, complete & concise. Information included in a contract SOW can include specifications, quantity desired quality levels, performance data, period of performance, work location & other requirements. Include description of any collateral services required, i.e. performance reporting or post-project operational support for the procured item. Contract SOW can be revised as required as it moves through the procurement process until incorporated into signed contract. Seller may also modify the SOW by suggesting more efficient approach or a less costly product than that originally specified.

Make-or-Buy Decisions

PMP Prep Procurement

Slide 25

PLAN PROCUREMENTS OUTPUTS


Procurement Documents
Used to seek proposals from prospective sellers e.g. RFP/RFQ/IFB etc. Terms such as bid, tender or quotation are generally used when the seller selection decision will be based on price; RFP is used when other considerations such as technical capability or technical approach are paramount) These documents include, - Procurement SOW - Any required contractual provisions - With government contracting, some or all of the content and structure of procurement documents can be defined by regulation.

PLAN PROCUREMENTS OUTPUTS


Source Selection Criteria
Selection Criteria are often included as a part of the procurement solicitation documents. Such criteria are developed and used to rate or score seller proposals, and can be objective or subjective (the proposed Project Manager should be a Certified PMP) or subjective (previous experience on similar projects) Other selection criteria to support an assessment of a complex products, services, or results may include: Understanding of need Overall or life-cycle cost Technical capability Risk Management approach Technical Approach Warranty Financial capacity Production capacity and interest Business size & type Past performance of sellers References Intellectual property rights Proprietary rights

PROCUREMENT PROCESSES
PROCESSES BY PROCESS GROUP

Planning Executing Monitorin Closing g and controllin g


12.2 12.3 12.4 Conduct Administer Close Plan Procurement Procurement Procurement Procurement s s s s

12.1

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CONDUCT PROCUREMENTS
WHAT HAPPENS IN CONDUCT PROCUREMENTS?

Conduct Procurements is the process of obtaining Seller responses, selecting a seller, and awarding a contract (see Figures 12-4 and 12-5 in page 329 of PMBOK)

In this process, the team will receive bids or proposals and will apply previously defined selection criteria to select one or more sellers who are qualified to perform the work and acceptable as a seller. On major procurement items, overall process of requesting responses from sellers and evaluating those responses can be repeated. A short list of qualified sellers can be established based on a preliminary proposal. A more detailed evaluation can then be conducted based on a more specific and comprehensive requirements document requested from the sellers on the short list. In addition, tools and techniques described here can be used alone or in combination to select sellers. For example, a weighting system can be used to: - Select a single seller that will be asked to sign a standard contract, and - Establish a negotiating sequence by ranking all proposals by the weighted evaluation scores assigned to each proposal.

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Slide 27

CONDUCT PROCUREMENTS
TOOLS & TECHNIQUES Bidder conferences Proposal evaluation techniques Independent estimates Expert judgement Advertising Internet Research Procurement negotiations

Project management plan


Procurement documents Source selection criteria Qualified seller list Seller proposals Project documents Make-or-buy decisions Teaming agreements Organizational process assets

INPUTS

OUTPUTS Selected sellers


Procurement contract award Resource calendars Change requests Project Mgmt. Plan (updates) Project document (updates)

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Slide 28

CONDUCT PROCUREMENTS INPUTS


INPUTS
Project Management Plan Procurement documents Source selection criteria Qualified seller list Seller proposals Project documents Make-or-Buy Decisions Teaming agreements Organizational process assets
Slide 29

PMP Prep Procurement

CONDUCT PROCUREMENTS T&T


1) Bidder Conferences Meeting with all prospective sellers and buyers prior to submittal of a bid or proposal (Read page 331)
2)

Proposal Evaluation Techniques On complex procurements, where source selection will be made based on seller responses to previously defined weighted criteria, a formal evaluation review process will be defined by the buyers procurement policies. The evaluation committee will make their selection for approval by management prior to the award.
Slide 30

PMP Prep Procurement

CONDUCT PROCUREMENTS T&T


3) 4) 5) 6) Independent Estimates Expert Judgment Advertising Internet Search

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Slide 31

CONDUCT PROCUREMENTS T&T


7) Procurement Negotiations
Clarifies the structure & requirements of the contract so that mutual agreement can be reached prior to signing the contract. Subjects covered include: Responsibilities & authorities Applicable terms & law Technical & business management approaches Proprietary rights Contract financing Technical solution Overall schedule Payments Price

CONDUCT PROCUREMENTS Outputs


Selected Sellers Those sellers who have been judged to be in a competitive range based upon the outcome of the proposal or bid evaluation, and Who have negotiated a draft contract that will become the actual contract when an award is made. Final approval of all high-value, high-risk procurements will generally require organizational senior mgmt. approval prior

CONDUCT PROCUREMENTS Outputs


Procurement Contract Award A procurement contract is awarded to each selected seller. The contract can be in the form of simple purchase order or a complex document. Regardless of the documents complexity, a contract is a mutually binding legal agreement that obligates the seller to provide the specified products, services, or results, and obligates the buyer to compensate the seller. A contract is a legal relationship subject to remedy in the courts.

CONDUCT PROCUREMENTS Outputs


The major components in a contract document will vary, but will sometimes include the following; - Statement of work or deliverables, - Schedule baseline, - Performance reporting, - Period of performance, - Roles and responsibilities, - Sellers place of performance, - Pricing, - Payment terms, - Place of delivery

CONDUCT PROCUREMENTS Outputs


Inspection and acceptance criteria, Warranty, Product support, Limitation of liability, Fees and retainage, Penalties Incentives, Insurance and performance bonds, Subordinate subcontractor approvals, Change request handling, and Termination and alternative dispute resolution (ADR) mechanisms. The ADR method can be decided in advance as a part of the procurement award. -

PROCUREMENT PROCESSES
PROCESSES BY PROCESS GROUP

Planning Executing Monitorin Closing g and controllin g


12.2 12.3 12.4 Conduct Administer Close Plan Procurement Procurement Procurement Procurement s s s s

12.1

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ADMINISTER PROCUREMENT
HOW DO WE ADMINISTER PROCUREMENT?
It is the process of managing procurement relationships, monitoring contract performance, and making changes and corrections as needed (see Figures 12-6 and 12-7 in page 336). Both the buyer and the seller will administer the procurement contract for similar purposes. Each must ensure that both parties meet their contractual obligations and that their own legal rights are protected.

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ADMINISTER PROCUREMENT
The Administer Procurements process ensures that the sellers performance meets procurement requirements and that the buyer performs according to the terms of the legal contract. The legal nature of the contractual relationship makes it imperative that the project management team is aware of the legal implications of actions taken when administering any procurement. Due to varying org. structures, many organizations treat contract administration as an administrative function separate from the project organization. While a procurement administrator may be on the project team, this individual typically reports to a supervisor from a different department. This is usually true if the performing organization is also the seller of the project to an external customer.

ADMINISTER PROCUREMENT
TOOLS & TECHNIQUES Contract change control system
Procurement performance reviews Inspections & audits Performance reporting Payment systems Claims administration Records management system

Project management plan Contract Performance reports Approved change requests Work performance information
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INPUTS Procurement documents

OUTPUTS Procurement documentation

Organizational process assets (updates) Change requests Project Mgmt. Plan (updates)

ADMINISTER PROCUREMENTINPUTS
1) Procurement Documents 2) Project mgmt. plan 3) Contract 4) Performance reports 5) Approved change requests 6) Work performance information

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ADMINISTER PROCUREMENTT&T
TOOLS & TECHNIQUES Contract change control system
Defines the process to modify a contract Includes paperwork, tracking systems, dispute resolution procedures & approval levels necessary for authorizing changes, i.e. work authorization system

Procurement performance reviews

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ADMINISTER PROCUREMENT- T&T


Inspections and audits Required by the buyer & supported by the seller as specified in contract documentation. If authorized by contract, some inspections and audit teams can include buyer procurement personnel.

ADMINISTER PROCUREMENT- T&T


Performance Reporting
How effectively the seller is achieving contractual objectives

Payment systems
Payments to the seller are typically processed by the accounts payable system of the buyer after certification of satisfactory work by an authorized person on the project team. Strictly as per terms of contract.

ADMINISTER PROCUREMENT- T&T


Claims administration
Contested changes and potential constructive changes are those requested changes where the buyer and seller cannot reach an agreement on compensation for the change, or cannot agree that a change has occurred. These contested changes are variously called claims, disputes, or appeals. Preferred method of claims/dispute settlement is through negotiation.

Records management system


It is used by the PM to manage contract and procurement documentation and records (it is a part of PMIS, section 4.3.2.2)

ADMINISTER PROCUREMENTOUTPUTS
OUTPUTS

1) Procurement documentation
It includes, but not limited to, the procurement contract with all supporting schedules, requested unapproved contract changes, and approved change requests. It also includes any seller-developed technical documentation and other work performance information such as deliverables, seller performance reports, warranties, financial documents including invoices and payment records, and the result of contract-related inspections.

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ADMINISTER PROCUREMENTOUTPUTS
2) Organizational Process Assets (updates) Read page 340 3) Change Requests 4) Project Mgmt. Plan (updates)
- Procurement mgmt. plan - Baseline schedule (must be updated to reflect the current expectations

PROCUREMENT PROCESSES
PROCESSES BY PROCESS GROUP

Planning Executing Monitorin Closing g and controllin g


12.2 12.3 12.4 Conduct Administer Close Plan Procurement Procurement Procurement Procurement s s s s

12.1

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CLOSE PROCUREMENTS
WHAT HAPPENS IN CLOSE PROCUREMENTS?
Close procurements process supports the close project process
Verifies that all work and deliverables were acceptable Administrative activities, such as update records to reflect final results and archive them for future use In multi-phase projects, the terms of a contract may only apply to a given phase of the project. Unresolved claims may be subject to litigation after close procurements. Contract terms & conditions can prescribe specific procedures for close procurements. Early termination of a contract is a special case of close procurements & can happen when the buyer & seller mutually agree or when there's contract default
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CLOSE PROCUREMENTS
TOOLS & TECHNIQUES Procurement audits
Negotiated settlements Records management system

INPUTS
Procurement management plan Procurement documentation

OUTPUTS
Closed procurements Organizational process assets (updates)

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CLOSE PROCUREMENTS INPUTS


INPUTS
Procurement Management Plan Procurement Documentation

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CLOSE PROCUREMENTS T&T


TOOLS & TECHNIQUES Procurement Audits Structured review of all the procurement process from Plan Procurement process through Administer Procurements Objective is to identify successes & failures that warrant recognition in the preparation and administration of other procurement contracts on the project, or on other project within the performing organization.
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CLOSE PROCUREMENTS T&T


Negotiated Settlements
In all procurement relationships the final equitable settlement of all outstanding issues, claims, and disputes by negotiation is a primary goal. Whenever settlement cannot be achieved through direct negotiation, some form of alternative dispute resolution (ADR) including mediation or arbitration may be explored. When all else fails, litigation in the courts is the least desirable option.

Records Management System (see section12.3.2.7)

CLOSE PROCUREMENTS OUTPUTS


OUTPUTS
Closed Procurements The buyer, usually through the authorized procurement administrator, provides the seller with formal written notice that the contract has been completed Organizational Process Assets (Updates) Procurement file -a complete set of indexed records Deliverable acceptance (or rejection) Lessons learned documentation

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SAMPLE EXAM QUESTION


Question
All the following are true statements about 'Just In Time Manufacturing' except: A. It emphasizes waste reduction

B. It eliminates costs related to material handling, storage, paperwork and inspection. C. It emphasizes short-term relationships with suppliers that last until the delivery is received. D. It reduces inventory to zero or the re-order level.

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SAMPLE EXAM QUESTION


Answer - C
All are true except C.
Amongst the true ones - But the best answer would be D (for exam). Just-in-time manufacturing is a process where inventory is delivered to the factory by suppliers only when it's needed.

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Questions?

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DAY 5
PROFESSIONAL & SOCIAL RESPONSIBILITY

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AGENDA
Day 1
PMP Exam Prep Introduction Management Project Management Framework Management *Introduction RESOURCE Management *Project Life Cycle & Organisation Project Management Processes Project INTEGRATION Management PROCUREMENT Management Project SCOPE Management Responsibility

DAY 4
Project QUALITY Project RISK Project HUMAN

DAY 2

Project

DAY 5

Professional & Social

DAY 3
Project TIME Management Project COST Management

DAY 6
REVISION & QUIZ

PROFESSIONAL RESPONSIBILITY
Responsibilities to the Profession Compliance with all organizational (PMI) rules & policies Candidate/Certificant Professional Practice Advancement of the Profession Responsibilities to Customers & the Public Qualifications, experience & performance of professional services Conflict of interest situations & other prohibited professional conduct Administration of Code of Conduct By becoming PMP, you agree to abide by this code of conduct. PMI reserves the right to suspend or revoke the credentials of any PMP who is determined to have committed a violation of this code.

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RESPONSIBILITIES TO THE PROFESSION


COMPLIANCE WITH ALL ORGANIZATIONAL (PMI) RULES & POLICIES

Provide accurate and truthful information directly or indirectly related to all aspects of PMI Certification Program Responsibility to report violations of the PMP Code of Professional Conduct by individuals in the field of project management Responsibility to cooperate with PMl concerning ethics violations and the collection of related information Responsibility to disclose to clients, customers, owners or contractors, significant circumstances that could be construed as a conflict of interest or an appearance of impropriety

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CANDIDATE/CERTIFICANT PROFESSIONAL PRACTICE Responsibility to provide accurate, truthful advertising and representations concerning qualifications, experience and performance of services

RESPONSIBILITIES TO THE PROFESSION

Responsibility to comply with applicable laws, regulations and ethical standards governing professional practice in the state/province and/or country when interacting with PMI and when providing project management services Responsibility to act in an honest & ethical manner when interacting with PMI and when providing PM services (another word for ethical is moral & the dictionary description of ethical is 'Being in accordance with the accepted principles of right & wrong that govern the conduct of a profession') Responsibility to maintain and respect the confidentiality of the contents of the PMP credential exam.
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RESPONSIBILITIES TO THE PROFESSION


ADVANCEMENT OF THE PROFESSION
Responsibility to recognize & respect intellectual property developed or owned by others, and to otherwise act in an accurate, truthful and complete manner, including all activities related to professional work and research. Responsibility to support & disseminate the PMP Code of Professional Conduct to other PMI certificants.

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RESPONSIBILITIES TO CUSTOMER AND PUBLIC


QUALIFICATIONS, EXPERIENCE & PERFORMANCE OF PROFESSIONAL SERVICES
Provide accurate & truthful representations to the public in advertising, public statements and in the preparations of estimates, concerning costs, services & expected results Maintain & satisfy the scope & objectives of professional services, unless otherwise directed by the customer Maintain & respect the confidentiality of sensitive information obtained in the course of professional activities or otherwise where a clear obligation exists

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RESPONSIBILITIES TO CUSTOMER AND PUBLIC


CONFLICT OF INTEREST SITUATIONS & OTHER PROHIBITED PROFESSIONAL CONDUCT
Ensure that a conflict of interest does not compromise legitimate interests of a client or influence/interfere with your professional judgments (Don't make/participate in a decision if there's an opportunity to further your own interests or those of an associate, friend or family member) Refrain from offering or accepting inappropriate payments, gifts or compensation for personal gain unless in conformity with applicable laws & customs of the country where PM services are being provided

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ADMINISTRATION OF CODE OF CONDUCT


ADMINISTRATION OF CODE OF CONDUCT

By becoming a PMP, you agree to abide by this Code of Conduct

PMI reserves the right to suspend or revoke the credential of any PMP who is determined to have committed a violation of this Code

SUMMARY
Truthfully report information about your PMP status & PM experience.
You're responsible for the integrity of the PM process, the product & yourself. Avoid putting your own personal gain above project objectives. Abide by laws, rules, & regulations of the country you're working in. Report instances that might appear to be a conflict of interest. It's always better to inform others of an apparent conflict than to have it discovered later & your methods called into question. Deal with problems.
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SUMMARY
Always strive to maintain honesty in project reporting.
Respect the use of confidential information and intellectual property & always verify who has permission to access it & when disclosures are required. Balance the needs & interests of stakeholders with project objectives. Respect and understand cultural differences & don't impose your beliefs on others. Culture shock is when you find yourself in a different cultural environment than you're familiar with. Diversity training can help project team members with relationship management techniques about cultural & ethnic differences.
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Questions?

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