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P M P E X A M

P rep a ra tio nA d d en d u m

CONTENTS

1. Foreword page 3

2. About the exam page 4

3. Cost page 9

4. Quality page 12

5. Human Resources page 21

6. Communication page 31

7. Procurement page 36

8. Simple questions – 1’ set page 45

9. Simple questions – 2’ set page 61

10. Answers – 1’ set page 85

11. Answers – 2’ set page 86

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FOREWORD

The candidate studying for the PMP certification examination must use the PMBOK Guide as a basis for his or her studies, but would be well advised to read other resources and seek professional experience before attempting to pass the certification examination.

This document aims to provide an addendum list of the main topics related to the PMP Exam that are NOT included in the PMBOK Guide, because part of General Management Skills.

Anyway, this document is not a book and it is NOT intended to replace the PMBOK Guide or any other book or publication specifically related to the PMP Exam Preparation.

For the terminology, please refer to the PMBOK Guide glossary.

Other suggested sources that certification candidates can use to get useful information on project management theory, principles and procedures are found in the PMP Resource Package, and in particular:

Principles of Project Management – different authors - PMI Edition

Human Resource Skills for the Project Manager - V.K. Verma - PMI Edition

Organizing Projects for Success - V.K. Verma - PMI Edition

Managing the Project Team – V.K. Verma – PMI Edition

The PMP exam preparation could be a great opportunity for project managers to enlarge existing knowledge and to increase professional credibility.

For this reason we strongly encourage and recommend to invest personal time in the lecture (better, the study) of the books above specified, avoiding to have the dream to find out a magic summary that can summarize in few pages what in reality is really broad.

Rita Mulcahy, an international expert in PMP exam preparation indicates in her book: “There are many reasons why people fail the exam. I have noticed five main reasons: 1) people do not read the questions correctly – 2) they do not read all the choices – 3) they are too nervous – 4) They have not studied enough – 5) they believe that they can rely exclusively on experience”.

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ABOUT THE EXAM

PMI conducts a certification program in project management. PMI's Project Management Professional (PMP) credential is the project management profession's most globally recognized and respected certification credential. To obtain PMP certification an individual must satisfy education and experience requirements, agree to and adhere to a Code of Professional Conduct, and pass the PMP Certification Examination.

The education and experience requirements are divided into two categories.

Category 1: at the time of application the candidate holds a baccalaureate/equivalent university degree and has a minimum of 4.500 hours of project management experience during at least 36 non-overlapping months.

Category 2: at the time of application the candidate holds a high school/equivalent diploma and has a minimum of 7.500 hours of project management experience during at least 60 non-overlapping months.

The PMP Certification examination is computer-based and is comprised of 200 multi-choice questions. The allotted time to complete the examination is four hours. The minimum score to obtain the certification is about 70% of correct answers.

The four hours examination administration is preceded by a briefing and 15-minute computer tutorial and followed by an optional candidate satisfaction survey and an examination score report.

PMPs must accrue a minimum of sixty Professional Development Units (PDUs) every three years. The PDP Cycle begins January 1 of the year following initial certification. PMPs can get PDUs in different ways (i.e. presenting a speech at PM workshop, or via self-directed learning that enhances project management knowledge or skills, or attending at project management conference or symposium).

For further information about PMI, PMP certification and PDUs, please refer to the PMI WEB site (www.pmi.org).

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Breakdown of the PMP questions by perforrmance domains and tasks

The Role Delineation Study (PMI – 2000) defines the profession of Project Management in terms of performance domains and tasks that are performed within the performance domains.

The following table indicates the breakdown of the 200 PMP Exam questions by performance domains and tasks, in term of number of questions from each domain and task that will appear on the certification examination.

Domain and Tasks No. of Items on

Test

Domain I – Initiating the project 17

1. Determine project goals by identifying and working with project stakeholders in order to meet their requirements, specifications, and/or expectations 2

2. Determine product or service deliverables by reviewing or generating the scope of work, requirements, and/or specifications to meet stakeholders expectations 2

3. Determine project management process outputs by applying appropriate practices, tools, and methodologies to ensure required product/service delivery 1

4. Document project constraints through coordination with stakeholders and review of policies and procedure to ensure compliance 1

5. Document assumptions by determining information that must be validated, or situations to be controlled during the project in order to facilitate the project planning process 2

6. Define the project strategy by evaluating alternative approaches to meet stakeholder requirements, specifications, and/or expectations 1

7. Identify performance criteria by referring to product/service specifications and process standards in order to ensure and/or support the quality assurance effort 2

8. Determine key resource requirements by referring to deliverables in order to support planning and decision-making 2

9. Define an appropriate project budget and schedule by determining time and cost estimates in order to support decision-making 2

10. Provide comprehensive information by producing a formal document to obtain an approval decision from the stakeholders 2

Domain II – Planning the project 47

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1. Refine project requirements, assumptions, and constraints through communication with stakeholders and/or by reviewing project documents to baseline the scope of work and enable development of the execution plan 8

2. Create the WBS using the scope of work, other project documents, and decomposition techniques to facilitate detailed project planning and the executing, controlling, and closing processes 7

3. Develop the resource management plan (Human Resources, Procurement, …) by identifying resource requirements and obtaining commitments from internal, external, and procured sources to complete all project activities 6

4. Refine project time and cost estimates by applying estimating tools and techniques to all WBS tasks in order to determine and define project baseline, schedule, and budget 6

5. Establish project controls by defining the required correct processes, measures, and controls to manage project change, communications, procurement, risk, quality, and human resources to facilitate project executing and controlling processes, and to ensure compliance with generally accepted industry standards 6

6. Develop a formal and comprehensive project plan by integrating and documenting project deliverables, acceptance criteria, processes, procedures, risks, and tasks to facilitate project executing, controlling and closing processes 7

7. Obtain project plan approval by reviewing the plan with the client and other required stakeholders to confirm project baselines prior to proceeding with project executing processes 7

Domain III – Executing the Project 47

1. Commit project resources in accordance with the project plan to ensure that all activities are performed 10

2. Implement the project plan by authorizing the execution of project activities and tasks to produce project deliverables 9

3. Manage project progress by ensuring that activities are executed as planned in order to achieve the project objectives 11

4. Communicate project progress by producing project reports to provide timely and accurate project status and decision support information to stakeholders 9

5. Implement quality assurance procedures by performing project control activities to meet project objectives 8

Domain IV – Controlling the Project 46

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1. Measure project performance continually by comparing results to the baseline in order to identify project trends and variances 7

2. Refine control limits on performance measures by applying established policy in order to identify needs for corrective actions 4

3. Take timely corrective actions by addressing the root causes in the problem areas in order to eliminate or minimize negative impact 7

4. Evaluate the effectiveness of the corrective actions by measuring subsequent performance in order to determine the need for further actions 5

5. Ensure compliance with the change management plan by monitoring response to change initiatives in order to manage scope 7

6. Reassess project control plans by scheduling periodic reviews in order to ensure their effectiveness and currency 4

7. Respond to risk event triggers in accordance with the risk management plan in order to properly manage project outcomes 6

8. Monitor project activities by performing periodic inspections to ensure that authorized approaches and processes are followed or to identify the need for corrective actions 6

Domain V – Closing the Project 14

1. Obtain final acceptance of deliverables by obtaining formal approval from appropriate stakeholders to achieve closeout 4

2. Document lessons learned by surveying project team members and other relevant stakeholders to use for the benefit of future projects 2

3. Facilitate administrative and financial closure in accordance with the project plan in order to comply with organization and stakeholder requirements 3

4. Preserve essential project records and required tools by archiving them for future use to adhere to legal and other requirements 3

5. Release project resources by following appropriate organizational procedures in order to optimize resource utilization 2

Domain VI – Professional Responsibility 29

1. Ensure individual integrity and professionalism by adhering to legal requirements and ethical standards in order to protect the community and all stakeholders 8

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2. Contribute to the project management knowledge base by sharing lessons learned, best practices, research, etc, within appropriate communities in order to improve the quality of project management services, build the capabilities of colleagues, and advance the profession 3

3. Enhance individual competence by increasing and applying professional knowledge to improve services 5

4. Balance stakeholders’ interests by recommending approaches that strive for fair resolution in order to satisfy competing needs and objectives 5

5. Interact with team and stakeholders in a professional and cooperative manner by respecting personal, ethnic, and cultural differences in order to ensure a collaborative project management environment 8

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COST MANAGEMENT

What to Study

The PMBOK Guide phases of Project Cost Management: Resource Planning (Chapter 7), Cost Estimating, Cost Budgeting, and Cost Control (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase)

Cost Estimates and Ranges: Order of Magnitude, Budgetary, and Definitive Depreciation methods: Straight-line, Accelerated, Double Declining balance and Sum of

Years Digits Earned Value Analysis: PV, EV, AC, EAC, BAC, ETC, CV, SV, CPI, SPI (see PMBOK

Guide pages 92, 123, 124) - Warning: PV = Planned Value; previously called BCWS (Budgeted Cost of Work Scheduled)EV = Earned Value; previously called BCWP (Budgeted Cost of Work Performed)AC = Actual Cost; previously called ACWP (Actual Cost of Work Performed)

Cost Estimating Techniques: analogous, parametric, and bottom-up Present Value and Net Present Value Type of cost: direct, indirect, labor, non labor Index like ROI, EVA, IIR

Addendum

Accounting elements: Benefit Cost Ratio (BCR): compares the costs to the benefits of different projects. The higher,

the better. A BCR < 1 means costs are greater than revenue. Internal Rate of return (IIR): it measures the investment’s return on project profitability. It is

the rate of discount at which thew project inflows (revenue) and project outflows (costs) are equal. The higher, the better. Alternative definition: the maximum rate of interest that may be paid for the capital used over the life of the investment without loss on the project.

Law of diminishing returns: the more you put into something, the less you get out of it. Example: adding twice as many resources to a task may not result in complete the task in half time.

Net Present Value (NPV): total revenue less the total costs. To calculate NPV proceed as follow: calculate PV1 related to expected incomes (inflows); calculate PV2 related to expected costs (outflows); compute PV1 - PV2

¬ Payback period: the number of time period it takes to reach the break even point (when the investment are recovered and the project is starting to generate revenue).

Opportunity Costs: the opportunity given up by selecting one project over another. Example: project A was estimated to have 10% return with minimal risk. Project B is expected to produce 30% of return but with higher risk. If management decides to pursue project A, the 20% return difference would be considered the cost of not pursuing the opportunity of project B, without regard to risk.

Present Value (PV): the value today of future cash flow; PV = FV / (1+r)n Where: FV = future value; r = interest rate; n = number of years

Reserve (Management / Contingency): management reserve is a percent of the project’s funds set aside for anticipated problems expected. These funds are usually retained at the management level. Contingency reserve is a specific provision for unforeseen elements of cost within the defined project scope. This is important when in previous projects certain cost

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estimates were known to increase. Allowance for those increases are contained within the contingency reserve account. This fund is not to take care of changes in scope or project catastrophes. The contingency reserve fund is usually held at the project level.

Sunk Costs: A historical or expended cost. Since the cost has been expended, we no longer have control over the cost. Sunk costs are not included when determining alternative courses of action.

Value analysis: (also value engineering) find a less costly alternative to perform the same scope of work. It implies adopting techniques to identify the required project functions, assign a value to these functions, and provide functions at the lower cost without loss of performance.

Types of costs Fixed Costs: Non-recurring costs that do not change based on the number of units Variable Costs: Costs that rise directly with the amount of production / work Direct Labor Costs (DLC): costs related to the project’s work (salary, social security

contribution, travel expenses) Indirect labor costs (ILC): overhead (O/H) plus Finance & Administrative (F&A). ILC are

specific for each company. Typically, overhead are calculated as % of DLC and F&A as % of DLC+O/H

Direct Non Labor Cost (DNLC): materials, equipment’s, third parties labor chargeable to the project

Depreciation:Whenever a company purchases an asset, this immediately begins to lose value. Accounting has coined the term depreciation to account for the asset losing its value. There are several depreciation methods; the most important are: Straight-line Method: Takes an equal credit during each year of the useful life of an asset

(linear depreciation). The % of depreciation is the same for each year. Accelerated Method: Writes off the expense even faster than straight-line.

Double-declining balance – there are different ways to calculate it. One is to use twice the percentage used in the straight-line method. Also in this case, the % of depreciation is the same for each year.

Sum-of-the-years digits – basing on this, the % of depreciation is different year by year, going form the higher to the lower as the years pass (the highest % of depreciation is in the 1’ year, the lowest one in the last).

Earned Value: PV: Baseline, Planned Value (the portion of the approved cost estimate planned to be spent o

the activity during a given period) EV: Earned Value (the value of the work actually completed) AC: Actual Cost (the total cost incurred in accomplishing work on the activity during a given

period BAC: Budget At Completion EAC: Estimated at Completion VAC: Variance at Completion. VAC = BAC - EAC. The difference between the total amount

the project was supposed to cost (BAC) and the amount the project is now expected to cost (EAC)

CPI = EV/AC (measures cost-efficiency); it is to be intended as cumulative (the sum of all individual EV budgets divided by the sum of all individual ACs)

CV = EV - AC SPI = EV/PV (measures schedule-efficiency); it is to be intended as cumulative (the sum of

all individual EV budgets divided by the sum of individual PVs)10

SV = EV - PV Percent Complete (accomplished): EV/BAC (real value of work accomplished) Percent Spent: AC/BAC EAC = Estimate At Competion: new estimate for BAC ETC = Estimate To Complete: EAC - AC Rule of thumb: You can use indices (CPI or SPI) to determine efficiency if you’ve completed

at least 20% of the project Fixed formula rule of progress reporting (xx/yy): When beginning a task, charge xx% of its

PV to its account; when the task is completed, charge the remaining yy% to its account. Typically, xx/yy can assume the following values: 50/50; 0/100; 20/80; …

Assumption for 50/50 rule: all tasks generally are of the same size (other rule of thumb: 40/80 hours each).

Life Cycle Costing: Project Cost Management is primarily concerned with the cost of the resources needed to complete the project. A broader view of Project Cost Management is Life Cycle Costing. Life Cycle Costing includes development, production, operating, maintenance, and discard costs. Also known as the total cost of ownership. Development costs – those expenditures which are required to design, build a prototype,

develop standards and procedures for production, test, perform any required activity to assist in the design effort, and evaluate the end product.

Production costs – cost incurred to implement the product. These costs include materials, assembly, shipping, installation, testing, and acceptance of the product.

Operating/maintenance costs – deal with the product after it has been completed (after the project is closed). After customer acceptance, any cost related to operating and maintenance of the product is part of this cost category.

Discard costs – the expenses associated with the disposal of the product once it has passed its point of usefulness.

If the project manager does not consider the life cycle costs, project costs may be low at the expense of a great overall costs for the operation and maintenance phase. For this reason project manager should pay attention and manage life cycle costs instead of project costs only.

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QUALITY MANAGEMENT

What to Study

The PMBOK Guide phases of Project Quality Management (Chapter 8): Quality Planning, Quality Assurance, and Quality Control (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase)

Know the difference between Quality Control and Quality Assurance Project characteristics and attributes (the 9 “ilities”) Cost of Quality Statistical Concepts and Quality Tools Cost trade-off Difference between the Deming, Juran, and Crosby Management approaches Pareto and fishbone diagrams

Key Concept

Quality definition & philosophy: (from: “Quality in Project Management” by Ireland & PMI perspective) It is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.Some goals of quality programs include: Fitness for use (Is the product or service capable of being used?) Fitness for purpose (Does the product or service meet its intended purpose?) Customer satisfaction (Does the product or service meet the customer’s expectations?) Conformance to the requirements. (Does the product or service conform to the

requirements?). Quality is NOT giving the customer extra. It is to provide what it has been agreed. Avoid gold plating approach. Gold plating adds no value to the project. Often such additions

are included due to project’s team impression of what the customer would like. Basing on the Chaos report (by Standish Group) only less than 30% of projects succeed, so that PM would better concentrate the attention, effort and time to fit the requirements.

Quality must be planned in, not inspected in. That means prevention over inspection.

Continuous Improvement Process (CIP) (From Japanese word, Kaizen) A sustained, gradual change to improve the situation. Differs from innovation - does not make a sudden jump to a plateau where it matures over

time. Focuses on 11 principles: constancy of purpose, commitment to quality, customer focus and

involvement, process orientation, continuous improvement, system-centered management, investment in knowledge, teamwork, conservation of human resources, total involvement, and perpetual commitment.

Control: The process of comparing actual performance with planned performance, analyzing variances, evaluating possible alternatives, and taking appropriate corrective action as needed.

Control Charts: A graphic display of the results, over time and against established control limits, of a process. They are used to determine if the process is in control or in need of adjustment.

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Corrective Action: Changes made to bring expected future performance of the project into line with the plan.

Cost of Quality: The cost of quality refers to the total price of all efforts to achieve product/service quality, and includes all work to build conformance to requirements, as well as work resulting from non-conformance to requirements (quality planning, quality control, quality assurance, and rework). It does not include the normal costs of performing the work. The typical project should have a goal of between 3-5% of the total value as the cost of a quality program depending on the type of project and its total dollar value. Cost of a quality system is (erroneously) often viewed as a negative cost because errors in work have been traditionally accepted as a cost of doing business. Prevention Cost - cost to plan and execute a project so that it will be error-free (training,

process capabilities studies, surveys of vendors/suppliers, surveys of subcontractors) Appraisal Cost - cost of evaluating the processes and the outputs of the processes to ensure

the product is error-free (inspections and testing of the products, cost to process and report inspection data, design reviews, internal design review and walk-through, expense reviews)

Internal Failure Cost - cost incurred to correct an identified defect before the customer receives the product (scrap & rework, charges related to late payment of bills, inventory cost that are a direct result of defects, engineering change cost related to correcting a design error, infant mortality, or products that fail early in their useful life, correcting documentation)

External Failure Cost - cost incurred due to errors detected by the customer (warranty costs, field service personnel training costs, recall costs, product liability suits, complaint handling, future business losses).

Measurement and Test Equipment Cost - capital cost of equipment used to perform prevention and appraisal activities.

Cost of Conformance: Planning Training and indoctrination Process control Field testing Product design validation Process validation Test and evaluation Quality audits Maintenance and calibration.

Cost of Nonconformance: Scrap Rework Expediting Additional material or inventory Warranty repairs or service Complaint handling Liability judgments Product recalls Product corrective actions.

Cost of Non-QualityThere is insufficient data to make conclusive assessments of the costs of quality or the cost of non-quality for all types of projects. Indications are that the additional cost of non-quality is in the range of 12 to 20% as compared to a should-cost of 3-5%. This general comparison of quality versus non-quality costs shows a difference of approximately 10%. In a competitive situation, this difference between a project with a quality program and another without a similar

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program could make the difference between profit & loss. The major areas of cost of non quality are: Waste of time and materials Rework of poor quality products Additional material Delays in schedule Product and service image Corporate image.

Crosby: (Quality is Free)– Four absolutes of quality management:

1. Quality is conformance to requirements 2. The system of quality is prevention 3. The performance standard is zero defects 4. The measurement of quality is the price of nonconformance.

– 14 steps to improving quality:1. Management commitment2. Quality improvement team3. Measurement4. Cost of quality5. Quality awareness6. Corrective action7. Zero defects planning8. Employee education9. Zero defects day10. Goal setting11. Error cause removal12. Recognition13. Quality councils14. Do it over again.

Deming: 4 step cycle for improvement: Plan, Do, Check, Act Major points for implementing quality (over 14):

1. Participative approach2. Adopt new philosophy3. Cease mass inspection4. End awards based on price5. Improve production and service6. Institute leadership7. Eliminate numerical quotas8. Education and training9. Encourage craftsmanship.

Juran: The quality trilogy:

Quality planning Quality control Quality improvement

– Management education, involvement and commitment.

Pareto Diagram: A histogram, ordered by frequency of occurrence, that shows how many results were generated by each identified cause.

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Performance Reporting: Collecting and disseminating information about project performance to help ensure project progress.

Project Quality Management: The processes required, to ensure that the project will satisfy the needs for which it as undertaken.

Quality Assurance (QA): The process of evaluating overall project performance on a regular basis to provide confidence that the project will satisfy the relevant quality standards. Also, the organizational unit that is assigned responsibility for quality assurance.

Quality Control (QC): The process of monitoring specific project results to determine if they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance. Also, the organizational unit that is assigned responsibility for quality control.

Quality Function Deployment (QFD): a tool to help identify customer needs, wants, and expectations. QFD involves translating customer requirements into technical requirements. QFD is a systematic process used to integrate customer requirements into every aspect of the design and delivery of products and services.

Quality Plan: A document setting out the specific quality practices, resources and sequence of activities relevant to a particular product, service, contract or project.

Quality Policy: The overall quality intentions and direction of an organization as regards quality, as formally expressed by top management.

Quality Planning: Identifying which quality standards are relevant to the project and determining how to satisfy them.

Total Quality Management (TQM): A common approach to implementing a quality improvement program within an organization.

Zero Defects:– Implies that there is no tolerance for errors within the system – The goal of all processes is to avoid defects in the product or service – Similar to six sigma: almost zero defects.

Quality Management Addendum

Processes:The Customer is the Next Person in the Process

The internal organization has a system that ensures the product or service is transferred to the next person in the process in a complete and correct manner.The product or service being built is transferred to another internal party only after it meets all the specifications and all actions at the current work station.Avoids incorrectly assembled components and poor workmanship.

Do the Right Thing Right the First Time (DTRTRTFT)Implies that it is easier and less costly to do the work right the first time than it is to do it the second time.

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Entails the training of personnel to ensure sufficient skills and tools to correctly complete the work.

Responsibility for quality:The entire organization has responsibilities relating to quality. The overall or primary responsible for the quality in the project is PM. The responsible of the quality related to a single task is the team member (or, as result of escalation, the functional manager, boss of the team member).The primary responsible for establishing design & test specification is the engineer.

The “9 ilities”: Producibility (technology required)

Ability of a product or service to be produced within the existing technology, human resources, skills, knowledge, and materials at a cost compatible with market expectations

Producibility is one of the most critical aspects of developing any new product. Usability (effort expended to use)

The ability of a product to perform its intended function for the specified user under the prescribed conditions

Usability is determined by examining performance, function and condition of a product.

Reliability (MTBF) The degree to which a unit of equipment performs its intended function under

specified conditions for a specified period of time Computed by 2 methods of Mean-Time-Between-Failure (MTBF):

Predicted MTBF: Based on a mathematical computation of a component failure using a tree diagram to determine sequential failure aspects of the component rated periods. Least desirable method because it cannot account for environmental variations that can degrade components to lower rates

Actual MTBF: Use of field collected data to compute the failures under realistic operating conditions to find the average time between failure. The actual reliability will seldom be the same as the predicted reliability.

Maintainability (Mean-Time-To-Repair: MTTR) The ability of a unit to be restored within a specified time to its performance

capability under the environmental operating conditions within a specified, average period of time.

Availability (Probability of performance) The probability of a product being capable of performing a required function under

the specified conditions when called upon The key parts of availability are reliability and maintainability.

Operability (Expected conditional use) The ability of a product to be operated by human resources for specified periods of

time under given conditions without significant degradation of the output. Flexibility (Expected variable use)

The ability of a product to be used for different purposes at different capacities and under different conditions.

Social Acceptability (Environment and safety) The degree of compatibility between the characteristics of a product or service and the

prevailing values and expectations of the relevant society The degree to which a public accepts a product for use.

Affordability (Return for quality required)

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The ability to develop, acquire, operate, maintain, and dispose of a product over its life

May be viewed in the classic model as being 10% cost for development (design, test, fix), 30% cost of purchase, 60% cost for operation and maintenance

A shift of more of the cost to design may easily reduce operation and maintenance costs, for a net overall savings, during the life of a product.

Opportunities for Reducing Cost:Just-in-Time - concept of zero inventory in a manufacturing plant. Reduces cost of storing and moving parts, cost of inventory, cost of parts damaged through handling, etc.Product Life Cycle Cost - concept of reducing overall product life cycle cost by linking the cost areas of the product life cycle (R&D, acquisition, and operations and maintenance) and considering each one’s cost implications for the other.Product Maturity - Identifying, documenting, and correcting failures early helps productsachieve stability earlier in the life cycle. Areas of Waste in Projects– Waste in rejects of completed work– Waste in design flaws– Waste in work-in-process– Waste in motion for manpower (Under-trained employee)– Waste in management (Improper direction of work)– Waste in manpower (Misplaced or waiting workers)– Waste in facilities (Ordering excess material)– Waste in expenses (Unnecessary meetings, travel).

Statistical Concepts and Quality Tools

Statistical Quality Control: Population: the entire universe, for example all the inhabitants of a town Sample: a part of the population, for example the girls between 18 and 25 years old that live

in the town Statistical independence: the probability of one event occurring does not affect the probability

of another event occurring (example: the probability of rolling a 4 of a die is statistically independent from the probability to have rolled a 6 the previous time)

Mutually exclusive: two events are defined mutually exclusive if they cannot both occur in a single trial. Rolling a die cannot results in both a 4 and a 6.

Method used to measure variability in a product for evaluation and corrective actions Normal Distribution Curve

Six standard deviations (+3 and -3) encompass 99.73% of area Four standard deviations (+2 and -2) encompass 95.46% of area Two standard deviations (+1 and -1) encompass 68.26% of area.

Quality Control Systems: Process Control Charts

Statistical techniques used for monitoring and evaluating variations in a process. Identifies the allowable range of variation for a particular product characteristic by

specifying the upper and lower bounds for the allowable variation Upper Control Limit (UCL), Lower Control Limit (LCL), process average: the mean

of the averages for the samples taken over a long period of time (see Ireland V-2 through V-7)

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Specification limits – are often shown as solid lines outside the UCL and LCL on the chart. They represent the customer’s expectations or contractual requirements for performance and quality.

Random cause: normal process variation within the UCL / LCL. The process is in control and doesn’t require adjustments.

Special cause: unusual event that produce a value outside the UCL / LCL range – must requires investigation to determine the cause of the variation. The process went out of control.

Visual patterns indicating out-of-control state or a condition that requires attention: Outliners: a sample point outside the control limits Hugging control limit: a series (run) of points that are close to a control limit

Requires correction to prevent data points from going outside the control limit Cycle: A repeating pattern of points Trend: A series of consecutive points which reflect a steadily increasing or

decreasing pattern Run: A series of consecutive points on the same side of the average. Rule of

thumb: considered abnormal if 7 consecutive points, 10 of 11, 12 of 14 data points are above or below the process average (Rule of seven).

Acceptance Sampling Used when expensive and time-consuming to test 100%. Random sampling may be

used to check the characteristics and attributes of a given lot of goods Determines whether or not the lot conforms to the specifications or standards

necessary to support the overall project requirements Inspection and test standards must be established to ensure that procedures are

adequate to determine whether a lot is conforming or nonconforming to specifications Standards must also be set for qualification of the sampled lot Important to select a sample size that will provide sufficient information about the

larger lot of goods without costing a great deal of money Must determine the number of allowable defects before lot is rejected.

Tools of Quality Management: Pareto Diagram

Ranks defects in order of frequency of occurrence to depict 100% of the defects (Displayed as a histogram)

Defects with most frequent occurrence should be targeted for corrective action 80-20 rule: 80% of problems are found in 20% of the work Does not account for severity of the defects.

Cause and Effect Diagrams (fishbone diagrams or Ishikawa diagrams) Analyzes the inputs to a process to identify the causes of errors Generally consists of 8 major inputs to a quality process to permit the characterization

of each input. Histograms

Shows frequency of occurrence of items within a range of activity Can be used to organize data collected for measurements done on a product or

process. Scatter diagrams

Used to determine the relationship between two or more pieces of corresponding data The data are plotted on an “X-Y” chart to determine correlation (highly positive,

positive, no correlation, negative, and highly negative). Other Tools

Graphs Check sheets (tic sheets) and check lists

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Flowcharts.

Quality and People in Project Management: Management defines type and amount of work Management is 85% responsible for quality in the organization Project manager is the ultimate responsible for the overall project quality The person performing a given task has the ultimate responsibility for the conformance of

results to requirements/specifications (ownership). This is possible only if the employee: Knows what’s expected to meet the specifications Knows how to perform the functions to meet the specifications Has adequate tools to perform the function Is able to measure the performance during the process Is able to adjust the process to match the desired outcome.

Project quality team consists of: Senior Management / Project Manager / Project Staff / Customer / Vendors, suppliers,

and contractors / Regulatory Agencies. Reviews & Audits

Management reviews determine the status, progress made, problems, and solutions Peer reviews determine whether proposed or completed work meets the requirements Competency center reviews are used to validate documentation, studies, and proposed

technical solutions to problems Fitness reviews and audits determine the fitness of a product or part of a project

(addresses specific issues). The collection of quantitative data for statistical analysis is the basis for pro-active

management by FACT rather than by EXCEPTION. Management by exception lets errors and defects happen before management intervention.

Steps to achieve quality Have the customer be part of the process so their expectations are known and completely

understood. Customer focus internal and external to the organization) is the single most important element in the equation since customers are the reason for the product or service offering.

Top management must become fully committed and have a clear policy statement about the direction the organization will take to achieve quality in all processes.

Strongly pursue the philosophy of prevention rather than correction Consider supplier partners in quality Validate each process in the project before implementation. The process must be

continuously maintained. Ensure there are process control in place Training of team members is essential Involve the people scheduled to do the tasks in the planning and development of the process Continuously recognize quality performance achieved by both team as whole or individuals Make quality everyone’s responsibility.

Quality Philosophy Comparison

Dimension Deming Juran Crosby Japanese PMIDefinition Conformance

to specsFitness for use Conformance

to requirements

Uniformity around target

Conformance to requirements

System Prevention Prevention Prevention Prevention PreventionPerformance Zero defects Minimize cost Zero defects Zero defects Zero defects

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standard of qualityMeasure Direct

measuresCost of quality data

Cost of non conformance

Cost Analysis Cost of non conformance

Role of Top management

Leadership & participation

Leadership & participation

Leadership & participation

Improvement Leadership & participation

Role of the worker

Maintenance Improvement

Moderate Involvement

Moderate Involvement

Moderate Involvement

High level involvement

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HUMAN RESOURCE MANAGEMENT

What to Study

The PMBOK Guide phases of Project Human Resources Management (Chapter 9): Organizational Planning, Staff Acquisition, and Team Development (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase)

Know the various organizational aspects, which influence projects. These include: organizational systems, organizational cultures and styles, and organizational structures (see PMBOK Guide, Chapter 2 – see also Organizing Project for Success)

Know how to identify and deal with project stakeholders (see Organizing Project for Success, pages 45-74)

Know the different types of organizational structures: functional, weak matrix, balancedmatrix, strong matrix, and projectized are the main ones. Also be familiar with the differences between project expeditor and project coordinator (see PMBOK Guide, Chapter 2, see also Principles of PM pages 8-26, and Organizing Project for Success pages 163-191)

Know the roles and responsibilities of the project manager (see Principles of PM, pages 69-84)

Know team dynamics and cultural diversity (see Managing the Project Team, pages 59-112)

Know the primary sources of authority and control (power) for project managers: formal, coercive, reward, expert, and referent (see HR Skills for the PM, pages 211-243)

Know the different leadership styles for project managers: autocratic, consultative, consensus manager, shareholder manager (see Principles of PM, page 158 and HR Skills for the PM pages 211-243)

Know the various motivation theories of human behavior: Theory X, Y, and Z, Expectancy, Contingency, Goal-Setting, Reinforcement, and Equity (see HR Skills for the PM, pages. 70-75 and HR Skills for the PM pages 55-86)

Know the different methods of managing conflict: forcing, problem solving, compromising, smoothing, and withdrawal - Know the one party conflict management methods: win-lose, yield-lose, lose-leave, compromise, and integrative. Understand the relationship between this method and the above methods. For instance, forcing is considered a win-lose situation (see Principles of PM, pages 169-208 and HR Skills for the PM pages 87-143)

Know about negotiation principles and techniques (see HR Skills for PM pages 145-174) Read up on Team Building principles and processes and be familiar with it. (see Principles of

PM, pages 125-164 and Managing the Project Team pages 113-224)

Read up on the Project Manager’s Work Environment and be familiar with it (see Principles of PM, pages 29-63).

Human Resource Management Addendum21

Organizational Influences / Organizational Systems: Project based: Operations consist primarily of projects. Two categories:

Organizations that derive their revenue primarily from performing projects for others (architectural firms, engineering firms, consultants, construction contractors, government contractors, etc.)

Organizations that have adopted management by projects – Have management systems such as accounting, financial, reporting and tracking in place to facilitate project management.

Non-project based: Absence of project-oriented systems generally makes project management more

difficult. Examples include: manufacturing companies, financial service firms, etc.

Organizational Influences / Organizational Cultures and Style: Culture is reflected in shared values, beliefs, norms, expectations, policies, procedures, view

of authority relationships, etc. Organizational cultures often have a direct influence on the project

A team proposing an unusual or high-risk approach is more likely to secure approval in an aggressive or entrepreneurial organization

A project manager with a highly participative style may encounter problems in a rigidly hierarchical organization while a project manager with an authoritarian style may be equally challenged in a participative organization.

Project managers need to be aware of the organization’s cultures and style.

Organizational Influences / Organizational Structure: The organization’s structure often constrains the availability of resources for the project. Structure types:

Functional: A hierarchy where each employee has one clear superior. Staff are grouped by specialty, such as production, marketing, engineering,

and accounting. Project work is done independently within each department.

Project Expeditor: The project expeditor acts as a staff assistant to the executive who has ultimate

responsibility for the project The workers remain in their functional organizations and provide assistance as

needed The PE has little formal authority. The PE’s primary responsibility is to

communicate information between the executive and the workers Most useful in the traditional functional organization where the project’s

worth and costs are relatively low. Project Coordinator:

Project expeditor is moved out of facilitator position into a staff position reporting to a much higher level in the hierarchy

The project coordinator has more authority and responsibility than a PE The PC has the authority to assign work to individuals within the functional

organization The functional manager is forced to share resources and authority with the PC The size of projects in terms of dollars is relatively small compared to the rest

of the organization. Matrix: (see PMBOK Guide, Chapter 2)

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Maintains the functional (vertical) lines of authority while establishing a relatively permanent horizontal structure to interact with all functional units supporting the projects

One result of the matrix is that workers frequently find themselves caught between the project manager and their functional manager

Advantages: Improved PM control over resources, rapid response to contingencies, improved coordination effort across functional lines, people have a “home” after the project is over, etc. (See Principles of PM, page 18)

Disadvantages: Not cost effective due to excess administrative personnel, workers report to multiple bosses, more complex structure to monitor and control, higher potential for conflicts due to differing priorities, power struggles, and competition for resources, etc. (See Principles of PM, page 19)

Weak matrix: Maintains many of the characteristics of a functional organization. The project manager’s role is more like that of a project coordinator or project expeditor

Balanced matrix: In-between weak and strong. The project manager has more authority than in a weak matrix. The PM is more likely to be full-time than part-time as in a weak matrix

Strong matrix: Similar in characteristics to a projectized organization. There is likely to be a department of project managers who are full-time.

Projectized: Team members are often co-located Most of the organization’s resources are involved in project work Project managers have a great deal of independence and authority. Departments either report directly to the project manager or provide services

to the various projects.

Project Manager Roles and Responsibilities: Integrator

PM is the most likely person who can view both the project and the way it fits into the overall plan for the organization

Must coordinate the efforts of all the units of the project team. Communicator

Communicates to upper management, the project team, and other stakeholders The PM who fails to decipher and pass on appropriate information to the appropriate

people can become a bottleneck in the project The PM has the responsibility of knowing what kind of messages to send, who to send

them to, and translating the messages into a language understood by all recipients. Team Leader

Must be able to solve problems Guide people from different functional areas Coordinate the project to show leadership capabilities.

Decision Maker Makes key decisions such as allocation of resources, costs of performance and

schedule tradeoffs, changing the scope, direction or characteristics of the project This is an important role with significant consequences for the project as a whole.

Climate Creator or Builder The PM should attempt to build a supportive atmosphere so that project team

members work together and not against one another Seek to avoid unrest and negative forms of conflict by building supportive atmosphere

early.

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Stakeholder management:The key to customer satisfaction is careful and accurate needs analysis. Therefore stakeholder management is a proactive task. The project manager should not just receive a scope of work and then strive to complete it but rather determine all the stakeholders and incorporate their needs into a project.

Sources of Authority and Control: (Power) The PM must deal with upper management, subordinates, functional managers, interface

personnel, and people outside the firm The degree to which the PM can influence each of these groups will have a bearing on the

success or failure of the project The PM must exert some type of power so that the necessary concessions or co-operation can

be obtained. Formal:

A legitimate (or positional) form of power Based on a person’s formal position in the company.

Reward: A legitimate (or positional) form of power Refers to positive consequences or outcomes that a person can offer.

Coercive (Penalty): A legitimate (or positional) form of power Refers to negative consequences that a person can inflict on others. (firing,

docking, reprimand, etc.) Referent:

A form of personal power Refers to earned power when people admire a person and want to follow that

person as a role model. Also called charisma. Expert:

A form of personal power Refers to earned power that a person acquires based on his/her technical

knowledge, skill, or expertise on some topic or issue. NOTE: The exam may equate legitimate power with formal power. Formal power,

reward power, and coercive power are considered legitimate forms of power. You’ll have to figure out from the question as to what context legitimate is being used. Choose the best answer.

Leadership Styles: Many PM’s have a preferred style of leadership Some may fit their leadership style to the situation Leadership styles have been described in terms of four possible extremes: (as

described in Adams, Principles of Project Management, page 158-159) Autocratic:

The PM solicits little or no information from team Makes decision solely Also referred to as Directing.

Consultative autocrat: Intensive information input is solicited from the team The PM still makes the decisions, solely May also be referred to as Persuading.

Consensus Manager: Problem presented to the team for open discussion and information gathering Team makes decision

24

Also referred to as Participating. Shareholder Manager:

Little or no information exchange takes place within the group The team has the ultimate authority for the final decision Also referred to as Delegating This style is considered to be poor management.

NOTE: May also want to study the leadership styles as defined in Verma’s, HR Skills for the PM, page 218. The styles are slightly different.

Motivation Theories: Motivation theories attempt to explain and analyze how personal and intrinsic factors interact

and influence one another to produce certain types of behavior It is important for project managers to understand what motivates their workers Maslow’s hierarchy of human needs: (from lower to higher) – Abram Maslow’s message is

that people do not work for security or money. They work to get a chance to contribute and to use their skills (the self-actualization level of the pyramid). One cannot enter into a level without having completely fulfilled all the levels below.

Herzberg’s theory (Fredrick Herzberg): Hygiene factors: poor hygiene factor may destroy motivation but improving them

often will not improve motivation. Hygiene factors are not enough to motivate people. Examples of these are: working conditions, salary, security

Motivator factors: what motivates people is the work itself, including for example: responsibility, self-actualization (as Maslow said), professional growth, recognition.

MD I-58

Maslow’s hierarchy of needs The Herzberg’s theory

Physiological

Safety

Social

Self-esteem

Self-act.

Dissatisfaction Satisfaction

HYGIENE FACTORS

MOTIVATORS

No dissatisfaction

No satisfaction

25

Six well-known motivation theories: Theory X: (developed by Douglas McGregor to describe how managers relate to

subordinates) Most people dislike their work and will avoid it Most people lack ambition and have little capacity for problem solving and

creativity Workers prefer direction and avoid taking responsibility and initiative Workers are motivated only by Maslow’s lower level needs (physiological and

safety) Workers are self-centered, indifferent to the needs of the organization, and

resistant to change. Theory Y: (also developed by Douglas McGregor)

Most people meet high performance expectations if appropriately motivated and the climate supportive

Most people are creative, imaginative, ambiguous, and committed to meeting the organization’s goals

Most people are self-disciplined, can direct and control themselves, desire responsibilities, and accept them willingly

Workers are motivated by Maslow’s higher level needs (self esteem and self actualization).

Other Motivation Theories: Theory Z: (Developed by Ouchi. The source was the Japanese workplace)

Similar characteristics as Theory Y Management deems workers as trustworthy and capable of working without

close supervision Workers are motivated by self esteem and self actualization Japanese management provides a supportive environment with lifetime

employment, consensus decision making, and collective responsibility Ouchi compared Japanese organizations (Type J) with traditional American

organizations (Type A) Ouchi theorized that to the extent lifetime employment, consensus decision

making, and collective responsibility could be incorporated into American organizations, then worker productivity and motivation would improve

Ouchi called this new hybrid American organization, Type Z. Contingency Theory: (Developed by Morse and Lorsch)

People have a central need to develop a sense of competence. This need continues to motivate even after competence has been achieved

Project managers should ensure that there is a good match between team members’ skills and their assignments and that the organizational climate is conducive to meeting team members needs and achieving a sense of competence.

Goal Setting Theory: (Developed by Latham and Locke) Working towards a goal is a major source of job motivation Individuals have an internal desire to achieve goals Clear, specific, concise, and challenging goals motivate team members Project participants must be allowed to participate in setting goals, formulating

plans and implementation strategies in order to gain participants’ acceptance and commitment to meeting project goals.

Expectancy Theory: (Developed by Victor Vroom) People think seriously about how much effort they should put into a task

before doing it 26

Motivation occurs if there is an expectation of a favorable outcome A person’s behavior is based on the strength of their expectation that an act

will be followed by a desired outcome or good performance A person’s behavior is based on their expectation that good performance will

be rewarded. The attractiveness of the reward to the individual also influences a person’s behavior

Project managers should try to ascertain the most important needs of their team via informal communication and by developing interrelationships with team members.

Equity Theory: (Developed by Adams) People are motivated by their desire to be treated equitably People compare their jobs and compensation with those of others on the

project Inequities can influence the degree of effort they exert Inequities can result in conflicts and problems, thus requiring considerable

effort from the project manager, functional managers, and human resources personnel to resolve

Project managers must ensure that all project participants are compensated fairly for their contributions to project success.

See Verma’s, HR Skill for the PM, page 75, for general suggestions on motivating employees. The suggestions are taken from the best of the above motivation strategies.

Team Building: Definition: the process of getting a diverse group of individuals to work together effectively

as a team Purpose: to get project team members focused on the big-picture and to concentrate on

overall project goals Characteristics of an effective team:

Team members must be interdependent Team members must have a reason for working together Team members must be committed to working together The team as a whole must be accountable Team members must have a moderate level of competition and conflict.

Symptoms of bad teamwork: Frustration Conflict and unhealthy competition Unproductive meetings Lack of trust or confidence in the project manager.

Team building process guide. (Must be carried out by the PM although not necessarily in this sequence):

Plan for team building Negotiate for team members Organize the team Hold a kick-off meeting Obtain team member commitments Build communication links Conduct team-building exercises Incorporate team-building activities into all project activities.

Effective Team Communications: Be an effective communicator Be a communications expediter Get rid of communication blockers

27

Use a tight matrix Have a war room Make meetings effective:

Establish a meeting policy Only call a meeting if there is a real need Make the purpose of the meeting clear Prepare an agenda and follow it Encourage participation Use meetings as part of the team building process Issue minutes Follow-up on assigned tasks and action items.

Conflict Management: Old view of conflict:

It is to be avoided It is resolved by physical separation of the intervention of upper management

Contemporary view of conflict: Inevitable between humans Often beneficial Natural result of change Can and should be managed Neither good nor bad but can have positive and negative results for the organization.

Seven sources of conflict over projects (in order of frequency – according to Thammain & Wileman - 1975): schedule, project priorities, manpower, technical opinions, administrative procedures, cost, personality.

The PM must carefully select the method of managing conflict appropriate for his/her organization so that an atmosphere conducive to constructive results is developed.

Five methods of managing conflict: Withdrawal:

Retreating from actual or potential disagreements and conflict situations Appropriate only in certain situations such as when a cooling-off period is

needed A temporary tactic: does not resolve the conflict, only delays it.

Smoothing: De-emphasizes differences and emphasizes commonalties Keeps the atmosphere friendly A temporary tactic: does not resolve the conflict, only delays it Should be used in conjunction with another method.

Compromising: Considers various issues and searches for solutions which bring some degree

of satisfaction to the conflicting parties Both parties must give up something that is important to them; however, this

method usually provides some acceptable form of resolution. Forcing:

Exerts one’s viewpoint at the potential expense of another party This method provides resolution but is considered to be a win-lose.

Problem Solving: (confrontation) Directly addresses disagreements Conflict is treated as a problem. The problem is defined; information is

collected; alternatives are identified and analyzed, and the most appropriate alternative is selected

28

Theoretically considered the best because both parties can be satisfied if they work together to solve the problem

Both parties must want to solve the problem and be willing to work together Time-consuming method This method is considered to be a win-win.

Negotiation: Stages of Negotiation:

Protocol: Introductions are made, and the negotiators get to know each other. The atmosphere for the rest of the negotiations is determined in this stage.

Probing: The negotiators begin the search process. Each party identifies issues of concern. Strengths and weaknesses are identified and possible areas of interest.

Scratch Bargaining: This is the essence of the meeting. Actual bargaining occurs and concessions are made. Points of concession are identified.

Closure: The two positions are summed up and final concessions are reached. The agreements are summarized and documented.

Agreement: The main difficulty in this stage is ensuring both parties have an identical understanding of the agreements. This stage should establish the plans for recording the agreements in a written contract.

Negotiation Tactics; The PM should be aware of the following negotiation tactics: Imposing a deadline for reaching an agreement

A powerful tactic because it implies a possible loss to both parties Other party does not have to accept deadline, but often does.

Surprise - One party springs information such as a price change on the other party Stalling

One party may claim that an agreement cannot be finalized because he has limited authority and cannot commit the company’s resources.

A party may claim that the person with final authority is absent. The “missing man” technique may also be used when the party does not have the information asked for by the other party.

Fair and reasonable Negotiator may claim the price for a computer is equitable because that is

what another company is paying. Delays

Useful when tempers are beginning to flare, a team member is going astray, to divert from a subject, etc.

Examples of delays: arrival of refreshments, request for recess, etc. Reasoning together

Confusing the other party: deliberately distorting issues and figures. (If this is done, someone should speak up before agreeing to anything).

Withdrawal Sometimes done to divert attention from an area of weakness One party may make an attack upon an issue, then retreat.

Make the other party appear unreasonable by pointing out all the concessions made by the party

Arbitration - a third party may be brought in when agreement cannot be reached Fait accompli - a party may claim that what is being asked for has already been

accomplished and cannot be changed.

29

30

COMMUNICATION MANAGEMENT

What to Study

The PMBOK Guide phases of Project Communications Management (Chapter 10): Communications Planning, Information Distribution, Performance Reporting, and Administrative Closure (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase)

Know the difference between the general management skill of communicating and Project Communications Management. The general management skill of communicating is the broader subject and involves knowledge such as: sender-receiver models, choice of media, writing style, presentation techniques, and meeting management techniques

Be familiar with the goals of interpersonal communication

Understand how interpersonal communication works. (sender-receiver model)

Know the different methods of communication. (written, verbal, non-verbal such as body language)

Be familiar with the barriers to successful communication

Be familiar with communication channels and links. Know the formula for communications channels: (N*(N-1))/2

Be familiar with effective listening techniques and the barriers to effective listening and the guidelines for active listening

Know the four major communication styles: concrete-sequential, abstract-sequential, concrete-random, and abstract-random

Know the amount of time project manager’s spend communicating (> 75%).

Note: Even if the exam contains relatively few questions directly related to Chapter 10 of PMBOK Guide (communication management), there are a lot of questions that include communication aspects (remember: 147 over 200 questions apply communications skills). For this reason, is absolutely mandatory for each PMP certification candidate to be familiar with communication methods, processes and techniques.

Additional reference book: HR Skills for PM pages 15-54

Communications Management Addendum

Goals of Interpersonal Communication: Understanding the exact meaning and intent of others Being understood by others Gaining acceptance for yourself and/or your ideas Producing action or change.

31

Interpersonal Communication: To ensure messages are received and understood, two-way communication is necessary Interpersonal communication is the process of sharing information with others Three basic elements of interpersonal communication:

The sender (or encoder) of the message The message or the signal The receiver (or decoder) of the message.

Process of interpersonal communication: Sender determines what information to share and with whom and encodes the

message Sender transmits the message as a signal to the receiver The receiver receives the message The receiver decodes the message to determine its meaning and then responds

accordingly Communication is successful if the decoded message is the same as the sender

intended.

MD I-63

The sender - receiver model

SENDER RECEIVERMESSAGE

EncodingMedium Filter Decoding

Feedback

Methods of Communication: Verbal:

Advantages: Timely exchange of information Rapid feedback Immediate synthesis of message Timely closure.

Disadvantages: technical jargon especially in complex projects may make verbal communication difficult for non-technical people and other stakeholders

Three stages of effective verbal communication and presentation: The introduction: Tell them what you’re going to tell them The explanation: Tell them The summary: Tell them what you just told them.

Non-verbal: Encoding a message without using words. Usually done through body language

32

Total Message Impact = Words (7%) + Vocal tones (38%) + Facial expressions (55%) (according to Albert Meharabian, Sept 1968 Communication without words - Psychology today)

PM’s may combine vocal and nonverbal factors but must be careful that the two do not present contradictory messages.

Written communication: The main aim of business writing is that it should be understood clearly when read

quickly The message should be well planned, simple, clear, and direct Major steps to writing:

Establish the basic purpose of the message Collect and organize material Prepare draft Check the overall structure Send the message.

Macro-Barriers to Successful Communication: Information overload:

Keep messages simple and direct Provide sufficient information but not too much.

Lack of subject knowledge: Must have sufficient knowledge to send message Must know level of understanding of receiver.

Cultural differences: Meanings and interpretations may vary among different cultures Encourage team members to learn each other’s cultures.

Organizational climate: Minimize the differences associated with status and ego within the organization Encourage open and trusting atmosphere.

Number of links: Reduce the number of transmission links The more links, the more opportunity for distortion

Micro-Barriers to Successful Communication: Perceptions:

Sender’s view of the receiver: how sender perceives the receiver’s level of knowledge and ability to understand the message

Receiver’s view of the sender: How the receiver personally feels about the sender may influence how carefully the receiver listens.

Message competition: Communicate only when you have the total attention of the recipient Try to minimize noise or other factors contributing to message interference.

Project jargon and terminology: Define project terminology used in messages Be aware of the use of project terminology and the intended audience.

Types of Project Communications: Interpersonal communication Communication with public and community Formal communication Informal communication.

33

Communication Channels and Links: The PM must recognize and understand the project’s formal communication channels Three basic channels of communication:

Upward communication (vertically or diagonally) Downward communication (vertically or diagonally) Lateral communication (horizontally).

Effective Listening: Effective listening is one of the most important skills for a PM to acquire and practice It helps develop mutual respect, rapport, and trust among project participants Verbal listening behaviors:

Asking questions to clarify and gather more information Paraphrasing what the speaker has said Summarizing at intervals what the speaker has said to confirm what you have

understood Asking the speaker for examples Ascertaining the speaker’s feelings and acknowledging them. (“You seem angry”).

Non-verbal listening behaviors: Making eye contact Being expressive and alert Moving closer to the speaker Listening for the intention behind the speaker’s communication Facial expressions, touching, use of space, use of time.

Barriers to Effective Listening: The mismatch between our speed of talking (100-400 words per minute) and our speed of

thinking (approx. 600 words per minute) makes effective listening difficult Some of the personal and environmental barriers that influence the overall effectiveness of

communication include: Poor listeners: People do not talk freely when they know the audience isn’t listening Resistance to the message: People don’t like to listen to something that is contrary to

their preconceived ideas Physical distractions: telephone calls, people coming in and out of office/meetings,

etc.

Guidelines for Active Listening: Stop talking! Show the speaker you are ready to listen:

Silence: signals you are ready to listen Few distractions: shut the door, put the phone on hold, etc. A receptive attitude: empathize with the speaker’s point of view.

Communication Styles: The PM uses communication more than any other skill set to manage the project throughout

its life cycle and ensure that team members are working cohesively and resolving problems. Four major communication styles (PM should pay attention dealing with them):

Concrete-sequential: (Mr./Ms. Fix-it) Person likes to focus on ideas and tasks, thinks systematically and predictably Person wants to complete tasks and minimize change.

Abstract-sequential: (Organizer) Person who relies on logical analysis and systematic planning to solve

problems 34

These communicators are people and task-oriented, which makes them effective team builders

A-S communicators prefer to have all information before making a decision, and they know how to control resources and information.

Concrete-random: (Explorer/entrepreneur) Person relies on people and technology, finds practical use for theories and

models C-R communicators make decisions after thorough analysis and evaluation

and excel at facilitating planning sessions, discussions, and changes. Abstract-random: (Intuitive free thinker)

Person views experiences from different perspectives and sees the big picture and the long-term view

A-R communicators make good brainstormers because they can listen actively and enjoy the process of generating new ideas.

PM cannot control all communication PM must try to control communication in order to avoid unwanted changes

miscommunications, unclear directions, scope creep, and lack of project management.

How PM’s Spend their Time: 70-90% of project manager’s time is spent communicating

Of the PM’s time spent communicating, approximately 45% is spent listening Another 30% is spent talking.

PM’s spend 50% of their time in meetings.

35

PROCUREMENT MANAGEMENT

What to Study?

The PMBOK Guide phases of Project Procurement Management (Chapter 12): Procurement Planning, Solicitation Planning, Solicitation, Source Selection, Contract Administration, and Contract CloseOut (Be familiar with Inputs, Tools and Techniques, and Outputs for each phase)

VERY IMPORTANT: Understand the viewpoint of the PMBOK Guide. Project Procurement Management is discussed from the perspective of the buyer in the buyer-seller relationship. The buyer is the organization seeking the service or product. The seller is the provider of the service or contract and is referred to as the vendor, the supplier, or the contractor (also subcontractor). Project Management should be done by both the buyer and the seller.

Understand the definitions and terms. (buyer, seller, express and implied warranties, “fitness for a particular use”, invitation to bid, request for proposal, etc.)

Understand the viewpoint of the reading material. Is procurement management discussed from the viewpoint of the buyer (the organization or person seeking to outsource) or the seller (the person or organization selling their services/products)?

Understand the different types of contracts: fixed price, cost plus percentage, cost plus fixed fee, cost plus incentive fee, and fixed price plus incentive fee. Know who assumes the most risk (buyer or seller) in each type of contract. Study examples of each type of contract so that you are comfortable with the different types and can adequately distinguish between each type of contract (especially the various shades of cost plus contracts!)

Know the elements of a legally enforceable contract: Mutual assent, consideration must be provided to both parties (sufficient cause to contract), signing parties must have legal right to contract, the contract must have a legal purpose, and the contract must not violate public policy

Be familiar with the reasons for contracting and subcontracting and the risks associated with procurement.

Additional reference book: Principles of PM pages 213-281

Key Concepts

Back Charge: Cost of corrective action by purchaser and chargeable to the supplier under terms of the contract.

Bid Protest: Allows an unsuccessful supplier an opportunity to protest the award of a government contract to another supplier.

Bill of Lading: A receipt issued by a carrier for merchandise to be delivered to a party at some destination.

36

Contract: a legal document of purchase or sale, which is binding on both parties. When entering into a contract, the people involved must have legal capacity to do so. (the definition of legal capacity varies from state to state). Consideration must be provided to both parties (in other words, there must be sufficient cause to contract). There must be mutual assent. All project requirements should be specifically stated in the contract. All contract requirements must be met.

Contract conditions: are provisions upon which the rights and duties of the parties depend. The occurrence or non-occurrence of the condition does not change the terms agreed upon.

Contract privity: a legal, contractual relationship that exists between the buyer and the seller (there are no privity between buyer and subcontractor).

Contract terms: are enforceable promises that address a specific subject (i.e. the specifications of payment terms).

Consideration: The inducement to a contract. The cause, motive, price, or impelling influence which induces a contracting party to enter into a contract.

Privity: contractual relationship. Example: buyer (A) has a contract relationship with seller (B); the seller can use a subcontractor (C) to fulfill a part of the project. There is privity between A and B, and B and C. There is no privity between A and C.

Provision: contract clause; in particular: Standard provision: (also boilerplate) companies very often have standard

contracts that are preprinted. In the majority of the cases, these standard terms & conditions are enough to enter into a contract with a seller.

Special provision: PM should consider adding or changing the standard provisions in order to address the specific needs of the project. Input for special provisions needs could be: risk analysis, type of project requirements, type of project, legal requirements, …

Independent estimates: The procuring organization may prepare its own estimates as a check on proposed pricing. These estimates are generally referred to as should cost estimates.

Invitation for Bid (IFB): PMBOK Guide equates this with Request for Proposal and recognizes that it may have a more specific meaning in certain application areas (appropriate for high dollar, standard items).

Letter of intent: a document manifesting the intention of the buyer to enter in contract with the seller. It is not a legal binding (it is not a contract).

Make or buy: the project can make all it needs, buy all it needs, or any range in between. One of the main reasons for buy is to decrease risks (especially if the contract is fixed price, see below); make should be better if buyer has the knowledge about the project, want to have the complete control and the work involves proprietary information.

Price Forecast: based on information gathered and analyzed about demand and supply. This forecast provides a prediction of short and long term prices and the underlying reasons for those trends.

Request for Proposal (RFP): A type of bid document used to solicit proposals from prospective sellers of products or services. In some application areas, it may have a more specific meaning (appropriate for high dollar, non-standard items).

Request for Quotation (RFQ): generally related to request a price for low value procurement, such as hourly labor rates, quote per single items, etc.

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Statement of Work (SOW): Describes the portion of the product to be contracted. In general, this is different from the product description (which tends to be more broader). Under the circumstance where the seller is producing the entire product, the difference between SOW and the product description is slight. Government terms: SOW is reserved for a procurement item that is a clearly specified product or service, and Statement of Requirements (SOR) is used for procuring an item that is presented as a problem to be solved. There are different type of scope of work described in a SOW:

Performance: defines what the final product should be able to accomplish rather than how it should be built or what its characteristics should be (high risk for seller)

Functional: conveys the end purpose or results. It may include a description of the minimum essential characteristics of the product

Design: specifies precisely hoe the work is to be done.Components of SOW include drawings, specifications, technical or functional descriptions, etc. In any case, SOW is a part of the contract.

Screening system: Involves establishing minimum requirements of performance for one or more of the evaluation criteria. For example, the seller project manager must be certified before the remainder of the proposal would be considered.

Weighting system: A method for quantifying qualitative data in order to minimize personal prejudice on source selection.

Procurement Management Addendum

Contract Origination:Two ways in which a contract can originate: unilaterally or bilaterally Unilaterally:

Common form for contract is a relatively simple type of document called a purchase order

A purchase order is used when routine, standard cost items are needed A purchase order is legally binding and should be specific.

Bilaterally - Procurement documents are used to solicit proposals from prospective sellers. The procurement document then becomes the basis for the seller’s proposal. The following are examples of procurement documents:

Request for quotation (RFQ) from different suppliers Items are of relatively low dollar value such as supplies and materials A survey of potential suppliers is completed The quotation request informing suppliers of the goods or services needed is

sent to a scaled-down number of possible suppliers. Request for proposal (RFP)

Items or services are usually high dollar and non-standard Examples: construction project, a research and development project; a made-

to-order, highly complex piece of machinery Blueprints, drawings, specifications, and other appropriate data should be

included with proposal. Invitation for bid (IFB)

Appropriate for high dollar, standard items A prerequisite to this process is a clear and accurate description of the

supplies, equipment, and services required

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Includes specifications, drawings, industry standards, performance requirements, etc.

Must ensure fair competition among all bidders Provisions should be stated in such a manner to avoid misinterpretation Formal bids are submitted to the contracting department in sealed envelopes.

All bids are opened at a specific time. In most cases, the contract award goes to the lowest responsible bidder. If not

awarded to the lowest bidder, must document reasons, carefully Type of contract is open to fraud, collusion, and other dishonest conduct.

Hence, PM and contracting personnel must practice defined ethical business procedures.

Contract Types: Two principal types of contracts: cost and fixed. At one end range is the cost-plus (or cost-

reimbursable), a fixed-fee type of contract where the contractor’s profit, rather than price, is fixed and contractor’s responsibility, except for its own negligence, is minimal. At the other end of the range there is the fixed price (or lump sum) type of contract under which the contractor has assumed full responsibility, in the form of profit or losses, for timely performance and for all cost under or over the fixed contract price. In between are various types of contracts, such as the guaranteed maximum, incentive types of contracts, and bonus-penalty type of contract. These contracts provide for varying degrees of cost responsibility and profit depending on the level of performance. Contracts that cover the furnishing of consulting services are generally on a per diem basis at one end of range and on a fixed-price basis at the other end of the range.

Fixed price contract - Also known as firm fixed price, lump sum, turnkey. Under this, the contractor must carefully estimate the target cost. The contractor is required to perform the work at the negotiated contract value. If the estimated target cost was low, the total profit is reduced and may even vanish. The contractor may not be able to underbid the competitors if the expected cost is overestimated. Thus, the contractor assumes a large risk. This contract provides maximum protection to the owner for ultimate cost of the project, but has the disadvantage of requiring a long period for preparation and adjudication of bids. Also, there is the possibility that because of a lack of knowledge of local conditions, all contractors may necessarily include an excessive amount of contingency. This form of contract implies that project requirements are well known. Change requested by the owner after award of a contract on a fixed price basis lead to troublesome and sometimes costly extras.

Cost-plus contract - Traditionally, this form of contract has been employed when it was believed that accurate pricing could not be achieved any other way. In the CPFF contract, the cost may vary but the fee remains firm. Because, in a cost-plus contract, the contractor agrees only to use his best efforts to perform the work, good performance and poor performance are, in effect, rewarded equally. The fixed fee is usually a small percentage of the total or true cost. The cost-plus contract requires that the contractor books be audited.

The following contracts are ordered in increasing risk to the seller and decreasing risk to the buyer:

Cost-Plus-Percentage of Cost (CPPC): Seller is reimbursed for allowable costs of performing the contract and

receives as profit an agreed upon percentage of the costs No limit on the seller’s profit. If the seller’s cost increases, so does the profit Most undesirable type of contract from buyer’s standpoint Prohibited for federal government use. Used in private industry, particularly

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Susceptible to abuse. No motivation for seller to decrease costs The buyer bears 100% of the risk The buyer project manager must pay particular attention to the control of the

labour and material costs so that the seller does not purposely increase these costs

Bottom line: no limit on seller’s profit!

Cost-Plus-Fixed Fee (CPFF): Seller is reimbursed for allowable costs of performing the contract and

receives as profit a fixed fee payment based on the percentage of the estimated costs

The fixed fee does not vary with actual costs unless the scope of work changes Susceptible to abuse in that there is a ceiling on profit, but no motivation to

decrease costs Primarily used in research projects where the effort required to achieve

success is uncertain until well after the contract is signed Bottom line: limit on profit but no incentive to control costs.

Cost-Plus-Incentive Fee (CPIF): Seller is paid for allowable performance costs along with a predetermined fee

and an incentive bonus If the final costs are less than the expected costs, both the buyer and seller

benefit by the cost savings based on a pre-negotiated sharing formula The sharing formula reflects the degree of uncertainty faced by each party Primarily used when contracts involve a long performance period with a

substantial amount of hardware development and test requirements Risk is shared by both buyer and seller Bottom line: provides incentive to seller to reduce costs by increasing profit

potential.

Fixed Price-Plus-Incentive Fee (FPIF): Most complex type of contract Consists of target cost, target profit, target price, ceiling price, and share ratio For every dollar the seller can reduce costs below the target cost, the savings

will be shared by the seller and buyer based on the share ratio The share ratio is a negotiated formula which reflects the degree of uncertainty

faced by each party If the costs exceed the ceiling price, the seller receives no profit. Regardless of

the actual costs, the buyer pays no more than the ceiling price Risk is shared by both buyer and seller, but risk is usually higher for seller Usually used when contracts are for a substantial sum and involve a long

production time Bottom line: provides incentive to decrease costs which in turn increases

profits. If costs exceed a ceiling, then contractor is penalized.

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Firm-Fixed Price (FFP): Seller agrees to perform a service or furnish supplies at the established

contract price Will also be called lump sum Seller bears the greatest degree of risk Seller is motivated to decrease costs by producing efficiently Best specifications are available and costs are relatively certain Common type of contract.

Examples of Contract Types: CPPC:

Estimated cost: $1,000K Percentage: 10% ($100K) Estimated total price: $1,100K (Estimated cost + 10%*Estimated cost) If cost increases to $1,100K the total price would be $1,100K plus 10% of the actual

costs = $1,210K. CPFF:

Estimated cost: $1,000K Pre-determinate fee: $100K Estimated total price: $1,100K (Estimated cost + 10%*Estimated cost) If cost increases to $1,100K the total price would be $1,100K plus 10% of the original

estimated costs = $1,200K. CPIF:

Estimated cost: $1,000K Predetermined fee: $100K Sharing formula: 85/15 (buyer absorbs 85% of the uncertainty and the seller absorbs

15% of the risk) Actual cost: $800K Savings: $200K Seller gets: $800K + $100K + $30K = $930K (Actual cost + Fee + 15%*Savings) Buyer saves: $170K.

FPIF: Target cost: $1,000K Target profit: $100K (Seller’s fee) Target price: $1,100K Ceiling price: $1,200K (The maximum payout to the seller) Share ratio: 70/30 Example A: Actual cost: $800K - Cost difference: $200K of Saving (Target cost -

Actual cost) Seller gets: $800K + $100K + 60K = $960K (Actual cost + fee +

30%*savings) Buyer saves: $140K.

Example B: Actual cost: $1100K – Cost difference $-100K of overcost (Target cost - Actual cost)

Seller gets: $1100K + $100K - 30K = $1170K (Actual cost + fee - 30%*overcost)

Example C: Actual cost: $1,300K Seller gets: $1,200K (no profit and a $100K loss on costs)

FFP (Lump Sum): Price: $1,000K Example A: Actual cost: $700K; Seller makes a profit of $300K (Price - Actual Cost) Example B: Final cost $1,100K Seller loses $100K on contract.

Time & Material (T&M) contracts:T&M contracts are a hybrid type of contractual arrangement that contain aspects of both cost-reimbursable and fixed-price type arrangements. T&M contracts resemble cost-type arrangements in that they are open ended, because the full value of the arrangement is not defined at the time of the award. Thus, T&M contracts can grow in contract value as if they

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were cost-reimbursable type arrangements. Conversely, T&M arrangements can also resemble fixed-unit arrangements when, for example, the unit rates are preset by the buyer and supplier, as when both parties agree on the rates for the category of “senior engineers”.

Example of relationship between contract type and SOW type

For cost plus contract:The SOW can describe only the performance or the requirements; generally in this case the buyer is acquiring the experience of how to perform the project, but it is often not possible to define exactly the project scope & time. Typically used in IT projects or when it has never been done before.

For Fixed price contract:SOW must be very complete and detailed because the customer is buying a product, not an expertise. In this case the scope must be very well defined and time & cost very carefully estimated. Typically used in construction projects

For T&M contract:SOW should be a short description of performance, functional or design requirements. Typically used for short time projects or small value project, or also for a preliminary phase of a larger project.

Contract Administration - Key Topics

Breaches: The breach of a contract is a failure to perform a contractual obligation

failure to make delivery on scheduled date failure to make progress so as to endanger performance of the contract and its terms failure to perform any other provisions of the contract

If the contract is terminated due to default, then the contractor may not be entitled to compensation of work in progress but not yet accepted by customer. The customer may even be entitled to repayment from the contractor of any advances or progress payments applicable to such work. Also, the contractor may be liable for any excess reprocurement costs. However, contractors can seek relief through negotiations, a board of contracts appeal, or claims court.

Material breach of contract: The non-faulted party is discharged from any further obligations under the contract. The breach is so serious that it also deprives the non-faulting party the expected benefits of the bargain

Time: Should no time for performance be stated or implied in the contract, the performance must be completed within a reasonable amount of time. However, if time is critical, the contract should explicitly state “time is of the essence”

Time is of the essence: when explicitly stated within the contract, failure to perform within the allowed time will constitute a material breach of contract and the buyer will not be required to accept late performance.

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Changes: Perhaps the majority of the contract administrator’s time is spent handling changes. Simply

stated, a change is a modification of the contract done to alter the specifications, delivery time, price, quality, or any other provision of the contract

Administrative changes: a unilateral contractual change, in writing, that does not affect the substantive rights of the parties (i.e. a change in the paying office)

Change order: a written order, signed by the owner, directed to the contractor to make a change

Contract modification: any written change in the terms of the contract. The change control system should be defined and included in the changes clause of

the project The system should cover who initiates a change request, how is it processed and funded and

who has the final approval authority For major projects, a configuration control committee should be established The change proposal must be explicit in terms of the impact of the change on the contract

work statement, specifications and drawings Legal: there must be mutual agreement to modify a contract and that agreement must be

supported by consideration (change clause is important!) Change may also be accomplished by unilateral action if pursuant to the exercise of options

contained in the terms of the original contract Constructive change: occurs when the PM’s conduct enables performance differing from that

prescribed by the contract. For instance, if final product performs better than standard specified in contract, or if the PM increases the quality over and beyond what’s stated in the contract.

Force majeure:An act of God such as fire or earthquake or … that is so great and so unpredictable that seller cannot perform as stated in contract / SOW.

Termination: Based on the type of contract, terms, and conditions, the customer may have the right to

terminate a contract for convenience at any time. However, the customer must compensate the contractor for his preparations and for any completed and accepted work related to the terminated part of the contract. Examples:

elimination of the requirement technological advances in the state-of-the-art budgetary changes related requirement and/or procurements anticipating profit not allowed

Waiver: The client PM must be continually aware of the waiver pitfall Under the doctrine of a waiver, a party may relinquish rights he otherwise has under the

contract If the client PM knowingly accepts incomplete, defective or late performance and accepts that

performance without objection, the PM has waived his right to strict performance In some cases the party at fault may remain liable for provable damages caused by the

incomplete performance; however, the waiver will prevent the client from calling the breech a material breech and thus from calling the contract to an end.

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Warranties:The concept of warranty is based on one party’s assurance to the other that the goods will meet certain standards of quality, including condition, reliability, description, function or performance Express warranty: involves an actual promise – the contract explicitly states the level of

quality for the contracted good or service. Implied warranty: in essence this is a warranty that has been created by law due to

relationship that exists between both parties. The most well known implied warranty is something that is created by the Uniform Commercial Code adopted by most U.S. States. The code implies merchantability (goods which have been sold are suitable for the ordinary purpose for which such goods are usually sold) and fitness (goods sold are suitable for purpose of use) for the proposed purpose.

Other topics related to procurement

Project manager’s role:Purchasing department, or contract department or legal office may handle the procurement; the project manager, as prime responsible for all the project, can greatly assist in making the contract appropriate for the project.One of the most important duty for PM is to manage risks. Contract is one of the most effective risk management tool. Therefore contracts should not be created before a PM is assigned to the project. PM must be able to operate in the procurement processes in order to manage the project (and the suppliers) effectively. For these reasons, PM must understand contracts.

Centralized, decentralized contracting:Centralized contracting means a separate contracting department, office, structure, having the duty to handle contracts for all the projects. Advantage: expertise, respect of company standards, better capacity to acquire at the best conditions. Disadvantage: the centralized department represents very often a bottleneck.Decentralized contracting implies to have a contract administrator assigned to each project. Advantage: flexibility, focus on the project, time to buy. Disadvantages: duplication of effort, less efficiency, less capability to apply company’s policies.

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SIMPLE QUESTIONS – 1’ SET

SCOPE MANAGEMENT

1. Which of the following is not an example of a source of scope change?a. A change in government regulationb. A desire to incorporate a newly emerged technology into the projectc. A need to refine the bottom-up cost estimating d. Customers who change their opinion about the expectation of a project deliverable

2. A scope statement provides a documented basis for making future project decisions. A good scope statement should includea. The business need that the project has to respond to b. Precedence diagram methodc. Activity duration estimatesd. Bottom-up cost estimate baseline

3. The process of decomposing deliverables into smaller more manageable components is complete whena. Project justification has been established b. Change requests have occurredc. Cost and duration estimates can be performed for each work element at this level of

detaild. The WBS dictionary has been completed for each work package

4. A general description of a project objective, coupled with a statement of management authorization is thea. Work Breakdown Structureb. Scope Statementc. Project baselined. Project Charter

5. The WBS isa. An organization oriented family tree of the projectb. A deliverable oriented family tree of the projectc. A calendarized list of the project activities d. The cost account plan

6. Scope Managementa. Is a subset of configuration management that focus on detailed changes b. Is a responsibility of project sponsorc. Is concerned with identifying all activities performed, the end products with results, and

the project objectivesd. Is a facilitating process for project management

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7. Documented work authorizations providea. A means for effective coordination of project activities b. The result of project auditc. The role and responsibility of project managerd. An suggestion about how to perform the job

8. Utilization of WBS a. Gives to project manager the certainty of identifying all the project risksb. Facilitates the identification of all project activitiesc. Provides the project sponsor with a time-phased task listd. Should be useful for the big projects only

9. The project charter is developed bya. Senior management and customerb. Customer and project managerc. Senior management and project managerd. The project team

10. Creation of project objectives a. Is accomplished by identification of measurable variables against which performance can

be evaluatedb. Is relevant for avoiding any project changec. Is a major issue in the executing phased. Should always involve the sub-contractors

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TIME MANAGEMENT

1. A dependency that requires that a car be designed before the car be produced is an example ofa. Discretionary dependencyb. External dependencyc. Mandatory dependency d. Expert dependency

2. Fast tracking usually involvesa. Developing workarounds for problem that have caused project delay in the pastb. Getting people work harder using appropriate incentivesc. Reducing delays better allocating scarce resourcesd. An increase in project risk

3. Your most recent project status report contains the following information: EV=3.000, AC=3.500, PV=4.000. The SV isa. -1.000 b. 500c. -500d. 1.000

4. The major difference between milestone and activity is that milestonea. Can only be delayed with proper approvalsb. Are more difficult to schedulec. Has zero floatd. Has zero duration

5. Duration estimate indicatesa. How many hours a resource will work on an activityb. When an activity will finishc. How many work periods an activity is expected to consumed. How much an activity is expected to cost

6. The schedule baselinea. Is used to measure project schedule performance b. Is determined as the result of Earned Value Analysisc. Cannot be changed during the projectd. Is responsibility of the functional managers

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7. If the end date of an initial plan is later than the desired date, which of the following should generally be tried the firsta. Start non-critical path activities at their early start dates b. Examine the activity sequences to determine if more work can be done in parallelc. Add more resources on the most difficult tasksd. Negotiate a budget review to allocate more resources to critical-path activities

8. The purpose of a dummy activity in an AOA diagram is to a. Identify a task that could be replaced with anotherb. Show a task that is not mandatoryc. Indicate a milestoned. Show a dependency relationship

9. Resource leveling will often make the projecta. More suitable to the customer expectationb. Longerc. Cheaper d. Shorter

10. The actual configuration of a project network diagram _________________ the amount of resources that can be devoted to the projecta. Increasesb. Is not affected byc. Is heavily depended upond. Optimizes

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COST MANAGEMENT

1. If variable cost is $200 per unit and all fixed costs are $1.600, what will be the cost of producing 10 extra units?a. $3.600b. $400c. $16.000 d. $2.000

2. Management reserve funds are intended to be used toa. Cover bad cost estimates b. Increase the fee on a fixed price contractc. Face up to unforeseen problems d. Pay incentives to project team for extra efforts

3. Double declining balance is a form of ____________ depreciationa. Decelerated b. Acceleratedc. Extraordinaryd. Uniform

4. Present Value isa. The total value of assets an organization possesses at given point in timeb. Today’s budget forecast for the futurec. The value today of future cash flowd. A cost appraisal using the discounted rate

5. The inputs to Cost Budgeting area. Cost baseline, WBS, project scheduleb. WBS, cost estimates, historical informationc. Cost estimates, WBS, project schedule d. Project schedule, resource requirements, WBS

6. If EV=350, AC=400, PV=325, what is the CPI?a. 0,875 b. 1,143c. 0,812d. 1,077

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7. Analogous estimatinga. Uses bottom-up estimation techniques b. Is always used for medium-size project c. Uses the WBS as starting pointd. Uses top-down estimating techniques

8. Parametric cost estimating involvesa. Using a mathematical model to estimate costsb. Calculating individual estimates of work package using PERT methodc. Including the risk estimation and evaluationd. Using the experience from previous similar projects

9. Sunk costs area. Future costs held in reserveb. Expended costs over which the project manager has no more controlc. Overhead costsd. Direct, non-labor costs

10. SPI is the result of a. EAC/ETCb. EV/ACc. BAC/EACd. EV/PV

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QUALITY MANAGEMENT

1. All of the following statements about control charts are true excepta. All data points outside the control chart limits are due to random causeb. It can apply the rule of seven c. Control chart can be used to establish as well as maintain process controld. Specification limits are often shown as solid lines outside the UCL and LCL on the chart

2. Quality management deals with all of the following topics excepts:a. Conformance to requirements/specificationb. Satisfying the needs of the customerc. Making the product more desirable and luxuriousd. Prevent instead of fix

3. Which of the following statement about the cost of quality is truea. The cost of quality includes the expense of non conformance to requirements and

specifications b. At company level, the cost of quality are mostly the direct responsibility of workers who

are manufacturing the productc. Quality control programs should only be implemented when the costs of quality are

easily affordable by managementd. The quality control can be performed without any quality planning

4. Most quality problemsa. Originate in the quality department where the ultimate responsibility for quality rests b. Originate on production department because of waste and product reworkc. Are the result of management inattention to potential quality improvement ideasd. Could be improved increasing the number of inspectors

5. The majority of product defects could be prevented in most processes if manufactures would do the followinga. Increase the use of acceptance control charts instead of standard three-sigma control

chartb. Make a concerted effort to eliminate the potential for product defects in the design stagec. Create a quality control departmentd. Perform quality audit every month

6. Random variance in a process, as measured by the standard deviation, can be directly reduced bya. Improving the overall production system b. Increasing the number of quality inspectors c. Making better use of Pareto chartd. Identifying patterns of variance using control charts

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7. The ____________ of a product or service most affects its reliability and maintenancea. Concept b. Designc. Fabricationd. Overall cost

8. According to current quality management thinking, which of the following approaches to quality improvement is least likely to produce positive – long term resultsa. Continuous improvementb. Statistical quality controlc. Increases inspectiond. Use of workers suggestion system

9. Quality control isa. Identifying which quality standards are relevant to the project and determining how to

satisfy themb. Monitoring specific project results to determine if they comply with relevant quality

standards and identifying ways to eliminate causes of unsatisfactory performancec. Evaluating overall project performance on regular basisd. Establish the basics of the project in terms of deliverables and objectives

10. The primary responsibility for establishing design and test specification should be of a. Project managerb. Quality managerc. Managementd. Engineering

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HUMAN RESOURCE MANAGEMENT

1. Advantages of the functional form of organization include ___________ and creation of technical competencea. Ease of horizontal coordinationb. Clearly defined authorityc. High information process capability d. Single voice to customer

2. Situations calling for a matrix organization include potential conflict for dual focus, ___________, and pressure for high information process capabilitya. Pressure for clear accountability b. Assurance of high specialized resources availabilityc. Pressure for shared resourcesd. Pressure for stable relations

3. In which type of organization is team building likely to be most difficulta. Functional b. Matrixc. Project expediterd. Projectized

4. Which are the two Herzberg’s theory factorsa. Hygiene and self-esteemb. Motivation and socialc. Security and self-actualizationd. Hygiene and Motivation

5. Which of the following is not a typical concern of matrixes employeesa. Serve multiple bossesb. Share the effort between different projectsc. Develop commitment to multiple projectsd. Report to project sponsor

6. The basis of Theory Y is that a. Workers are lazy and reactive to change b. Workers are imaginative, creative and willing to accept responsibilityc. Managers consider workers as active members of the organizationd. For every effort there is an expectance of performance

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7. Theory X holds thata. Management unknowns must be handled trough contingency plan b. Quality improvements lie in the hands of quality circlesc. Workers are inherently unmotivated and need strong guidanced. Absenteeism is tied to poor working conditions

8. The situation where employees are primarily motivated by desire for personal growth is called a. Job rotationb. Hygiene factor c. Theory Zd. Self-actualization

9. The chief trait of autocratic project managers is that theya. Make decisions without input from othersb. Possess substantial referent authorityc. Have a good technical experienced. Are concerned about relationship

10. The kick-off meeting should a. Identify and communicate team goalsb. Occur periodically during the life cycle of the projectc. Be run by upper managementd. Decide who will manage the project

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COMMUNICATION MANAGEMENT

1. In communication management, to assimilate through the mind or senses is the process ofa. Understandingb. Comprehendingc. Receiving d. Sending

2. How much time does the typical project manager spends communicating (formally or informally)a. 40-60% b. 30-70%c. 60-80%d. 75-90%

3. As project manager, you wish to impose a standard method by which subordinates calculate project costs. Which type of communication should be required for this efforta. Face-to-faceb. Non-verbalc. Speachd. Written

4. The process of interpreting a message isa. Decodingb. Receivingc. Encodingd. Feedback

5. Five people are involved on a project that requires significant communication between all project participants. How many lines of communication exist on this projecta. 5b. 15c. 9 d. 10

6. Paraphrasing is used toa. Help the speaker improve his/her presentation skills b. Check to see if you understand the speakerc. Confirm that the speaker is meeting your expectationsd. Surface and dealing with the conflict

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7. Project progress reports area. Needed weekly on all projects b. Most useful when kept to a single pagec. An important element of project communicationsd. Addressed primarily to project sponsor

8. A frequently voiced complaint about matrix organizations is that information flows area. Simple b. Open, clear and accurate c. Easier than in project expediter organizationd. Complex

9. Formal, written correspondence is required whena. The customer is asking for additional work not covered in the contractb. The project manager calls an internal meetingc. The customer has verbally asked some informationd. A team member refuses to work overnight

10. Informal meetings should generally not be used to a. Exchange informationb. Debate technical issuesc. Discuss a team member’s personal problemsd. Review the short term project schedule

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RISK MANAGEMENT

1. By using project risk management techniques, project manager can develop strategies that do all but which of the followinga. Significantly reduce risksb. Eliminate project risksc. Provide a rational basis for better decision making d. Identify risks, their impact and any appropriate response

2. Total project riska. Should not be calculated for small projectb. Is the probability of each project risk event times the sum of the consequences of

individual project risk events which could occur during the projectc. Is the cumulative sum of the probability of each individual project risk events times the

consequences of occurrence of that risk eventd. Cannot be properly estimated using the WBS

3. Risk response planning involves all but which of the followinga. Preparing planning alternativesb. Performing reactive actionsc. Performing contingency planningd. Obtaining insurance against loss

4. In project risk management, risk response includesa. Evaluating the expected monetary value of each riskb. Prioritizing riskc. Classify risks by categoriesd. Reduce the probability of risk events

5. In performing an impact analysis, the most effective tool to ensure risks are identified on large project is thea. WBSb. Milestone chartc. Earned Value d. Cost baseline

6. Identifying, analyzing, and responding to risk factors is risk a. Mitigation b. Transferencec. Quantificationd. Management

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7. Inputs to Qualitative Risk Analysis includea. Identified risks, Activity duration estimates b. Project type, Assumptionsc. Sources of risk, Expert judgmentd. WBS, Decision trees

8. If an identified risk event has a 20% chance of happening in any month, and if the project is expected to finish in 5 months, the probability that risk event will occur during last month isa. 20%b. 50% c. 100%d. 80%

9. Including a contingency reserve in the project budget is intended toa. Eliminate the risk of schedule overrunb. Increase the flexibility of scope changec. Reduce the risk of overruns of project objectivesd. Allow project sponsor to change project contents without impacting the project

management processes

10. If a project has a 60% chance of a $100.000 profit and a 40% chance of a $100.000 loss, the expected monetary value for the project is a. $100.000 profitb. $20.000 profitc. $40.000 profitd. $20.000 loss

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PROCUREMENT MANAGEMENT

1. Which of the following techniques are not commonly used to evaluate prospective contractorsa. Overall or life-cycle costs evaluation b. Weighting and screening systemc. Past performance d. Contract type used with their sub-contractors

2. On the following contract, which is the most risky for the buyera. Fixed priceb. Lump sumc. Cost plus percentage feed. Time & material

3. Contract change should bea. Kept to a minimum to help costs controlb. Managed carefully as other types of changesc. Approved as soon as possible to minimize project impactd. Performed under scope change control

4. Of the following, which is the contract type most advantageous for the buyera. Cost plus incentiveb. Fixed price plus incentivec. Unit priced. Fixed price

5. A statement of work (SOW) isa. Another name for a statement of requirementsb. Only necessary when the buyer is a government agencyc. A description of a product or service to be procured d. Similar to WBS

6. A make or buy analysis is made duringa. Procurement planning b. Solicitationc. Contract awardd. Contract administration

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7. Once signed, a contract is legally binding unlessa. One party is unwilling to perform the workb. One party is unable to finance the workc. One party has different objectives and needsd. It is in violation of applicable law

8. Standard contracts and standard clauses are desirable because they a. Cover all situations for all contractsb. Are legally enough for most cases c. Eliminate the need for legal adviced. Are shorter than customized contract and clauses

9. __________ is a formal invitation containing a scope of work which seeks a formal response describing both technical approach and compensation to for the basis of a contracta. Request for Proposalb. Invitation to bidc. Purchase orderd. Bill of Lading

10. By which means is a contractor able to control cost overruns due to changing requirementsa. Change orderb. Time & Material contract onlyc. Change controld. Solicitation planning

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SIMPLE QUESTION – 2’ SET

SCOPE

1. Detailed descriptions of work packages are commonly contained in:a) competitive analysisb) request for tenderc) WBS dictionariesd) statements of work

2. The process of subdividing a major project deliverable, as identified in the scope statement, into smaller, more manageable components is called:

a) parametric estimationb) scope definitionc) WBS deliverable orientedd) benefit-cost analysis

3. In what project phase are the project’s scope and objective usually determined?a) developmentb) implementationc) roll-outd) concept

4. Project plan should be generally developed by thea) project managerb) project teamc) key stakeholdersd) engineering department

5. Configuration management isa) a means of monitoring and controlling project scope against the scope baselineb) the production of a scope statementc) the creation of a WBSd) a mechanism to track budget and schedule variances

6. An objective is clear if:a) top management proposes itb) it is always expressed by numbersc) it is developed by the project teamd) different people reading it have the same interpretation of its meaning

7. A WBS numbering system should allow project staff toa) identify the level at which individual WBS elements are foundb) estimate the cost of each WBS elementc) identify configuration management milestonesd) perform schedule simulations

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8. Customer influence in the project planning processes is a) a source of distraction and could slow down the processb) essential in accurately documented the goals and objectives of the projectc) a problem because the customer has difficulty in defining what he wantsd) conveniently handled by the sales department

9. The final steps in the final phase of a project generally lead up to:a) customer acceptanceb) extension of the project scopec) project objective general reviewd) performance reporting

10. Failure to identify a work package in the project planning phase is a result ofa) improper time managementb) poor scope planningc) poor scope definitiond) mistake in project schedule

11. A narrative description of products or services to be supplied under contract is calleda) project planb) statement of workc) contract description of work d) narrative of work to be performed under contract

12. A key point of scope verification isa) quality control of work performedb) improving in cost / schedule estimationc) scope confirmationd) customer acceptance

13. A program is characterized asa) a grouping of related projects having the same scopeb) a unique effort having a definite time periodc) a grouping of similar projects having no definite end that supports the product or the solution

from cradle to graved) a project that costs more than a specified limit

14. Scope statement provides a documented basis for making future project decisions. A good scope statement should include:

a) detailed project milestonesb) WBSc) business needsd) RAM

15. The process of decomposing deliverables into smaller, more manageable components is completed when

a) budget is availableb) cost and schedule estimation can be developed at that levelc) the project seems protected against unauthorized scope changesd) resource could be assigned part time

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16. A key component of a scope management system isa) management reserveb) change control boardc) executive committeed) earned value analysis

17. A general description of project objectives coupled with a statement of management authorization is called

a) statement of workb) change control systemc) management overviewd) project charter

18. A role of the change control board is toa) issue change requestsb) coordinate the steering committeec) review / approve the impact of change requestsd) identify project scope improvement

19. A precise description of a physical item, procedure, or service is called a) specificationb) baselinec) work packaged) WBS element

20. A key rule for achieving customer satisfaction isa) exceed the specification requirementsb) conduct a need analysisc) do not contradict the customerd) convince the customer to accept what is delivered

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TIME

1. Ideally, resource leveling / smoothing would be limited to activitiesa) with positive floatb) on critical pathc) with negative floatd) with zero float

2. Both the CPM and PERT methods assume that estimated activity duration area) statistically dependentb) mean distributed c) variance distributedd) statistically independent

3. Project activity sequences shoulda) always be analyzed with the computer aidb) be analyzed only if the number of activities is bigc) always be analyzed for all projects d) be analyzed if the project is really schedule constrained

4. In the arrow diagramming method, __________ is a constraint that does not consume resource

a) a precedence relationshipb) a dummy activityc) an activity without successord) an activity without predecessor

5. Project schedules should be developed by thea) key stakeholdersb) scheduling expertsc) project managerd) project team

6. Meeting project milestones is a primary responsibility ofa) project teamb) project sponsorc) project managerd) steering committee

7. The project activity list should generallya) be organized as a WBS exstensionb) be developed with the aid of consultantsc) include the WBS dictionaryd) explain how milestones should be reached

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8. Resource leveling will generallya) require more staff as the project progressesb) push out the end date of the projectc) reduce the global cost of the projectd) limit the resource deployment

9. Bar charts generally illustrate __________ better than network diagramsa) logical relationshipsb) critical pathc) dummy activitiesd) progress or status

10. The tool that provides a basis to identify the work that must be scheduled is the ________

a) Scope statementb) RAMc) WBSd) Gantt chart

11. As a project is carried out and slack time is consumed on individual tasks, the slack left over for the remaining tasks is

a) reduced only if the remaining tasks are linked with the critical pathb) increasedc) unchangedd) reduced

12. If EV = 3.000, AC = 3.500, PV = 4.000, the SV isa) 1000b) 500c) -500d) -1000

13. The delivery of a new computer system, a non-critical path activity, will be delayed. This delay will not affect the overall outcome of the project. Because of the computer delay, one should

a) renegotiate the project completion date with the customerb) pay the computer supplier extra costs to bring the computer system delivery back on schedulec) evaluate the impact of the delay and perform a risk analysis to determine what alternatives

could be pursued if necessaryd) purchase a different computer system

14. The major difference between a milestone and an activity is that a milestonea) is more difficult to estimateb) has zero durationc) always represent a mandatory dated) has no logical relations with activities

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15. The __________ is an estimation approach developed to improve the scheduling of projects whose activities duration could not be estimated accurately

a) CMPb) PERTc) Fishbone diagramd) Pareto rule

16. If an activity lies on the critical path, its total float is normallya) positiveb) less than zeroc) zerod) equal to the path float

17. An important prerequisite in building a precedence diagram is toa) create a flow chartb) have the activity listc) create WBSd) show tasks relationships

18. The actual configuration of a project schedule __________ the amount of available resources

a) is statistically independent uponb) is heavily dependent uponc) is the only means for determininga) could be performed without knowing

19. In a network logic diagram, the critical path is thea) path containing the most important activitiesb) most expensive path of the networkc) shortest path through the networkd) longest path through the network

20. _______ is an indicator of schedule flexibilitya) slackb) latest start datec) earliest start dated) resource leveling

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COST

1. One common way to compute EAC is to take BAC anda) divide it by SPIb) multiply it by SPIc) multiply it by CPId) divide it by CPI

2. Based on the following scenario, which is the total price variance for direct materialDirect material Direct labor

planned price/unit $0,60 $4,00Actual units 36.810 15.000Actual price/unit $0,58 $4,10Actual cost $21.350 $61.500a) $140b) $736c) $-350d) $5850

3. Which of the following is not an example of direct cost?a) project manager costb) material to be used and consumed in the projectc) wages for the workers on the projectd) fringe benefits

4. EAC is a periodic evaluation ofa) cost of work completeb) value of work performedc) best estimate of total project cost d) what it will cost to finish the project

5. Which of the following is not an example of indirect cost a) taxesb) accounting support costc) subcontractor costd) management center cost

6. If EV = 350, AC = 400, PV = 325, the cost variance isa) -25b) 50c) -50d) 25

7. If EV = 350, AC = 400, PV = 325, the schedule variance isa) -25b) 50c) -50d) 25

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8. At XXX company, the hourly wage for junior engineer is $ 14.00. The annual audit shows that fringe benefits cost 30% of basic wages, and that overhead costs are 60% of wages plus fringe benefits. What is the “loaded” hourly wage for a junior engineer at XXX company

a) $26.60b) $29.12c) $28.96d) $40.60

9. In using historical data to estimate future costs, it usually best toa) assume previous mistakes will be not corrected and therefore will have an impactb) consider the project team’s aptitude to under evaluate scope changes probabilitiesc) assume past performance can indicate future problems that may adversely impact project

costsd) check if the information is not in an updated format

10. If variable costs equal $200 per unit, and all fixed costs equal $1.600, what will be the cost to produce ten units

a) $3.600b) $400c) $16.000d) $2000

11. The life cycle cost of a system is the _________ expenses of acquiring, owning, and operating a system for its life

a) averageb) totalc) fixedd) development

12. The following types of costs are relevant to making a financial decision excepta) opportunity costsb) direct costsc) sunk costsd) unavoidable costs

13. Which is the primary condition for developing a detailed project cost estimatea) a contractual requirement to do the estimateb) a clearly specified list of requirements that the project must meetc) a detailed milestone chartd) a detailed RAM

14. If PV = 800, EV = 400, AC = 800a) there is no cost varianceb) there is no schedule variancec) the effort is over budget and ahead of scheduled) the effort is behind schedule and over budget

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15. If EV = 350, AC = 400, PV = 325, the CPI isa) 0,875b) 1,143c) 1,077d) 0,929

16. A benefit-cost ratio of 3.22 indicates aa) unit profit of $3,22b) gross profit of $3,22c) payback period of 3,22 yearsd) gross payback of $3,22 for each dollar spent

17. Bottom-up estimating entailsa) evaluate the project costs using a detailed P&L modelb) entering cost estimates into WBS work package and then aggregate themc) looking at the after tax consequences of costsd) focus the attention on the bottom-line margin

18. Based on the scenario of question no. 2, which is the labor rate cost variance a) $1500b) $-100c) $-0,10d) $5600

19. The ETC representsa) project cost to dateb) estimation of project cost remainingc) actual cost of remaining workd) estimated costs for the total project completion

20. Which of the following is an input to cost controla) WBSb) RAMc) Ganttd) Change requests

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QUALITY

1. Using Pareto’s rule, and given the data in the following table, where should be corrective actions focus?

Source of problem % of problemsDesign 80Production 9Test 5Delivery 4Marketing 3

a) designb) design, production, testc) production, test, deliveryd) development, test, marketing

2. The process of determining that technical processes and procedures are being performed in conformance with scope requirements and quality plan is called quality

a) managementb) assurancec) controld) planning

3. Quality control includesa) identify the relevant quality standardb) monitoring specific project resultsc) extend the quality degree d) control the quality processes

4. From a high perspective, qualitya) is ensured by having quality inspectorsb) cannot be quantitatively measuredc) is something intangibled) is primarily a management issue

5. Quality management includes forming and directing a team of people to achieve a qualitative goal within an effective cost and time frame that results in

a) the project completion in the shortest time frameb) a final result that conforms to customer expectationsc) a final result that considerably exceed the customer expectationsd) make the most effective use of project budget

6. The primary goal of each quality program is to reach the zero defect goal. Despite it, companies are still facing costs of non conformance. What is the meaning of internal failure cost?

a) cost incurred to correct an identified defect before the customer receives the productb) cost due to incorrect design processc) cost incurred due to errors detected by the customerd) cost incurred to repair the equipment used in the project

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7. The most famous principle introduced by Crosby isa) quality is a project manager responsibilityb) quality is freec) massive inspectiond) zero defect is too costly

8. A project manager notices that all the measurements recorded on a control chart lie within the control band range. However, most of the measurements are below the midpoint (negative variance). Quality management practice offers us what guidance in dealing with this situation

a) the project manager should apply the fishbone diagramb) there is no problem as long as the variance lie within control bandc) the project manager should apply the rule of sevend) negative variance indicates a problem that should be fixed

9. The project manager team’s concern for quality shoulda) increase when the project is near to the endb) stop at the point of deliveryc) be significantly reduced by a good warrantyd) extend beyond the completion of the project

10. A fundamental principle of modern quality management holds that quality is most likely to be achieved by

a) planning it into the projectb) making the customer happyc) focused the effort to do the best job d) conducting quality circles activities

11. Poor quality in a design project is likely to directly affect _________ costsa) manufacturingb) advertisingc) indirectd) direct

12. The primary responsible for the quality related to each project task isa) project managerb) the single workerc) middle managementd) quality manager

13. In the project environment, the individual ultimately responsible for quality control isa) the team members who must strive to do the right things right the first time to avoid quality

problemsb) the quality control manager, who must work with the project manager and the team members

to ensure that quality control process is effectivec) the project manager who has the overall responsibility for the project deliverablesd) the steering committee, that can address, modify, and sustain the project goals, including the

quality processes

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14. Which statement best describes the cost of quality for a projecta) often increases project planning cost even if the quality effect is beneficial for the project

successb) are those costs necessary to perform the project right the first timec) involves primarily the costs for inspections to eliminate rework and scrapd) increases considerably the cost for making the project products or services

15. When a product or a service completely meets the customer requirementsa) quality is achievedb) the cost of quality is always justifiedc) the cost of non-quality is minimizedd) the customer is not completely satisfied because expects more

16. The concept of quality is based on a) transforming low grade in high qualityb) producing products that are superior to other, similar itemsc) conforming the product to the requirementsd) maintaining uniformity and coherence of design

17. 100% inspection for defects may be neither possible nor desirable. When is sampling for defects likely to be most useful?

a) when testing of each item produced is requiredb) when the overall cost impact of 100% inspection is too highc) when we hope there are not many defectsd) when there is a shortage in manpower

18. The quality management tool can be described as a diagram that ranks and displays defects in order of frequency of occurrence from left to right is a

a) control chartb) histogramc) Pareto chartd) fishbone diagram

19. Which of the following is least likely to contribute to developing an effective project team supportive of quality

a) commitment to the projectb) team member flexibilityc) working at full capabilityd) frequent personnel turnover

20. In what Quality Control differs from Scope Verificationa) quality control needs input from scope verificationb) quality control is optional, scope verification is mandatoryc) quality control is more related to verify the correctness of work resultsd) both are concerned to accept work results

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e) HUMAN RESOURCES

1. Theory X says thata) project unknowns should be effectively managed by management reserveb) quality improvements is mainly a management concernc) workers are responsive and open to changed) workers are inherently lazy and need strong orientation

2. “Listen, Bob, I know that is important for you and we have to discuss about it, but for now let’s calm down and try to concentrate our effort to get the job done” - which type of conflict management best describe this sentence

a) smoothingb) problem-solvingc) confrontationd) compromise

3. The project expeditor has the greatest level of authoritya) across all the divisionsb) within the division headed by her bossc) on technical projectsd) when the level of conflict is low

4. The performance review interview is a key component of any personnel evaluation system. Which of the following is not a characteristic of an effective personnel evaluation interview

a) completed during a single, uninterrupted block of timeb) focused on a limited number of topicsc) discusses the employee’s undesirable personality traitsd) performed by a supervisor who has adequately prepared the interview

5. In a “projectized” structure, the project manager typicallya) do not use the project office contributionb) has a direct control over team members c) reports directly to top managementd) operates through a deputy project manager

6. The hearing and resolution of labor dispute, performed by a neutral third party is calleda) neutralityb) bargainingc) arbitrationd) third party involvement

7. In a weak matrixa) budget must be assigned at cost account levelb) the shortage of resources can be managed effectivelyc) project managers have a considerable level of powerd) the balance of power is shifted toward the functional manager

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8. A fundamental obstacle to team building in a matrix structure is thata) teams are too large to be handled effectivelyb) team members are pressed by their functional managers to stay on the project for as short a

time as possiblec) team orientation risks being too technically oriented d) team members are borrowed resources and it can be hard to motivate them

9. There are both hard causes of conflict and soft, less tangible causes. Soft causes are as important to project success as hard causes. Soft causes include diversity of disciplinary expertise, ______________, and the project manager’s power of reward and punishmenta) performance indicatorsb) ambiguity of rolec) administrative proceduresd) earned value analysis

10. A common problem with matrix management is that team members come from different departments or different companies. A good way to facilitate the team spirit is

a) to establish a change control boardb) to develop the WBS as teamwork c) to co-locate team membersd) to set-up a project office

11. If one party in a conflict is forcing and the other party does the same, the most likely result is

a) compromiseb) stalematec) winningd) loosing

12. Which of the following rewards could be described as coming from the social environment

a) self-esteemb) motivation factorsc) recognitiond) advancement

13. The resource management tool that focuses on who does what is calleda) WBSb) CCBc) RAMd) PERT

14. The core function of a project manager isa) client interfacingb) quality assurancec) project requirements definitiond) integration

15. Parking space, private office, and access to executive dining room are example ofa) social needsb) prerequisites

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c) Herzberg’s factorsd) overhead

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16. Which of the following is generally most effective for engineering peoplea) referent authorityb) technical powerc) reward authority d) purse string power

17. In general, as team sizes increase, what is not likely to happen on projectsa) bureaucracy increasesb) administrative expenses increasec) economies of scale are realizedd) communication channels increase

18. Which of the following conflict resolution approaches is likely to lead towards the most lasting solution

a) forcingb) compromisec) smoothingd) confrontation

19. Project managers have some power because of their position in the company. Which of the following is not a form of power derived from project manager’s position

a) formal powerb) reward powerc) purse string powerd) expert power

20. Complex projects, involving a strong cross-disciplinary efforts, are usually best managed by a _______ organization

a) projectizedb) functionalc) matrixd) composite

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COMMUNICATION

1. The project manager’s formal communications are best handleda) in writingb) verballyc) through personal contactsd) during a speech

2. Project managers seldom need toa) make oral presentationb) write clearly and effectivelyc) explain technical issuesd) communicate with the customer

3. Which of the following would be less likely too improve project communicationa) modify procedure to reflect the prevailing organization cultureb) define policies that force people to communicatec) use available information properlyd) detect conflict and deal with them

4. Paraphrasing is used toa) help the speaker to improve her presentation skillsb) confirm that the speaker is meeting your expectationsc) check to see if you understand the speakerd) reduce the frequency of nodding the head

5. When a project manager is engaged in negotiations, non-verbal communication skills are ofa) little importance in any case, and should be limited, if not avoidedb) great importance, and can emphasize or repudiate the words c) great importance if the message has to be sent to a lot of peopled) great importance if the message is sent vis-a-vis to a single person 6. Project progress reports area) needed weekly for virtually all projectsb) mainly addressed to the project sponsorc) an important element of project communicationd) most useful when kept to a single page

7. Extensive use of ____________ is most likely to aid in solving problemsa) verbal communicationb) written communicationc) formal communicationd) facial expressions

8. Project status review meetings should generallya) be of a defined durationb) occur at least weeklyc) include all project stakeholdersd) be informal in nature

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9. Project status review meetings should generallya) occur less frequently in the last phases of the projectsb) last until all major issues have been solved in teamworkc) include a clear, pre-issued agendad) in the interest of the project, be open to admit also non-invited people

10. Formal, written correspondence with the customer is required whena) defects are detected during quality inspectionsb) the customer pretends additional work not covered in the SOWc) the project manager calls a meeting to discuss a technical issued) it is time for Christmas greetings, and the customer is very important

11. In dealing with the customer, the contractor project manager shoulda) try to maximize profits by encouraging scope creepb) do whatever it takes to satisfy the customer and win additional businessc) strive to develop a friendly, honest, and open relationshipd) try to avoid scope change to protect the customer against project cost overrun

12. When the project objectives include meeting an external, competitive challenge, the project team tends to

a) escape from their responsibilitiesb) lose cohesivenessc) gain cohesiveness d) become more structured, due to increased need for decisions

13. A frequently opinion about matrix organizations is that information flows area) simple, even if a close supervision is neededb) open, clear, and accurate, due to dual bosses situation that allow the best management of

shared resourcesc) complex, due to multiple bosses and shared resources situations d) very hard to organize inside a communication process, because too many people are involved

14. The project communication requirements can mostly be affected by thea) WBSb) PBSc) OBSd) Gantt

15. Effective listening includes all of the following excepta) watching the speaker to pick up physical gesture and facial expressionsb) limiting the amount of eye contactc) providing effective feedbackd) thinking about what you want to say before responding

16 . The need for ___________ is one of the major driving forces for communication in a projecta) optimizationb) ethicc) integrationd) inclusion

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17. When team members react differently to the same problem, the most likely cause isa) poor project integrationb) different perspectivesc) different management pland) understanding of ethical concerns

18. Communication is often enhanced when the sender __________ the receivera) sits less than one meter in front ofb) emotes as much asc) shows concern for the perspective ofd) avoids being influenced by the eye contact of

19. In a matrix organization, information dissemination is most likely to be effective whena) information flows both horizontally and verticallyb) the communication flow is kept essentialc) project managers and functional managers socialized) there is in place a computerized information system

20. If the project is experiencing increasing levels of conflict due to poor communication, which of the following is most likely to improve the situation

a) encouraging the team to socialize outside the workb) scheduling a short, effective project status meeting every morningc) scheduling an off-site team building workshopd) limiting the number of e-mails

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RISK

1. What is included in the purpose of Risk Management Planninga) planning the contingency fund and schedule for the projectb) perform the contingency planning as requiredc) deciding how to approach risk management activities in the projectd) define an accurate risk response planning

2. Which of the following scheduling techniques incorporates a form of risk assessmenta) ADMb) PDMc) CPMd) PERT

3. The most crucial time for project risk assessment isa) when problem surfacesb) during the development phasec) during the implementation phased) when the project charter is released

4. The most likely duration for Task A is 4 days, the optimistic estimation is 3 days, and the pessimistic one is 7 days. Assuming a PERT-like distribution, which is the standard deviation

a) 2/3 dayb) 5/6 dayc) 4 daysd) 1,33 days 5. In identifying risks, can be helpful to classify them into categories. Which of the following

are not risk categoriesa) project management & technicalb) internal & organizationalc) motivational & communicationd) organizational & quality 6. Which of the following statement about Quantitative Risk Analysis is truea) Quantitative risk analysis generally follows qualitative risk analysisb) Qualitative risk analysis generally follows quantitative risk analysis c) Quantitative risk analysis in big projects produces a false impression of precisiond) Quantitative risk analysis can effectively be replaced by qualitative risk analysis in the small

– medium size project

7. Once a risk assessment has been completed and the results show the overall risk, risk management is

a) complete, because all the project risk have been identified and documentedb) not needed again until the project will enter in the most crucial stagec) under the direct control of the project steering committeed) concerned with changes in the risk factors during the project

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8. Risk analysis is generally considered to be more effective if the analysis is organized according to the project

a) WBSb) OBSc) acceptance criteriad) budget baseline

9. Which of the following risk response strategies imply performing alternative actions only when the risk is occurring

a) mitigationb) avoidancec) acceptanced) transference

10. Risk assessment is often complicated because project risk factors area) unknown and unknowableb) not accepted by the customerc) interdependentd) discernible only using quantitative method

11. Risk response planning is intended toa) correct all project risksb) deflect all project risksc) formulate suitable strategies for dealing with potential adverse eventsd) avoid risks that will be part of future projects

12. Risk factors should be quantified to permita) mathematical proofs of risk eventsb) precision in evaluation of risk eventsc) estimation of expected project risks costd) computerization of response planning

13. When there is uncertainty associated with one or more aspects of the project, one of the first steps to undertake is to

a) cancel the projectb) conduct a risk assessmentc) substitute the project managerd) increase the estimated cost of the project

14. When it appears that a design error will interfere with meeting technical performance objectives, the preferred response is to

a) develop alternative solutions to the problemb) increase the specified objectives to set a new performances goalc) decrease the performance objectives to equal the assessed valued) reduce the overall technical complexity of the project

15. Increased uncertainty in a project is likely toa) increase the number of risk eventsb) decrease the number of risk eventsc) decrease the necessity of risk identificationd) increase the amount at stake

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16. The characterization of an individual’s willingness to take a risk in light of different levels of payoff is called

a) reward matrixb) risk propensityc) pay off leveld) risk mitigation

17. An appropriate sequence for risk management activities isa) planning, identification, analysis, and response planningb) planning, assessment, and identificationc) concept, planning, and managementd) identification, elimination, and mitigation

18. The process of determining what risk events may affect a project is called riska) analysisb) identificationc) managementd) avoiding

19. Risk owner isa) the overall responsible for budget allocation, so that can conveniently manage and monitor

the extra project expenditure necessary to face risksb) a project stakeholder able to play a role in developing risk response and consequently manage

and monitor itc) the project manager, that is the ultimate responsible of the projectd) any stakeholder having an active role in the project

20. By using project risk management techniques, project managers can develop strategies that do all but which of the following

a) significantly reduce project risksb) eliminate project risksc) provide a rational basis for better decision makingd) identify risks, evaluate the impact and prepare appropriate responses

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PROCUREMENT

1. The contract type with the highest cost risk for the buyer isa) fixed priceb) cost plus fixed feec) cost plus incentive feed) fixed price plus incentive fee

2. Which of the following statements concerning proposal documentation is correcta) well designed proposal documentation can simplify comparison of responsesb) proposal documentation must be rigorous with no flexibility to allow consideration of seller

suggestionsc) proposal documents should always include evaluation criteriad) proposal documents should be at least 30 pages long

3. By which means is a contractor able to control cost overrun due to changing requirementsa) additional procurementb) change orderc) cost change controld) overall change control

4. A SOW isa) the portion of project scope statement assigned to a supplierb) a narrative description of products and services to be supplied under contractc) required to assure the correct understanding of customer needsd) the lowest level of a WBS

5. Which of the following statements regarding change control is correcta) a fixed price contract will minimize the need for change controlb) changes seldom provide real benefits to the projectc) contracts should include procedures to accommodate changesd) more detailed specifications will eliminate the most common causes of change

6. A make or buy analysis is part ofa) procurement planningb) solicitation planningc) contract administrationd) acquisition process

7. Which of the following statements concerning contract negotiation is correcta) in contact negotiation, one side is always a winner and the other a loserb) the most successful contract negotiation are those that preserve the working relationship by

satisfying needs on both sidesc) be reasonable, maintain a common sense approach, and be prompt to facilitate a compromised) the most effective negotiating strategy is to define your objective in advance and to stick with

them at all costs

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8. By which process may an unsuccessful supplier seek remedy for unjust awardsa) contract disputeb) contract breachc) bid protestd) remedy claim

9. Contract administration should always be a) performed by legal expertsb) performed by individuals assigned full-time the projectc) the primary focus of concern for the project managerd) carefully coordinated, especially when there are multiple contracts on one project

10. A contract is awarded with a clearly specified SOW. The contractor completes the work as specified, but the buyer is not pleased with the results. Under normal circumstances, the contract is considered to be

a) incomplete because the buyer is not pleasedb) incomplete because the customer has the ultimate right to decide the contract completenessc) complete because the contractor met the terms and conditions of the contractd) still open because a revision of SOW is needed

11. __________________ is associated with a buyer’s request for material or equipment to meet a clearly stated need

a) express warrantyb) implied warranty of merchantabilityc) implied warranty of fitness for a particular purposed) prescribed warranty

12. Which of the following contract types does not encourage the seller to control costsa) cost plus fixed feeb) cost plus incentive feec) letter of intentd) cost plus percentage fee

13. The key objective of incentive clauses in a contract is toa) reduce costs for the buyerb) help contractor to control the costsc) help bring the contractor’s objectives in line with those of the buyerd) reduce risk for the contractor by shifting risk to the buyer

14. Which of the following statements concerning contract type is correcta) the most desirable type of contract for the buyer is cost plus percentage feeb) a fixed price contract contains the most risk for the buyerc) lump sum contracts generally offer to the buyer the greatest potential of protectiond) a letter of intent is a special type of contract in which all the responsibility are for the seller

15. With a __________ contract, it is essential for the contractor to maintain control of scope, schedule, and costs

a) fixed priceb) cost plus incentive feec) cost plus percentage of costd) time & material

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16. Changing a contract’s scope is usually easier with aa) letter agreementb) fixed price contractc) cost plus contractd) standard terms of contract

17. Transforming a cost plus contract in a FPI one during the projecta) is generally advisable because it saves moneyb) does not assure delivery of the required product for the negotiated pricec) will ensure buyer satisfaction because the contract scope can be changedd) should never be done in a competitive environment

18. A contract isa) a complex document used to describe required project servicesb) a legal relationship subject to remedy in the courtsc) an alternative to management agreementd) generally not needed for readily available goods and services

19. Contractor incentives for meeting or exceeding cost and schedule objectives area) poor contracting practiceb) seldom used by a well-managed organizationc) often cost effectived) seldom cost effective

20. As a project manager for the buyer, you have been advised you have no authority to enter into or change a contract. Youa) always have power to direct the seller to perform the work by a method you believe will be

more suitable to accomplish your projectb) may still cause your company to incur additional costs for changed work if the seller had

reasonable basis to believe you had the authority to direct change, even if the company can prove you have not such authority

c) cannot require the seller to correct a variance in its performance because you have no authority concept to change the contract

d) can contractually direct the seller to reduce the scope of the project in order to avoid additional costs for the company

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ANSWERS – 1’ SET

Simple Questions

Scope: 1.c - 2.a - 3.c - 4.d - 5.b - 6.c - 7.a - 8.b - 9.c - 10.a

Time: 1.c - 2.d - 3.a - 4.d - 5.c - 6.a - 7.b - 8.d - 9.b - 10.c

Cost: 1.d - 2.c - 3.b - 4.c - 5.c - 6.a - 7.d - 8.a - 9.b - 10.d

Quality: 1.a - 2.c - 3.a - 4.c - 5.b - 6.d - 7.b - 8.c - 9.b - 10.d

Human Resource: 1.b - 2.c - 3.b - 4.d - 5.d - 6.b - 7.c - 8.d - 9.a - 10.a

Communication: 1.c - 2.d - 3.d - 4.a - 5.d - 6.b - 7.c - 8.d - 9.a - 10.c

Risk: 1.b - 2.c - 3.b - 4.d - 5.a - 6.d - 7.b - 8.a - 9.c - 10.b

Procurement: 1.d - 2.c - 3.b - 4.d - 5.c - 6.a - 7.d - 8.b - 9.a - 10.c

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ANSWER 2’ SET

Question Scope Time Cost Quality1 c a d a2 b d b b3 a c d b4 b b c d5 a d c b6 d c c a7 a a d b8 b b b c9 a d c d10 c c a a11 b d b a12 d d c b13 c c b c14 c b d b15 b b a a16 b c d c17 d b b b18 c b c c19 a d b d20 b a d c

Question Human Resources Communication Risk Procurement1 d a c b2 a c d a3 b b b d4 c c a b5 b b c c6 c c a a7 d a d b8 d a a c9 b c c d10 c b c c11 b c c c12 c c c d13 c c b c14 d c a c15 c c d a16 b c b c17 c b a b18 d c b b19 d a b c20 a c b b

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