pmp examination content outline_2010
TRANSCRIPT
WELCOME TO
PMP Exam Prep by Simplilearn
Course e‐Book
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Lesson 1
Introduction to PMP Certification Course
Based on PMBOK Version 4
2
Agenda
What is PMP and PMIPMP Exam SyllabusHow is PMP Exam LikeAbout this Tutorial
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What is PMP and PMI ?
PMP: Project Management ProfessionalPMI: Project Management InstitutePMI is an Organization. PMP is a certification.PMI conducts PMP Examination.PMP is valid for 3 Years. PDU: Professional Development UnitPMBOK: Project Management Body of Knowledge.PMBOK is a Text Book for PMP Exam
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Pre‐requisite for the PMP Exam
Category College Education
PM Training PM Experience Total Experience
One Bachelors Degree
35 Contact Hours
4,500 hours 3 Years within last 6 years
Two High School Graduate
35 Contact Hours
7,500 hours Five Years within last 8 years
REP: Registered Education ProviderApplication can be submitted online. Once you pay the Exam fee, PMI sends Authorization Letter.You must write the exam within one year of getting the Authorization Letter.
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About the PMP Exam
Total No of Questions: 200. But, out of this 25 questions are test question for future tests.Only 175 questions are scored.PMI grades students on each of the Nine Knowledge area and based on this grading they declare PMP pass or fail.
How many grades one has to score to pass the PMP exam is not made public by PMI. The grading is Proficient, Above Proficient and Below Proficient in each of the Nine Knowledge area.Total duration of the exam is 4 hours.You get 1 Point for every right questions. There is no penalty for wrong answer.
Project Management Process Percentage of Questions
Project Initiating 11
Project Planning 23
Project Executing 27
Project Monitoring & Control 21
Project Closing 9
Professional and Social Responsibility 9
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PMP Exam Syllabus
There are 5 Process Groups. They are:
Project InitiationProject PlanningProject ExecutionProject Monitoring & ControlProject Closing
There are 9 Knowledge Areas. They are:Integration ManagementScope managementTime ManagementCost ManagementQuality ManagementHuman Resource ManagementCommunications ManagementRisk ManagementProcurement Management
There are 42 Project Management process areas. For example, “Develop Schedule” is one of these 42 process, which is part of Project Planning Process Area and is also part of Time Management Knowledge Area.
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About this Tutorial
There are total of 14 lessons. This being the first one.
The other Lessons are:Lesson 2: Project Management FrameworkLesson 3: Project Management Processes GroupsLesson 4: Integration ManagementLesson 5: Scope ManagementLesson 6: Time ManagementLesson 7: Cost ManagementLesson 8: Quality ManagementLesson 9: Human Resource Management Lesson 10: Communication ManagementLesson 11: Risk ManagementLesson 12: Procurement ManagementLesson 13: Professional and Social ResponsibilityLesson 14: PMP Examination Tricks and PMI‐ism
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Lesson 2
Project Management Framework
Based on PMBOK Version 4
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Agenda
Definition of a ProjectWhat is Project ManagementWhat is Program ManagementWhat is Portfolio ManagementProject Management Office (PMO)The Triple ConstraintsStakeholder ManagementOrganization StructureProject Life Cycle vs. Product Life CycleQuiz
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What is a Project ?
A project is a temporary endeavor undertaken to create a unique product, service or result.
Temporary means that a Project has a definite start and end date.
Temporary does not necessarily mean short in duration.
A Project End is met when either its objectives are met or it can not be met because of various reasons.
Project is different than Operation. Operation is doing ongoing repetitive work. For example, the work of an office receptionist can be classified as Operation.
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What is Project Management ?
Project Management is the application of Knowledge, skills, tools & technique to project activities to meet the project requirements.
Project Management is accomplished through the appropriate application and integration of the 42 logically grouped project management processes compromising the 5 process groups.
Managing a Project typically requires, Identifying Project RequirementsManaging StakeholdersBalancing the Project Constraints ( ie Cost, Time, Quality etc)
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What is Program Management?
A Program is a group of Projects, which when managed as a group, provides decreased risk, economies of scale and improved management.
For a group of Project to be classified as Program, there must be some value add in managing them together as Program. If there is no value add, it can not be classified as Program.
Various Projects in a Program may use the same resources.
Program Management focuses on the project interdependencies and helps to determine the optimal approach for managing them.
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What is a Portfolio Management ?
A Portfolio refers to a collection of projects or programs and other works that are grouped together to facilitate effective management of that work to meet strategic business objectives.
The Projects or Programs of the portfolio may not necessarily be interdependent or directly related.
A typical example of a Portfolio may be “Japanese Projects”, where in a company puts all its projects from Japan in one portfolio to give more focus and attention to its Japanese projects and grow its business in Japan.
Portfolio management refers to the centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing and controlling projects, programs and other related work to achieve strategic business objectives.
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Project Management Office (PMO)
PMO is an Organization Structure, its not a person like Project Manager.
PMO usually takes one of the three roles mentioned below:Provide the policies , methodologies and tools & templates for managing
projects within the Organization.Provide support and training to others in Organization on how to manage
projects. Provide Project Managers for different ongoing projects in the
Organization.
Some of the specific activities that PMO does is:Manage interdependencies between the ProjectsHelp Provide resourcesTerminate ProjectsHelp gather lessons learned, etc
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Triple Constraint
Triple Constraint originally included cost, time and scope.
The current explanation of Triple Constraint includes, but not limited toScopeQualityCostTimeResourcesRiskCustomer satisfaction
The Project Manager is supposed the manage the Project’s Triple Constraint.
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Stakeholder Management
A stakeholder is some one whose interests may be positively or negatively impacted by the Project.
The stakeholder include: The Project Manager, The Project Team, Thecustomer, The PMO, The Project Sponsor, The Performing Organization.
Stakeholder management requires:Identifying All StakeholderDetermining All of their requirementsDetermine Stakeholder ExpectationsCommunicating with Stakeholders
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Organization Structure
There are three types of Organization based on the authority that a Project Manager has.
Functional: The organization is grouped by areas of specialization within different functional areas, e.g, accounting, marketing, Sales. Team member report to functional Manager.
Projectized: The entire company is Organized by Project. There is nodepartment as such. Team member report to Project Manager.
Matrix: This is a mix of both the above types. This has three forms, Strong Matrix, Weak Matrix and Balanced Matrix.
In strong Matrix, power rests with the Project Manager. In weak matrix, power rests with the functional manager. In balanced Matrix, the power is shared between the functional manager and the Project Manager.
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Advantages and Disadvantages of Org. Type
Advantages Disadvantages
Functional
Specialist can be grouped togetherOnly one manager, so no confusionClearly defined career paths.
Departmental work get more priority than Project WorkNo career path in Project Management
Advantages Disadvantages
Projectized
Better communication within ProjectsLoyalty to Projects
Less efficient use of resourcesNo home when Project is completed.
Advantages Disadvantages
Matrix
Better coordinationMaximum utilization of resources
Higher potential for conflictExtra Administration required
Advantages Disadvantages
Functional
Advantages Disadvantages
Projectized
Matrix
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Project Lifecycle Vs Product Lifecycle
A typical Product lifecycle starts with the conception of the Product till its withdrawal from the market, when it becomes obsolete.
A Product can require or spawn many projects over its life. For example, a Project during Product conception would be determine customer’s need and project during product maturity phase can be to do competition analysis.
A Project has its own lifecycle. The lifecycle depends upon the Industry within which the project is being executed or the Organization preference of their project execution methodology.
For example, typically in IT industry, the Project Lifecycle is Requirement Analysis High Level Design Detailed Design Coding Testing Installation Hand over to Operation.
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Quiz‐1
1. A Project Manager is working on constructing a new Bridge., but he is notgetting enough project attention. Resources are occupied in doing processrelated work and project manager has no authority to properly assignresources. What form of Organization is the Project being performed ?
A. FunctionalB. ProjectizedC. Strong MatrixD. Weak Matrix
2. Which of the following is not a characteristics of a Project ?
A. Repeats Every WeekB. TemporaryC. Definite Beginning and EndD. Interrelated Activities
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Quiz‐2
3. You Just started a new Project as a Project manager, when couple ofstakeholder, with whom you have worked in the past, came to you, raisingconcern about the utility of the new Project Management Package beingused and the way project changes would be logged into the new Software.As a Project Manager what should you do?A. Supply with Training Material on new Project Management SoftwareB. Inform the Project Management Office about stakeholder’s concernC. Since they are friends, conduct informal training sessionD. Assume stakeholders that he will keep them engaged in the Project andnew Software will not way impact their functioning
4. Whom does the Project Team report in a Projectized Organization?
A. Does not report to any oneB. Project ManagerC. Functional ManagerD. CEO
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Quiz‐3
5. How is Project Lifecycle different than a Product Lifecycle ?
A. Project Lifecycle has no methodologyB. Project life cycle is different for different IndustryC. Project Lifecycle sees through many Product lifecycleD. Project Lifecycle talks about specific Project management Activities
6. In a matrix Organization, a Project Manager can expect the communicationto be
A. ComplexB. Difficult to UnderstandC. SimpleD. Open and Accurate
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Answer Explanation‐1
Answer 1: If you marked the Answer as A, you are right. In a FunctionalOrganization, Team
Members are more concerned about their daily functional activities than theProject activities.
Answer 2: This should have been easy for you. Its based on the Projectdefinition. Except Choice A, everything is part of the Project definitionitself. So the right Answer is Choice A.
If you got this Answer Wrong. You should repeat Lesson 2, once again.
Answer 3: Now this is a tricky question. You should expect lot of such questionsin your PMP Examination. Do you think all of them are right? If yes, youneed to identify the best Answer.
And the best answer is choice B. Inform the Project Manager Office, becausethey are the one who control the project management procedures andtools. By directing stakeholders to PMO, the Project Manager is helpingthem know of the right authority .
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Answer Explanation‐1
Answer 4: Now, this one was again simple. The right answer is choice B, theProject manager.
If you got this wrong, consider going through lesson 2 once again.
Answer 5: The right answer choice is B. Project Lifecycle is different for differentIndustry. Choice C is just the opposite, ie a Product Lifecycle sees manyproject through its lifecycle, not the other way round.
Choice D is also wrong. A Project Management Plan has various projectactivities, not the Project Lifecycle.
Answer 6: The right answer is A. Why the communication in a matrixorganization is complex, one of the key reason is presence of two boss forthe team members.
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Lesson 3
Project Management Processes
Based on PMBOK Version 4
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Agenda
Project Life Cycle vs Project Management ProcessThe Five Project Management Process GroupsProcess Groups, Knowledge Areas and Project Management process MappingWhat happens in Each Process GroupsQuiz
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Project Life Cycle Vs Project Management Process
Project Life Cycle – “What to do” to “get the work done”.Project Management Process – “What to do” to “Manage the Project”.Project Management Processes are grouped in 5 categories:
Initiating Process GroupsPlanning Process GroupsExecuting Process GroupsMonitoring & Control Process GroupsClosing Process Groups
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Project Management Process Groups
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Process Groups Interaction
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Project Management Process Group, Knowledge Area and Project Management Process Mapping
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Knowledge Areas
Project Management Process Groups
Initiating Planning Group
Planning Process Group
Execution Process Group
Monitoring & Control Process
Group
Closing Process Group
4. Project Integration Management
4.1 Develop Project Charter
4.2 Develop Project Management Plan
4.3 Direct and Manage Project Execution
4.4 Monitor & Control Project work
4.5 Perform Integrated Change Control
4.6 Close Project or Phase
5. Project Scope Management
5.1 Collect Requirement
5.2 Define Scope
5.3 Create WBS
5.4 Verify Scope
5.5 Control Scope
6. Project Time Management
6.1 Define Activities
6.2 Sequence Activities
6.3 Estimate Activity Resource
6.4 Estimate Activity Durations
6.5 Develop Schedule
6.6 Control Schedule
7. Project Cost Management
7.1. Estimate Costs
7.2 Determine Budget
7.3 Control Costs
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Knowledge Areas
Project Management Process Groups
Initiating Planning Group
Planning Process Group
Execution Process Group
Monitoring & Control Process
Group
Closing Process Group
8. Project Quality Management
8.1 Plan Quality8.2 Perform Quality Assurance
8.3 Perform Quality Control
9. Project Human Resource Management
9.1 Develop Human Resource Plan
9.2 Acquire Project Team
9.3 Develop Project Team
9.4 Manage Project Team
10. Project Communication Management
10.1 Identify Stakeholders
10.2 Plan Communications
10.3 Distribute Information
10.4 Manage Stakeholders Expectation
10.5 Report Performance
11. Project Risk Management
11.1 Plan Risk Management
11.2 Identify Risks
11.3 Perform Qualitative Risk Analysis
11.4 Perform Quantitative Risk Analysis
11.5 Plan Risk Responses
11.6 Monitor & Control Risks
12. Project Procurement Management
12.1 Plan Procurements
12.2 Conduct Procurements
12.3 Administer Procurements
12.4 Close Procurements33
Initiating Process Group
Formally starts a Project by incorporating all the needs of the Organization into the Project Charter.
Inputs to Initiating Process Groups
Business NeedContract, if work is done under a contractPotential StakeholdersHigh level Product descriptionProject Role vs Company strategic visionOrganization’s CultureOrganization’s project ArchivePossible Team membersIndustry Standards
Actions taken during Initiation Process
Select the Project among the list of potential ProjectsSelect Project ManagerDetermine Project Manager’s
authorityDocument Known Risk, assumptionsDivide Project into PhasesDetermine Initial Project Organization.Finalize & Get Approval of the Project
Charter
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Planning Process Group
Project Planning determines if the project charter can or can not bedelivered and also how the project will be accomplished.
Inputs to Planning Process Groups
Project Charter
Actions taken during Planning process
Refine requirements to make it more specificDefine Project deliverables and work required to
complete themGet Stakeholder approval on ScopeSelect Project TeamBreak down work into smaller manageable piecesDetermine Project Quality standardsDetermine Project Team’s Roles & ResponsibilityComplete Risk Identification, Analysis and Risk
Response PlanningDetermine what needs to be purchasedDetermine how to execute and control project etc
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Executing Process Group
The purpose of the executing Processes is to complete work in the project management Plan and to meet the project objectives.
Inputs to Executing Process Groups
Project Management Plan
Actions taken during Executing process
Manage Stakeholder’s expectation(s)Complete Work packagesImplement Quality AssuranceProduce Project ReportRemove Project bottleneck(s)Organize Team building ActivitiesOrganize Training for the team membersConduct Project progress meeting(s)Implement Approved Changes, corrective actions,
preventive actions and defect repairGet Sellers respond to procurement requestsetc
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Monitoring & Controlling Process Group
Monitoring and controlling means measuring the performance of theProject to the Project Management Plan, approving change requests,preventive actions and defect repair and managing changes.
Inputs to Monitoring & Controlling Process Groups
Project Management Plan Change RequestStatus Reports
Actions taken during Monitoring & Controlling process
Measure against the performance baselineDetermine variance and take appropriate actionRecommend changes, preventive and corrective
actionFacilitate conflict resolutionIdentify Root Cause of the ProblemObtain formal acceptance of the deliverablesAdminister Contract with sellersControl changesConduct Status review meetingsetc
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Closing Process Group
The Closing Processes are performed when the project’s product scope iscompleted., ie when the Project is completed.
Inputs to Closing Process Groups
Project ScopeProject Deliverables
Actions taken during Closing Process
Confirm all Project requirements are metObtain formal signoff from customerMake Payment to all parties and update cost recordsComplete Contract closureUpdate lesson learnt databaseMeasure Customer SatisfactionHandover Project deliverables to Operations teametc
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Quick Recap of Process Groups
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Quick Recap of Process Groups..contd
Monitoring & Control Process Group
Initiating Process Group to review Project Charter
Planning Process Group to re‐plan the project
Executing Process Group to work on defects
Closing Process Group if the Project is completed.
Change Request, Corrective & Preventive Action
Project Deliverables
Closing Process Group
Project / Project Phase is Complete
Project is terminated
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Quiz‐1
1. A Project Manager is making sure that Product of the Project is as per theProject Management Plan. Which part of the Project Management Processhe is in?
A. PlanningB. Monitoring & ControlC. InitiatingD. Closing
2. Which of the following is an output of the Initiating Process Group?
A. Project CharterB. Company processesC. Company cultureD. Historical Project Data
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Quiz‐2
3. Who is in control of the Project during Project Planning Phase?A. Project ManagerB. Functional ManagerC. Team MemberD. Stakeholder
4. The high level Project Schedule constraints are just determined. Whichprocess is the project in?
A. PlanningB. ClosingC. Monitoring & ControlD. Initiating
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Answer Explanation‐1
Answer 1: The right answer is D. Closing. The Project’s Product is verified duringthe closing phase of the Project. If you got it wrong, consider going troughlesson 3 all over again.
Answer 2: The right answer is A. Project Charter. All other options are input toInitiating Process Group.
Answer 3: Don’t get confused with the mention of Project Planning Phase. TheProject manager is in control of the Project throughout the Project… be itany phase. So the right answer is A. Project Manager.
Answer 4: The right answer is D. Initiating. The high level constraints ofschedule. Cost are determined during Initiating Process group. The detailedplanning is done during Planning Phase.
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Lesson 4
Project Integration Management
Based on PMBOK Version 4
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Agenda
What is Project Integration Management
The Key role of Project Manager, Project Team and Project Sponsor
Project Selection Methods
The Integration Management Knowledge Area. Develop Project CharterDevelop Project Management PlanDirect and Manage Project ExecutionMonitor & Control Project workPerform Integrated Change ControlClose Project or Phase
Quiz
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What is Project Integration Management
Project Integration Management involves unification, consolidation,articulation and integrative actions that are crucial for successfully completingthe Project.
The Project Integration Management is a high level work that Projectmanager does and it involves managing interdependencies among the otherknowledge areas.
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The Key role of Project Manager, Project Team and Project Sponsor
The Key role of the Project Manager is to Perform Integration.
The Key role of the Project Team is to concentrate on completing theProject Activities.
The Key role of the Project Sponsor is to protect the Project Team fromunnecessary changes and loss of resources.
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Project Selection Methods
Benefit Measurement Methods‐ >This is a comparative ApproachMurder Board‐ A panel of expert try to shoot down a new project idea.Peer ReviewScoring ModelsEconomic ModelsBenefit compared to Cost
Constrained Optimization Methods ‐> This is a Mathematical ApproachLinear Programming
Why a new Project ?ContractBusiness Need
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Project Integration Management Processes
S.No. Project Integration Management Process Done During
1 Develop Project Charter Initiating Process Group
2 Develop Project Management Plan Planning Process Group
3 Direct and Manage Project Execution Execution Process Group
4 Monitor & Control Project work Monitoring & Control Process Group
5 Perform Integrated Change Control Monitoring & Control Process Group
6 Close Project or Phase Closing Process Group
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Develop Project Charter
What is a Project Charter ?
Formally Authorizes theexistence of the Project
Provides authority to theProject Manager to spend moneyand other corporate resources
Provides high level Projectrequirements
It is issued by the ProjectSponsor
It is broad enough to be notrequiring any change duringProject Execution
Inputs to Create Project Charter
Project Statement of WorkEnterprise Environmental
factorsConstraint's and AssumptionsOrganization Process Assets
Process, Procedure &PoliciesCorporate Knowledge BaseLessons LearnedHistorical Information
Contract
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Develop Project Management Plan
Develop Project Management Plan is the Process of documenting the actionsnecessary to define, prepare ,integrate and co‐ordinate all the subsidiary plans.
The subsidiary plans are Cost Management Plan, Time Management Plan,Human Resource Management Plan etc.
The Project Management Plan defines how the project is executed, monitored &controlled and closed.
It contains all the other management plans and the performance measurementbaselines.
Inputs to Develop Project Management Plan
Project Charter Output from Planning Process Enterprise Environmental factorsOrganization Process Assets
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Few New Terms
Work Authorization SystemA System for authorizing work, i.e. notifying team members or contractors
that they may begin work on a project work package or a project activity
Corrective ActionAny action taken to bring expected future project performance in line with
the Project Management Plan.
Preventive ActionWhile corrective action involves implementing actions to deal with actual
deviations from the performance baselines, preventive action deals withanticipated or possible deviation from performance baselines.
Change Control SystemA collection of formal, documented procedures, paperwork, tracking systems
for authorizing changes.
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Direct and Manage Project Execution
Direct and Manage Project Execution is the process of performing theWork defined in the Project Management Plan to achieve the Projectobjective
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Monitor & Control Project Work
Monitor & control Project work is the process of tracking, reviewing andregulating the progress to meet the performance objective defined in theProject Management Plan.
The results of the monitoring & control are recommended changes to theproject as well as recommended corrective actions, preventive actions anddefect repair.
Inputs to Monitor & Control Project Work
Project Management Plan Work Performance InformationEnterprise Environmental factorsOrganization Process Assets
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Perform Integrated Change Control
Perform Integrated Change Control Process is the process of reviewing all changerequests, approving & managing changes to the Project deliverables, organizationalprocess assets, project documents and the project management plan.
Process of Making ChangeEvaluate ImpactCreate OptionsGet Internal Buy inGet Customer Buy‐in
Change Control Board
Inputs to Perform Integrated Change Control
Project Management Plan Work Performance InformationChange RequestsEnterprise Environmental factorsOrganization Process Assets
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Close Project or Phase
Close Project or Phase is the process of finalizing all activities across allthe project management process groups to formally complete the Projector phase.
The project is not closed when all the technical work is done but whenit is formally closed.
The project should always be closed no matter the circumstance inwhich it was stopped or terminated.
Inputs to Close Project or Phase
Project Management Plan Accepted deliverablesOrganization Process Assets
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Recap: Corrective Action and Integrated Change Control
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Quiz‐1
1. What is the most important activity with respect to change for a ProjectManager to focus attention on?A. Do the changeB. Track & Record the changeC. Prevent unnecessary changeD. Inform Project Sponsor of the change
2. In the middle of a project, you are informed that resources promised in thebeginning of the project is no longer available to the project. As a ProjectManager what would you do?A. Raise hand that you can no longer execute this projectB. Evaluate the impact of not having the promised resourcesC. Re‐plan the project without promised resourcesD. Identify other resources that can be provided to you in compensation of
earlier promised resources.
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Quiz‐2
3. A customer is well known for making lot of changes in a Ongoing project. Youhave been assigned as the Project Manager for a new Project from thiscustomer. What would you do in the beginning of the Project to manage thiscustomer?A. Check who is the Customer’s manager and inform him about the
customer past recordB. Involve the customer as early in the project as possibleC. Say No to the customer couple of times strictlyD. Send a copy of your company change control procedure.
4. Who does the Project Integration?A. Project SponsorB. Project ManagerC. Project TeamD. Stakeholder
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Quiz‐3
5. As a project Manager you received a change that does not impact the projectschedule. What would you do?A. Go ahead and do the changeB. Evaluate Impact on the other components of Triple constraintsC. Get in touch with Change control boardD. Ask your boss’s permission
6. You have been assigned as the Project Manager of a Project when the projectis half way in execution. You meet the customer and inform him that projectis within the baselines. But the customer informs you that he is not happywith the performance of the project. What would be the first thing that youwould do?A. Meet the Project Team to understand what can be doneB. Meet the Project Sponsor and explain him customer concernC. Inform customer that there is nothing wrong from project team sideD. Show customer the performance of similar other project
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Answer Explanation‐1
Answer 1: The right answer is C. Prevent unnecessary changes. The changes areactually done by the Project Team.
Answer 4: This is pretty simple and straight forward. The right answer is B. TheProject Manager. If you got this question wrong, please do go throughlesson once again.
Answer 2: Now this is a tricky question. You might be doing all the mentionedoption, but the right thing to do in such cases is to first evaluate the impact.So the right option is B. Evaluate the impact of not having the promisedresources.
Answer 3: This one is again a tricky question. In real project you might be doingall the options listed, but the best way to handle such scenario is to involvethe customer as early in the project as possible. The right option is B.Involve the customer as early in the project as possible
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Answer Explanation‐1
Answer 5: This question requires some knowledge of previous lessons as well.When ever there is a change and impact is known only one constraints.That’s not the complete analysis. You should look at the impact on all theTriple constraints factors. So the right answer is B. Evaluate the othercomponents of Triple constraints
Answer 6: This one is a tough question. The answer depends upon the scenario.If you heard that customer is unhappy from some one else, the best thingwould be to be meet the customer. But in this case, the customer is himselfsaying this to you that he is not happy. So the best option is to meet theProject Team and discuss customer’s concern, before doing any thing else.The right option is A. Meet the Project Team to understand what can bedone
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Lesson 5
Project Scope Management
Based on PMBOK Version 4
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Agenda
What is Project Scope ManagementProduct Scope vs. Project ScopeThe Key terms in Project Scope ManagementThe Project Scope Management Processes.
Collect RequirementsDefine ScopeCreate WBSVerify ScopeControl Scope
Quiz
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What is Project Scope Management ?
Project Scope management includes the processes required to ensurethat the project includes all the work required and only the work requiredto complete the project successfully.
Managing the Project scope is primarily concerned with defining andcontrolling what is and is not included in the Project.
The key activities that happens as part of Project Scope Management
Constantly checking to make sure that all the work is beingcompleted.Not letting people randomly add to the project scopePreventing Gold Plating, i.e. doing more than what is required as
part of Project Scope
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Product Scope vs. Project Scope
Product Scope : The features and functions that characterize a product,service or result.
Project Scope: The Work that needs to be accomplished to deliver aproduct, service or result with the specified features and functions.
The Project Scope Management deals with managing both the ProductScope as well as Project Scope.
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The Key terms in Project Scope Management
WBS: Work Breakdown StructureThe WBS breaks the work Project into smaller and more manageable pieces called
work Packages.Each level of the WBS is a smaller piece of the level above.Work not in WBS is not part of the Project.
WBS Dictionary:Since work can not be explained in detail in WBS. For every WBS, a WBS dictionary
is created to explain the WBS work package.It has details like description of WBS, person responsible, schedule etc
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A Typical WBS
The Project Scope Management Processes
S. No. Project Scope Management Process Done During
1 Collect Requirements Planning Process Group
2 Define Scope Planning Process Group
3 Create WBS Planning Process Group
4 Verify Scope Monitoring & Control Process Group
5 Control Scope Monitoring & Control Process Group
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Collect Requirements
Collect Requirements is the process of defining and documentingstakeholder's need to meet the project objectives.
InputsProject CharterStakeholder register
Tools & TechniquesInterviewPrototypingQuestionnaire & surveysFacilitated workshopsGroup creativity Techniques
OutputsRequirements DocumentRequirement Management PlanRequirement Traceability Matrix
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Define Scope
Define Scope is the process of developing a detailed description of theProject and product.
InputsProject CharterRequirements DocumentOrganization’s Process Assets
Tools & TechniquesExpert JudgmentProduct AnalysisAlternative IdentificationFacilitated Workshops
OutputsProject Scope StatementProject document update
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Create WBS
Create WBS is the process of subdividing project deliverables and projectwork into smaller, more manageable components.
InputsProject Scope StatementRequirements DocumentOrganization’s Process Assets
Tools & TechniquesDecomposition
OutputsWBSWBS dictionaryScope baselineProject document updates
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Verify Scope
Verify Scope is the process of formalizing acceptance of the completedproject deliverables.
InputsProject Management PlanRequirements DocumentRequirement Traceability MatrixValidated deliverables
Tools & TechniquesInspection
OutputsAccepted deliverablesChange RequestsProject document updates
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Control Scope
Control Scope is the process of monitoring the status of the project andproduct scope and managing changes to the scope baseline.
InputsProject Management PlanWork Performance InformationRequirements DocumentRequirement Traceability MatrixOrganization Process Assets
Tools & TechniquesVariance Analysis
OutputsWork Performance MeasurementsChange RequestsProject document updatesProject Management Plan updatesOrganization Process Assets updates
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Quiz‐1
1. During What part of the Project Management Process is the Project Scopecreated ?A. PlanningB. InitiatingC. ExecutingD. Monitoring & Control
2. During a regular project meeting, one of the team members suggests a nicefeature that customer may like. But the Project Manager says No to this nicefeature saying project should concentrate on only on what is required forthe project to get completed and nothing else. This is an example of :
A. Scope ManagementB. Change ManagementC. Project ManagementD. Quality Management
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Quiz‐2
3. A Software project is under construction Phase. After this only Testing &Implementation phase is done. The Project is 3 weeks ahead of theSchedule. As a Project manger, what would you be most concerned about?A. Quality ControlB. Scope VerificationC. Cost ControlD. Change Control
4. Another Project Manager asks you about the software to be used to createthe WBS. He is too much concerned about the graphical representation ofthe WBS. As an experienced Project manager, you suggest him that keyresult of creating WBS is not the graphical representation but:A. Team Buy‐inB. Bar ChartC. List of activitiesD. The WBS numbering System
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Quiz‐3
5. Which of the following is not True regarding subdividing the work in the WBSA. Subdivide until it has meaningful conclusionB. Subdivide until it can be done by a single personC. Subdivide until it can not be logically subdivided furtherD. Subdivide until it can be realistically estimated
6. As a Project Manager what can you use to clearly communicate what work isincluded in the Work Packages.A. Requirements DocumentB. Scope StatementC. Project Management PlanD. WBS dictionary
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Answer Explanation‐1
Answer 1: The right answer is A. Planning. There are only 5 processes in Scopemanagement, 3 in Planning and 2 in Monitoring & Control.
Answer 2: If you answered A. Scope Management. You are right. This is whatScope Management is all about.
Answer 3: The right answer is B. Scope Verification. Unless the deliverables isaccepted by the customer or sponsor as part of Scope verification process,you will not be sure, if Project is really 3 weeks ahead of schedule.
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Answer Explanation‐2
Answer 5: The right answer is B. Subdivide until it can be done by a singleperson. All other are important properties to be considered while comingwith a WBS.
Answer 6: The right answer is D. WBS dictionary
WBS dictionary has detailed work description of each of the team members.
Answer 4: The right answer is A. Team Buy‐in. WBS should be created with theProject Team and all the team members should have confidence that allwork and only work required to complete the Project is captured in theWBS.
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Lesson 6
Project Time Management
Based on PMBOK Version 4
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Agenda
What is Project Time ManagementWhat is Project Schedule The Key terms in Project Time ManagementThe Project Time Management Processes.
Define ActivitiesSequence ActivitiesEstimate Activity ResourcesEstimate Activity DurationsDevelop ScheduleControl Schedule
Schedule Network Analysis TechniquesQuiz
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What is Project Time Management ?
Project Time Management includes processes required to manage timelycompletion of the Project.
Project Time Management is primarily concerned with developing a realisticProject Schedule and controlling changes to the schedule.
Schedule Management Plan: This plan contains details like, How to go aboutplanning the Project Schedule and how to effectively manage and control theproject to the schedule baseline.
The key activities that happens as part of Project Time Management are:
Identifying the list of project activitiesEstimating the time and resource required to complete each of the
identified activitiesSequencing the activities to occur one after the other in a logical
manner.
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What is Project Schedule ?
A schedule wherein activities are assigned a duration and sequenced in a logical order .
it’s the Project Schedule that informs about the Project Start date and Project End date.
Its is very common to use Software to develop the Project Schedule.
The Microsoft Project is the most popular tool used for Project Schedule development.
Many people confuse Project Schedule as the Project Management Plan. But its not true. The ProjectManagement Plan is much more than a Project Schedule.
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A Typical Schedule
GANTT Chart
GANTT Chart: A Gantt chart is a type of bar chart that illustrates a project schedule .
A Gantt chart showing three kinds of schedule dependencies (in red) and percent complete indications.
Dependency:Finish to Start: An activity must finish before successor can start.Start to Start: An activity must start before the successor can start.Finish to Finish: An activity must finish before the successor can finishStart to Finish: An Activity must start before the successor can finish.
Finish to Start is the most commonly used dependency.Start to Finish is the rarely used dependency.
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Network Diagram
Precedence Diagramming Model (PDM) or Activity on Node (AON)
Boxes are used to show activities and arrow to show dependency.This types of Network can have all four
types of dependencies between the activities.
Activity A Activity B
Construct Wall
Start Painting
Start Painting
Start Furnishing
Start to Start Finish to Start
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Estimation
One time Estimate: When estimating using a one time estimate, one estimateper activity is received. For example, the person doing the estimate says that theactivity would take 2 weeks.In real life, people make their best guess and just double the estimate to take
care of any uncertainties. Adding this extra is also called “Padding”This techniques should be used to only get the high level estimate.
Analogous Estimating: Estimating based on previous projects or previousactivitiesThe last 5 similar projects took 6 months, so this one should also take 6 months.Analogous estimating is a kind of expert Judgment.
Parametric Estimating: This uses a mathematical model to calculate projectedtimes for an activity based on historical records from previous projects and otherinformation.
Heuristics: A heuristic means rule of thumb. An example of heuristic is the 80/20rule that in quality suggests that 80 percent of quality problems are caused by 20percent of potential sources of problem.
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The Project Time Management Processes
S. No. Project Time Management Process Done During
1 Define Activities Planning Process Group
2 Sequence Activities Planning Process Group
3 Estimate Activity Resources Planning Process Group
4 Estimate Activity Durations Planning Process Group
5 Develop Schedule Planning Process Group
6 Control Schedule Monitor & Control Process Group
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Define Activities
Define Activities is the process of identifying the specific actions to beperformed to produce the project deliverables.
InputsScope BaselineEnterprise Environmental factorsOrganizational Process Assets
Tools & TechniquesDecompositionTemplatesExpert Judgment
OutputsActivity ListActivity AttributesMilestone List
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Sequence Activities
Sequence Activities is the process of identifying and documentingrelationship among the project activities.
InputsActivity ListActivity AttributesMilestone ListProject Scope StatementOrganizational Process Assets
Tools & TechniquesPrecedence Diagramming
requirements (PDM)Dependency determinationApplying Leads and lags
OutputsProject Schedule network diagramProject Document Updates
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Estimate Activity Resources
Estimate Activity Resources is the process of estimating the type andquantities if material, people, equipment or supplies required to performeach activity.
InputsActivity ListActivity AttributesResource CalendarsEnterprise Environmental factorsOrganizational Process Assets
Tools & TechniquesExpert JudgmentAlternative AnalysisPublished Estimating dataBottom up estimatingProject Management Software
OutputsActivity Resource RequirementsResource Breakdown Structure
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Estimate Activity Durations
Estimate Activity Durations is the process of approximating the number ofWork periods needed to complete individual activities with estimatedresources.
InputsActivity ListActivity AttributesActivity Resource RequirementsResource CalendarsProject Scope StatementEnterprise Environmental factorsOrganizational Process Assets
Tools & TechniquesExpert JudgmentAnalogous EstimatingParametric EstimatingThree Point EstimateReserve Analysis
OutputsActivity Duration Estimates
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Develop Schedule
Develop Schedule is the process of analyzing activity sequences, durations,resource requirements and schedule constraints to create the Project Schedule.
InputsActivity ListActivity AttributesProject Schedule Network diagramsActivity Resource RequirementsResource CalendarsActivity Duration estimatesProject Scope StatementEnterprise Environmental factorsOrganizational Process Assets
Tools & TechniquesSchedule Network AnalysisCritical Path MethodCritical Chain MethodResource LevelingWhat‐if scenario AnalysisApplying Leads and LagsSchedule CompressionScheduling Tool
OutputsProject ScheduleSchedule BaselineSchedule DataProject Document Update. 91
Schedule Network Analysis Techniques
Schedule Network Analysis is aTechnique that generates ProjectSchedule. These techniques are:
PERTCritical Path MethodSchedule CompressionWhat if Scenario AnalysisResource LevelingCritical Chain Method
PERT
Expected Duration= (P+4M+O)/6
Standard Deviation of an Activity=
(P‐O)/6
Variance of an Activity = [(P‐O)/6]^2
P= Pessimistic EstimateM= Most Likely EstimateO= Optimistic Estimate
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PERT Example
Activity O M P Expected or PERT Duration
Standard Deviation
Activity Variance
Range of theEstimate
A 16 26 48 28 5.5 30.25 28,+/‐5.5
B 40 59 88 60.6 8 64 60.6,+/‐8
C 40 45 49 44.83 1.5 2.25 44.83,+/‐1.5
D 30 38 42 37.33 2 4 37.33,+/‐2
Project 170.76 10 100.5
If A, B, C, D are the only activities in the Project, what's the Project Duration?The Answer is 170.76 with a standard deviation of 10, so the minimum project durationis 160.76 and maximum duration is 180.76The Project standard deviation is calculated by adding all activity variances and takingthe square root of project variance
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Critical Path Method
Critical Path: The longest duration path through a network diagram anddetermines the shortest time to complete the project.
Float (Slack):
Total Float (Slack): The amount of time an activity can be delayedwithout delaying the project end date or an intermediary milestone.
Free Float (Slack): The amount of time an activity can be delayedwithout delaying the early start date of its successor's).
Project Float (slack): The amount of time a Project can be delayedwithout delaying the externally imposed project completion date requiredby the customer or previously committed by the Project Manager.
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How to Calculate Float ?
ES
LS
EF
LF
Forward Pass
Backward Pass
Float
ES: Early StartLS: Late StartEF: Early FinishLF: Late Finish
Float= LS‐ESFloat= EF‐LF
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Critical Path Example
Start
Activity 1Float=0
Activity 2Float=0
Activity 3Float=5
Activity 4Float=0
Activity 5Float=0
End
0 3
0 3
3 6
3 6
6 14
6 14
14 18
14 183 9
8 14
Paths Duration
Start, 1, 2, 4,5, End 18
Start, 1, 3, 5, End 13
Activity Duration
Activity 1 3
Activity 2 3
Activity 3 6
Activity 4 8
Activity 5 4
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Schedule Compression
Schedule Compression: Schedule compression is done during project planning to see if the desired completion date can be met and what will have to change to meet that date.Two techniques:Fast TrackingCrashing
Fast Tracking:
A B C
To
A
B
C
Crashing:
Making cost and schedule tradeoffsto determine how to obtain thegreatest amount of schedulecompression for the least incrementalcost while maintaining project scope.
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Schedule Compression Example
Activity Original Duration (in Months)
Crash Duration(in Months)
Time Savings
Original Cost in Dollars
Crash Cost
Extra Cost
Crash Cost Per Month
A 14 12 2 12,000 14,000 2,000 1,000
B 10 8 2 16,000 26,000 10,000 5,000
C 3 2 1 15,000 17,000 2,000 2,000
D 7 5 2 12,000 18,000 6,000 3,000
Assuming the Project has a float of ‐1 month. Which activity would you crash?The answer is Activity A, as it has the minimum crash cost.
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Impact of Schedule Compression
Option General Impact to the Project
Fast Track Adds RisksIncreases management time for the Project Manager
Crash Adds CostsIncreases management time for the Project Manager
Reduce Scope Save time and costIncreases customer dissatisfaction
Cut Quality Saves cost and ResourcesIncreases Risks
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Other Schedule Network Analysis Techniques
What if Scenario Analysis: In this method following questions are asked to produce arealistic schedule.
What if a particular thing changed on the project, would that produce a shorterschedule?
Monte Carlo Analysis: This method of estimating uses a computer to simulate theoutcome of a project making use of the three point estimates (optimistic, pessimisticand most likely).
Resource Leveling: Resource leveling is used to produce a resource limited schedule. Itresults is in more stable no of resources used in the project.
Critical Chain Method: Critical Chain Method is another technique to develop theProject Schedule that takes into account both the activity and resource dependencies.We will not go into detail of this technique, just remember that one such techniqueexists.
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Control Schedule
Control Schedule is the process monitoring the status of the Project to updateproject progress and managing changes to the schedule baseline.
InputsProject Management PlanProject ScheduleWork Performance InformationOrganization Process Assets
Tools & TechniquesPerformance ReviewsVariance AnalysisProject Management SoftwareResource LevelingWhat‐if ScenarioAdjusting Leads and LagsSchedule CompressionSchedule ToolOutputs
Work Performance MeasurementsOrganizational Process AssetsChange RequestsProject Management Plan updatesProject Document Updates.
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Quiz‐1
1. Assume that the Management has asked you to get the Project completedtwo weeks early. What is the BEST thing for you to do?
A. Consult the Project SponsorB. CrashC. Fast TrackD. Advise the management of the Impact of the Change
2. A dependency requiring that design be completed before manufacturing canstart is an example of a:
A. Scope DependencyB. Mandatory DependencyC. External DependencyD. Discretionary Dependency
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Quiz‐2
3. Which of the following is the BEST thing to do to try to complete a Projecttwo days earlier?A. Meet the team and look for options for crashing or fast tracking the
critical pathB. Motivate the team to work hard and look for status next monthC. Tell your boss that its not possibleD. Inform customer that critical path does not allow early completion
4. A Project Manager has received activity duration estimates from his team.Which of the following does he need in order to complete scheduledevelopment.A. Change RequestB. ReservesC. List of Preventive ActionsD. Change Control Procedure
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Quiz‐3
5. During the Project Execution, a large no of changes are made to the Project.The Project Manager should:A. Talk to management before any changes are madeB. Make only the changes approved by the ManagementC. Make approved changes and retain Schedule baselineD. Wait for all the changes to happen and print a new Schedule
6. Which of the following is the BEST project management tool to determine thelongest time the project will take?A. Project CharterB. Milestone ChartC. Network DiagramD. WBS
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Answer Explanation‐1
Answer 1: The right answer is D. Advise the management of the Impact of theChange. Yes, Fast Tracking, Crashing etc are done to reduce the projectschedule, but first thing is to understand the impact of the change.
Answer 2: If you answered B. Mandatory Dependency. You are right. As thename suggest, this is an example of mandatory dependency.
Answer 3: The right answer is A. Meet the team and look for options for crashingor fast tracking the critical path . The first option always is to understandwhat best can be done, before going ahead to any other task. Also, when itcomes to schedule compression, Crashing or fast tracking are the twooptions.
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Answer Explanation‐2
Answer 5: The right answer is C. Make approved changes and retain Schedulebaseline. Note that its not bad to have changes, but changes must bemanaged and baseline should also be maintained.
Answer 6: The right answer is C. Network Diagram. I hope you found it prettystraightforward.
Answer 4: The right answer is B. Reserves . Refer to your Develop Scheduleprocess area knowledge, once the team member give their estimate, agood project manager should add some extra estimate to it, which is calledReserves. This is also called Padding the estimate.
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Lesson 7
Project Cost Management
Based on PMBOK Version 4
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Agenda
What is Project Cost ManagementDifference Between Cost Estimating and Cost BudgetingControl AccountThe Project Cost Management Processes.
Estimate CostsDetermine BudgetControl Costs
Earned Value ManagementProject Selection MethodsQuiz
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What is Project Cost Management ?
Project Cost Management includes the processes involved in estimating ,budgeting and controlling costs so that the project can be completed within theapproved budget.
Cost Management Plan: This plan contains details like, How to go aboutplanning the Project cost and how to effectively manage and control the projectto the cost baseline and manage cost variance.
Cost Management Plan is the part of the Project Management Plan.
The techniques of Estimating the cost involved in performing each of theproject activities are same as estimating the Time required.
For example, Expert Judgment, Analogous Estimating, Bottom up Estimating,Reserve Analysis are used in Cost Management as well.
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What is Control Account ?
In Larger Project, its is difficult to do cost management at each individualactivity level and hence costs are managed at a higher level.
Usually its is done at one level higher than the Work Package. Remember,Project is broken into WBS. WBS is further broken down into Work Packagesand Work Packages are finally broken into activities.
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The Project Cost Management Processes
S. No. Project Cost Management Process Done During
1 Estimate Cost Planning Process Group
2 Determine Budget Planning Process Group
3 Control Costs Monitoring & Control Process Group
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Estimate Cost
Estimate cost is the process of developing an approximation of the monetaryresources needed to complete project activities.
Cost estimates are a predication that is based on the information known at a givenpoint in time.
InputsScope BaselineProject ScheduleHuman Resource PlanRisk RegisterEnterprise Environmental FactorsOrganization Process Assets
Tools & TechniquesExpert JudgmentAnalogous EstimatingParametric EstimatingBottom up estimatingThree Point EstimatesReserve AnalysisProject Management SoftwareVendor Bid AnalysisOutputs
Activity Cost EstimatesBasis of EstimatesProject document updates
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Determine Budget
Determine Budget is the Process of aggregating the estimated costs of individualactivities or work packages to establish an authorized cost baseline.
Cost baseline includes all authorized budgets but excludes management reserves.
InputsActivity Cost EstimatesBasis of EstimatesScope baselineProject ScheduleResource CalendarsContractsOrganizational Process Assets
Tools & TechniquesCost AggregationReserve AnalysisExpert JudgmentHistorical relationshipsFunding Limit Reconciliation
OutputsCost Performance BaselineProject Funding RequirementsProject Document Updates
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Control Costs
Control cost is the process of monitoring the status of the Project to update theProject budget and managing changes to the cost baseline.
Any increase to the authorized budget can only be approved through the PerformIntegrated Change Control Process.
InputsProject Management PlanProject Funding RequirementsWork Performance InformationOrganizational Process Assets
Tools & TechniquesEarned Value ManagementForecastingPerformance ReviewsVariance AnalysisProject Management Software
OutputsWork Performance MeasurementsBudget ForecastsOrganizational Process Assets
UpdatesChange RequestsProject Management Plan Updates
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Earned Value Technique
The Earned Value Technique is a method to measure project performance againstthe Project baseline. Result from an Earned Value analysis indicate potential deviationof the Project from cost and schedule baselines.
Acronym Term Explanation
PV Planned Value Estimated Value of the Work Planned to be done
EV Earned Value Estimated Value of the Work Actually accomplished
AC Actual Value Actual Cost incurred in work accomplished
BAC Budget At Completion
The Budgeted amount for the total Work
EAC Estimate At Completion
The current estimate for the Total Project Cost
ETC Estimate to Complete
From this point, how much more the Project Would cost to complete
VAC Variance at Completion
How much over or under budget we expect to be at the end of the Project.
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Earned Value Formulas
Acronym Formula Explanation
Cost Variance (CV) EV‐AC Negative is over budget, positive is underbudget.
Schedule Variance (SV) EV‐PV Negative is behind schedule, Positive isahead of schedule.
Cost Performance Index (CPI)
EV/AC We are getting $_____ worth of work outof every $1 spent.
Schedule Performance Index (SPI)
EV/PV We are progressing at ________ percentof the rate originally planned.
Estimate At Completion (EAC)
BAC/CPI How much more do we expect the Projectto cost
Estimate to complete (ETC) EAC‐AC How much more the Project would cost.
Variance at Completion BAC‐EAC How much over or under budget we expect to be at the end of the Project.
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Earned Value Problem Example
Lets take the example of a Project to build a compound wall. It’s a four side walland each side is to take one day to build and its budgeted for $500 per side. The wallsare planned to be completed one after the other. Today is end of day 3, calculate theCPI and SPI of this project.
Activity Day 1 Day 2 Day 3 Day 4 Status at the End of Day 3
Side 1 S‐‐‐‐‐‐‐‐‐F Complete, spent $500
Side 2 S‐‐‐‐‐‐‐PF ‐‐‐F Complete, spent $700
Side 3 S—PF 50% done, spent $300
Side 4 Not yet Started
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Earned Value Problem Solution
Term Calculation Value Interpretation of the Answer
PV 500+500+500 $1500 By third day, we should have done $1500 worth of Work.
EV Complete, Complete, half done500+500+250=$1250
$1250 We have actually accomplished only work worth $1250
AC 500 plus 700 plus 300=$1500
$1500 We have actually spent $1500
CV $1250 minus $1500 ‐$250 We are over budget by $250
SV $1250 minus $1500 ‐$250 We are behind Schedule
CPI $1250 divided by $1500 .83 We are getting 83 cent out of every dollar spent
SPI $1250 divided by $ 1500 .83 We are progressing at 83% of the rate originally planned.
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Project Selection Methods
Present ValueNet Present ValueInternal Rate of ReturnPayback PeriodBenefit Cost Ratio
Present Value: Present Value meansvalue today of future cash flows.
Net Present Value (NPV): Presentvalue of the total benefits (income orrevenue) less the costs over timeperiod.
Q: You have two Projects to choose from. Project X will 2 years to complete and has a NPV of $35,000. Project Y will take 5 years to complete and has NPV of $95,000. Which one will you take up?
A: The answer is Project Y, because it has a higher NPV. Don’t get confused with longer duration of the Project, what is important is that NPV should be more.
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Project Selection Methods..contd.
Internal Rate of Return (IRR): If doing project is like putting money in a bankaccount and earning interest, you will put money in the Bank that givesmaximum interest. Same is with the case of Project.
For example: If you have to choose from Project A and Project B. Project Awith an IRR of 25% or Project B with an IRR of 15%.
The Answer is Project A. The IRR is better for Project A.
Payback Period: The number of time periods it takes to recover your investment in the Project before your start accumulating profits.
For Example: You have two projects to choose from. Project A with a payback period of 5 months or Project B with a payback period of 12 months. Which one would you go for?
The Answer is Project A.
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Project Selection Methods..contd
Opportunity Cost: The Opportunity given up by selecting one project overanother.For Example: You have two projects to choose from. Project A with an NPV of$ 55,000 and Project B with an NPV of $ 85,000. What is the Opportunity costof selecting Project B ?
The Answer is $ 55,000. This is NPV of Project A, which we selected overProject B.
Benefit Cost Ratio: A benefit cost Ratio of more than 1 means that benefitsare greater than the costs.For Example: If the benefit cost ratio of Project A is 2.5 and benefit cost ratioof Project B is 1.5, which Project would you select.
The answer is Project A…as the Benefit cost ratio is higher in Project A.
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Some other Cost Related Terms
Law of Diminishing Return: The more you put into some thing, the less youget out of it. For example, doubling the no of resources working on a Project,cant get it done in half the time.
Working Capital: The amount of money the company has to invest on theProject and for the day to day company operations.
Depreciation: Large assets purchased by the company lose value time. This iscalled depreciation. They are two forms of depreciation.
Straight Line Depreciation: Same amount of depreciation is taken everyyear,. So, a Car with a price tag of $10,000 and useful life of 10 years, isdepreciated $1000 per year.
Accelerated Depreciation: Depreciates faster than straight linedepreciation. So, a Car with a price tag of $10,000 depreciates $3000 thefirst year, $1500 next year, $1000 the third year and so on….
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Quiz‐1
1. If Earned Value (EV) is $550, Actual Cost is $650, planned value is $600, whatis cost variance (CV) ?
A. ‐100B. +50C. ‐50D. +100
2. The difference between cost baseline and cost budget can be best describedas?
A. The Management ReserveB. The Sunk costC. Project Cost EstimateD. The contingency Reserve
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Quiz‐2
3. A Cost performance Index (CPI) of 0.73 means?A. The Project would cost 73% more than originally plannedB. The Project would cost 37% more than originally plannedC. The Project is progressing at only 73% of the originally plannedD. The Project is only getting 73 cents out of every $1 spent
4. A Schedule Performance Index (SPI) of 0.67 means?A. You are ahead of the Schedule by 33%B. You are behind schedule by 32.9%C. You are progressing at only 67% of the rate originally plannedD. You are progressing at only 37% of the rate originally planned
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Quiz‐3
5. As a Project Manager, you present your cost estimate to the Project Sponsorand he asks to cut cost by 10%. What would you do?A. Replace originally planned resources with new resources at lower ratesB. Cut some of the Project Activities and inform sponsor about the sameC. Strongly say NO to Sponsor and walk out from the ProjectD. Ask all team members to reduce cost of their activities by 10%
6. A Project Manager is allocating overall cost estimates to individual activitiesto establish a baseline for measuring project performance. What process ishe performing?A. Cost EstimationB. Cost ManagementC. Cost ControlD. Cost Budgeting
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Answer Explanation‐1
Answer 1: The right answer is A. ‐100. Apply the formula to get theanswer. Also note that Planned value is also provided, which is notused in solving this problem. This was just to confuse you.
Answer 2: The right answer is A. Management Reserve. This was apretty simple question and if you got it wrong, you should read thislesson all over again.
Answer 3: The right answer is D. The Project is only getting 73 cents outof every $1 spent. I have specifically informed about this earlier also.But I repeated this question again to give emphasis thatunderstanding CPI is very important.
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Answer Explanation‐2
Answer 5: The right answer is B. Cut some of the Project Activities and informsponsor about the same. Note that Project Manager has the responsibilityof cost overrun, so if you have estimated it in a certain way and itsrequired to be reduced, you should look at reducing scope by removingsome activities.
Answer 6: The right answer is D. Cost Budgeting . I hope you found it prettystraightforward.
Answer 4: The right answer is C. You are progressing at only 67% of the rateoriginally planned. I have specifically informed about this earlier also. But Irepeated this question again to give emphasis that understanding SPI isvery important.
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Lesson 8
Project Quality Management
Based on PMBOK Version 4
128
Agenda
What is Quality ?What is Quality Management ?Cost of QualityThe Project Quality Management Processes.
Plan QualityPerform Quality AssurancePerform Quality Control
Seven Basic tools of QualityIntroduction to Six SigmaQuiz
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What is Quality?
Quality is defined as “Conformance to Requirement and fitness for use””
So, if all the Project requirements are met and the resulting product / service isusable as well, quality is supposed to have been met.
Quality is the responsibility of each and everyone at the Organization.
Project Manager is responsible for Project Quality, where as Senior management isresponsible for quality of the whole organization.
Quality comes at a cost.
Optimal Quality is reached at the pointwhere the incremental revenue fromimprovement equals the incremental costto secure it.
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What is Quality Management?
Quality Management includes creating andfollowing policies, procedures in order that aProject meets the defined needs it wasintended to meet.
So, the aim of Quality Management is toensure that Project gets completed with nodeviation from the Project requirements.
There are three aspects to QualityManagement and they are:
Quality PlanningQuality Assurance, andQuality Control.
Impact of Poor QualityIncreased CostLow customer Satisfaction
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Quality Planning vs. Quality Assurance vs. Quality Control
Quality Planning Quality Assurance Quality Control
Determine a Plan for theQuality.
Determine if the Project iscomplying with theOrganizational ( as well asProject) policies andprocedures.
Measure specific projectresults against standards.
Major task is preparationof Quality Management Plan.
Major task is conducting regular project Audits.
Results of the Audit are corrective and preventive actions.
Major activity is defectrepair and measuringwhether the qualityindicators are improvingor not.
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Cost of Quality
Cost of quality includes all costs incurred over the life of the Product byinvesting in preventing nonconformance to requirements and ensuring thatthe product conforms to requirements.
Cost of Conformance
Quality TrainingInspection Testing
This is money spent during theProject to avoid failures.
Cost of Non Conformance
ReworkScrapWarranty Cost
This is money spent during and afterthe Project because of failures.
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The Project Quality Management Processes
S. No. Project Quality Management Process
Done During
1 Plan Quality Planning Process Group
2 Perform Quality Assurance Execution Process Group
3 Perform Quality Control Monitoring & Control Process Group
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Plan Quality
Plan Quality is the process of identifying quality requirements and/or standards forthe project or product, and documenting how the project will demonstratecompliance.
InputsScope baselineCost baselineSchedule baselineEnterprise Environmental factorsOrganization Process Assets
Tools & TechniquesCost benefit AnalysisCost of QualityBenchmarkingDesign of experiments
OutputsQuality Management PlanQuality MetricsQuality ChecklistsProcess Improvement Plans
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Perform Quality Assurance
Perform Quality Assurance is the process of determining whether quality standardsare being met, work is continuously improving and deficiencies are being corrected.
InputsProject Management PlanQuality MetricsWork Performance Information
Tools & TechniquesQuality AuditsProcess Analysis
OutputsChange Request to the Project Management PlanOrganization Process Assets UpdatesRecommendation for corrective Actions
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Perform Quality Control
Perform Quality Control is the process of monitoring and recording results ofexecuting the quality activities to assess performance and recommend necessarychanges.Quality Control is performed throughout the Project.
InputsProject Management PlanQuality MetricsQuality ChecklistWork performance measurementsApproved Change requestDeliverableOrganization Process Asset
Tools & TechniquesCause and effect diagramControl ChartsFlowchartingHistogramPareto ChartRun ChartScatter diagram
OutputsQuality Control MeasurementsValidated DeliverablesValidated Changes
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Seven Quality Tools
Cause and effect diagramControl ChartsFlowchartingHistogramPareto ChartRun ChartScatter diagram
Control Charts:
Control Chart graphically help you todetermine if the process is withinacceptable limit.A control chart can be used to monitor
project performance figures such as costor schedule variance.
138
Cause and Effect Diagram (Fishbone diagram or Ishikawa Diagram)
Used to find the root cause of a defect.Helps stimulate thinking and organizes thoughts.Can be used in Quality Planning as well as Quality Control.
139
A Typical Fishbone Diagram
Seven Quality Tools
FlowchartingFlowchart shows how a process or
system flows from beginning to endand how the elements interrelate
Graphically represent the processand helps analyze how the problemsoccur.
HistogramIt is a vertical bar chart showing
how often a particular variable occurred.
The height of each column represents the relative frequency of the variable
Pareto ChartAlso called 80/20 rule.Helps focus attention to the most
critical issues.Prioritizes potential cause of the
problem.Helps identify the critical few from
the uncritical many.
Run Chart
Used to identify a pattern of variation.Used to identifying trend.
Scatter diagramTracks two variables to see if they are
correlated
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Introduction to Six Sigma
If the data volume is huge, it isdifficult to study the whole data andwhat is done to is to study the sampledata.
Generally if large volume of data areplotted, the graph takes the form of aBell as shown here.
Such distribution of data is also called“Normal Distribution”. The linecorresponding to the tip of the bell isthe median of the data sample.
Standard deviation is used to measure how far the data is from the mean. Sigma isanother name for Standard deviation.In any such distribution, if you go one sigma above or below the mean, it covers 68%
data.At Six sigma, the distribution covers 99.99985% of the data. So if a company operates
at 6 sigma, less than3.4 defects are expected from a sample of 1 million.
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Quiz‐1
1. Which of the following is an Example of the Quality Assurance?
A. Fishbone DiagramB. Pareto ChartC. InspectionD. Process Analysis
2. Standard deviation is a measure of how:
A. How good the sample data isB. Far the measurement is from the meanC. Far the estimate is from highest estimateD. How less the estimate is from highest estimate
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Quiz‐2
3. As a Project Manager, what would you give the highest priority: Quality, Costor Schedule?A. It would depend upon the ProjectB. Quality is of uttermost important. Cost and Schedule comes laterC. Cost is most important. Everything else comes afterwardsD. Completing the project as per schedule is most important
4. A Project Manager is encountering too many problem in his Project. Hewants to identify the root cause of the Problems so that he can focus hisattention to those causes. Which of the following tools should he use?A. Fishbone DiagramB. Control ChartC. Pareto ChartD. Histogram
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Quiz‐3
5. You are currently working as a Project Manager of a major Software Project,which is going under severe time pressure, when some one from the Qualitydepartment comes up for quality Audit of the Project. The team membersare not co‐operating for the Audit. As a Project Manager, what do youexplain them about the purpose of the Audit?A. It’s a management decision and we must allow them to auditB. To check if the project is following any ineffective or inefficient policiesC. To check the time sheet of all team membersD. To check if customer is aware about the Project process
6. Which of the following is an example of cost of conformance?A. Quality TrainingB. Cost of ReworkC. Warranty costD. Scrap
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Answer Explanation‐1
Answer 1: The right answer is D. Process Analysis. This was a straight forwardquestion and I hope you got it right. Audit and Process analysis are keyQuality Assurance activities.
Answer 2: The right answer is B. Far the measurement is from the mean. TheBell curve that you learn is all about the data only.
Answer 3: The right answer is A. It would depend upon the Project. Quality, Costand Schedule, all of them are part of Triple Constraints and equallyimportant. Which one to compromise on a particular project can be aproject specific call.
Answer 1: The right answer is D. Process Analysis. This was a straight forwardquestion and I hope you got it right. Audit and Process analysis are keyQuality Assurance activities.
Answer 2: The right answer is B. Far the measurement is from the mean. TheBell curve that you learn is all about the data only.
Answer 3: The right answer is A. It would depend upon the Project. Quality, Costand Schedule, all of them are part of Triple Constraints and equallyimportant. Which one to compromise on a particular project can be aproject specific call.
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Answer Explanation‐2
Answer 5: The right answer is B. To check if the project is following anyineffective or inefficient policies. Please note that the quality Audit is notsupposed to be a burden but of help to the Project.
Answer 6: The right answer is A. Quality Training . Training helps in directincrease of productivity and hence listed as cost of conformance.
Answer 4: The right answer is A. Fishbone Diagram. This helps inunderstanding the root cause of the defect by plotting all possible reasonsof a Defect.
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Lesson 9
Project Human Resource Management
Based on PMBOK Version 4
147
Agenda
What is Human Resource ManagementRoles and Responsibilities of the Project SponsorFunctional Manager vs. Project ManagerThe Project Human Resource Management Processes.
Develop Human Resource PlanAcquire Project TeamDevelop Project TeamManage Project Team
Conflict ManagementPowers of Project ManagerMotivation TheoryQuiz
148
What is Human Resource Management ?
Project Human Resource Management includes the processes thatorganize, manage and lead the Project Team.
The Project Team is compromised of the people with assigned roles andresponsibilities for completing the project.
The Project Management is a subset of the Project Team and is responsiblefor the project management and leadership activities such as initiating,planning, executing, monitoring, controlling and closing the project.
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Roles and Responsibility: Project Sponsor
During InitiationProvide financial resources to the
ProjectIssue the Project CharterProvide Authority to the Project
ManagerPrioritize between the triple constraints
During Project Planning
Determine the reports needed by themanagement to oversee the ProjectApprove the Project Management
Plan
During Project Execution and Monitoring & controlEnforce Quality PoliciesProtect the Project from outside
influencesHandle escalationsProvide clarity on Project ScopeApprove changes to Project Charter
During Project Closing
Formal Acceptance of the ProjectdeliverablesUpdate Organization Process
Database.
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Functional Manager vs. Project Manager
Functional Manager
Manages and owns resources in aspecific department like “Engineering”,“HR”.
Generally the subject matter expertof the functional area that he/sheheads.
Exact roles and responsibility of aFunctional Manager depends upon theOrg type, i.e. matrix, projectized etc
Assign specific Individuals to theProject team and negotiates with theProject manager regarding resources.
Project Manager
In charge of the Project but notnecessarily the resources.
Is not necessarily the technicalexpert.
Negotiates with functional managerfor the best available resources.
Is Responsible for the Project Quality.
Is Accountable for Project Failure.However, the Project success belongs tothe whole team.
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The Project Human Resource Management Processes
S. No. Project Human Management Process
Done During
1 Develop Human Resource Plan Planning Process Group
2 Acquire Project Team Execution Process Group
3 Develop Project Team Execution Process Group
4 Manage Project Team Execution Process Group
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Develop Human Resource Plan
Develop Human Resource Plan is the process of identifying and documentingproject roles, responsibilities, reporting relationships and creating a staffingmanagement plan.
InputsActivity Resource RequirementsEnterprise Environmental FactorsOrganization Process Assets
Tools & TechniquesOrganization ChartNetworking
OutputsHuman Resource Plan
153
Acquire Project Team
Acquire Project Team is the process of confirming human resource availability andobtaining the team necessary to complete project assignments.
InputsEnterprise Environmental FactorsOrganization Process Assets
Tools & TechniquesPre‐assignmentNegotiationAcquisitionVirtual Teams
OutputsProject Team AssignmentsResource Calendars
154
Develop Project Team
Develop Project Team is the process of improving the competencies, teaminteraction and the overall team environment to enhance project performance.
InputsProject Team AssignmentsProject Management Plan
Tools & TechniquesInterpersonal skillsTrainingTeam building ActivitiesGround RulesCo‐locationRecognition and Rewards
OutputsTeam Performance Assessments
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Manage Project Team
Manage Project Team is the process of tracking performance, providing feedback,resolving issues and managing changes to optimize project performance.
InputsProject Team AssignmentsProject Management PlanTeam Performance AssessmentsPerformance ReportsOrganization Process Assets
Tools & TechniquesObservations and ConversationsProject Performance AppraisalsConflict ManagementInterpersonal skills
OutputsRecommended corrective ActionsChange RequestsOrganization Process Asset Updates
156
Conflict Management
Conflict is inevitable consequences of Organizational interactions.Conflict is best resolved by people involved in it and their immediate
managers.Conflict can be beneficial too!!Conflict can be avoided by:
Keeping team informed of the Exact Project statusClearly assigning work with no overlapping responsibilities.Continuously motivating team about the work challenges
Sources of Conflict :
ScheduleProject PrioritiesResourcesTechnical IssuesAdministrative IssuesCost Personality
Conflict Resolution Technique :
Confronting (Problem Solving).CompromisingWithdrawal (Avoidance)Smoothing Forcing
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Powers of the Project Manager
Here are some of the ways in which Project Manager can get the team membersperform on a Project:
Formal or LegitimateRewardPenaltyExpertReferent
The best form of powers are Expert and Reward. Penalty is the worst way of gettingthe work done.
Formal, Reward and Penalty are powers derived from Project Manager’s position in thecompany. Expert Power is earned on your own.
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Motivation Theory
How can a Project Manager reward team members if he or she does notunderstand what motivates them?
McGregor’s Theory of X and Y:All workers fit into twocategory, either X or Y.
Theory X: People should bewatched every minute. People areincapable, avoid work wheneverpossible.
Theory Y: People are willing towork without Supervision andthey want to achieve some thing.
Maslow Hierarchy for Needs
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Quiz‐1
1. Which Conflict Resolution Technique is the best for long lasting solution?
A. SmoothingB. ForcingC. Problem SolvingD. Withdrawal
2. What conflict resolution technique is when a Project Manager says “I can nolonger deal with this escalation”.
A. WithdrawalB. CompromiseC. Problem SolvingD. Forcing
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Quiz‐2
3. How is Project Performance Appraisals different than Team PerformanceAssessments?A. Project Performance Appraisal focuses on Team member performanceB. Project Performance Appraisal is evaluation of the team effectivenessC. It’s a tool for reducing employee turnoverD. It’s used for team building
4. You have been assigned as the Project Manager of an ongoing Projectinvolving 50 Employees of your company and 10 Sub contractors. You wantto know who is assigned to do what. Where should you look for thisinformation?A. Responsibility Assignment MatrixB. Project Organization ChartC. Pareto ChartD. Resource Histogram
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Quiz‐3
5. A team member is not performing well on a Project…because ofinexperience. But there is nobody else better qualified to do the Job. As aProject Manager, what should you do?A. Escalate the matter to higher authorityB. Try doing it on your ownC. Wait till the team member fails to deliverD. Arrange Training for the team member
6. As a Project Manager, you noticed that one of the Subcontractor iscontinuously sending late deliverables. When you pointed this, he agrees fora cost reduction but still wants you to accept late deliverable. This is anexample of ?A. ForcingB. SmoothingC. CompromisingD. Confronting
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Answer Explanation‐1
Answer 1: The right answer is C. Problem Solving. This was a straight forwardquestion and I hope you got it right. Problem Solving is the best way toresolve conflict.
Answer 2: The right answer is A. Withdrawal. I think it is obvious looking at thestatement by the Project Manager.
Answer 3: The right answer is A. Project Performance focuses on Team memberperformance. I have clarified it in detail while discussing the ManageProject Team Process. If you got this question wrong, you may like to referthat section again.
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Answer Explanation‐2
Answer 5: The right answer is D. Arrange Training for the team member.Remember the question asked for the best option, among the existingoptions, even though it might not be the best option in real life.
Answer 6: The right answer is C. Compromising. This must have been easyquestion for you. Here both parties are giving up some thing.
Answer 4: The right answer is A. Responsibility Assignment Matrix. Who isassigned to work on what is listed in Responsibility Assignment Matrix
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Lesson 10
Project Communication Management
Based on PMBOK Version 4
165
Agenda
What is CommunicationCommunication Methods, Technology and ChannelsBasic Communication ModelThe Communication Management Knowledge Area.
Identify StakeholdersPlan CommunicationsDistribute InformationManage Stakeholder ExpectationsReport Performance
Quiz
166
What is Communication ?
Sr. Management
The Project Stakeholders
Other Project Managers
Other Projects
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Communication is a two way process of transferring information from one entity toanother. Communication is a two way process of transferring information from one entity toanother.A Project Manager spends almost 90% of his /her time on communication.
Communication Methods , Technology & Channel
Communication Methods When Used
Formal Written Project Management Plans, Project Charter,Communicating over long distance
Formal Verbal Presentations
Informal Written Emails, Notes
Informal Verbal Conversations
Communication Technology:
Face to FaceTelephoneFaxEmailMeetings.
Communication Channel:
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Basic Communication Model
Encode: To translate thoughts or ideas into a language that is understood by others.Message / Feedback Message: Output of EncodingMedium: The communication method to convey the messageNoise: Anything that interfaces with the transmission and understanding of the
messages, for example, distance, unfamiliar technologyDecode: To translate the message back into meaningful thoughts or ideas.
Encode
Sender
Decode
Decode
Receiver
Encode
Message
Feedback Message
Noise Noise
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Project Communication Management Processes
S.No. Project Communication Management Process
Done During
1 Identify Stakeholder Initiating Process Group
2 Plan Communications Planning Process Group
3 Distribute Information Execution Process Group
4 Manage Stakeholder Expectations Execution Process Group
5 Report Performance Monitoring & ControlProcess Group
Project communication Management includes the processes required toensure timely and appropriate generation, collection, distribution, storage andultimate disposition of project information.
170
Identify Stakeholder
Identify Stakeholder is the process of identifying all people or Organizationsimpacted by the Project and documenting relevant information regarding theirinterests, involvement and impact on project success.
InputsProject CharterProcurement DocumentsEnterprise Environmental factorsOrganizational Process Assets
Tools & TechniquesStakeholder AnalysisExpert Judgment
OutputsStakeholder RegisterStakeholder management strategy
171
Plan Communications
Plan communication is the process of determining the project stakeholderinformation needs and defining a communication approach.
InputsStakeholder RegisterStakeholder Management StrategyEnterprise Environmental FactorsOrganizational Process Assets
Tools & TechniquesCommunication Requirement AnalysisCommunication TechnologyCommunication Methods
OutputsCommunication Management Plan
172
Distribute Information
Distribute Information is the process of making relevant informationavailable to project stakeholders as planned.
InputsProject Management PlanPerformance ReportsOrganization Process Assets
Tools & TechniquesCommunication MethodsInformation Distribution Tools
OutputsOrganization Process Assets Update
173
Manage Stakeholder Expectations
Manage stakeholder expectations is the process of communicating andworking with stakeholders to meet their needs and addressing issues as theyoccur.
InputsStakeholder RegisterStakeholder management strategyProject Management PlanIssue logChange logOrganization Process Assets
Tools & TechniquesCommunication MethodsInterpersonal skillsManagement skills
OutputsOrganization Process Assets UpdateChange RequestProject Management Plan Updates
174
Report Performance
Report Performance is the process of collecting and distributingperformance information, including status reports, progress measurementsand forecasts.
InputsProject Management PlanWork performance InformationWork performance MeasurementsBudget forecastsOrganization Process Assets
Tools & TechniquesVariance AnalysisForecasting methodsCommunication MethodsReporting Systems
OutputsPerformance ReportsOrganization Process Assets UpdateChange Request
175
Quiz‐1
1. As a Project Manager, you have a problem with a team member’sperformance. Which is the best way of communicating this problem withthe team member?A. Informal VerbalB. Formal VerbalC. Formal WrittenD. Informal Written
2. Lessons Learnt are best completed by whom?A. Project ManagerB. TeamC. CustomerD. Stakeholders
176
Quiz‐2
3. As a Project Manager, you have team working for you across 5 differentcountries. What is the best communication method that you should follow.A. Informal WrittenB. Informal VerbalC. Formal WrittenD. Formal Verbal
4. You were asked to sit as an observer in another project’s status reviewmeeting. You observed that everyone present in the meeting is talking atthe same time about different issues. The whole meeting is in a chaos. Whatdo you think was not done?A. Meeting Agenda was not set.B. The right people were not invited for the meetingC. The Project Manager was ineffectiveD. There were cultural issues with people with different background
attending the meeting
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Quiz‐3
5. When shall you go for Formal Written communication with the Customer?A. When customers ask for work not covered in contractB. When customer reports defectC. When customer compliments a team member for good workD. When customers asks for weekly status report to be resent.
6. What's the use of creating Lessons learnt database.A. Should be done as it’s a company policyB. It serves as historical record for future projectsC. Project Manager can show this as his accomplishmentD. All the above
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Answer Explanation‐1
Answer 1: The right answer in this case is A. Informal Verbal. If this does notsolve the problem, than you should for Formal Written communication.
Answer 4: Remember, you need to select the Best answer among the availableanswer. In this case, the right answer is A. Meeting Agenda was not set.People were talking about various issues, so meeting agenda must not havebeen set.
Answer 2: If you think Project Manager alone should prepare lesson learnt, youare wrong. The right answer is D. Stakeholders. Since Stakeholders as a terminclude everyone.
Answer 3: You should look for many such practice questions. In this case, theright answer is C. Formal Written. Communication is a big issues, if teammembers are geographically distributed and its always a good practice touse formal written communication in such cases.
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Answer Explanation‐1
Answer 5: This should have been an easy question for you. The right answer is A.When customers ask for work not covered in contract. You must have recordfor any extra work done, as you might have to bill for that work and get paidfor it.
Answer 6: The right answer is B. It serves as historical record for future projectsThis must have been an easy question as all other options are obviously wrong.
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Lesson 11
Project Risk Management
Based on PMBOK Version 4
181
Agenda
What is RiskHow is risk calculatedRisk CategorizationDecision TreeRisk ReserveThe Risk Management Knowledge Area.
Plan Risk ManagementIdentify RiskPerform Qualitative Risk AnalysisPerform Quantitative Risk AnalysisPlan Risk ResponsesMonitor & Control Risks
Quiz
182
What is Risk ?
Risk is an uncertainty that can positively or negatively impact a Project.
Example: Positive UncertaintiesYou ordered a new software which is
cheaper than your old softwarebecause of budget constraint..but thenew Software turns out to be moreefficient.
Example: Negative UncertaintiesGovernment mandates a compulsory
holiday due to Swine flue attack. Theproject delivery gets delayed.
Positive uncertainties are also called Opportunities or Good Risks.One who does not take risk is called “Risk Averse”.Risk Tolerance: means whether the risk can be tolerated or not. For example, a
company might have a policy that any risk that impacts their customer relationship willnot be tolerated.Risk Threshold: This means the amount of risk that is acceptable. For example, a
company may have a policy that a risk that increases the project cost by 10% or less isOK, but not more than that.
183
How is Risk Calculated?
Risk = Probability * Impact
Work Package Probability Impact Monetary Value
X 25% $10,000 $2,500
Y 40% $2,000 $800
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Risk Categorization
External: Regulatory, governmentalInternal: Time, cost, scope, people, planningTechnical: Requirements, Technology, QualityProject Management: Estimating, Planning
Schedule Risk: ?Cost Risk: ?Quality Risk: ?Scope Risk: Looks like you have not understood the work properly and you might
have to redo the whole thing!Resource Risk: CEO has asked our Tech Architect, to work on another project. In
such cases, who would make design decision on our project?
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Decision Tree: Which is more riskier ?
Failure :Probability=10%Impact= $15,000
Decision: To buya new Car or oldCar
Initial cost of buying new car= $20,000
Initial cost of buying old car= $15,000
Pass :Probability=90%Impact= $000
Failure :Probability=70%Impact= $10,000
Pass :Probability=30%Impact= $000
New Car $20,000+$15,000*10%= $21,500
Old Car $15,000+$10,000*.7= $22,000
186
187
Risk Reserve
Project Risk Management Processes
S.No. Project Risk Management Processes Done During
1 Plan Risk Management Planning Process Group
2 Identify Risks Planning Process Group
3 Perform Qualitative Risk Analysis Planning Process Group
4 Perform Quantitative Risk Analysis Planning Process Group
5 Plan Risk Responses Planning Process Group
6 Monitor and Control Risks Monitoring & Control ProcessGroup
Project Risk Management includes the processes of conducting risk managementplanning, identification, analysis, response planning and Risk monitoring & controlon a Project.
The objective of Risk Management is to increase the probability and impact ofpositive events and decrease the probability and impact of negative events.
188
Plan Risk Management
Plan Risk Management is the process of defining how to conduct riskmanagement activities for a Project.
InputsProject Scope StatementProject Management PlanEnterprise Environmental FactorsOrganization Process Assets
Tools & TechniquesPlanning Meeting & Analysis
OutputsRisk Management Plan
189
Identify Risks
Identify Risks is the process of determining which risks may affect theproject and documenting their characteristics.
InputsRisk Management PlanActivity Cost EstimatesActivity Duration EstimatesScope BaselineProject Management PlanEnterprise Environmental factorsOrganizational Process Assets
Tools & TechniquesDocumentation ReviewsInformation Gathering TechniquesChecklist AnalysisAssumption AnalysisSWOT AnalysisExpert Judgment
OutputsRisk Register
190
Perform Qualitative Risk Analysis
Perform qualitative Risk Analysis is the process of prioritizing risks forfurther analysis or action by assessing their probability of occurrence andimpact.
InputsRisk RegisterRisk Management PlanOrganization Process Assets
Tools & TechniquesRisk Probability and Impact
AssessmentProbability and Impact MatrixRisk CategorizationRisk urgency AssessmentExpert Judgment
OutputsRisk Register updates
191
Perform Quantitative Risk Analysis
Perform quantitative Risk Analysis is the process of numerically analyzingthe effect of identified risks on overall project objectives.
InputsRisk RegisterRisk Management PlanOrganization Process Assets
Tools & TechniquesData Gathering and Representation
techniquesQuantitative Risk Analysis and
Modeling TechniquesExpert Judgment
OutputsRisk Register updates
192
Plan Risk Responses
Plan Risk Responses is the process of developing options and actions toenhance opportunities and to reduce threats to project objectives.
InputsRisk RegisterRisk Management Plan
Tools & TechniquesStrategies for negative risks
AvoidTransferMitigateAccept
Strategies for positive risksExploitShareEnhanceAccept
OutputsRisk Register updates
Residual RisksContingency PlansRisk Response OwnerReserves
193
Monitor and Control Risks
Monitor and Control Risk is the process of implementing risk response plans,tracking identified risks, monitoring residual risks, identifying new risks and evaluatingrisk process effectiveness throughout the project.
InputsRisk RegisterRisk Management PlanPerformance Reports
Tools & TechniquesRisk Re‐assessmentRisk AuditsVariance and Trend AnalysisReserve AnalysisStatus Meetings
OutputsRisk Register updatesCorrective and Preventive ActionOrganization Process Asset Updates
194
Quiz‐1
1. Purchasing Insurance cover for your project equipment is a example ofwhat?A. TransferB. MitigationC. AcceptanceD. Avoidance
2. You have been assigned as the Project Manager of a new e‐Business Project.There appears to be many risk in the project but no body has evaluatedthem to assess the range of possible outcomes. According to you, what wasnot done?A. Risk IdentificationB. Risk Response PlanningC. Risk Management PlanningD. Risk Register not updated
195
Quiz‐2
3. During Risk Response Planning, you identified few new Risks..what shouldyou do?A. Just document as contingency reserve would take care of itB. Follow the Risk Management Processes of calculating risk probability
and impactC. Ask for increasing the contingency reserve to take care of these new
risksD. None of the Above
4. During Project Execution you encountered a major problem. What shouldyou do?A. Work towards solving the ProblemB. Inform your Manager about itC. Try to identify how this problem was not identified earlierD. Do something to ensure that nobody gets to know of this problem
196
Quiz‐3
5. You are executing a Project when the customer asks for a change that’s goingto increase the schedule risk. What should you do first?A. Go ahead and accept the changeB. Inform the customer that project would get delayedC. Analyze the impact of the change with your teamD. Inform your manager about customer request
197
Answer Explanation‐1
Answer 1: The right answer in this case is A. Transfer. You transferred your riskto the Insurance company.
Answer 2: The right answer is C. Risk Management PlanningI hope this was an easy question for you.
Answer 3: The right answer is B. Follow the Risk Management Processes ofcalculating risk probability and impact. At any stage, when new risks areidentified, you should follow the risk management process. Once the riskidentification is done, the next step is analyzing the probability and impactof the risk.
198
Answer Explanation‐1
Answer 5: The right answer is C. Analyze the impact of the change with yourteam. This is the first thing that you should do, because unless you know theimpact, you will really not be sure on what should get communicated toeither your manager or to the customer.
Answer 4: The right answer is A. Work towards solving the Problem. Wheneverany problems happens on the project, as a certified project manager, youshould deal with the problem and solve it.
199
Lesson 12
Project Procurement Management
Based on PMBOK Version 4
200
Agenda
What is a ContractCentralized vs. Decentralized contracting Different Types of ContractKey terms in Procurement ManagementThe Procurement Management Knowledge Area.
Plan ProcurementsConduct ProcurementsAdminister ProcurementsClose Procurements
Quiz
201
What is a Contract ?
A contract represents a mutually binding agreement that obligates the sellerto provide the specified products, service or results and obligates the buyer toprovide the monetary or other valuable consideration.
Important Points you should know aboutcontract:Contracts should be formalContract is a legally binding documentContract must be in writingIf some thing is not written in contract, it canbe done only by issuing a change requestChanges to contract should be signed bothby the buyer and the seller
Who is responsible for creatingand managing contracts?
Contract Manager
Contract Manager is also calledProcurement Manager,Procurement Officer orContract Officer.
202
Centralized vs. Decentralized Contracting
In centralized contracting, a single contract manager handles multiple projects, whereas in Decentralized contracting, a contract manager is assigned to the Project full time,and reports to the Project Manager.
Advantages Disadvantages
Increased expertise in Contracting Difficult to get contracting help as the person may be busy in multiple projects.
Standardized company practices
Advantages Disadvantages
More loyalty to the Project Duplication of expertise.
Easier access to contracting experience. Less standardization of contractingpractices from one project to another.
Centralized
Decentralized
203
Different Types of Contract
Contract Types Details
Cost Reimbursable (CR)
Example: Cost plus a fee of $50,000
Cost plus Fee (CPF)Cost plus Percentage of Costs (CPPC)Cost plus Fixed Fee (CPFF)
Time and Material (T&M)
Example: $25 per hour + material cost.
Generally used for small amount
Fixed Price (FP) Fixed Price Incentive Fee (FPIF)
What are the advantages and disadvantages of each type?
204
Advantages and Disadvantages of contract types
Advantages Disadvantages
Less costly than Fixed Price, becauseseller does not have to account for theirrisk.
Requires auditing all the seller invoicesand thus increases buyer efforts.
Such contracts are simple to draft. Seller has less incentive to control cost,and hence such contracts are inefficient.
Advantages Disadvantages
Seller has strong incentive to controlcost and hence these contract are efficient.
Seller may under quote initially and later try to make high margins on CRs
Requires less effort by buyer to managecontract.
Not having a proper SOW can result inseller not providing some of thedeliverables.
Cost Reimbursable
Fixed Price
205
Advantages and Disadvantages of contract types…
Time and Material
Advantages Disadvantages
Easy to create Seller has no incentive to control cost
Good for resource augmentation kind of assignment
Requires monitoring of daily output
Good for small projects only
206
Key Terms in Procurement Management
RFQ: Request for Quotation RFP: Request for ProposalRFI: Request for InformationRFB: Request for Bids
PO: Purchase Order:SOW: Statement of WorkQuotation
NDA: Non disclosure AgreementLOI: Letter of IntentT&C: Terms and Conditions
207
Project Procurement Management Processes
S.No. Project Procurement Management Process
Done During
1 Plan Procurements Planning Process Group
2 Conduct Procurements Executing Process Group
3 Administer Procurements Monitoring & ControlProcess Group
4 Close Procurements Closing Process Group
Project Procurement Management includes the processes necessary topurchase or acquire products, services or results needed from outside theproject team.
208
Plan Procurements
Plan Procurement is the process of documenting project purchasing decisions,specifying the approach and identifying potential sellers.
InputsScope BaselineRisk RegisterActivity Resource RequirementsActivity Cost EstimatesProject ScheduleEnterprise Environmental FactorsOrganization Process Asset
Tools & TechniquesMake or buy AnalysisExpert JudgmentContract Types
OutputsProcurement Management PlanProcurement Statement of WorkMake or buy decisionProcurement DocumentsSource Selection Criteria
209
Conduct Procurements
Conduct Procurements is the process of obtaining seller responses,selecting a seller and awarding a contract.
InputsProject Management PlanProcurement DocumentsSource Selection CriteriaQualified Seller ListSeller ProposalsOrganization Process Asset
Tools & TechniquesBidder ConferenceProposal Evaluation TechniquesIndependent EstimatesExpert JudgmentsAdvertisingInternet SearchProcurement Negotiation
OutputsSelected SellerProcurement Contract
Award
210
Administer Procurement
Administer Procurements is the process of managing procurementrelationships, monitoring contract performance and making changes andcorrections as needed.
InputsProcurement DocumentsProject Management PlanContractPerformance ReportsApproved Change RequestsWork Performance Information
Tools & TechniquesContract Change Control SystemProcurement Performance ReviewsInspection and AuditsPayment SystemsClaims Administration
OutputsProcurement DocumentationProject Management Plan UpdateChange Request
211
Close Procurements
Close Procurement is the process of completing each Project Procurement.
InputsProject Management PlanProcurement Documentation
Tools & TechniquesProcurement AuditsNegotiated Settlements
OutputsClosed ProcurementsOrganization Process Assets Updates
212
Quiz‐1
1. What is the Primary Objective of Negotiation?A. Find a win‐win proposition for both partiesB. Get the best dealC. Define the exact responsibility of each partyD. Clarify the contract scope
2. You have to fast track your project to meet the schedule deadline and henceyou decide to use your Software Development Vendor for developing theeLearning content as well, without going through the process of issuing theRFP and looking for the right vendor. What should be the main concern insuch scenario?A. Organization’s code of conduct violationB. The Vendor QualificationC. Too much dependence on same vendorD. None of the above
213
Quiz‐2
3. You have been asked as a Project Manager to assist the contract manager indrafting the contract of a large project with limited scope clarity. What typeof contract would you suggest so that your Organization does not make anyfinancial losses?A. Times and MaterialB. Fixed FeeC. Cost Plus Fixed FeeD. Cost plus percentage of Cost
4. How is contract closure different than administrative closure.A. Contract closure involves customer as wellB. Contract closure is not mandatoryC. Contract closure can be done many a times in a contractD. Contract Closure is done before Administrative Closure
214
Quiz‐3
5. A customer asked you to work on a contract scope of work for 6 months andcome back to him only after 6 months when the work is over. As a ProjectManager of the Vendor Organization, what should you do?
A. Complete the work as Requested but keep verifying scope with thecustomer
B. Meet the customer at the end of six month with deliverablesC. Ask your Sr. management to check if the customer is genuineD. Complete the work and also keep a written record that customer has
asked not to contact
215
Answer Explanation‐1
Answer 1: The right answer in this case is A. Find a win‐win proposition forboth parties.. Remember, only a win‐win contract can be long term.
Answer 2: The right answer is B. The Vendor Qualification. The Software solutionvendor might not be the right vendor to work on eLearning as well.
Answer 3: The right answer is C. Cost Plus Fixed Fee. Please note that Time andMaterial type of contract is best suited for the smaller projects.
216
Answer Explanation‐1
Answer 5: The right answer is A. Complete the work as Requested but keepverifying scope with the customer. Even though customer has requested notto contact, but you should keep verifying what you are doing to ensure thatthere is no gap in understanding the requirement.
Answer 4: The right answer is D. Contract Closure is done before AdministrativeClosure. All other options are wrong including Option A. Customer may beinvolved in even Administrative closure (e.g., contributing to lesson learnt)
217
Lesson 13
Professional and Social Responsibility
Based on PMBOK Version 4
218
Agenda
Ensure Individual IntegrityContribute to Project Management Knowledge BaseEnhance self Professional competencePromote Stakeholder collaborationQuiz
219
Ensure Individual Integrity
1. Always create true report. Even if it shows the project in bad state.2. Follow the copy right rules. Never use unlicensed product.3. When a conflict does occur. Deal with it. Don’t shy away.4. Don’t accept any kind of bribe.5. Treat everyone with respect.6. Always give more importance to project needs than personal gains.7. Always do the right thing and follow the right process.8. Never divulge company information to un‐authorized parties.9. Respect Intellectual property rights.10. Follow PMI’s code of Professional conduct. Refer it on PMI website.
220
Contribute to Project Management Knowledge Base
1. Share best practices learned on your project with other Project managers inyour Organization.
2. Mentor junior team members on Project Management related topics.3. Write or blog about Project Management. Participate in Project
Management discussions groups.4. Actively participate in analyzing past project data and come up with project
management related metrics to be used within the Organization.
221
Enhance Self Professional Competence
Q. Project Manager’s are busy managing Project, when do they do this?A. The fact that you are reading this tutorial shows that you care about your
professional competence!
Few things that as a Project Manager you can do:
1. Analyze your strength and weakness.2. Look for a Senior Project Manager to mentor you on your weak areas.3. Actively look for applying Project Management Knowledge on your projects.4. Read Project Management books for new ideas or techniques.5. Discuss with other project managers the challenges you face on your projects.
222
Promote Stakeholder Collaboration
Q. Why do the Project Manager needs to promote Stakeholder collaboration?A. So that Stakeholders are aware of the true benefits of the Project and help in
whatever way they can to make the project successful.
This is what Project Manager can do for Stakeholder collaboration:
1. Resolve Competing Interest.2. Deal with conflicting scenarios. Take charge!3. Respect cultural differences. More true when projects occur across geographies.4. Keep Stakeholders always informed about the true picture of the Project.
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Quiz‐1
1. You were about to send a deliverable to your customer and that point yourealized that there is one defect, which customer would not notice and istechnically against the contract, but still is a defect. What would you do?A. Discuss with the customerB. Go ahead and send the deliverableC. Inform your Sr. management and seek their guidanceD. Extend the Project deliverable timeframe
2. You have to catch a flight to submit a tender document for a strategic projectfor your company. You are running late for the flight, but there is a possibilitythat you can over speed and catch the flight. What would you do?A. Over speed and catch the flightB. Don’t over speed as its dangerous and against lawC. Ask your Manager for guidanceD. None of the above
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Quiz‐2
3. You were sent by your company to execute a Project in a foreign country. Allyour equipments are detained at the airport and airport authority asks for afee to release the equipment. You are getting late for your project. Whatwould you do?A. Don’t pay as it’s a bribeB. Establish whether such payment is legal in that countryC. Pay and get the money from management reserveD. Ask your boss for the next step
4. You were competing with another colleague of yours to become the project manager of a prestigious new project in the organization, but unfortunately your colleagues gets that assignment. Later he comes to you for some documentation. What would you do.A. Don’t give him the document. Create problems for him.B. Give him the document and also co‐operate with him by all possible
meansC. Just avoid him and let him keep coming back to youD. Tell him that the document is not all useful and you have lost it
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Quiz‐2
5. There was a pre‐scheduled project status review meet and one of your teamLead sends his report just an hour before. You find too many issues with thereport. What would you do?A. Let him present the report and thrash him in front of everyone to teach
him a lessonB. Cancel the meeting and prepare the report yourselfC. Postpone the meeting and ask him to fix the issuesD. Do nothing..just wait and see what happens.
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Answer Explanation‐1
Answer 1: The right answer in this case is A. Discuss with the customer.. Itsethically not right to send a deliverable with defect to the customer. In thepresent case, the best thing is to speak to the customer and if he is ok,send the deliverable.
Answer 2: The right answer is B. Don’t over speed as its dangerous and againstlaw . Remember PMI is against violating any applicable law, including trafficrules.
Answer 3: The right answer is B. Establish whether such payment is legal in thatcompany. Before jumping the gun, establish whether what they are asking isa fee or a bribe. If it’s a bribe, don’t pay. If it’s a airport usage fee, please goahead and pay.
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Answer Explanation‐1
Answer 5: The right answer is C. Postpone the meeting and ask him to fix theissues. There is no point wasting everyone’s time with a wrong report. Also,its not a good idea to scold a team member in front of other. Remember, youneed to respect everyone including your sub‐ordinates.
Answer 4: The right answer is B. Give him the document and also co‐operate himby all possible means. Once your colleague is selected as a Project Manager,you should co‐operate with him by all means.
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Thank You
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