THE PROJECT DEFINITION WIZARD. Project Management processes, terms and definitions. Contents

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2 Contents Welcome to the Project Management Terms and Definitions Wizard!... 3 General Project Management Definitions... 4 Agile and Scrum Starting Up a Project (pre-project preparation) Directing a Project (Senior Management, Sponsor / Governance) Initiating a Project (Creating the plans) Controlling a Stage (project execution by the project manager) Managing a stage Boundary (preparing for the end of a project stage/phase) Managing Product Delivery (creation of the deliverables by specialist team) Closing a Project (controlled project shutdown) Summary and Close Page 2

3 Welcome to the Project Management Terms and Definitions Wizard! Becoming very familiar with the terminology and definitions within a typical project is vital, and particularly relevant for those studying to gain an accredited project management qualification (including the PRINCE Methodology) A great way I teach my students to recall these definitions, is to learn them by remembering the project management process in which they are first used or created, or if more relevant, the process in which they are most used or owned. That said, there are some definitions that are general across the whole project. Another major set of definitions occur within Agile and Scrum frameworks, so I have created a separate section for those also. So, let s you and I cover general definitions first! Page 3

4 General Project Management Definitions activity A process, function or task that occurs over time, has recognizable results and is managed. It is usually defined as part of a process or plan. asset An item, thing or entity that has potential or actual value to an organization [ISO 000:014]. assumption A statement that is taken as being true for the purposes of planning, but which could change later. An assumption is made where some facts are not yet known or decided and is usually reserved for matters of such significance that, if they change or turn out not to be true, there will need to be considerable replanning. centre of excellence A corporate coordinating function for portfolios, programmes and projects providing standards, consistency of methods and processes, knowledge management, assurance and training. consensus A decision that a group agrees to support. It is usually achieved by discussing the relevant issues and options. constraint A financial, schedule, risk or resource-based limitation on a project. contingency reserve Allocation of resources to address possible adverse events. contract A legal, mutually-binding document between buyer and seller covering the terms and conditions by which the work must be completed. contract administration Managing the relationship with the seller and overseeing that all elements of the contract are met. corporate, programme management or customer standards These are overarching standards to which the project must adhere. They will influence the four project approaches (communication management, change control, quality management and risk management) and the project controls. cost plus fixed fee contract (CPFC) A cost-reimbursable contract where the buyer pays for costs defined in the contract plus an additional defined amount (fixed fee). Page 4

5 cost plus incentive fee contract (CPIF) A cost-reimbursable contract where the buyer pays for costs defined in the contract plus an additional amount if the seller meets performance criteria as outlined in the contract. cost plus percentage of cost contract (CPPC) A cost-reimbursable contract where the buyer pays for the costs defined in the contract plus an additional percentage of the costs if the seller meets performance criteria as outlined in the contract. cost reimbursable contract A contract that provides for payment to the seller for actual costs incurred. customer The person or group who commissioned the work and will benefit from the end results. The recipient of service or product that the project created. Also known as client in some organizations. decomposition Breaking the project deliverables into smaller, more manageable components. dedicated project time The amount of time that a resource is available to the project taking into account the resource s nonproject activities. deliverable Outcome or product that is produced to complete a work package or project. dependency The relationship between project activities. dependency (plan) A dependency means that one activity is dependent on another. There are at least two types of dependency relevant to a project: internal and external. An internal dependency is one between two project activities. In these circumstances the project team has control over the dependency. An external dependency is one between a project activity and a nonproject activity, where non-project activities are undertaken by people who are not part of the project team. In these circumstances the project team does not have complete control over the dependency. duration The length of time needed to complete an activity. decomposition Breaking the project deliverables into smaller, more manageable components. dedicated project time The amount of time that a resource is available to the project taking into account the resource s nonproject activities. Page 5

6 deliverable Outcome or product that is produced to complete a work package or project. dependency The relationship between project activities. duration The length of time needed to complete an activity. early finish date The earliest date that an activity may be completed in the activity sequence. early start date The earliest date that an activity can be started in the activity sequence earned value analysis The measurement of actual project status versus expected project status as of the measurement date. embedding (a methodology such as PRINCE2) The act of making something an integral part of a bigger whole. Embedding is what an organization needs to do to adopt PRINCE2 as its corporate project management method and encourage its widespread use. feasibility study A study undertaken to determine whether a project is viable. fixed price contract (FPC) A contract where work is performed or a product is provided for a predetermined price. fixed price incentive (FPI) fee contract A fixed price contract (see above) that contains incentives for meeting or exceeding predetermined specifications. functional manager The person responsible for the activities of a specific functional department. functional organization An organizational structure that groups staff hierarchically by area of specialty. functional requirements Conditions that the product must meet to support how the end users will interact with the product. governance (general) The overall structure of the roles, responsibilities and relationships between the project decision makers and the organization s long-term operational decision makers. Page 6

7 governance (corporate) The ongoing activity of maintaining a sound system of internal control by which the directors and officers of an organization ensure that effective management systems, including financial monitoring and control systems, have been put in place to protect assets, earning capacity and the reputation of the organization. governance (project) Those areas of corporate governance that are specifically related to project activities. Effective governance of project management ensures that an organization's project portfolio is aligned with the organization's objectives, is delivered efficiently and is sustainable. host site A location where project work is being undertaken (e.g. an office or construction site). key performance indicator (KPI) A measure of performance that is used to help an organization define and evaluate how successful it is in making progress towards its organizational objectives. management product A product that will be required as part of managing the project, and establishing and maintaining quality (e.g. highlight report, end stage report). The management products are constant, whatever the type of project, and can be used as described, or with any relevant modifications, for all projects. There are three types of management product: baselines, records and reports. matrix organization An organization where project team members answer to both a functional manager and a project manager. maturity A measure of the reliability, efficiency and effectiveness of a process, function, organization, etc. The most mature processes and functions are formally aligned with business objectives and strategy and are supported by a framework for continual improvement. maturity model A method of assessing organizational capability in a given area of skill. milestone A significant event in a plan's schedule, such as completion of key work packages, a development step or a management stage. The completion of a significant event or major deliverable used to measure project progress. PRINCE2 principles The guiding obligations for good project management practice that form the basis of a project being managed using PRINCE2. Page 7

8 PRINCE2 project A project that applies the PRINCE2 principles. procedure A series of actions for a particular aspect of project management established specifically for the project (e.g. a risk management procedure). process A structured set of activities designed to accomplish a specific objective. A process takes one or more defined inputs and turns them into defined outputs. programme A temporary, flexible organization structure created to coordinate, direct and oversee the implementation of a set of related projects and activities to deliver outcomes and benefits related to the organization's strategic objectives. A programme is likely to have a life that spans several years. project A temporary organization that is created for the purpose of delivering one or more business products according to an agreed business case. A temporary endeavor with defined start and end dates that creates a unique product or service. project champion An individual, who believes in, understands and supports the project. project management office (PMO) A group established by an organization to maintain standards, processes and procedures for managing projects throughout the organization. Projectized organization An organizational structure that is focused on projects. The project manager has authority over the resources assigned to the project. proof of concept A project that attempts to prove whether an activity or an idea can be accomplished. project lifecycle The period from initiation of a project to the acceptance of the project product. The management phases of a project which includes: initiation and scope definition; planning; execution, control and coordination; closure, acceptance and support. project management The planning, delegating, monitoring and control of all aspects of the project, and the motivation of those involved, to achieve the project objectives within the expected performance targets for time, cost, quality, scope, benefits and risk. The process of initiating, planning, executing, monitoring, controlling and closing out a project by applying skills, knowledge, tools and techniques to fulfill requirements. Page 8

9 project manager The person responsible for providing leadership to the team and managing the project and its associated work to ensure that expected results are obtained. project management plan An overall project plan that contains all of the project management-related documents created during the phases of initiation and scope definition and planning. project office A temporary office set up to support the delivery of a specific change initiative being delivered as a project. If used, the project office undertakes the responsibility of the project support role. quality The degree to which a set of inherent characteristics of a product, service, process, person, organization, system or resource fulfils requirements. quality management The coordinated activities to direct and control an organization with regard to quality. quality management system The complete set of quality standards, procedures and responsibilities for an organization or specific entity (site, business unit, etc.) within that organization. records Dynamic management products that maintain information regarding project progress. remote team Individuals in different locations working on the same project and collaborating electronically or by telephone. request for proposal (RFP) A document provided to a prospective vendor requesting a proposal for work and or products to be provided. Also known as Invitation for Bid (IFB). request for quote (RFQ) A document that solicits quotes or bids from prospective sellers. responsible authority The person or group commissioning the project (typically corporate, programme management or the customer) who has the authority to commit resources and funds on behalf of the commissioning organization. risk management The systematic application of principles, approaches and processes to the tasks of identifying and assessing risks, planning and implementing risk responses and communicating risk management activities with stakeholders. Page 9

10 schedule The timeline for the project including start and end dates for project activities. schedule control Managing and controlling changes to the schedule. solicitation Obtaining bids and proposals from vendors. sponsor An executive in the organization who can assign resources and can make final decisions on the project. stakeholder Any individual, group or organization that can affect, be affected by or perceive itself to be affected by, an initiative (i.e. a programme, project, activity or risk). tailoring Adapting a method or process to suit the situation in which it will be used. technical requirements The product characteristics that are required for the product to perform the functional requirements. theme An aspect of project management that needs to be continually addressed, and that requires specific treatment for the PRINCE2 processes to be effective. threat An uncertain event that could have a negative impact on objectives or benefits. time and material contract A contract based on a unit rate such as an hourly wage plus reimbursement for materials or other expenses incurred. triple constraint The link between the project constraints of time, cost and quality. tolerance The permissible deviation above and below a plan's target for time and cost without escalating the deviation to the next level of management. There may also be tolerance levels for quality, scope, benefits and risk. Tolerance is applied at project, management stage and team levels. tranche A programme management term describing a group of projects structured around distinct step changes in capability and benefit delivery. Page 10

11 transformation A distinct change to the way an organization conducts all or part of its business. trigger An event or decision that triggers a PRINCE process to begin. virtual team Individuals in different reporting structures, departments, locations or organizations working together on the same project. war room A room where team members can work on project activities with a minimum of external interference, which helps create a project identity in matrix organizations. waterfall method A development approach that is linear and sequential, with distinct goals for each phase of development. After a phase of development has been completed, the development proceeds to the next phase and earlier phases are not revisited (hence the analogy that water flowing down a mountain cannot go back). Page 11

12 Agile and Scrum agile and agile methods A broad term for a collection of behaviours, frameworks, concepts and techniques that go together to enable teams and individuals to work in an agile way that is typified by collaboration, prioritization, iterative and incremental delivery, and timeboxing. There are several specific methods (or frameworks) that are classed as agile, such as Scrum and Kanban. PRINCE is completely compatible with working in an agile way. backlog A list of new features for a product. The list may be made up of user stories which are structured in a way that describes who wants the feature and why. Page 12

13 burn chart A technique for showing progress (e.g. such as with a timebox), where work that is completed and work still to do are shown with one or more lines that are updated regularly or daily. epic A high-level definition of a requirement that has not been sufficiently refined or understood yet. Eventually, an epic will be refined and broken down into several user stories or requirements. information radiator A general term used to describe the use of walls or boards containing information that can be readily accessed by people working on the project. It can contain any information, although it would typically show such things as work to do and how work is progressing. Scrum An iterative, timeboxed approach to product delivery that is described as 'a framework within which people can address complex adaptive problems, while productively and creatively delivering products of the highest possible value' (Schwaber and Sutherland). Scrum master A Scrum role that is responsible for ensuring Scrum is understood and enacted and that the Scrum team adheres to Scrum theory, practice and rules. sprint A fixed timeframe (typically of -4 weeks) for creating selected features from the backlog. timebox A finite period of time when work is carried out to achieve a goal or meet an objective. The deadline should not be moved, as the method of managing a timebox is to prioritize the work inside it. At a low level a timebox will be a matter of days or weeks (e.g. a sprint). Higher-level timeboxes act as aggregated timeboxes and contain lower-level timeboxes (e.g. stages). user story A tool used to write a requirement in the form of who, what and why. Page 13

14 Starting Up a Project (pre-project preparation) acceptance criteria A prioritized list of criteria that the project product must meet before the customer will accept it (i.e. measurable definitions of the attributes required for the set of products to be acceptable to key stakeholders). acceptance test A group of end-users work with the final product to test it for unidentified issues that may appear during routine use. Also known as User Acceptance Testing (UAT). assumptions Factors that are believed to be true and affect project planning. Assumptions may impact risk and should always be documented and validated. business requirements The conditions that the product must meet to support the high-level processes and needs of the business. business value The positive impact for the business that will be achieved with completion of the project (e.g. generate revenue, customer satisfaction, etc.). Page 14

15 cost-benefit analysis A benefit measurement method that weighs expected project costs against expected project benefits. customer's quality expectations A statement about the quality expected from the project product, captured in the project product description. daily log A log used to record problems/concerns that can be handled by the project manager informally. opportunity A chance to increase project benefits. opportunity cost The opportunity given up by choosing to do one project over another one. project approach A description of the way in which the work of the project is to be approached. For example, are we building a product from scratch or buying in a product that already exists? project brief A statement that describes the purpose, cost, time and performance requirements, and constraints for a project. It is created before the project begins, during the starting up a project process, and is used during the initiating a project process to create the PID and its components. It is superseded by the PID and not maintained. project manager The person given the authority and responsibility to manage the project on a day-to-day basis to deliver the required products within the constraints agreed with the project board. project mandate An external product generated by the authority commissioning the project that forms the trigger for starting up a project. project product description A special type of product description used to gain agreement from the user on the project's scope and requirements, to define the customer's quality expectations and the acceptance criteria for the project. project selection Determining which proposed projects should move forward. requirements A set of measurable customer wants and desires. See functional requirements, business requirements and technical requirements. Page 15

16 start-up The pre-project activities undertaken by the executive and the project manager to produce the outline business case, project brief and initiation stage plan. Page 16

17 Directing a Project (Senior Management, Sponsor / Governance) approval The formal confirmation that a product is complete and meets its requirements (less any concessions) as defined by its product description. approver The person or group (e.g. a project board) who is identified as qualified and authorized to approve a (management or specialist) product as being complete and fit for purpose. assurance All the systematic actions necessary to provide confidence that the target (e.g. system, process, organization, programme, project, outcome, benefit, capability, product output or deliverable) is appropriate. Appropriateness might be defined subjectively or objectively in different circumstances. The implication is that assurance will have a level of independence from that which is being assured. See also project assurance; quality assurance. authority The right to allocate resources and make decisions (applies to project, management stage and team levels). Page 17

18 authorization The point at which an authority is granted. benefit The measurable improvement resulting from an outcome perceived as an advantage by one or more stakeholders. benefits management approach An approach that defines the benefits management actions and benefits reviews that will be put in place to ensure that the project's outcomes are achieved and to confirm that the project's benefits are realized. benefits tolerance The permissible deviation in the expected benefit that is allowed before the deviation needs to be escalated to the next level of management. Benefits tolerance is documented in the business case. See also tolerance. business case The justification for an organizational activity (project), which typically contains timescales, costs, benefits and risks, and against which continuing viability is tested. change authority A person or group to which the project board may delegate responsibility for the consideration of requests for change or off-specifications. The change authority may be given a change budget and can approve changes within that budget. concession An off-specification that is accepted by the project board without corrective action. dis-benefit A measurable decline resulting from an outcome perceived as negative by one or more stakeholders, which reduces one or more organizational objective(s). exception assessment A review by the project board to approve or reject an exception plan. executive The individual with overall responsibility for ensuring that a project meets its objectives and delivers the projected benefits. This individual should ensure that the project maintains its business focus, that it has clear authority, and that the work, including risks, is actively managed. The executive is the chair of the project board. He or she represents the customer and is responsible for the business case. management stage The section of a project that the project manager is managing on behalf of the project board at any one time, at the end of which the project board will wish to review progress to date, the state of the project plan, the business case and risks and the next stage plan, in order to decide whether to continue with the project. Page 18

19 outcome The result of change, normally affecting real-world behaviour and/or circumstances. Outcomes are desired when a change is conceived. They are achieved as a result of the activities undertaken to effect the change. output A specialist product that is handed over to a user (or users). Note that management products are not outputs but are created solely for the purpose of managing the project. performance targets A plan's goals for time, cost, quality, scope, benefits and risk. portfolio The totality of an organization's investment (or segment thereof) in the changes required to achieve its strategic objectives. project assurance The project board's responsibilities to assure itself that the project is being conducted correctly. The project board members each have a specific area of focus for project assurance, namely business assurance for the executive, user assurance for the senior user(s), and supplier assurance for the senior supplier(s). project initiation notification Advice from the project board to inform all stakeholders and the host sites that the project is being initiated and to request any necessary logistical support (e.g. communication facilities, equipment and any project support) sufficient for the initiation stage. quality assurance An independent (of the project team) check that products will be fit for purpose or meet requirements. senior supplier The project board role that provides knowledge and experience of the main discipline(s) involved in the production of the project's deliverable(s). The senior supplier represents the supplier's interests within the project and provides supplier resources. senior user The project board role accountable for ensuring that user needs are specified correctly, and that the solution meets those needs. sponsor The main driving force behind a programme or project. PRINCE2 does not define a role for the sponsor, but the sponsor is most likely to be the executive on the project board, or the person who has appointed the executive. Page 19

20 supplier The person, group or groups responsible for the supply of the project's specialist products. user The person or group who will use one or more of the project's products. Page 20

21 Initiating a Project (Creating the plans) activity A specified piece of work that needs to be completed. An activity typically has an expected duration, cost and requires certain resources. Also known as task. activity definition Identification of the activities that must be performed to complete the product deliverables. activity duration estimating Estimating the number of work periods, in days or hours, needed to complete the project s activities. activity-on-arrow (AOA) A method of diagramming the sequence of activities in a project using arrows to represent activities and small circles (nodes) connecting the activities to represent relationships. Dummy activities may be included to show activities that are dependent on one another. This method has only finish-to-start relationships. Also known as Arrow Diagramming Method (ADM). activity-on-node (AON) A method of diagramming the sequence of activities in a project where rectangles (nodes) represent the activities and arrows represent the relationship between the activities. This method uses four types of dependency relationships: finish to start, start to start, finish to finish and start to finish. Also known as precedence diagramming method (PDM). Page 21

22 analogous estimating An estimating technique that uses historical project information to estimate the project duration of a similar project. Also known as top-down estimating. activity list A list of the defined activities that need to be completed for a project. activity sequencing Identifying activity dependency relationships (how activities affect each other) and determining the best order to perform the activities to complete the project. assignment The activities team members are responsible to complete. backward pass Calculation of the late start and the late finish dates for uncompleted activities by working backwards through the network diagram from the project s end date. Part of critical path method (CPM). bottom-up estimating An estimating technique where every activity is individually estimated and then added together to determine the total project estimate. bar chart A schedule that shows project activities with associated start and completion dates. Also known as a Gantt chart. baseline Represents the original approved plan for schedules, costs, etc. and is used to monitor and control ongoing project performance. Reference levels against which an entity is monitored and controlled. baseline management product A type of management product that defines aspects of the project and, when approved, is subject to change control. best practices A generally accepted set of standards for performing work. budget The amount of money allocated for a project. communications Relaying information so that all concerned parties have an equal understanding. communications management plan A plan that documents who will receive information about the project, what information they will receive, when they will receive it and how the information will be communicated. It also identifies the person who is responsible for providing the information. Page 22

23 communications planning The planning process to determine the communication requirements. Identifying who will need what information, when they will need it and how the information should be formatted and disseminated. configuration management The process to ensure the project meets the desired outcome. change control board A group of stakeholders responsible for reviewing and accepting or rejecting changes to the project. change control process A process that ensures changes to the project are identified, evaluated, approved, documented and managed. change management plan A plan that documents the process for managing changes to the project. change request A document that is submitted to request a change to any part of the project management plan after the plan was approved. change control approach A description of how and by whom the project's products will be controlled and protected. communication management approach A description of the means and frequency of communication between the project and its stakeholders. configuration item An entity that is subject to change control. The entity may be a component of a product, a product or a set of products in a release. configuration item record A record that describes the status, version and variant of a configuration item, and any details of important relationships between them. configuration management Technical and administrative activities concerned with the controlled change of a product. configuration management system The set of processes, tools and databases that are used to manage configuration data. Typically, a project will use the configuration management system of either the customer or supplier organization. cost estimating Estimating the cost of resources that will be required to complete each project activity. Page 23

24 critical path The longest path through all project activities (as represented in a network diagram) that determines the duration of the project. The activities on the critical path usually have zero float. critical path method (CPM) A technique used to determine the duration of a project by looking at the sequence of activities and their flexibility in scheduling. definitive estimate An estimating technique usually made during the planning phase that assigns a cost estimate range to each work package in the WBS. This estimate typically falls between -5% and +10% of the actual budget. Also known as bottom-up estimating. discretionary dependency A preferred order of sequencing project activities. dummy An arrow in an AOA diagram that does not represent any actual work but is used to show the relationship between two activities. effort The number or person hours or person days needed to complete an activity. effort estimate Calculation of the number of person hours or days needed to complete an activity. end user The person or group who will use the product produced by the project expert judgment Using subject matter experts to assist in decision making. external dependency A relationship between a project activity and a factor outside the scope of the project that influences the completion of that activity. finish-to-finish dependency When the completion of an activity is dependent on the completion of the preceding activity. finish-to-start dependency When the start of an activity is dependent on the completion of the previous activity. fixed cost A cost that remains constant regardless of a change in production. Page 24

25 fixed resources An amount of a resource (human, equipment, material) that cannot be changed. float The amount of time that the early start of an activity can be delayed without affecting the completion date of the project. Also known as slack time. flowchart A diagram showing the steps in a process or system from beginning to end. forecast A prediction of future project status. forward pass Calculation of the early start and early finish times for project activities by working forward through the network diagram. Part of the Critical Path Method (CPM). free float The amount of time that an activity can be delayed without affecting the early start of the next activity. gantt chart A schedule that shows project activities with associated start and completion dates. Also known as bar chart. historical information Records of past projects that are used to assist in planning future projects human resource management plan A plan that documents the project team members along with their roles, responsibilities and reporting structure and defines team development. human resource planning The process of planning and hiring the project team, outlining roles, responsibilities and reporting structure and defining team development. Initiation (general) Formal definition and authorization of a new project or continuation of an ongoing project. initiation stage The period from when the project board authorizes initiation to when it authorizes the project (or decides not to go ahead with it). The detailed planning and establishment of the project management infrastructure is covered by the initiating a project process. kickoff meeting A meeting held at the end of major planning activities for all stakeholders to provide an overview of the project and outline expectations, ensure a common understanding of the project and to build consensus and excitement about the project. Page 25

26 lag A mandatory delay between activities. late finish date The latest date an activity can be completed without delaying the completion of the entire project. late start date The latest date an activity can begin without affecting the completion of the entire project. lessons log An informal repository for lessons that apply to this project or future projects. log An informal repository managed by the project manager that does not require any agreement by the project board on its format and composition. PRINCE2 has two logs: the daily log and the lessons log. management reserve An amount of money set aside by senior management to cover future unforeseen costs. It is typically a percentage of the total project cost. mandatory dependency An activity that is dependent upon another activity. For example, a telephone pole must be put up before telephone wire can be strung. monte carlo technique A technique that uses computer simulations to assess potential risks. negative variance The negative number that results from comparing planned project results with actual project results. A negative variance in the project schedule indicates the project is behind schedule. A negative variance in the budget indicates the project is over budget. network diagram A method of determining the sequence of activities, including dependencies for a project. Types include the activity-on-node (AON), arrow diagramming method (ADM) and precedence diagramming method (PDM). order of magnitude estimate A high-level estimate usually made during the initiation phase that assigns a cost estimate range to the project based on a completed similar project. This estimate typically falls between - 25% and +75% of the actual budget. organizational planning Consists of defining team member responsibilities, roles, and reporting structure, and preparing the staffing management plan. Page 26

27 output The outcome or end result of a process. parametric estimating A mathematical model of estimating costs (e.g., cost per square foot). pareto chart A graph that is used to rank the importance of a problem by the frequency with which it occurs. planned value (PV) The budgeted cost of work during a specified time period. Also known as budgeted cost of work scheduled (BCWS). predecessor An activity that is on the same network diagram path and occurs before another activity. probability impact matrix A method of determining the severity of risk by looking at the probability of occurrence and impact on project objectives. procurement management plan A plan that documents what goods and services needed for the project will be acquired outside of the organization and outlines the process for acquiring the goods and services. phase A distinct stage of the project or lifecycle. There are typically four phases in a project management lifecycle: Initiation and scope definition; planning; execution, control and coordination; and closure, acceptance and support. procurement planning The process of determining which goods and services should be purchased or performed outside of the organization and outlines the details of what, how and when the goods should be acquired. product description An explanation of the major characteristics of the product including an explanation of why the product meets the business needs. Also known as high-level requirements. product life cycle The required phases to develop the product. For example, creation of a software product may follow a software development lifecycle that consists of requirements-gathering, design, development, testing and roll-out phases. program evaluation and review techniques (PERT) A weighted average time estimate of project duration using optimistic (O), pessimistic (P) and most likely (ML) estimates of project duration. Also known as three-point estimating. PERT = O + (4)ML + P Page 27

28 project charter A document that is created in the initiation phase that provides direction about the project s objectives and management and authorizes the project to begin. Also known as a project initiation document. project initiation documentation (PID) A logical set of documents that brings together the key information needed to start the project on a sound basis and that conveys the information to all concerned with the project. project management team The entire management structure of the project board, and the project manager, plus any team manager, project assurance and project support roles. project management team structure An organization chart showing the people assigned to the project management team roles to be used, and their delegation and reporting relationships. project plan A high-level plan showing the major products of the project, when they will be delivered and at what cost. An initial project plan is presented as part of the PID. This is revised as information on actual progress appears. It is a major control document for the project board to measure actual progress against expectations. project scope The work required to produce the product of the project. project product What the project must deliver in order to gain acceptance. project support An administrative role in the project management team. Project support can be in the form of advice and help with project management tools, guidance, administrative services such as filing, and the collection of actual data. project team members The people who perform the work associated with the project. quality management approach An approach defining the quality techniques and standards to be applied, and the various responsibilities for achieving the required quality levels, during a project. quantitative risk analysis Uses a mathematical approach to analyze the probability that risks will occur and the impact that risks have on the project. This information enables the risks to be prioritized. Techniques used for computing quantitative risk analysis include sensitivity analysis, decision tree analysis and Monte Carlo. Page 28

29 residual risk Risk that is still present after risk responses have been planned. responsibility assignment matrix (RAM) Ensures that all activities in the work breakdown structure (WBS) are assigned to a team member and that each member understands the roles and responsibilities that have been assigned to him or her. resource Anything needed to complete the project. May be people, equipment, facilities or money. resource leveling Scheduling resource usage to be the same for each time period (e.g. monthly). resource planning The process of defining the type and amount of resources needed to complete the project. return on investment (ROI) Determining whether the project outcomes will benefit the organization based on the resources used to complete the project. risk A potential event, occurrence or result that can have positive or negative consequences. risk acceptance A risk response that chooses to accept the consequences of the identified risk or the inability to identify another response strategy. risk assessment Identifying risks to the project and determining the affect the risks will have on the project. risk avoidance A risk response that eliminates the identified risk or protects the project from the risk. risk identification Identifying potential risks and their associated characteristics along with the positive or negative impact they may have on the project. risk management approach An approach describing the goals of applying risk management, as well as the procedure that will be adopted, roles and responsibilities, risk tolerances, the timing of risk management interventions, the tools and techniques that will be used, and the reporting requirements. risk management plan A plan that documents the process for identifying and quantifying project risks and outlines how risks will be addressed or controlled. Page 29

30 risk mitigation A risk response that decreases the identified risk to an acceptable level. risk monitoring and control Uses the risk management plan to identify risks, respond to risks and monitor the effectiveness of the risk response. risk owner A named individual who is responsible for the management, monitoring and control of all aspects of a particular risk assigned to them, including the implementation of the selected responses to address the threats or to maximize the opportunities. risk planning The planning process to determine how to manage uncertainty within the project. It includes identifying potential risks, their impact and an appropriate response. risk profile A description of the types of risk that are faced by an organization and its exposure to those risks. risk register A record of identified risks relating to an initiative, including their status and history. A formal document that outlines identified project risks. risk response Actions that may be taken to bring a situation to a level where exposure to risk is acceptable to the organization. These responses fall into a number of risk response categories. The procedures that are implemented if an identified risk occurs. risk response category A category of risk response. For threats, the individual risk response category can be to avoid, reduce, transfer, share, accept or prepare contingent plans. For opportunities, the individual risk response category can be to exploit, enhance, transfer, share, accept or prepare contingent plans. risk response owner The person owning responsibility for monitoring a given risk and implementing the risk response plan if necessary. risk response planning The process of reviewing items on the prioritized risk list from the qualitative and quantitative risk analysis to determine which, if any, action should be taken if the risk occurs. Risk response strategies include risk avoidance, risk mitigation, risk transference and risk acceptance. risk tolerance The threshold levels of risk exposure that, with appropriate approvals, can be exceeded, but which when exceeded will trigger some form of response (e.g. reporting the situation to senior management for action). Page 30

31 risk tolerance line A line drawn on the summary risk profile. Risks that appear above this line cannot be accepted (lived with) without referring them to a higher authority. For a project, the project manager would refer these risks to the project board. risk transference A risk response that shifts the liability of the identified risk to a third party. risk trigger An event that tells a risk is about to occur or has occurred. root cause The main reason a specific situation occurs. schedule development The process of determining activity start and finish dates and finalizing the activity sequence and durations to create the schedule baseline. schedule management plan A plan that documents the process to manage project schedules and any changes made to the schedules. schedule performance index (SPI) Ratio of work completed to work planned. SPI = EV PV scope definition The process of breaking down deliverables into smaller components in order to provide better control. scope tolerance The permissible deviation in a plan's scope that is allowed before the deviation needs to be escalated to the next level of management. Scope tolerance is documented in the respective plan in the form of a note or reference to the product breakdown structure for that plan. See tolerance. solicitation planning The process of identifying product requirements and potential sources. source selection Choosing a vendor for a needed product, service or resource. threat A negative risk that may or may not occur (as opposed to an opportunity, which is a positive risk). time estimate Calculation of the time required to complete an activity or the project. It may be obtained by analogous estimating, expert judgment or by using an equation to calculate the duration of the activity. Page 31

32 time tolerance The permissible deviation in a plan's time that is allowed before the deviation needs to be escalated to the next level of management. Time tolerance is documented in the respective plan. See also tolerance. time-driven control A management control that is periodic in nature, to enable the next higher authority to monitor progress (e.g. a control that takes place every 2 weeks). PRINCE offers two key time-driven progress reports: checkpoint report and highlight report. to-complete performance index (TCPI) The performance that must be achieved during the remaining project to meet stated goals. variant A variation of a baselined product. For example, an operations manual may have English and Spanish variants. version A specific baseline of a product. Versions typically use naming conventions that enable the sequence or date of the baseline to be identified. For example, project plan version 2 is the baseline after project plan version 1. work breakdown structure (WBS) A deliverable-oriented hierarchy that depicts the entire project work. wbs dictionary A document describing each work package in the WBS. work effort The number of hours that it would take a person to complete an activity if they worked only on that activity. work package The lowest level of the WBS. Includes activities required to fulfill a project deliverable or other project work. Page 32

33 Controlling a Stage (project execution by the project manager) actual cost (AC) The actual cost expanded to complete a project activity or work package. accept (risk response) A risk response that means that the organization takes the chance that the risk will occur, with full impact on objectives if it does. Actual duration The number of hours or days expanded to complete a project activity. Actual effort The actual number of person hours or days expended to complete an activity. avoid (risk response) A risk response to a threat where the threat either can no longer have an impact or can no longer happen. budget at completion (BAC) The budget estimate determined in the planning phase for a work package or entire project to be completed. Page 33

34 budgeted cost of work performed (BCWP) The total budgeted cost of all work completed on a project to date. Also known as earned value (EV). budgeted cost of work scheduled (BCWS) The total budgeted cost expected to be spent for specific work. Also called planned value (PV). change budget The money allocated to the change authority available to be spent on authorized requests for change. change control The procedure that ensures that all changes that may affect the project's agreed objectives are identified, assessed and then approved, rejected or deferred. control chart Diagram of process results over time and against specified limits to determine whether processes are acceptable or need adjustment. cost budgeting Assigning specific cost estimates to specific activities and creating the cost baseline. cost performance index (CPI) A performance tracking method that compares budgeted cost to the actual cost. CPI = EV / AC corrective action Actions taken to bring expected performance in line with the project plan constraints The restrictions or limitations by which the project is bound. contingent plan A plan intended for use only if required (e.g. if a risk response is not successful). Often called a Fallback plan. corrective action A set of actions to resolve a threat to a plan's tolerances or a defect in a product. cost control Managing and controlling changes to the cost baseline. cost of quality The costs incurred to ensure the quality of the project cost tolerance The permissible deviation in a plan's cost that is allowed before it needs to be escalated to the next level of management. Cost tolerance is documented in the respective plan. See also tolerance. Page 34

35 cost variance (CV) The difference between the budgeted cost and actual cost. CV = EV AC crashing Adding resources to activities on the critical path to reduce project duration. duration compression Shortening the project completion time without changing the scope of the project. fast tracking A method of schedule compression where activities that would typically be performed sequentially are performed in parallel to decrease schedule duration. earned value (EV) A measurement used to determine a project s progress and represents the value of the work completed to date. Also known as budgeted cost of work performed (BCWP). enhance (risk response) A risk response to an opportunity where proactive actions are taken to enhance both the probability of the event occurring and the impact of the event should it occur. estimate at completion (EAC) The estimated total cost of the completed project at a particular time, using current project performance and work that still needs to be completed. EAC = AC + ETC estimate to complete (ETC) The estimated amount of the work that still needs to be completed. event-driven control A control that takes place when a specific event occurs. This could be, for example, the end of a management stage, the completion of the PID, or the creation of an exception report. It could also include organizational events that may affect the project, such as the end of the financial year. exception A situation where it can be forecast that there will be a deviation beyond the tolerance levels agreed between the project manager and the project board (or between the project board and corporate, programme management or the customer). exception plan A plan that often follows an exception report. For a stage plan exception, it covers the period from the present to the end of the current management stage. If the exception were at project level, the project plan would be replaced. exception report A description of the exception situation, its impact, options, recommendation and impact of the recommendation. This report is prepared by the project manager for the project board. Page 35

36 exploit (risk response) A risk response to an opportunity. It means seizing the opportunity to ensure that it will happen and that the impact will be realized. fishbone diagram A graphical diagram that shows how causes or potential causes relate to create potential problems. Also known as Ishikawa diagram. highlight report A time-driven report from the project manager to the project board on management stage progress. impact (of risk) The result of a particular threat or opportunity actually occurring, or the anticipation of such a result. information distribution Enacting the communications plan and providing stakeholders with needed information in a timely manner. inputs Information that is required for a process to begin. inspection A quality control method to examine and measure work results against baseline specifications and requirements. inherent risk The exposure arising from a specific risk before any action has been taken to manage it. integrated change control Coordinating and managing change across the entire project scope, schedule and budget. integration management plan A plan that documents how elements of the project will be integrated and outlines how changes will be managed across the project. integration planning The planning process to establish how all elements of the project will be coordinated and how changes will be managed throughout the project. issue An identified element or event that may have a negative impact on the project and needs to be avoided or resolved. A relevant event that has happened, was not planned, and requires management action. It can be any concern, query, request for change, suggestion or off-specification raised during a project. Project issues can be about anything to do with the project. Page 36

37 issue log/register A document that outlines each project issue, along with the person responsible for resolving it, status and expected resolution date. A register used to capture and maintain information on all of the issues that are being managed formally. The issue register should be monitored by the project manager on a regular basis. issue report A report containing the description, impact assessment and recommendations for a request for change, off-specification or a problem/concern. It is created only for those issues that need to be handled formally. lessons learned The learning that takes place during the project and is documented to provide information on what went well and which aspects could have been improved. Lessons learned serve as references for future projects. off-specification Something that should be provided by the project, but currently is not (or is forecast not to be). It might be a missing product or a product not meeting its specifications. It is one type of issue. performance reporting Reporting to the stakeholders to provide information about the project s status, progress, accomplishments and future project performance predictions. plan A detailed proposal for doing or achieving something which specifies the what, when, how and by whom it will be achieved. In PRINCE there are only the following types of plan: project plan, stage plan, team plan and exception plan. positive variance The positive number that results from comparing planned project results with actual project results. A positive variance in the project schedule indicates the project is ahead of schedule. A positive variance in the budget schedule indicates the project is under budget. progressive elaboration The steps associated with developing and refining a product as needed during the course of the project. project performance indicators Measures to determine whether the project is on track. qualitative risk analysis Uses a subjective approach to determine the likelihood that risks will occur and the impact that risks will have on the project. This information enables the risk to be prioritized. quality The degree to which the product of the project meets requirements. Page 37

38 quality assurance The evaluation of overall project performance on a regular basis to ensure quality management processes are followed. quality audit Review and evaluation of the project performance to ensure quality management processes are followed. quality control The process of measuring specific results to determine compliance with quality standards and taking corrective action if necessary. quality management plan A plan that documents the quality activities and outlines the processes, procedures, responsibilities and resources required for maintaining project quality. quality planning The planning process to identify quality standards for the project and determine how these standards will be met. quality register A register containing summary details of all planned and completed quality activities. The quality register is used by the project manager and project assurance as part of reviewing progress. reduce (risk response) A response to a risk where proactive actions are taken to reduce the probability of the event occurring by performing some form of control, and/or to reduce the impact of the event should it occur. schedule compression Methods to expedite the completion time of an activity or project (e.g. fast tracking and crashing). schedule variance (SV) The difference between scheduled activity completion and actual activity completion. SV = EV PV; SV = Planned Date Actual Date scope change control Controlling changes to the project scope. scope change request A form submitted to request a change to the project scope. scope creep The addition of new features or requirements while the project is in process. Page 38

39 share (risk response) A risk response to either a threat or an opportunity through the application of a pain/gain formula: both parties share the gain (within pre-agreed limits) if the cost is less than the cost plan, and both share the pain (again within pre-agreed limits) if the cost plan is exceeded. stage See management stage. stage plan A detailed plan used as the basis for project management control throughout a management stage. transfer (risk response) A response to a threat where a third party takes on responsibility for some of the financial impact of the threat (e.g. through insurance or by means of appropriate clauses in a contract). variance The difference between actual and planned values. variance analysis The process of comparing planned project results against actual project results, determining the impact of the variance and implementing corrective actions if needed. workaround A response to deal with an unforeseen risk. A workaround is not planned in advance of the risk occurrence. Page 39

40 Managing a stage Boundary (preparing for the end of a project stage/phase) end stage assessment The review by the project board and project manager of the end stage report to decide whether to approve the next stage plan. Depending on the size and criticality of the project, the review may be formal or informal. The authority to proceed should be documented as a formal record. end stage report A report given by the project manager to the project board at the end of each management stage of the project. This provides information about the project's performance during the management stage and the project status at the management stage end. iterating Updating project plans to reflect changes that occur during the planning phase and throughout the project. planning horizon The period of time for which it is possible to plan accurately. prerequisites (plan) Any fundamental aspects that must be in place, and remain in place, for a plan to succeed. Page 40

41 probability This is the evaluated likelihood of a particular threat or opportunity actually happening, including a consideration of the frequency with which this may arise. problem A type of issue (other than a request for change or off-specification) that the project manager needs to resolve or escalate. Also known as a concern. product An input or output, whether tangible or intangible, that can be described in advance, created and tested. PRINCE2 has two types of products: management products and specialist products. product breakdown structure A hierarchy of all the products to be produced during a plan. product checklist A list of the major products of a plan, plus key dates in their delivery. product description A description of a product's purpose, composition, derivation and quality criteria. It is produced at planning time, as soon as possible after the need for the product is identified. product flow diagram A diagram showing the sequence of production and interdependencies of the products listed in a product breakdown structure. product status account A report on the status of products. The required products can be specified by identifier or the part of the project in which they were developed. product-based planning A technique leading to a comprehensive plan based on the creation and delivery of required outputs. The technique considers prerequisite products, quality requirements and the dependencies between products. proximity (of risk) The time factor of risk (i.e. when the risk may occur). The impact of a risk may vary in severity depending on when the risk occurs. registers Formal repositories managed by the project manager that require agreement by the project board on their format, composition and use. PRINCE has three registers: issue register, risk register and quality register. release The set of products in a handover. The contents of a release are managed, tested and deployed as a single entity. See also handover. Page 41

42 reports Management products providing a snapshot of the status of certain aspects of the project. request for change A proposal for a change to a baseline. It is a type of issue. residual risk The risk remaining after the risk response has been applied. rework An action to correct a deficiency that was identified by a quality activity. risk An uncertain event or set of events that, should it occur, will have an effect on the achievement of objectives. A risk is measured by a combination of the probability of a perceived threat or opportunity occurring, and the magnitude of its impact on objectives. risk actionee A nominated owner of an action to address a risk. Some actions may not be within the remit of the risk owner to control explicitly; in that situation there should be a nominated owner of the action to address the risk. He or she will need to keep the risk owner apprised of the situation. risk appetite An organization's unique attitude towards risk-taking that in turn dictates the amount of risk that it considers acceptable. risk estimation The estimation of probability and impact of an individual risk, taking into account predetermined standards, target risk levels, interdependencies and other relevant factors. risk evaluation The process of understanding the net effect of the identified threats and opportunities on an activity when aggregated together. risk exposure The extent of risk borne by the organization at the time. schedule A graphical representation of a plan (e.g. a Gantt chart), typically describing a sequence of tasks, together with resource allocations, which collectively deliver the plan. In PRINCE2, project activities should be documented only in the schedules associated with a project plan, stage plan or team plan. Actions that are allocated from day-to-day management may be documented in the relevant project log (i.e. risk register, daily log, issue register or quality register) if they do not require significant activity. Page 42

43 scope For a plan, the sum total of its products and the extent of their requirements. It is described by the product breakdown structure for the plan and associated product descriptions. scope verification Formal acceptance by the stakeholders that deliverables and work results are completed to their satisfaction. work authorization system A formal process to ensure work is done in the right sequence and at the right time. Page 43

44 Managing Product Delivery (creation of the deliverables by specialist team) checkpoint A team-level, time-driven review of progress. checkpoint report A progress report of the information gathered at a checkpoint, which is given by a team to the project manager and which provides reporting data as defined in the work package. deliverable A specialist product that is handed over to a user (or users). Note that management products are not outputs but are created solely for the purpose of managing the project. delivery approach The specialist approach used to create the products. delivery step A step within the delivery approach. producer The person or group responsible for developing a product. Note. This includes management products created in other processes. Page 44

45 quality control The process of monitoring specific project results to determine whether they comply with relevant standards and of identifying ways to eliminate causes of unsatisfactory performance. quality criteria A description of the quality specification that the product must meet, and the quality measurements that will be applied by those inspecting the finished product. quality inspection A systematic, structured assessment of a product carried out by two or more carefully selected people (the review team) in a planned, documented and organized fashion. quality records Evidence kept demonstrating that the required quality assurance and quality control activities have been carried out. quality review A systematic, structured assessment of a product carried out by two or more carefully selected people (the review team) in a planned, documented and organized fashion. quality review technique A technique with defined roles and a specific structure, designed to assess whether a product in the form of a document (or similar, such as a presentation) is complete, adheres to standards and meets the quality criteria agreed for it in the relevant product description. The participants are drawn from those with the necessary competence to evaluate its fitness for purpose. quality tolerance The tolerance identified for a product for a quality criterion defining an acceptable range of values. Quality tolerance is documented in the project product description (for the project-level quality tolerance) and in the product description for each product to be delivered. reviewer A person or group independent of the producer who assesses whether a product meets its requirements as defined in its product description. scope document A document that contains the project requirements and overall project direction. It should contain the goals, deliverables, budget, success criteria and important milestones. scope management plan A plan that documents the process to manage project scope and any changes to project scope. scope of work The amount of work involved to complete the project. Includes identifying the problem to be addressed by the project including the goals and objectives, measures of success and risks, and obstacles and assumptions that may affect the project outcome. Also known as project scope. Page 45

46 scope planning The planning process to develop the scope statement and determine the work of the project. scope statement Documents the project objectives, business justification and goals. It outlines the deliverables that are to be included in the project along with the functional, business and technical requirements. specialist product A product whose development is the subject of the plan. The specialist products are specific to an individual project (e.g. an advertising campaign, a car park ticketing system, foundations for a building or a new business process). Also known as a deliverable. See also output. staff acquisition The process of getting people assigned to and working on the project. staffing management plan A plan that documents when and how people will be added to or released from the project team and outlines the responsibilities of each team member. stakeholder An individual or organization that affects or is affected by the project. start-to-finish dependency The completion of an activity is dependent on the start of the previous activity. start-to-start dependency The beginning of an activity is dependent on the start of the previous activity. statement of work (SOW) A document that outlines the details and requirements of the product or service being procured. successor An activity that is on the same network diagram path and occurs after another activity. team development Creating an encouraging environment for stakeholders to contribute and developing the project team into a functional group that enhances project outcomes. team manager The person responsible for the production of products allocated by the project manager (as defined in a work package) to an appropriate quality, timescale and at a cost acceptable to the project board. This role reports to, and takes direction from, the project manager. If a team manager is not assigned, the project manager undertakes the responsibilities of the team manager role. Page 46

47 team plan An optional level of plan used as the basis for team management control when executing work packages. work package The set of information relevant to the creation of one or more products. It will contain a description of the work, the product description(s), details of any constraints on production, and confirmation of the agreement between the project manager and the person or team manager who is to implement the work package that the work can be done within the constraints. Page 47

48 Closing a Project (controlled project shutdown) acceptance The formal act of acknowledging that the project has met agreed acceptance criteria and thereby met the requirements of its stakeholders. administrative closure The gathering and disseminating of information needed to formalize the completion or termination of a project or phase. Consists of obtaining formal acceptance and completing the related activities to formally end the project work. Contract closeout The process of determining whether the work as outlined in the contract was completed accurately and settling the terms of the contract. closure recommendation A recommendation prepared by the project manager for the project board to send as a project closure notification when the board is satisfied that the project can be closed. end project report A report given by the project manager to the project board, confirming the handover of all products. It provides an updated business case and an assessment of how well the project has done against the original PID. Page 48

49 follow-on action recommendations Recommended actions related to unfinished work, ongoing issues and risks, and any other activities needed to take a product to the next phase of its life. These are summarized and included in the end stage report (for phased handover) and end project report. formal acceptance When the authorized stakeholder provides sign-off, indicating the product has been received and is acceptable. handover The transfer of ownership of a set of products to the respective user(s). The set of products is known as a release. There may be more than one handover in the life of a project (phased delivery). The final handover takes place in the closing a project process. operations and maintenance The turnover of a project to the operational staff of an organization for ongoing support and maintenance. operational and maintenance acceptance A specific type of acceptance by the person or group who will support the product after it has been handed over into the operational environment. planned closure The PRINCE2 activity to close a project. premature closure The PRINCE2 activity to close a project before its planned closure. The project manager must ensure that work in progress is not simply abandoned, but that the project salvages any value created to date and checks that any gaps left by the cancellation of the project are raised to corporate, programme management or the customer. product verification Ensuring the stakeholders find the key deliverables to be satisfactorily completed. project closure notification Advice from the project board to inform all stakeholders and the host sites that the project resources can be disbanded and support services, such as space, equipment and access, demobilized. It should indicate a closure date for costs to be charged to the project. user acceptance A specific type of acceptance by the person or group who will use the product after it has been handed over into the operational environment. Page 49

50 Summary and Close My final advice is not to try and memorise these definitions, but rather to appreciate the context in which they occur. Many if not most, are used in multiple processes, and so I have taken a reasoned approach to naming them within a specific process. Remember also, that many of the processes are used more than once. This means that any one of these terms and definitions, may be originally created or used in one process, and re-used again as they are updated throughout the project lifecycle. If you are currently preparing for your PRINCE2 Foundation and Practitioner exams, then DO check out our latest PRINCE2 Masterclass available right now with a massive discount off ALL our training products! Page 50

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