Chapter 2 Understanding the PMBOK Guide

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1 Chapter 2 Understanding the PMBOK Guide Chapter Summary This chapter examines: The PMBOK Guide is a guide rather than a methodoogy and the difference is expored. This section aso summarizes some important points which shoud be remembered when appying the PMBOK Guide. The four section structure of the PMBOK Guide is described and the reader earns how to navigate this arge book. Chapter 1 of the PMBOK Guide introduces project management and paces it in the context of program and portfoio management. It is based on the experience of a arge number of project managers gobay and is therefore very practica. The different types of Project Management Office are mentioned. Chapter 2 of the PMBOK Guide focuses more on the organization which executes the project and manages it through the project ife cyce. When a project is finished, the team disbands. Chapter 3 of the PMBOK Guide goes into more detai about the centra theme; projects, athough unique, are best impemented by using standardized processes. As experience increases the processes can be improved, to the benefit of future projects. Chapters 4 12 describe the nine Knowedge Areas and are foowed by some usefu appendices. 2.1 What the PMBOK Guide Is In this chapter we narrow our focus from a the possibe project management standards to one: the PMBOK Guide. In its own words: This standard is a guide rather than a methodoogy. (See Sect. 1.1 of the PMBOK Guide.) 1 1 Figure and tabe references with hyphens are to the PMBOK Guide. D. Ó Conchúir, Overview of the PMBOK Guide: Paving the Way for PMP Certificatio n, 13 DOI / _2, Springer-Verag Berin Heideberg 2012

2 14 2 Understanding the PMBOK Guide What is the difference between a Guide and a Methodoogy? Simpy stated, a methodoogy tes you exacty what to do, with specific methods and terminoogy. This is ike a recipe for baking a cake, which tes you the exact amount of ingredients needed, which temperature to use and how ong to bake. It detais how to prepare the ingredients, so that what you cook is just ike what is in the photograph. On the other hand, a Guide suggests what to do. This is what we expect from the tite of the PMBOK Guide. Guides are ess specific than methodoogies in teing you how to do something, in this case how to manage projects. The foowing points shoud hep you understand the PMBOK Guide: It is a compete reference mode of project management, based on 42 processes, drawn from goba experience in many sectors. As a resut it is generic and is for genera use in a types of projects and in different branches. It is a guide which summarizes...good practices on most projects most of the time (see the introduction to Chap. 1 of the PMBOK Guide). It does NOT give detaied instructions, nor does it mean that you have to use ALL of the processes ALL the time. The Project Manager together with the team shoud decide what and how much to appy in a particuar situation (see the Introduction to Chap. 3 of the PMBOK Guide). Its appication is not uniform in a situations, but specific to each project. It is sef-consistent and compete. If you read it from beginning to end, you wi find that it is integrated and the interna references match. It combines the experience of thousands of project managers in different sectors around the word, so it is very practica. It is not theoretica. It does not repace your company processes but provides standard anguage and environment for them. This makes a unified approach to project management possibe among a organizations which use it. The PMBOK Guide has been revised severa times and each time it has become more mature. During the preparation of the 4 th edition, much effort was made to improve consistency, both internay and with regard to the other standards of the Project Management Institute. The PMI has aso deveoped so-caed Extensions to the PMBOK Guide for particuar sectors. These describe in more detai the processes for specific sectors, such as the Construction Industry or (American) Government. Again they are guides and this makes them more generay appicabe than a methodoogy which tes you exacty what to do. In summary: The PMBOK Guide describes projects in a unified way with standard vocabuary. It is based on Project Processes, which is a successfu mode for project management. The project manager and team must decide how and how much to appy these processes in each project according to the situation.

3 2.2 The Format of the PMBOK Guide The Format of the PMBOK Guide Now we are ready to actuay ook at the PMBOK Guide and understand its structure. To use a dictionary in aphabet-based anguages, it heps to know the order of the etters. In the same way, the background ideas we have discussed hep us to interpret the PMBOK Guide. This is a good time to open your copy, so that you can refer to it in connection with the notes beow. The basic structure of the PMBOK Guide is four parts (sections) which use Latin numbers: Tabe 2.1 The sections of the PMBOK Guide Tite Contents Section I (¼1) Chapters 1 & 2 The Project Management Framework An introduction to project management, ife cyces and organization. Section II (¼2) Chapter 3 The Standard for Project Management of a Project This section is THE STANDARD understanding this makes it easier to pass the PMP examination. It describes the project from the viewpoint of Process Groups and defines when certain activities or processes have to be executed. Section III (¼3) Chapters 4 12 The Project Management Knowedge Areas Descriptions of each of the 42 processes, which are discussed in Chap. 4 12, covering nine Knowedge Areas. Think of it as simiar to a dictionary; a ist of descriptions in forma anguage. Being famiiar with the detais of these 42 processes is essentia for passing the PMP examination. Section IV (¼4) Appendices Changes to and the history of the PMBOK Guide, as we as a usefu Gossary of Terminoogy. There is aso some materia not specificay reated to any of the main content, such as a section on Interpersona Skis Overview of Chapter 1: Introduction The introduction to the PMBOK Guide covers much of what we have aready described about the purpose of the standard, what a project is and what project management is. It aso states that the standard focuses ony on Projects, athough it interacts with other important aspects of organizationa work such as: Operations Management, which is repetitive in contrast with Projects which in principe are unique. Of course the main work of many organizations is the impementation of projects and they are often simiar to each other. Under these

4 16 2 Understanding the PMBOK Guide circumstances, the dividing ine between projects and processes is not absoute. The better the processes, the ess detai project managers must pan for each individua project. Program Management: management of groups of reated projects. An exampe program is given at the end of Sect of the PMBOK Guide: A new communications sateite system with projects for design of the sateite and of the ground stations, construction, integration and aunch. Portfoio Management: management of projects or programs which are grouped together...to meet strategic business objectives (See Sect of the PMBOK Guide). One way to think of this is that a projects, or programs, funded from one high eve budget form a portfoio. An exampe is that a the Asian projects of a company can form a Portfoio, whether or not they are reated to each other technicay or commerciay. Projects are one way of impementing strategic organization decisions. Severa measures may be identified which wi deveop the organization in the seected direction. These measures can then be impemented as projects. Of course projects shoud be designed so that they aso target program and portfoio objectives, as we as project eve objectives. Projects need to keep a the data they generate under contro. This incudes what activities are assigned, the contact detais of a peope invoved, when purchases were paid etc. The organization or function that ooks after the administration of the project is caed the Project Management Office, the PMO. Depending on the organization, there may be a PMO which has a project management roe. For exampe, a PMO can empoy project managers who manage projects for other departments. The PMO may aso have a roe supervising projects and ensuring Compiance, managing project resources, coaching project managers and maintaining organizationa project management standards etc. The detaied project information is stored in the Project Management Information System, PMIS. For any but the smaest projects, the PMO is responsibe for maintaining this data. This chapter aso describes the roe of the Project Manager, whose job it is to achieve the project objectives. The project manager is responsibe for everything. Especiay when the organization has ess deveoped process and project management maturity, the project manager must ensure that proper project processes and organization are estabished. In extreme situations, the Project Management Maturity in the organization is so ow that the project manager must set up a the structure and define the processes himsef. Unfortunatey this often eads to the overoading of the Project Manager whie the sponsor has unreaistic expectations; a dangerous combination. In situations ike this, it may hep the project manager to refer stakehoders to the independent authority of the PMBOK Guide. Finay there is a reference to Enterprise Environmenta Factors, in other words a the background issues which coud affect the project. The ist provided in Sect. 1.8 of the PMBOK Guide is very compete. In practice even more stressfu

5 2.2 The Format of the PMBOK Guide 17 situations than those described there can occur. For exampe, the ast project manager has just been fired and the expectations of management towards the new project manager are particuary high Overview of Chapter 2: Project Life Cyce and Organization This chapter focuses more on the projects themseves, starting with the Project Life Cyce. This is the term for a the phases of a project, starting when the ideas are being coected, through the panning, executing and cosing. Figure 2-1 shows in effect the eve of activity at different stages. There is a view that the start can take much onger than in the graph, but the important point is that the eve of activity varies and finay reduces to zero. A simiar shape is used if the amount of money spent per month is shown, the so caed Burn Rate, by anaogy with the use of fue by a rocket. The Project Life Cyce must not be confused with the Product Life Cyce. For exampe the project ife cyce corresponds to the deveopment of a new product, such as a new mode of a car. Then the car wi go into production and may be made for years or even decades. Finay there may be a period when ony spare parts are produced whie no new cars are made. After this the product ife cyce is finished. Ceary the project ife cyce forms ony part of the product ife cyce. Stakehoders are the peope who have an interest in the positive or negative effects of the project. They can be inside or outside the organization (See Sect. 2.3 of the PMBOK Guide). It is extremey important for project managers to find out who the stakehoders are, because their attitudes have a big infuence on the success of a project. The potentia infuence of stakehoders reduces as the project progresses because the project becomes more concrete and there is ess that they can change. This is shown in Fig On the other hand, the cost of project changes increases with time. It is easy to make changes on paper before pans have been fixed, but much more difficut and expensive ater on when the project is being executed. One of the most important stakehoders is the Sponsor. The PMBOK Guide uses this term for the person who is responsibe for assigning resources to or controing the budget for a project. When this is shared by a number of peope, we can tak of Sponsorship instead of a singe Sponsor. The term Sponsor is preferred to Owner, Originator etc. that are sometimes used. The concept of phases is widey known and used wherever project management is used. A Project Phase is a section of a project in which specific major deiverabes are deivered. In principe, phases are competed one after the other. This aows the stakehoders, in particuar the sponsor and project manager, to review the situation before moving on to the next phase. This review usuay incudes: A report about the progress of the project Detaied pans for the next phase

6 18 2 Understanding the PMBOK Guide The high-eve pan for a remaining phases Assumptions, which may of course have changed etc. When everything is agreed, the project is authorized to continue to the next phase. This is an exampe that aso defines how the project is controed. This is caed Project Governance. It is sometimes said: Choose the right project, then execute the right project right, or correcty. Choosing the right project is a governance issue. Doing it right is a project management issue. The project execution may be divided into severa phases. For exampe the design and construction of a ship coud be divided into the foowing phases: Design the ship Buid a mode and test its performance Buid the ship Fit (add in the equipment, furniture etc.) Commission (check that the engines and navigation equipment are in working order etc.) Handover to owner (fina acceptance checks). These are phases because they happen one after the other and each finishes with deiverabes. Working in phases reduces the risk that the project wi either not deiver or deiver something which is not needed because the environment has changed. To see why this is so, imagine an experienced project manager who convinces management that everything is under contro. A he needs is 12 months and $10 miion to impement his project. We can summarize the situation for the project manager ike this: Give me $10 miion and a year to deiver the project just et me do it. Of course $10 miion is a ot of money and a year is a ong time. Anything can happen during this time, for exampe the exchange rate changes, a stock market crisis, an earthquake etc. It is risky to pan ong and expensive phases, not because the project manager is not good but because circumstances may change. The project manager can reduce the risks by dividing the project into shorter, ess expensive and ess risky phases. Setting Miestones aong the way, in particuar for the end of each phase, is much ess risky. We now te the project manager: You have 4 weeks and $50,000 to pan the project, then you must come back with the updated pan for review before going further.

7 2.2 The Format of the PMBOK Guide 19 Dividing the project into shorter, ess costy phases reduces the project risks significanty. A project is an investment and the sooner it is deivered, the quicker the payback. How much this matters is particuary important in Product Deveopment. The company which gets to the market first with a new product can charge high prices and pay back the deveopment costs, unti the competition catches up. Being ate can mean ost potentia income or even going out of business. Depending on the sector and type of project, a phase can begin before the previous one is finished. This can increase the overa benefit, even if there is some rework and extra costs. Starting a phase before the ast one is finished is a business decision. In such cases, the risks can be reduced by extensive communication between the various participants. Long ago, before e-mai and mobie phones, project phases were often carried out with very itte communication with other parts of the organization. In this environment it made sense to compete one phase totay before starting the next. Depending on the industry this may or may not be possibe. A new car design is checked thoroughy before it is put into production because the tooing costs are very high. A buiding shoud not be buit unti the design is compete and checked. In other sectors such as software deveopment, overapping the phases is much more common or even essentia because it can actuay reduce the overa Risk. The Organizationa Environment has a big infuence on projects. Much depends on the organization, such as how managers use their power, channes of communication, formaity or informaity etc. It is easy to see that the practice in a raiway, a hospita and a software company are totay different. This affects how resources are aocated and decisions are made, how much power the project manager has and many other detais of project management. The technoogica environment is aso reevant. For exampe the approach to the requirements identification in software deveopment is different from that in an engineering company which buids bridges and highways. As we as being infuenced by organizationa stye, a project is very strongy infuenced by the structure of the organization. For exampe, in a functiona organization, ine managers are powerfu compared to project managers; projects wi find it more difficut to get priority for resources. At the other extreme in projectized organizations, the organization structure matches the projects, which get priority as a resut. Figures show a progression from Functiona to Projectized Organization types. The next section introduces a term which we wi find often: Organizationa Process Assets. This name emphasizes that the Processes of an organization are aso assets. They take time and money to deveop and contain the know-how of the organization, whether documented or not. These assets are the processes that aow the organization to deiver projects and may incude for exampe:

8 20 2 Understanding the PMBOK Guide Procedures and guideines which expain how particuar processes shoud be used Tempates Procedures for managing changes: Change Contro Procedures Corporate Know-How and experience from previous projects, such as risks, costs etc. as contained in databases, fies and archives Overview of Chapter 3: Project Management Processes for a Project This part of the PMBOK Guide represents the project management standard. It expands the description of projects based on processes, as we as showing how these processes are reated to each other. Let us go back and ook at the idea of project processes in more detai. In any project, the manager must use the resources and interactions to achieve the goas. However: Projects are unique, non-repetitive, once-off activities. This means that we cannot expect everything to go to pan, because some things are being done for the first time. When something does not go to pan, it often costs more money or deays to bring the project back on track. It is not easy to contro project costs, because neary everything that does not go according to pan affects costs. This is especiay chaenging for project-based businesses. They cannot survive if project costs are consistenty higher than panned. In the ong term, these unpanned costs coud threaten the viabiity of the business case. To reduce negative effects, we can earn from previous simiar projects. This resuts in more accurate and reiabe project pans. This experience is incorporated in the project processes, which can be used repeatedy for different types of project. New experience can be used to continuay improve the processes, making sure that it has a ong term effect. Even when projects are competey new, we can sti appy some earier project experience since they often foow simiar patterns. For exampe, we know that it works better to use phases. We can design our new projects in phases, even if everything ese about the project is new. This wi make it ess ikey to fai because we are using previous experience. Some peope object to this and may say: Our business is different from a others so we cannot earn from them we have to do it our own way.

9 2.2 The Format of the PMBOK Guide 21 We answer: Yes, of course the technoogy, methods, business etc. are specia or unique. That is true of a projects. You can however use genera project methods and so benefit from the experience of others. We appy previous experience by using Project Management Processes. If we use the same method to divide a project into phases every time, this is a process. A Process is repetitive, just ike Operationa Work. Athough projects are unique, we can manage projects by using processes because this makes them much more ikey to be successfu. This approach is centra to the PMBOK Guide description of project management. At the highest eve the project processes do not depend on technoogy. For exampe identifying who the stakehoders are is human activity, not a technica task. The PMBOK Guide detais this top eve of project management but aso refers in outine to ower eve technica processes, which each organization must then deveop in detai for itsef. It makes sense to aign these company-specific practices with the higher eve PMBOK Guide processes, because this gives a standard basis for communicating and cooperating with other companies, suppiers and organizations. Speaking the same project anguage reduces the chances of costy mistakes. As an exampe, a company impementing the PMBOK Guide coud reword its processes so that they refer uniformy to Sponsor, instead of owner, originator, etc. There are other advantages, for exampe we can benefit from a poo of experience when recruiting project staff new recruits do not have to earn absoutey everything from the beginning if they are aready famiiar with the PMBOK Guide. Before goba standards for project management existed, each company had to deveop its own standard and train everybody, incuding suppiers. The benefit from externa experience was generay imited. Another way that processes are sometimes described is earning from the mistakes of others. It is cever to see where others have earned and to copy them. This can be very attractive for businesses, because others pay and we benefit! This is what the PMBOK Guide does; it brings together project management experience from various industries so that we can use it. It is not unusabe theory ; it is usabe practice. To summarize some important concusions: Projects are unique, once-off efforts. Projects are best managed by appying the same (or simiar) processes to each one, in order to expoit the earning effect. At the highest eve, these processes are generic to a project management and are not specific to a particuar ine of business or technoogy. We can aways profit from the experience of others.

10 22 2 Understanding the PMBOK Guide Some of the process detais at higher eves and everything at ower eves wi usuay be specific to a particuar organization. They wi refect the particuar environment and technoogy. There are strong advantages, particuary in a goba economy, of using a standard scheme for project processes. The PMBOK Guide is such a scheme. The PMBOK Guide processes a have the foowing features: Inputs: items that must be avaiabe to the process so that the Toos & Techniques can be appied. Toos & Techniques: Methods of working. This is much broader than just IT Toos and Techniques. For exampe the use of Phases is a technique, but it may be impemented without any supporting IT. Outputs: items that are deivered by a process. Note that the Outputs of a process are very often the Inputs of other processes. Chapter 3 of the PMBOK Guide describes how the 42 processes interact and fit together. Chapters 4 12 take one Knowedge Area at a time and describe the reevant processes. 2.3 Exam Aids Fash Card Terms Burn Rate Change Contro Procedures Compiance Construction Industry Enterprise Environmenta Factors Extensions Functiona Organization Government Guide Inputs Methodoogy Miestones Operationa Work Operations Management Organizationa Environment Organizationa Process Assets Outputs Portfoio Management Process Groups Product Deveopment Product Life Cyce Program Management Project Governance Project Life Cyce Project Management Information System, PMIS Project Management Institute, PMI 1 Project Management Maturity Project Management Office, PMO Project Management Processes Project Manager Project Phase Project Processes Projectized Organization Risk Sponsor Stakehoders Toos & Techniques

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