PMP Certification Course Outline

Transcription

1 PMP Certification Course Outline (I) Becoming a PMP (II) Project Management Framework o Project Management Processes for a Project o Project Management Context (III) Project Management Environment o Project Phases and Project Life Cycle o Organizational Structure Influences on Projects (IV) PM Knowledge / Management Area 1. Manage Project Scope 6. Manage Project Quality 2. Manage Project Time 7. Manage Project Risks 3. Manage Project Human Resources 8. Manage Project Communications 4. Manage Project Procurement 9. Manage Project Stakeholder 5. Manage Project Cost 10. Manage Project Integration (V) Professional and Social Responsibility Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

2 (I) Becoming a PMP Course Objectives Participants will review the Project Management Institute's (PMI), Project Management Body Of Knowledge (PMBOK Guide), 5 th Edition. Participants will be able to prepare to take the PMP exam, complete the application forms, and learn how to communicate with PMI Participants will know how to visualize the Ten Management Knowledge Areas and relate them to the Five Process Groups as per the PMBOK Guide 5th Edition Participants will develop a strategy towards conducting the PMP exam by learning the structure and type of questions of the exam Participants will learn the tips, tricks, tools and the techniques in order to easily and quickly solve the questions Participants will become familiar with PMBOK Guide project management terms, concepts, theories, methods, approaches and formulas Participants will practice on the exam simulated questions to eliminate the anxiety of taking the exam, and learn how questions are analyzed and what topics are required to know Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

3 (I) Becoming a PMP Why PMP Certification? Demonstrates proof of professional achievement. Increases Marketability and greater earning potential. Provides Greater opportunity for advancement and development. Builds self-esteem and trust. Raises Customer Confidence. Gains professional credential and recognition. Delivers broader responsibilities and assignments. Exposes to wide area of skills and knowledge. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

4 (I) Becoming a PMP Situational Questions: What is the PMP Exam Like? Requires relying on knowledge, real-world experience and judgment in order to answer correctly. Conceptual Understanding: Must apply concepts to a new situation by using more than simple memorization. Memorization Questions: Short and direct questions that can be answered in less than 20 seconds. Double-Reverse Logic Questions: Ask about a topic using reverse or double-reverse logic. Generally, one has to select the exception. from the four possible options. Story Problem Questions: Can take several minutes (2-5 minutes) to process. To identify what information presented is very essential and needed to answer the question. Use the Pencil Questions: Require to perform simple calculations and/or draw simple diagrams to select the correct answer. Non-PMBOK Guide Questions: Around 60% of the exam questions come directly from the PMBOK Guide. The others originate from other reference materials, subjects related to project management, and real-world situations. No Answer Questions: Questions with doubts. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

5 (II) Project Management Framework Project and Project Management OPERATION Continuous & On-going Repetitive On Going Results Indefinite Operational Budget (OPEX) Daily Improvements Process Driven Sustain Business Continuity PROJECT Temporary Endeavor Unique Product, Service, Plan Defined Time Scale Limited Budget & Resources (CAPEX) Major Change Results Driven Achieve Strategic Plan Day-to-Day Activities is very necessary for business success but not sufficient BUSINESS Management Evolution Market Demands Organizational Needs Customer Requests Technical Advancement Legal Requirements Change Risk PROJECT Management R-evolution Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013 Sustain Business Continuity 5

6 (II) Project Management Framework Project and Project Management (Cont d) Why Project Management? Ensures that customer requirements are met. Eliminates reinventing the wheel by standardizing routine project work. Reduces the number of tasks that could be overlooked during the projects. Eliminates duplication of efforts. Addresses the rapid development of Third World and closed economies. Ensures that projects are in control. Maximizes the use of resources. What is Project Management? Project Management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements. Project Management is accomplished through the use of processes of Initiating, Planning, Executing, Monitoring &, and. Project Management Processes are Iterative. Project Characteristics: Progressive Elaboration Developing in steps, and continuing by increments. This occurs in many project management processes and adds more details to the project and enables better control. Program and Projects: Group of projects managed in a coordinated way to obtain benefits not available by managing it individually. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

7 (II) Project Management Framework Areas of Expertise 1. The Project Management Body of Knowledge (PMBOK) Guide: o Project Life Cycle, Five Project Management Process Groups, and Ten Knowledge Areas. 2. Application area Knowledge, Standards, Regulations and Practice: o Functional departments and supporting disciplines, technical elements, such as software development or engineering, management specializations, such as government contracting, and industry groups, such as automotive, and financial services. 3. Understanding the Project Environment: o Cultural and social environment, international environment, and physical environment. 4. General Management Knowledge and Skills: o Financial management, purchasing and procurement, contracts, manufacturing, logistics & strategic planning. 5. Interpersonal Skills: o Effective communications, influencing, leadership, motivation, negotiation, conflict management, and problem solving. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

8 (II) Project Management Framework Project Management Techniques & General Management Skills Communications Skills Organizations Skills Budgeting Skills Problem Solving Skills Negotiation and Influencing Skills Leadership Skills Team Building Skills Human Resources Skills Project Manager Skills (5) Interpersonal Skills PMI s A Guide to (PMBOK) PMP Certification Exam (1) Generally Accepted Project Management Knowledge and Practices The Project Management Body of Knowledge (PMBOK) Project (3) Environment A mile wide and an inch deep: Ability to motivate people Make the hard-line call when necessary Decision maker and focus on results (4) (2) General Management Knowledge and Skills Areas of Expertise Needed by the Project Team Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013 Application Area Knowledge, Standards, Regulations & Practice 8

9 (II) Project Management Framework 1. Initiating: Authorizing the project or phase. PM Processes for a Project 2. Planning: Defining and Refining Objectives and selecting the best of the alternatives courses of action to attain the project objectives. 3. Executing: Coordinating people and the other resources to carry out the plan. 4. Monitoring & : Ensuring that project objectives are met by monitoring and measuring progress regularly to identify variances from plan so that corrective action can be taken when necessary. 5. : Formalizing acceptance of the project or phase and bringing it to orderly end. Project Plan is Drafted by the project team; Approved by the sponsor, and Distributed to management and key stakeholders Decision is made Charter is prepared The Executed Plan is monitored & controlled by measuring the progress regularly to identify variances from plan for further corrective actions Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 42 The Plan is executed and monitored, and the final deliverables (a product, service, process or plan) are delivered to the project customers The project is evaluated and close-out report is written and distributed to management and key stakeholders 9

10 (II) Project Management Framework Initiation Develop Project Charter Identify Stakeholders 2 Planning Develop Project Management Plan Plan Scope Management Collect Requirements Define Scope Create WBS Plan Schedule Management Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule Plan Cost Management Estimate Costs Determine Budget Plan Quality Management Plan Human Resource Management Plan Communications Management Plan Risk Management Identify Risks Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis Plan Risk Responses Plan Procurement Management Plan Stakeholder Management PM Processes for a Project (Cont d) 24 Execution Direct and Manage Project Work Perform Quality Assurance Acquire Project Team Develop Project Team Manage Project Team Manage Communications Conduct Procurements Manage Stakeholder Engagement 8 47 Monitoring & Monitor and Control Project Work Perform Integrated Change Control Control Scope Validate Scope Control Schedule Control Costs Control Quality Control Communications Control Risks Control Procurements Control Stakeholder Engagement 11 Close Project or Phase Close Procurements 2 Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

11 (II) Project Management Framework Project Management Context Programs and Program Management: Centralized, coordinated management of group of projects to achieve the program s strategic objectives and benefits. Portfolios and Portfolio Management: Collection of projects or programs and other works that are grouped together to facilitate effective management of that work to meet strategic business objectives. Subprojects: More manageable components and are often contracted to an external enterprise or to another functional unit in the performing organization. Project Management Office (PMO): Oversees the management of projects, programs, or combination of both. Provides PM support in form of training, software, standardized policies, and procedures. Manages project for achieving the project objectives. Has different degree of controlling and Influence: Supportive - Directive Management By Objectives (MBO): A system of managerial leadership that defines individual managerial responsibilities in terms of corporate objectives. Works only with Management Support. It has THREE main objectives: 1. Establish unambiguous and realistic objectives. 2. Periodically evaluate if objectives are being met. 3. Take corrective actions. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

12 Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

13 (III) Project Management Environment Initial Phase Design Phase Project Phases Implementation Phase Final Phase Cost and Staffing Level Start High Risk High Influence High Cost & Staffing Level Low Risk Low Influence Sample Generic Life Cycle: Project Phases and Process Groups Interactions End Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Pages 39, 43 13

14 (III) Project Management Environment Project Life Cycle Project Life Cycle: Identifies the Beginning and the End of the Project. Determines completion of one or more deliverables: Initial, Intermediate and Final Phase. It defines (a) The technical work to be done in each phase (b) The skills involved in each phase. Product Life Cycle: Is the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal. Similarly; starting with business plan, through idea, to product operations, then product release and retirement. (1) Predictive Life Cycles: (Fully Plan-Driven) The Project Scope, Time and Cost are determined as early in the project life cycle. The project then proceeds through a series of sequential or overlapping phases. (2) Iterative and Incremental Life Cycles: Project phases (iterations) intentionally repeat one or more activities as the project team s understanding of product increases. The product will be developed though a series of repeated cycles. (3) Adaptive Life Cycles: (Change Driven or Agile methods). Responds to high levels of change and ongoing stakeholder involvement. Adaptive projects perform several processes in each iteration. The customer should be continuously engaged with the project. Percent Complete Milestone 1 Formulation Feasibility Studies Strategic Design & Approval Feasibility Base Design Cost & Schedule Contract Terms Detailed Planning GO Decision Planning & Design Milestone 3 Milestone 4 Installation Full Milestone 2 Complete Operations Major Contracts Let Production Manufacturing Delivery Civil Works Installation Testing Turnover & Startup Final Testing Maintenance Reviews against a set of metrics are performed. These reviews are called: Phase Exits Stage Gates Exit Gates Control Gates Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Pages 44, 45 14

15 (III) Project Management Environment Project Accountability Stakeholders: People or organizations that have a vested interest in the outcome of the project. Project Manager: Assumes responsibility for the project success. Customer/User: Individual or organization who will use the project product. Project Sponsor: An Executive who has the power and authority to make decisions. Project Champion: Technical Sponsor who focuses on the project with technical perspective. Functional Manager: Administrative duties, assign staff members, and performance review. Project Senior Managers Project Sponsor Functional Managers Vendors Board of Directors Suppliers Customer User Project Manager Responsibility can be delegated but accountability cannot Project Champion Team Leader Team Member Project Manager Role: Integrator: Views both the project and the way it fits into the overall plan for the organization. Communicator: Communicates to upper management, the project team, and other stakeholders. Project Leader: Able to: Solve problems; Guide people; and Show Leadership. Decision Maker: Makes key decisions. Climate Creator or Builder: Builds supportive atmosphere. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

16 (III) Project Management Environment Project Stakeholders The Project Stakeholders, Source: Cleland, David I., Stakeholder Management Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

17 (III) Project Management Environment Project Characteristic Organization Structure Project Manager s Authority Resource Availability Organizational Structure Influences on Projects Functional Little or None Little or None Weak Balanced Strong Limited Limited Matrix Low to Moderate Low to Moderate Moderate to High Moderate to High Projectized High to Almost Total High to Almost Total Who Controls the Project Budget Functional Manager Functional Manager Mixed Project Manager Project Manager Project Manager s Role Project Management Administrative Staff Part-time Part-time Expediter Coordinator Full-time Full-time Full-time Part-time Part-time Part-time Full-time Full-time Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 22 17

18 (III) Project Management Environment Organizational Structure Influences on Projects (Cont d) Functional Matrix Weak Matrix Balanced Matrix Strong Projectized 1. Part Time 2. No Authority 3. No Resources 1. Part Time 2. Little Authority 3. Little Resources 1. Full Time 2. Limited Authority 3. Part Time Resources 1. Full Time 2. High Authority 3. Full Time Resources 1. Full Time 2. Full Authority 3. Full Time 4. Full Administration Project Expeditor (PE): The project expeditor acts as a staff assistant to the executive who has ultimate responsibility for the project. The PE has little formal authority. The PE's primary responsibility is to communicate information between the executive and the workers. Project Coordinator (PC): Project coordinator is moved out of facilitator position into a staff position reporting to a much higher level in the hierarchy. The PC has more authority and responsibility than a PE. The PC has the authority to assign work to individuals within the functional organization. Composite Organization: Involves all organizational structures at various levels. Functional organizational structure with a team that have many of the projectized characteristics. Team may include full-time staff from functional departments. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

19 Mapping of PM Process Groups to PM Knowledge Area Process Group Knowledge Area Initiate (2) Plan (24) Execute (8) Monitor & Control (11) Close (2) 47 Integration (6) Scope (6) Time (7) Cost (4) Develop Project Charter Develop Project Management Plan Plan Scope Management Collect Requirements Define Scope Create WBS Plan Schedule Management Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule Plan Cost Management Estimate Costs Determine Budget Direct and Manage Project Work Monitor and Control Project Work Perform Integrated Change Control Control Scope Validate Scope Control Schedule Control Costs Quality (3) Plan Quality Management Perform Quality Assurance Control Quality Human Resource (4) Plan Human Resource Management Acquire Project Team Develop Project Team Manage Project Team Communications (3) Plan Communications Management Manage Communications Control Communications Risk (6) Plan Risk Management Identify Risks Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis Plan Risk Responses Control Risks Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 61 Close Project or Phase Procurement (4) Plan Procurement Management Conduct Procurements Control Procurements Close Procurements Stakeholder (4) Identify Stakeholders Plan Stakeholder Management Manage Stakeholder Engagement Control Stakeholder Engagement 19

20 Documents Major Project Documents Management Plans Components Project Charter Project Management Plan Project Scope Statement Requirements Plan Scope Plan Schedule Plan Quality Plan Communications Plan Cost Plan Human Resource Plan Stakeholders Plan Risk Plan Procurement Plan Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

21 Project Management Framework and Environment With Project Management The customer is satisfied or delighted with the final deliverable (a product, service, process, or plan). The deliverable is given to the customer on time. The project team has stayed within the budget and staffing allocations. Team members have increased their skills and knowledge as a result of the project. The organization has benefited from the lessons learned by the team. Without Project Management Excessive work loads for some individuals. Cost overruns. Team members lack the right skills or expertise for the project. Staffing conflicts with other projects or assignments. Relationships among team members are strained. The scope of the project keeps changing. Work is redone or duplicated. Resources are insufficient. Deadlines are missed. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

22 Project Management Framework and Environment Review Questions Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

23 PM Knowledge Area Agenda 1. Project Scope Management 2. Project Time Management 3. Project Human Resource Management 4. Project Procurement Management 5. Project Cost Management 6. Project Quality Management 7. Project Risk Management 8. Project Communications Management 9. Project Stakeholder Management 10. Project Integration Management Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

24 (1) Scope Management Concerned with the work of the project. Only the work that is required to complete the project. 1. Plan Scope Management 2. Collect Requirements 3. Define Scope 4. Create WBS 5. Validate Scope 6. Control Scope Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

25 INPUTS 1. Project management plan 2. Project charter 3. Enterprise environmental factors 4. Organizational process assets (1) Scope Management (1.1) Plan Scope Management TOOLS & TECHNIQUES 1. Expert judgment 2. Meetings OUTPUTS 1. Scope management plan 2. Requirements management plan Documenting how the project scope will be defined, validated, and controlled (2) Project Charter: Provides the project context needed to plan the scope management processes. Provides high level project description and product characteristics from the project Statement of Work (SOW). (3) Enterprise Environmental Factors: Organization s culture Infrastructure Personal administration Market place conditions (1) Expert Judgment: Knowledgeable and Experienced parties Any group or person with specialized education, knowledge, skill, experience, or training in developing scope management plans. (4) Organizational Process Assets: Policies and Procedures Historical information, and Lessons Learned (1) Scope Management Plan: Subsidiary plan of the Project Management Plan Describes how the scope will be defined, developed, monitored, controlled and validated Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

26 INPUTS 1. Scope management plan 2. Requirements management plan 3. Stakeholder management plan 4. Project charter 5. Stakeholder register (1) Scope Management (1.2) Collect Requirements TOOLS & TECHNIQUES 1. Interviews 2. Focus groups 3. Facilitated workshops 4. Group creativity techniques 5. Group decision-making techniques 6. Questionnaires and surveys 7. Observations 8. Prototypes 9. Benchmarking 10. Context diagrams 11. Document analysis OUTPUTS 1. Requirements documentation 2. Requirements traceability matrix Defining and documenting stakeholder s needs to meet the project objectives Requirements: Includes the quantified and documented needs and expectations of the sponsor, customer, and other stakeholders. Needs to be elicited, analyzed, and recorded in enough detail to be measured once project execution begins. Defines and manages customer expectations. Becomes the foundation of WBS. Schedule, Cost, Quality planning are all built upon these requirements. The development of requirements begins with an analysis of the information contained in the project charter. Project Requirements : Business requirements, project management requirements, delivery requirements, etc. Product Requirements: Information on technical requirements, security requirements, performance requirements etc. Product Scope: The features and functions that characterize a product, service, or result. Project Scope: The work that needs to be accomplished to deliver a product, service, or result with the specified features and functions. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

27 (4) Project Charter: Document that formally authorizes a project Provides the project manager with the authority to apply organizational resources to project activities. Project Manager should always be assigned prior to the start of PLANNING and preferably while the Project Charter is being developed. Project Charter issued by Project Initiator or Sponsor external to the project organization. (1) Interviews: (1) Scope Management (1.2) Collect Requirements (Cont d) INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Requirements management plan 3. Stakeholder management plan 4. Project charter 5. Stakeholder register Defining and documenting Formal or informal approach. Asking prepared questions & recording responses. One-on-one/multiple interviewers and/or multiple interviewees. 1. Interviews 2. Focus groups 3. Facilitated workshops 4. Group creativity techniques 5. Group decision-making techniques 6. Questionnaires and surveys 7. Observations 8. Prototypes 9. Benchmarking 10. Context diagrams 11. Document analysis (2) Focus Groups: 1. Requirements documentation 2. Requirements traceability matrix Stakeholder s needs to meet the project objectives (5) Stakeholder Register: Public document which identifies stakeholders that can provide information on detailed project and product requirements: 1. Identification information: name, position, role etc. 2. Assessment information: major requirements, main expectations, and potential influence in the project. 3. Stakeholder classification: internal/external, supporter/neutral/resistor, etc. Bring together prequalified stakeholders and subject matter expert to learn about their expectations and attitudes about proposed product, service, or result. Training moderator guides the group through, interactive discussion, designed to be more conversational than a one-on-one interview. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

28 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Requirements management plan 3. Stakeholder management plan 4. Project charter 5. Stakeholder register Defining and documenting (3) Facilitated Workshops: 1. Focused sessions that bring cross-functional stakeholders together to define product requirements. 2. Can build trust, foster relationships, and improve communication among the participants. 3. Issues can be discovered and resolved more quickly than individual sessions. 4. Examples: A. Software development industry uses Joint Application Development (or Design) (JAD) sessions. B. In the manufacturing, Quality Function Deployment (QFD) helps determine critical characteristics of new product development. (1) Scope Management (1.2) Collect Requirements (Cont d) 1. Interviews 2. Focus groups 3. Facilitated workshops 4. Group creativity techniques 5. Group decision-making techniques 6. Questionnaires and surveys 7. Observations 8. Prototypes 9. Benchmarking 10. Context diagrams 11. Document analysis 1. Requirements documentation 2. Requirements traceability matrix Stakeholder s needs to meet the project objectives (4) Group Creativity Techniques: Brainstorming: A technique used to generate and collect multiple ideas related to project and product requirements. Nominal Group Technique: Enhances brainstorming with voting process used to rank the most useful ideas for further brainstorming or for prioritization. Delphi Technique: A selected group of experts answers questionnaire and provides feedback regarding the responses from each round of requirements gathering anonymously. Lead/Mind Mapping: Ideas created through individual brainstorming are consolidated into a single map to reflect commonality and differences in understanding, and generate new ideas. Affinity Diagram: Allows large numbers of ideas to be sorted into groups for review and analysis. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

29 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Requirements management plan 3. Stakeholder management plan 4. Project charter 5. Stakeholder register Defining and documenting (5) Group Decision Making Techniques: Making an assessment process of multiple alternatives with an expected outcome in the form of future actions resolution. Techniques that can be used to generate, classify, and prioritize product requirements: 1. Unanimity: Single course of action. 2. Majority: Support for more than 50% of the members of the group. 3. Plurality: The largest block in a group decides even if a majority is not achieved. 4. Dictatorship: One individual makes the decision for the group. (1) Scope Management (1.2) Collect Requirements (Cont d) 1. Interviews 2. Focus groups 3. Facilitated workshops 4. Group creativity techniques 5. Group decision-making techniques 6. Questionnaires and surveys 7. Observations 8. Prototypes 9. Benchmarking 10. Context diagrams 11. Document analysis 1. Requirements documentation 2. Requirements traceability matrix Stakeholder s needs to meet the project objectives (6) Questionnaires and Survey: Questionnaires and surveys written sets of questions designed to quickly accumulate information from a wide number of respondents. Most appropriate: 1. With broad audiences. 2. When quick turnaround is needed. 3. Where statistical analysis is appropriate. (7) Observations: A direct way of viewing individuals in their environment and how they perform their jobs or tasks and carry our processes. Particularly helpful for detailed processes when there are difficulties and or/users are reluctant to articulate their requirements. Job Shadowing is usually done by a participant observer who performs a process or procedure to experience how it is done to uncover hidden requirements. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

30 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Requirements management plan 3. Stakeholder management plan 4. Project charter 5. Stakeholder register Defining and documenting (8) Prototypes: Obtaining early feedback on requirements by providing a working model of the expected product before actually building it. Since it is tangible, it allows stakeholders to experiment with a model. Supports the concepts of Progressive Elaboration (used in interactive cycles of mock-up creation). (1) Scope Management (1.2) Collect Requirements (Cont d) 1. Interviews 2. Focus groups 3. Facilitated workshops 4. Group creativity techniques 5. Group decision-making techniques 6. Questionnaires and surveys 7. Observations 8. Prototypes 9. Benchmarking 10. Context diagrams 11. Document analysis 1. Requirements documentation 2. Requirements traceability matrix Stakeholder s needs to meet the project objectives (9) Benchmarking: Comparing actual or planned practices, such as processes and operations, to those of comparable organizations to: Identify best practices Generates ideas for improvement, and Provide a basis for measuring performance. (10) Context Diagrams: Example of Scope Model. Depict the product scope by showing a business system (process, equipment, computer system, etc.) and how other systems interact with it. Show inputs to business system, the actor(s) providing the input, the output from the business system, and the actor(s) receiving the output. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

31 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Requirements management plan 3. Stakeholder management plan 4. Project charter 5. Stakeholder register Defining and documenting (1) Scope Management (1.2) Collect Requirements (Cont d) 1. Interviews 2. Focus groups 3. Facilitated workshops 4. Group creativity techniques 5. Group decision-making techniques 6. Questionnaires and surveys 7. Observations 8. Prototypes 9. Benchmarking 10. Context diagrams 11. Document analysis (1) Requirements Documentation: Describes how individual requirements meet the business need for the project. Before being baselined, requirements must be unambiguous ( measureable and testable), traceable, complete, consistent, and acceptable to key stakeholders. Components of requirements documentation can contain: 1. Business need or opportunity as well business and project objectives. 2. Stakeholder requirements, Impacts to other organizational areas, stakeholder communications and reporting 3. Solution requirements: 1. Functional requirements, describing business processes, information. 2. Non-functional requirements, such as level of service, performance, safety 4. Quality requirements and Acceptance criteria, and Transition requirements. 5. Support and training and Requirements assumptions and constraints. 1. Requirements documentation 2. Requirements traceability matrix Stakeholder s needs to meet the project objectives (2) Requirements Traceability Matrix: Table that links requirements to their origin and traces them to throughout the project life cycle. Provides structure or managing changes to the product scope. It includes tracing: 1. Requirements to business needs and objectives. 2. Requirements to project scope/wbs deliverables. 3. Requirements to product design and development etc. Typical attributes: A. Unique identifier, and textual description. B. Owner, source, priority, version, C. Content status (active, cancelled, added, approved). Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

32 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Project Charter 3. Requirements documentation 4. Organizational process assets (1) Scope Management (1.3) Define Scope 1. Expert judgment 2. Product analysis 3. Alternatives generation 4. Facilitated workshops 1. Project scope statement 2. Project documents updates Developing a detailed project scope statement as the basis for future project decisions (4) Organizational Process Assets: Formal & Informal policies, procedures, and guidelines that could impact how the project s scope is managed: 1. Organizational Policies, Processes & Procedures (Forms & Templates). 2. Project files from previous projects. 3. Historical Information (Lessons Learned). (1) Expert Judgment: Each application area has experts who can be used to develop portions of the detailed project scope statement. (2) Product Analysis: Translating project objectives into tangible deliverables and requirements. Includes techniques: Product breakdown, systems analysis, systems engineering, value engineering, value analysis, and functional analysis. (3) Alternatives Generation: Techniques used to generate different approaches to execute and perform the work of the project. The most common used are brainstorming and lateral thinking, pair wise comparisons, etc. Identifies the influence and interests of the various stakeholders and documents their needs, wants, and expectations. Selects, prioritizes, and quantifies the needs, wants, and expectations to create requirements. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

33 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Project Charter 3. Requirements documentation 4. Organizational process assets (1) Scope Management (1.3) Define Scope (Cont d) 1. Expert judgment 2. Product analysis 3. Alternatives generation 4. Facilitated workshops 1. Project scope statement 2. Project documents updates Developing a detailed project scope statement as the basis for future project decisions (1) Project Scope Statement: (2) Project Document Updates: Project Objectives Project documents that may be updated include: Product Scope Description A. Stakeholder register Project Requirements B. Requirements documentation Project Boundaries C. Requirements traceability matrix Project Deliverables Product Acceptance Criteria Project Constraints Project Assumptions o Initial Project Organization o Initial Defined Risks o Schedule Milestones o Fund Limitations o Cost Estimates o Project configuration Management Requirements o Project Specifications o Approval Requirements Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

34 INPUTS 1. Scope management plan 2. Project scope statement 3. Requirements documentation 4. Enterprise environmental factors 5. Organizational process assets (1) Scope Management (1.4) Create WBS TOOLS & TECHNIQUES 1. Decomposition 2. Expert judgment OUTPUTS 1. Scope baseline 2. Project documents updates Subdividing the major project deliverables and project work into smaller, more manageable components Work Breakdown Structure (WBS): A deliverable-oriented grouping of project components that organizes and defines the total Scope of the Project. Work not included in the WBS is outside the Scope of Work. Each Level Assigned Unique Identifier (Number). Numeric Identifiers are known as Code of Accounts or Chart of Accounts. Higher levels represents Phase, Subprojects, Deliverable, Department or Discipline. Milestone is a major accomplishment in a project. (Check point). Higher level usually represents Milestone. Work Breakdown Structure Templates: Using pervious projects as Project a template for new projects. Rolling Wave Planning Technique: Wait until the deliverable or subproject is clarified so details of WBS can be developed. 8/80 Rule for WBS: No task should be less than 8 hours or more than 80 hours. common practice. 100% Rule: WBS represents all product and project work. (1) Decomposition: The process of subdividing deliverables into smaller components. Further breaking into smaller components called Work Packages. The Point at which cost and schedule for the work can be reliably estimated. Subproject Deliverable 1.1 Deliverable 1.2 Phase 1 1 Deliverable 1.3 Phase 2 2 Deliverable 2.1 Deliverable 2.2 Subproject Deliverable Planning Package Work Package Work Package Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 125 Deliverable 3 Planning Package Work Package C B 4.1 Subproj 4 C B 4.2 C B

35 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Scope management plan 2. Project scope statement 3. Requirements documentation 4. Enterprise environmental factors 5. Organizational process assets (1) Scope Management (1.4) Create WBS (Cont d) 1. Decomposition 2. Expert judgment 1. Scope baseline 2. Project documents updates Subdividing the major project deliverables and project work into smaller, more manageable components WBS (Work Breakdown Structure): Is finalized by establishing control accounts for the work packages and a unique identifier from code of accounts. A control account is a management control point where scope, cost, and schedule are integrated and compared to the earned value for performance measurement. Each control account may include one or more work package, but each of the work packages must be associated with only one control account. Should not be confused with the other kinds of breakdown structures, Organizational Breakdown Structure (OBS), Bill of Materials (BOM), Risk (or Resource) Breakdown Structure (RBS). WBS Dictionary: Document that supports the WBS Document. It includes: o Code of Account Identifier. o Statement of Work, and Responsible Organization. o List of Schedule Milestones, and o Others, such as Contract Information, Quality Requirements, Technical References, Charge Numbers, Resources Required, and Estimate of Costs. (1) Scope Baseline: Approved detailed Project Scope Statement. Associated WBS Document. Associated WBS Dictionary Document. (2) Project Documents Updates: Updates to the requirements documentation to include any approved changes to the WBS. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

36 INPUTS 1. Project management plan 2. Requirements documentation 3. Requirements traceability matrix 4. Verified deliverables 5. Work performance data Monitoring & (1) Scope Management (1.5) Validate Scope TOOLS & TECHNIQUES 1. Inspection 2. Group decision-making techniques OUTPUTS 1. Accepted deliverables 2. Change requests 3. Work performance information 4. Project documents updates Formalizing acceptance of the completed project deliverables by the project stakeholders The Scope Validation is the process in which the project customer formally accepts the project deliverables. Scope Validation happens at the end of each phase. It is the customer feedback on a detailed basis. While Scope Validation focuses on Customer Acceptance, Quality Control focuses on Correctness of Work. Quality Control is usually performed before Scope Validation. (4) Verified Deliverables: Verified deliverables have been completed and checked for correctness by the Perform Quality Control process. (1) Inspection: Activities Such as: Measuring, Examining, Testing. Variously called: Reviews, Audits, Walk-through. (1)Accepted Deliverables: Documents completed deliverables that have been accepted in order to be forwarded to the final Close Project or Phase Process. Not accepted deliverables are documented along with the reasons, for non-acceptance. Scope Creep: Refers to uncontrolled changes in a project s scope. It happens when the project team drifts away from its original purpose. Can occur when the scope of a project is not properly defined, documented, or controlled. The scope increase consists of either new products or new features of already approved products. Scope creep can be a result of: poor change control, lack of proper initial identification of what is required, and weak project manager or executive sponsor. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

37 Monitoring & Initiating Planning Executing Monitoring & INPUTS 1. Project management plan 2. Requirements documentation 3. Requirements traceability matrix 4. Work performance data 5. Organizational process assets (1) Scope Management (1.6) Control Scope TOOLS & TECHNIQUES 1. Variance analysis OUTPUTS 1. Work performance information 2. Change requests 3. Project management plan updates 4. Project documents updates 5. Organizational process assets updates Monitoring the status of the project and product scope and managing changes to the scope baseline (1) Project Management Plan: Scope Baseline. Scope Management Plan. Change Management Plan. Configuration Management Plan. Requirements Management Plan. (1) Variance Analysis: Project Performance Measurements are used to assess the magnitude of variation. Determining the cause of variance relative to the Scope Baseline, and deciding whether corrective action is required. (2) Change Requests: Any modifications to the agreed-upon project scope baseline, as defined by the approved project scope statement, WBS, and WBS dictionary. It can include preventive or corrective actions or defect repairs. Change requests are processed for review and disposition according to the Perform Integrated Change Control process. (4) Project Documents Updates: Updates to: Requirements documentation, and Requirements traceability matrix. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

38 (1) Scope Management Practice 1: Review Questions Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

39 (2) Time Management Developing Schedule, keeping project activities on track and monitoring those activities against project plan. 1. Plan Schedule Management 2. Define Activities 3. Sequence Activities 4. Estimate Activity Resources 5. Estimate Activity Durations 6. Develop Schedule 7. Control Schedule Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

40 INPUTS 1. Project management plan 2. Project charter 3. Enterprise environmental factors 4. Organizational process assets (2) Time Management (2.1) Plan Schedule Management TOOLS & TECHNIQUES 1. Expert judgment 2. Analytical techniques 3. Meetings OUTPUTS 1. Schedule management plan Establishing the policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule (2) Analytical Techniques: Strategic options to estimate and schedule the project such as: Scheduling Methodology Scheduling Tools and Techniques Estimating approaches Formats, and Project Management Software (1) Schedule Management Plan: Establishes the criteria and the activities for developing, monitoring, and controlling the schedule: Formal or informal Highly detailed or broadly framed Establish the followings: Project Schedule Model Level of accuracy, and Units of Measure Schedule Model maintenance and control Thresholds Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 145 Scheduling Overview Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)-Fifth Edition, Project Management Institute, Inc, 2013, Fig: 6-2, Page

41 INPUTS 1. Schedule management plan 2. Scope baseline 3. Enterprise environmental factors 4. Organizational process assets (2) Time Management (2.1) Define Activities TOOLS & TECHNIQUES 1. Decomposition 2. Rolling wave planning 3. Expert judgment OUTPUTS 1. Activity list 2. Activity attributes 3. Milestone list Identifying the specific schedule activities that need to be performed to produce the various project deliverables (1) Activity List: Project Work Packages are typically decomposed into smaller components called activities. Provides a basis for estimating, scheduling, executing and monitoring and controlling the project work. Level 1: Project GSM Project Level 2: Subproject Control Account Level 3: Category Division Department Planning Package Level 4: Activity Work Package Access Road Soil Test & Foundation Civil Works Power Works Transmission Radio Works Tower Cable Station Fabricate Deliver Install Hardware Design Order Install Test Accept Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 149 Software 41

42 INPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Milestone list 5. Project scope statement 6. Enterprise environmental factors 7. Organizational process assets (1) Precedence Diagramming Method (PDM): Activity On Node (AON) and uses One Time Estimate for Original Duration (OD). Four Precedence Relationships FS, SF, FF, and SS. (2) Time Management (2.3) Sequence Activities TOOLS & TECHNIQUES 1. Precedence diagramming method (PDM) 2. Dependency determination 3. Applying leads and lags OUTPUTS 1. Project schedule network diagram 2. Project documents updates Identifying and documenting relationships among the project activities (2) Dependency Determination: 1. Mandatory: Hard Logic; Dictated Work. 2. Discretionary: Preferred Logic; Soft Logic or Preferential Logic; Process or Procedure Driven and/or Best Practices. 3. External: External Conditions (Weather, Materials Delivery, Dependencies outside project s control). 4. Milestones: Events to assure that the requirements are met. Recognize Major Events. Conditional Diagramming Methods: (Probabilistic) Graphical Evaluation and Review Techniques (GERT)/ System Dynamic Models. Allow for non-sequential activities such as Loops and Conditional Branches. (3) Applying Leads & Lags: Lead: Allows an acceleration of the successor activity. Lag: Directs a delay in the successor activity. Schedule Network Templates: Can represent an entire project if appropriate Portions of a network template, such as the required project management activities, are common. This is also known as Subnetwork or Fragnet or Fragment. They are associated with repetitive actions within a network diagram. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

43 INPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Resource calendars 5. Risk register 6. Enterprise environmental factors 7. Organizational process assets (2) Time Management (2.4) Estimate Activity Resources TOOLS & TECHNIQUES 1. Expert judgment 2. Alternative analysis 3. Published estimating data 4. Bottom-up estimating 5. Project management software OUTPUTS 1. Activity resource requirements 2. Resource breakdown structure (RBS) 3. Project documents updates Estimating the type and quantities of resource required to perform each schedule activity (4) Resource Calendars: Working days and non-working days. Active or Idle. Resource Specific holidays and/or availability. Identify the quantity of each resource available during each availability period. (3) Published Estimating Data: Companies routinely publish updated production rates and units costs of resources. Effort vs. Duration: Effort is the amount of labor that is applied to a task. Duration is how long the task is expected to take with the given amount of labor. Resource Capabilities: The abilities of the project team members must be taken into consideration. (4) Bottom-up Estimating: Work is decomposed into more details. Resources needed for more detailed piece of work are estimated. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

44 INPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Resource calendars 5. Risk register 6. Enterprise environmental factors 7. Organizational process assets (2) Resource Breakdown Structure (RBS): A hierarchical structure of the identified resources by resource category and resource type. It standardizes the Departments personnel resources to facilitate planning and controlling of project work. (2) Time Management (2.4) Estimate Activity Resources (Cont d) TOOLS & TECHNIQUES 1. Expert judgment 2. Alternative analysis 3. Published estimating data 4. Bottom-up estimating 5. Project management software OUTPUTS 1. Activity resource requirements 2. Resource breakdown structure (RBS) 3. Project documents updates Estimating the type and quantities of resource required to perform each schedule activity Ref: Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

45 INPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Activity resource requirements 5. Resource calendars 6. Project scope statement 7. Risk register 8. Resource breakdown structure 9. Enterprise environmental factors 10.Organizational process assets (4) Activity Resource Requirements: Assigned Resources to complete an activity. Have an effect on the duration of the activity. (1) Expert Judgment: Estimates done by Team Members. Avoid Bias and comply with Scientific Means. Mix it with Historical Information. (2) Analogous Estimating: Called Top Down Estimating. Uses Estimates of Similar Activity. Useful in early stage of the project and Project Evaluation Process. (2) Time Management (2.5) Estimate Activity Durations TOOLS & TECHNIQUES 1. Expert judgment 2. Analogous estimating 3. Parametric estimating 4. Three-point estimates 5. Group decision-making techniques 6. Reserve analysis OUTPUTS Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page Activity duration estimates 2. Project documents updates Approximating the number of work periods that will be needed to complete individual schedule activities (3) Parametric Estimating: Quantitatively Based Durations. Utilized unit & productivity rate. Conservative. (4) Three-Point Estimates: Three types of estimates: Most likely: Realistic. Optimistic: Best-case scenario. Pessimistic: Worst-case scenario. (1) Activity Duration Estimates: Risk Register: Information on identified risks (Threats or Opportunities). Risks with rating of high probability or high impact. Activity Cost Estimates: Project activity cost estimates can be developed in sufficient detail to provide estimated resources for each schedule activity. (6) Reserve Analysis: (Contingency Called, Reserves, Buffer or Contingency time. Can be Fixed or Percentage of Estimated Duration, or developed by quantitative schedule risk analysis. Can be used completely or partially. 45

46 Approximating the number of work periods that will be needed to complete individual schedule activities Classes of Estimates and their accuracy (%) (Estimate Actual) /Actual x 100 Estimate Range from Actual Remarks Rough Order of Magnitude (ROM) -50% to 100% Order of Magnitude -25% to 75% Budgetary -10% to 25% Definitive -05% to 10% (2) Time Management (2.5) Estimate Activity Durations (Cont d) INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Activity resource requirements 5. Resource calendars 6. Project scope statement 7. Risk register 8. Resource breakdown structure 9. Enterprise environmental factors 10.Organizational process assets 1. Expert judgment 2. Analogous estimating 3. Parametric estimating 4. Three-point estimates 5. Group decision-making techniques 6. Reserve analysis Estimates in high range (Initiation Phase). An approximate estimate made without detailed data. Used during the initial evaluation of the project (Concept). Other terms: Feasibility, Conceptual, Ball Park. To establish activities durations required for the project (Development). Also used to obtain approval for the project. Other terms: Appropriations, Capital (Cost). Prepared from well defined specifications, data, drawings, etc. Used for bid proposals, bid evaluations, contract changes, extra work, legal claims, permit and government approvals. Other terms: Engineering, Finalized. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page Activity duration estimates 2. Project documents updates 46

47 INPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Project schedule network diagrams 5. Activity resource requirements 6. Resource calendars 7. Activity duration estimates 8. Project scope statement 9. Risk register 10.Project staff assignments 11.Resource breakdown structure 12.Enterprise environmental factors 13.Organizational process assets (2) Critical Path Method (CPM): (Next Slide) Calculates Single, Deterministic Dates. No Resource limitations (Forward & Backward Pass). Total Float (Float/Slack) = Late Dates Early Dates. Critical Path (Longest Path) with ZERO Total Float Activities. (7) Schedule Compression: Shortens the project schedule Without changing the project scope : Crashing: Greatest Compression with less cost. Fast Track: Parallel Activities and Increases risk. (2) Time Management (2.6) Develop Schedule TOOLS & TECHNIQUES 1. Schedule network analysis 2. Critical path method 3. Critical chain method 4. Resource optimization techniques 5. Modeling techniques 6. Leads and lags 7. Schedule compression 8. Scheduling tool Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 173 OUTPUTS 1. Schedule baseline 2. Project schedule 3. Schedule data 4. Project calendars 5. Project management plan updates 6. Project documents updates Analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule (1) Schedule Network Analysis: Technique that generates the project schedule. It calculates ES, EF, LS, LF. Analytical Techniques: CPM, PERT and GERT. Law of Diminishing Returns: (Diminishing Marginal Returns) A law of economics stating that, as the number of new employees (Efforts) increases, the marginal (Output/Yield) of an additional employee (Efforts) will at some point be less than the marginal product (Output/Yield) of the previous employee (Efforts). Concurrent Engineering: (Is Not Fast Tracking) An approach to project staffing that calls for the implementers to be involved in the design phase. 47

48 Critical Path Method (CPM): 1. Start Beginning of the Day. 2. Finish End of the Day. 3. Early Start: Earliest Possible to Start. 4. Late Finish: Latest Possible to Finish. Total Float (Float) (Slack) is: (L) Start (E) Start OR (L) Finish (E) Finish Free Float (Current Activity) is: Min [ES of Succeeding Activities] EF of Current Activity 1 Start A B G End The Longest Path (Critical Path) Total Project Duration: 13 days 3 8 Start A E 6 D C 6 B 6 (2) Time Management (2.6) Develop Schedule (Cont d) 9 13 G F H I K 3 13 Activity Duration Predece ssor I Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, D ES EF Succes sor 8 9 H, K LS LF Total Float A B,C,D,E B 6 A 3 8 F,G C 6 A 3 8 End D 5 A 3 7 I E 6 A 3 8 K F 3 B 9 11 End G 5 B 9 13 End H 2 I End K 3 I,E End End 0 G, F,C,H,K End Backward Pass ES LS ACT OD EF LF Free Float Forward Pass Total Float (Float) (Slack) ES LS ACT OD 2 EF LF 48

49 Program Evaluation & Review Technique (PERT) : (Very Rarely Used) Uses Weighted Average duration estimates and Distribution s Mean (EV) instead of Most Likely Value (CPM). Is a network model that allows randomness in activity completion times. Developed in late 1950 s for the US Navy s Polaris project having thousands of contactors. PERT Formulas: Activity Duration Estimate E(V) Standard Deviation (STD) Variance (P+4M+O)/ 6 (P O) / 6 (STD) 2 P = Pessimistic, Worst Scenario M = Most Likely, Realistic O = Optimistic, Best Scenario (2) Time Management (2.6) Develop Schedule (Cont d) Left Skew Activity P M O E(V) STD VAR = (STD) 2 A B C Project 29 (15.79) = O O Most Likely Mean= E(V) Mean= E(V) Most Likely P P Right Skew Confidence Level Project Duration 68.26% Between (29-STD) and (29+STD) 95.46% Between (29-2xSTD) and (29+ 2xSTD) 99.73% Between (29-3xSTD) and (29+ 3xSTD) 99.99% Between (29-6xSTD) and (29+ 6xSTD) Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

50 INPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Project schedule network diagrams 5. Activity resource requirements 6. Resource calendars 7. Activity duration estimates 8. Project scope statement 9. Risk register 10.Project staff assignments 11.Resource breakdown structure 12.Enterprise environmental factors 13.Organizational process assets (3) Critical Chain Method: (Dr. Eliyahu Goldratt, 97) Technique that accounts for Impacts of Project s Variations (Uncertainty), and Human Behaviors (Perception/Response). Combines deterministic and probabilistic approaches. Accounts for Task Dependencies and Resources Dependencies. Uses Feeding Buffers (Key Tasks) and Project Buffer-(End of the Project). After critical chain is identified, resource availability is entered and resource-limited schedule is determined. Focuses on managing the buffer activity durations and the resources applied to planned schedule activities. (2) Time Management (2.6) Develop Schedule (Cont d) TOOLS & TECHNIQUES 1. Schedule network analysis 2. Critical path method 3. Critical chain method 4. Resource optimization techniques 5. Modeling techniques 6. Leads and lags 7. Schedule compression 8. Scheduling tool (4) Resource Optimization Techniques: Resource Leveling Heuristics (Rule of Thumb): Preliminary Early Start Dates. Allocate Scarce Resource to Critical Path Activities. Results in Longer project and Resource-Base Method. Resource Smoothing: Delayed within Total and Free Float Only. (5) Modeling Techniques: What If Scenario: Using the schedule model to compute the different scenarios. The outcome can be used to assess the feasibility of the project schedule. Simulation involves calculating multiple project durations with different set of activity assumptions (Monte Carlo Simulation). Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 172 OUTPUTS 1. Schedule baseline 2. Project schedule 3. Schedule data 4. Project calendars 5. Project management plan updates 6. Project documents updates Analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule Monte Carlo Analysis: A Distribution of possible activity durations is defined for each schedule activity and used to calculate a distribution of possible outcomes for the total project duration. 50

51 INPUTS 1. Schedule management plan 2. Activity list 3. Activity attributes 4. Project schedule network diagrams 5. Activity resource requirements 6. Resource calendars 7. Activity duration estimates 8. Project scope statement 9. Risk register 10.Project staff assignments 11.Resource breakdown structure 12.Enterprise environmental factors 13.Organizational process assets (1) Schedule Baseline: Specific version of the project schedule. It is accepted and approved by the project management team. (3) Schedule Data: Supporting data for project schedule includes: 1. Schedule Milestones and Activities, activity attributes. 2. Other supporting details: Resource requirements by time period. Alternative schedules, and Schedule Contingency reserves. Constraints: Constraints will restrict when and how the project may be implemented. Added to a project for a purpose, not just to rush the work to completion. (2) Time Management (2.6) Develop Schedule (Cont d) TOOLS & TECHNIQUES 1. Schedule network analysis 2. Critical path method 3. Critical chain method 4. Resource optimization techniques 5. Modeling techniques 6. Leads and lags 7. Schedule compression 8. Scheduling tool (2) Project Schedule: Shows Planned (Start-Finish). Can be presented in summary form, Master Schedule or Milestone Schedule or details. Can be presented in Tabular form, or Graphical form using: (a) Project Schedule Network Diagram: Shows both the project network logic and the project s critical path schedule activities with relationships. Presented in AON diagram format (b) Logic Bar Chart: Shows Start and End dates with Relationships. (Gantt Chart) Summary Bars. No Relationships. (Hammock Activity) (c) Milestone Charts: Only identifies the schedule start or completion of major deliverables. No Relationships. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 172 OUTPUTS 1. Schedule baseline 2. Project schedule 3. Schedule data 4. Project calendars 5. Project management plan updates 6. Project documents updates Analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule 51

52 Monitoring & Initiating Planning Executing Monitoring & INPUTS 1. Project management plan 2. Project schedule 3. Work performance data 4. Project calendars 5. Schedule data 6. Organizational process assets (2) Time Management (2.7) Control Schedule TOOLS & TECHNIQUES 1. Performance reviews 2. Project management software 3. Resource optimization techniques 4. Modeling techniques 5. Leads and lags 6. Schedule compression 7. Scheduling tool OUTPUTS 1. Work performance information 2. Schedule forecasts 3. Changes requests 4. Project management plan updates 5. Project documents updates 6. Organizational process assets updates Monitoring the status of the project to update project progress and manage changes to the schedule baseline (1) Performance Reviews: Actual start and finish dates. Remaining durations for unfinished activities. Earned Value (Percent complete of in-progress schedule activities can be also included). Trend analysis: examines project performance over time to determine whether performance is improving or deteriorating Critical Path Method: Comparing the progress along the critical path to determine schedule status, using Variance Analysis. Variance Analysis: Time Control. Comparing Target with Actual/ forecast. Detect Deviation. Request Corrective Actions. (1) Work Performance Information: Produces the Schedule Variance (SV) and Schedule Performance Index (SPI). Assesses the magnitude of schedule Variations. Identifies if the schedule variation requires Corrective Actions. (4) Project Management Plan updates: May or may not require adjustment to Project Plan. Schedule Baseline: Anything to bring Schedule on Track. Expediting: Special Action. Requires Root-Cause Analysis. Schedule Recovery can be planned and executed. Revisions: Special Category of Schedule Updates. Re-baseline: Provides realistic data to measure performance. Multiple Baselines. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

53 (2) Time Management Practice 2: Review Questions Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

54 (3) Human Resource Management Involves all aspects of people management and personal interaction. 1. Plan Human Resource Management 2. Acquire Project Team 3. Develop Project Team 4. Manage Project Team Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

55 INPUTS 1. Project management plan 2. Activity resource requirements 3. Enterprise environmental factors 4. Organizational process assets (3) Enterprise Environmental Factors: Organizational: Involvement of departments and relationship. Technical: Different disciplines & specialties. Interpersonal: Formal & informal reporting relationship. Logistical: Physical locations of team and time zones if any. Political: Individual goals and agenda of the potential stakeholders. Constraints: Organization Structure: Weak-Strong Matrix. Collective Agreements: Unions. Economic Conditions: Hiring freezes, reduced training funds, travel budget etc. (3) Human Resource Management (3.1) Plan Human Resource Management TOOLS & TECHNIQUES 1. Organization charts and position descriptions 2. Networking 3. Organizational theory 4. Expert judgment 5. Meetings (3) Organizational Theory: Provides information regarding the ways people, teams, and units behavior. OUTPUTS 1. Human resource management plan Identifying and documenting project roles, responsibilities, and reporting relationships, as well creating the staffing management plan (1) Organization Charts and Position Descriptions: Team members roles and responsibilities formats: 1. Hierarchical: Organizational Break Down Structure (OBS), shows responsibilities by Department. Uses WBS, RBS and Work Packages. 2. Matrix: Responsibility Assignment Matrix (RAM). Example: RACI: Responsible, Accountable, Consult, Inform. 3. Text Oriented: Free format Heading and Sub-Heading Responsibilities, Authority, Competencies, Qualifications. (2) Networking: Informal interaction with others in an organization or industry: Proactive Correspondence. Luncheon Meetings. Informal Conversations. Trade Conferences. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

56 Roles and Responsibilities: Role: (Who Does What) Describing the portion of a project for which a person is accountable. Responsibility: (Who Decides What Role) The work that a project team member is expected to perform in order to complete the project's activities. Authority: The right to apply project resources, make decisions, and sign approvals. Competency: The skill and capacity required to complete project activities. Activity Head Team Leader Engineer Act. A C A R Act. B I R A Act. C R I C Act. D A C R (3) Human Resource Management (3.1) Plan Human Resource Management (Cont d) INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Activity resource requirements 3. Enterprise environmental factors 4. Organizational process assets 1. Organization charts and position descriptions 2. Networking 3. Organizational theory 4. Expert judgment 5. Meetings Staffing Management Plan: Describes when and how human resource requirements will be met: Example of RAM: Roles: RACI R: Responsible A: Accountable C: Consult I: Inform Staff Acquisition. Timetable: Resource Histogram: Illustrates the number of hours that a person, department, or entire project team will be needed each week or month over the course of the project. Release Criteria. Training needs, Recognition and rewards. Compliance, and Safety. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 258 Staff days for Consultants 1. Human resource management plan Identifying and documenting project roles, responsibilities, and reporting relationships, as well creating the staffing management plan (1)Human Resource Management Plan: Resource Histogram Jan Feb Mar Apr 56

57 Initiating Planning Executing Monitoring & INPUTS 1. Human resource management plan 2. Enterprise environmental factors 3. Organizational process assets (3) Human Resource Management (3.2) Acquire Project Team TOOLS & TECHNIQUES 1. Pre-assignment 2. Negotiation 3. Acquisition 4. Virtual teams 5. Multi-criteria decision analysis Obtaining the human resources needed to complete the project OUTPUTS 1. Project staff assignments 2. Resource calendars 3. Project management plan updates (2) Enterprise Environmental Factors: Availability. Ability. Experience. Interests. Cost. (3) Organizational Process Assets Policies. Guidelines. Procedures governing staff assignments. Recruiting. Hiring. Orientation. 1. Pre-assignment: Team members are known in advance. 2. Negotiation: To negotiate with Functional Managers, and other performing organization to appropriately assign scarce or specialized resources. 3. Acquisition: Required services can be acquired from outside sources. 4. Virtual Teams: Groups of people with a shared goal, who fulfill their roles with little or no time spent face to face. 5. Multi-criteria decision analysis: Used as a part of acquiring the project team. The criteria are weighted according to the relative importance of the needs within the team. Examples: Availability, Cost, Experience, and Ability, Knowledge, skills, Attitude, and International Factors. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

58 Initiating Planning Executing Monitoring & INPUTS 1. Human resource management plan 2. Project staff assignments 3. Resource calendars (3) Human Resource Management (3.3) Develop Project Team TOOLS & TECHNIQUES 1. Interpersonal skills 2. Training 3. Team-building activities 4. Ground rules 5. Colocation 6. Recognition and rewards 7. Personnel assessment tools OUTPUTS 1. Team performance assessments 2. Enterprise environmental factors updates Improving the competencies, team interaction, and the overall team environment to enhance project performance (1) Interpersonal Skills: (Soft Skills) Skills such as Empathy, Influence, Creativity, and Group Facilitation are valuable assets when managing the project team. Forming Storming Norming Project Start Performing Effective Team Symptoms : Better Conflict Resolution. Commitment to the project & Team. High Job Satisfactions. Enhanced Communications. A sense of belonging and Purpose. Adjourning Project Finish (4) Ground Rules: Clear Expectations regarding acceptable behavior. (5) Colocation: Moving many or all team members to same physical location, Example War Room: Meeting room with all or most team members. Team Building Activities: Forming: Beginning of Team Formation. Storming: Team Members become Confrontational. Norming: Team members know each other fairly well. Performing: Perfection. Great Team Ending Results. Adjourning: The work is completed and the team breaks up. Ineffective Team Symptoms : Lack of motivation I don t care Project work that is not satisfying Status Meeting that turn into Storming Session Poor Communications Lack of Respect and Lack of Trust. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 273 (7) Personnel Assessment Tools : Attitudinal Surveys Specific Assessments Structured Interviews Ability Tests Focus Groups 58

59 Initiating Planning Executing Monitoring & Recognition and Rewards Systems: Motivation can be Extrinsic: Material Things; Bonuses, Certificates, Stock Options, Special Employee Benefits (PERKs) e.g. Parking, Car etc. and Fringe Benefits: Standard Employee Benefits. Motivation can be Intrinsic: Specific to individuals (Naturally Driven to be Motivated- Cultural and Religious). Organizational and Motivation Theories: 1) Maslow s Hierarchy of Needs: Human has Five Basic Needs, Food (Physiological), Security (Safety), Social, Self Esteem and Self Actualization (2) Herzberg s Theory of Motivation: (Frederick Herzberg) Two Catalysts contribute to Motivation: Hygiene Agents: Job Security, Paycheck, Safe Environment Motivating Agents: Responsibility, Appreciation, Recognition, chance of development (3) Expectancy Theory: Expectation of a positive outcome drives motivation (4) Achievement Theory: People are motivated by the need for THREE things: Achievement, Power and Affiliation (3) Human Resource Management (3.3) Develop Project Team (Cont d) (5)Theory X and Theory Y: (McGregor) X Managers are like dictators, impose rigid controls. Believe people don t like work and will try to steer clear of it. Y Managers believe people are creative and committed to project goals, and are able to perform their Roles & Responsibilities. (6) Ouchi s Theory Z: (William Ouchi- Japanese workplace) Similar to theory Y. Workers are motivated by a sense of commitment, opportunity, and advancement. Credits the idea of Lifetime Employment, Consensus Decision Making, and Collective Responsibility. Maslow s Hierarchy of Needs: Halo Effect: (Should be avoided) Physiological Needs An assumption that because the person is good at a technology, Food, Drink, shelter, breathing, survival he/she will be good as a project manager. You are a great programmer. I would like to assign you to manage x project and expect you to do Same Good Job. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013 Self Actualization Morality, Problem Solving, Lack of Prejudice Self Esteem Needs Confidence, Respect, Achievement Social Needs Love, Family, Friend, Marriage Safety Needs Security (Health, Property, Job) 59

60 Initiating Planning Executing Monitoring & INPUTS 1. Human resource management plan 2. Project staff assignments 3. Team performance assessments 4. Issue log 5. Work performance reports 6. Organizational process assets (3) Human Resource Management (3.4) Manage Project Team TOOLS & TECHNIQUES 1. Observation and conversation 2. Project performance appraisals 3. Conflict management 4. Interpersonal skills OUTPUTS 1. Change requests 2. Project management plan updates 3. Project documents updates 4. Enterprise environmental factors updates 5. Organizational process assets updates Tracking team member performance, providing feedback, resolving issues, and coordinating changes to enhance project performance (2) Project Performance Appraisals: (3) Conflict Management: (Time, Importance, Relationship, and Power ) Can be Formal and Informal. Forcing (Dictating): The person with the power makes the decision. The Depends on project: Length, Complexity, decision made may not be the best for the project, but it is fast (win-lose). Organizational Policy, Contract, and Quality Withdrawal (Avoidance): Worst conflict resolution approach. One side of the of regular communication. argument walks away from the problem. Not paying attention to the conflict 360-Degree Feedback: (Observed Behavior) and not taking any action to resolve it (yield-lose) or (lose-lose). Process to improve individual and work-unit Compromising (Bargaining): Requires that both parties give up something. performance. Partially satisfactory to both parties, but completely satisfactory to neither Feedback should come from distinctly (lose-lose) or (win-win). different sources (subordinates, peers, Smoothing (Accommodating): Minimizing the perceived size of the problem. customers and clients, managers). Temporary Solution, but can calm team relations. Allowing the other party to Making that Performance information satisfy their concerns while neglecting your own (lose-win). available to the individual for further Collaborating (Consensus): Cooperating with the other party to understand improvements and enhancements. their concerns and expressing your own concerns in an effort to find a 360-degree because there are 360 mutually and completely satisfactory solution (win-win). degrees in a circle. Confronting (Problem Solving): Directly analyzing and solving the problem. Best Strategy (win-win). Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

61 Initiating Planning Executing Monitoring & INPUTS 1. Project staff assignments 2. Project management plan 3. Team performance assessments 4. Performance reports 5. Organizational process assets Leadership Styles: Autocratic: Making decisions without Input. Also called Directing Telling others what to do. Consultative: Inviting Ideas from others Persuading. Shareholder: Team had ultimate authority for the final decision Delegating. Facilitating: Coordinating the others inputs. Coaching: Instructing and training others. Supporting: Providing assistance along the way. Consensus: Problem solving group with decision making based on group agreement Participating. Laissez-Faire: A French phrase meaning "let do, let go, let pass." Leave it alone. Places few demands or controls on the team member. "Do your own thing. (3) Human Resource Management (3.4) Manage Project Team (Cont d) TOOLS & TECHNIQUES 1. Observation and conversation 2. Project performance appraisals 3. Conflict management 4. Issue log 5. Interpersonal skills Power Description Source Sources of Conflicts: Schedules Priorities Resources Technical Beliefs Administrative Policies Project Costs Personalities Expert Referent Reward Coercive (Penalty) Formal OUTPUTS 1. Enterprise environmental factors updates 2. Organizational process assets updates 3. Change requests 4. Project management plan updates Tracking team member performance, providing feedback, resolving issues, and coordinating changes to enhance project performance The Power of the Leader: (Influence and Limit of Authority) Power based on a person s knowledge or expertise. Borrowed power that is transferred from a formal leader; or earned power (role model) Admiring. Power based on the ability to provide or withhold rewards. Power based on intimidation or use of force to push one s issues or decision. Formal Authority based on a title or position within an organization. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 279 Personal Personal Charisma Legitimate Legitimate Legitimate 61

62 (3) Human Resource Management Practice 3: Review Questions Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

63 (4) Procurement Management Includes the contract management and change control processes required to develop and administer contracts (Services) or purchase orders (Goods) issued by authorized project team members. 1. Plan Procurement Management 2. Conduct Procurements 3. Control Procurements 4. Close Procurements Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

64 INPUTS 1. Project management plan 2. Requirements documentation 3. Risk register 4. Activity resource requirements 5. Project schedule 6. Activity cost estimates 7. Stakeholder register 8. Enterprise environmental factors 9. Organizational process assets (4) Procurement Management (4.1) Plan Procurement Management TOOLS & TECHNIQUES 1. Make-or-buy analysis 2. Expert judgment 3. Market research 4. Meetings Limited Choices of Vendors: (1) Sole Source: Only one qualified Seller exists in the marketplace. (2) Single Source: Organization prefers to contract with Specific Seller. (3) Oligopoly: Very few Sellers, and the actions of one Seller will have a direct effect on the other seller s prices and the overall market condition. (4) Monopoly: A situation in which a single company owns all or nearly all of the market for a given type of product or service. OUTPUTS 1. Procurement management plan 2. Procurement statement of work 3. Procurement documents 4. Source selection criteria 5. Make-or-buy decisions 6. Change requests 7. Project documents updates Determining and documenting purchasing decisions, the approach, and identifying potential sellers (1) Make-or-Buy Analysis: Cost effective Analysis (Cost includes Direct Costs: costs incurred for work in project, and Indirect Costs: Overhead allocated. Cost of doing business). Example of buying Crane versus Renting (Capital Item). Capacity Issue, Skills, availability and trade secrets. Example: Rent a Crane or Buy a Crane Item Buy Rent Price 70,000 0 Monthly Rent 0 10,000 Service/Month 3,000 1,000 Total Cost (10 Months) 100, ,000 Decision (if it is to be used for at least 10 months) Buy Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

65 INPUTS 1. Project management plan 2. Requirements documentation 3. Risk register 4. Activity resource requirements 5. Project schedule 6. Activity cost estimates 7. Stakeholder register 8. Enterprise environmental factors 9. Organizational process assets (4) Procurement Management (4.1) Plan Procurement Management (Cont d) TOOLS & TECHNIQUES OUTPUTS 1. Make-or-buy analysis 1. Procurement management plan 2. Expert judgment 2. Procurement statement of work 3. Market research 3. Procurement documents 4. Meetings 4. Source selection criteria 5. Make-or-buy decisions 6. Change requests 7. Project documents updates Determining and documenting purchasing decisions, the approach, and identifying potential sellers Privity: Confidential and Secret contractual relationship. Contract Information. Contract Types: Contract: A mutually binding agreement that obligates the seller to provide the specified product or service or result and obligates the buyer to pay for it. Contract is Formal ; Specific ; Time Bound ; and Managed. Legally (Binding) Enforceable Contract should contain: 1. An Offer; 2. Accepted and Signed; 3. Consideration (Payment); 4. Lawful and Legal purpose; 5. Executed by someone with Capacity and Authority. Contract Origination: Unilaterally: Common form for Simple type contract Purchase Order. Bilaterally: Procurement Documents translated into a final Contract; also called: Agreement; Subcontract; Memorandum of Understanding (MOU). Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

66 (4) Procurement Management (4.1) Plan Procurement Management (Cont d) Contract Types: Compulsory agreement between two or more parties. 1. Firm Fixed Price (Lump Sum Contracts): (FFP) a) Well defined deliverable for a set price. b) High Risk to the Seller. Used for Projects that will take long time. (1) Fixed Price Plus Incentive Fee Contracts: (FPIF)/ Fixed Price Award Fee (FPAF) a) Buyer includes an incentive or bonus for early completion. b) Some of the risk is borne by the buyer compared to Fixed Price. (2) Fixed Price with Economic Price Adjustment Contracts: (FP-EPA) (3) Unit Price Contracts: a) Seller specifies a set amount for the product rendered by some measurements. b) Rates are preset and agreed upon by the buyer and seller ahead of time. 2. Cost Reimbursable Contracts: a) All costs incurred by the seller are charged back to the Buyer (reimbursed). b) Highest Risk to the Buyer as total costs are uncertain. Requires Auditing. c) Used when there is a lot of Uncertainty regarding the project. (1) Cost Plus Fixed Fee (CPFF): a) Charge Back all project costs to the buyer and include a fixed fee. No motivation. (2) Cost Plus Incentive Fee (CPIF)/ Cost Plus Percentage of Saving (CPPS): a) Incentive is Fixed or otherwise Percentage of Savings. Some motivation for savings. (3) Cost Plus Percentage of Cost (CPPC) a) Incentive is Percentage of Cost, therefore it is the Riskiest to Buyer. b) Seller s profit is increased with increased cost. (4) Cost Plus Award Fee (CPAF): a) Majority of seller s fee is only earned on satisfaction of subjective Performance. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, % SELLER S RISK 100% 100% 0% BUYER S RISK 3. Time & Materials (T&M) Contracts: Crosses between other types, Unknown full amount of contract (Reimbursable) & Unit Rates may be used (Fixed). Sometimes called Unit Price Contracts, and it is ideal for small projects. CPAF FFP FPIF Unit Rate Reimbursable CPIF CPPS CPPC CPFF 66

67 (4) Procurement Management (4.1) Plan Procurement Management (Cont d) (1) Firm Fixed Price (FFP) Lump Sum: Price Scenario 1 Firm Fixed Price (FFP) (Lump Sum) $1,000K Actual Cost $700K Seller's Profit Scenario 2 Final Cost Seller's Loss Price Scenario 1 $300K (Price - Actual Cost) $1,100K $100K on contract (2) Unit Price Contract $1,000K Actual Cost $700K Seller's Profit $300K (Price - Actual Cost) Scenario 2 (Cost per unit is up-market changes) Actual Cost $1,200K Buyer Pays 1,000K Seller s Loss $1,200K 1,000K = 200K Target Cost Target Profit Target Price Ceiling Price Share Ratio Scenario 1 (1) Fixed Price Incentive Fee (FPIF) $1,000K $100K (Seller's Incentive Fee) $1,100K Actual Cost $800K $1,260K (The maximum pay-out to the seller) 70/30 (70% Buyer and 30% Seller) Savings Savings $200K (Target cost - Actual cost) Seller Gets $800K + $100K + 60K = $960K (Actual cost + Fee + 30%*Savings) Buyer Saves $1,100K - $960K = $140K Scenario 2 Actual Cost Seller Gets Buyer s Loss $1,300K (will be paid by Seller) $1,260K (Ceiling Price) (no profit. In addition Seller Incurs 40K Loss) $1,260K - $1,100K = $160K [Ceiling Price Target Price] (the pay-out is $160K over Target price = Ceiling Price) Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

68 (4) Procurement Management (4.1) Plan Procurement Management (Cont d) Fixed Price Incentive Fee (FPIF): 70/30 Sharing Ratio 1.0 Target Cost Estimated Cost Fixed Fee 0.1 Fee Estimated Total Price Target Price 1.1 Point of Total = Target Cost + Assumption Cost Plus Fixed Fee (CPFF) $1,000K PTA Ceiling Price (2) Cost Reimbursement Contracts: Agreed Fixed Fee is (15% of Estimated Cost) = ($150K) $1,150K (Estimated Cost + Fixed Fee) 1.26 Buyer s Sharing Ratio Example: PTA = 1 + ( )/ 0.7 = 1.23 M The amount above which the Seller bears all the loss of Cost Overrun If cost increases to $1,300K the total price would be $1,300K + 15% of the original estimated costs = $1,300K + $150K = $1,450K Estimated Cost Estimated Cost Fee Estimated Total Price Cost Plus Incentive Fee (CPIF) $1,000K Predetermined Fee $100K Sharing Formula Actual Cost $800K 85/15 (buyer absorbs 85% of the uncertainty and the seller absorbs 15% of the risk) Savings $1,000K - $800K = $200K Seller Gets $800K + $100K + $30K = $930K (Actual cost + Fee + (15% * Savings) ) Buyer Saves ($1,000K+$100K) - $930K = $170K Cost Plus Percentage of Cost (CPPC) $1,000K 10% of Final Cost $1,100K (Estimated Cost + 10% * Final Cost) If cost increases to $1,200K, then the total fees would be 10% of the final actual costs ($1,200K) = $120K, hence total cost would be: $1,200K + $120K = $1,320K Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

69 INPUTS 1. Project management plan 2. Requirements documentation 3. Risk register 4. Activity resource requirements 5. Project schedule 6. Activity cost estimates 7. Stakeholder register 8. Enterprise environmental factors 9. Organizational process assets Blanket Order: (Form of Forward Buying) An order the customer makes with its supplier which contains multiple delivery dates scheduled over a period of time, sometimes at predetermined prices. Used when there is recurring need for expendable goods. Items are purchased under a single purchase order rather than processing a separate Purchase Order (PO) each time supplies are needed. Relieving the customer from holding large inventories and avoiding the administrative expense of processing frequent purchase orders, while favoring discount pricing through volume commitments. Repetitive purchase from the same supplier, which are paid in a predictable manner. Used when the order requires numerous shipment / excessive storage. (4) Procurement Management (4.1) Plan Procurement Management (Cont d) TOOLS & TECHNIQUES Forward Buying: The process of buying items in anticipation of their needs. Advantage: Some protection against running out of an item Stock Out. Disadvantage: Risk of becoming obsolete. OUTPUTS 1. Make-or-buy analysis 1. Procurement management plan 2. Expert judgment 2. Procurement statement of work 3. Market research 3. Procurement documents 4. Meetings 4. Source selection criteria 5. Make-or-buy decisions 6. Change requests 7. Project documents updates Determining and documenting purchasing decisions, the approach, and identifying potential sellers (1) Procurement Management Plan: Details how the procurement will be managed. Defines the type of contract to use, what authority the team has, if more than one contractor will be used. How the procurement process will be integrated. How to manage multiple providers. (2) Procurement Statement of Work: Describes the procurement item in sufficient details to allow prospective sellers to determine if they are capable of providing the item. Sufficient Detail may vary, based on the nature of the item, the needs of the buyer, or the expected contract form. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

70 INPUTS 1. Project management plan 2. Requirements documentation 3. Risk register 4. Activity resource requirements 5. Project schedule 6. Activity cost estimates 7. Stakeholder register 8. Enterprise environmental factors 9. Organizational process assets (4) Procurement Management (4.1) Plan Procurement Management (Cont d) TOOLS & TECHNIQUES OUTPUTS 1. Make-or-buy analysis 1. Procurement management plan 2. Expert judgment 2. Procurement statement of work 3. Market research 3. Procurement documents 4. Meetings 4. Source selection criteria 5. Make-or-buy decisions 6. Change requests 7. Project documents updates Determining and documenting purchasing decisions, the approach, and identifying potential sellers (3) Procurement Documents: Used to solicit proposals from prospective sellers. Bids & Quotation, is used when source selection is based on Price. Proposal is used when other considerations, such as technical skills or technical approach, are paramount. Request For Quotation (RFQ) [Low dollars such as supplies/materials]. Invitation For Bid (IFB) [High dollars and Standard items]. Request For Proposal (RFP) [High dollars and Non-Standard items]. Tender Notice (TN). Invitation For Negotiation (IFN). Documents should be structured to facilitate accurate and complete. responses from sellers. Should be rigorous enough to ensure consistent, and comparable responses. (4) Source Selection Criteria: To Rate or Score Proposals. Objective (Specify: the PM must be PMP). Subjective (Specify: have several years of experience. Criteria may be Purchase Price (Known Purchase). Understanding of need. Overall or life-cycle cost. Technical Capability. Technical Approach. Management Approach. Financial Capacity. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

71 Initiating Planning Executing Monitoring & INPUTS 1. Procurement management plan 2. Procurement documents 3. Source selection criteria 4. Seller proposals 5. Project documents 6. Make-or-buy decisions 7. Procurement statement of work 8. Organizational process assets (4) Procurement Management (4.2) Conduct Procurements TOOLS & TECHNIQUES 1. Bidder conference 2. Proposal evaluation techniques 3. Independent estimates 4. Expert judgment 5. Advertising 6. Analytical techniques 7. Procurement negotiations OUTPUTS 1. Selected sellers 2. Agreements 3. Resource calendars 4. Change requests 5. Project management plan updates 6. Project documents updates Obtaining seller responses, e.g. information, quotations, bids, offers or proposals, selecting a seller, and awarding a contract (2) Procurement Document: Is a buyer-prepared formal request sent to each seller. Is the basis upon which a seller prepares a bid for the requested products, services, or results that are described in the procurement documentation. Qualified Seller List: Those sellers who are asked to submit a proposal or quotation. Maintain List of Prospective Sellers. General Information can be obtained from Internet, Library Directories, Local Associations and Trade Catalogs. Detailed Information on specific sources may require more extensive efforts, such as survey and contacting pervious customers. (4) Seller Proposals: Are seller-prepared documents that describe the seller s ability and willingness to provide the requested product. Prepared in accordance with the requirements of the relevant procurement documents. May be supplemented with an oral presentation to provide additional information of the seller s proposal. (1) Bidder Conference: Also called contractor conferences, vendor conferences, and pre-bid conferences. Meetings with prospective sellers prior to preparation of a bid proposal. To ensure all prospective sellers have clear, common understanding on the procurement documents. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

72 Initiating Planning Executing Monitoring & INPUTS 1. Procurement management plan 2. Procurement documents 3. Source selection criteria 4. Seller proposals 5. Project documents 6. Make-or-buy decisions 7. Procurement statement of work 8. Organizational process assets (4) Procurement Management (4.2) Conduct Procurements (Cont d) TOOLS & TECHNIQUES 1. Bidder conference 2. Proposal evaluation techniques 3. Independent estimates 4. Expert judgment 5. Advertising 6. Analytical techniques 7. Procurement negotiations OUTPUTS 1. Selected sellers 2. Agreements 3. Resource calendars 4. Change requests 5. Project management plan updates 6. Project documents updates Obtaining seller responses, e.g. information, quotations, bids, offers or proposals, selecting a seller, and awarding a contract (2) Proposal Evaluation Techniques: Weighting System Assign numerical weights to evaluation criteria. Multiply this by the weight of each criteria factor to come up with the Total Scores for each vendor. Useful where multiple vendors to choose from. (3) Independent Estimates: (Should-cost) estimate Prepared by the Organization internally (Buyer). To be used for Comparison purposes. Large Differences mean: a) SOW or Terms of Contract was not detailed enough. OR b) Vendor Simply failed to respond appropriately. Screening System: Uses Predetermined Performance Criteria. Example: request for Certified Engineers. Weighting and Screening Systems are used in combination to come up with a selection. (5) Advertising: Expanding existing list of Potential Sellers. Letting Potential Vendors know that RFP is available. (7) Procurement Negotiations: To iron out the details of the Contract (Next Slide) Contract Language should include: Price, Responsibilities, Regulations or Laws that apply and an overall approach to the project. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

73 Initiating Planning Executing Monitoring & INPUTS 1. Procurement management plan 2. Procurement documents 3. Source selection criteria 4. Seller proposals 5. Project documents 6. Make-or-buy decisions 7. Procurement statement of work 8. Organizational process assets (4) Procurement Management (4.2) Conduct Procurements (Cont d) TOOLS & TECHNIQUES 1. Bidder conference 2. Proposal evaluation techniques 3. Independent estimates 4. Expert judgment 5. Advertising 6. Analytical techniques 7. Procurement negotiations OUTPUTS 1. Selected sellers 2. Agreements 3. Resource calendars 4. Change requests 5. Project management plan updates 6. Project documents updates Obtaining seller responses, e.g. information, quotations, bids, offers or proposals, selecting a seller, and awarding a contract (7) Procurement Negotiations: Stages of Negotiation: 1. Preparation and Planning: Negotiators get to know each other. 2. Definition of Ground Rules: The negotiators begin the search process. 3. Clarification and Justification: This is the essence of the meeting. 4. Bargaining and Problem Solving: Actual bargaining occurs and concessions are made. The two positions are summed up and final concessions are reached. The agreements are summarized and documented. 5. Agreement Closure and Implementation: Taking care of the details required to finalize the agreement. Negotiation Tactics: Deadline: Imposing a deadline for reaching an agreement. Surprise: One party springs information such as a price change on the other party. Stalling: Agreement cannot be finalized, due to limited authority or the authorized person is absent. Fair and Reasonable: Comparing to another equitable contract case. Delays: To lower down temper and divert from a subject. Refreshments, Recess, etc. Withdrawal: Sometimes done to divert attention from an area of weakness. Arbitration: A third party may be brought in when agreement cannot be reached. Fait Accompli: A party may claim that what is being asked for has already been accomplished and cannot be changed. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

74 INPUTS 1. Project management plan 2. Procurement documents 3. Agreement 4. Approved change requests 5. Work performance reports 6. Work performance data Monitoring & (1) Contract Change Control System: Processes to make contract Changes. Formal system to track disputes and their resolutions and all the paper-works for changes. (4) Procurement Management (4.3) Control Procurements TOOLS & TECHNIQUES 1. Contract change control system 2. Procurement performance reviews 3. Inspections and audits 4. Performance Reporting 5. Payment systems 6. Claims administration 7. Records management system OUTPUTS 1. Work performance information 2. Change requests 3. Project management plan updates 4. Project documents updates 5. Organizational process assets updates Managing the contract relationships, monitoring contract performance, and making changes and corrections as needed (5) Payment Systems: Review and authorize to issue the check. Payment Request: Where the Check gets sent to the vendor. Methods of Project Endings and Termination: (1) Completion (Extinction): Successful performance, Fulfill the scope. (2) Displacement: Becomes obsolete because of another project. (3) Collapse: Ends due to external factors, disasters, mergers. (4) Absorption (Addition): Becomes a permanent part of the sponsoring org. (5) Integration: Distributing some of the resources to other areas. (6) Deterioration (Starvation): A Slow death. Decreasing support gradually. (6) Claims Administration: Direct Negotiation OR Alternative Dispute Resolution (ADR): Mediation: Third party listens and helps put facts into perspective. Usually handled by single mediator who makes no judgments about neither party, only helps facilitating a dialogue and get parties reach resolution. Arbitration: Third party takes the position of the judge and makes decision. Usually Three Arbitrators; One is the Head and the other Two are representing the two parties. Usually Binding and should be complied to. Litigation: Resolving disputes by the legal/judicial Process. (2) Change Requests: Contested Changes: Changes that cannot be agreed upon, hence lead to Disputes, Claims or Appeals. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

75 INPUTS 1. Procurement management plan 2. Procurement documents (4) Procurement Management (4.4) Close Procurements TOOLS & TECHNIQUES 1. Procurement audits 2. Procurement negotiation 3. Records management system OUTPUTS 1. Closed procurements 2. Organizational process assets updates Completing and settling each project procurement, including the resolution of any open items, and closing each procurement applicable to the project or a project phase (1) Procurement Audits: Reviews of the procurement process to determine if they are meeting the right needs. Should occur all the way through the Contract Closeout Process. Purpose: Identify Lessons Learned and determine areas of improvements. Characteristics of : High Probability of Completing the Project. Stakeholders have Least Amount of Influence. Costs Are significantly Lower in this Process. Weak Matrix Organization tends to experience the Least amount of Stress during Closeout. (1) Closed Procurements: Confirmation that project has met all customer requirements for the product of the project (This is Not Close Project, See Next Slide). The customer has formally accepted the project results & deliverables. Kicks off the beginning of the Warranty Period. (2) Organizational Process Assets Updates: Contract File: Complete set of indexed contract documentation, including the closing contract. Deliverable Acceptance: Formal Written Notice by the buyer to the seller, that the deliverables have been accepted or rejected. Lessons Learned Documentation: Developed in conjunction with suppliers/contractors, and subcontractors. Force Majeure: A powerful and unexpected event, such as hurricane or other disasters. Contract Termination: Buyer, Mutually Agreed, Seller (Breach/Default). Release Project Team Members: Releasing team members and let them go to their Functional Managers or another Projects. Communicating any short term plans to Functional Managers for the return of Employees. Celebrating the Accomplishment of the Project to recognize the End of the Project. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

76 INPUTS 1. Procurement management plan 2. Procurement documents (4) Procurement Management (4.4) Close Procurements (Cont d) TOOLS & TECHNIQUES 1. Procurement audits 2. Procurement negotiation 3. Records management system OUTPUTS 1. Closed procurements 2. Organizational process assets updates Completing and settling each project procurement, including the resolution of any open items, and closing each procurement applicable to the project or a project phase (A) Close Project or Phase Process (Integration): Involves performing the project closure portion of Project Management Plan. Used to closeout overall Project when completed. (1) Administrative Closure Procedure: Details all Activities, Interactions, Roles & Responsibilities. Includes integrated activities needed to: (a) Collect Project Records. (b) Analyze project success & failure. (c) Gather Lessons Learned. (d) Archive Project Information. Formally the Project or Project Phase Customer Satisfaction Final Lessons Learned with Team members and End User Project Hand Over Release Resources Celebration (2) Contract Closure Procedure: To Legally Protect both Parties Interests Ensures all activities to settle and close project s contracts are developed and executed during Close Procurements Process. (1) Product Verification: All Works Completed Correctly & Satisfactorily. (2) Financial Closure. (3) Records Management System. (4) Final Contract Performance Reporting. (5) Contract File. (6) Formal Acceptance, Sign Off, and Contract Closure. (B) Close Procurements Process (Procurements): Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 386 the Contract Done when the Contract is Finished or Terminated. All Contracts must be Closed. Termination may occur: Inability, Budget overrun, Lack of Resources etc. The PM performs Procurement Audits for Procurement Process for each contract, then administratively closes the Contract. The PM develops Lessons Learned in conjunction with Suppliers, Contractors, Subcontractors etc.. Administrative 76

77 (4) Procurement Management Practice 4: Review Questions Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

78 (5) Cost Management Centers around Cost and Budget 1. Plan Cost Management 2. Estimate Costs 3. Determine Budget 4. Control Costs Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

79 INPUTS 1. Project management plan 2. Project charter 3. Enterprise environmental factors 4. Organizational process assets (5) Cost Management (5.1) Plan Cost Management TOOLS & TECHNIQUES 1. Expert judgment 2. Analytical techniques 3. Meetings OUTPUTS 1. Cost management plan Establishing the policies, procedures, and documentation for planning, managing, expending, and controlling project costs (3) Enterprise Environmental Factors: Market place conditions; and Commercial databases. (4) Organizational Process Assets: Cost estimating policies. Cost estimating templates. Historical information. Project files & team knowledge. (2) Analytical Techniques: Strategic options to fund the project: Self-funding Funding with Equity Funding with Debit Commercial databases. Finance project resources, such as: Making Purchasing Renting, Leasing Chart of Accounts: Coding system used by finance department. Code of Accounts is an association between charts and WBS. (1) Cost Management Plan: Can establish the following: Units of measure Level of precision Level of accuracy Organizational procedures links Control Thresholds Rules of performance measurement Reporting format Process description Strategic funding.. Etc. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

80 INPUTS 1. Cost management plan 2. Human resource management plan 3. Scope baseline 4. Project schedule 5. Risk register 6. Enterprise environmental factors 7. Organizational process assets (5) Cost Management (5.2) Estimate Costs TOOLS & TECHNIQUES 1. Expert judgment 2. Analogous estimating 3. Parametric estimating 4. Bottom-Up estimating 5. Three point estimates 6. Reserve analysis 7. Cost of quality 8. Project management estimating software 9. Vendor bid analysis 10.Group decision-making techniques OUTPUTS 1. Activity cost estimates 2. Basis of estimates 3. Project documents updates Developing an approximation of the costs of the resources needed to complete project activities (2) Analogous Estimating: Uses values such as scope, cost, budget, and duration of scale such as size, weight, and complexity from previous similar projects (3) Parametric Estimating: Uses a statistical relationship between historical. and other variables (Sq Ft, lines of codes SW etc.). (6) Reserve Analysis: Also called Contingency Allowance. To deal with anticipated, but not certain events (Known unknowns). Different than Management Reserve (Unknown unknowns). (9) Vendor Bid Analysis: Analyzes vendor s bids to determine cost estimates for certain activities Vendor Bid Analysis. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

81 Rough Order of Magnitude (ROM) -50% to 100% Order of Magnitude Estimate 25% to 75% Budgetary Estimate 10% to 25% Definitive Estimate 5% to 10% (5) Cost Management (5.2) Estimate Costs (Cont d) INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Cost management plan 1. Expert judgment 1. Activity cost estimates 2. Human resource management 2. Analogous estimating 2. Basis of estimates plan 3. Parametric estimating 3. Project documents updates 3. Scope baseline 4. Bottom-Up estimating 4. Project schedule 5. Three point estimates 5. Risk register 6. Reserve analysis 6. Enterprise environmental factors 7. Cost of quality 7. Organizational process assets 8. Project management estimating software 9. Vendor bid analysis 10.Group decision-making techniques Developing an approximation of the costs of the resources needed to complete project activities Costs Estimates: [ (Estimate Actual )/Actual ] x 100 Fixed Costs Nonrecurring costs that do not change based on the Estimate Type From Actual number of units. Variable Costs Direct Costs Indirect Costs Costs that rise directly with the size of the project. Costs incurred directly by a specific project. Costs that are part of the overall organization's cost of doing business and are shared among all. Opportunity Cost: The cost of choosing one project over another. This foregoes the potential benefits of another alternative; it is the value of Lost Opportunity. Future Dimension (Requires No Calculations). (NPV Project A: $270 K, and NPV Project B: $190 K, then Opportunity Cost of selecting Project A is $190 K) Sunk Cost: The cost already expended. Decisions about continuing investments should ignore every sunken cost. Past Dimension. Don t Cry over Spilt Milk Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

82 (5) Cost Management (5.2) Estimate Costs (Cont d) (1) Benefit Cost Ratio (BCR): A ratio attempting to identify the relationship between the Benefits and Costs of a proposed project. Used to measure both quantitative and qualitative factors since sometimes Benefits and Costs cannot be measured exclusively in financial terms. Benefits are the same as REVENUE (Pay Back). Represents the Ratio of Total Benefits on Total Costs, both discounted as appropriate. The formula for calculating BCR is: Description Value Pay Back (Revenue) / Benefits 4,000 Profit 1,000 Cost 2,000 Life Cycle Cost 5,200 Example: Benefit Cost Ratio = Revenue (Pay Back) / Costs = 4,000 / 2,000 = 2 (2) Pay Back Period Analysis: (Cash Flow) Time taken to Break Even or Payback initial investment Project A Project B Year1 Year2 Year3 Year4 Year Project A Cash Flow Project B Cash Flow Payback 2.33 yrs 3.33 yrs Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

83 (5) Cost Management (5.2) Estimate Costs (Cont d) (3) Return On Investment: (ROI) (Net Income) Cash Invested = 1,000 Project A: Avg Annual Income= ( )/4 =325 ROI = (325/1,000)*100 = 32.5% Project B: Avg Annual Income = ( )/4=350 ROI = (350/1,000)*100 = 35.0% (4) Time Value of Money: FV = PV * (1+i) n FV: Future Value, PV: Present Value i: Interest rate, n=no. of years Example: FV(1,000) = 1,000 * (1+0.1) 1 = 1,000*1.1 = 1,100 (5) Present Value: PV = FV /(1+i) n PV of various investments can be compared to arrive at the appropriate decision. Project A worth More than Project B Cost of Capital Project A i = 15% Project B Yields 10,000 12,000 Period In 2 years In 4 years Present Value (PV) 7,561 6,861 (6) Net Present Value: (NPV) Difference of discounted cash flows and discounted expenses occurring over the products life cycle. Uses Discounted Cash Flow (DCF) technique: NPV = ( ) ( ) ( ) ( ) A = NPV = ( ) ( ) ( ) ( ) 4 B = If NPV > 0 Accept Project If NPV < 0 Reject Project If NPV > 0 For both projects, Choose the Largest value (7) Internal Rate of Return: (IRR) The discount rate that makes the PV( inflows) = PV (outflows ) Requires Iterative calculation using different Interest Rates. IRR has to be GREATER than the Cost of Capital to be taken forward. Use a (financial) calculator or a computer. For project A, the IRR that solves this equation is 14.5% For project B, the IRR that solves this equation is 11.8% Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

84 (5) Cost Management (5.2) Estimate Costs (Cont d) Depreciation Costing Methods: Records the decreases in the Asset Value, hence it is a fixed cost to production. It is used to allocate the initial investment in the asset as an expense over the life of the asset communicated to stakeholders. Example: Depreciation Calculations for an Asset Cost of $ 100K over an Asset Life of 4 years Asset Life is 4 Years Straight Line Depreciation Assumed Salvage (10K) Sum of Years Digits Assumed Salvage (10K) Annual Depreciation (100K-10K)/4 = 22.5K Sum of Years Digits = =10 First Year Depreciation 22.5 (100K-10K)*4/10 = 36K Declining Balance Depreciation (Accelerated) Double Declining Balance (Rapid Declining) Assumed 20% 2 * (1/ Asset life) = 100 * 20% = 20K ½ 100 * ½ = 50K Second Year Depreciation Third Year Depreciation Fourth Year Depreciation Remaining Value After 4 Years K * 3/10 = 27K K * 2/10 = 18K K * 1/10 = 9K (100K 20K)* 20%= 16K (100K 20K 16K) *20% = 12.8K (100K-20K-16K-12.8K) *20% = (100K 50K)* ½ = 25K (100K 50K 25K)* ½ = 12.5K (100K - 50K - 25K 12.5K)* ½ = 6.25K 10K 10K 40.96K 6.25K Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

85 INPUTS 1. Cost management plan 2. Scope baseline 3. Activity cost estimates 4. Basis of estimates 5. Project schedule 6. Resources calendars 7. Risk register 8. Agreements 9. Organizational process assets Cost Budgeting Tools and Techniques: Similar to Cost Estimating Techniques. 1. Analogous (Similarity) Top-Bottom. 2. Parametric estimating. 3. Bottom-Up estimating. 4. Computerized. 5. Other Cost Budgeting Methods. (5) Funding Limit Reconciliation: Expenditure of funds is reconciled with the funding limits set by the customer or performing organization. Life-Cycle Costing: Cost of the Whole Life of Product Product s Life-Cycle costs include; project cost, operating costs, maintenance costs, support, delivery, etc. (5) Cost Management (5.3) Determine Budget TOOLS & TECHNIQUES 1. Cost aggregation 2. Reserve analysis 3. Expert judgment 4. Historical relationships 5. Funding limit reconciliation OUTPUTS 1. Cost baseline 2. Project funding requirements 3. Project documents updates Aggregating the estimated costs of individual activities or work packages to establish a cost baseline for measuring project performance (1) Cost Baseline: Used as a basis against which to measure, monitor, and control overall cost performance on the project. Referred as Performance Measurement Baseline (PMB). Value Engineering: Finding Less Costly ways to do the same scope of work. Life-cycle costing, together with value engineering techniques, can improve decision-making and is used to reduce cost and execution time and to improve the quality and performance of the project deliverable. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 208 Cumulative Values The difference between the maximum funding and the end of the cost baseline is called Management Reserve (Unknown unknowns) Funding Requirements Cost Baseline Time Expected Cash Flow 85

86 INPUTS 1. Project management plan 2. Project funding requirements 3. Work performance data 4. Organizational process assets Monitoring & (5) Cost Management (5.4) Control Costs TOOLS & TECHNIQUES 1. Earned value management 2. Forecasting 3. To-complete performance index (TCPI) 4. Performance reviews 5. Project management software 6. Reserve analysis OUTPUTS 1. Work performance information 2. Cost forecasts 3. Change requests 4. Project management plan updates 5. Project documents updates 6. Organizational process assets updates Influencing the factors that create cost variances and controlling changes to the project budget Control Costs Includes: Influencing the factors that create changes to the cost baseline. Ensuring requested changes are agreed upon. Managing the actual changes when and as they occur. Assuring the potential cost overruns do not exceed the authorized funding periodically and in total for the project. Monitoring cost performance to detect and understand variances from the cost baseline. Recording all appropriate changes accurately against the cost baseline. Preventing incorrect, inappropriate, or unapproved changes from being included in the report cost or resource usage. Informing appropriate stakeholders of approved changes. Acting to bring expected cost overruns within acceptable limits. Project Budget Management Reserve COST BASELINE Control Account Contingency Reserve Work Package Cost Estimates Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Pages 208, 213 Activity Contingency Reserve Activity Cost Estimates 86

87 Monitoring & Initiating Planning Executing Monitoring & INPUTS 1. Project management plan 2. Project funding requirements 3. Work performance data 4. Organizational process assets (5) Cost Management (5.4) Control Costs (Cont d) TOOLS & TECHNIQUES OUTPUTS 1. Earned value management 2. Forecasting 3. To-complete performance index 4. Performance reviews 5. Project management software 6. Reserve analysis updates Influencing the factors that create cost variances and controlling changes to the project budget 1. Work performance information 2. Cost forecasts 3. Change requests 4. Project management plan updates 5. Project documents updates 6. Organizational process assets (3) Work performance data: Completed and incompleted deliverables. Costs authorized and incurred. Estimates to complete schedule activities. % physically complete of the schedule activities. (2) Forecasting: Making estimates or predictions of conditions in the project s future based on present. Next Slide. Earned Value Technique parameters of BAC, AC, and CPI are used to evaluate: EAC: Estimate At Completion. ETC: Estimate To Complete. (3) To-Complete Performance Index (TCPI): The calculated projection of cost performance that must be achieved on the remaining work to meet a specified management goal such as BAC or the EAC. Next Slide. (4) Performance Reviews: Variance Analysis: Cost variances are calculated using performance Measurement & EVM. Planned Value (PV), Earned Value (EV) and, Actual Cost (AC) are continuously monitored (S-Curve). Trend Analysis Earned Value Performance. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

88 Monitoring & Initiating Planning Executing Monitoring & (1) Earned Value Analysis (EV): Performance Measurement Integrates Scope, Cost and Schedule. Assess Performance Helps to assess Project Performance PV (Planned Value): Budgeted Cost of Work Scheduled. (Value of the amount of work that was planned to be Accomplished) WBS, Budget, (Scheduled) AC (Actual Cost): Actual Cost of Work Performed. (Total of Costs incurred in accomplishing work) Measuring Actual Spending EV (Earned Value): Budgeted Cost of Work Performed (Value of Work Actually Completed) Earned = % Work Completed x Project Budget (5) Cost Management (5.4) Control Costs (Cont d) Cumulative Values TIME AC PV CV Data Date SV EV BAC Scheduled Completion Date BAC = Budget At Completion VAC EAC Actual Completion Date SV (Schedule Variance) = EV-PV CV (Cost Variance) = EV-AC ( +$ = Ahead of Schedule and -$ = Behind Schedule) ( +$ = Spending Less than Planned and -$ = Over Spending) Performance Indicators: SPI = EV/PV (Schedule) ( > 1 Ahead of Schedule trend) (Schedule Performance Index) CPI = EV/AC (Cost) ( > 1 Spending Less trend) (Cost Performance Index) Reporting Work Completed (Earned Value) Rule : 50% of the Earned Value is credited as earned value when the activity begins The remaining 50% of the Earned Value is not credited until all of the work is completed Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, Rule and Rule : Allowing different percentages of the Earned Values to be claimed at the start and completion of the work 88

89 ETC (Estimate To Complete) EAC (Estimate At Completion) VAC (Variance At Completion) TCPI Atypical (Variances are not Typical ) Use Remaining Budget Monitoring & Typical Project Statistical Forecasts: (To-Complete Performance Index = BAC EV = AC + ETC = BAC- EAC (5) Cost Management (5.4) Control Costs (Cont d) (Same Type of Variance Continue). Same Rate of Spending Use CPI Low End: = (BAC EV)/ CPI High End: = (BAC EV)/ (CPI x SPI) = BAC / CPI (Original Estimate was Flawed) = AC + ETC When BAC is no longer Viable, then new BAC= EAC TCPI = (BAC-EV) / (BAC(new)-AC) EV 01-Mar-13 Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013 Cumulative Values EV Curve AC TIME AC Curve AC ETC Works ETC Funds PV 01-Mar-13 CV Data Date SV EV Scheduled Completion Date ETC Works ETC Funds BAC VAC BAC EAC 89 EAC Actual Completion Date

90 Monitoring & (5) Cost Management (5.4) Control Costs (Cont d) Project Statistical Forecasts Summary: Method 1: (BAC is FIXED & CPI is FIXED) assumes that the rate of progress to date will continue to prevail and is expressed as: EAC = BAC/CPI Method 2: (BAC is NOT FIXED) requires that we determine the Actual Cost as of to-date (AC), and Re-Evaluate the amount of works that are still to be Completed (ETC). This is expressed as: EAC = AC + ETC Method 3: (Atypical) assumes that work from a specified point forward will progress at Planned rates (CPI=1) whether or not these rates have prevailed to this point. This is expressed as: EAC = AC + (BAC-EV) Method 4: (Typical) assumes that work from a specified point forward will progress at Actual rates (Based on CPI) whether or not these rates have prevailed to this point. This is expressed as: EAC = AC + (BAC-EV)/CPI EV Curve 01-Mar-13 EV AC Curve AC 01-Mar-13 Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013 Cumulative Values TIME AC PV CV Data Date SV EV Scheduled Completion Date ETC Works ETC Funds BAC VAC BAC EAC 90 EAC Actual Completion Date

91 Monitoring & Initiating Planning Executing Monitoring & (5) Cost Management (5.4) Control Costs (Cont d) INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Project funding requirements 3. Work performance data 4. Organizational process assets 1. Earned value management 2. Forecasting 3. To-complete performance index 4. Performance reviews 5. Project management software 6. Reserve analysis updates Influencing the factors that create cost variances and controlling changes to the project budget 1. Work performance information 2. Cost forecasts 3. Change requests 4. Project management plan updates 5. Project documents updates 6. Organizational process assets (4) Performance Reviews: Compared cost performance over time. Schedule Activities overrun or underrun budget (Planned Value). Milestones Due or Met. Performance-Reporting Techniques: 1. Variance analysis: Actual Planned Cost and Schedule (Quality/Risk). 2. Trend Analysis: Examining performance over time (Improving or Deteriorating). 3. EVM: Compares Planned Performance to Actual Performance. (1) Work Performance Information: Calculated CV, SV, CPI, and SPI values for WBS components, are documented and communicated to stakeholders. (2) Cost Forecasts: Either Calculated EAC; or A Performance organization-reported EAC value is documented and communicated. (6) Organizational Process Assets updates: Lessons learned are documented. Includes Root Causes of Variances. Reasoning behind the corrective action chosen. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

92 (5) Cost Management Practice 5: Review Questions Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

93 (6) Quality Management Measures overall performance, monitors project results, and compares them to Quality Standards set in the planning Phase 1. Plan Quality Management 2. Perform Quality Assurance 3. Control Quality Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc,

94 INPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management TOOLS & TECHNIQUES 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings OUTPUTS 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them Quality Management Approach: Compatible with International Organization for Standardization (ISO) [Greek word (isos) means equal ]. Proprietary Approaches: Deming, Juran, Crosby and Taguchi Six Sigma, Quality Function Deployment, CMMI etc. Non-Proprietary: Total Quality Management (TQM), Failure Mode & Effect Analysis (FMEA), Design Reviews, Voice of the Customer (VOC), Cost of Quality (COQ), and Continuous Improvement. Quality: The degree to which a set of inherent characteristics fulfill requirements. Grade: Category assigned to products or services having the same functional use but different technical characteristics. Example: A software product can be of high QUALITY (no defect, readable manual etc.) and low GRADE (Limited Number of features). Precision: Consistency that the value repeated measurements are clustered and have little scatter. Accuracy: Correctness that measures the value is very close to the true value. Example: PRECISE measurements are not necessarily accurate, while a very ACCURATE measurement is not necessarily precise Precision Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 232 Accuracy True Value 94

95 (6) Quality Management (6.1) Plan Quality Management (Cont d) INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them Modern Quality Management: Complements project management, both recognize the importance of: Customer Satisfaction: Conformance to requirements and fitness for use. Prevention or Inspection: Cost of preventing defects is much less than the cost of correcting them, as revealed by inspection. Management Responsibility: Success requires the participation of all members of the team. Continuous Improvement: The Plan-Do-Check-Act is the basis for quality improvement (by Shewhart & modified by Deming). The cost of quality refers to the total cost of all efforts related to quality. Project decisions can impact operational costs of quality as a result of product returns, warranty claims, and recall campaigns. (1) Cost-Benefit Analysis: Quality planning must consider Cost-Benefit tradeoffs. The Primary Cost of meeting quality requirements is: the expense associated with Project Quality Management activities. The Primary Benefit of meeting quality requirements is: less work, which means higher productivity, lower costs, and increased stakeholder satisfaction. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

96 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them (2) Cost of Quality (COQ): The total costs incurred by investment in preventing nonconformance to requirements, appraising the product or service for conformance to requirements, and failing to meet requirements (rework). Costs to produce the product or service of the project according to the quality standards. THREE Costs: 1. Prevention Costs: Defects-Free Away from Customers. Cost of Quality Planning, Training, Design Review etc. 2. Appraisal Costs: Costs to Examine product or process. Example: Cost of Inspection and Testing. 3. Failure Costs: Cost of things that don t go according to Plan: A. Internal Failure Costs: Customer Requirement NOT Satisfied Costs: Corrective Action, Rework, Scrapping, and Downtime B. External Failure Costs: Product Delivered and Not Satisfied Costs: Inspections on-site, Returns, Customer Service Costs (A) Cost of Conformance: This includes Costs for planning & Training A policy of building right the first time Process control and field-testing & Calibration Process & product design validation Testing, evaluation and quality audits Maintenance (B) Cost of Nonconformance: This includes Rework and Scrap Expediting Additional material and inventory Warranty repairs or service Complaint handling Liability judgment Product recalls Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

97 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them (3) Seven Basic Quality Tools: Known as the 7QC Tools. Are used within the context of the (Plan, Do, Check, Act) (PDCA) Cycle to solve quality-related problems. 1. Cause-and-effect-diagrams: Also known Fishbone diagrams or as Ishikawa diagrams. Asking Why several times. 2. Flowcharts: Also referred to as Process Maps because they display the sequence of steps and branching possibilities that exist for a process. It shows the order of processing by mapping the operational details of procedures that exist within a horizontal value chain of a SIPOC (Suppliers-Inputs-Process-Outputs-Customers) 3. Checksheets: Known as Tally sheets and may be used as a checklist when gathering data. 4. Pareto Diagrams: Special form of vertical Bar Chart and are used to identify the vital few sources that are responsible for causing most of the problem effects; representing the Rule. 5. Histograms: Special form of Bar Charts that are used to describe the central tendency, dispersion, and shape of a statistical distribution. It does not consider the influence of time on the variation that exists within a distribution. 6. Control Charts: Determine whether or not a process is stable or has predictable performance. Upper and lower specification limits are based on requirements of the agreement. 7. Scatter Diagrams: Plot ordered pairs (X,Y) and are sometimes called correlation charts because they seek to explain a change in the dependant variable, Y, in relationship to a change observed in the corresponding independent variable, X. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

98 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them Seven Basic Quality Tools Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)-Fifth Edition, Project Management Institute, Inc, 2013, Fig: 8-7, Page 239 Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

99 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them Thresholds: Defined as Cost, Time, or Resource values used as parameters, and can be part of the project scope statement. The quantitative point at which an action is triggered, especially a lower limit. Acceptance Criteria: Includes performance requirements and essential conditions that must be achieved before project deliverables are accepted. (4) Benchmarking: Comparing Actual or Planned Project Practices to other projects for improvement and performance measure. Standard and Regulation: Standard: Approved and Recognized by Recognized Body. Not Mandatory. Regulation: Imposed by Government/Institutes. Mandatory with Fine/Penalty. (5) Design of Experiments: Statistical Methods to define which factors influence specific variables. Applied to the Product. Most important aspect of this technique is that it provides a statistical framework for systematically changing all of important factors, instead of changing factors one at a time. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

100 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them (7) Additional Quality Planning Tools: Brainstorming: Liberating people from their disciplined way of thinking, to get them to look far-a field from conventional thinking. Right Brain activity. Affinity Diagrams: KJ method (Author: Kawakita Jiro) Opposite of a cause and effect diagram. Developed to discover meaningful groups of ideas within a raw list. Used when facts or thoughts are uncertain and need to be organized, and to be clarified. (Creative rather than Logical) Force Field Analysis: (Driving Forces Restraining Forces) A method for listing, discussing, and evaluating the various forces for and against a proposed change. Helps look at the big picture by analyzing all of the forces impacting the change and weighing the pros and cons. Nominal Group Technique: (Small group to produce a large number of ideas in a relatively short period of time) Used to generate many, creative ideas, to ensure everyone is heard. To build consensus when there is conflict. Matrix Diagrams: Shows the relationship between two, three or four groups of information. It also can give information about the relationship, such as its strength, the roles played by various individuals or measurements. Prioritizing Matrices: Are useful for applying a systematic approach to weighting/prioritizing criteria towards evaluating solutions against the criteria. Having customers prioritize wants and Prioritizing functional and design requirements. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

101 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates Identifying which quality standards are relevant to the project and determining how to satisfy them Total Quality Management (TQM): A management approach for an organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society. Requires that the company maintain this quality standard in all aspects of its business. Requires ensuring that things are done right the first time and that defects and waste are eliminated from operations. Gold Plating: Gold Plating is when project manager interprets the scope/specification in a certain way and decides to add bells and whistles that were not in the original scope. Just In Time (JIT): An inventory strategy that reduces in-process inventory. International Organization for Standardization (ISO): A family of international standards for quality management and assurance, that covers design, procurement, production, quality assurance, and delivery processes for everything from banking to manufacturing. Organizational Project Management Maturity Model (OPM3 ): Continuous improvement model which is developed by PMI. It covers project management practices within performing organizations. It uses Benchmarking to achieve observable improvements, and to generate ideas for process improvement. Occupational Safety and Health Administration (OSHA): Sets standards for the safety of American workers. Capability Maturity Model (CMM ): Continuous improvement model which is developed by the Software Engineering Institute (SEI) covering software development. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

102 (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Philip Crosby: (Zero Defects Practice, Quality is Free) Quality is defined as conformance to requirements, not as goodness or elegance. The system for causing quality is prevention, not appraisal. Performance standard must be zero defect, not close enough. The measurement of quality is the price of non-conformance. Dr. Genichi Taguchi: Quality is planned in, not inspected in Optimization of Processes and Actual Product/Service. Developed Design of Experiments (DOE). 2. Joseph Juran: (Fitness for Use) Focused on methods of quality improvement. Six Sigma (Process Quality Goal) created at Motorola in the 80 s to achieve breakthrough results based on fundamentals of Juran. (Sigma is a statistical measure of variability in a process). Six Sigma capability means 12 STD of process output between the upper and lower specification limits. Therefore, no more than 3.4 parts per million fall outside of the specification limits. Six Sigma provides the techniques and tools to improve the capability and reduce the defects in any process. Uses a methodology known as DMAIC (Define opportunities, Measure performance, Analyze opportunities, Improve performance, Control performance). 3. W. Edwards Deming: (85% of the Cost of Quality is a Management Problem) Rule of 85 Plan-Do-Check-Act It is not enough to just do your best or work hard. You must know what to work on. 85% of a worker s effectiveness is determined by the system he works in, only 15% by his own skill. When you understand the importance of quality and timeliness of inputs from suppliers, you ll stop buying on low-bid. Monitor outputs throughout i.e. prevention over inspection. 4. Kaizen Approach: (Japanese term for Continuous Improvement Activity) (Kai- Alter, Zen- Improve ) Making small, incremental improvements over an extended period of time. Kaizen Event is new developed methodology that significantly accelerates the Kaizen process and produces dramatic results in a week or less. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

103 INPUTS TOOLS & TECHNIQUES OUTPUTS 1. Project management plan 2. Stakeholder register 3. Risk register 4. Requirements documentation 5. Enterprise environmental factors 6. Organizational process assets (6) Quality Management (6.1) Plan Quality Management (Cont d) 1. Cost-benefit analysis 2. Cost of Quality (COQ) 3. Seven basic quality tools 4. Benchmarking 5. Design of experiments 6. Statistical sampling 7. Additional quality planning tools 8. Meetings 1. Quality management plan 2. Process improvement plan 3. Quality metrics 4. Quality checklists 5. Project documents updates (1) Quality Management Plan: Describes how the project management team will implement the performing organization s quality policy. Provides input to the overall project management plan. Must address Quality Control (QC), Quality Assurance (QA), and continuous improvement for the project. (3) Quality Metrics: Describe what something is and how the quality control process measures it. Are used in QA and QC processes. Examples: Defect Density, Failure Rate, Availability, Reliability, and Test Coverage. Identifying which quality standards are relevant to the project and determining how to satisfy them (2) Process Improvement Plan: Subsidiary of the project management plan. Details the steps for analyzing processes that will facilitate the identification of waste and non-value added activity: A. Process boundaries. B. Process Configuration. C. Process metrics. D. Targets for improved performance. (4) Quality Checklists: Structured tool, used to verify that a set of required steps has been performed. They are usually phrased as imperatives Do this. Might be available from professional organizations or commercial service providers. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

104 Initiating Planning Executing Monitoring & INPUTS 1. Project management plan 2. Process improvement plan 3. Quality metrics 4. Quality control measurements 5. Project documents (6) Quality Management (6.2) Perform Quality Assurance TOOLS & TECHNIQUES 1. Quality management and control tools 2. Quality audits 3. Process analysis OUTPUTS 1. Change requests 2. Project management plan updates 3. Project documents updates 4. Organizational process assets updates Applying the planned, systematic quality activities to ensure that the project employs all processes needed to meet requirements (1) Quality Management and Control Tools: 1. Affinity diagrams: (2) Quality Audits: 2. Process Decision Program Charts (PDPC) Review Quality Management Activities. 3. Interrelationship Digraphs Measure Progress & Identify Corrective Actions. 4. Tree Diagrams Identify Lessons Learned. Performed on Regular or 5. Prioritization Matrices Random basis. 6. Activity Network Diagrams If Applied Correctly then the Benefits: 7. Matrix Diagrams 1. Gained Fit Product and Meets Safety Standards. 2. Adhered to Applicable Laws and Standards. 3. Correctives actions identified and implemented. 4. Quality Plan is adhered to. 5. Quality Improvement are identified. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)-Fifth Edition, Project Management Institute, Inc, 2013, Fig: 8-10, Page 246 Quality Management and Control Tools (3) Process Analysis: Follows the steps outlined in the process improvement. Examines problems experienced, constraints experienced, and non-value-added activities. Includes: Root Cause Analysis Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

105 Monitoring & Initiating Planning Executing Monitoring & INPUTS 1. Project management plan 2. Quality metrics 3. Quality checklists 4. Work performance data 5. Approved change requests 6. Deliverables 7. Project documents 8. Organizational process assets (6) Quality Management (6.3) Control Quality TOOLS & TECHNIQUES 1. Seven basic quality tools 2. Statistical sampling 3. Inspection 4. Approved change requests review OUTPUTS 1. Quality control measurements 2. Validated changes 3. Verified deliverables 4. Work performance information 5. Change requests 6. Project management plan updates 7. Project documents updates 8. Organizational process assets updates Monitoring specific project results to determine whether they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance Prevention: Keeping errors out of the processes. Inspection: Keeping errors out of the hands of the customer. Special causes: Unusual events. Common causes: Normal process variation (Random Causes). Tolerances: The result is acceptable if it falls within range specified by the tolerance. Control Limits: The process is in control if the result falls within the control limits. Attribute (Discrete) sampling: The result conforms, or it does not. Gender, True/False, Excellent, Good, Poor. Variables sampling: The result is rated on a continuous scale that measures the degrees of conformity. Ages, Counts, Speed, Percentages etc. Mutual Exclusive: Two events cannot occur in a single trial. Statistically Independent: The probability of one event occurring does not affect the probability of another event occurring. Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

106 Monitoring & (6) Quality Management (6.3) Control Quality (Cont d) Monitoring specific project results to determine whether they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance (1) Cause and Effect Diagram: Ishikawa Diagram or Fishbone Diagram How various Factors linked to Potential Problems or Effects. Time Machine Method Material Energy INPUTS 1. Project management plan 2. Quality metrics 3. Quality checklists 4. Work performance data 5. Approved change requests 6. Deliverables 7. Project documents 8. Organizational process assets Measurement Potential Causes Personnel Environment Effect Major Defect (2) Flowcharts: Help analyze how problems occur. Graphical presentation of a process. Show activities, decision points, and order processing. Mapping the operational details of procedures that exist within a horizontal value chain of a SIPOC model. TOOLS & TECHNIQUES 1. Seven basic quality tools 2. Statistical sampling 3. Inspection 4. Approved change requests review Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 249 OUTPUTS 1. Quality control measurements 2. Validated changes 3. Verified deliverables 4. Work performance information 5. Change requests 6. Project management plan updates 7. Project documents updates 8. Organizational process assets updates The SIPOC Model Flowcharts Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Fig: 8-6,7, Page 237 & Page

107 Monitoring & Initiating Planning Executing Monitoring & INPUTS 1. Project management plan 2. Quality metrics 3. Quality checklists 4. Work performance data 5. Approved change requests 6. Deliverables 7. Project documents 8. Organizational process assets (6) Quality Management (6.3) Control Quality (Cont d) TOOLS & TECHNIQUES 1. Seven basic quality tools 2. Statistical sampling 3. Inspection 4. Approved change requests review OUTPUTS 1. Quality control measurements 2. Validated changes 3. Verified deliverables 4. Work performance information 5. Change requests 6. Project management plan updates 7. Project documents updates 8. Organizational process assets updates Monitoring specific project results to determine whether they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance (3) Checksheets: Also known as tally sheets and may be used as a checklist. Used to organize facts in a manner that will facilitate effective collection of useful data about potentional quality problem Useful for gathering attributes data while performing inspections to identify defects. Example: data about the frequencies or consequences of defects collected in checksheets are often displayed using Pareto diagrams Checksheets Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)-Fifth Edition, Project Management Institute, Inc, 2013, Fig: 8-7, Page 239 Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page

108 INPUTS 1. Project management plan 2. Quality metrics 3. Quality checklists 4. Work performance data 5. Approved change requests 6. Deliverables 7. Project documents 8. Organizational process assets Monitoring & (4) Pareto Chart: (To identify and evaluate nonconformities) Histogram ordered by Frequency of Occurrence Small number of causes will typically produce a large majority of the problems or defects. 80/20 principle. 80% of the problems are due to the 20% of the causes. Fix problems that are causing the greatest number of defects first. (5) Histograms: Special form of Bar Chart to describe the central tendency, dispersion, and shape of statistical distribution. Help identify the cause of problem in a process by the shape and width of the distribution (6) Quality Management (6.3) Control Quality (Cont d) TOOLS & TECHNIQUES 1. Seven basic quality tools 2. Statistical sampling 3. Inspection 4. Approved change requests review Cumulative Percentage Pressure Axle Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 249 No. of Defective Cases Causes Rotation Noise OUTPUTS Monitoring specific project results to determine whether they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)-Fifth Edition, Project Management Institute, Inc, 2013, Fig: 8-7, Page Quality control measurements 2. Validated changes 3. Verified deliverables 4. Work performance information 5. Change requests 6. Project management plan updates 7. Project documents updates 8. Organizational process assets updates Frequency by Cause Wobble Color Others Percentage of Defective Cases 108

109 Monitoring & Initiating Planning Executing Monitoring & INPUTS 1. Project management plan 2. Quality metrics 3. Quality checklists 4. Work performance data 5. Approved change requests 6. Deliverables 7. Project documents 8. Organizational process assets (6) Quality Management (6.3) Control Quality (Cont d) TOOLS & TECHNIQUES 1. Seven basic quality tools 2. Statistical sampling 3. Inspection 4. Approved change requests review OUTPUTS 1. Quality control measurements 2. Validated changes 3. Verified deliverables 4. Work performance information 5. Change requests 6. Project management plan updates 7. Project documents updates 8. Organizational process assets updates Monitoring specific project results to determine whether they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance (6) Control Charts: Graphical Display of the Results over time. Determine if the process is in control, Stable or has predictable performance. Answers: Are the process variables within acceptable limits? Upper Control Limit and Lower Control Limit are usually set at +/- 3 Sigma (STD). Rule of Seven: Rule of Thumb or Heuristic Non-random data points grouped together in a series that TOTAL SEVEN on one side of the MEAN (upper or lower). Although none of these points are outside the Control Limits, they are not Random and the Process is Out of Control. This type of Situation should be investigated to find the Cause. Upper Specification Limit (USL) Upper Control Limit (UCL) Rule of Seven Mean Lower Control Limit (LCL) Lower Specification Limit (LSL) Assignable Cause OR Special Cause Common Cause Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)- Fifth Edition, Project Management Institute, Inc, 2013, Page 249 Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK Guide)-Fifth Edition, Project Management Institute, Inc, 2013, Fig: 8-7, Page 239 Outlier Outlier 109