Project Integration Management

DAY 1
PROJECT INTEGRATION
MANAGEMENT
PMP Prep – Integration Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction
Project Management Framework
*Project Life Cycle & Organisation
Project Management Processes
Project INTEGRATION Management
DAY 2
Project SCOPE Management
Project TIME Management
Project COST Management
Project QUALITY Management
DAY 3
Project COMMUNICATION Management
Project HUMAN RESOURCE Management
Project RISK Management
Project PROCUREMENT Management
DAY 4
Professional & Social Responsibility
REVISION & QUIZ
MAJOR PROJECT DOCUMENTS
Before we begin Integration, let's summarize the
project's major documents:
ALL are formally approved
Major Project Documents - generated by the project

• Project Charter – formally authorizes a project or a phase
and documents initial requirements that satisfy the
stakeholder’s needs and expectations. (never changes)
• Project Management Plan – documents the actions

necessary to define, prepare, integrate, and coordinate all
subsidiary management plans (changes a lot)
PMP Prep - Integration Slide 2

Other Project Documents (or Systems) Used by the Project
These systems could include tools, techniques, methodologies, resources
(i.e. templates), procedures, documentation, tracking systems, approval
levels, etc.
Project Management Information System(PMIS)
• an information system, consisting of the tools and techniques used to

gather, integrate, and disseminate the outputs of project management
processes.
• It is used by project management team to support all aspects of the
project from initiating through closing, and can include both manual and
automated systems.

Configuration Management System
It is a sub-system of the overall PMIS. It is a collection of formal documented procedures
used to apply technical and administrative direction and surveillance to:
- identify and document the functional and physical characteristics of a

product, result, service, or component;
- control any changes to such characteristics;
- record & report each changes and its implementation status; and
- support the audit of the products, results, or components to verify conformance to
requirements
- it includes the documentation, tracking systems, and defined approval levels
necessary for authorizing and controlling changes.
Change Control System - is a collection of formal documented procedures that

define how deliverables and documentation are controlled, changed and approved
In most application areas CCS is a subset of the configuration management system.

PROJECT INTEGRATION MANAGEMENT
WHAT DOES THE INTEGRATION KNOWLEDGE AREA DO?
• It's about the entire project - processes & activities needed to
identify, define, combine, unify, and coordinate the various
processes and project management activities within the project
management process groups
• Projects start and close here.
• Project plan is made here.
• Product, service or result is made here.
Coordinate all knowledge area processes

PROJECT INTEGRATION MANAGEMENT
The integrative nature of projects and project management
can be understood by thinking of other types of activities
performed while completing a project. Examples of some
activities performed by the PM team are:
• Analyze and understand the scope. This includes the project and
product requirements, criteria, assumptions, constraints, and other
influences related to a project, and how each will be managed or
addressed within the project.
• Understand how to take the identified information and then transform it
into a project management plan using a structured approach as
described in PMBOK Guide.
• Perform activities to produce project deliverables.
• Measure and monitor all aspects of the project’s progress and take
appropriate action to meet project objectives.

INTEGRATION PROCESSES
INTEGRATION PROCESS DEFINITIONS
4.1 Develop Project Charter

• that formally authorizes a project or a project phase.
4.2 Develop Project Management Plan

• the process of documenting the actions necessary to define,
prepare, integrate, and coordinate all subsidiary plan.
4.3 Direct & Manage Project Execution

• the process of performing the work defined in the project
management plan to achieve the project’s objectives.

4.5 Monitor & Control Project Work

• The process of tracking, reviewing, and regulating the progress to
meet the performance objectives defined in the project
management plan.
4.6 Perform Integrated Change Control

• Review all change requests, approve changes, and manage
changes to the deliverables, organizational process assets, project
documents, and the project management plan.
4.7 Close Project or Phase

• Finalize all activities across all Project Management Process Groups
to formally complete the project or phase.

PROCESSES BY PROCESS GROUP
Initiating Planning Executing Monitoring Closing
and
controlling
4.1 Develop 4.3 Develop 4.4 Direct and 4.5 Monitor and 4.7 Close
Project Manage Project Control Project Project or Phase
Project Management Execution work
Plan
Charter
4.6 Perform
Integrated
Change Control

PROJECT CHARTER
What should a project charter address?
• Project purpose or justification,

• Measurable project objectives and related success criteria,
• High-level requirements,
• High-level project description,
• High-level risks,
• Summary milestone schedule,
• Summary budget,
• Project approval requirements,
• Assigned project manager, responsibility, and authority level, and
• Name and authority of the sponsor or other person(s) authorizing the
project charter.
Formally
authorizes
a project (never
changes)

DEVELOP PROJECT CHARTER
Tools & Techniques
• Expert judgement
Inputs
• Project statement of work Outputs
• Business Case
• Contract • Project Charter
• Enterprise environmental
factor
• Organizational process
assets

DEVELOP PROJECT CHARTER-INPUTS
INPUTS
Contract (when applicable)
• A contract from the customer’s acquiring organization is an input if the
project is being done for an external customer.
Project Statement of Work

• Narrative description of products or services to be supplied by the
project
• For internal projects, the project initiator or sponsor provides the
statement of work based on business needs, products or service
requirements.
• For external projects, the SOW can be received from the customer as
part of a bid document, for example, request for proposal, request for
information, request for bid, or as part of a contract.

The SOW references:
• Business need - an organization’s business need can be based on needed

training, market demand, technological advance, legal requirement, or
governmental standard
• Product scope description – documents the product requirements and

characteristics of the product or service that the project will be undertaken to
create
• Strategic plan -all projects should support the organization's strategic goals.
The strategic plan of the performing organization should be considered as a
factor when making project selection decisions.

Business Case:
• Business case or similar document provides the necessary information from a
business standpoint to determine whether or not the project is worth the required
investment.
• Typically the business need and the cost-benefit analysis are contained in the
business case to justify the project.
• For external project, the requesting organization or customer may write the
business case.
• Business case is created as a result of one or more of the following:
- Market demand
- Organizational need
- Customer request
- Technological advance
- Legal requirement
- Ecological impacts
- Social need
Enterprise Environmental Factors
These are examples

• Governmental or industry standards and not specific to
Project Charter – an
input to all
• Organization Infrastructure, and knowledge areas
• Marketplace conditions
Not specific to
project Charter
– an input to all
knowledge
Organizational Process Assets areas
• Organizational standard processes, policies, and standardized process

definitions for use in the organization;
• Templates (e.g. project charter template); and
• Historical information and lessons learned knowledge base.

DEVELOP PROJECT CHARTER- T & T
Expert Judgement
It is available from many sources, including:

• Other units within the organization,
• Consultants,
• Stakeholders, including customers or sponsors,
• Professional and technical associations,
• Industry groups,
• Subject matter experts, and
• Project management office (PMO)

DEVELOP PROJECT CHARTER-T & T
TOOLS & TECHNIQUES
Project Selection Methods
• Mostly financial considerations are used.

• Project selection is generally the responsibility of Portfolio Managers,
Steering Committees. In smaller companies, Presidents and Vice-
Presidents
These methods generally fall into one of two broad categories:

• Benefit measurement methods that are comparative approaches,
scoring models, benefit contribution, or economic models.
• Mathematical models that use linear, nonlinear, dynamic, integer, or
multi-objective programming algorithms

Weighted Scoring Model (benefit measurement method)
A systematic process for selecting projects based on criteria (example on next

slide)
• First, decide on a list of criteria used for project selection

• Assign weights (percentages) to each so that they add up to 100%
• Assign scores to each for each project
• Multiply scores by weights to get total weighted scores for each
project
• Highest weighted score wins
Note: Also used for selecting contractors/sellers (Procurement)


DEVELOP PROJECT CHARTER- T&T
Other Benefit Measurement Methods:
Cash Flow Techniques
a) Payback Period
• Length of time it will take to get back the initial investment
• Time value of money is ignored here, i.e. no interest, so this is
the least precise of the cash flow techniques
Example:
Initial Investment (P) = $200,000
Cash Inflow (C) =$25,000 I quarter for 3 years
n = # of periods
Payback period (n) = P/C= $ 200,000 I $25,000
= 8 quarters or two years

b) Discounted Cash Flow (or Net Present Value method)
Calculates the present worth of future money (called net
present value)
Example -Which project is worth more?

Project X expects to make $250K 1 year from now
Project Y expects to make $300K 2 years from now
i= 12% (or 0.12)
Given this formula, calculate present value & pick one.
PV = FV/ (1 +i)n or FV = PV(1 +i)n
Where FV is future value, PV is present value, n is number of periods , i is
interest rate
Project X, PV=250/1.12= 223.2 ; Project Y, PV=300/(1.12)2 = 239.2
Project Y is worth more.

Net Present Value
Calculates the expected net value of a project in today's money
To do this, discount all anticipated cash inflows and outflows to the
present day
If Interest (i) = 12% & Initial Investment (P) = $20,000, what's the NPV of
this? NPV=Total of all PVs-P
PMP Prep –Integration Slide 23

Question
You're managing a software project for a manufacturing company. A new

computer, which costs $50,000 including shipping and installation, will speed
up the development process and cause a gross savings of $100,000 after one
year of purchase of the computer.
Assuming an interest rate of 10% per annum, what's the NPV of the savings ?
A. $90,000
B. $40,909
C. $45,555
D. $91,110

Answer is B
You know:
FV of the investment == $100,000
i = 10% or 0.1
n= 1 (year)
P (initial investment) == $50,000
NPV =PVc - P (initial investment), we need all the PV's (in this problem only one).
Since PV=FV/(1 +i)n

Or, PV= $100,000/ (1 + 0.1 )1 = $90,909.09 ( is the present value )
Therefore, NPV = $90,909 -$50,000 == $40,909

Accounting Terms
Sunk Cost (Incurred Cost):

• In project selection method, when comparing projects for continuity,
costs already incurred should be considered as sunk costs and should
not be taken in to account in any calculation
Opportunity Cost :
• The cost of the opportunity that you picked
• What did you give up (your cost) for the project you selected?
• The amount you would have made if you picked the project with the
next best NPV (expected value in today's money)
• Opportunity cost is always the second best alternative (doesn't take
the third or subsequent projects into account)

Internal Rate of Return (IRR)
• IRR is the interest rate when NPV equals zero (0)
• Net present value of all cash inflows (revenue) and outflows

(investments) are the same
• Choose projects with highest IRR

Question
Four projects are being considered.
A. NPV is negative, its IRR is 16%, and its payback period is 13 months.
B. NPV is positive, its IRR is 14%, and its payback period is 2 months.
C. NPV is negative, its IRR is 9%, and its payback period is 16 months.
D. NPV is positive, its IRR is 16%, and its payback period is 18 months.
Which project should you choose if financial consideration is important?

Answer is D.
If IRR is greater than 0 and NPV is positive, you shouldn't give payback period
much consideration as its the least precise calculation. Don't select projects A or
C with negative NPV. Project D has a higher IRR than Project B and should be
chosen, even though Project B has a shorter payback period.
Consideration in order of priority:

1. IRR (highest positive)
2. NPV (highest positive)
3. Payback period (shortest)

2. Project Management Methodology
• Defines a set of project management process groups, their related
processes and the related control functions that are consolidated and
combined into a functioning unified whole.
3. Project Management Information System (PMIS)
4. Expert Judgment
• Expert judgment is often used to assess inputs used to make the
Project Charter
• Available from many sources, including:
• Other departments in your organization
• Consultants
• Stakeholders
• Professional or technical associations and industry groups, i.e. PMI

DEVELOP PROJECT CHARTER - OUTPUTS
OUTPUT
Project Charter

and
controlling
4.1 Develop 4.2 Develop 4.3 Direct and 4.4 Monitor 4.6 Close
Project Manage and Control Project
Project Management Project Project work
Charter Plan Execution
4.5 Perform
Integrated
Change
Control

and
controlling
4.1 Develop 4.2 Develop 4.3 Direct 4.4 Monitor 4.6 Close
Project and Manage and Control Project
4.5 Integrated
Change
Control

PROJECT MANAGEMENT PLAN
What’s in a Project Management Plan?
• Documents/defines 'how' a project is executed, monitored and
controlled
• Generally includes subsidiary management plans & other

planning documents
• May be summary or detailed plan (changes often)
• Formally approved
• Updates are approved through the Integrated Change Control

process and implemented in the Direct and Manage Project
Execution process

Specifically the plan includes:
• Which processes have been selected

• Level of implementation of each of the processes (how thorough
each should be)
• Which inputs, tools & techniques and outputs are to be used for
each process
• How processes will be used, their dependencies & interactions
• How work will be executed
• How changes will be monitored & controlled
• How configuration management will be performed
• How baseline integrity will be maintained (i.e. approved budget or
schedule )
• Stakeholder communication needs & techniques to be used
• Project life cycle (if needed for phases)
• Key management reviews

Subsidiary management plans (if required), such as:
• Scope
• Schedule
• Cost
• Quality
• Process Improvement (in Quality)
• Staffing
• Communication
• Risk
• Procurement

Other components, such as:
• Milestone list
• Resource calendar
• Schedule baseline
• Quality baseline
• Risk register
All these give explicit details of 'how' to produce the requirement(s)

DEVELOP PROJECT MANAGEMENT PLAN
TOOLS &Techniques
Inputs
• Project Charter Outputs
• Output from Planning • Project management

processes Plan
factor
assets

INPUTS
• Project Charter
• Output from Plannning Processes
• Enterprise Environmental Factors
• Organizational Process Assets

TOOLS & TECHNIQUES
•Expert Judgment

OUTPUT
Project Management Plan

and
controlling
Project and and Control Project
Project Management Manage Project work
Charter Plan Project
Execution
4.5 Integrated
Change
Control

DIRECT AND MANAGE PROJECT EXECUTION
WHAT HAPPENS DURING PROJECT EXECUTION?
• PM and the project team to perform multiple actions to execute the

project management plan to accomplish the work defined in the
project scope statement.
• Some actions create the project's product, service or result while
other actions manage the whole of the project in an integrated
manner
• Some actions include:
• Perform activities to accomplish project objectives
• Expend effort and spend funds to accomplish project objectives
• Staff, train & manage project team members
• Obtain quotations, bids, offers, or proposals as appropriate
Select sellers
……continued

• Obtain, manage & use resources including materials, tools,

equipments and facilities
• Implement the planned methods and standards
• Create, control, verify & validate project deliverables
• Manage risks & implement risk response activities
• Manage sellers
• Adapt approved changes into project scope, plans & environment
• Establish & manage project communication channels both external
& internal to the project team
• Collect project data and report cost, schedule, technical & quality
• progress, and status information to facilitate forecasting
• Collect & document lessons learned, and implement approved
process improvement activities

TOOLS &Techniques
• Project management
Information system
Outputs
Inputs • Deliverables
• Project management plan •Work performance information
• Approved change requests •Change requests
• Enterprise Environmental • Project management plan
factors updates
•Organisational process Assets • Project document updates

INPUTS
• Project Management Plan
Enterprise Environmental factors : The enterprise environmental factors

that can influence the direct and manage project execution process include:
•Organizational, company or customer culture/structure,
•Infrastructure (existing facilities and capital equipment)
•Personnel administration(hiring and firing guidelines),
• stakeholder risk tolerances,
•Project management information system
•Organizational Process assets: standardized guidelines and work
instructions, communication requirements defining allowed communication
media, record retention, and security requirements, project files from prior
projects(e.g. scope, cost, schedule etc), issue and defect management database
containing historical issues and defect status, its control, resolutions and actions.
• Approved Change Request
They are documented, authorized changes to expand or contract
project scope. They can also modify policies, project management
plans, procedures, costs or budgets, or revise schedules. They are
scheduled for implementation by the project team.

DIRECT AND MANAGE PROJECT EXECUTION-T&T
TOOLS & TECHNIQUES
•Expert Judgement
•Project Management Information System (PMIS)

DIRECT AND MANAGE PROJECT EXECUTION-OUTPUT
OUTPUTS
• Deliverables
Any unique & verifiable product, result or capability to perform a
service that is identified in the project management planning
documentation, and must be produced and provided to
complete the project
• Change Request
When issues are found while project work is being performed, change requests
are issued which may modify project policies and procedures, project scope,
project cost or budget, project schedule or quality. Other change requests cover
needed preventive or corrective actions to forestall negative impacts later in the
project. Request for a change can be direct or indirect, externally or internally
initiated, can be optional or legally/contractually mandated.

OUTPUTS
Work Performance Information
Information on status of project activities being performed to accomplish
the project work. Includes:
• Schedule progress showing status information
• Deliverables that have been completed and those not completed
• Schedule activities that have started and those that have been
finished
• Extent to which quality standards are being met
• Costs authorized and incurred
• Estimates to complete the schedule activities that have started
• Percent physically complete of the in-progress schedule activities
• Documented lessons learned posted to the lessons learned
knowledge base
• Resource utilization detail
Project Management updates

Elements of the project management plan that may be updated include:
Requirements(Scope) management plan, Schedule management plan, cost
management plan, human resource management plan, quality management
plan, communications management plan, risk management plan, procurements
management plan, project baselines
Project Document updates
Project documents that may be updated include but are not limited to:
• Requirements documents
• Projects log (issues, assumptions)
• Risk register and
• Stakeholder register

and
controlling
Project Management Project Project
Charter Plan Execution work
4.5 Integrated
Change
Control

MONITOR AND CONTROL PROJECT WORK
WHAT HAPPENS DURING MONITOR & CONTROL PROJECT WORK?
• Monitor project processes associated with initiating, planning, executing &

closing.
Corrective or preventive actions are taken to control the project performance.
Monitoring is an aspect of project management performed throughout the
project.
• This process is concerned with:

• Comparing actual project performance against the project management plan
• Assessing performance to determine whether any corrective or preventive
actions are indicated, then recommending those actions as necessary
• Analyzing, tracking, and monitoring project risks to make sure the risks are
identified, their status is reported, and that appropriate risk response plans
are being executed
• Maintaining an accurate, timely information base concerning the project’s
product (s) and their associated documentation through project completion
• Providing information to support status reporting, progress measurement, and
forecasting
• Providing forecasts to update current cost and current schedule information
• Monitoring implementation of approved changes when and as they occur
MONITOR AND CONTROL PROJECT WORK
TOOLS &Techniques
•Expert judgement
Inputs
Outputs
• Project management plan • Change Requests
• performance reports • Project Management Plan updates
•Enterprise environmental • Project documents updates
factors
• Organizational process assets

MONITOR AND CONTROL PROJECT WORK - INPUTS
INPUTS
• Performance reports
•Enterprise environmental factors
•Organizational process assets

MONITOR AND CONTROL PROJECT WORK – T&T
TOOLS & TECHNIQUES
• Expert Judgment

MONITOR AND CONTROL PROJECT WORK - OUTPUTS
OUTPUTS
Change requests
• Recommended Corrective Actions
Corrective actions are recommended to bring expected future project
performance into conformance with the project management plan
• Recommended Preventive Actions
Preventive actions are recommended to reduce the probability of
negative consequences associated with project risk
• Recommended Defect Repair
Some defects, which are found during the quality inspection and audit
process, are recommended for correction
Project Management plan updates

Project Documents updates

and
controlling
4.5
Integrated
Change
Control

INTEGRATED CHANGE CONTROL
WHAT HAPPENS DURING INTEGRATED CHANGE CONTROL?
• During the entire project, this process ensures that the project
management plan, project scope statement, and other deliverables
must be maintained by carefully and continuously managing
changes, either by rejecting changes or by approving changes so that
those approved changes are incorporated into a revised baseline.
• ICC process includes the following:
• Identify if a change needs to occur or has occurred
• Influence the factors that circumvent ICC so that only approved
changes are implemented
• Review, approve & then manage change requests
• Review and approve all recommended corrective and preventative
actions
• Control & update scope, cost, budget, schedule & quality
requirements, based on approved changes, by coordinating across
entire project, i.e. a schedule change may affect risk

• Document impact of requested changes
• Validate defect repairs
• Control project quality (in a coordinated fashion)
• Some configuration management activities included here are:
• Configuration Identification -product details (to the level needed) are
defined, verified & labeled; changes are managed & accountability
is maintained
• Configuration Status Accounting -capturing, storing & accessing
configuration information
• Configuration Verification & Auditing -compare performance &.
functional requirements defined in the configuration documentation
with reality
• Large organizations have Change Control Boards (CCB) to authorize
changes (their roles & responsibilities should be clearly documented
here)

TOOLS &Techniques
methodology
Information system
Outputs
Inputs • Approved change requests
• Project management plan • Rejected change requests
• Requested changes • Project management plan (updates)
•Work performance information • Project scope statement (updates)
• Requested changes
• Recommended preventive actions
• Approved preventive actions
• Recommended corrective actions • Approved corrective actions
• Recommended defect repair • Approved defect repair
• Deliverables • Validated defect repair
• Deliverables

INTEGRATED CHANGE CONTROL-T&T
• Requested Changes Work Performance Information
• Recommended Preventive Actions
• Recommended Corrective Actions
• Recommended Defect Repair
• Deliverables
Integrated Direct &

• 23 Change
Change Approved change Req. Manage Implemented
•
Different Request Control Project Mgmt. plan updated Project Change
•
Process (Monitoring Scope statement updated
Execution Request
& (Executing)
Controlling)

INTEGRATED CHANGE CONTROL-T&T
TOOLS & TECHNIQUES
• Project Management Methodology

It defines a process that aids a project management team in
implementing ICC for the project
• Project Management Information System (PMIS)
• Expert Judgment
INTEGRATED CHANGE CONTROL-OUTPUT
OUTPUTS
Approved Change Requests

Rejected Change Requests
Project Management Plan (Updates)
Project Scope Statement (Updates)
Approved Corrective Actions
Approved Preventive Actions
Approved Defect Repair
Validated Defect Repair
Deliverables

and
controlling
4.2 Develop 4.6 Integrated

Preliminary Change
Project Scope Control
Statement

CLOSE PROJECT
WHAT HAPPENS DURING PROJECT CLOSURE?
• Finalize all activities completed across all process groups to formally
close the project or project phase
• Transfer completed or cancelled project as appropriate
• Establish procedures to coordinate activities needed to verify and

document the project deliverables, to coordinate and interact to
formalize acceptance of those deliverables by the customer or sponsor
• Investigate and document the reasons for actions taken if a project is

terminated before completion
CLOSE PROJECT
PROCEDURES TO PERFORM CLOSURE ACTIVITIES
Administrative Closure Procedures
• integrated activities needed to collect project records
• analyze project success or failure
• gather lessons learned
• archive project information for future use by organization
Contract Closure Procedures (from Procurement)

• closing all contracts
• product verification (confirm if all work is completed correctly and
satisfactorily)
• Administrative closure (update & archive contract records)

CLOSE PROJECT
Tools &Techniques
methodology
Information system
Inputs
Outputs
• Project management plan
• Contract documentation • Administrative closure procedure
• Enterprise environmental factors • Contract closure procedure
• Organizational process assets • Final product, service or result
• Work performance information • Organizational process assets
• Deliverables (updates)

CLOSE PROJECT
INPUTS
• Contract Documentation
Includes contract itself, as well as changes to the contract and
other documentation (such as the technical approach, product
description, acceptance criteria)
• Enterprise Environmental Factors e.g. government

regulations
• Organizational Process Assets e.g. formal sign off forms
• Work Performance Information e.g. all invoices from procurement
• Deliverables

CLOSE PROJECT-T&T
TOOLS & TECHNIQUES
• Project Management Methodology
• Project Management Information System (PMIS)
• Expert Judgment

CLOSE PROJECT - OUTPUTS
OUTPUTS
• Administrative Closure Procedure
• Contract Closure Procedure
• Final Product, Service, or Result

Formal acceptance/handover of the final product, service or result
Receipt of formal statement that contract terms have been met

CLOSE PROJECT - OUTPUTS
• Organizational Process Assets (updates)
• Formal Acceptance Documentation
Formal confirmation from customer/sponsor that requirements &
specifications of product, service or result have been met
• Project Files
Documentation resulting from the project’s activities
• Project Closer Documents
Formal documentation indicating completion of project &
transfer of completed project deliverables to others, such as
an operations group
• Historical Information
Historical information & lesson learned information are
transferred to the lessons learned knowledge base for use by
future projects

SAMPLE EXAM QUESTION
Question
Which of the following describes configuration management?
A. it ensures that the description of a project’s product is correct &
complete
B. a set of tools, techniques, methodologies, resources & procedures
used to manage products
C. the set of procedures developed to ensure that the project design
criteria are met
D. a mechanism to record budget & schedule variances

B is correct.
Configuration Management System -It's a collection of formal documented

procedures used to apply technical and administrative direction and surveillance
to: identify and document the functional and physical characteristics of a product,
result, service, or component; control any changes to such characteristics;
record and report each change and its implementation status; and support the
audit of the products, results or components to verify conformance to
requirements. –
See PMBOK, p.354.
In other words -Procedures to manage (mostly control change) characteristics

of something (like a procedure document, user guide)

Question
Project A had an initial investment of $4 million, out of which $2 million

has already been spent.
A new Project B needs $1.5 million to complete and will meet the same
objectives as Project A.
Which project should you select? You can only pick one.

Answer
Choose Project B.
Project A has already spent $2 million (sunk cost). To complete, it needs $2

million more out of $4 million total.
Project B needs $1.5 million to complete, which is less that the $2 million needed
to complete Project A.
Therefore, selecting Project B is better because $l.5M is less than $2M.

Question
Three projects are being considered: Project A has a NPV of $5 million
Project B has a NPV of $3 million Project C has a NPV of $2 million
What is the opportunity cost if Project A is selected?
A -$5 million
B -$3 million
C -$2 million
D -$0

Answer
B - $3 million.
Opportunity cost is the cost of giving up the next best option.

If you choose Project A, you loose the opportunity to make Project B's
potential profit (NPV), which is $3 million.

Questions?

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DAY 12
DAY
CHAPTER 5
PROJECT SCOPE MANAGEMENT
PMP Prep – Scope Slide 1

AGENDA
Day 1
PMP Exam Prep Introduction
Project Management Framework
Project INTEGRATION Management
DAY 2
Project SCOPE Management
Project TIME Management
Project QUALITY Management
DAY 3
Project RISK Management
DAY 4
REVISION & QUIZ
What does the scope knowledge area do?
• It includes the processes required to ensure that the project

includes all the work required and only the work required to
complete the project successfully.
• Managing the project scope is primarily concerned with defining
and controlling what is and is not included in the project.
• Project Scope Management defines and controls all the of work

included and not included in the plan.
• It Makes sure that every one agrees with the scope.

Project Scope Management includes the following processes:
• Collect Requirements
• Define Scope
• Create WBS
• Verify Scope
• Control Scope

In the project context, the term scope can refer to:
Product Scope
- Features & functions that characterize a product, service or result,
and/or
Project Scope
- Work that needs to be accomplished to deliver a product, service or
result with the specified features and functions.
The processes used to manage project scope, as well as the supporting

tools and techniques, vary by application area and are usually defined as
part of the project life cycle.
Scope baseline includes 3 things:

- Approved Detailed Project Scope statement
- Associated work breakdown structure
- WBS dictionary

SCOPE PROCESSES
SCOPE PROCESS DEFINITIONS
5. 1 Collect Requirements
- Collect Requirements is the process of defining and documenting
stakeholders’ needs to meet the project objectives.
- The project’s success is directly influenced by the care taken in
capturing and managing project and product requirements.
- Requirements include the quantified and documented needs and
expectations of the sponsor, customer, and other stakeholders.
- the requirements need to be elicited, analyzed, and recorded in
enough detail to be measured once project execution begins.
- Collecting requirements is defining and managing customer
expectations.
- Requirements become the foundation of the WBS.
- Cost, schedule, and quality planning are all built upon these
requirements.
- The development of requirements begins with an analysis of the
information contained in the project charter and stakeholder register.

SCOPE PROCESSES
5.2 Define Scope
• It is the process of developing a detailed description of the project and
product.
5.3 Create WBS

• Subdivide major project deliverables into smaller, more
manageable components
5.4 Verify Scope

• Formal acceptance of completed project deliverables, i.e. a signed
document
5.5 Control Scope

• Control changes to the project scope

SCOPE PROCESSES
Process by process group
Planning Monitoring and
Controlling
5.1 5.4
Collect Verify Scope
Requirements
5.2 5.5
Define Scope Control Scope
5.3
Create WBS
COLLECT REQUIREMENTS
WHAT HAPPENS IN COLLECT REQUIREMENTS?
The development of requirements begins with

an analysis of the information contained in the
project charter and stakeholder register.
The requirements are elicited, analyzed, and

recorded in enough detail to be measured once
project execution begins.
COLLECT REQUIREMENTS
TOOLS & TECHNIQUES
• Interviews
• Focus groups
• Facilitated workshops
• Group creativity techniques
• Group decision making
techniques
• Questionnaires and surveys
• observations
• Prototypes
OUTPUTS
• Requirements
INPUTS documentation
• Project charter • Requirements
• Stakeholder register Management Plan
• Requirements
traceability matrix

COLLECT REQUIREMENTS - INPUTS
INPUTS
1. Project Charter
2. Stakeholder Register
It is used to identify stakeholders that can provide information on
detailed project and product requirements (Stakeholder register is
described in Sec 10.1)
COLLECT REQUIREMENTS -T&T
COLLECT REQUIREMENTS – T&T
TOOLS & TECHNIQUES
1. Interviews
2. Focus groups
Focus groups bring together prequalified stakeholders and subject
matter experts to learn about their expectations and attitudes about a
proposed product, service, or result. A trained moderator guides the
group through an interactive discussion, designed to be more
conversational than one-on-one interview.
3. Facilitated Workshops
4. Group Creativity Techniques

- Brainstorming
- Nominal group technique
- The Delhi Technique
- Idea/mind mapping
- Affinity diagram

COLLECT REQUIREMENTS – T&T
TOOLS & TECHNIQUES
5. Group Decision Making Techniques
- Unanimity
- Majority
- Plurality (the largest block in a group)
- Dictatorship
6. Questionnaires and Surveys
7. Observations
8. Prototypes
Prototyping is a method of obtaining early feedback on requirements
by providing a working model of the expected product before

actually building it.
COLLECT REQUIREMENTS - OUTPUTS
OUTPUTS
• Requirements Documentation
(Read Sec. 5.1.3.1, page 109)
• Requirements Management Plan

(Read Sec. 5.1.3.2, page 110)

COLLECT REQUIREMENTS - OUTPUTS
OUTPUTS
• Requirements Traceability Matrix
Traceability matrix is a table that links requirements to their origin and
traces them throughout the project life cycle. It provides a structure for
managing changes to the product scope. The process includes, but not
limited to tracing:
- Requirements to business needs, opportunities, goals, and objectives;

- Requirements to project objectives;
- Requirements to project scope/WBS deliverables;
- Requirements to product design;
- Requirements to product development;
- Requirements to test strategy and test scenarios; and
- High-level requirements to more detailed requirements

SCOPE PROCESSES
Controlling
5.1 5.4
Collect Requirements Verify Scope
5.2 5.5
5.3
Create WBS

DEFINE SCOPE
What happens in Define Scope?
• Define Scope is the process of developing a detailed description of

the project and product.
• The preparation of a detailed project scope statement is critical to

project success and builds upon the major deliverables, assumptions, and
constraints that are documented during project initiation.
• During planning, the project scope is defined and described with

greater specificity as more information about the project is known.
• Existing risks, assumptions and constraints are analyzed for

completeness
DEFINE SCOPE
TOOLS & TECHNIQUES
• Product analysis
• Alternative identification
• Facilitated workshops
OUTPUTS
INPUTS
• Project charter
• Requirements documentation
• Project scope statement
• Organizational process assets • Project document updates

DEFINE SCOPE - INPUTS
INPUTS
• Project Charter
High-level project description and product characteristics
Described in Sec. 5.1.3.1
• Organizational process Assets

DEFINE SCOPE – T & T
TOOLS & TECHNIQUES
Expert Judgment
• Expert judgment is often used to analyze the information needed to

develop the project scope statement.
Product Analysis
• Differs by application area (translates product objectives into tangible

deliverables and requirements).
• Includes techniques such as product breakdown, systems analysis,
systems engineering , value engineering, and value analysis.

DEFINE SCOPE– T&T
Alternatives Identification
• Technique used to generate different approaches to execute &

perform project work.
• Common techniques are brainstorming (group shares impulse

ideas & gains ideas from each other) & lateral thinking (consider
several points of view)
Facilitated Workshops
• Read Section 5.1.2.3

DEFINE SCOPE - OUTPUTS
1) Project Scope Statement
• It describes in detail the project deliverables & work required to create

the deliverables.
• It defines what work will be performed & what work is excluded –

determines how well the PM team can control the overall project scope –
in turn can determine how well the PM team can plan, manage & control
execution of the project
• It includes, either directly or by reference to other documents (must read

page 115 of PMBOK thoroughly)

The detailed project scope statement includes, either directly, or by reference to
other documents, the following:
• Product scope description
• Progressively elaborated characteristics of project's product, service or result

described in the project charter and requirements documentation.
• Product acceptance criteria
Process and criteria for accepting completed products
• Project deliverables
Product or service of the project, and supplementary results, such as

project management reports & documentation

• Project exclusions
Generally identifies what is excluded as from the project (must state
explicitly)
• Project constraints
- Restriction or limitation of the project scope that limit team’s option e.g.
pre-defined budget; imposed dates or schedule milestones etc.
- Projects performed under contract generally have contractual provisions
• Project assumptions
- Factors, that for planning purposes, are considered true, real or certain. -
- Generally involve a degree of risk

2) Project Document Updates

Documents that may be updated
include, but not limited to :
- Stakeholder register
- Requirements documentation
- Requirements traceability matrix

Question
My company is researching on “clean energy on clean
transportation”. As the Project Manager, which of the
following is a valid assumption?
A. Project scope is to develop an alternative energy source or

electric drive for Off-road vehicles.
B. Project has to be completed in 24 months
C. Cost of the project is $ 17m
D. Gas will become a scarce commodity after 20 years

Answer : D
Assumptions are factors that are considered true, real or certain

(PM needs to make assumptions at every stage of the project)
Constraints are limitations or restrictions. (given in Project Charter)
D is the only assumption; all the others are constraints.

SCOPE PROCESSES
Controlling
5.1 5.4
5.2 5.5
5.3
Create WBS

CREATE WBS
WHAT'S A WORK BREAKDOWN STRUCTURE?
• Deliverable-oriented hierarchy of decomposed work to be done by

the project team.
• Organizes & defines the total scope of the project.
• Subdivides the project work into smaller, more manageable pieces

of work.
(refer to figure 5-7 in page117 of PMBOK)

CREATE WBS
TOOLS & TECHNIQUES

• Decomposition
INPUTS OUTPUTS
• Project scope statement • WBS
• Requirements documentation • WBS dictionary
• Organizational process assets • Scope baseline
• Project document updates

CREATE WBS - INPUTS
INPUTS
• Project Scope Statement
• Requirements Documentation

CREATE WBS – T&T
TOOLS & TECHNIQUES
Decomposition
• Decomposition is sub-division of project deliverables into smaller, more

manageable components. Decomposition involves the following activities:
• Decomposition may not be possible for a deliverable or sub-project that

will be accomplished far into the future.
• PM team waits until the deliverable or sub-project is clarified so the

details of WBS can be developed. This technique is called “ Rolling Wave
Planning”.
(Read page 118)

CREATE WBS – Definitions
• Work Package – a deliverable at lowest level of WBS with a group of activities,

which are used in Activity Definition as schedulable tasks (may be further
decomposed)
• Planning package – Future deliverables or subprojects that can’t be

decomposed

CREATE WBS
Decomposition process involves:
• Identifying the deliverables and related work
• Structuring and organizing the WBS
• Decomposing the upper WBS levels into lower level detailed
components.
• Develop & Assign identification codes to each WBS component
(code of account)
• Verifying that the degree of decomposition of the work is
necessary and sufficient

APPROACHES TO DEVELOP WBS
• Using guidelines: Some organizations, like the DOD,
provide guidelines for preparing WBSs
• The analogy approach: It often helps to review WBSs of

similar projects
• The top-down approach: Start with the largest items of

the project and keep breaking them down
• The bottoms-up approach: Start with the detailed tasks

and roll them up

CREATE WBS
Sample Intranet WBS Organized by Product

SAMPLE INTRANET WBS ORGANIZED BY
PHASE

CREATE WBS
Basic principles for creating a WBS:
1. A unit of work should appear at only one place in the WBS.

2. The work content of a WBS item is the sum of the WBS items below it.
3. A WBS item is the responsibility of only one individual, even though many
people may be working on it.
4. The WBS must be consistent with the way in which work is actually going
to be performed; it should serve the project team first and other purposes
only if practical.
5. Project team members should be involved in developing the WBS to
ensure consistency and buy-in.
6. Each WBS item must be documented to ensure accurate understanding
of the scope of work included and not included in that item.
7. The WBS must be a flexible tool to accommodate inevitable changes
while properly maintaining control of the work content in the project
according to the scope statement.

CREATE WBS - Definitions
Code of Accounts -Uniquely identifies each element (box) of the WBS
MS Project, Visio etc. can generate Code of Accounts.
Chart of Accounts -Coding structure used by the performing organization

to report financial information by category, i.e. labour or supplies. It's
generally as given in General Ledger.
Control Account -A management control point placed in a WBS element

where scope, cost & schedule can be tracked. Also used for planning
when work packages are not planned yet. Documented in a Control
Account Plan.

CREATE WBS- OUTPUTS
OUTPUTS
Work Breakdown Structure
The WBS should not be confused with other break-down structure used to
present project information. Some of them used in other
application/knowledge areas include:
• Organizational Breakdown Structure (OBS): depiction of project by

departments, units or teams
• Bill Of Material (BOM): tabulation of physical assemblies, subassemblies
and components
• Risk Breakdown Structure (RBS): depiction of identified project risks
arranged by risk category
• Resource Breakdown Structure (RBS): depiction of project resources by
type

CREATE WBS- OUTPUTS
WBS Dictionary
• Document that details each WBS component
• It includes:
• Code of account identifier

• a statement of work with defined deliverables
• Responsible organization
• List of schedule milestone
• It could include:
• Contract information
• Quality requirements
• Technical references
• List of associated activities/interdependencies
• Resources required
• Cost estimate
CREATE WBS- OUTPUTS
Scope Baseline - The approved detailed “Project Scope

Statement” and its associated WBS & WBS Dictionary.
Project Document Updates

SCOPE PROCESSES
Controlling
5.1 5.4
5.2 5.5
5.3
Create WBS

VERIFY SCOPE
HOW DO WE VERIFY SCOPE?
• Getting the stakeholders' formal acceptance of completed or updated
scope & deliverables, i.e. the WBS or the software you delivered
• If a project terminates early, project scope verification should be done

next to establish & document the level & extent of completion.
• Scope verification is concerned with acceptance of deliverables, While

quality control is concerned with quality of deliverables
• Quality control is generally performed before scope verification but can

be performed in parallel as well
• It's unethical to ignore Scope Verification because it adds risk to meeting

the customer's needs (see PMP Code of Conduct)

VERIFY SCOPE
TOOLS & TECHNIQUES
• Inspection
INPUTS OUTPUTS
• Project scope statement • Accepted deliverables
• WBS dictionary
• Requested changes
• Project scope
• Recommended
management plan
• Deliverables corrective actions

VERIFY SCOPE - INPUTS
INPUTS
Project Scope Statement -
WBS Dictionary -
Project Scope Management Plan -
Deliverables - partially or fully completed & are an output of the Direct &
Manage Project Execution

VERIFY SCOPE – T&T
TOOLS & TECHNIQUES
Inspection
• Measuring, examining, and verifying to determine whether work or

deliverables meet requirements and product acceptance criteria.
• Inspections are also called reviews, product reviews, audits and

walkthroughs.
VERIFY SCOPE - OUTPUTS
OUTPUTS
Accepted Deliverables
• Documents those completed deliverables that have been

accepted.
• Documents those completed deliverables that have not been
accepted, along with the reasons for non-acceptance.
• Includes supporting documentation received from customer or
sponsor and acknowledging stakeholders acceptance of the
project’s deliverables.
Requested Changes -
Recommended Corrective Actions –

SCOPE PROCESSES
Controlling
5.1 5.4
5.2 5.5
5.3
Create WBS

CONTROL SCOPE
WHAT HAPPENS DURING CONTROL SCOPE ?
(Change is inevitable)
• Influencing the factor that create project scope changes
• Controlling the impact of those changes
• Assures all requested changes and recommended corrective actions

are processed through the project Integrated Change Control
process
• Project scope control is used to manage the actual changes when

they occur& integrated with other control processes
Note: Uncontrolled changes are often referred to as project scope

creep
CONTROL SCOPE
TOOLS & TECHNIQUES
• Change control system
• Variance analysis
• Replanning
• Configuration management
system
OUTPUTS
INPUTS
• Project scope statement (updates)
• WBS (updates)
• Work breakdown structure • WBS dictionary (updates)
• WBS dictionary • Scope baseline (updates)
• Project scope management plan • Requested changes
• Performance reports •Recommended corrective action
• Approved change requests • Organizational process assets
• Work performance information (updates)
• Project management Plan (updates)

CONTROL SCOPE - INPUTS
INPUTS
Project Scope Statement -
Work Breakdown Structure -
WBS Directory -
Project Scope Management Plan -
Performance Reports -
• Performance reports provide information on project work performance,
such as interim deliverables that have been completed
Approved Change Requests -
Work Performance Information –

CONTROL SCOPE – T&T
TOOLS & TECHNIQUES
Change Control System
Documented in project scope management plan, defines the procedures by

which the project scope or product scope can be changed.
Variance Analysis
• Project performance measurements are used to assess the magnitude of

variation. Important aspects of scope control include determining cause of
variance to scope baseline and deciding whether corrective action is
required.
• Time & cost areas (to come) use a mathematical technique called earned
value analysis.

CONTROL SCOPE – T&T
Re-planning –
• Approved change requests can require modifications to the:
• WBS
• WBS dictionary
• Project Scope Management Plan
• Other components of Project Management Plan
• Configuration Management System
Provides procedures for the status of the deliverables, and assures that
requested changes to the project scope & product scope are thoroughly
considered & documented before being processed through ICC process.
CONTROL SCOPE - OUTPUTS
OUTPUTS
Project Scope Statement (updates) -
Work Breakdown Structure (updates) -
WBS Dictionary (Updates) -
Scope Baseline (Updates) -
Requested Changes -
Recommended Corrective Actions -
Organizational Process Assets (Updates) -
Project Management Plan (Updates) -

Question
You're the project manager for an advertising campaign. The
stakeholders, including the client, approved your completed WBS.
Later, after some of the artwork has been printed, the client wants
to add a registered trademark symbol, which will cost a
considerable amount of money. The client says that your company's
salesperson, prior to signoff on the WBS, promised this feature
would be included. Who should pay for the change?
A. Your company managing the project

B. Both the client and your company should pay part of the cost
C. The change should not be implemented
D. The client

Answer - D
Because signing of the WBS constitutes an agreement between
your company managing the project and the client, the client should
pay. Work that is not specified in the WBS is not part of the project
scope.
In reality, this is sometimes not the case. Companies will frequently

do work that is outside the project scope in order to ensure the
goodwill of the client.
Also note that if the WBS had been done with a milestone
deliverable for signing of the artwork before printing (scope
verification), this could have been avoided.

Questions?

DAY 3
CHAPTER 6
PROJECT TIME MANAGEMENT
PMP Prep – Time Slide 1

AGENDA
Day 1 DAY 4
PMP Exam Prep Introduction Project QUALITY Management
Project Management Framework Project RISK Management
*Introduction Project HUMAN RESOURCE Management
DAY 2 DAY 5
Project INTEGRATION Management Project PROCUREMENT Management
Project SCOPE Management Professional & Social Responsibility
DAY 3 DAY 6
Project TIME Management REVISION & QUIZ
PROJECT TIME MANAGEMENT
WHAT DOES THE TIME MANAGEMENT AREA ATTAIN?
• Manages the project schedule to ensure timely

completion of the project
• Utilizes the Schedule Management Plan from the

Develop Project Management Plan process

TIME PROCESSES
DEFINITIONS : TIME PROCESSES
6.1 Define Activities

• Identifying the specific actions to be performed to produce project deliverables
(at the lowest level in the WBS, which is called the work package).
6.2 Sequence Activities

• Identifying & documenting relationships among the project activities.
6.3 Estimate Activity Resources

• Estimate the type & quantities of material, people, equipment, or supplies
required to perform each activity.

TIME PROCESSES
6.4 Estimate Activity Durations

• Estimate the number of work periods needed to complete individual activities
with estimated resources.
6.5 Develop Schedule

• Analyze activity sequences, durations, resource requirements, and schedule
constraints to create the project schedule.
(The five processes above could be viewed as a single process in small projects)
6.6 Control Schedule

• Monitor the status of the project to update project progress and managing
changes to the schedule baseline.

TIME PROCESSES
PLANNING MONITORING & CONTROLLING
6.1 Define Activities 6.6 Control Schedule

DEFINE ACTIVITIES
WHAT HAPPENS IN DEFINE ACTIVITIES?
• Identifies the specific actions to be performed to produce the project deliverables. The
Create WBS process identifies the deliverables at the lowest level in the Work
Breakdown Structure (WBS), the work package.
• Decompose the work packages into smaller components called activities that represent
the work necessary to complete the work package.
• Differentiate between a work package and an activity?

• A work package is a deliverable as a result of work
• An activity is an action that produces a deliverable alone or together with other
activities
• Activities provide a basis for estimating, scheduling, executing, and

monitoring & controlling the project work.
• Implicit in this process is defining and planning the schedule activities such that the
project objectives will be met.

DEFINE ACTIVITIES
TOOLS & TECHNIQUES
• Decomposition
• Rolling wave planning
• Templates
OUTPUTS
• Scope baseline • Activity list
• Enterprise environmental factors • Activity attributes
• Organizational process assets • Milestone list

DEFINE ACTIVITIES - INPUTS
• Scope Baseline

- Existing formal and informal activity planning-related policies, procedures,
and guidelines, such as scheduling methodology, that are considered in
developing the activity definitions, and
- Lessons-learned knowledge base containing historical information

regarding activities lists used by previous similar projects.
DEFINE ACTIVITIES – T&T
TOOLS & TECHNIQUES
Decomposition
• Subdivides work packages into smaller, more manageable components called

activities. Activities represent the effort needed to complete a work package.
Rolling Wave Planning

• Rolling wave planning is a form of progressive elaboration planning, where
• Work in near term is planned in detail
• Work in future is planned at a higher level of WBS
Therefore, work can exist at various levels of detail depending on where it is in the
project life cycle.
For example, during early strategic planning, when information is less defined, work
packages may be decomposed to the milestone level. As more is known about the
upcoming events in the near term it can be decomposed into activities.

DEFINE ACTIVITIES– T&T
Templates
• A standard activity list or a portion of an activity from a
previous project is often used as a template for a new
project.
• Templates are also used to identify typical schedule
milestones.
Expert Judgment
• Experts - experienced and skilled in developing detailed
project scope statements, the WBS, and project schedules
can provide expertise in defining activities
DEFINE ACTIVITIES - OUTPUTS
OUTPUTS
Activity List
•The activity list is a comprehensive list of all schedule activities required on the project.
•The activity list includes the activity identifier and a scope of work description for each
activity in sufficient detail to ensure that project team members understand what work is
required to be completed.
Activity Attributes
• Multiple components associated with each activity that evolve over time.
During the initial stages of the project they include:
- Activity ID, WBS ID, and Activity Name
and when completed may include

- Activity codes, activity description
- Predecessor activities, successor activities, logical relationships
- Leads & lags
- Resource requirements
- Imposed dates, constraints & assumptions
- Person or company responsible for executing the work
- Geographic area or place where the work has to be performed
- Activity type such as level of effort, discrete effort, and apportioned effort

DEFINE ACTIVITIES - OUTPUTS
OUTPUTS
Activity Attributes (Contd.)

• Activity attributes are used for schedule development and for
selecting, ordering, and sorting the planned schedule activities in
various ways within reports. The number of attributes varies by
application area.
Milestone List
• A milestone is a significant point or event in the project.
Its type that could be either:
• Mandatory (required by contract or law)
• Optional (based upon project requirements or historical
information)

TIME PROCESSES

SEQUENCE ACTIVITIES
WHAT HAPPENS IN SEQUENCE ACTIVITIES?
• Identifies & documents logical relationship among the project

activities.
• Every activity and milestone except the first and last are connected to
at least one predecessor and one successor.
• Defines precedence relationships and leads & lags to support

development of a realistic & achievable project schedule.
• Sequencing can be performed by using project management software or by

using manual or automated techniques.

SEQUENCE ACTIVITIES
TOOLS & TECHNIQUES
• Precedence diagramming
method (PDM)
• Dependency determination
• Applying leads & lags
• Schedule network
templates
INPUTS OUTPUTS
• Activity list • Project schedule
• Activity attributes network diagrams
• Milestone list • Project document
• Project scope statement updates

SEQUENCE ACTIVITIES
INPUTS
• Activity List
• Activity Attributes
• Milestone List
PMP Prep-Time Slide 16

SEQUENCE ACTIVITIES
Tools &Techniques
1) Precedence Diagramming Method (PDM)

• Method of constructing a Project schedule network diagram that uses
• Rectangles or boxes (called nodes) to represent activities
• Arrows  show dependencies
This method is also called activity-on-node (AON)

SEQUENCE ACTIVITIES - T&T
Types of Predecessor
Finish-to-Start –Successor activity can not start until the predecessor activity
is completed
Activity A Predecessor  Activity B Successor
e.g. Trouser can not be stitched till the linen is cut.
Finish-to-Finish – Completion of successor activity depends upon completion

of predecessor activity. Hence two tasks must finish at the same time
e.g. – ‘Wiring Inspection’ can’t finish until ‘House Wiring” is completed.
Predecessor Activity A  Successor Activity B

Start-to-Start -Start of successor activity depends upon start of the

predecessor activity
e.g. start canvassing only after candidature is announced by the Election
Commission.
Predecessor Activity A Successor Activity B
Start-to-Finish – Completion of successor activity depends upon start of the

predecessor activity
e.g. – To pass PMP exams, you have to start reading PMBOK
Predecessor Activity A Successor Activity B

Read just for knowledge
Arrow Diagramming Method (ADM)
ADM uses arrows to represent activities & connects to nodes to show their
dependencies
• Also called activity-on-arrow (AOA)
• Used in teaching ‘Schedule Network Theory’
• Uses only finish-to-start dependencies and is not as

prevalent as PDM
• Can require "dummy" relationships (dummy activities)

(broken lines) that have zero value for duration
• Uses more than one time estimate.

2) Dependency Determination
Three types of dependencies are used
• Mandatory dependencies (sometimes called hard logic)

• Inherent in the nature of the work e.g. before basement 1st floor
• Discretionary dependencies (preferred, preferential or soft logic)

• Sometimes required in unusual aspect of the project
• PM team decides based on knowledge, best practices & exp.
• External dependencies
Relationship between project & non-project activities, i.e. dependent on
delivery of computers before the software development can start

3) Applying Leads & Lags
 A lead allows the following activity start before the previous one
is finished.
• Start painting the bedroom before all the rooms are constructed.
• Lead is overlap between activities
 A lag allows a delay in the next activity.
• Staff joined but training to commence after 15 days (a lag of 15 days)

• Lag is waiting time between activities.
4) Schedule Network Templates
• Standardized project schedule network diagram templates can be

used to expedite the preparation of networks
• Portions of a project schedule network diagram are often referred as

‘sub network’ or ‘fragment network’
• Useful for identical deliverables, as in different floors of a multi-storied

building

SEQUENCE ACTIVITIES - OUTPUTS
OUTPUTS
1) Project Schedule Network Diagrams
• Schematic displays of project schedule activities and logical relationships
among dependencies
• A short narrative describing the approach used to sequence the activities. Any
unusual activity sequences within the network are fully described in the
narrative (during schedule updates, you'll need to remember)
Project documents that may be updated include, but not limited to:
Activity lists
Activity attributes
Risk register

TIME PROCESSES

ESTIMATE ACTIVITY RESOURCES
WHAT IS IN “ESTIMATE ACTIVITY RESOURCES”?
• Estimate Activity Resources is the process of estimating the type and

quantities of material, people, equipment, or supplies required to
perform each activity.
• For example. a construction project team will need to be familiar with

local building codes. Such knowledge is often readily available from local
sellers. However, if the local labor pool lacks experience with unusual or
specialized construction techniques, the additional cost for a consultant might
be the most effective way to secure knowledge of the local building codes.

ESTIMATE ACTIVITY RESOURCES
TOOLS & TECHNIQUES

• Expert judgment
• Alternative analysis
• Published estimating data
• Bottom-up estimating
• Project management software
INPUTS
OUTPUTS
• Activity list • Activity resource
• Activity attributes requirements
• Resource calendars • Resource breakdown
• Enterprise environmental factors structure
• Organizational process assets • Project document updates

ESTIMATE ACTIVITY RESOURCES - INPUTS
INPUTS
• Activity List
• Activity Attributes
• Resource Calendars
The composite resource calendar includes the availability,
capabilities, and skills of human resources
- Which resources (people, equipment, material) are potentially available.
- Estimate resource types, i.e. senior vs. junior engineer at different phase of
the project (e.g. during early phases of an Engineering Design Project-Junior
engineer is fine but at later stages experienced engineers will be required).
- Consider geographical location & when they will be available.


ESTIMATE ACTIVITY RESOURCES – T&T
Expert Judgment
Experts access the resource-related inputs in planning & estimating
Alternatives Analysis
Many schedule activities have alternative methods of accomplishment. They
include:
• Using various levels of resource capability or skills
• Using different sizes or types of machines or tools, e.g.
automated or manual
• Make-or-buy decisions regarding the resources (whether to
outside contracting is cheaper than hiring)

ESTIMATE ACTIVITY RESOURCES – T&T
Published Estimating Data
Some companies publish production rate and unit cost of resources for
different trades, material & equipment within countries, various info
published by PMI for its members
Bottom-up Estimating
• For accuracy, the work within schedule activity is decomposed into more
detail
• Each activity is then totalled into overall project
• Schedule activities may or may not have dependencies between
them that can affect the application and use of resources.
Project Management Software

Sophisticated software help plan, organize and manage resource pools &
develop resource estimates.
PMP Prep-Time Slide 30

ESTIMATE ACTIVITY RESOURCES - OUTPUTS
Activity Resource Requirements
• Identification & description of types & quantities of

resources required for each schedule activity
• Added up to determine estimated resources for each

work package
• Schedule activity forms basis of estimate & determines

type, availability and quantity of resources used
• Schedule Development process determines when

resources are needed

ESTIMATE ACTIVITY RESOURCES - OUTPUTS
Resource Breakdown Structure (RBS)

Is hierarchical structure of identified resources by
(i) Resource category, and (ii) Resource type

• Activity list,
• Activity attributes,
• Resource calendars.

TIME PROCESSES

ESTIMATE ACTIVITY DURATIONS
WHAT IS THERE IN ESTIMATE ACTIVITY DURATION?

The process of approximating the number of work periods needed to complete individual
activities with estimated resources. The process uses information on:
• Activity scope of work
• Required resource types, estimated resource quantities &
resource calendars.
The duration estimate is:
• progressively elaborated
• the process considers the quality & availability of the input data
• All data and assumption that support duration estimating are documented for each
estimate of activity duration.
Most project management software for scheduling will handle this situation by using a
project calendar and alternative work-period resource calendars that are usually identified
by resources that require specific work-periods. In addition to the sequencing logic, the
activities will be performed according to the project calendar and appropriate resource
calendars.

ESTIMATE ACTIVITY DURATIONS
TOOLS & TECHNIQUES

• Expert judgment
• Analogous estimating
• Parametric estimating
• Three-point estimates
• Reserve analysis
INPUTS
• Activity list
• Activity attributes OUTPUTS
• Activity resource requirements • Activity duration estimates
• Resource calendars • Project document updates
• Enterprise environmental factors

ESTIMATE ACTIVITY DURATIONS - INPUTS
INPUTS
Activity List
Activity Attributes
Resource Calendars
Project Scope Statement
Organizational Process Assets

ESTIMATE ACTIVITY DURATIONS – T&T
Expert Judgment
Analogous Estimating
• An estimate that's based on the duration of previous, similar schedule activity

as the basis for estimating duration of a future schedule activity.
• It uses historical information & expert judgement.
• It is most reliable when the previous activities are similar in fact and not just in
appearance, and the project team members preparing the estimates have the
needed expertise (A form of a top-down estimate)

Parametric Estimating
Estimates activity durations quantitatively by multiplying the quantity of work to
be performed by the productivity rate.
Basically uses some measurable parameter that changes the same way as cost
does
Three – Point Estimates

The accuracy of the activity estimate can be improved by considering
estimation uncertainty and risk. This concept originated with the
Program Evaluation and Review Technique (PERT). PERT uses three
estimates to define an approximate range for an activity’s duration:
The three estimates are Optimistic, Pessimistic & Most Likely. PERT
analysis calculates an Expected activity duration using a weighted
average of the these three estimates:
Weighted average = {Optimistic + (4* Most likely) + Pessimistic} / 6

Reserve Analysis (read 6.4.2.5, page 151)
• Project teams can choose to incorporate additional time referred to as

contingency reserve or time reserves or buffers
• Can be applied to overall project schedule or at a point in the schedule as

recognition of project risk
• They are planned provisions to mitigate the impact of variance in cost or

schedule (takes care of risk in cost & time)

ESTIMATE ACTIVITY DURATIONS – OUTPUTS
OUTPUTS
Activity Duration Estimates
• Quantitative assessments of the likely number of work periods

required to complete a schedule activity
• Estimates should include some indication of the range of

possible results, I.e. 2 weeks +/-2 days to indicate that schedule
activity will take at least eight days and no more than 12 days
(assume 5 day week)

TIME PROCESSES

DEVELOP SCHEDULE
HOW DO YOU DEVELOP A SCHEDULE ?
• Develop Schedule is the process of analysing activity sequences, durations,

resource requirements, and schedule constraints to create the project schedule.
•Determine planned start & finish dates for all project activities
• Schedule development is iterative (repeats in cycles) & continues throughout

the project to modify duration & resource estimates as the:
• Work progresses
• Project Management Plan changes
• the nature of risk events evolves
• The schedule baseline (developed at the beginning of the project) is used to

track work progress and variance.

DEVELOP SCHEDULE
TOOLS & TECHNIQUES
• Schedule network analysis
• Critical path method
• Critical chain method
• Resource levelling
• What-if scenario analysis
• Applying leads and lags
• Schedule compression
• Scheduling tool
INPUTS
• Activity list
• Activity attributes
• Project schedule network OUTPUTS
diagrams • Project schedule
• Activity resource requirements • Schedule baseline
• Resource calendars • Schedule data
• Activity duration estimates • Project document updates

DEVELOP SCHEDULE - INPUTS
INPUTS
Activity List
Activity Attributes
Project Schedule Network Diagrams
Resource Calendars
Activity Duration Estimates
• e.g. Scheduling methodology, and project calendar

DEVELOP SCHEDULE – T&T
TOOLS & TECHNIQUES
1) Schedule Network Analysis
• Generates the project schedule with early and late start and finish dates
using:
• Critical path method
• Critical chain method
• What-if analysis & resource levelling
• Schedule compression or analysis
2) Critical Path Method (CPM ) – Read page 154-155
• Series (or path) of activities through the network diagram that
determines the soonest time a project can finish
• Calculates the theoretical early start and finish dates, and late start and
finish dates, for all activities without regard for any resource limitations, by
performing a forward and backward pass analysis through the schedule
network.
• longest path through the network diagram
• they have either zero or negative total float.
• Networks can have multiple near critical paths.
• the schedule activities on critical path are called critical activities
TOOLS & TECHNIQUES
3) Critical Chain Method (Read page 155)

• Critical chain is a schedule network analysis technique that modifies the
project schedule to account for limited resources.
• The critical chain method adds duration buffers that are non-work
schedule activities to manage uncertainty. One buffer, placed at the end of
the critical chain, is known as the project buffer and protects the target
finish date from slippage along the critical chain.

TOOLS & TECHNIQUES
4) Resource Levelling
• After using critical path to analyse your schedule, you may need to
address:
• Resource usage that needs to be kept at a constant level, e.g. a technician utilized for
120 hours for one week is better utilized at 40 hours a week for 3 weeks
• Activities that need to be performed to meet specified delivery dates
• to address the situation where shared or critical required resources are only available at
certain times and in limited quantities
• Resource levelling often results in:
• A longer project duration
• Allocating scarce resources to critical path activities
• Using overtime or multiple shifts
• Methods to increase resource productivity like different technology or machines
• Can cause the original critical path to change
• A cost increase, but staff cost may decrease if overtime is eliminated
• Produces a resource-limited or resource-constrained schedule
• Reverse resource allocation scheduling is done from project end.

TOOLS & TECHNIQUES
5) What-If Scenario Analysis
• Creates a schedule model, then computes different scenarios (simulations) if X
happens; assess the feasibility of the project schedule under adverse conditions.
• The most common technique is Monte Carlo Analysis (read Section 11.4.2.2)
6) Applying Leads and Lags
7) Schedule Compression
• Shortens project schedule without changing the project scope to meet schedule
constraints, imposed dates, or other schedule objectives.
• Crashing –addition of more resources on the critical path to complete the project
earlier (generally increases cost).
• Fast tracking - activities or phases that normally would be done in sequence are
performed in parallel; can require work to be performed without detailed info. & can
increase risk.
8) Scheduling Tool
• Automated scheduling tools expedite the scheduling process by generating start and finish
dates based on the inputs of activities, network diagrams, resources and activity durations. A
scheduling tool can be used in conjunction with other project mgmt. Software applications as
well as manual methods.

Consider the following diagram of activities (time is given in days)
1. How many paths are on this network diagram?

2. How long is each path in days?
3. Which is the critical path?
4. What is the least amount of time needed to finish this project?

PERT (Problem)
What's the expected time to complete an activity given these

times?
Optimistic = 15 min. Most Likely =30 min. Pessimistic = 60 min.

Weighted Average (Expected) Time using PERT calculations:
{Optimistic + ( 4 x Most Likely) + Pessimistic} divided by 6
Answer: (15 + 120 + 60) /6 = 32.5 min


Schedule Exercise -Draw a network diagram based on this information to

answer these questions.
Task A can start immediately & is estimated at 3 weeks

Task B can start after Task A is completed & is estimated at 3 weeks
Task C can start after Task A is completed & is estimated at 6 weeks
Task D can start after Task B is completed & is estimated at 8 weeks
Task E can start after Tasks C & 0 are finished & IS estimated at 4 weeks
1. How long is the critical path?

2. What's the float of Task C?_______ and Task B?
3, What's the total float (between all nodes) of the path with the longest float?


More Exercise Questions
4. If Task C changes to 10 weeks, how will the schedule dates be affected?
5. Task F, which is estimated at 11 weeks, has been added to the project. It

must be completed before Task E & after Task C. The customer is concerned
that this will add an additional 11 weeks to the elapsed time of the project. How
many weeks will be added?
(Assume question 4 above didn't happen.)

Exercise Answers 4 & 5
4. No effect. Task C is on a path with a 5 week total float so adding

another 4 weeks will still leave 1 week of total float on its path.
5. Task F is added to a path with a 5 week float. Adding this 11

week activity will use up all 5 of the float weeks and delay the project
by an additional 6 weeks. The critical path will move to the bottom
with a 6 week float on the top path.

DEVELOP SCHEDULE – OUTPUTS
OUTPUTS
1) Project Schedule
• Includes at least a planned start date & planned finish
date for each schedule activity.
• Project Schedule can be presented in summary form,
called master or milestone schedule, or presented in
detail.
• More often presented graphically using following
formats:
• Project Schedule Network Diagrams (These diagrams
can be presented in the activity-on-node diagram
format or in a time-scaled schedule network diagram
format (see Figure 6-10, p.150), sometimes called a
logic bar chart.

• Milestone Charts
• Bar chart with only scheduled start or completion dates of major
deliverables and key external interfaces (see Fig. 6-14, p.158 top
milestone schedule)
• In milestone chart activities have zero duration
• Bar Charts
• Gantt Charts with bars representing activities show activity start and end
dates & expected durations
• For control & management communication, more comprehensive
summary activity, (see Fig. 6-14, p.158 middle summary schedule)
sometime referred to as a hammock activity, is used between milestones
or across multiple interdependent work packages

• Project schedule network diagrams (see Fig. 6-7 and Fig. 6-14)
2) Schedule Baseline
• Accepted & approved schedule
3) Schedule Data

- Activity resource requirements
- Activity attributes
- Calendar
- Risk register

TIME PROCESSES

CONTROL SCHEDULE
WHAT HAPPENS IN CONTROL SCHEDULE?
• Schedule control is concerned with:

• Determining the current status of the project schedule
• Influencing the factors that create schedule changes
• Determining that the project schedule has changed
• Managing the actual changes as they occur
Schedule Control is a portion of Integrated Change Control process

CONTROL SCHEDULE
TOOLS & TECHNIQUES

• Performance reviews
• Resource levelling
• What-if scenario analysis
• Adjusting leads and lags
• Schedule compression
• Scheduling tool
INPUTS OUTPUTS
• Project management plan • Work performance measurements

• Project schedule • Organizational process assets updates
• Work performance information • Change requests
• Organizational process assets • Project management plan updates

CONTROL SCHEDULE - INPUTS
INPUTS
• It describes how the schedule will be managed and controlled, for example:
• Format of your schedule; rules for use of MS Project
• How and how often is the schedule updated
• Rules for authorizing schedule changes
• Mechanisms for detecting schedule changes
• How is time estimating done
• The schedule baseline is used to compare with actual results to determine if a
change, corrective action, or preventive action is necessary.
Project Schedule
CONTROL SCHEDULE – T&T
Performance Reviews
Performance reviews measure, compare, and analyse schedule performance
such as actual start and finish dates, percent complete, and remaining duration
for work in progress.
If earned value mgmt.(EVM) is utilized the schedule variance (SV) and schedule
performance index (SPI) are used to assess the magnitude of schedule
variations (read page 162)
Variance Analysis
• Compare target vs. actual/forecast start and finished dates provides useful
information for the detection of deviations and for the implementation of
corrective actions in case of delays.

CONTROL SCHEDULE – T&T

Resource Leveling
What-If Scenario Analysis
Adjusting Leads and Lags
Schedule Compression
Scheduling Tool

CONTROL SCHEDULE – OUTPUTS
OUTPUTS
• Work Performance Measurements

• Organizational Process Assets Updates
• Change Requests
• Project Management Plan Updates
• Project Document Updates

Question 1
Mathematical analysis often produces a preliminary schedule that show peaks

and valleys in the resource requirements. Resource levelling can take care of
this and may result in all the following except:
A. Increase project duration
B. Increase in productivity by using different technologies and/or machinery
C. Reduction in many project costs, but may not be human resource cost
D. Utilization of weekends, extended hours or multiple shifts
Answer 1
C is the correct answer. See PMBOK, p.147

Question 2 TASK Preceding Estimate in
Activity Months
What is the length of the
Start - 0
critical path?
A Start 3
A. 12
B. 10 B A 4
C. 11 C Start 2
D. 14 E C 5
D Start 7
E D 1
END B 3
END E 4




Questions?

DAY 13
DAY
CHAPTER 7
PROJECT COST MANAGEMENT
PMP Prep – Cost Slide 1

AGENDA
Day 1 DAY 4
DAY 2 DAY 5
DAY 3 DAY 6
WHAT DOES THE COST KNOWLEDGE AREA INCLUDE?
• Processes involved in estimating, budgeting, and controlling costs

so that the project can be completed within the approved budget.
• Primarily concerned with resource costs of schedule activities.
• The work involved in performing the three processes of Project Cost

Mgmt. is preceded by a planning effort of the project mgmt. team.
This planning effort is the part of the Develop Project Mgmt. Plan
process, which produces a cost management plan that sets out the
format and establishes the criteria for planning, structuring,
estimating, budgeting, and controlling project costs.

WHAT DOES THE COST KNOWLEDGE AREA INCLUDE?
• The cost management processes and their associated tools and

techniques are usually selected during the project life cycle
definition (read Sec. 2.1), and are documented in the cost mgmt.
plan.
Life Cycle Costing

• It is defined as the cost of using, maintaining & supporting the
product, service or result of the project, but it's not part of the
project's budget (will get many questions on life cycle costing).
• Uses the Cost Management Plan (which is a part of the Project

Management Plan)

Types of Costs : Let us illustrate using an example: Seminar
• Fixed- rent of the seminar room is a fixed cost

• Variable – cost of food to participants varies with number of participants
• Direct – hiring of PA system for the seminar
• indirect – cost of electricity of the venue is shared by all the other users

COST PROCESSES
COST PROCESS DEFINITIONS
7.1 Estimate Costs

• Develop cost approximations of all monetary resources needed to
complete project activities.
7.2 Determine Budget

• Aggregating the estimated costs of individual activities or work packages
to establish an authorized cost baseline.
7.3 Control Costs

• The process of monitoring the status of the project to update the project
budget and managing changes to the cost baseline.
In smaller projects, Cost Estimating & Cost Budgeting can be one single
process

COST PROCESSES
Processes by process group

controlling
7.1 7.3
Estimate Costs Control Costs
7.2
Determine Budget

ESTIMATE COSTS
HOW DO YOU ESTIMATE COSTS?
Get a cost approximation of the monetary resources needed to
complete each schedule activity
Resources should include:
• Labour & services
• Materials, equipment & facilities
• Information technology
• Inflation, cost contingency reserves
• Cost estimates are generally expressed in units of currency (or
hours)
• Possible causes of variations should be considered (risk)
• Accuracy should increase as project progresses
• Some organizations have formally trained project cost estimators

ESTIMATE COSTS
Salient Features:
• Cost estimating includes identifying and considering various

costing alternatives
• Cost estimates are expressed in units of currency
• Cost estimates are normally refined during the course of the
project. The accuracy of a project estimate will increase as
the project progresses through the project life cycle.
• A project in initial phase could have a rough order of
magnitude (ROM) estimate in the range of -50 to +50%.
• Later in the project, as more info. Is known, estimates could
narrow to a range -10 to +10%.

ESTIMATE COSTS
TOOLS & TECHNIQUES
• Analogous estimating
• Parametric estimating
• Bottom-up estimating
• Three-point estimates
• Cost of quality
estimating software
• Vendor bid analysis
INPUTS
Scope baseline OUTPUTS
• Project schedule • Activity cost estimates
• Human resource plan • Basis of estimates
• Risk register •Project document
factors
updates

ESTIMATE COSTS - INPUTS
INPUTS
Scope Baseline
• Scope statement
• Work breakdown structure
• WBS dictionary
Project Schedule
The type and quantity of resources and the amount of time which those resources
are applied to complete the work of the project are major factors in determining the
project cost. Schedule activity resources and their respective durations are used as
key inputs to this process.
Human Resource Plan

The following are necessary components for developing the project cost estimates
• Project staffing attributes
• Personnel rates
• Related rewards/recognition

ESTIMATE COSTS - INPUTS
INPUTS
Risk Register
The risk register should be reviewed to consider risk mitigation costs

The cost estimating process considers
• Commercial databases

• Cost estimating policies, procedures & guidelines
• Cost estimating templates
• Historical information
• Project files
• Project team knowledge
• Lesson learned

ESTIMATE COSTS – T&T
TOOLS & TECHNIQUES
Expert Judgment
Analogous Estimating
Using actual cost of previous, similar projects as the basis for costing
current project. This method is less costly than other techniques, but is less
accurate. Most reliable when previous projects are similar.

Parametric Estimating
Uses statistical relationship between historical data and other variables (
e.g. required labour hours, square footage in construction etc.)
Bottom-up Estimating
Estimating the cost of individual work packages or schedule activities with
the lowest level of detail. This detailed cost is then summarized or "rolled
up" to higher levels for reporting and tracking purposes. More accurate than
Analogous Estimating.
Three-Point Estimates
PERT uses three estimates to define an approximate range for an activity’s
cost as under:
{Optimistic + (4 * Most Likely) + Pessimistic} / 6

Reserve Analysis
• Cost estimate may include “Contingency Reserve” (or contingency allowances) to
account for cost uncertainty.
• PM's discretion to deal with anticipated, but not certain events ("known
unknowns"). These events are part of the project scope and cost baselines.
• Contingency reserve may be a percentage of the estimated cost.
• A schedule reserve can be a zero duration activity.
Cost of Quality
Can also be used to prepare the schedule activity cost estimate (see section 8.1.2.2
in PMBOK) Cost of Quality
“Quality-Costs”
Cost of Cost of
Good Quality Poor Quality
Appraisa
Prevention Internal External Faliure
l
Costs Failure Costs Cost
Costs
Project Management Estimating Software

Cost estimating software applications, computerized spreadsheets,
simulation and statistical tools are becoming more widely accepted
to assist with cost estimating.
Vendor Bid Analysis

Analyse vendor bids to determine price of individual products.

ESTIMATE COSTS - OUTPUTS
Activity Cost Estimates

Quantitative (numerical) assessment of the likely costs of the
resources required to complete schedule activities. This includes,
but not limited to, labour, materials, equipment, services, facilities,
information technology and special categories such as an inflation
allowance or cost contingency reserve.

ESTIMATE COSTS - OUTPUTS
Basis of Estimates
- The amount and type of additional details supporting schedule
activity cost estimate vary by application area.
- Supporting detail for activity cost estimate vary by application area.

Supporting detail for activity cost may include:
• Documentation of the basis of the estimate,
• Documentation of all assumptions made,
• Documentation of any known constraints,
• Range of estimates {e.g.$ 10K (-10% / + 10%) or
between $9K and $11K}
• Indication of the confidence level of the final estimate

Project documents that may be updated include, but are not limited to, the
risk register.

COST PROCESSES

controlling
7.1 7.3
7.2
Determine Budget

DETERMINE BUDGET
WHAT HAPPENS IN DETERMINE BUDGET?
• Aggregating the estimated costs of individual schedule activities or work
packages to establish a total cost baseline for measuring performance.
It establishes the Project's funding requirements.
• Remember that the project scope statement provides only the summary
budget.

DETERMINE BUDGET
TOOLS & TECHNIQUES
• Cost aggregation
• Expert judgment
• Historical relationship
• Funding limit reconciliation
INPUTS
• Activity cost estimates OUTPUTS
• Basis of estimates • Cost Performance baseline
• Scope baseline • Project funding
• Project schedule requirements
• Resource calendars • Project document updates
• Contracts
assets

DETERMINE BUDGET - INPUTS
INPUTS
Activity cost estimates

Basis of estimates
Scope baseline
Project Schedule
Resource Calendars
Contracts
Organizational process assets

DETERMINE BUDGET - T&T
TOOLS & TECHNIQUES
Cost Aggregation
• Cost estimates of all activities in each work package are aggregated in accordance
with the WBS.
• Total all work packages for higher component levels of WBS,
such as “control accounts” & get the entire project total expected
budget by period.
Reserve Analysis
Establishes contingency reserves, such as the management contingency
reserve, that are allowance for “unknown unknowns” risks identified in risk
register. PM needs approval for using such reserves. They are not part of
project cost baseline, but are included in the budget for the project.
• Review your reserves through the project to ensure you have the right amount
• Contingency reserves (spare funds) allow for unplanned, but potentially required
changes that may result from identified risks (to cost baseline)
• Management reserves account for "unknown unknowns":
a) Included in performing organization's management budget
b) Not included in project budget, cost baseline or earned value calculations

DETERMINE BUDGET - T&T
Expert Judgement
Historical Relationship
Any historical relationships that result in parametric estimates or analogous
estimates involve the use of project characteristics (parameters) to develop
mathematical models to predict total project costs. Such models can be
simple (e.g., residential home construction is based on a certain cost per
square foot of space) or complex (e.g., one model of software development
costing uses multiple separate adjustment factors, each of which has
numerous points within it).

DETERMINE BUDGET – T&T
Tools & Techniques
Funding Limit Reconciliation
• The expenditure of funds should be reconciled with any funding

limits on the commitment of funds for the project.
• A variance between funding limits and the planned expenditures

will sometimes necessitate the rescheduling of work to level out
the rate of expenditures. This can be accomplished by placing
imposed date constraints for work into the project schedule.

DETERMINE BUDGET – OUTPUTS
OUTPUTS
Cost Performance Baseline
The cost baseline is an authorized time-phased budget at completion (BAC)

used to measure, monitor, and control overall cost performance on the
project . It is developed as a summation of the approved budgets by time
period and is typically displayed in the form of an S-curve, as is illustrated in
Figure 7-6 (page 178).
In the earned value management technique the cost performance baseline

is referred to as the performance measurement baseline (PMB)

DETERMINE BUDGET – OUTPUTS
OUTPUTS
Project Funding Requirements
• Get funding requirements, total & by period (e.g. annual or quarterly) and
derived from cost baseline, which can exceed (usually by a margin) to
allow for either early progress or cost overruns
• Funding usually occurs in incremental amounts, not continuous, appears
as a step graph (see Figure 7-6, p.178)
• Total required funds is cost baseline plus management contingency
reserve
Project Document Plan Updates
• Risk register,
• Cost estimates, and
• Project schedule

COST PROCESSES

controlling
7.1 7.3
7.2
Determine Budget

CONTROL COSTS
WHAT SHOULD YOU DO IN CONTROL COSTS?
• Influencing the factors that create changes to the cost baseline,

• Ensure that all change requests are acted on in a timely manner,
• Manage the actual changes when and as they occur,
• Make sure that cost expenditures don't exceed authorized funding (by
period & in total) for the project,
• Monitor cost performance to isolate and understand variances from
approved cost baselines,
• Monitor work performance against funds expended,
• Prevent unapproved changes from being included in the reported cost or
resource usage,
• Inform appropriate stakeholders of approved changes and associated
cost, and
• Act to bring expected cost overruns within acceptable limits

CONTROL COSTS
TOOLS & TECHNIQUES
• Earned value mgmt.
• Forecasting
• To-complete performance
index
• Performance reviews
• Cost change control system
OUTPUTS
INPUTS • Work performance measurements
• Project management plan • Budget forecasts
• Project funding requirements • Organizational process assets updates
• Organizational process assets • Project management plan updates

CONTROL COSTS - INPUTS
INPUTS
- Cost Performance Baseline
- Cost Mgmt. Plan
• Project Funding Requirements
• Work Performance Information

CONTROL COSTS - T&T
TOOLS & TECHNIQUES
Cost Change Control System
Performance Measurement Analysis

• An important part of cost control is to determine:
- Cause of variance
- Magnitude of a variance
- Decide if variance requires corrective action
• Performance measurement techniques (called EVT) help to assess the
magnitude of any variances that will invariably occur.
• Earned Value Technique (EVT) compares the value of the budgeted cost
of work performed (earned) at the original allocated budget amount to both
- the budgeted cost of work scheduled (planned)
- to the actual cost of work performed (actual)
This technique is especially useful for cost control, resource management
& production .

CONTROL COSTS - T&T
Earned Value Management
• Earned value mgmt. (EVM) in its various forms is a commonly

used method of performance measurements.
• It integrates project scope, cost, and schedule measures to help the

project mgmt. team assess and measure project performance and
progress.
• It is a project mgmt. technique that requires the formation of an integrated

baseline against which performance can be measured for the duration of
the project.
• The principles of EVM can be applied to all projects, in any industry.

CONTROL COSTS - T&T
Earned Value Management (Contd.)
• EVM) develops and monitors three key dimensions for each work
package and control account:
- Planned Value (PV): budgeted cost for the work scheduled (in
planned time) to be completed
- Earned Value (EV): budgeted amount for work actually

completed
- Actual Cost (AC): actual money spent in finishing the work

(actual cost)

CONTROL COSTS - T&T
For example,
You've hired a man to paint your house. It should take 3 months & you'll pay
him $2,700 ($900/mo.). Paint is estimated at $3,600. After, one month, he's
completed 20% of the work, but used 40% of the paint, therefore the:
PV = {( $2,700 + $3,600) / 3 } = $2,100

EV = 20% of $6,300 = $1,260
AC = $900 + 40% of $3,600 = $ 900 + $1,440 = $2,340

CONTROL COSTS - T&T
EV= 1,260 PV= 2,100 AC=2,340

(See Figure 7-9, p.183)
Cost Variance (CV) (sometimes called burn rate)

= EV - AC
= $1,260 -$2,340 = -$1,080 (over budget)
CV%=CV/EV (many a time asked in exam)
Schedule Variance (SV) = EV-PV

=$1,260 -$2,100 = -$840 (behind schedule)
SV%=SV/PV (many a time asked in exam)

CONTROL COSTS - T&T
EV= 1,260 PV= 2,100 AC=2,340
Cost Performance Index (CPI) -Cost efficiency ratio (cost trend analysis)
CPI = EV / AC = $1,260/ $2,340 = 0.54
CPI < 1 -over budget
CPI> 1 -under budget
This is the ratio of what you expected to spend for the work you've earned
(done) to what you really spent for it.
Schedule Performance Index (SPI) -Schedule efficiency ratio (schedule

trend)
SPI = EV / PV = $1,260/ $2,100 = 0.6
SPI < 1 -behind schedule
SPI > 1 ahead of schedule This is the ratio of what you planned on doing
to what you really did.

CONTROL COSTS - T&T

CONTROL COSTS - T&T
Forecasting: Predicts or estimates future values of Estimate to
Complete (ETC) and Estimate at Completion (EAC)
The earned value technique parameters are:
Budget At Completion (BAC) : total of all PV's (project's total cost
baseline) = PVc (also called Cumulative Planned Value)
Project Cost Variance (CV) - After project is complete, difference
between budget at completion (total project budget) & actual
amount spent
CV = BAC- AC
Variance at Completion (VAC) - Before project is complete,
difference between budget at completion (total project budget) &
estimate at completion (now that project is underway)
VAC = BAC –EAC

CONTROL COSTS - T&T
Estimate to Complete (ETC) - Expected cost to finish all the
remaining work
ETC based on new estimate – Revised (New) estimate for the work
remaining (uses standard estimating techniques) because original
estimate was flawed, e.g. in a project installing the latest version of
Primavera on 500 computers, the team though initially had expected
current hardware would be okay, found that 20% of the computers require
upgrading; thus a revised new estimate.
ETC based on atypical variances –PM team expectations are that

similar variances will not occur in future.
ETC = BAC-EV
ETC based on typical variances – This approach is used when

current variances are seen as typical of future variances (is expected
to occur in future as well).
ETC = (BAC -EV)/ CPI (factors in CPI for trend)

CONTROL COSTS - T&T
Estimate at Completion (EAC) - Most likely total cost of the project
(or activity) based on performance to date (often called latest
revised estimate)
EAC using a new estimate - Actual costs to date plus new

estimate for the remaining work. Used when original estimate was
flawed or no longer relevant.
EAC = AC + ETC (doesn't rely on original budget BAC)
EAC using remaining budget - Similar variances not expected to

occur in future (atypical)
EAC =AC + BAC -EV
EAC using CPI - Similar variances are expected to occur (is

typical)
EAC =AC +(BAC-EV)/CPI
CONTROL COSTS - T&T
To-complete Performance Index (TCPI) –
The to-complete performance index (TCPI) is the calculated

projection of cost performance that must be achieved on the
remaining work to meet a specified management goal, such as the
BAC or the EAC. If it becomes obvious that the BAC is no longer
viable, the project manager develops a forecasted estimate at
completion (EAC). Once approved, the EAC effectively supersedes
the BAC as the cost performance goal.
Equation for the TCPI based on the BAC:
TCPI = (BAC-EV) / (BAC-AC)
The TCPI is conceptually displayed in Fig 7-10. The equation for the
TCPI is shown in the lower left as the work remaining (defined as
the BAC minus EV) divided by the funds remaining (which can be
either the BAC minus the AC, or the EAC minus AC).

CONTROL COSTS - T&T
To-complete Performance Index(TCPI) – Contd.
If the cumulative CPI falls below the baseline plan (as shown in Fig.7-6), all
future work of the project will need to immediately be performed in the
range of the TCPI (BAC) (as reflected in the top line of Fig.7-6) to stay
within the authorized BAC. Whether this level of performance is achievable
is a judgment call based on a number of considerations, including risks,
schedule, and technical performance.
Once the mgmt. acknowledges that the BAC is no longer attainable, the
project manager will prepare a new estimate at completion (EAC) for the
work, and once approved, the project will work to the new EAC value. This
level of performance is displayed as the TCPI (EAC) line. The equation for
the TCPI based on the EAC:
TCPI = (BAC - EV) / (EAC – AC)

CONTROL COSTS - T&T
Performance Reviews
Compare cost performance over time, schedule activities or work packages
overrunning & under running budget (planned value), and estimated funds
needed to complete work in progress.
If EVM is being used, the following information is determined:
• Variance analysis -Compares actual to planned or expected
cost and schedule variances are the most frequently analyzed.
• Trend analysis - Examines performance over time to determine if
performance is improving or deteriorating. Graphical analysis techniques
are valuable for understanding performance to date and for comparison to
future performance goals in the form of BAC versus EAC and completion
dates.
• Earned value performance – EVM compares the baseline plan to actual
schedule and cost performance.

CONTROL COSTS - T&T
Variance Analysis
• Cost performance measurements (CV,CPI) are used to assess the
magnitude of variation to the original cost baseline.
• Important aspects of project cost control include determining the
cause and degree of variance relative to the cost performance
baseline (section 7.2.3.1) and deciding whether corrective or
preventive action is required.
•The % range of acceptable variances will tend to decrease as more
work is accomplished. The larger % variances allowed at the start of
the project can decrease as the project nears completion. .
PMS is often used to monitor the three EVM dimensions (PV, EV, and AC),
to display graphical trends, and to forecast a range of possible final results.

CONTROL COSTS - OUTPUTS
OUTPUTS
• Budget Forecasts
• Organizational Process Assets Updates -
• Change Requests –
• Project Management Plan Updates -

- Cost performance baseline
• Project document Updates

- Cost estimates
- Basis of estimates

DEPRECIATION
Straight Line Depreciation (SLD)
• Equal amount of depreciation is taken out each period (year)
Example below shows depreciation for 5 years where:
Depreciable value is $140,000 (purchase price) - $40,000 (salvage Value) = $100,000
Depreciation each year is $100,000 / 5 years = $20,000/year
Purchase Price Salvage Value Year Depreciation Depreciated Balance
$ 140,000 $40,000 0 0 $100,000

1 $20,000 $80,000
2 $20,000 $60,000
3 $20,000 $40,000
4 $20,000 $20,000
5 $20,000 0
Total $100,000

DEPRECIATION
Double Declining Balance (DDB)
• Depreciation taken out each period (year) by double straight line depreciation
• Usually, applied on the initial purchase price (don’t subtract salvage value)
Example below shows depreciation for 5 years where:
Depreciation for 1st year is $140,000 / 5 years x 2 = $56,000 (or 40% of $140,000)
Depreciation for 2nd year is $84,000 / 5 years x 2 = $33,600 (or 40% of $84,000)
Purchase Price Depreciation % Year Depreciation Depreciated Balance
$ 140,000 0 0 $140,000
40% 1 $56,000 $84,000
40% 2 $33,600 $50,400
40% 3 $20,160 $30,240
40% 4 $12,096 $18,144
40% 5 $7,257 $10,886 (Salvage)
Total $100,000

DEPRECIATION
Sum of Years Digits Depreciation (SYD)
• Accelerated depreciation amount taken out each period (year) based on year’s digits
Example below shows depreciation for 5 years where sum of years’ digits = 1+2+3+4+5 = 15
Depreciation factor for 1st year is 5 (reverse order of years) / 15 (sum of years)
Multiply factor by original balance to get depreciation for that year
Depreciation for 1st year is 5/15 x $100,000 = $33,333, 2 nd year is 4/15 x $100,000 = $26,667
Purchase Salvage Depreciation Year Depreciation Depreciated

Price Value Factor Balance
$140,000 $40,000 0 0 $100,000
5/15 1 $33,333 $66,667
4/15 2 $26,667 $40,000
3/15 3 $20,000 $20,000
2/15 4 $13,000 $6,667
1/15 5 $6,667 0
Total $100,000
CONTROL COSTS - EARNED VALUE
Performance Measurement Baseline
Current
PV EV AC
January 0 0 0
February 2500 3600 6000
March 8000 8000 8000
April 13000 10000 8000
May 42000 38000 48000
June 62000
July 70000

CONTROL COSTS - COST VARIANCE
From the last chart, we have these values and can make these
calculations:
PV $42,000 EV = $38,000 AC = $48,000
Comparing original amount budgeted for work that's done (EV) to

the amount spent to produce that work (AC), we can get cost
variance (CV) as follows:
CV (= EV -AC ) = $38,000 -$48,000 = -$10,000 (> spent than
planned)
Comparing original amount budgeted for work that's done (EV) to

the amount budgeted for that work In the plan (PV), we can get
schedule variance (SV) as follows:
SV (= EV -PV ) = $38,000 -$42,000 = -$4,000 «work than planned)

CONTROL COSTS - OTHER CALCULATIONS
CPI ( = EV / AC ) = $38,000/ $48,000 = 0.79

$0.79 worth of work was done for each $1.00 spent
SPI(= EV/PV) =$38,000/ $42,000 =0.90

$0.90 worth of work was done for each $1.00 worth of work planned
ETC ( = BAC -EV) = $70,700 -$38,000 = $32,700
EAC ( = AC+BAC-EV) = $48,000 + $70,700 -$38,000 = $80,700
VAC ( = BAC -EAC) = $70,700-$80,700 =-$10,000

Project will exceed planned budget by $10,000

CONTROL COSTS - SAMPLE COST PROBLEM
More Calculations (slight possibility that these will be on the exam)
Calculate
Given % of work Scheduled

% of Budget Spent
BAC = $40K % of Work Accomplished
EV = $20K To Complete Performance
PV = $28K
Index (TCPI)
AC = $26K
CV%
SV%

CONTROL COSTS - SAMPLE SOLUTION
More Calculations
Answers
% of Work Scheduled PV/ BAC = $28K/ $40K = 0.7 or 70%

% of Budget Spent AC/ BAC = $26K / $40K = 0.65 or 65%
% of Work Accomplished EV / BAC =$20K / $40K = 0.5 or 50%
TCPI (BAC-EV)/( BAC - AC) =
($40K -$20K) / ( $40K -$26K) = 1.43
CV% CV / EV =($20K -$26K ) / $20K =0.3 or 30%

SV% SV/ PV =( $20-$28)/$28K =0.28 or 28%

CONTROL COSTS - EARNED VALUE EXAMPLES
FOR BUDGET
If CPI < 1 EV < AC Over Budget
If CPI > 1 EV > AC Under Budget
FOR SCHEDULE
IF SPI < 1 EV < PV Behind Schedule
IF SPI > 1 EV > PV Ahead of Schedule

CONTROL COSTS - CASE 1
PV = $1,860
EV = $1,860
AC = $1,860
This is the ideal
situation,
Where everything
goes
According to plan

CONTROL COSTS - CASE 2 SCHEDULE
CASE 2 SCHEDULE
PV = $1,900
EV = $1,500 Here we see $400 worth of
work is behind schedule in
AC = $1,700 being completed. We are
21% behind where we
planned to be.
SV = EV-PV = -$400
SV% = SV/ PV = -0.21 or -21%

CONTROL COSTS - CASE 2 COST
PV= $1,900
EV= $1,500
AC= $1,700
Also, we see “Actuals” (AC)
exceed “Earned” (EV)
$1,500 worth of work was
accomplished, However; it
cost $1,700 to do so. We
have a $200 cost overrun
(13% over budget)
CV = EV-AC = -$200
CV% = CV I EV = -0.13 or -13%

CONTROL COSTS - CASE 2 INDICES
PV = $1,900
EV = $1,500
AC = $1,700 This means only 79 cents
worth of work was done for
each $1.00 of work
planned, and only 88 cents
worth of work was actually
done for each $1.00 spent.
SPI = EV I PV = $0.79
CPI= EV I AC = $0.88
Case 2 is the worst case where all

performance indicators are negative.

CONTROL COSTS - CASE 3 INDICES
PV= $2,600
EV= $2,400
AC= $2,200 This is bad news. Our work efficiency is
a bit low. We are getting only 92 cents
of work done per dollar. We are behind
schedule.
SV= -$200
SV% = - 8%
SPI= 0.92

CONTROL COSTS – CASE 3 INDICES
PV = $2,600
EV = $2,400
AC = $2,200 This is good news as we are under
budget. We are getting $1.09 worth of
work done for each $1.00 spent.
CV = $200
CV% = 8%
CPI = 1.09
SPI = EV/PV = 2400/2600 = 0.92
Case 3 is under budget, but behind schedule.

Questions?

DAY 3
CHAPTER 10
PROJECT COMMUNICATIONS
MANAGEMENT
PMP Prep – Communications Slide 1

AGENDA
Day 1 DAY 4
DAY 2 DAY 5
DAY 3 DAY 6
PROJECT COMMUNICATIONS MANAGEMENT
WHAT DOES THE COMMUNICATIONS KNOWLEDGE AREA DO?
• It employs the processes required to ensure timely and appropriate

generation, collection, distribution, storage retrieval, and ultimate
disposition of project information
• These processes provide the critical links among people & information
that are necessary for successful communications.
• Project managers spend the majority of their time communicating with team
members and other project stakeholders, whether they are internal or
external to the organization.
Effectively deals with stakeholders' information needs.

COMMUNICATION SKILLS
COMMUNICATION SKILLS
• Most communication skills are common for general mgmt. and project
mgmt., such as, but not limited to:
• Listening actively and effectively,

• Questioning, probing ideas and situations to ensure better
understanding,
• Educating to increase team’s knowledge so that they can be more
effective,
• Fact-finding to identify or confirm information,
• Setting and managing expectations,
• Persuading a person or organization to perform an action,
• Negotiating to achieve mutually acceptable agreements between
parties,
• Resolving conflict to prevent disruptive impacts, and
• Summarizing, recaping, and identifying the next steps.

COMMUNICATION MODELS
COMMUNICATION MODELS
• See Fig 10-8, p.255 for a basic two-person model of communications (how ideas or
information are sent & received between two parties)
• Key components of model include:
• Encode: translate thoughts or ideas into a language that is understood by
others
• Message & feedback-message: the output of encoding
• Medium: the method used to convey the message, e.g. email, fax
• Noise: anything that interferes with transmission and understanding of
the message (e.g. distance)
• Decode: to translate the message back into meaningful thoughts or
ideas
• Inherent in the model is an action to acknowledge a message.

• Acknowledgement means that the receiver signals receipt of the message, but not
necessarily in agreement with the message.
• Another action is response to a message, which means that the receiver has
decoded, understands, and is replying to the message.
• Sender is responsible for making information clear & complete so that the receiver
can receive it correctly & confirming that it is understood properly
• Receiver is responsible for making sure that information is received in its
entirety & correctly understood
COMMUNICATION METHODS
There are several communication methods used to share information among project
stakeholders. These methods can be broadly classified into:
• Interactive communication
Between two or more parties performing a multidirectional exchange of
information. It is the most efficient way to ensure a common
understanding by all participants on specified topics, and includes
meetings, phone calls, video conferencing, etc.
• Push communication
Sent to specific recipients who need to know the information. This
ensures that the information is distributed but does not certify that it
actually reached or was understood by the intended audience. Push
communication includes letters, memos, reports, emails, faxes, voice
mails, press releases etc.
• Pull communication
Used for very large volumes of information, or for very large audiences, that
requires the recipients to access the communication content at their own
discretion. These methods include intranet sites, e-learning, and knowledge
repositories, etc.

COMMUNICATIONS PROCESS
COMMUNICATIONS PROCESS DEFINITIONS
10.1 Identify Stakeholders
• Identify all people or organizations impacted by the project, and documenting
relevant
information regarding their interests, involvement, and impact on project
success.
10.2 Plan Communications
• The process of determining the project stakeholder information needs and
defining a communication approach.
10.3 Distribute Information
• The process of making relevant information available to project stakeholders as
planned.
10.4 Manage Stakeholders Expectations
• The process of communicating and working with stakeholders to meet their
needs and addressing issues as they occur.
10.5 Report Performance
• The process of collecting and distributing performance information, including
status reports, progress measurements, and forecasts.

COMMUNICATIONS PROCESSES
INITIATING PLANNING EXECUTING MONITORING &

CONTROLLING
10.1 10.2 Plan 10.2 10.3

Identify Communications Distribute Report
Stakeholders Information Performance
10.3 Manage
Stakeholders
Expectations

IDENTIFY STAKEHOLDERS
WHAT HAPPENS IN IDENTIFY STAKEHOLDERS?
• It is the process of identifying all people or organizations impacted by the
project, and documenting relevant information regarding their interests,
involvement, and impact on project success
• Project stakeholders are persons and organizations such as customers,

sponsors, the performing organization, and the public that are actively
involved in the project, or whose interests may be positively or negatively
affected by the execution or completion of the project. They may also exert
influence over the project and its deliverables.
• Stakeholders may be at different levels within the organization and may

possess different authority levels, or may be external to the performing
organization for the project (Section 2.3 identifies various types of project
stakeholders.

IDENTIFY STAKEHOLDERS
TOOLS & TECHNIQUES

• Stakeholder analysis
INPUTS
• Project Charter OUTPUTS
• Procurement documents • Stakeholder register
• Enterprise environmental factors • Stakeholder mgmt.
• Organizational process assets strategy

IDENTIFY STAKEHOLDERS - INPUTS
INPUTS
• Project Charter
• Procurement Documents

i.e. company culture and structure, and Governmental or industry
standards
i.e. stakeholder register templates, lessons learned from previous
projects, and stakeholder registers from previous projects.

IDENTIFY STAKEHOLDERS – T&T
TOOLS & TECHNIQUES
• Stakeholder Analysis
Follows a number of steps (read page 248 to 250)
• Expert Judgement

IDENTIFY STAKEHOLDERS – OUTPUTS
OUTPUTS
Stakeholder Register
This contains all details related to the identified

stakeholders including, but not limited to:
• Identification information
(Name, position, location, role in the project , contact info.)
• Assessment information
(major requirements., main expectations, potential influence in the
project, phase in the life cycle with the most interest; and
• Stakeholder classification
(internal/external, supporter/neutral/resistor, etc.)

IDENTIFY STAKEHOLDERS – OUTPUTS
OUTPUTS
Stakeholder Management Strategy

The stakeholder management strategy defines an approach to
increase the support and minimize negative impacts of stakeholders
throughout the entire project life cycle. It includes elements such as:
• Key stakeholders who can significantly impact
the project,
• Level of participation in the project desired for each
identified stakeholder, and
• Stakeholder groups and their management (as groups)
A common way of representing the stakeholder management strategy
is a stakeholder analysis matrix. An example of a blank matrix with
column headers is provided in Fig. 10-5 (page 251)

COMMUNICATION PROCESSES

CONTROLLING
10.1 10.2 Plan 10.2 10.3

10.3 Manage
Stakeholders
Expectations

PLAN COMMUNICATIONS
WHAT HAPPENS IN PLAN COMMUNICATIONS?
• Plan communications is the process of determining the project

stakeholder information needs and defining a communication
approach (see fig. 10-7, the Data Flow diagram)
• Who needs - what, when; how the needs will be fulfilled and by whom
• Identifying the information needs of the stakeholders and determining a

suitable means of meeting those needs are important factors for project
success.
• Improper communication planning will lead to problems such as delay in message

delivery, communication of sensitive information to the wrong audience, or lack of
communication to some of the required stakeholders.

PLAN COMMUNICATIONS
TOOLS & TECHNIQUES
• Communication requirement
analysis
• Communication technology
• Communication models
• Communication methods
INPUTS OUTPUTS
• Stakeholder register • Communications

• Stakeholder management strategy management plan
• Enterprise environmental factors • Project document
• Organizational process assets updates

PLAN COMMUNICATIONS - INPUTS
INPUTS
• Stakeholder Register
Section 10.1.3.1
• Stakeholder Management Strategy

Section 10.1.3.2

PLAN COMMUNICATIONS – T&T
TOOLS & TECHNIQUES
COMMUNICATION REQUIREMENT S ANALYSIS
• Determine total information needs of project stakeholders
• Combine the type & format of information needed with an analysis of the
value of that information (e.g. all information that contributes to project
success or prevents failure)
• Number of communication channels is, n ( n -1 ) / 2 (remember for exam)

where n = number of stakeholders
• How many potential channels of communication are there in a project with

21 stakeholders? __________

COMMUNICATIONS TECHNOLOGY
Methodologies used to transfer information among stakeholders can vary significantly, e.g.
email, text messaging, etc.
Communications technology factors that can affect the project

include:
• Urgency of the need for information – Is project success dependent upon
having frequently updated information available on a moment’s notice, or
would regularly issued written reports suffice?
• Availability of technology - Are existing systems appropriate, or do the
project needs warrant change needed?
• Expected project staffing - Are proposed communications systems
compatible with the experience & expertise of project participants, or is
extensive training and learning required?
• Length of the project - Is the available technology likely to change before
the project is over?
• Project environment - Does the team meet and operate on a face-to-face or
in a virtual environment?
• COMMUNICATION MODELS
• See Fig 10-8, p.255 for a basic two-person model of communications (how ideas or
information are sent & received between two parties)
• Key components of model include:
• Encode: translate thoughts or ideas into a language that is understood by
others
• Message & feedback-message: the output of encoding
• Medium: the method used to convey the message, e.g. email, fax
• Noise: anything that interferes with transmission and understanding of
the message (e.g. distance)
• Decode: to translate the message back into meaningful thoughts or
ideas
• Inherent in the model is an action to acknowledge a message.
• Acknowledgement means that the receiver signals receipt of the message, but not
necessarily in agreement with the message.
• Another action is response to a message, which means that the receiver has
decoded, understands, and is replying to the message.
• Sender is responsible for making information clear & complete so that the receiver
can receive it correctly & confirming that it is understood properly
• Receiver is responsible for making sure that information is received in its
entirety & correctly understood
repositories, etc.

repositories, etc.

PLAN COMMUNICATIONS – OUTPUTS
OUTPUTS
COMMUNICATIONS MANAGEMENT PLAN is a subsidiary plan of the

Project Management Plan that provides:
• Stakeholder communication requirements;

• Information to be communicated (includes format, content & level of
detail);
• Reason for the distribution of that information;
• Time frame and frequency for the distribution of required information;
• Person responsible for communicating the information
• Person responsible for authorizing release of confidential information;
• Person/groups who will receive the information;
• Methods or technologies used to convey the information, such as
memos, email, and/or press releases;

PLAN COMMUNICATIONS – OUTPUTS
OUTPUTS
COMMUNICATIONS MANAGEMENT PLAN (contd.)
• Resources allocated for communication activities, including time and budget;
• Escalation process – identifying time frames & the management chain for
escalation of issues;
• Method for updating and refining the communications management plan as project
progresses and develops;
• Glossary of common terminology;
• Flow charts of the information flow in the project, workflows with possible sequence
of authorization, list of reports, and meeting plans, etc.; and
• Communication constraints, usually derived from specific legislation or regulation,
technology, and organizational policies, etc.

PLAN COMMUNICATIONS - OUTPUTS
OUTPUTS
Project documents that may be updated include but are not limited to:
• Stakeholder management strategy

CONTROLLING
10.1 10.2 Plan 10.2 10.3

10.3 Manage
Stakeholders
Expectations

DISTRIBUTE INFORMATION
WHAT HAPPENS IN DISTRIBUTE INFORMATION?

• Making information available to project stakeholders as
planned (see Fig. 10-10, page 259, Data Flow Diagram
• It is performed throughout the entire project life cycle and in

all management processes.
• The focus is mainly in the execution process, which includes

implementing the communications management plan, as well
as responding to unexpected requests for information.

DISTRIBUTE INFORMATION
TOOLS & TECHNIQUES
•Communications methods
• Information distribution tools
INPUTS OUTPUTS
• Project management plan • Organizational process

• Performance reports assets updates)
• Organizational process assets • Requested changes

DISTRIBUTE INFORMATION - INPUTS
INPUTS
Section 10.2.3.1 contains the communications management plan.
Performance reports are used to distribute project performance and status
information, should be made available prior to project meetings, and should be as
precise and current as possible.

The organizational process assets that can influence the Distribute Information
process include, but are not limited to
- Policies, procedures, and guidelines regarding information distribution
- Templates, and
- Historical information and lessons learned

DISTRIBUTE INFORMATION– T&T
Tools & Techniques
Communications Methods
Individual and group meetings, video and audio conferences, computer chats, and
other remote communications methods are used to distribute information.
Information Distribution Tools
• Hard-copy document distribution, manual filing systems, press releases, and

shared-access electronic databases;
• Electronic communication and conferencing tools, such as email, fax, voice mail,
telephone, video and web conferencing, websites and web publishing; and
• Electronic tools for project management, such as web interfaces to scheduling and
project mgmt. Software, meeting and virtual office support software, portals, and
collaborative work mgmt. Tools.

DISTRIBUTE INFORMATION – OUTPUTS
Outputs
Organization Process Assets Updates
• Stakeholder notifications
• Project reports
• Project presentations
• Project records
• Feedback from stakeholders
• Lessons learned documentation
Requested Changes

CONTROLLING
10.1 10.2 Plan 10.2 10.3

Identify Stakeholders Communications Distribute Report
Information Performance
10.3 Manage
Stakeholders
Expectations

MANAGE STAKEHOLDERS EXPECTATIONS
WHAT HAPPENS IN MANAGE STAKEHOLDERS

EXPECTATIONS?
• It is the process of communicating and working with

stakeholders to meet their needs and addressing issues as
they occur ( see Fig. 10-1.20, page 262, Data Flow Diagram)
• It involves communication activities directed towards project

stakeholders to influence their expectations, address
concerns, and resolve issues (read page 261)

MANAGE STAKEHOLDERS EXPECTATIONS
TOOLS & TECHNIQUES
• Communications methods
• Interpersonal skills
• Management skills
OUTPUTS
INPUTS • Organizational process
• Stakeholder register assets updates
• Stakeholder mgmt. strategy • Change requests
• Project management plan • Project mgmt. plan
• Issue log updates
• Change log • Project document
• Organizational process assets updates

MANAGE STAKEHOLDERS EXPECTATIONS - INPUTS
Inputs
• Stakeholder management strategy

An understanding of stakeholder goals and objectives is used to determine a
strategy to manage stakeholder expectations (see Section 10.1.3.2)
• Project mgmt. plan
• Issue log
It is used to document and monitor the resolution of issues.
• Change log
It is used to document changes that occur during a project. These changes and
their impact to the project in terms of time, cost, and risk,

MANAGE STAKEHOLDERS EXPECTATIONS - T&T
Tools & Techniques
• Communication Methods
• Interpersonal Skills
Building trust, resolving conflict, active listening, and public speaking
• Management Skills Issue log

Presentation skills, Negotiating, Writing skills, and public speaking
MANAGE STAKEHOLDERS EXPECTATIONS - OUTPUTS
Outputs
• Change Requests
• Project Mgmt. Plan Updates


CONTROLLING
10.1 10.2 Plan 10.2 10.3

Identify Stakeholders Communications Distribute Report
Information Performance
10.3 Manage
Stakeholders
Expectations

REPORT PERFORMANCE
What ‘Report Performance’ process do?
Report performance is the process of collecting and distributing performance

information, including status reports, progress measurements, and forecasts (see
Fig, 10-14, Data Flow Diagram) The process involves the periodic collection and
analysis of baseline versus actual data to understand and communicate the project
progress and performance as well as to forecast the project results.
Performance reports need to provide information at an appropriate level for each

audience.

REPORT PERFORMANCE
TOOLS & TECHNIQUES
• Forecasting methods
• Communication methods
• Reporting systems
INPUTS
• Work performance information
OUTPUTS
• Work performance measurements • Performance reports
• Budget forecasts • Organizational process
• Quality control measurements assets updates
• Organizational process • Change Requests
assets •

REPORT PERFORMANCE - INPUTS
INPUTS

• Work Performance Information
e.g. completion status of the deliverables and what has been accomplished
is collected as part of project execution, and is fed into the Performance

Reporting process
• Budget Forecasts
REPORT PERFORMANCE - T&T
TOOLS & TECHNIQUES

• Variance Analysis
It is an after-the-fact look at what caused a difference between the
baseline and the actual performance.
• Forecasting Methods
It is the process of predicting future project performance based on
actual performance to date. Forecasting methods may be
classified in different categories:
- Time series methods
- Causal/econometric methods
- Judgmental methods
- Other methods (include simulation, probabilistic forecasting, and
ensemble forecasting)
REPORT PERFORMANCE - T&T
• Communication Methods
Exchange and analyze information about the project progress and
performance. The project manager generally uses a push communication
technique.
• Reporting Systems
Standard tool for the project manager to capture, store, and distribute
information to stakeholders.

REPORT PERFORMANCE - OUTPUTS
OUTPUTS
Performance Reports
- Organize & summarize project performance information from all areas
- Results of any analysis are compared with performance measurement
baseline
- Report should provide the status & progress information, and the level of
detail required by various stakeholders, as documented in the
communications management plan
Common formats for performance reports include:

• Bar charts
• S-curves
• Histograms (bar graph where bar widths are proportional to variable
classes & bar heights proportional to class frequencies)
• Tables
• Earned value analysis data is often included
• Forecast data
See Fig. 10-15, page 271- Tabular Performance Report Sample

REPORT PERFORMANCE - OUTPUTS
• Change Requests
- Analysis of project performance often generates change requests

Question
Some common formats of performance reports are:
A.S-curves, histograms, WBS

B.S-curves, precedence network diagrams, histograms
C.Bar charts, S-curves, histograms
D.Bar charts, earned value analysis, histograms

Answer-
C is the correct answer.
A - WBS does not report performance. It is a deliverable-oriented

hierarchical decomposition of the work to be executed by the project team
to accomplish the project objectives and create the required deliverables.
B - A precedence network diagram does not report performance. A network

diagram presents the project schedule in a format that demonstrates logical
relationships between project activities.
D - Earned value analysis is a technique, not a report.

Questions?

DAY 4
CHAPTER 8
PROJECT QUALITY MANAGEMENT
PMP Prep – Quality Slide 1

AGENDA
Day 1 DAY 4
DAY 2 DAY 5
DAY 3 DAY 6
WHAT’S PROJECT QUALITY MANAGEMENT?
WHAT’S PROJECT QUALITY MANAGEMENT?
Project Quality Management processes include all the activities of the

performing organization that determine quality policies, objectives, and
responsibilities so that the project satisfy the needs for which it was
undertaken. It implements the quality management system through the
policy, procedures, and processes of quality planning, quality assurance,
and quality control, with continuous process improvement activities
conducted throughout, as appropriate.

PROJECT QUALITY MANAGEMENT?
WHAT DO THE QUALITY EXPERTS SAY ABOUT QUALITY?
• Quality is "the degree to which a set of characteristics fulfil

requirements"
• Quality should be planned, designed & built-in as the integral

part of the process.
QUALITY MANAGEMENT APPROACH
PMl's QUALITY MANAGEMENT APPROACH
1. Uses standards established by:
a) International Organization for Standardization (ISO)
b) Total Quality Management (TQM)
c) Six Sigma Cost of Quality (COQ)
d) Continuous Improvement
2. Addresses quality of the project & the product of the project
3. Because projects are temporary, the cost for product quality is often
borne by the acquiring organization, especially defect prevention &
appraisal.
ISO TQM COQ
PMP Prep - Quality Slide 4

QUALITY MANAGEMENT APPROACH
Modern quality management complements project management. For
example, both disciplines recognize the importance of:
• Customer Satisfaction: understanding, evaluating, defining, and

managing combination of:
• conformance to requirements (the project must produce what it said it
would produce), and
• fitness for use (the product or service must satisfy real needs)
• Prevention Over Inspection: The cost of preventing mistakes is generally

much less than the cost of correcting them, as revealed by inspection
• Management Responsibility: Management must provide resources

needed to meet quality levels and thus succeed
• Continuous Improvement: The plan-do-check-act cycle is the basis for

quality improvement (as defined by Shewhart and modified by Deming)

QUALITY VS GRADE
QUALITY versus GRADE
• Quality and Grade are not the same.
• Grade is a category (or rank) that distinguishes items having the same
functional use but different technical characteristics, e.g. a product with lots
of features and benefits is generally considered a high grade product, but
still can be of poor quality.
• Quality is a degree measuring fitness for use, e.g. a high quality product
will meet the specs and satisfy the real purpose, but may have limited
features (or, grade).
• For example, software of high quality has no bugs, but may be low grade
because it has limited features (such as Microsoft Calculator).
• Low quality is always a problem, low grade may not be.
• PM and his team are responsible for determining and delivering the
required levels of both quality and grade.
QUALITY PHILOSPHIES
QUALITY PHILOSOPHIES
W. Edwards Deming
• Workers need to be shown “what acceptable Quality is”
• Quality is a Management problem
• Improve Leadership, drive out fear
• Improve constantly and forever (continuous improvement)
• Started the TQM movement
Dr. Joseph Juran

• Fitness to Use/Conformance
• Quality & Grade
• Trilogy: Quality Improvement, Planning & Control

QUALITY PHILOSPHIES
Phillip Crosby
• Quality is ‘Free’
• ‘Right’ the First Time
• Prevention is the ‘Key’
• Zero Defects
Kaizen Method or Technologies

• Continuous improvement in small increments (continuous improvement
of people first, then products & services
• Overall improvement, in life at work, the well-being
• Kaizen is a Japanese word that means gradual continuous
improvement

What’sISO
A PMP?
The International Organization for Standardization
• ISO 9001 is a quality standard that checks on the systems used by an

organization
• Quality Management System (QMS) is a systematic approach used

to plan, manage and continually improve the quality of an
organization's products or services. It's a framework that directs and
ensures that controls are in place to achieve success in management
of a business.
• See www.iso.org
ISO 14001 defines Environment standard
OHSAS 18001 defines Health & Safety standard

What’sPROCESSES
QUALITY A PMP?
QUALITY PROCESS DEFINITIONS
8.1 Plan Quality

• The process of identifying quality requirements and/or standards for
the project & product, and documenting how the project will
demonstrate compliance.
8.2 Perform Quality Assurance

• The process of auditing the quality requirements and the results from
quality control measurements to ensure appropriate quality standards
and operational definitions are used
8.3 Perform Quality Control

• The process of monitoring and recording results of executing the
quality activities to assess performance and recommend necessary
changes.
See Figure 8-3, p.193 for plan quality data flow diagram

QUALITY PROCESSES
Planning Executing Monitoring &

Controlling
8.1 8.2 8.3
Plan Quality Perform Quality Perform Quality
Assurance Control

PLAN QUALITY
WHAT YOU DO IN PLAN QUALITY?
•
The process of identifying quality requirements and/or standards for the
project & product, and documenting how the project will demonstrate
compliance.
• Quality planning should be performed in parallel with the other project

planning processes. For example, proposed changes in the product to
meet identified quality standards may require cost or schedule

adjustments and a detailed risk analysis of the impact to plans.
• The quality planning techniques discussed here are those most

frequently used on projects. There are many others that may be useful
on certain projects or in some application areas.
PLAN QUALITY
TOOLS & TECHNIQUES
• Cost-benefit analysis
• Cost of Quality
• Control charts
• Benchmarking
• Design of experiments
• Statistical sampling
• Flowcharting
• Proprietary quality mgmt.
methodologies
• Additional quality planning tools
INPUTS
• Scope baseline OUTPUTS
• Stakeholder register • Quality management plan
• Cost performance baseline • Quality metrics
• Schedule baseline • Quality checklists
• Risk register • Process improvement plan
• Enterprise environmental factors • Project document updates

PLAN QUALITY -INPUTS
INPUTS
1. Scope Baseline
- Scope statement
- WBS
- WBS Dictionary
2. Stakeholder Register
It identifies stakeholders with a particular interest in, or impact on, quality.
3. Cost Performance Baseline

It documents the accepted schedule performance measures including
start and finish dates.
4. Schedule Baseline
It documents the accepted schedule performance measures including start and
finish dates
PLAN QUALITY-INPUTS
INPUTS
5. Risk Register
The risk register contains information on threats and
opportunities that may impact quality requirements
6. Enterprise Environmental Factors

Governmental agency regulations, rules, standards, and guidelines
specific to the application area may affect the project
7. Organizational Process Assets

Organizational quality policies, procedures and guidelines, historical
databases and lessons learned from previous projects specific to the
application area may affect the project

PLAN QUALITY – T&T
TOOLS & TECHNIQUES
• Cost-Benefit Analysis
• Quality planning must consider cost-benefit tradeoffs.
• The primary benefit of meeting quality requirements is less rework,

which means higher productivity, lower costs, and increased
stakeholder satisfaction.
• The primary cost of meeting quality requirements is the expense

associated with Project Quality Management activities.
• Cost of Quality (COQ)
• Quality costs are the total costs incurred by investment in preventing
non-conformance to requirements, appraising the product or service
for conformance to requirements, and failing to meet requirements
(rework). Failure cost are categorized into internal or external (Failure
costs are also called cost of poor quality).
• Examples of :
Cost of Conformance
Prevention - training, surveys, using a quality system, planning,
recruiting quality staff, etc.
Appraisal - testing, inspecting, auditing, etc.
Cost of non-conformance
Internal - rework, rejects, etc.
External - warranty, recall, repairs, handling complaints, legal issues,
loss of goodwill, etc.

Control Charts
• Control charts are used to determine whether or not a process is stable or

has predictable performance.
• They reflect the maximum and minimum values allowed.
• Control charts are used to monitor various types of output variables
• See Fig. 8-5 & Fig. 8-6(Page 196-197) – Read thoroughly

•Benchmarking
• Comparing actual or planned project practices to those of other
projects to generate ideas for improvement and to provide a basis
by which to measure performance
• Design of Experiments
• Statistical method that helps identify which factors may influence
specific variables of a product or process under development or
production.
• The most important aspect of this technique is that it provides a
statistical framework for systematically changing all of the important
factors
• For example, automotive designers use this technique to determine
which combinations of suspensions and tires will produce the most
desirable ride characteristics at a reasonable cost

Statistical Sampling
• Statistical sampling involves choosing part of a population of
interest for inspection
• There is a substantial body of knowledge on statistical sampling.
In some application areas it may be necessary for the PM team
to be familiar with a variety of sampling techniques to assure the
sample selected actually represents the population of interest.
Flowcharting
• Graphical representation of a process showing the relationships
among process steps. Flowcharts show activities, decision
points, and the order of processing
• See Fig. 8-7 in Page 199.

Proprietary Quality Mgmt. Methodologies

• These include Six Sigma, Lean Six Sigma, Quality Function
Deployment, CMMI, etc.
Additional Quality Planning Tools

These include brainstorming, affinity diagrams, force field
analysis*, nominal group techniques, matrix diagrams,
and prioritisation matrices.
* Identifies forces and factors, both restraining and driving,

effecting the solution of an issue so that the positives can
be reinforced and negatives reduced or eliminated.

Quality Management Plan
• Describes how the PM team will implement the performing organization's

quality policy (Quality management plan is a component or a subsidiary
plan of the project management plan).
• Provides input to the overall Project Management Plan and must
address quality assurance, quality control and continuous process
improvement for the project.
• Quality management plan may be formal or informal, highly detailed or
broadly framed, based on the requirement of the project.
• Should include efforts at the front end of the project to ensure that
earlier decisions (e.g. on concepts, designs, and tests) are correct
These efforts should be performed through an independent peer
review and not include persons that worked on the material being
reviewed.

PLAN QUALITY – OUTPUTS
Quality Metrics
• A metric is an operational definition that describes, in very specific

terms, what something is and how the quality control process
measures it.
• Very specific (actual) measurable values to be met by a process,
activity or work result.
• For example, it is not enough to say that meeting the planned
schedule dates is a measurement of management quality. The PM
team must also indicate whether every activity must start on time
or only finish on time and whether individual activities will be
measured, or only certain deliverables and if so, which ones.
• Quality metrics are used both in QA & QC processes.
Quality Checklists
• Structured tool used by both QA and QC to verify a set of required

steps have been performed (usually component specific)

Process Improvement Plan
• It is subsidiary of the project management plan.
• Details the steps for analysing processes that will facilitate the
identification of waste, error & non-value added activity, thus
increasing customer value.
• Examples of such steps are:

• Process boundaries: describes the purpose, start, and end of
processes, their inputs & outputs, data required and the owner
and stakeholder of the processes.
• Process configuration: a flowchart of processes to facilitate
analysis with interfaces identified
• Process metrics
• Targets for improved performance

Project documents that may be updated include, but are not limited to:
• Stakeholder register, and
• Responsibility Assignment Matrix (Section 9.1.2.1)

QUALITY PROCESSES

Controlling
8.1 8.2 8.3
Plan Quality Perform Quality Perform Quality
Assurance Control

PERFORM QUALITY ASSURANCE
HOW SHOULD YOU PERFORM QUALITY
ASSURANCE?
• Quality assurance (QA) is application of planned, systematic quality

activities to ensure the project will employ all processes needed to
meet requirements
• QA uses the Process Improvement Plan to make project processes

better
• A quality assurance department, or similar organization, often

oversees quality assurance activities.
• QA also provides an umbrella for another important quality activity,

continuous process improvement (CPI). CPI provides an iterative
means for improving the quality of all processes (improves in small
steps over time)

PERFORM QUALITY ASSURANCE
TOOLS & TECHNIQUES
• Plan Quality and Perform &

Quality control tools &
techniques
• Quality audits
• Process analysis
INPUTS OUTPUTS
• Project management plan • Organizational process
• Quality metrics assets updates
• Quality control measurement • Project management plan
(updates)

PERFORM QUALITY ASSURANCE- INPUTS
INPUTS
• Quality Metrics
• Quality Control Measurements

QC measurements are the results of quality control activities that
is fed back to the QA process for use in re-evaluating and
analysing the quality standards and processes of the performing
organization

PERFORM QUALITY ASSURANCE-T&T
TOOLS &TECHNIQUES
• Plan Quality and Perform Quality Control tools and techniques
Tools & techniques from Plan Quality and Perform Quality Control, discussed
in Section 8.1.2 and Section 8.3.2 (can also be used for that Quality
Assurance activities.
• Quality Audits
• A structured, independent review to determine whether project
activities comply with organizational & project policies, processes,
& procedures
•The objective of a quality audit is to identify inefficient and
ineffective policies, processes, and procedures in use on the
project.
• May be scheduled or at random
• May be carried out by properly trained in-house auditors or third
parties
• Quality audits confirm that approved change requests, corrective
actions, defect repairs & preventive actions are being implemented

PERFORM QUALITY ASSURANCE-T&T
• Process Analysis
• Follows the steps outlined in the Process Improvement Plan to

identify needed improvements from an organizational and technical
standpoint
• Examines problems & constraints experienced and non-value-
added activities identified during process operation
• Uses root cause analysis, a specific technique to analyse a
problem/situation, determine the underlying causes that lead to
it, and create preventive actions for similar problems
PERFORM QUALITY ASSURANCE-OUTPUTS
OUTPUTS

e.g. quality standards
• Change Requests
• Project Management Plan Updates

- Quality mgmt. plan
- Schedule mgmt. plan
- Cost mgmt. plan

- Quality audit reports
- Training plans
- Process documentation

QUALITY PROCESSES

Controlling
8.1 8.2 8.3
Quality Planning Perform Quality Perform Quality
Assurance Control

PERFORM QUALITY CONTROL
HOW DO YOU PERFORM QUALITY CONTROL?
• Use the Quality Management Plan to monitor specific project results

to determine whether they comply with relevant quality standards
(metrics) for both project & product quality
• Identify ways to eliminate causes of unsatisfactory results.
• It should be performed throughout the project
• QC is performed by a Quality Control Department
• The PM team should have a working knowledge of statistical quality

control, especially sampling & probability
TOOLS & TECHNIQUES
• Cause and effect diagram
• Control charts
• Flowcharting
• Histogram
• Pareto chart
• Run chart
• Scatter diagram
• Statistical sampling
• Inspection
• Approved change requests review
INPUTS OUTPUTS
• Quality control measurements
• Validated changes
• Quality metrics
• Validated deliverables
• Quality checklists
• Organization process assets updates
• Change Requests
• Approved change requests
• Project management plan updates
• Deliverables

Know the difference between:
Prevention (keeping errors out of the process); Inspection (keeping

errors out of the hands of the customer)
Attribute sampling (result conforms, or it doesn't); Variables sampling

( the result is rated on a continuous scale that measures the degree of
conformity); Statistical sampling (measures only a percentage of items,
e.g. 5 out of every 100)
Special causes (unusual events); Common or random causes (normal

process variation)
Tolerances (the result is acceptable if it falls within range specified by

tolerance); Control limits (the process is in control if the result falls within
the control limits)

PERFORM QUALITY CONTROL-INPUTS
INPUTS
•Project Management Plan

•Quality Metrics
•Quality Checklists
•Work Performance Information
•Approved Change Requests
•Deliverables
•Organizational Process Assets

PERFORM QUALITY CONTROL-T&T
TOOLS & TECHNIQUES
• Cause and Effect Diagram

• Also called Ishikawa (inventor) or fishbone diagrams
• Below is an example to show how various factors might be linked
to potential problems or effects
• Control Charts (See Figure 8-5 & 8-6, p.196-7)

• Shows whether or not a process is stable or has predictable
performance over a period of time
• Stable or Predictable – normal (no action required)

• Out of control – process is subject to special cause variation
and (needs to be fixed)
• used for repetitive activities like manufacturing
• a graphic display of the interaction of process variables on a

process ( Are the process variables within acceptable limits?)

• A process is out of control if the values are:
• widely fluctuating values (outside the control limits set)

• suddenly jumps or shifts
• gradually increasing variation (trend)
‘Rule of Seven' which is when 7 values in a row are all below or all
above the mean or increase/decrease in direction
• For processes outside acceptable limits, the process should

be adjusted ( the upper & lower limits are usually set at +/-3
sigma, where sigma is standard deviation)

• Flowcharting
• Helps to analyse how problem occur
• A flowchart is a graphical representation of a process
• There are many styles, but all flowcharts activities,

decision points, and the order of processing
• See Figure 8-8, an example of a process flowchart for

design reviews
• Histogram
- A bar chart showing a distribution of variables
- Each column represents an attribute or characteristic
so that one can compare two or more things
- Height of each column represents the frequency (or amount) of a
characteristic

Pareto Chart
• A Pareto chart is a specific type of histogram, ordered by
frequency of occurrence
• The Pareto technique is used primarily to identify and evaluate
nonconformities
• In Pareto diagrams, rank ordering is used to guide corrective action
• The project team should take action to fix that problem first, which
are causing the greatest number of defects
• Pareto diagrams are conceptually related to Pareto’s Law, which
holds that a small number of causes will typically produce a large
majority of the problems or defects
• Pareto's Law is commonly referred as the 80/20 principle, where
80 percent of the problems are due to 20 percent of the causes


Run Chart
• A run chart shows the history and pattern of variation
• A run chart is a line graph that shows data points plotted in order in
which they occur (over time)
• Run charts show trends in a process over time, variation over time,
or declines or improvements in a process over time
• Trend analysis is performed using run charts
• Trend analysis is using mathematical techniques to forecast future
outcomes based on historical results
• Trend analysis is often used to monitor technical performance;
project cost & schedule performance.
Scatter Diagram
• Shows the pattern of relationship between two variables
• This tool allows the quality team to study and identify the possible
relationships between changes observed in two variables
• The closer the points are to a diagonal line, the more closely they're
related

• Statistical Sampling
• Involves
choosing part of a population of interest for inspection
(For example, select 10 widgets at random out of 100)
• Inspection
• Examination of a work product to determine if it conforms to
standards
• Generally, the results of an inspection include measurements
• Inspection can be conducted at any level, for example, the results of
a single activity can be inspected, or final product of the project can
be inspected
• Inspections are also called reviews, peer reviews, audits, and
walkthroughs
• Approved Change Requests Review

• All approved change requests should be reviewed to verify that they
were implemented as approved.

PERFORM QUALITY CONTROL-OUTPUTS
OUTPUTS
• Quality Control Measurements
• Quality control measurements are documented results of
quality control activities in the format specified during quality
planning.
• Validated Changes
• Any changed or repaired items are inspected & will be either
accepted or rejected before notification of the decision is
provided. The rejected items may require rework.

PERFORM QUALITY CONTROL-OUTPUTS
• Validated Deliverables

• Completed checklists
• Lessons learned documentation, i.e. causes of variances,
reasoning behind the corrective action chosen
• Change Requests
• Project Mgmt. Plan Updates

STANDARD DEVIATION- Slide 1
Accuracy Measurement
Standard deviations from the mean (or average):

+/-1 (on both sides of the mean) = 68.3% : (1sigma)
+/-2 =95.5% : (2 sigma)
+/-3 =99.7% : (3 sigma)
+/-6 =99.9% : (6 sigma)
Sigma and
Standard
Deviation
are the same

STANDARD DEVIATION-Slide2
Formulas:
Mean (u)/Average = (sum the data, and then divide by the number
of items)
= 31 / 6 = 5.17
Variance (a 2) - how spread out a distribution of data is (both

sides of mean)
=E ( ( x - u ) 2) -where x is, each sample data, i.e. 4.9 on the
n -1
next slide and n is the number of samples (6)
= 0.2334 =0.04668
6-1

STATISTICAL STANDARD DEVIATION

STATISTICAL STANDARD DEVIATION

Question
All the following are true about 'Quality' and 'Grade' except:
A. A low quality product may be of high grade

B. A low grade product may be of high quality
C. It is a problem if either the product is low grade or low quality
D. Grade is a rank given to entities having the same functional
use
but different technical characteristics
The answer is C.
Quality is "the degree to which a set of inherent characteristics fulfil

requirements".
Grade is a category assigned to products or services having the same

functional use but different technical characteristics.
Low quality is always a problem, low grade may not be.

PMBOK, p.18D.

Questions?

DAY 4
CHAPTER 9
PROJECT HUMAN RESOURCE

MANAGEMENT
PMP Prep – HR Slide 1

AGENDA
Day 1 DAY 3
PMP Exam Prep Introduction Project TIME Management
Project Management Framework Project COST Management
*Introduction Project COMMUNICATION Management
DAY 2 DAY 4
Project INTEGRATION Management Project QUALITY Management
Project SCOPE Management Project RISK Management
DAY 5
PROJECT HUMAN RESOURCE MANAGEMENT
WHAT DOES THE HUMAN RESOURCE KNOWLEDGE AREA DO?
Organize & manage the project team (also referred to as project staff)
• The project team comprises of the people who have assigned roles and
responsibilities for completing the project (who report directly or
indirectly to the Project Manager and perform the project work).
• Team members should be involved in much of the project’s planning and
decision-making.
• Early involvement of team members adds expertise during the planning
process and strengthens commitment to the project.
• The Project Management Team is a subset of the project team and is
responsible for project management activities such as planning,
controlling, and closing.
• Project sponsor works with project management team , typically
assisting with matters such as project funding , clarifying scope
questions , and influencing other in order to benefit the project.

HUMAN RESOURCE PROCESSES
HUMAN RESOURCE PROCESS DEFINITIONS
9.1 Develop Human Resource Plan

• Identifying & documenting project roles, responsibilities & reporting
relationships, as well as creating the Staffing Management Plan
9.2 Acquire Project Team

• Obtain people needed to complete the project
9.3 Develop Project Team

• Improve competencies & interaction of team members to enhance
project performance
9.4 Manage Project Team

• Track team member performance, provide feedback, resolve issues &
coordinate changes to enhance project performance
See Figure 9-3, p.218 for human resource plan data flow diagram

Planning Executing
9.1 9.2
Develop Human Resource Acquire Project Team
Plan
9.3
Develop Project Team
9.4
Manage Project Team

DEVELOP HUMAN RESOURCE PLAN
WHAT DOES ‘DEVELOP HUMAN RESOURCE PLAN’ DO?
• Identifies & documents project roles, responsibilities, and required

skills, reporting relationships, and
• Creates a staffing management plan

• can include how & when project team members will be acquired
(the persons can be from inside or outside the performing org.)
• criteria for releasing them from the project
• Identification of training needs
• Plans for recognition & rewards
• Compliance considerations (e.g. labour laws), safety issues (e.g.
workman's safety
DEVELOP HUMAN RESOURCE PLAN
TOOLS & TECHNIQUES

• Organization charts &
position descriptions
• Networking
• Organizational theory
INPUTS
• Activity resource requirements OUTPUTS
• Enterprise environmental factors Human Resource Plan

DEVELOP HUMAN RESOURCE PLAN - INPUTS
The preliminary requirements regarding the required people and

competencies for the project team members are progressively
elaborated as part of human resource planning process (Section
6.3.3.1 of PMBOK)


The enterprise environmental factors (section 1.8) that can
influence the Develop Human Resource Plan process include, but
are not limited to:
• Organizational culture and structure,

• Existing human resources,
• Personnel administration policies, and

• Organizational standard processes and policies and

standardized role descriptions,
• Templates for organizational charts and position

descriptions, and
• Historical information on organizational structures

that have worked in previous projects

DEVELOP HUMAN RESOURCE PLAN – T&T
TOOLS & TECHNIQUES
Organization Charts & Position Descriptions

Used to ensure each work package has an unambiguous owner & that all
team members have a clear understanding of their roles & responsibilities
(See Figure 9-4, p.205 shows three different types of chart)
Hierarchical- type charts
Organizational breakdown structure (OBS) - looks similar to WBS,

but is broken down by organisation’s existing departments, units or teams
Resource breakdown structure (RBS) – another hierarchical chart

broken down by types of resources, e.g. welders, graphic designers, etc.
RBS can help tracking project costs, and can be aligned with the
organization’s accounting system (RBS can contain resource categories
other than human resources).

Matrix-based charts
Responsibility assignment matrix (RAM) is used to shows connections
between work & people. See Figure 9-5, p.206, is a type of RAM called a
RACI chart (responsible, accountable, consult, inform)
Text-oriented formats
Detailed job or position descriptions; documents that provide information
such as responsibilities, authority, competencies, and qualifications; etc.
Other sections of the project management plan

Some responsibilities related to managing the project are listed and
explained in other sections of the project management plan. For example,
the risk register lists risk owners, the communication plan lists team
members responsible for communication activities.

Networking
• Informal interaction with others is an effective way to understand

political & interpersonal factors that will impact the effectiveness of
staffing options
• Include proactive correspondence, luncheon meetings, informal
conversations, and trade conferences
Organizational Theory
• Provides information regarding the ways people, teams &

organizational units behave.
• Helps managing people & groups; includes motivational theories
DEVELOP HUMAN RESOURCE PLAN – OUTPUTS
OUTPUTS
Roles & Responsibilities
List include:
Role – the label describing the portion of a project for which a person is
accountable; examples of project roles are business analyst, electrical
engineer, testing coordinator, etc.
Authority – The right to apply project resources, make decisions & sign
approvals (members work best with authority matching their
responsibility)
Responsibility – The work that a project team member is expected to

perform in order to complete the project activities
Competency – The skill & capacity needed to complete project activities
Project Organization Charts

Graphic display of project team members & their reporting relationships

Staffing Management Plan
• Describes when & how human resource requirements will be met
• May be tied with Procurement processes
• Includes:
• Staff acquisition – from internal/external contracted sources; need

to work in a central location or can they work from distant locations,
costs associated with each level of expertise , HR department’s
assistance to project management team, etc.
• Timetable - describes necessary time frames for project team

members, either individually or collectively, as well as when
acquisition activities such as recruiting should start. One tool for
charting human resources is a resource histogram (see Fig 9-6)

RESOURCE HISTOGRAM

Staffing Management Plan (contd.)
Staff Release plan - method & timing of releasing team members
Training Needs – If the team members to be assigned are not expected

to have the required competencies, a training plan can be developed as
part of the project. The plan can also include ways to help team members
obtain certifications that would support their ability to benefit the project
Recognition & rewards - criteria for recognition and rewards are

planned; awarded as part of the Develop Project Team process
Compliance - Government regulations, union contracts & HR policies
Safety – policies & procedures that protect team members from safety
hazards

Planning Executing
9.1 9.2
Develop Human Resource Plan
Acquire Project Team
9.3
9.4
Manage Project Team

ACQUIRE PROJECT TEAM
HOW SHOULD YOU ACQUIRE YOUR PROJECT TEAM?
• A project team can be acquired by:
• Pre-assignment (known in advance)

• Negotiation (staff assignments are negotiated on many projects
inside the performing organization)
• Acquisition (from outside the performing organization)
• Virtual Teams (groups of people with a shared goal, placed at
different locations)
• Project Manager may or may not have control over which

members are selected

ACQUIRE PROJECT TEAM
TOOLS & TECHNIQUES
• Pre-assignment
• Negotiation
• Acquisition
• Virtual teams
INPUTS
• Project mgmt. plan OUTPUTS
• Enterprise environmental • Project Staff assignments
factors • Resource calendars
• Organizational process • Project management plan
(updates)
assets
ACQUIRE PROJECT TEAM-INPUTS
INPUTS

• Project team members are drawn from all available sources, both
internal & external
• When PM team is able to influence or direct staff assignments,
characteristics to consider include:
• Availability (Who is available & when they're available?)

• Ability (What competencies do they possess?)
• Experience (Do people have similar experience? Have they done
it well? )
• Interests (Are people interested in working on this project?)
• Cost (How much will each team member be paid?)

ACQUIRE PROJECT TEAM-INPUTS
HR department (policies, guidelines, or procedures governing

staff assignments)

ACQUIRE PROJECT TEAM-T&T
TOOLS & TECHNIQUES
Pre-Assignment
Specific people may be promised as part of a competitive proposal, if the
project is dependent on expertise of particular persons. Some staff
assignments are defined within the Project Charter
Negotiation
PM team uses their influencing skills to obtain staff members from within
the performing organisation. May need to negotiate with
• Functional managers
• Other project management teams

ACQUIRE PROJECT TEAM-T&T
Acquisition
• Required services can be acquired from outside sources when the
performing organization lacks in-house staff.
Virtual Teams
• People with a shared goal who perform with little or no face to face
meetings
• Benefit from e-mail & video conferencing; must plan communications
carefully
• Virtual team format makes it possible to:
• Form teams from widespread geographic areas
• Add special expertise to a project team, even though the expert is
not in the same geographic area
• Incorporate employees who work from home offices
• Form teams of people who work different shifts or hours
• Include people with mobility handicaps
• Move forward with projects otherwise ignored due to travel
expenses
ACQUIRE PROJECT TEAM-OUTPUTS
OUTPUTS
Project Staff Assignments
• Project is staffed when appropriate people are assigned to work on it
• Documentation can include a project team directory, memos to
team members, and names inserted into other parts of project
management plan (such as organization charts & schedules)
Resource Calendars
• Documents the time periods (or calendar) each project team
member can work on the project
• Creating a reliable final schedule depends on having a good
understanding of each person’s schedule conflicts, including
vacation time and commitments to other projects

• Elements of project mgmt. plan that may be updated include, but are
not limited to the human resources plan
Planning Executing
9.1 9.2
Develop Human Resource Plan Acquire Project Team
9.3
9.4
Manage Project Team

DEVELOP PROJECT TEAM
HOW DO YOU DEVELOP YOUR PROJECT TEAM?
Improve the competencies and interaction of team members to enhance

project performance. Objectives include:
a) Improve skills of team members in order to increase their ability to

complete project activities
b) Improve feelings of trust & cohesiveness among team members so as

to raise their productivity through greater team-work
c) Develop the team early to realize greater benefits
Examples of effective teamwork:

• Assisting each other when workloads are unbalanced
• Communicating in ways that fit individual preferences
• Sharing information & resources

DEVELOP PROJECT TEAM
TOOLS & TECHNIQUES
• Training
• Team Building Activities
• Ground Rules
• Co-location
• Recognition and rewards
OUTPUTS
INPUTS • Team Performance
• Project staff assignments
Assessment
• Resource calendars
factors updates

DEVELOP PROJECT TEAM-INPUTS
INPUTS
Project Staff Assignments
Resource Calendars

DEVELOP PROJECT TEAM-T&T
TOOLS & TECHNIQUES
Interpersonal Skills
Interpersonal skills, sometimes known as "soft skills" are particularly
important to team development. Understanding the sentiments of team
members, anticipating their actions, acknowledging their concerns and
following up on their issues can greatly reduce problems and increase
cooperation.
Skills such as: empathy, influence, creativity, group facilitation are
valuable assets when managing the project team
Training
Activities designed to enhance the competencies of the project team
members. Example of training methods include:
Classroom, online, computer-based, on-the-job training from another
project team member, mentoring, and coaching from other team
members (Training includes diversity/cultural training as well)

Team-Building Activities
• Could be
• a ten minute agenda item in a status review meeting
• an off-site, professionally facilitated experience designed to
improve interpersonal relationships
• some group activities, although not specifically designed for team
building, like developing a WBS (can increase team cohesiveness)
• Encourage informal communication & activities

• Team building strategies are particularly valuable when team
members operate from remote locations
• Five stages of team development (explained later)
Ground Rules
• Establish clear expectations regarding acceptable behaviour by
project team members to decrease misunderstandings & increase
productivity

Co-Location
• Placing many or all of the most active team members in the same
physical location enhances their ability to perform as a team
• Can be temporary, only at strategically important times in the project
• Co-location strategy can include a meeting room ("war room") with
electronic communication devices and other conveniences that
enhance communication and a sense of community
Recognition and Rewards
• The original plans concerning ways to reward people are developed
during Human Resource Planning.
• Process involves recognizing & rewarding only desirable behaviour,
e.g. need to work overtime because of poor planning should not be
rewarded (undesirable behaviour)
• Win-lose (zero sum) rewards that only limited number of project team
members can achieve, e.g. employee of the month etc. (can hurt team
cohesiveness)
• Rewarding win-win behaviour that everyone can achieve tends to
increase support among team members
DEVELOP PROJECT TEAM-OUTPUTS
OUTPUTS
Team Performance Assessment
Informal or formal evaluation of a team's effectiveness can include

indicators like:
• Improvements in skills that allow a person to perform assigned
activities more effectively
• Improvement in competencies and sentiments that help team
perform better as a group
• Reduced staff turnover rate
Enterprise Environmental Factors Updates

TYPES OF POWER
Power is the potential ability to influence behaviour to get people
to do things they would not normally do.
Types of Power
Legitimate (Formal) -based on actual or perceived position e.g. boss or
boss‘s spouse
Coercive-based on fear of punishment (normally used as the last resort)
Reward -based on reward possibility (great to use). To be effective,

rewards should be based on activities & performance under a person's
control. Must have a clear criteria with a planned system of evaluation.
Must be awarded in public.
Expert –Exert power based on your expertise or knowledge (great to use)
Referent - Ability to influence other through charisma

STAGES OF TEAM DEVELOPMENT
Stages of Team development Project Manager’s style to

match the stage
Forming Directing
Storming Coaching
Norming Supporting
Performing Delegating
Adjourning Relieving

TYPE OF ROLES PLAYED BY PROJECT TEAM MEMBERS
Supportive Destructive
Initiators Aggressor
Information Seekers Dominator
Information Givers Devil’s Advocate
Encouragers Topic Jumper
Clarifiers Recognition Seeker
Harmonizers Withdrawer
Consensus Takers Blocker
Gate Keepers

MANAGEMENT STYLES
Autocratic Management by authority vs Consensus
Good For Weakness

Mature, well-defined projects Limits staff bye-in leading to low
morale
When quick decisions are needed Possible arbitrary decision
Laissez-Faire – Meaning “to let do”

- Minimal or no interference by authority
Good For Weakness
Innovative projects Confusion about project objectives
Projects with high morale, self-

motivated staff – promotes Inability to make decisions
creativity
MASLOW’S HIERARCHY OF NEED

MANAGEMENT THEORIES
MANAGEMENT THEORIES
McGregor's Theory
Theory X
• Workers viewed as inherently self-centred, lazy
• Traditional view of management; top-down .
• Managers control & micromanage the workers
Theory Y
• People will perform their best if they are properly motivated
• Workers viewed as willing & eager to accept responsibility
• Managers create environment that aids workers in achieving goals

MANAGEMENT THEORIES

MANAGEMENT THEORIES
HYGIENE FACTORS
• Absence of proper hygiene factors are linked to dissatisfaction

at the work-place. Examples of Hygiene factor are:
• company policies & job security
• pay, remuneration, salaries
• working conditions
• supervision
MOTIVATING FACTORS
• When they exist, team members have a good time at their place of
work. It includes,
• sense of achievement & recognition for things done
• opportunity for growth & advancement
• responsibility & stimulating work

Planning Executing
9.1 9.2
Develop Human Resource Plan Acquire Project Team
9.3
9.4
Manage Project Team

MANAGE PROJECT TEAM
HOW SHOULD YOU MANAGE YOUR PROJECT TEAM?
• Track & appraise team member performance

• Provide feedback
• Observe team behaviour, manage conflict & resolve issues
• Coordinate changes to enhance project performance
• As a result of managing the project team, staffing management plan
is updated, change requests are submitted, issues are resolved, input
is given to organizational performance appraisals, and lessons
learned are added to the organization’s database.
• Management of the project team is complicated when team
members are accountable to both a functional manager and the
project manager within a matrix organization
• Effective management of this dual reporting is often a critical
success factor for the project, and is generally the responsibility of
the project manager

MANAGE PROJECT TEAM
TOOLS & TECHNIQUES
• Observation & conversation
• Project performance
appraisals
• Conflict management
• Issue log
INPUTS OUTPUTS
• Project staff assignments • Enterprise environmental
• Project management plan factors updates
• Team performance assessment • Organization process assets
• Work performance information (updates)
• Performance reports • Change Requests
• Organizational process • Project management plan
assets (updates)
FORMS OF COMMUNICATION
Form of Characteristics Examples
Communication
Written Formal • Precise • Project charter, Scope statement,
• Transmitted project plan, WBS, project status
through medium • Complex issues
of correspondence • Contract related communication
Written informal • Emails, notes, memos, letters
• Regular communication with team member
Oral Formal • High degree of • Presentations, Speeches
flexibility • Negotiations, conflict resolution
• Personal contact,
group meetings or
telephone
Oral Informal • Conversation with team members
• Project meetings
• Break-room or war-room conversations
Non-verbal • About 55% of total • Facial expression, hand movements,
Communication communication physical mannerism , etc.
MANAGE PROJECT TEAM – INPUTS
• Project staff assignments
• Team performance assessments
• Performance Reports

MANAGE PROJECT TEAM – T&T
Observation and Conversation
• Stay in touch with the work & attitudes of project team members
• The PM team members monitors indicators such as :
• progress toward project deliverables
• accomplishments that are source of pride for team members
• interpersonal issues
Issue Log
As issues arise in course of managing the project team, a written

log can document persons responsible for resolving specific
issues by a target date

TOOLS & TECHNIQUES
Project Performance Appraisals

• Need for formal or informal appraisals depends on length and
complexity of project, organizational policy, labour contract
requirements, and the amount and quality of regular communication
• Evaluation information can be gathered from people who interact
with project team members using 360-degree feedback principles
(where feedback is provided to the person being evaluated from many
sources, including superiors, peers & subordinates)
• Objectives for conducting performance appraisals include:

• Re-clarification of roles & responsibilities
• Structured time for team members receive positive feedback in what
might otherwise be a hectic environment
• Discovery of unknown or unresolved issues
• Development of individual training plans
• Establishment of specific goals for future time period
Conflict Management
• Successful conflict management results in greater productivity and
positive working relationships
• Common sources of conflict include scarce resources, scheduling
priorities & personal working styles
• Conflict reduction techniques include team ground rules, group
norms, and solid project management practices, like communication
planning & role definition
• Differences of opinion can be healthy, can lead to increased creativity
and better decision-making, if managed properly
When the differences become a negative factor:

• project team members are initially responsible for solving their own
conflicts
• if escalates, then PM should help facilitate a satisfactory resolution
• conflicts should be addressed early, usually in private, using a direct
& collaborative approach

Conflict Resolution Techniques

• Forcing (Win/lose) - one person forces solution on the other parties
• Smoothing (accommodating) (lose/lose) - attempts are made to

make conflict appear less important than it is
• Compromise (negotiating) (neutral/neutral) - each party gives up

something to reach a solution
• Withdrawal (avoiding) (lose/lose) - one party gives up & refuses to

discuss the conflict, which is probably the worst technique
• Confrontation (collaboration/problem solving) (win/win) - the only

true and best solution -a fact finding mission results in some
possible solutions which are chosen from

Issue Log
Issues arise in course of managing project team. A written log documents
and helps monitor who is responsible for resolving specific issues by a
target date. Issue resolution addresses obstacles that can block the team
from achieving its goals.
Interpersonal Skills
Project managers uses combination of technical, human, and
conceptual skills to analyze situations and interact appropriately with
team members. This aids PM capitalizing on the strengths of all
team members (read Appendix F in PMBOK).

MANAGE PROJECT TEAM – OUTPUTS
OUTPUTS
Enterprise Environmental Factors Updates

EEF that may require updates as a result of the Manage
Project Team process include, but are not limited to:
Input to organizational performance appraisals, and
Personnel skill updates
Organizational Process Assets (Updates)
Organizational process assets that may require updates as a
result of the Manage Project Team process include, but are
not limited to:
- Historical information and lessons learned documentation
- Template, and
- Organizational standard processes

MANAGE PROJECT TEAM – OUTPUTS
Change Requests
• Staffing changes, whether by choice or by uncontrollable events
Project Management plan (Updates)
• Updates to Staffing Management Plan – they include new roles,

training, reward decisions
HUMAN RESOURCE QUIZ
Quiz
You're the Project Manager for a one-year construction project.

The project is a quarter done and your team consists of six sellers
and 25 company employees. To understand who is responsible
for what work, you would look at the:
A. Resource histograms
B. Bar chart
C. Responsibility assignment matrix
D. Project organization chart

HUMAN RESOURCE QUIZ
Answer
C is the answer.
The responsibility assignment matrix maps who will do what work.

The resource histogram show the number of resources used in
each time period. The bar chart, in its pure form, shows only
activity and calendar dates. An organizational chart shows who
reports to whom.

Questions?

DAY 4
CHAPTER 11
PROJECT RISK MANAGEMENT
PMP Prep – Risk Slide 1

AGENDA
Day 1 DAY 4
DAY 2 DAY 5
DAY 3 DAY 6
WHAT DOES THE RISK KNOWLEDGE AREA DO?
• Risk management planning, identification, analysis,

responses, and monitoring & control on a project
• The objectives of Project Risk management are to increase

the probability & impact of positive events (opportunities),
and decrease the probability & impact of events adverse to
the project (threats)

What is project risk?
• Uncertain event or condition that, if it occurs, has a positive or a negative
effect on at least one project objective (i.e. time, cost, scope, or quality)
Positive effect is an opportunity

Negative effect is a threat
Known risks
• Those that are identified and can be proactively managed & analyzed
Unknown risks (unknown knowns & unknown unknowns)

• Cannot be proactively managed

• Look for risks caused by things like poor project management,
dependency on uncontrollable external resources, concurrent
multiple projects, etc.
• Accept risks if they're in balance with a possible reward
• Communicate about risk information openly & honestly
• Provide risk responses in line with the organization's perceived

balance between risk-taking &risk-avoidance
• To be successful, an organization should be committed to

addressing the management of risk proactively & consistently
throughout the project

RISK PROCESSES
RISK PROCESS DEFINITIONS
11.1 Plan Risk Management

• Process of deciding how to approach and conduct (plan & execute) the
risk management activities for a project.
11.2 Identify Risks

• Determine which threats/opportunities might affect the project &
document their details
11.3 Perform Qualitative Risk Analysis

• Assess each risk's chance of occurring & probable impact to get a
prioritized list of risks requiring more analysis or action

RISK PROCESSES
11.4 Perform Quantitative Risk Analysis
• Numerically analyze identified risks' effect on overall project objectives
11.5 Plan Risk Responses

• Analyze risks and make a plan of actions & options to enhance
opportunities & reduce threats to project objectives
11.6 Monitor & Control Risks

• Track identified & residual risks, identify new risks, execute risk response
plans & evaluate their effectiveness
• See Figure 11-20, p.309 for Risks data flow diagram

RISK PROCESSES
Planning Monitoring and controlling
11.1 11.6
Plan Risk Management Monitor and Control Risks
11.2
Identify Risks
11.3
Perform Qualitative Risk Analysis
11.4
Perform Quantitative Risk
Analysis
11.5
Plan Risk Responses

PLAN RISK MANAGEMENT
HOW DO YOU PLAN FOR RISK?
• Establish an agreed-upon approach for conducting risk

management activities & evaluating risk
• Ensure that the level, type, and visibility of risk management are
commensurate with both risk and importance of the project to the
organization
• Provide sufficient resources and time for risk management
activities
• Planning Risk management should be completed early during
project planning, since it is crucial to successfully performing the
other processes

PLAN RISK MANAGEMENT
TOOLS & TECHNIQUES
• Planning meeting &

analysis
INPUTS
• Cost mgmt. plan OUTPUTS
• Schedule mgmt. plan
• Communications mgmt. plan
• Risk management plan

PLAN RISK MANAGEMENT-INPUTS
INPUTS
Project Scope Statement (sec 5.2.3.1)
Cost Management Plan (sec 7.0)
Schedule Management Plan (sec 6.0)
Communications Management Plan (sec 10.2.3.1)

PLAN RISK MANAGEMENT-INPUTS

• Attitudes towards risk and the risk tolerance of organizations and
people involved in the project will influence the project management
plan.

• Organizations may have predefined approaches to risk
management such as categories, common definitions of concepts &
terms, standard templates, roles & responsibilities, and authority
levels for decision- making.

PLAN RISK MANAGEMENT -T & T
TOOLS & TECHNIQUES
Planning Meetings and Analysis
• Project teams hold planning meetings to develop the risk management

plan (attendees may include the project manager, selected project team
members and stakeholders)
• Develop risk cost elements (e.g. contingency reserves) and schedule
activities (e.g. risk status meetings or buffer time) for inclusion in the
project budget and schedule
• Assign risk responsibilities
• Develop general organizational templates for risk categories and
definitions (e.g. risk levels, types)
PMP Prep – Risk Slide 12 Powered by POeT Solvers Limited

PLAN RISK MANAGEMENT -OUTPUTS
Risk Management Plan
• Describes how risk management will be structured & performed

on the project
• It includes:
• Methodology – defines the approaches, tools, & data sources that

may be used to perform risk management on the project
• Roles & responsibilities - defines the lead, support, & risk

management team membership for each type of activity in the risk
management plan, assigns people to these roles, and clarifies their
responsibilities
• Budgeting – assigns resources & estimates costs needed for risk

management for inclusion in the project cost baseline

PLAN RISK MANAGEMENT- OUTPUTS
• Timing
Defines when & how often the risk management process will be
performed throughout the project life cycle, and establishes risk
management activities to be included in the project schedule.
• Risk categories
• Provides a structure that ensures a comprehensive process of
systematically identifying risk to a consistent level of detail &
contributes to the effectiveness and quality of Risk Identification
• An organization can use a previously prepared categorization of
typical risks.
• A Risk Breakdown Structure (RBS) (not a Resource Breakdown
Structure, which is also RBS) is one approach to providing such a
structure (see fig.11-4, page 244)
• Revised stakeholders' tolerances - Stakeholders tolerances may be

revised in risk management planning process

Definitions of risk probability & impact
• The impact scale reflects significance of impact, either negative for

threats or positive for opportunities, on each project objective if a
risk occurs.
• Impact scales are specific to the objective potentially impacted, type
& size of the project, organization’s strategies and financial state,
and the organization’s sensitivity to particular impacts.
• See fig. 11-5 in page 281

• Relative scales (also called ordinal scale) for impact are rank
ordered descriptors such as low, medium, high, very high reflecting
impact in increasing order.
• Alternatively, numeric scales (also called cardinal scales) assign
values to these impacts. The values may be
• Linear (e.g. 1, 3, 5, 7, 9) or,
• Non-linear (e.g. 1, 2,4, 8) – non-linear scales may represent organization’s
desire to avoid high-impact threats or exploit high impact opportunities, even if they
have relatively low probability
Linear – Risk Value total is 40 Non-Linear – Risk value is 63

Risk impact- Risk Impact-
Proj. Objective 1 2 3 4 Proj. Objective 1 2 4 8
Time 3 1 Time 3 1
Cost 4 Cost 4
Scope 5 Scope 5
Quality 2 Quality 2
3 8 9 20 3 8 12 40
Note: The figures in the box are probability of a risk impacting an objective
• Probability & impact matrix
• Risks are prioritized by their potential impact on project multiplied by
their possibility of occurring, e.g. 10% x $800 = $80 risk value
• See Figure 11-5, p.245 for a sample impact scale (relative &
numerical)
• See Figure 11-8, p.252 for a Probability & Impact Matrix look-up table
where you can look up your impact (bottom row) multiplied by your
determined probability (left column) and get a rating which can be
measured against other projects in your company
Reporting formats
Describes the content & format of risk register (list of risks with details)
Tracking
Documents how all facets of risk activities will be recorded for the
benefit of current project, future needs, and lessons learned.
RISK PROCESSES

11.1 11.6
11.2
Identify Risks
11.3
11.4
Analysis
11.5
Plan Risk Responses
IDENTIFY RISKS
WHAT HAPPENS IN IDENTIFY RISKS?
• Identify Risks determines which risks might affect the project &
documents their characteristics
• Participants in identify risk activities can include the following, where

appropriate: project manager, project team members, risk management
team (if assigned), risk experts from outside, customers, end-users,
stakeholders, etc.
• All project personnel should be encouraged to identify risks.
• Identify risks - is an iterative process because:
– Risk events may happen, which may cause new risks

– Status of identified risks may change
– New risks may occur

IDENTIFY RISKS
TOOLS & TECHNIQUES
• Documentation reviews
• Information gathering
techniques
• Checklist analysis
• Assumptions analysis
• Diagramming techniques
INPUTS • SWOT analysis
• Risk management plan • Expert judgement
• Activity cost estimates
• Activity duration estimates
• Scope baseline
• Stakeholder register OUTPUTS
• Cost mgmt. plan
• Risk register
• Quality mgmt. plan
• Project documents
factors
assets
IDENTIFY RISKS - INPUTS
INPUTS
• Risk Management Plan
• Activity time estimates
• Activity duration estimates
• Scope baseline

IDENTIFY RISKS - INPUTS
• Cost mgmt. plan

IDENTIFY RISKS – T&T
TOOLS & TECHNIQUES
Documentation Reviews
Structured review of project documentation including plans,
assumptions, prior project files, and other information to ensure
• Quality of the plans

• Consistency between those plans and with the project requirements
and assumptions

Information Gathering Techniques
Brainstorming -a group creativity technique to share impulsive ideas & get

new ideas from each other to build on
Delphi technique -experts take part in an anonymous questionnaire so as

not to influence each other, then their ideas are shared for more input
Interviewing -meeting a person to draw out facts & statements
Root cause identification -examine underlying causes for a risk

Checklist Analysis
• Checklist are developed based on historical information & knowledge
• Impossible to build an exhaustive one
• Get sample checklists or Questionnaires commercially or from the
internet
Assumptions Analysis
• Are assumptions still valid? It identifies risks to the project from
inaccuracy, inconsistency, or incompleteness of assumptions.
Diagramming Techniques
• Cause-and-effect diagrams (also called Ishikawa or fishbone diagrams)
• System or process flow charts
• Influence diagrams (What affects What) – It is a graphical
representation of situation showing causal influences, time ordering of
events, and other relationships among variables and outcomes.

SWOT Analysis
• The technique examines the project from each of the SWOT
(strengths, weaknesses, opportunities, and threats)
perspectives to increase the breadth of identified risks by
including internally generated risks
• SWOT analysis also examines the degree to which
organizational strengths offset threats and opportunities that
may serve to overcome weaknesses.
Expert Judgement

IDENTIFY RISKS – OUTPUTS
Risk Register
The primary outputs of Identify Risks are the initial entries into the risk
register. The risk register ultimately contains the outcomes of the other
risks mgmt. processes as they are conducted, resulting in an increase in
the level and type of information contained in the risk register over time.
The preparation of risk register begins with
• List of identified risks

• List of potential responses

RISK PROCESSES

11.1 11.6
11.2
Identify Risks
11.3
11.4
Analysis
11.5
Plan Risk Responses

QUALITATIVE RISK ANALYSIS
HOW DO YOU PERFORM QUALITATIVE RISK ANALYSIS?
• Prioritize identified risks for further action, such as Quantitative Risk

Analysis or Risk Response Planning
• Organizations can improve the project’s performance effectively by

focusing on high-priority risks
• Assess the priority of identified risks using their probability of occurring,

the corresponding impact on project objectives if the risks do occur
• Also use factors such as time frame & risk tolerance of the project
constraints of cost, schedule, scope & quality

PERFORM QUALITATIVE RISK ANALYSIS
TOOLS & TECHNIQUES
• Risk probability and impact
assessment
• Probability and impact matrix
• Risk data quality assessment
• Risk categorization
• Risk urgency assessment
INPUTS
• Risk register
• Risk management plan OUTPUTS
• Project scope statement • Risk register (updates)

PERFORM QUALITATIVE RISK ANALYSIS-INPUTS
INPUTS
Risk Register

PERFORM QUALITATIVE RISK ANALYSIS - T&T
TOOLS & TECHNIQUES
Risk Probability & Impact Assessment
• It investigates the likelihood that each specific risk will occur
• Risk impact assessment investigates the potential effect on a project
objective such as time, cost, scope, or quality, including both negative
effect for threats and positive effects for opportunities.
• The level of probability for each risk and its impact on each objective is
evaluated during the interview or meeting with experts or key
stakeholders
Probability & Impact Matrix
Risk Data Quality Assessment

• Risk analysis requires accurate & unbiased data
• Examine the degree to which the data about the risk is useful
• Examine the degree to which the risk is understood
• Examine the risk data for accuracy, quality, reliability, & integrity

PERFORM QUALITATIVE RISK ANALYSIS – T&T
TOOLS & TECHNIQUES

Risk Categorization
• Risks to the project can be categorized by sources of risk (e.g. using the
RBS)
Risk Urgency Assessment
• Risks requiring near-term responses may be considered more urgent to

address.
Expert Judgement
• Expert judgement is required to assess the probability and impact of each risk to determine its
location in the matrix shown in Fig. 11-10 (page 293)

RISK PROCESSES

11.1 11.6
11.2
Identify Risks
11.3
11.4
Analysis
11.5
Plan Risk Responses

PERFORM QUANTITATIVE RISK ANALYSIS
HOW DO YOU PERFORM QUANTITATIVE RISK ANALYSIS?
• Analyze priority risks (identified in Qualitative Risk Analysis)
• Analyzes the effect of those risk events and assigns a numerical
(quantitative) rating to those risks
• It also presents a quantitative approach to making decisions in the
presence of uncertainty
• The process uses techniques such as Monte Carlo simulation & decision
tree analysis to:
• Quantify possible outcomes for the project and their probabilities
• Assess probability of achieving specific project objectives
• Identify risks requiring the most attention
• Identify cost, schedule & scope targets in the light of risk
• Make best decisions when conditions or outcomes are uncertain
• Experienced risk managers sometime perform it directly after Identify Risk

PERFORM QUANTITATIVE RISK ANALYSIS
TOOLS & TECHNIQUES
• Data gathering &
representation techniques
• Quantitative risk analysis &
modeling techniques
• Expert judgment
INPUTS
• Risk register
• Risk mgmt. plan OUTPUTS
• Cost mgmt. plan • Risk register (updates)

PERFORM QUANTITATIVE RISK ANALYSIS-INPUTS
INPUTS
Risk Register
Cost Management Plan
Schedule Management Plan

PERFORM QUANTITATIVE RISK ANALYSIS – T&T
TOOLS & TECHNIQUES

Data Gathering & Representation Techniques
 Interviewing:
- The info. needed depends upon type of probability
distributions that will be used, e.g. three-point estimates for some
commonly used distributions, and the mean & standard deviation
for others
- Documenting the rationale of the risk ranges is an important
component of risk interview
 Probability distributions (beta and triangular) see Figure 11-14, p.298

PERFORM QUANTITATIVE RISK ANALYSIS -T & T
Quantitative Risk Analysis & Modeling Techniques
Commonly used techniques include:
• Sensitivity Analysis
Which risks have the most potential impact on the project ( tornado diagram is
used- will definitely get question in exam)
• Expected Monetary Value (EMV) Analysis
• Calculates average outcome from a group of conditional values when their
future has events that may or may not occur
(Will definitely get question in exam)
• Multiply each possible impact by its probability (risk value), uses decision tree
• Decision Tree diagram (see Fig. 11-15, page 299)
• Modeling & Simulation
• Models that translate uncertainties at a detailed level into their potential
impact
• Typically uses Monte Carlo technique
• Better for cost or schedule risk than EMV because EMV is subject to misuse

PERFORM QUANTITATIVE RISK ANALYSIS -T & T
Expert Judgement
• It is required to identify potential cost and schedule impacts, to

evaluate probability, and to define inputs (such as probability
distributions) into the tools
• It also comes into play in the interpretation of the data. Experts

should be able to identify the weaknesses of the tools as well as
their relative strengths.
• Experts may determine when a specific tool may or may not be

more appropriate given the organization’s capabilities and culture.

QUANTITATIVE RISK ANALYSIS - OUTPUT
OUTPUT
Risk Register (updates)
• Probabilistic analysis of the project
• Probability of achieving cost and time objectives
• Prioritized list of quantified risks
• Trends in quantitative risk analysis results

RISK PROCESSES

11.1 11.6
11.2
Identify Risks
11.3
11.4
Analysis
11.5
Plan Risk Responses

PLAN RISK RESPONSES
HOW DO YOU PLAN RISK RESPONSES?
• Develop options & determine actions to enhance

opportunities and reduce threats
• Risk responses must be:
• Appropriate to the significance of the risk
• Cost effective
• Timely
• Realistic
• Within the project context
• Agreed upon by all parties involved
• Owned by a responsible person

PLAN RISK RESPONSES
TOOLS & TECHNIQUES
• Strategies for negative risks or
threats
• Strategies for positive risks or
opportunities
• Contingent response strategies
OUTPUTS
INPUTS • Risk register (updates)
•Risk register • Risk-related contract
•Risk management plan decisions
(updates)

PLAN RISK RESPONSES - INPUTS
INPUTS
Risk Register

PLAN RISK RESPONSES – T&T
TOOLS & TECHNIQUES
Strategies for Negative Risks or Threats

Avoid – Changing the Project Management Plan to eliminate a potential
risk
For example:
• Avoid a scope risk by changing to a less "bleeding edge" technology,
e.g. TD bank lost three months on a project because of unproven
software
• Avoid a cost risk by properly doing Activity Resource Estimating
• Avoid a resource risk by removing its requirement

• Transfer - To third party
• Generally involves payment to the party taking on the risk e.g.
procurement of a critical item, For example:
• Transfer a scope risk by employing a contractor
• Transfer schedule risk by purchasing flood insurance for a New

Orleans project
• Transfer a resource risk by purchasing on-site warranty

PLAN RISK RESPONSES– T&T
• Mitigate -Reduce impact of an adverse risk/or reduction in the
probability
For example:
• Mitigate a scope risk by building a prototype
• Mitigate a resource risk by cross-training a team member
• Mitigate a schedule risk by using a pool of temporary workers, e.g.
Departmental Stores/Malls use lots of part-time workers
• Accept
• Used because it's seldom possible to eliminate all threats from a project
• Actively decide not to change project plan to deal with a risk
• Passive acceptance requires no action, leaving the project team
to deal with the threats or opportunities as they occur
• Active acceptance establishes a contingency reserve or strategy

PLAN RISK RESPONSES –T&T
Strategies for Positive Risks or Opportunities
• Exploit - Eliminates the uncertainty associated with a particular

upside risk by making the opportunity will definitely happen
e.g. hiring more talented resources to the project to reduce the
completion time
"To take advantage of" or "To make best use of“

PLAN RISK RESPONSES– T&T
• Share - Share responsibility and accountability to get best chance
of seizing an opportunity
e.g. risk sharing partnerships or joint ventures
• Enhance - Modify the "size“ of an opportunity by increasing

probability and/or positive impacts by identifying & maximizing key
drivers.
e.g. a sales opportunity may make a higher profit if a volume
discount is offered
• Accept
Accepting an opportunity is being willing to take advantage of it if it comes along, but

not actively pursuing it.

PLAN RISK RESPONSES –T&T
Contingent Response Strategy
• Respond only if certain event occurs and there's sufficient warning

to implement the plan. Examples of events that trigger contingency
response
• missing intermediate milestones

• cost of resource has gone down
• gaining high priority with a supplier
should be defined and tracked

Expert Judgement
Input from knowledgeable parties pertaining to the actions

be taken on a specific and defined risk.

PLAN RISK RESPONSES - OUTPUTS
• Risk Register (Updates)
 The risk register is developed in Identify Risk, and is updated
during Perform Qualitative Risk Analysis & Perform Quantitative
Risk Analysis
 In Plan risk responses, appropriate responses are chosen,
agreed upon, and included in the risk register
 Components of risk register (read page 305 & 306)
a) Residual risks - risk that are expected to remain after
planned responses have been taken as well as those that
have been deliberately accepted
b) Secondary risks -new risk that arise as a direct outcome of
implementing a risk response.

Risk-Related Contractual Agreements
Such as agreements for insurance, services, and other items as

appropriate, can be prepared to specify each party’s responsibility
for specific risks, should they occur.

Project Mgmt. Plan (updates)

• Cost mgmt. plan
• Procurement mgmt. plan
• Human resource mgmt. plan
• Work breakdown structure
• Schedule baseline
• Cost performance baseline
Project Document (updates) – Read page 307

• Assumption log updates
• Technical documentation updates

RISK PROCESSES

11.1 11.6
11.2
Identify Risks
11.3
11.4
Analysis
11.5
Plan Risk Responses

MONITOR AND CONTROL RISK
WHAT HAPPENS IN MONITOR AND CONTROL RISK?
• Identify, analyze & plan for new or changed risks

• keep track of the identified risks and those on the watch list
• reanalyze existing risks
• Monitor trigger conditions for contingency plan
• Monitor residual & secondary risks
• Review the execution of risk responses while evaluating their
effectiveness.
• Monitor & Control Risk process applies techniques, such as
variance and trend analysis, which require the use of
performance data generated during project execution

Other purposes of Monitor & Control Risk are to determine if:
• Mid-course correction needed to handle the risk appropriately Project

assumptions are still valid
• Risk, as assessed, has changed from its prior state, with analysis of trends
• Proper risk management policies & procedures are being followed
• Contingency reserves of cost or schedule should be modified in line with

the risk of the project
• Monitor & Control Risk can involve choosing alternative strategies,

executing a contingency or fallback plan, taking corrective action &
modifying the project management plan
• Receive periodic reports from risk response owner on the effectiveness of

the plan, and any unanticipated effects.

TOOLS & TECHNIQUES
• Risk reassessment
• Risk audits
• Variance and trend analysis
• Technical performance
measurement
• Status meetings
INPUTS
OUTPUTS
• Risk register • Risk register (updates)
• Risk management • Org. process assets (updates)
plan • Change Requests
• Work performance • Project management plan (updates)
information • Project document updates

MONITOR AND CONTROL RISK - INPUTS
INPUTS
Risk Register
Performance Reports

MONITOR AND CONTROL RISK – T&T
TOOLS & TECHNIQUES
Risk Reassessment
• Risk Monitoring & Control often requires identification of new risks & re-
assessment of risks
• Risk reassessment should be regularly scheduled & should be an agenda
item at project team status meetings
Risk Audits
• Examine & document the effectiveness of risk responses in dealing with
identified risks and their root causes, as well as the effectiveness of the risk
management process
Variance and Trend Analysis

• Earned value analysis & trend analysis may be used to monitor overall project
performance. Outcomes from these analyses may forecast potential deviation of the
project at completion from cost and schedule targets
• Deviation from baseline plan may indicate the potential impact of threats or
opportunities

MONITOR AND CONTROL RISK – T&T
Technical Performance Measurement

• Compares technical accomplishment during project execution to the
plan’s schedule of technical achievement
Reserve Analysis
• Compares the amount of contingency reserves remaining to the amount of
risk remaining at any time in the project, to determine if the remaining
reserve is adequate
Status Meetings
• Risk management can be an agenda item in periodic status meetings to
proactively manage risk

MONITOR AND CONTROL RISK - OUTPUTS
Risk Register (Updates)
Change Requests
Project Document (Updates)
(Read page 311 & 312)

Exercise
Give examples of three risks with a response plan for each.
Schedule - _____________________________________________
______________________________________________________
Cost - _________________________________________________
_______________________________________________________
Scope- _________________________________________________
_______________________________________________________

Exercise
What’s the difference between:
Passive acceptance & active acceptance? ____________________

_______________________________________________________
Secondary & residual risks? ________________________________

_______________________________________________________
Management reserve & contingency reserve? _________________

_______________________________________________________

Questions?

DAY 15
DAY
CHAPTER 12
PROJECT PROCUREMENT
MANAGEMENT
PMP Prep – Procurement Slide 1

AGENDA
Day 1 DAY 4
DAY 2 DAY 5
DAY 3 DAY 6
PROJECT PROCUREMENT MANAGEMENT
WHAT DOES THE PROCUREMENT KNOWLEDGE AREA DO?
• Purchases or acquires products, services or results needed to perform
project work (internal or external to the performing organization)
• PMI uses the terms Buyer & Seller very often. Buyer is normally the
performing organization. Sellers can be Contractors, Sub-contractors,
Service providers, Suppliers/Vendors.
• Buyer can also be clients, customers, contractors, or purchasers.
• It is important to understand the situation/context and accordingly
interpret – who is a Buyer or Seller.
• A Seller may consider delivering you their own project (which may be a
a subproject to you.
• If required, seek early assistance from Specialists in contracting,
purchasing within the legal framework (so as to be fair to both).

Contracts
• Contracts are formal. Also named as Agreements, Subcontracts, or
Purchase orders. Letters of intent are not considered as Contract.
• Contract is defined as an agreement between competent parties, for

valid (effective, well-grounded, logical and producing desired results )
consideration, to accomplish a lawful purpose with clearly defined
terms.
• Contracts are a method of transferring risk for a fees (a strategy used in

Risk Response Planning).
• If internal to the Project Team’s organization, a non-contractual formal

agreement is prepared in form of an MOU (with other departments).
• PM team should prepare a tailor-made contract based on specific

project needs.
• PM must know the contents of the contract & the purpose.

PROCUREMENT PROCESS DEFINITIONS
12.1 Plan Procurements

• Make a Procurement Management Plan: that defines What, When &
How to buy goods and services for the Project. Then, prepare a SOW
defining the purchase needs.
12.2 Conduct Procurements
• Document the requirements (for products, services & results from
outside the project organization)
• Identify potential Sellers
12.3 Administer Procurements
• Obtain Information, Quotes, Bids, Offers or Proposals

PROCUREMENT PROCESSES
• Review the Offers; Select the best out of the potential Sellers;
Negotiate a written Contract.
• Manage the Contract & contract changes; the relationships

between Buyer and Seller.
• Review & document the Seller performance.
• Manage contractual relationship with outside Buyer of the
Project.
12.4 Close Procurements

• Complete & settle each contract
• See the Process flow diagram in page 273.

Planning Executing Monitoring Closing

and
controlling
12.1 12.2 12.3 12.4
Plan Conduct Administer Close
Procurements Procurements Procurements Procurements

PLAN PROCUREMENTS
TOOLS & TECHNIQUES
• Make-or-buy analysis
• Contract types
INPUTS
• Scope baseline OUTPUTS
• Teaming agreements
• Risk register • Procurement management plan
• Risk-related contract decisions • Procurement statements of work
• Activity resource requirements • Make-or-buy decisions
• Procurement documents
• Cost performance baseline
• Source selection criteria
• Enterprise environmental factors • Change requests
• Organizational Process assets

PLAN PROCUREMENTS
INPUTS
• Marketplace conditions: what products, services & results are available,
at what prices, under what terms & conditions.
• If the performing organization does not have a purchasing or contracting
group, then project team will have to supply both resources & expertise
to perform all procurement activities.
• Formal & informal procurement-related policies, procedures, forms,
guidelines & management systems that are considered in developing
Procurement Management Plan & selecting contract types to be used.
• Existing organisation policies frequently constrain procurement
decisions. Though many a times those policies are devised based on
lessons learned from past projects.

PLAN PROCUREMENTS - INPUTS
Scope Baseline
The scope baseline describes the need, justification, requirements,
and current boundaries for the project. It consists of the following
components:
• Scope statement : It contains the product scope description, service
description, the list of deliverables, and acceptance criteria, as well as
important information regarding technical issues or concerns that could
impact cost estimating. Examples of constraints are required delivery
dates, available skilled resources, and organizational policies.
• Work Breakdown Structure
• WBS Dictionary

Requirements Documentation
Requirements documentation may include:

• Important information about project requirements that is considered
during planning procurements.
• Requirements with contractual and legal implications that may include
health, safety, security, performance, environmental, insurance,
intellectual property rights, equal employment opportunity, licenses, and
permits – all of which are considered when planning for procurements.

Teaming Agreements:
• Legal contractual agreements between two or more entities
to form a partnership or joint venture, or some other
arrangement as defined by the parties.
• The agreement defines buyer-seller roles for each party.
• Whenever the new business opportunity ends, the teaming
agreement also ends.
• When teaming agreement is in effect, the planning process
for the project is significantly impacted.
• When teaming agreement is in place on a project, the roles of
buyer and seller are predetermined, and such issues as scope
of work, competition requirements, and other critical issues
are generally predefined.
Risk Register (Section 11.2.3.1)
Risk-Related Contract Decisions
• They include agreements including insurance, bonding,
services, and other items as appropriate, that are prepared to
specify each party’s responsibility for specific risks.
Activity Resource Requirements (Section 6.3.3.1)
Project Schedule
Activity Cost Estimates
• Cost estimates developed by the procuring activity are used
to evaluate the reasonableness of the bids or proposals
received from potential sellers
Cost Performance Baseline (Section 7.2.3.1)
EEF that can influence the Plan Procurements process include,
but are not limited to:
• Marketplace conditions;
• Products, services, and results that are available in the marketplace;
• Suppliers, including past performance or reputation;
• Typical terms and conditions for products, services, and results or for the
specific industry; and
• Unique local requirements.
OPA that influence the Plan Procurement process include, but
are not limited to:
• Formal Procurement policies, procedures, and guidelines.
• Management systems that are considered in developing the
procurement management plan and selecting the contract
types to be used.
• An established multi-tier supplier system of pre-qualified
sellers based on prior experience.
PLAN PROCUREMENTS -T&T
TOOLS & TECHNIQUES
Expert Judgment
Make or Buy Analysis
Price is not the only consideration. Also consider:
• Exposure of proprietary information

• Difficulty in defining deliverables and communicating externally
• Is this work your core competency?
• Work you want to do in parallel
• Amount of change contemplated
• Time to manage several procurement processes/find sellers
• Skills available within your team/company and their moral if you
outsource
• Special resource requirement-time duration for training, learning curve
etc.
Questions on Make or Buy decisions: can include buy or lease
questions like this.
It costs $300/day to lease an item. It would cost $2000 plus $100/day on

maintenance to buy it. When will lease and purchase costs be equal (in
Days)?
Lease cost = $300/day Investment =$2000 + $100/day

D = # of days when purchase & lease costs will be equal
$300D =$2000 + $100D ( No. of days)

$300D -$100D = $2000 + $100D -$100D (subtract $100D from both sides)
$200D = $2000
D = 10 i.e. 10 days


CONTRACT TYPES
Contract Types
FIXED-PRICE (FP) CONTRACTS
Firm Fixed Price Contracts (FFP)

• Seller to complete the job within a fixed total price.
• The Product has to be well defined ( both seller & buyer are at risk )
Fixed Price Plus Incentive Fee -FPIF

• Seller completes within a fixed total price, plus an extra incentive for
meeting or exceeding certain objectives
e.g. fixed price of $100,000 + $25,000 for completing by a target date

CONTRACT TYPES
Fixed Price Incentive Fee Contracts (FPIF)
• Incentive is based on sellers performance
tied to achieving agreed to metrics.
• Typically such financial incentives are related to cost,
schedule, or technical performance of the seller
• In FPIF contracts, a price ceiling is set, and all costs
above the price ceiling are the responsibility of the
seller, who is obligated to complete the work.
CONTRACT TYPES
Fixed price with Economic Price Adjustment
Contracts (FP-EPA)
• The contract type is used whenever the seller’s performance
period spans a considerable period of years, as is desired
with many long-term relationships.
• It is Fixed price contract, but with a special provision allowing
for pre-defined final adjustments to the contract price due to
changed conditions, such as inflation changes, or cost
increases (or decreases) for specific commodities.
• The EPA clause must relate to some reliable financial index
which is used to precisely adjust the final price. The FP-EPA
contract is intended to protect both buyer and seller from
external conditions beyond their control.
CONTRACT TYPES
COST-REIMBURSABLE (CR) CONTRACTS
• Involves payment (reimbursement) to the seller for seller's actual costs,
plus a fee typically representing seller profit
• May also include financial incentive clauses whenever the seller
exceeds, or falls below, defined objectives such as costs, schedule, or
technical performance targets.
• Three or more common types in use are as given below:
Cost Plus Fixed Fee –CPFF
•Buyer pays all costs plus a fixed fee

• Cost over runs will not increase the fixed fee
• e.g. cost of $100,000 + fixed fee of $15,000 (as profit)

CONTRACT TYPES
Cost Plus Incentive Fee -CPIF
• Buyer pays all costs plus an incentive to beat some criteria
• Criteria might be a cost or time target with a certain formula
• e.g. cost of $100,000 + a pre-determined fee $5000 as
incentive for early delivery
Cost Plus Award Fee contracts (CPAF)

• The seller is reimbursed for all legitimate costs, but the majority
of the fee is only earned based on the satisfaction of certain

broad subjective performance criteria defined and incorporated
into the contract.
• The determination of fee is based solely on the subjective
determination of seller performance by the buyer, and is
generally not subject to appeals.

CONTRACT TYPES
TIME & MATERIAL (T&M) CONTRACTS
• Hybrid type of contractual agreement that contains aspects of both

cost-reimbursable & fixed-price contracts.
• The full value of the agreement and the exact quantity of items to be
delivered is not known when the agreement is made (like a cost
reimbursement contract)
• Based upon unit rates or hourly rates as preset by the Buyer & Seller
for a specific resource category (like a fixed-price contract)

CONTRACT TYPES
Question
Contract cost is estimated to be $210,000 and a fee of $10 ,000 is offered

to the supplier for completing the contract on or before time.
If the contractor beats the cost, both the buyer and the seller will share
the savings at 40:60 ratio.
If the actual cost of the work comes out to $180,000, what will the
Seller get if the contract is completed before time?

CONTRACT TYPES
ANSWER:
Target cost" $210,000

Seller's fee" $10,000
Sharing ratio = 40% buyer / 60% seller
seller Actual cost" $180,000
Cost savings = $210,000 -$180,000 = $30,000

Seller's profit = $10,000 + ( $30,000 X 60% ) = $28,000
Final price to buyer = $180,000 + $28,000 = $208,000

CONTRACT TYPES

CONTRACT TYPES
Spectrum of Risk
• Contract type should be chosen based on the degree of risk (do you
know what will it cost to deliver?)
• Risk increases if scope is not well defined. So defining the scope better
will get you a better contract with less risk for all.
• Risk can affect any/or all of them - time, cost, quality & scope
Contracts - buyer on high risk

• Buyer pays for what it costs to deliver
If costs go up, buyer's price increases, but seller's costs are always
covered.
Contracts - seller on high risk

• Buyer pays for agreed price no matter what it costs to deliver
If costs go up, seller has to absorb them, but buyer has fixed price &
isn't affected.

PROCUREMENT DOCUMENTS
Procurement Documents
RFP (Request for Proposal or Request for Tender) - requests a price and
details on how the work will be carried out, time frame, who will do it,
biography of the team, company experience, etc.
IFB (Invitation for Bid or Request for Bid) -requests one price for all the
work.
Request for Quote (RFQ) -requests a price quote per item, on hourly or
per unit basis.

PLAN PROCUREMENTS - OUTPUTS
Procurement Management Plan

• Describes how the procurement processes will be managed from
developing procurement documentation through contract closure
• The procurement management plan can include guidance for:
• Types of contracts to be used;
• Risk management issues;
• Whether independent estimates will be used and if they are needed
as evaluation criteria;
• Those actions the PM team can take unilaterally, if the performing
organization has a prescribed procurement, contracting, or
purchasing department;
• Standardized procurement documents, if they are needed;

Procurement Management Plan (Contd.)
• Managing multiple suppliers;

• Coordinating procurement with other project
aspects, such as scheduling and performance
reporting;
• Handling the required lead times
• Handling the make-or-buy decisions, etc.
Procurement Statements of Work
• Describes the procurement item in sufficient detail to allow prospective
sellers to determine if they are capable of providing the item.
• Written to be clear, complete & concise.
• Information included in a contract SOW can include specifications,
quantity desired quality levels, performance data, period of performance,
work location & other requirements.
• Include description of any collateral services required, i.e. performance
reporting or post-project operational support for the procured item.
• Contract SOW can be revised as required as it moves through the
procurement process until incorporated into signed contract. Seller may
also modify the SOW by suggesting more efficient approach or a less
costly product than that originally specified.
Make-or-Buy Decisions

Procurement Documents
• Used to seek proposals from prospective sellers e.g.

RFP/RFQ/IFB etc.
• Terms such as bid, tender or quotation are generally used when
the seller selection decision will be based on price;
• RFP is used when other considerations such as technical
capability or technical approach are paramount)
• These documents include,
- Procurement SOW
- Any required contractual provisions
- With government contracting, some or all of the content and
structure of procurement documents can be defined by
regulation.
Source Selection Criteria
• Selection Criteria are often included as a part of the procurement solicitation documents. Such
criteria are developed and used to rate or score seller proposals, and can be objective or
subjective (the proposed Project Manager should be a Certified PMP) or subjective (previous
experience on similar projects)
• Other selection criteria to support an assessment of a complex products, services, or results may
include:
 Understanding of need
 Overall or life-cycle cost
 Technical capability
 Risk
 Management approach
 Technical Approach
 Warranty
 Financial capacity
 Production capacity and interest
 Business size & type
 Past performance of sellers
 References
 Intellectual property rights
 Proprietary rights

and
controlling
12.1 12.2 12.3 12.4

CONDUCT PROCUREMENTS
WHAT HAPPENS IN CONDUCT PROCUREMENTS?
• Conduct Procurements is the process of obtaining Seller responses, selecting a seller, and
awarding a contract (see Figures 12-4 and 12-5 in page 329 of PMBOK)
• In this process, the team will receive bids or proposals and will apply previously defined
selection criteria to select one or more sellers who are qualified to perform the work and
acceptable as a seller.
• On major procurement items, overall process of requesting responses from sellers and
evaluating those responses can be repeated.
• A short list of qualified sellers can be established based on a preliminary proposal. A more
detailed evaluation can then be conducted based on a more specific and comprehensive
requirements document requested from the sellers on the short list. In addition, tools and
techniques described here can be used alone or in combination to select sellers. For
example, a weighting system can be used to:
- Select a single seller that will be asked to sign a standard contract, and
- Establish a negotiating sequence by ranking all proposals by the weighted evaluation
scores assigned to each proposal.

CONDUCT PROCUREMENTS
TOOLS & TECHNIQUES
• Bidder conferences
• Proposal evaluation
techniques
• Independent estimates
• Advertising
• Internet Research
• Procurement negotiations
INPUTS
• Project management plan OUTPUTS
• Source selection criteria • Selected sellers
• Qualified seller list • Procurement contract award
• Seller proposals • Resource calendars
• Project documents • Change requests
• Make-or-buy decisions • Project Mgmt. Plan (updates)
• Teaming agreements • Project document (updates)

CONDUCT PROCUREMENTS - INPUTS
INPUTS
• Source selection criteria
• Qualified seller list
• Seller proposals
• Make-or-Buy Decisions
• Teaming agreements
CONDUCT PROCUREMENTS – T&T
1) Bidder Conferences
Meeting with all prospective sellers and buyers
prior to submittal of a bid or proposal (Read page
331)
2) Proposal Evaluation Techniques

On complex procurements, where source selection
will be made based on seller responses to
previously defined weighted criteria, a formal
evaluation review process will be defined by the
buyer’s procurement policies. The evaluation
committee will make their selection for approval by
management prior to the award.
3) Independent Estimates
4) Expert Judgment
5) Advertising
6) Internet Search

7) Procurement Negotiations
Clarifies the structure & requirements of the contract so that mutual
agreement can be reached prior to signing the contract.
Subjects covered include:
• Responsibilities & authorities
• Applicable terms & law
• Technical & business management approaches
• Proprietary rights
• Contract financing
• Technical solution
• Overall schedule
• Payments
• Price
CONDUCT PROCUREMENTS – Outputs
Selected Sellers
• Those sellers who have been judged to be in a
competitive range based upon the outcome of the
proposal or bid evaluation, and
• Who have negotiated a draft contract that will
become the actual contract when an award is made.
• Final approval of all high-value, high-risk
procurements will generally require organizational
senior mgmt. approval prior to award.
Procurement Contract Award
• A procurement contract is awarded to each selected seller.
• The contract can be in the form of simple purchase order or a
complex document.
• Regardless of the document’s complexity, a contract is a
mutually binding legal agreement that obligates the seller to
provide the specified products, services, or results, and
obligates the buyer to compensate the seller.
• A contract is a legal relationship subject to remedy in the
courts.
• The major components in a contract document will vary, but
will sometimes include the following;
- Statement of work or deliverables,
- Schedule baseline,
- Performance reporting,
- Period of performance,
- Roles and responsibilities,
- Seller’s place of performance,
- Pricing,
- Payment terms,
- Place of delivery
- Inspection and acceptance criteria,
- Warranty,
- Product support,
- Limitation of liability,
- Fees and retainage,
- Penalties
- Incentives,
- Insurance and performance bonds,
- Subordinate subcontractor approvals,
- Change request handling, and
- Termination and alternative dispute resolution (ADR)
mechanisms. The ADR method can be decided in advance as a part of
the procurement award.

and
controlling
12.1 12.2 12.3 12.4

ADMINISTER PROCUREMENT
HOW DO WE ADMINISTER
PROCUREMENT?
• It is the process of managing procurement relationships,

monitoring contract performance, and making changes and
corrections as needed (see Figures 12-6 and 12-7 in page 336).
• Both the buyer and the seller will administer the procurement
contract for similar purposes.
• Each must ensure that both parties meet their contractual

obligations and that their own legal rights are protected.

• The Administer Procurements process ensures that the seller’s performance
meets procurement requirements and that the buyer performs according to the
terms of the legal contract.
• The legal nature of the contractual relationship makes it imperative that the project
management team is aware of the legal implications of actions taken when
administering any procurement.
• Due to varying org. structures, many organizations treat contract administration as

an administrative function separate from the project organization. While a
procurement administrator may be on the project team, this individual typically
reports to a supervisor from a different department. This is usually true if the
performing organization is also the seller of the project to an external customer.
TOOLS & TECHNIQUES
• Contract change control system

• Procurement performance
reviews
• Inspections & audits
• Performance reporting
• Payment systems
• Claims administration
• Records management system
INPUTS
OUTPUTS
• Contract • Procurement documentation
• Performance reports • Organizational process assets
• Approved change requests (updates)
• Project Mgmt. Plan (updates)
ADMINISTER PROCUREMENT- INPUTS
1) Procurement Documents
2) Project mgmt. plan
3) Contract
4) Performance reports
5) Approved change requests
6) Work performance information

ADMINISTER PROCUREMENT- T&T
TOOLS & TECHNIQUES
Contract change control system

• Defines the process to modify a contract
• Includes paperwork, tracking systems, dispute
resolution procedures & approval levels necessary
for authorizing changes, i.e. work authorization
system
Procurement performance reviews

Inspections and audits
• Required by the buyer & supported by
the seller as specified in contract
documentation.
• If authorized by contract, some
inspections and audit teams can
include buyer procurement personnel.
• Performance Reporting
How effectively the seller is achieving
contractual objectives
• Payment systems
Payments to the seller are typically
processed by the accounts payable system
of the buyer after certification of satisfactory
work by an authorized person on the project
team. Strictly as per terms of contract.
• Claims administration
Contested changes and potential constructive
changes are those requested changes where the
buyer and seller cannot reach an agreement on
compensation for the change, or cannot agree that a
change has occurred. These contested changes are
variously called claims, disputes, or appeals.
Preferred method of claims/dispute settlement is
through negotiation.
It is used by the PM to manage contract and
procurement documentation and records (it is a part
of PMIS, section 4.3.2.2)
ADMINISTER PROCUREMENT- OUTPUTS
OUTPUTS
1) Procurement documentation
It includes, but not limited to, the procurement
contract with all supporting schedules, requested
unapproved contract changes, and approved
change requests. It also includes any seller-
developed technical documentation and other work
performance information such as deliverables, seller
performance reports, warranties, financial
documents including invoices and payment records,
and the result of contract-related inspections.

ADMINISTER PROCUREMENT- OUTPUTS
2) Organizational Process Assets

(updates) – Read page 340
3) Change Requests
4) Project Mgmt. Plan (updates)

- Procurement mgmt. plan
- Baseline schedule (must be updated to reflect
the current expectations

and
controlling
12.1 12.2 12.3 12.4

CLOSE PROCUREMENTS
WHAT HAPPENS IN CLOSE PROCUREMENTS?
• Close procurements process supports the close project process

• Verifies that all work and deliverables were acceptable
• Administrative activities, such as update records to reflect final
results and archive them for future use
• In multi-phase projects, the terms of a contract may only apply to a
given phase of the project.
• Unresolved claims may be subject to litigation after close procurements.
• Contract terms & conditions can prescribe specific procedures for
close procurements.
• Early termination of a contract is a special case of close procurements
& can happen when the buyer & seller mutually agree or when there's
contract default

CLOSE PROCUREMENTS
TOOLS & TECHNIQUES

• Procurement audits
• Negotiated settlements
INPUTS OUTPUTS
• Procurement management plan • Closed procurements
• Procurement documentation
(updates)

CLOSE PROCUREMENTS - INPUTS
INPUTS
• Procurement Management Plan

• Procurement Documentation

CLOSE PROCUREMENTS – T&T
TOOLS & TECHNIQUES
Procurement Audits
• Structured review of all the procurement
process from Plan Procurement process
through Administer Procurements
• Objective is to identify successes & failures
that warrant recognition in the preparation
and administration of other procurement
contracts on the project, or on other project
within the performing organization.
CLOSE PROCUREMENTS – T&T
Negotiated Settlements
• In all procurement relationships the final equitable settlement
of all outstanding issues, claims, and disputes by negotiation
is a primary goal.
• Whenever settlement cannot be achieved through direct
negotiation, some form of alternative dispute resolution (ADR)
including mediation or arbitration may be explored.
• When all else fails, litigation in the courts is the least desirable
option.
Records Management System (see section12.3.2.7)
CLOSE PROCUREMENTS - OUTPUTS
OUTPUTS
Closed Procurements
• The buyer, usually through the authorized procurement
administrator, provides the seller with formal written notice that
the contract has been completed

• Procurement file -a complete set of indexed records
• Deliverable acceptance (or rejection)
• Lessons learned documentation

Question
All the following are true statements about 'Just In Time

Manufacturing' except:
A. It emphasizes waste reduction.

B. It eliminates costs related to material handling, storage,
paperwork and inspection.
C. It emphasizes short-term relationships with suppliers that last
until the delivery is received.
D. It reduces inventory to zero or the re-order level.

Answer - C
All are true except C.

Amongst the true one’s - But the best answer would be D (for exam).
Just-in-time manufacturing is a process where inventory is
delivered to the factory by suppliers only when it's needed.

Questions?

DAY 5
PROFESSIONAL & SOCIAL

RESPONSIBILITY
PMP Prep – Responsibilities Slide 1

AGENDA
Day 1 DAY 4
DAY 2 DAY 5
DAY 3 DAY 6
PROFESSIONAL RESPONSIBILITY
Responsibilities to the Profession
 Compliance with all organizational (PMI) rules & policies
 Candidate/Certificant Professional Practice
 Advancement of the Profession
Responsibilities to Customers & the Public

 Qualifications, experience & performance of professional services
 Conflict of interest situations & other prohibited professional conduct
Administration of Code of Conduct

• By becoming PMP, you agree to abide by this code of conduct.
• PMI reserves the right to suspend or revoke the credentials of any PMP
who is determined to have committed a violation of this code.

RESPONSIBILITIES TO THE PROFESSION
COMPLIANCE WITH ALL ORGANIZATIONAL (PMI) RULES & POLICIES
• Provide accurate and truthful information directly or indirectly related

to all aspects of PMI Certification Program
• Responsibility to report violations of the PMP Code of Professional

Conduct by individuals in the field of project management
• Responsibility to cooperate with PMl concerning ethics violations and

the collection of related information
• Responsibility to disclose to clients, customers, owners or contractors,

significant circumstances that could be construed as a conflict of
interest or an appearance of impropriety

CANDIDATE/CERTIFICANT PROFESSIONAL PRACTICE
 Responsibility to provide accurate, truthful advertising and
representations concerning qualifications, experience and
performance of services
 Responsibility to comply with applicable laws, regulations and ethical

standards governing professional practice in the state/province and/or
country when interacting with PMI and when providing project
management services
 Responsibility to act in an honest & ethical manner when interacting

with PMI and when providing PM services (another word for ethical is
moral & the dictionary description of ethical is 'Being in accordance
with the accepted principles of right & wrong that govern the conduct
of a profession')
 Responsibility to maintain and respect the confidentiality of the contents

of the PMP credential exam.
ADVANCEMENT OF THE PROFESSION
• Responsibility to recognize & respect intellectual property developed

or owned by others, and to otherwise act in an accurate, truthful and
complete manner, including all activities related to professional work
and research.
• Responsibility to support & disseminate the PMP Code of Professional

Conduct to other PMI certificants.

RESPONSIBILITIES TO CUSTOMER AND PUBLIC
QUALIFICATIONS, EXPERIENCE & PERFORMANCE OF
PROFESSIONAL SERVICES
• Provide accurate & truthful representations to the public in

advertising, public statements and in the preparations of estimates,
concerning costs, services & expected results
• Maintain & satisfy the scope & objectives of professional services,

unless otherwise directed by the customer
• Maintain & respect the confidentiality of sensitive information

obtained in the course of professional activities or otherwise where a
clear obligation exists

RESPONSIBILITIES TO CUSTOMER AND PUBLIC
CONFLICT OF INTEREST SITUATIONS & OTHER
PROHIBITED PROFESSIONAL CONDUCT
• Ensure that a conflict of interest does not compromise legitimate

interests of a client or influence/interfere with your professional
judgments
• (Don't make/participate in a decision if there's an opportunity to

further your own interests or those of an associate, friend or family
member)
• Refrain from offering or accepting inappropriate payments, gifts or

compensation for personal gain unless in conformity with applicable
laws & customs of the country where PM services are being provided

ADMINISTRATION OF CODE OF CONDUCT
ADMINISTRATION OF CODE OF CONDUCT
• By becoming a PMP, you agree to abide by this Code of Conduct
• PMI reserves the right to suspend or revoke the credential of any

PMP who is determined to have committed a violation of this
Code
SUMMARY
• Truthfully report information about your PMP status & PM experience.
• You're responsible for the integrity of the PM process, the product &
yourself.
• Avoid putting your own personal gain above project objectives.
• Abide by laws, rules, & regulations of the country you're working in.
• Report instances that might appear to be a conflict of interest. It's

always better to inform others of an apparent conflict than to have it
discovered later & your methods called into question.
• Deal with problems.

SUMMARY
• Always strive to maintain honesty in project reporting.
• Respect the use of confidential information and intellectual property &

always verify who has permission to access it & when disclosures are
required.
• Balance the needs & interests of stakeholders with project objectives.
• Respect and understand cultural differences & don't impose your

beliefs on others.
• Culture shock is when you find yourself in a different cultural

environment than you're familiar with. Diversity training can help
project team members with relationship management techniques
about cultural & ethnic differences.
Questions?

Project Integration Management

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DAY 1

PMP Prep – Integration Slide 1

Major Project Documents - generated by the project

• Project Management Plan – documents the actions

PMP Prep - Integration Slide 2

• an information system, consisting of the tools and techniques used to

PMP Prep - Integration Slide 3

- identify and document the functional and physical characteristics of a

Change Control System - is a collection of formal documented procedures that

PMP Prep - Integration Slide 4

Coordinate all knowledge area processes

PMP Prep - Integration Slide 5

PMP Prep – Integration Slide 6

4.1 Develop Project Charter

4.2 Develop Project Management Plan

4.3 Direct & Manage Project Execution

PMP Prep – Integration Slide 7

4.5 Monitor & Control Project Work

4.6 Perform Integrated Change Control

4.7 Close Project or Phase

PMP Prep – Integration Slide 8

PMP Prep – Integration Slide 9

• Project purpose or justification,

PMP Prep – Integration Slide 10

Tools & Techniques

PMP Prep – Integration Slide 11

Project Statement of Work

PMP Prep – Integration Slide 12

• Business need - an organization’s business need can be based on needed

• Product scope description – documents the product requirements and

PMP Prep – Integration Slide 13

Enterprise Environmental Factors

These are examples

• Organizational standard processes, policies, and standardized process

• Templates (e.g. project charter template); and

• Historical information and lessons learned knowledge base.

It is available from many sources, including:

PMP Prep – Integration Slide 17

Project Selection Methods

• Mostly financial considerations are used.

These methods generally fall into one of two broad categories:

PMP Prep – Integration Slide 18

Weighted Scoring Model (benefit measurement method)

A systematic process for selecting projects based on criteria (example on next

• First, decide on a list of criteria used for project selection

Note: Also used for selecting contractors/sellers (Procurement)

PMP Prep – Integration Slide 19

PMP Prep – Integration Slide 20

Cash Flow Techniques

PMP Prep – Integration Slide 21

Example -Which project is worth more?

Project Y is worth more.

PMP Prep – Integration Slide 22

PMP Prep –Integration Slide 23

You're managing a software project for a manufacturing company. A new

PMP Prep - Integration Slide 24

Since PV=FV/(1 +i)n

Therefore, NPV = $90,909 -$50,000 == $40,909

PMP Prep – Integration Slide 25

Sunk Cost (Incurred Cost):

PMP Prep - Integration Slide 26

Internal Rate of Return (IRR)