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Project Fundamentals

1. A project is a temporary endeavor. Projects are unique and non-repetitive. Building a

road is an example of a project. The process of building a road takes a finite amount of
time, and produces a unique product. Operations on the other hand are repetitive.
Delivering mail every day is an example of operation.
2. The characteristics associated with a project are - unique purpose, temporary in nature,
require resources (often from various domains), should have a primary sponsor and/or
customer, and involves uncertainty.
3. Project management is the application of knowledge, skills, tools, and techniques to
project activities in order to meet project requirements
4. A program consists of a related group of projects. Projects are finite where as programs
are ongoing and continuous. Programs may be repetitive and cyclic. In some cases
Project Management is a subset of Program Management. The project manager may
report to the program manager in such cases. A portfolio consists of multiple programs.
5. A subproject is a subset of a project. Subprojects can be subcontracted. Technical or
Functional Manager may be in charge of a subproject.
6. Type of organization - This is an important concept to understand for the PMP exam. The
type of organizations in decreasing order of Project Manager's authority are o Projectized
o Strong Matrix
o Weak Matrix
o Functional
Project Manager has maximum authority in a Projectized organization and least authority
in a Functional organization. In Functional organizations staff is organized based upon
their specialty, such as engineering or sales. In these organizations, functional managers
are responsible for specialized departments like marketing. In Functional organization,
the role of Project Manager is limited. In Projectized organization, PMs have more
authority and independence. All the persons in the project team report to the Project
Real situations are a mixture of functional and projectized organizations. These mixed
situations are called matrix organizations. Strong matrix organizations have
characteristics of projectized organizations. Weak matrix organizations have
characteristics of functional organizations.
7. Leadership style varies from autocratic to democratic. Shared leadership involves team
members taking most of the decisions. It encourages team development.
8. Project Management consists of nine Knowledge Areas. These are
o Project Integration Management
o Project Scope Management
o Project Cost Management
o Project Time Management
o Project Risk Management
o Project Quality Management
o Project HR Management
o Project Communication Management
o Project Procurement Management
Each Knowledge area has further Processes. There are a total of 44 processes. Each
process has inputs, outputs and "tools and techniques" (ITTO). The PMBOK primarily
covers each of the processes and it's ITTO in detail. You need to understand the
concepts related to each of the input, output and "tools and techniques".

9. Further the discipline of Project Management has five process groups. These are o Initiation
o Planning
o Execution
o Control
o Closure
Each process is part of one of these five project phases. It is important to know the
process group for each of the 44 processes.
10. Project Sponsors are primarily involved in funding the project. Tasks performed by project
sponsor include
o Provides financial support
o Accepts the project during scope verification
o May provide key milestone and deliverables due dates
o Does not sign the Project Charter. This is done by Senior Management.
Tasks performed by the senior management include

Issues the project charter

Helps organize the work into projects
Helps identify risks
Approves the final project plan

Stake-holders are all the individuals that are concerned with the project. Stakeholders
have vested interest in the outcome of the project. They include project team members,
customers, management, and other individuals who get impacted by the project. Stake
holders role includes o Distributed information during the project.
o Notified of project plan changes
o Are listed in the project team directory.
o Become risk owners.
11. At the end of each project phase, reviews against a set of metrics are performed. If the
project fails to meet these metrics, the project may not be allowed to continue. These
phase end reviews are called Stage gates or Phase exits.
12. At the beginning of the project there is less cost and demand for resources. Also there is
a higher risk of failure at the beginning of the project.

Project Integration Management

1. The knowledge area of Project Integration Management consists of the following seven
processes Project Integration Processes


Key Deliverables

Develop Project Charter


Project Charter

Develop Preliminary Project Scope



Preliminary Project Scope


Develop Project Management Plan


Project Management Plan

Direct and Manage Project Execution



Manage and Control Project Work


Requested Changes

Integrated Change Control


Approved Change Requests

Close Project


Final product

2. A project charter
o Formally authorizes the project.
o Gives the objectives and business case
o Identifies the Project Manager.
o Generic enough not to change often.
o Written by a Manager higher in authority than Project Manager.
o Includes name, description, deliverables
o A project does not start unless it has a Project charter.
3. During project execution the project team focuses on completing the tasks assigned. The
Senior Management protects the project from changes and loss of resources. The Project
Manager integrates all the pieces into the project as a whole.
4. The Inputs, Tools and Techniques, and Outputs of the Project Plan Development process
are given in the table below.
Project Plan Development

Tools & Techniques

Other Planning outputs Project Planning Methodology

Historical Information

Stake holder skills and Knowledge

Organizational Policy

Project Management Information System (PMIS)


Earned Value Management (EVM)

Project Plan

5. At the end of each phase of a project, a lessons learned document must be prepared.
The lessons learned document defines what was done right, wrong etc. It is required to
be completed in order for the project to be completed.
6. Project Management Information System (PMIS) is a system that keeps track of status of
all the project tasks. It is used to track the status of the project. The exam does not focus
on any specific system (for example Microsoft Project ).

7. Project Plan is developed by Project Manager with inputs from the team, stake holders
and management. Project Plan development is iterative. A project plan is bought into,
approved, realistic and formal.
8. A Project Plan includes o Project Charter
o Budget
o Schedule
o Resources
o Scope Statement
o Responsibility charts/assignments
o Management Plans
9. Project baseline refers to the original version of the project plan.
10. Progressive Elaboration involves the process of taking a project from concept to
detailed design.
11. Kick-off meeting happens after the planning phase and before the project execution. It is
typically used to communicate responsibilities of key stake holders.
12. Change Control Board is formed to review change requests. It is used to approve or
reject change requests. After the project scope has been baselined, each requested
change must go through a change control review process.
13. Project Manager needs to be proactive in looking for deviations from project plan and
then take timely corrective action. After that the Project Manager needs to evaluate the
effectiveness of corrective action, and measure performance of corrective action, and
then determine the need for further corrective action.
14. When a change request is received, the following steps must be taken (in this order) 1. Evaluate (assess) the impact of change to the project
2. Create alternatives including cutting other tasks, crashing, fast-tracking etc.
3. Meet with management, sponsors etc.
4. Meet with the customer if necessary

Project Scope Management

This chapter covers key concepts related to Project Scope Management.
1. The knowledge area of Project Scope Management consists of the following processes Scope Management Processes

Project Phase

Key Deliverables

Scope planning


scope management plan

Scope definition


project scope statement

Create WBS


WBS, WBS dictionary

Scope verification Control

Acceptance deliverables

Scope control

Requested Changes


2. The knowledge area of Scope Management includes the processes required to ensure
that the project includes all the work, and only all the work required to complete the
project successfully. It is primarily concerned with controlling what is and what is not in
the scope.
3. Project Portfolio Management is the process of project selection. It involves making a
decision about which project an organization should execute.
4. There are two types of project selection methods. These are
o Benefits Measurement
o Constrained Optimization
5. Benefits Measurement project selection methods involve comparing the values of one
project against another. There are the following type of Benefit Measurement project
selection techniques o Murder Boards - This involves a committee asking tough questions from each
o Scoring Models - Different projects are given scores based on certain defined
criteria. Project with higher score is selected.
o Benefits Cost Ratio - This technique involves computing benefits to cost ratio
(BCR) for a project. Project with higher BCR is selected.
o Payback period - This technique involves considering how long it takes back to
"pay back" the cost of the project. Inflation or interest earned in not considered in
this technique. A project with lower pay back period is better.
o Discounted Cash Flow - This technique takes into account the interest earned on
the money. The Future Value (FV) of projects is compared.
PV is the present value of the project. A project with higher present value is
o Internal Rate of Return (IRR) - A project that has higher IRR is better, as it is
giving higher return on money.
6. Constrained Optimization Project selection methods are used for large projects. These
are techniques based on mathematical models. The Constrained Optimization techniques
are o Linear Programming
o Non-Linear Programming
o Integer Algorithm
o Dynamic Programming
o Multi-objective Programming

7. Expected monetary value of a project (or expected value) is equal to probability*impact.

So if probability of a project's success is 20% and revenue earned if successful is
$100000, then the net value of the project will be $20,000. A project with higher net value
should be selected when performing project selection.
8. Management by Objective (MBO) is a management philosophy with three objectives o Establish unambiguous and realistic objectives
o Periodically Evaluate if objectives are being met
o Take corrective actions.
MBO works only if management supports it.
9. The tools and techniques of the Scope planning process are - Expert Judgment and
"Templates, forms and standards". The process has only one output - Project Scope
Management Plan.
10. Work Breakdown Structure (WBS) is an important part of the exam. It is a graphical
representation of the hierarchy of the project. The WBS template can be reused across
projects. WBS forces the project team to think through all the levels of the project. If a
task is not in the WBS, then it is not part of the project.
11. 8/80 rule for WBS - No task should be less than 8 hours or more than 80 hours.
12. WBS dictionary explains all the WBS components. Also WBS is input to most of the
planning processes. Specifically WBS is input to the following processes o Cost Estimating
o Cost Budgeting
o Scope control
o Activity Definition
o Plan Purchases and Acquisitions
13. The Scope Verification is the process in which the project customer formally accepts the
project deliverables. Scope Verification happens at the end of each phase. It is the
customer feedback on a detailed basis. While Scope Verification focuses on customer
acceptance, Quality Control focuses on correctness of work.
14. The table below gives inputs, Tools & Techniques, and Outputs of the Scope Verification
Scope Verification Process
Project Scope Statement

Tools &

Accepted Deliverables

WBS Dictionary

Requested changes

Project scope management


Recommended corrective

Project Plan

Project Time Management

This chapter covers key concepts related to Project Time Management.
1. The knowledge area of Project Time Management consists of the following processes Time Management Processes

Project Phase

Key Deliverables

Activity Definition


Activity List, Milestone list

Activity Sequencing


Project Schedule network diagrams

Activity Resource Estimating Planning

Activity resource requirements,

Resource breakdown structure

Activity Duration Estimating Planning

Activity duration estimates,

Activity attributes (updates)

Schedule Development


Project Schedule, Schedule model data

Schedule Control


Performance measurements,
Requested changes

2. Inputs to Activity Definition process are o Enterprise environmental factors

o Organizational process assets
o Project Scope Statement
o WBS Dictionary
o Project Management Plan
3. The Activity Sequencing process has the following inputs and Tools and Techniques Activity Sequencing Process

Tools and Techniques

Project scope statement

Precedence diagram method (PDM) or AON

Activity List

Arrow diagram method (ADM) or AOA

Activity attributes

Schedule Network Templates

Milestone list

Dependency determination

Approved change requests Applying leads and lags

4. Tools and Techniques for Activity Duration Estimating process are o Expert Judgment
o Analogous Estimating
o Parametric estimating
o Three point estimating
o Reserve analysis

5. The Schedule Development process has the following inputs and Tools and Techniques Schedule Development Process

Tools and Techniques

Organizational process assets

Schedule network analysis

Project scope statement

Critical path method

Activity List

Schedule Compression

Activity attributes

What-if scenario analysis

Project Schedule Network diagram Resource levelling

Activity Resource requirements

Critical chain method

Resource Calendars

Project Management Software

Activity duration estimates

Applying calendars

Project Management Plan Risk Register

Adjusting Leads and Lags

Schedule Model

6. Bar charts (or Gantt charts) are used to display tasks and their dates in a graphical
fashion. They are used to display information of the type task 1 is scheduled from date A
to date B. Typically the date range is displayed in the X-axis and the tasks on the Y-axis.
Bar charts do not show task dependencies. They are generally used to track progress
and show to the team.
7. Milestone charts are similar to bar charts but display only major events. They display
major milestones (for example bridge design completed). They are used to report status
to Management.
8. Network diagrams are used to display activities and their dependencies. Network
diagrams can be used to perform critical path analysis. Network diagrams can also be
used to perform crashing and fast tracking of the project.
There are two type of network diagrams o Activities on Node (or Precedence)
o Activities on Arrow (or AOA)
Precedence is most commonly used. AON and AOA cannot have loops or conditional
9. An activity in a network diagram is displayed as shown below.
Activity name
Activity Number Estimate
10. As an example Documentation

5 days

11. In the above example Documentation is activity number 2 and is estimated to last 5 days.

12. Precedence (or Activity on Node) diagrams can be used to display four type of
relationship between activities. These are
o Finish-To-Start
o Start-To-Start
o Start-To-Finish
o Finish-To-Finish
Finish-to-start relationship means the dependent activity cannot start until the first activity
is finished. This is the most common way to represent relationships between activities.
13. Activity on Array (AOA) network diagrams have the following characteristics.
o AOA only uses Finish-To-Start relationship between tasks.
o PERT and CPM can only be used with AOA.
o Dummy events are shown with dotted lines. They do not take any time. They
show dependencies between tasks.
14. Longest path through the network diagram is called the critical path. The activities on the
critical paths are called critical activities.
15. Lags are inserted waiting times in between tasks. For example Task B cannot start until
three days after task A completes.
16. Slack or Float is the amount of time a task can be delayed without delaying the project.
Tasks on the critical path have zero float.
17. Critical Path Method (CPM) has the following characteristics.
o It uses one time estimate per activity
o It can be drawn only using AOA diagrams
o It can have dummy events
18. Program Evaluation and Review Technique (PERT) has the following characteristics.
o It uses three estimates per activity - optimistic, pessimistic and most likely
o It can be drawn only using AOA diagrams
o It can have dummy events
19. PERT utilizes more information than CPM as it considers the "Pessimistic" and
"Optimistic" values in addition to the "Most Likely" value in its calculations. The following
are formulae used by PERT Mean = (P + 4M + O)/6
Standard Deviation = (P-O)/6
Variance = ((P-O)/6)2
Here P is the pessimistic estimate, O is the optimistic estimate and M is the most likely
20. GERT is another type of network diagram. It can support looping.
21. If a project has more than one critical paths then the risk to the project increases.
22. Resource levelling refers to keeping the resources same across the duration of the

Project Cost Management

This chapter covers key concepts related to Project Cost Management.
1. The knowledge area of Project Cost Management consists of the following processes Project Cost Processes

Project Phase

Key Deliverables

Cost Estimating Planning

Activity Cost Estimates,

Cost Management Plan

Cost Budgeting Planning

Cost Baseline

Cost Control

Cost Estimates (updates),

Cost baseline (updates)


2. Alternative identification process identifies other solutions to an identified problem.

3. Value Analysis approach is used to find more affordable, less costly methods for
accomplishing the same task.
4. The Cost Estimation process takes the following inputs o Enterprise environmental factors
o Organizational process assets
o Project scope statement
o WBS dictionary
o Project Management plan Schedule Management plan,
Staffing Management plan,
Risk register
5. Depreciation is technique used to compute the estimated value of any object after few
years. There are three type of depreciation techniques. These are
o Straight line depreciation The same amount is deprecated (reduced) from the
cost each year.
o Double-declining balance - In the first year there is a higher deduction in the
value - twice the amount of straight line. Each year after that the deduction is
40% less than the previous year.
o Sum of year depreciation - Lets say the life of an object is five years. The total
of one to five is fifteen. In first year we deduce 5/15 from the cost, in second year
we deduce 4/15, and so on.
6. Analogous Estimating is an estimating technique with the following characteristics o Estimates are based on past projects (historical information)
o It is less accurate when compared to bottom-up estimation
o It is a top-down approach
o It takes less time when compared to bottom-up estimation
o It is a form of an expert judgment
7. In Parametric Modeling Estimation, you use a mathematical model to make an
estimate. It is of two types.
o Regression Analysis is a mathematical model based upon historical
o Learning Curve model is based upon the principal that the cost per unit
decreases as more work gets completed.
8. Bottom up estimation is same as WBS estimation. It involves estimating each work item
and adding the estimates to get the total project estimate.

9. You can expect five to ten questions related to Earned Value Management. These are
generally pretty simple once you have good understanding of the concepts, and
remember the formulae. These formulae are explained below.
10. Planned Value (PV) refers to what the project should be worth at this point in the
schedule. It is also referred as BCWS (Budgeted Cost of Work Scheduled).
11. Earned Value (EV) is the physical work completed to date and the authorized budget for
that. It is also referred as BCWP (Budgeted Cost of Work Performed).
12. Actual Cost (AC) is the actual amount of money spent so far. It is also referred as
ACWP (Actual Cost of Work Performed).
13. Estimate at Completion (EAC) refers to the estimated total cost of the project at
14. CPI refers to Cost Performance Index. It is defined as
If CPI is less than 1, this means that the project is over budget.
15. BAC refers to Budget at Completion. It is related to EAC.
16. ETC refers to Estimate to Completion. It is defined as
17. CV refers to Cost Variance. It is defined as
CV = EV - AC
18. SV refers to Schedule Variance. It is defined as
SV = EV - PV
Negative cost or schedule variance means that project is behind in cost or schedule.
19. SPI refers to Schedule Performance Index. It is defined as
20. VAC refers to Variance at Completion. It is defined as
21. The process of Cost budgeting defines time phased cost estimates for the project. For
example, in the first month the project will require $10,000. Cost estimating involves
defining cost estimates for tasks. Cost budgeting defines cost estimates across time.
22. The tools and techniques used for Cost Estimating are o Analogous estimating
o Determine resource cost rates
o Bottom-up estimating
o Parametric estimating
o Project Management software
o Vendor bid analysis
o Reserve analysis
o Cost of quality
23. Cost baseline refers to what is expected to be spent on the project. It is usually an Scurve. That is the expenditure is less in the beginning, and the end. The expenditure is
maximum during the middle of the project.
24. The after project costs are called life cycle costs.

Project Risk Management

This chapter covers key concepts related to Project Risk Management.
1. The knowledge area of Project Risk Management consists of the following processes Risk Management Processes

Project Phase

Key Deliverables

Risk Management Planning Planning

Risk Management Plan

Risk Identification


Risk register

Qualitative Risk Analysis


Risk register (updates)

Quantitative Risk Analysis


Risk register (updates)

Risk Response Planning


Risk related contractual agreements

Risk Monitoring and Control Control

Requested changes

2. A project risk is a potential source of deviation from the project plan. Project risks can
have a negative or positive impact on the project. Project risks that are negative are
called threats. Project risks that are positive are called opportunities.
3. Responses to threat include -o Reducing the probability of risk
o Developing contingency plans
o Passively accepting consequences.
o Transferring risk
Insurance is an example of transferring risk.
4. Non-critical risks should be documented. They should be revisited and reviewed
5. Risks are identified in all phases.
6. Work-around refers to how to handle risks that have occurred but are not part of risk
response plan. This happens in risk monitoring and control phase.
7. Delphi technique is most commonly used to obtain expert opinions on technical issues. It
can be used to get inputs on Scope, Estimates or Risks. Some characteristics of the
Delphi technique are o The experts identities are anonymous. They are not in the same room.
o The PM tries to build a consensus among the experts.

Project Quality Management

This chapter covers key concepts related to Project Quality Management.
1. The knowledge area of Project Quality Management consists of the following processes Quality Management Processes
Quality Planning

Project Phase

Key Deliverables
Quality Management Plan,
Quality Metrics,
Quality baseline

Perform Quality Assurance Execution

Requested changes

Perform Quality Control

Quality control measurements


2. Grade refers to category or rank given to entities having same functional use but different
technical characteristics. As an example, for different grades of hotels, the customers
expectations are different. Poor grade may be acceptable, but poor quality is not.
3. The aim of quality is to ensure "Conformance to requirements" and "fitness for use".
4. Quality Policy defines the company goals and how to adhere to them. This acts as an
input to Quality Planning for a project.
5. Deming suggested a process of Plan-Do-Check-Act to improve quality. According to
Deming, each process should go through these steps to improve the quality.
6. Kaizen Theory - Apply continuous small improvements to reduce costs and ensure
7. Marginal Analysis - You compare the cost of incremental improvements against the
increase in revenue made from quality improvements. Optimal quality is reached when
cost of improvements equals the costs to achieve quality.
8. The value of sigma of Normal Distribution are given below. These are important for the
Normal Distribution Sigma values

Percentage covered

One sigma


Two sigma


Three sigma 99.73%

Six sigma


9. Based on the above table, we can see that in six sigma one out of 10,000 items can have
defects. In three sigma, twenty seven out of 10,000 items can have defects.
10. The following are inputs to Quality Planning Process o Enterprise environmental factors
o Organizational process assets
o Project Scope statement
o Project management plan
11. Giving extras i.e. doing more than the project scope is called gold-plating. PMI does not
recommend gold-plating.
12. Quality must be planned in and not inspected in. Prevention is more important than
13. The following are tools and techniques for Quality Planning process -




o Benefit/Cost Analysis
o Benchmarking
o Additional quality planning tools
o Design of experiments
o Cost of quality
Quality Assurance is done during execution of the project. It includes
o Process of evaluating overall performance on a regular basis
o Re-evaluating quality standards
o Quality audits - structured review of quality activities that identify lessons learned.
These lessons learned are used for process improvement.
Perform Quality Control focuses on correctness of work. It includes inspections. The tools
and techniques used for Quality Control are o Cause and effect diagram
o Control charts
o Flowcharting
o Histogram
o Pareto chart
o Run chart
o Scatter diagram
o Statistical Sampling
o Inspection
o Defect repair review
In Just-In-Time (JIT) Quality, the amount of inventory is zero. The inputs are made
available, just when they are required. This reduces the storage cost.
Rule of seven : In control charts, if there are seven points on one side of mean, then an
assignable cause must be found.
The process of Analogous Estimation involves looking at the history of past projects,
and use them to make estimates.

Project HR Management
This chapter covers key concepts related to Project HR Management.
1. The knowledge area of Project HR Management consists of the following processes HR Management Processes

Project Phase

Key Deliverables

Human Resource Planning Planning

Organization Chart,
Roles and responsibilities,
Staffing Management Plan

Acquire Project Team


Project Staff assignments

Develop Project Team


Team performance assessment

Manage Project Team


Requested changes

2. The table below gives the inputs, and tools and techniques for the Human Resource
Planning process Human Resource Planning Process

Tools and Techniques

Enterprise environmental factors

Organization charts and

position descriptions

Organizational process assets

Organizational Theory

Project Management Plan Activity resource requirements


3. Responsibility Assignment Matrix (RAM) defines who does what. The Staffing
Management Plan defines when will people get added and removed from the project.
4. A Project Manager may yield authority over the project team in one of the following ways
o Referent - project team knows the PM
o Formal Power - Power due to Project Managers position
o Technical Power - Project Manager has strong technical skills in the projects
o Coercive Power - The project team is afraid of the power the Project Manager
5. Conflicts in the team are caused due to the following reasons in decreasing order of
o Schedules
o Project Priorities
o Resources
o Technical Opinions
So the most common cause of conflicts in projects are issues related to schedules.
6. Conflicts are best resolved by those in the team.
7. There are standard conflict resolution techniques available to resolve conflicts. These are
(from best to worst) -

Problem Solving or Confrontation (look at the facts, analyze them and find a
solution). This is an example of win-win situation.
o Compromising (Find the middle route). This is an example of loose-loose
o Withdrawal or Avoidance
o Smoothing (Emphasize the agreements)
o Forcing (Do it my way). This is an example of win-loose situation.
The process of problem solving has these steps o Define the cause of the problem
o Analyze the problem
o Identify solution
o Implement a decision
o Review the decision, and confirm that the problem is solved.
War room is a technique for team building. As part of this the project team meets in one
room. It helps to create a project identity.
Halo Effect is the assumption that because the person is good at a technology, he will be
good as a project manager.
There are many organizational theories. Some of the main ones are - Expectancy
Theory, McGregory Theory, Herzberg Theory, Maslow's Hierarchy of needs.
Expectancy Theory - People accept to be rewarded for their efforts. This is a motivation
factor. People put in more efforts because they accept to be rewarded for their efforts.
McGregory Theory of X and Y - There are two type of employees. Employees of type X
need to be always watched. They cannot be trusted and need to be micro managed.
Employees of type Y, on the other hand, are self-motivated. They can work
Herzberg Theory - Hygiene factors (salary, cleanliness etc.) if not present can destroy
motivation. However good hygiene alone does not improve motivation. What motivates
people is the work itself. The motivation factors for employees include responsibility, selfactualization, growth, recognition etc.
Maslow's Hierarchy of needs - there are various levels of needs for an employee.
When a lower level is met, employee attempts to reach the next higher level. The
maximum satisfaction is achieved when the employee reaches the highest level of
satisfaction - self-fulfillment. These level of needs from the highest to lowest are o Self-fulfillment
o Esteem
o Social
o Safety
o Physiology





Project Communication Management

This chapter covers key concepts related to Project Communication Management.
1. The knowledge area of Project Communication Management consists of the following
processes Communication Management Processes

Project Phase

Key Deliverables

Communication Planning Planning

Communication Management Plan

Information Distribution


Organization process
assets (updates)

Performance Reporting


Performance Reports

Manage Stakeholders


Resolved issues

2. Communication Management Plan defines how and when the various stakeholders
receive information, and communicate with each other.
3. Memos, emails are examples of non-formal communication.
4. The total number of communication channels between n stakeholders is n(n-1)/2. So if
there are ten stakeholders in a project, there are 45 channels of communication.

Project Procurement Management

This chapter covers key concepts related to Project Procurement Management.
1. Procurement Management involves getting work done by people outside the project
team. The knowledge area of Project Procurement Management consists of the following
processes Procurement Management Processes

Project Phase

Key Deliverables

Plan Purchases and Acquisitions Planning

Procurement Management Plan

Plan Contracting


Contract Statement Of Work,

Evaluation Criteria

Request Seller Responses


Sellers list, Proposals

Select Sellers


Selected Sellers,

Contract Administration


Contract Changes

Contract Closure


Closed Contracts

2. Procurement Planning involves build versus buy decisions.

3. A contract is a formal agreement. It is a legal document biding to both seller and buyer.
Changes to contract must be in writing and formally controlled. Most Governments back
all contracts by providing a court system.
4. Sole Source refers to a market condition in which only one qualified seller exists in the
Single Source refers to a market condition in which the company prefers to contract with
only one seller.
Oligopoly refers to a market condition where very few sellers exist, and the action of one
seller will have impact on other seller prizes.
5. Contract can be used as a risk management tool, as in transferring risk.
6. Centralized Contracting refers to a separate contracting office that handles contracts for
all projects. In De-centralized Contracting a contract administrator is assigned for each
7. Force majeure is a powerful and unexpected event, such as hurricane or other disaster.
8. Privity is contractual information between customer and vendor

Code of Professional Ethics

This chapter covers PMI's code of Professional Conduct.
1. Culture Shock refers to the initial disorientation that a person first experiences when
visiting a country other than his own.
2. Ethnocentrism is a typical belief that one's culture is superior to the foreigner's culture.
3. PMP's Code of Professional Conduct is a document provided by PMI. It is a guide to
Project Managers on how to conduct as a professional.
4. PMP aspirants need to provide accurate and truthful information through out the
application process. Any violations can lead to disciplinary action.
5. If a project team member or the project manager has a conflict of interest, then it must be
brought into notice of all the stake-holders, to prevent any appearance of impropriety. As
an example of this consider a case where a Project Manager is evaluating some vendors.
Lets assume the Project Manager has friendship with one of the vendors. In such a
situation, the Project Manager should let all the stakeholders know, and offer herself to
be excluded out of the evaluation process.
6. The confidentiality of any intellectual property information that a PMP professional works
with, must be maintained.
7. Any information that a PMP provides to general public must be accurate and truthful.
8. A PMP must not accept any form of inappropriate gifts. Similarly a PMP must not offer
inappropriate compensation for personal gains.