DAY 2

PROJECT MANAGEMENT BODY OF KNOWLEDGE

(PMBOK ® GUIDE 6 TH EDITION) EXAMINATION
GKK 2 ND & 3 RD OCT 2021REVISION CLASS

VETRI SIVAM, PMP,PRINCE2,PRINCE2 AGILE

ITIL V4, LSSGB,LSSBB, ASM, MoR, BIG DATA(UTM), COLOR BRAIN
SPECIALIST

GKK_SIVAM_2&3RD OCT 2021

1
 MODULE 7 COST MANAGEMENT
7.1 Plan Cost 7.2 Estimate Costs 7.3 Determine Budget 7.4 Control Costs
Management
• Inputs • Inputs • Inputs • Inputs
• Project Charter • Project Management • Project Management • Project Management
• Project Management Plan Plan Plan
Plan • Project Documents • Project Documents • Project Documents
• Enterprise • Enterprise • Business Documents • Project Funding
Environmental Factors Environmental Factors • Agreements Requirements
• Organizational Process • Organizational Process • Enterprise • Work Performance
Assets Assets Environmental Factors Data
• Tools & Techniques • Tools & Techniques • Organizational Process • Organizational Process
• Expert Judgment • Expert Judgment Assets Assets
• Data Analysis • Analogous Estimating • Tools & Techniques • Tools & Techniques
• Meetings • Parametric Estimating • Expert Judgment • Expert Judgment
• Outputs • Bottom-Up Estimating • Cost Aggregation • Data Analysis
• Cost Management Plan • Three-Point Estimating • Data Analysis • To-Complete
• Data Analysis • Historical Information Performance Index
• Project Management Review • Project Management
Information System • Funding Limit Information System
• Decision Making Reconciliation • Outputs
• Outputs • Financing • Work Performance
• Cost Estimates • Outputs Information
• Basis of Estimates • Cost Baseline • Cost Forecasts
• Project Documents • Project Funding • Change Requests
Updates Requirements • Project Management
• Project Documents Plan Updates
Updates • Project Documents
Updates
2
MODULE 7: COST MANAGEMENT
Project Cost Management establishes the procedures in planning cost management, project cost estimates
for performing all the project activities, including costs of quality management activities, followed by
project budgeting where risk management costs are added as a project cost contingency reserve, and
finally provide the monitoring and controlling mechanism for project cost control
Life-cycle costing for the project capital investment including costs during its useful lifespan
Planning the project scope with an appreciation of Value Engineering i.e. finds alternatives in production
and material with specific economic or production objectives
Percent rule: 0/100, 100/0, 50/50, 25/75, etc. - left number (upfront) followed by right number
(balance at completion of work)
Project Selection is finding out the financial attractiveness of a project investment over others
 Benefit Cost Ratio (BCR) = Benefit/Cost, a.k.a. Return-On-Investment (ROI) = Return/Investment
 Payback Period – how long does it take in time to recover the invested amount and what happens
after this time is unimportant (the shorter the period, the more attractive is the project)
 Discounted Cash Flow using Present Value (PV) where present value accounts for the real value of
future value of money as if at hand today
 PV=FV/ ((1+r)^n) where FV is Future Value; r is interest a.k.a. discount rate, cost of capital, hurdle
rate, or inflation rate, and n is the time periods in the future.
 Net Present Value (NPV) is the cumulative total of PVs over a certain period of time
 Internal Rate of Return (IRR) is the discount rate r, of which the NPV is made zero, and the IRR is
determined by trial and error to make NPV to zero or close to zero as possible (assuming returns are
plowed back as investment)
3
LIFE CYCLE COSTING

4
DEFINITION
Variable Cost cost that is dynamic with the amount of production or work
 Direct Cost (related to the project in question), e.g. salaries, allowances, travel costs
 Indirect or Overhead Cost (not only related to the project in question), e.g. taxes, utility costs
Fixed Cost cost that is static with production or work
 Direct Cost (related to the project in question), e.g. setting up costs, training costs
 Indirect or Overhead Cost (not only related to the project in question), e.g. rentals, security, insurance,
operating permits
Sunk Cost – written-off cost which can never be recovered or considered in a revived project’s budget
(Rough) Order of Magnitude Estimate in the range of -25 to +75% of actual, usually made during
Initiating; Budget(ary) Estimate in the range of -10 to +25% of actual, usually made during early and mid
Planning; and Definitive Estimate in the range of -5 to +10% of actual, usually made during later in
Planning and is based on detailed information
Net Working Capital = Current Assets − Current Liabilities (indicating an organization’s financial health)
Economic Value Added is value produced by the project above the costs of financing the project
Opportunity Cost is the cost of the opportunity one would obtain for an opportunity while neglecting all
other opportunities – adding all the other neglected opportunities is the opportunity cost
Law of Diminishing Returns – in the real world, doing double effort does not mean halving the time taken to
accomplish an activity due to overhead loss or inefficiency
Depreciation is a decrease in the value of an asset over time
1. Straight line depreciation
2. Accelerated depreciation - depreciates much faster than straight line depreciation, e.g. Sum of Years'
Digits, and Double Declining Balances
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7.1 PLAN COST MANAGEMENT
Cost Management Plan describes how costs will be estimated, budgeted, managed, monitored, and
controlled
Normally, the project financial performance analysis is performed outside the project, or before getting
the project go-ahead (before issuance of the project charter)

INPUTS TOOLS & TECHNIQUES OUTPUTS

The Project Charter, Project
Management Plan (e.g. schedule
management plan, and risk
management plan)
Enterprise Environment Factors (e.g.
marketplace economic terms and
conditions, use of commercial
databases to help estimate costs
more accurately), and
Organizational Process Assets like
cost estimating policies and
templates, historical cost
information and relevant project
files such as lessons learned from
previous projects
Expert Judgment Cost Management Plan containing
accuracy and precision levels, units
Data Analysis,
of measure, organizational
and Meetings procedures links between each
WBS control account to the
performing organization's
accounting system, control
thresholds, rules of performance
measurement (earned value
management), reporting formats,
and cost management process
descriptions

6
7.2 ESTIMATE COSTS
Estimating the amount of monetary resources needed to compete the project activities - resources for cost
estimating are Human Resources, Materials, Equipment, Facilities, Services, Misc., etc., and when estimating
costs, cost trade-offs and cost-related risks must also be considered

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g. cost
management plan, quality
management plan, and scope
baseline), Project Documents (e.g.
lessons learned register, project
schedule, resource requirements, and
risk register), Enterprise
Environmental Factors (e.g. market
conditions, published commercial
information, and exchange rates
and inflation), and Organizational
Process Assets
Expert Judgment, Analogous
Estimating, Parametric
Estimating, Bottom-Up
Estimating and Three-Point
Estimates
Data Analysis (e.g. alternatives
analysis, reserve analysis, and
cost of quality)
Decision Making
Cost Estimates, including the Basis
Of Estimates which are supporting
documents to substantiate how the
cost estimate is obtained, and
Project Documents Updates (e.g.
assumption log, lessons learned
register, and risk register)

7
RESERVE ANALYSIS USING MONTE CARLO
SIMULATION & TORNADO DIAGRAM

8
UNDERSTANDING COST RESERVE ANALYSIS
We have understood that we can utilize any of these tools and techniques to produce the cost reserve:

1. Quantitative Cost Risk Analysis (basing on probability of occurrence and cost impact) – this analysis is
mentioned in the 11.4 Quantitative Risk Analysis section

2. Three Point Estimating (uses optimistic best case, most likely and pessimistic worst case costs for use in
Triangular or PERT distribution calculation)

3. Monte Carlo Simulation (simulating many possible and random cost durations bounded by optimistic best
case, most likely and pessimistic worst case costs to find the project cost probability distribution

The cost reserve calculation can either be obtained from [1] when optimistic best case and pessimistic worst case
are not known, [2] for better reserve analysis, or [3] for the best reserve analysis

9
7.3 DETERMINE BUDGET
Aggregating the costs estimated at every activity or work packages, and are then added with the
summation of the activities’ contingency reserves to become the project cost baseline
The project budget is the project cost baseline (from the summation of work package costs and
contingency reserves) provided that the management reserve is not included

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g. cost
management plan, resource
management plan, and scope
baseline), Project Documents (e.g.
basis of estimates, cost estimates,
project schedule, and risk register)
Business Document (e.g. business
case, and business management
plan)
Agreements (especially the cost-
related information), Enterprise
Environmental Factors, and
Organizational Process Assets
Cost Aggregation Cost Baseline
Funding Limit Reconciliation Known as S-Curve Chart shows the
A regulatory function where large project’s accumulated cost
variation in project expenditure is expenditure pattern over time - this
undesirable because of the large chart includes all the necessary
fund disbursements which may cause reserves, where the Project Budget
difficulties in managing cash flows – = Work Package Cost Estimates +
the funding requirement needs to be
smoothened, probably by setting
Contingency Reserves
date constraints for work, staggering Project Funding Requirements
payment schedules, or spreading out
procurements over a longer period of Project Documents Updates
time
Expert Judgment, Data Analysis,
Historical Information Review,
and Financing

10
COST BASELINE & PROJECT BUDGETING
Management
Reserve (when
expected to be utilized Read this way
for unknown-unknown
risks
(Multiple)
Contingency
PROJECT Control Activity
Reserve (for
BUDGET Accounts Contingency
known risks)
(this is known Reserve
Cost Baseline as the Project
Budget if Sum of Activities
Management (Multiple)
or Work
Reserve is Activity Cost
Package Cost
excluded) Estimates
Estimates

EARNED VALUE
CHART

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EARNED VALUE MANAGEMENT FORMULAE
Description of Measurement Description Acronym Formula

How much work should be done? Planned Value PV

How much work is done? Earned Value EV
How much did the “is done” work actually cost? Actual Cost AC

What is the schedule variance now? Schedule Variance SV EV-PV

What is the cost variance now? Cost Variance CV EV-AC

What is the performance index for schedule now? Schedule Performance Index SPI EV/PV

What is the performance index for cost now? Cost Performance Index CPI EV/AC

What do we now expect the project duration to be at completion? Schedule At Completion SAC (Planned Project Duration)/SPI

What was the total job supposed to cost at completion? Budget At Completion BAC

EAC forecast for ETC work

performed at the present CPI
EAC=BAC/CPI or
EAC=AC+ETC
EAC forecast for ETC work
What do we now expect the total job to cost at completion? Estimate At Completion EAC performed at the budgeted
rate EAC=AC+(BAC-EV)
EAC forecast for ETC work
considering both SPI and CPI
EAC=AC+[(BAC–
EV)/(CPI×SPI)]

What do we now expect the remaining cost to be until completion? Estimate To Complete ETC EAC-AC

What do we now expect the cost variance to be at completion? Variance At Completion VAC BAC-EAC

Remaining Work/Remaining
What do we now expect the cost performance index to be until To Complete Performance TCPI Funds: (BAC-EV)/(BAC-AC) or
completion to ensure meeting the cost performance baseline? Index (BAC-EV)/(EAC-AC) when
AC>BAC} 12
7.4 CONTROL COSTS
Causes to inflated expenditures need to be detected promptly and through cost variance analysis – by
comparing the actual expenditures against the planned cost expenditures in the cost performance baseline
or S-cost curve)
Variations need to be kept to a minimum, with an approved cost variation tolerance band called control
thresholds in the cost management plan

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g. cost
management plan, cost baseline, and
performance measurement
baselines), Project Documents,
Project Funding Requirements, Work
Performance Data, and
Organizational Process Assets
Expert Judgment, Data Analysis Work Performance Information,
(e.g. Earned Value Analysis Cost Forecasts, Change Requests,
(EVA), variance analysis, trend Project Management Plan Updates
analysis using charts and (e.g. cost management plan, cost
forecasts, and reserve analysis)baseline, and performance
measurement baseline), Project
To-Complete Performance Index Documents Updates, (e.g.
(TCPI) is a measure of the cost assumption log, basis of estimates,
performance that is required to cost estimates, lessons learned
be achieved with the remaining register, and risk register)
resources where TCPI = work
remaining / remaining funds
Project Management
Information System (to capture
planned value PV, earned value
EV, and actual cost AC statistics)
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7.4 CONTROL COSTS
An oil pipeline 280kms long is to be assembled in a project taking 280 days to complete at a project cost of $28
million.

Assuming the project progresses linearly, we can assume the following:

 280 days → 280kms would mean 1km/day planned productivity rate
 280 days → $28 million would mean $100K/day planned cost expenditure rate
 Where 1km distance costs $100K to assemble or $100K/km

Supposing at Day 5, the engineer on-site announces 7kms had been assembled and the cost accountant says that it
costs $800,000 to perform the work of the engineer
1. PV@Day5 = 5 days x 1km/day x $100K/km = $500K
2. EV@Day5 = 7kms x $100K/km = $700K
3. AC@Day5 = $800K
4. Therefore, SV@Day5 = EV@Day5 - PV@Day5 = $700K - $500K = $200K (worth of work ahead of schedule), and
SPI@Day5 = EV@Day5 / PV@Day5 = 1.4 (the schedule is ahead by 40%)
5. CV@Day5 = EV@Day5 - AC@Day5 = $700K - $800K = -$100K (more spending for the work done) , and CPI@Day5 =
EV@Day5 / AC@Day5 = 0.875 (overspending by 12.5%)
6. If the SPI and CPI are maintained throughout the project until project completion, it is expected that the SAC =
280days/SPI = 200 days, and EAC = $28million/CPI = $32 million
7. Because the project had overspent in the 5 days, it has to “catch up” to ensure that the planned value PV is
maintained until project completion → future CPI value must be TCPI = Remaining Work/Remaining Funds where
(BAC-EV) / (BAC-AC) = ($28million - $700K) / ($28million - $800K) = 1.0037
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EARNED VALUE CHART

15
QUANTITATIVE RISK ANALYSIS EXAMPLE
A project manager is assigned to a project to build a massive data center complex in a secured
industrial park. The part the manager is involved in is worth $2.6 million. The project plan
requires work to be done to install and setup the server hardware and networking equipment,
test and validate the performance, and install building access security.

A vendor has informed that several key servers may be late to arrive, causing a delay that has
to be overcome by accelerating the installation and testing works. It is predicted that there is a
80% chance the servers will be late by 30 days. To bring the work up to speed will require an
additional cost of $320,000 in overtime payments and other expedition costs. Also, a new
security feature costing $100,000 is included in the security system that can lower the
unauthorized assess risk to the building to 2% where the security breach can cost a goodwill
damage of $500,000.

A bonus worth $50,000 will be awarded when the project can be delivered on time and on
specification,. The project manager estimates a 50% chance of getting the bonus should the
delays be resolved by then.

What is the expected project cost, the best case and its worst-case costs?

Note: Expected Monetary Value (EMV) is positive for opportunities and negative for threats, and the
new Project Cost = project cost – (ΣEMV)
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8.1 Plan Quality Management
• Inputs
• Project Charter
• Project Management Plan
• Project Documents
• Enterprise Environmental Factors
• Organizational Process Assets
• Tools & Techniques
• Expert Judgment
• Data Gathering
• Data Analysis
• Decision Making
• Data Representation
• Test and Inspection Planning
• Meetings
• Outputs
• Quality Management Plan
• Quality Metrics
• Project Management Plan
Updates
• Project Documents Updates
MODULE 8 QUALITY
MANAGEMENT
8.2 Manage Quality 8.3 Control Quality
• Inputs • Inputs
• Project Management Plan • Project Management Plan
• Project Documents • Project Documents
• Organizational Process Assets • Approved Change Requests
• Tools & Techniques • Deliverables
• Data Gathering • Work Performance Data
• Data Analysis • Enterprise Environmental Factors
• Decision Making • Organizational Process Assets
• Data Representation • Tools & Techniques
• Audits • Data Gathering
• Design for X • Data Analysis
• Problem Solving • Inspection
• Quality Improvement Methods • Testing/Product Evaluations
• Outputs • Data Representation
• Quality Reports • Meetings
• Test and Evaluation Documents • Outputs
• Change Requests • Quality Control Measurements
• Project Management Plan • Verified Deliverables
Updates • Work Performance Information
• Project Documents Updates • Change Requests
• Project Management Plan
Updates
• Project Documents Updates
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DEFINITION
Quality is the degree to which a set of inherent characteristics fulfills requirements (e.g. a candidate
wanting to “pass” the exam and not about getting excellent grades)
Grade is a category or rank used to distinguish items that have the same functional use but do not share
the same requirements for quality (e.g. choice of different PC processors, different grades of engine oil,
etc.)
Precision is the level of consistency of repeated measurements or exactness, whereas accuracy is the
assessment of “correctness” of the measured value to a certain measure standard
Prevention Over Inspection – when quality is built into or having good quality assurance, there should be
little reason for non-conformance to happen!
Outliers (assignable causes are mentioned in [ ], special cause in red)
[overfill due to machine restart] [overfill due to jammed bottle] Common Causes are also known as
randomly occuring causes in a process
UCL – they are normal process variations
48.5 Special Causes are where assignable
causes reveal as unusual events which
occur in a process and these are not
LCL normal process variations
35.3
Control Limits are observed data points
within the tolerances bounded by the
upper control limit (UCL) and the lower
control limit (LCL) are known to be “in-
control”, and those outside are “out-of-
control” or outliers 18
DEFINITION
Cost of Quality (COQ) is the total price of all efforts to achieve product or service quality, and this includes all
work to build a product or service that conforms to the requirements as well as all work resulting from
nonconformance to the requirements
COQ should be incorporated into the project cost estimate, and it includes:
Cost of conformance: Cost of non-conformance:
 Planning ◦ Scrap
 Training and indoctrination ◦ Rework
 Process control ◦ Expediting
 Field testing ◦ Additional material or inventory
 Product design validation ◦ Warranty repairs or service
 Process validation ◦ Complaint handling
 Test and evaluation ◦ Liability judgments
 Quality audits ◦ Product recalls
 Maintenance and calibration ◦ Product corrective actions
Tolerance is a range of acceptable results within upper and lower limits
Standard Deviation (or Sigma) is the distance from the mean value
+/- 6 sigma: 99.99%; +/- 3 sigma: 99.73%;
+/- 2 sigma: 95.46%; +/- 1 sigma: 68.26%

19
DEFINITION
Internal failures are found in the project, and external failures are found by the customer
Marginal Analysis shows that there is an optimal quality cost for projects, where investing in additional
prevention/appraisal costs is neither beneficial nor effective
Prevention – Avoiding quality non-conformance (quality assurance)
Inspection – Appraising if quality is being met (purposely seeking non-compliance)
Attribute Sampling – Numerical count of conformance or non-conformance in a sample (countable non-
conformance like number of faulty light bulbs)
Variables Sampling – Continuous-scale measurement of a certain measure in a sample (like appraising
the actual volume of liquids, weights, lengths to target KPIs)
Customer Satisfaction – project customer is satisfied when the project
deliverables or results conform to their quality expectations and
needs
Prevention Over Inspection – when quality is built into or having good
quality assurance, there should be little reason for non-conformance
to happen!
Plan-Do-Check-Act (PDCA) - an iterative four-step management
method for the control and continual improvement of processes and
products; also known as the Shewhart-Deming cycle

20
8.1 PLAN QUALITY MANAGEMENT
Quality planning is conducted simultaneously with other project planning processes and it determines
which quality standard to comply, how compliance is satisfied, and accommodate the performing
organization’s quality policy and project customer quality validation format
According to Deming and Juran, most of the quality problems that exist are due to a defect or failure in
processes that are controlled by the quality policy defined according to the performing organization’s top
management and their lack of leadership in this area
Deming supports the practice of ceasing mass inspections and ending awards based on price

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Charter, Project Data Gathering (e.g. Quality Management Plan, Quality
Management Plan (e.g. benchmarking, brainstorming, Metrics, Project Management Plan
requirements management plan, risk and interviews) Updates (e.g. risk management
management plan, stakeholder plan, and scope baseline), and
Data Analysis (e.g. cost-benefit Project Documents Updates (lessons
engagement plan, and scope
analysis, and cost of quality) learned register, requirements
baseline)
Decision Making (e.g. flowcharts, traceability matrix, risk register, and
Project Documents (e.g. assumption logical data model, matrix stakeholder register)
log, requirements documentation, diagrams, and mind mapping)
requirements traceability matrix, risk
register and stakeholder register), Data Representation, Expert
Enterprise Environment Factors, and Judgment, Test and Inspection
Organizational Process Assets Planning, and Meetings
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8.2 MANAGE QUALITY
The process is conducted throughout the project life cycle but is more intense during Executing phase, and it
translates the quality management plan into executable quality activities
The process uses quality control measurements which are data and results from 8.3 Control Quality
process to bring quality assurance while in a broader sense also have concern with the product design
aspects, design guidelines, and process improvements
This process is where project managers have greatest influence over quality, or impact on the quality of
the project during this process
In agile projects, quality management is performed by all team members throughout the project, but in
traditional projects, quality management is often the responsibility of specific team members

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, Project
Documents (e.g. lessons learned
register, quality control
measurements, quality metrics, and
risk report), and Organizational
Process Assets
Data Gathering, Data Analysis,
Decision Making, Data
Representation, scheduled or
random quality Audits
Design for X is a set of technical
guidelines for the design and
optimization of a product
Problem Solving, and Quality
Improvement Methods (e.g.
PDCA and Six Sigma)
Quality Reports, Test and
Evaluation Documents, Change
Requests (e.g. corrective and
preventive changes), Project
Management Plan Updates and
Project Documents Updates Note: In
agile, retrospectives are considered
as lessons learned within the context
of “Manage Quality” process
22
 FLOWCHARTING

SCATTER DIAGRAM
(OR SCATTER PLOT)
Used to determine
the relationship
Variable A

between two or CAUSE & EFFECT

more pieces of DIAGRAM
corresponding data Analyzes the Input to a
The data are process to identify the
plotted on an "X-Y" causes of errors to an
chart to determine observed effect
correlation

CAUSE
& EFFECT
Variable B
DIAGRAM
23
8.3 CONTROL QUALITY
Controlling quality is a reactive initiative, that is to identify, recommend, correct, repair, or fix non-
conformance after the non-conformance has been detected through stakeholder inspection or complaints
It requires project deliverables to be verified (for completeness, compliance, and fitness for use) by the
project team to meet stakeholders’ requirements, and for final acceptance
Control Quality process is performed throughout the project life cycle, but more intensely during
Monitoring and Controlling phase
In agile projects, the Control Quality activities may be performed by all team members throughout the
project life cycle but in waterfall model-based projects, the quality control activities are performed at
specific times, toward the end of the project or phase, by specified team members

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, Project
Documents (e.g. lessons learned
register, quality metrics, and test and
evaluation documents), Approved
Change Requests, Deliverables,
Work Performance Data, Enterprise
Environmental Factors, and
Organizational Process Assets
Data Gathering (e.g. checklists,
check sheets, statistical sampling,
and questionnaires and surveys),
Data Analysis (e.g. performance
reviews, and root cause analysis),
Inspection, and Testing/Product
Evaluations
Data Representation, Meetings
Quality Control Measurements are
the results obtained from quality
control initiatives passed back to
manage quality process
Verified Deliverables, Work
Performance Information, Change
Requests, Project Management Plan
Updates, Project Documents
Updates

24
SEVEN BASIC QUALITY TOOLS
1. Cause-And-Effect Diagram (a.k.a. Ishikawa diagram or fishbone diagram) shows the causes
relating to an anticipated or observed effect
2. Flowcharts
3. Checksheet organizes facts to reveal certain traits or patterns
4. Pareto Diagram is a ranked frequency histogram detailing the attributes or causes of non-
compliance/defects (also known as 80/20 rule where 80% of defects are contributed by a lesser
few 20%)
5. Histogram is a bar chart which shows statistical distributions from the frequency of occurrence
6. Control Chart plots process variations bounded by two sets of limits

Process-determined Upper (UCL) and Lower (LCL)

Control Limits which are moving averages based on a
certain standard deviation or sigma (e.g. ±3s)
May have project customer-specified Upper (USL) and
Lower (LSL) Specification Limits
Out-Of-Control (a.k.a. outliers) points are either
process data points beyond the UCL/LCL limits, or
rule-of-seven (or Run) data points grouped suspiciously
above or below the mean because they show non-
random behavior

7. Scatter Diagram (a.k.a. Scatterplot) shows if there is any relationship or correlation between two
factors or variables
25
CHECKSHEET & PARETO DIAGRAM

PARETO DIAGRAM
• Ranks defects in order of frequency of occurrence to
depict 100% of the defects (displayed as a histogram)
• Defects with most frequent occurrence should be
targeted for corrective action.
• 80-20 rule: 80% of problems are found in 20% of the
work.
• It does not account for severity of the defects

26
27
 Unusual behavior - Rule of Seven:
CONTROL CHART out of control (outliers) here is known as a “run”

RUN CHART
Apart from the normally understood out-of-control points
or outliers, we use the rule of seven data points in a row
and this is also called a Run: A series of consecutive
points on the same side of the average and is considered
abnormal if 7 consecutive points data points are above
or below the process mean because of suspicious non-
randomness and requires investigation

A Run Chart is a chart useful to observe shifts and trends

– a series of consecutive points which reflect a steadily
increasing or decreasing pattern
28
 MODULE 9 RESOURCE MANAGEMENT
9.1 Plan Resource 9.2 Estimate Activity 9.3 Acquire Resources 9.4 Develop Team 9.5 Manage Team 9.6 Control Resources
Management Resources
• Inputs • Inputs • Inputs • Inputs • Inputs • Inputs
•Project Charter •Project Management •Project Management •Project Management •Project Management •Project Management
•Project Management Plan Plan Plan Plan Plan
Plan •Project Documents •Project Documents •Project Documents •Project Documents •Project Documents
•Project Documents •Enterprise •Enterprise •Enterprise •Work Performance •Work Performance
•Enterprise Environmental Factors Environmental Factors Environmental Factors Reports Data
Environmental Factors •Organizational •Organizational •Organizational •Team Performance •Agreements
•Organizational Process Assets Process Assets Process Assets Assessments •Organizational
Process Assets • Tools & Techniques • Tools & Techniques • Tools & Techniques •Enterprise Process Assets
• Tools & Techniques •Expert Judgment •Decision Making •Colocation Environmental Factors • Tools & Techniques
•Expert Judgment •Bottom-Up Estimating •Interpersonal and •Virtual Teams •Organizational •Data Analysis
•Data Representation •Analogous Estimating Team Skills •Communication Process Assets •Problem Solving
•Organizational •Parametric Estimating •Pre-Assignment Technology • Tools & Techniques •Interpersonal and
Theory •Data Analysis •Virtual Teams •Interpersonal and •Interpersonal and Team Skills
•Meetings •Project Management • Outputs Team Skills Team Skills •Project Management
• Outputs Information System •Physical Resource •Recognition and •Project Management Information System
•Resource Management •Meetings Assignments Rewards Information System • Outputs
Plan • Outputs •Project Team •Training • Outputs •Work Performance
•Team Charter •Resource Requirements Assignment •Individual and Team •Change Requests Information
•Project Documents •Basis of Estimates •Resource Calendars Assessments •Project Management •Change Requests
Updates •Change Requests •Meetings Plan Updates •Project Management
•Resource Breakdown •Project Documents
Structure •Project Management • Outputs Plan Updates
Plan Updates •Team Performance Updates •Project Documents
•Project Documents •Enterprise
Updates •Project Documents Assessments Updates
Updates •Change Requests Environmental Factors •Enterprise
•Enterprise •Project Management Updates Environmental Factors
Environmental Factors Plan Updates Updates
Updates •Project Documents
•Organizational Updates
Process Assets •Enterprise
Updates Environmental Factors
Updates
•Organizational
Process Assets
Updates

29
ORGANIZATIONAL CONSIDERATIONS FOR PROJECT
AGILITY
Organizational process assets (OPAs) and enterprise environmental factors (EEFs) can influence both the
direction and the outcome of any project

Organizational change management covers the skills and techniques for influencing changes that
support agility

Two key factors that motivate the use of change management in an agile context are:
1. Changes associated with accelerated delivery: early and often - unfortunately, the customer organization
many not be ready to accept the delivery at this increased pace and this requires alignment between
customer acceptance and project outputs pace

2. Changes associated with agile approaches – organizations just beginning to embrace agile approaches see
high degrees of change, thus requiring transitioning to more frequent hand-offs between teams, departments,
or vendors

Barriers to change happen when work is decomposed into departmental silos instead of building cross-
functional collaboration, short-term pricing strategies instead of long-term, failing to look at the big
picture delivery, lack of incentives to hone and diversify skills, and overwhelming many projects at once

When details of a deliverable are not sufficiently known, a planning package should be used, where
the details of the deliverables defined within planning packages can be considered known unknowns,
or risks
TRENDS AND EMERGING PRACTICES
 Resource management methods - due to the scarce nature of critical resources, concepts in lean
management, just-in-time (JIT), Kaizen, total productive maintenance (TPM), theory of constraints (TOC),
and other methods are used
 Emotional intelligence (EI) - the project manager should invest in personal EI by improving inbound (e.g.
self-management and self-awareness) and outbound (e.g. relationship management) competencies
 Self-organizing teams - the increase in using agile approaches requires team functions to operate
without centralized control, and the project manager provides the environment and support needed and
trusts the team to get the job done. The team continuously adapt to the changing environment and
embrace constructive feedback
Virtual teams/distributed teams – the globalization of projects has need for virtual teams and they are not
co-located at the same site. The availability of communication technology has made virtual teams
feasible. The challenges of managing virtual teams are mainly in the communication domain, including a
possible feeling of isolation, gaps in sharing knowledge and experience between team members, and
difficulties in tracking progress and productivity, possible time zone difference and cultural differences

Parkinson's law states that “work expands so as to fill the time available for its completion”
 If something must be done in a year, it will be done in a year ; if something must be done tomorrow, it
will be done tomorrow
Student syndrome refers to planned procrastination
 A student will only start to apply themselves to an assignment at the last possible moment before its
deadline, and this eliminates any potential safety margins and puts the person under stress and
pressure
31
ORGANIZATIONAL CULTURE
Every project has its own aspirations complete with culture and
requirements of where emphasis is placed within the business
environment
Awareness of the organizational priorities must be communicated, and
priorities are recorded between two extremes like:
 Exploration - Execution
 Speed - Stability
 Quantity - Quality, and
 Flexibility – Predictability

Every organization has tradeoffs, and the best balance is required to

establish the right priorities for an agile implementation
ORGANIZATIONAL STRUCTURE
The structure of an organization strongly influences through:
 Geographically distributed and dispersed project organizations may find several challenges
impeding their work on any project
 Projects with highly functionalized structures may find general resistance to collaboration across its
organization
 Reducing the size of a project deliverable will motivate more frequent handoffs across departments,
and thus more frequent interactions and a faster flow of value across the organization.
 Allocation of people to projects
 Some organizations choose to implement projects primarily through vendors and through agile
techniques such as retrospectives and follow up on possible improvement areas when the vendor is
still engaged can help mitigate loss of product knowledge
When addressing an individual challenge area or implementing a new hybrid or agile
approach, it is recommended to undertake the work incrementally
A common practice is to treat the change process as an agile project with its own backlog
of changes that could be introduced and prioritized by the team, based on perceived
value or other considerations
AGILE PMO
Agile creates cultural change and the PMO helps to shepherd the
business value creation across the organization
The PMO needs to be conversant in several competencies such as:
 Developing and implementing standards
 Developing personnel through training and mentoring
 Multiproject management
 Facilitating organizational learning
 Managing stakeholders
 Recruiting, selecting, and evaluating team leaders
 Executing specialized tasks for projects
MANAGEMENT & LEADERSHIP
In agile/adaptive environments, the projects will have high variability and can benefit from team
structures that maximize focus and collaboration, such as self organizing teams with generalizing
specialists, and therefore planning for physical and human resources is much less predictable in projects
with high variability
Management involves using positional power to produce results and control
Leadership involves:
 Visionary - setting long-term direction and aligning people through relational power
 Innovative, challenges status quo, motivating, and inspiring trust
 Communicating, building and preserving relationships
 Facilitating ethical conduct, negotiating, and leading change
Responsibility and accountability
 Project manager is ultimately responsible (accountable) for the entire project and the team
 Project manager gives responsibility and authority to the team by delegating, and expects reliability
and accountability from the team in return

35
FORMS OF POWER
The ability of one person to influence the behavior of another
1. Positional also called formal, authoritative, legitimate (e.g. formal position granted in the
organization or team)
2. Informational (e.g. control of gathering or distribution)
3. Referent (e.g. respect or admiration others hold for the individual, credibility gained)
4. Situational (e.g. gained due to unique situation such as a specific crisis)
5. Personal or charismatic (e.g. charm, attraction)
6. Relational - preferable power (e.g. participates in networking, connections, and alliances)
7. Expert – preferable power (e.g. skill, information possessed; experience, training, education,
certification)
8. Reward-oriented – preferable power (e.g. ability to give praise, monetary or other desired
items)
9. Punitive or coercive – least preferable power (e.g. ability to invoke discipline or negative
consequences)
10. Ingratiating (e.g. application of flattery or other common ground to win favor or cooperation)
11. Pressure-based (e.g. limit freedom of choice or movement for the purpose of gaining compliance
to desired action)
12. Guilt-based (e.g. imposition of obligation or sense of duty)
13. Persuasive (e.g. ability to provide arguments that move people to a desired course of action)
14. Avoiding (e.g. refusing to participate)
36
LEADERSHIP STYLES
Many ways of leading the team depending on the leader, team member, organization and
environmental characteristics, such as:
1. Laissez-faire (e.g. allowing the team to make their own decisions and establish their own
goals, also referred to as taking a hands-off style)
2. Transactional - most typically used (e.g. focus on goals, feedback, and accomplishment to
determine rewards; management by exception)
3. Servant leader (e.g. demonstrates commitment to serve and put other people first by
focussing on other people’s growth, learning, development, autonomy, and well-being;
concentrates on relationships, community and collaboration; leadership is secondary and
emerges after service)
4. Transformational (e.g. empowering followers through idealized attributes and behaviors,
inspirational motivation, encouragement for innovation and creativity, and individual
consideration)
5. Charismatic (e.g. able to inspire; is high-energy, enthusiastic, self-confident; holds strong
convictions)
6. Interactional – most preferred (e.g. a combination of transactional, transformational, and
charismatic)

37
 HERSEY AND BLANCHARD SITUATIONAL
LEADERSHIP STYLES & BRUCE TUCKMAN TEAM
DEVELOPMENT PHASES
Hersey and Blanchard characterized leadership
styles into four behavior types, which they
named S1 to S4:
 S1: Directing (or Telling) - is characterized by one-
Encouraging Steering way communication in which the leader defines the
roles of the individual or group and provides the
what, how, why, when and where to do the task
 S2: Coaching (or Selling) - while the leader is still
providing the direction, he/she is now using two-way
communication and providing the socio-emotional
support that will allow the individual or group being
influenced to buy into the process and build
teamwork
Entrusting Tasking  S3: Supporting (or Participating) - this is how shared
Low Directive High Directive decision making about aspects of how the task is
and Low Supportive and Low Supportive accomplished and the leader is providing less task
Behavior Behavior
behaviors while maintaining high relationship
behavior
 S4: Delegating - the leader is still involved in
decisions; however, the process and responsibility has
been passed to the individual or group. The leader
stays involved to monitor progress
Adjourning Performing Norming Storming Forming
Effective leaders need to be flexible, and must
adapt themselves according to the situation
38
 CONFLICT RESOLUTION TECHNIQUES
1. Collaborate/ Work together and diffuse head-on conflicts, or find solutions to the root cause
Problem Solve of the conflict. Most preferable technique because of its “win-win” approach.

Finding solutions that are majority acceptable to the affected parties.

2. Compromise/
Regarded as second preferable a “lose some-lose some” solution when all
Reconcile
parties give something up to meet in the “middle” and reach a consensus.

Retreating from the conflict, or deferring it to be resolved at a later date or

3. Withdraw/
get it resolved by others. Perhaps conducted because of other pressing issues
Avoid
to consider. Does not provide a solution to the conflict.

Focusing on what has been agreed upon rather than the differences of
4. Smooth/ opinion, in order to minimize disagreements by making differences seem less
Accommodate important. May involve willing to give up someone’s interest to the needs of
others to achieve harmony. Does not provide a solution to the conflict.

Imposing own opinion or viewpoint (solution) on others (using his/her superior

power position) and eliminating the other parties’ opinions. Least preferable
5. Force/Direct
technique, and is a “I win, you lose” solution and may result in increased
conflict later. Perhaps conducted because of an urgent or emergency situation.
39
THEORIES OF MOTIVATION
Maslow's Hierarchy Of Needs Theory
The lower-level needs must be satisfied first before the higher
needs can be addressed - individuals have five levels of needs in
which motivational tension develops and is directed towards
satisfying the next level of unmet need
The person advances to the next level of needs after the lower
level need is at least satisfied

Level 5: Self-actualization
Level 4: Self-esteem, recognition
Level 3: Socialization, acceptance, love
Level 2: Security and safety
Level 1: Food, shelter and clothing

40
 THEORIES OF MOTIVATION
Frederick Herzberg's Motivation-Hygiene Theory
Consists of satisfiers (motivators) and the
dissatisfiers (hygiene factors) using the term hygiene
in the sense that they are considered maintenance
factors that are necessary to avoid dissatisfaction
If individuals are satisfied, they can thus be
motivated because it is the job content or job
passion that motivates individuals
These are Hygiene Factors These will make
or “must haves”, otherwise people more
people will be dissatisfied satisfied
Contingency Theory
There is “no one best way to manage people” – it is all too
dependent on the person himself and the situation the
person is in
Vroom’s Expectancy Theory
Creating an expectancy in a person, the expectancy may
indeed become a fact through motivating by altering the
person's effort-to-performance expectancy, performance-
to-reward expectancy, and the reward valence (the value
an individual places on the rewards of an outcome)
McGregor's Theory X and Theory Y
Theory X says that people inherently dislike work, prefer to
be directed, and that they must be coerced or controlled to
do work to achieve objectives
Theory Y says that people view work as being as natural as
play and rest, and they will exercise self-direction and
control towards achieving objectives they are committed to,
and they learn to accept and seek responsibility
Theory Z
The belief that management's high levels of trust,
confidence and commitment to workers leads to high levels
of motivation and productivity on the part of workers
41
THEORIES OF MOTIVATION
McClelland's Three Needs Theory (also known as Achievement Motivation Theory) proposed that an
individual’s specific needs are acquired over time and are shaped by one’s life experiences
A person’s motivation and effectiveness in certain role functions are influenced by three needs
1. Achievement need - people with a high need for achievement loves to seek challenges to achieve
and excel
2. Affiliation need - the need to feel accepted by other people, living and working harmoniously, and
delights in personal interactions
3. Power need - a person's need for power can be one of two types - personal and institutional
 Those who need personal power want to direct others
 Persons who need institutional power (also known as social power) want to organize the efforts of
others to further the goals of the organization
 Managers with a high need for institutional power tend to be more effective than those with a high
need for personal power

McClelland says that people with different needs are motivated differently
 High need for achievement (Ach) - high achievers should be given challenging projects with
reachable goals
 High need for affiliation (Aff) - employees with a high affiliation need perform best in a cooperative
environment
 High need for power (Pow) - management should provide power seekers the opportunity to manage
others
42
9.1 PLAN RESOURCE MANAGEMENT
Project resources include team members, supplies, materials, equipment, services and facilities - physical
resources are acquired from the performing organization’s internal assets or procured from outside, and
team resources are recruited into project roles, developing the team and administering their competency
development
Resource availability and the country’s governing laws need to be considered – planning for the team
resources is done by the project manager and the human resource manager
Collective action refers to action taken together by a group of people whose goal is to enhance their
status and achieve a common objective, and it is enacted by a representative of the group

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, and
Project Documents
Enterprise Environmental Factors
engagement with worker’s union via
Collective Bargaining Agreements,
and existing economic conditions)
Organizational Process Assets
Expert Judgment
Data Representation
Assignment matrix shows the
project resources assigned to
each work package – one
example of a responsibility
assignment matrix is a RACI
(Responsible, Accountable,
Consult, and Inform) chart
Organizational Theory and
Meetings
Resource Management Plan
Identification of resources, acquiring
resources, roles, authority,
competence, and responsibilities
Contains project organization charts,
project team resource management,
training, team development, resource
control, and recognition plan
(recognition and rewards)
Team Charter and Project
Documents Updates
43
RACI CHART

RACI Person Person Person Person Person Person

Activity 1 2 3 4 5 6

Obtain user requirements A R C I C C

Produce technical
R R I C I A
specifications

Produce design schematics R C R A I C

Conduct alternatives study C I R R I A

44
9.2 ESTIMATE ACTIVITY RESOURCES
This process estimates the team resources, and the type and quantities of materials, equipment, and
supplies necessary to perform project work
This process is closely coordinated with other processes such as the 7.2 Estimate Costs process

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g.
resource management plan, and
scope baseline), Project Documents
(e.g. activity list, activity attributes,
assumption log, cost estimates,
resource calendars, and risk
register), Enterprise Environmental
Factors, and Organizational
Process Assets
Expert Judgment, Bottom-Up Resource Requirements, Basis of
Estimating, Analogous Estimates, Resource Breakdown
Estimating, Parametric Structure which is a hierarchical
Estimating, Data Analysis, structure of resource types (e.g.
Project Management human resource, equipment,
Information System, and material, facility, and others), and
Meetings Project Documents Updates (e.g.
activity attributes, assumption log,
and lessons learned register)

45
9.3 ACQUIRE RESOURCES
This process obtains team members, facilities, equipment, materials, supplies, and other resources
necessary to complete project work, and this can happen anytime throughout the project
INPUTS
Project Management Plan, (e.g.
resource management plan,
procurement management plan
obtained from 12.1 Plan
Procurement Management process,
and cost baseline)
Project Documents (e.g. project
schedule, resource calendars,
resource requirement, and
stakeholder register)
Enterprise Environmental Factors,
and Organizational Process Assets
TOOLS & TECHNIQUES
Decision Making (multi-criteria
decision analysis to make
selections based on availability,
cost, ability, experience,
knowledge, skills, attitude, and
international factors)
Interpersonal and Team Skills
(negotiating for resources with
functional managers, other
teams, external organization
and suppliers)
Pre-Assignment (where team
members are already given)
Using Virtual Teams where the
team members are separated
by great distances
OUTPUTS
Physical Resource Assignments, and
Project Team Assignments
Knowing when resources are
available using Resource
Calendars, and making Change
Requests
Project Management Plan Updates
Project Documents Updates
Enterprise Environmental Factors
Updates, and Organizational
Process Assets Updates
46
9.4 DEVELOP TEAM
Developing the team (including the project manager) to have high team performance throughout the
project life cycle - the cost of developing the team comes from the project budget
INPUTS
Project Management Plan, Project
Documents (e.g. lessons learned
register, project schedule, project
team assignments, resource
calendars, and team charter), and
Enterprise Environmental Factors
TOOLS & TECHNIQUES
Colocation (e.g. war room or
tight matrix is where a team can
sit together and get closer
communication and
teamworking), Virtual Teams,
using Communication
Technology (e.g. shared portal
or repository, video
conferencing, audio
conferencing, and email/chat),
Interpersonal and Team Skills
(e.g. conflict management,
influencing, motivation,
negotiation, and team building),
Recognition and Rewards,
Training, Individual and Team
Assessments, and Meetings
OUTPUTS
Team Performance Assessment of
developmental activities and team
effectiveness, Change Requests,
Project Management Plan Updates
(e.g. lessons learned register, project
schedule, project team assignments,
resource calendars, and team
charter), Enterprise Environmental
Factors Updates , and
Organizational Process Assets
Updates
47
9.5 MANAGE TEAM
Managing team members performance, optimizing performance, observing behavior, manages conflicts,
and resolves issues
INPUTS
Project Management Plan, Project
Documents (e.g. issue log, lessons
learned register, project team
assignments, and team charter),
Work Performance Reports (from
4.5 Monitor and Control Project
Work), Team Performance
Assessments, Enterprise
Environmental Factors, and
Organizational Process Assets
Note: Reward items like perquisites
(perks) are at management’s
discretion (different from
employment benefits)
TOOLS & TECHNIQUES
Interpersonal and Team Skills
(e.g. conflict management by
intervening early and apply
conflict resolution techniques,
decision making, emotional
intelligence, influencing, and
leadership), and Project
Management Information
System
Note: HR performance appraisals
may use 360-deg feedback
OUTPUTS
Change Requests to correct any
shortcomings or enhancements,
Project Management Plan Updates
(e.g. Resource management plan,
schedule baseline, and cost baseline),
Project Documents Updates (e.g.
Issue log, lessons learned register,
and project team assignments), and
Enterprise Environmental Factors
48
9.6 CONTROL RESOURCES
Controlling physical resources assignments and allocation as per plan, monitoring the planned and actual
utilization of resources, taking actions

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, Project
Documents (e.g. issue log, lessons
learned register, physical resource
assignments, project schedule,
resource breakdown structure,
resource requirements, and risk
register), Work Performance Data,
Agreements, and Organizational
Process Assets
Data Analysis (e.g. alternatives
analysis, cost-benefits analysis,
performance reviews, and trend
analysis), Problem Solving,
Interpersonal and Team Skills
(e.g. negotiation and
influencing), and Project
Management Information
Systems
Work Performance Information,
Change Requests, Project
Management Plan Updates (e.g.
resource management plan, schedule
baseline, and cost baseline), Project
Documents Updates (e.g.
assumption log, issue log, lessons
learned register, physical resource
assignments, resource breakdown,
and risk register)

49

10.1 Plan Communications
Management
• Inputs
• Project Charter
• Project Management Plan
• Project Documents
• Enterprise Environmental Factors
• Organizational Process Assets
• Tools & Techniques
• Expert Judgment
• Communication Requirements
Analysis
• Communication Technology
• Communication Models
• Communication Methods
• Interpersonal and Team Skills
• Data Representation
• Meetings
• Outputs
• Communications Management
Plan
• Project Management Plan
Updates
• Project Documents Updates
MODULE 10 COMMUNICATIONS
MANAGEMENT
10.2 Manage Communications
• Inputs
• Project Management Plan
• Project Documents
• Work Performance Reports
• Enterprise Environmental Factors
• Organizational Process Assets
• Tools & Techniques
• Communication Technology
• Communication Methods
• Communication Skills
• Project Management Information
System
• Project Reporting
• Interpersonal And Team Skills
• Meetings
• Outputs
• Project Communications
• Project Management Plan
Updates
• Project Documents Updates
• Organizational Process Assets
Updates
10.3 Monitor Communications
• Inputs
• Project Management Plan
• Project Documents
• Work Performance Data
• Enterprise Environmental Factors
• Organizational Process Assets
• Tools & Techniques
• Expert Judgment
• Project Management Information
System
• Data Representation
• Interpersonal and Team Skills
• Meetings
• Outputs
• Work Performance Information
• Change Requests
• Project Management Plan
Updates
• Project Documents Updates
50
MODULE 10: COMMUNICATIONS MANAGEMENT

It is found that 80%-90% of a project manager’s time is spent on

communicating the project, making communication a key requirement
and processes are required for the collection and consolidation of data,
creation, release and storage of the kinds of information to be
communicated with selected stakeholders at the right time and place
There are two parts to successful communication:
1. Developing an appropriate communication strategy based on both the
needs of the project and the project’s stakeholders
2. From that strategy, a communications management plan is developed to
ensure that the appropriate messages are communicated to stakeholders
in various formats and various means as defined by the communication
strategy
Communication has to be adaptive to the stakeholders because of the
different cultures, competency backgrounds, expertise levels,
understanding and influence
51
COMMUNICATION THEORY – JOHARI WINDOW
The Johari window has four quadrants representing
Open Area, Blind Spot, Hidden Area, and Unknown
Area
 Arena or Open Area - represents public information about
the person, known by each individual and others
 Blind Spot or Blind Area - refers to the characteristics of the
person unknown to the individual themselves, but known to
others
 Facade or Hidden Area: - represents the secret side of the
person, or what the person knows, and others do not know,
the individual keeping such information concealed
deliberately or otherwise
 Unknown Area - represents the characteristics innate in a
person, but which neither the person nor anyone else comes  The purpose of the Johari window concept
to realise is to expand the open area of an
The ultimate need is to enlarge the open self individual through self-disclosure and
quadrant with the intent to establish a fruitful feedback
relationship with the self as well with others such that  Self disclose by the person expands the
the work can be performed efficiently when working open area horizontally by contracting the
as a team facade or hidden area
 Feedback from others expands the open
area vertically by contracting the unknown
area
52
 Communication Dimensions
Written
Verbal Visual
Printed words, figures, drawings, graphs,
Listening and talking Video, demonstrations
schematics

Verbal Nonverbal, Indirect (a.k.a. paralingual)

Vocalized message Volume, pitch, rhythm, body language (e.g. gestures)

Internal External
In-project communication needs Press release, media statement
Vertical Horizontal
Superiors and subordinates Peers
Formal
Informal
Reports, briefings, presentations,
Sketches, paper notes, casual discussions, company and personal emails
newsletters, company letters

Communication Methods
Between two or more parties performing a multidirectional exchange of information
Interactive
in real time. It employs communications artifacts such as meetings, phone calls, instant
Communication
messaging, some forms of social media, and videoconferencing.

Sent or distributed directly to specific recipients who need to receive the information.
This ensures that the information is distributed but does not ensure that it actually
Push Communication
reached or was understood by the intended audience. Push communications artifacts
include letters, memos, reports, emails, faxes, voice mails, blogs, and press releases.
Used for large complex information sets, or for large audiences, and requires the
recipients to access content at their own discretion subject to security procedures.
Pull Communication
These methods include web portals, intranet sites, e-learning, lessons learned
databases, or knowledge repositories.
53
 Steps For Effective Communication

1. Prepare your message, intent

A. Sender and purpose beforehand
encode
message 2. Encode the message into a
format and language the
recipient can understand
accurately

Communication 3. Time the message transmission

D. Recipient
may Noise B. Sender and choose a suitable
acknowledge; transmit
Values, culture, message via transmission medium to allow for
feedback or taboos, beliefs, suitable
respond to maximum recipient's attention or
message distance, out-of- medium
context urgency

4. Ensure the recipient understood

(acknowledge) the message

C. 5. Recipient understands the

Recipient message carefully and
decode accurately or check facts first
message before feedback or responding
to sender

54
10.1 PLAN COMMUNICATIONS MANAGEMENT
This process is about finding out the kinds of information and other communication needs of the project
stakeholders – who needs it, when should the information be released, what information to release, who
prepares the information, how is the information released

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Charter, Project
Management Plan (e.g. resource
management plan, and stakeholder
engagement plan), Project
Documents (e.g. requirement
documentation, and stakeholder
register), Enterprise Environmental
Factors, and Organizational
Process Assets
Expert Judgment, and Communications Management Plan,
Communication Requirement Project Management Plan Updates,
Analysis and Project Documents Updates
(e.g. project schedule, and
Total number of
stakeholder register)
communication channels is
n(n-1)/2, where n is the number
of stakeholders
Communication Technology
Communication Models
Communication Methods
Interpersonal and Team Skills,
Data Representation, and
Meetings

55
10.2 MANAGE COMMUNICATIONS
This process ensures relevant and timely distribution to the right project stakeholders and allows them to
participate for further information requests, making clarifications, and engage in discussions

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g.
resource management plan,
communications management plan,
and stakeholder engagement plan),
Project Documents (e.g. change log,
issue log, lessons learned register,
quality report, risk report, and
stakeholder register), Work
Performance Reports (from 4.5
Monitor and Control Project Work),
Enterprise Environmental Factors,
and Organizational Process Assets
Communication Technology, Project Communication, Project
Communication Methods, Management Plan Updates (e.g.
Communication Skills (e.g. Communications management plan,
communication competence, and stakeholder engagement plan),
feedback, nonverbal, and and Project Documents Updates
presentations), Project (e.g. issue log, lessons learned
Management Information register, project schedule, risk
System, Project Reporting, and register, and stakeholder register)
Interpersonal and Team Skills
(e.g. active listening, conflict
management, cultural awareness,
meeting management,
networking, and political
awareness), and Meetings

56
10.3 MONITOR COMMUNICATIONS
This process ensures the information needs of the project and its stakeholders are met, making sure the key
benefit of this process is the optimal information flow

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g.
resource management plan,
communication management plan,
and stakeholder engagement plan)
Project Documents (e.g. issue log,
lessons learned register, and project
communications), Work Performance
Data, Enterprise Environmental
Factors, and Organizational
Process Assets
Expert Judgment, Project
Management Information
System, Data Representation,
Interpersonal and Team Skills,
and Meetings
Work Performance Information,
Change Requests, Project
Management Plan Updates (e.g.
communications management plan,
and stakeholder engagement plan),
Project Documents Updates (e.g.
issue log, lessons learned register,
and stakeholder register)

57
 MODULE 11 RISK
11.3 Perform 11.4 Perform
MANAGEMENT
11.1 Plan Risk 11.2 Identify Risks Qualitative Risk Quantitative Risk 11.5 Plan Risk 11.6 Implement 11.7 Monitor Risks
Management Analysis Analysis Responses Risk Responses

• Inputs • Inputs • Inputs • Inputs • Inputs • Inputs • Inputs

•Project Charter •Project •Project •Project •Project •Project •Project
•Project Management Plan Management Plan Management Plan Management Plan Management Plan Management Plan
Management Plan •Project Documents •Project Documents •Project Documents •Project Documents •Project Documents •Project Documents
•Project Documents •Agreements •Enterprise •Enterprise •Enterprise •Organizational •Work
•Enterprise •Procurement Environmental Environmental Environmental Process Assets Performance Data
Environmental Documents Factors Factors Factors • Tools & •Work
Factors •Enterprise •Organizational •Organizational •Organizational Techniques Performance
•Organizational Environmental Process Assets Process Assets Process Assets •Expert Judgment Reports
Process Assets Factors • Tools & • Tools & • Tools & •Interpersonal and • Tools &
• Tools & •Organizational Techniques Techniques Techniques Team Skills Techniques
Techniques Process Assets •Expert Judgment •Expert Judgment •Expert Judgment •Project •Data Analysis
•Expert Judgment • Tools & •Data Gathering •Data Gathering •Data Gathering Management •Audits
•Data Analysis Techniques •Data Analysis •Data Analysis •Data Analysis Information •Meetings
•Meetings •Expert Judgment •Interpersonal and •Interpersonal and •Interpersonal and System • Outputs
• Outputs •Data Gathering Team Skills Team Skills Team Skills • Outputs •Work
•Risk Management •Data Analysis •Risk •Representation of •Strategies for •Change Requests Performance
Plan •Interpersonal and Categorization Uncertainty Threats •Project Documents Information
Team Skills •Data • Outputs •Strategies for Updates •Change Requests
•Prompt Lists Representation •Project Documents Opportunities •Project
•Meetings •Meetings Updates •Contingent Management Plan
• Outputs • Outputs Response Updates
•Risk Register •Project Documents Strategies •Project Documents
•Risk Report Updates •Strategies for Updates
Overall Project •Organizational
•Project Documents Risk Process Assets
Updates •Decision Making Updates
• Outputs
•Change Requests
•Project
Management Plan
Updates
•Project Documents
Updates

58
DEFINITIONS

Risk Management is an on-going activity throughout the life cycle and its purpose is to
identify risks, assess the risks ranked in order of probability and impact, determine the
risk threshold, and develop risk responses to these risks – in order to maximize
opportunities and minimize threats

Risk Threshold is the level of a specific risk a stakeholder is willing to take; below the
risk threshold risk is accepted, but above it risk is not accepted (e.g. we can accept
some shipment delay but no more than 4 days)

Risk Trigger is the point when the risk happens (e.g. hitting 4 days)

Risk Tolerance is *the degree, amount, or volume of risk that an organization or

individual will withstand (the overall risk in a project)

Risk Factors are determined by the risk event’s probability (or frequency) of occurrence
and impact (or consequence)

Risk Conditions like project and business environment which poses risks to the project
(e.g. recession, flood, high staff turnover, etc.)

59
11.1 PLAN RISK MANAGEMENT
A risk management plan is required to document the requirements and objectives of risk management
such as the risk tolerances of the project stakeholders, including managing of “new” risks and removal of
“old” risks during the course of the project life cycle, making ad-hoc risk response decisions; identifying,
analyzing the risks and planning for risk responses
As the project progresses, the overall project risk reduces when remaining unknowns are translated to
knowns - unknowns are eventually zero when the project has been successfully completed

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Charter, Project
Management Plan, Project
Documents, Enterprise Environmental
Factors (understanding risk attitudes
of people and risk tolerence of the
organization), and Organizational
Process Assets (observing risk-
related compliance and
procedures, etc.)
Expert Judgment, Data Analysis, Produce the Risk Management Plan
and Meetings with project
stakeholders to brainstorm and
analyze risk information, needs
and expectations, and develop
risk-related initiatives to
manage risks according to the
risk management plan

60
11.2 IDENTIFY RISKS
Project stakeholders are involved to provide risk information inputs and their risk tolerances during
identifying risks
Identify risks individually as well as overall project risk is an iterative process or on-going throughout the
project life cycle because new risks may emerge anytime in the project, and earlier identified risks may
disappear or at a level of different risk intensity

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan
Project Documents
Agreements
Procurement Documents (from 12.1
Plan Procurement Management
process)
Enterprise Environmental Factors,
and Organizational Process Assets
Expert Judgment, Data
Gathering (e.g. brainstorming,
checklists, interviews), Data
Analysis (e.g. root cause
analysis, assumption and
constraint analysis, SWOT
analysis, document analysis),
Interpersonal and Team Skills,
Prompt Lists, and Meetings
Risk Register is a document that
captures:
List of identified risks
Probability and impact
Risk triggers
Potential risk owners
List of potential risk responses
Risk Report, and Project Documents
Updates

61
 11.3 PERFORM QUALITATIVE RISK ANALYSIS
A rapid, cost-effective and subjective analysis of ranking and prioritizing risks (may use narratives,
scoring, weightages, guessimates)

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, Project Expert Judgment, Data Project Documents Updates
Documents (e.g. assumption log, risk Gathering, Data Analysis (e.g. Risk report and issue log
register, and stakeholder register), risk data quality assessment, risk
Enterprise Environmental Factors, probability and impact Risk register updates (such as
and Organizational Process Assets assessment, and assessment of revision of risk rankings, “flagging”
other risk parameter like of certain risk areas, risk-related
urgency, strategic impact, etc. issues requiring different levels of
Probability attention and response, risks
/ Low Medium High Interpersonal and Team Skills, requiring additional analysis, watch
Impact
Risk Categorization, Data lists, risk trends, etc.) –
Representation (e.g. probability
Low A6 A7
and impact matrix, and Assumption log updates to
hierarchical charts), and accomodate new risk assumptions
Medium A4 A3
Meetings when new information is made
available
High A1 A2, A5
Low risks need to be added into
Conventional probability-impact matrix table, where each identified risk is watch lists for monitoring
mapped against the probability of risk occuring and the severity of impact
62
11.4 PERFORM QUANTITATIVE RISK ANALYSIS
Quantitative Risk Analysis process uses a numerical approach to risk analysis and this is more preferable,
accurate and objective (but is more time-consuming to undertake) compared to Qualitative Risk Analysis
Statistical backing either by frequency of observations, or probability distribution by Monte-Carlo
simulation; and Decision-Tree which can numerically justify the probability of occurrence, and this is
primarily used for decision making purposes

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g. risk
management plan, scope baseline,
schedule baseline, and cost baseline),
Project Documents (e.g. assumption
log, basis of estimates, cost
estimates, cost forecasts, duration
estimates, milestone list, resource
requirements, risk register, risk
report, and schedule forecasts)
Enterprise Environmental Factors,
and Organizational Process Assets
Expert Judgment, Data
Gathering, Interpersonal and
Team Skills, Representations of
Uncertainty like using
probability distributions, Data
Analysis (e.g. simulation like
Monte Carlo, sensitivity analysis
for determining which risks have
the most influence Tornado
Diagram, decision tree analysis,
and influence diagrams)
Project Documents Updates
Assessment of overall project risk
exposure
Detailed probabilistic analysis of the
project
Prioritized list of individual project
risks
Trends in quantitative risk analysis
results
Recommended risk responses

63
11.5 PLAN RISK RESPONSES
Responding to risks to increase opportunities and reduce threats to the project
Often used with a modifier (e.g. management reserve, contingency reserve) to provide details on what
types of risk are meant to be mitigated; the funds and resources will be reduced and adjusted over time

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g.
resource management plan, risk
management plan, and cost
baseline), Project Documents (e.g.
lessons learned register, project
schedule, project team assignments,
resource calendars, risk register, risk
report, and stakeholder register),
Enterprise Environmental Factors,
and Organizational Process Assets
Expert Judgment, Data
Gathering, and Interpersonal
and Team Skills
Strategies For Negative Risks
Or Threats
Strategies For Positive Risks Or
Opportunities
Contingent Response Strategies
Strategies For Overall Project
Risk
Data Analysis, and Decision
Making
Change Requests, Project
Management Plan Updates (e.g.
schedule management plan, cost
management plan, quality
management plan, resource
management plan, procurement
management plan, scope baseline,
schedule baseline, and cost baseline),
and Project Documents Updates
(e.g. assumption log, cost forecasts,
lessons learned register, project
schedule, risk register, and risk
report)

64
DEFINITIONS
Risk Categories
Grouping risks by common root causes can help us to develop effective risk
responses like technical, external, organizational, environmental, business, etc.
Helps to determine the areas of the project most exposed to the effects of
uncertainty

Risk Responsibilities
Project Manager is fully responsible to initiate, integrate and lead risk
management across all knowledge areas and processes
Functional Manager manages functional risks affected by, or affecting the project
Project Team requires a working knowledge of risk management tools and
techniques, and be the “ears and eyes” for the project manager

Risk Types
Unknown unknowns (unplanned) - having no information about the risk; cannot be
proactively planned to respond as it has to be a reactive response called a
workaround and is financed by the management reserve
Known unknowns - having partial information about the risk and known knowns -
having complete information about the risk; these risks are proactively planned
are financed by the contingency reserve

65
RESIDUAL, SECONDARY RISKS AND RISK
RESPONSE STRATEGIES
Residual risk is the leftover/minor risks that remain after a risk response
Secondary risk is a risk arising as a direct outcome of implementing a risk response
A workaround is an unplanned risk response (does not appear in the risk response plan) but only be
determined and executed when an unknown-unknown risk happens
Strategies For Negative Risks Or Threats
1. Escalate when the threat is outside the scope of the project, or the proposed response would exceed
the project manager’s authority and is no further monitored by the team
2. Avoid or eliminate the adverse risk (or cause), or taking an alternative course of action; usually this is
considered during initiating or planning where the level of influence is high and the cost of change is
low, otherwise reducing the impact of a risk event by reducing the possibility of its occurrence
3. Transfer or deflect the risk and risk ownership to a third party; e.g. contracting, retention, warranties,
guarantees, bonds and insurance
4. Mitigate the risk's probability and impact to an acceptable threshold (e.g. prototyping, simulating
and modeling)
5. Accept the consequence of a risk occurring, perhaps because it is not cost-effective to respond -
active risk acceptance is to execute alternatives or fallback (contingency) plan; and passive risk
acceptance is to accept the risk and do nothing
66
RESIDUAL, SECONDARY RISKS AND RISK
RESPONSE STRATEGIES
Strategies For Positive Risks Or Opportunities
1. Escalate when the opportunity is outside the scope of the project, or the proposed response would
exceed the project manager’s authority and is no further monitored by the team
2. Exploit or pursue the opportunity
3. Enhance an existing opportunity
4. Share the opportunity with strategic partners (e.g. joint-ventures, alliances and partnerships) to
increase the value of collaboration energies instead of doing it on its own
5. Accept the opportunity as it comes along (not actively pursuing it)
Strategies For Overall Project Risk
 Avoid, Exploit, Transfer/share, Mitigate/enhance, and Accept
Contingent Response Strategies
These are developed in advance and designed to be used only under predefined conditions if there is
advanced and sufficient warning to implement this plan (such as missed milestones, missed deliverables, etc.)
e.g. if you are having an outdoor barbeque and it seems it is going to rain, move the cooking under a
shelter and have guests moved inside the house
Note: Can be a contingency plan (or alternative backup plan), or a fallback plan (return to previous
workable solution) developed in advance of a risk event occurring and is designed to be used when the
primary risk response proves not to be effective
67
11.6 IMPLEMENT RISK RESPONSES
This is process of implementing the risk response plans when the risks are triggered

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, (e.g.
lessons learned register , risk
register, and risk report), and
Organizational Process Assets
Expert Judgment, Interpersonal
and Team Skills, and Project
Management Information
System
Change Requests, and Project
Documents Updates (e.g. issue log,
lessons learned register, project team
assignments, risk register, and risk
report)

68
11.7 MONITOR RISKS
This is a continuing process of tracking new risks and those on the watch list, reanalyzing existing risks,
monitoring threshold trigger conditions for risk responses and contingency plans, monitoring residual (or
secondary) risks, reviewing the execution of risk responses, and monitoring contingency reserve

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, Project
Documents (e.g. issue log, lessons
learned register, risk register, and
risk report), Work Performance
Data, and Work Performance
Reports (from 4.5 Monitor and
Control Project Work)
Data Analysis (e.g. technical Work Performance Information,
performance analysis, and Change Requests, Project
Management Plan Updates, Project
reserve analysis to find out if the
contingency reserve is sufficient Documents Updates (e.g.
to last until project closeout assumption log, issue log, lessons
learned register, risk register, and
Audits to check the risk response
risk report), and Organizational
effectiveness and how well the
Process Assets
risk management methodology
is being practiced
Meetings like conducting risk
reassessment on identified risks,
including residual or secondary
risks left behind from executed
risk responses, and new risks

69
 MODULE 12 PROCUREMENT MANAGEMENT
12.1 Plan Procurement
Management
• Inputs
• Project Charter
• Business Documents
• Project Management Plan
• Project Documents
• Enterprise Environmental Factors
• Organizational Process Assets
• Tools & Techniques
• Expert Judgment
• Data Gathering
• Data Analysis
• Source Selection Analysis
• Meetings
• Outputs
• Procurement Management Plan
• Procurement Strategy
• Bid Documents
• Procurement Statement of Work
• Source Selection Criteria
• Make-or-Buy Decisions
• Independent Cost Estimates
• Change Requests
• Project Documents Updates
• Organizational Process Assets
Updates
12.2 Conduct Procurements
• Inputs
• Procurement Management Plan
• Procurement Documents
• Procurement Documentation
• Seller Proposals
• Enterprise Environmental Factors
• Organizational Process Assets
• Tools & Techniques
• Expert Judgment
• Advertising
• Bidder Conferences
• Data Analysis
• Interpersonal and Team Skills
• Outputs
• Selected Sellers
• Agreements
• Change Requests
• Project Management Plan
Updates
• Project Documents Updates
• Organizational Process Assets
Updates
12.3 Control Procurements
• Inputs
• Project Management Plan
• Project Documents
• Agreements
• Procurement Documentation
• Approved Change Requests
• Work Performance Data
• Enterprise Environmental Factors
• Organizational Process Assets
• Tools & Techniques
• Expert Judgment
• Claims Administration
• Data Analysis
• Inspection
• Audits
• Outputs
• Closed Procurements
• Work Performance Information
• Procurement Documentation
Updates
• Change Requests
• Project Management Plan
Updates
• Project Documents Updates
• Organizational Process Assets
Updates
70
Project Procurement Management covers the essentials of procurement decisions, contract administration
and closure principles

Procurement is buying resources from outside the project organization for use in the project to produce
the required deliverables, results, products or services

The term Buyer is used to refer to the party buying things from a Seller who provides them

Procurement management process is seller-centric - e.g. managing seller’s performance, payments to

seller, agreements with seller, etc.

A contract is in place if there is an offer and acceptance - a bilateral contract has both the Buyer and
Seller sign-offs; whereas a unilateral contract is for a unit price purchase by the Buyer is also known as
a purchase order for a straight-forward procurement

Constructive changes are unauthorized contract changes that are performed but are not from a change
document going through the CCB to have the CCB approval - they are frequent cause of disputes and
claim

A Buyer/Seller share ratio means (Buyer’s commitment)/(Seller’s commitment), e.g. 20/80 ratio means
20% buyer–80% seller (BSR = 0.2)

71
PROCUREMENT AND CONTRACTS
A collaborative win-win approach is required in procurements and contracts
 Emphasizing multi-tiered structure in contracting relationships using several agreements
rather than lumped into one agreement
 Promote value-driven deliverables instead of phase gates and milestones
 Scope according to fixed-priced micro-deliverables (i.e., as per user stories) presented
in fixed-price increments
 Limit the overall budget to a fixed amount, so that any new inclusions to the scope will
be a decision of replacing original work with new work
 Implement a shared financial risk approach whereby the seller will be rewarded for
early delivery, or penalized for lateness
 Provide an exit clause whereby the customer can exercise control over contractual
obligations to the seller or agile supplier
 The customer may adjust or vary the project scope, or adjust features to fit the capacity
 Embedding the agile supplier’s services directly into the customer’s organization
 Favoring full-service agile suppliers that provide wholesome full value, rather than
piecemeal work
12.1 PLAN PROCUREMENT MANAGEMENT
Making procurement decisions: finding out what to buy, what to make (make-or-buy), from whom, when
and how
The types of contract to enter in must be appropriate to the kind of purchases to be made and need to
be favorable to the buyer although we aim to achieve a win-win resolution
Ignorance of purchasing law is not an excuse to exempt from legal implications – the project manager is
to provide purchasing advice to the procurement office to execute the procurement
Procurement office will dominate the procurement process in compliance to the project organization
process assets – who signs off the procurement documents is the person who can make amendments

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Charter, Business
Documents,(e.g. business case and
benefits management plan), Project
Management Plan
Enterprise Environmental Factors,
and Organizational Process Assets
Expert Judgment, Data
Gathering, Data Analysis, Data
Analysis, Source Selection
Analysis (e.g. least cost or
qualifications only, quality-
based/highest technical proposal
score, quality and cost-based,
sole source, and fixed budget
decisions), and Meetings
Procurement Management Plan,
Procurement Strategy, Bid
Documents, Procurement Statements
Of Work, Source Selection Criteria,
Make-Or-Buy Decisions,
Independent Cost Estimates,
Change Requests, Project
Documents Updates, and
Organizational Process Assets
Updates

73
PROCUREMENT DOCUMENTS
Procurement Management Plan
• The document that describes how procurement processes from developing procurement documentation
through contract closure will be managed.
• Contains information on what to make or buy, the pre-qualified vendor list, make an independent
estimate of expected project costs, develop the seller’s screening, seller’s evaluation criteria and
weighting system, the types of contracts to use, and how the procurement will be executed
Procurement Strategy (e.g. delivery methods, contract payment types, and procurement phases)
• Fixed-price contracts are suitable when work is predictable and its requirements are well defined and
not likely to change; cost-plus contracts are suitable when work is evolving, likely to change, or not well
defined; time and material contracts are suitable when the work is uncertain, amounting in time for
effort and material to use
Bid Documents (e.g. request for information, request for quotation, and request for proposal when there is
a problem in the project and the solution is not easy to determine)
Procurement Statements Of Work
• Is derived from the WBS whose work or procurement item requires to be fulfilled by sellers, including
performance criteria required of sellers
• The procurement statement of work must be clear, complete and as concise as possible and it should
also describe the work and activities that the seller is required to complete, including meetings, reports
and communications
The procurement documentation consists of bid documents, procurement statement of work, independent
cost estimates, and source selection criteria
74
CONTRACT TYPES
Fixed-Price (or Lump-Sum) Contracts
Fixed-price contracts are suitable when work is predictable and its requirements are well defined and not
likely to change

FFP Firm Fixed Price (most commonly used,
a.k.a. lump sum: least buyer risk, highest seller
risk)
Seller sells item at $100K and buyer accepts and
pays $100K
If the item gets more expensive, the seller must
keep his promise to sell at $100K
FPIF Fixed Price Incentive Fee given for fixed
price contracts as a way to motivate the seller to
meet or exceed the predetermined project cost,
schedule or technical performance metrics
Seller sells item at $100K and buyer accepts and
pays $100K with an additional incentive fee if the
seller can meet some predetermined conditions
If the item gets more expensive, the seller must
keep his promise to sell at $100K, and the
incentive fee offer is still valid
FPEPA Fixed Price Economic Price Adjustment
contract allows for price adjustment based on
some predetermined price index if the contract is
for many years, affected by inflation/deflation,
or susceptible to volatile prices
Seller sells item at $100K and buyer accepts and
pays $100K
If the item gets more expensive, the seller must
keep his promise to sell at $100K
However, if the item gets more expensive over a
certain price, the seller can negotiate with the
buyer for a new selling price
75
CONTRACT TYPES
Cost-Plus also known as Cost-Reimbursable Contracts
Payment (reimbursement) to the seller for seller's actual costs, plus a fee typically representing seller profit
Cost-plus contracts are suitable when work is evolving, likely to change, or not well defined
CPFF Cost Plus Fixed Fee is commonly used
where a fixed fee (profit) has already been
agreed to the seller, although the reimbursable
cost can vary
Seller sells item at target selling price $100K with
a certain fixed fee, and buyer accepts and pays
$100K plus the fixed fee
If the item gets more expensive, the buyer will pay
at the new higher selling price plus the fixed fee
If the item gets cheaper, the buyer will pay at the
new cheaper selling price plus the fixed fee
CPIF Cost Plus Incentive Fee is the fairest
contract to buyer and seller as there is an
additional incentive to seller based on lower cost
differential (on top of his agreed upon fixed
fee) to obtain the best cost advantage to buyer;
however, if vice-versa, the seller has to absorb
the excess cost
Seller sells item at a target selling price $100K
with a certain fixed fee, and buyer accepts and
pays $100K plus the fixed fee
If the item gets more expensive, the buyer will pay
at the new higher selling price plus the fixed fee
If the item gets cheaper, the buyer will pay at the
new cheaper selling price plus the fixed fee with
an additional pre-agreed incentive amount
calculated from the difference of the target selling
price and the cheaper selling price
76
CONTRACT TYPES
CPAF Cost Plus Award Fee is used when a
majority of fee is only earned based on the
satisfaction (discretion) by the buyer of the seller
according to certain subjective performance
criteria defined and incorporated in the contract
Seller sells item at a target selling price $100K
with a certain award fee, and buyer accepts and
pays $100K plus the award fee provided that the
seller is able to meet certain obligation
If the item gets more expensive, the buyer will pay
at the new higher selling price plus the award fee
If the item gets cheaper, the buyer will pay at the
new cheaper selling price plus the award fee
Time and Material Contracts
The full value of the agreement and the exact
quantity of items to be delivered are not
defined by the buyer at the time of the contract
award, and this is usually used when the project
scope is unable to be defined (e.g. legal costs)
Time and material contracts are suitable when the
work is uncertain, amounting in time for effort
and material to use
These contracts can be a combination of cost-
reimbursable and fixed-price

Note: There is a Cost Plus Percentage of Costs (CPPC) contract but is removed from the PMBoK 6th
Edition. The CPPC works when the buyer agrees to give the seller a certain percentage of the final cost as
a fee – this may be exploited by the seller to charge a high cost to command a high seller’s fee. The buyer
has to audit to ensure that the final cost is not being manipulated.

77
12.2 CONDUCT PROCUREMENTS
Procurements are conducted to solicit seller responses, appraise sellers through the bid , shortlisting,
negotiating, and finally awarding a written contract to the seller
It is important that purchasing, contracting, and legal requirements are observed, and advised by
experts in these areas

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan, Project
Documents (e.g. lessons learned
register, project schedule,
requirements documentation, risk
register, and stakeholder register)
Procurement Documentation (e.g.
bid documents, procurement
statement of work, independent cost
estimates, and source selection
criteria)
Seller Proposals, Enterprise
Environmental Factors, and
Organizational Process Assets
Expert Judgment, Advertising,
Bidder Conferences are
conducted between the buyer
and sellers to acquaint the
sellers with the procurement
needs, Data Analysis, and
Interpersonal and Team Skills
with seller on the terms and
conditions of the purchase in a
contract, governing law, seller
performance, schedules,
payments, warranty, etc.
Selected Sellers, Agreements (or
contracts) for the procurement with
sellers, Change Requests, Project
Management Plan Updates, Project
Documents Updates (e.g. lessons
learned register, requirements
documentation, requirements
traceability matrix, resource
calendars on the availability of the
sellers, risk register, and stakeholder
register), and Organizational
Process Assets Updates

78
12.3 CONTROL PROCUREMENTS
Procurement contracts which had been signed with sellers need to be administered to ensure sellers
perform to contractual obligations and paid accordingly
INPUTS
Project Management Plan (e.g.
requirements management plan, risk
management plan, procurement
management plan, change
management plan, and schedule
baseline)
Project Documents (e.g. assumption
log, lessons learned register,
milestone list, quality reports,
requirements documentation,
requirements traceability matrix, and
stakeholder register), Agreements,
Procurement Documents, Approved
Change Requests, Work
Performance Data, Enterprise
Environmental Factors, and
Organizational Process Assets
TOOLS & TECHNIQUES
Expert Judgment, Claims
Administration such as disputes
or contested claims, or appeals,
Data Analysis (e.g. performance
reviews, earned value analysis,
and trend analysis), Inspection,
and Audits of seller’s
performance
OUTPUTS
Closed Procurements when the
buyer formally provides a written
notice to the seller to formally
discharge from the contract, or
informally the buyer pays the seller
the final payment, Work
Performance Information,
Procurement Documentation
Updates, Change Requests, Project
Management Plan Updates, Project
Documents Updates, and
Organizational Process Assets
Updates (e.g. payment schedules
and requests, seller performance
evaluation documentation,
prequalified seller lists updates,
lessons learned repository, and
procurement file)
79
TERMINATING DISPUTED PROCUREMENT
CONTRACT
Terminated work has to be mutually agreed by buyer and seller, and has to be validated by the buyer
(or valuation) before payment for work done so far is given to the seller
Disputes are preferred to be settled by, by order:
1. Mediation (negotiation)
2. Adjudication (statutory procedure and legally binding provided by a third party adjudicator
selected by the parties in dispute)
3. Arbitration (by a third party arbitrator or arbitration panel, selected by the parties in dispute,
having a court process, providing testimony and give evidence similar to a trial but it is usually less
formal and legally binding)
4. Litigation (going to court with lawyers and a lengthy process) when all else fails and this is least
desirable

Adjudication/Arbitration and Mediation are the two major forms of Alternative Dispute Resolution (ADR)
refers to any means of settling disputes other than Litigation

80
 MODULE 13 STAKEHOLDER
MANAGEMENT
13.1 Identify Stakeholders 13.2 Plan Stakeholder 13.3 Manage Stakeholder 13.4 Monitor Stakeholder
Management Engagement Engagement
• Inputs • Inputs • Inputs • Inputs
• Project Charter • Project Charter • Project Management Plan • Project Management Plan
• Business Documents • Project Management Plan • Project Documents • Project Documents
• Project Management Plan • Project Documents • Enterprise Environmental • Work Performance Data
• Project Documents • Agreements • Factors • Enterprise Environmental
• Agreements • Enterprise Environmental • Organizational Process • Factors
• Enterprise Environmental Factors Assets • Organizational Process
• Factors • Organizational Process • Tools & Techniques Assets
• Organizational Process Assets • Expert Judgment • Tools & Techniques
Assets • Tools & Techniques • Communication Skills • Data Analysis
• Tools & Techniques • Expert Judgment • Interpersonal And Team • Decision Making
• Expert Judgment • Data Gathering Skills • Data Representation
• Data Gathering • Data Analysis • Ground Rules • Communication Skills
• Data Analysis • Decision Making • Meetings • Interpersonal And Team
• Data Representation • Data Representation • Outputs • Skills
• Meetings • Meetings • Change Requests • Meetings
• Outputs • Outputs • Project Management Plan • Outputs
• Stakeholder Register • Stakeholder Management Updates • Work Performance
• Project Management Plan Plan • Project Documents Information
Updates Updates • Change Requests
• Project Documents • Project Management Plan
Updates Updates
• Project Documents
Updates

81
Project Stakeholder Management identifies
people, groups or organizations having a vested
interest in the project, with the aim of engaging
stakeholders using strategies, and ensuring
stakeholders needs and expectations are met
Stakeholders come and go, and it is important
for the project manager to be “on top of things”,
and tailor each project stakeholder management
considering stakeholder diversity, relationship
complexity, and communication technology used
Project managers in reality behave like
salespersons, always “reading” the stakeholders
mind, finding appropriate stakeholder
management strategies to actively pursue good
rapport with key stakeholders and always
engaging the stakeholders with the motive of
increasing project success
Image credit:
In agile/adaptive environments, aggressive https://www.mindtools.com/media/Diagrams/Figure2_Forcefield
transparency using direct and active engagement _Analysis_v3.png
with stakeholders is encouraged, bypassing
layers of bureaucracy in order to ensure timely Kurt Levin created the Force Field Analysis to help
and productive discussion and decision making make a decision by analysing the forces for and
against a change, and it helps you communicate the
reasoning behind your decision

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13.1 IDENTIFY STAKEHOLDERS
Project stakeholders are people, groups and organizations who have positive or negative interests and
impacts in a project
INPUTS
Project Charter
Business Documents (e.g. business
case, and benefits management
plan)
Project Management Plan (e.g.
communications management plan
and stakeholder engagement plan
just as these plans are
progressively elaborated)
Project Documents (e.g. change log,
issue log, and requirements
documentation)
Agreements, Enterprise
Environmental Factors, and
Organizational Process Assets
TOOLS & TECHNIQUES
Expert Judgment, Data
Gathering (e.g. questionnaires
and surveys, and brainstorming)
Data Analysis (mapping
stakeholders)
Stakeholders can be classified
via Data Representation and
Meetings
OUTPUTS
Stakeholder Register is a project
document about project
stakeholders:
Identification information
Assessment information
Stakeholder classification
Project Management Plan Updates
(e.g. requirements management plan,
communications management plan,
risk management plan, and
stakeholder engagement plan)
Project Documents Updates (e.g.
assumption log, issue log, and risk
register)
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 STAKEHOLDER MAPPING
Images are sourced from:
clockwise from top left
High power, interested
people: these are the people
1. www.mindtools.com
you must fully engage and 2. www.justpmblog.com
make the greatest efforts to 3. www.projectexperts.com
satisfy. Best channels:
Issues, Change Logs, Status
4. www.bawiki.com
Meetings

High power, less interested

people: put enough work in
with these people to keep
them satisfied, but not so
much that they become
bored with your message.
Steering Committee, Board Stakeholder Cube
Meeting Updates by Lucid Consulting
Low power, interested
people: keep these people
adequately informed, and
talk to them to ensure that
no major issues are arising.
These people can often be
very helpful with the detail
of your project. In-Person,
Video, Email Updates

Low power, less interested

people: again, monitor
these people, but do not
bore them with excessive
communication. Send Email,
Status Reports

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 STAKEHOLDER MAPPING
http://www.gpmfirst.com/books/stakeholder-relationship-management/mapping-stakeholders

Salience Model (Mitchell, Agle and Wood, 1997)

https://www.slideshare.net/archanabinoy143/salience-modelsupply-chain-management

Power: Coercion (based on force or threat), utilitarian (based on

Dimension
resource control or incentives offered), or normative (based on symbolic
influences such as moral authority)
Legitimacy: Factors such as who is funding the effort, who is impacted
by the effort, and who has control of specific assets needed to execute
the project are common factors of legitimacy
Image sources from top to bottom

Urgency: The degree to which stakeholder claims call for immediate

attention
Latent Stakeholders
1. Dormant: They have the power to cause problems for the project,
and need to be carefully managed
2. Discretionary (Weak Stakeholder): Their needs and issues should
be heard and understood by the project team, but incorporating
those needs is likely to be discretionary based on the needs of
other stakeholders with greater power or urgency
Direction of influence 3. Demanding: These are most likely to be project detractors if their
Category demands are not incorporated
Expectant Stakeholders
4. Dominant: Their power and legitimacy make them important for
project success, but their low urgency means they may not have to
be part of the core project effort
5. Dangerous: Their power and urgency can make them threats to
project success, and they are often drivers of scope expansion or
other changes that do not fall within the legitimate needs of the
project
6. Dependent: Their lack of power makes them dependent on the
project team to ensure their needs are heard and fully considered
7.  Core or Definitive: These are stakeholders who always take top
priority and evaluated as having power, legitimacy, and urgency
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13.2 PLAN STAKEHOLDER ENGAGEMENT
Developing approaches to involve stakeholders based on their needs, expectations, interests, and
potential impact on the project
INPUTS TOOLS & TECHNIQUES OUTPUTS
Project Charter, Project Expert Judgment , Data Stakeholder Engagement Plan
Management Plan (e.g. resource Gathering, Data Analysis (e.g. A subsidiary plan of the project
management plan, communications assumption and constraint management plan that identifies
management plan, and risk analysis, and root cause the strategies and actions required
management plan), Project analysis), Decision Making, Data to promote productive involvement
Documents (e.g. assumption log, Representation (e.g. mind of stakeholders in decision making
change log, issue log, project mapping, stakeholder and execution
schedule, risk register, and engagement assessment matrix),
stakeholder register), Agreements, and conduct Meetings
Enterprise Environmental Factors,
and Organizational Process Assets
Stakeholder Unaware Resistant Neutral Supportive Leading
Current Desired
Stakeholder Engagement Assessment Stakeholder 1
engagement engagement
Matrix identifies the current Desired
engagement level of a specific Stakeholder 2
engagement
Current
stakeholder and the desired engagement
engagement level Current Desired
Stakeholder 3
engagement engagement

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13.3 MANAGE STAKEHOLDER ENGAGEMENT
This is a process of regularly communicating and working with stakeholders throughout the project life
cycle to increase project success
INPUTS
Project Management Plan (e.g.
communications management plan,
risk management plan, stakeholder
engagement plan, and change
management plan), Project
Documents (e.g. change log, issue
log, lessons learned register, and
stakeholder register), Enterprise
Environmental Factors, and
Organizational Process Assets
TOOLS & TECHNIQUES
Expert Judgment,
Communication Skills,
Interpersonal and Team Skills
(e.g. conflict management,
cultural awareness, negotiation,
observation/conversation, and
political awareness), Ground
Rules, and Meetings
OUTPUTS
Change Requests, Project
Management Plan Updates (e.g.
communications management plan
and stakeholder engagement plan),
Project Documents Updates, (e.g.
change log, issue log, lessons
learned regster, and stakeholder
register)
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13.4 MONITOR STAKEHOLDER ENGAGEMENT
This is a process of monitoring stakeholder relationships, tailoring strategies and plans for engaging
stakeholders, and conduct the necessary changes to enhance interactions in managing stakeholders

INPUTS TOOLS & TECHNIQUES OUTPUTS

Project Management Plan (e.g.
resource management plan,
communications management plan,
and stakeholder engagement plan),
Project Documents (e.g. issue log,
lessons learned register, project
communications, risk register, and
stakeholder register), Work
Performance Data, Enterprise
Environmental Factors, and
Organizational Process Assets
Data Analysis (e.g. alternatives
analysis, root cause analysis, and
stakeholder analysis), Decision
Making (e.g. multicriteria
decision analysis and voting),
Data Representation,
Communication Skills (e.g.
feedback and presentations),
Interpersonal and Team Skills
(e.g. active listening, cultural
awareness, leadership,
networking, and political
awareness), and Meetings
Work Performance Information,
Change Requests, Project
Management Plan Updates (e.g.
resource management plan,
communications management plan,
and stakeholder engagement plan),
Project Documents Updates (e.g.
issue log, lessons learned register,
risk register, and stakeholder
register)

88