Self-Study Guide

Training: Project Manager Seminar

Author: Knowledge Management

Email: knowledge.management@lafargeholcim.com

Date: Version 2015

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Table of Contents

1 Project Initiation ........................................................................................................................ 3

1.1 What is a project? 3
1.2 Characteristics of a project 3
1.3 What is project management? 3
1.4 How do we measure project success? 4
1.5 Project Objectives vs. Project Success Factors (PSF) 4
®
1.6 Contents of the Project Definition (equivalent to the PMBOK Guide Project Charter) 4
1.7 Product Scope 4
1.8 Project Scope 4
1.9 Project Scope Statement 5
1.10 Work Breakdown Structure (WBS) 5
2 Time Management ......................................................................................................................... 7
2.1 The Scheduling Process 7
2.2 Network Diagram / Dependencies 7
2.3 Critical Path Analysis 8
2.4 Gantt Chart 9
3 Cost Management …............................................................................................................ 10
3.1 Cost Estimating 10
3.2 Cost Budgeting 10
3.3 Cost Control 11
4 Procurement Management .................................................................................................... 12
4.1 Processes 12
4.2 Plan Purchases and Acquisitions 12
4.3 Plan Contracting 12
4.4 Request Seller Responses 13
4.5 Select Sellers 13
4.6 Contract Administration 13
4.7 Contract Closure 13
5 Risk Management ................................................................................................................... 14
5.1 Risk Management Planning 14
5.2 Risk Identification 14
5.3 Risk Analysis (Qualitative and Quantitative) 14
5.4 Risk Response Planning 15
5.5 Risk Monitoring and Control 15
6 Project Control ............................................................................................................................ 16
7 Integrated Change Control ..................................................................................................... 17
8 Project Closing........................................................................................................................ 18
8.1 Close project 18
8.2 Contract closure 18

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1 Project Initiation

This consists of a group of processes that facilitate the formal authorization to start a new project or
project phase (according to the size and complexity of the project). Ref: PMBOK Guide

1.1 What is a project?

It is a temporary endeavor undertaken to create a unique product, service or result.

1.2 Characteristics of a project

 Complex and numerous activities
 Unique - a one-time set of events
 Finite - limited time, resources and budget
 Many people involved, usually across several functional areas in the organizations
 Sequenced activities
 Goal-oriented
 End product or service must result

1.3 What is project management?

It is the application of knowledge, skills, tools and techniques to project activities in order to meet
defined objectives. There are different levels of objectives:

a) Business objectives The reasons for performing the project

Example Improve customer service so that 95% of responses to the
customer satisfaction survey are “Very satisfied”.

b) Project objectives
Example
The product or the physical outcome of the project, by a given
date, for a given cost. The project objectives are a means of
achieving business objectives.
Develop, within six months and at a cost of no more than
$150,000, an interactive Internet-based computer system to
answer 99% of customer inquiries without human
intervention. Another objective for the same project could be
to create standards and procedures for operations and
support of the new system, following the corporate standard
format and guidelines for operating procedures.

NOTE: A SINGLE BUSINESS OBJECTIVE MAY GIVE RISE TO A NUMBER OF PROJECTS BEING LAUNCHED.

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 1.4 How do we measure project success?

There are 3 different levels at which success is measured.

Organizational Success
Organizational Success
 Effectiveness in implementing
(Do we consistently do the right projects, and corporate strategy
do them right)
 Overall success of all projects
undertaken
Project Success Project Success
(Did we do the right project?)  Benefits realized ( including NPV,
ROI, Payback)
 Stakeholder satisfaction
Project management Success Project Management Success
 Time
(Did we do the project right?)
 Cost
 Scope
 Quality

1.5 Project Objectives vs. Project Success Factors (PSF)

Project Objectives as described above refer to the product, which is delivered. Project Success
Factors are benefits that are realized through delivering the product. These can be monetary or non-
monetary, although even so-called non-monetary elements will eventually contribute some monetary
advantage, even if it cannot be measured.

1.6 Contents of the Project Definition

(equivalent to the PMBOK® Guide Project Charter)
 Reason for and objectives of the project - the business need
 Acceptance criteria
 Constraints, including funding limitations and target dates
 Contributing organizations and key people, particularly the Project Manager and his or her
authority
 Product description (generally in brief, but may be available as an appendix in detail,
depending on the type of project)
 Major interim deliverables (Ex. design documents), checkpoints and the related
milestones
 Risk assessment
 Project success factors

1.7 Product Scope

The features and functions that characterize a product, service or result.

1.8 Project Scope

The work, that needs to be accomplished to deliver a product, service, or result with the specified
features and functions.

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 1.9 Project Scope Statement
It describes, in detail, the project’s deliverables and the work required to create those deliverables
and provides the project stakeholders with a common understanding of the project scope. It also
enables the project team to perform detailed planning. Anything that is not described in the project
scope statement is said to be “out of scope”. The scope statement is closely linked to the Work
Breakdown Structure (WBS).

1.10 Work Breakdown Structure (WBS)

The WBS is a deliverable-oriented hierarchical decomposition of the work to be executed by the
project team in order to accomplish the project objectives and create the required deliverables. The
lowest level of the hierarchy is the work package. The size of work packages should be such that
they can be estimated with a reasonable level of confidence and adequately managed.
As a rule of thumb a work package should take 10-15 days of effort. Less would tend towards micro-
management and more could lead to an inadequate level of control.

The WBS describes “What NOT When” with “Nouns NOT Verbs”

What is in the WBS will get done, what is not in the WBS will not.

Example of a WBS

WBS Dictionary
A document, which contains a detailed description of the components of the WBS.
It should include a statement of work for each work package, which could contain, for example,
quality requirements, effort estimate, cost estimate, accounting code.

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 Responsibility Assignment Matrix (RAM)
Used to illustrate the connection between the work that needs to be done and project team
members. A particular type of RAM that is often used is the RACI Chart. There must be an R in each
row.

RACI Chart Person

Activity Ann Ben Carlos Dina Ed
Define A R I I I
Design I A R C C
Develop I A R C C
Test A I I R I

R = Responsible A = Accountable C = Consult I = Inform

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 2 Time Management
This section includes the techniques required to produce a realistic project schedule.
Time management according to the PMBOK Guide includes Schedule Control, but this will be covered
in this seminar under Integrated Project Control on Day 4.

2.1 The Scheduling Process

This is the process of calculating a time schedule for the activities to be performed on a project. It
requires the following parameters:

Activity Description
Estimated Duration - the amount of elapsed time from the start to the finish of an activity
Estimated Effort – the amount of person time that will be expended in completing the activity
Resource Definition
Resource Availability - the amount of time a resource has available to perform project activities
Dependencies – relationships between activities

The schedule is developed by building a network diagram and then performing a Critical Path
Analysis.

2.2 Network Diagram / Dependencies

The network diagram is a graphical representation of the project activities showing the relationships
(dependencies) between them. There are 3 types of dependency:

Mandatory (Hard): Dependencies between activities that are mandatory. Typically, these represent
physical constraints. For example, the walls of a house must be constructed, before the roof can be
put in place.

Discretionary (Soft): Dependencies that can be used to sequence activities at the discretion of the
project manager.

External: Dependencies to/from activities which are outside the project being scheduled.

The activities are said to have Predecessors (those activities that immediately proceed) and
Successors (those activities that immediately follow) in the network diagram.

A B C

D E F

In this sample network, A is a Predecessor of B and D, while G is a Successor of C and F

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 2.3 Critical Path Analysis

This is a technique to calculate the minimum total duration of the project. Based upon the network
diagram (dependency chart) and the estimated durations of activities, following set of parameters can
be calculated:

Early Start – The earliest point in time that an activity can start
Early Finish – The earliest point in time that an activity can finish
Late Start – The latest point in time that an activity can start without delaying the project
completion
Late Finish – The latest point in time that an activity can finish without delaying the project
completion
Free Float – The amount of time that an activity can be delayed without delaying the start any
immediate successor activity
Total Float – The amount of time that an activity can be delayed without delaying the project
completion

Each activity will be represented on the network diagram by a box in the following format,
whereby the green text represents data input from the WBS and the red text represents calculated
fields.

Early Free Float Early

Start Finish

Duration Activity
Description

Late Total Float Late

Start Finish

The early start and finish are calculated by going through the network in a so-called Forward Pass, by
using for each activity the data from the predecessors and the activity itself.
This calculation will ultimately give the early finish for the project i.e. the earliest point in time that the
project can finish based on the network logic and the activity durations.

Then using the calculated early finish for the project as the starting point, a Backward Pass is
performed to ascertain the late start and finish for each activity, i.e. the latest time at which an
activity can start/finish without delaying the project completion (as calculated in the forward pass).

The float (or slack) can then be calculated. Float is the amount of free time available.

Total Float = Late Start – Early Start

Free Float = Early Start of Successor – Early Finish

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 We have now calculated a schedule based purely on the estimated activity durations. However,
we now need to consider the availability of the required resources. The previously estimated
activity duration may change due to lack of resources.

Example: An activity is planned to take 4 days (duration) with 8 person-days’ worth of effort. This is
equivalent to 2 people working full-time for 4 days. If only one person is available at the time the
activity is due to take place, then this would take 8 days and might thus affect the schedule.
The final schedule must necessarily take into account activity dependencies, resource requirements
and resource availability.

2.4 Gantt Chart

Once the schedule has been calculated, each activity will (early) start and finish. The activity
schedule can now be displayed in a Gantt Chart (Bar chart)

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 3 Cost Management
Project Cost Management includes the processes involved in planning, estimating, budgeting and
controlling costs so that the project can be completed within the approved budget.

There are three main elements to cost management:

1. Cost estimating
Developing an approximation of the costs of the resources needed to complete project
activities.

2. Cost budgeting
This is the process of aggregating the estimated costs of individual activities to establish a
cost baseline.

3. Cost controlling
Ensuring that, factors which create cost variances and changes to the budget are kept
under control.

Considerations when preparing the cost management plan could include setting up earned value
rules, if earned value analysis will be applied and if so, also the level of WBS at which it will be
applied. A further consideration could be the definition of reporting formats.

3.1 Cost Estimating

The primary input to cost estimating is the Work Breakdown Structure (WBS). The WBS lists all of
the work packages that are to be delivered during the project lifecycle. These should include project
management work.

Cost estimates are generally expressed in units of currency, although they can be expressed in units
such as person hours or person days. There could be different types of cost element, such as fixed-
price contract work, procurement cost or cost of effort. Estimating is as much of an art as a science
and there are no “correct” answers. The only time the cost of a project is known with 100% certainty
is at project closure. However, over the years a number of techniques have been developed. Some
such techniques are:

Analogous Estimating – using data from previous, similar projects as a basis.

Bottom-up Estimating – estimating at the lowest level of the WBS and then rolling up Parametric

estimating – based upon historical/statistical information, such as cost per square

meter in construction work

3.2 Cost Budgeting

Budgeting is the process of aggregating the estimated costs of project activities to establish the total
cost for the project. The budget can be expressed as a single figure, but just as importantly as a
time-based cost baseline which will show how the budget is allocated over the duration of the project
and can also be used in controlling overall cost performance.

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 3.3 Cost Control
Project Cost Control includes:
 Influencing factors that create changes to the cost baseline
 Ensuring requested changes are properly approved
 Managing such changes when they occur
 Assuring that potential cost overruns do not exceed authorized funding
 Monitoring cost performance to detect and understand variances from the cost baseline

One of the techniques that can be applied to assess the magnitude of variances and possible
consequences is Earned Value Management (EVM).

EVM is based on the following set of parameters:

Planned Value (PV) – the budgeted cost of work scheduled to be completed on an activity or WBS
component

Earned Value (EV) – the budgeted amount for the work actually completed on an activity or WBS
component

Actual Cost (AC) – the total cost incurred in accomplishing work on an activity or WBS component

Cost Variance (CV) – the earned value minus the actual cost CV = EV-AC

Schedule Variance (SV) – the earned value minus the planned value SV = EV-PV

Cost Performance Index (CPI) – the ratio of earned value to actual cost CPI = EV/AC
A value of less than 1.0 indicates a cost overrun with respect to the estimates. The CPI is the most
commonly-used cost-efficiency indicator.

Schedule Variance (SPI) – the ratio of earned value to planned value SPI = EV/PV. It is used to
predict the project completion date.

Illustrative Graphic Performance Report

This figure uses S-curves to display EV data for a project that is over budget and behind the work plan.

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 4 Procurement Management
Procurement management includes the processes to purchase or acquire the products, services or
results needed from outside the project team to perform the work. Ref: PMBOK® Guide. In any
procurement situation there is a buyer and a seller who enter into a contractual agreement, whereby
the seller provides the buyer with products, services or results as specified in the contract.

4.1 Processes

Procurement consists of 6 processes.

 Plan Purchases and Acquisitions
 Plan Contracting
 Request Seller Responses
 Select Sellers
 Contract Administration
 Contract Closure

These processes interact with each other, not necessarily in a purely sequential fashion. They also
interact with processes in other areas such as schedule, cost and risk management.

A contract is a legally binding document, which in the last resort could be enforced through the
courts. It is, therefore, of great importance that due diligence is shown when entering into procurement
agreements. Although all project documents should be properly reviewed and approved, the nature of
a contract demands that a more extensive review process is necessary.

The project management team may and should seek support from specialists in the disciplines of
contracting, purchasing and law. A complex project can involve managing multiple contracts
simultaneously. If the acquisition does not just consist of a simple product or service, then the “seller”
may manage the work as a project, in which the “buyer” is a key stakeholder and as such should be
addressed within the seller’s communication plan.

4.2 Plan Purchases and Acquisitions

This process identifies which project needs can best be met by purchasing or acquiring products,
services, or results outside the project organization. The process includes consideration of potential
sellers, particularly if the buyer wishes to exercise some degree of control or influence over contracting
decisions. The project schedule can significantly influence the Plan Purchases and Acquisitions
process.

4.3 Plan Contracting

The Plan Contracting process prepares the documents needed to support processes Request Seller
Responses and Select Sellers. Some of the main elements of this process relate to risks (e.g.
contractual risk) and the evaluation criteria. The evaluation criteria which will be used to select
sellers might contain technical, financial, business viability factors etc. It is highly likely that standard
forms such as standard contracts are mandated within an organization.

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 4.4 Request Seller Responses

This process obtains responses such as bids and proposals from prospective sellers as to how
project requirements can be met. Typically, prospective sellers (suppliers) expend most of the effort
in this process, normally at no direct cost to the project (or buyer).

4.5 Select Sellers

This Select Sellers process receives bids or proposals and applies the evaluation criteria which were
selected in the Plan Criteria Process, to select one or more sellers who are qualified and acceptable
as a seller. The process of requesting and evaluating sellers’ responses can be a one-time activity or
can be repeated by, for example, selecting a short list and then conducting a more detailed
investigation requesting a more comprehensive proposal from the prospective sellers. The Select
Sellers process results in one or more sellers being given contracts to supply the products, services
or results needed.

4.6 Contract Administration

Both the buyer and the seller ensure that both it on the other party meet their contractual obligations
and that their own legal rights are protected. The Contract Administration process ensures that the
seller’s performance meets contractual requirements and that the buyer performs according to the
terms of the contract.

Contract Administration will have links to the following areas: Project Execution, Performance
Reporting, Quality Management and Change Control.

4.7 Contract Closure

The Contract Closure process contains both project and administrative activities. From a project
perspective it consists of verifying that all work and deliverables stipulated on the contract are
acceptable. It also involves administrative activities such as updating records to reflect final results
and archiving such information for future use. Contract Closure closes off contracts as and when
applicable. One special case of contract closure is early termination and can result from a mutual
agreement between the parties or through default of one of the parties. The rights and
responsibilities of the parties in the event of early termination are contained in a terminations clause
in the contract.

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 5 Risk Management
Project risk is an uncertain event or condition that, if it occurs, has an effect (positive or negative) on at
least one project objective such as time, cost, scope or quality. A risk may have one or more causes
and, if it occurs, one or more impacts.

Risk management includes the processes concerned with risk management. This includes the
following areas:

 Risk Management Planning

 Risk Identification
 Qualitative Risk Analysis
 Quantitative Risk Analysis
 Risk Response Planning
 Risk Monitoring and Control

5.1 Risk Management Planning

This is deciding how to approach, plan and execute the risk management activities for a project.
Planning of the risk management processes is important in ensuring that the level, type and visibility
of risk management are commensurate with the importance of the project to the organization, in
order to provide sufficient time and resources for risk management activities and establish a
commonly agreed basis for evaluation of risks. Risk Management Planning should be completed
early during project planning, since it is crucial to successfully performing the other risk processes.

5.2 Risk Identification

Risk identification determines which risks might affect the project and documents their characteristics.
All project personnel (including the client and other stakeholders outside of the project team) should be
encouraged to identify risks. Risk Identification is an iterative process as new risks can appear at any
time throughout the project life cycle. Therefore, there should be a periodic review of the risks.
Typically, the project review/status meeting is a good time to review the risks, although, as stated,
risks can appear at any time and must be dealt with as soon as possible.

5.3 Risk Analysis (Qualitative and Quantitative)

Qualitative Risk Analysis is the process of prioritizing risks according to the perceived probability of
them occurring and the impact they are expected to have on the project's objectives. This will then
allow one to split the risks into three categories of severity: High, Medium and Low

Quantitative risk analysis will enable the overall project risk profile to be understood. It will also
enable the time and cost of mitigating actions to be estimated, so that these can be included in the
overall project plan. Tracking the evolving risk profile during the course of the project will also give
an indication of whether the level of risk is increasing or decreasing.

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 5.4 Risk Response Planning

Risk Response Planning is the process of developing options and determining actions to either
enhance opportunities or reduce threats to the project's objectives. It includes the identification and
assignment of one or more persons known as the "risk response owner" to take responsibility for
each agreed risk response. Risk Response Planning addresses the risks according to their priority
by inserting mitigation activities along with resources into the schedule, budget and project
management plan.

Planned risk responses must be appropriate to the significance of the risk and be cost effective,
timely and realistic within the project context. They must also be agreed by all relevant stakeholders
and "owned" by one person who is responsible for resolution. Typically, the risks are documented in
a so-called risk register, through which they can also be tracked. It should not be forgotten that risk
may change in severity, cease to exist or come into existence at any point during the project. A risk
register can be used to keep an audit trail and may serve as a source of lessons learned during or at
the end of the project. Furthermore, the most severe risks can be put on to a "watch list" to enable
efficient and timely monitoring.

5.5 Risk Monitoring and Control

Risk Responses that were included in the project management plan will be executed during the life
cycle of the project wherever necessary. However, the project should be continuously monitored for
new and changing risks. Risk Monitoring and Control is the process of identifying, analyzing and
planning for newly arising risks as well as keeping track of the identified risks, especially those on
the "watch list". There are a number of techniques for risk management, which will not be described
here, but for which numerous reference resources are available. Other purposes of Risk Monitoring
and Control are to determine if

 Project assumptions are still valid

 Risk, as previously assessed, has changed from its prior state.
 Proper risk management policies and procedures are being followed.
 Cost/schedule contingency reserves require modification in line with the current state of risks
within the project.

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 6 Project Control
Project Control concerns monitoring and controlling processes. This includes all of the
following areas:

 Scope
 Schedule
 Cost
 Quality
 Resources
 Communication
 Risk
 Procurement

The Project Management Plan contains sections detailing the individual management plans for
each of these areas. Once Project Execution has commenced, the Project Management Plan
becomes the “roadmap” against which project progress is measured and tracked.

Project Control consists of

 Comparing actual performance against the Project Management Plan.

 Assessing performance to determine whether any corrective or preventive actions are
indicated and then recommending those actions as necessary.
 Analyzing, tracking and monitoring project risks to make sure the risks are identified, their
status is reported and the appropriate risk response plans are being executed. It should be
pointed out the risks are “living” entities that can and usually do change during the project
lifecycle with new risks appearing, existing risks becoming obsolete and other risk changing
with regard to likelihood and possible impact.
 Maintaining an accurate, timely information base concerning the project’s product(s) and
their associated documentation through to project completion.
 Providing information to support status reporting, progress measurement and forecasting.
 Providing forecasts to update current cost and schedule information.
 Monitoring the implementation of approved changes when and as they occur.

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7 Integrated Change Control
This is the process necessary for controlling factors that create change, to make sure those
changes are beneficial, determining whether a change has occurred and managing the
approved changes. This process is performed throughout the project from project initiation to
project closure.

Change Control is necessary because projects seldom run exactly according to plan. The
project management plan, the project scope statement and other deliverables must be
maintained by carefully and continuously managing changes, either by rejecting changes or by
approving changes so that those approved changes are incorporated into the revised baseline.

The Integrated Change Control process includes the following change management activities:

 Identifying that a change needs to occur or has occurred.

 Ensuring that only approved changes are implemented.
 Reviewing and approving requested changes.
 Managing the approved changes when they occur.
 Maintaining the integrity of baselines by releasing only approved changes for incorporation
into project product or services and maintaining their related configuration and planning
documentation.
 Reviewing and approving all recommended corrective and preventive actions.
 Controlling and updating the scope, cost, budget, schedule and quality requirements
based upon approved changes, by coordinating changes across the entire project.
 Documenting the complete impact of requested changes.
 Validating defect removal.
 Controlling project quality in compliance with standards based on quality reports.

Proposed changes can require new or revised cost estimates, schedule sequence and dates,
resource requirements and analysis of risk response alternatives. These changes can and
generally do require adjusts to the project management plan, the project scope statement and
other deliverables. The configuration management system with change control provides a
standardized, effective and efficient process to centrally manage changes within a project.
Configuration management together with change control includes identifying, documenting and
controlling
changes to baseline.

The term integrated is used to describe the change process, because a change will seldom if
ever affect only one element of the project in isolation but will generally require adjustments to
be made in several different areas at the same time.

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8 Project Closing
This includes processes to formally terminate the activities of a project, hand off the
completed product to the client or close a cancelled project. The process group verifies that
all defined processes are completed in order to close the project and formally establishes
that the project is finished. The two project management processes applied are called
Close Project and Contract Closure.

8.1 Close project

This is the process of delivering the final product, service or result and ensuring that all
administrative procedures are applied to terminate the activities of a project, such as obtaining
client sign-off, archiving project documentation, formally releasing the project team.

8.2 Contract closure

This is the process of completing and settling each contract including the resolution of any
open items, completion of outstanding financial transactions and formally closing out each
contract.

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