7.Important Concepts (Page 71-76)

8/20/2019 7.Important Concepts (Page 71-76)

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Change control

The Perform Integrated Change Control (PICC) process is conducted throughout project lifecycle and is the ultimate responsibility of the project

manager.

Changes may be requested by any stakeholder involved with the project.

Changes should be recorded in written form and entered into the change management and/or configuration management system.

Change requests are subject to the process specified in the change control and configuration control systems.

Change request processes may require information on estimated time and cost impacts.

PICC process includes a change control board (CCB)

CCB: Formally chartered group responsible for reviewing, evaluating, approving, delaying, or rejecting changes to the project, and for recording and

communicating such decisions.

Customer or sponsor approval may be required for certain change requests after CCB approval, unless they are part of the CCB

Closing the project

When closing the project, the project manager reviews all prior information from the previous phase closures to ensure that all project work is completed

and that the project has met its objectives.

This includes all planned activities necessary for administrative closure of the project or phase, including step- by-step methodologies that address:

Actions needed to satisfy completion or exit criteria for the phase or project;

Actions needed to transfer the project’s products to the next phase or to production and/or operations

Activities needed to collect project or phase records, audit project success or failure, gather lessons learned and archive project information for

future use by the organization

Scope

Product scope: The features and functions that characterize a product, service, or result; and/or



Project scope: The work performed to deliver a product, with the specified features and functions. The term project scope is sometimes viewed as including

product scope.

Quality vs. Grade

Quality and Grade are not the same concepts.

Quality as a delivered performance or result is “the degree to which a set of inherent characteristics fulfil requirements” (ISO 9000)

Grade as a design intent is a category assigned to deliverables having the same functional use but different technical characteristics.

While a quality level that fails to meet quality requirements is always a problem, a low grade of quality may not be a problem.

For example: It may not be a problem if a suitable low-grade software product (one with a limited number of features) is of high quality (no obvious

defects, readable manual). In this example, the product would be appropriate for its general purpose of use. It may be a problem if a high-grade

software product (one with numerous features) is of low quality (many defects, poorly organized user documentation). In essence, its high-grade

feature set would prove ineffective and/or inefficient due to its low quality.

Precision vs. Accuracy

The project management team should determine the appropriate levels of accuracy and precision for use in the quality management plan.

Precision is a measure of exactness

For example, the magnitude for each increment on the measurement’s number line is the interval that determines the measurement’s precision—the

greater the number of increments, the greater the precision

Accuracy is an assessment of correctness

For example, if the measured value of an item is very close to the true value of the characteristic being measured, the measurement is more accurate

An illustration of this concept is the comparison of archery targets. Arrows clustered tightly in one area of the target, even if they are not clustered in the

bull’s-eye, are considered to have high precision. Targets where the arrows are more spread out but equidistant from the bull’s-eye are considered to have

the same degree of accuracy. Targets where the arrows are both tightly grouped and within the bull’s-eye are considered to be both accurate and precise.



Precise measurements are not necessarily accurate measurements, and accurate measurements are not necessarily precise measurements.

Modern quality management

In the context of achieving ISO compatibility, modern quality management approaches seek to minimize variation and to deliver results that meet defined

requirements. These approaches recognize the importance of:

Customer satisfaction: Understanding, evaluating, defining, and managing requirements so that customer expectations are met. This requires a

combination of conformance to requirements (to ensure the project produces what it was created to produce) and fitness for use (the product or service

needs to satisfy the real needs).

Prevention over inspection: Quality should be planned, designed, and built into not inspected into the project’s management or the project’s deliverables.

The cost of preventing mistakes is generally much less than the cost of correcting mistakes when they are found by inspection or during usage.

Continuous improvement: The PDCA (plan-do-check-act) cycle is the basis for quality improvement as defined by Shewhart and modified by Deming.

In addition, quality improvement initiatives such as Total Quality Management (TQM), Six Sigma, and Lean Six Sigma could improve the quality of the

project’s management and project’s product. Commonly used process improvement models include Malcolm Baldrige

Organizational Project Management Maturity Model (OPM3®)

Capability Maturity Model Integrated (CMMI®).

Management responsibility: Success requires the participation of all members of the project team. Nevertheless, management retains, within its

responsibility for quality, a related responsibility to provide suitable resources at adequate capacities.

Communication

The communication activities may often have many potential dimensions

• Internal (within the project) and external (customer, vendors, other projects, the public);

• Formal (reports, minutes, briefings) and informal (emails, memos, ad-hoc discussions);

• Vertical (up and down the organization) and horizontal (with peers);

• Official (newsletters, annual report) and unofficial (off the record communications); and

• Written and oral, and verbal (voice inflections) and nonverbal (body language)



Risk attitude

Organizations perceive risk as the effect of uncertainty on projects and organizational objectives

Organizations and stakeholders are willing to accept varying degrees of risk depending on their risk attitude.

The risk attitudes of both the organization and the stakeholders may be influenced by a number of factors, which are broadly classified into three themes

Risk appetite: degree of uncertainty an entity is willing to take on in anticipation of a reward.

Risk tolerance: degree, amount, or volume of risk that an organization or individual will withstand.

Risk threshold: measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest. Below that risk

threshold, the organization will accept the risk. Above that risk threshold, the organization will not tolerate the risk.

For example, an organization’s risk attitude may include its appetite for uncertainty, its threshold for risk levels that are unacceptable, or its risk tolerance at

which point the organization may select a different risk response

Contracts

All Contracts generally fall into one of two broad families:

Fixed-price

Cost reimbursable

Third hybrid type commonly in use called the time and materials contract.

In practice, combination of one or more types into a single procurement is used

Fixed-price contracts: This category of contracts involves setting a fixed total price for a product. They incorporate financial incentives for achieving or

exceeding selected project objectives (such as schedule delivery dates, cost and technical performance, or anything that can be quantified and measured).

Sellers under fixed-price contracts are legally obligated to complete such contracts, with possible financial damages if they do not. Buyers need to precisely

specify the product being procured. Changes in scope may be accommodated, but generally with an increase in contract price.



• Firm Fixed Price Contracts (FFP). The most commonly used contract type is the FFP. It is favoured by most buying organizations because the

price for goods is set at the outset and not subject to change unless the scope of work changes. Any cost increase due to adverse performance

is the responsibility of the seller, who is obligated to complete the effort. Under the FFP contract, the buyer should precisely specify the product

or services to be procured, and any changes to the procurement specification can increase the costs to the buyer.

• Fixed Price Incentive Fee Contracts (FPIF). This fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation

from performance, with financial incentives tied to achieving agreed upon metrics. Typically such financial incentives are related to cost,

schedule, or technical performance of the seller. Performance targets are established at the outset, and the final contract price is determined

after completion of all work based on the seller’s performance. Under FPIF contracts, a price ceiling is set, and all costs above the price ceiling

are the responsibility of the seller, who is obligated to complete the work.

• Fixed Price with Economic Price Adjustment Contracts (FP-EPA). This contract type is used whenever the seller’s performance period spans a

considerable period of years, as is desired with many long-term relationships. It is a fixed-price contract, but with a special provision allowing

for pre defined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases (or decreases) for

specific commodities. The EPA clause needs to relate to some reliable financial index, which is used to precisely adjust the final price. The FP-

EPA contract is intended to protect both buyer and seller from external conditions beyond their control.

Cost-reimbursable contracts: This category of contract involves payments (cost reimbursements) to the seller for all legitimate actual costs incurred for

completed work, plus a fee representing seller profit. Cost-reimbursable contracts may also include financial incentive clauses whenever the seller exceeds,

or falls below, defined objectives such as costs, schedule, or technical performance targets. A cost-reimbursable contract provides the project flexibility to

redirect a seller whenever the scope of work cannot be precisely defined at the start and needs to be altered, or when high risks may exist in the effort.

• Cost Plus Fixed Fee Contracts (CPFF). The seller is reimbursed for all allowable costs for performing the contract work, and receives a fixed-fee

payment calculated as a percentage of the initial estimated project costs. A fee is paid only for completed work and does not change due to

seller performance. Fee amounts do not change unless the project scope changes.

•

Cost Plus Incentive Fee Contracts (CPIF). The seller is reimbursed for all allowable costs for performing the contract work and receives a

predetermined incentive fee based upon achieving certain performance objectives as set forth in the contract. In CPIF contracts, if the final

costs are less or greater than the original estimated costs, then both the buyer and seller share costs from the departures based upon a pre-

negotiated cost-sharing formula, for example, an 80/20 split over/under target costs based on the actual performance of the seller.



• Cost Plus Award Fee Contracts (CPAF). The seller is reimbursed for all legitimate costs, but the majority of the fee is earned only based on the

satisfaction of certain broad subjective performance criteria defined and incorporated into the contract. The determination of fee is based

solely on the subjective determination of seller performance by the buyer, and is generally not subject to appeals.

• Time and Material contracts (T&M). Time and material contracts are a hybrid type of contractual arrangement that contain aspects of both cost-

reimbursable and fixed-price contracts. They are often used for staff augmentation, acquisition of experts, and any outside support when a precise

statement of work cannot be quickly prescribed.

T&M contracts resemble cost-reimbursable contracts in that they can be left open ended and may be subject to a cost increase for the buyer. The

full value of the agreement and the exact quantity of items to be delivered may not be defined by the buyer at the time of the contract award.

Thus, T&M contracts can increase in contract value as if they were cost- reimbursable contracts. Many organizations require not-to-exceed values

and time limits placed in all T&M contracts to prevent unlimited cost growth.

T&M contracts resemble fixed unit price arrangements when Unit labour or material rates can be preset by the buyer and seller, including seller

profit, when both parties agree on the values for specific resource categories, such as senior engineers at specified rates per hour, or categories of

materials at specified rates per unit

Statistical control processes

The project management team may have a working knowledge of statistical control processes

It is useful to know the differences between

• Prevention (keeping errors out of the process) and inspection (keeping errors out of the hands of the customer).

• Attribute sampling (the result either conforms or does not conform, yes or no, 0 or 1)) and variables sampling (the result is rated on a

continuous scale that measures the degree of conformity, %, ranking etc).

• Tolerances (specified range of acceptable results) and Control limits (that identify the boundaries of common variation in a statistically s

table process or process performance).

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7.Important Concepts (Page 71-76)