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This material is intended to provide project leaders with a foundational understanding of leading practice project management processes, activities, tools, techniques, and deliverables as prescribed the Project Management Institute (PMI).
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PMI Project Management Principles
A Point of Reference(based on the 5th Edition PMBOK®
Guide)
By Tom Tiede
2
Agenda
• What is PMI and the PMP?• Why PMI Project Management Principles are
Useful to Know• A Few Basic PMI Definitions• Five Process Groups
o Initiatingo Planningo Executingo Monitoring and Controllingo Closing
• Ten Knowledge Areaso Integrationo Scopeo Timeo Costo Qualityo Human Resourceso Communicationo Risko Procuremento Stakeholders
• Project Management Terms, such as:o Triple Constrainto Project Chartero Project Management Plano Work Breakdown Structure (WBS)o Predecessor Relationshipso Earned Value Managemento Gold Platingo Responsibilities Assignment Matrixo Forming, Storming, Norming, Performing,
Adjourningo Communication Noiseo Risk Probability and Impact Matrixo Contract Typeo Stakeholder Power vs. Interest Grid
• Code of Ethics and Professional Conducto Honoro Responsibilityo Respecto Fairnesso Honesty
This material will cover the following project management topics:
3
The Project Management Institute (PMI) is the world’s largest membership association for the advocacy of Project and Program management.
What is PMI and the PMP?
• Over 400,000 current members across 180 countries
• Over 600,000 PMI certification holders
• Their most widely recognized certification is the PMP (Project Management Professional). The PMP credential recognizes your:o Experience,
o Education, and
o Competency to lead and manage projects
• Earning the PMP credential requires:o A bachelor’s degree and 4,500 hours of documented project management experience, or a
secondary degree and 7,500 hours of documented project management experience
o 35 hours of certified project management training
o Passing the certification exam
• Regardless of your inclination to pursue PMP certification, PMI project management principles apply to your role as a project leader or stakeholder
The purpose of this material is to share a few PMI project management principles that apply to your role as a project
leader or stakeholder
4
Leveraging prescribed PMI project management principles reduces the risk and impact of costly project omissions, changes, and errors.
Why Is This Useful to Know?
ProjectInitiation
ProjectPlanning
ProjectExecution
ProjectClosure
Cost of Resolving Project Omissions, Changes, or Errors
(Illustrative)
The PMI approach places great emphasis on project initiation and planning when requirements are clearly defined and agreed upon and the full scope of the project
is planned
5
Let’s Start with a Few PMI Definitions
• PMBOK ® - the Project Management Book of Knowledge from which PMI defines terms, standards, and good practices
• Portfolio – Projects, programs, and operations managed as a group to achieve strategic objectives
• Program - A group of projects and program activities managed in a coordinated way
• Project – a temporary endeavor undertaken to create a unique product, service, or result
• Project Management – the application of knowledge, skills, tools, and techniques to project management activities to meet project requirements
• Project Manager – the person authorized by the performing organization to direct the team accountable for realizing project objectives
• Project Stakeholder – includes all project team members and anyone impacted by or impacting the project
• Triple Constraint – the foundation of project management is balancing scope, time, and cost. Quality is at the center of the triple constraint
Portfolio
Programs
Projects
A few basic definitions:
Quality
Time Cost
Scope
6
Initiating Planning Executing
Monitoring &
Controlling
Closing
A process group is a logical grouping of activities, inputs, tools, techniques, and outputs required for any type of project.
Project Management Process Groups
Define a new project or new phase,
identify stakeholders, and
obtain authorization
“Authorize the Work”
Develop an integrated project management plan to attain project
objectives
“Plan the Work”
Complete the work and satisfy project
objectives
“Work the Plan”
Track and review project progress and
performance; manage variance
and change
“Control the Plan”
Finalize all activities and formally close
the project or phase
“End the Work”
• Project Charter• Stakeholder
Register
• Project Mgt. Plans & Related Documents- Scope- Requirements- Schedule- Cost- Quality- Human Resources- Communication- Risk- Procurement- Change- Stakeholders
• Project Deliverables
• Work Performance Data
• Team Performance Assessments
• Project Communications (e.g. status reports)
• Selected Suppliers & Agreements
• Change Requests• Issue Log
• Change Logs• Approved Change
Requests• Work Performance
Information• Schedule Forecasts• Cost Forecasts• Updates to Project
Plan• Quality Control
Measurements• Verified
Deliverable• Accepted
Deliverables
• Final Product, Service, or Result (i.e. purpose of project)
• Closed Procurement (e.g. formal signature of acceptance)
Act
ivit
ies
Key
Ou
tputs
Pro
cess
G
roups
7
The five process groups overlap and follow a basic cycle of “plan, do, check, act” until project closure.
Applying Project Management Process Groups
Process Group Overlap
Time
Initiating
Planning
Executing
Monitoring & ControllingClosing
Initiating
Planning ExecutingMonitoring
& Controlling
Change?
Complete?
Closing
Yes Yes
No
No
“Plan, Do, Check, Act”
8
A project manager is responsible for applying and managing the following ten knowledge areas:
Knowledge Areas
Identify, define, combine, unify and coordinate activities within the Project Management Process GroupsIntegration
Ensure the project includes all work required to complete the project successfullyScope
Manage the timely completion of the projectTime
Manage the planning, estimating, budgeting, financing, funding, monitoring, and controlling of cost to enable the project to be completed within the approved budgetCost
Determine quality policies , objectives, and responsibilities so that the project will satisfy the needs for which it was undertaken Quality
Organize, manage, and lead the project team, including the identification of roles, responsibilities, required skills, and reporting relationships
Human Resources
Ensure timely and appropriate planning, collection, creation, distribution, storage, retrieval, management, control, monitoring and disposition of project informationCommunicationIdentify and assess risks, plan responses, and control risk to increase the likelihood and impact of positive events and decrease the likelihood and impact of negative events on the project
Risk
Purchase or acquire and control products, services, or results needed from outside the project teamProcurementIdentify people, groups, or organizations that could impact or be impacted by the project; analyze expectations, and develop strategies to engage stakeholders in decisions and activities
Stakeholders
9
Activity within each knowledge area is applied based on the appropriate process group.
Knowledge Areas & Process Groups
Process Groups
Knowledge Areas(Below)
Initiating Planning ExecutingMonitoring & Controlling Closing
Integration Applicable Applicable Applicable Applicable Applicable
Scope Applicable Applicable
Time Applicable Applicable
Cost Applicable Applicable
Quality Applicable Applicable Applicable
Human Resources Applicable Applicable
Communication Applicable Applicable Applicable
Risk Applicable Applicable
Procurement Applicable Applicable Applicable Applicable
Stakeholders Applicable Applicable Applicable Applicable
Each shaded intersection has defined activities, inputs, tools & techniques, and outputs
10
Change Requests
DevelopProject Charter
DevelopProject Mgt. Plan
Direct & ManageProject Work
Monitor & ControlProject Work
PerformIntegrated Change
Control
UpdatesReports
Change Requests
CloseProject or Phase
UpdatesChange Log
Approved ChangeRequests
Final ProductService, or Results
Project SOWBusiness CaseAgreements
ApprovedChange Requests
Project Mgt. Plan
Project Charter
Project ManagementPlan Updates
Project Documents, Deliverables, &
Work Performance Data
1. Integration Management - Process Activities
Integration management connects all of the knowledge areas together from beginning (project initiation) to end (project closure).
Develop a document that formally authorizes the project
Define, prepare, coordinate and
integrate all subsidiary plans
into a comprehensive
plan
Lead and perform the work to accomplish project objectives
Track, review, and report progress to meet performance
objectives
Review all change requests, approve changes, and manage
changes to deliverables and the project management plan
Finalize all activities across all Process Groups to formally
complete the project or phase
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
11
• A typical charter will identify:o Business need or justificationo Scope (high level)o Objectives (such as the intended product, service, or result)o Requirements (high level)o Risks (high level)o Assumptions and constraintso Stakeholders (primary)o Timing (anticipated)o Costs (anticipated)
• The charter must be signed by someone who can invest authority for the project (typically senior management or a sponsor)
A project charter formally authorizes the project and the project manager to apply resources to project activities. Per PMI, without a charter, there is no project.
Project Charter
Project Charter
12
The project management plan is the collection of all plans and related documents pertaining to planning, executing, monitoring, controlling, and closing the project.
Project Management Plan
ProjectManagement
Plan
Procurement
Change
Scope
Cost
Process Improvement
RiskStakeholders
Configuration
Schedule
Quality
Communication
13
Accepted Deliverables
PlanScope Management
Collect Requirements
DefineScope
CreateWBS
ValidateScope
ControlScope
Scope Baseline(Scope Baseline, WBS,
WBS Dictionary)
Project Documents
Updates
WorkshopsInterviews
BenchmarkingContext
Diagrams
Decomposition of Work
Change Requests
Inspection
Project ScopeStatement
Reqs DocumentationReqs Traceability
Matrix
Scope Mgt;. PlanReqs Mgt. Plan
Change Requests
Project Charter
This area includes collecting requirements, defining scope, creating the work breakdown structure (WBS), and validating and controlling scope.
2. Scope Management - Process Activities
Project Scope is the work performed to deliver a product, service, or result that satisfies specified features and
functions
Determine, document, and
manage stakeholder needs and
requirements to meet
objectives
Create a plan that documents how the project scope will be
defined, validated, and controlled
Develop a detailed
description of the
project and product
Subdivide project deliverables into
smaller, more manageable components
Gain formal acceptance of
completed project deliverables
Monitor status of
the project scope and manage
changes to the scope baseline
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
Scope
14
The WBS is the decomposition of the work to be performed. The output is called the Scope Baseline.
Work Breakdown Structure (WBS)
Scope Baseline:
• Scope Statement – description of project scope, major deliverables, assumptions, and constraints
• WBS – hierarchical decomposition of the total scope of work
• WBS Dictionary – provides details regarding the deliverables, activities, and scheduling information of each component of the WBS
Project Title
Deliverable 1
Work Packages
Deliverable 2
Work Packages
Control Account
Planning Packages
Work Packages
Illustrative WBS
Used when insufficient detail
is available at the work
package level
Break down the work into the
smallest level for which cost and
time can be assessed and administered
15
PlanSchedule
Management
DefineActivities
SequenceActivities
EstimateActivity Resources
EstimateActivity Durations
DevelopSchedule
ControlSchedule
Schedule BaselineProject ScheduleProject Calendars
Exp. JudgmentDecompositionRolling Wave
Planning
PDMDependencies
Leads/Lags
Exp. JudgmentBottom Up
PMIS
Exp. JudgmentAnalogousParametric
3 PointReserve Anal.
Critical PathCompression
Resource Optimization
PMIS
Project ScheduleNetwork Diagrams
Activity ResourceRequirements
RBS
Activity DurationEstimates
Schedule Mgt. Plan
Activity ListMilestone List
Schedule Forecasts
Project Charter
Scope Baseline
Time management includes all activity related to developing and managing the project schedule.
3. Time Management – Process Activities
Establish the policies, procedures, and
documentation for planning, developing, managing, executing,
and controlling the project schedule
Define and document specific actions to be performed to
produce project deliverables
Identify and document relationships among project
activities
Estimate the type and quantities of material, human resources, or
suppliers required to perform each activity
Estimate the number of work periods needed to complete
individual activities with estimated resources
Analyze activity sequences, durations, resource requirements, and schedule constraints to create
the project schedule
Monitor the status of project
activities to update project progress and
manage changes to
the schedule baseline to achieve the
plan
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
16
Below are a few of many terms project managers should know when developing and managing a project schedule.
Time (Schedule) Management Terms
PMI Terms Descriptions
3-Pt. Estimating Based on estimated Pessimistic (P), Optimistic (O), and Most Likely (M) durations
Analogous Estimating High level, top down estimate based on similar projects (usually by a SME - subject matter expert)
Bottom-Up Estimating Estimate at the lowest level of the WBS (level 3) and then roll up for the total project estimate
Parametric Estimating Based on an existing, comparable parameter (e.g. $/ft. in the same neighborhood)
Reserve AnalysisContingency (buffer based on known risk) & include in project budget or Managerial (buffer based on unknown risks)
Rolling Wave PlanningAn iterative technique used when future details aren't known; near term is planned in detail; future is higher level
Predecessor Relationships
Finish to Start (FS) Finish to Finish (FF) Start to Start (SS) Start to Finish (SF)
Default relationship; B cannot start until A is finished
B cannot finish until A is finished
B cannot start until A starts
Rare, A starts before B finishes (e.g. when replacing an old system B with a new system A)
Free Slack The latest an activity can start without delaying next activitiesTotal Slack The latest an activity can start without delaying project finish date Float Often referred to as the same as SlackLag Lag (a delay) = the successor must wait due to some delay after the predecessor is completeLead Lead (an accelerant) = the successor can begin before the predecessor is completeSchedule Compression Crashing or fast tracking the schedule to adjust the schedule to align with the plan
Fast Tracking Compression technique based on overlapping sequential activities (risky)Resource Leveling Adjusting peaks and valleys to create a level usage of resources
Resource SmoothingAdjusting peaks and valleys to create a level usage of resources AND also accounts for individual resource limitations
A BA
B
A
B
A
B
17
PlanCost Management
EstimateCosts
DetermineBudget
ControlCosts
Cost BaselineProject FundingRequirements
Work Performance InfoCost Forecasts
Change RequestsUpdates
AnalogousParametricBottom Up
3 PointReserve
Exp. JudgmentAggregation
Reserve Analysis
Funding LImits
Earned ValueTCPI
ForecastingPMIS
Reserve Anal.
Cost Mgt. Plan
Activity Cost EstimatesBasis of Estimates
IRRNPVROI
Opportunity $Payback
This area includes defining how project costs will be managed, estimating activity costs, determining the budget, and controlling costs.
4. Cost Management – Process Activities
Establish the policies,
procedures, and
documentation for planning, managing,
expending, and controlling
project costs
Develop an approximation of the monetary resources needed to complete
project activities
Aggregate estimated costs of individual activities or work
packages to establish an authorized cost baseline
Monitor the status of the project to update project
costs and manage changes to the cost
baseline
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
18
EVM is a means of measuring project cost and schedule vs. the plan.
Earned Value Management (EVM)
Time
Dollars
Cost Baseline (“S” Curve)Approved Time-Phased Budget
BACBudget at Completion (BAC) = total project budget
ETC
Estimate to Complete (ETC) = cost to complete the project based on current spending efficiency
EAC
Estimate at Completion (EAC) = current projected final cost based on current spending efficiency
Variance at Completion (VAC)
Cost Variance(CV)
Cost Performance (CPI) = EV/ACSchedule Variance
(SV)
Schedule Performance (SPI) = EV/PV
Planned Value (PV) = budgeted cost for work scheduled
Actual Cost (AC) at point in time
AC
PV
Point in Time
Earned Value (EV) = budgeted cost for work actually completed
EV
19
PlanQuality
Management
PerformQuality Assurance
ControlQuality
Cost/BenefitCost of Quality7 Basic Tools
BenchmarkingSampling
Quality Mgt. PlanProcess Improvement
PlanQuality Metrics
Quality Checklists
Quality AuditsControls Charts
Process Analysis
UpdatesVerified Deliverables
QC MeasuresValidated Changes
Measurements
Quality management includes identifying quality requirements and standards, auditing requirements and control measurements, assessing quality performance, and recommending changes, when needed.
5. Quality Management – Process Activities
Identify quality requirements and/or
standards for the project and its deliverables, and
document how the project will demonstrate
compliance
Audit the quality requirements and the results
from quality control measurements to ensure
appropriate standards and operational definitions are
used Monitor and record results of quality activities to assess
performance and recommend necessary changes
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
20
Quality Management Philosophies and Principles
Quality Philosophies:• Total Quality Management (Deming) –
proactive approach with statistical analysis
• Zero Defects (Crosby) – Do it right the first time
• Fitness for Use (Juran) – Satisfy customer needs
• Continuous Improvement (Kaizen) – proactive approach to process improvement
• Gold Plating – unacceptable practice of providing more than requested
• Cost of Quality – cost of conforming is less than cost of non-conforming
• Design of Experiments – isolate factors that influence results
• 6 Sigma – strive for 99.9997% error free
• ISO 9000 – document what you do; do what you document
Quality Principles:• Define and satisfy customer
needs
• Prevent rather than inspect
• Be proactive rather reactive
• Validate project processes
• Measure against approved standards
• Continually improve
• Take accountability
PMI quality management principles are based on a few popular philosophies.
21
Project managers should be familiar with common quality management tools and terms.
Quality Management Tools and Terms
Tools Description
1. Cause and Effect Diagrams Fishbone (Ishikawa) diagram
2. Flowcharts Basic flow chart or GERT diagram with feedback loop3. Checksheets Check list (e.g. pre-flight list to ensure you are "cockpit ready" before taking flight)4. Pareto Diagrams Cumulative histogram (e.g. 80/20 rule)5. Histograms Depiction of volume or frequency of occurrences of several events6. Control Charts Depiction of process output over time with UCL & LCL at 3 sigma from mean7. Scatter Diagrams Depicts pattern of results across two variables
Terms DescriptionBenchmarking Comparing actual or planned processes to comparable projects to identify best practicesDesign of Experiments Variable based analysis (freeze all variables but one and assess outcome)Statistical Sampling Using a % of the population and extrapolating the results within an acceptable confidence level
Quality AuditsIdentify best practices; identify gaps; share best practices; offer assistance to improve; highlight lessons learned
Process Analysis Assess process, identify root causes, alleviate root causesInspection Examination of work product and comparison to documented standards (e.g. reviews, audits)85/15 Rule 85% of quality relates to mgt.; 15% is worker related80/20 Rule 80% of problems come from 20% of the issuesRule of 7 Must have 7 consecutive data points above or below mean to consider process "out of control"Mean Time Before Failure MTBF, example quality metricMean Time to Repair MTTR, example quality metric
Grade vs. QualityNot the same; you can have a lower grade product with high quality and vice versa (e.g. automobile models)
Upper Control Limit UCL = 3 sigma above mean (average)Lower Control Limit LCL = 3 sigma below mean (average)Upper Specification Limit USL is customer established and can be above or below UCLLower Specification Limit USL is customer established and can be above or below LCL
22
PlanHR Management
AcquireProject Team
DevelopProject Team
ManageProject Team
Change RequestsUpdates
Org ChartsJob Descriptions
Org. Theory
Pre-AssignmentAcquisitionNegotiation
TrainingTeam BuildingGround RulesRecognition
Rewards
HR Mgt. Plan
Project StaffAssignments
Resource Calendars
Team PerformanceAssessments
ObservationsConversationsConflict Mgt.Performance
Appraisals
Human resource management consists of planning, acquiring, developing, and managing the project team.
6. Human Resource Management - Process Activities
Define roles, responsibilities, required skills, and reporting relationships
Confirm availability and
obtain the necessary team
Improve competencies, team interaction, the team
environment, and enhance project
team performance
Track team member performance, provide
feedback, resolve issues, and manage
changes to the team to optimize team performance
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
23
Responsibility assignment matrix (RAM) charts such as a “RACI” let each team member know who is responsible for each activity and deliverable.
Roles and Responsibilities
• (R) Responsible - those who do the work
• (A) Accountable - The one who:o Is ultimately answerable for the completion of the deliverable
o Delegates the work to those responsible
o Approves the work that the responsible person provides
• (C) Consulted – those whose opinions are sought (typically subject matter experts); typically this is a two way communication
• (I) Informed – those who are kept up-to-date on progress; typically this is a one way communication
RACI Person
Activity Ann Ben Carlos Denny
Develop Schedule A R I I
Collect Requirements
I A R C
Develop Test Plan I A R C
Develop Training Plan
A C I R
24
Project Life Cycle - Team Building & Leadership Styles
Team Building Stages
• Forming – creating the team
• Storming – team chaos as people start working with one another
• Norming – team behavior starts to normalize
• Performing – team performs as a unit
• Adjourning – team completes work and disbands
Situational Leadership Styles
• Directing – provide specific, clear instructions and closely supervise
• Coaching – solicit input, offer rationale and examples
• Facilitating –maintain team progress; delegate day-to-day control
• Supporting – support and motivate the team to complete objectives
Project managers should be aware of typical team building dynamics and situational leadership styles across a project life cycle.
Time
Team Building: Forming Storming Norming Performing Adjourning
Directing Coaching Facilitating SupportingLeadership Style:
Project Life CycleInitiating Closing
25
Conflict Management
• Scheduling Priorities
• Scarce Resources
• Personal Work Styles
• Methodology/Details
• Cost/Budget
• Personalities
Recommended:
1. Collaborate/Problem Solve
2. Compromise/Reconcile
3. Force/Direct
Not Recommended:
4. Smooth/Accommodate
5. Withdraw/Avoid
Conflict is inevitable. A project manager should be aware of typical sources of project conflict and recommended techniques to resolve them.
Higher
Lower
Probability of
Conflict
Sources of Conflict Conflict Resolution Techniques
26
PlanCommunication
Management
ManageCommunications
CommunciationMgt. Plan
ControlCommunications
Project Communications
Req. AnalysisTechnology
ModelsMethodsMeetings
ModelsMethodSystems
Reporting
Exp. JudgmentSystems
Meetings
Work PerformanceInformation
Change Requests
Roughly 90% of a project manager’s job is communication.
7. Communication Management - Process Activities
Develop a communication
approach based on
stakeholder’s informational
needs
Create, collect, distribute, store,
and retrieve information
Monitor and control
communication throughout the
entire project life cycle
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
27
Communication Paths
N
N N
N
• # of Communication Paths
equals [N x (N-1)]/2• N equals # of
Stakeholders• Example: [4 x (4-1)]/2
= 6
Communication Methods• Interactive – between two people
• Push – send to specific recipients
• Pull – recipient actively seeks information
Communication Management
Communication Types• Active listening – receiver verifies correct
interpretation• Effective listening – receiver observes visual
and vocal cues• Feedback – sender receives feedback from
receiver• Nonverbal - ~55% of communication (e.g.
body and facial language)• Para-lingual – Voice characteristics
Project managers should be aware of the basics of effective communication across the broad stakeholder community.
Communication Model
Sender/Encode
Decode/ReceiverTransmi
t
AcknowledgementResponse
Noise
Noise
28
PlanRisk Management
IdentifyRisks
PerformQualitative Analysis
PerformQuantitative
Analysis
PlanRisk Response
ControlRisks
Updates
Updates
Project Documents
Risk Register(Risks & Triggers)
Risk Mgt. Plan
Updates
Updates
8. Risk Management – Process Activities
Risks are possible events that could impact the project in a positive (an opportunity) or negative (a threat) way.
Define how to conduct risk management
activities
Determine and document the characteristics of risk
which may affect the project
Prioritize risks for further analysis or action by assessing their
probability of occurrence and impact
Analyze the effect of identified risks on
overall project objectives
Develop options and actions to
enhance opportunities and reduce threats to
project objectives
Implement risk response plans, track identified risks, monitor residual risks, identify new risks, and evaluate risk
process effectiveness
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
29
Risk Probability and Impact Matrix
A probability and impact matrix can be used to evaluate the impact of a risk and the probability of its occurrence.
Low High
High
Moderate
Moderate
Probability of
Occurrence
Level of Impact
Higher Prio
rity
Need
for R
isk R
espon
se
Plan
Positive Risk Responses• Share – split the responsibility and
benefit to maximize the opportunity
• Exploit – take steps to ensure success
• Enhance – improve the size of the risk event and impact
• Accept – do nothing
Negative Risk Responses• Avoid – get rid of the potential
problem
• Transfer – re-assign to another party
• Mitigate – minimize the bad characteristics of the risk
• Accept – do nothing
Probability and Impact Matrix
The higher the combined probability and impact of the risk event the greater the need to develop a risk
response plan
30
Project managers should be aware of risk management terms.
Risk Management
Risk Management Terms• Monte Carlo – simulation of possible outcomes
• Risk Breakdown Structure – breakdown by category (e.g. internal, external, technology, organizational, etc.)
• Risk Trigger – an indicator that an event “could” occur
• SWOT Analysis – strengths, weaknesses, opportunities, and threats
• Expected Monetary Value (EMV) – summation of probability x impact of alternative decisions (…not to be confused with EVM – earned value management)
• Contingency Reserves – for known risks (include in budget and schedule)
• Management Reserves – for unknown risks (excluded from baselines for budget and schedule)
• Residual Risk – risk remaining after risk response
• Secondary Risk – potential risk as a result of risk response
• Workaround – “wing it” response when other risk response plans don’t work
• Types of Risk Toleranceo Averse – Avoids risk
o Seeker – Seeks risk
o Neutral – Middle ground
31
Procurement Mgt. Plan
PlanProcurement Mgt.
ConductProcurements
ControlProcurements
CloseProcurements
Work Performance InfoUpdates
Change Requests
Procurement Mgt. PlanSOWRFPs
Selection CriteriaMake Buy Decision
Selected SuppliersAgreements
Resource Calendars
Exp. JudgmentMake Buy Analysis
Exp. JudgmentBidder Conf.
Ind. EstimatesAdvertising
Seller Proposals
Inspect/AuditsReporting
A/P SystemsClaims Admin.Records Mgt.
AuditsNegotiationsRecord Mgt.
Closed ProcurementsOPA Udpates
Procurement management includes planning, selecting, contracting, controlling, and closing outsourced products and services.
9. Procurement Management – Process Activities
Document project
procurement decisions, specify the
approach, and identify
potential sellers
Obtain seller response, select a seller, and award a
contract
Manage procurement relationship, monitor
contract performance, and make changes and
corrections as appropriate
Complete each project
procurement, including finalizing
open claims, updating records to reflect final results,
and archiving information
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
32
Project managers should be aware of the benefits and risks of different contract types from a buyer’s perspective and a seller’s perspective.
Contract Types
Buyer’s Risk
Seller’s Risk
Low High
High Low
• (FFP) Firm Fixed Price – allows buyer to budget fixed price; requires seller to detail scope and accurately estimate price; very common
• (FFIF) Fixed Price Incentive Fee – includes incentive to motivate seller to produce at greater speed
• (FF EPA) Fixed Price Economic Price Adjustment – compensates for year to year economic changes
• (T&M) Time and Materials – typically used for smaller initiatives
• (PO) Purchase Order – typically used for commodity items
• (CPFF) Cost Plus Fixed Fee – typically variable costs are cost-plus and predictable costs are fixed fee
• (CPIF) Cost Plus Incentive Fee – actual costs plus incentive to motivate seller to produce at greater speed
• (CPAF) Cost Plus Award Fee – actual costs plus award based on customer satisfaction with agreed criteria
• (CPPC) Cost Plus Percent of Cost – actual cost plus % of actual; the higher the cost, the higher the fees
FFP FPIF FP EPA T&M PO CPFF CPIF CPAF CPPC
33
Project managers should be familiar with additional procurement terms in the table below:
Procurement Terms
Terms Description
Make or Buy Analysis Is it more practical to insource or outsource (based on a cost comparison between the two)?
Bidder ConferencePrior to bid submission, offers opportunities for prospective sellers to obtain requirements clarification from buyer
Independent Estimates Used to validate proposal information
Contract (CCOLA) Must have 5 Components: Capacity, Consideration, Offer, Legal Purpose, Acceptance
Point of Total Assumption Point at which seller is responsible for all cost overruns; PTA = (Ceiling Price - Target Price)/Buyer Share + Target Cost
Ceiling Price % of Target Cost (e.g. Ceiling = 140% of target cost)
Target Cost Expected cost of work in the contract
Target Price Equals Target Cost + Target Profit
Share Ratio Ratio of split between buyer and seller of cost savings or overruns (e.g. 70/30)
RFP Request for Proposal, typically used for higher priced, customized services or products
RFQ Request for Quote, typically used for small dollar commodity type products
IFB Invitation to Bid, used for government sealed bids (similar to RFP)
Design Scope of Work (SOW) Buyer provides exact details; generally results in fixed price contractFunctional Scope of Work (SOW) Buyer provides functionality needed; generally results in cost plus contract
Sole Source Go direct to a supplier without any available competition (e.g. supplier holds the patent)
Single Source Go direct to a supplier although competitors are available (e.g. "preferred supplier")
Negotiation PMI prefers "win/win" negotiation approach
Standard Terms & Conditions Typical common (non-negotiable) contract items with a tight range or parameters
Special Provisions Typically added to account for changes to standard terms and conditions
Claims Administration Means of administering contested changes or disagreements regarding compensation
ADRAlternative dispute resolution (e.g. arbitration) used when claims cannot be negotiated between buyer and seller
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Identify Stakeholders
PlanStakeholder
Management
ManageStakeholderEngagement
Stakeholder Register
Stakeholder Mgt. Plan
ControlStakeholder Engagement
Issue LogChange Requests
Updates
Work Performance InfoChange Requests
Updates
Exp. JudgmentStakeholder
Analysis (Power/Interest)
Interpersonal Skills
Management Skills
Stakeholder Engagement Matrix (Unaware, Neutral,
Resistance, Leading)
It is critical to project success to identify stakeholders, address their requirements, meet their expectations, and foster their engagement.
10. Stakeholder Management – Process Activities
Identify the people, groups, or organizations that
could impact or be impacted by
the decision, activity, or
outcome of the project.
Develop appropriate management strategies to
effectively engage stakeholders throughout the project life cycle
based on their needs and potential impact on project
successCommunicate and work with stakeholders to meet their needs and expectations, address issues as they occur, and foster appropriate
stakeholder engagement throughout the project life cycle
Monitor overall project
stakeholder relationships and adjust strategies
and plans for engaging
stakeholders
Key:InitiatingPlanningExecutingMonitoring & ControllingClosing
Note, additional inputs, outputs, tools and techniques not depicted may apply
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Keep Satisfied Manage Closely
Monitor Keep Informed
All stakeholders are different and, therefore, need to be managed differently based on their relative authority (power) and level of concern (interest).
Stakeholder Power vs. Interest Grid
Low High
High
Moderate
Moderate
Power
Interest
StakeholderPower vs. Interest Grid
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All PMI members must agree to adhere to a high personal standard of ethical and professional behavior.
PMI Code of Ethics and Professional Conduct
Tenets of Code:1. Honor
o Do what is right and honorableo Set high standards for yourself and aspire to meet those standards is all aspects of life
2. Responsibility – Take ownership of:o The decisions you make or fail to makeo The actions you take or fail to takeo The consequences that result
3. Respecto Show high regard for yourself, others, and the resources (e.g. people, money, reputation,
safety) entrusted to youo Engender trust confidence, performance excellence, and mutual cooperation in an environment
of diverse perspectives and views
4. Fairnesso Make decisions and act impartially and objectivelyo Conduct yourself in a way free from competing self interest, prejudice, and favoritism
5. Honestyo Understand the trutho Act in a truthful manner both in your communication and in your conduct
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Summary
• What is PMI and the PMP?• Why PMI Project Management Principles are
Useful to Know• A Few Basic PMI Definitions• Five Process Groups
o Initiatingo Planningo Executingo Monitoring and Controllingo Closing
• Ten Knowledge Areaso Integrationo Scopeo Timeo Costo Qualityo Human Resourceso Communicationo Risko Procuremento Stakeholders
• Project Management Terms, such as:o Triple Constrainto Project Chartero Project Management Plano Work Breakdown Structure (WBS)o Predecessor Relationshipso Earned Value Managemento Gold Platingo Responsibilities Assignment Matrixo Forming, Storming, Norming, Performing,
Adjourningo Communication Noiseo Risk Probability and Impact Matrixo Contract Typeo Stakeholder Power vs. Interest Grid
• Code of Ethics and Professional Conducto Honoro Responsibilityo Respecto Fairnesso Honesty
This material covered the following project management topics:
Thank you for taking the time to review this material!