Project Lifecycle

Project life cycle Organizations performing projects will usually divide each project into
several project phases to improve management control. Collectively, the project phases are known as
the project life cycle. Usually they are sequential. These are unique to the industries
Project Life Cycle Define:
1. What technical work to do in each phase.
2. When the deliverables are to be generated, how they are reviewed, verified & validated.
3. Who is involved in each phase.
4. How to control and approve each phase.

Project Phase Each project phase is marked by completion of one or more deliverables.
A deliverable is a tangible, verifiable work product. The conclusion of a project phase is generally
marked by a) completion and review of both key deliverables and project performance to date, to b)
determine if the project should continue into its next phase and c) detect and correct errors cost
effectively. These phase-end reviews are often called phase exits, stage gates, or kill points.
Practice of overlapping phases is often called fast tracking.
PHASES Common Characteristics:

Cost and staffing levels are low at the start, higher towards end, and drop rapidly as the project
draws to a conclusion.
Completion The probability of successful completion generally gets progressively higher as the
project continues.
Stakeholder Influence On the final characteristics of the projects product and the final cost of
the project is highest at the start and gets progressively lower as the project continues.
Risk Uncertainty and hence risk of failing is high at the beginning and get progressively
lesser/better as project continues
Key stakeholders PM, customer (buy/use), org, team & sponsor (pays), project management
team, PMO
Differences In general, differences between or among stakeholders should be resolved in favor of
the customer.
Managing is primarily concerned with consistently producing key results expected by
stakeholders,
Leading Establishing direction vision of the future and strategies, Aligning people to vision,
Motivating and inspiring.
Organizational Structure Influence on Projects

Functional Weak Matrix Balance Strong Projecte

d Matrix Matrix d
PM authority Little or Limited Low to Moderat High to
None Moderate e to Total
High
 Resource Little or Limited Low to Moderat High to
Availability None Moderate e to Total
High
Project Budget Functional Functional Manager Mixed PM PM
Manager
PM Role Part Time Part Time Full Time Full Full Time
(Expeditor/coordinato Time
r)
Project Staff Part Time Part Time Part Time Full Full Time
Time
Grouped by Area of mix Organized
specializatio by project
n
Communicatio Request to Team Within
n department member project
al head then to two
to other bosses
dept. and
back
Unique Silos Two No home
bosses

Functional one clear superior, staff grouped by specialization. Scope of projects are usually limited
to boundaries of the function. Any communication with other functions is done through function
heads.
Projectized- team members are collocated, most of the employees are on projects, PM have a great
deal of independence and authority.
Matrix org Blend of functional and projectized characteristics:
Weak maintains many characteristics of functional org and PM role is more of a
coordinator or expediter.
Strong maintains many characteristics of the projectized org, can have F/T PM with full
authority and FT staff.
Balanced recognizes PM but not full authority over projects.
Composite Mix responsibility.

PMO function may range from advisory to recommendation to specific policy and procedure to a
formal grant of authority from executive management. PM reports to PMO if it exists.
Planning Planning is the only PM Process group that has a specific order of activities
Release Resources Is the Last activity in the closing process group.
Iterations Start after Risk management because only after this final cost and schedule can be
determined.
Project Management Processes
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Project process:

1. Project management process

2. Product oriented processes: specify and create the projects product. Typically defined
by project lifecycle and application area.

Pick Process Project Manager along with team is responsible for picking what processes are
appropriate.

Concept of interaction among PM processes (By Deming) PLAN (Planning)

DO(executing) CHECK & ACT (Monitoring and Control)

Process Groups Are not project phases. Process groups are usually repeated for each phase/sub
project.
1. Initiating Process Group- Defines and authorizes the project.
1. Are often done external to the projects scope of control.
2. Facilitate formal authorization to start a new project.
3. Inputs: requirements, SOW
4. Output: Prelim Starts the project or its phase, Scope statement, Authorized
Project Charter
5. Project manager assigned
6. Funding and approval happens external to project boundaries
7. Many large or complex projects are divided into phases, and repeating it for each
subsequent phases.
2. Planning Process Group: Defines and refines the objectives and plan the course of action
required to attain the objective and scope that the project was undertaken to address.
1. Develops project management plan and also refines project scope, project cost
and schedule.
2. It is updated and refines through out execution process group thru rolling wave
planning.
3. All necessary stakeholders are involved in this process
4. Includes following processes
i. Develop project management plan, Scope planning, Create
WBS, Activity definition, Activity Sequencing, Activity Resource Estimating, Activity Duration
Estimating, Schedule Development, Cost Estimating, Cost Budgeting, all sub plans and all risk process
except Risk Monitoring and Control.
1. Executing Process Group Majority of the project budget will be spent in performing
Executing process group. Integrates people and other resources to carry out the project
management plan for the project.
1. Includes Direct and Manage Project Execution, Perform Quality Assurance,
Acquire Project Team, Develop Project team, Request Seller Responses,
Information Distribution, and Select Sellers.
 2. Monitoring and Controlling Process Group Group not only monitors and controls the work
being done within a process group but also monitors and controls the entire project effort
say all process areas so that timely corrective action can be taken.
1. a. Monitoring and Control Project Work, ICC, Scope Verification, all control
process, Manage Project Team, Performance Reporting, Manage Stakeholders,
Contract Administrator.
2. Monitoring the ongoing project against PMP and baselines, Control and Approve
Changes, Preventive Action, Defect Repair and Manage Changes.
3. Closing Process Group: formalizes acceptance of the project deliverable.
1. Close Project, Contract Closure

Project Charter Approval and funding are handled external to the project boundaries. Charter is
primarily concerned with authorizing the project /phase. It links project to the ongoing work of the
organization.
Preliminary Scope Statement contains project and deliverables requirements, product
requirements, boundaries of the project, methods of acceptance and high level scope control. In multi
phase project the process validates the project scope for each phase.
Rolling Wave Planning Progressive detailing of the project management plan is called rolling
wave planning, indicating plan is an interactive and ongoing process.
Core processes Are performed in same order & may be iterated several times during any one
phase
Facilitating processes Performed intermittently and as needed during project planning, they are
notoptional.
Integration Management
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Knowledge Major Primary Tools & Techniques Primary

Areas Processes Inputs Outputs

INTEGRATI CSMMMIC
ON
Develop Developing 1. Contract 1. Project Selection Methods 1. Project
Project Charter the project (when Chapter
2. Project
charter that applicable)
formally Management Methodology (PMM)
2. Project
authorizes a
project or a Statement of
project 3. Project
Work
phase Management Infor
mation system(PMIS)

4. Expert Judgment
 3. Enterprise
environment
al factors

4.
Organization
al Process
Assets

Develop Developing 1. Project 1. PMM 1.

Preliminary Preliminary Charter Preliminary
2. PMIS
Project Scope Project project
2. Project
Statement Scope Scope
Statement Statement of Statement
3. Expert Judgment
that Work
provides
high level
scope 3. Enterprise
narrative.
Environment
al Factors

4.
Organization
al Process
Assets

Develop Documenti 1. 1. PMM 1. Project

Project ng the Preliminary Managemen
2. PMIS
Management actions project t Plan
Plan necessary to Scope
define, Statement 3. Expert Judgment
prepare,
2. Project
integrate
and Management
coordinate Processes
all
subsidiary
plans into a 3. Enterprise
project
managemen Environment
t plan. al Factors

4.
Organization
al Process
Assets
Direct and Executing 1. Project 1. PMM 1.
Manage the work Management Deliverables
2. PMIS
Project defined in Plan
2.
Execution the project
2. Approved
managemen Requested
t plan to Corrective
Changes
achieve the actions
projects
requirement 3. Work
s defined in 3. Approved
the project Performance
scope Preventive
Information
statement. Actions

4.
4. Approved
Implemente
Change
d corrective
Requests
actions

5. Approved
5.
defect repair
Implemente
d Preventive
6. Validated
actions
defect
Repair
6.
Implemente
7.
d Change
Administrati
Requests
ve Closure
Procedure
7.
Implemente
d defect
repair

Monitor and Monitoring 1. Project 1. PMM 1.

Control Project and Management Recommend
2. PMIS
Work Controlling Plan ed
the corrective
2. Work
processes 3. Earned Value Technique actions
used to Performance
2.
initiate, Information
plan, 4. Expert Judgment Recommend
execute, ed
and close a 3. Rejected
project to Preventive
meet the Change
actions
performanc Requests
e objectives
defined in 3.
the project
Recommend
 managemen
ed Defect
t plan
Repair

4. Forecasts

5.
Requested
Changes

Integrated Reviewing 1. Project 1. PMM 1.Project

Change all change Management Managemen
2. PMIS
Control requests, Plan t
approving Plan(update
2.
changes, 3. Expert Judgment s)
and Deliverables
2. Project
controlling
changes to Scope
the 3. Work
Statement
deliverables Performance
and (updates)
organizatio Information
nal process
assets. 3.
4. Requested
Deliverables
Changes

4. Approved
5.
corrective
Recommend
actions
ed corrective
actions
5. Approved
corrective
6.
actions
Recommend
ed
6. Approved
Preventive
Change
actions
Requests

7.
7. Rejected
Recommend
Change
ed Defect
Requests
Repair

8. Approved
Defect
Repair
 9. Validated
Defect
Repair

Close Project Finalizing 1. Project 1. PMM 1.

all activities Management Administrati
2. PMIS
across all of Plan ve closure
the project Procedure
2. Contract
managemen 3. Expert Judgment 2. Contract
t process Documentati
groups to on closure
formally Procedure
close the
project or a 3.
project 3. Final
phase. Deliverables
Product,
Service or
4. Work
Performance result

Information
4.
Organizatio
5. Enterprise
environment nal Process
Assets
al factors
(updates)

6.
Organization
al Process
Assets

Integration Management Unification, consolidation, articulation and interactive actions that are
crucial to project completion. Integration is about making choices, about where to concentrate
resources and effort. It also involves making tradeoffs among competing objectives and alternatives.
Integration is primarily concerned with effectively integrating the processes among the Project
Management Process Groups.
Integration could be said to cover the high level work a PM needs to do. The other knowledge areas
in this book are detailed work.

Reasons to start projects Problems, market, opportunity, business requirements, customer

request, technological advance, legal requirement, social need.
A project manager should be always be assigned prior to the start of planning and preferably while
the project charter is being developed.
It is a job of project manager to put all the pieces of the project together into one cohesive whole
that gets the project done faster, cheaper and with fewer resources while meeting the project
objectives.

1. Develop Project Charter Developing the project charter that authorizes a project.
2. Develop Preliminary Project Scope Statement Developing PPSS provides detailed
scope description
3. Develop Project Management Plan Developing all subsidiary plans into a project
management plan.
4. Direct and Manage Project Execution Accomplish the work defined in the project
plan to achieve the projects scope.
5. Monitor and Control Project Work Monitoring and controlling the process used to
Initiate, Plan, Execute and Close a project to fulfill the objectives defined in the project
management plan.
6. Integrated Change Control Review, approve and control all the changes/ change
requests.
7. Close Project Closing all the activities across all the process groups to close the project.

Project Charter 1. Authorizes a project 2. Gives Project Manager Authority 3. Issued by initiator
or sponsor external to project organization who has the authority to fund. 4. It is broad enough that
it does not have to change as the project changes.
Project Charter Contain:

1. Requirements, wants and expectations

2. Business Needs

3. Project purpose or justification

4. Assigned PM and authority level

5. Stakeholder influences

6. Functional organization participation

7. Assumptions & Constraints

8. Business case and return on investment

9. Summary Budget
Inputs

1. Contract (if applicable)

2. SOW is a narrative description of products or services to be supplied by the project and
indicates: Business need, Product scope description, strategic plan. Created by
customer/sponsor
3. Project doesnt exist without Project Charter
4. Environmental Process Assets Company Culture & Structure, Government or industry
standards, infrastructure, existing human resources, personal administration (Hire, Fire,
performance), work authorization, Market place condition, Stake holder risk tolerance,
Commercial database, PMIS
5. Organizational Process Assets Standards, Policies, Standard Product and Project Life
Cycles, Quality policies & procedure, performance measurement criteria, Templates,
Communication requirements, Project Closure Guidelines, Risk Control procedure, Issue and
Defect Management Procedure, Change Control Procedure, Procedure for Approving &
issuing work authorization. It also include Process Measurement database, project files,
Historical information & Lessons learned, Configuration management database, financial
database containing labor hours, costs & budgets.

Tools and Techniques

PMIS
Expert Judgement

Project Selection Methods Two categories used are Benefit Measurement (comparative
approach) and Constrained Optimization (mathematical approach).
1. Benefit Measurement Methods (Comparative Approach)
1. Scoring Models
2. Benefit Contributions
3. Murder board Panel of people who try to shoot down a new project idea.
4. Peer Review
5. Economic Models
1. Benefit Cost Ratio 2. Cash Flow 3.Internal Return Rate 4. Preset Value (PV) and net present value
(NPV) 5.Opportunity Cost 6.Discounted Cash Flow 7. Return on Investment

1. Constrained Optimization Methods (Mathematical Models)

1. Linear 2. Nonlinear 3. Dynamic 4. Integer 5. Multiple Objective Programming
Preliminary Project Scope Statement Contain:

1. Project & Product Objectives 2. Requirements & Characteristics 3.Acceptance Criteria 4.Boundaries
5.Requirements and Deliverables 6.Constaints 7.Assumptions 8.Project Organization 9.Initial Defined
Risks 10.Schedule Milestone 11.Initial WBS 12.Order of Magnitude Cost Estimate 13. Configuration
Management Requirements 14 approval requirements

It is developed based on information from the sponsor or initiator. In general is contains all
management plan and performance measurement baselines. It should be BARF (bought into,
approved, realistic, formal)

Project Management Plan It defines how project is executed, monitored and controlled and
Closed. PMP can be either summary level or detailed and can be composed of one or more subsidiary
plans and other components. It contains following management plans
1. Scope 2.Schedule 3.Cost 4.Quality 5.Risk 6.Communication 7.Procurement 8.Schedule Baseline
9.Process improvement Plan 10.Staffing 11.Mile Stone list 12. Resource Calendar 13.Cost Baseline
14.Quality Baseline 15.Risk Register 16 Contract 17 Risk Response 18 Change Control

Configuration Management (Tool) It is a sub system of overall project management information

system. It is a means of monitoring and controlling emerging project scope against the scope
baseline; its purpose is to control change throughout the project. It is any documented procedures
used to apply technical and administrative direction and surveillance to audit the items and system to
verify conformance requirements. It documents the physical characteristics of formal project
documents and steps required to control changes to them (e.g. would be used by a customer who
wishes to expand the project scope after the performance measurement baseline has been
established). When more than one individual has sign a Charter, you have to be concerned with
competing needs and requirements impacting your efforts on configuration management.
It is designed in the planning process group and used in the ICC process
Configuration Management Activities 1.Configuration Identification 2.Configuration Status
Accounting 3.Configuration Verification and auditing
Change Control Board A group of stakeholders responsible for reviewing, approving and rejecting
the changes to the project.
Change Control System It is a collection of formal documented procedures that define how
project deliverables and documentation are controlled, changed and approved. It is a subsystem of
configuration management. It must also include procedures to handle changes that may be approved
without prior review (e.g. result of an emergency). CMS includes Change Control System.
Integrated Change Control It is performed from project inception thru completion. Here all
recommendations for changes, CA, PA and defect repairs are evaluated and either approved or
rejected. It includes:

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

 2. Make sure only approved changes are implemented
3. Reviewing and approving requested changes
4. Managing approved changes as and when they occur and regulating them
5. Maintain integrity of baseline
6. Review and approve all recommended corrective and preventive actions
7. Controlling and updating scope, cost, budget, schedule and quality
8. Documenting impact of requested changes
9. Validating defect repair
Changes The best method to control changes on the project is to look for sources of change. The
best method to deal with changes is to direct the changes to the Change Control Board. Changes
to project charter from sponsor and other signatories.
Project Manager has authority to approve some change requests. He is given authority to approve
changes in emergency situations.
Result of Monitoring & Control are recommended changes to the project as well as recommended
corrective actions, preventive actions and defect repairs.
Work Authorization System: system for authorizing the work-notifying team members or
contractors that they may begin work on a project work package.
Work performance Information: includes schedule progress, deliverables completion status,
schedule, extend to which quality standards are met, costs authorized and incurred, estimates to
complete, % complete, LLs, Resource utilization details. Primarily status reports on work progress.
Baselines can be for scope, schedule, cost, quality, resource, technical performance baselines.
Scope baseline includes the WBS, Project scope statement and WBS dictionary. Projects that deviate
far from their baselines should have their risk management process reviewed. Should be changed for
all implemented changes. Sometimes, certain classification of changes gets automatic approval on a
project and do not need Change Control Board approval.
Project Execution Although the products, services or results of the project are frequently in the
form of tangible deliverables such as building, road or software, intangible deliverables such as
training is also provided.
Schedule Change Control System can include the paper, systems and approvals for authorizing
changes. The project manager is normally not the approval authority, and not all the changes
approved
Organization Process Assets Includes an index & location of project documentation
Formal Acceptance Documentation
Project Files
Closure Documents
Historical information
Corrective Actions: are recommended in following processes
M & C project work, Scope verification, All control areas, Perform quality assurance (only area from
executing process group), Manage project team, Performance reporting, Contract Administration.
Mostly in executing and M&C process groups. Recommended corrective actions result in the creation
of change required which are approved or rejected in the ICC process and implemented in direct and
manage project execution process.

Preventive action: deals with anticipated or possible deviation from the performance baselines.
Recommended PA are output of M&C project work, Perform quality control, Manage project team,
RMC

Defect Repair: another work for rework and is necessary when a component of the project work
does not meet its specification. Discovered during Quality Management process and formed into
change request during M&C, these changes are dealt in ICC.
They are output of M&C and perform quality control

Process for making changes: PM should Prevent Root cause of change

1. Evaluate impact with triple constraint
2. Create options
3. Get internal buy in
4. Get customer buy in

Close project:
Administrative Closure: happens ones to close the project or each phases of the project.
Contract Closure: happens to close each contract. Involves both product verification and
administrative closure.
Scope Management
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Knowledge Major Processes Primary Inputs Tools & Primary Outputs

Areas Techniques

SCOPE Pack Dynamite

With Verified Care
(PDWVC)
Scope Creating a project 1. Project charter 1. Expert 1. Project Scope
Planning scope management Judgment Management Plan
2. Preliminary
plan that documents
2. Templates,
how the project Project Scope
scope will be forms, standards
Statement
defined, verified,
controlled and how
the work breakdown 3. Project
structure will be
created and defined. Management Plan
 4. Organizational
Process Assets

5. Enterprise
environmental
factors

Scope Developing a 1. Project charter 1. Product 1. Project Scope

Definition detailed project analysis Statement
2. Preliminary
scope statement as
2. Stakeholder 2. Project Scope
the basis for future Project Scope
project decisions. analysis Management plan
Statement
(updates)
3. Alternatives
3. Project Scope
Identification 3. Requested
Management Plan
changes
4. Expert
4. Organizational
Judgment
Process Assets

5. Approved
Change requests

Create WBS Subdividing the 1. Project Scope 1. Work 1. Project Scope

major project Statement Breakdown Statement
deliverables and Structure (Updates)
2. Project Scope
project work into Templates
Management Plan 2. Project Scope
smaller more
2. Decomposition Management plan
manageable
components (updates)
3. Organizational
Process Assets
3. Scope baseline

4. Approved
Change requests 4. Work
Breakdown
Structure

5. WBS dictionary

6. Requested
changes

Scope Formalizing 1. Project Scope 1. Inspection 1. Accepted

Verification acceptance of the Statement deliverables
completed project
deliverables.
 2. Project Scope 2. Requested
Management Plan Changes

3. WBS dictionary 3. Recommended

corrective actions
4. Deliverables

Scope Controlling changes 1. Project Scope 1. Variance 1. Project Scope

Control to the project scope. Statement analysis Statement (updates)
2. Project Scope 2. Re planning 2. Scope Baseline
management plan (updates)
3. Change
3. Work Control system 3. Work
breakdown Breakdown
structure 4. Configuration Structure (updates)
Management
4. WBS dictionary system 4. WBS Dictionary
(updates)
5. Work
Performance 5. Project
information Management plan
(updates)
6. Performance
reports 6. Organizational
Process Assets
7. Approved (Updates)
Change requests
7. Recommended
Corrective action

8. Requested
changes

Project Scope Management processes required to define what work is required and ensure that
the project includes only that work required to complete the project. Involves managing both product
scope and project scope. Processes outlined are used to manager the project scope only.

Project Scope Management Plan Provides guidance on how project scope will be defined,
documented, verified, managed and controlled by project management team. It includes
1. Scope definition: A process to prepare detailed project scope statement based on
preliminary project scope statement
 2. Create WBS: A process that enables creation of WBS also establishes how WBS will be
maintained and approved
3. Scope Verification: How formal verification and acceptance of the completed project
deliverables will be obtained
4. Scope Control: A process to control changes to project scope, it is directly linked to
integrated change control
Project Scope the work that must be done in order to deliver a product, services or result of the
project; completion is measured against the project plan. It includes meetings, reports, analysis and
all the other parts of PM.
Product Scope features and functions that are to be included in a product ; completion is
measured against the Product requirements. It can be supplied as a result of a previous project to
determine the requirements.
Design Scope contain the detailed project requirements (used for FP contract).
Gold plating is not an approved PMI practice.
Scope Baseline Approved detailed 1.project Scope statement, 2.WBS and 3.WBS dictionary.

Scope Definition subdividing major project deliverables. Primarily concerns with what is and is not
included in the project. It involves using prelim scope statement and fleshing it to include all needs of
the stakeholders, Scope constraints and assumptions.
All the processes of scope management results in change requests.

TOOLS

Stakeholder Analysis: Stakeholder influences and interests and document their needs, wants and
expectations for requirements.
Product Analysis: methods for translating project objective into tangible deliverables and req. Product
breakdown, system analysis, system engineering, value engineering and functional analysis.
Alternative Analysis: tech used to generate different approaches to execute and perform the work of
the project
Project Scope statement: describe in detail the projects deliverable and the work required to
create those deliverables. Provides common understanding of the project scope among all
stakeholders and describe projects major objective. It also provides the scope baseline.
Scope Statement Contains 1.Project Objectives 2.Product Scope Description 3.Project
Requirement 4.Project Boundaries 5.Project Deliverables 6.Product Acceptance Criteria 7. Constraints
8.Assumptions 9.Initial Project Organization 10.Initial identified risks 11.Schedule Milestones 12.Fund
Limitation 13.Cost Estimate 14.Project Configuration Management Requirements 15.Specifications
16.Approval Requirements

.Break Down Structures

1. Work Break Down Structure (WBS)
2. Organizational Breakdown Structure (OBS)
3. Resource Breakdown Structure (RBS)
 4. Risk Breakdown Structure (RBS)
5. Bill of Materials (BOM) Hierarchical tabulation of physical assemblies, subassemblies &
components needed to fabricate a manufactured product.

CREATE WBS

WBS subdividing project deliverables into smaller, more manageable components. It is a

deliverable-oriented grouping of project elements that organizes and defines the total scope of the
project. It is a communication tool and it describes what needs to be done and what skills are
required. Anything missing in the WBS should be added. The WBS is created by the team (helps to
get buy-in) and it is used to make certain that all the work is covered. It provides a basis for
estimating the project and helps to organize the work. Its purpose is to include the total project scope
of all the work that must be done to complete the project.
The 1st level should be the project life-cycle (not product). Defines the projects scope baseline.
Include only work needed to create deliverables. Divided further to get work packages.
WBS is foundation of the project as everything that occurs in the planning process group after the
creation of the WBS is directly related to the WBS. Ex risks, assignment, estimation, activity list,
schedule, budget, network control.
The 3 most common types of WBS are system/sub systems, life-cycle phasing and organizational.

Benefits of WBS
1. Prevent work slipping thru the crack.
2. Provides the team with an understanding of where their pieces fit into the overall Project
Management Process.
3. and gives them an indication of the impact of their work on the project as a whole
4. facilitates communication among team member and other stakeholders
5. provides basis and proof for all kind of estimates
6. help in team building

WBS in short is
1. is a graphical picture of hierarchy of the project components
2. if it not in WBS then it is not part of the project
3. should exist for all project
4. does not show dependencies
Decomposition (1st level Project lifecycle (for IT design, code, test, install), 2nd level
Deliverables (Break down till cost estimates can be done, verify decomposition correctness) ) lowest
level of the WBS may be referred to as work packages.
Work not in the WBS is outside the scope of the project. WBS is a tool to do
decomposition. Subdividing project work packages into smaller, more manageable components
(activities/action steps). The heuristic (rule of thumb) used in project decomposition is 80 hours
(work packages).
Work Package deliverable at the lowest level of WBS. They are control points in the work
packages and are used for task assignments, cost and schedule estimates, risk identifications etc.
They are further divided into schedule activities.
Control account one level above the Work Package, in large projects costs are estimated at this
level.
WBS Dictionary Defines each item in the WBS, includes info such as a number identifier, control
account for cost budgets, Statement of work (SOW) to be done, person responsible/staff assignments
and schedule milestone. It helps to reduce Scope Creep, increases understanding and control and
inspect the on going work.
WBS dictionary can be used as a part of Work Authorization system to inform team members of
when their work package is going to start, schedule milestones and other info.
Scope Verification to verify that the work done satisfies the scope of the project . It must be done
at the end of each phase of project lifecycle to verify phase deliverables and in M&C. A similar activity
during closure process is Product Verification (is for complete product) but scope verification (for
deliverables/components) happens in M&C. The review at the end of the project phase is called phase
exit, stage gate, or kill point.
SV Checks the work against the PMP and project scope mgmt plan, WBS and WBS dictionary and
then meeting the customer to gain formal acceptance of deliverables.
Scope Verification is normally done after quality control which checks for correctness of work
based on quality requirements and scope verification focuses on customer acceptance but these two
processes can be performed in parallel.
Alternative way to describe SV, Inspection, Reviews, Product Reviews, Audits and Walkthroughs,
sign off etc

SCOPE CONTROL: focuses on changes due to scope control and changes on scope due to other
changes. All requested changes passes thru ICC
1. have clear definition of scope
2. measure scope performance against scope baseline
3. determine if any update to PMP or scope management plan needed.
Scope Creep Uncontrolled changes are often referred as project scope creep.
Variance Analysis Project performance is measurements are used to assess the magnitude of
variation. It includes finding the cause of variation relative to the scope baseline.
Rolling Wave Planning The Project Management team usually waits until the deliverable or
subproject is clarified so the details of the WBS can be developed. This is referred as rolling wave
planning. So Work to be performed in the near future is planned to the low level of the WBS, where
as work to be performed far into the future can be planned at the relatively high level of the WBS
Management by Objective (MBO) determining companys objective and how the project fits into
them. MBO focuses on the goals of an activity rather than the activity itself (manager is responsible
for results rather than performing certain activities)
Stakeholder Management the project manager must identify the stakeholders, determine their
needs and expectations, then manage and influence expectations to ensure project success. Project
success depends primarily on customer satisfaction.
1. Identify all of them
2. Determine all of their requirements
3. Determine their expectations
4. Communicate with them
5. Manage their influence
The principal sources of project failure are organizational factors, poorly identified customer
needs, inadequate specified project requirements, and poor planning and control.

Most Change Requests are the result of

1. 1. An external event
2. 2. An error or omission in defining the scope of the product
3. 3. An error or omission in defining the scope of the project
4. 4. A value-adding change

A Change Request is the most effective way of handling the disconnect between what users
actually want and what management thinks they want. The project managers role related to project
change is to influence the factors that affect change. He should ask for a change order and look for
impacts to the triple constraint. Scope Changes on project can be minimized by spending more time
developing the scope baseline.
If there is enough reserve to accommodate a change then it should be handled as a risk
management process, the Project Manager can approve the change (we are paid to manage the
scope completion within our budget and reserves)
End of phase reviews happens at the end of the phase and is same as administrative closure at the
end of the project
Time Management
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Knowledge Major Processes Primary Inputs Tools & Primary Outputs

Areas Techniques

TIME DSRDDC

Activity Identifying the 1. Enterprise 1. Decomposition 1. Activity List

Definition specific schedule environmental
activities that need factors 2. Templates 2. Activity
be performed to Attributes
produce the
 various project 2. Organizational 3. Rolling wave 3. Milestone list
deliverables
Process Assets planning
4. Request Changes
3. Project Scope 4. Planning
Statement component

4. Project 5. Expert
Management Plan Judgment

5. Work
breakdown
structure

6. WBS dictionary

Activity Identifying and 1. Project Scope 1. PDM 1. Project Schedule

Sequencing documenting Statement Network diagrams
dependencies 2. ADM
among schedule 2. Activity list 2. Activity list
activities (updates)
3. Schedule
3. Activity Network
Attributes templates 3. Activity
attributes (updates)
4. Milestone list 4. Dependency
determination 4. Requested
5. Approved changes
Change Requests 5. Applying leads
and lags

Activity Estimating the type 1. Enterprise 1. Bottom-up 1. Activity resource

Resource and quantities of environmental estimating requirements
Estimating resources required factors
to perform each 2. Alternatives 2. Activity
schedule activity 2. Organizational Analysis attributes (updates)
Process Assets
3. Published 3. Resource
3. Project estimated data calendar (updates)
Management Plan
4. Project 4. Resource
4. Activity list Management Breakdown
Software Structure
 5. Activity 5. Expert 5. Requested
Attributes Judgment changes

6. Resource
Availability

Activity Estimating the 1. Enterprise 1. Analogous 1. Activity Duration

Duration number of work environmental estimating estimates
Estimating periods that will be factors 2. Activity
needed to 2. Parametric attributes
complete each 2. Organizational estimating (updates)
schedule activities. Process Assets
3. Three-point
3. Project Scope estimates
Statement
4. Reserve
4. Project Analysis
Management Plan
5. Expert
.Risk register judgment

.Activity Cost
estimates

5. Activity list

6. Activity
Attributes

7. Activity
Resource
requirements

8. Resource
Calendar

Schedule Analyzing activity 1. Enterprise 1. Schedule 1. Project schedule

Development sequences, environmental Network analysis
durations, resource factors 2. Schedule model
requirements, and 2. Critical path data
schedule 2. Project Scope method
constraints to Statement
 create the project 3. Project 3. Schedule 3. Schedule
schedule.
Management Plan Compression baseline

. Risk register 4. What-if 4. Resource

scenario analysis requirements
4. Activity list (updates)
5. Resource
5. Activity leveling 5. Activity
Attributes attributes (updates)
6. Critical chain
6. Project Schedule method 6. Project calendar
network diagrams (updates)
7. Project
7. Activity management 7. Requested
Resource software Changes
requirements
8. Applying 8. Project
8. Resource calendars Management Plan
Calendars (updates)
9. Adjusting leads
9. Activity duration and lags .Schedule
estimates Management
10. Schedule Plan (updates)
model

Schedule Controlling 1. Schedule 1. Progress 1. Schedule model

Control changes to the management plan Reporting data (updates)
project schedule.
2. Schedule 2. Schedule 2. Schedule
baseline change control baseline (updates)
system
3. Performance 3. Activity list
reports 3. Performance (updates)
measurement
4. Approved 4. Activity
Change requests 4. Project Attributes (updates)
management
software 5. Performance
measurements
5. Variance
analysis
 6. Schedule 6. Requested
comparison bar changes
charts
7. Recommended
Corrective actions

8. Project
Management Plan
(updates)

9. Organizational
Process Assets
(updates)

Project Time Management processes required to ensure timely completion of the project
Time Management In small projects Activity Definition, Sequencing, Resource Estimation,
Duration Estimation and Schedule development are so tightly linked that they are viewed as single
process.

Activity Definition involves identifying and documenting the work that is planned to be
performed. Here work packages are planned (decomposed) into schedule activities to provide basis
for estimating, scheduling, executing, and monitoring and controlling the project work.
Its final output is schedule activity where as final output is deliverable in create WBS process.
It is done by the project team members responsible for the work packages.
Planning Component (TT used in Activity Definition)
1. Control account: above work package and below WBS. All the work effort performed within
a control account is documented in a control account plan
2. Planning component: above work package but below control account
Decomposition (TT used in Activity Definition)
1. Involves sub dividing the Work Packages into smaller components called schedule activities.
2. Activity Definition output is schedule activities not Deliverables (Create WBS output is
Deliverables)
3. Activity list, WBS and WBS dictionary can be developed either sequentially or concurrently.
4. Performed by team members responsible for the work package.
Activity List (output of activity definition)
Includes all schedule activity that is required as part of the project scope
It includes the activity identifier and scope of work description for each schedule activity in
sufficient detail.
It is used in schedule model and is part of PMP
 Schedule Activitys scope of work can be in physical terms such as linear feet of pipe or
lines of computer program.
Schedule Activity are discrete components of the project schedule but are not components of the
WBS
Activity Attributes (output) for each SA contains Activity identifier, activity Code, Activity
Description, Predecessor Activities, Successor activities, logical relationships, leads and lags, resource
requirements, imposed dates, constraints and assumptions, personal responsible for, geographical
area, level of effort,
Milestone (input) Can be mandatory or optional, it a component of PMP, included in SS and WBSD
and used in schedule model.

Activity Sequencing involves identifying and documenting the logical relationship among the
schedule activities.
Tool:
Arrow Diagramming Method (AOA): PERT and CPM focuses on float duration, to determine which
activities have the least scheduling flexibility. Only Show finish-to-start relationship. Used by CPM
Precedence Diagram Method (AON): Represents improvement to PERT and CPM by adding lag
relationships to activities
[Start to Start; Start to Finish; Finish to Start; Finish to Finish]. Work is done during activity. Arrow
indicates dependency.

No dummy, its used by most softwares.

Dependencies:
Mandatory or Hard logic: Often involve physical or technological limitations (based on the
nature of work being done)
Discretionary: may also be called preferred logic, preferential logic, or soft logic.
Soft: desirable and customary (based on experience). Preferential: preferred or mandated
by a customer (also, need of the project sponsor) Defined by PM Team. It is documented
so that can be exploited for the schedule compression. All above are based on past
experience
External: Input needed from another project or source
Apply Leads and Lags Lead allows acceleration of the successor activity, A lag direct a delay in
Successor activity.

Activity Resource Estimation Identifies when and what resources (person, equipment or
material) required for a schedule activity and what quantities of each resources will be available. It is
closely coordinated with Cost estimating process.
Schedule Management Plan (Input) Development of Schedule Management Plan is part of
Develop Project Management Plan Process. SMP is a subsidiary plan of PMP and may formal or
informal, highly detailed or broadly framed depending on the project. This plan sets the format and
establishes criteria for developing and controlling the project schedule.
Bottom Up Estimation (TT of Resource Estimation) Estimation is done for lower level items and
then aggregated.
Output: Activity resource requirements, Resource Calendar(update), RBS it is a hierarchical
structure of resources by category & type.
Activity consumes time (eg testing)
Events specified accomplishment / does not consume time (eg tested)
Activity Duration Estimate requires to estimate amount of work effort required, the
assumed amount of resources to be applied and the number of work periods needed to complete the
schedule activity is determined.
Resource Calendar (Input) includes availability, capability and skills of human resources.
TT for Activity Duration Estimation
1. Analogous Estimation Using actual duration of previous similar schedule activity. It is
at the project level, generally given to PM from Management or Sponsor; uses historical
information and Expert Judgment and it is a form of Top Down estimate.
2. Parametric Estimation Quantity of Work * Productivity Rate 1.Regression Analysis
(Scatter Diagram) 2.Learning Curve. Results of Parametric Estimation can become
heuristics. It is based on historical records.
3. Three Point Estimates Program Evaluation and Review Technique (PERT) Three-
Point Estimate = (O + 4M + P)/6 Where O is Optimistic, M is Most likely and P is
Pessimistic standard deviation = (P O)/6 variance = standard deviation2 (To add
standard deviations: convert to variance then add; take the square root of the sum). Best
method when you have no historical data for a similar task. Result is the 50% point
(mean).The probability of completing a project at or later than its expected time is 50%
4. Reserve Analysis: Contingency reserve (known unknown) is for remaining risk after risk
response planning and management reserve (unknown- unknown) is any extra amount of
funds to be set aside to cover unforeseen risk. Cost baseline will include contingency
reserve and cost budget will include management reserve. Contingency reserve is created
as a part of contingency plan and used when identified (residual) risk as a part of active
acceptance strategy, occurs.
5. Expert Judgment time reserve, Contingency Reserve or buffers as recognition of
schedule risk. They can be % of the estimates.
Graphical Evaluation and Review Technique (GERT)allows for probabilistic treatment of both
network logic and activity duration estimates. It is a form of ADM (A Network Drawing Method) that
allows loops between activities. The easiest example is when you have an activity to design a
component and then test it. A network diagram drawing method that allows loops between tasks. It
is a method of sequencing (e.g. a project requires redesign after completion of testing)

PM Role on estimating
1. Provide team with enough info to estimate
2. Set accuracy level for estimates
3. Do a sanity check
4. Prevent padding
 5. Formulate reserve
6. Make sure assumption are recorded

Schedule development: difference between time estimate and schedule is that the schedule is
calendar based.
Imposed Dates Imposed dates in Scope Statement (I/P to Schedule Development Process)
restrict the start or finish date.
Schedule Network Analysis (TT for Schedule Development)
1. Critical Path Method Calculate Project Duration, Critical path length and Float. Critical
path can have 0 or negative total float. Uses only one time estimates. Doesnt consider
risk as important as cost so it focuses on controlling cost and leaving schedule flexible.
Uses only ADM (AOA) diagram
2. Schedule Compression Crashing (Additional Resources) and Fast Tracking (Parallel)
3. What if Scenario Monte Carlo Analysis in which a distribution of possible activity
duration is defined for each schedule activity and used to calculate a distribution of possible
outcome for the total project. It helps to assess feasibility of the project schedule under
adverse condition and in preparing contingency and response plans to overcome or
mitigate the impact.
4. Applying calendars: identifying periods when work is allowed. Project calendar (affects
all project activities like snowfall season no work can be planned) and Resource calendar
affect a specific resource or category or resources like shift timings, planned vacations)
5. Schedule Compression Methods occurs after activity duration estimating and before
finalizing the schedule. Include Crashing when you are worried about time, not so much
about costs. Fast Track activities that are done in sequence are done in parallel, involve
increases risk and rework, it is done on discretionary dependencies. Should fast track tasks
on the critical path (float = 0) in order to save time. Re-estimate should be done by
reviewing risks.
6. Resource Leveling Applied after Critical Path Method, Keep resource usage at constant
level. Allows you to level the peaks and valleys of resource use from one month to another.
Also know as resource based method and resource constrained schedule and
produces resource limited schedule. Often results in a project duration that is longer than
the preliminary schedule. Resource reallocation from non-critical to critical path activities is
a common way to bring the schedule back, or as close as possible, to the originally
intended overall duration. So 1. Schedule can slip 2. Cost increase. Reverse Resource
allocation scheduling: based on finite and critical project resource (end date), in this case
the resource is scheduled in reverse from the project ending date.
7. Critical Chain Method deterministic and probabilistic approach. In lieu of managing the
total float of network paths, the critical chain method focuses on managing the buffer
activity durations and the resources applied to planned schedule activities.
1. Project schedule network diagram is built using non conservative/most likely
estimates with required dependency and defines constraints. Each activity is
schedule to occur as late as possible to meet end date.
 2. Then Critical Path is calculate and
3. Then resource limited schedule is determined making a altered critical path.
4. Then add duration buffers that are non work schedule activities to maintain focus
on the planned activity durations. Think of them as reserves from risk response
planning.
5. Then planned activities are schedule to their latest possible planned start and
finish dates.

Float / Slack 1.Free 2. Total. A negative slack on the critical path means that the project is behind
schedule. Free Float amount of time a task can be delayed without delaying the early start of its
successor. Total Float amount of time that an activity may be delayed from early start without
delaying the project finish date
Start no earlier than & Finish no later than Respectively #1 and #2 most popular date
constraint in project management software.
Monte Carlo Analysis computer simulation of project outcomes using PERT estimates; result
represented in S curve. Provides the ability to compute the probability of completing a project on a
specific day. Can also be used to assess feasibility of schedule under adverse conditions (e,g., when a
schedule constraint is identified)
Monte Carlo Analysis 1. Probability of Completion and any specific day 2.
Probability of Completion in amount of Cost 3.Probability of activity in critical path 4.
Risk

Time Estimate Non-Calendar Schedule Calendar Based

Output Schedule development

Project network diagrams. Project network diagrams are schematic displays of the projects
activities and the logical relationships (dependencies) among them.
Barchart (Gantt) 1. Weak Planning Tools 2. Good reporting tools 3. No Dependency Shown 4. No
Resources shown
Hammock Activity O/p of Schedule Development -> Bar Charts -> For Control and management
communication, the broader more comprehensive summary activity called Hammock Activity is used
between milestones or across multiple interdependent work packages.
Milestone Chart: Significant events; good for communicating status to top management.
Schedule development:
1. Work with stakeholder priorities
2. Look for alternative ways to complete the work
3. Look for impact on other projects
4. Meet with managers to negotiate for resources availability
5. Give a team to approve the schedule
6. Look at calendar estimates to see if they are feasible.
7. Compress the schedule
8. Adjust all the component of PMP
 9. Simulate using monte carlo anal
10. Level resources
11. Conduct meetings and conversation to gain stakeholder and mgmt approval.

Schedule Control: part of ICC

1. Determining current status of the project schedule
2. Influencing the factors that create changes
3. Determining if schedule has changes
4. Managing actual changes as they occur
Schedule Baseline the original, approved project schedule; should never be changed without
approved Change request. Any approved change should be documented in writing. Should be
created at the beginning of the project and used during the project to gauge (measure) overall
project performance, not just schedule. The project Performance Measurement Baseline should
generally change only in response to a scope or deliverable change.
Schedule Change Control System defines procedures for changing the project schedule and
includes the documentation, tracking systems, and approval levels required for authorizing schedule
changes and part of Integrated Change Control Process.

Fragment Network Portions of project schedule network diagram are often referred to as a Sub
network or Fragment Network. Sub Network templates are useful when project has several identical
or nearly identical deliverables.
Heuristics rules of thumb
Near Critical Path Path is close in duration to critical path, the close it is the more RISK project
has.
Variance Plan minus Actual
Lag waiting time between two tasks (negative lead)
Resource Planning
Tools

Responsibility Matrix Identify who does what at what time/phase of the project,

Resource Quantifies how much work is needed from each resource during each time period
Spreadsheet

Resource Gantt Identify the periods of time (e.g. calendar date) when a particular resource is
Chart working on a particular task

Resource Histogram Vertical bar chart showing the total number of resources needed during each
time period
(Resource Loading
Chart)
Progress Report 50/50, 20/80, 0/100 An Activity is considered X percent complete when it
begins and gets credit of the last 100-X percent only when it is completed.
Cost Management
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Knowledge Major Processes Primary Inputs Tools & Primary Outputs

Areas Techniques

COST EBC radio is free

of cost.
Cost Developing an 1. Enterprise 1. Analogous 1. Activity Cost
Estimating approximation of environmental estimating estimates
the costs of the factors
2. Determine 2. Activity Cost
resources needed
2. Organizational
to complete Resource Cost Estimate Supporting
project activities Process Assets Rates detail

3. Project Scope 3. Bottom-up 3. Requested

Statement
estimating Changes
4. Cost management
4. Work breakdown
4. Parametric plan (updates)
structure estimating

5. WBS dictionary 5. Project

Management
6. Project Software
Management Plan

6. Vendor Bid
Schedule
analysis
Management Plan

7. Reserve
Staffing analysis
Management
Plan 8. Cost of Quality

Risk Register

Cost Aggregating the 1. Project Scope 1. Cost 1. Cost baseline

Budgeting estimated costs Statement aggregation
2. Project funding
of individual
2. Work breakdown 2. Reserve
activities or work requirements
packages to structure Analysis
establish a cost
baseline.
 3. WBS dictionary 3. Parametric 3. Cost management
Estimating plan (updates)
4. Activity Cost
estimates 4. Funding Limit 4. Requested
reconciliation Changes
5. Activity Cost
Estimate Supporting
detail

6. Project Schedule

7. Resource
Calendars

8. Contract

9. Cost management
plan

Cost Control Influencing the 1. Cost baseline 1. Cost change 1. Cost estimates
factors that create control system (updates)
2. Project funding
cost variances 2. Cost baseline
2. Performance
and controlling requirements (updates)
changes to the measurement
3. Performance
project budget. Analysis
3. Performance Measurements
reports
3. Forecasting
4. Forecasted
4. Work Completion
4. Project
performance
performance
information 5. Requested
reviews
Changes
5. Approved Change
5. Project
requests 6. Recommended
Management
corrective actions
software
6. Project
management plan 7. Organization
6. Variance
process assets
Measurement
(updates)
 8. Project
management
plan (updates)

Cost Estimating Developing an approximation (estimate) of the costs of the resources needed to
complete project activities.
Cost Budgeting Aggregating the estimated costs of individual activities or work packages to
complete project activities
Cost Control Controlling changes to the project budget and influencing the factors that causes
cost variance.
Life Cycle Costing Broader view of Project Cost Management, which includes cost of resources
needed to complete schedule activities along with effect of cost decisions on using, maintaining &
supporting the product, service or result of the project. Life cycle costing together with value
engineering can improve decision making and is used to reduce cost and execution time.
Cost Management Plan It is created as part of the Develop Project Management Plan process. It
can establish
1. Precision Level ($100, $1000 etc)
2. Units of Measure (Staff hours/days/lump sum etc)
3. Organizational Procedure Links (Control Account, code or account number directly linked
accounting system)
4. Control thresholds (Agreed amount of variation allowed)
5. Earned Value rules (1.Computation Formula 2.Earned Value Credit Criteria 3.WBS Level)
6. Reporting Formats
7. Process descriptions (Each of the three cost management Processes are documented.)

ROM Accuracy of project estimate will increase as it progresses, project at initial stages can
have rough order of magnitude (ROM) in the range of 50 to +100% later it will narrow to a range
of definite estimate 10 to +15%.
Cost Management Plan (from Cost Estimating) the action taken by the project manager for all
variances are described in the Cost Management Plan.
Cost Estimating (Tools)
Analogous estimating also called top-down estimating, means using the actual cost of a
previous, similar project. It is given by management as an expectation. It is less costly and less
precise.
Parametric modeling mathematical model to predict project costs per square foot of living
space. It uses statistical relationship between historical data and other variables to calculate cost
estimate. It can produce higher levels of accuracy depending on sophistication, resource quantity and
cost data.
Bottom-up estimating The cost of individual activities or work packages rolled up to get the
estimate for whole component. It is more accurate and costly.
Reserve Analysis Contingency Reserve are estimated to be used at the discretion of the project
maanger to deal with anticipated but not certain events, called known unknowns. They are
managed as a buffer kept at the end of the network path for that group of activities. As the schedule
progresses, reserve is measure by resource consumption by the schedule activities. Management
reserve: they are there to manage events called unknown unknowns. Since they are not distributed
as budget to project hence they are not used for calculating earned values metrics.
Cost of Quality: cost of quality initiative in an organization like training, audits etc, cost of poor
quality: warranty cost, claims
EV equals PV when the project is completed.

Cost Calculations Costs are more practical to calculate at one level higher (Control Account) than
work package level
Cost Budgeting Tools and Techniques

Cost aggregation
Funding Limit Reconciliation Customer/sponsor will set limits on disbursement of funds for the
project. Funding Limit Reconciliation will necessitate the scheduling of work to be adjusted to smooth
or regulate those expenditures. It is accomplished by placing imposed date constraints for some work
packages and compressing the schedule to reduce the estimated cost of the project. Conciliation
happens for the cash flow of the project and with any cost constraint of the project.
Cost baseline (output) The cost baseline is a time-phased budget that will be used to measure and
monitor cost performance on the project. It is shown as an S curve. The difference between
maximum funding and the end of the cost baseline is Management Reserve in the S curve.

Project Funding requirement (output)

Project Performance Reviews (TT of Cost Control) 1.Variance Analysis 2.Trend Analysis
3.Earned Value Technique
Performance Measurement Analysis (TT of Cost Control) PV, EV, AC, ETC, CV, SV, CPI, SPI
Benefit Cost Ratio Expected Revenues / Expected Costs. Measure benefits (payback) to costs; not
just profits. The higher the better (if rating over 1, the benefits are greater than
the costs)
Internal Rate of Interest Rate which makes the PV of costs equal to PV of benefits
Return
Payback Period Number of time periods up to the point where cumulative revenues exceeds
cumulative costs. Weakness in this approach is the lack of emphasis on the
magnitude of the profitability. Does not account for time value of money nor
consider value benefits after payback.
Opportunity Cost Cost of choosing one alternative and therefore giving up the potential benefits
of another alternative: it is the value of the project not selected (lost
opportunity).
Sunk Cost Expended costs which should be ignored when making decisions about whether
to continue investing in a project
Law of Diminishing The point beyond which the marginal addition of resources does not provide a
Returns proportional amount of utility. Same amount each time period (e.g. 10 10
10).
Straight Line
Types 1. Straight Line 2. Accelerated (1. Double Declining Balance 2. Sum of
Depreciation
Years Digits)

Working Capital Current Assets Current Liabilities

Value Analysis Cost reduction tool that considers whether function is really necessary and
whether it can be provided at a lower cost without degrading performance or
quality. Finding the least expensive way to do the scope of work.
Value Engineering Tool for analyzing a design, determining its function, and assessing how to
Tool provide those functions cost effectively.
50-50 Rule At beginning, charge 50% of its BCWS to the account. Charge remaining at
completion.
Regression Analysis Statistical technique graphically represented on scatter diagram
Learning Curve Mathematically models the intuitive notion that the more times we do
something, the faster we will be able to perform
Variable Costs Costs rise directly with the size and scope of the project
Fixed Costs Costs do not change; non-recurring (e.g. project setup costs)
Direct Costs Incurred directly by a specific project. Project training to project team.
Indirect Costs Part of the overall organizations cost of doing business and are shared by all
projects. Usually computed as a percentage of the direct costs. General and
administrative cost, allocated to the project by the project team as a cost of
doing business.
Control accounts Represent the basic level at which project performance is measured and
reported. The purpose of control accounts is to monitor and report on project
performance.
Cost Change Control Documented in the cost management plan, defines the procedures of the cost
Systems baseline change. Includes the documentation, tracking systems, and approval
levels needed to authorize a change and integrated with the integrated change
control process.
Operating profit Amount of money earned: Revenue direct costs
Discounted cash-flow Present value method determines the net present value of all cash flow by
approach discounting it by the required rate of return.
Project Closeout (output to cost control) Process and procedures developed for the closing or
canceling of projects

Formulas
Expected Value Probability * Impact
Present Value FV / (1 + r)t
Cost Variance EV = BAC * (work completed/total work required)
CV EV AC (BCWP ACWP) Variance = planned actual
Schedule Variance PV = BAC *(Total time passed /total schedule time)
 Formulas

SV EV PV [BCWP BCWS] (if <0; work completed is less than what was
planned)

Cost Performance Index EV/AC [BCWP / ACWP] I am getting ____ out of each dollar. (>1
(CPI) good; <1 bad)
Schedule Performance EV/PV [BCWP / BCWS] I am progressing at ____% of the rate
Index (SPI) originally planned
Estimate at Completion BAC / CPI
(EAC) AC+ETC (when original estimates are considered flawed)

AC+BAC-EV (when everything is OK and current variance will not occur

in the future)

AC+((BAC-EV)/CPI) (when everything is OK and current variance will

occur in the future)

Estimate to Completion EAC AC or (BAC EV) / CPI

(ETC)
Variance at Completion BAC EAC
(VAC)
% Spent AC/BAC
Cost Variance in % CV/EV
Schedule Variance in % SV/PV
To Complete Performance (BAC-EV)/(BAC AC)
Index (TCPI)
BCWS (PV) How much should be done? This is the performance measurement
baseline.
BCWP (EV) How much work is done? (Progress) Budgeted cost of work performed.
Value of the work completed in terms of what you budgeted (your baseline)
ACWP (AC) How much did the is done work cost?
BAC Budget at Completion How much is budgeted for the total job? BAC
would change every time there is a funded scope change approved for
activity to be performed in the future.
EAC Based on project performance and risk quantification
ETC Estimate to Completion
CPI Cumulative CPI does not change by more than 10% once a project is
approximately 20% complete. The CPI provides a quick statistical forecast
of final project costs.
AD Work Quantity(scope of the activity) / Production rate
Slope (crash cost normal cost) / (crash time normal time) ; if <0, as the time
required for a project/task decrease, the cost increase

Quality Management
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Knowledge Major Processes Primary Inputs Tools & Primary Outputs

Areas Techniques

QUALITY The quality 3-

Pack. (3 PAC)
Quality Identifying which 1. Enterprise 1. Cost-Benefit 1. Quality
Planning quality standards are environmental analysis management plan
relevant to the project factors
2. Benchmarking 2. Quality Metrics
and determining how
2. Organizational
to satisfy them.
Process Assets 3. Design of 3. Quality
experiments Checklists
3. Project Scope
Statement
4. Cost of quality 4. Process
(COQ) Improvement Plan
4. Project
Management Plan 5. Additional 5. Quality Baseline
quality Planning
Tools 6. Project
Management Plan
(updates)

Perform Applying the 1. Quality 1. Quality 1. Requested

Quality planned systematic management plan planning tools Changes
Assurance quality activities to and techniques
2. Quality Metrics 2. Corrective
ensure that project
2. Quality audits
employs all processes Actions
needed to meet 3. Process
requirements 3. Process
Improvement Plan 3. Organization
analysis
process assets
4. Work (updates)
4. Quality
performance
control tools and
Information 4. Project
techniques
management
5. Quality control plan (updates)
Measurements

6. Approved
Change Requests
 7. Implemented
Corrective Actions

8. Implemented
Preventive Actions

9. Implemented
Change Requests

10. Implemented
Defect Repair

Perform Monitoring specific 1. Quality 1. Cause and 1. Quality Control

Quality project results to management plan effect diagram Measurements
Control determine whether
2. Quality Metrics 2. Control charts 2. Validated Defect
they comply with
relevant quality Repair
standards and 3. Quality 3. Flow-charting
identifying ways to
eliminate causes of Checklists 3. Quality Base line
unsatisfactory 4. Histogram (updates)
performance.
4. Organization
process assets 5. Pareto chart 4. Recommended
Corrective Actions
5. Work 6. Run Chart
performance 5. Recommended
Information 7. Scatter Preventive Actions
diagram
6. Approved 6. Requested
Change Requests 8. Statistical Changes
sampling
7. Deliverables 7. Recommended
9. Inspection Defect Repair

10. Defect repair 8. Organization

review process assets
(updates)

9. Validated
deliverables
 10. Project
management
plan (updates)

Approach is compatible with ISO.

Quality Planning Identifying which quality standards are relevant to the project and determining
how to satisfy them. Although it usually occur during planning phase, it can occur during execution if
there is a change.
Quality Assurance Applying the planned, systematic quality activities to ensure that the project
employs all processes needed to meet requirement. (e.g. evaluating overall project performance
regularly)
Quality Control Monitoring specific project results to determine whether they comply with relevant
quality standards and identifying ways to eliminate causes of unsatisfactory performance.
Project Quality Management processes, procedures, policies required and followed to ensure
that the project will satisfy the needs for which it was undertaken.
Quality the degree to which a set of inherent characteristics fulfill requirements. Quality is planned,
designed and built in not inspected in.
Input: Major input to quality management is to turn stakeholder needs wants and expectations into
requirements through Stakeholder analysis performed during Project Scope Management.

Grade is a category assigned to products or services having the same functional use but different
technical characteristics. (a limited number of features). Low Grade is not a problem low
quality (many bugs) is a problem
Precision Consistency is value of repeated measurements having fine cluster and little
scatter. Accuracy is a correctness of how close is measured value to true value.
4 Pillars of Quality Management: customer satisfaction, Prevention over inspection, Management
responsibility, Continuous Improvement.
Quality Is planned, designed and built in, not inspected in.
Joseph Juran Quality Fitness of Use

Edward Deming Quality Improvement 14 steps to TQM, Plan, Do, Check and Act

Philip Crosby Quality COPQ, Conformance to requirements, Advocated Prevention over

inspection and Zero Effects.

Action for ensuring Quality

1. Review the project charter and project scope statement
2. Ask customer what is his definition of quality
3. Identify any quality standards that are applicable to the project
 4. Identify the desired levels of performance in the product
5. Identify level of control for the project
6. Set standard to reach to that level of performance
7. Decide what will you to to ensure processes are followed and standards are met
8. Meetings, reports, measurements, calculations.
9. Perform QA
10. Perform QC

Quality Planning: Key inputs are Quality Policy, rules, govt regulation, procedures, scope statement
etc. Project Scope statement provide info on major project deliverables, project objectives,
requirements, thresholds and acceptance criteria. If thresholds are exceeded it will require action
from the project management team. Acceptance criteria include performance requirement and
essential condition that must be achieved before project deliverables are accepted. The result of
deliverables satisfying all acceptance criteria implies that the needs of the customer have been met
and further formal acceptance during scope verification validates that the acceptance criteria have
been satisfied.

TT of Quality Planning:
1. Cost Benefit Analysis
2. Benchmarking: Comparing practices of other projects. Provides a standard to measure
performance (time consuming). (e.g. investigating quality standards that other companies
are using)
3. Cost of quality All work to ensure conformance to requirements + nonconformance to
requirements. Like audit, training, rework, COPQ. It is total cost incurred in preventing NCs
to requirements, appraising the product etc. It includes Prevention Costs (training),
Appraisals Costs (inspection/testing) and Internal (scrap, rework)/External (warranty)
Failure costs
4. Additional Quality tools: like brainstorming, affinity diagram, force field analysis,
nominal group techniques, matrix diagrams, flowcharts, and prioritization matrices.
5. Design of experiments is a statistical method that helps identify which factors might
influence specific variables. A statistical method to identify the factors
which influences specific variables of a product/process and optimizes the
product/process. The aspect of this technique is to provide a statistical framework for
systematically changing all the important factors
Output of Quality planning
1. Quality Management Plan it describes how the PM team will implement the
performing organizations quality policy. Provides input to the overall project management
plan and must address Quality Control, Quality Assurance and continues process
improvement for the project.
2. Process improvement Plan Subsidiary of PMP, it details the steps for analyzing
processes that will facilitate the identification of waste and non value added activity, it
 includes: 1. Process boundaries (describes the purpose, start and end of processes,
input/output, owner and stakeholder) 2.Process configuration (flowchart of the process)
3.Process metric (maintain control over status of the processes) 4.Targets for improved
performance.
3. Quality Metrics Defines what something is and how to measure it.
4. Quality Baseline: records quality objective of the project.

Perform Quality Assurance:

Inputs: QMP, Quality metrics, PIP, Work performance information, Quality control measurements.
TT: Quality Planning TT, Quality Audits, process anal, Quality Control TT
Quality Audit: objective is to identify ineffective policy, procedure, processes in use on the project,
performed by auditors and can confirm implementation of approved CRs, CA, PA and defect repairs.
It also creates LLs
Process analysis: follows PIP to identify needed improvement and create preventive. It includes
root cause analysis
Checklist: Used to verify that a set of required steps has been performed in quality control process

Perform Quality Control: involves monitoring specific project results to determine whether they
comply with relevant QMS and are in control and identify ways to eliminate the causes of
unsatisfactory results.
Project management team should have working knowledge of statistical quality control, especially
sampling and probability to help evaluate QC outputs.
Following pairs useful to know:
Prevention (keeping errors out of the process) and inspection (keeping errors out of the
hands of the customer).
Attribute Sampling Measures whether or not the results conform to specifications
and Variable Sampling is the result on a continuous scale that measures the degree of
conformity.
Variable Sampling Are characteristic you want to measure (size, shape, weight, etc).
An attribute is what you are measuring. The result is rated on a continuous scale that
measures the degree of conformity
Special Cause Unusual event, Random Cause Normal process variation also know as
common cause.
Tolerance is the result is acceptable if it falls within the range specified by the
tolerance. Control limit is the process in control if the result falls within the control limits
Inputs: QMP, Quality Metric, Checklists, Work Performance Information, Deliverables.
TT: Seven basic tools of quality C&E diagram, control chart, flowcharting, histogram, Pareto chart,
run chart, scatter diagram, Statistical Sampling, inspection, defect repair review.
Cause and Effect Diagram (Fishbone)
(1) Creative way to look at actual causes and potential causes of a problem
(2) Process of constructing helps stimulate thinking about an issue; helps to organize thoughts;
generates discussion

(3) Used to explore a wide variety of topics

(4) Also known as Ishikawa or Fishbone diagram

Control Chart Help determine whether the project is out of control (in order to verify quality level).
Used for bother project and product life cycle processes such as schedule variance, volume and
frequency of scope changes, and errors in project documents.
Out of Control points that are beyond control limits or non-random still within the upper and
lower control limit
(1) Upper and Lower Control Limit on a Control Chart Acceptable range of variation of
a process, 3 sigma. [The control limits are determined from data obtained from the process itself.]
(2) Assignable Causes Data point on a control chart that requires investigation
(3) Specification Limit Shows customers expectations for quality (on a control chart). Fixed
by the customer
(4) Rule of Seven Based on Heuristics, seven random data points grouped together in a
series with in control limit. It represents that they are not random and should be investigated.
Flow chart Help analyze how problems occurs, A diagramming technique shows how various
elements of a system are interrelated.
Histogram: its a bar chart showing a distribution of variables. Its helps identify the cause of
problems in a process by the shape and width of the distribution.
Pareto Diagram Histogram, ordered freq of occurrence, take corrective action & 80 prob/20
causes. Used to identify and evaluate NCs. Rand ordering is used to guide CA.
Run chart: shows the history and pattern of variation. It is a line graph that shows data points
plotted in the order in which they occur (over time). Trend analysis involves using mathematical
techniques to forecast future outcomes based on historical results.
Scatter Diagram: shows pattern of relationship between two variables.
Statistical sampling Statistical sampling involves choosing part of a population of interest for
inspection. Appropriate sampling can reduce cost of quality.
Inspections are variously called reviews, product reviews, audits, and walkthroughs. It is
examination of a work product to determine whether it conforms to standards. It is also used to
validate defect repairs.
Defect Repair review.

Output
Validated Deliverables, recommend CA and PA, defect repair, Validated Defect Repair,
quality baseline (updates),
Quality Control Measurements Results of QC activities that are fed back to QA to reevaluate
and analyze the quality standards and processes for performing organization.
PM is ultimately responsible for quality. Senior management has the overall responsibility and 85% of
costs of quality are due to them.
Operational definitions are also called metrics
Quality function deployment provide better product definition and product development. Its
main feature are to capture the customers requirements, ensure cross functional teamwork, and link
the main phases of product development.
Rework action taken to bring a non-conforming item into compliance. Rework is a frequent cause
of project overruns.
Marginal Analysis Optimal Quality is reached at the point where the increased revenue from
improvement equal incremental cost to secure it.
Gold Plating Giving Customers extras, it is not recommended.
Quality Variable A quality characteristic that is measurable
Quality Attribute A quality characteristic that is classified as either conforming or nonconforming
Inspection Prevent errors from reaching the customer before delivery to the customer. Can be
done throughout product development.
Ishikawa Made popular Pareto Chart, Cause-and-Effect Diagram and Control Chart
Taguchi Method Is used to estimate the loss associated with controlling or failing to control process
variability. If you select good design parameters, you can produce products that are
more forgiving and tolerant. The tool helps determine the value or break-even point of
improving a process to reduce variability.
ISO 9000 Provides a basic set of requirements for a quality system, without specifying the
particulars for implementation.
Statistically Determine if problems are related before planning what to do about them, one can use
Independent scatter diagram or regression anal to know that.
Mutually If two events cannot both occur in a single trial
Exclusive
Conformance Non-Conformance (most accurate)
Planning Scrap
Training Rework and repair
Process Control Additional Material
Design and process validation Repairs and service
Test and evaluation Complaints
Quality audits Liability
Maintenance and calibration Product recalls
Inspection Field service
Field testing Expediting

Impact of Poor Quality Increased cost, Decreased productivity, Increased risk and uncertainty,
Increased costs in monitoring

Goal of the cost of quality program should be 3 5% of total value.

Cost of non-quality is estimated to be 12 20% of sales.
Two components of product availability are reliability and maintainability.
To effectively use statistical quality control, the project team should know the differences
between special causes and random causes.
Sampling and probability are the most important topics to understand in statistical process
control.
TQM Total Quality Management Philosophy encourages companies and their employees to focus on
finding ways to continuously improve quality of their business practices and products.
Normal distribution is used to measure variation
Standard Deviation From 3 point Estimates = (P O)/6
Six Sigma Level of Quality 3 sigma is 2700 defects ppm. +/- 1
+-1 Standard deviation equal to 68.26%, +-2 = 95%, +-3 = 99.73, +-6 = 99.99996% which is
percentage of occurrences to fall between the two control limits.

HR Management
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Knowledge Major Primary Inputs Tools & Primary Outputs

Areas Processes Techniques

HUMAN PAD
RESOURCE

Human Identifying and 1. Enterprise 1. Organization 1. Roles and

Resource documenting Environmental charts responsibilities2.
Planning project roles, Factors2. and position Project Organization
responsibilities and Organizational descriptions2. charts
reporting Process Assets Networking
relationships as 3. Staffing
well as creating the 3. Project 3. Organizational management plan
staffing management plan theory.
management plan

.Activity
resource
requirements

Acquire Obtaining the 1. Enterprise 1. Pre- 1. Project Staff

Project Team human resources Environmental assignment2. Assignments2.
needed to Factors2. Negotiation Resource Availability
complete the Organizational
project. Process Assets 3. Acquisition 3. Staffing
management plan
4. Virtual teams (updates)
 3. Roles and
responsibilities

4. Project
Organization charts

5. Staffing
management plan

Develop Improving the 1. Project Staff 1. General 1. Team

Project Team competencies and Assignments2. management Performance
interaction of team Resource skills2. Training assessment
members to Availability
enhance project 3. Team-building
performance. 3. Staffing activities
management plan
4. Ground rules

5. Co-location

6. Recognition
and rewards

Manage Assigning the tasks 1. Organizational 1. Observation 1. Requested

Project Team to the team Process Assets2. and Changes2.
member, Tracking Project Staff conversation2. Recommended
team member Assignments Project Corrective Actions
performance, performance
providing feedback, 3. Roles and appraisals 3. Recommended
resolving issues, responsibilities Preventive Actions
solving the conflicts 3. Conflict
among the team management
members, 4. Project 4. Organization
appraises team Organization charts process assets
member 4. Issue log
(updates)
performance and
5. Staffing
coordinating
changes to management plan 6. Project
enhance the management
project 6. Team plan (updates)
performance
Performance
assessment
 7. Work
Performance
Information

8. Performance
Reports

Project management team is a subset of the project team and is responsible for project
management activities. Can be divided into administrative and behavioral decisions
HR Planning
I/P to HR Planning
Enterprise Environmental Factors (I/P to HR Planning)
1. Organizational (which departments, their working arrangements, relationships)
2. Technical (Disciplines and Specialties needed)
3. Interpersonal (Formal or informal reporting relationships, culture and language differences
etc)
4. Logistical (How much distance)
5. Political (Individual goals and agendas)
Constrains Organizational Structure, Collective bargaining agreements, Economic Conditions.
Collective bargaining agreements: Contractual agreements with unions or other employee
groups can require certain roles or reporting relationships.
Organizational process assets templates and Checklists
PMP: Activity Resource Requirement
TT
Organizational Charts and position description Hierarchical, Matrix based and Text Oriented.
Some assignments are in risk, quality or communication plan. To ensure each work package has clear
owner and each member has clear understanding of their R&R.
Hierarchical
Organizational Breakdown Structure (OBS) A depiction of the project organization arranged
so as to relate work packages to organization units.
RBS Resource Break Down Structure is an hierarchical chart which shows break down of project by
resource types. RBS is helpful in tracking project costs, aligned with organizations accounting system,
can contain categories other than human resources.
RAM (Matrix based also called table) Responsibility assignment Matrix, can be developed at
various levels. RACI (Responsible, Accountable, Consult and Inform). Show who does what
(x=person, y=phase). The most important feature of the RAM is the participatory development
process involving all stakeholders
Text oriented more detailed include responsibilities, authority, competencies and qualification also
known as position description and Role responsibility authority forms.
Networking: Informal interaction including proactive correspondence, luncheon etc. Concentrated
Networking is useful at the beginning of the project. Interpersonal Skills Are also known as soft
skills
O/P of HR Planning
Roles and Responsibilities Role, Authority, Responsibility and competency
Staff Management Plan Describes when and how human resource requirements will be met.
SMP can be updated because of promotions, retirements, illness, performance issues and changing
workloads. SMP contents:
1. 1. Staff acquisition internal or external or contract, same location or different, Cost
etc
2. 2. Timetable Resource histogram is prepared, bars beyond the maximum available
hours identify need for resource leveling strategy.
3. 3. Release criteria Morale is improved if transitions are already planned.
4. 4. Training Needs
5. 5. Recognition and rewards
6. 6. Compliance With Government regulations
7. 7. Safety
Project Organization Chart
Acquire Project team: improves the competencies and interaction of team members to enhance
project performance. Includes improving skill and feeling of trust and cohesiveness.
I/P : EE factors (availability, ability, experience, Interest, cost), OP assets, R&R, Project Org Chart,
Staffing Mgmt Plan.
TT: Pre-assignment, Negotiation, Acquisition, Virtual teams
O/P: Project Staff Assignments, resource availability, SMP (update)

* Before creating final schedule resource availability has to be confirmed.

Develop Project Team: involves tacking team member performance, providing feedback, resolving
issues and coordinating changes to enhance project performance.
I/P : Project staff assignment, staffing management plan, resource availability
TT: General Mgmt Skills (Soft Skill), Training, Team Building activities, Ground rules, Co-location, R&R
O/P: Team Performance Assessment: Project team effectiveness is evaluated.
Manage Project Team: involves tracking team member performance providing feedback, resolving
issues and coordinating the changes to enhance project performance. Project management team
observes team behavior, manages conflict, resolves issues and coordinating changes to enhance
project performance. Management of Project teams is complicated in Matrix organization.
I/P: OP asset, Project Staff Assignments, R&R, Org Charts, Staff MP, Team Performance Assessment
(for project teams), Work Performance Information (for team member), Performance Reports (for
projects).
TT: Observation and conversation, Project performance appraisals, conflict management (team
members initially responsible to resolve and later manager), Issue log.
O/P: Inputs to org performance appraisal, LLs,

Halo Effect Tendency to rate high or low on all the factors due to the impression of a high or low
rating on some specific factor.
Five Stages of Team Development Forming, Storming, Norming, Performing and Adjourning
Kickoff Meeting Indirect Method to start team development. It should answer 1.Why am I here?
2.Who are you and your expectations of me? 3. What is this team going to do? 4.How is the team
going to do this work? 5.How do I fit into all this?
Lessons Learned from Manage Project Team
1. Project organization charts, positions and Staff MP
2. Ground rules, conflict management techniques and recognitions
3. Procedures for Virtual teams, co-location, training and team building
4. Special skills and competencies by team members discovered
5. Issues and solutions

Role of Sponsor
1. During initiation: to provide financial resource, provide requirements, SOW, info for Prelim
project scope statement, dictates milestone, issue project charter, set priority between
projects and triple constraints,
2. Act as a protector of the project
3. During planning: May review WBS, supply initial risks, determine reporting needs, provide
expert judgment, approve PMP
4. During project executing and M&C: approve changes to project charter, enforce quality
policy, resolve conflict beyond PM, help evaluate tradeoffs between crashing, fast tracking
and re-estimate, clarify scope questions, approve or reject changes
5. provide formal acceptance of deliverables (if he is a customer)
Role Team member: completes the work in addition involve in determining WBS, estimates and its
completion and deviation from PMP.
Role of functional manager: individual who manages and owns the resources in a specific
department and directs the technical work. Approves PMP and final schedule, assigns resources,
assist with team member performance.
Role of Project manager: Is in charge of the project not necessarily of the resources. May be
technical expert, leads and direct project plan development, determine and deliver quality level,
create change control system, maintains control over the project, accountable for project success and
failure, integrates project components into a cohesive whole.

Leadership
Styles

Autocratic PM makes decision without soliciting information from team

 Consultative Intensive information solicited; PM makes decision

Consensus Team makes decision; open discussion and information gathering by team

Directing Telling other what to do

Facilitating Coordinating the input of others

Coaching Instructing others

Supporting Providing assistance along the way

Linear Responsibility Chart (LRC) identifying responsibility, assignments by work packages and
action required. Also referred to as RAM.
Resources Histogram often part of Staffing Management Plan; shows resource usage (eg staff
hours) per time period (eg week, month) of a specific job function.
Types of Power

Legitimate Derived from formal position

(Formal)

Penalty Predicated on fear

(Coercive)

Reward Involves positive reinforcement and ability to award something of valueProject often
needs their own rewards system to affect employee performance. Used correctly,
bring the teams goals and objectives in line with each other and with the project.

Expert Held in esteem because of special knowledge or skill (requires time). Earned of our
own.

Referent Ability to influence others through charisma, personality, etc.

The best forms of power are generally Reward and Expert. Form of power by position are reward,
penalty and formal

Reasons of Conflicts in Order of Frequency 1. Schedule 2. Project Priorities 3. Resources 4.

Technical Opinions 5. Administrative Procedures 6. Cost 7. Personality
Conflict Management

Avoidance/Withdrawal At least one party withdraws from conflict. Cool off period, could be
(Ignoring) lose/loseRetreating from actual or potential disagreement; delaying (e.g.
Just document the problem)

Competition/Forcing Exerting ones viewpoint; a last resort [win/lose] (e.g. Call the
customer and demand that you receive the approval today.
 Compromising Bargaining and searching for solutions; neither party wins but each gain
some satisfaction. [Lose-Lose Situation] this is very rarely a good way to
resolve technical issues. Definite solution is achieved in the end

Accommodation Opposite of Competition. One party meets other party need at expense of
his own. Lose/Win

Collaborating Involves incorporating multiple ideas and viewpoints from people with
different perspectives and offers a good opportunity to learn from others
(good when project is too important to be compromised) Win/Win Best
Strategy

**Smoothing De-emphasize differences and emphasize commonalities; friendly but avoids

solving root causes; delaying (eg. Manager says an issue is valid but doesnt
think it will be a big problem later)

**Problem Solving / Address conflict directly in problem solving mode [win/win]

Confrontation

3 steps of problem solving:

1. Analyze the situation / Document the situation

2. Develop alternatives with the team
3. Go to management
Motivational Theory: Content & Process TheoriesContent: What energizes, directs behavior

1. Maslows Hierarchy of Needs Theory Physiological (need for air, water, food housing,
clothing), Safety (security, stability, freedom from harm), Social (love, affection, approval,
friends, association), Esteem (accomplishment, respect, attention, appreciation), Self-
Actualization (self fulfillment, growth, learning)
2. Hertzbergs Motivator/Hygiene Theories (Motivator: Responsibility, Self-Actualization,
Professional Growth, Recognition; Hygiene: Working Conditions, Salary, Relationship at
Work, Safety, status)
Process: How personal factors influence behavior

1. McGregors Theory X and Theory Y (X: Assumes people lack ambition, dislike responsibility,
are inherently self-centered and are not very bright; motivate by reward and
punishment. Y: Assumes people become lazy w/o recognition, will accept responsibility,
can become self-motivated and exercise self-control; motivate by removing obstacles and
providing self-directed environment.)
2. Ouchis Theory Z/Japanese Theory ( focus on team, company; usually lifetime employment,
collective decision making )

Other Motivational Theories:

Behaviorism people behavior can be modified through manipulation of rewards and punishments
Expectancy Theory Motivation is explained in terms of expectations that people have about (1)
their ability to perform effectively on the job, (2) the rewards they might obtain if they do perform
effectively and (3) the value or degree of satisfaction they anticipate from those rewards.
Leadership Theories:
McGregor Theory X (employee lack ambition) and Theory Y (org structure are responsible for
motivation)
Tannenabaum-Schmidt model Continuum of leadership styles between the autocratic and
participative styles
Blake and Mouton ref to managerial grid (Concern for People Vs Concern for Production),
whereas 1,1 is laissez faire mgmnt, 1,9 is Country Club mgmnt, 9,1 is Task oriented mgmnt, 5,5 is
Compromise mgmnt and 9,9 is team mgmnt.

Forms of Organization

Functional A hierarchical organization where each employee has one clear superior, staff are
Grouped people by areas of specialization, and managed by a person with expertise in
that area. Project manager has no formal authority of resources and must rely on
informal power structure and his own interpersonal skills to obtain resource
commitments from functional managers.

Project Retains functional but adds a Project Expeditor who serves as a communications link and
Expeditor coordinator for the project across functional units

Project Similar to Project Expeditor except the Coordinator reports to a higher level manager and
Coordinator has some authority to assign work

Weak Matrix Vertical functional lines of authority maintained with a relatively permanent horizontal
structure containing managers for various projects. Balance of power leans toward the
Functional Manager. Can cause a project to fall behind because functional managers are
pulling resources away to perform non-project related tasks. The Project Manager may be
able to make resource decision on his own but not technical decision.

Strong Same as Weak except that the balance of power leans towards the Project Manager
Matrix

Projectized A separate, vertical structure is established for each project. All the project team members
report directly and solely to the project manager.

**Memorize PMBOK Organizational Structure Influence on ProjectsTeam building is most difficult in a

matrix organization. Its main purpose is to improve team performance.

Team development is based on the individual development of each member.

Resource calendar identifies period when resource is working through the year.
Performance Appraisals/Assessment Project Manager will collect information from team
members supervisors when project performance appraisals are completed. Team Performance
assessment is done by the PM in order to evaluate and improve the effectiveness of team.
Arbitration The hearing and resolution of a dispute performed by a neutral party.
Perquisites Giving Special rewards like corner office, parking space.
Fringe Benefits Standard benefits given to all employees.
Communications Management
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Knowledge Areas Major Primary Inputs Tools & Techniques Primary

Processes Outputs

COMMUNICATI CIPM
ONS
Communications Determining 1. Enterprise 1.
1. Communic
Planning the information Environmental Communicati
and Factors ations on
communication requirement management
2. Organizational
s needs of the plan
stakeholders Process Assets analysis
2. Communic
3. Project Scope ations
Statement Technology

4. Project
management plan

.Constraints

.Assumptions
Information Making needed 1. Communication 1. Communication 1.
Distribution information management plan skills Organization
available to al Process
2. Information
project Assets
stakeholders in gathering and retrieval (updates)
a timely systems 2. Requested
manner
Changes
3. Information
distribution methods

4. Lessons learned
Process

Performance Collecting and 1. Work 1. Information 1.

Reporting distributing Performance presentation tools Performance
performance Information reports
information. T
2. Forecasts
his includes
Status
 reporting,
2. Performance 2. Performance 3. Requested
progress
measurement Measurements information gathering Changes
and forecasting and compilation
3. Forecasted 4.
completion 3. Status review Recommende
meetings d Corrective
4. Quality control Actions
measurements 4. Time reporting
systems 5.
5. Project Organization
management plan 5. Cost reporting al Process
systems Assets
Performance (updates)
measurement bas
eline

6. Approved
Change requests

7. Deliverables

Manage Managing 1. Communications 1. Communications 1. Resolved

Stakeholders communication management plan Methods Issues
s to satisfy the
2. Organizational 2. Issue Logs 2. Approves
requirements
of and resolve Process Assets Change
issues with Requests
project
stakeholders.
3. Approved
corrective
actions

4.
Organization
al Process
Assets (upda
tes)

5. Project
management
plan
(updates)
Communications Planningdetermining the information and communications needs of the
stakeholders: who needs what information, when they will need it, and how it will be given to them.
It is often tightly linked with enterprise environmental factors and organizational influences. It is
required to ensure timely and appropriate generation, collection, distribution, storage, retrieval and
disposition of project information.
1. Communication planning: determining the info and comm. needs of the project
stakeholders
2. Information distribution: making needed info available to project stakeholders in a
timely manner.
3. Performance reporting: collecting and distributing performance information, including
status reporting, progress measurement, and forecasting
4. Manage Stakeholders: managing communication to satisfy the requirements of and
resolve issues with project stakeholders.

Art of Communications Includes Sender-receiver Models, Choice of Media, Writing Style,

Presentation techniques and Meeting Management Techniques.
Communication planning: determines who needs what, when, how and by whom.
I/P:
EE Factors, Org Process assets, Project Scope statement, PMP (constraint and assumptions)

TT:
Comm requirement Analysis: info required on: org chart, pjt org and stakeholder resp
relationship, departments in org, logistic of how many channels, int-ext comm need,
Communications Technology factors that affect the project include Urgency of the need for
information, Availability of technology, Expected Project Staffing, Length of the Project and Project
Environment.

O/P:
CMP Contains stakeholder communication requirements, information format, receiver, content,
detail level, person responsible, methods or technologies, frequency and time of communication,
methods for CMP updates, escalation process & Glossary of common terms. Can also include
guideline for project status meetings, email etc. basically documents how one control and manage
communication.
Information distribution: includes implementing the CMP as well as responding to unexpected
RFI.
I/P: CMP
TT:
Communication skills: Written and oral, listening and speaking; Internal and ext; Formal Vs
informal; vertical Vs horizontal (with peers).
Information gathering and retrieval system:
Infor distribution methods: Project meetings; electronic comm and conf tool (email, fax);
electronic tool.
LLs: it can be good team building exercise. PMs are professionally obligated to hold LL session
particularly if project yielded less than desirable results.
O/P: LL dox, Project Records, Project reports (DSRs, issue logs, closure reports), Requested Change

Performance reporting Involves collection of all baseline data and distribution of performance
report to stakeholders. Generally on Scope, Quality, Schedule and Cost. But may include information
on Risk and Procurement. right definition is Collecting and Distributing performance information in
terms of status reports, progress measurement reports and forecasting reports. It is a control feature
and is done during control and project closure phase.
I/T: Work performance info, performance measurements, forecasted completion, quality control
measurements, baselines, deliverables.
TT: info presentation tools, performance info gathering and compilation, Status review meetings,
time reporting system, cost reporting system.
O/P: Performance reports, forecasts, recomm CA, changes, LL update to OPA.
Manage Stakeholder: refers to managing comm. To satisfy the needs of and resolve issues with
project stakeholders. Ensure persons to operate synergistically and limits disruption with
stakeholders.
I/P: CMP, OPA
TT: Communication Methods (face to face, email), Issue log (that can be used to document and
monitor the resolution of issues, owner is assigned and target date is given)
O/P: resolved issues, approved CRs, CA
Major responsibility of project expeditor is communication management.

Team Meetings periodic team meetings is the most effective way to accelerate the project
integration process.
Performance Reviews meetings held to assess status and/or progress. The main objective of a
performance review is to identify performance successes or failures, progress with respect to the
contract statement of work.
Communications
Model
Communicator The originator of the message
Message Thoughts, feelings, or ideas reduced to code that is understood by both sender
and receiver
Medium The vehicle or method used to convey the message
Recipient The person for whom the message is intended
[Sender] Encoding Transmission Decoding [Receiver] Feedback
Communications Channels = (n2 n)/2 or n(n-1)/2
the fact that two team members are working directly together does not reduce the number of
communication channels.

Tight Matrix all team members allocated in a single office space

A variance is considered to be significant if it jeopardizes project objectives.
Types of
Communications
Formal Written Project Charter, Management Plan, complex problem, change contract,
clarifying work package, requesting resource, poor performance notice
Second (this is the best type of communication method to use when there are
cultural differences and distance between team members)
Informal Written Notes, memos, scheduling meeting, email,
Formal Verbal Presentations, conducting bidder conference
Informal Verbal Conversations, discover root cause, poor performance notice- first
Note: 55% of communications is non-verbal (it is the most important aspect of a conversation)
90% of Project Managers time is spent acquiring and communicating information
Paralingual: Pitch and tone of voice also helps to convey a message.
Everything we do in contract environment is more formal than what we do in other project activities.

Objectives of a Kickoff Meeting

Get to know each other
Set team goals and objectives
Review project status
Review project plans
Identify problem areas
Establish responsibilities and
accountabilities
Obtain commitments

Barriers to Communications (which lead to

conflict)
Lack of clear communication channels
Physical or temporal distance
Difficulties with technical language
Distracting environmental factors
Detrimental attitudes
The most likely results of communication blocker and miscommunication as a whole is conflict.

Building Effective Team Communications

 Be an effective communicator
Be a communications expeditor
Avoid communication blockers
Use a tight matrix (single office space)
Make meetings effective (meeting during execution is the best format to
communicate)

Management
Styles
Authoritarian Lets individuals know what is expected of them
Combative Eager to fight or be disagreeable over any situation
Conciliatory Friendly and agreeable
Disruptive Tends to disrupt unity and cause disorder
Ethical Honest and sincere
Facilitating Does not interfere with day-to-day tasks, but is available for help and guidance when
needed
Intimidating Reprimands employees for the sake of a tough guy image
Judicial Applies sound judgment
Promotional Cultivates team spirit; rewards good work; encourages subordinates to realize their full
potential
Secretive Not open or outgoing in speech, activity, or purpose
Management Skills
Leading Establishing direction, aligning people, and motivating and inspiring
Communicating The exchange of information in a variety of dimensions
Negotiating Conferring with others in order to come to terms or reach an agreement
Problem Solving A combination of problem definition and decision making
Influencing the The ability to get things done based on an understanding or the formal and
Organization informal structures of the organization
Documentation
Kind of Performance report
Progress Report summarize project status. Preferred report to quickly review where a project
now stands.

Reports are a method to distribute information, not just to report on progress
Trend Report show performance over time (shows if it is improving or deteriorating)
Variance Report compare project results, looks at specific project items or tasks
Forecasting Report only looks into the future (predicting)
Status Report relating a moment in time (static) regarding triple constraints.
Earned Value
LLs
o Project Plan -Staffing Management Plan
Communications Management Plan should cover all phases of the project
WBS Can be effective tool for communicating in a situation internal and external to the project.
Risk response strategy should be communicated.
Communication in Contract Everything we do is more formal communication in contract
environment.
Risk Management
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Knowledge Major Primary Inputs Tools & Primary Outputs

Areas Processes Techniques

RISK Its risky to have

an IQ in DC.

Risk Deciding how to 1. Enterprise 1. Planning 1. Risk

Management approach and Environmental Factors meetings and management plan
Planning plan risk analysis
management 2. Organizational
activities. Process Assets

3. Project Scope
Statement

4. Project
Management Plan

Risk Determining 1. Enterprise 1.Documentation 1.Risk Register

Identification which risks are Environmental Factors reviews
likely to affect
the project & 2. Organizational 2. Info-gathering
documenting Process Assets techniques
their
characteristics
3.Risk management 3. Checklist
plan analysis

4. Project Scope 4. Assumptions

Statement analysis
 5. Project 5. Diagramming
Management Plan techniques

Qualitative Assessing the 1. Organizational 1. Risk probability 1.Risk Register

Risk Analysis impact and Process Assets & impact (Updates)
likelihood of assessment
identified risks. 2. Risk Register
2. Probability and
3. Project Scope impact matrix
Statement
3. Risk data
4. Project quality assessment
Management Plan
4. Risk
Categorization

5. Risk urgency
assessment

Quantitative A process that 1. Organizational 1. Data Gathering 1. Risk Register

Risk Analysis analyzes numerically Process Assets and (Updates)
the probability of representation
each risk and its 2. Project Scope techniques
consequence on Statement
project objectives (Interviewing,
probability
3. Risk
distribution and
Management Plan
EJ)

4. Risk Register
2. Quantitative
Risk analysis &
5. Project
modeling
Management Plan
techniques.
(Sensitivity, EMV,
* Project
Decision Tree)
Schedule
Management Plan

* Project Cost
Management Plan

Risk Response Developing options 1. Risk 1. Strategies for 1. Risk Register

Planning & determining Management Plan negative risk or (Updates)
actions to enhance threats
 opportunities to 2. Risk Register 2. Strategies for 2. Project
reduce threats to
positive risk or Management Plan
project objectives
opportunities (Updates)

3. Strategies for 3. Risk related

both threats and contractual
opportunities agreements

4. Contingency
response strategy

Risk Tracking identified 1. Risk 1. Risk 1. Risk Register

Monitoring & risk, monitoring Management Plan reassessment (Updates)
Control residual risks, and
identifying new risk, 2. Risk Register 2. Risk audits 2. Requested
ensuring the Changes
execution of risk
3. Approved 3. Variance and
plans and evaluating
the effectiveness in Change Requests trend analysis 3. Recommended
reducing risk. Corrective actions
4. Work 4. Technical
Performance performance 4. Recommended
Information measurement Preventive actions

5. Performance 5. Reserve analysis 5. Organizational

Reports process asset
6. Status Meetings (Update)

6. Project
Management Plan
(Updates)

Project risk Is an uncertain event or condition that, if it occurs, has a positive or a negative effect
on a project objective.
A risk has a cause and, if it occurs, a consequence. Risk identification is an iterative process. (Just like
core process). Objective is to decrease the probability and impact of negative events and vice versa.

1. Risk Management Planning: deciding on how to approach, plan and execute risk mgmt
activities for a project.
 2. Risk Identification: determining which risk can effect the project and documenting their
characteristics.
3. Qualitative Risk Analysis Prioritizing risks for subsequent further analysis or action by
assessing and combining their probability of occurrence and impact.
4. Quantitative Risk Analysis Numerically analyzing the effect on overall project
objectives of identified risks.
5. Risk Response Planning: developing options and actions to enhance opps and reduce
threats to project objectives.
6. Risk Monitoring and Control: tracking identified risk, monitoring residual risks,
identifying new risks, executing risk response plans and evaluating their effectiveness
though the project life cycle.

RMP: it is input to cost and time estimating, schedule development and cost budgeting.
I/P: EE factors (attitude towards risk and tolerance, which can be found in policy statement or
revealed in actions), OP assets, Project scope statement, PMP
TT: Planning meetings and analysis: Risk cost element and schedule activities will be developed for
inclusion in the project budget and schedule respectively. Responsibilities will be assigned; templates
will be tailored for use later.
Output:
Risk Management Plan Describes how Risk Management will be structured and performed, it
includes
1. Methodology (Approach, tools and data sources)
2. Roles and responsibilities
3. Budgeting (assign Resources and estimated Cost for inclusion in cost baseline)
4. Timing (When and how often; includes risk activities in project schedule)
5. Risk Categories (RBS, Good practice is to review risk categories during RMP prior to Risk
Identification Process)
6. Definition of Risk Probability and Impact (Definition of probability and impact)
1. Probability and Impact Matrix (Look up table, with impact categorized as
Low, Moderate or High)
7. Revised Stakeholders tolerances
8. Reporting Formats (Describes Risk Register Contents and format)
9. Tracking (Auditing and Documentation for current project, future needs and LL)

Risk Types 1. Business (Gain or Loss) 2. Pure Risk (Only Risk of Loss)
Attitude about Risk Should be made explicit, Communication about risk should be honest and
open. Risk response reflects organizations perceived balance between risk taking and risk avoidance.
Some one who does not want to take risks is said to be Risk Averse.
Tolerance and Threshold Tolerance are areas of risk that are acceptable or unacceptable. A
threshold is the amount of risk that is acceptable. You use this information to help assign levels of
risk on each work package.
Risk Identification
IP: EE Factors, OP assets, project scope statement (assumptions), risk management plan(R&R, RBS,
risk provisions), project management plan
Tools: Documentation reviews, info gathering techniques (Brainstorming, Delphi tech, interviewing,
RCA, SWOT); Check List Analysis based on Historical information of previous similar projects. The
lowest level of RBS is used as Risk Checklist; Assumption analysis; Diagramming tech: C&E,
system/process flow chart, influence diagram,
OP: Risk Register
Delphi tech: is a way to reach a consensus of experts, questionnaire is sent to solicit ideas and
responses are summarized and re-circulated to the experts. Consensus is reached in few rounds. It
helps to reduce bias in the data and keeps any one perform fro having undue influence.
Qualitative Risk Analysis: focuses on prioritizing risks using probability and impact of the risk as
well as time frame and risk tolerance. It also leads to over all risks of the project. It is also known as
Risk assessment.
IP: OP assets, project scope statement, RMP, Risk Register,
TT: Risk probability and impact assessment, Probability and impact matrix, Risk data quality
assessment, Risk Categorization (based on common causes, using RBS/WBS/Phases), Risk urgency
assessment.
OP: risk register (updates)
Quantitative Risk Analysis: it assigns numerical ranking to the prioritized risks primarily uses
Monte Carlo Simulation and Decision Tree Analysis. It should be redone after RRP and RMC to asses
risk reduction.
IP: OP Assets, Scope Statement, RMP, Risk Register, PMP (SMP, CMP).
TT:
1. Expert Judgment
2. Data Gathering and Representation Techniques
o Interviewing,
o Probability Distribution Beta Distribution and Triangular Distribution can
use ordinal or cardinal values. Both uses 3 point estimates and are continuous
distribution. Decision tree uses representation of discrete distribution. Uniform
distribution can be used when no obvious value in early concept stage of design.
3. Quantitative Risk Analysis and Modeling Techniques
o Sensitivity Analysis Determine which risks have most potential
impact, TornadoDiagram (compares relative importance of variables that have a
high degree of uncertainty to those more stable)
o Expected Monetary Value Opportunity expressed as Positive, Risk expressed as
negative example Decision tree. Modeling and Simulation is recommended for
Cost & Schedule Risk analysis because they are more powerful and less subject
to misuse than EMV analysis.
o Decision tree analysis Shows available choices and their possibilities with more
complex process than EMV. It assumes mutual exclusivity.
 o Modeling and Simulation Done using Monte Carlo Technique. In simulation
project model is calculated many time (iterated), with the input values
randomized from a probability distribution function and a probability distribution
is made. Cost Risk Analysis use CBS or WBS. Schedule Risk analysis use
PDM.
OP: Risk Register (updates)

Risk Response planning: it creates owner for each agreed to and funded risk. Risks responses are
developed in risk planning and risk response planning stage
IP: RMP, Risk Register
TT: Strategy for negative risk (avoid, transfer, mitigate), Strategy for positive risk ( exploit, share,
enhance), for both acceptance, contingent response strategy,
OP: Risk Register (Updates), PMP (updates), Risk related contractual agreement.

Risk Management Control

Process of identifying, analyzing and planning for newly arising risks, keeping track of identified risks
and those on the watch list, reanalyzing existing risks, monitoring trigger condition for contingency
plans, monitoring residual risks and reviewing the execution of the risk responses and their
effectiveness.

IP: RMP, Risk Register, App CRs, work performance Info

TT: Risk reassessment, Risk Audits, Variance and trend analysis, Technical performance
measurement, reserve Analysis, Status Meetings (RM is an agenda)
1. Risk Audits: examine and document the effectiveness of risk responses in dealing with
identified risks and their root causes, well as the effectiveness of the risk management
process.
2. Variance and trend analysis: reviewed using performance data, EV anal and other
methods used. Measure overall project performance deviation from baseline indicating the
potential impact of threats or opps.
3. Technical performance measurement: compares technical accomplishments during
project ececution to the PMPs schedule of technical achievement. Reveals degree of
success in achieving projects scope.
4. Reserve Analysis: it monitors contingency reserves remaining to the amount of risk
remaining at any time in the project in order to determine if the remaining reserve is
adequate.
OP: Risk register (updates), CRs, recommended CAs and Pas, OP asset (update), PMP (update)

Risk Register (O/P of Risk Identification)

1. List of Identified Risks (including root causes and assumptions)
2. List of Potential Responses
3. Root causes of Risks
4. Updated Risk Categories (RBS which is developed in RMP is enhanced or amended)
Updates after Qualitative Risk Analysis
1. Relative Ranking or Priority list of Project Risks
2. Risks grouped by categories
3. List of Risk requiring Response in the near term
4. Watch list of low priority risks
5. Trends in Relative Risk analysis results
Updates after Quantitative Risk Analysis
1. Probabilistic Analysis of the project: this output typically expressed as a cumulative
distribution is used with stakeholder risk tolerances to permit quantification of the cost and
time contingency reserves
2. Probability of Achieving Cost and Time Objective
3. Prioritized List of Quantified Risks
4. Trends in Quantitative Risk Analysis Results
Updates after Risk Response Planning
1. Identified Risks, their descriptions, areas of the project and how they affect project
objectives
2. Risk owners and their responsibilities
3. Agreed upon response strategies
4. Symptoms and warning signs of risks occurrence
5. Budget and Schedule activities required to implement the chosen responses
6. Contingency reserves of Time and Cost and Triggers.
7. Fallback plan
8. Residual and Secondary Risks

Risk Response Planning Techniques

Strategies for Negative Risks or Threats
Avoidance (elimination/abatement) Eliminate the threat posed by an adverse risk.
Can be done by changing the Project Plan or protecting (isolating) project objectives from
its impact. Or relaxing time, cost, scope and quality or cut scope
Mitigation (reduction) Reduce the Expected Monetary Value by reducing probability or
impact. Float can be use to mitigate potential risks. Reduction in the probability or impact
of an adverse risk. Adoption less complex processes, conducting more tests, stable supplier.
Transfer Deflect or share (eg. Insurance, warranties). Shifts the negative impact of a
threat to a third party it doesnt eliminate it, insurance, performance bonds, warranties,
guarantees etc,
Strategy for positive Risks or opps
Exploit: assigning better quality resource to reduce time to complete
Share: allocating ownership to third party who has expertise.
Enhance: by facilitating or strengthening the cause of the opportunity, targeting its
trigger.
Strategy for both
 Acceptance Accept or retain consequences. 2 types: Active Acceptance (develop a
contingency reserve) or Passive Acceptance (no action).

Residual Risks Risks that are expected to remain after planned responses have been taken, as
well as those have been deliberately accepted.
Secondary Risks Risks that arise as a direct outcome of implementing a risk response.
Recommended Corrective Actions For Risk monitor and Control include Contingency plans and
workaround plans.
Workaround Unplanned response to negative risk events (requires to be impacted by the risk
first).Work around plans are not initially planned but are required to deal with emerging risks that
were previously unidentified or accepted.
Contingency Plan Planned action steps to be taken if an identified residual risk occurs. (e.g.
developing alternative activity sequences). It is for the risks which are accepted.
Contingency Reserve: calculated based on the quantitative analysis of the project and organization
risk thresholds.
Fall Back Plan: It is plan executed when contingency plan is not effective.
Risk database A repository that provides for collection, maintenance, and analysis of data
gathered and used in the risk management processes.

Types of Risk

Business Normal risks that offer gain and loss

Pure / Insurable Only loss: property damage, indirect consequential loss, legal liability,
personnel. For risk we can outsource, we have contract. For pure risks, we
obtain insurance.

Statistical Independence Occurrence of one event is not related to occurrence of the other

Data Precision Ranking Purpose is to test the value of data (input to Qualitative Analysis)

Path Convergence Tendency of parallel paths of equal duration to delay the completion of
the milestone where they meet. It is characterized by schedule activity
with more than one predecessor activity

Uncertainty An uncommon state of nature, characterized by the absence of any

information related to a desired outcome.

Expected Monetary Value = Probability * Monetary Impact (used in Decision Tree Analysis)

Risk Event A discrete occurrence that may affect the project for better or worse.
After a risk event, the project managers role is to reassess the risk
ranking. The risk owner is responsible to take action when an identified
risk occurs.
 Risk Trigger A symptom of risk; indirect manifestation of actual risk event; output of
risk identification; example is poor morale

Risk Portfolio Risk data assembled for the management of the project

Utility Theory Technique that characterizes an individuals willingness to take risk

Sensitivity Analysis Places a value on the impact to the project plan by adjusting a single
project variable; simplest form of analysis

Risk Auditor Role is to investigate the effectiveness of the risk owner (which can cause
potential conflict with risk owner)

Numbers to Know

Cost Estimates:

Order of Magnitude -25%

(ballpark estimate)

Budget -10% +75%

Definitive -5% +25%

+10%

1 sigma 68.3%

2 sigma 95.5%

3 sigma 99.7%

6 sigma 99.99%

The range of an estimate with the smallest range is the least risky.

Documentation
Risk Management Plan would most likely be developed during scope planning phase of the
scope management process.
Decision Tree Analysis 1. Takes into account future events in trying to make decision today
2. It calculates EMV in more complex situations 3. Involves mutual exclusivity

Fall back Plan Specific actions that will be taken if the contingency plan is not effective.
Procurement Management
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Knowledge Major Processes Primary Inputs Tools & Primary Outputs

Areas Techniques

PROCUREMENT PPSSAC

Plan Purchases & Determining what 1. Enterprise 1. Make or buy 1. Procurement

Acquisitions to procure and Environmental analysis mgmt plan
when and Factors 2. Contract
how (make or buy) 2. Expert Statement(s) of
2. Organizational judgment Work
Process Assets
3. Make or Buy
3. Contract types
Decisions
3. Project scope
statement
4. Requested
Changes
4. WBS

5. WBS
Dictionary

6. Project
Management Plan

Plan Contracting Preparing the 1. Procurement 1. Standard 1. Procurement

documents needed management plan forms documents
to do contracting. 2. Evaluation
Document 2. Contract 2. Expert criteria
requirement and Statement(s) of judgment
identify sellers 3. Contract
work
Statement of work
(updates)
3. Make or Buy
Decisions

4. Project
Management Plan
Request Seller Obtaining 1. Organizational 1. Bidder 1. Qualified sellers
Responses quotations, bids, Process Assets conferences list
offers, or
proposals (answer 2. Procurement 2. Advertising 2. Procurement
questions) Management Plan Document Package
3. Develop
3. Procurement qualified sellers 3. Proposals
Documents list

Select Sellers Involves the 1. Organizational 1. Weighting 1. Selected Sellers

receipt of bids or Process Assets system
proposals and the 2. Contract
application of 2. Procurement 2. Independent
evaluation criteria Management Plan estimates 3. Contract
to select a seller.
Also involves Management Plan
applying evaluation 3. Evaluation 3. Screening
criteria. Criteria system 4. Resource
Availability
4. Procurement 4. Contract
Document Negotiation 5. Procurement
Package Management Plan
5. Seller Rating (Updates)
5. Proposals System
6. Requested
6. Qualified 6. Expert changes
Sellers List Judgment

7. Project 7. Proposal
Management Plan Evaluation
Techniques

Contract Ensuring that the 1. Contract 1. Contract 1. Contract

Administration sellers change control Documentation
performance 2. Contract system
meets contractual Management Plan 2. Requested
requirements 2. Buyer Changes
conducted
3. Selected Sellers
performance 3. Recommended
review Corrective actions
4. Performance
Reports
3. Inspections 4. Organizational
and audits Process assets
(Updates)
 5. Approved 4. Performance 5. Project
change requests reporting Management plan
(updates)
6. Work 5.Payment
Performance system * Procurement
information Management Plan
6. Claims
administration * Contract
management plan
7. Records
management
system

8. Information
technology

Contract Product 1. Procurement 1. Procurement 1. Closed Contracts

Closeout verification and management Plan audits
administration 2. Organizational
closeout (finish) 2. Contract 2. Records process assets
management plan Management (Updates)
System
3. Contract
documentation

4. Contract closure
procedure

Procurement Processes Repetition When the project obtains products and services (project
scope) from outside the performing organization, the processes from procurement planning through
contract closeout would be performed once for each product or service item.
Contract Subjects covered include Responsibilities, authorities, law and terms, technical and
management approaches, financing, schedule, payments and price. Contract negotiations conclude
with a document that can be signed by both buyer and seller, that is contract. The final contract can
be a revised offer by the seller or counter offer by the buyer.
PLAN PROCUREMENT (OP)

Procurement Management Plan Describes how procurement will be managed till contract
closure. It includes Type Of contract, who prepares independent estimates, standardized procurement
documents, Constraints and assumptions, identifying seller list etc.
Contract SOW Developed from Scope Statement, WBS and WBS Dictionary describes procurement
item in sufficient detail to allow prospective sellers to determine if they are capable of providing it.
Type of Contract SOW:
1. Performance: what final product should be able to accomplish, car with a speed of 240 KM
per hr (T&M, CR; IT, R&D)
2. functional: end purpose or result, car with 6 seats (T&M, IT, R&D)
3. design: what work is to be done, built car as per the design (T&M, FP, construction)
Make or buy decisions: Costs Direct costs are costs incurred for the exclusive benefit of the
project (e.g., salaries of full-time project staff). Indirect costs, also called overhead costs, are costs
allocated to the project by the performing organization as a cost of doing business (e.g., salaries of
corporate executives).
PLAN CONTRACTING (OP)

Procurement Documents Common names for different types of procurement documents include:
Invitation for Bid (IFB), Request for Proposal (RFP), Request for Quotation (RFQ), tender notice,
Invitation for Negotiation, and Contractor Initial Response. Procurement documents are rigorous
enough to ensure consistent, comparable responses but flexible enough to allow seller suggestions
for better ways to satisfy the requirements. Seller is allowed to propose alternative solution in a
separate proposal.
It has 1. Information for sellers 2. Contract SOW 3. Proposed terms and conditions of the contract
(Legal & Business)

Evaluation Criteria

Proposal technical approach, Bid, Tender and quotation price

REQUEST SELLER RESPONSE

Bidder Conferences (TT) Also called, as Contactor Conferences, Vendor Conferences and Pre-Bid
Conferences are meetings with prospective sellers prior to preparation of bid or proposal, ensures
clear and common understanding of procurement needs.
Procurement Document Package (OP) Buyer prepared formal request sent to each seller and is
the basis upon which a seller prepares a bid for the requested products, service or result.
Procurement Documents
1. Request For Proposal/Tender (RFP, RFT ) Requests for Price and Detailed Proposal (CR)
2. Invitation for Bid/Request for Bid (IFB, RFB) One Price (FP)
3. Request for Quotation Price Quote per item (T&M)

Select Sellers Tools & Techniques

1. Weighting System Numeric Weight to each criteria, rating sellers, selection based on
total weight
 2. Independent Estimates called Should-Cost, prepared by procuring organization.
3. Screening System Establish minimum performance requirement for one or more
criteria and use 1 & 2 methods
4. Contract Negotiation Project Manager may not be the lead negotiator, PM team may
be present during negotiations for providing any clarification of projects technical and
management requirements.
5. Seller Rating Systems
6. Expert Judgment
7. Proposal Evaluations techniques Use some Expert judgment and evaluation criteria
to rate and score proposals.

Output

Contract Management Plan Lists documentation, delivery and performance requirements that
the buyer and seller must meet. The plan covers the contract administration activities throughout the
life of the contract. Part of PMP.
Selected Seller
Contract
Resource Availability

Contract Administration Ensures the seller meets the performance requirements of the contract.
Because of legal considerations many organizations treat contract administration as a separate
administrative function from the project organization. Contract administration includes application of
the appropriate project management processes to the contractual relationships(s) and integration of
the outputs from these processes into overall management of the project.
Contract administration also has a financial management component. Payment terms should be
defined within the contract and must involve a specific linkage between seller progress made and
seller compensation paid.

TT:
Contract CC system
Buyer conducted perf review
Inspection and audits
Performance reporting
Payment System Usually handled by accounts payable system of the buyer. It includes reviews &
approvals by PM team.
Claims Administration Contested Charges (claims, Disputes or appeals) are those where buyer
and seller cannot agree. If both parties do not resolve a claim it is handled according to the resolution
procedures established in the contract. Contract clauses can involve arbitration or litigation and can
be invoked prior or after contract closure.
Records Management System Set of procedures and automation tools that are consolidated as
part of PMIS to manage contract documentation and records.
IT

OP:
Organization Process Assets (After Contract Administration)
1. Correspondence In addition to documentation, it is a record of all the written and oral
communication.
2. Payment Schedules and Requests
3. Seller Performance evaluation documentation
PMP updates Procurement Management Plan and Contract Management Plan.
Contract Closure
Procurement Audit Review of procurement processes from Plan purchases to Contract
administration. Aims to identify successes and failures.
Records Management System
Contract closeout is similar to administrative closure in that it involves both product verification (Was
all work completed correctly and satisfactorily?)

Administrative closeout (updating of records to reflect final results and archiving of such information
for future use).

Administrative Closure (Internal)generating, gathering, and disseminating information, to

formalize a phase or project completion.
Contract Closeoutcompletion and settlement of the contract, including resolution of any open
items. (External )

Difference between Contract Closeout and Admin Closure

1. Contract Closure comes first 2. AC is done at end of each phase or project, CC is done only once at
the end of Contract 3.AC Lessons learned CC Procurement audit 4. AC Less
Formal CC More Formal.

a contract, an agreement, a subcontract, a purchase order, or a memorandum of understanding.

Buyer(Give Order )-PO Seller
Seller -Invoice Buyer (Pay order)
Contract Types and Risk 1. Fixed Price 2. Cost-Reimbursable 3.Time & Material

CR Buyer has risk, as total cost are unknownYou are buying what to do from
seller.

Cost plus fee or Cost Plus No valid for federal contracts. Sellers are not motivated to control cost, used
Percentage of Cost when buyer can tell what is needed then what to do. Seller write SOW. Bad
(CPPC) for buyer
 Cost Plus Fixed Fee Used for research and development contracts (which generally have low
(CPFF) level of detail in the scope); fixed fee can change if there is a change to the
contract (usually through change orders). The risk rests with the buyer. This
is the most common cost reimbursable contract.

Cost Plus Incentive Fee Buyer and seller share in savings based on predetermined %s; long
CPIF) performance periods and substantial development and test requirements
(incentive to the seller to perform on or ahead of time) Cost plus agreed fee
plus a bonus for beating the objective

Cost plus Award fee Similar to CPIF but award amount is amount is determined in advance and
apportioned out depending on performance.

In Cost plus contract, the only firm figure is the fee

T&M Used for small amount contract. Good if the buyer wants to be in full control
and/or the scope is unclear/not detailed or work has to start quickly. Profit
factor into the hourly rate. Fixed rate but variable total cost. They are open
ended.

Fixed price or Firm Fixed Buyer defines reasonably detailed specifications (e.g. SOW). Shift risk to
Price (FFP) seller. Good when deliverable is not a core competency. Fixed Price (FP) is
the most common type of contract in the world. Seller is at risk.

Fixed Price Plus Incentives for fixed price contract. The inventive is same as CPIF. High-value
Incentive Fee (FPIF) projects involving long performance periods

Fixed Price Award Fee bonus to the seller based on performance (e.g. 100K + 10K for every
designated incremental quality level reached. Award fee is decided in
advance.

Fixed Price Economic Allow Price increase if the contract is for multiple years
Price Adjustment (FPEPA)

Purchase Order A form of contract that is normally unilateral and used for simple commodity
purchases. It is simplest type of fixed price contract and is usually
unilateral(Signed by one party instead of bilateral)

Contract type Vs Risk FP FPIF FPAF FPEPA T&M CPIF CPAF CPFF CPPC

Fixed Price T&M Cost Reimbursable

Buyers risk from low to high

Sellers risk from high to low

Cost Reimbursable
Advantages Disadvantages

Simpler contract SOW Required auditing sellers invoices

 Usually required less work to write the scope than Requires more work for buyer to manage
FP

Generally lower cost than PL because the seller Seller has only a moderate incentive to control
does not have to add as much for risk. costs

Total price is unknown

T&M
Advantages Disadvantages

Quick to create Profit is in every hour billed

Contract duration is brief Seller has no inventive to control costs

Good choice when you are hiring to augment your Appropriate only for small projects
staff

Requires the most day to day oversight from the

buyer

Fixed Price
Advantages Disadvantages

Less work for buyer to manage Seller may under price the wok and try to make up
profits on change orders

Seller has a strong incentive to control cost Seller may not complete some of the SOW if they
begin to loose money

Companies have experience with this type More work for buyer to write the CSOW

Buyer know the total price at the project start Can be more expensive than CR is the CSOW is
incomplete. The seller will add to the price for their
increased risk.

Elements of a Contract

Offer Assent to certain terms by both parties

Acceptance Agreement, written or spoken

Consideration Something of value

Legal Capacity Able to contract

Legal Purpose No violation of public policy

 Stages of Contract
Negotiation

Protocol Introductions

Probing Identify concerns, strengths, weaknesses

Scratch bargaining Actual bargaining

Closure Positions summed up

Agreement Documenting

Specification precise description of a physical item, procedure, or service. The SOW supplements
the specification in describing what must be done to complete the project.
Privity legal relationship that exists between any contracting parties (e.g. if company A hires B
and B subcontract to C, C is not legally bound by anything A can say; the privity is with B)
Waiver a party can relinquish rights that it otherwise has under the contract. Forebearance can
mature into waiver.
Force Majeure Act of God, Floods, Fire etc
Indemnification Liability, who is liable
Retainage withholding of funds under contract. Amount of money usually 5% to 10% withheld
form each payment. This money is paid when work is complete.
Warranty assurance of the level of quality to be provided
A contract ends by:

Successful
performance

Mutual agreement Last two are Termination

Breach of contract

Terms and Conditions the project manager must uphold the Terms and Conditions of the
contract, even if it meets the needs of the project, it has to also meet the requirement of the
contract.
Liquidated damages
Contract Control System vs. Project Control System they both include procedures. The
contract control system requires more documentation and more signoff.
Work Authorization Systems can be used to coordinate/control what time and sequence work is
done. It helps with integrating tasks into a whole.
Performance Scope of Work describes the performance not the functionality required by the
customer
Independent Estimate most concern with costs, comparing cost estimates with in-house
estimates or with outside assistance (part of Source Selection)
Procurement Audit structured review that flush out issues, and set-up lessons learned. Helps
ensure problems are resolved for future projects. Identify successes and failures that warrant transfer
to other procurements.
Beneficial Efficiency when the work is being used for the intended purpose and has been
certified
Terminating contract for Convenience if a project is terminated before it is complete, the level of
extent of completion should be established and documented.
Material Breach Breach so large that it may not be possible to complete the work.
Sole Source (not Single Source) Only one seller, it might be a company that owns a patent.
Contracting

Centralized Decentralized

+ More economical + Project Manager has more control

+ Easier to Control + Contracting personnel are more familiar with project

+ Higher degree of + More flexible and adaptable to project needs

specialization (expertise)

+ Orders can be consolidated Duplication of contracting efforts

May become a bottleneck Higher costs

Less attention to special No standard policies

needs

Negotiating Tactics

Deadline Strategic Delay

Surprise Reasoning Together

Limited Authority Withdrawal

Missing Man Unreasonable

Fair and Reasonable Suggesting Arbitration

Fait Accompli (A done deal)

Procurement Management
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Knowledge Major Processes Primary Inputs Tools & Primary Outputs
Areas Techniques

PROCUREMENT PPSSAC

Plan Purchases & Determining what 1. Enterprise 1. Make or buy 1. Procurement

Acquisitions to procure and Environmental analysis mgmt plan
when and Factors 2. Contract
how (make or buy) 2. Expert Statement(s) of
2. Organizational judgment Work
Process Assets
3. Make or Buy
3. Contract types
Decisions
3. Project scope
statement
4. Requested
Changes
4. WBS

5. WBS
Dictionary

6. Project
Management Plan

Plan Contracting Preparing the 1. Procurement 1. Standard 1. Procurement

documents needed management plan forms documents
to do contracting. 2. Evaluation
Document 2. Contract 2. Expert criteria
requirement and Statement(s) of judgment
identify sellers 3. Contract
work
Statement of work
(updates)
3. Make or Buy
Decisions

4. Project
Management Plan

Request Seller Obtaining 1. Organizational 1. Bidder 1. Qualified sellers

Responses quotations, bids, Process Assets conferences list
offers, or
proposals (answer 2. Procurement 2. Advertising 2. Procurement
questions) Management Plan Document Package
 3. Procurement 3. Develop 3. Proposals
Documents qualified sellers
list

Select Sellers Involves the 1. Organizational 1. Weighting 1. Selected Sellers

receipt of bids or Process Assets system
proposals and the 2. Contract
application of 2. Procurement 2. Independent
evaluation criteria Management Plan estimates 3. Contract
to select a seller.
Also involves Management Plan
applying evaluation 3. Evaluation 3. Screening
criteria. Criteria system 4. Resource
Availability
4. Procurement 4. Contract
Document Negotiation 5. Procurement
Package Management Plan
5. Seller Rating (Updates)
5. Proposals System
6. Requested
6. Qualified 6. Expert changes
Sellers List Judgment

7. Project 7. Proposal
Management Plan Evaluation
Techniques

Contract Ensuring that the 1. Contract 1. Contract 1. Contract

Administration sellers change control Documentation
performance 2. Contract system
meets contractual Management Plan 2. Requested
requirements 2. Buyer Changes
conducted
3. Selected Sellers
performance 3. Recommended
review Corrective actions
4. Performance
Reports
3. Inspections 4. Organizational
and audits Process assets
5. Approved
change requests (Updates)
4. Performance
reporting 5. Project
Management plan
(updates)
 6. Work 5.Payment * Procurement
Performance system Management Plan
information
6. Claims * Contract
administration management plan

7. Records
management
system

8. Information
technology

Contract Product 1. Procurement 1. Procurement 1. Closed Contracts

Closeout verification and management Plan audits
administration 2. Organizational
closeout (finish) 2. Contract 2. Records process assets
management plan Management (Updates)
System
3. Contract
documentation

4. Contract closure
procedure

Procurement Processes Repetition When the project obtains products and services (project
scope) from outside the performing organization, the processes from procurement planning through
contract closeout would be performed once for each product or service item.
Contract Subjects covered include Responsibilities, authorities, law and terms, technical and
management approaches, financing, schedule, payments and price. Contract negotiations conclude
with a document that can be signed by both buyer and seller, that is contract. The final contract can
be a revised offer by the seller or counter offer by the buyer.
PLAN PROCUREMENT (OP)

Procurement Management Plan Describes how procurement will be managed till contract
closure. It includes Type Of contract, who prepares independent estimates, standardized procurement
documents, Constraints and assumptions, identifying seller list etc.
Contract SOW Developed from Scope Statement, WBS and WBS Dictionary describes procurement
item in sufficient detail to allow prospective sellers to determine if they are capable of providing it.
Type of Contract SOW:
 1. Performance: what final product should be able to accomplish, car with a speed of 240 KM
per hr (T&M, CR; IT, R&D)
2. functional: end purpose or result, car with 6 seats (T&M, IT, R&D)
3. design: what work is to be done, built car as per the design (T&M, FP, construction)
Make or buy decisions: Costs Direct costs are costs incurred for the exclusive benefit of the
project (e.g., salaries of full-time project staff). Indirect costs, also called overhead costs, are costs
allocated to the project by the performing organization as a cost of doing business (e.g., salaries of
corporate executives).
PLAN CONTRACTING (OP)

Procurement Documents Common names for different types of procurement documents include:
Invitation for Bid (IFB), Request for Proposal (RFP), Request for Quotation (RFQ), tender notice,
Invitation for Negotiation, and Contractor Initial Response. Procurement documents are rigorous
enough to ensure consistent, comparable responses but flexible enough to allow seller suggestions
for better ways to satisfy the requirements. Seller is allowed to propose alternative solution in a
separate proposal.
It has 1. Information for sellers 2. Contract SOW 3. Proposed terms and conditions of the contract
(Legal & Business)

Evaluation Criteria

Proposal technical approach, Bid, Tender and quotation price

REQUEST SELLER RESPONSE

Bidder Conferences (TT) Also called, as Contactor Conferences, Vendor Conferences and Pre-Bid
Conferences are meetings with prospective sellers prior to preparation of bid or proposal, ensures
clear and common understanding of procurement needs.
Procurement Document Package (OP) Buyer prepared formal request sent to each seller and is
the basis upon which a seller prepares a bid for the requested products, service or result.
Procurement Documents
1. Request For Proposal/Tender (RFP, RFT ) Requests for Price and Detailed Proposal (CR)
2. Invitation for Bid/Request for Bid (IFB, RFB) One Price (FP)
3. Request for Quotation Price Quote per item (T&M)

Select Sellers Tools & Techniques

1. Weighting System Numeric Weight to each criteria, rating sellers, selection based on
total weight
2. Independent Estimates called Should-Cost, prepared by procuring organization.
3. Screening System Establish minimum performance requirement for one or more
criteria and use 1 & 2 methods
 4. Contract Negotiation Project Manager may not be the lead negotiator, PM team may
be present during negotiations for providing any clarification of projects technical and
management requirements.
5. Seller Rating Systems
6. Expert Judgment
7. Proposal Evaluations techniques Use some Expert judgment and evaluation criteria
to rate and score proposals.

Output

Contract Management Plan Lists documentation, delivery and performance requirements that
the buyer and seller must meet. The plan covers the contract administration activities throughout the
life of the contract. Part of PMP.
Selected Seller
Contract
Resource Availability

Contract Administration Ensures the seller meets the performance requirements of the contract.
Because of legal considerations many organizations treat contract administration as a separate
administrative function from the project organization. Contract administration includes application of
the appropriate project management processes to the contractual relationships(s) and integration of
the outputs from these processes into overall management of the project.
Contract administration also has a financial management component. Payment terms should be
defined within the contract and must involve a specific linkage between seller progress made and
seller compensation paid.

TT:
Contract CC system
Buyer conducted perf review
Inspection and audits
Performance reporting
Payment System Usually handled by accounts payable system of the buyer. It includes reviews &
approvals by PM team.
Claims Administration Contested Charges (claims, Disputes or appeals) are those where buyer
and seller cannot agree. If both parties do not resolve a claim it is handled according to the resolution
procedures established in the contract. Contract clauses can involve arbitration or litigation and can
be invoked prior or after contract closure.
Records Management System Set of procedures and automation tools that are consolidated as
part of PMIS to manage contract documentation and records.
IT
OP:
Organization Process Assets (After Contract Administration)
1. Correspondence In addition to documentation, it is a record of all the written and oral
communication.
2. Payment Schedules and Requests
3. Seller Performance evaluation documentation
PMP updates Procurement Management Plan and Contract Management Plan.
Contract Closure
Procurement Audit Review of procurement processes from Plan purchases to Contract
administration. Aims to identify successes and failures.
Records Management System
Contract closeout is similar to administrative closure in that it involves both product verification (Was
all work completed correctly and satisfactorily?)

Administrative closeout (updating of records to reflect final results and archiving of such information
for future use).

Administrative Closure (Internal)generating, gathering, and disseminating information, to

formalize a phase or project completion.
Contract Closeoutcompletion and settlement of the contract, including resolution of any open
items. (External )

Difference between Contract Closeout and Admin Closure

1. Contract Closure comes first 2. AC is done at end of each phase or project, CC is done only once at
the end of Contract 3.AC Lessons learned CC Procurement audit 4. AC Less
Formal CC More Formal.

a contract, an agreement, a subcontract, a purchase order, or a memorandum of understanding.

Buyer(Give Order )-PO Seller
Seller -Invoice Buyer (Pay order)
Contract Types and Risk 1. Fixed Price 2. Cost-Reimbursable 3.Time & Material

CR Buyer has risk, as total cost are unknownYou are buying what to do from
seller.

Cost plus fee or Cost Plus No valid for federal contracts. Sellers are not motivated to control cost, used
Percentage of Cost when buyer can tell what is needed then what to do. Seller write SOW. Bad
(CPPC) for buyer

Cost Plus Fixed Fee Used for research and development contracts (which generally have low
(CPFF) level of detail in the scope); fixed fee can change if there is a change to the
contract (usually through change orders). The risk rests with the buyer. This
is the most common cost reimbursable contract.
 Cost Plus Incentive Fee Buyer and seller share in savings based on predetermined %s; long
CPIF) performance periods and substantial development and test requirements
(incentive to the seller to perform on or ahead of time) Cost plus agreed fee
plus a bonus for beating the objective

Cost plus Award fee Similar to CPIF but award amount is amount is determined in advance and
apportioned out depending on performance.

In Cost plus contract, the only firm figure is the fee

T&M Used for small amount contract. Good if the buyer wants to be in full control
and/or the scope is unclear/not detailed or work has to start quickly. Profit
factor into the hourly rate. Fixed rate but variable total cost. They are open
ended.

Fixed price or Firm Fixed Buyer defines reasonably detailed specifications (e.g. SOW). Shift risk to
Price (FFP) seller. Good when deliverable is not a core competency. Fixed Price (FP) is
the most common type of contract in the world. Seller is at risk.

Fixed Price Plus Incentives for fixed price contract. The inventive is same as CPIF. High-value
Incentive Fee (FPIF) projects involving long performance periods

Fixed Price Award Fee bonus to the seller based on performance (e.g. 100K + 10K for every
designated incremental quality level reached. Award fee is decided in
advance.

Fixed Price Economic Allow Price increase if the contract is for multiple years
Price Adjustment (FPEPA)

Purchase Order A form of contract that is normally unilateral and used for simple commodity
purchases. It is simplest type of fixed price contract and is usually
unilateral(Signed by one party instead of bilateral)

Contract type Vs Risk FP FPIF FPAF FPEPA T&M CPIF CPAF CPFF CPPC

Fixed Price T&M Cost Reimbursable

Buyers risk from low to high

Sellers risk from high to low

Cost Reimbursable
Advantages Disadvantages

Simpler contract SOW Required auditing sellers invoices

Usually required less work to write the scope than Requires more work for buyer to manage
FP
 Generally lower cost than PL because the seller Seller has only a moderate incentive to control
does not have to add as much for risk. costs

Total price is unknown

T&M
Advantages Disadvantages

Quick to create Profit is in every hour billed

Contract duration is brief Seller has no inventive to control costs

Good choice when you are hiring to augment your Appropriate only for small projects
staff

Requires the most day to day oversight from the

buyer

Fixed Price
Advantages Disadvantages

Less work for buyer to manage Seller may under price the wok and try to make up
profits on change orders

Seller has a strong incentive to control cost Seller may not complete some of the SOW if they
begin to loose money

Companies have experience with this type More work for buyer to write the CSOW

Buyer know the total price at the project start Can be more expensive than CR is the CSOW is
incomplete. The seller will add to the price for their
increased risk.

Elements of a Contract

Offer Assent to certain terms by both parties

Acceptance Agreement, written or spoken

Consideration Something of value

Legal Capacity Able to contract

Legal Purpose No violation of public policy

 Stages of Contract
Negotiation

Protocol Introductions

Probing Identify concerns, strengths, weaknesses

Scratch bargaining Actual bargaining

Closure Positions summed up

Agreement Documenting

Specification precise description of a physical item, procedure, or service. The SOW supplements
the specification in describing what must be done to complete the project.
Privity legal relationship that exists between any contracting parties (e.g. if company A hires B
and B subcontract to C, C is not legally bound by anything A can say; the privity is with B)
Waiver a party can relinquish rights that it otherwise has under the contract. Forebearance can
mature into waiver.
Force Majeure Act of God, Floods, Fire etc
Indemnification Liability, who is liable
Retainage withholding of funds under contract. Amount of money usually 5% to 10% withheld
form each payment. This money is paid when work is complete.
Warranty assurance of the level of quality to be provided
A contract ends by:

Successful
performance

Mutual agreement Last two are Termination

Breach of contract

Terms and Conditions the project manager must uphold the Terms and Conditions of the
contract, even if it meets the needs of the project, it has to also meet the requirement of the
contract.
Liquidated damages
Contract Control System vs. Project Control System they both include procedures. The
contract control system requires more documentation and more signoff.
Work Authorization Systems can be used to coordinate/control what time and sequence work is
done. It helps with integrating tasks into a whole.
Performance Scope of Work describes the performance not the functionality required by the
customer
Independent Estimate most concern with costs, comparing cost estimates with in-house
estimates or with outside assistance (part of Source Selection)
Procurement Audit structured review that flush out issues, and set-up lessons learned. Helps
ensure problems are resolved for future projects. Identify successes and failures that warrant transfer
to other procurements.
Beneficial Efficiency when the work is being used for the intended purpose and has been
certified
Terminating contract for Convenience if a project is terminated before it is complete, the level of
extent of completion should be established and documented.
Material Breach Breach so large that it may not be possible to complete the work.
Sole Source (not Single Source) Only one seller, it might be a company that owns a patent.
Contracting

Centralized Decentralized

+ More economical + Project Manager has more control

+ Easier to Control + Contracting personnel are more familiar with project

+ Higher degree of + More flexible and adaptable to project needs

specialization (expertise)

+ Orders can be consolidated Duplication of contracting efforts

May become a bottleneck Higher costs

Less attention to special No standard policies

needs

Negotiating Tactics

Deadline Strategic Delay

Surprise Reasoning Together

Limited Authority Withdrawal

Missing Man Unreasonable

Fair and Reasonable Suggesting Arbitration

Fait Accompli (A done deal)