PMP Certification, 2/e: Excel with ease [2nd ed] 9788131774717, 9789332516380, 8131774716, 9332516383

Table of contents :
Cover......Page 1
About the Author......Page 6
Contents......Page 8
Preface......Page 12
The Eight Steps for PMP® Exam Preparation......Page 16
Tips and Tricks for Succeeding at the PMP® Exam......Page 19
Project Management Body of Knowledge......Page 24
Process......Page 25
Project......Page 26
The Temporary Nature of a Project......Page 28
Progressive Elaboration: Integrating the Unique and the Temporary......Page 29
Projects Versus Operations......Page 30
Projects and Strategic Planning......Page 32
Project Management......Page 33
Why Do Project Managers Need Interpersonal Relationship Skills?......Page 37
Program Management......Page 39
Portfolio Management......Page 40
Project Management Office......Page 41
Standard......Page 42
Regulation......Page 43
Characteristics of a Typical Project Life Cycle......Page 58
Relationship Between Project Phases......Page 60
Different Life Cycle Models......Page 62
Incremental Life Cycle Model......Page 63
Adaptive Life Cycle Model......Page 64
Stakeholders......Page 66
Organizational Influence on Project Management......Page 67
Functional Structure......Page 68
Matrix Structure......Page 69
Organization Process Assets......Page 73
Work Performance Reports......Page 74
Initiation......Page 88
Executing......Page 90
Closing......Page 91
Process Group Interactions......Page 92
Project Integration Management......Page 93
Unification......Page 94
Inputs......Page 95
Develop Project Management Plan......Page 99
Inputs......Page 100
Project Management Plan......Page 101
Direct and Manage Project Work......Page 103
Inputs of Direct and Manage Project Work......Page 104
Tools and Techniques of Direct and Manage Project Work......Page 106
Monitoring and Control Monitor and Control Project Work......Page 107
Close Project or Phase......Page 111
Procedures to Perform Closure Activities......Page 112
Why Do Projects Fail?......Page 128
Challenges in Collecting Project Requirements......Page 129
Types of Scope......Page 130
Plan Scope Management Process......Page 131
Inputs......Page 132
Tools and Techniques......Page 133
The Collect Requirements Process......Page 134
Tools and Techniques......Page 136
Prototypes......Page 137
Group Decision Making......Page 138
Delphi Technique......Page 140
Idea/Mind Mapping Technique......Page 141
Output of the Collect Requirements Process......Page 142
Inputs......Page 144
Product Analysis......Page 146
Alternative Identifi cation......Page 147
Scope Statement......Page 148
The Create Work Breakdown Structure Process......Page 149
Alternative Forms a WBS Can Take......Page 150
The WBS Dictionary......Page 151
Scope Baseline......Page 152
Inputs and Tools......Page 153
The Control Scope Process......Page 154
Inputs......Page 155
Work Performance Information......Page 156
The Change Request Form......Page 157
Introduction......Page 172
Inputs......Page 174
Output......Page 175
The Define Activities Process......Page 176
Activity Attributes......Page 177
The Sequence Activities Process......Page 179
The Precedence Diagramming Method......Page 181
Project Schedule Network Diagram......Page 183
Resource Calendars......Page 184
Resource Breakdown Structure......Page 185
The Estimate Activity Duration Process......Page 187
Three Point Estimation—PERT......Page 188
Reserve Analysis......Page 189
Schedule Network Analysis......Page 190
Schedule Optimization......Page 193
The Control Schedule Process......Page 195
Introduction......Page 216
Inputs......Page 218
The Estimate Cost Process......Page 220
Inputs of the Estimate Cost Process......Page 221
Tools and Techniques of the Estimate Cost Process......Page 222
Types of Cost Estimates......Page 223
Basis of Costs......Page 224
The Determine Budget Process......Page 225
Inputs of the Determine Budget Process......Page 226
Output of the Determine Budget Process......Page 227
The Control Cost Process......Page 229
Tools and Techniques of the Control Cost Process......Page 230
Output of the Control Cost Process......Page 234
Introduction......Page 248
Precision Versus Accuracy......Page 249
Costs of Quality......Page 251
The Plan Quality Management Process......Page 253
Tools and Techniques of the Plan Quality Management process......Page 255
Outputs of the Plan Quality Management process......Page 256
Quality Audits......Page 259
Process Analysis......Page 260
The Control Quality Process......Page 261
Cause-and-Eff ect Diagrams......Page 262
Histograms......Page 265
Control Charts......Page 266
Output of the Perform Quality Control Process......Page 268
Introduction......Page 282
Tools and Techniques of the Plan Risk Management Process......Page 285
Output of the Plan Risk Management Process......Page 286
The Identify Risks Process......Page 287
Information-Gathering Techniques......Page 289
Tools and Techniques of the Perform Qualitative Risk Analysis Process......Page 292
Tools and Techniques of the Perform Quantitative Risk Analysis Process......Page 296
Quantitative Risk Analysis and Modeling Techniques......Page 298
The Output of the Perform Quantitative Risk Analysis Process:Updated Risk Registers......Page 299
Tools and Techniques of the Plan Risk Response Process......Page 300
Output of the Plan Risk Response Process......Page 302
Tools and Techniques of the Control Risks Process......Page 303
Introduction......Page 320
The Forms of Communication......Page 321
The Process of Communication......Page 322
Encoding the Message......Page 323
Tools and Techniques of the Plan Communications Management Process......Page 324
The Manage Communication Process......Page 327
The Control Communication......Page 329
Judgemental Methods......Page 330
Work Performance Reports......Page 331
Common Formats for Performance Reports......Page 332
Introduction......Page 346
Inputs of Plan HR Management Process......Page 348
Tools and Techniques of the Plan HR Management Process......Page 349
Organizational Theories......Page 351
Tools and Techniques of the Acquire Project Team Process......Page 352
Inputs of the Develop Project Team Process......Page 354
Tools and Techniques of the Develop Project Team Process......Page 355
The Tool Used in the Manage Project Team Process: Power......Page 357
Conflict Management......Page 359
Contracts......Page 374
The Plan Procurement Management Process......Page 376
Tools and Techniques of the Plan Procurement Management Process......Page 377
The Outputs of the Plan Procurement Management Process......Page 380
The Conduct Procurements Process......Page 382
The Tools and Techniques of the Conduct Procurements Process......Page 383
The Outputs of the Conduct Procurements process......Page 384
The Control Procurements Process......Page 385
The Tools and Techniques of the Control Procurements Process......Page 386
The Close Procurements Process......Page 387
The Tools and Techniques of the Close Procurement Process......Page 388
Outputs of the Close Procurement Process......Page 389
Stakeholders and Their Characteristics......Page 402
Plan Stakeholders Management......Page 405
Inputs to the Plan Stakeholders Management Process......Page 406
Tools and Techniques of the Plan Stakeholders Management Process......Page 407
Inputs of the Manage Stakeholder Engagement Process......Page 409
Outputs of the Manage Stakeholder Engagement Process......Page 411
Control Stakeholders Engagement......Page 412
Tools and Techniques of the Control Stakeholder Engagement Process......Page 413
Outputs of the Control Stakeholder Engagement Process......Page 414
Introduction......Page 426
Business Ethics......Page 427
General Guidelines for Maintaining Professional Responsibility......Page 428
Key Points......Page 444
Index......Page 460

Citation preview

®

PMP Certification—Excel with Ease Based on PMBOK ®, 5th Edition

S. Chandramouli PMP

Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Licensees of Pearson Education in South Asia No part of this eBook may be used or reproduced in any manner whatsoever without the publisher’s prior written consent. This eBook may or may not include all assets that were part of the print version. The publisher reserves the right to remove any material in this eBook at any time. ISBN 9788131774717 eISBN 9789332516380 Head Office: A-8(A), Sector 62, Knowledge Boulevard, 7th Floor, NOIDA 201 309, India Registered Office: 11 Local Shopping Centre, Panchsheel Park, New Delhi 110 017, India

My sincerest thanks and appreciation go to several people... My parents Subramanian and Lalitha My wife Ramya My son Krishna My daughter Siva Ranjani And my colleagues and friends

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About the Author S. Chandramouli, PMP, PMI-ACP, is an alumnus of the Indian Institute of Management Kozhikode (IIM-K). A Project Management Professional certified by the Project Management Institute, Newton Square, PA, he is a prolific writer of business management articles dealing with delivery management, competitiveness, IT, organizational culture and leadership. He has authored a book titled PMI Agile Certified Practitioner—Excel with Ease, published by Pearson. A certified Global Business Leader who has presented numerous papers at various international forums on project management, he is actively involved with ‘program management discipline’. Chandramouli has a good record of delivering large-scale, mission-critical projects on time and within budget to the customer’s satisfaction, using Agile and traditional project management methodologies. He was an active member in PMI’s Organization Project Management Maturity Model (OPM3) and Project Management Competency Development Framework (PMCDF) assignments. He has been an invited speaker at various management conferences and has addressed more than 5,000 business managers worldwide on a variety of themes associated with delivery management, competitiveness and leadership.

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Contents About the Author

v

Preface

xi

The Eight Steps for PMP® Exam Preparation

xv

Tips and Tricks for Succeeding at the PMP® Exam

1

Introduction to Project Management Introduction Project Management Body of Knowledge Process Project Project Management Why Do Project Managers Need Interpersonal Relationship Skills? Program Management Portfolio Management Project Management Office Enterprise Environmental Factors

2

The Contexts of Project Management Project Life Cycle Relationship Between Project Phases Stakeholders Organizational Influence on Project Management Organizational Structure Organization Process Assets

3

Project Integration Management Project Management Processes Process Group Interactions Project Integration Management

4

Project Scope Management Introduction Plan Scope Management Process The Define Scope Process The Create Work Breakdown Structure Process The Validate Scope Process The Control Scope Process

xviii

1 1 1 2 3 10 14 16 17 18 19

35 35 37 43 44 45 50

65 65 69 70

105 105 108 121 126 130 131

viii • Contents

5

Project Time Management Introduction Plan Schedule Management Process The Sequence Activities Process The Estimate Activity Resources Process The Estimate Activity Duration Process The Develop Schedule Process The Control Schedule Process

6

Project Cost Management Introduction Plan Cost Management The Estimate Cost Process The Determine Budget Process The Control Cost Process

7

Quality Management Introduction Quality Policy Costs of Quality The Plan Quality Management Process The Perform Quality Assurance Process The Control Quality Process

8

Project Risk Management Introduction The Plan Risk Management Process The Identify Risks Process The Perform Qualitative Risk Analysis Process The Perform Quantitative Risk Analysis Process The Plan Risk Responses Process The Control Risks Process

9

Communication Management Introduction The Plan Communications Management Process The Manage Communication Process The Control Communication Output of the Control Communication Process

149 149 151 156 161 164 167 172

193 193 195 197 202 206

225 225 228 228 230 236 238

259 259 262 264 269 273 277 280

297 297 301 304 306 308

Contents

10

Project Human Resource Management Introduction Plan HR Management Process The Acquire Project Team Process The Develop Project Team Process The Manage Project Team Process

11

Project Procurement Management Introduction The Plan Procurement Management Process The Conduct Procurements Process The Control Procurements Process The Close Procurements Process

12

Project Stakeholders Management Stakeholders and Their Characteristics Plan Stakeholders Management Manage Stakeholders Engagement Control Stakeholders Engagement

13

Professional Responsibilities of a PMP Introduction Professional Responsibilities

• ix

323 323 325 329 331 334

351 351 353 359 362 364

379 379 382 386 389

403 403 404

Key Points

421

Index

437

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Preface Why Take the PMP Exam? One of the students who attended my session on Project Management Professional (PMP) examination told me, “Sir, after attending your session I not only passed the PMP certification easily, it also gave me the confidence to face the real-life problems in a more methodological way. It has increased my confidence level exponentially.” The PMP exam focuses more on real-life situations. Hence, when you prepare for the exam by practicing real-time scenarios, your confidence level automatically increases; there is no magic in it. PMPs are paid at least 10% more than non-PMPs. I have come across many situations where professionals are getting higher salaries just after obtaining PMP certification. I wish readers all the benefits of PMP certification.

About PMP Certification The PMP® certification is the project management profession’s most recognized credential and is awarded by the Project Management Institute (PMI). At present, this project management certification is well recognized all over the world. Preparing for, appearing for, and passing the examination is not easy, and so proper guidance can help in gaining PMP® certification. This book will surely help professionals in passing the examination and understanding the concepts better. To be eligible to appear for the PMP certification examination, an individual must satisfy the requisite educational and Project management experience criteria. The candidate should possess a Bachelor’s degree or global equivalent thereof and a total of 4,500 hours of project management experience. In addition, candidates must have undergone 35 hours of project management training. Applicants also need to agree to adhere to a professional code of conduct.

Why This Book? This book has been written to help professionals preparing for PMP® exam based on PMBOK® 5th edition. Due care was taken to write this book in simple English and to present the project management concepts in an easily understandable way. Explanations and examples are given to explain the concepts.

Are You Ready for the PMP Exam? A lot of people fail in the exam because they have not had proper project management training that uses PMI terminology. It would be better to attend the training conducted by a registered education provider (REP), as their study materials are reviewed by PMI using standard methodologies. From 2002 onwards, project management training has been mandated by PMI for applicants taking the PMP exam. Do not attempt the PMP exam by reading just the PMBOK guide. The guide is not enough to pass the exam as there will be many questions based on real-time scenarios. You will not be prepared to take the PMP exam if you don’t understand or use the following terms: Project charter Project management Using best practices and lessons learnt Earned value management Critical path method Fast tracking

xii • Preface Crashing Network diagram Project management information system Risk register Risks classification Project management plan Cost management plan Scope management plan Enterprise environmental factors Organization process assets Stakeholder register Building team Conflict management Negotiation PERT estimation Work breakdown structure Controlling projects using project management plan Change control process All of these terms are equally important (not all inclusive) not only for passing the PMP exam but also to run projects in a professional way.

How This Book Is Organized Each chapter starts with an introductory paragraph that gives an overview of the chapter and provides a list of topics covered in the chapter. Exercise questions under each topic are given for practice, with answers at the end of the chapter. Discussion point questions are given under each topic; these points are to be discussed with professionals during the PMP preparatory training session. The questions given therein are designed to stimulate your thought about managing projects. A question-and-answer session and a summary, for quick review of the topics covered, are available at the end of each chapter. This book covers all the major items in the PMP exam. Please do not skip these questions; you will realize their importance when writing the exam. The exercises, discussion points and multiple-choice questions at the end of each chapter are key features of this book. You will see the results when you pass the exam.

Applying to Take the Exam The PMP exam application may be submitted by post or online. I strongly recommend you use the online submission process as it is easier and faster. When your application is accepted, you will receive an e-mail authorizing you to make an appointment to take the examination. You must pass the examination within one year after receiving your authorization letter.

Exam Pattern The PMP exam has 200 multiple-choice questions, with four answer choices per question. The examination duration is four hours. Twenty-five of the 200 questions are not counted for the final score. Your immediate question will be, which 25 questions. Where will these 25 questions be? Will they be the first 25 questions or the last 25 questions? There is no such pattern; these questions will be randomly placed in the examination.

Preface

• xiii

The final score will be calculated based on the 175 remaining questions. The passing score on the exam is now 106 out of 175, approximately 60%. The questions are randomly generated from a huge database. They may not be in the order of any chapter presented here. Each correct answer fetches you one mark. To pass, you must get 106 correct out of 175 scoreable questions; there are no negative marks for wrong answers. The result will be announced soon after the examination (online). This book will definitely be helpful for you to prepare for the PMP certification examination. I wish you all the best for your preparation and for the PMP exam. My e-mail address is msmouli@rediff mail.com.

Acknowledgements to the Second Edition This book is the result of all the learning I have gained from many highly reputed professionals in the industry. I was fortunate to work with them and in the process, acquire knowledge that helped me in molding my professional career. I thank Mr. Chandra Sekaran, Group Chief Executive, Tech and Ops, Cognizant, for his continuous encouragement and unabated passion for strategic value creation, whose advice was invaluable for working on this book. I am obliged to Mr. Chandrasekar, CIO, Standard Chartered Bank, for demonstrating how the lives, thoughts and feelings of others in professional life are to be valued. He is a wonderful and cheerful man who inspired me and gave me a lot of encouragement when he launched my first book, Virtual Project Management Office. The journey through Traditional Project Management, Agile Project Management, Program Management and Portfolio Management involving PMO has been very rewarding, as it has given me the opportunity to work for some of the best companies in the world and learn from some of the best minds. Along the way, several individuals have been instrumental in providing me with the guidance, opportunities and insights I needed to excel in this field. I wish to personally thank Mr. Subho Samanta and Mr. Pradeep Shilige, Senior Vice-president, Cognizant; Mr. Ramam Atmakuri, Vice-president, Cognizant; and Mr. Subhayu Paul, Chief Architect (Technology), Cognizant; for their inspiration and help in creating this book. They have immensely contributed to improve my skills. I am indebted to Mr. Ramesh Yanthra, MFA, for his help in drawing the wonderful infographics throughout this book. I obliged to Mr. Natarajan, a good human being and a good family friend of mine, who roused my interest in the subject, and helped me to understand the complex topics through easy mind mapping in a logical way. He gave me the first assignment of writing, in 1999, for a technical subject. In our lives, we are influenced, shaped, and molded by many people and experiences to become the people we are today. I am no different. The list of such people in my life could fill pages, but certain people do stand out and I would like to thank them here: Mr. Balu Mohan Rao and Mr. Sriram Vaidheeswaran, Senior Vice-presidents at Scope International; Mr. Thamizh Sanjeevi, Managing Director at Intee Soft; Mr. Govindaswamy Abbupillai, Senior Vice-president at Mahindra Satyam; Mr. Sriram K., Senior Vice-president at Mahindra Satyam and Mr. Narayana Murthy K., Senior Vice-president at Mahindra Satyam. I am grateful to Pearson Education, who came forward to publish this book. Ms. Anita Yadav and Mr. Ramesh M. R of Pearson Education were always kind and understanding. Mr. Ramesh reviewed this book with abundant patience and helped me to say what I had wanted to convey, improvising each and every page of this book with care. Their patience and guidance were invaluable. Thank you very much Kalyan and Ramesh.

xiv • Preface My parents (Mr. Subramanian and Ms. Lalitha) have always been enthusiastic about this project. Their unconditional love and affection provided the much-needed moral support. My son, Shri Krishna, and daughter, Shri Siva Ranjani, constantly added impetus to my motivation to work hard. This book would not have been possible without the constant inspiration and support of my wife, Ramya. She was unfailingly supportive and encouraging during the long months that I had spent glued to my laptop while writing this book. Last and not the least, I beg forgiveness of all those who have been with me over the course of the years and whose names I have failed to mention here.

S. Chandramouli

The Eight Steps for PMP® Exam Preparation I strongly recommend the following eight-step process for passing the PMP exam.

Eight-Step Process for PMP® Exam Certification Become a PMI Member

Attend Mandatory Training

Submit PMP® Exam Application

Get Eligibility Letter from PMI

Prepare for PMP® Exam

Fix Up Examination Date

Attend PMP® Revision Class

Celebrate the Success

Step 1 PMI Membership and Benefits ■ Reconfirm the need to become a PMP. ■ If yes, become a PMI member by simple online enrollment at www.pmi.org. ■ PMI membership is not mandatory for PMP certification, but recommended. Members get a CDROM of the PMBOK’s latest version plus a monthly magazine, PM Network, a quarterly research journal and monthly news letter (subscription for a year), and discounts on PMI books. Membership is annual (US$129 for the initial membership and US$119 for renewals).

xvi • The Eight Steps for PMP® Exam Preparation ■ Keep the e-receipt of the membership fee for the purpose of reimbursement, if applicable. ■ Also become the member of your nearest local chapter for assistance in PMP certification. Add local chapter subscription to the initial membership enrolment. Step 2 Mandatory Training/PM Education ■ It is mandatory to have 35 hours of formal PMBOK education covering all process groups. ■ You can attend classroom training or complete 35 hours through e-learning. ■ While submitting the application kit for PMP exam, the details of this training need to be furnished. ■ I recommend that you get this training through registered education provider (REP) of PMI. Step 3 Submit PMP Examination Application ■ Fill up the online application for the examination. Before filling up the application, have the following details ready: – A detailed split of the 4,500 hours of project management experience project-wise (name of the project, reporting line, brief description of role, and hours split by initiation, planning, execution, controlling, and closure) – PMI membership ID ■ While filling the application form, you need to provide only the requested information. Documentary evidence need not be provided. Documentary evidence is required only if it is requested during the audit process (Refer Step 4). ■ The application fee for PMI members is US$405. ■ The application fee for non-PMI members is US$555. ■ Keep the e-receipt for the purpose of reimbursement. ■ You can save the information keyed into the application form and continue later also. ■ After submission you will get an acknowledgement from the PMI through e-mail. Step 4 Receipt of PMP Examination Eligibility Letter from PMI ■ After submitting the application, within a week you will get the eligibility letter through e-mail. ■ Applications are audited at random. ■ Usually, every tenth application is audited. ■ In case your application is audited, there is no reason to worry. It is sufficient if you provide the information requested by PMI. ■ You need to produce the documents (proofs) only if your application is being audited. ■ The eligibility letter is valid for 12 months, that is, you should appear for the examination within 12 months of receiving the letter. Step 5 Prepare for the Exam ■ The key requirement for preparation is a substantial time investment from you. ■ Prepare systematically through relevant sources. ■ Focus should mainly be on PMBOK, 5th edition with supporting information from other references. ■ Constantly map study material with your real-life experiences. ■ For more information on how to prepare for the exam, refer “Tips and Tricks for Succeeding at the PMP® Exam on Page xviii.”

The Eight Steps for PMP® Exam Preparation

• xvii

Step 6 Contact Local Prometric Centre and Fix Up Examination Date ■ When you are confident about the examination, contact the nearest Prometric center and fix up an appointment for examination (10–15 days in advance). ■ For details about the location and other details in India, call 91-124-514-7700. ■ Examination centers are available at the following primary locations: Ahmedabad, Allahabad, Bangalore, Calcutta, Chennai, Hyderabad, Mumbai, New Delhi, Trivandrum. If you want to register for PMP examinations in the India region, please contact the Prometric Center at India Registration Center Thomson Prometric, Prometric Testing Private Ltd, 2nd Floor, DLF Infinity Tower, A Sector-25, Phase II, DLF City Gurgaon (Haryana) 122002, India Phone: +91 124 514 7700 Fax: +91 124 514 7773 www.prometric.com e-mail: [email protected] Step 7 Attend PMP Revision Class Lot of education providers conduct a one-day crash course for PMP exam revision. Attending such a session gives you inputs on how to take the exam and helps to boost your confidence level. Step 8 Execute, Succeed, and Celebrate Relax! Taking the test is stressful! You have 240 minutes to answer 200 questions. Most people finish the test in about 2.5 hours, so you have plenty of time. Certification documentation will be sent to you within three to four weeks of passing the exam. Enjoy the taste of PMP. S. Chandramouli

Tips and Tricks for Succeeding at the PMP® Exam Preparing for the Exam 1. Allocate at least three months for the whole preparation. Do not try to attempt the exam without preparation. 2. Lock and freeze your exam date well in advance (at least three months before). We can prepare seriously only when the exam date is out (perhaps a habit from our college days!). The preferable exam dates may not be available as there is always huge demand for this exam. 3. Read the PMBOK guide at least three times, fully. 4. Order the knowledge area as per your interest. For example, 1. Communication management, 2. Risk management, and so forth, before starting to read the PMBOK guide. 5. Study each chapter at least three times before starting to answer questions on that knowledge area. 6. For each knowledge area, practice as many questions as possible before going to the next knowledge area. (This will definitely increase confidence in that particular knowledge area). Practice the questions in exam mode rather than just reading the questions and answers. 7. Take at least one week to study each knowledge area along with practicing questions. 8. Practice mathematical questions as there will be lot of questions on calculation (e.g., EV, CPM, PERT). 9. Even if you take one week for each knowledge area, you can finish your preparation in nine weeks. Spend another month for revision and going through the question papers. 10. Read the PMBOK glossary fully without fail. 11. Create a study note for yourself in each knowledge area; this will help you to revise on the exam day. 12. Remember your success formula from your past academic successes and follow a similar study pattern. 13. Be aware of tools and techniques used in time, cost, quality, and risk as most of the questions on tools will be from these topics. 14. Go through at least two full questions papers in examination mode before the exam; five full question papers would be better. 15. Do not try to memorize anything. Try to understand the concepts well. Exam Pattern 1. The exam has 200 multiple-choice questions, each having only four choices. 2. The total examination duration is four hours (240 minutes). 3. About one-third of the questions will be situational based. 4. Generally, “none of the above” and “all of the above” answer options may not be available in the exam. 5. You can expect some True/False type of questions. 6. Read a question completely before trying to answer it. 7. There are no negative marks, so do not leave any question unanswered. 8. This exam tests knowledge and the application of knowledge. You must understand how the various terminologies used in this book are used in the real world. 9. There can be more than 10 earned value questions—So understand each formula covered in the topic well and practice different questions on this topic. 10. There can be a few questions (about five) related to CPM path. You would need to draw the diagram on paper before answering the question. 11. Understand risk calculations (using decision trees, expected monetary value, etc.) and categories of risk.

Tips and Tricks for Succeeding at the PMP® Exam

• xix

12. Understand Maslow’s needs hierarchy, leadership styles, motivation theories, sources of authority/power, conflict management (various techniques and advantages and disadvantages of each), team building, and use of kick-off meetings. 13. Regarding time management, the exam’s focus will be on use of crashing and fast tracking for reducing project duration and calculating CPM, lags, early start, and late start. 14. There will be a few questions on contracts, types of contracts in relation to risk to buyer or seller, and general procurement questions. 15. Know the difference between quality planning, assurance, and control. 16. There would be several questions on costing estimates, types of costs, and so forth. Concentrate more on questions with key words such as often, not, at least, at the most, not true, not false, and except. 17. It is not necessary to use all the information provided to answer the question. 18. Each question has only one correct answer. You need to select the answer choice that is nearest to the correct answer or to the given situation. 19. Answer the questions based on the PMBOK® concepts first, and then consider your own experience. If they are in conflict, the PMBOK® wins. Types of Questions in the Exam Try to understand and be prepared for the following patterns of questions. 1. Straight from PMBOK

Usually there will be 10 to 15 questions in this pattern, wherein the questions and answers will be straight from the PMBOK’s latest edition. Examples follow. Question: The order of process groups is A. Planning, initiating, executing, monitoring and controlling, closing B. Initiating, planning, executing, monitoring and controlling, closing C. Kick-off meeting, planning, executing, monitoring and controlling, closing D. Initiating, planning, monitoring and controlling, executing, closing Answer: B 2. Situational Questions

Most of the questions will be of this pattern, wherein a situation will be described to set the problem in context. Based on the situation, you would need to choose the best answer. Question: You are working in a training organization. The proposal that you submitted two months before to start and conduct a new course to increase revenue got approved. This is an example of A. strategic opportunity B. customer request C. legal requirement D. employee request Answer: A 3. Questions with Unnecessary Information

Not all information included in a question will be required to answer the question. Sometimes, there will be multiple paragraphs of information for each question on the exam.

xx • Tips and Tricks for Succeeding at the PMP® Exam Question: You are discussing with another project manager, who is also preparing for PMP exam. There are arguments about number of process groups and processes discussed in the new PMBOK guide. Which of the following is true? A. PMBOK, 5th edition has 42 logically grouped project management process comprising nine process groups. B. PMBOK, 5th edition has 45 logically grouped project management process comprising five process groups. C. PMBOK, 5th edition has 40 logically grouped project management process comprising five process groups. D. PMBOK, 5th edition has 47 logically grouped project management process comprising five process groups. Answer: D Instead of asking how many groups and processes are there, a situation is given that is not necessary to answer the question. 4. True/False Questions

Question: You are a program manager in discussion with another program manager; you generally discuss about project and program relationship. He is telling that if a relationship between projects is only that of a shared client or services, the efforts should be managed as a portfolio of projects rather than as a program. Is it true? A. True B. False Answer: A Program management focuses on project interdependencies and helps to determine the optimum approach of managing the projects.

Day Before the Exam 1. Relax a lot the day before the exam. 2. Revisit your exam notes in all the knowledge area. 3. Visualize success.

In the Exam Hall 1. 2. 3. 4. 5. 6. 7. 8. 9.

Go to the exam hall at least one hour before the start time. Bring snacks if possible as it may prevent hunger towards the end of the exam. Report your presence to the coordinator immediately; do not wait to be called. You must bring your authorization letter from PMI, as well as two forms of identification with exactly the same name you entered on the exam application. Relax and be cool in the exam hall. Do not get tense with the surroundings as there will be people who write other exams. Avoid last-minute preparation. As soon as you are given rough papers for calculations, try to write down formulas that you would need because you will not be required to recall them while answering the questions. Many students have needed only about 2.5 hours to finish the PMP exam; they spend the rest of the time for review.

Tips and Tricks for Succeeding at the PMP® Exam

• xxi

10. You will see only one question on the screen at a time. You can answer a question and/or mark it for later review. You can move back and forth through the questions at any point in time before submission. 11. Do not spend more than two minutes on the same question; just mark it for review and move ahead. You can come back and review these questions at a later point in time. 12. Do not expect all the questions to be known to you; there may be some questions that you may not know or even heard of; don’t worry about these questions; mark them for review and move ahead. 13. Manage your time well in the exam hall. You should have crossed 60 questions in the first hour and another 60 in the second hour. If you find that you are spending more time, try to speed up. 14. Maintain your energy levels and control your frustrations in the exam hall as you may not like some of the questions and may not agree with some of the answer choices. Do not worry: A lot of people who wrote the exam before faced these of situations and you need to just move ahead with the exam. 15. You need to keep your energy level up always from the beginning until the end. Try to take a 5-minute gap, perhaps at the end of two hours to refresh you. 16. Read all the four answer choices completely before picking the correct answer. Practice this from the beginning of your preparation. Better to read the answers backwards (choice D first, then C, etc.), which will be helpful for you to pick the right answer easily. 17. Data used for one question may need to be used for others as well; this is particularly true of network diagram and EV-related questions. So for these types of questions, try to jot down steps on a piece of paper as it may prove helpful later. 18. You need to understand and answer each question based on the PMI viewpoint and not what your company or you may follow or recommend. 19. If you do not know the answers correctly, try to use the elimination method. Eliminate those answer choices you are sure are incorrect. 20. Try to find out common project management errors in the answers, which may be useful for elimination purpose. 21. Look for words such as next, best, never, most, always, except, most likely, and less likely. Try to understand the real meaning of the questions using these key words. 22. Sometimes, a negative key word will be given in the question; you need to rephrase the question before answering it; for example, Which of the following is not true should be rephrased to which of the following is false before answering the question. 23. Understand the process of project management as it applies to the real world before selecting the answers. 24. If you find more than one answer for any question, try to choose the best answer. 25. When you answer fill-in-the-blank type of questions, the technically correct answer may not be among the given options. Choose the best answer among the available alternatives. 26. When you mark a question for later review, just jot down on the sheet of paper given to you the possible correct answers. When you review, you can straightaway choose from among the marked choices. 27. The exam will not be scored until you indicate that you are ready or until the 4-hour time limit is over. (There will be clock tickling at the top right-hand corner of the screen, indicating the remaining time.) 28. Do not click the Finish button without answering all the questions. Even if you do not know the correct answer, choose the option you feel may be correct, because it may go right and cost you nothing! 29. A printed summary of test results will be given immediately after the exam.

xxii • Tips and Tricks for Succeeding at the PMP® Exam

Common Project Management Mistakes Project management mistakes are often listed as choices on the exam. Following are the mistakes that even experienced project managers make. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Not getting the final signoff on the requirement Not focusing on quality Considering quality as redundant Not having an updated project management plan Not updating project schedule frequently Not updating budget estimates Not revising the estimates at the end of each phase Not setting the expectation clearly with stakeholders Blaming presales team for unrealistic expectation Not having any management control system in place Not using historical records Not implementing review process Blaming resources for poor skills Blaming customer for poor requirements A belief that “my customer is tough always”! Not finding the root causes for problems Not spending enough time with team members Not tracking project metrics per the plan Updating records only for quality review

Common Things a Project Manager Should Know A project manager is generally expected to know the following attributes of effective project management. Understand these as they will help you answer well in exam. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Project managers should know the order of process execution. Project managers should focus on preventing problems in advance. Project managers should plan meetings with a clear agenda. Only relevant topics should be discussed in meeting. The agenda for the meeting should be identified and communicated well in advance. Team members should know their roles and responsibilities. The project must be completed on time. The project must be completed on budget. The project management plan must be approved by all parties. All stakeholders must be identified before the project begins. Roles and responsibilities should be clearly defined for all. There should be a change control board identified early. Communication should be based on the communication management plan. A WBS should be used for all projects. All projects should be effectively planned, executed, and controlled. Choose the right process and follow the process rightly. Project managers should spend time in improving quality. Project managers should treat people with respect. Project managers should follow organizational rules, policies, and procedures always.

Introduction to Project Management CHAPTER COVERAGE 1. Introduction 2. Project Management Body of Knowledge 3. Process 4. Project 5. Strategic Planning 6. Project Management 7. Project Management Office 8. Role of a Project Manager

1

INTRODUCTION Organizations aspire to not only complete projects successfully but also execute them professionally to stay on top of competition, with this objective assuming ever more significance in times of economic recession. Keeping this aspiration in mind, many organizations prefer professionals with a project management professional (PMP) certification. This preference, in turn, has led to a rise in demand for PMP certification. Certifications awarded by the Project Management Institute (PMI) (Newtown Square, PA, USA) help business professionals to start, build, or advance their careers in project, program, and portfolio managements. Moreover, PMP-certified professionals enjoy better employability and brighter career prospects. As a consequence, the value attached to an individual designated by the PMI as a project management professional has increased dramatically in the recent past.

PROJECT MANAGEMENT BODY OF KNOWLEDGE The Project Management Body of Knowledge (PMBOK® (pronounced “pimbok”)) is a guidebook, published by the PMI, used as a standard worldwide for managing various projects across many industries. The PMBOK describes project management processes, tools, and techniques used to manage a project toward a successful outcome. This standard is unique to the project management field and is interrelated with other disciplines, such as program management and portfolio management. The latest edition of PMBOK has gone through many revisions and has been refined at many stages. In 2000, ANSI (American National Standards Institute) declared that the standard for project management would be the PMBOK).

2 • PMP® Certification—Excel with Ease The fifth edition of PMBOK, which is the latest, defines 47 processes of project management. Therefore, it is recommended that you understand what a process means, before getting into project and project management. The Glossary section of PMBOK has a lot of definitions that should not be missed by PMP aspirants.

PROCESS A process is a set of interrelated activities performed to create prespecified products, services, or results. Suppose you plan to go to your bank to withdraw money. What steps would you follow? 1. 2. 3. 4. 5. 6.

Check whether the bank is working on the day Go to the bank Get a service ticket for your service Fill in a form, if any Wait for your turn Get serviced

These activities constitute a process—a set of interrelated activities performed to achieve a prespecified service, here, the withdrawal of money from a bank. Figure 1.1 is a process diagram that illustrates the process flow involved in this process. A typical process has 3 components, namely, input, tools and techniques and output. Input comprises of the things that are necessary to run the Process. Input is transformed to the Output by the Process using the specified Tools and Techniques. Let us look into the example given in Figure 1.1: Check Holiday is the name of the Process. What are the primary inputs required here? 1. Calendar to check for the usual holidays 2. Newspaper to check for unusual holidays 3. Steps indicating how to browse through the calendar (Plan)

Check Holiday 1

2 Go to Bank

4

Fill Form

Service 3

Figure 1.1 Process flow diagram for withdrawing money from a bank

Introduction to Project Management

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What is the primary output required here? 1. Knowledge of the holiday flag 2. Knowledge of the calendar used. 3. Technique of browsing the calendar. Sometimes, we may need inputs for a process that may not be directly related to the output but they may be necessary for the execution of the process. For example, let us take the “Go to Bank” process. It requires an input such as Scooter/Car, which may not be directly related to the process of receiving a banking service. However, we may reach the bank earlier if we use the car instead of the scooter. The point to be noted here is that while some inputs may be directly related to the output, a few others that are not directly related to the output may be required for the execution of the process. We shall discuss this later at an appropriate place in the book. Let us consider another example: Suppose that making a Dosa (an Indian dish) is the process. If we call five different people (chefs) and give them the same ingredients and tools required to make the dosa, will the output be th e same? The size and taste of the dosa is bound to vary. Why is it so? This is not only because of the difference in skills possessed by the chefs but also due to the techniques they have learnt over a period. Thus, we need to understand and learn the techniques of a process in order to produce a better output. To understand the process described in the PMBOK, first visualize the output that is to be produced by the process. This will help you to understand the process and the corresponding tools and techniques. In PMBOK, the process name is based on the output produced by the process. For example, “Develop Project Management Plan” is the name of the process which produces “Project Management Plan” as output, “Identify Stakeholders” is the name of the process which produces the “Stakeholder Register”, etc. All process names in the PMBOK is in the form of “Do-What” format, as can be seen from the following examples: 1. Develop (Do) Project Management Plan (What) 2. Identify (Do) Stakeholders (What) 3. Develop (Do) Project Charter (What)

PROJECT Before discussing what a project is, let us consider an example: the construction of the Big Temple at Thanjavur, Tamil Nadu. In his 19th regnal year (AD 1009 to AD 1010), Rajaraja Chola ordered the construction of the temple. The following are some details of the Big Temple: 1. The temple lies within a spacious inner prakara 240.9 m long (east–west) and 122 m wide (north–south). 2. It has its gopura on its eastern side. 3. There are three other ordinary entrances, one each on each lateral side and the third on the rear. 4. A double-storied malika with parivaralayas surrounds the prakara. 5. The gopura does not cast a shadow outside itself.

4 • PMP® Certification—Excel with Ease

From a project management perspective, the following points are of note: 1. There was a start date for constructing this temple and an end date, that is, an inauguration date. 2. The task was unique. 3. The temple was constructed at a previously unused site (see “Progressive Elaboration: Integrating the Unique and the Temporary”). 4. To haul the vimana (gopura) to the top, a slope-like structure was constructed to the top from Vallam (15 km from Thanjavur). Although no written records exist on how this project was managed, it is likely that many unique and best practices and methods (processes) were followed, all some 2,000 years back. However, such is the sophistication of modern project management techniques, completing a project of this magnitude and complexity today would not pose as much difficulty as it would have in the times of Rajaraja Chola. Other examples of projects are: 1. Construction of a house 2. Construction of a bridge 3. Election campaigning So what is the common binding factor in these examples that define the term “Project”?

Definition The PMI defines a project as a temporary endeavor undertaken to create a unique product, service, or result. We also need to keep in mind that a project is progressively elaborated. Hence, the outcome of a project is called as Product. There are three key words that define the term “Project”. They are 1. Temporary 2. Unique 3. Progressive Elaboration. We shall examine each of these terms in detail in the subsequent sections.

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The Temporary Nature of a Project Every project should have specific start and end dates. Temporary does not imply short in duration. But it does mean that a project should have a planned end date. Some projects last years; some run for more than 10 years. The principle is that, when managing a project, you should always have planned start and end dates. Project activities are intentionally woven together with the purpose of accomplishing a specific objective, and the project ceases to be in operation when its objectives have been achieved. A project can have more than one objective; for example, the Alpine House project (see table below) has two objectives: reduce costs by 75% and reduce manual errors in the existing process by 95%. Moreover, a project team, which is formed to manage a project, is generally released upon the completion of the project. Thus, you may say that the team itself is temporary and only lasts the duration of the project. Example Project Objectives Project Name

Project Type

Estimated Start

Estimated Finish

ABC Corporation

Business continuity planning

January 4, 2010

March 4, 2010

Adventure Works

Business process re-engineering

January 20, 2010

February 21, 2010

Alpine House

Cost reduction and error reduction

February 6, 2010

April 16, 2010

The business opportunity or market window that mandates a project is often of a temporary nature. Owing to this reason, we cannot continue with a project indefinitely. The temporary nature of the market window requires that we complete a project per plan and move the product to the market within the time frame the market window provides us. Assume, for example, that we started a project in 1993 in FoxPro with a planned duration of 10 years. In 2003, the project would be of no use as customers may no more require a product in FoxPro; instead they may need the same product in Java or another technology. This time-bound nature of project management makes it challenging.

6 • PMP® Certification—Excel with Ease

Component 1

Component 3

Component 2

Component 4

Component 5

Figure 1.2 New and existing components of a project

The Unique Nature of a Project A project involves work that has not been attempted before and is therefore unique. However, unique does not mean that a project is completely so. We may use reusable components of past projects or existing systems to simplify our efforts. Suppose we develop a banking software that requires coding for 10 components. This requirement does not mean that we need to write the code (develop) for all 10 components of the software. We can reuse five existing components from our previous projects, and write the remaining five components afresh. But, as you may note, the combination is unique (see Figure 1.2). Because of the unique nature of projects, there may be uncertainty about achievement of their goals, that is, realization of intended products, services, or results. A project manager manages this uncertainty. In fact, project managers can be called uncertainty managers, because they generally manage uncertainties. If we are able to anticipate the uncertainty to an extent, we stand a better chance of managing it effectively.

Outcome of a Project The outcome of a project may be: 1. A product (e.g., a banking software). 2. A capability to perform a service (e.g., election campaigning for an upcoming election). 3. A result, such as an outcome or a document (e.g., a requirement analysis document).

Project

Product Service Documents

Progressive Elaboration: Integrating the Unique and the Temporary Sometimes, product characteristics are progressively elaborated. Progressive elaboration is the characteristic of a project that integrates the concepts of the unique and the temporary: Start with nothing and slowly move forward to create valuable results.

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Start from the Scratch

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Concepts Evolved

Progressive elaboration refers to developing in steps with continuous improvement. Goals and objectives that we set in the beginning are slowly elaborated and made clearer and more detailed as the project progresses. Progressive elaboration allows a project management team to manage at a greater level of detail as the project moves along. Basically, it is the process of identifying the characteristics of a project. The project plan is continuously modified and refined as more sets of information becomes available to the project using the progressive elaboration technique. As a result, the modified project plan becomes more accurate and complete. This technique of progressive elaboration is widely used in the project planning stage. Real use of progressive elaboration leads to the Agile principles of project management. Rolling wave planning is a form of progressive elaboration technique. Let us see what is a rolling wave. If you go to the sea shore and observe the waves (snapshot), at a particular point of time, one wave will just be starting, another would be in the process of ascending, a third would have already reached its crest. There would also be a wave that is in the process of descending and another that would have completely subsided (the last stage). Likewise, in a project, we need to plan the activities in such a way that immediate activities are planned in detail while activities scheduled for a faraway period (say, next year) would be charted at a macro level. Planning of all other activities that fall between these timelines would be at an intermediate level, that is, between micro and macro levels. This is called rolling wave planning in project management. It is a step-by-step planning where higher details of the activities are specified for the immediate future. For example, if we are planning to visit Thanjavur (South India) in the upcoming summer, the first thing we do is to book the flight and hotel considering the start and end date of our tour plan. But the local trips within Thanjavur will be planned in detail once we reach the town. This is called as rolling wave planning.

Projects Versus Operations The following table presents the salient differences between a project and an operation. Projects

Operations

Projects are temporary and unique.

Operations are ongoing and repetitive.

The purpose of a project is only to attain its objectives; the project is terminated once objectives have been achieved.

The main objective of operations is to sustain the business.

8 • PMP® Certification—Excel with Ease Characteristics common to both projects and operations are as follows: 1. Both are performed by people. 2. Both are planned, executed, and controlled. 3. Both have limited resources.

Project

People Executed Controlled

Operation

However, the implementation of projects intersects with that of operations at various points during a product’s life cycle, for example, at the closeout phase of the project (see “Project Management”), when developing a new product, and at the end of the product’s life cycle. Project interacts with operation at various stages of its life cycle. It cannot run in isolation. For example: 1. Team members entering is an operation 2. Project manager raising the invoice and billing is an operation 3. Project manager approving the leaves of the team members is an operation In these examples, projects cannot run without the operations. Thus, projects interact with operations during their execution. What happens to the product after the execution of the project? The product will be deployed in the production environment and used by the end-user. This is an operation. During the production support, if the customers (end-users) want an enhancement (additional functionality), the concerned enhancement alone will be considered as a separate project. The immediate question that comes to our mind is “Why should we distinguish between the activities of a project and an operation?” The process described in detail in the Project management Book of Knowledge (PMBOK) is applicable to project activities resulting in good results (which is already proven). However, this process may not be directly applicable to operational activities and the project manager needs to be knowledgeable to identify a suitable process that would apply to the concerned operation.

Exercise 1.1

Classify below activities as “Project” or “Operation”. 1. Construction of a bridge 2. Production activities 3. Establishment of new business processes 4. Manufacturing activities 5. Accounting activities

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PMP WATCH There will be a few questions in the exam asking you to differentiate projects and operations; so understand both concepts clearly.

Projects and Strategic Planning Projects are often used to achieve an organization’s strategic plan. In such projects, the project team is either formed out of employees of the organization or contracted. Exercise 1.2

Write down some reasons for an organization to initiate a project.

From a strategic perspective, projects are initiated for the following reasons: market demand, organizational needs, customer requests, technological advances, and legal requirements. The following table amplifies this point. Environmental Factors that Mandate Projects in Organizations Market demand

A bank initiates a project to offer customers an option to transfer money to other accounts over the Internet, following an increase in the use of the Internet for such intrabank and interbank transactions.

Business needs

A company initiates a new project to design a portal for business-tobusiness transactions as the current manual process of transaction is slow.

Customer requests

A bank initiates a project to develop a loan automation system to automate verification and sanction, as the existing manual system generated customer dissatisfaction. Customer feedback required a new system to reduce processing time and errors.

Technological advances

Whenever a new technology comes to market, every company manufactures a proof of concept (POC) product in the new technology to showcase its ability in the new technology; for example, when Java was introduced in late 1990s, many companies initiated POC projects in Java technology to showcase their ability in the new technology and generate new business.

Legal requirements

New income tax laws might require modifications or new programming to the existing income tax system.

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Exercise 1.3

List down the activities of a project manager in your organization.

PROJECT MANAGEMENT Although many may believe project management to be little more than paper work, it is in reality a complex activity—both an art and a science. According to the latest edition of the PMBOK, project management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements. Project management thus converts the abstract into the concrete or an organization’s vision to reality. Three key words to remember while defining project management are 1. Knowledge 2. Skills 3. Tools and Techniques You can acquire knowledge by going through books, browsing the internet, reading magazines, hearing from others, etc. We need to continuously apply knowledge in order to develop our skills. Similarly, the project manager should know the tools and techniques of the process in order to function in a project management environment. The project management life cycle has five distinct phases: 1. 2. 3. 4. 5.

Initiation Planning Execution Control Closure

The above set is also called as Project Management Process Groups. PMBOK defines only 47 processes. These 47 processes across these five process groups.

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PMP WATCH Understand clearly the difference between project life cycle and project management life cycle.

Pharma Project Life Cycle R & D Phase

Develop

Market

Construction Project Life Cycle Market

Study Phase

Develop

Closing Initiation

Controlling

Project Management Life Cycle

Planning Execution

Apart from the aforementioned five distinct phases, project management also comprises the following ten overlapping project management knowledge areas (see also Figure 1.3): 1. Project scope management 2. Project time management 3. Project quality management 4. Project communication management 5. Project risk management 6. Project cost management 7. Project human resource management 8. Project integration management 9. Project procurement management 10. Project stakeholder management

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Scope Management Time Management

Stakeholder Management

Communication Management

Cost Management Integration Management

Procurement Management

Quality Management

Risk Management

HR Management

Figure 1.3 The ten knowledge areas of project management As Figure 1.3 shows, integration is at the centre of the knowledge area continuum, and it is the primary function of a project manager. The 47 processes defined in the PMBOK can also be distributed across these 10 knowledge areas. PMP WATCH You need to understand all the knowledge areas and the purpose of each knowledge area and how they interact with each other.

Let us now consider the conduction of a project management training session as a project. What are the various activities we perform in conducting the training? The following are some of the activities (not necessarily in the same order) required for conducting the training course. 1. 2. 3. 4. 5. 6. 7.

Finalize the syllabus and the course material for the course Employ a good trainer for conducting the session Get REP status for the training to obtain customer confidence Advertise the course to potential students Contact those students who have responded and communicate important dates Arrange for infrastructure facilities for students Negotiate fees and enroll students

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8. Install backups: alternative plans for power, projectors, and the like 9. Employ a relationship officer who ensures that classes are conducted per plan These nine activities may be identified with the ten knowledge areas of project management, as the following table indicates. The Ten Knowledge Areas of Project Management as Applied to a Training Course Activities

Knowledge Area

Finalize the syllabus and the course material for the course

Scope management

Employ a good trainer for conducting the session

Human resource management and Stakeholder management

Get REP status for the training to obtain customer confidence

Quality management

Advertise the course to potential students

Communication management

Contact those students who have responded and communicate important dates

Communication and time management

Negotiate fees to enroll students

Cost management

Install backups: alternative plans for power, projectors, and the like

Risk management

Employ relationship officer who ensures that class is conducted per plan

Integration management and Stakeholder management

Arrange for infrastructure facilities for students

Procurement management

Discussion Points 1. Do you think that project management is an art, a science or both? 2. How can we improve the scientific nature (science) of project management? 3. How can we improve the judgmental nature (art) of project management?

Exercise 1.4

What are all the skills required for a project manager to perform activities in the nine knowledge areas mentioned?

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Exercise 1.5

Try to map the knowledge areas with the descriptions given (guess, if you have to!)

Scope management

Processes required to ensure timely completion of the project

Time management

Processes required to ensure that the project will satisfy the needs for which it was undertaken

Quality management

Includes the processes required to ensure that the project includes all the work and only the work required to complete the project successfully

Communication management

Processes required for effectively identifying, analyzing, and responding to project risks

Risk management

Processes required to ensure timely and appropriate development, collection, dissemination, storage, and, ultimately, disposition of project information

Cost management

Processes required to make effective use of the people involved in the project

Human resource management

Processes required to purchase or acquire products, services, or results needed from outside the project team

Procurement management

Processes required to ensure the project is completed within the approved budget

To summarize, we have 47 processes overall, which are distributed across process groups (initiation, planning, execution, monitoring, controlling and closing). The same 47 processes can also be distributed across the 10 knowledge areas. Each process defined in the PMBOK is attached (one-to-one) to unique knowledge areas (one-to-one). People who are preparing for the PMP exam have the following options to learn the process: 1. Going through each process (totalling 47) one by one. 2. Going through each process groups one by one (thereby learning its attached 47 processes). 3. Going through each knowledge area one by one (thereby learning its attached 47 processes). We strongly recommend going through each knowledge area, which is easier to remember. In this book, we will learn the process by going through each knowledge area (scope management, time management, etc.) Figure 1.4 summarizes the distribution of process across knowledge areas and process groups.

WHY DO PROJECT MANAGERS NEED INTERPERSONAL RELATIONSHIP SKILLS? Nothing in this world would happen without relationships, whose effective management is important for project managers. They need to maintain relationships with superiors, peers, clients, end users, sponsors, and the media. Moreover, project managers should maintain effective interpersonal relationships so that projects remain well managed. Project management skills in this area include problem management, conflict management, negotiation, motivational skills, and leadership skills. Figure 1.4 shows the interplay of interpersonal relationships. PMP WATCH Communication is at the center of all interpersonal relationship skills required for a project manager. In fact, communication occurs throughout all the knowledge areas and throughout the life cycle of the project.

Introduction to Project Management

PG

Initiation

Planning

1

1

Execution Control

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Closure

KA Integration Management

1

2

Scope Management

4

2

Time Management

6

1

Cost Management

3

1

Quality Management

1

1

Human Resource Management

1

3

Communication Management

1

1

Risk Management

5

Procurement Management

1

1

1

1

1

1 1

Stakeholder Management

1

1

1

1

Total

2

24

8

11

1

2

Figure 1.4 Process Distribution – Process Group Vs Knowledge Areas

One of the most important skills of a project manager is effective communication. Effective communication involves exchanging proper information to meet the objective of communication and ensure smooth relations with team members. Merely conveying your want is not enough: You need to communicate in such a manner that you get the desired response out of the person with whom you are interacting. Effective communication is, thus, a two-way process. Suppose a project manager realizes that a particular project has missed a deadline. How should the project manager communicate this lapse effectively to the client? Just picking up the phone and simply conveying the delay will not solve the problem. The project manager needs to communicate this information in such a manner that the client at least understands the problem situation. If, in such a situation, the project manager succeeds in eliciting a not-unfavorable response from the client, it could be called an instance of effective communication. Knowledge of how to communicate effectively and efficiently helps the team and the project manager to minimize friction and misunderstandings between stakeholders. Discussion Points How will you communicate bad news to the customer? How will you start conversation in this case?

16 • PMP® Certification—Excel with Ease Leadership skills refer to developing a strategic plan and motivating team members to achieve their objectives. Leadership and management skills help project managers to realize successful project completion.

Discussion Points How will you motivate your team members? What strategy would you follow in different situations? Would different strategies be required at different times?

Motivational skills involve energizing people to achieve high levels of performance and overcome barriers to change. Negotiation skills refer to the implementation of a give-and-take policy whereby parties involved are happy with the outcome of the deal and a win–win situation results. Confl ict management skills refer to conferring with others to enable an agreement to be reached. Problem solving skills involve the combination of problem definition, alternatives identification and analysis, and decision making.

Discussion Points 1. Why correct identification of a problem is critical? 2. Discuss a problem you solved recently using the aforementioned steps.

We will discuss interpersonal relationships in more detail in subsequent chapters. Exercise 1.6

Classify below activities as “Project” or “Process” Cleaning your house once in a week Organizing an election campaign Going for a walk once in a week Organizing a project management conference Arranging a training program

PROGRAM MANAGEMENT According to the PMBOK, a program is a group of projects managed in a coordinated way to obtain benefits and control that would not have been obtained had the projects been managed separately. Program management focuses on project interdependencies and helps to determine the optimal approach for effectively managing them. An example of a program would be a new communications satellite system program, comprising projects for designing the satellite, constructing and integrating the individual systems, and launching the satellite. In the exam, you may be given an example program and asked to identify possible projects associated with that program. So understand programs and projects and the relationship between them. A project may or may not be part of a program. A program will always have projects.

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PMP WATCH In the exam, you may be given an example program and asked to identify possible projects associated with that program. So understand programs and projects and the relationship between them. A project may or may not be part of a program. A program will always have projects.

Program

Project 1

Project 2

Project 3

Project 4

Program Sponsor

Program Manager

Project Sponsor

Project Manager

PORTFOLIO MANAGEMENT By portfolio, we refer to a collection of projects or programs that have been grouped together to facilitate effective management to meet strategic business objectives. Portfolio management refers to the selection process based on the need, profitability, and affordability of the proposed projects. The projects or programs that belong to a portfolio may not necessarily be interdependent or directly related. Portfolio management also refers to the centralized management of one or more portfolios, as detailed in the following section.

18 • PMP® Certification—Excel with Ease Portfolio refers to a collection of sub portfolios, programs and operations grouped together in order to meet strategic business objectives of the organization. Programs which are grouped within a portfolio may be comprised of its own subprograms, its projects, or other work to support the corresponding portfolio. Individual projects that are either within or outside of a program are still considered part of a portfolio.

Portfolio 1

Program 1

Project 1

Project 3

Project 2

Portfolio 3

Portfolio 1

Program 1

Portfolio 2

Program 1

PROJECT MANAGEMENT OFFICE The primary function of a project management office (PMO) is to support project managers in a variety of ways. More informally, “PMO means vastly different things to different people with only this as their common thread: Something that’s going to fix our project management mess” (PM Network, February 2001). The PMO manages methodologies, standards, overall risks/opportunities, and interdependencies among projects at the enterprise level. The PMO also manages the project team and organizes the common services of projects. Moreover, it can operate in the following areas: 1. Project support 2. Project management process/methodology

Introduction to Project Management

3. 4. 5. 6.

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Home for project managers Internal consulting and mentoring Project management software tools Portfolio management

Different organizations may refer to their PMOs using different terms: project police, project support group, or project consulting Following are the types of PMO and their roles: 1. Supportive PMO: Supportive PMO provides templates, best practices and lessons learnt from other projects to the project team. The degree of control is low. 2. Controlling PMO: Controlling PMO provides support and ensure compliance by adopting project management frameworks or methodologies. The degree of control is moderate in this model. 3. Directive PMO: Directive PMO directly manages and controls the projects. The degree of control is high in this model. 4. Project Governance PMO: This provides a comprehensive and consistent method of controlling the project, thereby ensuring its success by defining and documenting reliable, repeatable project practices. It actually defines responsibility and accountability for the success of a project.

ENTERPRISE ENVIRONMENTAL FACTORS Enterprise environmental factors are factors that surround (the environment) or influence project success. Of course, they may have a positive or a negative influence on project outcome. These factors are used as inputs to the planning and initiating process because a project cannot be planned without analyzing available infrastructure, tools, and soft ware. Readers may well recall that environmental factors played a crucial role in the Tata Nano project being moved from West Bengal to Gujarat. An organization’s structure and infrastructure are good examples of the enterprise environmental factors that would govern any project management initiatives the organization may undertake. We cannot implement a strategy within the organization if its organizational structure is not supportive of that strategy. The influence of a project manager will be different across different organizational structures. We will discuss organization context in Chapter 2.

Standard A standard is a guideline approved by a recognized body. There is no compulsion for anybody to follow a standard but it will be helpful if followed. The standard contains already proven methods. Examples: 1. The PMBOK guide is a standard for individual project management. 2. PMCDF (Project Management Competency Development Framework) is a standard for project management competency. 3. OPM3 (Organization Project Management Maturity Model) is a standard for an organization.

20 • PMP® Certification—Excel with Ease

Regulation A regulation is a restriction imposed by the government. It is an official document that must be followed. It is mandatory and has to be followed. Regulations are used by government/official organizations. Example: Traffic regulations must be followed. Summary This chapter has introduced the reader to the PMBOK, the PMI, and the fundamentals of project management. Moreover, it has discussed the meaning and definition of process, project, operation, project management, program management, and portfolio management, and PMO. It has also introduced the nine knowledge areas of project management. Answers to Exercise Questions Exercise 1.1 Answers 1.

Construction of a bridge

Project

2.

Production activities

Operation

3.

Establishment of new business processes

Project

4.

Manufacturing activities

Operation

5.

Accounting activities

Operation

Exercise 1.2 Possible answers A market demand An organization need A customer request A technological advance A legal requirement Exercise 1.3 Possible answers Planning the project Executing the project Controlling the project Managing stakeholders Exercise 1.4 Possible answers Project management skills General management skills Problem solving skills Communication skills Negotiation skills

Introduction to Project Management

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Exercise 1.5 Answers Scope management

Includes the processes required to ensure that the project includes all the work and only the work required to complete the project successfully

Time management

Processes required to ensure timely completion of the project

Quality management

Processes required to ensure that the project will satisfy the needs for which it was undertaken

Communication management

Processes required to ensure timely and appropriate development, collection, dissemination, storage, and, ultimately, disposition of project information

Risk management

Processes required for effectively identifying, analyzing, and responding to project risks

Cost management

Processes required to ensure the project is completed within the approved budget

Human resource management

Processes required to make effective use of the people involved in the project

Procurement management

Processes required to purchase or acquire products, services, or results needed from outside the project team

Exercise 1.6 Answers Cleaning your house once in a week

Process

Organizing an election campaign

Project

Going for a walk once in a week

Process

Organizing a project management conference

Project

Arranging a training program

Project

Chapter 1 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. A peer project manager who is about to start on his first project asks you to provide him a project management document that describes established norms and methods. This document would be called a

A. B. C. D.

standard. project management plan. process document. project document.

22 • PMP® Certification—Excel with Ease Question 2. All the project management processes described in the PMBOK guide must be used in all projects. A. True B. False Question 3. A colleague asks you what the PMBOK is, and you tell him that it is a standard whose recommendations are generally recognized as good practice. Here generally recognized means A. knowledge and practices are applicable to most projects most of the time. B. generally people recognize it. C. knowledge and practices are applicable to all projects most of the time. D. knowledge and practices are applicable to all projects all of the time. Question 4. The recommendations of the PMBOK are generally recognized as good practice. Good practice means A. knowledge and practices must always be applied uniformly to all projects. B. knowledge and practices must always be applied uniformly across all organizations. C. the PMBOK can enhance the chances of success over a wide range of projects. D. knowledge and practices are applicable to all projects all of the time. Question 5. A project manager told his project leader that a project is a temporary endeavor undertaken to create a unique product or service. Here temporary means A. The project has a short duration. B. It has a beginning but no definite end. C. It has a definite beginning and an end. D. It creates a temporary product or service. Question 6. Assume that there is a hot debate in your organization about the level at which projects are executed in organizations. What will be your take in this scenario? A. Projects are undertaken across all organization levels. B. Projects are undertaken only at the lower levels of an organization.

C. Projects are undertaken only at the higher levels of an organization. D. Projects are undertaken only by the CXO. Question 7. Six project managers were discussing products and projects. Which of the following is not true? A. A project can result in a product that can be a component of another product. B. A project can result in a product that can be an end product in itself. C. A project can result in an outcome or a document. D. A project always involves many people. Question 8. Which of the following is not a project? A. Changing the structure of an organization B. Constructing a building C. Implementing a new business process D. Manufacturing operations Question 9. The order of process groups in a project is A. planning, initiating, executing, monitoring and controlling, closing. B. initiating, planning, executing, monitoring and controlling, closing. C. kick off meeting, planning, executing, monitoring and controlling, closing. D. initiating, planning, monitoring and controlling, executing, closing. Question 10. You are discussing with another project manager who is also preparing for the PMP exam and there is an argument over the number of process groups and processes discussed in the fourth edition of the PMBOK guide. Which of the following is true? A. PMBOK, 4th ed., has 42 logically grouped project management processes comprising 9 process groups. B. PMBOK, 4th ed., has 45 logically grouped project management processes comprising 5 process groups. C. PMBOK, 4th ed., has 40 logically grouped project management processes comprising 5 process groups. D. PMBOK, 4th ed., has 42 logically grouped project management

Introduction to Project Management

processes comprising 5 process groups. Question 11. A project manager preparing for the PMP exam tells you that the processes described in the PMBOK bear a relationship with program and portfolio management. The project manager’s statement is A. true. B. false. Question 12. Which of the following is not false? A. Projects or programs of a portfolio may not necessarily be interdependent or directly related. B. Projects or programs of a portfolio must be interdependent. C. Programs of the portfolio may not necessarily be directly related but projects should be directly related. D. Projects of a portfolio may not necessarily be directly related but programs should be directly related. Question 13. A portfolio manager states that his portfolio scope changes often as the organization’s strategic goals change frequently. Is this true? A. True B. False Question 14. Two program managers discuss the relationship between projects and programs. Which of the following is not true? A. A project may or may not be part of a program. B. A program will always have projects. C. Programs will include elements of related work outside the scope of discrete projects in the program. D. Programs will not have elements of related work outside the scope of discrete projects in the program. Question 15. Assume that you are a program manager in discussion with another program manager about the relationship between projects and programs. He tells you that if the relationship between projects is that between shared clients or shared services, the efforts should be managed

• 23

as a portfolio of projects rather than as a program. Is it true? A. True B. False Question 16. Program management focuses on project interdependencies and these interdependencies include all of the following except A. Resolution of resource constraints and/or conflicts that affect multiple projects within the program B. Alignment of organizational/strategic direction that affects project and program goals and objectives C. Resolution of issues and change management within a shared governance structure D. Resolution of client-related issues and conflicts Question 17. Projects are authorized typically as a result of one or more of the following strategic considerations except A. B. C. D.

market demand. Business need. utilizing free resources. customer request.

Question 18. You are working in a training organization. Your proposal, based on your market analysis and judgment, to conduct a new training course receives approval. This is an example of project initiation driven by a A. B. C. D.

strategic opportunity. customer request. legal requirement employee request.

Question 19. A pharmaceutical-drug manufacturer authorizes a project to establish safety guidelines for handling of its toxic chemicals. This may be an example of project initiation driven by a A. B. C. D.

market demand. business need. technological advance. legal requirement.

Question 20. A car manufacturer authorizing a project to build cars that run on water because of increase in petrol prices is an example of project initiation driven by a A. business need.

24 • PMP® Certification—Excel with Ease B. market demand. C. customer request. D. legal requirements. Question 21. An organization’s strategic plan becomes the primary factor guiding investments in projects. A. True B. False Question 22. The projects supported by the PMO may not be related. A. True B. False Question 23. A program manager is in discussion wit h s enior managers ab out t he structure of a proposed PMO. Which of the following is true regarding the structure of the proposed PMO? A. The structure of the PMO depends on the PMO head. B. The structure of the PMO depends on the projects it is likely to handle. C. The structure of the PMO depends on the needs of the organization. D. The structure of the PMO depends on the stakeholders of the PMO. Question 24. A program manager is in discussion wit h s enior managers ab out t he structure and primary function of a proposed PMO. The primary function of the proposed PMO in supporting project managers includes all of the following except A. Developing and managing project procedures, policies, templates B. Coordinating communication across projects C. Identifying and developing project management methodologies and best practices D. Focusing on specific project objectives Question 25. Project managers and the PMO pursue different objectives and in principle are driven by different organizational requirements. A. True B. False

Question 26. A group of project managers, discussing about the relationship between projects and operations, states that projects intersect with operations at various points during the product life cycle. A. False B. True Question 27. A group of project managers is in discussion of the role of the project manager and that of the operations manager. Which of the following is not true? A. A functional manager focuses on providing management oversight for an administrative area. B. An operations manager is responsible for a facet of the core business. C. The role of a project manager is distinct from that of a functional manager. D. Understanding and applying knowledge, tools, and techniques that are recognized as good practices are sufficient for effective project management. Question 28. A group of project managers is in discussion of the characteristics of project managers and operations managers. The “personal” characteristics of a project manager refer to A. what the project manager knows about project management. B. what the project manager is able to do. C. what the project manager accomplishes by applying knowledge. D. how the project manager behaves when managing a project or performing a related activity. Question 29. Which of the following is true A. Environmental factors refer only to internal factors. B. Environmental factors refer only to external factors. C. Environmental factors refer to both internal and external factors. D. Environmental factors come only from particular enterprises involved in the project.

Introduction to Project Management

Question 30. Enterprise environmental factors are an input to almost all planning processes. Which of the following is not true? A. Enterprise environmental factors refer to both internal and external factors. B. Enterprise environmental factors are considered as inputs to most planning processes. C. Enterprise environmental factors always enhance project management options. D. Enterprise environmental factors may enhance or constrain project management options. Question 31. Which of the following is not a project management group? A. B. C. D.

Planning Initiation Controlling Coding

Question 32. In which process is a project manager selected to manage the project? A. B. C. D.

Planning Initiation Controlling Executing

Question 33. What does a project manager do most of the time? A. B. C. D.

Communicates Solves problems Leads Codes

Question 34. The project management knowledge area that ensures that a project includes all the activities and only those activities required to complete the project successfully is A. B. C. D.

communication management. work management. scope management. task management.

Question 35. Processes required for effectively identifying, analyzing, and responding to uncertainties in a project are classified under A. B. C. D.

uncertainty management. scope management. risk management. task management.

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Question 36. The outcome of a project is generally called a A. B. C. D.

deliverable. project. process. product.

Question 37. All of the following are characteristics of a project except: A. B. C. D.

Temporary nature Definite beginning and end dates Ongoing activities Progressive elaboration

Question 38. A program is defined in the PMBOK as A. a group of projects managed in a coordinated way to obtain benefits not available when managed individually. B. a collection of a number of projects divided into manageable components enabling a project team to ensure the completion of a desired outcome. C. a project plan developed by senior management personnel. D. the means to subdivide the project into manageable segments. Question 39. Operations and projects share many characteristics. A. True B. False Question 40. Which of the following is true? A. A project is a temporary service undertaken to create a temporary product. B. A project is a unique endeavor undertaken to create a progressively elaborated service. C. A project is a temporary endeavor undertaken to create a unique product or service. D. A project is a temporary product undertaken to create a temporary endeavor or service. Question 41. Projects are authorized typically as a result of any of the following except A. Organization need B. Successful bidding C. Customer Request D. Technological advance

26 • PMP® Certification—Excel with Ease Question 42. While managing a project, you think you need to recheck the templates to be used in a subsequent phase. Who would you turn to for templates, software, and standard policies? A. A PMO B. The project sponsor C. The human resources department of your organization D. Your project leader Question 43. Who is usually responsible for portfolio management within an organization? A. B. C. D.

PMO Project sponsors Project manager Senior management

Question 44. You as a project manager along with other stakeholders created a scope document two months ago. Now you find that the scope has evolved and provides much more details. A scopeevolving process is technically known as A. B. C. D.

progressive elaboration. decomposition. rolling wave. scope validation.

Question 45. Standards defined in the PMBOK are A. B. C. D.

neither complete nor all inclusive. complete and all inclusive. complete but not all inclusive. not complete and all inclusive.

Question 46. Stakeholders can be identified in which process group(s)?

A. Initiating, planning, executing, monitoring and controlling, and closing B. Initiating C. Planning and monitoring, and controlling D. Initiation and planning Question 47. The primary purpose of a project management plan is A. to define how the project will be executed and controlled. B. to document product-related activities. C. to capture the risks related with project activities. D. to document the project schedule. Question 48. One portfolio manager tells another that he has two programs in his portfolio but they are not related. Is it possible and true? A. True B. False Question 49. The purpose of the PMBOK is to identify and describe knowledge and practices that must be applied uniformly across all projects. A. True B. False Question 50. One project manager asks another as to which factor is an input to most planning processes? Enterprise environmental factor is the answer he got. Is it true? A. True B. False

Introduction to Project Management

Answer Sheet for Chapter 1 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

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28 • PMP® Certification—Excel with Ease

Answers for Chapter 1 Questions

Question Number Question 1

Answer

Question Number

Answer

A

Question 26

B

Question 2

B

Question 27

D

Question 3

A

Question 28

D

Question 4

B

Question 29

C

Question 5

C

Question 30

C

Question 6

A

Question 31

D

Question 7

D

Question 32

B

Question 8

D

Question33

A

Question 9

B

Question 34

C

Question 10

D

Question 35

C

Question 11

A

Question 36

D

Question 12

A

Question 37

C

Question 13

A

Question 38

A

Question 14

D

Question 39

A

Question 15

A

Question 40

C

Question 16

D

Question 41

B

Question 17

C

Question 42

A

Question 18

A

Question 43

D

Question 19

D

Question 44

A

Question 20

B

Question 45

A

Question 21

A

Question 46

A

Question 22

A

Question 47

A

Question 23

C

Question 48

A

Question 24

D

Question 49

B

Question 25

A

Question 50

A

Introduction to Project Management

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Explanations for Chapter 1 Answers

1. Answer A A document that describes established norms, methods, process and practices is called as a standard. The Project manager here gave the PMBOK® Guide, which is the standard. Option B is not right because Project management plan is a document that describes how a project will be executed; it has the process (the How part). 2 Answer B There is no compulsion to use all processes in all Projects. We can use only the most suitable process as per the project requirement. 3. Answer A PMBOK® is a standard generally recognized as good practice. Generally recognized means that its knowledge and practices are applicable to most of the projects, most of the time. (Note: It is not for all Projects. It is for most projects most of the time). Option C is not right because it is not applicable to all projects. Option D is not right because it is not applicable to projects all the time. 4. Answer B PMBOK® is a standard generally recognized as good practice. Generally recognized means its knowledge and practices are applicable to most of the projects, most of the time. Good Practices means, it is applicable uniformly across all Organizations. Option B is false because it is not applicable across all projects. Option C is false because it does not deal with the chances of success of the project. The success depends on the success criteria of the project defined. Option D is also false because it is not applicable to all projects all the time. 5. Answer C A Project is a temporary endeavor undertaken to create a unique product/service/result. Temporary does not mean use-and-throw. It indicates that a project will have specific start date and end date. Option D is not right because temporary does not mean use-and-throw (or Temporary product). Option A is not right because temporary does not mean shorter duration of the project. A Project can have any duration, shorter or longer,

depending on the need. Option B is also false because a project always has a definite end. 6. Answer A A Project is undertaken at all Organization levels from top to bottom. A Project is undertaken at CXO level, Top level (Executive level), Lower level etc. 7. Answer D A Project can involve a single person to any number of people (many people). Note You need to choose a FALSE answer (not true). A Project can result in a product that can be a component of another project (Option A). A Project can result in a product that can be an end product, why not? (Option B). A Project need not create a product. It can create a document or any outcome (Option C). 8. Answer D Operation is not a project whereas all other Options are the examples of Projects. Changing the structure of an Organization (Option A) is a project. Construction of a Building (Option B) is a project. Implementing a new business process (Option C) is a project. A Project is a temporary endeavor undertaken to create a unique product/ service/result. Options A, B and C qualify based on the above criteria. Option D qualifies as Operation and hence, it is the answer. 9. Answer B Process group order is: Initiating, Planning, Executing, Monitoring and Controlling, Closing. (Note: This is not an execution order. All the process group elements are integrative in nature) 10. Answer D PMBOK® 4th Edition has 42 logically grouped process and 5 corresponding process groups. (Note: PMBOK® 5th edition has 47 logically grouped process and 5 corresponding process groups) 11. Answer A A Process that is defined in PMBOK® is applicable for Project and at the same time, it is related to Program and Portfolio management.

30 • PMP® Certification—Excel with Ease 12. Answer A A Portfolio consists of Program, Projects and Operations. Projects within portfolio need not necessarily be interdependent on or directly related with each other. It qualifies within portfolio if it satisfies the strategic objectives of the Organization. Option B is false because projects/programs within portfolios need not be interdependent on each other. Option C is false because projects within portfolios need not be related with each other. Option D is false because the dependency and relationship aspects defined above are not only applicable for projects but also applicable for Programs within the portfolio. 13. Answer A A Portfolio Scope depends on the strategic objectives of the Organization. Whenever the strategic objectives change the portfolio scope also changes. Strategic Objectives of an organization usually change over a period of time. 14. Answer D A Program consists of Projects and Operations. A Program may also have few programs within its umbrella. We need to choose the False Option (not True) to answer this question. Option A is not right answer, because a project may or may not be part of a program. Option B is not the right answer, because a program will always have a few set of projects. Option C is not the right answer, because a program will include elements of related work outside the scope of discrete projects in the program (say operation related to program, etc.) 15. Answer A Program management focuses on project interdependencies and helps to determine the optimum approach to the management of projects. 16. Answer D Program management focuses on Project interdependencies and these interdependencies include resolution of resource constraints and conflicts that affect multiple projects within the program (Option A), Alignment of organizational and strategic direction that affects project and program goals (Option B), and Resolution of issues within a shared government structure (Option C). We need to choose the false option. (Options A, B, C are correct statements and hence Option D is the answer).

17. Answer C Projects are authorized typically as a result of market demand, customer requests, business need, technological advances, and legal Requirements. 18. Answer A Projects are authorized typically as a result of market demand, customer requests, internal business need, technological advances, and legal requirements. Strategic Opportunity (Option A) is the answer in the given example because here, the project initiation is based on market analysis and judgment, which indicates a strategic opportunity. 19. Answer D Projects are authorized typically as a result of market demand, customer requests, internal business need, technological advances and legal requirements. Legal Requirement (Option D) is the answer as in the given example because here, the project initiation is based on safety guidelines (law). 20. Answer B Projects are authorized typically as a result of market demand, customer requests, internal business need, technological advances and legal requirements. Market Demand (Option B) is the answer in the given example because here, the project initiation is based on market demand (increased petrol price can create a market demand for cars that run on water). 21. Answer A The goal of portfolio management is to maximize the value of a portfolio by examining its components. Those components that contribute least to the portfolio’s strategic objectives are generally excluded. An organization’s strategic plan becomes the primary factor guiding the investments in projects. 22. Answer A PMO can support any type of Project. The Projects supported by PMO need not be related with each other. 23. Answer C PMO can support any type of Project. The Projects supported by PMO need not be related with each other but the structure of a PMO depends on the needs of the Organization. Option A is false, because PMO head does not decide the PMO structure. It is based on the needs of the Organization. The PMO structure does not depend on the stakeholders (Option D) or the projects (Option C).

Introduction to Project Management

24. Answer D PMO can support any type of Project. The Projects supported by PMO need not be related with each other. Structure of a PMO depends on the needs of the Organization. We need to choose false option here. The primary function of PMO in supporting the project managers include developing procedures, templates (Option A), Coordinating communications and sending reports (Option B), Developing project management methodologies, best practices (Option C). 25. Answer A PMO can support any type of Project. Project managers and PMO pursue different objectives. Objective of PMO and Objective of projects are different. 26. Answer B Projects do intersect with Operations. In the closeout phase of a project, during improvement of operations or during the product development process, activities under the project and regular operations overlap, after which the target process of product is brought under regular operations, at the end of the lifecycle. 27. Answer D A project manager, in addition to domain-specific skills, should possess general management proficiencies. Understanding and applying knowledge that are recognized as good practices alone are not sufficient. Option A describes the functional manager (He focuses on providing management oversight for an administrative area). The role of the project manager is distinct of a functional manager (Option B). 28. Answer D Option A refers to knowledge (What the project manager knows), Options B and C refer to Performance. The personal characteristics of a project manager refer to “how the project manager behaves when managing a project or performing a related activity. 29. Answer C Environmental factors refer to both internal and external factors. Option A refers to only internal factors; Option B refers to only external factors. Option D is also not the right option. Enterprise environment factors are for all enterprises involved in projects. (It is not for a particular enterprise involved).

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30. Answer C We need to choose the FALSE Option. Environmental factors need not enhance project management options always. It actually imposes a constraint on the options (Option D). Environmental factors refer to both internal and external factors (Option A). 31. Answer D Project management process group consists of Initiation, Planning, Executing, Monitoring and Controlling, Closing. 32. Answer B A Project manager is selected in the Initiation process group through a Project Charter. 33. Answer A A Project manager spends more than 92% of the time for project communication. 34. Answer C The definition described is the Scope management process. Work management (Option B) is not a Knowledge Area. Task Management (Option D) also is not a defined Knowledge Area. 35. Answer C The definition described is the Risk Management. Uncertainty Management (Option A) is not a Knowledge Area. Task Management (Option D) also is not a defined Knowledge Area. 36. Answer D The outcome of a project is product/service/ defined result. A Project is a temporary endeavor undertaken to create unique product/service/ result. 37. Answer C A Project is a temporary endeavor undertaken to create unique product/service/result. Operation has ongoing activities. 38. Answer A A Program is a group of projects managed in a coordinated way to obtain benefits that are not available when we manage them individually. 39. Answer A Both Operations and Projects are performed by people only; both are planned, executed and controlled; and both have limited resources.

32 • PMP® Certification—Excel with Ease 40. Answer A A Project is a temporary endeavor undertaken to create unique product/service/result. Operation has ongoing activities. 41. Answer B Projects are authorized, typically, as a result of market demand, customer requests, internal business need, technological advances and legal requirements. We need to choose the wrong option and hence, the answer is Option B. 42. Answer A Templates are usually provided by PMO. Senior management is responsible for Portfolio management 43. Answer D Templates are usually provided by PMO. Senior management is responsible for Portfolio management 44. Answer A Progressive elaboration deals with evolvement and getting clear picture as we progress further. Decomposition (Option B) refers to splitting bigger things to smaller things. Rolling wave (Option C) talks about different planning levels at different point of time, even though this is close to Option A, Option A is the best option.

45. Answer A Standards defined in PMBOK are neither complete nor inclusive of all. (It is also progressively elaborated) 46. Answer A Identify Stakeholder process is part of Initiation and Stakeholder Management but stakeholder identification in project happens continuously in all other process groups also. 47. Answer A A Project schedule is different from a project management plan. Project management plan (the How part) is a document that describes a process (usually, a word document). This will not contain any specific project-related activities, risks etc. 48. Answer A Among the projects or programs that belong to portfolio many are not necessarily interdependent or related with each other. 49. Answer B The knowledge and practices prescribed in the PMBOK are not intended to be applied uniformly across all projects. We need to choose the best process on the basis of the specific project requirements. 50. Answer A Enterprise Environmental factors (EE factors) and Organization Process Assets (OPAs) are inputs to almost all planning processes.

Introduction to Project Management

• 33

Key Terms Enterprise environmental factors They are factors that surround (the environment) or influence project success. PMBOK A guidebook published by the PMI, used as a standard worldwide for managing various projects across many industries. Process Set of interrelated activities performed to create prespecified products, services, or results. Project The PMI defines a project as a temporary endeavor undertaken to create a unique product, service, or result.

Progressive elaboration It is the characteristic of a project that integrates the concepts of the unique and the temporary: Start with nothing and slowly move forward to create valuable results. Program It is a group of projects managed in a coordinated way to obtain benefits and control that would not have been obtained had the projects been managed separately. Portfolio By portfolio, we refer to a collection of projects or programs that have been grouped together to facilitate effective management to meet strategic business objectives.

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The Contexts of Project Management CHAPTER COVERAGE 1. Project Life Cycle 2. Characteristics of Project Life Cycle 3. Types of Project Life Cycle 4. Relationship Between Project Phases 5. Life Cycle Models 6. Stakeholders 7. Organizational Influence 8. Functional Structure 9. Projectized Structure 10. Matrix Structure 11. Organization Process Assets

2

PROJECT LIFE CYCLE The life cycle is the only factor that uniquely distinguishes projects from non-projects. The project life cycle defines the beginning and the end of a project and the various milestones associated within it. Although every project has definite planned start and end dates, specific deliverables vary widely across projects. At various points in the project life cycle, a project is checked and verified for any variance from the freezed or agreed version, and a decision is made on whether to go forward with the project, go forward to the next phase, or to stop work on it or on what actions are required to bring the project back to control. The project life cycle provides the basic framework for managing a project, regardless of the specific work involved. In general, a project life cycle refers to a logical sequence of activities undertaken to accomplish goals or objectives. All projects follow the sequence of activities, that is, life cycle, shown in the following list (see also Figure 2.1): 1. 2. 3. 4.

Project initiation Organization and preparation Execution Closure

This generic life cycle structure is used in all communications with an organization’s top management (see Figure 2.1).

Characteristics of a Typical Project Life Cycle The following list provides the salient characteristics of a project life cycle: 1. Cost and staffing are low at the start of a project. 2. Stakeholder influence is high at the start of a project.

36 • PMP® Certification—Excel with Ease

Start

Organize

Work

Complete

Figure 2.1 Typical project life cycle structure

3. Uncertainties are high at the start of a project. 4. The ability to influence the final outcome characteristics of a project without impacting the cost is high at the start of a project 5. The likelihood of a project not being completed at all is highest in its initial stages. As the implementation of the project matures and recognition of its perceived value to the organization increases, risks and uncertainties that were associated with the project during initiation decline. Figure 2.2 shows the variation of various project inputs and parameters over time, from the project initiation stage to the project closeout stage. As you may note, project costs are highest during project execution.

Exercise 2.1

List down the different project life cycle models you know

The Contexts of Project Management

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High

Inf Stakluence eho of lder s d an ts els s o v t C Le ec fing j o Pr Staf

Risk an

Low

d Uncert

Concept Initiation

Time Development

Planning

ainty

Execution

Execution

Closeout

Controlling

Closing

Figure 2.2 Typical project life cycle characteristics

RELATIONSHIP BETWEEN PROJECT PHASES Projects are generally so complex and ridden with uncertainties that they are divided into divisions; these divisions are allotted more specific controls to effectively manage realization of deliverables. Please recall from Chapter 1 that projects have different phases like requirement analysis, design etc. Each phase has specific deliverables at the end (phase end), they are called as stage gates or kill gates. Phases are related with each other in three ways, namely, sequential, overlapping, and iterative relationships. Project life cycles are determined based on these relationships. Project Life Cycle Phase 1 Phase 2

Phase 3

Phase 4

1. Sequential relationships. In projects whose phases bear a sequential relationship with each other, a subsequent phase starts only when the implementation of its immediately preceding phase is complete. This project life cycle model is called a waterfall model because, like flow of water in a waterfall, the implementation of a project is carried out phase by phase, from top to bottom; for example, the completion of the requirement phase precedes the start of the design phase.

38 • PMP® Certification—Excel with Ease Coding

Testing

2. Overlapping relationships. In projects whose phases bear an overlapping relationship with each other, a subsequent phase starts even before implementation of its immediately preceding phase is complete; for example, design review may be initiated before requirement analysis is complete. Waterfall model with feedback is an example of overlapping relationships. Sashimi model, and V model are also examples of overlapping relationships.

Requirement Gathering

Designing

3. Iterative relationships. In projects whose phases bear an iterative relationship with each other, at any given point in time, implementation of only one phase is planned, and if required, the same phase is executed again, depending on outcomes; for example, requirement analysis alone may be executed many times over until the requirement has been clearly defined. This project life cycle model is also called the RUP, spiral model.

Requirement Analysis Phase

Phase transition stages are convenient and appropriate points to update baselines, conduct senior management reviews, and evaluate project costs, quality requirements, and schedules, as it indicates the end of particular types of work like requirement gateway, design etc. Specialist review can be conducted at the end of the phase as this point determines whether we can take the project forward or not, and what actions are required to bring the project back to control. Figure 2.3 shows the generic tasks carried out in a project. Although all project life cycles across all industries share these five phases, the actual processes entailed by these phases may vary over different industries; for example, the project life cycle of a pharmaceutical project is likely to be different from that of a construction project. For pharmaceutical projects, the phases would be an R&D phase, a develop phase, and a market phase. For construction projects, the possible phases would be a study phase, a market phase, and a develop phase. In projects spread over years, it is appropriate to provide customers and project sponsors (who sponsor the project by giving money at the initial stage and who authorize the project) interim deliverables, as evidence that the implementation of the project is being carried out per plan; for example, if a project’s requirement analysis has been planned to be made over

The Contexts of Project Management

Risk Analysis

Requirement Analysis

Maintenance

• 39

Development

Testing

Figure 2.3 Generic tasks carried out in a project several years, interim deliverables such as templates, template with Module 1 complete, and template with Module 2 may be provided to customers and sponsors. Project planning too is based on the project life cycle model of the project (tasks to be accomplished in each phase are clearly defined and quantified, whenever possible, during planning). A project completion phase is also called a phase exit. Exit criteria entail getting an accpetance from the customer, called sign-off.

Different Life Cycle Models Predictive Life Cycle Model: This is also known as plan-driven or waterfall methodologies (Refer Figure 2.4). It was first formally described for software by Winston Royce. Here, the project is executed based on a plan, which we freeze upfront before starting the project. Since we freeze the plan upfront before starting the project we baseline the project scope, the time and the cost required to deliver the overall product, all in the beginning of the life cycle itself. The phases are executed in a sequential manner (sometimes simultaneously). Each phase focuses on a subset of project activities and uses a different skill set of resources. Each phase has different cost levels. Advantages of Predictive Life Cycle Model: 1. 2. 3. 4.

Very easy to understand Easy for implementation Widely used and known; hence, all stakeholders understand this Identifies deliverables and milestones upfront.

Requirements Design Coding Testing Figure 2.4 Waterfall Model

40 • PMP® Certification—Excel with Ease Disadvantages of Predictive Life Cycle Model: 1. 2. 3. 4.

Does not match well with reality It is unrealistic to freeze the requirement upfront Software is delivered only at the last phase Difficult and expensive to make changes (CRs always)

Iterative Life Cycle Model Professor Barry Boehm’s paper describes this model as “Analyze a little, design a little, test a little, and loop back.” Development happens in iterations that encompass the activities of requirements analysis, design, Coding and testing. (Refer Figure 2.5) The early iterations produce a small system, which gradually expands over a series of iterations to become the overall complete system. Feedback is implemented from one iteration to the next iteration. During iteration, activities from all Project Management Process Groups will be performed. At the end of each iteration, a set of deliverables will be completed. Advantages of Iterative Life Cycle Model: 1. 2. 3. 4.

Quick feedback loop from business stakeholders Focus on customer feedback Focus on getting the highest priority features first Ability to validate pieces of deliverables incrementally

Disadvantages of Iterative Life Cycle Model: 1. 2. 3. 4.

Getting feedback from customer on time is difficult Even though deliverables are given in pieces, tracking and monitoring is difficult Project may not proceed further if customer is not cooperating The fully developed solution requires the partial developments to be implemented, and this is often complicated and costly.

Incremental Life Cycle Model Project delivery is divided into parts – analyze, design, code, test and deliver product (release). The delivery of product is also divided into parts. Initially, a part of the product is released and then, additional developments are made based on feedback. These developments are linked and the overall solution is finally completed. The solution from each part is reviewed and tested. Results from the testing are assessed and any required changes are incorporated into the next stage (next part) of solution development (Figure 2.6). Spiral model is a type of incremental model. Requirements

Requirements

Requirements

Design

Design

Design

Coding

Coding

Coding Testing

Testing

Figure 2.5 Iterative Model

Testing

The Contexts of Project Management

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Project Completion Systems Analysis

Systems Analysis

Release

Release

Project Commencement

Design

Design

Plan and Budget

Test Build

Plan and Budget

Test

Build

Figure 2.6 Incremental Model Examples differentiating Incremental and Iterative Model: Incremental: Start with a small house; keep adding rooms, balcony etc and upgrades to it. Iterative: On each iteration, the house is re-designed and built anew. Advantages of Incremental Life Cycle Model: 1. Quick feedback loop from business stakeholders 2. Focus on customer feedback 3. Customer feels the product early. Disadvantages of Incremental Life Cycle Model: 1. Scheduling of development is difficult with incremental model 2. Even though the final product is given in pieces, tracking and monitoring is difficult 3. Testing needs to be exhaustive in each part.

Adaptive Life Cycle Model Adaptive life cycles (agile methods) are both iterative and incremental (Figure 2.6). Adaptive life cycle models are intended to facilitate change. This model requires a high degree of ongoing stakeholder involvement than all other models. Iterations are rapid (usually 2 to 4 weeks in length) and limited in

42 • PMP® Certification—Excel with Ease time and resources. Adaptive projects generally perform all processes (RA, design, coding, etc.) within each iteration. Each iteration is planned for and scheduled based on the findings from the previous iterations. Iterations are also called as Cycles. The client should aware the nature of the project and also understand the working model. A dedicated time is required from the customer side. Advantages of Adaptive Life Cycle Model: 1. 2. 3. 4.

Active client involvement Customer feels the product early. Just-in-time planning Does not waste time planning when there is uncertainty

Disadvantages of Adaptive Life Cycle Model: 1. Active client involvement is required, which is difficult to achieve 2. Testing needs to be exhaustive in each iteration. 3. Cannot identify exactly what will be delivered at the end of the project Table 2.1 below summarizes the difference between predictive and adaptive model: Table 2.1 Difference between Predictive and Adaptive Models

Project Environment Category

The Development Team

Project Management

Processes and Tools

Customer Contract

Project Characteristic Variable

Predictive

Adaptive

Communication Style

Only when necessary

Regular collaboration

Location

Not relevant

Collocated

Size

Not relevant

Ideally 6-10

Learning

Not relevant

Continuously encouraged Responsive, Pro-active

Management Culture

Command & Control

Team Involvement

Unnecessary

Mandatory

Planning

Up front

Up front and continuous

Feedback Mechanisms

Not available

Several Team decides

Team Input

Team is told what to use

Amount

More than enough

Just enough

Adaptation

None

At well -defined moments

Involvement

During scope phase

Throughout the project

Availability

Not required

Easily Accessible

Requirements and Timing

Fixed

Flexible

Cost

Fixed

Time and Materials

PMP WATCH Phase end should have deliverables Each phase uses different skill sets Each phase has different cost levels Phase structure provides formal degree of control

The Contexts of Project Management

Exercise 2.2

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Write down some advantages of defining individual project phases rather than defining a single phase for the whole project

Discussion Points 1. Discuss the differences between the waterfall model and the RUP model (iterative model). 2. What are all the advantages of the iterative model? 3. What are all the risks associated with the iterative model?

STAKEHOLDERS A stakeholder is a person, a group, or an organization that is actively involved in the project or whose interests may be positively or negatively affected by the results achieved by or the completion of the project. A project manager should identify both the internal and external stakeholders of and their influence levels on the project (see Figure 2.7). Individual stakeholders often have different conflicting objectives. For example, the program manager concentrates more on benefit management, the project leader concentrates more on technical feasibility, while the project sponsor concentrates more on cost factors associated. Stakeholders who are not in favor of a particular project deliverable may try to negatively influence a project, which can manifest itself as rumors or other such negative influences.

Customer

Sponsor

Organization

PM Society

PMO

Team

Figure 2.7 The typical internal and external stakeholders of the project

44 • PMP® Certification—Excel with Ease Examples of stakeholders are the organization’s project management office, the project team, the project manager, project sponsors, and the implementing organization. Customers and end users of a project’s prespecified result also have a role to play in the implementation of a project and in some cases, for example, in software development, provide day-to-day inputs to the project team. For this reason, customers and end users are called the primary stakeholders of a project. Stakeholder identification, carried out at the beginning of a project, is a continuous and difficult process. Project managers use group dynamics techniques, whereby key project-team members are asked to identify all possible stakeholders of the project. The Crawford slip is another popular technique used for this purpose. The Crawford slip technique can be used to rapidly collate ideas from a large group of people. It is actually one of the original forms of brainwriting, and for small groups, it reduces to an undemanding “private idea generation” phase.

PMP WATCH The primary task of a project manager is to identify and manage the expectations of stakeholders. Different stakeholders have different expectations and views; also, their views change over time. The first step in managing stakeholders, of course, is to identify the stakeholders.

Discussion Points Is your spouse a stakeholder? (Your spouse is likely to be affected negatively if you, as a project manager, often go home late in the evening.)

Discussion Points Why all project managers are not able to be star performers in all the organizations they work with.

ORGANIZATIONAL INFLUENCE ON PROJECT MANAGEMENT Organizational structure, style, and culture influence implementation of projects. Cultures and styles of an organization are known collectively as its cultural norms. These norms include a standard approach (organization style) regarding the manner in which projects are implemented, what means are considered, and who is influential in facilitating implementation. Cultural fitment, or cultural quotient (CQ), is the ability of an organization to cope with national, corporate, and vocational cultures. Project managers should understand the different organizational styles and cultures that may affect a project. The project manager should identify important organizational decision makers and work with them to influence project success. Figure 2.8 depicts the organizational factors influencing project performance. PMP WATCH Primary role of the Project Manager is to identify and manage the expectation of the stakeholders. Different stakeholders have different expectations and views. Their view also changes at different point of time. The first step to manage stakeholder is to identify the stakeholder itself.

The Contexts of Project Management

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Style Structure

Culture Project Performance

Figure 2.8 Organizational factors influencing project performance

ORGANIZATIONAL STRUCTURE Organization structure is the hierarchical relationships of various entities within the organization that collaborate with each other for project execution. Different organizations, by virtue of their objectives and core philosophies, carry different organizational structures. The structure of an organization determines the operational model used in the organization. Organizational structure determines the responsibilities for different functions and entities.

High Transparency

Communication Management Support

Shared Reliability

Matrix Hierarchy

Rapid Response

Decentralized Reporting Continuous Monitoring

Functional Structure The structure of a functionally structured organization is based on the functions performed by each component of the organization (Figure 2.9). Such an organization would have a production department, a marketing department, a human resources department, and a finance department, to name a few. Each department in a functionally structured organization envisions, plans, and implements its own projects. The responsibilities of a project manager are few in such organizations, where important management decisions fall within the purview of functional managers (e.g., finance manager, marketing manager).

46 • PMP® Certification—Excel with Ease

CEO

VP Marketing

Staff

VP Finance

Staff

Staff

Figure 2.9 Structure of a functional organization Advantages of Functional Structure

Disadvantages of Functional Structure

Easy management of functional specialists

No career path in the project management

Clearly defined career path for associates

Project management has little or no authority

Team members report to only one manager Grouping of associates based on skill sets

Projectized Structure The structure of a projectized organization is based simply on the projects the organization executes (Figure 2.10). It follows that project managers have complete responsibility over all projects assigned to them. They are provided complete authority to define priorities, use resources, and direct and monitor work. In projectized structures, team members are often colocated, that is, they work in the same work area. Most of the organizational resources are spent on projects, meaning that the organization specializes in project management and not operations. Such an organization has units reporting directly to the project manager.

Advantages of Projectized Structure

Disadvantages of Projectized Structure

More effective communication across all stakeholders regarding project

Team members need to search for new projects when the project they are working on has been completed.

Dedicated attention to projects

Resources are streamlined only for the given project and not for the competencies they belong to

More control over projects

Resources may be spent on overheads rather than used for growth of a core competence in a particular business area (functional)

Matrix Structure The matrix structure effectively combines the best attributes of the functional and the projectized structures (Figure 2.11). A complex project is generally best served by a matrix structure. In

The Contexts of Project Management

• 47

CEO

Program A Manager

Project Manager

Project B Manager

Project Manager

Staff

Figure 2.10 Structure of a projectized organization a matrix-structured organization, the role of a project manager is more that of a coordinator or an expediter; for example, in such an organization, the functional manager takes responsibility for personnel performance and project performance measurements rather than the project manager. A project expeditor basically acts as a staff assistant to an executive who is ultimately responsible for the project. In a matrix-structured organization, team members report to both their functional managers and project managers. Effective management of this dual relationship—a responsibility of the project manager—is critical to overall organizational efficiency. Thus, matrix structures require exact and extensive role definition. Also, team building in a matrix-structure organization is often difficult because of the dual reporting structure. Matrix-structured organizations may themselves be classified on the basis of the three types of matrix structures: strong matrix, weak matrix, and balanced matrix (Figures 2.12–2.14). Advantages of Matrix Structure

Disadvantages of Matrix Structure

Highly visible project objectives

More than one reporting authority for team members

Improved project-manager control over resources

Requirement for detailed policies and procedures

Better coordination among team members

Higher potential for conflict due to dual reporting structure

CEO

Program A Manager

Project Manager

Project Manager

VP Marketing

Staff

Figure 2.11 Structure of a matrix organization

48 • PMP® Certification—Excel with Ease

CEO

VP Marketing

Staff

Staff

VP Finance

Program Manager

Staff

Project Manager

Project Coordination

Figure 2.12 Structure of an organization employing a strong matrix

CEO

VP Marketing

Staff

VP Finance

Staff

VP Procurement

Staff

Staff

Project Coordination

Figure 2.13 Structure of an organization employing a weak matrix

CEO

VP Marketing

Project Manager

VP Finance

Staff

Staff

VP Procurement

Staff

Project Coordination

Figure 2.14 Structure of an organization employing a balanced matrix

The Contexts of Project Management

• 49

Strong Matrix In organizations with strong matrix structures, project managers have greater authority or right to command than functional managers. Such organizations closely resemble those with projectized structures and have full-time project managers and full-time administrative staff for projects. Weak Matrix In organizations with weak matrix structures, project managers do not have as much power as functional managers. In a weak matrix, the role of a project manager might be more that of a project expediter or project coordinator, and, as a matter of fact, no official designation as “project manager” exists. The project expediter acts primarily as a staff assistant and communications coordinator and is not authorized to make or enforce decisions, whereas the project coordinator has moderate decisionmaking powers and reports to a higher-level manager. Balanced Matrix In organizations with balanced matrix structures, the powers of the project manager and the functional manager are about equal and in balance. Here, although the need for project managers is recognized, the project manager is not provided full authority over the project and project funding. PMP WATCH A projectized organizational structure affords high authority for project managers in project execution.

Matrix of Authority of Project Manager Versus Organizational Structure* Functional

Weak Matrix

Balanced Matrix

Strong Matrix

Projected

Project manager authority

Little or none

Limited

Low to moderate

Moderate to high High to total

Control over resource availability

Little or none

Limited

Low to moderate

Moderate to high High to total

Influence over project budget

Functional manager

Functional manager

Mixed

Project manager

Project manager

Project manager role

Part time

Part time (expeditor/ coordinator)

Full time

Full time

Full time

Role of project staff

Part time

Part time

Part time

Full time

Full time

Grouped by

Area of specialization

Mix

Organized by project

Communication channels

Request to departmental head and then to other departments and back

Team member to two reporting authorities

Within project

*A tight matrix structure is one wherein all team members involved are brought together in one location to solve a particular problem.

50 • PMP® Certification—Excel with Ease

Exercise 2.3

Classify below activities as “Projectized,” “Functional,” “Weak Matrix,” or “Strong Matrix” Project manager has high authority No home for team members Project manager acts a as project coordinator Mostly like functional organization

ORGANIZATION PROCESS ASSETS Organization process assets (OPAs) are assets of an organization involved in project implementation that can be used to influence project success (see Figure 2.15). Updating OPAs is generally the responsibility of the project team members as only they would have the complete details of the work they do including that of technical artifacts. The project management team’s first and foremost activity is to look for information regarding similar kinds of projects executed in their organization. If the project is entirely new, then they need to collect information regarding similar projects from other sources. OPA is an outcome of this. OPA keeps growing as the organization becomes larger. It is obvious that we need not have to remake something that is already available to us. OPA is being used as inputs for almost all processes, planning related processes in particular. These processes are: Develop Project Charter, Identify Stakeholders, Develop Project Management Plan, Define Scope, Create WBS, Define Activities, Sequence Activities, Estimate Activity Resources, Estimate Activity Durations, Develop Schedule, Estimate Costs, Determine Budget, Plan Quality Management, Plan Human Resource Management, Plan Communications Management, Plan Risk Management, Identify Risks, Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, Plan Procurement Management, Direct and Manage Project Work, Acquire Project Team, Manage Project Team, Manage Communications, Manage Stakeholder engagement, Conduct Procurements, Monitor and Control Project Work, Perform Integrated Change Control, Control Scope, Control Schedule, Control Costs, Control Quality, and Close Project or Phase. Some processes have one of their output as updates to the Organizational Process Assets These processes are: Perform Quality Assurance, Manage Project Team, Manage Stakeholder engagement, Control Scope, Control Schedule, Control Costs, Control Quality, Control Risks, Control Procurements, Close Project or Phase, and Close Procurements. OPA is not only being updated at the end of the project, it is being updated continuously by the project team at various stages.

Procedures Knowledge Base

Process

OPA

Figure 2.15 The process assets of an organization

The Contexts of Project Management

• 51

OPAs are grouped into two categories: 1. Processes and procedures 2. Project knowledge base—knowledge repository where filled-in templates and other data are available Examples of process assets include formal and informal plans, procedures, processes, guidelines, “lessons learnt,” and historical information. Generally, OPAs appear on an organization’s intranet site, so that team members can refer the procedure or process easily. Such an intranet may also carry filled-in templates and documents from other projects for reference. [Many organizations call this intranet site a QMS (quality management system) site. Does your organization have a QMS site? If it does, what are its contents?]

WORK PERFORMANCE DATA PMBOK 5 defines work performance data as the raw observations and measurements identified during activities being performed to carry out the project work. Examples: 1. 2. 3. 4.

Percentage of work completed Actual cost spent Number of defects from a phase Start and end dates of a phase

WORK PERFORMANCE INFORMATION Work performance data collected is analyzed in context to infer information from it based on its relationship. This is called as work performance information (WPI). Examples: 1. 2. 3. 4.

Schedule variance Cost variance Estimate at complete (EAC) Estimate to complete (ETC)

WORK PERFORMANCE REPORTS It is the physical or electronic representation of work performance information compiled in a logical fashion to infer the overall status of the project, which helps to take decisions or actions. Examples: 1. Weekly status reports 2. Project justifications Discussion Points 1. Which organization structure would you as a project manager prefer to work with? Why? 2. Have you worked in all the organizational structures described here? If so, what are the challenges to effective goal attainment you faced? 3. If you are a functional manager in a functionally structured organization, how would you ensure that the morale of project managers remains high?

52 • PMP® Certification—Excel with Ease

Summary This chapter has discussed project life cycle and its characteristics, organizational influence on project management, and types of organizational structures. Answers to Exercise Questions Exercise 2.1 Answers 1.

Waterfall model

2.

Spiral model

3.

V model

4.

Iterative model

5.

RUP model

Exercise 2.2 Possible answers Better control over resources Better control over cost Better control over scope and risks Easier to identify current stage of project Better control over organizational effort to meet client expectation Exercise 2.3 Answers Project manager has high authority

Projectized

No home for team members

Projectized

Project manager acts as a project coordinator

Weak Matrix

Organizational structure resembles that of a functional organization

Weak Matrix

Chapter 2 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. You along with three project managers discuss the factors determining the number of phases in their projects. All of the following determine the number of phases in a project life cycle except

A. B. C. D.

the nature of the project. the area of application of the project the control needs of the organization. stakeholder interest.

The Contexts of Project Management

Question 2. A peer project manager of yours told you that “every project has a definite start date and a definite end date, and the specific deliverables and activities that take place in between will vary widely with the project.” Is it true? A. False B. True Question 3. Four project managers discuss project life cycles. Which of the following of their statements is not true? A. A project life cycle is a collection of generally sequential and sometimes overlapping project phases. B. A project life cycle provides a basic framework for managing the project regardless of the specific work involved. C. A project life cycle can be determined by the unique aspects of the organization. D. A project life cycle is a collection of sometimes sequential and generally overlapping project phases. Question 4. A generic life cycle is often referred to when communicating with upper management. A. True B. False Question 5. You are about to send a status report on a project to upper management, and you refer to the generic life cycle of the project for understanding the status of the project. Following are the phases of the general life cycle structure except A. starting the project. B. organizing the project. C. reporting the project. D. closing the project. The generic phases of a project life cycle structure are starting the project, organizing and preparing, carrying out the project work, closing the project. Question 6. You are about to send a status report on a project to upper management, and you refer to the generic life cycle of the project for understanding the status of the project. The general life cycle structure shows the characteristics of all except one the following:

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A. Cost and staffing levels are low at the start. B. Cost and staffing levels drop rapidly as the project nears completion. C. Stakeholder influence is lowest at the start of the project. D. Stakeholder influence is greatest at the start of the project. Question 7. You have a dis c ussion with your colleague about the final characteristics of a product. The ability to influence the final characteristics of a product without significantly impacting the outcome of the project is low at the start of the project. A. True B. False Question 8. You are discussing with your team members about the different product life cycle phases of a new product to be developed. The last product life cycle phase for a product is generally the A. B. C. D.

product’s retirement. product’s launch into market. product’s peak consumption level. product’s steady state.

Question 9. Different people have different opinions about project life cycles and product life cycles. People generally confuse between the two. One of your colleagues argues that project life cycle occurs in one or more phases of a product life cycle. Is it true? A. True B. False Question 10. One product may have many projects associated with it. A. True B. False Question 11. All of the following is not false except that A. project phases are typically completed sequentially. B. project phases can overlap in some situations. C. a project phase is a project management process group. D. all phases have almost similar characteristics.

54 • PMP® Certification—Excel with Ease Question 12. The end of a phase can be called by all of the below names except A. B. C. D.

milestone. stage gate. kill point. birth point.

Question 13. You are about to call for a management review as the design phase is to be started without completion of the requirement analysis phase. A management review is often held to start a phase, particularly when the previous phase is not yet complete. A. True B. False Question 14. You are about to call for a phase end review as the requirement analysis phase is almost over and the design phase is to be started. Various factors to take the project forward were discussed. Which of the following is false regarding that? A. A formal phase completion does not necessarily include authorizing the subsequent phase. B. A phase end review can achieve the combined goal of authorizing the close of the current phase and the start of the next phase. C. A review of both key deliverables and performance determines if the project should continue to the next phase. D. A review of deliverables alone determines if the project should continue to the next phase, as customer requires only the deliverable. Question 15. You are discussing with team members about the next two phases of a project. Different people suggest different relationships because of various reasons. Following are the types of phase-tophase relationships possible between two phases except A. sequential relationship. B. overlapping relationship.

C. iterative relationship. D. logical relationship. Question 16. The following techniques are used in fast tracking A. B. C. D.

Sequential relationship Overlapping relationship Iterative relationship Logical relationship

Question 17. Which of the following relationship types increases risks in a project? A. B. C. D.

Sequential relationship Overlapping relationship Iterative relationship All increase risk

Question 18. Which of the following relationship types would be used in rapidly changing environment? A. B. C. D.

Sequential relationship Overlapping relationship Iterative relationship Logical relationship

Question 19. All three types of relationships between phases can occur in a single project itself. A. True B. False Question 20. All of the following determine the relationship between the phases except A. B. C. D.

effectiveness. degree of uncertainty. level of control required. cost of each phase.

Question 21. Projects and operations share all except one of the following characteristics. A. Performed by individual(s) B. Both have objectives C. Both are planned, executed, and controlled D. Both are temporary in nature Question 22. Operations are not terminated when their objectives have been met. A. True B. False

The Contexts of Project Management

Question 23. All except one of the following statements are true. Which one? A. Operations support the business environment where projects are executed. B. Projects and operations interact with each other in an organization. C. Project deliverables may modify or contribute to existing operations. D. Team members from regular operations cannot work with project team members. Question 24. A l l e xc e pt one of t he fol l ow i ng statements are false. Which one? A. The project management team must identify both internal and external stakeholders. B. Stakeholder influence will not vary in a project as they have common objectives. C. The responsibility levels of stakeholders are always high in a project. D. Stakeholder identification takes place only in the beginning of a project. Question 25. Stakeholders often have different and conflictive objectives. A. True B. False Question 26. A PMO (project management office) in an organization performs all except one of the following functions. Which one? A. Training, mentoring, and coaching project managers B. Project support and guidance C. Administrative support services D. Project selection decision Question 27. Organizational structure can affect the availability of resources. A. True B. False Question 28. Organizational structure can influence how projects are implemented. A. True B. False

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Question 29. A project manager’s role is part-time in which type of structure? A. B. C. D.

Functional matrix Functional and weak matrix Balanced structure Strong matrix

Question 30. A functional manager controls project budget in which type of organization structure? A. B. C. D.

Projectized structure Weak matrix Balanced structure Strong matrix

Question 31. A balanced matrix structure recognizes the need of the project manager. A. False B. True Question 32. In a balanced matrix structure, a project manager reports to A. B. C. D.

a program manager. a functional manager. another project manager. another staff member.

Question 33. Which of the following statements describes the relationship between project phases and the project life cycle? A. The project life cycle repeats inside a project phase. B. Collectively project phases are known as a project life cycle. C. The project life cycle is a sequence of project activities whereas project phases are defined to control the overlapping of activities. D. The project life cycle contains the repetitive elements inside a project phase. Question 34. A complex project will fit best in what type of organization? A. B. C. D.

Functional Projectized Matrix Balanced

56 • PMP® Certification—Excel with Ease Question 35. In a weak matrix organization, functional managers are usually responsible for A. monitoring personnel performance. B. approval of project schedule changes. C. monitoring their project team member’s deliverables. D. changes that impact their team member’s participation. Question 36. You have been promoted as “Manager, Kaizen.” Which of the following is true? A. It is not a project as work will be performed by people only. B. It is not a project because continuous process improvement will continue indefinitely. C. It is a project because it is constrained by limited resources. D. It is a project because improvements must be planned, executed, and controlled. Question 37. At what stage in the project life cycle would costs be lowest? A. B. C. D.

Concept Development Implementation Closeout

Question 38. In which project stage would stakeholders have maximum influence over project outcomes? A. B. C. D.

Development Implementation Concept Closeout

Question 39. Stage gates are used for what purpose? A. To plan the next activity in a project B. To measure earned value C. To determine if the project should continue to the next phase D. To communicate milestones to the customer Question 40. Project stakeholders are A. team members. B. entities who are actively involved in the project, or those whose interests may be positively or negatively

affected by the result or successful completion of the project. C. the project manager and the project sponsor. D. those who actively work on the project. Question 41. The project life cycle A. defines and determines the product life cycle. B. has distinct phases that are almost the same for all projects. C. defines what work should be done in phases individually. D. has toll gates that must be “opened” before moving onto the next phase. Question 42. Which of the following is a common characteristic of most project life cycle descriptions? A. Staffing levels are low at the start, higher toward the end, and drop rapidly as the project nears completion. B. The probability of success is more at the start of the project. C. Stakeholders have highest influence on the final characteristics of the product as the project nears completion. D. A and B Question 43. A tight matrix refers to which of the following: A. A balanced matrix organization. B. Team members are brought together in one common location. C. A functional matrix organization. D. A and C. Question 44. Projects are authorized typically as a result of any of the following except A. B. C. D.

market demand. successful RFQ bidding. regulatory requirement. technological advance.

Question 45. In which type of organizational structure is team building likely to be most difficult? A. B. C. D.

Functional Projectized Matrix Weak matrix

The Contexts of Project Management

Question 46. Who are usually responsible for portfolio management within an organization? A. B. C. D.

Project managers Project sponsors Stakeholders Senior management

Question 47. In a matrix organization, a project manager’s estimate of human resource requirements would be forwarded to A. B. C. D.

senior management. the functional manager concerned. the team. the project sponsor.

Question 48. Organizational culture and style are typically known as A. B. C. D.

style norms. cultural norms. organization norms. project norms.

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Question 49. Which of the following statements is not true? A. In a strong matrix organization, project managers have little or no formal authority. B. Project managers have moderate level of authority in a balanced matrix organization. C. In a weak matrix, conflicts between functional and project managers are commonly seen. D. Project managers have high authority in a projectized organization. Question 50. Who is assigned the most power in a projectized organization? A. The project team B. project coordinator C. The project manager D. The functional manager

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Answer Sheet for Chapter 2 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

The Contexts of Project Management

Answers for Chapter 2 Questions

Question Number Question 1

Answer D

Question Number Question 26

Answer D

Question 2

B

Question 27

A

Question 3

D

Question 28

A

Question 4

A

Question 29

B

Question 5

C

Question 30

B

Question 6

C

Question 31

B

Question 7

B

Question 32

B

Question 8

A

Question33

B

Question 9

A

Question 34

C

Question 10

A

Question 35

A

Question 11

C

Question 36

B

Question 12

D

Question 37

A

Question 13

A

Question 38

C

Question 14

D

Question 39

C

Question 15

D

Question 40

B

Question 16

B

Question 41

C

Question 17

B

Question 42

A

Question 18

C

Question 43

B

Question 19

A

Question 44

B

Question 20

D

Question 45

C

Question 21

D

Question 46

D

Question 22

A

Question 47

B

Question 23

D

Question 48

B

Question 24

A

Question 49

A

Question 25

A

Question 50

C

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60 • PMP® Certification—Excel with Ease

Explanations for Chapter 2 Answers 1. Answer D Factors determining the number of phases in a project lifecycle are (Note Requirement Analysis, Design, Coding etc are Phases) the nature of the project, the area of application of the project and the control needs of the organization. It is not based on stakeholders interest (Option D). 2. Answer B Every Project has a definite start date and end date (temporary) and specific set of deliverables executed by a set of activities. Activities will vary widely with the project. It is a TRUE statement and hence Option B is the right answer 3. Answer D We need to choose the FALSE Option. A Project Lifecycle is a collection of generally sequential and sometimes overlapping project phases (Option A). A Project lifecycle provides basic framework for managing the project regardless of the specific work involved (Option B). A Project lifecycle can be determined by the unique aspects of the Organization (Option C). Option D is false (It is just opposite to what is stated in Option A) 4. Answer A A generic lifecycle is usually referred when communicating with upper management. (Upper management reports needs to be clear with basic minimal details which are at the generic lifecycle) 5. Answer C The Generic phases of a project lifecycle structure are Starting of the Project (Option A), Organizing and preparing (Option B), Carrying out the work, Closing the Project (Option D). Reporting the Project (Option C) is not part of the generic lifecycle and hence, it is the answer. 6. Answer C We need to choose the FALSE statement. Stakeholder influence is greatest at the beginning of the project (Option D). Cost and staffing levels are low at the start (Option A). They are at the peak during the Execution phase of the Project. It drops rapidly towards the end of the Project (Option B).

7. Answer B The ability to influence the final characteristics of the product without significantly impacting the outcome is highest at the start of the Project and decreases as the project moves towards completion. 8. Answer A Product launch, product’s peak consumption level, product’s steady state and Product retirement are the stages. The last phase is called as Product retirement (Option A). 9. Answer A Project lifecycle occurs in one or more phases of a product Lifecycle. One product can have more than one project associated with it. 10. Answer A Project lifecycle occurs is one or more phases of a product Lifecycle. One product can have more than one project associate with it. A number of separate projects may be related with the development of a product (Example a new car). Development of the car may have many projects associated with it. 11. Answer C Rephrase the question to “All of the following are TRUE, except”. In other words, choose the FALSE option. Project Phases are typically completed sequentially (Option A is TRUE). Project phases can overlap in some situations (Option B is TRUE). All phases have almost similar characteristics (Option D is TRUE). Project phases are different, process groups are different and hence, Option C is FALSE. 12. Answer D The end of a phase is called as milestone, Stage gate or Kill point. 13. Answer A A Management review is often held to start a phase of the project, in particular when the previous phase is not yet completed.

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14. Answer D A formal phase completion does not necessarily include authorizing the subsequent phase (Option A). A phase end review authorizes closure of the current phase and start of the next phase (Option B). Review happens to both the deliverables and performance (Option C).

21. Answer D Project and Operations are performed by people; both are planned, executed and controlled. Both have problems associated with limited resource and both have their own objectives. A Project is temporary in nature but Operation is ongoing and repetitive.

15. Answer D Relationship between various phases is Sequential relationship, Overlapping relationship, Iterative relationship. There is no relationship called as logical relationship (Option D).

22. Answer A A Project is terminated once all its objectives are met. Operations are not terminated when their objectives have been met.

16. Answer B Relationship between various phases may be listed as Sequential relationship, Overlapping relationship and Iterative relationship. An overlapping relationship is used in a scheduling compression technique called Fast Tracking. Overlapping relationship increases Risk in a project. 17. Answer B Relationship between various phases may be listed as Sequential relationship, Overlapping relationship and Iterative relationship. An overlapping relationship is used in a scheduling compression technique called Fast Tracking. Overlapping relationship increase Risk in a project. 18. Answer C Relationship between various phases may be listed as Sequential relationship, Overlapping relationship and Iterative relationship. Iterative relationship is used in rapidly changing environment. 19. Answer A Relationship between various phases may be listed as Sequential relationship, Overlapping relationship and Iterative relationship. All three types of relationship can occur in a single project itself. 20. Answer D Relationship between various phases may be listed as Sequential relationship, Overlapping relationship and Iterative relationship. Relationships between phases are determined by effectiveness, degree of uncertainty and level of control required.

23. Answer D As a matter of fact, team members from regular operations work closely with the project team members and hence, Option D is the Answer. Projects and operations interact with each other during execution and even after execution. 24. Answer A The Project management team must identify both internal and external stakeholders. Stakeholders influence will vary over the project Lifecycle. Stakeholder identification is a continuous process. 25. Answer A Stakeholders have often conflictive Objectives. 26. Answer D Project selection decision is taken by the portfolio manager and not by the PMO. PMO does Training, Coaching, and Project support. 27. Answer A Organization structure affects the availability of resources. In a functional structure, the functional manager is responsible for allocation of resources, whereas in Projectised structures, the Project manager is responsible for it. 28. Answer A Organization structure affects the availability of resources. Organization Structure can influence how projects are implemented. 29. Answer B Although Answer A may also be correct, in both the functional and weak matrix structure, the role of a project manager is part-time. Hence, Answer B would be the better Answer. 30. Answer B The functional manager controls project budget in functional and weak matrix structure.

62 • PMP® Certification—Excel with Ease 31. Answer B A balanced matrix structure recognizes the need for the project manager but does not provide the project manager full authority. 32. Answer B A balanced matrix structure recognizes the need for the project manager but does not provide the project manager full authority. In balanced matrix the project manager reports to a functional manager. 33. Answer B Collectively, project phases are known as project lifecycle. A Project lifecycle is divided into phases for effective implementation. 34. Answer C The matrix structure is the most flexible of all organizational structures. Complex project is best fit into matrix structure. 35. Answer A In a weak matrix, functional managers monitor personnel performance while project managers monitor project performance. 36. Answer B Kaizen means continuous improvement. Continuous process improvement is designed to continue indefinitely. It refers to repeated identification and attainment of objectives; once one of the objectives has been met, another objective is set, and the improvement process continues. 37. Answer A The Concept or Initiation phase comprises only those activities that initiate a project. Hence, the costs are generally lowest in this phase of the project. We will spend more money in the execution phase of the project. 38. Answer C In the Concept phase, project requirements remain largely undefined. The Project team depends rather heavily on project stakeholders. In the beginning the stakeholders will have high influence.

or negatively affected by the result or successful completion of the project. 41. Answer C A Project lifecycle consists of project phases that define the activities to be done in each phase of the project. 42. Answer A Staffing level is low at the beginning peaks during the execution and again it goes down. It drops rapidly as the project nears completion. 43. Answer B Tight matrix refers to where team members are brought together in one common location 44. Answer B Market demand and leg, technological requirements act as a strategic influence to initiate a new project. Successful RFQ Bidding is not the right option. 45. Answer C Team building is likely to be difficult in a matrix structure because it has dual reporting relationship. 46. Answer D Project managers may not get assigned at the portfolio stage and hence senior management is responsible for it. In other words, portfolio management is the responsibility of the senior management. 47. Answer B In a matrix organization, team members report directly to their functional manager, the project manager being responsible for project execution alone. 48. Answer B Organization cultures and styles are collectively known as cultural norms.

39. Answer C Stage Gate refers to the ‘Gates’ that need to be open for the project to proceed to the next phase.

49. Answer A Project managers have high authority in strong matrix; it is comparable to Projectised structure.

40. Answer B Project stakeholders are entities who are involved in the project or whose interests may be positively

50. Answer C Project managers have high authority in Projectised structure.

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Key Terms Cultural fitment It is otherwise called as cultural quotient (CQ), is the ability to cope with national, corporate, and vocational cultures. Functional structure The structure of a functionally structured organization is based on the functions performed by each component of the organization Iterative relationships In projects whose phases bear an iterative relationship with each other, at any given point in time, implementation of only one phase is planned, and if required, the same phase is executed again, depending on outcomes. Matrix structure The matrix structure effectively combines the best attributes of the functional and the projectized structures. Organization process assets OPAs are assets of an organization involved in project implementation that can be used to influence project success Overlapping relationships Projects whose phases bear an overlapping relationship with each

other, a subsequent phase starts even before implementation of its immediately preceding phase is complete. Project life cycle The project life cycle provides the basic framework for managing a project, regardless of the specific work involved. In general, a project life cycle refers to a logical sequence of activities undertaken to accomplish goals or objectives. Sequential relationships In projects whose phases bear a sequential relationship with each other, a subsequent phase starts only when the implementation of its immediately preceding phase is complete. Stakeholder A stakeholder is a person, a group, or an organization that is actively involved in the project or whose interests may be positively or negatively affected by the results achieved by or the completion of the project.

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Project Integration Management CHAPTER COVERAGE 1. Project Management Processes 2. Process Group Interactions 3. Project Charter 4. Project Management Plan 5. Work Authorization System 6. Work Performance Information 7. Expert Judgment 8. Project Execution

3

PROJECT MANAGEMENT PROCESSES Management processes are grouped into five categories known as project management process groups (or process groups): 1. 2. 3. 4. 5.

Initiating Planning Executing Monitoring and controlling Closing

We will now define these five process groups, which will be elaborated upon later in this chapter Figure 3.1 (a) shows the relationship between the process groups and the feedback and process loops among them.

Initiation The initiation process group, as the term implies, occurs at the beginning of a project or phase. Initiation phase actually sets the vision of the project stating what is needed to be accomplished. Project life cycle phases (RA, design, coding etc.) are actually determined in the initiation stage of the project. Initiation occurs at the beginning of the project and also at each project life cycle phases like requirement gathering phase, design phase, coding phase etc. Initiating each phase helps to keep the project focused on the actual business need for which it was undertaken. The initiation phase identifies all the stakeholders (both internal and external) who will be working on this project; importantly, the project manager is identified in this stage. This phase also gives the visibility to the stakeholders in terms of what is being expected from them. They also come to know about the project objectives, high level plan,

66 • PMP® Certification—Excel with Ease

Process Groups Initiating

Planning

Monitoring and Controlling

Executing

Closing

Figure 3.1 The five process groups and the feedback and process loops among them

Initiation

Planning

Closing Process Groups

Monitoring and Controlling

Executing

Figure 3.1a Process groups

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schedule etc. Involving stakeholders during initiation generally improves the probability of success of the project, creates shared ownership among all. In general, we do kick off and this helps to get aligned with the expectations of all the stakeholders involved in the project. The initial scope of the project/phase is defined and initial financial resources are committed, which helps to start the project or phase. The scope of the project defined here need not be an elaborate and detailed one; it needs to be just enough to initiate the particular project/phase. The project charter is created and the project becomes officially authorized only after the project charter is signed. The main outcomes of the initiation phase are the 1. identification of the project manager for the project. 2. formal assignment usually through a project charter. 3. allotment of funds, mostly external to project boundaries. Discussion Points Why the initiation process is necessary for a project? What are the possible pitfalls of not performing this process?

Planning The planning process group collates project requirements, identifies project metrics, and identifies stakeholders. This process group helps to refine the objectives of the project set in the initiation process group. The main output of the planning process group is the project management plan, which explores all aspects of the scope, time, costs, quality, communication, human resources, risk, and procurements. This process group defines the total scope of the project, strategy and tactics and the efforts required to achieve the project objective. Planning process group is a continuous group that is executed throughout the lifecycle of the project. There is no end to the planning; we cannot say that planning has been completed at any stage of the project. The plan is fine tuned/changed continuously as and when more information and clarity arrives. This is called as progressive elaboration. Successful Execution of project depends on the planning process group.

Executing The executing process group executes project plans as defined in the planning process groups. The executing process group consists of those processes performed to complete the work and are defined in the project management plan as an outcome of the planning process group. In order to execute the defined plan, it coordinates various people and resources. During the execution, the plan will get fine tuned and updated, if required. At any point of time the execution should be in line with the planning. The executing process group is characterized by the following: 1. This process consumes a majority of project time and resources. 2. Project costs incurred are highest during execution. 3. The execution process assumes great significance in the context of successful project completion per plan. However, the probability that the approved plan may change is highest during execution.

68 • PMP® Certification—Excel with Ease PMP WATCH What actions will help project successful completion? 1. Select appropriate processes required to meet the project objectives 2. Use a defined approach that can be adopted to meet requirements 3. Comply with requirements 4. Balance the competing demands of scope, time, cost, quality, risks, and resources

Monitoring and Controlling Controlling refers to periodic checks on processes and in-process products to monitor project performance, analyze deviations, and implement corrective action to align project activities with the project plan. The key benefit of this process group is that project performances are analyzed at periodic intervals to identify variances if any, from the project management plan. The following are the tasks associated with the Monitoring and Controlling process group: • • • • • • • • • •

Monitor the project activities in line with the project management plan Conduct status review meetings Ensure project deliverables conform to quality standards Recommend preventive action, take corrective actions if required Identify issues and problems Identify root causes of a problem Verify and manage changes to the project Control changes which are happening in the project Influence factors necessitating the changes Ensure that only approved changes are implemented

PMP WATCH The planning process group has the most number of processes—about 20—because other process groups are planned in this process group. Planning processes are executed iteratively as planning is a task that is performed from the beginning to end of a project.

Closing The closing process finalizes all activities across all process groups. It gathers complete project information and stores the same for future reference. Stakeholders approve formal closure of the project. This is the last process group and the simplest of all the process groups. Documentation of the best practices, lessons learnt and archival of the project artifacts happens in this process group. It also gives clear signal to the resource manager to re-assign the resources to other projects. It is essential to complete the closing process at the conclusion of a project even if the project is prematurely terminated. Prematurely terminated projects include aborted projects, cancelled projects, projects in exception, etc.

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PROCESS GROUP INTERACTIONS The five process groups discussed in preceding text are iterative and integrative in nature. Because processes in one phase are related to those in another—change in one process affects another—all processes over all phases require integration. Figure 3.2 shows how the process groups overlap over time; hence the term integrative. By iterative, we mean that these processes would be executed several times during the project life cycle (see Figure 3.3). This repeated execution is employed to obtain complete compliance of project outcomes to project requirements inside a phase. Figure 3.3 explains how project management process groups are being executed within a single phase. At the phase start we “initiate” the phase and at the phase end we “close” the phase using the “closing process.” After initiation of a phase, planning and execution processes are carried out repeatedly. “Controlling processes” are executed from the beginning to the end of the phase. To conclude, there are 5 process groups and they are initiation, planning, executing, monitoring and controlling, and closing. (Refer Figure 3.1) We have overall 10 knowledge areas, namely, integration management, scope management, time management etc. as shown in Figure 3.4 We have overall 47 processes defined. Let us learn the processes one by one, going through each knowledge area. To start with, let us learn the first knowledge area, namely, Integration Management and the corresponding process associated with it. Initiating Process Group

Planning Process Group

Phase start

Executing Process Group

Monitoring And Control Process Group

Closing Process Group

Phase end

Time

Figure 3.2 The five overlapping process groups Executing Process Level of Activity

Planning Process

Planning Process

Phase Start

Planning Process Controlling Process

Initiating Process

Time

Executing Process

Executing Process

Closing Process

Phase Finish

Figure 3.3 The repeated execution of processes within a process group

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PROJECT INTEGRATION MANAGEMENT Integration management is an important factor in successful project completion and includes processes and activities that are primarily integrative. “Project Integration Management” is one of the ten knowledge areas defined. See Figure 3.4. As the name suggests, it integrates all the knowledge areas (scope management, time management etc). The number inside each circle indicates the number of processes in that knowledge area. For example: Scope Management (6) indicates there are six processes in Scope Management knowledge area. Cost Management (4) indicates there are four processes in Cost Management knowledge area. Project integration management consists of the following process: 1. 2. 3. 4. 5. 6.

Develop project charter Develop project management plan Direct and manager project work Monitor and control project work Perform integrated change control Close project or phase

It facilitates coordination of project and operations. Project integration management is the process of ensuring that the various aspects of a project are coordinated effectively with each other to facilitate

Scope Management (6) Time Management (7)

Stakeholder Management (4)

Communication Management (3)

Integration Management(6)

Cost Management (4)

Quality Management (3)

Procurement Management (4)

Risk Management (6)

HR Management (4)

Figure 3.4 Knowledge Areas

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optimization of costs and performance. In the project management context, integration refers to the characteristics of unification, consolidation, articulation, and integrative actions that are crucial to project completion, meeting of customer and other stakeholder requirements, and managing stakeholder expectations.

Unification Unification means coming together for achieving a purpose. Initiation of the project indicates that different groups come together to form a team. As a team, they have a common objective. A project cannot be executed in an isolated environment. It needs the help of different teams like HR, finance, travel, etc and without them it is almost impossible to execute the project and we need to call them for unification meeting in the beginning of the project. Unification also means consolidations, integrative actions.

Project Integration Process Group

Project integration management processes

Initiation

Develop project charter

Planning

Develop project management plan (i.e., overall plan)

Executing

Direct and manage project work

Monitoring and Controlling

Monitor and control project work, and perform integrated change control

Closing

Close project or phase

Discussion Points 1. What did you do as an integrator in your previous project? 2. What are the difficulties you faced as an integrator?

Table 3.1 Develop Project Charter – Initiating Process Group Initiating

Planning

Executing

Monitoring and Controlling

Closing

Develop Project Charter

Develop Project Management Plan

Direct and Manage Project Work

Monitor and Control Project work

Close Project or Phase

Perform Integrated Change Control

72 • PMP® Certification—Excel with Ease

Develop Project Charter The project initiation process lays the foundation for the planning process that follows initiation. Initiation may be performed by a process—external to the project—belonging to a program or a portfolio of which the project forms a part. A feasibility study, again, a process external to the project, clearly defines project objectives and metrics. The output documents of a project initiation process are the project charter, a list of project constraints and assumptions, and the stakeholder register. PMP WATCH Internal and external stakeholders, entities that influence and are affected by the outcome of a project, are identified in the initiation process group. Also, a project manager is assigned to the project, if it has not happened already. For large and complex projects, initiation processes are carried out in the individual phase level to validate the project charter and stakeholder register. It is also used to kick-start each phase.

Project Charter A project comes into existence—goes live—with the creation of a project charter. The latter is a formal document that authorizes the project. A project charter 1. formally authorizes the project or phase. 2. documents initial requirements that satisfy stakeholder needs and expectations. 3. is used in multiphase projects to validate or refine decisions made during previous iterations of developing project charter. Contents of a project charter A project charter is an important document that defines justifies the business needs of the project, the project requirements and boundaries, and identifies stakeholders. Figure 3.5 summarizes the input components and processes that lead to the generation of a process charter.

Inputs Contract (when applicable): Contract is an input if the project is being executed for an external customer.

Inputs Project Statements of Work Business Case Contract Enterprise Environmental Factors Organizational Process Assets

Tools and Techniques Expert Judgment

Outputs Project Charter

Figure 3.5 Develop project charter

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The statement of work (SOW): This is the document given to the vendor by the customer. This explains how the customer wants the vendor to execute the project. It basically contains the narrative description of the products or services to be delivered as an outcome of the project. SOW is provided by the customer along with the request for proposal (RFP) document. Next time before you start the project, please ensure that you have the SOW document of the project. SOW helps the vendor (executing organization) to serve the customer best. The SOW references: 1. Business Need: Why the customer is doing the project; whether it is based on market demand/ legal requirement/technological advance etc. 2. Product Scope description: This is the main content of SOW which describes the characteristics of the product. The product requirements will generally have less detail during the initiation process. 3. Strategic Plan: It describes the organization’s strategic goals. Business case: It provides the necessary information from a business point of view to determine whether the project is worth the required investment. Business need and the cost benefit analysis are the contents of the business case document. Customer provides the business case document. Enterprise environmental factors (EE Factors): The factors that surround and influence the project’s success are to be considered as an input to develop the project charter. This includes (but is not limited to) • • • • • •

Organizational culture Organizational Structure Infrastructure facilities Industry Standards (if any) Market Conditions Project Management Information Systems (PMIS)

Organizational process assets (OPA): OPA factors that influence the project’s success are to be considered as an input to develop the project charter. This includes (but is not limited to) • Organizational Procedures (financial controls procedures, defect management procedures, risk control procedures etc) • Organizational policies • Organizational process (what standards already available) • Organizational templates (charter template here) • Historical information (completed schedules, EV, risk data etc) • Lessons learnt knowledge bas Expert judgment is the best tools technique for creating project charter. An experienced person can write a powerful but simple project charter. Expert judgment helps to evaluate the inputs of this

74 • PMP® Certification—Excel with Ease

Organization Strategic Goals

Project Charter Project Name: Date: Point of Contact: Project Objectives

Milestone Name

Milestone Date

Summaryof Scope Statement

Project Resource Details

Project Assumptions

Project Constraints/High level Risks

Summary Budget

Figure 3.6 Project Charter Template process clearly; it helps to assess the business case of the project and statement of work of the project. Hence, anybody who understands the business purpose of the project can be considered as an expert judge. An example of project charter is given below (Figure 3.6). The following list shows the purpose and salient features of a project charter: 1. Requirements that satisfy customers, sponsors, and other stakeholder needs, wants, and expectations are documented. 2. Business needs and high-level project description or product requirements are documented. 3. Project purpose or justification for the project is stated. 4. Assignment of a project manager and authority level is made. 5. A summary milestone schedule is established. 6. Stakeholder influences are studied and recorded. 7. Functional organizations and their participation are finalized. 8. Organizational, environmental, and external assumptions/constraints are identified. 9. A business case justifying the project, including return on investment and summary budget, is made. Project charter sign-off A project charter is not complete without a sign-off from the project sponsor. The project charter states the goals of the project, the deliverables of the project, the time frame, the resources, and the anticipated costs required to meet the goals defined. However, a project charter may change over the execution of the project.

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Exercise 3.1

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Is it a good idea to define the roles and responsibilities and the authority level of a project manager in the project charter? Why?

Project Assumptions and Constraints Project assumptions are defined as those factors that do not exist at the time of planning but are considered to be true, real, or certain in the opinion of the project manager. Because of the inherent uncertainty regarding project execution (see “The Unique Nature of a Project,” Chapter 1), assumptions require to be made for planning of resources, vendors, start and end dates, contract signing, and the like. Of course, these assumptions need to be valid and demand judgment and experience from project planners. Constraints are the factors that limit the options of a project manager for project execution. These factors are considered as primary risk factors for a project. A project may have more than one constraint at the same time; such as scope related constraints, quality related constraints, team size related constraints, schedule related constraints, team experience related constraints. For example, you may get only limited budget sanctioned for your project. It is a constraint on the project, which is cost related. Constraints may also be related with each other, and this increases the complexity and limits options. PMP WATCH Constraints limit a project. A procurement contract document is the document wherein time schedules and deliverables in each phase are clearly specified, along with other conditions and requirements stated by the customer. Exercise 3.2

List down some of the assumptions you considered in one of your projects.

76 • PMP® Certification—Excel with Ease

Exercise 3.3

List down some of the constraints you considered in one of your projects.

Discussion Points 1. Discuss the importance of constraints and assumptions in a project and how it affects project planning. 2. How identification of assumptions and constraints helps a project manager?

Stakeholders and Their Characteristics Stakeholders, as we know, are those team members or entities who are actively involved in project execution or whose interests may be positively or negatively affected by project outcomes. The following list presents their salient characteristics: • Stakeholder interests may be either positively or negatively impacted by the project. • Alternatively, stakeholders may influence project execution and project results. • It is important for project planners to identify all stakeholders and their requirements. Sometimes individual stakeholder requirements may be implicit and not explicitly stated. For instance, in one of the requirements gathering workshop, a customer said that he wanted a “world class system.” When he was probed further, it came to be known that he wanted a system with background in golden color and transaction response time of 5 seconds. • Stakeholders may have conflicting interests and objectives—Managing stakeholders may not so easy. • Involving stakeholders in the initiation phase group improves the probability of a positive outcome for the project. • In general, differences among stakeholders must be resolved in favor of the customer or end user. Discussion Points 1. Discuss how stakeholders can negatively impact a project. 2. How did you manage the conflicting objectives of stakeholders? Give examples.

Develop Project Management Plan The project planning process group establishes the total scope of all the efforts, defines and refines the objectives of the project, and develops the course of action required to attain those objectives.

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Tools and Techniques Expert Judgment

Inputs Project Charter Output from Planning Process Enterprise Environmental Factors Organization Process Assets

Outputs Project Management Plan

Figure 3.7 Inputs and the process involved in determining the project management plan It develops the project management plan (see Figure 3.7, Table 3.2) and the project documents that will be used to carry out the project. The process aims at a comprehensive review of project scope, required quality level, time frame over which the project needs to be executed and completed, communication processes required, human resource requirements, risks entailed, and procurements to be made.

Inputs Project Charter: The project charter has basic information about the project and it is considered as an input while developing the project management plan. (This refers to the process of developing the project charter and its contents) Outputs from Planning Process: It forms part of the integration management knowledge area (which integrates other knowledge areas). Develop Project Management Plan is the process of defining and documenting the steps/procedures which are necessary to define, integrate, and coordinate the subsidiary plans (like scope management plan, cost management plan etc). Project management plan is the bigger plan consisting of the entire subsidiary plans and hence, whenever the subsidiary plans are prepared, this process is invoked. It is also attached with the Project Management Plan (bigger plan). Enterprise Environmental Factors (EE Factors):

Table 3.2 Develop Project Management Plan – Planning Process Group Initiating

Planning

Executing

Monitoring and Controlling

Closing

Develop Project Charter

Develop Project Management Plan

Direct and Manage Project Work

Monitor and Control Project work

Close Project or Phase

Perform Integrated Change Control

78 • PMP® Certification—Excel with Ease EE factors that are considered while creating project management plan include (but are not limited to): • Governmental or industry standards, • Project management information systems (e.g., an automated tool, such as a scheduling software tool, a configuration management system, an information collection and distribution system, or web interfaces to other online automated systems), • Organizational structure and culture, • Infrastructure (e.g., existing facilities and capital equipment), and • Personnel administration (e.g., hiring and firing guidelines, employee performance reviews, and training records). PMP WATCH A project management plan is a primary document that describes how the project will be planned, executed, and controlled. As entailed by progressive elaboration, project plans are revisited regularly.

Project Management Plan The project management plan defines how the project is executed, monitored and controlled, and closed. The process of the project execution is written in the project management plan. From the exam perspective this is very important. In practice, we use the same project management plan for various projects, since it defines only the process (the ‘how’ part) and it does not vary from project to project (at least not much). The project management plan is also being developed continuously throughout the life cycle of the project (progressive elaboration). A project management plan is a document, which describes the process of managing the entire project. It is actually a guide for the entire project over its life cycle. We document assumptions and constraints related to the project in the project management plan. It also documents project planning decisions for alternatives chosen. It defines key management reviews and duration. Following are the usual contents of a project management plan: • • • • • • • •

the management processes selected by the project management team; the level of implementation of each selected process; the descriptions of the tools and techniques used in each process; how the selected processes will be used to manage the specific project, including dependencies and interactions among those processes; how changes will be monitored and controlled; how configuration management (see later in this chapter) will be performed; the need and techniques for communication among stakeholders; the selected project life cycle and the associated project phases.

Note: There are two types of processes, namely, product oriented process and project management process. The process defined in project management plan is called a project management process, and helps a project manager to manage the project. Product oriented processes are those processes to be followed, which are inherent to the characteristics of the product to be produced. The project manager should know

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both the types to manage the project efficiently. The project management plan may change when more details of the projects are known. It will be a high level document in the beginning of the project and remaining processes will be explained only at later point of time when more details of the processes are known.This technique is called rolling wave planning. Decomposition is a technique of dividing a component into subcomponents or activities into subactivities. This is described more in Chapters 4 and 5. The quality of a project plan depends on many factors. Some of these include how well the plan is embedded in the organization’s culture, structure, policies, procedures, constraints, and accuracy of assumptions. Other planning processes will be discussed in subsequent chapters on scope management, HR management, quality management, and procurement management. Work Authorization System Project managers need a system to allocate the work to individual team members based on the priority of the tasks to be allocated and the status of the dependencies of the tasks to be allocated. The system also contains the steps, documents, tracking system, and defined approval levels needed to issue work authorization. A work authorization system is used to coordinate the time and sequence in which the work is performed so that work and people may properly interface with other work and other people. Refer Figure 3.8 for the tasks done by a typical work authorization system. It automates the task of work allotment and follow-up and the accompanying tasks of monitoring the status of work assigned, flagging, and escalation in the event of delays. The system helps the project manager in generating project work information at any point of time, reducing the need for manual allocation of work. It also can have a facility to trigger reminders about tasks to be completed and reports to team members and managers, respectively. PMP WATCH A work authorization system is a set of documented procedures that define how project work will be authorized (committed) to ensure that project tasks are performed by the identified organization, or by the identified person, at the right time and in the approved sequence.

Basically, a work authorization system (see also Figure 3.8) automates the task of work allotment and follow-up and the accompanying tasks of monitoring status of work assigned and flagging and escalating in the event of delays. The system helps the project manager in generating project-work information at any point in time, reducing need for manual allocation of work. It also has a facility to trigger reminders and reports to team members about tasks to be completed and to managers, respectively. Discussion Points 1. What type of work authorization system does your organization use? 2. What are the advantages of a work authorization system?

Expert Judgment Expert judgment is used for the following tasks: 1. How to tailor the process to meet the business needs 2. Develop technical and management details to be included

80 • PMP® Certification—Excel with Ease Allocate work to individuals

Collect the status of work allocated

Send reminders to individuals

Calculate metrics for the projects

Send automatic reports to seniors

Figure 3.8 Sample work flow in a work authorization system 3. To determine resources and skill levels needed 4. Define the level of configuration management 5. To determine which documents are subject to change control process and which are not

Direct and Manage Project Work Project execution processes are performed to complete the project work defi ned in the project management plan. Because project execution is ridden with uncertainties, changes in objectives and processes may be required over the course of execution. Such changes require formal approval and documentation, thus entailing a formal process to document and record work results and changes. Direct and manage project work is a process (Figure 3.9 and Table 3.3) that coordinates the team members and various resources that have been allocated to a project with the tasks needed to complete the project. These activities include but are not limited to the following: 1. 2. 3. 4. 5.

Create project deliverables Staff the resources and train and manage them Issue change request and adapt approved changes Manage risks and implement risk response activities Collect and document lessons learnt

The direct and manage project execution also requires implementation of approved changes covering: 1. Corrective action. Documented direction for executing the project work to bring back the expected future performance of the project work in line with the project management plan. 2. Preventive action. A documented direction to perform an activity that can reduce the probability of negative consequences associated with project risks. 3. Defect repair. The formally documented identification of defect in a project component with a recommendation to either repair the defect or completely replace the component.

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Tools and Techniques Expert judgment Project Management Information System

Inputs Project Management Plan Approved Change Requests Enterprise Environmental Factors Organization Process Assets

Outputs Deliverables Work Performance Information Change Requests Project Management Plan Update Project document update

Figure 3.9 Inputs and the process involved in the direct and manage project work

The project manager and the project team perform activities to accomplish project objectives and in order to do that, a project manager obtains and manages resources including people, materials, equipments and facilities. He/She manages risks of the project and implements risk response activities. He/She is responsible for maintaining project communication channels and reports costs, schedule, etc.

Inputs of Direct and Manage Project Work Project Management Plan: Project Management Plan is the main input of this process, which talks about the process (the how part) of executing the project. Various subsidiary plans which are part of the main project management plan helps in the process. Enterprise Environmental Factors: The following factors are considered during the execution of the project: organizational structure and culture; infrastructure; personnel administration Organizational Process Assets: Standardized guidelines for execution of the project work and instructions if any; project lessons learnt/templates from past projects; issue and risk management database.

Table 3.3 Direct and Manage Project Work – Executing Process Group Initiating

Planning

Executing

Monitoring and Controlling

Closing

Develop Project Charter

Develop Project Management Plan

Direct and Manage Project Work

Monitor and Control Project work

Close Project or Phase

Perform Integrated Change Control

82 • PMP® Certification—Excel with Ease Approved Corrective Actions Authorized directions required to bring expected future project performance into conformance with the project management plan. For example, technical training may be imparted to all team members to check repititive mistakes. Direct and Manage Project Execution requires implementation of the following: • • • • •

Approved corrective actions Approved preventive actions Approved change request Approved defect repair Validated defect repair

Approved Preventive Actions Authorized directions that reduce the probability of negative consequences associated with project risk. That is, we take steps to avoid adverse consequence before the actual event occurs. For example, allocating experienced resources for critical activities to avoid unfavourable outcome or escalations. Approved Change Request Authorized changes of scope, time, and cost. If a particular Change Request (CR) is approved through the specifi ed process set (say Perform Integrated Change Control), this Approved Change Request becomes an input to Direct and Manage Project Execution, as this also needs to be executed. Approved Defect Repair Authorized request for product corrections of a defect found during quality inspection or the audit process. You need to fix the error/repair prior to taking corrective actions. Validated Defect Repair Notification that re-inspected repaired items have been accepted or rejected. Defects are repaired and the quality inspector either accepts or rejects it. Preventing unnecessary changes is one of the primary responsibilities of a project manager. Finding unnecessary change is a typical task and a project manager needs to consider factors such as time, cost, and effect of the change requested. Exercise 3.4

Classify below actions as “Preventive Action” or “Corrective Action” Planning for Rotation Adding Buffer Adding Resource During Escalation

PMP WATCH Costs associated with corrective actions generally well exceed those associated with prevention actions.

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Tools and Techniques of Direct and Manage Project Work Project Management Information Systems Project management information systems (PMISs) represent an important part of enterprise environmental factors prevalent in an organization. These systems typically provide user access to inhouse automated tools, information collection and distribution systems, or Web interfaces to online automated systems used during the direct and manage project execution efforts. For example, a configuration management tool is a subsystem of overall PMISs and is used mainly for monitoring and controlling emerging project scopes against the baseline scope. Its purpose is to control change throughout the project. It focuses on the physical characteristics of the project and not on the overall project scope. It defines the steps required to control changes to them. Configuration management activities are as follows: 1. Configuration identification. Selection and identification of a configuration item provides the basis for which product configuration is defined and verified, products and documents are labeled. Accountability is maintained. 2. Configuration status accounting. Information is recorded and reported as to when appropriate data about the configuration item is to be provided. 3. Configuration verification and auditing. It ensures the configuration items are correct, corresponding changes are recorded, assessed, approved, tracked, and correctly implemented. A configuration management system along with change control processes accomplishes three main objectives: 1. Establishes a method to consistently identify and request changes to established baselines and to assess the value and effectiveness of those changes. 2. Provide opportunities to continuously validate and improve the project by considering the impact of each change, and 3. It provides the mechanism for the project management team to consistently communicate all approved and rejected changes to the stakeholders in a formal way. Discussion Points 1. What type of configuration management system you used in your previous projects? 2. What are the difficulties you are likely to face if you do not use a configuration management system? 3. What is the alternative if your organization does not invest in this tool? Is there any free ware available for achieving this?

Deliverables The primary output of the process is Deliverables, which actually demonstrates the importance of this process. While a project is being executed, we finally expect Deliverables out of it. This is the execution process and so the outcome is the venila (note this) deliverable. The Deliverables are the results of the project (but neither conformed nor validated). This deliverable needs to be validated (validated deliverable) and the customer has to accept it (accepted deliverable). Deliverable is defined as unique and verifiable products/results that must be produced to complete the project (or sub-project).

84 • PMP® Certification—Excel with Ease

Outputs of Direct and Manage Project Work Work Performance Information Work performance information (WPI) can be related to various performance results routinely collected as part of the project management plan and fed into the performance reporting process, which includes but is not limited to the following: • • • • •

Schedule progress Deliverable status Schedule activities started Costs authorized and incurred Resource utilization detail

Project Management Plan Updates: At any point of time we need to keep the plan and execution in line, this is an important characteristic expected out of a professional manager. During the execution, there may arise a need for change in the plan and so we may update a few subsidiary management plans such as Scope Management Plan, Cost Management Plan etc and their baselines depending on the need. Project Document Updates: Documents for which updates may be provided includes but is not limited to: Requirements documents, Issue documents, Risk register, and the Stakeholder register. Exercise 3.5

Classify below as “Deliverable” or “WPI” Building a software Development team worked 2 hours overtime daily A team member takes an average of 4 hours to close a ticket

Monitoring and Control Monitor and Control Project Work “We have a set of processes for planning and another set of processes for execution. We need a process to ensure that execution happens as per the plan. This is the Monitor and Controlling Process. Monitor and controlling processes (see Figure 3.10 and Table 3.4) is the process of tracking, reviewing, regulating and controlling the progress to meet the performance objectives as per the Project Management Plan. Monitoring is an aspect of project management performed throughout the project”. They include the following: Inputs Project Management Plan Performance Reports Enterprise Environmental Factors Organization Process Assets

Tools and Techniques Expert Judgment

Outputs Change Requests Project Management Plan Update Project Document Update

Figure 3.10 Inputs and the process involved in the monitor and control project work stage

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Table 3.4 Monitor and Control Project Work – Monitoring and Controlling Process Group Initiating

Planning

Executing

Monitoring and Controlling

Closing

Develop Project Charter

Develop Project Management Plan

Direct and Manage Project Work

Monitor and Control Project work

Close Project or Phase

Perform Integrated Change Control

1. Controlling changes and recommending preventive actions 2. Monitoring the ongoing project activities 3. Influencing the factors that could circumvent integrated change control so that only approved change requests are implemented 4. Collect, analyze, and distribute performance information. 5. Compare the actual performance information against the plan. 6. Assess the trends 7. Change the plan or change the execution if required 8. Identify new risks and monitor the existing risks. Project Management Plan: Project management plan is the input of this process, which discusses the monitoring and controlling of project work. Performance Reports Performance reports can be used to report key project information. They include but are not limited to the following: 1. 2. 3. 4. 5.

Current status Forecasts Issues Scheduled activities Significant achievements during the period under review

Output: Along with the change requests the following are also considered as an output of this process. Recommended corrective actions: Corrective actions are recommended to bring expected future project performance into conformance with the project management plan

86 • PMP® Certification—Excel with Ease Recommended preventive actions: Preventive actions are recommended to reduce the probability of negative consequences associated with project risk Forecasts: Estimates or predictions of conditions and events in the project’s future, based on information and knowledge available now Recommended defect repair: Some defects, which are found during the quality inspection and audit process, are recommended for correction Perform Integrated Change Control Change control is an important control process because, owing to the uncertainties inherent in project execution, changes are bound to surface and effectively managing and documenting change is critical for project success (see also Figure 3.11 and Table 3.5). Integrated change control is a process whereby changes approved and documented are readily shared and applied across several similar projects being managed at a given pint in time. The process of reviewing all change requests, approving changes, and controlling changes to deliverables and organizational process assets includes recommendations for changes, corrective action, preventive action, and defect repairs. These recommendations are evaluated and either approved or rejected by the project manager (See Figure 3.12). The approved change requests are implemented (executed) using the process “Direct and Manage Project Work”. The project manager has authority to approve some change requests in emergency situations per the procedures defined in preceding text. Overall change control is concerned with (1) influencing the factors that create change, (2) determining that a change has occurred, and (3) managing the actual changes when they occur. PMP WATCH While managing change, identify the main source of change, perform a thorough analysis, and direct the change to the change control board. The latter may approve or reject the change request submitted.

Integrated change control is the process which ensures that all the project deliverables including the project management plans are maintained and configured carefully. Changes are monitored carefully, and are either approved or rejected. Integrated change control also ensures that approved changes are incorporated and rejected changes are not incorporated into the product. Scope, cost, and time are together called as triple constraints, and are to be monitored closely in integrated change control.

Inputs Project Management Plan Work Performance Information Change Requests Enterprise Environmental Factors Organization Process Assets

Tools and Techniques Expert Judgment Change Control Meetings

Outputs Change Requests Status Update Project Management Plan Update Project Document Update

Figure 3.11 Inputs and the process involved in the perform integrated change control

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Table 3.5 Perform Integrated Change Control – Monitoring and Controlling Process Group Initiating

Planning

Executing

Monitoring and Controlling

Closing

Develop Project Charter

Develop Project Management Plan

Direct and Manage Project Work

Monitor and Control Project work

Close Project or Phase

Perform Integrated Change Control

Activities performed in change control are as follows: 1. 2. 3. 4. 5.

Identifying that a change has occurred Checking whether only the approved changes are being implemented Reviewing and approving requested changes as per guidelines Managing approved changes as and when they occur Maintaining integrity of baseline scope using various mechanisms such as review, and inspections. 6. Controlling and updating scope, budget, schedule, and quality 7. Documenting the impact of requested changes on project parameters and deliverables

Perform Integrated Change Control – Outputs Integrated change control process not only just approves or rejects the change requests but also approves the necessary preventive and corrective action necessary to ensure that the change is beneficial to the project. Approved Change Requests (Planned and Executed) 1. Rejected change requests 2. Project management plan (updates) 3. Project scope statement (updates)

Different Process

Change Request

Perform Integrated Change Control

Approved Change Request

Direct and Manage Project Work

Figure 3.12 Perform Integrated Change Control Flow

Implemented Change Request

88 • PMP® Certification—Excel with Ease Outputs Final Produce, Service or Results Transition Organization Process Update

Inputs Project Management Plan Accepted Deliverables Organization Process Assets

Figure 3.13 Inputs and the process involved in the close project stage 4. 5. 6. 7.

Approved corrective actions (planned and executed) Approved preventive actions (planned and executed) Approved defect repair (planned and executed) Deliverables given to the project owner before closing the project.

Discussion Points 1. What is the need for an integrated change control system? 2. What is a triple constraint? And how is it related to integrated change control systems? 3. What type of integrated change control system does your organization use?

Close Project or Phase Close project is the process (see Figure 3.13 and Table 3.6) for confirming and documenting the completion of a project or a phase of a project. The process allows the sponsor to formally accept the project outcome and provides a procedure for transition of the product from its status as a project deliverable to one is standard operational use.

Table 3.6 Close Project or Phase – Closing Process Group Initiating

Planning

Executing

Monitoring and Controlling

Closing

Develop Project Charter

Develop Project Management Plan

Direct and Manage Project Work

Monitor and Control Project work

Close Project or Phase

Perform Integrated Change Control

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The close project process provides for documentation of any changes made throughout the project life cycle. The process also provides for documentation of the corrective actions that had been taken over the course of project execution. This documentation of corrective action is made retrospectively, it has the benefit of hindsight and helps the organization in taking effective preventive action and establishing robust systems, to avoid reinventing the wheel, so to speak. The following are typical activities performed during the close project process: 1. Actions and activities necessary to satisfy completion or exit criteria for the phase or project 2. Actions and activities necessary to transfer the project’s products, services, or results to the next phase or to production and/or operation 3. Activities necessary to collect project or phase records, audit project success or failure, gather lessons learned, and archive project information for future use by the organization

Procedures to Perform Closure Activities Administrative Closure Procedures: • • • •

Integrated activities needed to collect project records Analyze project success or failure Gather lessons learnt Archive project information for future use by the organization

Contract Closure Procedures (from Procurement): • Close all contracts • Confirm if all work is completed correctly and satisfactorily • Update and archive contract records for future reference/check/audit. Inputs Project management plan: For referring the closure procedure Contract documentation: Includes the contract itself, as well as changes to the contract and other documentation (such as the technical approach, product description, acceptance criteria) Enterprise environmental factors: e.g. government regulations Organizational process assets: e.g. formal sign-off forms Work performance information: e.g. all invoices from procurement Acceptable deliverables: Project can be closed only after the deliverables are accepted by the customer. Tools and Techniques Project Management Methodology Project Management Information System (PMIS) Expert Judgment Outputs Final product, service or result: Formal acceptance/handover of the final product, service or result

90 • PMP® Certification—Excel with Ease Receipt of formal statement that contract terms have been met Organizational process assets (updates): Formal acceptance documentation: Formal confirmation from customer/sponsor that requirements and specifications of product, service or result have been met Project files: Documentation resulting from the project’s activities Project closure documents: Formal documentation indicating completion of the project and transfer of completed project deliverables to others, such as an operations group Historical Information: Historical information and lesson learnt information are transferred to the lessons learnt knowledge base for use by future projects Discussion Points 1. Why do we need a process for closing a project? 2. What processes does your organization use for closing a project?

Exercise 3.6

Consider, for example, the following scenario. You are part of a project management consulting company contracted by a certain ABC Software, for helping their project manager in charge of a software development project with 125 team members. This megaproject has high visibility. The project is now almost at the end of the design phase. During design phase, the approved budget was exceeded by 25%. Many team members left the project in frustration as the scope of the design got changed five times. But the remaining team members started working on coding as they wanted to move the project quickly. Now answer these questions. 1. What does the project manager need to do at the end of the design phase? 2. What are the possible lessons learnt in the above scenario (make them positive) 3. Are closing process phases important? why or why not?

Summary This chapter introduces five process groups namely initiation, planning, execution, monitoring and controlling, closing. We also discussed how these five process groups overlap with each other within phase and within project. We discussed each process within each groups in detail specific to integration particularly the contents of project charter, contents of project management plan were discussed in detail. We also discussed the process of integrated change control and the process followed in change request scenario.

Answers to Exercise Questions Exercise 3.1 Answers Yes. It is better to write the project manager’s roles and responsibilities and authority level in the project charter. This is so because the project manager can act on predefined boundaries. It also helps in getting the support from other units.

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Exercise 3.2 Possible Answers 1.

Customer will give the Sign-off on time.

2.

Resources will not take any extra leave other than planned.

3.

We have expertise in the team as described in proposal.

4.

Interfaces will be ready at the time planned.

Exercise 3.3 Possible Answers 1.

Budget constraints.

2.

Only tools available in the organization are to be used.

3.

On-time completion of project as it is a fixed bid project.

Exercise 3.4 Answers Planning for Rotation

Preventive Action

Adding Buffer

Preventive Action

Adding Resource during Escalation

Corrective Action

Exercise 3.5 Answers Building a Software

Deliverable

Development team worked 2 hours overtime daily

WPI

A team member takes average of 4 hours to close a ticket

WPI

Exercise 3.6 Possible Answers 1.

What does the project manager need to do at the end of the design phase? Do not let team members decide whether to go ahead with the design or not. Baseline the design document. Document the lessons learnt, get acceptance from the customer for sign-off, schedule introspective meeting (throw a party to celebrate!).

2.

What are the possible lessons learnt in the above scenario (make them positive). Report the status of the project along with the budget every week to senior management to avoid last-minute surprises. Prepare a succession and a rotation plan Have a good scope control process in place and ensure that team members follow it meticulously.

3.

Are closing process phases are important? why or why not? It will ensure that we deliver everything required It is an opportunity to correct mistakes at least in the next phase It is an opportunity to get help from senior management It will boost the confidence level of stakeholders It is chance for performing tasks in a better way in the next phase

92 • PMP® Certification—Excel with Ease

Chapter 3 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. All except one of the following descriptions of project integration management are false. Which one? A. Project integration management involves processes required to ensure that the project includes all the work and only the work required to complete the project successfully. B. Project integration management involves processes required to ensure timely and early completion of the project. C. The process of defining and documenting the stakeholder’s needs and expectations to meet the project objectives. D. Project integration management involves processes required to ensure that the various elements of the project are properly coordinated. Question 2. A project charter includes A. B. C. D.

arrow diagramming methods. dependency estimates. detailed resource estimates. the business need for the project.

Question 3. Who originates the project charter? A. B. C. D.

The end user The project sponsor The client A senior manager external to the project

Question 4. Which of the following is not true about the five project process groups? A. The process groups organize and describe the tasks of the project. B. The process groups are related to the products they produce.

C. The process groups are related to specifying and creating the products of the project. D. The process groups are executed for each phase within the project life cycle. Question 5. Which of the following is not normally an element of a project charter? A. Authorization documentation to apply organizational resources to project activities B. Work package descriptions C. The business need for the project D. Product description Question 6. Which of the following about project management processes is true? A. They are groups of actions bringing about a result. B. They deal with describing and organizing the work of a project. C. They deal with specifying and creating a product. D. They are divided into core and noncore processes. Question 7. On which activity is the bulk of the funds allotted for a spent? A. B. C. D.

Requirement gathering Production Designing Project plan execution

Question 8. At what stage in the project life cycle would costs be the lowest? A. B. C. D.

Concept Development Testing Closeout

Project Integration Management

Question 9. Phase exits, kill points, and stage gates are used for what purpose? A. Communicating milestones to stakeholders B. Measuring schedule and effort variances C. Determining the possibility of moving into the next phase D. Measuring earned value Question 10. Those areas that a project manager considers to be true, real, or certain are called A. B. C. D.

constraints. risks. assumptions. project performance.

Question 11. All of the following are generally true about a project charter except that it A. carries product description. B. includes business objectives to be met by the project. C. is usually authorized by the project sponsor. D. includes a trend analysis. Question 12. One of the first deliverables of the project initiation phase is A. B. C. D.

the project charter. a scope statement. the project plan. a scope management plan.

Question 13. Statement of specific time schedules and deliverables for each phase of a project is an example of A. B. C. D.

risk. assumption. constraint. issue.

Question 14. The process group coordinates people and other resources to carry out the plan. A. B. C. D.

Initiation process Resource planning Resource leveling Executing process

Question 15. A collection of documents that will change over time as more information becomes available may be referred to as

A. B. C. D.

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a project baseline. a project plan. PMIS. WPI.

Question 16. Where can a project manager expect to get access to templates and standardized policies? A. B. C. D.

A project management office With the stakeholders Human resources Customer

Question 17. Who are usually responsible for portfolio management within an organization? A. B. C. D.

Project managers Project sponsors Stakeholders Senior management

Question 18. Suppose that, when your project is in the execution stage, a change in legal requirements entails a change in the scope of your project. What would be your first response? A. Create a documented change request. B. Proceed per existing plan. C. Consult with the project sponsor and the stakeholders. D. Stop project execution until the issue is resolved. Question 19. A s e t o f i nt e r r e l at e d a c t i v i t i e s and actions performed to achieve prespecified products, results, or services is referred to as A. B. C. D.

a process. project management. operation management. service management.

Question 20. Product-oriented processes are typically defined by A. B. C. D.

project life cycle. project management life cycle. product life cycle. general life cycle.

Question 21. Product-oriented processes and project management processes overlap and interact with each other throughout the life of the project. A. True B. False

94 • PMP® Certification—Excel with Ease Question 22. Which of the following is not true about project management process groups? A. They are typically performed in the same sequence in each project. B. They are independent of application areas. C. They are independent of industry focus. D. Process groups are normally not repeated for each phase. Question 23. Project funding is handled external to the project boundaries. A. True B. False Question 24. Suppose a project management plan changes as more details and certainty emerge. This is an instance of A. B. C. D.

rolling wave planning. decomposition. Project assumptions Project constraints

Question 25. The process of defining and documenting stakeholders’ needs is called A. B. C. D.

collecting requirements. defining scope. defining activities. identifying stakeholders.

Question 26. The process of developing a detailed description of the project and the product is called A. B. C. D.

collecting requirements. defining scope. defining activities. identifying stakeholders.

Question 27. Suppose, during the execution of a project that you are handling, the customer is not happy with the deliverables your team had recently supplied. What will be your first response? A. B. C. D.

Speak to your team members. Speak to the customer. Rework on the deliverables. Wait for the customer to come to you.

Question 28. Suppose, upon receipt of a deliverable, a customer insists on a change in that deliverable and also that you to do it free of cost and on priority as it is critical

for the business of the customer. What would be your response? A. Follow approved change control processes B. Effect the customer-requested changes on priority as it is business critical for the customer C. Simply say “no” to the customer D. Wait for the customer to come to you again Question 29. A central document that integrates various project management processes is a A. B. C. D.

risk register. project charter. project management plan. stakeholder register.

Question 30. In the change control process, which of the following would be a project manager’s top priority? A. Making necessary changes per plan B. Analyzing the impact of changes C. Informing the stakeholders about the impact of changes D. Preventing unnecessary changes Question 31. Who usually generates the lessons learnt document? A. B. C. D.

Project customer Project sponsor Project team Functional manager

Question 32. Suppose that your project is moving 15% ahead of schedule. Your have been requested to perform additional testing to increase product quality. This is an example of A. B. C. D.

scope verification integrated change control quality control scope control

Question 33. Which of the following is a formal document to manage and control project execution? A. B. C. D.

Statement of work Risk register Project charter Project plan

Project Integration Management

Question 34. Which of the following documents is provided by the customer as a part of bidding process? A. B. C. D.

Statement of work Proposal WBS Project plan

Question 35. All of the following are contents of a statement of work document except A. B. C. D.

business need. product scope description. strategic plan. cost estimation.

Question 36. A documented action plan to ensure that the future performance of a project task is brought in line to comply with the project management plan is an instance of A. corrective action. B. preventive action. C. defect repair. D. accepted deliverable. Question 37. A documented action plan to perform an activity intended to reduce the probability of a negative outcome associated with project risks is an instance of A. B. C. D.

corrective action. preventive action. defect repair. accepted deliverable.

Question 38. A formally documented identification of a defect in a deliverable component with recommendation to either repair the defect or scrap the component is an instance of A. B. C. D.

corrective action. preventive action. defect repair. Updates.

Question 39. All of the following are examples of WPI except A. B. C. D.

deliverable status. schedule progress. costs incurred. PMIS.

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Question 40. A change to documented plans to reflect modified or additional ideas or content regarding deliverables is an instance of A. B. C. D.

corrective action. preventive action. defect repair. updates.

Question 41. Configuration management activities included in the integrated change control process include all of the following except A. B. C. D.

configuration identification. configuration item approval. configuration verification and audit. configuration status accounting.

Question 42. What would you as a project manager do if your reporting authority asks you to initiate a project without a valid contract from the customer, stating that this customer is likely to provide more projects in future? A. Do not initiate the project (without contract) B. Initiate the project because it has been requested by your manager C. Generate an impact analysis document, providing the impact of initiating a project without a contract D. Complain to other senior managers on this Question 43. Which of the following is of greatest help to a project manager during project execution? A. B. C. D.

PMIS WBS Inspection Audit

Question 44. Stakeholders can be identified in which project management process groups? A. Monitoring and controlling, and closing B. Planning, and monitoring and controlling C. Initiating D. Initiating, planning, executing, monitoring and controlling, and closing

96 • PMP® Certification—Excel with Ease Question 45. Suppose that you take over a project from another project manager that is in the planning process. Having studies the project charter, you decide to change it. Who approves these changes? A. B. C. D.

Project sponsor Project leader Project manager Stakeholders of the project

Question 46. Integration is the key responsibility of A. B. C. D.

project manager. project team member. customer. end user.

Question 47. Suppose that you are midway through the execution of a project and you receive formal communication that resources that you had originally requested per plan have been diverted to another project. What would be your response? A. Prepare an impact plan B. Stop the project for want of sufficient resources C. Continue the project without sufficient resources D. Inform the customer about the same Question 48. Upon receipt of deliverable, following sign-off from the customer on requirement, design, coding, and testing and during the user acceptance testing protocol, the end user refuses to accept the product, stating that “this is not what we expected.” What do you think is the root cause of this problem? A. Incorrect identification of requirements B. Incorrect analysis of impact of key stakeholder (end user)

C. Incorrect project charter D. Incorrect review of deliverable made by client Question 49. Suppose you, the project manager, have just received a change request from the customer, requesting a technically simple and yet value-adding change. You, however, would require two extra resources for effecting this change. What would be your response? A. Determine the impact of this change on other knowledge areas. B. Instruct team members to effect these changes as the changes would add value to the deliverable. C. Escalate the request to the change control board for approval. D. Contact senior management for the two resources. Question 50. Suppose that, midway through the execution phase of a project, the project manager concerned is moved to another assignment and you are instructed to take over the half-executed project. Suppose also that the outgoing project manager told you that the project is generating a higher-than-expected profit but you have a strong suspicion on the validity of these profit figures. As an incumbent fresh into a project midway in its execution, what would you do first? A. Discuss your concern with team members B. Independently formulate a strategy to deal with your concerns C. Discuss your concerns with the project sponsor D. Accept the profit figures although you have misgivings about their validity

Project Integration Management

Answer Sheet for Chapter 3 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

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98 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 3 Questions

Question Number

Answer

Question Number

Answer

Question 1

D

Question 26

B

Question 2

D

Question 27

B

Question 3

B

Question 28

A

Question 4

C

Question 29

C

Question 5

B

Question 30

D

Question 6

B

Question 31

C

Question 7

D

Question 32

B

Question 8

A

Question33

D

Question 9

C

Question 34

A

Question 10

C

Question 35

D

Question 11

D

Question 36

A

Question 12

A

Question 37

B

Question 13

C

Question 38

C

Question 14

D

Question 39

D

Question 15

B

Question 40

D

Question 16

A

Question 41

B

Question 17

D

Question 42

C

Question 18

A

Question 43

A

Question 19

A

Question 44

D

Question 20

A

Question 45

A

Question 21

A

Question 46

A

Question 22

D

Question 47

A

Question 23

A

Question 48

B

Question 24

A

Question 49

A

Question 25

A

Question 50

A

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Explanations for Chapter 3 Answers

1. Answer D Option A refers to the definition of Scope Management. Option B refers to the definition of Time Management. 2. Answer D The business need of a project is the primary content of the project charter. Project charter will not have arrow diagramming methods, dependency estimates and resource estimates; all these are prepared in the time management process. 3. Answer B Generally, the project sponsor originates and signs off the project charter and appoints the project manager. If sponsor is not available, then any senior manager outside the project will do that work. Option B is a better choice than Option D. 4. Answer C All options but C relate to processes that are associated with the project. It is an odd option. Note that we need to choose the FALSE (not True) option. The process groups organize and describe the tasks of the project (Option A). Process groups are related to the product being developed (Option B). The Process groups (Initiation, Planning, Execution, Monitoring and Controlling, Closing) are executed within each phase of the Project Life Cycle (Option D). 5. Answer B The definition of work package is defined in Chapter 4 (Scope Management). Work package is developed as part of Scope Management process and it is not an element of Project Charter. Product descriptions, business need and authorization to apply project resources are the contents of the Project Charter. 6. Answer B Option B is the right option. Option A is the general definition of Process. There are two different types of Process, namely, project management process and product oriented process. Option C is the definition of product oriented process and not project management process.

7. Answer D Most of the Project Budget is spent in the Execution phase of the project. Resource loading will be at its peak during the execution phase of the project. During the project initiation phase (the concept phase), the activities performed are limited and hence, the cost involved is low. 8. Answer A Most of the Project Budget is spent in the Execution phase of the project. Resource loading will be at its peak during the execution phase of the project. During the project initiation phase (the concept phase), the activities performed are limited and hence, the cost involved is low. 9. Answer C The main purpose of the stage gate is to check the status and keep the gate (phase) open or close. Phase exits kill points and stage gates denote the end of the phase. They determine the possibility of moving to the next phase depending on the check. 10. Answer C It is the definition of Assumption. Ideas which the project manager considers to be true, real or certain are called as assumptions. The project manager may consider a lot of assumptions while executing the project. Constraints limit the options of the project manager. For instance, deadlines that specify that the project needs to be finished on or before 31st December is a constraint for the project. A Risk is an event or action, which will affect the project. 11. Answer D Trend Analysis is an activity more likely to be performed during the execution phase of the project. It is not part of the Project Charter. The Project Charter will have business objectives and product descriptions (preliminary) and it is authorized by the Project Sponsor. 12. Answer A The main output of the initiation phase of the project is Project Charter. “Develop Project Charter” is part of the initiation phase of the project.

100 • PMP® Certification—Excel with Ease 13. Answer C Constraints limit the Options. Constraint is a term used to indicate factors that limit the scope of various options available during project execution. Specific time and specific deliverables limit the options and are considered as Constraints. The viewpoint which the project manager considers to be true, real or certain is called as Assumption. 14. Answer D The key word in this question is “carrying out the plan”, which clearly indicates that it is the Execution phase of the project. Options B and D are not process groups and hence, these are ruled out. 15. Answer B A Project Plan will certainly change over the course of the project execution. Remember progressive elaboration. More details and clarity emerge are we progress in the project and hence the project plan is fine-tuned/changed accordingly. PMIS (Option C) is a tools and technique and is not a document. WPI also does not refer to a document. 16. Answer A Access to templates is provided by PMO. Note Key word here is the template. PMO also provides standardized policies and procedures, which can be used in the project. 17. Answer D Portfolio management is the responsibility of the senior management (somebody outside the project). Portfolio based decision is based on the strategic objectives of the Organization. Project managers are identified only at the initiation stage of the project, as an outcome of the Project Charter. The project sponsor provides financial support to start the project. 18. Answer A For any change, we need to follow the Change request process. For following the Change Request process, the first step is creating the Change Request document (CR document). Consulting the sponsor or consulting the team may happen after the analysis, based on the outcome of the analysis phase. 19. Answer A A Process may be defined as a set of inter-related activities to product a result.

20. Answer A There are two different types of Process, namely, Product oriented process and Project management process. Product oriented processes are specific to the product and defined by the project lifecycle. Note Project lifecycle is specific to the product developed and it may vary with domain. 21. Answer A There are two different types of Process, namely, Product oriented process and Project management process. Product oriented processes are specific to the product and defined by the project lifecycle. Product oriented process and Project management process interact and overlap throughout the project lifecycle. Note Each phase is initiated, planned, executed, monitored and controlled, and closed. Thus, they interact and overlap with each other. 22. Answer D Each phase is initiated, planned, executed, monitored and controlled, and closed. Process groups are repeated for each phase of the project. We need to choose the “not true” or FALSE option. Process groups are performed in the same sequence in each project and they are independent of the application areas. They are also independent of industry focus. 23. Answer A Project funding is usually handled external to the project boundaries; it may happen at the program level or portfolio level. Loss in one project will get adjusted in another project. 24. Answer A A Project Plan will certainly change over the course of the project execution. Remember the concepts of progressive elaboration and rolling wave planning. More details and clarity emerge as we progress in the project and hence, the project plan is fine-tuned/changed accordingly. 25. Answer A The process of defining and documenting stakeholder needs (requirements) is called as “Collect Requirements”. It is part of Scope management. 26. Answer B The process of developing a detailed description of the project and the product is called “Define

Project Integration Management

Scope”. The output of “Define Scope” process is the scope statement. 27. Answer B The first task in processing feedback, especially when it is of a negative nature, would be to understand exactly the cause of the customer dissatisfaction. A discussion with the customer is the most effective way to achieve this objective. Attack the problem where it exists. Here, the customer is not happy; so first understand why he is not happy and then solve the problem. 28. Answer A Irrespective of urgency or time constraints, changes to a process or a deliverable should be routed through a formal change request process. The project team’s change control board may monitor the execution of the tasks to meet urgent needs of the customer. Doing it free of cost is the decision to be taken by the change control board and not by the project manager alone. The decision to say “Yes” or “No” should be taken by the Change Control Board (CCB). The project manager needs to do the analysis after getting the change request and forward the recommendation to the CCB. 29. Answer C A Project Management Plan is the central document that integrates and details the process. It defines the planning process of all knowledge Areas. (It has Scope Management Plan, Schedule Management Plan, Cost Management Plan, etc.) 30. Answer D Any changes should be routed through a formal change request process. Project manager’s top priority is to prevent unnecessary changes. 31. Answer C Project team members are generally best placed to generate the lessons learnt document. Only executors can write the best lessons learnt and so, it is the right option. The project manager just facilitates the team to create a better lessons learnt document. 32. Answer B Here, the changes are happening both in schedule and quality and so the best option is

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the integrated change control (Even otherwise, we may not know the impact of change on other knowledge areas. Hence, integrated change control is always executed for any change). Integrated change control takes care of the impact on other knowledge areas due to change in one knowledge area. 33. Answer D A project management plan is the central document that integrates and details the process. The process of managing and controlling a project is part of the Project Management Plan. 34. Answer A Statement of Work (SOW) is the document provided by the customer as part of the bidding process. SOW contains the business need, product scope description and strategic plan. SOW is the input for creating the Project Charter. 35. Answer D Statement of Work (SOW) is the document provided by the customer as part of the bidding process. SOW contains the business need, product scope description and strategic plan. SOW is the input for creating the Project Charter. 36. Answer A Bringing the project back to line after a mistake is an example of Corrective Action. Hence, Option A is the best option. Preventive action is done in order to avoid a particular mistake. 37. Answer B Preventive action is done in order to avoid a particular mistake before it occurs. Repairing a defect after it occurs is an instance of defect repair. 38. Answer C Repairing a defect after it occurs is an instance of defect repair. Preventive action is done in order to avoid a particular mistake before it occurs. 39. Answer D WPI stands for Work Performance Information. PMIS stands for Project Management Information System. Work performance data collected is analyzed in context to infer information from it based on its relationship and is called as Work Performance Information (WPI).Examples:1. Schedule variance 2. Cost variance 3. Estimate at complete (EAC) 4. Estimate to complete (ETC)

102 • PMP® Certification—Excel with Ease 40. Answer D Change to a document is generally referred to as “Update”. Preventive action is done in order to avoid a particular mistake before it occurs. Repairing a defect after it occurs is an instance of defect repair. Bringing back to line after a mistake is an example of corrective action 41. Answer B Configuration Management includes activities such as configuration identification, configuration verification and audit, and configuration status accounting. Configuration item approval is not part of Configuration Management and hence, Option B is the right answer. 42. Answer C In this scenario, your reporting manager is asking you to start the project without contract. As a project manager, you need to do an impact analysis of starting a project without contract and let your manager know the result. Option C is better than Option A. Complaining about this to other senior managers is not the right option because it will not help anybody. 43. Answer A PMIS is a tool in direct and manage project execution process. It helps the project manager to execute the project and track work by providing the various reports. Hence, it is the best option. 44. Answer D Identify stakeholders is a continuous process and it happens continuously throughout the project lifecycle though it is marked in the “initiation” process group. 45. Answer A Project charter is approved by the project sponsor and so, any change in the charter is also approved by the project sponsor.

46. Answer A Integration is the key responsibility of the Project Manager. The project manager can be called as an integration manager since he integrates various people, process and components of the project. 47. Answer A An impact plan details the possible negative project outcome due to unexpected nonavailability of resources. Any action should be taken after doing the impact analysis. Continuing the project or stopping the project after informing the customer depends on the outcome of impact analysis. Hence, it is the best option. 48. Answer B Although all answer options appear to be right, the project manager’s error of not analyzing the impact level of various stakeholders in the project is the root cause of the problem and hence it is the right option. Identify Stakeholders process is not executed at the appropriate time and hence, it is a project management problem. 49. Answer A Although Option C seems right, a project manager is expected to escalate the change request to the change control board with the impact analysis document, detailing other possible solutions. 50. Answer A Option A is the best option. Discussing the case with project team members is the best option to solve this problem. Team members include all the people involved in the execution of the project.

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Key Terms Assumptions Project assumptions are defined as those factors that do not exist at the time of planning but are considered to be true, real, or certain in the opinion of the project manager. Closing The closing process finalizes all activities across all process groups. It gathers complete project information and stores the same for future reference. Stakeholders approve formal closure of the project. Constraints Constraints limit a project with its options. Controlling It refers to periodic checks on processes and in-process products to monitor project performance, analyze deviations, and implement corrective action to align project activities with the project plan.

Corrective action Documented direction for executing the project work to bring back the expected future performance of the project work in line with the project management plan. Initiation The initiation process group, as the term implies, occurs at the beginning of a project or phase. Planning The planning process group collates project requirements, identifies project metrics, and identifies stakeholders. Preventive action A documented direction to perform an activity that can reduce the probability of negative consequences associated with project risks. Work authorization system The work authorization system is a subsystem of the overall project management system used by the project manager.

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4 Project Scope Management CHAPTER COVERAGE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Why Do Projects Fail? Product Scope Project Scope Collect Requirements Interviews Group Decision Making Nominal Techniques Scope Statement Value Analysis Work Breakdown Structure 11. Scope Baseline 12. Work Performance Information 13. Work Performance Measurements

INTRODUCTION Project scope management refers to the processes required to identify and ensure that a project includes all the work and only the work required for successful project completion. It is primarily concerned with identification and control of what is and what is not part of project requirements. It follows that effective scope management comprises correct and exact identification of project requirements. This process entails identification—from the standpoint of a particular project—of two classes of processes: (1) processes that are critical for and add value to the desired project outcome and (2) processes that may present superficially as required but may in reality be safely ignored without loss of ability to achieve the desired project outcome, that is, processes that do not add value.

Why Do Projects Fail? Although many reasons exist for project failure, ineffective, scope management remains the single most potent tool to mitigate the likelihood of project failure. The following table indicates why. As you can see, project failure is most often related to incorrect understanding of project requirements. In a nutshell, therefore, project scope management deals with requirement identification. Project requirements can be misunderstood, documented incorrectly, or simply omitted because of clerical error. Sometimes, requirements—and the statement of requirements—may be inconsistent and potentially conflicting as well. A project would benefit in its latter stages if such lapses are eliminated. A sound understanding

106 • PMP® Certification—Excel with Ease of processes related to scope management would therefore help a project manager to avoid the aforementioned pitfalls and ensure effective project implementation. Reasons for Project Failure Reason

Percentage Contribution to Failure

Incomplete requirements

13.1

Lack of user involvement

12.4

Lack of resources

10.6

Unrealistic expectations

9.9

Lack of executive support

9.3

Changing requirements

8.7

Lack of planning

8.1

Change in project environment (project was not needed any longer)

7.5

Lack of information technology management

6.2

Technology illiteracy

4.3

Other

9.9

Source: PMI Network

Exercise 4.1

List some challenges you as a project manager faced in collecting correct and proper project requirements

Discussion Points 1. What are the external factors that affect the success of the project? 2. What are the internal factors the affect the success of the project?

Challenges in Collecting Project Requirements The following list presents the inherent challenges that lie in the way to effective collection of project requirements: • Requirements usually come from different stakeholders. • Different stakeholders may have different views about the same requirement. • Getting the stakeholders together is a difficult task due to their influence and classification level (refer Figure 3.6).

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• Sometimes, stakeholders themselves have communication problems in explaining the requirement. • Knowing what to ask, how to ask it, and how to help domain specialists to become cognizant of their requirements are critical skills. • Requirements are most often linked to one another. Identifying the link between requirements is often a difficult task. • Knowing how to plan, prepare, and facilitate effective requirements gathering sessions is one of the most critical skills of a project manager.

Types of Scope In the context of project management, there are two types of scope: product scope and project scope. Product scope. It refers to the inalterable features and functions that are to be included in a product or service, for example, a particular characteristic of a product such as Internet Explorer browser compatible or Netscape Navigator browser compatible. Project scope. It refers to the work that must be done to deliver a product with the specified features and functions; for example, all tasks involved in an office construction project. Let us consider this scenario: It is 7AM on Sunday morning and you are just waking up from bed. Your wife or mom asks to buy one kilogram of brinjal for making breakfast. So, buying one kilogram of brinjal is the requirement. Now, let us look at that extent of work (scope) that we need to do in order to buy the brinjal: 1. Wake up from bed 2. Brush our teeth 3. Wear a decent dress 4. Decide on which shop to go 5. Decide on the mode of travel (walk/bike/car) 6. Get sufficient money to buy brinjal 7. Get a suitable bag to buy brinjal 8. Start the car (bike) 9. Reach the market 10.Reach the brinjal counter 11.Choose the brinjal suitably (quality?) 12.Pay cash 13.Bring the brinjal home. Are all the above activities are required to buy one kilogram of brinjal? Yes. However, while some of these steps (scope) are directly related with buying the brinjal (product), a few other steps not directly related with the activity are also required to buy the brinjal. This is the difference between product scope and project scope. In general, a business analyst takes care of the product scope and the project manager takes care of project scope. (Of course, the project manager is responsible for the whole project). Product scope is validated against the project requirements and project scope is validated against the project management plan.

108 • PMP® Certification—Excel with Ease Product Scope Versus Project Scope Product Scope

Project Scope

Features and functions that characterize a product or service

Work that must be done to deliver a product

Required processes, tools, and techniques vary by application area

Required processes, tools, and techniques are similar across application areas

Defined in project life cycle

Defined in project management life cycle

Completion of product scope validated by measurement against product requirements

Completion of project scope validated by measurement against project life cycle requirements, that is, validation of approved procedures involved

A product may have several subsidiary components A project generally results in a single product or with their own scopes service

Exercise 4.2

Following are the processes/attributes of a new project. Classify them as “project scope” or “product scope”

1. Coding 2. Testing 3. Internet Explorer browser compatibility 4. Four types of administration 5. Three level approval

Following are the six processes in scope management, as defined by the latest edition of PMBOK (see also Figure 4.1): 1. Plan Scope Management: Process of creating a scope management plan. 2. Collect Requirements. Collect requirements is the process of defining and documenting stakeholders’ needs on the project in order to meet the project objectives. 3. Define Scope. It is the process of developing a detailed description of the project (how the project will be executed) and product (what the project will produce). 4. Create Work Breakdown Structure. Subdividing major project deliverables into smaller, more manageable components so that we are able to control and manage project scope, time, cost. 5. Verify Scope. Formal acceptance of completed project deliverables happen here. 6. Control Scope. Controlling any changes related to the project scope. We will now discuss, in detail, the six processes of scope management.

PLAN SCOPE MANAGEMENT PROCESS Plan Scope management process is the first process in Scope Management knowledge area. It is the process which creates the scope management plan. Scope management plan is a document that describes how project requirements will be collected, how the scope will be defi ned, how the scope will be validated, and how the scope will be controlled. It provides the guidelines (process) of how the scope will be managed, in general. Scope management plan is a part of the overall project management plan.

Project Scope Management

Project Charter

Develop Project Charter

Plan Scope Management Requirement Management Plan

Identify Stakeholders

Stakeholder Register

Project Management Plan

Scope Management Plan

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Develop Project Management Plan

Collect Requirements Requirement Documentation

RTM

Define Scope

OPA

Approved CR Requested Changes

Project Scope Statement

Create WBS

Control Quality

Control Communications

Close Project

Va D e lida l i v ted er ab les WP I Pe r Re form an po ce rts

OPA Update

WBS WBS Dictionary

Requested Changes

Scope Baseline

Validate Scope

Recommended Corrective Actions Requested Changes

Accepted Deliverables

Control Scope

CR

Perform Integrated Change Control

Figure 4.1 Processes involved in scope management

Inputs Project management plan: The project management plan is used as input to create the scope management plan. Pre-existing contents in the project management plan, if any, that are related to how the scope will be managed will be considered before writing the new scope management plan. If any other process talks about scope-related aspects in the project management plan, it will also be considered to maintain consistency. The latest approved version of the project management plan is considered for this purpose. Project charter: Project charter will already have some preliminary information about the scope and it will be considered while writing the scope management plan. There should be no discrepancy between the discussion of scope in the charter and its description in the scope management plan. Enterprise environmental (EE) factors: The following EE factors are considered while framing the scope management plan • Organization’s structure and culture, • Already existing infrastructure and other tools Organizational process assets: The following assets are considered while framing the scope management plan: • Policies and procedures (related with the management of scope) • Historical information (already existing scope management plan) • Lessons learnt documents (from similar kind of projects)

110 • PMP® Certification—Excel with Ease Table 4.1 Plan Scope Management – Planning Process Group Planning

Monitoring and Controlling

Plan Scope Management

Validate Scope

Collect Requirements

Control Scope

Define Scope Create WBS

Tools and Techniques Expert judgment: Here, the expertise is used on how similar kind of projects can be managed within the scope/ process of scope management. Dos and Don’ts are implemented based on the expertise gained from previous projects. Meetings: In order to develop a scope management plan which is realistic and accepted by the entire team, it is better to conduct team meetings while drawing the scope management plan. This meeting should also be attended by other stakeholders such as project sponsors and others who have a responsibility towards the scope management process. The project manager can also conduct this meeting with selected team members who have good knowledge of the scope of work being executed.

Tools • Expert Judgment • Meetings

Inputs

Outputs

• Project management Plan • Project Charter • Enterprise Environmental Factors • Organization Process Assets

• Scope Management Plan • Requirement Management Plan

Figure 4.2 Inputs, tools and outputs of the Plan Scope Management Process

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Outputs Scope management plan: The scope management plan describes how the project scope will be defined, developed and validated. This document describes the process of Collecting Requirements, Define Scope, Create WBS, Validate Scope and Control Scope. In general, Scope Management plan will discuss the process (the how part) of the requirements. The Scope Management Plan defines who is responsible for managing the project’s scope and acts as a guide for managing and controlling the scope. Scope management plan is part of the overall project management plan. The components of a scope management plan include: • • • •

Process for preparing a detailed project scope statement; Process of creating the Work Breakdown Structure (WBS) Process of formal acceptance of the completed project deliverables Process to control the scope of the project.

PMP WATCH The scope management plan can be informal or formal based on the actual needs and the requirements of the project

Requirements management plan: The process of managing requirement is the content of requirement management plan. Requirements management plan is also part of the overall project management plan. The requirements management plan discusses how requirements will be collected, analyzed and documented throughout the project lifecycle. Phase-to-phase relationship within the project is considered for this purpose. This document also talks about the configuration management process of the requirements documentation. Ongoing requirements management includes receiving the approval of all requirements by all vested parties (requirement signoff ). The process of prioritizing the requirements and the attributes of the requirement traceability matrix are also defined in this document.

The Collect Requirements Process Table 4.2 Collect Requirements – Planning Process Group Planning

Monitoring and Controlling

Plan Scope Management

Validate Scope

Collect Requirements

Control Scope

Define Scope Create WBS

112 • PMP® Certification—Excel with Ease

Tools • • • • •

Inputs • Scope Management Plan • Requirement Management Plan • Stakeholder Management Plan • Stakeholder Register

• • • • • • • •

Interviews Focus Groups Facilitated Workshops Prototypes Group decision making Techniques Questionnaires Observing Group Creativity Techniques Observations Bench Marking Context Diagram Surveys Document Analysis

Outputs • Requirement documentation • Requirements Traceability Matrix

Figure 4.3 The inputs, tools, and outputs of the Collect Requirements process

The Collect Requirements process (Figure 4.3, Table 4.2) is the process of identifying, defining, and documenting the stakeholder’s needs to meet project objectives. In the context of requirements collection, the following points are of note: 1. Definition and accurate documentation of project requirements, one of the most challenging of all project tasks, is critical for project success. 2. If identification of project requirements has not been comprehensive or exhaustive in any way, the entire project would undergo implementation under high risk. 3. A project can have more than one objective. Inputs Scope Management Plan: The Scope Management Plan describes how the project scope will be defined, developed, and validated. This document describes the process of Collecting Requirements, Define Scope, Create WBS, Validate Scope and Control Scope. In general Scope Management plan will discuss the process (the how part) of the requirements. The Scope Management Plan defines who is responsible for managing the projects’ scope and acts as a guide for managing and controlling the scope. Requirement Management Plan: The content of Requirement Management Plan defines the process of managing the requirement. It discusses how requirements will be collected, analyzed and documented throughout the project lifecycle. This is the output of “Plan Scope Management” Process. This document also talks about the configuration management process of the requirement documentation. Ongoing requirements management includes receiving the approval of all requirements by all vested parties (requirement signoff ). Requirement management plan also addresses the following tasks: 1. Configuration management activities 2. Requirement Prioritization Process 3. Traceability Structure

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Stakeholder Management Plan: Project Communication with stakeholders is an important part of any project. A project manager needs to establish lines of communication with all the stakeholders and also a mechanism to keep them involved and aware of the project’s progress and status. Stakeholder management Plan defines an approach to communicate with stakeholders and a mechanism to provide them with project data. It may be necessary to develop different strategies for the different groups identified during the collect requirement process. Some possible methods of communication are: • • • •

Progress reports Meetings and briefings User groups (email groups) Access to documentation (Requirements)

How we manage different stakeholders (processes) form the contents of the stakeholder management plan. While collecting the requirements, we need to ensure that we communicate with the stakeholders as per the stakeholder management plan. Stakeholder Register: It is used to identify stakeholders who can provide information on detailed project and product requirements. It will also have the contact details of the customer(s) and the end users of the deliverables. We shall see more about stakeholder register in Chapter 13. PMP WATCH Collecting requirements may look like a straightforward task. But experienced project managers state that it is not. More than 13% of projects fail because of incomplete requirements. More than 12% of the project failures are due to lack of user involvement in the requirements collection process.

Exercise 4.3

List five characteristics of good requirement-gathering techniques

The remainder of this section deals with the salient processes, techniques, and documents involved in the Collect Requirement process.

Tools and Techniques Interviews The project manager could set the Collect Requirements process rolling with one-on-one interviews with stakeholders who in his or her opinion have a complete understanding of the project with regard to functional and end-user requirements. Also, face-to-face interviews with customers and end users represent the primary source of information on final project requirements and an important tool for validation of the same, if the latter has been tentatively defined ahead of customer interviews. It is common practice for project executives to visit customers on site during this process. The interview

114 • PMP® Certification—Excel with Ease technique is of particular value when a project entails documentation of detailed requirements and differing opinions are likely to exist. Focus Groups The focus group technique is conceptually similar to the interview technique, the difference being interviews in this technique are conducted with 6 to 10 stakeholders at the same time in the same group. Types of Focus Groups Two-way focus group. One focus group watches another focus group and discusses the observed interactions and conclusions. Dual-moderator focus group. This technique has two variations: Model 1. One moderator ensures that the interactive session progresses smoothly, while another ensures that all the topics are covered. Model 2. Two moderators deliberately take opposite points of view on the project or particular issue under discussion. As you may guess, Model 2 helps better in identification of the pros and cons of the issue. Respondent moderator focus group. Each respondent is asked to take turns and act as the moderator temporarily. This technique evaluates opinions and considerations of respondents when they have been entrusted—when each donned the role of the moderator—with the task of ownership of the session. Client participant focus groups. Here, client representatives participate in the requirement identification session and ensure communication of concerns from this important stakeholder. Projects have a strong likelihood of failure if client concerns are not addressed during requirement identification. Failure to employ a client participant focus group and involve the client, particularly in the User Acceptance Testing phase of requirements collection, may lead to overall project failure. Mini focus groups. Groups are restricted to 4 to 5 members rather than 8 to 12. Teleconference focus groups. A telephone network is used. Online focus groups. Computers connected via the Internet are used.

Facilitated Workshops Workshops can be used for rapid assessment and collection of project requirements. Although workshops are expensive, they are widely used for requirements collection as time involved is less. Brainstorming (see under “Group Decision Making”) and high-level discussions ensure that facilitated workshops identify quickly and effectively all requirements. Workshops are of particular value when requirements are focused on an area of business in which participants have sound functional expertise or when a consensus is sought.

Prototypes A prototype is an original type, form, or instance of the final product or service serving as a typical example, basis, model, or standard for other products or services in the same category. The word is derived from the Greek prototypon, which means model. Prototypes and models present end users an idea or glimpse of what they might expect of the final product. Moreover, upon inspecting the prototype, end users are likely to think of and present more definite, more detailed, or newer requirements. This technique therefore helps end users in their objective of clearly articulating their requirements to the project team.

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Types of Prototypes There is no general agreement on what constitutes a “prototype.” The following is a list of prototypes generally used: Proof-of-principle prototype (breadboard). Used to test an aspect of the intended design without attempting to exactly simulate the visual appearance Form study prototype. Allows designers to explore the size, look, and feel of a product without simulating its functions Visual prototype. Simulates the appearance, color, fonts, and surface textures of the intended product without representing the function(s) of the final product Functional prototype or working prototype. Simulates the final design, aesthetics, materials, and functionality of the intended product

Advantages of Prototyping 1. Early visibility to the users—it will give the end users a feeling of seeing the end product in the early stages of the product and thereby users can compare their thoughts with the prototypes. 2. Encourage active participation among users—prototypes also involve the end users early in the project life cycle and helps the usability aspect of the system. 3. Cost effective—the ultimate idea of developing the prototype is to reduce the cost of the project in a proactive manner. It increases the system development speed and decreases the overall cycle of the project. It also helps to reduce the risks of the project by identifying defects in the cycle.

Steps of Prototype Creation The correct order of steps of prototype creation are mock-up creation, user experimentation, feedback generation, prototype revision. The first step is to just create a mock-up prototype and not to do a full fledged one. Get the feeling of the users for mock-up prototype using feedback, and revise the prototype to meet the needs of the users.

Group Decision Making In these groups, members meet face to face and rely on both the verbal and nonverbal interaction to communicate with each other. Brainstorming overcomes pressures toward conformity in the interacting group that retard the development of creative alternatives. Brainstorming generates ideas using a group decision making process that specifically encourages any and all alternatives, while strictly withholding judgment or criticism of those alternatives. A typical brainstorming session comprises a group of about six people. The group leader states the problem clearly, ensuring that it is understood by all group members. Each member then suggests possible solutions and alternatives in an allotted period of time. All alternatives presented are recorded for subsequent discussion and analysis. Of note is that brainstorming generates ideas that, after analysis, may or may not be found workable. Of the several brainstorming techniques, the nominal group technique is perhaps most popular. It usually restricts discussion or interpersonal immunization during the decision making process; hence, the term nominal. All group members present for discussion but they operate independently. A problem is presented and members perform the following steps.

116 • PMP® Certification—Excel with Ease 1. Each member, although part of the nominal group, independently records ideas toward solving the problem concerned before the discussion starts. 2. Each member presents at least one idea to the group. No discussion takes place until all ideas of all group members have been recorded. 3. The group then discusses the ideas in detail and evaluates each one of them with its pros and cons. 4. Each group member independently rank the ideas presented. The ideas with the highest aggregate ranking are considered for final decision. The main advantage of the nominal group technique is that it permits the group to meet formally but does not restrict independent thinking. When norms support high output, managers can expect individual performance to be markedly higher than when group norms aim to restrict output. Similarly, acceptable standards of absenteeism will usually be dictated by group norms. The choice of one technique over another will depend on (1) what criteria the project manager wishes to emphasize and (2) the cost–benefit analysis. Group decision making builds group cohesiveness. Also, electronic meetings afford quick and costeffective idea-generation processes. Group Decision Making Styles The command style In the command style, the leader makes a decision for a group with little or no input from the members of that group. The group members may provide specific information on request but are not asked to contribute toward finalizing the solution. One may think this process is autocratic. The advantage, however, with the command style is that the decision is made quickly. The disadvantage is that some group members who may disagree with the decision of the group leader may fall short on levels of commitment required. Therefore, the command style of group decision making is generally employed when • the group perceives the group leader to have sufficient domain expertise to make a nonconsultative decision. • the group asks the group leader to make the decision. • there is not enough time available to use a consultative or consensus-oriented group decision making processes, typically, in times of a crisis. The consultative style Here, the group leader invites suggestions and alternative plans from group members and makes only such a decision that meets the needs of the group. Group members have been consulted but some or all of them may still disagree with the decision that has been made. The consultative style of group decision making is generally employed when any of the following conditions applies: • The group does not have the information, education, skills, or experience to make a high quality decision. • The group does not share the goals or objectives that the group leader hopes to achieve by solving the problem. The consensus style The consensus style of group decision making refers to a situation wherein the leader seeks input from the group and works through the decision making process with the group until every group member can “live with” the decision that is made. This is a truly democratic solution-generating process as every group member has taken part in the decision made. It leads to a

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high degree of “buy in” and commitment to the decision by all group members. The disadvantage of this technique is that it time consuming. The consultative style of group decision making is generally employed when any of the following conditions applies: • The group shares the same goals or objectives. • All group members support the decision reached irrespective of their individual opinion. • Plenty of time is available for the decision making process. Methods of Reaching a Group Decision Unanimity

Everyone agrees on a single course of action

Majority

Support from more than 50% of participants

Plurality

The largest block in a group decides even if a majority is not achieved

Dictatorship

One individual makes decision for the group

Exercise 4.4

List five consequences of not properly collecting project requirements

Questionnaires This technique just ask questions to gather the requirements. Questionnaires are cheaper and may be faster than the interview technique. Questionnaires are best for gathering technical information and responses to close-ended questions. Interviews are better for process and open-ended questions.

Observing It is useful to observe how people actually work with the system. By observing the way people work, we may gather information about the everyday actions of people that they are unaware of. We can also observe how people use the system, the screens they mostly use and the sequence in which they use it. The observation technique is very helpful to gather requirements on a legacy system for which no documents are available. An observation technique is also called as Job Shadowing.

Group Creativity Techniques Group Creativity techniques involve Delphi technique, brainstorming, idea/mind mapping technique and affinity diagram technique.

Delphi Technique The Delphi method is a systematic, interactive forecasting method that relies on a panel of independent experts. The selected experts answer questionnaires in two or more rounds and the facilitator

118 • PMP® Certification—Excel with Ease provides an anonymous summary of the experts’ forecasts. Experts can revise their earlier answers based on the replies of other members of their panel.

Brainstorming It is a group creativity technique that can be used for multiple aspects of the project management including collecting requirements. It involves facilitating a group of individuals to generate as many ideas on a topic as possible. While collecting the requirements using this technique, we should clearly write down the set of rules to be followed. There should not be any arguments on the points (requirements) raised. However, the disadvantage of this technique is that it easily gets biased. When an experienced member of the team makes suggestions, the other members of the team tend to agree with him/her rather than come up with their own solutions by thinking creatively/innovatively. The nominal group technique may take brainstorming a step further by including a voting process to rank the ideas that are generated.

Idea/Mind Mapping Technique Ideas created through individual brainstorming are consolidated into single map that visually captures ideas in a non-linear format. This is a good technique for gathering and understanding the whole requirements better. Affinity Diagram: Allows large numbers of similar ideas/requirements to be sorted into groups for review and further analysis (Refer Figure 4.4) Which Technique to Apply for Collecting Requirements? The five techniques of project requirements collection discussed thus far are applicable to a variety of organizational styles and cultures and project-specific requirements. The choice of any one technique depends, among others, on the • availability of stakeholders. • skill levels of the stakeholders. Group each ideas under different Heading Look for similar kind of Ideas Look for Ideas for a requirement IDEAS

GROUP A

SIMILAR IDEAS

SIMILAR IDEAS

IDEAS

GROUP B

Figure 4.4 Affinity Diagram

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• knowledge possessed by stakeholders on project requirements. • influence levels of stakeholders in the project. • knowledge possessed by stakeholders on work processes and the methodologies. The popular mnemonic SMART—specific, measurable, achievable, realistic, time bound, may be used to evaluate or validate project requirements: • • • •

Specific. Clearly state what is required Measurable. Confirm when an objective has been met Achievable. Confirm whether the project can be executed (e.g., technically possible) Realistic. Confirm whether a good probability exists that the project will be completed with returns (e.g., cost is not prohibitive). • Time bound. Confirm whether the project is achievable within an acceptable timeframe.

Output of the Collect Requirements Process Requirements Prioritization Requirement in a project is usually prioritized based on the urgency of the requirement. The level of the requirements is determined by the end users. In a typical project, the core components are built early in the project, thereby prioritizing the requirements of the core components. Project Requirement Document This is the primary output document of the Collect Requirement process. It is designed to understand what a product should do and how it should work. Typical components of a product requirement document are the following: • Purpose and scope, from both a technical and a business perspective • Stakeholder identification • Market assessment and target demographics like the area in which a specified product will be used • Product overview and use cases • Requirements, including functional requirements (e.g., what a product should do), usability requirements, technical requirements (e.g., security, network, platform, integration, client), environmental requirements, support requirements, interaction requirements (e.g., how the final product should work with other systems), quality requirements, training requirements, acceptance criteria. • Constraints Functional requirements: It indicates what a product should do. For example, a “customer details gathering” functionality may list the details that need to be gathered from the requirements, and the definition of each data to be collected like Name of the Customer, Gender, Qualification, etc. It may describe the format of each data to be collected. It may also explain how to add the data, delete the data, and modify the data. It also gives details about the data that can be modified by the users, and the type of users who can modify data. Usability requirements: Gathering usability requirements from the end user will increase the probability of project success and also involves end users early in the project life cycle. The end

120 • PMP® Certification—Excel with Ease users should understand the purpose of the system clearly. The product should be designed in such a way that end users learn how to use the system quickly. Consistency in fonts, error messages, and navigation are part of usability requirement of the system. Usability requirements include classifying the group of users with defined role for each user group. Screen layout is also part of usability requirement. Technical requirements: It includes the requirement related to authentication and authorization of the system along with other security factors like encryption and decryption of data, the platform or software in which the system will be deployed, and the interaction requirement of the system. Quality requirements: It includes the requirement related to the quality of the system and addresses the following quesitons: What kind of review will be done in this project? What metrics will be used? How the metrics will be collected? When and how the quality audit will be conducted? Requirement Traceability Matrix A traceability matrix is created by associating project requirements with other related processes, such as design, coding, testing. It provides a means to track requirements throughout the project life cycle. It provides a skeleton and a path for managing changes to the product scope. The requirement traceability matrix ensures that during future changes to project processes, all accompanying process changes and modifications are well addressed and clearly defined. It ensures that all lowerlevel requirements come only from the higher-level requirements, and that all higher-level requirements are allocated to lower-level requirements. The requirement traceability matrix is thus a twoway process. Figure 4.5 shows a traceability matrix, listing examples of forward and backward tracing between user and system requirements. In the below example, U1 and U2 are the unique numbers assigned to users’ requirements. U1 is the number associated with a user requirement related to medical claim and U2 is the number associated with a user requirement related to insurance maturity. S12 and S13 are the unique numbers assigned to functional requirements and are related with the user requirement defined above. The user requirement is first collected before defining the functional requirement. Hence, the forward traceability matrix maps user requirement with functional requirement whereas the backward traceability matrix maps functional requirement with user requirement. We can also draw another forward traceability matrix to map requirements vs. design components and a backward traceability matrix to map design components vs. requirement components.

ID

User Requirements

U1

User can do medical Claim

Forward Traceability S12

U2

User can claim for Insurance maturity

S13

ID

Functional Requirement

S12

The system will get user Input

U1

S13

The system will calculate maturity value for Insurance

U2

Backward Traceability

Figure 4.5 An example traceability matrix

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PMP WATCH Typical attributes included in the requirement traceability matrix include a unique identifier, a description, owner, source, priority, version, current status, and date completed. Additional attributes to ensure that requirement has met stakeholders’ satisfaction may include stability, complexity, and acceptance criteria.

Discussion Points 1. List the consequences of incorrect requirements collection. 2. What technique did you use to gather requirements in your previous project? Explain the reason for choosing that technique.

THE DEFINE SCOPE PROCESS The Define Scope process (Figure 4.6, Table 4.3) involves preparation of a detailed project scope statement, comprising tasks critical to project success, and builds on major deliverables and existing assumptions and constraints and identifies possible future assumptions and constraints. It also involves preparation of a detailed product scope. Scope management plan describes the process of managing the scope of the project, which includes process of collecting requirements, process of defining scope, process of creating WBS, process of verifying scope, and process of controlling scope.

Inputs Scope Management Plan: It describes the process of managing the scope of the process, which includes the process of collecting requirements, defining scope, creating WBS, validating scope, and controlling scope. Project Charter: Project charter is created during the initiation phase of the project. It has just sufficient details to kick-start the project but we need to consider that while we are defining the scope. Table 4.3 Define Scope – Planning Process Group Planning

Monitoring and Controlling

Plan Scope Management

Validate Scope

Collect Requirements

Control Scope

Define Scope Create WBS

122 • PMP® Certification—Excel with Ease Tools • Product Analysis • Alternative identification • Expert judgment • Facilitated Workshops

Inputs • Scope Management Plan • Project charter • Organization Process Assets • Requirements documentation

Outputs • Project scope statement • Project Document (updates)

Figure 4.6 Inputs, tools, and outputs of the Define Scope process Requirement Documentation: Requirement documentation is the outcome of the Collect Requirement process and is the input for the Define Scope process. The work (Scope) is based on the requirement of the project. When the requirement changes, the work (Scope) associated with the requirement, also changes. Hence, the requirement documentation is the input for this process. Scope definition should address the following: Origin and background of the project. The scope definition should include information on issues that led to the project and organizational justification for the project. Any extraordinary urgency for executing a project—if such an urgency exists—and associated organizational concerns are also listed. Stakeholders of the project. Consideration of who are mainly affected by and who will have an effect on the project and its outcome leads to effective identification of stakeholders. Who will facilitate, assist, and support the project execution? Project governance. The role of a project management office (PMO), if the organization has one, is clearly defined. Project authority. Definition of project authority in the scope facilitates quick and effective decision making during project execution. The objective of such a definition is to define authorities, for example, for change management and approval of funding, define the role of the project manager, and draw boundaries between functional heads. This demarcation of project-specific authority levels enables a project manager, during project execution, to determine whom to approach when for smooth execution. Organizational benefits. Organizational benefits that would result out of the resources committed to this project are detailed. A good way to start on this would be to justify the question, “Why the organization should undertake the project?” The portfolio manager is best placed to answer this question. Project objectives. SMART objectives are established. Statement of deliverables. A clear statement of deliverables ensures that a conflict between intended deliverables and client expectations does not surface in future.

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Statement of milestones. Important milestones during project execution are installed. Project milestones like RA, design, coding, etc are defined here. Constraints. As mentioned earlier, constraints are factors that limit the organization’s ability to successfully execute a project or factors that inhibit the organization from extracting any value or business advantage out of successful project completion. Inhibiting factors that carry a 100% probability of occurring are identified. Also, facts that limit project objectives such as impossible schedules, inadequate budgets, lack of required skills, lack of software licenses, and lack of required infrastructure are determined. These are constraints that limit project objectives and are managed suitably. Assumptions. Assumptions that have been made or are implicit on the resources available, financial commitments, technical skills, and commitments of third parties are identified. Assumptions also represent risks to be examined, as untenable or invalid assumptions represent project risks that may emerge at a later time point. Typical assumptions are that the client will sign off on time, that client will respond to the project team’s queries on time, and that critical project resources will finish their tasks on time. Exclusions. Oftentimes clients may expect particular deliverables or project outcomes not included in the project work. Such outcomes are referred to as being out of the scope of the project. It is therefore mandatory to clearly state in the scope statement not only what the project will produce but also what it will not. For example, migration of data on to another system may be out of scope. Major risks identified. Major risks are defined as those that may impact the success of the project. Particularly risks related to schedule, quality, resources, and clients are to be defined up front. We will discuss project risks in Chapter 8, on risk management. Project budget. Last but not the least, the scope statement should clearly state the approved budget for the project. The budget is generally defined on the basis of the estimated revenue and/or the priority the management attaches to the intended project outcome.

Product Analysis Product analysis is a technique used to gain a sound understanding of the intended product, which would help in identifying tasks required—and those not required—for project implementation. This technique, however, applies only to those projects that produce as deliverables not services or results but physical products. Product analysis includes techniques such as product breakdown, systems analysis, systems engineering, value engineering and value analysis. Product Breakdown Structure A product breakdown structure (PBS) is an exhaustive, hierarchical tree structure of components that make up a product, arranged to show the whole–part relationship and to help to clarify what is to be delivered by the project. It may also be used to help build a work breakdown structure (WBS). Systems Analysis Systems analysis is an interdisciplinary science, dealing with analysis of sets of interacting entities, the operational systems, often prior to their automation as computer systems, and the interactions among those systems.

124 • PMP® Certification—Excel with Ease Systems Engineering The need for systems engineering arose with the increase in complexity of systems and projects. This technique is used in the design and management of complex engineering projects and deals with the work processes and associated tools used to manage projects. Systems engineering usually comprises the following seven tasks. (Note that the first letters represent the word similar) 1. 2. 3. 4. 5. 6. 7.

State the problem Investigate alternatives Model the system Integrate Launch the system Assess performance Reevaluate

Value Engineering Value engineering (VE) is a method to systematically improve the value of goods or products and services by using an examination of the functional attributes of an intended product. It is defined as the ratio of function to cost. Value can be increased by either improving the function a product or service can perform or reducing the cost associated with the product or service. Value Analysis Value analysis defines a basic function as any characteristic or feature of a product on the basis of which that product works or is marketed and cannot be altered. The technique defines secondary functions as the manner in which the basic functions are implemented and those that may be modified or eliminated to reduce product cost. The following list indicates the tasks entailed in value analysis in the context of primary functions: 1. Identify the product and its intended customers. 2. Identify the basic functions for which the customer is planned to be billed. (Generally, only a few basic functions would fall into this category.) Following this task is that of identifying the secondary functions. This is performed by asking “How is this to be achieved or achieved already?” or “What other functions support the basic functions described?” The relative importance of each primary and secondary function is then determined. The product is broken down into the individual components that allow for its key functions. Then the cost of each component is accurately measured, including all material and production costs. Finally, components that add little value but cost more must be considered for elimination or lowercost components should be sourced.

Alternative Identification Alternative identification is a technique used to generate different approaches to executing a project. A variety of general management techniques can be used, such as brainstorming, lateral thinking, to name a few.

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Facilitated Workshop Workshops can be used for rapid assessment. Though expensive, workshops are an effective way to define the project scope since they involve all stakeholders. Workshops get the buy-in from all stakeholders and hence, the output will be more accurate and achievable and the time involved is comparatively less. Workshops are useful to define the scope for a particular area of business. We may conduct different workshops for different business areas that cater to different stakeholders. Exercise 4.5

Currently you do not have a user experience team to design a front-end screen in a banking-software project. What are the alternatives you can think of?

Define Scope Analysis – Outputs The output of the Define Scope process consists of the following elements: • • • • • • •

Project objective Product scope description Product acceptance criteria Project deliverables Project exclusions Project constraints Project assumptions

Scope Statement A scope statement is a document used to develop and confirm a common understanding of the project scope, which includes 1. 2. 3. 4.

project justification. a brief description of the project’s products. a summary of all project deliverables. a statement of what determines project success.

Exercise 4.6 The work required to create a banner at a site Process of scope verification Process to handle change requests How a software will be unit tested List of deliverables

Classify the below attributes as part of “scope management plan” or “scope statement”

126 • PMP® Certification—Excel with Ease Table 4.4 Create WBS – Planning Process Group Planning

Monitoring and Controlling

Plan Scope Management

Validate Scope

Collect Requirements

Control Scope

Define Scope Create WBS

THE CREATE WORK BREAKDOWN STRUCTURE PROCESS The Create WBS process organizes by breaking down the project work into manageable pieces while highlighting the deliverables orientation of the work involved. Establishing an effective WBS involves a process called decomposition—the process of subdividing major project deliverables into smaller, more manageable components until deliverables are defined in sufficient detail to support project activities. The WBS (Figure 4.7, Table 4.4) identifies and serves as a blueprint for all the tasks and deliverables mandatory in a project. It follows that if a piece of work or task has not been included in the WBS, it is not part of the project. The WBS serves as a reference point for all stakeholders as a list of tasks and deliverables entailed in a project. In practice, the WBS manifests as a visual representation of the hierarchy of the project and the work specified in the project scope statement.

Create WBS Tools • Decomposition

Inputs • Scope management plan • Project scope statement • Requirement documentation • Organizational process assets

Outputs • Scope baseline • Project document update

Figure 4.7 The inputs, tools and outputs of the Create WBS Process

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The WBS is the foundation upon which project execution is planned and built. The WBS template of a project can be used for other projects as well, although it does not show project dependencies. Specifically, a WBS is direct input to the following processes: • • • •

Estimate cost Budget cost Control scope Define activity

Alternative Forms a WBS Can Take For complex project with many uncertainties yet to be resolved, decomposition may not be possible for all the deliverables to be made. In such projects, the project management team generally defers the WBS process until deliverables are clarified to enable their breakdown into manageable pieces. This technique of deferring the WBS process is referred to as rolling wave planning. A common error in management of complex projects is to attempt to establish a complete WBS at one go. For complex projects, this is not only not possible but also not necessary. Elaboration of tasks and deliverables may be completed only for a short term, say, for 1 month. Further elaboration may be made as details emerge and requirements become clearer. A WBS can also be generated by one the following ways: 1. A WBS can be established using (1) the phases of a project life cycle at the first level of decomposition and (2) the product and project deliverables at the second level of decomposition (see Figure 4.8A).

WBS - Type 1 Project Life Cycle Phase Deliverables

Sub division

Design

High Level Design Data Base Design

Low Level Design System Design

Interface Design

WBS - Type 2 Major Deliverable Sub Deliverables

Sub division

Requirement Document Functional Requirement System System11 Requirement

System System22 Requirement

Architect Requirement Technical Requirement

Figure 4.8 A, B: Two examples of alternate WBSs

128 • PMP® Certification—Excel with Ease 2. A WBS can be established using major project deliverables at the first level of decomposition (see Figure 4.8B). 3. A WBS can be established using subprojects developed by a third-party organization.

The Work Package and WBS Identifiers A work package is the smallest component of a WBS. It appears at the lowermost level in the WBS’s hierarchy of elements. A work package is process oriented in that it • • • • • •

defines work (what needs to be done). identifies time to complete a work package (how long). identifies a time phased budget to complete a work package (cost). identifies resources needed to complete a work package (how much). identifies a single person responsible for units of work (who). identifies monitoring points (milestones) for measuring success.

Each element at each level of a WBS is assigned a unique identifier; this identifier is typically a number, and it is used to track the cost of the WBS element to which it has been assigned. The nomenclature used is usually associated with the organization’s financial system. These numeric identifiers are collectively known as a code of accounts or a chart of accounts. For example, we may assign a number for the WBS element called “Functional Requirement” represented in Figure 4.8B, to help us track the cost of that particular element easily. The cost may include the cost associated with System 1 requirement and System 2 requirement.

The WBS Dictionary A WBS dictionary contains detailed information about each element in the WBS. The information includes cost, time, and resource information that will be used to measure performance and completion. The WBS dictionary (see Figure 4.9) helps the project team to determine what it will take to

Project Name:

Task No:

Person Assigned:

Date Issued:

Task Description: (what work is authorized?) Quantified Objectives: (See the description in the project charter) Product Description: (What is the end result of the task or the work package?) Acceptance Criteria (How will the team member be able to check their own work?) Deliverables (See the description in the project charter) Assumptions Resources Assigned Duration Cost Due Date Interdependencies:

Before the task

Approved By:

Project Manager

After the task Date

Figure 4.9 An example WBS dictionary template

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complete the work. The WBS dictionary also helps planning by providing an additional framework for cost and time estimates, staffing assignments, and performance monitoring.

WBS Rules The primary task in a WBS process is breaking down the project work into work packages. The following conditions—rules of thumb—may be used to validate the work packages we propose to identify: 1. 2. 3. 4.

The work package can be realistically and confidently estimated. The work package cannot be logically further subdivided. The work package can be completed quickly (relative to entire project). The work package can be completed without disruption (without the need for more information).

Exercise 4.7

An Example WBS

Suppose that the organization you work with has placed you as a consultant project manager with another organization and that you have been assigned a loan approval automation project, titled Loan Approval Automation Project, one that is expected to generate heavy revenue. The third-party organization expects you to get the project completed at the earliest. The scope statement of the project includes the following: 1. The system should be ready first for Indian market first, the UAE market next, and the European market third. 2. A customization logic is required for each market. 3. The project comprises both hardware and software components. 4. The automation project module comprises a setup module and an approval module. Now answer the following questions. 1. What is the name of the highest-level component of the WBS? 2. What can be the second level of the WBS in the above diagram? 3. What are all the substeps at level three? Illustrate and uniquely number each level.

Scope Baseline A scope baseline is a component of the project management plan. The scope baseline measures the success of the project. The components of a scope baseline are the project scope statement, the WBS, and the WBS dictionary. Other breakdown structures that are similar to the WBS are the following: Organizational breakdown structure (OBS). The main purpose of the OBS is to show the organization of resources and human resources that will be used on a project. The work components of the WBS are shown related to the groups of individuals and resources that will accomplish the work. Resource breakdown structure (RBS). The RBS is prepared from the OBS in that the details of the RBS generally go to right down to the level of the individual resource. For example, the top level of a RBS could be the business unit, competency unit, or consultancy unit to which the resource belongs; the second-to-last level could be the reporting manager of that resource, which includes asset line and service line managers; the final level could be the resource. Bill of material (BOM). The various product components required are represented in the BOM in a hierarchical way. The BOM may be in a tree form or indented to the lowest level required, to accurately list all parts and raw materials required by for project execution. The BOM is then used by the project manager to order any supplies that are necessary.

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Benefits of a WBS The following is a list of the salient advantages of creating a WBS for a project: 1. The components of a WBS assist stakeholders in readily viewing the deliverables of the project. 2. The process of establishing the WBS for a project often leads to important updates to the scope statement. 3. Because a WBS subdivides major project deliverables into manageable components, it serves to improve the quality of cost, time, and resources estimates. 4. A WBS provides a baseline for assigning responsibilities. 5. A WBS is often used to crosscheck with the client about a project team’s understanding of the project scope. 6. A WBS provides the project team with an understanding of where the pieces—the work packages—fit into the overall project management plan. 7. A WBS gives the project team an indication of the impact of their work on the project as a whole. 8. A WBS helps prevent change 9. A WBS provides a basis for estimating resources, cost, and time, and proof of need for resources, cost, and time required

THE VALIDATE SCOPE PROCESS The Validate Scope process (Figure 4.10, Table 4.5) refers to the end user accepting project deliverables. Scope verification takes place at the end of every project phase or when a major interim deliverable has been completed. Simply put, this process is concerned with acceptance of project work. It also entails the accompanying checking processes such as quality control activities. Client’s or sponsor’s acceptance of the product is documented as per plan. In general, the Validate Scope process

Inputs and Tools • comprisest the process of formalizing stakeholders’ acceptance of the project scope (up until the stage for which scope is presented for validation). • reviews work products and results from quality control process (validated deliverable is the

Table 4.5 Validate Scope – Monitoring and Controlling Process Group Planning

Monitoring and Controlling

Plan Scope Management

Validate Scope

Collect Requirements

Control Scope

Define Scope Create WBS

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Verify Scope Tools • Inspections • Group Decision making Techniques

Inputs • • • • • •

Scope Management Plan Requirements documentation Requirement Traceability Matrix Validated deliverables Work Performance Data Scope Basseline

Outputs • Accepted deliverables • Change Requests • Project documents updates

Figure 4.10 The inputs, tools, and outputs of the Validate Scope process outcome of that process) • is primarily concerned with acceptance of the work results by the customer and end user. • comprises inspection of deliverables, such as measuring, examining, and testing whether results conform to requirements. Product reviews, audits, and walk-throughs are examples of processes that are used to check compliance of deliverables. (Inspection and group decision making techniques are used as tools and techniques here.) Work Performance Data: Work performance data is the input for this process, which includes the data related to the degree of compliance and requirements (Scope) such as number of non-conformance (NC), severity of the NC etc.

Outputs If a project is terminated early, the project scope validation process documents the level and extent of completion. Assuming successful execution, accepted deliverables are the main outputs of this process. The scope validation process documents completed deliverables that have been accepted and deliverables that have not been accepted, with reasons for rejection and suggested rework. Hence, change request is also an output of this process. If a project terminates early, project scope validation should be done next, to establish and document the level and extent of completion. Scope validation is concerned with acceptance of deliverables, while quality control is concerned with quality of deliverables. Quality control is generally performed before scope validation but can be performed in parallel as well. Validated Deliverable is an output of Perform Quality Control, which is used as an input for Validate Scope process.

THE CONTROL SCOPE PROCESS The only certainty in project execution—particularly execution of complex projects—is change. Therefore, a robust system to track, monitor, manage, and document change is critical to project success. The objective of the Control Scope process is effective change management, that is, to ensure that scope creep is

132 • PMP® Certification—Excel with Ease Table 4.6 Control Scope – Monitoring and Controlling Process Group Planning

Monitoring and Controlling

Plan Scope Management

Validate Scope

Collect Requirements

Control Scope

Define Scope Create WBS

prevented or minimized. All changes to project scope occur only through an authorized change process. The Control Scope process (Figure 4.11, Table 4.6) is used for controlling changes to project scope by • influencing factors that create scope changes and ensure the changes are beneficial. • determining that a scope change has occurred. • managing the changes when they occur.

Inputs Project management plan: This will have the process of controlling the scope and hence is used as an input

Control Scope Tools • Variance Analysis

Inputs

Outputs

• Project Management Plan • Work Performance Data • Requirements Documentation • Requirements Traceability Matrix • Organizational Process Assets

• Work Performance Informations • Organizational Process Assets Updates • Change Requests • Project Management Plan Update • Project documents Update

Figure 4.11 The inputs, tools, and outputs of the Control Scope process

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Work performance data: It shows the degree of compliance of requirements, which helps to take actions. Before doing variance analysis we need basic data like percentage of completion of projects, actual cost spent as of today etc. Requirement documentation and RTM: Both are used to ensure that requirement is intact and is being tracked and traced. It also ensures that all changes are being documented correctly.

Scope Creep Project scope control is also used to manage the actual changes when they occur and is integrated with other control processes. Uncontrolled scope is referred to as scope creep. Scope creep is said to result when improper or insufficient project scope definition leads to delays and/or cost overruns. Preventing or effectively managing scope creep is, therefore, a part of successful project management. The following best practices may be employed to avoid scope creep: Keep the scope realistic. Overambitious and extremely complex projects are best avoided; alternatively, such projects may be broken down to a set of smaller ones. Always involve users. Assignment of key users may be made to the project team and ownership for requirements definition and scope verification may be delegated to them. Use off-the-shelf hardware and software. An existing or available technology may be used. Costly “reinventing of wheels” do not ensure good returns on investment. Employ Scope Management Process as defined above. Well-defined processes for managing project scope and others aspects of projects may be followed.

Tools and Techniques Variance Analysis Project performance measurements are used to assess the magnitude of variation. Variance analysis is an important task of a project manager. A process cannot be improved if we are unable to measure it. First, we need to identify the magnitude of variation and then find out the root cause of the variation. An important aspect of variance analysis in scope control is to identify the cause of variation between Scope Baseline vs. Actual Product Scope. We need to identify the corrective actions to bring the scope deviation back to control. The project manager also finds out the preventive actions that could check the same kind of problem from occurring again. Earned value management is a tool of variance analysis that helps to combine Scope, Time and Cost using a mathematical formula. We will be discussing more on Earned Value in Cost Management.

Work Performance Information Performance information on project activities is routinely collected as the project progresses. Work performance information (WPI) is collected per the metrics defined in the project management plan. These metrics include but are not limited to 1. 2. 3. 4. 5.

deliverable status. cost incurred. schedule status and progress. status of adherence to standards defined. lessons learned.

134 • PMP® Certification—Excel with Ease 6. resource consumption and utilization.

The Change Request Form The results of project scope control can generate change requests, which are processed for review and disposition according to the project’s integrated change control process. Change requests help to connect what customers and end users actually want and what the project team thinks they want. The project manager needs to influence the factors that affect change. The following is an example change request form. Project Name Date Requester Change Number Description Reason for Change Impact of Change Change Control Review Board (CCRB) Review Date Accepted Rejected

Exercise 4.8

Match the following elements

A output software should have less than 20 defects per functionality

Project organization

There will be one project manager, two project leaders, and five team members

Project deliverable

The requirement analysis document will be submitted to the customer

Project constraints

A project should be completed in next 60 days

Project requirements

A output software should run with Internet Explorer 7 or below versions

Product acceptance criteria

Summary Projects fail most often because of incomplete identification of requirements. Scope Management is an important and fundamental knowledge area, which acts as an input to almost all other knowledge areas. This chapter has introduced the reader to the processes related to Scope management as defined in the PMBOK Guide. We discussed two different types of Scope: Product Scope, and Project Scope. WBS, which is the guiding principle of project management has been discussed in detail.

Project Scope Management

Answers to Exercise Questions Exercise 4.1 Probable Answers: Customer not aware of or unable to clearly communicate requirements Customers unable to articulate what they want Business analyst not aware of gathering techniques Customer has unrealistically high expectations of project outcome Too many requirements to be gathered over a short time Exercise 4.2 Answers: Coding

Project scope

Testing

Project scope

IE and NN compatible

Product scope

Four types of administration Project scope Three level approval

Project scope

Exercise 4.3 Possible Answers 1.

Attainable

2.

Complete

3.

Unambiguous

4.

Consistent

5.

Traceable and testable

Exercise 4.4 Possible Answers Scope creep Possible cost overruns Customer dissatisfaction Decline in team morale Further business with the same client may be hit Exercise 4.5 Possible Answers. 1.

Recruit a user experience designer

2.

Outsource the work to another company

3.

Reuse an existing screen

4.

Contract a person outside to do this work

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Exercise 4.6 Answers The work required to create a banner at a site

Scope statement

Process of scope verification

Scope management plan

Process to handle change requests

Scope management plan

How a software will be unit tested

Scope statement

List of deliverables

Scope statement

Exercise 4.7 Answers Answer1: Loan Approval Automation Project. Answer 2: 1. Indian market 2. UAE market 3. European market. Answer 3:

Loan Approval Automation Project

1.0 Indian Market

1.1 Indian Device

2.0 UAE Market

1.2 Indian Software

3.0 European Market

3.1 European Device

3.2 European Software

Exercise 4.8 Answers A output software should have less than 20 defects per functionality

Product acceptance criteria

There will be one project manager, two project leaders, and five team members

Project organization

The requirement analysis document will be submitted to the customer

Project deliverable

A project should be completed in next 60 days

Project constraint

A output software should run with Internet Explorer 7 or below versions

Project requirement

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Chapter 4 Questions and Answers

• • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. A clear definition of end users’ needs serves as the direct basis for A. the WBS. B. functional requirement. C. project cost estimate. D. selection of personnel. Question 2. The WBS is A. an organization oriented tree of a project. B. a task based family tree of a project. C. a cost center tree of a project. D. required only on large complex projects. Question 3. The WBS is best described as A. a schedule. B. a method. C. an organization. D. a task oriented family tree of activities. Question 4. In general, product specifications are best developed by A. the technical staff. B. the project manager. C. upper management. D. the logistics department. Question 5. A Key Attributes of Validate Scope Process is – A. customer acceptance of project efforts. B. improved schedule estimates. C. improved schedule variance. D. better quality assurance. Question 6. The main characteristic of the Delphi technique is that it employs A. simulation models. B. extrapolation from historical data.

C. intuitive expert opinion. D. linear programming algorithms. Question 7. The lowest level of a WBS is the A. cost element B. planning element C. accounting interface D. work package Question 8. Completion of product scope is measured against A. Product requirements. B. Product requirement management. C. Project management plan. D. work package. Question 9. Validated deliverables are the input of which of the following process A. Validate Scope B. Control Scope C. Create WBS D. Define Scope Question 10. A document that describes how project scope will be managed and how scope changes will be integrated into the project is a A. project plan. B. risk analysis plan. C. scope management plan. D. scope statement. Question 11. Where can a project manager find work package information such as cost, time, and resource information that will be used to measure performance and completion? A. Project plan B. WBS C. WBS dictionary D. Project management plan

138 • PMP® Certification—Excel with Ease Question 12. Suppose all tasks entailed by the planning process is complete. Now, for the customer to accept the project, what will you do? A. Nothing. The plan is complete and so the project is complete. B. Perform Scope Validation. C. Finalize lessons learned. D. Implement manufacture of a proofof-concept product. Question 13. Which project scope management process defines how scope will be verified? A. Plan Scope Management B. Define Scope C. Verify Scope D. Control Scope Question 14. You are working on a construction project that is just past its initiation phase. What is the main outcome of this phase? A. Project charter B. Scope statement C. A WBS D. Project management plan Question 15. You have been recently assigned a project to create a succession and rotation plan for the organization. There are four people reporting to you and two people from other departments. The project charter of this project issued would be by A. the project manager. B. the PMO. C. senior management. D. the project team. Question 16. As you discuss with other Project managers about Scope Validation, a statement is made that scope validation is not important as everything else is implied. Do you agree with this statement? A. No, I don’t agree. Scope Validation is related with acceptance of the project work. B. Yes, I agree. Scope Validation is not necessary and avoiding this process would save time for the team C. Yes, I agree. Scope Validation is not required as quality control procedures are performed for all deliverables

D. No, I don’t agree. Scope Validation is related with the correction of the project work and can be avoided. Question 17. A tool commonly used to define scope is A. decomposition. B. WBS. C. inspection. D. audit. Question 18. A document that has the features and functions that characterize a product or service is called a A. product scope document B. project scope document C. project management plan D. statement of work document Question 19. Work that must be accomplished to deliver a product or service with the specified functions and features is classified under A. product scope. B. project scope. C. a project management plan. D. statement of work. Question 20. The business need for which the project is undertaken to address is called A. project justification. B. project deliverables. C. project compulsion. D. project objective. Question 21. A scope management plan can be informal, based on project needs. A. True B. False Question 22. Which of the following statement is not false? A. Completion of product scope is measured against product requirements. B. Completion of project scope is measured against product requirements. C. Completion of product scope is measured against the project management plan. D. Completion of project scope is measured against statement of work. Question 23. The process of gathering stakeholder needs to meet project objectives is part of which process?

Project Scope Management

A. B. C. D.

Collect requirements Stakeholder analysis Identify stakeholders Information distribution

Question 24. As you hand over your project to another project manager, you would like to show him how the scope will be monitored and controlled. Which document will describe it? A. Scope management plan B. Scope monitoring plan C. Scope monitoring and controlling plan D. WBS Question 25. Product requirements include all of the following except A. technical requirements. B. security requirements. C. performance requirements. D. delivery requirements. Question 26. Project requirements include all of the following except A. technical requirements. B. business requirements. C. Project management requirements. D. delivery requirements. Question 27. All of the following are examples of group decision making techniques except A. brainstorming B. the Delphi technique C. the affinity diagram D. QFD Question 28. All of the following are methods of reaching a group decision except A. unanimity. B. majority. C. popularity. D. plurality. Question 29. In a group decision making process, the largest block makes a decision even though majority has not been achieved. The group decision making process involved here is A. unanimity. B. majority. C. plurality. D. dictatorship. Question 30. One individual making a decision for the group is called

A. B. C. D.

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unanimity. majority. plurality. dictatorship.

Question 31. Everyone agrees on a single course of action. The group decision making process involved here is A. unanimity. B. majority. C. plurality. D. dictatorship. Question 32. An expert group creativity technique is an example of A. brainstorming technique. B. Delphi technique. C. nominal group technique. D. idea mapping technique. Question 33. An observation technique is also called A. job shadowing. B. secret viewing. C. buffering technique. D. idea mapping technique. Question 34. A prototype supports the concept of A. progressive elaboration. B. decomposition. C. buffering technique. D. idea mapping technique. Question 35. The correct order of prototype management is A. mock-up creation, user experimentation, feedback generation, prototype revision. B. user experimentation, mock-up creation, feedback generation, prototype revision. C. feedback generation, user experimentation, mock-up creation, prototype revision. D. user experimentation, feedback generation, mock-up creation, prototype revision. Question 36. A prototype is a tool used in which of the following processes? A. Collect Requirements B. Define Scope C. Create WBS D. Validate Scope

140 • PMP® Certification—Excel with Ease Question 37. Scope is baselined in which of the following processes? A. Collect Requirements B. Define Scope C. Create WBS D. Validate Scope Question 38. A traceability matrix is an outcome of which of the following processes? A. Collect Requirements B. Define Scope C. Create WBS D. Verify Scope Question 39. Before baseline, requirements must meet all of the following characteristics except A. ambiguity. B. consistency. C. completion. D. acceptability to key stakeholders. Question 40. Which document would be used to refer to the process of controlling project scope? A. WBS B. Scope management plan C. WBS dictionary D. Project charter Question 41. Suppose for a project that would require an expenditure of 100,000 USD an organization’s management sets aside only 20,000 USD, citing cash flow problems. This is an instance of A. management by objectives. B. a constraint. C. an assumption. D. a condition. Question 42. Suppose that by the terms of execution of a project, you are to ensure that the customer formally accepts the deliverables in each phase. Such a process is an instance of A. management by objectives. B. Validate Scope. C. an assumption. D. a condition.

Question 43. All of the following except one are true about the last level of a WBS. Which one? A. Can be realistically and confidently estimated B. Can be logically subdivided C. Can be completed quickly (relative to entire project) D. Can be completed with more information Question 44. Suppose that in the first project that you managed, you did not develop a WBS, using an alternative tool instead. During one of the management reviews, however, your manager asked you to prepare a WBS for the project. This change is an instance of a A. change due to legal issue. B. change due to error and omission. C. change due to an external event. D. change due to management review. Question 45. A senior manager in your organization always tends to have more than one solution for a problem. He also uses different approaches to execute a project in face of uncertainties in the project. This is an instance of A. root cause analysis. B. uncertainty management. C. alternative identification. D. experience management Question 46. Which of the following is not an output of the Control Scope process? A. Work performance measurement B. WPI C. Change requests D. Project management plan update Question 47. Which of the following is an input of the Control Scope process? A. Work performance measurement B. WPI C. Change requests D. Project management plan update

Project Scope Management

Question 48. Which process applies to breaking project into smaller, more manageable elements? A. Control Scope B. Define Scope C. Verify Scope D. Plan Scope Question 49. Detailed descriptions of work packages are commonly part of

A. B. C. D.

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the project charter. SOW. WBS. WBS dictionaries.

Question 50. When should Scope Validation be done? A. At the end of a project only B. At the beginning of a project only C. At the end of each phase of a project D. During the execution phases

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Answer Sheet for Chapter 4 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

Project Scope Management

Answer Sheet for Chapter 4 Questions

Question Number Question 1

Answer B

Question Number

Answer

Question 26

A

Question 2

B

Question 27

D

Question 3

D

Question 28

C

Question 4

A

Question 29

C

Question 5

A

Question 30

D

Question 6

C

Question 31

A

Question 7

D

Question 32

B

Question 8

A

Question33

A

Question 9

A

Question 34

B

Question 10

C

Question 35

A

Question 11

C

Question 36

A

Question 12

B

Question 37

C

Question 13

A

Question 38

A

Question 14

A

Question 39

A

Question 15

C

Question 40

B

Question 16

A

Question 41

B

Question 17

A

Question 42

B

Question 18

A

Question 43

D

Question 19

B

Question 44

B

Question 20

A

Question 45

C

Question 21

A

Question 46

B

Question 22

A

Question 47

B

Question 23

A

Question 48

B

Question 24

A

Question 49

D

Question 25

D

Question 50

C

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144 • PMP® Certification—Excel with Ease

Explanations for Chapter 4 Answers

1. Answer B End Users’ needs are related to product requirements and hence form part of functional requirement. The definition of Collect requirement process is – identifying, defining and documenting the stakeholders’ needs to meet project objectives. Hence, B is the best answer out of all the given options. 2. Answer B WBS is a task oriented grouping of project activities and hence is required for all projects. The last level of the WBS is called work package and from the work package we create the activities and tasks. 3. Answer D WBS is a task oriented grouping of project activities and hence is required for all projects. The last level of the WBS is called work package and from the work package we create the activities and tasks. 4. Answer A Product is technical oriented. Technical staff members work on product specifications to generate a product, right from the design to production. Note Business analysts also classified here as technical staff members. 5. Answer A Validate Scope process output is the Accepted deliverables and hence, customer acceptance of project happens here. 6. Answer C The Delphi method is a systematic, interactive forecasting method that relies on a panel of independent experts. The selected (chosen) experts answer questions in two or more rounds and the facilitator provides an anonymous summary of the experts to others. Experts can revise the earlier response; thereby better answers (solutions) are arrived at. Delphi means Expert Opinion. 7. Answer D The lowest level of WBS is called as work package. One level above the work package level is called as planning package level, the level above which is called as control account level.

8. Answer A Remember that Product Scope is measured against the product requirement document (requirement documents). The Project Scope is measured against the Project Plan (Project Management Plan) 9. Answer A Validated deliverables are the output of the Perform Quality Control process (Deliverables are validated in Quality Process) and act as input of Validate Scope process (Validated Processes are accepted and hence Accepted deliverables are the output) 10. Answer C Any management plan describes the process (the how part). The document that describes how the scope will be managed is part of the Scope Management Plan. This is better Option than Option A. Scope Management Plan is part of the Overall Project Plan. Better Option is C than A. 11. Answer C WBS dictionary contains details of WBS. The information explains the contents of WBS, which includes unambiguous description of WBS elements along with basic information like cost, time and resource information that will be used to measure the performance and completion of activities and work packages. 12. Answer B The output of Validate Scope process is Accepted Deliverables. Validated deliverables are the output of the Perform Quality Control process (Deliverables are validated in Quality Process) and act as input of Validate Scope process (Validated process is accepted and hence Accepted deliverables are the output) 13. Answer A Plan Scope Management is the process which produces the Scope Management plan. Scope Management plan describes how the scope will be managed. This includes how the requirements will be collected, how the scope will be defined, how WBS will be created, how we will validate the scope, and how we will control the Scope.

Project Scope Management

14. Answer A Initiation phase of the project has two processes, namely, “Develop Project Charter” and “Identify Stakeholders”. The main output of the Initiation phase of the project is Project Charter. 15. Answer C Initiation phase of the project has two processes namely “Develop Project Charter” and “Identify Stakeholders”. The main output of the Initiation phase of the project is Project Charter. The Project Charter is issued by someone external to the project team (Project Sponsor/Senior Management) 16. Answer A Scope Validation is related to the acceptance of the project work not related to the correction of project work. Only corrected work is accepted and hence, A is the better option. 17. Answer A Define Scope process uses Decomposition. It is the technique which decomposes the requirements into pieces in order to derive the Scope (Scope Statement). 18. Answer A Requirement document defines the features and functions (Product Scope is derived from this). 19. Answer B Work that must be accomplished to deliver a product or service with the specified functions and features is called as Project Scope. 20. Answer A The business need for which the project is undertaken is called as Project Justification. 21. Answer A Scope Management Plan can be formal or informal, highly detailed or broadly framed, both based on the needs of the project. 22. Answer A Completion of Product Scope is measured against the product requirements and the Project Scope is measured against the Project Management plan. 23. Answer A The definition of Collect Requirement process is – identifying, defining and documenting the stakeholders’ needs to meet project objectives

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24. Answer A The document that describes how the scope will be managed is the Scope Management plan. 25. Answer D Requirement document defines the features and functions (Product Scope is derived from this). A product requirement includes the technical requirements, security requirements and performance requirements. 26. Answer A Requirement document defines the features and functions (Product Scope is derived from this). A product requirement includes the technical requirements, security requirements and performance requirements. A Project requirement includes Business requirement, Project management requirements and Delivery requirement. 27. Answer D Group takes a decision in group decision making. Brain Storming, Delphi Technique, and Affinity Diagram in all these the decisions are taken by the group. QFD is used to prioritize the requirement and anybody can do it. 28. Answer C The methods of reaching a group decision makings are unanimity (no one opposes – everyone agrees on a single course of action), majority (more than 50% supports), plurality (single largest group support) and dictatorship (the boss takes decision on his own) 29. Answer D The methods of reaching a group decision makings are unanimity (no one opposes – everyone agrees on a single course of action), majority (more than 50% supports), plurality (single largest group support), dictatorship (boss takes decision on his own) 30. Answer D The methods of reaching a group decision makings are unanimity (no one opposes), majority (more than 50% supports), plurality (single largest group support), dictatorship (boss takes decision on his own- One individual making a decision for the group) 31. Answer A The methods of reaching a group decision makings are unanimity (no one opposes –

146 • PMP® Certification—Excel with Ease everyone agrees on a single course of action), majority (more than 50% supports), plurality (single largest group support), dictatorship (boss takes decision on his own- One individual making a decision for the group) 32. Answer B Delphi is an expert technique. 33. Answer A Job shadowing is done to observe the work done by a particular person. 34. Answer B Prototype supports the decomposition. Prototype helps to check a particular screen, screen flow, look and feel etc., and hence it is decomposed. 35. Answer A Prototype supports the decomposition. The correct order is mock up creation, user experimentation, feedback generation and prototype revision (if required). 36. Answer A Prototype supports the decomposition. The correct order is mock up creation, user experimentation, feedback generation, prototype revision (if required). Prototype is a technique in Collect Requirements process. 37. Answer C Scope Baseline is the output of Create WBS process. Scope baseline consists of Scope Statement, WBS and WBS dictionary. 38. Answer A Collect Requirement process output is Requirement Documentation and also Traceability Matrix. Traceability Matrix is created as soon as the requirements get identified; otherwise, we may miss it out. 39. Answer A Scope baseline is the output of Create WBS Process. Scope baseline consists of Scope Statement, WBS and WBS Dictionary. Before we set a baseline, there should not be any ambiguity. It has the properties of Consistency, Completeness and also Acceptability to key

stakeholders (requirements need not be accepted by all stakeholders). 40. Answer B We refer to the process. Any process is part of the management plan. Here, we refer to scope and hence, Scope Management Plan is the answer. Process of Controlling the Scope is part of the Scope Management plan. 41. Answer B Constraints limits the options. Here, the cost is limited and gives less than what is asked for and it is a constraint. 42. Answer B Accepted deliverable is the output of Validate Scope Process. 43. Answer D The last level of WBS called Work Package can be logically subdivided into Activities. It can be completed quickly and can be realistically and confidently estimated. It has all the information to execute the work and hence, Option D is the answer (which is False) 44. Answer B This is a classic example of change due to error and omission. Here, we did not use WBS (omitted) and instead, used an alternative one. Changes can occur due to other options also, but the example given is suitable to Option B. 45. Answer C Alternative identification is a technique used to generate different approaches to execute and perform the work of a project. It is a technique of Define Scope process. 46. Answer B Work Performance Information (WPI) is an input to Control Scope process. Work Performance measurement, Change Request, Project Management Plan update and Project Document Updates are the outputs of the process. 47. Answer B Work Performance Information (WPI) is an input to Control Scope process. Work

Project Scope Management

Performance Measurement, Change Request, Project Management Plan update, Project Document updates are the outputs of the process. 48. Answer B Define Scope process used Decomposition technique and hence, the answer is B.

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49. Answer D WBS dictionary contains more information about WBS and hence, detailed description of work package is part of WBS dictionary. 50. Answer C Scope Validation is done at least once at the end of each phase of the project.

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Key Terms Bill of materials (BOM) A hierarchical tabulation of components involved Organizational breakdown structure (OBS) A hierarchically organized depiction of the project organization to relate the performing organizational units Product scope The inalterable features and functionalities of a product or service Project scope The work that must be performed to deliver a product or service with specified features and functions Resource breakdown structure (RBS) A hierarchically organized representation of the resources by type to be used on the project Risk breakdown structure (RBDS) A hierarchically organized diagrammatic representation of the identified project risks arranged by risk category Scope All processes, products, and services a project involves and intends to accomplish better control

Scope management plan A plan which describes how project scope will be managed and actually defines the process of scope management Scope planning The process of developing a scope statement Scope statement A statement that justifies the project, describes the project’s approach, content, and deliverables Work breakdown structure (WBS) The deliverablesoriented grouping of project elements that organizes and defines the total scope of the project. The output of a process of decomposing major project deliverables into smaller, more manageable components to provide the WBS dictionary: A component of detailed project scope definition; is used to verify that the deliverables being produced and accepted are included in the approved project scope Work package A deliverable at the lowest level of a WBS; is further divided into activities

5 Project Time Management CHAPTER COVERAGE 1. Decomposition 2. Precedence Diagramming Method 3. Leads and Lags 4. Resource Breakdown Structure 5. Parametric Estimating 6. Three Point Estimation 7. Schedule Network Analysis 8. Critical Path Method 9. Schedule Optimization

INTRODUCTION The backbone of project management is the ability to plan, schedule, and control the schedule. Project time management includes the processes required to manage timely completion of the project. The work involved in preparing the six processes of project time management is preceded by efforts for planning the same. This planning effort is part of the Develop Project Management plan process and is a part of integration. The project time management process (Figure 5.1) and its associated tools and technologies are documented in Schedule Management Plan, which is a part of the project management plan. There are seven major processes required to perform project time management: Plan Schedule Management: The process of defining the procedures of schedule management activities. Define Activities. The process of defining the work (activities) that must be performed to meet project objectives. Sequence Activities. The process of identifying and documenting the interaction and logical relationships between activities. Estimate Activity Resources. The process of determining resources (e.g., equipment, materials) that are required, quantities of each resource that is planned to be used, and the availability of each resource to perform project activities Estimate Activity Duration. The process of using information on project scope and resources and developing durations for input to schedules Develop Schedule. The process of determining the start, intermediate milestones, and end dates of project activities Control Schedule. The process of monitoring the status of the project to update project progress and manage changes to the accepted schedule.

150 • PMP® Certification—Excel with Ease Develop Project Charter

Plan Schedule Management

Charter

Project Management Plan

Schedule Management Plan

Define Scope

Scope Baseline

Develop Project Management Plan

Define Activities Activity List Activity Attribute Milestone List

Sequence Activities

Estimate Activity Resources

Project Management Plan (Update) Requested Changes

Project Management Plan (Update)

Activity Resource Requirement Resource Breakdown Structure Resource Calendars

Estimate Cost

Plan Risk Management

Estimate Activity Durations

Requested Changes

Activity Duration Estimate

P WPI Re erfo po rm rts an c

Develop Schedule

OPA Update U d

Requested Changes

Project Management Plan Project Schedule (Update) Schedule Model Data Resource Requirement Perform Project Calendar

e

Close Project

Requested Changes

Project Schedule Network Diagram

Acquire Project Team

Control Communications

Requested Changes

Control Schedule

Integrated Change Control

Figure 5.1 Project time management processes Discussion Points 1. Why should a project manager to manage his time and the duration of the project? 2. What kind of tools a project manager would use to manage time? 3. What are all the time management tools you are aware of?

Exercise 5.1

Can you determine the order of execution of the following project time management processes? (Guess if you have to!) Control Schedule Develop Schedule Estimate Activity Duration Sequence Activities Define Activities Estimate Activity Resources

Discussion Points How is historical information useful for project time management?

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Tools and Techniques • Expert judgment • Analytical Techniques • Meetings

Inputs • • • •

Outputs

Project management plan Project Charter Enterprise Environmental Factors Organization Process Assets

• Schedule Management Plan

Figure 5.2 Inputs, tools and outputs of the Plan Schedule Management Process

PLAN SCHEDULE MANAGEMENT PROCESS Plan schedule management process belongs to the planning process group. Plan schedule management is the process of establishing a process for planning, developing, executing, monitoring and controlling the project schedule-related activities (Refer Figure 5.2 and Table 5.1). This process ensures that the schedule management processes and its associated tools and techniques are clearly documented.

Inputs Project Management Plan: The project management plan is used as input to create the schedule management plan to ensure consistency. If any contents related to how the schedule will be Table 5.1 Plan Schedule Management – Planning Process Group Planning

Monitoring and Controlling

Plan Schedule Management

Control Schedule

Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Duration Develop Schedule

152 • PMP® Certification—Excel with Ease managed are already present in the project management plan, these will be considered before writing the new schedule management plan. Other processes, if any, which talk about the schedule related aspects in the project management plan will also be considered to maintain consistency. The latest approved version of the project management plan is considered for this purpose. Project Charter: The project charter will already have some preliminary information about the schedule and it will be considered while writing the schedule management plan. There should not be any disconnect between what is being discussed about schedule in the charter and what is described in the schedule management plan. Enterprise Environmental Factors: The following EE factors are considered while framing the schedule management plan • • • •

Organization’s structure and culture, Already existing Infrastructure and other scheduling tools Resource availability and resourcing skills Resource productivity related information

Organizational Process Assets: The following assets are considered while framing the schedule management plan: • • • •

Policies and procedures (related with the management of Schedule) Schedule monitoring and reporting tools Historical information (already existing schedule management plan) Lessons learnt documents (from similar kind of projects)

Tools and Techniques Expert Judgment: Here the earlier experience of managing similar kind of projects within the schedule/ process of schedule management is utilized. Dos and Don’ts are implemented based on the expertise gained from previous projects. Meetings: In order to develop a schedule management plan which is realistic and accepted by the entire team, it is better to conduct team meetings while drawing the schedule management plan. This meeting should also be attended by other stakeholders like project sponsors who are associated with the schedule management process. The project manager can also conduct this meeting with the selected team members who have good knowledge of the scheduling process. Analytical Techniques: These are the techniques used to manage and control the schedule of the project and include scheduling tools, approach of estimation, fast tracking/crashing approaches, decision of executing activities in parallel etc.

Output Schedule Management Plan: This is the output of Plan Schedule management process and defines the process of defining, managing and controlling the schedule of the project. It is also the content of the overall project management plan and includes the process of schedule reporting to higher management. Contents of Schedule Management Plan: • Scheduling methodology • Scheduling tool to be used • Scheduling reporting formats

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• • • •

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Unit of measurement of scheduling activities Threshold limits related to the schedule Earned value rules (important from the PMP perspective) WBS points in which the progress will be measured

The Define Activities Process Because every project has definite start and end dates, a project schedule becomes the basic block for definition of the entire project. The first step in the Define Activities process (Figure 5.3 and Table 5.2) is the estimation of realistic start and end dates for each of the activities in a project, of course, is definition of the activities themselves. Recall from Chapter 4 that the lowest tier of a project’s work breakdown structure (WBS) is called a work package (Figure 5.4). Decomposition of work packages leads to activities. Activities provide a basis for estimating, scheduling, executing, monitoring, and controlling project work. The output of the Define Activities process is an activity list, a list of all activities to be performed as part of a project. Project assumptions and constraints, identified and documented in the project’s scope statement (see Chapter 4), also serve as inputs to the process of defining activities. Required quality levels—both stated and implied—serve as project constraints and have a substantial effect on activity definition: Rigorous quality standards would obviously entail more project activities. Enterprise environmental factors and organizational process assets are also used as inputs to the Define Activities process. Organization process assets give the activity related policies and procedures of a project; it also helps to define activities using historical information and lessons learnt. Enterprise environmental factors such as infrastructure, and project management software help to define the activities of the project. PMP WATCH The WBS is the main input for the activity definition as well as the determination of the duration and sequence of activities, which is part of the scope baseline. The WBS indicates all the work and only the work that a project team must do to complete a project.

Define Activities Tools and Techniques Decomposition Templates Rolling wave planning Expert judgment

Inputs Scope baseline Enterprise environmental factors

Outputs Activity list Activity attributes Milestone list

Organization process assets

Figure 5.3 The inputs, tools, and outputs of the Define Activities process

154 • PMP® Certification—Excel with Ease Table 5.2 Define Activities – Planning Process Group Planning

Monitoring and Controlling

Plan Schedule Management

Control Schedule

Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule

Decomposition Decomposition is the first step in the Define Activities process because the work packages of the WBS, which lists only deliverables-oriented components, must be broken down into the actual tasks or activities required to realize the deliverables. The outputs of decomposition in the Define Activities process are referred to as activities (Figure 5.5). This subdivision of work packages into smaller and manageable components of activities is often performed by the project team members responsible for that work package. The correct level of decomposition helps for accurate schedule estimates and timely completion of project. Correct level of decomposition means decomposing the project to such a level where all efforts of planning, executing, monitoring and controlling are in a state that can be readily addressed and managed. Excessive decomposition leads to more work without much value added and also leads to inefficient use of resources and decreased work efficiency.

The Activity List The primary output of the decomposition process is the activity list. An activity list is a comprehensive list of all scheduled activities required on the project. It includes the activity identifier and scope of work description for each activity in sufficient detail. An activity identifier is a unique number that identifies a particular activity. It helps to distinguish an activity from others that are similar in nature/ name. These activity identifiers are unique across the entire project schedule network diagram.

Activity Attributes Activity attributes represent the inherent properties of a particular activity. A WBS Id, an activity Id, a predecessor activity, a successor activity, leads, lags, constraints, and assumptions are attributes associated with an activity. Some activities may require a disproportionately high level of effort, whereas some others may not. The duration of some activities may be controlled by the level of effort input, whereas in some other activities, such a control over duration may be not possible. These

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Work Package

Activity 1

Sub Activity 1

Activity 2

Sub Activity 2

Sub Activity 3

Figure 5.4 A work package Project

Phases

Deliverables Decomposition Output of Scope Management Output of Time Management

Work Packages Decomposition Activities

Figure 5.5 Decomposition of project work packages yields project activities considerations require to be factored in in determining activity duration estimations (see later in this chapter). A related concept addresses the effort required to complete an activity. There are three types of effort, namely, level of effort (LOE), apportioned effort (AE), and discrete effort (DE). Level of Effort LOE refers to work of a supportive nature that does not directly add to execution of activities and does not require a definite product outcome. However, it is mandatory, as support for other work activities or the entire project effort, and consists of short amounts of work that must be repeated periodically. Examples of such an activity are project budget accounting or oiling of machinery in manufacturing. LOE is usually is applicable for both a start–start (SS) and a finish–finish successor. It is sometimes referred to as a hammock activity or relationship and is used to define the amount of work performance within a period of time and is measured in man days or man hours per day/week/month.

156 • PMP® Certification—Excel with Ease Apportioned Effort AE is the effort that is directly related to some other measured effort and is related and proportional to measured effort in other work packages. For example, we may consider (apportioned) efforts of the quality assurance division as depending on performance of the project team as a whole. Discrete Effort These kinds of efforts can be directly traced against each deliverables. It is easily measurable. This is just opposite to AE.

Milestone Lists The milestone list (generally coupled with a milestone chart) (see Figure 5.5) is used to provide a series of indicators regarding project progress to date and achievements or goals yet to be reached. In Figure 5.6, Tollgate1 indicates that it will deliver SRS document at the end of its phase. Assuming that a project consists of only these four milestones of equal efforts and duration, we can say that 50% of the project is complete as we cross Tollgate2.

Templates Templates from other projects can be used to create activity lists and also to define activity attributes. Templates can be used to define typical milestones as well. Historical data is very useful not only to stop reinventing the wheel, but also to reduce the efforts involved in defining an activity. In a typical project, the PMO provides the templates that can be used in the project. However, it is the project manager’s responsibility to customize this template for its purpose.

THE SEQUENCE ACTIVITIES PROCESS Discussion Points 1. What is the need for sequencing activities? 2. What parameters determine the order of sequencing?

Milestone List Mile Stone

Deliverables

Tollgate 1

SRS document

Tollgate 2

Design Document

Tollgate 3

Tested Code

Tollgate 4

Deployed Code and Client Acceptance after testing

Figure 5.6 An example milestone list

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Sequence Activities Tools and Techniques Precedence diagramming method (PDM) Applyingleads and lags Dependency determination Schedule network templates

Outputs

Inputs

Project schedule network diagram Project documents update

Activity list Activity attributes Milestones Project scope statement Organizational process assets

Figure 5.7 The inputs, tools, and outputs of the Sequence Activities process Having defined all activities entailed by the project and generated the activity list, the project team now needs to arrange these activities in a logical sequence, from start to end. In other words, all subsequent processes that require as inputs the outputs of preceding processes need to be identified. The project team is therefore required to identify the logical relationships—and preferred relationships— between all activities. The project team accomplishes this task by identifying project dependencies (see the following table).

The Different Types of Project Dependencies Dependency Types

Nature

Organizational Control

Example

Mandatory dependencies

Dependencies that are inherent in the nature of the work involved; also called “hard” dependencies

It is generally difficult to alter this dependency

In a building project, construction of walls of a house must necessarily precede construction of ceiling

Discretionary dependencies

Usually defined by the project management team or organization

Is generally within organizational control, but may limit later scheduling options and hence must be set with caution; flexible

Best practices of an organization

External dependencies

involves a relationship between project activities and nonproject activities

Organization may not hold as much control over these discrepancies compared to the above two

Organizational dependency on a country’s economy, environmental factors, external interfaces

158 • PMP® Certification—Excel with Ease Table 5.3 Sequence Activities – Planning Process Group Planning

Monitoring and Controlling

Plan Schedule Management

Control Schedule

Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule

Therefore, the Sequence Activities process (Figure 5.7 and Table 5.3) is one of documenting and identifying such relationships among all project activities.

The Precedence Diagramming Method The precedence diagramming method (PDM) is widely used and available in most of the project management scheduling software available today. The PDM employs a diagram that arranges all activities of a project with the relationships and dependencies among them shown.

Example of PDM Activity

Activity A

Prior Activity

x

None

y

y

Activity B

Also, the PDM is a technique used in the critical path method (CPM) used to construct a project schedule network diagram (PSND) (see later in this chapter). The PDM is not a diagram showing project schedule; rather, it is a technique used before the project schedule is defined. A PDM typically uses boxes to indicate project activities and arrows to connect them. The PDM usually has an activity number to identify each activity, a short description of the activity, and indications for early start, early finish, late start, late finish, and duration of the activities. An activity might have one, two, or more predecessors and one, two, or more successors.

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Relationships between activities shown on a PDM can be of four types. These four types may be referred to as the logical relationships in a PDM. Logical Relationships A total of four logical relationships are possible between any two activities, because an activity can have start or finish relationship with another: Finish–start relationship Here, the initiation of a successor activity depends upon the completion of a predecessor activity. Many project activities bear this relationship with others (Figure 5.8). For example, the user acceptance test (UAT) cannot be started until final deployment in production is completed. Deployment needs to be complete for UAT to start. Start–start relationship Here, the initiation of a successor activity depends upon the initiation of a predecessor activity (Figure 5.9). Therefore, a subsequent task can start even before a preceding task has been completed, only the latter should have started and—as would be the case—partially completed. In other words, two tasks related by a start–start relationship may be performed in tandem. For example code review can be started only after we start writing the code. Finish–finish relationship Here, the completion of a successor activity depends upon the completion of a predecessor activity (Figure 5.10). For example, a project manager cannot close a project until customer signoff has been completed.

A

B

Figure 5.8 A finish–start relationship between two tasks A and B

A

B

Figure 5.9 A start–start relationship between two tasks A and B

A

B

Figure 5.10 A finish–finish relationship between two tasks A and B

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A

B

Figure 5.11 A start–finish relationship between two tasks A and B Start–finish relationship Here, the completion of a successor activity requires the start of a predecessor activity (Figure 5.11). Such a relationship is unusual but is often found in activities involved in just-in-time management processes. When people work in shifts, the begining of one shift indicates the end of another shift. The project manager of this project can use this type of relationship.

Leads and Lags Leads and lags refer to buffers introduced between tasks for better control of activities. A lag directs a delay in a successor activity. If a delay of x days is required between the finish of one task and the start of another, a finish–start dependency may be established with a specification lag time of x days. Alternatively, a lead may also be established between two tasks; when a lead has been established, the two tasks involved may overlap: a successor task may start after a predecessor task has started. For example, a technical-writing team can begin on the editing of the draft of a document 10 days after it begins writing: The two tasks—writing and editing—bear a start–start relationship with each other with a 10-day lag.

PMP WATCH A lead time tends to accelerate a successor activity. A lag time directs a delay in a successor activity.

Project Schedule Network Diagram The PSND is a schematic display of project’s activities and dependencies, showing the flow of project work, which is then used to develop the project schedule. A subnetwork is simply a section of the overall PSND. PSNDs are an output of the Sequence Activities process and an input to the Develop Schedule process. PSNDs are generally activities on the node (AON) and use all four types of dependencies between activities (i.e., finish–start, finish–finish, start–start, and start–finish). Following are the advantages of generating PSNDs: • PSNDs show interdependencies of all activities (a decomposition of WBS). • They depict project work flow showing clearly activities that need to be performed in the required sequence. • They compress the schedule in planning and throughout the life of a project. • If used for schedule control and reporting, they show project progress. • They help justify the project manager’s estimate for the duration of a project.

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THE ESTIMATE ACTIVITY RESOURCES PROCESS The Estimate Activity Resources process (Figure 5.12 and Table 5.4) is one of determining (1) the resources (including equipment and materials) that are required, (2) the quantities of each resource that will be used, and (3) the point in time (in the future) when each identified resource will be available to perform assigned project activities. Discussion Points 1. Why the Estimate Activity Resources process is executed before the Estimate Activity Duration process? 2. What would happen if a project manager reversed this order?

Resource Calendars In the context of project management, calendars are of two types: project calendars and resource calendars. Project calendars are related to all the resources involved in the project, whereas resource calendars refer to particular resources or groups of resources and their availability. Resource calendars are used to ensure that work is scheduled only when resources are available for work. The working time settings in the resource calendar need to match those in the project calendar. Moreover, the resource calendar can be customized to show individual schedule information, such as vacations and leaves of absence. If work time settings of resources involve part-time or the night shift, a separate base calendar for each shift may be set up and applied. Also, project managers can use resource calendars to accommodate exceptions to working times of individual resources.

Estimate Activity Resources Tools and Techniques Expert judgment Alternatives analysis Published estimating data PM software Bottom-up estimating

Inputs Enterprise environmental factors Organization process assets Activity list Activity attributes Resource calendar

Outputs Activity resource requirements Resource breakdown structure Project document updates

Figure 5.12 The inputs, tools and outputs of the Estimate Activity Duration process

162 • PMP® Certification—Excel with Ease Table 5.4 Estimate Activity Resources – Planning Process Group Planning

Monitoring and Controlling

Plan Schedule Management

Control Schedule

Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule

Bottom–Up Estimating The bottom–up estimating technique is just the opposite of the top–down estimating. The technique is used to estimate every activity or work item individually and sum that estimate to determine a final estimate. Bottom–up estimations, although accurate, are time consuming and are used only when definitive, detailed estimates are required.

Published Estimating Data Production rate and unit cost of the resources can be arrived at from published data based on historical informations gathered from different companies. This data is useful for determining the resources of an activity. It can be used as base data to arrive at accurate estimation of resources.

Activity Resource Requirements The activity resource requirements technique is used to identify the type and quantity of resources required for each activity in a work package. These requirements then can be aggregated to determine the estimated resources for each work package. The level of detail varies by application area.

Resource Breakdown Structure A resource breakdown structure (RBS) is a hierarchal structure of human resources, organized by function. For example, the top level of an RBS could be the business unit to which a resource belongs; the second-to-lowest level would be a team manager to whom that resource reports, the final level being the resource itself. In the following table, the resource at Level 3, the assistant vice president of operations, could be provided access to all resources through Levels 4 through 7.

Project Time Management

Level

Resource

Level 1

[Organization name]

Level 2

Senior vice president

Level 3

Assistant vice president

Level 4

Project manager

Level 5

Team manager

Level 6

Resource A

Level 7

Resource B

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ABC Company

Senior Vice President

VP1

AVP1

VP2

Senior Vice President

VP3

VP4

AVP2

Program Manager

Discussion Points 1. Discuss the hierarchy level in your organization. 2. How hierarchical structure of an organization is related to project time management?

Exercise 5.2

Identify the tools/techniques used in the scenarios given, on the basis of those used in Estimate Activity Resources process 1. A project manager requested his project leader for a report on the feasibility of executing a project in ASP or JAVA. 2. A project manager hired the services of a project management consultant to solve his problem. 3. There is an article in a project management journal that carries a table of metrics in projects executed by famous project managers. 4. A project manager downloaded a specialized Excel sheet developed by another project manager for similar projects.

164 • PMP® Certification—Excel with Ease

THE ESTIMATE ACTIVITY DURATION PROCESS The Estimate Activity Duration process (Figure 5.13 and Table 5.5) is one of taking information on project scope and resources and then developing durations for input to schedules. Activity duration refers to the number of work periods needed to complete the activities listed in the activity list. The accuracy of estimates can be improved by considering the amount of risk in the original estimate. As more number of realistic risks are identified, the estimates become more accurate and realistic. The Estimate Activity Duration process requires that the • amount of work effort required to complete the schedule activity is estimated. • assumed quantity of resource to complete the schedule activity is estimated. • work periods required to complete the scheduled activity is calculated. Estimating activity duration accurately is of high important to the success of a project. Inaccurate estimates lead to cost and schedule overruns. Moreover, activity duration should allow for leakage time or hidden time and intervening breaks. For example, if an activity takes 1½ days to complete and starts on a Friday morning, Saturday and Sunday being holidays, the activity duration should be calculated considering the two intervening holidays: the activity should be scheduled as complete only on the following Monday afternoon, the elapsed time being 3½ days. In activity duration calculation, the duration of a work package is equal to the amount of time required to do the work, divided by the number of people working: Duration =

Work Unit

The remainder of the section addresses the main inputs to the estimation of activity duration. Estimate Activity Duration Tools and Techniques

• • • • •

Expert judgment Analogous estimating Parametric estimating Three point estimating Reserve analysis

Inputs

• • • • • • • •

Enterprise environmental factors Organization process assets Project Scope statement Activity list Activity attributes Activity resource requirements Resource calendar Project management plan

Outputs

• Activity duration estimates

• Project Document Update

Figure 5.13 Inputs, tools and outputs of the Estimate Activity Duration process

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Table 5.5 Estimate Activity Durations – Planning Process Group Planning

Monitoring and Controlling

Plan Schedule Management

Control Schedule

Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule

Analogous Estimating Experience, that is, expert judgment, and the use of historical data serve as important inputs to the activity duration estimation process, markedly improving accuracy of estimates. Use of these inputs is referred to as analogous estimating.

Parametric Estimating When accurate information on an activity is not available, project managers use regression analysis and learning curve methods for duration estimation. In regression analysis, two variables are plotted on a graph and their relationship is derived using mathematical modeling. The regression equation deals with the following variables: Y = f (X, β) where β is a constant, a scalar or a vector of length k X is the independent variable Y is the dependent variable. The learning curve method assumes that a resource consumes progressively less time in carrying out a task, that is, all other work factors being the same, a resource always consumes less time compared to the duration consumed previously to complete a similar activity.

Heuristics Heuristics refers to the “rule of thumb” estimate, based on knowledge of duration actually consumed after working on large number of similar activities.

Three Point Estimation—PERT The three point estimation technique is better known as PERT (program, evaluation, and review technique). This technique assumes that there is very small probability that a project will be

166 • PMP® Certification—Excel with Ease completed on a given date estimated at the beginning of the project. The project manager makes three types of estimations, namely, best, worse, and most likely, for completing an activity. Expected value =

SD =

P + 4M + O 6 P−O 6

where O is the best-case estimate M is the most likely estimate P is the worst-case estimate SD is the standard deviation.

Graphical Evaluation and Review Technique The graphical evaluation and review technique (GERT) is a combination of network logic and activity duration estimates and usually allows looping. Consider an activity “A” which is executed five times continuously. We cannot represent it using the normal diagramming technique. We need to use GERT to represent it. We can use any graphical method to represent the looping.

Reserve Analysis Reserve analysis addresses buffer in the calculation of duration estimation. Contingency reserve or buffer is generally factored in as a percentage of the overall activity duration estimation. The buffer, often set at 10% of the estimated overall activity duration, is used to manage unknown future project risks. If we are ready to take more risks in the activity then reserve can be zero. In order to reduce risks, we add more reserve. However it is better for the reserve to be always at an optimum level (neither too high nor too low). There can be some minor setbacks for the activity duration since it depends on various factors like: 1. Resource attrition. 2. Resource at activity taking leave. 3. External factors like strike etc. We may accommodate the above factors by doing reserve analysis. Exercise 5.3

Identify the tools/techniques used in the scenarios given, on the basis of those used in the Estimate Activity Duration process 1. Your project manager comes up with three estimates: one in which everything goes wrong, one in which everything goes right, and one in which something goes wrong 2. You have an Excel sheet for estimating the scope of a project and in turn the duration of that Project by entering the details relating to that specific project, such as number of functionalities etc 3. While planning a project, you realize that you have already executed a similar project. You therefore have a good idea of the duration of your current project.

Project Time Management

Exercise 5.4

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List major objectives and activities for developing a schedule for a project. 1. 2. 3. 4. 5.

The Role of a Project Manager in Estimation Many of the estimates discussed so far are made not by the project manager but team members or resources who are assigned to actually carry out the activities. The project manager, however, provides team members with sufficient information for them to accurately estimate the duration of activities, after communicating to them the criticality of the accuracy of their estimates. The project manager also performs a sanity check of the estimates received, in addition to formulating a contingency management plan. As in all other processes, the project manager documents the assumptions made during estimating for later review. Discussion Points 1. What are the mistakes a project manager may make in developing schedules? 2. Why schedules generally prove to be unrealistic? At what frequency should schedules be updated?

THE DEVELOP SCHEDULE PROCESS The Develop Schedule process (Figure 5.14 and Table 5.6) is used to determine the start and end dates of project activities.

Schedule Network Analysis Schedule network analysis is a technique that generates the project schedule using the PSND. It employs various techniques such as critical path method (CPM) and what–if analysis. It also uses resource leveling techniques to compress the schedule by identifying path convergence and path divergence. Definition of Float/Slack Total float/slack. This is the time for which completion of an activity can be delayed without delaying the project end date or an intermediary milestone. Free float/slack. This is the time for which completion of an activity can be delayed without delaying the early start date of its successor activities. Project float/slack. This is the time for which completion of a project work can be delayed without delaying the externally imposed project completion date (imposed by the customer).

168 • PMP® Certification—Excel with Ease Develop Schedule Tools and Techniques Schedule network analysis Critical path method Schedule compression What-if scenario Resource leveling Critical chain method Applying leads and lags Schedule model

Inputs Organization process assets Project scope statement Activity list Activity attributes Projeect schedule network diagram Resource calendar Activity duration estimates

Outputs Project schedule Schedule date Schedule daseline Project document updates

Figure 5.14 The inputs, tools, and outputs of the Develop Schedule process

Table 5.6 Develop Schedule – Planning Process Group Planning

Monitoring and Controlling

Plan Schedule Management

Control Schedule

Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Duration Develop Schedule

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Critical Path Method CPM is a method of using network analysis techniques to identify those tasks that are on the critical path, that is, where any delay in the completion of these tasks will lengthen the project timescale, unless action is taken. Critical path is the longest path which is the shortest duration of a completion of a project. There can be more than one critical path, which increases the risks. A critical path can change. The network diagram does not change when the end date changes. The project manager should investigate options such as fast tracking and crashing the schedule to meet the new date and then, with approved changes, change the network diagram accordingly. When a project has a negative float, the project manager should consider compressing the schedule. For all activities in critical path, the float will be zero. Figure 5.15 shows calculation of critical path for a process. What–If Scenario Analysis What If Scenario Analysis (WISA) is a powerful tool that can analyze various What–If scenarios determine the schedule of the project. The schedule of a project depends on various parameters including but not limited to: 1. 2. 3. 4. 5.

Resource utilization Cost factors Dependencies of activities Risk parameters Unknown external factors like strike, storming etc.

WISA estimates the effect that potential events may have on the project schedule. Path Convergence The merging of different network paths into the same node in a project schedule network diagram is called path convergenced. It is usually characterized by a schedule activity with more than one predecessor activity. The merging of different network diagrams into a single node is also called as path convergence. Critical path 6 8

3

10

5 1

2

5 4

4

4

6

3

4 9

Critical path is 5+8+10+4+3+4 = 34 days. Critical path = Longest path, float zero for all activities

Figure 5.15 Critical path calculation

7

4

8

170 • PMP® Certification—Excel with Ease

Network Diagram of Module 1

Network Diagram of Module 2

Project Integration

Network Diagram of Module 3

Path Divergence This is the opposite of path convergence. Branching of different paths from a single path (or) node is called path divergence. For example, when we are doing a software project, after requirement analysis, design can be done parallely for different modules. Design of Module 1 Requirement Analysis

Design of Module 2 Design of Module 3

Schedule Optimization Schedule optimization is mandated when execution of a project as per schedule has been affected because of internal or external factors, upon which the project manager is required to optimize the schedule. The following is a list of tools a project manager commonly uses to optimize a project schedule: Crashing Here, total project duration is decreased, with minimal compromises on original objectives. We usually add extra resources to decrease the project duration. Consequently, the cost of the project increases due to the crashing technique. Fast tracking Here, activities are processed in parallel instead of being processed in sequence as per the project schedule. The risks associated with the project increase by doing things parallely. Activities in critical path that are to be done in parallel, are first identified to reduce overall project duration. In this technique, the duration of critical activities is shortened or working hours increased. Resource Leveling Resource leveling is the reapportioning of available resources to avoid over-allocation or underallocation and ensure that activities are performed with maximum efficiency. Here, peak overloads are reduced by redistributing allocations to activities with float (see later in this section). This optimization technique can increase activity duration.

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8 a Workers

Activity

a b

6 4

c

c

b

b

2

c

c

0 1

2

3 Days

4

1

2

3

4

5

Days

5 Before Resource Leveling

8 a Workers

Activity

6 b c

a

b

4 c

2 0 1

2

3

4

5

Days

1

2

3 Days

4

5

After Resource Leveling

The following example illustrates this tool. Application of resource leveling can result in the same tasks (say, Tasks A, B, and C) being completed in five days with only six resources, whereas without resource leveling tool applied, the tasks may have used eight resources. The following is a list of key factors of resource leveling: • Rule of thumb. “allocate scarce resources to critical path activities first” • Increased project duration. Often results in a project duration that is longer than the preliminary schedule • Reallocation. Resource reallocation and adjustments are used to bring the schedule back or as close as possible to the originally intended duration. • Reverse resource allocation. Resource is scheduled in reverse from the project ending date. • Critical chain. A technique that modifies the project schedule to account for and accommodate limited resources. Critical Chain Method This technique modifies the project schedule to account for limited resources, mixes deterministic and probabilistic approaches, and puts more emphasis on the resources. When resources are always available in unlimited quantities, then a project’s critical chain is identical to its critical path. This technique involves adding duration buffers, which are not actual activities. Following are steps used to calculate earliest and latest times using this technique:

172 • PMP® Certification—Excel with Ease The following steps may be followed for calculating earliest time (TE): 1. For the start node TE = 0. 2. Begin from the start node and move toward end node in all paths. Add duration with previous node’s TE to arrive the TE for the new node. 3. If more than one value comes for a particular node, insert the maximum value in that node. The following steps may be followed for calculating latest time (TL): 1. For the end node TL = TE 2. Begin from the end node and move backward toward start node in all paths. Subtract duration with previous node’s TL to arrive the TL for the new node. 3. If more than one values comes for a particular node, insert the minimum value in that node.

Exercise 5.5

Identify the schedule compression techniques used in the scenarios given as “fast tracking” or “crashing” 1. You arrange a conference and because you are sure that all VPPs will arrive as promised, you go ahead and book a slot for them 2. You seek help from another project manager to provide few testing resources to you to enable you to complete the testing quickly 3. You hire a consultant because your resource is struggling to find a solution but you also know that the cost of a consultant is high.

THE CONTROL SCHEDULE PROCESS The Control Schedule process (Figure 5.16 and Table 5.7) is concerned with • • • •

measuring the current status of the project schedule. influencing the factors that cause schedule changes, ensuring that these are agreed upon. determining the reason for the deviation, if any. managing the changes when they happen.

The schedule control process is used to monitor the status of project execution, to update on project progress, and to manage changes to the schedule baseline, if required. The following are important metric and tools concerning schedule control. Project schedule. The approved project schedule is called the schedule baseline; it provides the basis for measuring and reporting schedule performance. Work performance information. This information updates the project manager on schedule performance, such as which planned dates have been met and which have not (see also Chapter 4 and Chapter 6 for definition of SV and SPI). Performance reviews (earned value). This process involves assessment of schedule variations to determine whether they require corrective actions. Progress reporting. The progress reporting and current schedule status include information such as actual start and end dates and the remaining durations for unfinished schedule activities. PM software. This schedule control tool is used for tracking planned dates against actual dates and forecasting.

Project Time Management

Control Schedule Tools and Techniques

Inputs Project Management Plan Project Schedule Work Performance information Organization Process Assets

Performance Reviews Resource leveling Project management software Variance analysis What if Analysis Adjusting Leads and Lags Schedule Compression Scheduling Tool

Outputs Work Performance measurements OPA Update Change Requests Project Managements Plan update Project documents update

Figure 5.16 The inputs, tools, and outputs of the Control Schedule process

Table 5.7 Control Schedule – Controlling Process Group Planning

Monitoring and Controlling

Plan Schedule Management

Control Schedule

Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule

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174 • PMP® Certification—Excel with Ease Variance analysis. This tool compares target dates with the actual/forecast start and end dates to analyze variance (see also Chapter 4). Work performance measurements. This tool is used to calculate schedule variance (SV) and schedule performance index (SPI) values for WBS components, in particular the work packages and control accounts, and document and communicate the same to stakeholders (see also Chapter 4). Exercise 5.6

Why a project manager needs to know what is the critical path in a project?

Exercise 5.7

In the network diagram shown here, the following are the durations of the activities. Activity A, 3 days Activity B, 5 days Activity C, 11 days Activity D, 8 days For all activities, calculate (1) early start, (2) early finish, (3) late start, (4) late finish.

Network Diagram 1 A B C D

START

Duration 3 days Duration 5 days Duration 11 days Duration 8 days

B

D

FINISH

A

C

1. 2. 3. 4.

Calculate Early Start Calculate Early Finish Calculate Late Start Calculate Late Finish

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PMP WATCH Tips for effective project time management: • Estimation based on a WBS will improve accuracy. • Activity duration should be estimated by the resource actually performing the activity. • Use of historical information improves accuracy of estimates. • A schedule baseline should be maintained and not changed except for approved project changes. • Estimates are more accurate if smaller-sized work components are estimated. Bottom–up estimation is most accurate type of estimation. • Corrective and preventive actions should be recommended when schedule problems occur. • Continuous monitoring of schedules helps in anticipating deviations. • Plans should be revised during completion of the work.

Summary Time management of a project produces the schedule baseline. From WBS, in particular from the work packages, individual activities to be scheduled and activity durations for the schedule are determined. The activities are sequenced in a logical order called a network diagram using the PDM method. Fast tracking and crashing are two techniques for optimizing schedules. Buffering is a technique for adjusting the schedules for accommodating future risks. All activities on critical paths are called critical activities. Slack or float is the time for which a task can be delayed without delaying successor activities.

Answers to Exercise Questions Exercise 5.1 Answers Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Duration Develop Schedule Control Schedule

176 • PMP® Certification—Excel with Ease

Exercise 5.2 Answers 1.

Alternative analysis

2.

Expert judgment

3.

Published estimating data

4.

PM software

1.

Three point estimates

2.

Parametric estimation

3.

Analogous estimation

Exercise 5.3 Answers

Exercise 5.4 Answers 1.

What is the work to be done?

2.

Define activities (WBS, WBS dictionary, and activity list)

3.

The order of how the work will be done (activity sequencing)

4.

An estimate of the resources needed (activity resource estimating)

5.

An estimate of the duration of each activity (activity duration estimating)

6.

Assumptions, constraints, risk management plan, possible leads and lags

Exercise 5.5 Answers 1.

Fast tracking

2.

Crashing

3.

Crashing

Project Time Management

Exercise 5.6 Possible Answers Prove to the management about the time required to complete a project. Determine where to put the critical resources in a project. Determine where to put less experienced resources in the project. Determine which issues or problems in the project needs immediate attention Determine the risks in the project.

Exercise 5.7 Activity

Early Start

Early Finish

A

0

3

B

3

8

C

3

14

D

14

22

Activity

Late Start

Late Finish

A

0

3

B

9

14

C

3

14

D

14

22

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178 • PMP® Certification—Excel with Ease

Chapter 5 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. In which time management process are the specific activities that must be performed to produce the deliverables in the WBS identified and documented? A. Sequence activity B. Define activity C. Develop schedule D. Estimate activity duration Question 2. A period of time in work weeks that includes non-working days is called A. elapsed time. B. leads. C. effort. D. earned value. Question 3. Calculate the PERT weighted average given the following estimates: Optimistic, 2 days; Pessimistic, 9 days; most likely, 5 days. A. B. C. D.

5.17 days 5 days 6.3 days 9 days

Question 4. Calculate the standard deviation given the following estimates: Optimistic, 3 days; Pessimistic, 9 days; most likely, 6 days. A. B. C. D.

0.6 day 1 day 1.5 days 0.5 day

Question 5. An activity that consumes no time or resources and shows only that a dependency exists between two activities is called a A. B. C. D.

milestone. hammock. dummy activity. gimmick.

Question 6. Fast tracking is also known as A. B. C. D.

overtime. resource leveling. crashing. concurrent engineering.

Question 7. Which of the following relationships represents concurrency between two activities? A. B. C. D.

Start–start Finish–start Start–finish Finish–finish

Question 8. The major difference between PERT and CPM techniques is that A. PERT mandates a three-time estimate whereas CPM mandates a one-time estimate. B. PERT is usually used for construction projects whereas CPM is used mainly for IT projects. C. PERT addresses only time whereas CPM deals with costs and scope. D. PERT is a software-based solution whereas CPM is a manual technique. Question 9. Fast tracking usually adds A. B. C. D.

cost. risk. time. scope.

Question 10. Which of the following is not false? A. A Gantt chart evaluates what was planned against what actually occurred. B. A Gantt chart compares planned work and completed work.

Project Time Management

A. A PDM B. A network template C. Conditional diagramming methods D. An arrow diagram method (ADM) GERT uses conditions and looping, which ADM or PDM do not use.

C. A Gantt chart shows the work in a project against a calendar. D. A Gantt chart shows the work in a project against each resource’s calendar. Question 11. Which of the following best describes GERT? Question 12.

In the network diagram shown here, the following are the durations of the activities. Activity A, 4 days Activity B, 6 days Activity C, 12 days Activity D, 9 days Calculate (1) early start and (2) late start for Activity B.

Network Diagram 2 A B C D

START

Duration 4 days Duration 6 days Duration 12 days Duration 9 days

B

D A

C

What is the Early start Late start of Activity B?

A. B. C. D.

4, 10 0, 6 4, 6 6, 4

Question 13. Project budget accounting is an example of A. LOE. B. activity attributes. C. apportioned efforts. D. discrete efforts.

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FINISH

180 • PMP® Certification—Excel with Ease Question 14.

In the network diagram shown here, the following are the durations of the activities. Task A, 4 days Task B, 6 days Task C, 12 days Task D, 9 days Calculate (1) early start and (2) early finish of Activity D. Network Diagram 3 A B C D

START

Duration 4 days Duration 6 days Duration 12 days Duration 9 days

B

D A

C

What is the Early Start and Early Finish of Activity D?

A. B. C. D.

16, 9 16, 25 12, 9 12, 25

Question 15. The LOE is sometimes referred to as A. hammock. B. lead. C. lag. D. discrete effort.

FINISH

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Question 16. Calculate the critical path of the process in the network diagram shown here.

Network Diagram 4 6 8

3

10

5 1

2

5 4

4

4

6

3

7

4

8

4 9

Find the Critical Path of the above Network diagram

A. B. C. D.

38 days 36 days 32 days 34 days

Question 17. The type of effort that is directly related to some other measured effort and is related and proportional to measured effort in other work packages is referred to as A. B. C. D.

LOE. activity attributes. apportioned effort. discrete effort.

Question 18. Efforts that have specific measurable end results and are ideal for earned value measurements are referred to as A. LOE. B. activity attributes. C. apportioned effort. D. discrete effort. Question 19. Which type of dependency among the following is difficult to alter? A. B. C. D.

Mandatory dependencies Discretionary dependencies External dependencies Internal dependencies

Question 20. Which type of dependency among the following is inherent in the nature of the work? A. B. C. D.

Mandatory dependencies Discretionary dependencies External dependencies Team dependencies

Question 21. Which type of dependency among the following is also called as hard dependency? A. B. C. D.

Mandatory dependencies Discretionary dependencies External dependencies Team dependencies

Question 22. Best practices is an example of which type of dependencies? A. B. C. D.

Mandatory dependencies Discretionary dependencies External dependencies Team dependencies

Question 23. Which type of dependency among the following involves a relationship between project activities and non-project activities? A. B. C. D.

Mandatory dependencies Discretionary dependencies External dependencies Team dependencies

Question 24. How many logical relationships are possible between two activities? A. B. C. D.

2 4 3 6

Question 25. The initiation of a successor activity depends upon the completion of the predecessor activity in which type of relationship? A. B. C. D.

Finish–start Start–start Finish–finish Start–finish

182 • PMP® Certification—Excel with Ease Question 26. You cannot build the ceiling of a house until walls of a house are completed. This relationship is an example of which type of logical relationship? A. B. C. D.

Finish–start Start–start Finish–finish Start–finish

Question 27. You c an n ot s t ar t t he UAT u nt i l final deployment in production is completed. This type of relationship is an example of which type of logical relationship? A. B. C. D.

Finish–start Start–start Finish–finish Start–finish

Question 28. A project manager cannot close a project until a customer sign-off has been received. This relationship is an example of which type of logical relationship? A. B. C. D.

Finish–start Start–start Finish–finish Start–finish

Question 29. Which of the following elements tends to accelerate a successor activity? A. B. C. D.

Lead Lag Float Buffer

Question 30. Which one among the following delays a successor activity? A. B. C. D.

Lead Lag Float Buffer

Question 31. A lag allows which of the following type of relationships? A. B. C. D.

Finish–start Start–start Finish–finish Start–finish

Question 32. Which of the following is true about PDM? A. PDM uses all four types of relationship.

B. PDM uses only the finish–start relationship. C. PDM uses both the finish–start and start–finish relationships. D. PDM uses only the start–finish relationship. Question 33. The Calendars that are specific to the Project are called as? A. Project calendar B. Resource calendar C. Project calendar and resource calendar D. Stakeholder calendar Question 34. Which among the following tools/ processes is allows for the most accurate estimations? A. Top–down approach B. Bottom–up approach C. Estimation performed by senior resource D. Estimation performed by a business analyst Question 35. Which among the following types of estimation takes most time? A. Top–down approach B. Bottom–up approach C. Estimation performed by a senior resource D. Estimation performed by a business analyst Question 36. Which among the following structures is a hierarchal structure of human resources, organized by function? A. B. C. D.

RBS WBS OBS EBS

Question 37. The Estimate Activity Resources process includes estimation or calculation of all the following except the A. amount of work effort required to complete a schedule activity. B. assumed amount of resource to complete a schedule activity. C. work periods required to complete a scheduled activity. D. billed resources for a scheduled activity excluding buffer resources.

Project Time Management

Question 38. Which among the following types of estimate uses experience and the use of historical data? A. B. C. D.

Analogous estimation Bottom–up estimation Top–down estimation Parametric estimation

Question 39. A rule-of-thumb estimate is a A. B. C. D.

heuristic estimate. bottom–up estimate. top–down estimate. parametric estimate.

Question 40. Given that a project manager has set pessimistic estimation at 50 days, optimistic estimation at 15 days, and most likely estimation at 25 days, what is estimated time to complete? A. B. C. D.

37 days 27.5 days 17 days 47 days

Question 41. One estimate considering that all project assumptions would prove to be wrong set activity duration at 50 days. Another estimate considering that all project assumptions would prove to be right set activity duration at 15 days. If the expected time to complete was 17 days, estimate most likely time for completion. A. B. C. D.

37 days 22 days 25 days 47 days

Question 42. If the pessimistic estimation of a schedule’s duration is 50 days and the optimistic estimation is 20 days, calculate the standard deviation for this schedule? A. Insufficient data provided B. 15 days C. 5 days D. 30 days Formula for standard deviation = (P − O)/6

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Question 43. Which of the following techniques allows looping? A. B. C. D.

GERT PERT Gantt chart CPM

Question 44. Analysis of the schedule network diagram of a project involves use all the following techniques except A. B. C. D.

path convergence. path divergence. CPM. path leveling.

Question 45. Consider a project that is 40% behind schedule. Suppose an additional four resources from another project are allotted to it to reduce its schedule variance. This is an instance of A. B. C. D.

fast tracking. crashing. resource leveling. a constraint.

Question 46. When res ources are available in unlimited quantities, a project’s critical chain is identical to its critical path. Is it true? A. False B. True Question 47. The time for which a current activity can be delayed without delaying the early start of its successor activity is called A. B. C. D.

project float. float. total float. free float.

Question 48. The time for which a current activity can be delayed without delaying the project’s end date is called A. B. C. D.

free float. float. total float. project float.

184 • PMP® Certification—Excel with Ease Question 49. A project that was running behind schedule was allotted more resources and tasks that were originally planned to be executed in sequence are now executed in parallel. This is an instance of A. B. C. D.

fast tracking. crashing. resource leveling. constraint.

Question 50. Addition of resources to quicken the execution of a project that is running behind schedule will definitely increase which of the following? A. B. C. D.

Risk Cost Schedule Quality.

Project Time Management

Answer Sheet for Chapter 5 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

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186 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 5 Questions

Question Number

Answer

Question Number

Answer

Question 1

B

Question 26

A

Question 2

A

Question 27

A

Question 3

A

Question 28

C

Question 4

B

Question 29

A

Question 5

C

Question 30

B

Question 6

D

Question 31

A

Question 7

A

Question 32

A

Question 8

A

Question33

C

Question 9

B

Question 34

B

Question 10

C

Question 35

B

Question 11

C

Question 36

A

Question 12

A

Question 37

D

Question 13

A

Question 38

A

Question 14

B

Question 39

A

Question 15

A

Question 40

B

Question 16

D

Question 41

C

Question 17

C

Question 42

C

Question 18

D

Question 43

A

Question 19

A

Question 44

D

Question 20

A

Question 45

B

Question 21

A

Question 46

B

Question 22

B

Question 47

D

Question 23

C

Question 48

C

Question 24

B

Question 49

A

Question 25

A

Question 50

B

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Explanations for Chapter 5 Answers

1. Answer B Define Activities is the process where activities that must be performed to produce project deliverables are defined. Activity List is the output of Define Activities process. 2. Answer A Elapsed time includes non-working time. It is the time taken from the beginning to the end, including non-working hours like break time, tea time, holidays etc. Lead time is the commitment to deliver the final product to your customer. 3. Answer A PERT formula = (P + 4M + O)/6 = (9 + 4 * 5 + 2)/6 = 31/6 4. Answer B Standard Deviation = (P - O)/6 = (9 - 3)/6 = 1 day 5. Answer C Dummy Activity has no duration and is used only to show the relationships between activities. It consumes no time or duration. End of a Phase is called as Milestone (Option A). 6. Answer D Performing activities in parallel to compress the schedule is called Fast Tracking or Concurrent Engineering. Concurrent Engineering is used in design engineering and manufacturing engineering. 7. Answer A Concurrency means doing activities in parallel. When we do activities in parallel they follow Start-to-Start relationship. 8. Answer A PERT mandates three-time estimates (Optimistic, Pessimistic, Most likely). CPM mandates a onetime estimate. 9. Answer B Doing things in parallel is called as Fast Tracking. When we do things in parallel, we take Risks. Thus, fast tracking adds to risks in a project. Note:Crashing (adding resources) will increase the cost of the project.

10. Answer C We need to choose the “not false” option, meaning “TRUE” or “RIGHT” Option. Gantt chart just shows the work in a project against the calendar (days). Gantt chart does not show resources (Option D); it also does not show Planned vs Completion also (Options A and B). 11. Answer C GERT uses conditions and looping which ADM or PDM do not use. GERT stands for Graphical Evaluation and Review Technique and is a network analysis technique. GERT attacks the limitations of both PERT and CPM. 12. Answer A Refer Exercise 5.7. We need to do Forward Pass and Backward Pass to arrive at the solution (Refer to the steps mentioned in Critical Chain Method to do this) 13. Answer A LOE means Level of Efforts. Calculation of LOE is mandatory to support other work activities or the entire project effort. LOE refers to small amounts of work that must be repeated periodically. Project budget accounting is an example of LOE. As a result, an LOE activity should never be on the critical path of the project schedule, as it never by itself, adds time to the project. LOE is also referred to as the hammock. 14. Answer A Refer to Exercise 5.7 for similar exercise. We need to do Forward Pass and Backward Pass to arrive at the solution (Refer to the steps mentioned in Critical Chain Method to do this). The diagram is also similar to that in Question 12. In PMP Exam, there may be similar diagrams in questions. 15. Answer A LOE means Level of Efforts. Calculation of LOE is mandatory to support other work activities or the entire project effort. LOE refers to small amounts of work that must be repeated periodically. Project budget accounting is an example of LOE. As a result, an LOE activity should never be on the

188 • PMP® Certification—Excel with Ease critical path of the project schedule, as it never by itself, adds time to the project. LOE is also referred to as the hammock 16. Answer D Critical Path is the longest path of a network diagram. 1-2-3-5-6-7-8 with duration 34. Other paths are 1-2-3-6-7-8, 1-2-4-5-6-7-8 and 1-2-4-78 with less duration. 17. Answer C The type of efforts that are directly related to other measured efforts and related and proportional to the measured effort is called as Apportioned Effort. Apportioned Effort is referred to as AE. Example:Quality Assurance Efforts. 18. Answer D The concept of discrete effort applies directly to the specific work efforts that can be directly traced and identified and is used in Earned Value Technique. 19. Answer A There are three types of dependencies – Mandatory dependencies, Discretionary dependencies and External dependencies. Mandatory means ‘must’. This type of dependency cannot be changed and it is inherent in the nature of the work. It is difficult to alter this. It is also called as Hard Dependency (hard-to-change). 20. Answer A There are three types of dependencies Mandatory dependencies, Discretionary dependencies and External dependencies. Mandatory means ‘must’ and this type of dependency cannot be changed and it is the inherent in the nature of the work. It is difficult to alter this. It is also called as Hard Dependency (hard-to-change). 21. Answer A There are three types of dependencies Mandatory dependencies, Discretionary dependencies and External dependencies. Mandatory means ‘must’ and this type of dependency cannot be changed and it is the inherent in the nature of the work. It is difficult to alter this. It is also called as Hard Dependency (hard-to-change). 22. Answer B There are three types of dependencies Mandatory dependencies, Discretionary dependencies and External dependencies. Discretionary means ‘optional’ and this type of dependency can be

changed based on discretion. It is easy to alter this and is changed based on best practices. It is also called as Soft Dependency (soft-to-change). 23. Answer C There are three types of dependencies Mandatory dependencies, Discretionary Dependencies and External dependencies. External dependency means the dependency between project and nonproject activities. 24. Answer B Logical relationships possible between activities are Start-to-Start, Start-to-Finish, Finish-to-Start and Finish-to-Finish. 25. Answer A The initiation (Start) depends on the predecessor (Finish). The relationship is Finish-to-Start. 26. Answer A The initiation (Start) depends on the predecessor (Finish). The Initiation (Ceiling) depends on the Wall (Finish) and hence, the answer is Finish-toStart. 27. Answer A The initiation (Start) depends on the predecessor (Finish). The initiation (UAT) depends on the deployment (Finish) and hence, the answer is Finish- to-Start. 28. Answer C The project manager cannot Close (Finish) until a customer Sign off is completed (Finish). This is an example of Finish-to-Finish. 29. Answer A Lead means acceleration. Lag means Deacceleration (Delaying). Float means Buffer. 30. Answer B Lead means acceleration. Lag means DeAcceleration (Delaying). Float means Buffer. 31. Answer A Lag means De-Acceleration (Delaying). When we delay the start of one activity because we want to finish the previous activity, it is called as Finishto-Start. 32. Answer A PDM (Precedence Diagrammatic Method) uses all four types of relationship namely Start-to-Start, Start-to-Finish, Finish-to-Start and Finish-to-Finish.

Project Time Management

33. Answer C We usually use two types of calendars. They are Project Calendar and Resource Calendar. Stakeholder Calendar is non-existent and is given to confuse the reader. 34. Answer B Bottom–Up approach is most accurate but it takes more time to do. Top–Down approach is less accurate comparatively, but it takes less time (It can be done quickly). We cannot guarantee that the estimation done by a senior resource or a business analyst will be accurate. 35. Answer B Bottom–Up approach is most accurate but it takes more time to do. Top–Down approach is less accurate comparatively but it takes less time (It can be done quickly). 36. Answer A Hierarchical structure of human resources organized by function is called as Resource Breakdown Structure (RBS). WBS is a task-oriented hierarchical structure. OBS (Organization Breakdown Structure) combines RBS and WBS. It specifies who is responsible for the work defined in WBS. OBS is a good communication tool. 37. Answer D Estimate Activity Resources process helps to estimate amount of work required to complete an activity, amount of resources to complete a scheduled activity and work periods required to complete a scheduled activity. It will not talk about billing resources or non-billing resources. 38. Answer A Analogous means comparison and it needs historical data for comparison. Parametric estimation uses formulas and is usually done after analogous estimation. Top–Down estimation indicates distributing overall efforts of the project across all the activities. Bottom–Up estimation indicates the calculation of efforts of various activities and sums up to calculate the efforts of the project. It is more accurate but takes more time to do. 39. Answer A A Rule of thumb is generally called as heuristics.

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40. Answer B T(E) = (P + 4M + O)/6 = (50 + 100 + 25)/6 = 175/6 = 27.5 days. 41. Answer C Pessimistic estimator makes a lot of assumptions (he assumes all possible ways in which the project will fail). Optimistic estimator assumes less (he assumes that everything will go right). The assumption of the Most Likely Estimator is between that of Optimistic and Pessimistic estimator. T(E) = (P + 4M + O)/6 = (50 + 4 * 17 + 15)/6 = 25 days. 42. Answer C SD = (P − O)/6 = (50 − 20)/6 = 5 days 43. Answer A GERT uses conditions and looping, which ADM or PDM do not use. GERT stands for Graphical Evaluation and Review Technique and is a network analysis technique. GERT addresses the limitations of both PERT and CPM. 44. Answer D Schedule network analysis uses techniques such as What–If analysis, Path Convergence, Path Divergence and CPM. 45. Answer B Adding more resources to compress the schedule is called as Crashing. Doing things in parallel to compress the schedule is called as Fast Tracking. 46. Answer B When resources are available in abundance, a Project’s Critical Chain is identical to its Critical Path. 47. Answer D There are two types of Floats namely, Free Float and Total Float. The time for which an activity can be delayed without affecting the next subsequent activity is called as Free Float. The time for which an activity can be delayed without affecting the end of the project is called as Total Float (Most of the time, the next activity may be affected, but the end of the project may not be affected) 48. Answer C There are two types of Floats namely, Free Float and Total Float. The time for which an activity can be delayed without affecting the next subsequent

190 • PMP® Certification—Excel with Ease activity is called as Free Float. The time for which an activity can be delayed without affecting the end of the project is called as Total Float (Most of the time, the next activity may be affected, but the end of the project may not be affected) 49. Answer A Adding more resources to compress the schedule is called as Crashing. Doing things in

parallel to compress the schedule is called as Fast Tracking. 50. Answer B Adding more resources to compress the schedule is called as Crashing. Doing things in parallel to compress the schedule is called as Fast Tracking. Crashing definitely increases the cost of the project while Fast Tracking increases the risk of the project.

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Key Terms Activity Work performed during the course of a project. (Normally it has duration, cost, and resource requirements.) Arrow diagram method (ADM) A network diagramming technique where activities are represented by arrows and is also called ActivityOn-Arrow (AOA). Backward pass The calculation of late finish and start dates for the uncompleted portions of all network activities and are determined by working backwards through the network logic from the project’s end date. Baseline The original plan plus or minus approved changes. Concurrent engineering An approach to project staffing that calls for the implementers to be involved in the design phase. (Most of the time it is confused with fast tracking.) Control account It is the management control point where scope, budget, actual cost, and schedule are integrated. Each control account includes one or more work package but each work package associated with only one control account. Critical activity An activity on a critical path. Critical path Longest path, float less than or equal to specified value mostly Zero. Critical path The series of activities which determines the earliest completion of the project and is usually defined as those activities with float less than or equal to a specified value (usually zero). Discretionary dependencies (soft logic) It is defined by the project management team and is flexible usually. Dummy activity An activity which has zero duration and is used to show a logical relationship in the arrow diagramming method. Early finish (EF) date Earliest possible date in which the uncompleted portions of an activity or project can complete. Early start (ES) date Earliest possible date in which the uncompleted portions of an activity or project can start and it Can change as the project progresses. External dependencies Relationships between project activities and non-project activities. Float The overall amount of time that an activity may

be delayed from its early start without delaying the project finish date. (It is also called slack, total float and path float). Forward pass It is helpful to calculate the early start and early finish dates for the uncompleted portions of all network activities. Free float Amount of time an activity can be delayed without delaying the early start of the follow-on activity Free float (FF) The amount of time an activity in a Project can be delayed without delaying the early start of any immediately succeeding activities of the Project. Gantt chart It is the graphic display of schedulerelated information using bars. GERT Type of network diagram which support looping. Hammock An aggregate or summary activity of a Project Hanger An unintended break in a network path which are usually caused by missing activities or missing logical relationships. Lag Modification of a logical relationship which directs a delay in the successor task and they are basically inserted waiting times in between tasks. Late finish (LF) date The latest possible date that an activity may be completed without delaying a specified milestone (usually the project finishes date). Late start (SF) date The latest possible date that an activity may begin without delaying a specified milestone (usually the projects finish date). Lead A modification of a logical relationship where the successor task can be started earlier than planned. For example, in a FS relationship with a 6 day lead, the successor can start 6 days prior to the completion of the predecessor. Master schedule A summary level schedule of the project which identifies the major activities and milestones. Milestone A significant event in the project, usually completion of a major deliverable, which determines the signal to go ahead to the next phase or Project. Milestone schedule It is the summary level schedule which identifies the major milestones in a Project. Path Set of activities connected sequentially. Precedence diagram method (PDM) It is the network diagramming technique where activities

192 • PMP® Certification—Excel with Ease are represented by nodes. Activities are linked by precedence relationships to show the logical sequence in which the activities are to be performed. Program evaluation and review technique (PERT) It is the event-oriented network analysis technique used to estimate project duration of the project with high degree of uncertainty. Project network diagram Schematic display of the logical relationships of project activities. We often incorrectly refer it as a “PERT chart”. Resource leveling Form of network analysis in which start and finish dates are driven by resource management concerns. Resource leveling refers to keeping the resources same across the duration of the project thereby avoid resource overloading. Resource pool It is the description of the number of resources available and other details like the time they are available to work on the project, Cost of the resources etc Resource-limited schedule A project schedule which fully depend on resource availability.

Scheduled finish (SF) date Time in which the work was scheduled to finish on an activity. It is normally within the range of dates delimited by the early finish date and the late finish date. Scheduled start (SS) date Time in which the work was scheduled to start on an activity. It is normally within the range of dates delimited by the early start and late start dates. Simulation The most commonly known technique is Monte Carlo Analysis, where a distribution of probable results is defined for each activity and it is used to calculate a distribution of probable results for the total project. Tasks Subdivision of activities. Time-scaled network diagram Project network diagram drawn with the positioning and length of the activity represents its duration. It is a bar chart with network logic. Total float (slack) Amount of time an activity can be delayed without delaying the project finish date Work item similar to activity

6 Project Cost Management CHAPTER COVERAGE 1. 2. 3. 4. 5. 6.

Cost Cost Management Problems in Estimation Parametric Estimating Analogous Estimating Earned Value Management 7. Depreciation

INTRODUCTION Cost is a resource sacrificed, foregone, or consumed to achieve a specific objective or something given up in exchange for something in return. In the context of project management, resources are spent in exchange for profits. Project cost is usually measured in monetary units. Calculation of project cost considers the requirements of all project stakeholders, who need project cost– related information in different ways at different points in time. Costs associated with a project are the costs of equipment, material, and human resources required to complete all the activities of a project. Accurate project cost estimation is difficult, because of the uncertainties inherent in project execution, particularly so in the case of complex projects. However, if project costs are effectively managed, predicted, accounted for, and controlled, the gap between planned costs and actual costs could be kept to a minimum or, sometimes, even made zero. The foundation of a good project cost estimate is an accurately developed work breakdown structure (WBS). The ability of stakeholders to influence project cost is greatest in the early stages of project execution, which is why early scope definition is critical: Overall project cost can be fixed on the basis of a clearly defined scope. Project cost management refers to the processes involved in planning, estimating, budgeting, and controlling cost to ensure that the project is completed within the approved budget and time. On projects of narrow scope, cost estimating and cost budgeting are so tightly linked that project managers look at them as a single process. A person who is very good or bad in one trait may be assumed to be as good or bad in all other traits. For example, a project leader who is technically good may be promoted as project manager assuming that he/she is (or will be) good in project management aspects also. This is called the halo effect.

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Discussion Points Why does a project manager need to know about costing? What is halo effect? Discuss its impact on cost management? What cost management tools do you use in the projects you execute? How will you determine the cost of the whole project?

According to the PMBOK, 4th edition, project cost management consists of the following four processes: 1. Plan Cost Management: The process that establishes the policies, procedures, and documentation for planning, managing, executing, and controlling the project costs. 2. Estimate Cost: It is the process of identifying an approximate measure of the cost of the resources necessary to complete the activities of the project. 3. Determine Budget: It is the process of distributing the overall cost estimate of the project over individual activities or work packages, thereby establishing a cost baseline. 4. Control Cost: It is the process of influencing the factors that are responsible for changes to the cost baseline to ensure that changes due to these factors are beneficial. Figures 6.1 and 6.2 depict the project cost management process flow. To control expenses, project managers implement cost management processes, which not only help control project expenses but also ensure that only expenses that have been approved occur.

Develop Project Charter Define Scope Develop Schedule

Project Charter

Scope Baseline

t jec Pro edule Sch

Develop Project Management Plan

Project Management Plan

Plan Cost Management Cost Management Plan

Estimate Cost Activity Cost Estimates

Approved CR

Activity Cost Supporting Details

Conduct Procurement Develop Schedule Control Communication Close Project

Requested Changes

Co

ntr act Re Ca sour len ce da r

t jec Pro edule Sch

Cost Management Plan Update

Determine Budget

Requested Changes

Cost Baseline Project Funding Requirements

Cost Management Plan Update Recommended Corrective Actions Requested Changes

WP I Perfo rma Repo nce rts

OPA Update

Approved Corrective Actions

Cost Management Plan update

Control Cost

Figure 6.1 Cost Management Flow

Perform Integrated Change Control

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Project Cost Management Monitoring and Controlling

Planning

Estimate Costs

Determine Budget

Control Costs

Figure 6.2 Project cost management Design-to-cost. In this process, cost goals of each activity are considered at the design stage along with the planned technical performance required of the product or service. Cost as an independent variable. In this cost management process, the scope of the project is based on the specified budget; in other words, project scope is restricted on the basis of the allotted budget, and associated costs beyond are curtailed. The following are the categories of costs incurred during project execution: Variables costs. Costs that change with the number of units produced, that is, costs of material, wages. Fixed costs. Costs that do not change as number of units’ changes, that is, rentals, machine costs, and so forth. Direct costs. Costs that are directly connected and accountable to the work on the project, that is, project travel costs, salaries, project-related software. Indirect costs. Costs that are incurred during the execution and benefit of more than one project; such costs are billable under each project. Opportunity cost. The cost of selecting and investing in a particular project and thereby forgoing the potential benefits of other projects that were not selected.

PLAN COST MANAGEMENT Plan Cost Management process is carried out by the Planning Process Group (Figure 6.3 and Table 6.1). Plan cost management is a process that establishes the procedures (the how part) for planning, managing, executing, and finally controlling the aspects related to project costs. This process plans and documents the tools and techniques associated with project cost management.

Inputs Project Management Plan: The project management plan is used as input to create the cost management plan to ensure consistency. If any content in the project management plan already relate to how the cost will be managed, it will be considered before writing a new cost management plan. For example, risk management plan will be the input for drawing out the cost management plan. If any other process talks about cost related aspects in the

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Tools and Techniques

Inputs

• Expert Judgment • Analytical Techniques • Meetings

• Project Management Plan • Project Charter • Enterprise Environmental Factors • Organization Process Assets

Outputs • Cost Management Plan

Figure 6.3 Inputs, Tools, Techniques and Outputs of Plan Cost Management Process

project management plan, it will also be taken into account to maintain consistency. The latest approved version of the project management plan would be taken as final. Scope Baseline and Schedule Baseline are important data that are examined while arriving at the cost management plan. Project Charter: Project Charter will have preliminary information about the cost (summary budget and project approval requirements) and it will be considered while writing the cost management plan. There should not be any disconnect between what is being discussed about cost in the charter and what is being described in cost management plan. Enterprise Environmental Factors: The following EE factors are considered while framing the cost management plan • Organization’s structure and culture, • Already existing infrastructure and other tools Organizational Process Assets: The following assets are considered while framing the cost management Plan • Policies and procedures (related with the management of cost) • Historical information (already existing cost management plan) • Lessons learnt documents (from similar kind of projects)

Table 6.1 Plan Cost Management – Planning Process Group Planning

Monitoring and Controlling

Plan Cost Management

Control Cost

Estimate Costs Determine Budgets

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Tools and Techniques Expert Judgment: Here, the expertise gained from managing the costs of similar projects worked on earlier is used to judge the extent of cost associated with the current project. Dos and Don’ts are implemented based on the expertise gained from previous projects. Meetings: In order to develop a cost management plan which is realistic and accepted by the entire team, it is better to conduct team meetings while drawing the cost management plan. This meeting should also be attended by other stakeholders like project sponsors and others who are responsible for the cost management process. The project manager can also conduct this meeting with selected team members who have good knowledge of the cost management process. Analytical Techniques: These are the techniques used to manage and control the cost of the project and include costing tools, approach of estimation, fast tracking/crashing approaches, decision of executing activities in parallel, self funding, funding with equity, funding with debt, combination technique (equity, debt), key decisions like purchasing, renting, leasing, pay back period, internal rate of return (IRR), discounted cash flow, net present value (NPV) etc..

Outputs Cost Management Plan: This is the output of Plan Cost management process and defines the process of defining, managing and controlling the cost of the project. It is also the content of the overall project management plan and includes the cost reported to the higher management. Contents of Cost Management Plan: • • • • • • • •

Cost measurement methodology (level of accuracy) Costing tool to be used Cost reporting formats Unit of measurement of cost management activities Threshold limits related with the cost (percentage deviation from baseline) Earned value rules (important from PMP perspective) WBS points in which the progress will be measured Additional details like strategic funding choices, roles and responsibilities of persons performing cost related activities etc.

The WBS component which is used for the project cost accounting is called the control account (CA). Each control account is assigned a unique code or account number(s) that links directly to the performing organization’s accounting system (Accounting manager(s) work hard to maintain profit and loss for their respective account number)

THE ESTIMATE COST PROCESS Figure 6.4 shows the inputs, tools involved, and outputs of the Estimate Cost process. It is the process of identifying an approximate measure of the cost of the resources necessary to complete the activities of the project (Table 6.2). Cost estimation is done throughout the life cycle of the project and is based on the project’s WBS to improve accuracy. Whenever cost-related issues or problems occur, corrective and preventive actions are implemented.

198 • PMP® Certification—Excel with Ease Estimate Costs Tools and Techniques

Inputs • Cost Management Plan • Enterprise environmental factors • Organization process assets • Scope Baseline • Project Schedule • Human Resource Plan • Risk Register

• • • • • • • • • •

Analogous estimating Expert Judgment Parametric modeling Bottom-up estimating Three Point Estimates Reserve analysis Cost of quality Project Management Estimating Software Vendor Bid Analysis

Outputs • Activity cost estimates • Basis of Estimates • Project Document Update

Figure 6.4 The inputs, tools and techniques and outputs of Estimate Costs Process Table 6.2 Estimate Cost – Planning Process Group Planning

Monitoring and Controlling

Plan Cost Management

Control Cost

Estimate Cost Determine Budget

Inputs of the Estimate Cost Process Cost Management Plan: This contains the procedure of estimating the cost of the project. It also contains other cost estimation related details like level of accuracy, unit of measurement etc.. Human Resource Plan: An important process that precedes the aforementioned three processes is human resource planning. It refers to the process of examining the project objectives and the associated project work and expertise involved; determining the resources, equipment, and materials needed to complete the project work; and identifying the quantities of these resources—within the performing organization or outside—so that their costs can be computed. The primary inputs to resource planning are WBS, the project scope statement, organizational policies, and activity duration estimates or historical information on activities similar to those planned to be performed in the current project. Risk Register: Cost estimation of a project depends on the number of risks identified in the project along with its contingency and mitigation plans. Monitoring risks and implementing risk strategies involve cost, and hence, a risk register is used as an input for cost estimation processes. Scope Baseline: Scope baseline consists of scope statement, WBS and WBS dictionary. WBS is used as primary input for estimating the costs.

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Project Schedule: Project schedule comes with assumptions, constraints, and resource allocation to each activity of the schedule. Cost estimation depends on the project schedule and the corresponding resources assigned to each activity. Hence, this is also used as an input for the process. Cost estimation depends not only on the inherent nature of the activities defined but also on the type of resources such as experienced resources, less costlier resources etc. OPA and EE: They provide the software for cost estimation. Historical records of similar kind of projects will be helpful in the organization for estimating cost. If the cost estimates prove to be high and require to be decreased, a project manager may consider the following: revise quality standards, use reusable components, decrease risk, cut scope, outsource the entire project, subcontract a part of the project, use cheaper resources and at the same time closely monitor the impact of changes on the project schedule and technical and quality requirements. Cost estimating also includes identifying and considering cost alternatives for managing risks. The four common cost-estimating methods are as follows: 1. 2. 3. 4.

Subjective estimate. Based on personal experience Statistical estimate. Based on comprehensive historical data Comparative estimate. Based on cost estimates of similar projects Empirical estimate. Based on real-time data

PMP WATCH Difference between cost estimating and pricing may be seen by the following definitions: Cost estimating refers to assessing how much the organization will spend to provide the product or service. Pricing refers to assessing how much the organization will invoice for the product or service. Generally, the difference between the cost estimate and the cost price of the product or service yields the profit margin of the performing organization.

Tools and Techniques of the Estimate Cost Process The following tools and techniques are used to accomplish the Estimate Cost process. Analogous Estimating Analogous estimating is used to estimate total project costs when detailed information is limited or no data are available about the project. This process uses the actual cost of previously completed similar projects to predict the cost; hence, the estimates are based on historical information. Analogous estimating is a form of expert judgment, as current project requirements are estimated without access to real-time data. It uses a top–down approach, and time required for estimation is less compared to that in bottom–up estimation. The main advantages of analogous estimating are as follows: (1) speed of estimation is high, (2) cost involved in the process of estimations is less, and (3) individual tasks do not require to be identified. The main disadvantages of analogous estimating are as follows: (1) accuracy of the estimation is low as the latter is largely based on previous projects’ process parameters, which may not be valid for the current project, (2) applicability for use in complex projects with high uncertainty is low, primarily because uncertainties vary across projects and their quantification is difficult, and (3) risk

200 • PMP® Certification—Excel with Ease management politicking is present, as the cost associated with the risk management largely depends on the politicking involved in the project. Parametric Estimating Parametric estimating uses a mathematical model with project characteristics (or parameters) as inputs to predict costs. The input parameters can vary based on the type of work completed. The following may be seen as a rudimentary example: Assume that a module in a previous project cost 600 USD. If the current project carries 10 similar modules, its cost would be 6,000 USD. Parametric estimating often follows an analogous estimation. Bottom–Up Estimating In bottom–up estimating, the cost of each individual work item in the WBS is calculated; the individual costs are then summed to arrive at the total project cost. Bottom–up estimating is performed with the project team, and, although, this method yields accurate results, the cost of and time involved in performing such an detailed estimate is high. Vendor Bid Analysis In vendor bid analysis, an analysis of what the project should cost is made on the basis of responsive bids from qualified vendors who submitted their quotes or bids for the project concerned. When multiple vendors are involved for each deliverable, the price of an individual deliverable is calculated to derive a cost that supports the final total project cost. PMP WATCH Clearly understand the pros and cons of the differences between analogous estimation, parametric estimation, bottom–up estimation, and top–down estimation. There will be at least five questions based on this in the exam.

Reserve Analysis A contingency reserve is generally included in project cost. This reserve lies at the discretion of project manager, to deal with anticipated but not certain events emerging out risks associated with the project. The objective of building a reserve component into the estimated cost is to ensure that project objectives are met without cost overruns. Cost of Quality The desired quality level of the product or service determines the cost associated with project execution. If the final product or service requires higher quality levels, obviously the cost of project execution and deliverables would be higher. Costs of quality typically include costs of reviews, audits, inspections, and other such quality control systems and procedures.

Types of Cost Estimates Order of Magnitude Estimate An order of magnitude estimate is also called a ballpark estimate. It is based on high-level objectives and provides a bird’s-eye view of project deliverables.

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The Budget Estimate A budget estimate is more accurate than an order of magnitude estimate. It should be formulated early in the project’s planning stage; the budget estimate is most often based on analogous estimating, considering budget lessons learned from a similar project and applying them to the current project. The Definitive Estimate A definitive estimate uses the bottom–up technique and is the most accurate of all estimate types. However, it consumes considerable resources and the most time because of the many calculations and data collections involved. The definitive estimate uses the WBS of the project. Types of Cost Estimates Types of Estimate

When Done

Why Done

How Accurate

Rough Order of Magnitude (ROM)

Very early in the project life cycle, often 3–5 years before project completion

Provides estimate of cost for selection decisions

25% to 75%

Budgetary

Early, 1–2 years out

Puts dollars in the budget plans

10% to 25%

Definitive

Later in the project, less than 1 year out

Provides details for purchases, estimates actual costs

5% to 10%

PMP WATCH Understand the types of estimates and the accuracy of each type. You will be required to differentiate between types of estimates in the exam on the basis of accuracy and range of each estimate type.

The Output of Estimate Cost Process: Activity Cost Estimate An activity cost estimate is the quantitative assessment of the probable costs required to complete each activity in a project. Cost is calculated for all the types of activities. Cost management plan is not an output of the estimate cost process; rather, it is an input of the estimate cost process. The cost management plan describes how cost variances will be managed, and it is a subsidiary element of the overall project plan, which in turn is the output of the develop project management plan process. This also acts an input for the estimate cost process.

Basis of Costs It contains the logic behind the estimation of costs, with details that include the assumptions, and constraints considered for the estimation. We know that there are different types of techniques for estimating the cost such as analogous estimation, parametric estimation, top-down approach, bottom-up approach, and also different types of cost estimates like order of magnitude, budgetary and definitive estimates. We follow different approaches for different types of activities by considering various assumptions; these needs to be detailed in the basis of estimation.

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Problems in Accurate Estimation of Costs Although we use sophisticated softwares and different techniques for the estimation of project cost, the cost can not be determined accurately due to problems associated with the estimation as enlisted below: • Developing an estimate for a large project is a complex task due to inherent complexities associated with the tasks and their interrelationships. • Lots of training and work standards required. • Stakeholders and estimators generally are prone to underestimation bias or overestimation bias. Exercise 6.1

Choose the tool used in the below scenarios

You got a new project in new domain; you contacted a colleague who has already worked in that domain and asked his input to estimate the total cost for your project

Analogous estimation Parametric estimation

You estimate the cost for each and every activity and sum up the individual estimates determine the whole project cost estimation

Top–down approach

You have historical information about similar kinds of projects; adjusting the same per the attributes of the existing project, you arrive at the final cost estimation

Analogous estimation Parametric estimation

You have the cost estimate for the overall project as a whole; you distribute it over the individual activities and work packages

Top–down approach

Bottom–up approach

Bottom–up approach

THE DETERMINE BUDGET PROCESS Figure 6.5 shows the tools and techniques involved in the Determine Budget process. It is the process of distributing the overall cost estimate of the project over individual activities or work packages, thereby establishing a cost baseline (Table 6.3). A project budget is the amount of monetary resources allocated for particular goal of the project (usually for a specific period of time). The project needs to be executed within the approved budget to achieve the stated goals of the project.

Table 6.3 Determine Budget – Planning Process Group Planning

Monitoring and Controlling

Plan Cost Management

Control Cost

Estimate Cost Determine Budget

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Determine Budget Tools and Techniques • • • •

Inputs

Cost aggregation Reserve analysis Expert Judgment Historical Relationships • Funding Limit Reconciliation

• • • • • • • •

Cost Management Plan Activity cost estimates Basis of Estimates Project schedule Scope Baseline Resource Calendar Contracts/Agreements Organization Process Assets • Risk Register

Outputs • Cost Baseline • Project Funding Requirements • Project document Updates

Figure 6.5 The inputs, tools, and outputs of the Determine Budget process

Inputs of the Determine Budget Process Cost Management Plan: This contains the procedure of the cost budgeting of the project. It also contains other cost budget related details such as level of accuracy, unit of measurement, threshold limits etc. Activity cost estimates and basis of estimates: This is the output of the estimate cost process. An activity cost estimate is the quantitative assessment of the probable costs of completing each activity in a project. This is the key input for establishing the cost baseline. As may be seen, the main difference between cost estimates and cost budgets is that the former shows costs to be incurred by category, whereas the latter shows costs to be incurred over time. Contracts: For most projects, the expected value for risks of the overall contract is budgeted. Activities associated with the contract should be budgeted properly and hence, this is also used as input. For example, the contract may specify risk auditing and associated activities, and these should be properly budgeted. Project Schedule: Project schedule comes with assumptions, constraints, and resource allocation to each activity of the schedule. Proper budgeting should be done for all the activities associated with the project schedule and hence, this is also used as an input. Assignment of costs to individual work packages has the following important advantages: 1. The cost baseline enables the performing organization to plan its expenditures and cash flow requirements over the estimated time of project execution. 2. Assignment of cost to individual work packages allows for objective measurements of performance. An unethical practice in the context of determining the project budget is called padding. Padding refers to the practice of obtaining extra resources for an activity with the intention of using them for another activity. Obtaining cost approval for training needs of a project and using the allotted resources for procuring software may be seen as an example of padding.

204 • PMP® Certification—Excel with Ease

Tools and Techniques of the Determine Budget Process Cost Aggregation Cost aggregation refers to the aggregate costs of individual work packages of the WBS. These cost estimates are then aggregated for higher component levels of the WBS (control account) and ultimately for the entire project. Reserve Analysis Reserve analysis, discussed also under the Estimate Cost process, can establish a contingency reserve and a management reserve of the project. Contingency reserves are allowances for unplanned but potentially required changes that can result from realized risk. Management reserve is a separately planned allowance retained to allow for use in future situations that are impossible to predict. It is intended to reduce the risk of failing to meet cost or schedule objectives. Funding Limit Reconciliation The use of funds should be reconciled with any funding limits on the commitment of funds for the project. Large variations in the periodic expenditure of funds are usually undesirable for organizational operations. The use of funds is reconciled with the funding limits set by the customer or performing organization on the disbursement of funds for that particular project. Reconciliation will necessitate adjustments of the scheduling to smooth or regulate those expenditures, which is accomplished by placing deadlines and schedule milestones for work packages. Expert Judgement: Even at home, it is often seen that the expert (usually the housewife) can do better budgeting than the person who is earning the money. In project management, the experience of experts is vital to estimate accurate time and cost estimates for the project. Hence, budgeting the activities of the project based on the skill level of those who have worked on previous similar activities is considered as expert judgement. Historical Relationships: This is also referred to as parametric estimating and is based on historical data. For example, if the project is for constructing a bridge of length 10 kilometers, and a previous similar project (near the current project location) found that construction costs of that particular bridge were $150,000 per kilometer, then the cost of the current project (constructing a new bridge) could be calculated based upon its length.

Output of the Determine Budget Process Cost baseline The cost baseline refers to the freezing of the costs estimates and is used to measure and monitor the cost performance of the project. The cost baseline is also called as spend plan or an ‘S curve’ because of the typical shape (Refer Figure 6.6). The cost baseline is a critical project parameter and is not changed without a proper approval process authorizing change. These changes are usually documented and approved via the Integrated Change Control process. As may be seen, the main difference between cost estimates and cost budgets

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S-Curve Management Reserve

Budget Ceiling Spend Plan

Dollars Actuals

Months

Figure 6.6 The S-curve is that the former shows costs to be incurred by category, whereas the latter shows costs to be incurred over time. Project Funding Requirements Project funding requirements are derived and directly based on the cost baseline and can be established to exceed the baseline, usually by a fixed margin, to allow for either early progress or cost overruns. Funding usually occurs in incremental amounts and is not usually continuous. The total funds required are those included in the cost baseline plus the management contingency reserve defined for that project. S-Curve A simple technique for tracking project costs is to develop a periodical cumulative budget spend plan and then track actual costs against that plan. The rate of expenditure at the beginning of the project is usually slow. Maximum cost will occur during the execution phase (middle) of a project when the spending rate is high. As the project comes to an end, the end-stage rates are low and hence, the slope of the curve is shallow, resulting in the curve’s “S” shape. The slope of the graph (Figure 6.6) indicates the project expenditure rate, sometimes called the “burn rate.” By plotting actual costs against the budget planned, one can identify the differences between actual spending and the estimated plan. Project Document Updates: When the actual cost requirements of a project are calculated, it is common to consider changes to other already existing documents which are related to cost management (scope, schedule etc). PMP WATCH Understand the S-curve and the various parameters associated with it such as actual, spend plan, management reserve, budget ceiling, with time on the x axis and cost on the y axis.

206 • PMP® Certification—Excel with Ease

Choose the tool used to build the budget in the below scenarios

Exercise 6.2 Your project involves extensive traveling to be made by project team members. Because the price of petrol increased by 10%, and you reserve 500 USD aside to deal with the petrol price hike.

Reserve analysis

Cost aggregation

You add up all the estimations to control accounts to find out how much more will it cost than the previous account.

Cost aggregation

Funding limit reconciliation

Once the budget is done, you look over again to make sure you can afford everything on time.

Cost aggregation

Funding limit reconciliation

THE CONTROL COST PROCESS Figure 6.7 depicts the tools and techniques involved in the Control Cost process. Control Cost process is part of Controlling process group (Refer Table 6.4) The primary objectives of this process are to • • • • • •

influence the factors that create changes to the cost baseline. manage the actual changes when and as they occur. detect variances from the plan. ensure that all appropriate changes are recorded. prevent inappropriate or unauthorized changes. inform the appropriate stakeholders about the changes. Control Cost Tools and Techniques • Earned Value Management • Forecasting • To Complete Performance Index • Performance Reviews • Variance analysis • Project Management Software

Inputs • • • •

Project Management Plan Project funding requirements Work performance Data Organizational Process Assets

Outputs • Work Performance Information • Budget Forecasts • Change Requests • Organization process assets (updates) • Project Management Plan update • Project document update

Figure 6.7 The inputs, tools, and outputs of the Control Cost process

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Table 6.4 Control Cost – Controlling Process Group Planning

Monitoring and Controlling

Plan Cost Management

Control Cost

Estimate Cost Determine Budget

• analyze positive and negative variances. • find how variances affect other control processes.

Establishing Control Accounts A control account is a level of the WBS at which a budget is assigned and a control account manager is given responsibility for delivering the item defined; the control account manager also monitors accounts in that level, which is generally that at which the organization’s senior management tracks the project’s cost and schedule.

Inputs of the Control Cost Process Work Performance Data: Raw observations and measurements, identified during activities being performed, to control the cost of the project. Examples: 1. Percentage of work completed 2. Actual cost Spent Project Management Plan: The project management plan, especially the cost management plan, which defines the process of the entire cost control mechanism and acts as input to control the cost process. Cost Baseline and Project Funding Requirement: These are outputs of the budget cost process and acts as inputs to the control cost process. Baseline is compared with the WPI to calculate the variance and appropriate action is taken based on the degree of variance.

Tools and Techniques of the Control Cost Process Forecasting Learning curve. This term refers to the decrease in time taken to perform a task because of the increase in efficiency in performing the task that results solely out of repeatedly performing the task. Therefore, with passage of time, although total costs typically increase, the cost per unit drops. This pattern of cost reduction is given by Yx = Kx log b 2

where K is the number of direct work hours required to produce the first unit, Yx is the number of direct work hours to produce the xth unit, x is the number of units produced, b is the learning percentage.

208 • PMP® Certification—Excel with Ease Law of diminishing returns. This law indicates that merely adding more resources to a project’s execution by itself would not facilitate its early completion. Addition of more resources may increase overall output in the beginning, but will eventually decrease individual productivity. For example, adding thrice as many people to the same task may not cause the task to be finished thrice as fast. PMP WATCH There may be a few questions in the exam on the learning curve based on the simple formula Yx = Kx log b. So be ready for it!! 2

Earned Value The earned value method measures project performance against a plan to identify variances. It may also be used to identify future variances and determine final cost at project completion. The term earned value refers to the actual work completed and the allotted budgeted cost for that portion of work. For example, if 20% of work on a project with a budget of 10,000 USD (for 20% of work) has been found completed on a given date, the earned value for the performing organization on the date when 20% of the work is completed would be 10,000 USD. Project managers apply the earned value method to have better control over project execution. Earned value is calculated by comparing the planned amount of work with that actually accomplished, to determine if cost incurred and adherence to schedules and quality standards are per baseline projections. Project cost and schedule performance measurements should be managed as integrated elements. Earned value management facilitates such an integration. PMP WATCH Do not memorize the formula for earned value; instead try to understand the purpose of each term in it. There will be 5 to 10 questions on earned value in the exam. If you understand the concepts, then you can pocket these marks easily.

The earned value method is favored across the globe and widely used by project managers in project performance measurement. It integrates cost and schedule performance into a single report and helps the project manager to control the entire project. Planned Value: It is defined as budgeted cost of work scheduled (BCWS). Earned Value: It is defined as budgeted cost of work performed (BCWP). For example, consider a project with a total budget of 10,000 USD. The total project timeline is 10 months. Let us assume that we shall be finishing 10% of the work every month. Total project budget (10,000 USD) is uniformly distributed across the months. Now, at the end of first month, the planned value is 1000 USD where 10% of the work is expected to be completed. At the end of second month, the planned value is 2000 USD where 20% of the work is expected to be completed, and so on. At the end of tenth month, the planned value is 10,000 USD where 100% of the work is expected to be completed. Calculation: Now, consider the end of third month. When we calculate the actual cost incurred, the amount is 4000 USD (AC). When we calculate the percentage of work completed, it is 20% only. However, we are supposed to complete 30% (as planned).

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So, at the end of third month, planned value is 3000 USD (because we planned to complete 30%) and earned value (EV) is 2000 USD (because only 20% is completed and the budgeted cost of 20% is 2000 USD). The following formulas illustrate the important parameters used in the earned value method: 1. Schedule variance (SV) is the difference between earned value (EV) and planned value (PV): SV  EV  PV. 2. Cost variance (CV) is the difference between earned value and actual cost (AC) : CV  EV  AC. 3. Schedule performance index (SPI) is the ratio of earned value to planned value: SPI  EV/PV. 4. Cost performance index (CPI) is the ratio of earned value to actual cost: CPI  EV/AC. Estimate at completion. Estimate at completion (EAC) is the expected total cost of the project at the end of the project, that is, when the defined scope of work has been completed. Estimate to complete. It is the expected additional cost needed to complete the project from the point of calculation. Estimate to complete (ETC) is calculated by adjusting the original cost estimate on the basis of actual project performance: ETC  EAC  AC. There are five formulas to calculate EAC: 1. EAC  BAC/CPI, where BAC is the budget at completion. 2. EAC  BAC/(CPI × SPI); this method reflects the compound impact of schedule and cost issues on the project. 3. EAC  ACC  ETC; this method is used when sufficient grounds exist to believe that all past problems and issues will get corrected. Here, ACC is the actual cumulative cost. 4. EAC  AC  (BAC  EV); when AC  EV, the formula reduces to EAC  BAC. 5. EAC  AC  (BAC  EV)/CPI. Formulas 1 and 2 are used when sufficient grounds exist to believe that all past problems and issues will not get corrected and that the same problems will continue. For example, if BAC of the project is

EV Terms Data Element

Term

Definition

Scheduled Work

Planned Value (PV)

Budgeted Cost of Work Scheduled (BCWS)

Work Accomplished

Earned Value (EV)

Budgeted Cost of Work Performed (BCWP)

Actual Cost of Work Accomplished

Actual Costs (AC)

Actual Cost of Work Performed (ACWP)

Authorized Work

Budget at Completion

-

Forecasted Cost

Estimate at Completion

-

Work Variance

Schedule Variance

-

Cost Variance

Cost Variance

-

Completion Variance

Variance at Completion

-

210 • PMP® Certification—Excel with Ease 10,000 USD and CPI is 0.7 at a particular point of time, we assume that CPI will be 0.7 even at the end of the project so EAC  10,000/0.7  14,285 USD. Formula 3 is used when sufficient grounds exist to believe that all past problems and issues will get corrected. In this case ETC is freshly calculated and we use the formula EAC  ACC  ETC where ACC is accumulated actual cost. Formula 4 is an extension of Formula 3, where ETC is calculated using the formula ETC 5 BAC 2 EV and so EAC 5 AC 1 (BAC 2 EV). This formula assumes that irrespective of the actual costs, the amount allocated for future comptetion of the remaining work will be budgeted. If EV 5 2000 USD, AC 5 3000 USD, BAC 5 10,000 USD then EAC 5 3000 1 (10,000 2 2000) 5 3000 1 8000 5 11,000 USD. Formula 5 is an extension of Formula 4 and takes past performance into consideration and hence, CPI is used. EAC  AC  (BAC  EV)/CPI. Variance at completion. Variance at completion (VAC) is the difference between budget at completion BAC and estimate at completion EAC. VAC  BAC  EAC Work remaining. Work remaining is calculated using the formula BAC  EV. Cost remaining. Cost remaining is calculated using the formula EAC  AC. To complete performance index. The parameter to complete performance index (TCPI) is calculated using the following formula: TCPI 

Work remaining Cost remaining

TCPI 

BAC 2 EV EAC 2 AC

Example 1: PV EV AC $1 $1 $1 On schedule

On cost

$2

$2

$1

On schedule

Under cost

$1

$1

$2

On schedule

Over cost

$1

$2

$2

Ahead of schedule

On cost

$1

$2

$3

Ahead of schedule

Over cost

$1

$2

$1

Ahead of schedule

Under cost

$3

$2

$1

Behind schedule

Under cost

$2

$1

$3

Behind schedule

Over cost

$2

$1

$1

Behind schedule

On cost

Example 2: BAC  40,000 USD EV  20,000 USD PV  28,000 USD AC  26,000 USD

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Percentage of work scheduled. PV / BAC  28,000 / 40,000  70% Percentage of budget spent. AC / BAC  26,000 / 40,000  65% Percentage of work accomplished. EV / BAC  20,000 / 40,000  50% Cost variance. EV  AC  20,000  26,000  6,000 USD Schedule variance. EV  PV  20,000  28,000  8,000 USD

• • • • • If

AC > EV

AC 5 EV

AC < EV

Then

CV < 0

CV 5 0

CV > 0

CPI < 1

CPI 5 1

CPI > 1

The project is

Over budget

On budget

Under budget

If

PV > EV

PV 5 EV

PV < EV

Then

SV < 0

SV 5 0

SV > 0

SPI < 1

SPI 5 1

SPI > 1

Behind schedule

On schedule

Ahead of schedule

The project is

Exercise 6.3

EV calculation exercise If EV  94,000 USD and SPI  0.87, what is the planned value? If PV  257,000 USD and BAC  330, 000 USD, what is scheduled percent complete?

Other Concepts in Costing Depreciation is the decrease in value of an asset over a period of time. It is an important parameter for the purposes of accounting, taxation, and value calculation after a period of time. The following are some methods used to calculate depreciation: 1. Straight line method. In this method, the asset is assumed to depreciate by the same amount every year. 2. Double declining balance. In this method, in the first year, a higher deduction in the value of the asset is made, twice the amount of straight line method. A deduction that is 40% less than that in the previous year is made every subsequent year. 3. Sum of year digit method. In this method, a fraction of the total is deducted every year of the life of the asset. Let us, for example, assume that the life of an asset is 6 years; the total of 1 to 6 (i.e., 6  5  3  2  1) is 21. In the first year, a fraction 6/21 is deducted from the cost, in second year, a fraction 5/21 is deducted, and so on.

Output of the Control Cost Process Measuring Progress of Individual Tasks Assume the duration of a task is 10 days. If an activity has been planned to start on January 1 and end by January 10, the following table may be used to calculate the progress of the activity in question.

212 • PMP® Certification—Excel with Ease Measuring rule for progress of individual tasks Rule

Task Begins

Tasks Completed

Percentage Progressed

50/50

Y

N

50

50/50

Y

Y

100

20/80

Y

N

20

20/80

Y

Y

100

0/100

Y

N

0

0/100

Y

Y

100

Work Performance Information Work performance data collected is analyzed in context to infer information based on the relationship between the various measured parameters. This is called as Work Performance Information (WPI). Examples: 1. 2. 3. 4.

Schedule variance Cost variance Estimate at Complete (EAC) Estimate to Complete (ETC)

Budget Forecasts Calculated EAC value or bottom–up EAC value represents the budget forecast and is communicated to all stakeholders. Discussion Points How is historical information useful for cost management processes? What were the difficulties faced by you for calculating the cost of tasks?

Summary Project cost management is a vital component of successful project management. Because generally the ultimate objective of project execution is profit, failure to manage costs effectively results in failure to achieve this fundamental project objective. Also, evidence of poor cost management affects funding for future projects. The WBS is the basis of an accurate cost estimate. Therefore, arriving at a robust WBS is the first step toward successful cost management. Cost estimation, as with several other components of project management, is performed throughout the life cycle of the project. In this regard, the earned value reporting system, which measures performance to schedule and performance to budget in the same system using simple formulas, is an effective tool available to project managers. Project expenditures are less both in the beginning and toward the closing stages of a project’s execution. Expenditure is more in the middle phase of the project.

Project Cost Management

Answers to Exercise Questions Exercise 6.1 Choose the tool used in the below scenarios You got a new project in new domain; you contacted a colleague who has already worked in that domain and asked his input to estimate the total cost for your project

Analogous estimation

You estimate the cost for each and every activity and sum up the individual estimates determine the whole project cost estimation

Bottom–up approach

You have historical information about similar kinds of projects; adjusting the same per the attributes of the existing project, you arrive at the final cost estimation

Parametric estimation

You have the cost estimate for the overall project as a whole; you distribute it over the individual activities and work packages

Top–down approach

Exercise 6.2 Choose the tool used to build the budget in the below scenarios Your project involves extensive traveling to be made by project team members. Because the price of petrol increased by 10%, and you reserve 500 USD aside to deal with the petrol price hike.

Reserve analysis

You add up all the estimations to control accounts to find out how much more will it cost than the previous account.

Cost aggregation

Once the budget is done, you look over again to make sure you can afford everything on time.

Funding limit reconciliation

Exercise 6.3 EV calculation exercise If EV  94,000 USD and SPI 0.87, what is the planned value?

We know that SPI  EV/PV; so PV  EV/SPI  94,000/0.87  108,046 USD

If PV  257,000 USD and BAC  330, 000 USD, what is scheduled percentage complete?

We know that PV  BAC × scheduled percentage completion; so scheduled percentage completion  PV/BAC  257,000/333,000  77%.

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214 • PMP® Certification—Excel with Ease

Chapter 6 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. Earned value is A. B. C. D.

planned work value. revenue from customer. value given to customer. completed work value.

Question 2. Which of the following methods would give the most effective input for project managers seeking successful project cost management? A. B. C. D.

Historical information WBS Bottom–up estimation Expert judgment

Question 3. Which of the following methods would yield a project manager the most accurate cost estimate? A. B. C. D.

Top–down approach Parametric model Bottom–up approach Analogous estimation

Question 4. Which of the following methods would yield a project manager a cost estimate quickly? A. B. C. D.

Top–down approach Parametric model Bottom–up approach Analogous estimation

Question 5. In the context of estimating the monetary resources needed to complete project activities, which of the following is in the order of less accurate to most accurate? A. Order of magnitude, budget, definitive B. Definitive, budget, order of magnitude C. Budget, order of magnitude, definitive D. Budget, definitive, order of magnitude

Question 6. A project manager approximates the monetary resources needed to complete a project’s activities; this is an example of the A. B. C. D.

Estimate Cost process. Determine Budget process. Control Cost process. Plan Cost process.

Question 7. A project manager aggregates the estimated costs of individual activities or work packages to establish an authorized cost baseline; this is an example of the A. B. C. D.

Estimate Cost process. Determine Budget process. Control Cost process. Plan Cost process.

Question 8. What is the present value of a project that would be worth 100,000 USD after a year if the annual interest rate is 5%? A. B. C. D.

95,238 USD 105,000 USD 95,000 USD 100,000 USD

Question 9. A project manager monitors the status of the project to update the project budget and manage changes to the cost baseline. This is an example of the A. B. C. D.

Estimate Cost process. Determine Budget process. Control Cost process. Plan Cost process.

Question 10. In a small project with limited scope, which of the following combinations would be most effective in cost estimating? A. B. C. D.

Cost estimating and cost budgeting Cost estimating and cost controlling Cost budgeting and cost controlling Cost planning and cost estimating

Project Cost Management

Question 11. The ability to influence cost is greatest at early stages of the project. A. True B. False Question 12. The process of cost estimation is defined in which process? A. B. C. D.

Estimate Cost Budget Cost Control Cost Plan Cost Management

Question 13. A senior project manager is states that a cost management plan can be informal. Is it possible and would you agree with this? A. Yes, I would agree. B. No, I would not agree. Question 14. Which of the following statements is true regarding cost estimates? A. A cost estimate is accurate in the beginning of a project. B. The accuracy of a cost estimate increases as the project progresses. C. The accuracy of a cost estimate is the same at all levels of the project. D. The accuracy of a cost estimate decreases as the project progresses. Question 15. Cost estimating is an iterative process. A. True B. False Question 16. All the following are the outputs of Estimate Cost process except A. B. C. D.

basis of estimates. activity cost estimates. project document updates. cost of quality.

Question 17. If only limited information is available at the beginning of a project, which of the following types of estimation techniques would be most effective? A. B. C. D.

Parametric estimation Top–down approach Bottom–up approach Analogous estimation

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Question 18. The analogous estimation technique may generally not be preferred. What do you think might be the reason for this? A. B. C. D.

It is costly. It requires more time. It is generally less accurate. It is not at all accurate.

Question 19. The parametric estimation technique may generally be preferred. What do you think might be the reason for this? A. B. C. D.

It is less costly. It requires less time. It can yield accurate estimates. It is a risk-free estimation technique.

Question 20. As more precise information about a project becomes available, the contingency reserve may be used, reduced, or eliminated. A. True B. False Question 21. Which of the following statements is not true? A. Management reserve is part of the cost baseline. B. Management reserve is not a part of the project cost baseline. C. The project manager may be required to obtain approval before using the management reserve. D. Management reserve may be included in the total budget for the project. Question 22. The two lines in an S-curve represent A. B. C. D.

income versus expenditures. cost baseline versus expenditures. cost versus time. cost estimate versus cost budget.

Question 23. Which of the following parameters is plotted on the x axis of an S-curve? A. B. C. D.

Expenditure Cost baseline Time Scope

216 • PMP® Certification—Excel with Ease Question 24. In the EV technique, the cost performance baseline is referred to as A. B. C. D.

cost measurement baseline. performance measurement baseline. earned value baseline. performance indicator baseline.

Question 25. Earned value management integrates which of the following components? A. B. C. D.

Cost, scope, quality Quality, scope, time Risk, cost, time Cost, scope, time

Question 26. An authorized budget assigned to the work to be accomplished for an activity is defined as A. B. C. D.

planned value. earned value. actual cost. budget value.

Question 27. When a project has been completed, which of the following case would be true? A. EVM schedule variance would ultimately equal zero. B. EVM schedule variance would be a positive value. C. EVM schedule variance would be a negative value. D. EVM schedule variance can be positive or negative depending on project performance. Question 28. A senior project manager claims that a negative EVM CV is often non-recoverable to the project. A. False B. True Question 29. When a project has been completed, which of the following case would be true? A. EV would ultimately equal zero. B. EV would be near BAC. C. EVM schedule variance would have negative value. D. EVM schedule variance can be positive or negative depending on the project performance.

Question 30. An SPI value less than 1 indicates which of the following? A. More work was completed than planned. B. Less work was completed than planned. C. It indicates nothing. D. CPI also is less than 1. Question 31. Value of work completed compared to the actual cost or progress made on a project is called A. B. C. D.

SPI. SV. CV. CPI.

Question 32. Analysis that examines project performance over time to determine if performance is improving or deteriorating is called A. B. C. D.

trend analysis. variance analysis. system analysis. EV analysis.

Question 33. The cost of investing in a particular project and thereby forgoing the potential benefits of other projects is known as A. B. C. D.

direct cost. indirect cost. opportunity cost. variable cost.

Question 34. Formula for working capital is A. current assets minus current liabilities. B. current liabilities minus current assets. C. current liabilities plus current assets. D. management reserve minus contingency reserve. Question 35. Which of the following estimates would closely estimate the actual cost of a project? A. B. C. D.

Order of magnitude Budget Definitive Initial

Project Cost Management

Question 36. In the EV system, cost variance is computed as A. B. C. D. E.

EV  PV. EV  AC. AC  EV. AC  PV. PV  EV.

Question 37. If among two projects one worth 40,000 USD and the other 60,000 USD an organization chooses the former, what would be the opportunity cost of choice? A. B. C. D.

40,000 USD 60,000 USD 20,000 USD 0 USD

Task

PV

Task 1

1000 1000 900

Task 2

900

1000 800

Task 3

800

900

700

Task 4

900

900

1000

AC

EV

Task 1 Task 2 Task 3 Task 4

Question 39. Refer the figure in Question 38. Which task is ahead of schedule? A. B. C. D.

Task 1 Task 2 Task 3 Task 4

Question 40. Refer the figure in Question 38. Which task is ahead of schedule and within budget? A. B. C. D.

Task 1 Task 2 Task 3 Task 4

Question 41. Following are the metrics of a project: PV  1,000 USD and AC  2,000 USD. Which of the following is true regarding variance? A. B. C. D.

Project ahead of schedule Project behind schedule Sufficient data not available Project is under budget

Question 42. Range of budget estimate is A. B. C. D.

25 to  75% 10 to 25% 5 to  10 % 10 to 40%

Question 43. Definitive estimate is

Question 38. Which task is more over budget?

A. B. C. D.

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A. B. C. D.

25 to  75% 10 to 25% 5 to  10 % 10 to 40%

Question 44. Order of magnitude estimate is A. B. C. D.

25 to  75% 10 to 25% 5 to  10 % 10 to 40%

Question 45. If the SPI of a project is 1.45, the project is A. ahead of schedule. B. behind schedule. C. performing poorly with respect to the schedule. D. 45% behind schedule. Question 46. In w h i ch of t he fol l ow i ng c o s t estimating techniques is statistical models used? A. B. C. D.

Analogous cost estimating Parametric cost estimating Top–down estimating Bottom–up cost estimating

Question 47. An organization purchased software worth 20,000 USD with an estimated life of 5 years. If the worth of the software at the end of 5th year would be 2,000 USD. Using the straight line method of depreciation, the amount written off each year is A. B. C. D.

4,000 USD. 3,600 USD. 3,500 USD. 2,000 USD.

218 • PMP® Certification—Excel with Ease Question 48. Suppose that a project’s BAC is 50,000 USD and that the duration of the project is 10 months. If the project manager has planned to spend uniformly across all months and the project is at the end of 5th month with only 40% of the work complete, what is the earned value of this project at that point of time? A. B. C. D.

25,000 USD 20,000 USD 5000 USD 50,000 USD

Question 49. Your project has a budget of 150,000 USD and an expected duration of 15 months, wherein budget is planned to be spent uniformly across all months.

If, at the end of 10th month, the project is going per schedule with 120,000 USD spent, what is the cost variance? A. B. C. D.

20,000 USD 0 USD 30,000 USD 35,000 USD

Question 50. Suppose a project has a budget of 16,000 USD and is planned to be executed over 10 months. If, after 4 months, the project is going per the plan, what is the BAC? A. B. C. D.

6,400 USD 9,600 USD 16,000 USD 20,000 USD

Project Cost Management

Answer Sheet for Chapter 6 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

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220 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 6 Questions

Question Number Question 1

Answer D

Question Number

Answer

Question 26

A

Question 2

B

Question 27

A

Question 3

C

Question 28

B

Question 4

D

Question 29

B

Question 5

A

Question 30

B

Question 6

A

Question 31

D

Question 7

B

Question 32

A

Question 8

A

Question33

C

Question 9

C

Question 34

A

Question 10

A

Question 35

C

Question 11

A

Question 36

B

Question 12

D

Question 37

B

Question 13

A

Question 38

B

Question 14

B

Question 39

D

Question 15

A

Question 40

D

Question 16

D

Question 41

C

Question 17

D

Question 42

B

Question 18

C

Question 43

C

Question 19

C

Question 44

A

Question 20

A

Question 45

A

Question 21

A

Question 46

B

Question 22

B

Question 47

B

Question 23

C

Question 48

B

Question 24

B

Question 49

A

Question 25

D

Question 50

C

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Explanations for Chapter 6 Answers

1. Answer D Earned Value refers to budgeted Cost of work performed. It represents the completed work Value. Option C is not the right answer because the value produced may not always be given to the customer. The deliverable is given to the customer only at the end of the phase, but earned value can be calculated in between also. Option A indicates Planned Value and not Earned Value.

9. Answer C Approximating the monetary resources needed to complete activities is called as Cost Estimation and is part of Estimate Cost process. Aggregating the estimated Cost to individual activities is called as Cost Budgeting. Cost baseline is output of Determine Budget process. Continuously monitoring the Cost baseline for any changes are part of Control Cost process.

2. Answer B WBS is used as an input for Estimate Cost and Determine Budget process. Note WBS is part of Scope Baseline and it is used for successful Cost management.

10. Answer A Approximating the monetary resources needed to complete activities is called as Cost estimation and is part of “Estimate Cost” Process. Aggregating the estimated Cost to individual activities is called as Cost Budgeting. Cost baseline is output of Determine Budget process. Cost Estimation and Cost Budgeting can be a single process (combined) for smaller projects.

3. Answer C Accurate Cost estimated is derived using the Bottom-up Estimation technique but it takes lot of time to do the estimation. When more information/ details are available we can use the Bottom-up estimation technique. 4. Answer D Quick Cost estimation is possible with Analogous Estimation technique. ‘Analogous’ means comparison. By comparing an activity with similar kind of activities, we can do analogous estimation. It may not, however, be accurate. 5. Answer A Order of Magnitude, Budget and Definitive Estimates are the ways used to represent the ranges of Cost Estimation. Order of Estimate is less accurate (High range). 6. Answer A Approximating the monetary resources needed to complete activities is called as Cost estimation and is part of Estimate Cost Process. 7. Answer B Approximating the monetary resources needed to complete activities is called as Cost Estimation and is part of Estimate Cost process. Aggregating the estimated cost to individual activities is called as Cost Budgeting. 8.

PV = FV/ (1+r)n. Future value given as 100,000 USD. n = 1 year. r = 15%. FV = 10,000/1.15 = 95,238 USD

11. Answer A Ability to influence the cost of the project is high in the beginning of the project as we progress more control needs to be put to manage the cost of the project. 12. Answer D The process of Cost estimation is part of Cost Management plan. And it is the output of Plan Cost Management process. 13. Answer A A Project Cost Management plan may be formal or informal, highly detailed or broadly framed on the basis of the needs of the project. 14. Answer B Accuracy of Cost Estimate increases as the project progresses because more information (data) will be known as the project progresses. In other words, Cost Estimate will be accurate at the end of the project. Note:This is also the concept of progressive elaboration. 15. Answer A Cost Estimation is not a single-time activity. It happens throughout the lifecycle of the project. It is an iterative process as more information/details will be known as the project progresses.

222 • PMP® Certification—Excel with Ease 16. Answer D Cost of Quality is the tool/technique used in the Estimate Cost process and it is not the output of the Process. The main outputs of the Estimate Cost process are Activity Cost Estimates and the level of Estimates. 17. Answer D Quick Cost estimated is possible with analogous Estimation technique. Analogous means comparison. By comparing an activity with similar kind of activities, we can do analogous estimation. It may not, however, be accurate and is used only when limited information is available. For Bottom-up and Parametric estimations, we need detailed information. 18. Answer C Analogous means comparison. By comparing an activity with similar kind of activities, we can do analogous estimation. It may not, however, be accurate (generally, it is less accurate) 19. Answer C Analogous means comparison. By comparing an activity with similar kind of activities, we can do analogous estimation. It may not, however, be accurate (generally, it is less accurate). Parametric estimation is more accurate than analogous estimation. Parametric estimation uses some formula for calculation. 20. Answer A When more information about the project is available, the Risks will be in control and so contingency reserve (which is based on Risks) can be used, and risks can be reduced and eliminated. Contingency reserve is increased based on the Risk of the project. More Risks means more contingency has to be added. 21. Answer A Management reserve is not part of the cost baseline. It is just being added for unknown– unknown (Risk is unknown and the impact is also unknown). Management reserve is blindly added irrespective of the Risks. A Project Manager may be required to obtain approval before using the management reserve.

22. Answer B The two lines in the S-curve represent the cost baseline vs. expenditure. (Cost baseline indicates the freeze, approve one. Expenditure is the Actual Expenditure). 23. Answer C The two lines in the S-curve represent the cost baseline vs. expenditure. (Cost baseline indicates the freeze, approve one. Expenditure is the Actual Expenditure). Cost baseline is drawn on the X-axis of an S-curve. 24. Answer B In Earned Value Technique the performance baseline is referred as Performance measurement baseline. 25. Answer D Earned Value management integrates Cost, Scope and Time concepts. (CV and CPI represent Cost. SV and SPI represent Schedule, EV and PV represent Scope of the Project). Note:Earned Value means Budgeted Cost of Work Performed (Work Means Scope). 26. Answer A Earned Value management integrates Cost, Scope and Time concepts. (CV and CPI represent Cost. SV and SPI represent Schedule, EV and PV represent Scope of the Project). Note:Planned Value means the work to be accomplished, Budgeted Cost of Work Scheduled. 27. Answer A Planned Value means the work to be accomplished, Budgeted Cost of Work Scheduled. Since all the planned values will have been earned, schedule variance will ultimately equal zero when the project is completed. 28. Answer B Money already spent on the work performed cannot be recovered. Further, the budgets for the remaining tasks are often calculated (predicted) correctly and there is no scope for further reduction. 29. Answer B Since all the planned values will have been earned, schedule variance will ultimately equal zero when the project is completed. EV would be near BAC.

Project Cost Management

30. Answer B SPI < 1 indicates that the project has a problem related to the schedule (behind the schedule). Less work is completed than planned. We cannot predict the value of CPI based on SPI value alone. 31. Answer D CPI = EV/AC and SPI = EV/PV 32. Answer A Trend Analysis compares the performance over a period of time (past) and is hence helpful to determine the change in it over a period. 33. Answer C Opportunity Cost. The cost of an alternative that must be forgone in order to pursue a certain action. In other words, it is the benefits you could have received by taking an alternative action. 34. Answer A Working Capital = Current Asset – Current Liabilities. Working Capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or any other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. 35. Answer C Order of Magnitude, Budget and Definitive Estimates are the ways used to represent the ranges of Cost Estimation. Order of Estimate is less accurate (High range). Definitive Estimate closely estimates the Actual Cost. 36. Answer B CV = EV − AC and SV = EV − PV 37. Answer B If 40,000 USD worth of project gets selected then Opportunity Cost is 60,000 USD. Note If 60,000 USD worth of project get selected then Opportunity Cost is 40,000 USD.

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38. Answer B When EV > AC it is Good for Cost. EV < AC is bad. 39. Answer D When EV > PV it is Good for Schedule. EV < PV is bad for the Schedule. 40. Answer D Task 4 is ahead of Schedule and within Budget. 41. Answer C EV > AC is good for Cost. EV < AC is bad. > PV it is good for Schedule. EV < PV is bad for the Schedule. Without Earned Value we can’t come to any decision. In this question, EV value is not known. Sufficient data not available. 42. Answer B Range of Budget estimate is −10 to 25 % 43. Answer C Definite estimate is −5 to 10 % 44. Answer A Order of magnitude estimate is −25 to 75 % 45. Answer A SPI > 1 is always good for schedule. 46. Answer B In parametric estimation we use some formula and statistical model. 47. Answer B Written Off amount = (20,000 – 2000)/5 48. Answer B 40% of 50,000 = 20,000 49. Answer A Cost Variance = 120,000 – [10 * (150,000/15)] 50. Answer C BAC will not change as the project is going as per the plan

224 • PMP® Certification—Excel with Ease

Key Terms Actual cost (AC) The total cost incurred in accomplishing work during a given period. It is also referred to as ACWP (actual cost of work performed). Budgeted cost of work performed (BCWP) Also called the earned value, this is the cumulative sum of the approved cost estimates for activities completed during a given period (usually project-to-date). Budgeted cost of work scheduled (BCWS) The sum of the approved cost estimates for activities scheduled to be performed during a given period per the plan. Chart of accounts A numbering system used to monitor project costs by category (e.g., wage cost, material cost). The project chart of accounts is based on the corporate chart of accounts of the main performing organization. Code of accounts A numbering system used to uniquely identify each element of the WBS. Generally, it is numeric system for easy identification of the levels. Contingency reserve Time to manage future situations (“known unknowns”), intended to reduce the impact of missing cost or schedule objectives and is included in the project’s cost and schedule baselines. Cost budgeting Allocating cost estimates to individual project components for better control overall of the project. Cost estimating Cost estimation of the resources needed to complete project activities defined. Cost performance index (CPI) The ratio of budgeted costs to actual costs (BCWP/ACWP). The CPI is often used to predict the magnitude of a possible cost overrun. Cost of quality Cost to keep the quality to a particular level defined; includes review cost. Cost variance (CV) Difference between the estimated cost of an activity and the actual cost of that activity.

Earned value The method of measuring project performance by comparing the amount of work planned with that of actual accomplished work. Estimate at completion (EAC) The expected total cost of an activity, a group of activities, or the project at the end; EAC  Actual-to-date  ETC. Estimate to complete (ETC) The expected cost needed to complete an activity, a group of activities, or the project; also known as forecast final cost. Fixed costs Costs that do not change based on the number of units and nonrecurring. Management reserve Financial resources retained to manage future situations that are impossible to predict (“unknown unknowns”). It is used to reduce the risk of missing cost or schedule objectives; use of the management reserve requires a change to the project’s cost baseline. Parametric estimating An estimating technique that is based on a possible statistical relationship between historical data and other variables and current parameters to calculate an estimate. Payback period The number of time periods at which cumulative revenues exceed cumulative costs and, therefore, the project has turned a profit. Planned value (PV) The budgeted cost for the work scheduled to complete an activity; also referred to as BCWS (budgeted cost of work scheduled). Schedule performance index (SPI) The ratio of work performed to work scheduled. Schedule variance (SV) The difference between the scheduled completion of an activity and the actual completion of that activity. Value analysis Careful analysis of a design or item to identify all the functions and the cost of each item to reduce cost associated with it. It determines whether the function is necessary and the reviews alternative methods providing the same product or service at a lower cost without degrading performance or quality.

7 Quality Management CHAPTER COVERAGE 1. Quality Versus Grade 2. Precision Versus Accuracy 3. Quality Policy 4. Costs of Quality 5. Affinity Diagrams 6. Quality Management Plan 7. Quality Audits 8. Cause and Effect Diagrams 9. Pareto Charts 10. Control Charts

INTRODUCTION Quality means different things to different people, according to their positional and influencing roles. A customer may define quality as “fitness for intended use,” whereas a vendor may define it as “meeting the requirements.” More formally, the term quality may be used to indicate the degree to which the inherent characteristics of a product or feature meet stated or implied requirements. Quality management refers to the processes necessary to ensure that a project will satisfy the needs for which it was undertaken. Quality management, per the PMBOK, comprises three processes, namely, Plan Quality, Perform Quality Assurance, and Perform Quality Control: 1. Plan Quality. The process of identifying the project-specific quality standards and determining the manner in which they are to be achieved 2. Perform Quality Assurance. The managerial process of auditing whether established quality requirements are valid and initiating process improvements 3. Control Quality. The process of inspection to eliminate nonconforming products from reaching the next stage of project execution and providing feedback to improve quality standards Quality management addresses the management of the project and the product of the project. It improves execution of project management as well. The product of a project relates to the “what” of the project, whereas the management of a project relates to the “how” of the project. We will discuss two important factors related to the meaning of quality.

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Quality Versus Grade Quality and grade are not one and the same. As per PMBOK, quality is “the degree to which a set of inherent characteristics fulfil requirements,” whereas grade is a category assigned to products or services that are intended for identical or similar functional applications but possess different technical characteristics. A software product may be used to explain the difference between the quality and grade of a product. Suppose that a banking-software product has been developed with a view to be used as an extremely user friendly interface, featuring a large number of on-screen prompts, and that it automates a large number of banking processes, requiring few decisions to be made by its users. Such a product may be called a high grade product. Alternatively, another banking-software product may not attempt to provide such user friendliness or automation. Users of this software may be required to intervene and make manual decisions often. Such a product may be called a lower grade product. However, both products can well be products of high quality if they meet requirements of stated intended use. It follows that a high grade product may be low quality product and a low grade product a high quality product. Similarly, coins made of, for example, 22 carat gold, 20 carat gold, and 18 carat gold, are gold products of stated differing grades. A fitness-for-intended-use comparison of 22 gold and 18 carat gold would not be valid. A fitness-for-intended-use comparison is valid, however, between two 5 g coins of 22 carat gold bought from two vendors, and a proper judgment on the comparative quality of the two coins may be made. Therefore, a product low grade is not a problem but one of low quality certainly is. In the context of project management, the project management team decides upon and manages the trade-off between the intended levels of quality and grade in a product. Discussion Points What are the quality characteristics you would look into when you are buy a kilogram of brinjal in the retail market?

Discussion Points A trade-off between quality and grade is required. In this case, how will you convince the customer, who demands both higher quality and higher grade.

Precision Versus Accuracy Precision and accuracy are terms related to the process that yields the product and so indirectly have a bearing on the product’s quality. Precision refers to the repeatability of measurements made on a process; good repeatability means high precision. Accuracy refers to the measured value being close to the true value or target value aimed at by the process; nearness of the process value to the specification value means high accuracy. As in the discussion of quality and grade, precise measurements need not be accurate and vice versa. However, a process that is in control and capable would be characterized by both precision and accuracy. The following example illustrates the difference between precision and accuracy. Suppose that a project manager’s forecasts of cost variance in, for example, five projects, on the basis of the data available at the start of each project, were 48%, 57%, 52%, 50%, and 55%. Suppose that the actual cost variance in the five projects turned out to lie between 50% and 55%. In this case, the project

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manager’s forecast may be called accurate but not precise. Suppose that another project manager’s forecasts of cost variance for five similar projects—each having a cost variance between 50% and 55%—are 59%, 58%, 58%, 59%, and 59%. In this case, the forecast may be called precise but not accurate. Generally, achieving precision is a much more difficult and capital intensive process compared to one for achieving accuracy. The project management team bears the responsibility to determine the intended level of accuracy and precision in the various measurements involved in a project.

Discussion Points How will you determine the level of accuracy and precision for your projects? Will this priority change over the life cycle of the project? What is the role of availability of data in calculating precision and accuracy?

If a project manager follows the quality management process described in the PMBOK, the project would automatically be rendered compliant with requirements of the ISO 9000 and ISO 10000 series of standards. The process outlined in the PMBOK is also compatible with proprietary approaches (e.g., those recommended by Juran, Deming, and Crosby) and non-proprietary approaches (e.g., total quality management, six sigma, and failure model effect analysis). Juran defined quality as “fitness for use,” and Deming developed the 14 Steps to total quality management. Deming also advocated the plan-do-check-act cycle as the basis for quality improvement. Crosby popularized the concept of the cost of poor quality and advocated prevention over inspection and “zero defects.” Crosby believed that quality is “conformance to requirements.” JIT stands for Just-in-Time principle, used in inventory concepts. There will not be any excess on-hand inventory but based on the demand the orders will be made. This principle is used to improve efficiency. Quality management initiatives such as total quality management complement project management processes and recognize the importance of the following objectives and processes: • Customer satisfaction. Understanding, managing, and influencing the needs of the customer so that customer expectations are always met or exceeded • Prevention over inspection. The cost of avoiding mistakes is always lower than the cost of correcting them • Management responsibility. Although achieving high process quality is an organization-wide team effort, it is the responsibility of top management to provide organizational resources and support required for quality initiatives • Continuous improvement. The plan-do-check-act cycle (Figure 7.1) defined by Shewhart and modified by Deming is used to effect continuous improvement. Continuous improvement is an iterative means of improving the quality of all processes, referring to the repeated application of the plan-do-check-act cycle to processes with a view to making small but steady incremental progress.

Discussion Points Do you know the quality policy of your organization? What is the importance of a quality policy?

228 • PMP® Certification—Excel with Ease

Act by correcting

Plan for improvement

Process Improvement

Check the results

Do on a small scale

Figure 7.1 The plan-do-check-act cycle

QUALITY POLICY The quality policy of an organization generally defines the primary goal and vision of the organization and outlines the latter’s plan to achieve its goals. • As per PMBOK, a quality policy is defined as the “overall intentions and direction of an organization with regard to quality as formally expressed by the top management.” • The quality policy of an organization can usually be adopted “as is” for use in a project. • If the organization lacks a formal quality policy, or if the project involves multiple performing organizations, the project management team will need to define a quality policy for the project. • The design and structure of the quality management system (see also Figures 7.2 and 7.3) of an organization is built upon and derived from the organization’s quality policy • The project management team is responsible for ensuring that all project stakeholders are aware of the applicable quality policy and their contribution to achieving it. This is to ensure that the contributions of all the project stakeholders are aligned with quality policy. PMP WATCH Gold plating refers to providing embellishments to products or services not defined in service level agreements or project charters. Because such extras cannot be billed on customers— in any case, they did not ask for them—project managers should avoid gold plating of deliverables.

COSTS OF QUALITY The costs of quality (COQ), in the context of project management, refer to the total cost incurred by the organization in its attempt to produce deliverables conforming to requirements in a project. Each task in a project is associated with its own cost, namely cost of conformance and nonconformance, and establishing an appropriate balance—the responsibility of the project team—is mandatory. Costs of quality include prevention costs and appraisal costs; failure costs are costs of poor quality. The costs

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Define Scope

Scope Baseline

• 229

Develop Project Management Plan

Plan Quality Management

Project Management Plan Quality Management Plan Quality Metrics Quality Check List Quality Baseline Quality Improvement Plan Project Management Plan Update

Approved CR

Implemented CR Implemented Corrective Action Implemented Defect Repair Implemented preventive Action

Perform Quality Assurance

Requested Changes Recommended Corrective Actions

Quality Control Measurements

Direct and Manage Project Execution Close Project

De

live

WP I

rab

Approved Preventive Actions

Validated Deliverables Recommended Corrective Action Recommended Defect Repair Recommended preventive Action Requested Changes Quality Baseline

les

OPA Update

Approved Corrective

Actions

Perform Integrated Change Control

Control Quality

Figure 7.2 Quality Management Process Flow

Planning

Plan Quality Management

Executing

Perform Quality Assurance

Controlling

Control Quality

Figure 7.3 Three process of Quality Management

of not meeting quality requirements are always considered before establishing the outgoing quality level of a particular parameter, because planning for and achieving a much higher quality level than that required may add to costs of quality without a trade-off in returns. In general, costs of quality are discussed under two heads and four subheads: costs of conformance, namely, prevention costs and appraisal costs, and costs of nonconformance, namely, internal failure costs and external failure costs. The following lists examples of these costs.

230 • PMP® Certification—Excel with Ease

Costs of conformance Costs of conformance refer to the accumulation of costs related to the work used to conform the quality aspects in the project. There are two types of costs of conformance, namely, prevention costs and appraisal costs. Prevention costs are the costs related to the factors that are used to prevent errors in the product/service and appraisal costs are the costs related to the factors that are used to appraise the quality standards of the product/service. Activities related to prevention costs: Planning, vendor surveys, requirement and design reviews, code reviews, schemes to promote good services or products. Activities related to appraisal costs: Inspections, reviews, and laboratory tests

Costs of nonconformance Costs of nonconformance refer to the accumulation of costs related to the work which are related to overcome the defects, called nonconformance already produced in the project. There are two types of costs of nonconformance namely internal failure costs and external failure costs. Internal failure costs. Examples are costs associated with scrap/rework, repair, downtime, defect evaluation, corrective measures External failure costs. Examples are costs associated with rejects, returns, complaints, customer inspections Exercise 7.1

List down the actions you will take as a project manager to maintain quality in a project

THE PLAN QUALITY MANAGEMENT PROCESS Figure 7.4 and Table 7.1 shows the concepts of the Plan Quality Management process. It is the process of identifying the quality standards of the project and the product to be developed and determining the manner in which they are to be achieved. The output of the Plan Quality Management process is the quality management plan, which is the basic document for managing the quality of a project. A quality management plan addresses 1. 2. 3. 4. 5.

how to manage the quality of the project. the process of performing quality assurance activities. the process of controlling quality of the project. the standards to follow. the measurement protocols to be used in the project.

The processes of quality assurance and quality control are defined in the quality management plan. Please note that the Perform Quality Assurance process actually executes the quality assurance process and the Perform Quality Control process actually executes the Quality Control Process.

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Tools and Techniques

Inputs • Scope Baseline • Project Management Plan • Stakeholder register • Cost Performance baseline • Schedule Baseline • Risk Register • Enterprise Environmental Factors • Organizational Process Assets

• Benefit/cost analysis • Cost of quality • Seven Basic Quality Tools • Bench Marking • Design Of Experiments • Statistical Sampling • Additional Planning Tools

Outputs • Quality management plan • Quality metrics • Checklists • Process improvement plan • Project Document Update

Figure 7.4 The inputs, tools, techniques and outputs of Plan Quality Process A standard is an agreed-upon quality level to achieve a project result and is applicable to that project alone. Generic quality standards usually come from within the organization or from government or professional associations. The project manager, however, should have a plan in place for continually improving processes.

PMP WATCH Quality planning is conducted in parallel with the other planning processes, such as scope planning and risk planning. The project charter and project scope statement are needed before quality planning can begin as they act as a guide to planning the quality requirements of the entire project.

Table 7.1 Plan Quality Management – Planning Process Group Planning

Plan Quality Management

Executing

Perform Quality Assurance

Monitoring and Controlling

Control Quality

232 • PMP® Certification—Excel with Ease

Tools and Techniques of the Plan Quality Management process The following tools and techniques are used to accomplish the Plan Quality Management process: Cost–Benefit Analysis The quality level in a project is planned considering the benefits of meeting the quality requirements versus the costs incurred in meeting them. The resultant quality level generally proves to the optimum level. Of note, costs and benefits here refer to both those tangible and intangible. The cost of losing a customer goodwill is more damageable financially than the cost of implementing a process to focus on customer satisfaction. Hence, need to consider both the tangible and intangible costs benefits during the cost benefit analysis. For example, the cost of reviewing and fixing the error findings may cost the project manager's one day effort whereas not implementing the review process will incur him more efforts to fix it. Seven Basic Quality Tools: The following tools are referred as seven basic quality tools 1. Cause-and-effect diagrams 2. Flow charts 3. Check sheets 4. Pareto diagrams 5. Histogram 6. Control charts 7. Scatter diagrams We discuss the above tools in detail in the next few pages. Benchmarking Benchmarking is a technique that compares the standards aimed at by one project against those of another. Past projects in the same organization or other organizations may be used to determine ideas for improvement on a current project, base don which a plan for quality and standards for the current project may be initiated. Benchmarking is commonly used in continuous improvement processes. For example, if a project handled by an organization received an excellence award from a professional body, that project could be used by the organization as a benchmark for all similar projects it may handle in future. Thus, methodologies and standards that the award-winning project followed could be used for other projects as well. Choosing an appropriate benchmark, however, is important: An inappropriate choice could well result in cost overruns or losses. Design of Experiments The design of experiments (DOE), a statistical what–if tool, uses experimentation to statistically determine the process variable that serves as the most critical parameter for process improvement. For this purpose, the tool involves systematically changing all important parameters in a process to identify that combination of parameters that has a marked quality-improving effect. The DOE technique is generally used in product design and is a good tool to set the design based on quality. Hence, it is included in the plan quality process. The DOE analyst may use one of the several statistical software packages readily available in the market for conducting a DOE. The analyst can view graphical displays, build models, and test assumptions. Because this is an experimental technique, however, it is as effective as it is expensive.

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Control Charts The control chart, also known as the Shewhart chart or process-behavior chart, is a tool used to determine whether a process is in statistical control or not. If it is not in statistical control, needless to say, it should be brought into control. Control charts are often used as part of quality control processes (see later under “The Perform Quality Control process”), feedback from which can be used for planning. Therefore, a control chart may be seen as a planning tool.

Additional Planning Tools For planning the quality, project managers use a number of tools other than benchmarking, such as DOE like brainstorming, affinity diagrams, force field analysis, nominal group techniques, matrix diagrams, and prioritization matrixes. Brainstorming: It is a group creativity technique that can be used for multiple aspects of project management including collecting quality related requirements. It involves facilitating a group of individuals to generate as many ideas on a topic as possible. While collecting the quality related requirements using this technique, we should clearly write down the set of rules to be followed. There should not be any arguments on the points (quality requirements) raised. But the main disadvantage of brainstorming technique is that it easily gets biased. When an experienced member of the team makes suggestions, the other members of the team tend to agree with him/her rather than come up with their own solutions by thinking creatively/innovatively. The nominal group technique may take brainstorming a step further by including a voting process to rank the ideas that are generated. Affinity Diagrams Figure 7.5 shows an example affinity diagram. The affinity diagram helps organization of ideas into common themes from large amounts of information. It discovers previously unknown connections between ideas and pieces of information and basically brainstorms root causes and solutions to a problem. The basic steps for constructing an affinity diagram are as follows: 1. Look for ideas 2. Look for similar ideas 3. Group these ideas logically Force Field Analysis Force field analysis (Figure 7.6) is a technique that identifies all forces for and against a decision. In order to move the quality standard from the current state to a desired state, quality should be planned to overcome the hindering factors and strengthen the forces supporting it.

Outputs of the Plan Quality Management process The Quality Management Plan The primary output of the Plan Quality Management process is the quality management plan. It describes how the project management team will implement the performing organization’s quality policy. It also includes the approaches for implementing quality control, quality assurance, and quality

234 • PMP® Certification—Excel with Ease Group each ideas under different heading

Look for similar kind of ideas

Look for Ideas for quality planning

SIMILAR IDEAS

IDEAS

SIMILAR IDEAS

IDEAS

GROUP A

GROUP B

Figure 7.5 An example affinity diagram

Desired state

Forces Against

Current State

Forces For

Time

Figure 7.6 Improvement over time that is realized when opposing forces to a decision have been removed

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Communication Check List

Y

N

?

All stakeholders and stakeholder groups, including other project identified?

Y

N

?

Has each stakeholder or stakeholder group been classified in terms of their potential impact and influence on the project?

Y

N

?

If "Yes", is there a plan to manage and communicate with each stakeholder/group to ensure their commitment for the project?

Figure 7.7 An example communication checklist improvement processes. A quality management plan may be formal, informal, highly detailed, or broadly framed. Checklists A checklist (Figure 7.7) is an instruction sheet for an operator to use for the purpose of verification. Customized checklists are prepared to meet the needs of a particular project, program, or activity. A checklist indirectly states all defined planning activities. A Process Improvement Plan Activities necessary to improve processes are included in the process improvement plan and are part of the overall project management plan. All projects need not have this process improvement plan, it is required only for the project where the improvement in process is necessary and is planned. Steps for process improvement include the following: 1. Draw clear process boundaries for improvement—The beginning and the end point of the process under consideration of improvement should be identified clearly. All activities associated with the process under improvement should also be identified in this step. A context diagram may be used to draw the boundaries of the process clearly. 2. Configure the process areas for improvement—After identifying the clear boundaries of the process, we need to identify the areas inside the process to be improved. It is not advisable to consider all the process areas for impovement at the same time. For example, if a project manager wants to improve the process called “Project Reporting” there can be different areas of improvement in that process, namely, (i) Improving quality of data, (ii) Archieving and retrieving old reports, (iii) Changing the formats of report, (iv) Adding more reports with the system, (v) Introducing authorization and authentication for reports etc. We need to consider improvement only in few areas at the same time. 3. Identify process metrics related to improvement—After identifying the area(s) of improvement, we need to consider the metrics for measurement of improvement. For example, if the project manager discussed in Point 2 above wants to add more reports with the system, these may be measured through the number of reports added per week or number of reports to be added per month.

236 • PMP® Certification—Excel with Ease 4. Identify targets for improved performance—We need to set a target for performance improvement, which is achievable and easy to measure. Lets take the same example of “Add more reports with the system”. Suppose we decide to add 15 new reports in a month, we need to set a target for each week like number of reports to be developed in the first week, number of reports to be developed in the second week and so on. CMMI (Capability Maturity Model Integration), OPM3 (Organisation Project Management Maturity Model), and Malcolm Bridge Model are examples of process improvement models. Performance Metrics A metric is a verifiable measure stated in quantitative or qualitative terms that translates customer needs into performance measures, for example, defect frequency, failure rate, availability, reliability, and test coverage.

THE PERFORM QUALITY ASSURANCE PROCESS Quality assurance refers the process of (Figure 7.8 and Table 7.2) auditing and analyzing established quality requirements and process results to ensure that appropriate and valid quality standards and operational definitions are in place. The term refers to the systematic and planned activities implemented to provide confidence to all stakeholders—particularly the customers, share holders, and the organization’s management—that all processes established to for successful project execution are in place and comply to applicable quality standards. Continuous improvement activities form part of quality assurance initiatives.

Quality Audits A quality audit is the task of systematic examination of the effectiveness of a quality system carried out by a quality auditor or an audit team and is the key engine of a quality system. It is generally a

Tools and Techniques

Inputs • Project Management Plan • Quality Metrics • Work Performance Information • Quality Control measurements

• Quality planning tools and techniques • Quality audits • Process analysis • PDPC Diagram • Affinity Diagram • Inter relationship Diagram • Tree Diagram • Matrix Diagram

Outputs • Organizational process assets (updates) • Project management plan (updates) • Change requests • Project document Update

Figure 7.8 The inputs, tools, techniques and outputs of Perform Quality Assurance Process

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Table 7.2 Perform Quality Assurance – Executing Process Group Planning

Plan Quality Management

Executing

Perform Quality Assurance

Monitoring and Controlling

Quality Control

scheduled task. Results of quality audits, along with quality control reports, form the basis of measuring the functioning of a quality assurance system. Discussion Points Discuss the purpose of quality audits. How are audits carried out in your organization?

The objectives of quality audits are to • • • • •

identify best practices being implemented. identify gaps and shortcomings of a quality system. share the good practices introduced in similar project. add to lessons learned. confirm the implementation—or otherwise—of approved change requests, corrective and preventive actions, and defect repairs.

Process Analysis Process analysis is a part of continuous improvement initiatives and either directs on how to execute a task or an activity (directive) or provides information on a task or an activity was executed (informative). It follows the steps outlined in the process improvement plan to identify needed improvements. Process analysis (Figure 7.9) is used to reduce risk, improve efficiency, and control costs. PMP WATCH Because quality-system auditors need to review the entire planning process and planning methodologies used and check whether applicable quality control mechanisms are in place per the documented quality plan, they use the tools and techniques of both the Plan Quality and Perform Quality Control processes in their audits.

Process analysis also examines the issues faced, constraints experienced, and non–value added activities identified during project execution. It employs causal analysis, a tool that analyzes a problem or a situation, determines the underlying causes that led to it, and helps establish preventive action programs for similar problems.

238 • PMP® Certification—Excel with Ease

Process Analysis

Reduce Risk

Control Cost

Improve Efficiency

Figure 7.9 The continous improvement cycle Affinity Diagrams: Figure 7.5 shows an example affinity diagram. The affinity diagram helps organization of ideas into common themes from large amounts of information. The basic steps of drawing affinity diagrams are 1. Look for Ideas 2. Look for similar Ideas 3. Group similar ideas logically Process Decision Program Chart (PDPC): It is used to identify potential problems and the appropriate counter-measures in a Quality Plan. It helps to identify potential risks and select from a set of possible counter-measures to the risks. It is also used to explore ways of eliminating identified risks. The risks associated with every plan are identified and the counter-measures to the risks are specified. Inter-relationship Diagram: An inter-relationship diagram is an analysis tool that allows a team to identify the cause-and-effect relationships among critical issues. One cause may lead to another cause and so it is called as inter-relationship diagram. This analysis helps a team distinguish between issues that serve as drivers and those that are outcomes. An inter-relationship diagram is used when a team is struggling to understand the relationships among several issues associated with a process. Consider, for example, a simple question such as “Why did you come late to office today?” may elicit a response that the bus came late. Probing why the bus came late may lead to “Traffic Jam” as the answer. Further questioning the reason for traffic jam may point to an “Improper Signal”, which, in turn may be attributed to a “technical fault” and so on. Tree Diagram: This diagram looks like a tree and hence it is called as Tree Diagram. The diagram starts at a single node (root node) with branches to additional nodes, which represent mutually exclusive decisions or events. It is also called as systematic diagram, tree analysis, analytical tree or hierarchy diagram Matrix Diagram: The matrix diagram shows the relationship between two, three or four groups of related information. It also gives information about the relationship among the groups, their strengths and the roles played by various individuals or measurements.

THE CONTROL QUALITY PROCESS Quality control processes (Figure 7.10 and Table 7.3) are used to conduct process checks, document results and monitor patterns of defects, if any. Quality control reports are used to determine actions

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Control Quality Tools and Techniques

Inputs • Quality metrics • Project Management Plan • Quality Checklist • Work performance Measurements • Approved change requests • Organization process updates • Deliverables

• Cause and effect diagram • Inspections • Control charts • Pareto diagrams • Statistical sampling • Flowcharting • Run chart • Histograms • Defect repair review • Scatter diagram • Approved Change Request Review

Outputs • Quality control measurements • Validated Changes • Validated deliverables • Quality baseline (updates) • Change Request • Project management plan (updates) • Organizational process assets (updates) • Project documents update

Figure 7.10 The inputs tools, techniques and outputs of Control Quality Process

Table 7.3 Quality Control – Controlling Process Group Planning

Plan Quality Management

Executing

Perform Quality Assurance

Monitoring and Controlling

Control Quality

to eliminate root causes of process problems. Quality control processes are performed throughout the project life cycle and often by a dedicated quality control department. The project management team, however, should have a working knowledge of the concepts of statistical quality control to help evaluate quality control outputs. Statistical quality control (SQC) describes a set of statistical tools used for maintaining quality. There are seven quality control tools called 7 QC tools, namely, Cause–Effect diagrams, histograms, Pareto charts, flowcharts, scatter plots, run charts, and control charts. We will now discuss each of the above 7 QC tools.

Cause-and-Effect Diagrams Also known as the fishbone diagrams or Ishikawa diagrams, after Kaoru Ishikawa, who developed them, cause and effect diagrams are used to first identify all possible causes for a particular problem and then determine the root cause of that problem. A possible root cause can be identified using the Why–Why (Figure 7.11) and the How–How (Figure 7.12) diagrams. Typically, the causes in a cause and effect diagram (Figure 7.13) are arranged into four classes: man, methods, materials, and machinery. More Ms, such as money and measurements, may also be added to suit a particular need. The causes are indicated by lines leading to the primary horizontal, which

240 • PMP® Certification—Excel with Ease

Why-Why Diagram Lack of Experience

Individual Problem

Lot of Assumptions

High Documentation Errors

Monotonous Job

Work Place Problem

Time Pressure

Ask Why each stage

Ask Why each stage

Figure 7.11 The why–why diagram How-How Diagram Change weekly call to daily

Better Communication

Change Teleconference to Video Conference

Increase Customer Satisfaction Better Status Report

Ask How each stage

Change Template Formate Gather Report Requirement From Customer Ask How each stage

Figure 7.12 The how–how diagram

represents the main problem under consideration. Figure 7.14 shows the steps to solve a problem using a cause and effect diagram. A project manager may take the following steps: Identify the problem. Write down precisely the problem faced with the details of who is involved, what the problem is, and when and where it occurs. Write the problem in a box on the left hand side of a sheet of paper and draw a line across the paper horizontally from the box. The line will look like the head and spine of a fish, which are the basic bones of fishbone diagram. Identify major factors. Next, identify the factors that contributed to the problem and draw lines off the spine for each factor identified. These may be team members involved with the problem, machine,

Quality Management

Material

Machine

Incoming

Calibration Environment

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Maintenance

Consumables

Wear Characteristic

Sampling Accuracy

Operator Recipe Bias

Measurement

Method

Figure 7.13 A typical cause-and-effect diagram

Steps to solve a problem using Cause-Effect Diagram Identify the problem Who is involved

When it occurred

Identify major factors Draw lines of spine

Find as many factors

Identify problem causes Causes to sub causes

Lines coming off cause line

Analyze diagram

Figure 7.14 The steps used in constructing a cause and effect diagram materials, external forces, and the like. Try to draw out as many possible factors as possible using brainstorming, all the factors being represented by the “bones of the fish” on the diagram. Identify possible causes. For each of the factors, brainstorm possible causes of the problem related to the factor and show these as smaller lines coming off the bones of the fish. Break the causes down into subcauses and show these as lines coming off each cause line.

242 • PMP® Certification—Excel with Ease 40

100

30

Number of Defectives

75

Cumulative Percentage

20

50 Percentage of Defectives

Frequency by Cause 10

25

0

0 A

B

C

D

E

Defective Items

Figure 7.15 An example Pareto chart Analyze the diagram. Depending on the complexity and importance of the problem, investigate the most likely causes. This may involve setting up investigation teams and carrying out surveys.

Pareto Charts Pareto’s law states that 80% of the problems are due to 20% of the causes, also known as the 80–20 rule. A Pareto chart (Figure 7.15) is a histogram ordered by frequency of occurrence of defects or problems and is used by a project team to determine the causes leading to the greatest number of defects. The problems in a process are arranged in the order of importance using factors, such as cost, time delay, or some other parameter. The following list shows the steps in the construction of a Pareto diagram: 1. Determine the classification of defect to be used in the graph (e.g., number of defects) 2. Decide on a time period to be covered for the analysis decided upon 3. Total the frequency of occurrence for each category for the period In the Pareto diagram shown in Figure 7.15, Cause A alone is responsible for about 50% of defectives, resulting in nearly 20 defectives. Thus, the cause of the most frequently occurring problem has been established. Therefore, addressing the cause of Defective A would lead to a 50% decline in defects generation. However, a Pareto chart, while showing the most frequently occurring defective, does not readily show those defects that cost the organization or the project team the most. For example, in Figure 7.15, it may well be that the five defectives yielded by Cause D cost the organization more in terms of resources spent or prestige. In other words, the results of a Pareto diagram would need to be factored in from a cost standpoint to prioritize problem solving efforts.

Histograms A histogram is a graphical representation (Figure 7.16) of the frequency distribution of the variable under consideration. The values of the variables are grouped into intervals and shown on the horizontal axis and the frequency of occurrence of values in various intervals is shown on the vertical axis.

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Phase-Wise Efforts Status

Man Hours

500 400 300

Planned Actual

200 100 0 Analysis

Design

Construction

Testing

Phase

Figure 7.16 A histogram is best employed to study trends

Any special-cause process events that might have occurred during the period for which the histogram has been constructed would be readily evident on the histogram. The histogram is best used to study trends.

Run Charts A run chart also called as a run-sequence plot. It is a graph that displays observed data on a time sequence. A trend analysis is performed on a run chart to forecast future outcomes on the basis of historical data. Trend analysis is often used to monitor the following: 1. Technical performance. How many defects were identified and how many defects were closed out of it? 2. Cost and schedule performance. How many activities per period were completed within the service level agreement defined?

Control Charts Control charts are used to assess whether a process is in statistical control and to determine whether the observed variations in a process are due to normal process variations or due to special cause variations. Control chart analysis leads to corrective inputs to be made to the process before the latter begins to generate a large number of defectives.

PMP WATCH • A run of seven continuous measurements falling on either the upper- or lower-control-limit side is an indication that the process may be out of control. • An assignable cause variation in a control chart is one whose cause can be readily identified, for example, poor machining, worn out parts, or operator errors.

244 • PMP® Certification—Excel with Ease There are two types of control charts: variable control charts and attribute control charts. Variable control charts are used to study parameters that can be measured or quantified, such as height, density, schedule. –– x charts and r charts are examples of variable control charts. Attribute control charts are used to study parameters that cannot be measured or quantified, for example, parameters that are tested using go and no-go gauges. P charts and C charts are examples of attributes control charts. Project managers may apply the following steps in constructing control charts: 1. Choose a control chart that best suits the parameter that is to be monitored. 2. Determine the appropriate time period required for collecting the data and plot the data collected. 3. Analyze the trends as seen on the control chart. 4. Look for “out-of-control signals” on the control chart and investigate the cause. Figure 7.17 shows an example control chart. A control shows two sets of control limits are set. One set is determined by customer or technical requirements, and these limits are referred to as upper and lower specification limits, USL and LSL. The other set represents the actual process variation, and these limits are referred to as upper and lower tolerance limits, UTL and LTL. A process is said to be out of control when one of the following conditions is met: • One or more points fall outside the control limits. • Seven successive points lie in the same half of the control chart—Rule of Seven. • Multiple points in a row fall near the control limits. Process capability is a measure used to indicate the compliance level of a process. Process capability provides an indication of how much of the allotted tolerance a process is actually using. It is given by Cp =

UTL − LTL 6σ

Upper Control Limit

_ X

Lower Control Limit Center line is mean UCL = 3* Standard Deviation above mean LCL = 3* Standard Deviation belabove mean

Figure 7.17 A typical control chart

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Process Capability Index (Cp) Cp =

UTL − LTL

6σ Where, UTL = Upper tolerance limit LTL = Lower tolerance limit σ = Standard Deviation of the process variability

If the value of Cp is more than one, the process is considered capable. If the value of Cp is less than 1, the process is considered not capable. Here, Cp is the process capability and σ the standard deviation of the process. The simplest and best known indicator of a process out of control is the presence of a point beyond the 3σ control limits. Because in a normal distribution 99.73% of the population will fall within ±3σ of the mean, there is only a 0.27% chance that a point will fall outside those limits. In other words, there is a 99.73% chance that the points outside the limits are the result of nonrandom causes. It is important to note that if a given phenomenon is unlikely than it does not mean that it is impossible to occur. For example, a point outside the 3σ limits does not necessarily mean that the process is unstable. It is, however, always a cause for investigation. Cp should not be calculated until it has been determined that the evidence of instability is in fact a random occurrence. The charts are reviewed for evidence of instability and the “rules” are intended to provide evidence—not conclusive proof.

Statistical Sampling It is the term used to infer that within a given confidence level, a randomly selected sample of items from a population will reflect the same characteristics that occur in the population. This will reduce the overall quality control costs. This tool is used mostly in the electrical or manufacturing field for quality control. Let us suppose that we want to test a process (manufacturing process), which produces car tyres. We cannot test all the tyres (as we know testing involves putting tyres under extreme conditions). Hence, so, we select tyres randomly from the whole set of tyres, which will refl ect the same characteristics of the whole population (all tyres produced).

Output of the Perform Quality Control Process Validated Deliverables The main outputs of the Perform Quality Control process are validated deliverables; these validated deliverables alone are provided to customers for scope verification. Validated deliverables serve as inputs to the Verify Scope process. Quality Control Measurements Quality control measurements are the documented results of quality control activities in a format finalized during the quality planning process.

246 • PMP® Certification—Excel with Ease

Validated Changes It is a documented proof that a (recommended and approved) change has been successfully implemented. This validated change acts as input for scope verification process.

OPA Update Updates of the organizational process assets are generated by the documenting checklist, reusable by other projects. Lessons learned from the OPA update can be used for future projects.

Summary Quality is a term applied to a product or service to indicate its conformance to requirements or fitness for intended use. Quality planning precedes project execution, although part of the quality planning process, such as quality control inspections. The cost of preventive action to avoid defectives being produced is always lower than the cost of rework. The three areas of quality management are quality planning, quality assurance, and quality control. Quality planning involves processes that ensure that appropriate and relevant project management principles and applicable quality standards have been applied to the processes and deliverables. Quality assurance refers to the managerial activity of verifying whether established processes are complaint to applicable quality standards. Quality control involves operational techniques to conduct inspections of both in-process and final deliverables.

Exercise 7.1

Possible Answers 1. Review all project deliverables 2. Identify quality standards applicable to the project 3. Take actions to ensure that quality standards are followed 4. Take actions to ensure quality process are followed 5. Take actions to ensure quality audits

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Chapter 7 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. Quality management is defined as A. the process of identifying quality requirements and/or standards for projects and products and documenting how the project will demonstrate compliance. B. the process of auditing the quality requirements and the results from quality control measurements to ensure appropriate quality standards and operational definitions are used. C. the process of monitoring and recording results of executing quality control activities to assess performance and recommend necessary changes. D. a system that includes the processes and activities of the performing organization that determine quality policies, objectives, and responsibilities so that projects will satisfy the needs for which they are undertaken. Question 2. Which of the following is true? A. Project quality management addresses management of projects only. B. Project quality management addresses management of products only. C. Project quality management addresses management of projects and the products of a project. D. Project quality management applies to projects on the basis of the nature of projects. Question 3. The degree to which a set of inherent characteristics of a product or service fulfills requirements for use is called A. B. C. D.

grade. quality. scope. accuracy.

Question 4. A category assigned to products having same functional uses but different technical characteristics is called A. B. C. D.

grade. quality. scope. accuracy.

Question 5. An organization develops a product in two technologies to increase its marketability. The resulting two products are products of different A. B. C. D.

grade. quality. scope. accuracy.

Question 6. “F it n e s s for u s e” i s t h e c on c e pt introduced by A. B. C. D.

Shewhart. Deming. Juran. Crosby.

Question 7. In an organization, who is responsible for the establishing the trade-off between quality and grade? A. The project manager and the project management team B. Project stakeholder C. Client D. Project sponsor Question 8. Precise measurements are not necessarily accurate. A. True B. False

248 • PMP® Certification—Excel with Ease Question 9. Which of the following is not true? A. Precise measurements are not necessarily accurate. B. An accurate measurement is not necessarily precise. C. Precise means the measured value is close to its true value. D. Precise and accuracy are not equivalent. Question 10. Quality management complements project management. Both disciplines recognize the importance of all the following except A. B. C. D.

customer satisfaction. prevention over inspection. continuous improvement. stakeholder responsibility.

Question 11. Quality is planned in and not inspected in A. True B. False Question 12. The PDCA cycle was defined by A. B. C. D.

Shewhart. Deming. Juran. Crosby.

Question 13. “14 Steps to Total Quality Management” was developed by A. B. C. D.

Shewhart. Deming. Juran. Crosby.

Question 14. OPM3 stands for A. organizational project management maturity model. B. organizational process management maturity model. C. organizational program management maturity model. D. organizational portfolio management maturity model. Question 15. “I” in CMMI stands for A. India. B. intensified.

C. integrated. D. implied. Question 16. The total cost of all efforts related to quality throughout a product life cycle is called A. B. C. D.

cost of conformance. cost of nonconformance. cost of quality. efforts of quality.

Question 17. All of the below are inputs to the Plan Quality process except A. B. C. D.

scope baseline. stakeholder register. schedule baseline. cost of quality.

Question 18. A quality checklist is the output of which of the following process? A. B. C. D.

Plan Quality Perform Quality Assurance Perform Quality Control Measure Quality

Question 19. A process improvement plan is the output of which of the following process? A. B. C. D.

Plan Quality Perform Quality Assurance Perform Quality Control Measure Quality

Question 20. Identification of quality metrics is made in which of the following processes? A. B. C. D.

Plan Quality Perform Quality Assurance Perform Quality Control Measure Quality

Question 21. Failure cost is the A. B. C. D.

cost of poor quality. cost of quality. cost of rework. cost of conformance.

Question 22. Failure cost is often classified as A. B. C. D.

parallel cost, vertical cost. standard cost, variable cost. internal cost, external cost. fixed cost, variable cost.

Quality Management

Question 23. A process is said to be out of control if there is a run of consecutive data points on side of the mean on a control chart. A. B. C. D.

3 7 9 5

Question 24. Consuming more time and cost than planned to ensure that a product complies with requirements would be billed under A. B. C. D.

appraisal costs. external failure costs. internal failure costs. prevention costs.

Question 25. Consuming more time and cost than planned to ensure that a product complies with requirements before submitting to the customer would be billed under A. B. C. D.

appraisal costs. external failure costs. internal failure costs. prevention costs.

Question 26. A project management office’s inspection to assess quality would be billed under A. B. C. D.

appraisal costs. external failure costs. internal failure costs. prevention costs.

Question 27. Cost of warranties would be billed under A. B. C. D.

appraisal costs. external failure costs. internal failure costs. prevention costs.

Question 28. Documentation of processes would be billed under A. B. C. D.

appraisal costs. external failure costs. internal failure costs. prevention costs.

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Question 29. Suppose that the standard deviations of processes from two sources are 0.14 and 0.23. What is the total standard deviation assuming there is no other deviation? A. B. C. D.

0.23 in 0.14 in 0.27 in 0.47 in

Question 30. The stability of a newly commissioned process would be tested using A. B. C. D.

control charts. flowcharts. design of experiments. cost–benefit analysis.

Question 31. A quality audit is intended to be conducted at the end of every phase in a project. An audit would be part of the organization’s A. B. C. D.

quality assurance process. quality control process. quality planning process. process improvement program.

Question 32. Control limits are generally set as A. B. C. D.

±3σ ±1σ ±2σ ±6σ

Question 33. Quality metrics set on the basis of a competitor’s standards would be an instance of A. B. C. D.

benchmarking. quality control. quality assurance. quality policy.

Question 34. A statistical tool to identify which factors influence specific variables of a product or process under development or in production is called A. B. C. D.

benchmarking. quality control. quality assurance. design of experiments.

250 • PMP® Certification—Excel with Ease Question 35. Which document describes how a project management team will implement a performing organization’s quality policy? A. B. C. D.

Quality management plan Quality policy document Quality assurance document Quality control document

Question 36. A structured tool to verify that a set of required steps has been performed is called A. B. C. D.

design of experiments. checklist. cost of quality. quality audit.

Question 37. A tool used to determine whether project activities comply with organizational and project-specific policies, processes, and procedures is called a A. B. C. D.

design of experiments. checklist. cost of quality. quality audit.

Question 38. A tool used to identify the root cause of problems is the A. B. C. D.

flowchart. Pareto chart. control chart. fishbone diagram.

Question 39. Which of the following is not true? A. Eliminating errors from a process is achieved by inspection. B. Ensuring that errors do not reach customers is achieved by inspection. C. By the results of attributes sampling, products either conform or fail to conform to specifications. D. A specified range of acceptable results is defined by control limits. Question 40. A Pareto diagram resembles a A. B. C. D.

histogram. process chart. flowchart. scatter diagram.

Question 41. Application of results of a Pareto diagram use the A. B. C. D.

90/20 rule. 50/50 rule. 40/60 rule. 80/20 rule.

Question 42. Which of the following tools monitors specific project results to determine whether they comply with applicable quality standards and identifies ways to eliminate causes of unsatisfactory performance? A. B. C. D.

Quality planning Quality assurance Quality control Process control

Question 43. A project quality management program must address both the of the project and the of the project. A. B. C. D.

scope, cost cost, management management, product cost, schedule

Question 44. The summarizes the strategic goals of an organization with regard to quality, as formally expressed by top management. A. B. C. D.

Quality plan Quality control Quality assurance Quality policy

Question 45. Which among the following tools is an analytical technique that helps to identify which variables have the most influence on process compliance? A. B. C. D.

Design of experiments Benchmarking Quality audits Checklists

Question 46. To measure the cost of nonconformance in a project, a project team must consider all of the following except A. B. C. D.

scrap. rework. warranty work. Review.

Quality Management

Question 47. If you are asked to identify the reasons that account for about 80% of process problems, you would readily use a A. B. C. D.

design of experiments. checklist. Pareto diagram. scatter diagram.

Question 48. Who popularized the concept of the cost of poor quality A. B. C. D.

Shewhart. Deming. Juran. Crosby.

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Question 49. The concept of zero inventory is called A. B. C. D.

JET. BOM. TQM. just in time.

Question 50. If you intended to depict the frequency and distribution of process problems over a period of time, you would readily use a A. B. C. D.

flowchart. Pareto chart. control chart. fishbone diagram..

252 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 7 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

Quality Management

Answer Sheet for Chapter 7 Questions

Question Number

Answer

Question Number

Answer

Question 1

D

Question 26

A

Question 2

C

Question 27

B

Question 3

B

Question 28

D

Question 4

A

Question 29

C

Question 5

A

Question 30

A

Question 6

C

Question 31

A

Question 7

A

Question 32

A

Question 8

A

Question33

A

Question 9

C

Question 34

D

Question 10

D

Question 35

A

Question 11

A

Question 36

B

Question 12

A

Question 37

D

Question 13

B

Question 38

D

Question 14

A

Question 39

D

Question 15

C

Question 40

A

Question 16

C

Question 41

D

Question 17

D

Question 42

C

Question 18

A

Question 43

B

Question 19

A

Question 44

D

Question 20

A

Question 45

A

Question 21

A

Question 46

D

Question 22

C

Question 47

C

Question 23

B

Question 48

D

Question 24

D

Question 49

D

Question 25

C

Question 50

B

• 253

254 • PMP® Certification—Excel with Ease

Explanations for Chapter 7 Answers

1. Answer D Option A is the definition of Plan Quality Process. Option B is the definition of Perform Quality Assurance Process. Option C is the definition of Perform Quality Control Process 2. Answer C Project Quality management addresses management of projects and the products of the project. Note:We discussed Product Scope and Project Scope as part of the Scope Management. Quality management verifies and validates both. So, the best option is C. 3. Answer B There are various definitions available for Quality. One of the definitions is that Quality is the degree to which a set of inherent characteristics of a product or service fulfills requirement. Conformance to requirement is also called as Quality. 4. Answer A Option A is the definition of Grade. For example, we have different grades in gold like 22 carat, 20 carat, and 18 carat etc. It is the category assigned to products having same functional uses but different technical characteristics. 5. Answer A We have different grades in Gold like 22 carat, 20 carat, and 18 carat etc. It is the category assigned to products having same functional uses but different technical characteristics. ‘Different technical characteristics’ is the key word here, which indicates the definition of Grade. 6. Answer C ‘Fitness for use’ is the concept introduced by Juran. It is another definition of Quality. 7. Answer A Tradeoff between Quality and Grade is the responsibility of the Project Manager and the Project Management team. 8. Answer A Precise measurements are not necessarily accurate. Accuracy indicates how close the measured value is near the True value. Precision is how close the measured values are to each other.

9. Answer C Precise measurements are not necessarily accurate. Accuracy indicates how close the measured value is near the True value. Precision is how close the measured values are to each other. Precise and accuracy are not equivalent. 10. Answer D Quality Management complements Project Management. Both the disciplines recognize the importance of Customer Satisfaction, Prevention over Inspection, and Continuous Improvement. 11. Answer A Quality is planned in and not inspected in. The meaning of the phrase is we need to plan the quality aspect in all the activities we do (It should be part of the overall plan automatically). We should not do quality related activities just because somebody is inspecting it. 12. Answer A Although PDCA cycle is generally attributed to Deming, it was originally defined by Shewhart and later it was modified by Deming. Deming is also famous for “14 Steps to Total Quality Management”. 13. Answer B Although PDCA cycle is generally attributed to Deming, it was originally defined by Shewhart and later it was modified by Deming. Deming is also famous for “14 Steps to Total Quality Management. 14. Answer A OPM3 stands for Organization Project Management Maturity Model. It is a standard from PMI which can be utilized to assess where an Organization stands. PMCDF (Project Management Competency Development Framework) is another framework from PMI, which helps to build Project Management Competency. 15. Answer C CMMI stands for “Capability Maturity Model Integration” and so “I” means Integration

Quality Management

16. Answer C Although Option A also is right, the best Option is C because cost related to quality throughout a product lifecycle is called “Cost of Quality” which is includes “Cost of Conformance” and “Cost of Non-conformance”. 17. Answer D Cost of Quality is a measure used in planning quality and is not the input to the process. Plan Quality is a process whereas cost of quality is a measure. Be careful to distinguish measures, information, inputs, outputs, tools and techniques. 18. Answer A Quality Checklist is the output of Plan Quality process. Note:While we planning to travel abroad, we prepare a checklist, right? 19. Answer A Process improvement is planned in Plan Quality Management process. Process Improvement and Quality metrics are also the output of this process. 20. Answer A Process Improvement and Quality metrics are also the outputs of Plan Quality Management process. 21. Answer A Failure Cost is the Cost of Poor Quality. Failure Cost is also classified as Internal Failure Cost and External Failure Cost. 22. Answer C Failure Cost is the Cost of Poor Quality. Failure Cost is also classified as Internal Failure Cost and External Failure Cost. 23. Answer B Remember the Rule of Seven. If seven Consecutive points moves towards the UCL or LCL, then we need to attend it by taking immediate action. 24. Answer D Prevention is better than Cure. Here, the situation describes the Prevention Cost. Here Efforts are taken to avoid Mistakes/Defects. 25. Answer C It is called internal failure Cost, as we are trying to fix the problem before it reaches to the Customer. Note:The problem already occurred. Appraisal Costs like inspections, reviews, laboratory tests are planned. The key word in the question is than “Planned”.

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26. Answer A Project management office efforts of inspection are classified as “Appraisal Costs” not as “Prevention Cost” 27. Answer B Cost of Warranties would be billed under “External Failure Cost” 28. Answer D We usually do documentation to prevent errors at later stages of the product and hence, it is being classified as “Prevention Costs” 29. Answer C The standard deviation is calculated by square root of the sum of the squares of the individual standard deviation. First square each standard deviation. Add the resultant. Find the square root to find the standard deviation. Square root (0.14 * 0.14 + 0.23 * 0.23) = Square root (0.0196 + 0.0529) = 0.27 30. Answer A Control Charts helps to identify the stability of the process. Process Capability Index helps for this. Process capability Index = (UTL – LTL)/6. If the value is more than q then the process is considered capable. 31. Answer A Quality Audit is the technique used in the “Perform Quality Assurance” process. 32. Answer A UCL = (MU + 3 * Sigma) where MU is the mean value. Sigma is the Standard Deviation. 33. Answer A Benchmarking is the process of comparing one's business processes and performance metrics to industry bests or best practices from other industries. The dimensions typically measured are quality, time and cost. 34. Answer D Design of Experiment (DOE) is a tool to identify the factors that influence specific variables of a product/process. In general usage, design of experiments (DOE) or experimental design is the design of any information-gathering exercises where variation is present, whether under the full control of the experimenter or not. However, in statistics, these terms are usually used for controlled experiments.

256 • PMP® Certification—Excel with Ease 35. Answer A Quality Management plan has the process to implement the quality policy. This document has the process of “how to plan the Quality”, “How to perform the quality assurance” and “How to perform the quality control”. 36. Answer B Check List is the output of “Plan Quality Management” process. Checklist is a structured tool to verify that a set of required steps has been performed. We use the check list to check whether we have followed all the process. 37. Answer D Quality Audit is the technique used in “Perform Quality Assurance Process”. It is the tool used to determine whether the project activities comply with the organizational standards/procedures/policies. 38. Answer D Fish-bone diagram is used to identify the root causes of a problem. Another name of fishbone diagram is Root Cause Analysis Diagram, Ishikawa Diagram. 39. Answer D The key words here are “not true” and modify the question to “which of the following is false”. C is not the right option as sampling is either conform or fail to specifications. D is the answer, as the specified range of acceptable results is defined by specification limits and not control limits. 40. Answer A Pareto diagram is a type of histogram. Pareto rule is called as 80/20 rule. 80% of the problem can be solved just by identifying 20% of the causes of the problem. 41. Answer D Pareto diagram is a type of histogram. Pareto rule is called as 80/20 rule. 80% of the problem can be solved just by identifying 20% of the causes of the problem. 42. Answer C Quality Control helps to monitor and take necessary actions whenever deviations are identified.

43. Answer B Project Quality management addresses both the management of the project and the product of the project. (It validates both Product Scope and Project Scope) 44. Answer D Quality Policy comes from the top boss (CEO) and gives direction to the Organization. It is expressed by top management. It can be considered as high-level summary. 45. Answer A DOE helps to identify which variable has most influence. Design of Experiment (DOE) is a tool to identify which factors influence specific variables of a product/process. In general usage, design of experiments (DOE) or experimental design is the design of any information-gathering exercises where variation is present, whether under the full control of the experimenter or not. 46. Answer D Review is not part of cost of non-conformance. Review is an example for Cost of Conformance. Scrap, Re-work and Warranty as examples of cost of non-conformance. 47. Answer C Pareto diagram is a type of histogram. Pareto rule is called as 80/20 rule. 80% of the problem can be solved just by identifying 20% of the causes of the problem. 48. Answer D The concept of cost of poor quality was popularized by Crosby 49. Answer D JIT means Just-in-Time. It explains the concept of Zero Inventory. Goods are produced just in time and inventory is maintained as zero. 50. Answer B Pareto diagram is a type of histogram. It helps to draw frequency and distribution of process problems over a period of time.

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Key Terms Attribute sampling The results either Conform or not Conform Control charts A graphic display of the results, over time and against established control limits which is used to determine if the process is in control or in need of adjustment. Control limits The process is said to be in control if the result falls within the control limits. Control limits thresholds which can indicate whether the process is out of Control Corrective action Changes made to bring back the expected future performance of the project in line with the plan. Cost of quality The cost incurred to ensure quality which Includes quality planning, quality control, quality assurance, and rework. Inspection Keeping Errors out of the hands of Customer Kaizen theory Continuous improvements to reduce costs and ensure consistency. Marginal analysis You compare the cost of incremental quality improvements against the increase in revenue and optimal quality is reached when cost of improvements is same as the costs to achieve quality. Pareto diagram A histogram ordered by frequency of occurrence that shows number of results against identified cause. Performance reporting Collecting and disseminating information about project performance for project progress. Prevention keeping Errors out of the Process Prevention vs. inspection The cost of preventing

defects is much less than the cost of correcting them later. Quality assurance (QA) Process of evaluating overall project performance to provide confidence that the project will satisfy the relevant quality standards and this usually happen in regular intervals. Quality control (QC) Process of monitoring particular project results to determine if they comply with the quality standards and identifying ways to eliminate causes related with the problems. Quality plan A document setting out the specific quality practices, resources and process relevant to a particular product, service, contract or project. Quality planning Identifying quality standards related to the project and determining the process to satisfy them. Quality policy The overall quality intentions and direction of quality, as formally expressed by top management. Rule of seven In control charts, if there are seven points on one direction, then an assignable cause must be found. Tolerances The result is acceptable if it falls with the range specified by the tolerance. Total quality management (TQM) A common approach to implementing a quality improvement program within an organization and Deming suggested a process of PDCA Cycle for the same. Variables sampling The results are rated on Continuous Scale that measure the degree of conformity

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8 Project Risk Management CHAPTER COVERAGE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Documentation Reviews Delphi Technique SWOT Analysis Risk Probability and Impact Assessment Probability and Impact Matrix Risk Data Quality Assessment Risk Urgency Assessment Probability Distributions Decision Trees Sensitivity Analysis

INTRODUCTION Although every activity or enterprise has an element of risk attached to it, effective risk management techniques can mitigate the noxious effects of risks coming to fruition. The American Express Bank, for example, obviously succeeded in managing risk effectively and professionally, because their centers in New York were back in operation just a day after the 9/11 attacks. Project managers, too, are required to plan for and manage risks, because cost overruns, loss of stakeholder confidence, or even outright project failure can result if any or all threats associated with project risks do materialize. An important responsibility of a project manager and the project management team is to identify all project risks, analyze and rank them in importance, and set processes and systems in place to possibly avert identified threats. Risks are events or consequences that have been estimated to have a nonzero probability of occurring during execution of a project and that are always measured by their impacts on the project. Generally, risks entail losses or benefits, contrary to an opinion that risks always represent only threats to project success. Therefore, project risk management techniques aim to increase the probability and impact of positive events and decrease the probability and impact of negative events on a project. The following are two important concepts related to risk management: High-risk area. The intensity of a risk varies over a project’s life cycle. Risk is usually high in the conceptual and developmental phases of a project, and decreases over the project’s life cycle with gradual completion of project work. Alternatively, the cost at stake is low in the early phases of the life cycle and increases as work is accomplished. The area of overlap is known as the

260 • PMP® Certification—Excel with Ease high-risk area. Risk is very high in the beginning because of uncertainties in the project. The cost at stake is low in the beginning because we would have just started spending our money. But as we move ahead with the project, uncertainties will go down because the project scope becomes cleaner. But the costs at stake slowly move up as the project progresses. Both these (cost at stake and risk) meet at a point forming an area called high risk area which needs to be monitored cautiously. Stakeholder tolerance. Different stakeholders, depending on the criticality of perceived benefits or losses, accept varying degrees of risk in a project. For example, cost variance and scope variance are acceptable up to a certain limit, beyond which it will go out of control. This is called stakeholder tolerance level. Project risks have their roots in the uncertainties inherent in projects. Figures 8.1 and 8.2 explain the risk management process flow. Discussion Points 1. How many risks did you find in your previous project? 2. Name the top three risks for your previous project. 3. How did you manage these three risks?

Discussion Points How do you think a risk can produce benefits to a project?

Project managers ask the following questions when addressing risks in projects: • • • •

What is the probability of occurrence of the risk? What is the cost at stake if the threat entailed by the risk materializes? What is the time point in the project life cycle at which the threat is likely to occur? What is the frequency of occurrence of the threat over the course of the project life cycle? Risk Management Process Planning Plan Risk Management

Identify Risks

Controlling Perform Qualitative Risk Analysis

Perform Quantitative Risk Analysis

Plan Risk Response

Figure 8.1 Risk management processes

Monitoring and Control Risks

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Risk Management Flow Define Scope

Scope Statement

Plan Risk Management

Project Management Plan

Risk Management Plan

EE

Identify Risks

OPA

Develop P Pro jjectt Management Plan

pp Approved CR

Risk Register

Perform Qualitative Q Risk Analysis

Develop Project Management Plan

Approved CR Approved Corrective Actions Approved Preventive Actions

Risk Register Update

Perform Quantitative Risk Analysis

Direct and Manage Project Execution

Risk Register Update

Plan Risk Response

Report Performance

P j t M Project Managementt Plan Update

Risk Register Update Risk related Contractual Agreement

Close Project

OPA Update Risk Register

Monitor and Control Risks

Recommended Corrective Actions Requested Changes Risk Management Plan Update

Perform Integrated Change Control

Figure 8.2 Risk management process flow

Discussion Points For the top three risks you identified earlier, discuss the probability of occurrence, amount at stake, possible life cycle stage of occurrence, and frequency of occurrence of that risk. Do you think these parameters will vary with the life cycle of the project? If so, how will they change for the risks identified?

Project risk management, per the PMBOK, includes the process of risk management planning, identification, analysis, response planning, monitoring and control on a project. 1. Plan Risk Management Process: The entire process of risk management is defined here. It looks at how a project manager manages risks. 2. Identify Risks Process: It involves determination of risks that are likely to affect a project and documentation of the characteristics of each risk. 3. Perform Qualitative Risk Analysis process: It is one of assessment and evaluation of the impacts of and likelihoods of realization related to identified risks. Qualitative risk analysis is a subjective analysis of identified risks. 4. Perform Quantitative Risk Analysis Process: It is a process, as the term suggests, of quantifying the probability and consequences of risks taken.

262 • PMP® Certification—Excel with Ease 5. Plan Risk Responses Process: It is one of identifying many alternatives to enhance opportunities and reduce threats to project objectives and determine action plans. 6. Monitor and Control Risks Process: One of tracking risks, monitoring residual risks and possibly new risks as they emerge over project execution, ensuring effective execution of risk plans, and continually evaluating the effectiveness of the established risk response plans, which may be updated in view of emerging risks, if any.

THE PLAN RISK MANAGEMENT PROCESS The Plan Risk Management (Figure 8.3 and Table 8.1) process begins as soon as a project is initiated and is completed early during project planning. Careful and explicit risk management planning enhances the probability of success of the five subsequent risk management processes.

Inputs of the Plan Risk Management Process Project scope statement acts as a primary input as the entire project revolves around executing the scope of the project successfully. In addition, cost management plan and schedule management plan also act as input for this process, as risk management depends on these plans. The process of how a project manager manages the risk depends on how he manages the schedule and cost of the project.

Tools and Techniques of the Plan Risk Management Process Plan meetings is the tool that helps to plan risk management process. Plan meetings should involve the project manager, project team leaders, key stakeholders, and others who may be deemed authorities on providing inputs to risk management. In these meetings, risk management responsibilities are assigned. Cost elements and schedule activities of managing risks are also assigned to the project budget and project schedule, respectively. Risk management plans of similar past projects may serve as inputs to preparing the risk management plan for a current project. Templates of similar projects can also be used to assist draw Tools and Techniques Planning meetings and analysis

Inputs Project scope statement Cost management plan Schedule management plan Enterprise environmental factors Organization process assets

Outputs Risk management plan

Figure 8.3 The inputs, tools, and outputs of the Plan Risk Management process

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Table 8.1 Plan Risk Management – Planning Process Group Planning

Monitoring and Controlling

Plan Risk Management

Control Risks

Identify Risks Perform Qualitative Risks Analysis Perform Quantitative Risks Analysis Plan Risk Response

PMP WATCH The contents of a typical risk management plan: • Methodology to manage risks • Roles and responsibilities for each actions • Budget • Frequency of occurrence of the meeting • Risk categories • Definitions of risk probability and impact • Probability and impact matrix • Scoring and interpretation • Reporting formats

up the risk management plan. General organizational templates as well can be used to help identify risk categories.

Output of the Plan Risk Management Process Risk categories and a risk breakdown structure are parts of the risk management plan which is the primary output of the plan risk management process. Risk categories help in systematic identification of risks and contribute to the effectiveness and quality of the Identify Risk process. Risk categories are simply lists of common areas or sources of risk; typically, project management offices have standard lists of risk categories that all projects can use to identify risks easily. A typical risk breakdown structure (RBDS) (Figure 8.4) lists the categories and subcategories within which risks for a project may arise.

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Project Risk

External Categories

Market Rists

Regulatory Risk

Oranization Risks

Customer Risk

Resource Risk

Funding Risk

Policy Risk

Figure 8.4 Risk breakdown structure External categories. Government regulations, markets, customers, suppliers Project management. Initiation, planning, controlling, closing Organization. Resources, funding, prioritization

THE IDENTIFY RISKS PROCESS The Identify Risks process (Figure 8.5 and Table 8.2) involves determination of risks that are likely to affect a project and documentation of the characteristics of each risk. Both the positive and negative effects of risks are documented: both the opportunities or rewards and the threats. The project team, subject matter experts, stakeholders, and other project managers are used for the identification of risks. The identify risks process is iterative because the identification occurs over the entire life cycle of the project from starting to end, continuously. Because project managers are often called uncertainty managers, it would be fair to call them risk managers as well. Discussion Points Do you agree with the statement that all activities of a project manager are related with risks in one way or another? State why.

PMP WATCH There are many ways to identify risks: documentation reviews, brainstorming and information gathering techniques, Delphi technique, checklist analysis, diagramming techniques, assumption analysis, SWOT analysis, and expert judgment.

In addition to the formal already-identified project risks, there also exist risks that may evolve over the course of project execution. A risk trigger is a symptom of and an indirect manifestation of a risk event; however, risk triggers may prove to be false alarms as well: their identification does not indicate the certainty of a risk developing. An example of a risk trigger is poor team morale. Risk triggers—if identified on time—serve project managers helpful warning signs of an emerging risk.

Project Risk Management

Identify Risks Tools and Techniques Documentation reviews Information gathering techniques Checklist analysis Assumptions analysis Diagramming techniques SWOT analysis Expert judgment

Inputs Risk management plan Activity cost estimates Activity duration estimates Scope baseline Stakeholder register Cost, schedule, quality Management plan Project documents Enterprise environmental factors Organizational process assets

Outputs Risk register

Figure 8.5 The inputs, tools, and outputs of the Identify Risks process

Table 8.2 Identify Risks – Planning Process Group Planning

Monitoring and Controlling

Plan Risk Management

Control Risks

Identify Risks Perform Qualitative Risks Analysis Perform Quantitative Risks Analysis Plan Risk Response

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Assumptions ? Project Baseline

Manage Risks

Risk List Unknowns ?

Start with your current baseline Roll risk plans back into the baseline Assess baseline changes for new risk

Re-plan High Risks to Project Baseline

Figure 8.6 Project baseline

Tools and Techniques of the Identify Risks Process Documentation Reviews A structured documentation review comprises review of all project materials, particularly project baseline documents (Figure 8.6). Use of this tool includes review of all project plans, assumptions, lessons learned and risk management plans from previous similar projects, and contractual obligations, if any, for the project. The quality of past risk management plans, agreement if any between those plans and requirements and assumptions of those projects, and agreement if any between those plans and the actual execution of those projects can be useful sources of indicators of risks in the current project.

Information-Gathering Techniques Brainstorming The main goal of brainstorming, a popular and widely used information-gathering technique, in risk identification is to obtain the material required to generate a comprehensive list of risks as envisioned by all project stakeholders. Please refer Chapter 4 for a discussion of the modalities of conducting brainstorming meetings. An important feature of brainstorming meetings is that they use participants of widely differing functional backgrounds, which enhances the likelihood fresh ideas and innovations being generated. Delphi Technique The Delphi technique (Figure 8.7) is a systematic, interactive forecasting method that uses a panel of independent experts. It is also used to help the participating experts reach a consensus. Experts answer questionnaires in two or more rounds. After each round, the session facilitator provides a summary of the forecasts of each expert, one by one, without indicating the identity of the expert. The summary also includes the reasons the expert provided for judgments made. After summaries of all experts’ views have been thus presented, experts are encouraged to revise their forecasts—on the

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START

Select Expert Panel

Development and Distribution of Questionnaire

Analyze Results

Yes

Consensus?

No

Prepare New Questionnaire

END

Figure 8.7 Delphi technique as used for risk analysis basis of the summaries presented—and resubmit them. On the completion of this process, the expert group converges on the correct answer. The process is stopped after a predefined stop criterion, such as number of rounds or stability of results. The mean or median scores of the final rounds determine the decision adopted by the expert group. The main advantage of this technique is that it reduces bias in and eliminates subjective influences from the decision making process. However, the success of the technique hinges on the analytical skill and subject matter expertise of the facilitator.

PMP WATCH Following are the key characteristics of the Delphi method: 1. Anonymity of the expert participants 2. Opportunity for experts to review their inputs 3. Structured information flow

Checklist Analysis Risk identification checklists can be prepared on the basis of historical information available and similar past projects. The lowest level of RBDS can also be used as risk checklist. Diagramming Techniques There are different diagramming techniques like cause and effect diagrams (see Chapter 7), and system or process flow charts that show how various components of a project are interrelated and this link identification serves as a basis for risk identification. Influence diagrams, pictorial representations of a problem showing causal influences, and time ordering events may also be used as diagramming tools to identify risks.

268 • PMP® Certification—Excel with Ease Weather Forecast

Vacation Activity

Weather Condition

Satisfction

Figure 8.8 An example influence diagram An influence diagram, also referred to as a decision network, is a graphical and mathematical representation of a decision. It helps to take a decision and the decision is fully based on the influence of various factors associated with the decision. Risks associated with various factors are the sources of risks for the entire decision making process. For example, assume that you are the project manager of a construction project and you want to plan your vacation based on the weather forecast which is not conducive for the work. Figure 8.8 shows two functional arcs ending in Satisfaction, one conditional arc ending in Weather Forecast, and one informational arc ending in Vacation Activity. The informational arc ending in Vacation Activity indicates that the project manager will only know Weather Forecast, not Weather Condition, when making a choice. In other words, actual weather will be known after a choice has been made. It also indicates that Vacation Activity is independent of Weather Condition, given Weather Forecast is known from it. Both Weather Forecasts and actual weather are the sources of Risks. SWOT Analysis SWOT analysis is an instrument used in strategic planning. Factors internal to an organization can be classified as strengths (S) or weaknesses (W) and those external to the organization classified as opportunities (O) or threats (T). The following list defines the four components of a SWOT analysis. Strengths. Positive tangible and positive intangible attributes internal to an organization that are within the organization’s control. Weakness. Negative attributes that are within an organization’s control representing areas for organizational improvement. Opportunities. Attractive factors external to the organization. Threats. External risk factors beyond the organization’s control; the organization may yet benefit from threats by having contingency plans to effectively address these threats.

PMP WATCH SWOT analysis dos and donts

• • • • •

Be realistic on all the factors Be specific with the factors and area of comparison Compare factors only with core mission Keep analysis short and simple Avoid complexity

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Discussion Points Can you do SWOT Analysis for your current project? Some Clues: Strengths: quality resources, good competency Weakness: dual reporting Opportunity: recent closing of similar project Threat: competitor ready to give more salaries for this skill

Discussion Points What are the steps you can take to convert a weakness into a strength, a threat into an opportunity? What are the risks you may face in these steps?

Output of the Identify Risks Process The risk register is the primary output of the Identify Risks process. The register is used updating risk information, because risk identification is an ongoing process. It lists identified risks, potential responses of the risks identified, root causes of identified risks, and updated risk categories. The risk register is an important project document and is often referred to as a risk tracker sheet. Discussion Points Continuing from the previous discussion point, which tools and technique you used to identify risks in your project? What alternative tools and technique can be used in this situation to identify risks and how?

THE PERFORM QUALITATIVE RISK ANALYSIS PROCESS The Perform Qualitative Risk Analysis process (Figure 8.9 and Table 8.3) is one of assessment and evaluation of the impacts of and likelihoods of realization related to identified risks. Qualitative risk analysis is a subjective analysis of identified risks. Here, subjective refers to the classification of risks as high-impact, medium-impact, and low-impact risks. Establishing normative standards to classify identified risks reduces the element of personal bias in the classification process. The Perform Qualitative Risk Analysis process is a quick and cost effective means of establishing priorities. The outputs of this process, however, are revised during project execution. Qualitative risk analysis is followed by quantitative risk analysis. First, the risk needs to be qualified as high, medium, or low. Only then can we quantify the risks stating how much high or how much low.

Tools and Techniques of the Perform Qualitative Risk Analysis Process Risk Probability and Impact Assessment Risk probability is defined as the chance level of risks occurring in a project, whereas risk consequences refer to the impact on projects if identified risks do materialize. Both these important factors and identified and documented in the risk management plan. The levels of risk probability and impact are assessed, measured, and analyzed in project team meetings, attended by subject matter experts as well.

270 • PMP® Certification—Excel with Ease Tools and Techniques Risk probability and impact assessment Probability and impact matrix Risk data quality assessment Risk categorization Risk urgency assessment Expert judgment

Inputs

Outputs

Risk management plan Risk resister Project scope statement Organizational process Assets

Risk register (updates)

Figure 8.9 The inputs, tools, and outputs of the Perform Qualitative Risk Analysis process

Probability and Impact Matrix A probability and impact matrix is used to assign risk ratings, namely, low, medium, or high (Figure 8.10), to risks on the basis of a combination of (1) the probability of occurrence of that risk and (2) its impact of the risk event occurring on project objectives. Risk response action depends on the classification of the risk (Figure 8.11). Risks with high probability and high impact require further analysis, including quantification and timely management. Risks with lower probability and impact may not require action but would typically be monitored. Table 8.3 Perform Qualitative Risks Analysis – Planning Process Group Planning

Monitoring and Controlling

Plan Risk Management

Control Risks

Identify Risks Perform Qualitative Risks Analysis Perform Quantitative Risks Analysis Plan Risk Response

Project Risk Management

Probability Scale and Impact Scale Impact Scale Consequence

Health and Safety

High

>10 Server Failure at a time

Moderate

6 to 10 Server Failure at a time

Low

1 to 5 Server Failure a time

Probability Scale Likelihood Class

Likelihood of Occurrence (events/year)

Low

10% chance of occurrence

Figure 8.10 An example impact scale and probability scale Risk Probability / Impact Matrix: Immediate Attention

High Probability

Medium Low Low

Medium

High

Impact

Figure 8.11 An example probability and impact matrix Risk Data Quality Assessment

Risk understood Fully?

Data available for Risks? Is Data Reliable? Better Data

Figure 8.12 Risk data quality assessment

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272 • PMP® Certification—Excel with Ease Ordinal scale is a ranked-order scale, such as very low, medium low, low, moderate, high, and very high. Cardinal scale values are usually linear (0.1/0.3/0.5/0.7/0.9) or nonlinear (0.05/0.1/0.2/0.4/0.8/). Ordinal scale is an example of Likert scale (i.e., risk effects on a scale of 1 to 5). A rating of 5 would be considered to be high riskier than a rating of 1, but we cannot say that it is five times riskier than the 1. Cardinal scales have an absolute value in them and we can make quantitative comparisons between results. Risk Data Quality Assessment Risk data quality assessment is a technique used to evaluate the degree to which project data are useful. Needless to say, accurate data are necessary for accurate qualitative risk analyses. The technique (Figure 8.12) involves the following steps: • • • •

Extent of understanding of a risk Data available on the risk Reliability of data Collection of more reliable data

Risk Urgency Assessment Indicators of risk may include time to effect a risk response, symptoms and warning signs, and the risk ratings (Figure 8.13). The following factors are involved: Time based action. A positive opportunity may be temporarily available. Only a time-bound risk response action can eliminate the risk and enable availing of the rewards offered by the opportunity. Symptoms and warning signs of risk. Such signs may allow for only a short response window, sometimes just a few hours before a indented risk event occurs. Such signs are also referred to as risk triggers. Risk ratings. High risk ratings are typically assigned to risk events carrying high impact and high probability of occurrence. Such risks obviously require continuous monitoring.

Time Based Urgency Opportunity to be captured quickly Quick Decision Trigger Based Urgency Urgency based on Trigger No Risk Trigger then No Urgency Rating Based Urgency High Rating needs High Urgency Figure 8.13 Risk urgency assessment

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Risk Categorization Risks in projects can be categorized on the basis of source of risks or area of the project affected. For example, risks can be categorized as operational risks, financial risks, risks related with project schedule, risks related with environment, risks related with change, risks related with resources, risks related with timeline etc. Operational risk: Risks due to operational factors such as loss due to improper process implementation. Example: Lack of proper training for resources. Schedule risk: Risks related to delay in the project schedule. Schedule risks directly affect the project and may lead to project failure. Apart from the above mentioned risk, there is one more category of risk associated with project management. This risk is related to attributes like project planning, project organization, frequent requirement changes. The above categorization helps to analyze the risks in a better way. Special treatments can be given to special categories of risks. For example, for all financial related risks, we can assign a risk owner who is good in financial management.

Output of the Perform Qualitative Risk Analysis Process The main outputs of the Perform Qualitative Risk Analysis process are updates to the risk register generated in the Identify Risks process. Significant risks have a description of the basis for the assessed probabilities and impacts. Updates to the risk register may include 1. 2. 3. 4. 5. 6.

relative rankings of risks. causes of risks. risks requiring response in near term. list of risks for further analysis. watch list of low priority. any trends in analysis results.

THE PERFORM QUANTITATIVE RISK ANALYSIS PROCESS The Perform Quantitative Risk Analysis process (Figure 8.14 and Table 8.4) is a process, as the term suggests, of quantifying the probability and consequences of risks taken. The process is used to quantify risk exposure for a project and determine achievable and realistic costs, schedules, or scope targets to manage identified risks.

Tools and Techniques of the Perform Quantitative Risk Analysis Process Data Gathering and Representation Techniques Project stakeholders and subject matter experts quantify the probability and consequences of risks on various parameters such as cost, schedule, and scope. For example, a cost expert can quantify the risks related to costs in a better way. The quantification of risks is based on the determination of its impact, which depends on the accuracy of data in hand. The type of data to be gathered in turn depends on the type of probability distributions that will be used for quantitative analysis. In general, process variations tend to follow a binomial, normal, or Poisson distribution, and therefore, while

274 • PMP® Certification—Excel with Ease Tools and Techniques Data gathering and representation techniques Quantitative risk analysis and modeling techniques Expert judgment

Inputs Risk management plan Risk register Schedule management plan Cost management plan Organizational process assets

Outputs Risk register (updates)

Figure 8.14 The inputs, tools, and outputs of the Perform Quantitative Risk Analysis process

quantifying risks, only use of the applicable probability distribution function would lead to a more reliable analysis. Probability Distributions A probability distribution is continuous if its cumulative distribution function is continuous, and is equivalent to saying that for random variables X, P[X = a] = 0 for all real numbers a, that is, the probability that X attains the value a is zero, for any number a. Here X is called a continuous random variable. Continuous probability distributions represent uncertainties in values, such Table 8.4 Perform Quantitative Risks Analysis – Planning Process Group Planning

Monitoring and Controlling

Plan Risk Management

Control Risks

Identify Risks Perform Qualitative Risks Analysis Perform Quantitative Risks Analysis Plan Risk Response

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as durations of schedule activities and costs of project related components. Process measurements follow discrete probability distributions when they are restricted to being within a predefined list of possible values and the list either has a finite number of members or is at most countable. It can be used to represent uncertain project events, such as the outcome of a test or a possible scenario in a decision tree. Decision Trees A decision tree is a tool used in risk analysis and are used to investigate the risks associated with several possible courses of action. In a typical decision tree, a chance node is represented by circle and a decision node represented by square. In decision tree analysis, the process of risk analysis starts from the right of the tree diagram and works toward the left, that is, from the future toward the past. Future decisions are made and they are rolled back to become part of the earlier decisions. For example, a future decision can be selection of Project A, Selection of Project B, success of Project A after selection, Failure of Project A after selection, Success of Project B after selection, and Failure of Project B after selection. Uniform distributions are used only if there is no obvious value that is more likely than any other between specified high and low bounds, as in the early concept stage of design.

Quantitative Risk Analysis and Modeling Techniques For quantifying risks, we need the list of risks identified in the risk register along with the tolerance limits of the stakeholders, approximate cost estimation of the risks, and resources required. Once these lists are available, we can start performing quantitative risk analysis using sensitivity analysis, expected monetary value analysis, and simulation. Sensitivity Analysis Sensitivity analysis is used to determine risks that have potentially the greatest impact on project outcome. The technique is used to examine the extent to which uncertainty associated with each project element affects the overall project objective, while assuming that the uncertainty associated with all other project elements is zero. Sensitivity analyses often involve use of tornado diagrams (see Figure 8.15), also called tornado plots or tornado charts, which are used to examine the relative importance of process variables. Expected Monitory Value Analysis EMV is a technique in which a calculation is made to determine the average of all potential outcomes of an event when the future includes a number of scenarios that may or may not happen. The expected monetary value analysis, referred to as EMV, can be conducted at any point in the life cycle of a project but should be done as early as possible to get the better results out of it. Risks with higher expected monetary value (EMV) need to be addressed as a priority. Expected monetary value is given by Expected monetary value = Probability × cost Using this technique, project managers summarize expected values to total project risks. Three probabilities values are used to calculate EMVs (not to be confused with those used in PERT calculations). The expected value thus estimated serves as a guideline for total costs entailed to eliminate identified project risks. For example: If a project has a 55% chance of a US $100,000 profit and a 40% chance of a US $300,000 loss, the EMV of the project is calculated as

276 • PMP® Certification—Excel with Ease

Uncertainty

-15

-5

Profitability ($ Millions) 0 5

Current

Service Level

10

15

World Class

Low

High

Sales Volume Current Quality A few uncertainties Current really matter to Factor 1 strategic choice, but most do not High Other Factors Current Course and Speed

High

World Class Efficient

Other uncertainties be managed once the choice is made

Low Low Hybrid

Figure 8.15 An example tornado diagram EMV = profit of (0.55 × 100,000) + loss of (0.40 × 300,000) = profit of (55,000) + loss of (120,000) = loss of 65,000 $

PMP WATCH There will be a few questions in PMP exam asking you to calculate the expected value by giving out the probability and the cost associated with it.

Modeling and Simulation Simulation techniques are widely used to generate models that analyze the behavior or performance of a system and quantify the effects of identified risks on that system. Project execution is simulated many times to obtain a statistical distribution of calculated results. The Monte Carlo analysis is a good example of simulation techniques. The Monte Carlo analysis represents a class of iterative, computational techniques that produce results to quantify the risks associated with simulated schedules and alternative plans, paths through network diagrams, and strategies for successful project outcome. The analysis results in a probability distribution, which may be inputs for further analyses.

The Output of the Perform Quantitative Risk Analysis Process: Updated Risk Registers The following contents of risk register is updated as part of quantitative risk analysis. • The probabilistic analysis of the project is updated. • The probability of achieving time and cost objectives is updated.

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• The prioritized list of quantified risks is updated. • Trends in quantitative risk analysis results are updated.

THE PLAN RISK RESPONSES PROCESS The Plan Risk Responses process is one of identifying many alternatives to enhance opportunities and reduce threats to project objectives and determining action plans (Figures 8.16, 8.17 and Table 8.5). Risk response planning is based on the severity of the identified risk and estimated cost effectiveness in overcoming the challenge. Response plans require to be time bound, realistic within the project context, and agreed upon by all parties involved. A risk owner is assigned who takes ownership of the risk. The risk owner identified has the responsibility of analyzing and controlling project risks. A risk owner is identified based on the skill set and experience level. For example, for all project management related risks, the project manager can be an owner and for all technical related risks, the team leader can be the owner. Risk responses may include • • • • •

action plans to eliminate the threats before they happen. action plans to decrease the probability and/or impact of threats. action plans to increase the probability and/or impact of opportunities. contingency plans. fallback plans if contingency measures taken prove to be ineffective.

Tools and Techniques of the Plan Risk Response Process Strategies to Counter Negative Risks (Threats) Avoidance. This strategy attempts to eliminate a specific threat by eliminating its cause. For example, scope creep, which occurs when project scope is not frozen, may be eliminated by freezing project scope at an appropriate point in time. Transference. This strategy aims at use of contracting, insurance warranties, guarantees, and

Plan for Contingency

Plan to increase the impact of Opportunities

Plan for Fallback Plan if Contingency fails

Risk Response Plan

Plan to Eliminate Threats

Plan to Decrease the Impact of Threats

Figure 8.16 Objectives of risk response planning

278 • PMP® Certification—Excel with Ease Tools and Techniques Strategies for negative risk or threats Strategies for positive risks or opportunities Strategies for both opportunities and threats Contingent response strategy Expert judgment

Outputs

Inputs

Risk register (updates) Project management plan (updates) Risk-related contractual agreements Project documents update

Risk management plan Risk register

Figure 8.17 The inputs, tools, and outputs of the Plan Risk Responses process

outsourcing of work, all which transfer risk from the performing organization to a third party. Mitigation. This strategy attempts to decrease the probability of occurrence of a risk, reduce the risk-event value, or both, thereby reducing the cost of managing that particular risk.

Table 8.5 Plan Risk Response – Planning Process Group Planning

Monitoring and Controlling

Plan Risk Management

Control Risks

Identify Risks Perform Qualitative Risks Analysis Perform Quantitative Risks Analysis Plan Risk Response

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Strategies to Exploit Opportunities (Positive Risks) • Exploit. This strategy attempts to ensure that the opportunity event occurs. For example, the most talented resource in a project team may be assigned to a demanding task to reduce project duration. • Share. This strategy aims at allocating a part of the ownership of an opportunity to a third party to ensure that the opportunity event occurs, while decreasing the cost associated with a risk event occurring. Joint venture enterprises are an example of risk sharing • Enhance. This strategy increases the positive impact of an opportunity. For example, more buffer resources are allotted to an activity to ensure early completion.

Discussion Points How did you exploit an opportunity in a project? How did you enhance an opportunity in a project?

Strategies for Both Threats and Opportunities Acceptance is a type of strategy applicable for both the threats and opportunities. This strategy accepts the risk and develops a contingency plan, should the risk event occur. For example, in a cost plus contract the buyer takes more risks and in a fixed bid project the seller takes more risks. The risks related with the contract are accepted and a contingency plan is developed to tackle it. Contingency reserve. This strategy aims at generating a contingency reserve to tackle unknown risks and accepted known risks. The quantum of the contingency reserve, which may be in the form of additional time for the project, additional resources, and/or additional billing to the customer, is based on the expected impact of the risk. Management reserve. This strategy generates a separately planned quantity to be used to manage future uncertain scenarios that are impossible to predict—unknown unknowns. Use of management reserve requires a change to the project’s cost and schedule baselines, whereas a contingency reserve is not required to be refl ected in cost and schedule baselines.

Output of the Plan Risk Response Process The main outputs of the Plan Risk Response process are updates to the risk register and include residual risks and contingency plans: Residual risks. These are risks that remain after a risk response plan has been determined and put in place. Residual risks are documented and continually monitored. Contingency plans. These are plans describing the specific actions that will be taken if identified opportunities or threat occur. Discussion Points What is the difference between a contingency plan and a mitigation plan? Take a top-priority risk in your project and discuss its contingency plan and mitigation plan.

280 • PMP® Certification—Excel with Ease

THE CONTROL RISKS PROCESS The Control Risks process is one of tracking risks, monitoring residual risks and possibly new risks as they emerge over project execution, ensuring effective execution of risk plans, and continually evaluating the effectiveness of the established risk response plans, which may be updated in view of emerging risks, if any (Figures 8.18, 8.19 and Table 8.6). The process uses variance analysis and trend analysis techniques on performance information generated during project execution to control risks related with various activities and also checks whether project assumptions are still valid.

Tools and Techniques of the Control Risks Process The project manager needs to know the tools and techniques for risk monitoring and controlling as the risk management process is not only about identifying and analyzing but also about proper control of the identified risks. Risk audits, risk reviews, technical performance measurement, work around, status meeting, and reserve analysis are some of the tools used for this purpose. Project risk response audits. Risk auditors examine the effectiveness of established risk response plans with respect to risk avoidance, risk transfer, and risk mitigation. Checks are made on whether the organization has adopted appropriate and relevant techniques to assess the severity of the risks and whether a combination of qualitative and quantitative techniques has been used in assessment of risks. The effectiveness of risks owner is also audited. Periodic project risk reviews. Established risk response plans are periodically reviewed for their implementation and for their continued relevance and effectiveness. If changes are deemed to be required, risk plans are appropriately updated. Risk reviews also check whether appropriate procedures are being followed. Technical performance measurement. This tool is used to compare technical accomplishments during project execution to the project plan’s schedule of technical achievements. Appropriate action is taken wherever deviations are found high. Additional risk response planning. This technique is used to address risks not identified—not documented in the risk register—that may have emerged over project execution. Additional

Monitoring Residual Risks

Identify New Risks

Ensuring Execution of Risk Plan

Evaluate Effectiveness of Risk Plan

Monitoring and Controlling Risks

Figure 8.18 Objectives of Controlling Risks

Change Risk Plan if required

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Monitoring and Control Risks Tools • Risk audits • Risk assessment • Variance and trend analysis • Technical performance measurement • Reserve analysis • Status meetings

Inputs

Outputs

• Project management plan • Risk register • Work performance Information • Performance reports

• • • • •

Risk register (updates) Change Requests Project Management Plan Update Project document updates OPA Updates

Figure 8.19 The inputs, tools and outputs of the Control Risks process

Table 8.6 Control Risks – Controlling Process Group Planning

Monitoring and Controlling

Plan Risk Management

Control Risks

Identify Risks Perform Qualitative Risks Analysis Perform Quantitative Risks Analysis Plan Risk Response

planning—and allocation of resources—may also be required if the impact of identified risks proves to be greater than anticipated. Work-arounds. These are unplanned responses to unanticipated risk events. Status meetings. These are meetings that are convened the deviation from established risk

282 • PMP® Certification—Excel with Ease response plans is high. Status meetings are used to review, plan, and if required upgrade existing risk response plans. Reserve analysis. Reserve analysis is a technique that is used to identify the quantum of reserve resources that require to be set aside for project contingencies. The magnitude of this quantum depends on the complexity of the project. Reserves may be reallocated if expected threat events do not occur or if expected opportunities do occur. Additional response planning technique is used to address risks not identified, while reserve analysis is for the identified risks. Discussion Points Identify risks and assess the level of risks and the control mechanism you would use in a project that you have been asked to execute largely using entry-level staff.

Exercise 8.1

Determine the type of risk management technique used in the below scenarios

1. You know that people will leave your project due to heavy work pressure and so you prepared a succession and rotation plan for the project. Avoided

Mitigated

Accepted

Transferred

2. You insure the infrastructure used in a project because it entailed considerable risk Avoided

Mitigated

Accepted

Transferred

3. You declined to accept an individual allocated to your project on grounds of professional incompetence. Avoided

Mitigated

Accepted

Transferred

4. In a particular project, you quoted low in knowledge that it will yield low profit margin. You did this because you believed that your organization would get multiple project from the client in future. Avoided

Mitigated

Accepted

Discussion Points How historical information is useful in risk management processes?

Exercise 8.2

List some common risk management mistakes

Transferred

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Answers to Exercise Questions Exercise 8.1 Answers 1. You know that people will leave your project due to heavy work pressure and so you prepared a succession and rotation plan for the project. Mitigated 2. You insure the infrastructure used in a project because it entailed considerable risk Transferred 3. You declined to accept an individual allocated to your project on grounds of professional incompetence. Avoided 4. In a particular project, you quoted low in knowledge that it will yield low profit margin. You did this because you believed that your organization would get multiple project from the client in future. Accepted

Exercise 8.2 Answers • • • • • • • •

Completing the risk identification process without knowledge of project details Assuming that the risk identification process is a one-time activity; it is a continuous process Inappropriate use of historical data and risk templates of apparently similar projects Generalizing project risks rather than identifying them as being specific to particular projects Inadequate review of identified risks for their continued relevance Inadequate categorization of risks Use of a single method for risk identification rather than a combination of methods Inadequate communication of risks made by project managers to project team members during planning • Not involving team members in the risk identification process • Not identifying risk owners for risks • Not identifying roles and responsibilities clearly for risk owners

Summary Risks can be effectively managed by following predefined steps. The following lists salient features of risk management: • A project risk is a potential source of deviation from the project plan and can have a negative or positive impact on the project. • Project risks that represent threats are classified as negative; project risks that represent opportunities are classified positive. • Risks should be identified in all phases of the project life cycle; risk identification is an iterative process. Established risk response plans require continual review • Work-arounds are unplanned responses to unanticipated risk events.

284 • PMP® Certification—Excel with Ease

Chapter 8 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. Project risk management is defined as A. the process of identifying how to conduct risk management activities for a project. B. the process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact. C. the process of developing options and actions to enhance opportunities and to reduce threats to protect objectives. D. the process of conducting risk management planning, identification, analysis, response planning and monitoring, thereby exerting control over a project’s execution. Question 2. The process of numerically analyzing the effect of identified risks on overall project objectives is called A. plan risk responses. B. perform quantitative risk analysis. C. perform qualitative risk analysis. D. plan risk management. Question 3. The process of evaluation of risk process effectiveness throughout a project refers to the A. Plan Risk Responses process. B. Perform Quantitative Risk Analysis process. C. Perform Qualitative Risk Analysis process. D. Monitor and Control Risk process.

Question 4. The process of developing options and actions to enhance opportunities and to reduce threats to project objectives refers to the A. Perform Quantitative Risk Analysis process. B. Perform Qualitative Risk Analysis process. C. Plan Risk Responses process. D. Monitor and Control Risk process. Question 5. Which one of the following statements is not true? A. Project risk is related with future. B. Risk is an uncertain event or condition. C. Risk can occur without affecting any of the project objectives. D. A single risk can have more than one impacts. Question 6. The term used to indicate the varying degrees of risk that organizations and stakeholders accept is called A. B. C. D.

risk tolerance. risk limit. risk level. risk acceptance.

Question 7. Risk exists the moment a project is conceived. A. True B. False Question 8. The process of defining how to conduct risk management activities for a project is referred to as the A. Perform Quantitative Risk Analysis process. B. Perform Qualitative Risk Analysis process. C. Plan Risk Responses process. D. Plan Risk Management process.

Project Risk Management

Question 9. Which of the following statements is true regarding the Plan Risk Management Process? A. It should begin during initiation phase and end during closing phase. B. It should begin once a project is conceived and should be completed early during project planning. C. It should begin once a project is conceived and should be completed at the closing phase. D. It should begin in the planning phase and should be completed at the closing phase. Question 10. A risk management plan contains all of the following except A. B. C. D.

risk categories. budgeting. timing. list of risks.

Question 11. Which of the following provides a structure that ensures a comprehensive process of systematically identifying risks to a consistent level of detail? A. B. C. D.

Risk categories Budgeting Timing List of risks

Question 12. All project stakeholders should be encouraged to identify risks, including customers. A. True B. False Question 13. R i s k e x p e r t s p ar t i c ip ate i n t h i s technique anonymously. Identify the technique A. B. C. D.

Brainstorming Delphi technique Checklist analysis Root cause analysis

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Question 14. Which one of the following techniques helps to reduce bias in the data and keeps any one person from having an undue influence on the outcome? A. B. C. D.

Brainstorming Delphi technique Checklist analysis Root cause analysis

Question 15. Which one of the following techniques is simple and quick but cannot be made exhaustive? A. B. C. D.

Brainstorming Delphi technique Checklist analysis Root cause analysis

Question 16. A list of potential responses to risk may sometimes be identified during the Identify Risk process itself. A. True B. False Question 17. Which of the following statements on the risk analysis process is not true? A. Establishing definitions of the levels of probability and impact can reduce the influence bias. B. The time criticality of risk-related actions may magnify the importance of a risk. C. An evaluation of the quality of the available information on project risks helps clarify the assessment of the risk’s impact on the project. D. The Perform Qualitative Risk Analysis process is usually a quick and cost effective means of establishing priorities. Question 18. Risk impact assessment investigates the likelihood of each specific risk event occurring. A. True B. False Question 19. Risk probability assessment investigates the potential effect of risk on project objectives. A. True B. False

286 • PMP® Certification—Excel with Ease Question 20. Which of the following distributions represents the uncertainty in values such as duration of schedule and cost of project components? A. B. C. D.

Discrete distributions Continuous distributions Uniform distributions Uneven distributions

Question 21. Which of the following distributions can be used to represent uncertain events such as the outcome of a test or possible scenarios in a decision tree? A. B. C. D.

Discrete distributions Continuous distributions Uniform distributions Triangular distributions

Question 22. Which of the following distributions can be used only if there is no obvious value that is more likely than any other between specified high and low bounds? A. B. C. D.

Discrete distributions Continuous distributions Uniform distributions Triangular distributions

Question 23. Which of the following techniques helps to determine risks that have the greatest potential impact on the project? A. B. C. D.

Compact analysis Sensitivity analysis EMV analysis Requirement analysis

Question 24. Which of the following tools is an example of sensitivity analysis? A. B. C. D.

Flow diagram Process diagram Tornado diagram EMV diagram

Question 25. EMV requires a risk averse or risk seeking assumption. A. True B. False

Question 26. EMV for a project is calculated by A. subtracting each possible outcome from its probability of occurrence and adding all probabilities. B. multiplying each possible outcome by its probability of occurrence and finding the maximum value. C. multiplying each possible outcome by its probability of occurrence and adding the results. D. dividing each possible outcome by its probability of occurrence and adding the results. Question 27. Which one of the following risk response techniques involves changing the project management plan to eliminate threat entirely? A. B. C. D.

Transfer Avoid Accept Mitigate

Question 28. Shutting a project down on account of the high risks it entails is an instance of which type of risk response technique? A. B. C. D.

Transfer Avoid Accept Mitigate

Question 29. Outsourcing a part of a project’s work is an instance of which type of risk response technique? A. B. C. D.

Transfer Avoid Accept Mitigate

Question 30. Suppose that you, as a project manager, have decided to transfer part of the risk in a project to a third party. All of the following are examples of risk transfer except A. B. C. D.

insurance. performance bonds. guarantees. prototype.

Project Risk Management

Question 31. Use of a cost plus contract may transfer the cost risk to the -------. A fixed price contract may transfer risk to ----------. A. B. C. D.

Seller, buyer Buyer, seller Seller, seller Buyer, buyer

Question 32. Taking early action to reduce the probability and/or impact of a risk event occurring during a project’s execution is an instance of which type of risk response technique? A. B. C. D.

Transfer Avoid Accept Mitigate

Question 33. Establishing better processes at a cost of implementation is an instance of which type of risk response technique? A. B. C. D.

Transfer Avoid Accept Mitigate

Question 34. Adopting less complex processes in a project although the project carries nonnegligible risks is an instance of which type of risk response technique? A. B. C. D.

Transfer Avoid Accept Mitigate

Question 35. Maintaining a contingency reserve to handle risks is an instance of which type of risk response technique? A. B. C. D.

Transfer Avoid Accept Mitigate

Question 36. Which of the following strategies can be used to counter negative as well as positive risk events? A. B. C. D.

Transfer Avoid Accept Mitigate

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Question 37. All of the following are examples of positive risks except A. B. C. D.

exploit. share. accept. mitigate.

Question 38. Incurring considerable costs to ensure a successful project outcome is an instance of which type of risk response technique? A. B. C. D.

Exploit Share Accept Mitigate

Question 39. Suppose that a government invests considerably in private–public partnerships. Which of the following techniques the government is implementing? A. B. C. D.

Share Exploit Accept Mitigate

Question 40. Monitor and Control risks can involve all of the following except A. B. C. D.

Choosing alternative Strategies Executing a fallback plan Taking correction action Analyzing the Risk

Question 41. The Monitor and Control Risks process often results in all of the following except A. B. C. D.

identification of new risks. reassessment of current risks. closing of risks that are outdated. reassessment of new risks.

Question 42. Comparing the amount of contingency reserve remaining to the amount of risk remaining at any point in time in a project is called A. B. C. D.

risk analysis. reserve analysis. contingency analysis. project analysis.

288 • PMP® Certification—Excel with Ease Question 43. Management reser ves are used to handle which of the following types of risk? A. B. C. D.

Pure risks Business risks Financial risks Unknown unknowns

Question 44. When should risk identification be performed? (Select best among options provided) A. B. C. D.

During initiation phase During planning phase During execution phase Risk identification should be performed throughout the project on regular basis

Question 45. If a project has a 60% chance of a US $200,000 profit and a 40% chance of a US $200,000 loss, the EMV of the project is A. B. C. D.

US $40,000 profit. US $80,000 loss. US $30,000 profit. US $40,000 loss.

Question 46. A project’s procedures for managing risk would be documented in its A. B. C. D.

risk register. risk management plan. risk response plan. risk identification plan.

Question 47. If a risk has a 15% chance of materializing in any given month, and if the project is expected to last 6 months, the probability that this risk event will occur during the last month of the project is A. B. C. D.

15% 90% 40% 50%

Question 48. A risk trigger is also called as A. B. C. D.

scope point. kill point. warning sign. phase end point.

Question 49. An anonymous poll with experts in the insurance domain to gather domain related risks is an instance of A. B. C. D.

brainstorming. the Delphi technique. a warning sign. risks gathering.

Question 50. How often should identification of risk take place in a large, complex project involving first-time use of a particular technology? A. Only when the project manager is free B. One per phase C. Throughout the project D. One in the planning phase

Project Risk Management

Answer Sheet for Chapter 8 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

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290 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 8 Questions

Question Number

Answer

Question Number

Answer

Question 1

D

Question 26

C

Question 2

B

Question 27

B

Question 3

D

Question 28

B

Question 4

C

Question 29

A

Question 5

C

Question 30

D

Question 6

A

Question 31

B

Question 7

A

Question 32

D

Question 8

D

Question33

B

Question 9

B

Question 34

C

Question 10

D

Question 35

C

Question 11

A

Question 36

C

Question 12

A

Question 37

D

Question 13

B

Question 38

A

Question 14

B

Question 39

A

Question 15

C

Question 40

D

Question 16

A

Question 41

D

Question 17

C

Question 42

B

Question 18

B

Question 43

D

Question 19

B

Question 44

D

Question 20

B

Question 45

A

Question 21

A

Question 46

B

Question 22

C

Question 47

A

Question 23

B

Question 48

C

Question 24

C

Question 49

B

Question 25

B

Question 50

C

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Explanations for Chapter 8 Answers 1. Answer D Option A is the definition of Plan Risk Management Process. Option B is the definition of Perform Qualitative Risk Analysis. Option C is the definition of Plan Risk Response Process. Option D is the definition of Project Risk Management. (Risk Management includes Planning, Identify and Analyze Response and Control). 2. Answer B Numerical analysis is part of Quantitative Risk Analysis. (Quantifying the Value). Qualitative Risk Analysis just qualifies the parameter as High, Low, and Medium. Quantitative Risk Analysis quantifies the risk as a numerical value. 3. Answer D The best option is Monitor and Control Risk Process. The monitor and control risk process is performed over the lifecycle of a project. Risk Process effectiveness is monitored through the Controlling process and may result in changing the parameter value, changing the response plan, identifying new risks etc. 4. Answer C The process of developing actions and options to tackle risk is part of Plan Risk Response Process. It helps to increase the Opportunity and reduce Threats. 5. Answer C We need to choose the FALSE Option (not true). The definition of Project Risk itself indicates that the event or condition that will affect the project. Since it may affect any of the project objectives it is being called as Project Risk. Risk is uncertain in nature. Risk may or may not occur. A single risk can have more than one impact. For example Customer delaying the signoff beyond a period may affect the Schedule, Cost of the project, quality (due to re work). 6. Answer A Risk is tolerated up to a particular point called as Risk Tolerance Limit. For Example Customer delaying the signoff beyond a period may affect the Schedule, Cost of the project and Quality (due to re-work). Schedule may not get affected immediately because of this risk, but beyond a limit (tolerance) the project schedule will get affected.

7. Answer A Risk of the project is born the moment the project is conceived. Risk (uncertainty) will be present in the project from the beginning until the closure of the project. 8. Answer D Any Process definition is part of the Risk Management Plan. Risk Management Plan is associated with the process of identifying the Risks of the Project, the process of analyzing the Risks of the Project, the process of identifying the risk response, and the process of monitoring and controlling the risk. Risk management plan is the output of the Plan Risk Management process. The process of Plan Risk Management begins as soon as the project is conceived and is completed early during the project planning. 9. Answer B Risk Management plan is the output of the Plan Risk Management process. The process of Plan Risk Management begins as soon as the project is conceived and is completed early during the project planning. Risk Management plan has Risk categories which help in classifying risks, Budgeting which helps in creating an appropriate plan, and Timing which helps in deciding when to do what. 10. Answer D Risk management plan is the output of the Plan Risk Management process. Risk management plan has Risk categories which help to classify risks, Budgeting which helps to plan appropriate plan, and Timing which helps when to do what. List of Risk is part of Risk Register (Project document) and it is not part of the Project Plan. 11. Answer A Risk management plan has Risk categories which help to classify risks. It provides a structure that ensures a comprehensive process of systematically identifying risks to a consistent level of detail. 12. Answer A All Project stakeholders should be encouraged to identify Risks. The Project Manager needs to involve all stakeholders including customers to identify the risks related to the project. The customer should be part of the Risk Management process which helps to address risks that need his attention.

292 • PMP® Certification—Excel with Ease 13. Answer B Delphi technique helps to identify the risks. The participants of this technique are independent experts who express their views anonymously to the session moderator. The results are accumulated by the moderator and then shared with all the participants (experts).

21. Answer A A probability distribution assigns a probability to each of the possible outcomes of a random experiment. Discrete distribution helps to make discrete decision. Decision tree is an example. The outcome of a test or possible scenario is represented using discrete distribution.

14. Answer B Delphi technique helps to identify the risks. The participants of this technique are independent experts who express their views anonymously to the session moderator. This technique reduces the bias in the data and prevents the views of any one person from having undue influence on the outcome.

22. Answer C A probability distribution assigns a probability to each of the possible outcomes of a random experiment. Uniform distribution can be used only if there is no obvious value that is more likely than any other between specified high and low bounds.

15. Answer C Checklist can be used to identify risks. Checklist can be prepared based on historical information available on similar projects. The lowest level of Risk Breakdown structure can also be used as Checklist. It is simple and quick. It is very difficult to make an exhaustive checklist. 16. Answer A Risk response can be formulated during the Identify Risk process itself provided the risk response level is known and clarified. 17. Answer C We need to choose the FALSE option (not true). Perform Qualitative Risks Analysis is quick and cost-effective. Time criticality may magnify the importance of the risk. Influence bias can be reduced by having sufficient details. 18. Answer B Risk probability assessment investigates the stated likelihood of occurrence of the risk. Risk impact assessment investigates the potential effect on project objectives such as Cost, Schedule and Quality. 19. Answer B Risk probability assessment investigates the stated likelihood of occurrence of the risk. Risk impact assessment investigates the potential effect on project objectives such as Cost, Schedule and Quality. 20. Answer B A probability distribution assigns a probability to each of the possible outcomes of a random experiment. Continuous distribution represents the uncertainty in values such as Duration and Cost.

23. Answer B Sensitivity Analysis is the study of how the uncertainty in the output of a mathematical model or system (numerical or otherwise) can be apportioned to different sources of uncertainty in its inputs. Sensitivity Analysis helps to determine the risks that have the greatest potential impact on the project. Tornado diagram helps in sensitivity analysis. 24. Answer C Tornado diagram helps in sensitivity analysis. Tornado diagrams, also called tornado plots or tornado charts, is a special type of Bar chart, where the data categories are listed vertically instead of the standard horizontal presentation, and the categories are ordered so that the largest bar appears at the top of the chart, the second largest appears second from the top, and so on. They are so named because the final chart appears to be one half of a tornado. 25. Answer B EMV stands for Expected Monetary Value. It requires a Risk averse or Risk seeking assumption. 26. Answer C EMV stands for Expected Monetary Value. EMV of a project = Sum (P * C), where C is the possible outcome and P is the probability of occurrence of that event. 27. Answer B Changing the plan to eliminate threat entirely is an example for Avoid. We change the plan in order to Avoid.

Project Risk Management

28. Answer B Shutting a project down is also way to Avoid the risk. 29. Answer A Outsourcing is a way to transfer risk to some other third party. Outsourcing and insuring through insurance companies are examples of transferring risk to third parties. Insurance, Guarantees and Performance bonds are examples of Risk Transfer. 30. Answer D Outsourcing and insuring through insurance companies are examples of transferring risk to third parties. Insurance, Guarantees and Performance bonds are examples of Risk transfer. Prototype may be an example of mitigation. 31. Answer B In Cost plus Contract, a buyer takes more Risks, whereas in Fixed Bid project, the seller takes more risks. 32. Answer D Prototype may be an example of mitigation. Taking proactive action reduces the probability/ impact of a risk. Prototype is prepared to avoid risks related to Requirement Clarifications. 33. Answer B Avoid means taking a different direction. Establishing a better process to tackle risk is an example of mitigation. We are not avoiding here. We take action and do something better. Hence, it is called as mitigation. 34. Answer C Avoiding strategy attempts to eliminate a specific threat by eliminating its cause whereas the mitigation strategy tries to reduce the impact of the risks (doing a prototype). 35. Answer C Contingency reserve is maintained to accept the risks. Accepting a risk event is the only technique that helps to handle negative and positive risks. 36. Answer C Accepting a risk event is the only technique that helps to handle negative and positive risks. Both positive and negative risks are accepted. Negative risks are accepted when the impact is less and positive risks are accepted by default.

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37. Answer D Risk mitigation is the technique to counter negative Risks. When a project is executed with inexperienced people, giving proper training to the people is risk mitigation. 38. Answer A Exploit is the risk response strategy to tackle positive risks. This strategy attempts to ensure that the opportunity event occurs. For example, the most talented resource in a project team may be assigned to a demanding task to reduce project duration. 39. Answer A Share is the strategy which aims to allocate part of the ownership of an opportunity to a third party to ensure that the opportunity event occurs, while decreasing the cost associated with the risk event. Joint venture enterprise is an example of risk sharing. PPP is also an example of the same. 40. Answer D Monitor and Control Risks involve identification of new risks, choosing alternative strategies, executing fallback plan, taking corrective action etc. Analyzing the risk is part of “Perform Quantitative Analyses” and “Perform Qualitative Analysis”. 41. Answer D Monitor and Control Risks involve identification of new risks, choosing alternative strategies, Reassessment of new risks, executing fallback plan, taking corrective action etc. Re-assessment of new risks is often a result of Monitor and Control Risk process. 42. Answer B Reserve Analysis compares the reserve (contingency reserve) against the amount of Risks remaining. 43. Answer D Management reserve is used to tackle Unknown– Unknown Risk. Management reserve is blindly added irrespective of the risks in the project. Usually 10 to 15 percent is added as Management Reserve. 44. Answer D Risk Identification happens throughout the lifecycle of the project. Risk Identification happens in all process groups and in all phases of the project.

294 • PMP® Certification—Excel with Ease 45. Answer A EMV = (0.6 * 20,000 ) – (0.4 * 20,000) = 40,000 USD 46. Answer B Risk Management Plan is associated with the process of identifying the Risks of the Project, the process of analyzing the Risks of the Project, the process of Identifying the Risk Response, and the process of Monitoring and Controlling the Risk. Risk Management plan is the output of the Plan Risk Management process. The process of Plan Risk Management begins as soon as the project is conceived and it gets completed early during the project planning. 47. Answer A The value is given for any given month (starting from 1 to end of the Project) and hence the risk has 15% chance of occurrence.

48. Answer C Risk trigger indicates that risk is going to happen. Risk trigger is also called as warning sign. 49. Answer B Delphi technique helps to identify the risks where the participants are experts and also anonymously participated. It reduces the bias in the data and keeps any one person from having undue influence on the outcome. 50. Answer C Risk identification happens throughout the lifecycle of the project. It does not happen during the planning phase along. It does not happen on a weekly basis, every Friday. It does not happen when the project manger is free. It does not happen when the quality reviewer reviews your project.

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Key Terms Amount at stake The extent of adverse consequences in dollar terms (Also referred to as risk impact). Business risk The inherent chances for both profit and loss associated with business activities. Contingency planning Alternative strategies to be used if specified risk events occur. Contingency reserve A separately planned quantity for “unknown unknowns” and are intended to reduce the impact of missing cost or schedule objectives, included in the project’s cost and schedule baselines. Deflection Transferring all or part of a risk to another party, usually thru contract. Enhance This strategy modifies the size of an opportunity by increasing probability and/ or positive impacts, and by identifying and maximizing key drivers of these positive-impact risks. Expected monetary value Multiplication of an event’s probability of occurrence and the gain or loss that will result. Impact analysis Examining the nature of individual risks on the project and potential arrangements of interdependent risks. Insurable risk Risk covered by an insurance policy and is also referred to as a pure risk. Management reserve A separately planned quantity to reduce the risk of missing cost or schedule objectives and requires a change to the project’s cost baseline.

Mitigation Action plan to reduce the probability/ impact of a risk to an acceptable threshold Monte Carlo analysis A schedule risk assessment technique to calculate a distribution of likely results using simulation. Opportunities Positive outcomes of risk. Project risk management Processes concerned with identifying, analyzing, and responding to project related risk. Risk identification Determining risks event which are likely to affect the project. Risk management plan Part of the overall project plan which documents the procedures that will be used to manage risk which covers who is responsible for managing various risk areas; how contingency plans will be implemented, and how reserves will be allocated. Risk quantification Process of evaluating the probability of risk event occurrence and effect. Risk response development Steps for opportunities and threats. Threats Negative outcomes of risk. Total certainty All information is known without confusion. Total uncertainty No information is available and total confusion. Transference Shift the consequence of the threat to third party. Work-around A response to a negative risk event and is not planned in advance of the occurrence of the risk event.

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9 Communication Management CHAPTER COVERAGE 1. Dimensions of Communication 2. Forms of Communication 3. Process of Communication 4. Communication Channels 5. Barriers to Communication 6. Effective Team Meetings

INTRODUCTION Communication management refers to the process of timely and appropriate development, collection, dissemination, storage, and disposition of project related information. Generally, more than 90% of a project manager’s time goes for communication. Project managers generate a communication management plan, prepare reports based on it, ask and discuss with stakeholders about their needs, identify what communication processes they need, and frequently revisit communication needs of stakeholders at team meetings to avoid communication related problems. The above activities of project managers clearly state that whatever a project manager does is related with communication. The PMBOK has indentified three communication processes, each of which will be discussed in detail later in this chapter. 1. Plan Communication: This process determines the information needs of project stakeholders and establishes a communications system. 2. Manage Communication: The Manage Communication process accomplishes the following tasks: (a) providing project stakeholders the needed information when required, (b) implementing the communication management plan, and (c) responding to unexpected requests for information. 3. Control communication: The Control Communication process is one of collecting and presenting performance stakeholders with information on how resources are being used to achieve project objectives. Project performance is measured against the performance measurement baselines defined in the project management plan.

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Exercise 9.1

List at least 10 points that a project manager would be required to communicate to stakeholders in a project.

The Dimensions of Communication Project managers are always at the centre of communications and the primary key to success in their role is understanding the various ways to interact with different stakeholders and also with others inside and outside of an organization. There are different dimensions of communications such as internal vs. external, formal vs. informal, vertical vs. horizontal, official vs. unofficial, written vs. oral, verbal vs. nonverbal. Choosing a particular dimension depends on the situation, context in which the communication evolves and also the purpose of the communication. About 55% of communications are nonverbal communications. Refer Figure 9.1 for various dimensions of communications along with the purpose of each dimensions.

The Forms of Communication The term forms of communication refers to the physical medium using which communication is made. In organizational contexts, such media may be formal or informal, oral or written. The choice of the form of communication to be used to make a communication varies over situations, priorities, and organizational cultures. Forms of Communication in Organizations Form of Communication

Characteristic

Examples

Written formal

Precise; transmitted through the medium of correspondence

Project charter, scope statement, project plan, WBS, project status, contract related communication

Written informal Oral formal Oral informal

e-mails, notes, memos, letters High degree of flexibility; use the medium of personal contact, group meetings or telephone

Presentations, speeches Conversations with team members Project meetings Break room or war room conversations

Nonverbal communication

About 55% of total communication

Facial expressions, hand movements, tone of voice while speaking.

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Internal Vs External Internal means with the project team External means with customers, other projects, media Formal Vs Informal Formal includes memos, reports, briefings Email and adhoc communications are informal Vertical Vs Horizontal Vertical means communication with peers at the same level Official Vs Unofficial Newsletters and annual reports are official communication Off the record communication are unofficial communication Written Vs Oral Any documents in writing can be classified as Written Verbal Vs Nonverbal Nonverbal communication includes voice fluctuation and body language About 55% of communication are nonverbal communication

Figure 9.1 The dimensions of communication Figure 9.2 shows the typical activities handled by project managers that draw on their communications skills. In view of the criticality of the effectiveness of these activities for project success, you may guess how important communications skills are to successful project management.

The Process of Communication The actual process of communication involves three components: sending the communication, receiving the communication, and eliciting feedback on the communication made. A fourth component could be understanding of the possible organizational barriers to effective communication. Organizations address these barriers to communication, establish formal procedures for communication, and thereby facilitate the aforementioned three components (see also Figure 9.3). Sending messages. There are four elements involved in sending a message: (1) formulate the message of communication, (2) consider possible barriers to the communication that is going to be made, (3) encode the message, and (4) clearly communicate (send) the message. Formulating the message to be communicated is an art. First the sender needs to be clear in what he communicates, why he communicates; the message should not give dubious meaning and it should be clear and accurate. The format of the message also varies depending on the

300 • PMP® Certification—Excel with Ease Setting and Managing Expectations

Fact Finding Skills

Probing Ideas for Better Understanding

Resolving Conflicts Communication Skills required for Project Manager

Listen Actively and Effectively

Identifying Next Steps

Figure 9.2 Activities that entail good communications skills in a project manager Sender

Encode

Transmit

Decode

Receive

Feedback

Figure 9.3 The three main processes involved in communication are sending, receiving, and feedback type of message (formal vs. informal), choosing appropriate formats is also important for communication. The sender should consider the different barriers to communication such as 1. Lack of clear communication channels—using email, where the server is not working properly. 2. Garrulous and voluble communication—we should not communicate to others rapidly without determining the understanding level of other persons. 3. Physical distance—People sitting in different physical working areas separated from each other. 4. Jargons used in technical communication—Using technical jargons are to be avoided when communication with different groups. For example, RAM means both Random Access Memory and Responsibility Assignment Matrix. 5. Distracting environmental factors—Background noise in working environments is a good example.

Encoding the Message Converting the message which is feasible enough to communicate directly. For example, our voice message should be converted to digital signal before transmitting it through media. Receiving messages. Recipients receive the message, but the latter is generally affected by external barriers and the recipient’s own internal barriers, if any. Possible internal barriers are the recipient’s experience level, understanding of the message, and attitude toward the subject

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matter of the communication made or the sender. Recipients decode the message contained in the communication received through the use of mental images. Our human mind always links the message with the information that we already know in order to understand the message clearly. For example, “sky blue” color is more understandable instead of saying light blue color. Feedback. After a communication has been made, the senders generally confirm on the receipt of the message contained in the communication. This process of eliciting feedback may entail the sender asking the receiver questions, such as, “Do you understand what I say?”

Exercise 9.2

Match the following on the basis of the type of communication

Writing proposal for a client

Informal written

Writing requirement documentation for a client Formal verbal You send email to a team member asking more information about a project issue

Formal written

You run a power point presentation to your senior management

Formal written

Figures 9.4A and 9.4B show flowcharts of communication management flow processes.

THE PLAN COMMUNICATIONS MANAGEMENT PROCESS The Plan Communications Management process (Figure 9.5 and Table 9.1) is one of determining the information needs of project stakeholders and establishing a communications system that (1) identifies information that is required by each stakeholder, (2) provides that information to stakeholders when they need it, (3) determines the manner in which the information is to be disseminated to stakeholders, and (4) specifies and authorizes individuals to disseminate information. Effective communication is said to have been made when information has been provided in the right format, at the right point in time, and with the right impact on both the sender and receiver. Here, “right impact” means that the purpose of passing the message should be achieved. For example, if you are send a message stating a proposed delay in a project along with the reasons for the delay, the client, on getting the message, should accept the delay and the reasons you describe. That is effective communication. Efficient information, on the other hand, refers only to the process of providing the required information when needed. The Plan Communications Process is tightly linked with the enterprise environmental factors of the organization, and therefore, organizational structure has a major impact on project communication requirements. The communication management plan, which is the output of plan communication process is reviewed regularly and revised as needed to ensure continued applicability.

Tools and Techniques of the Plan Communications Management Process Communications Requirements Analysis A communications requirements analysis is made to collect information requirements of all project stakeholders. Techniques of the Collect Requirements process (discussed in Chapter 4) may be used to gather communication needs of stakeholders. The following formula can be used to determine the number of possible communication channels in a project team.

302 • PMP® Certification—Excel with Ease A

Develop Project Charter

Project Charter Project Management Plan

Define Scope

Sc Sta ope tem ent

Enterprise Environmental Factors

Plan Communication Management

Approved CR

Communication Management Plan Project Documents Update

Approved Corrective Actions

Manage Communication

M

OPA

Co m et mu ho n do ica log tio y n

t arn Le e ns as so B s Le ge led ow Kn

Develop Project Management Plan

Approved CR WPI

Control Communication

Recommended Corrective Actions Requested Changes

Perform Integrated Change Control

B

Develop Project Management Plan

Approved CR

Identify Stakeholders Stakeholder Management Strategy

Approved Corrective Actions

Stakeholder Register Communication Management Plan Update Project Management Plan Update

Close Project

OPA Update Resolved Issues

Manage Stakeholder Expectations

Change Requests

Perform Integrated Change Control

Figure 9.4 A, B: Communication Management Flow N(N1) 2 Here, N refers to the number of team members. Therefore, if there are 6 resources in a project team, there would be 15 communications channels between them. Number of communication channels 

PMP WATCH There would be a few questions on communication channels that would involve use of the formula N(N  1)/2 (see text).

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Tools and Techniques • Communications requirements analysis • Communications technology • Communication

Models Inputs

• Communication Methods

• Project Management Plan • Enterprise environmental factors • Organizational process assets

Outputs • Communication management plan • Project Document Update

Figure 9.5 The inputs, tools, and outputs of the Plan Communication Management Process

Communication Technologies Communication technologies are used to transfer information back and forth among project elements. Communications can take place in many ways: face to face, via fax, via e-mail, over phone, or by net meetings, video conferences etc. The choice of which technology to use is based on the following factors: • • • • •

Urgency of the need of information Availability of the technologies identified Expected project staffing of the project Duration of the project using the technology Project environment where communication technologies are applied

Discussion Points How urgency of required communication influences the choice of the communication technology used? (Clue: e-mail versus phone) How availability of a communication technology influences communication? (Clue: video conference versus audio conference)

Table 9.1 Plan Communication Management – Planning Process Group Planning

Plan Communication Management

Executing

Manage Communication

Monitoring and Controlling

Control Communication

304 • PMP® Certification—Excel with Ease Communication Methods There exist three types of communication methods: push communication, pull communication, and interactive communication. Push communication. Here, a communication is sent (pushed) to the receiver without confirmation or certification as whether it has reached the intended recipient (e.g., letters, e-mails, faxes). Pull communication. Here, recipients access the communication (pull) at their discretion. Pull communication methods are employed when large volumes of information need to be transferred (e.g., intranet). Interactive communication. Here, both the push method and pull methods are used (phone, video conferencing). PMP WATCH Understand the different types of communication methods and the advantages and disadvantages of each type.

Output of the Plan Communications Management Process The output of the Plan Communications process is a communication management plan, which documents management and control of communications. The communication management plan becomes part of the project management plan and contains the following elements: • • • • • • •

Stakeholder communication requirements Collection and filing structure of various pieces of information Escalation process Description of information to be distributed Production schedules Methods for accessing information Methods of updating and refining the communication management plan as the project progresses

Discussion Points Why would you establish one communication management plan for a colocated team and a different one for a fully virtual team?

THE MANAGE COMMUNICATION PROCESS The Manage Communication process (Figure 9.6 and Table 9.2) addresses the following tasks: (1) providing project stakeholders needed information when required, (2) implementing the communication management plan, and (3) responding to unexpected requests for information. Effective distribution of information includes a number of techniques such as choosing appropriate sender-receiver models, correct choice of communication media, writing style of the message, presentation methods, facilitation, etc. • Sender–Receiver models: An appropriate sender-receiver model is based on aspects such as whether it is a one-to-one communication or one-to-many communication, a push communication (email) or pull communication (records retrieval), etc.

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Tools and Techniques • Communication Methods • Information-distribution systems

Inputs • Project management plan • Work Performance Information • Organizational Process Assets

Outputs • Organizational process asset Update

Figure 9.6 The inputs, tools and outputs of the Manage Communication Process

• Choice of media: Choosing the right media to convey information will make the process effective. For example, some types of information can be passed on through e-mail, while others may be best disclosed face-to-face. • Writing style of the message: Key elements that make an e-mail (or any other message effective) include choosing an appropriate and meaningful “subject line”, use of proper salutation in the message, correct sentence structure, and appropriate use of active and passive voice. • Meeting management techniques: Agenda, conflicts • Presentation styles: Body language • Facilitation techniques: Building consensus Although several techniques exist for managing communication, team meetings continue to be the most preferred. The following may be used as guidelines for conducting effective team meetings: • • • • • • • •

Set and enforce strict time lines for meetings Meet team members regularly but not frequently as it may distract them from their work. Involve team members to generate agenda for the meeting Ensure that only point on the agenda are discussed Distribute the agenda beforehand to members Revisit the minutes of previous meetings and address pending action items, if any Let team members know what is expected out of them in advance Invite only those team members to meetings who are required for the meeting

Table 9.2 Manage Communication – Executing Process Group Planning

Plan Communication Management

Executing

Manage Communication

Monitoring and Controlling

Control Communication

306 • PMP® Certification—Excel with Ease • Set and enforce ground rules for discussions in meetings • Document and communicate minutes of all meetings

Tools and Techniques of the Manage Communication Process Communication methods used for information distribution include individual and group meetings, and video and audio conference sessions. The following table presents the two techniques involved in handling of project information. Information Gathering and Retrieval Systems Technique

Examples

Information gathering and retrieval systems

Manual filing systems, electronic-text databases, project management software, systems that allow access to technical documentation such as engineering drawings

Information distribution methods

Project meetings, hard-copy document distribution, shared access to networked electronic databases, faxes, e-mails, voice mails, and video conferencing sessions

Discussion Questions Which Communication method you will use in which Scenario? For Example: When will you use Video Conference and when will you use Audio conference, Computer Charts? What factors influence the selection of the method described above?

Discussion Questions What are all the disadvantages of using manual filing systems? What are all the advantages and disadvantages of using electronic database system? How will you overcome the disadvantages?

THE CONTROL COMMUNICATION The Control Communication process (Figure 9.7 and Table 9.3) is one of collecting and presenting performance information to stakeholders on how resources are being used to achieve project objectives. Project performance is measured against the performance measurement baselines defined in the project management plan. There are different types of performance reports: • Status report. This report presents the current status of a project. • Forecasting report. This report presents an estimate of future project status. • Trend report. This report presents an analysis of project results over time to check whether performance has improved or deteriorated. • Variance report. This report presents a comparison of actual results and baseline targets Performance reports generally provide information on scope, schedule, cost, quality, and possibly risks and lessons learned. They represent a basis for corrective actions and mid-course corrections, if any.

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Tools and Techniques • Expert Judgments • Meetings • Reporting Systems

Outputs Inputs • • • • •

Project Management Plan Communication Management Plan Issue Log Work Performance Data Organization Process Asset

• Work Performance Information • Organizational process assets (updates) • Change Requests

Figure 9.7 The inputs, tools and outputs of the Control Communication Process

Tools and Techniques of the Control Communication Process The following two tools are widely used forecasting methods, which help to prepare performance reports: Time-series methods. These techniques are used to make forecasts on the basis of past patterns in available data. Time is set as an independent variable to forecast demand. Measurements are taken at successive points or over successive periods, for example, every hour, day, week, month, or year, or at any other regular (or irregular) interval.

Judgemental Methods They incorporate intuitive judgments based on opinions and subjective estimates. Forecast by analogy, composite forecasts, Delphi method, and scenario building (analyzing possible future events based on different possible outcomes) are examples of judgmental method. Causal/econometric methods. Such techniques use the assumption that the underlying factors that influence the forecast variable may be identified with confidence. For example, use of  many trainees in a project as key resources would lead to more escalations in the project: If causes are understood, projections of the influencing variables may be forecast. ARMA, regression analysis, and nonlinear regression are examples of causal econometric methods. Table 9.3 Control Communication – Controlling Process Group Planning

Plan Communication Management

Executing

Manage Communication

Monitoring and Controlling

Control Communication

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Communication Methods These methods are used to exchange the information about the project progress and performance. They are also used to analyze the project performance and progress. The project manager generally uses a push communication technique.

Reporting Systems Standard tools to capture, store, and distribute the needed information to stakeholders are helpful for a project manager for reporting the performance and progress of the project.

Expert Judgment Here, the expertise gained from similar projects worked on earlier is used to manage and control communication/ process of communication management. Dos and Don’ts are implemented based on the expertise gained from previous projects.

Meetings In order to control the communication and also to make the control realistic and accepted by the entire team, it is better to conduct team meetings. This meeting should also be attended by other stakeholders such as project sponsors and others who have a stake in the project. The project manager can also conduct this meeting with selected team members to control the communication. The project manager has to ensure through the selected few that communication is happening as per the Communication Management Plan.

OUTPUT OF THE CONTROL COMMUNICATION PROCESS Work Performance Information Work performance data collected is analyzed in context to infer information based on the relationship between the various measured parameters. This is called as Work Performance Information (WPI). Examples: 1. 2. 3. 4.

Schedule variance Cost variance Estimate at complete (EAC) Estimate to complete (ETC)

Work Performance Reports It is the physical or electronic representation of work performance information compiled in a logical fashion to infer the overall status of the project, which helps to take decisions and initiate actions. Examples: 1. Weekly Status Reports 2. Project Justifications The main output of the process is the performance report. It organizes and summarizes project performance information. Results of analysis are compared with the performance measurement baseline to infer more meaning. Performance reports are detailed to the level of detail required by various stakeholders, as documented in the communications management plan.

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Common Formats for Performance Reports There are different formats of performance reports like bar charts, S-curves (refer Cost Management, Chapter 6), histogram (refer Quality Management, Chapter 7, Figure 7.16), tables, variance analysis report, earned value analysis (refer Cost Management, Chapter 6). Bar Charts: A bar chart is a chart with rectangular bars with its length proportional to the values they represent on the X-axis. These bars can also be plotted horizontally with the values represented on the Y-axis. PMP WATCH Forecasting methods include time-series methods, causal econometric methods, and judgmental methods.

A project manager with effective team-communication skills would • • • •

be an effective communicator of project information. avoid communication blockers wherever possible. use a single office if possible for all project team members. make meetings effective by preparing agendas and follow-ups.

Summary Memos, emails are examples of non-formal communication, Reports, Metrics are example of formal communication. Approximately 70–90% of project manager’s time goes only for communicating. PM’s spend ~50% of his time in meetings. Formula for calculating Number of communication channel is n*(n  1)/2 where n is the number of people involved.

Communication Methods: Exercise 9.1 Possible Answers Project management plan When you need resources? Meeting schedule to all required Project schedule to all stakeholders Work assignments to the team Status of the project Problems you have on the project Success stories of the project Upcoming work to the team Delays to the customer Contact information for all stakeholders Communicating process to be followed to all

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Exercise 9.2 Answers Writing proposal for a client

Formal written

Writing requirement documentation for a client

Formal written

You send email to a team member asking more information about a project issue

Informal written

You run a power point presentation to your senior management

Formal verbal

Chapter 9 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. The processes required for ensuring timely and appropriate generation, collection, distribution, storage and retrieval, and ultimate disposition of project information is called A. B. C. D.

project report management. project record management. project communication management. project information management.

Question 2. How much percentage of a project manager’s time is spent on communication? A. B. C. D.

62% 70% 82% 90%

Question 3. The process of making relevant information available to project stakeholders is called A. B. C. D.

Project Reports. Manage Communication. Control Communication”. Plan Communication.

Question 4. You are the project manager for ABC Project. The Management has requested you to create a document detailing the information that can be expected from the stakeholders of the project and to whom that information will be disseminated. You are being asked for which one of the following? A. B. C. D.

Work Performance Information Scope Management Plan Communications Management Plan Risk Management Plan.

Question 5. You are the project manager for ABC Project. The Management has requested you to update the Escalation Management Plan. Escalation Management plan is part of which document? A. B. C. D.

Work Performance Information Scope Management Plan Risk Management Plan Communication Management Plan

Communication Management

Question 6. The project status report is an example of which form of communication? A. B. C. D.

Formal written communication Informal written communication Informal verbal communication Informal verbal communication

Question 7. You are the project manager for ABC Project. With 20 stakeholders, you have added two new team members to the project. How many more communication channels do you have now? A.190 B. 231 C. 41 D. 18 Question 8. Suppose that you hand over your project to a new project manager, who wishes to see a document depicting which stakeholder needs what information, when, how, and from whom. Which among the following documents would you give him? A. The project’s stakeholder managment plan B. The project’s communication maagment plan C. The project’s scope management plan D. The project’s quality management plan Question 9. Effective communication refers to relevant information being provided in the right at right and in the right . A. B. C. D.

Format, time, impact Meaning, quality, analysis Format, time, language Meaning, time, impact

Question 10. What would a project manager mean by efficient communication? A. Providing information without errors B. Providing only the information that is needed C. Providing the information with quality D. Providing the information to the right person

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Question 11. The Plan Communications process is closely linked to A. B. C. D.

scope. schedule. enterprise environmental factors. organization process assets.

Question 12. A project team comprising 11 stakeholders has communication channels. A. B. C. D.

11 10 55 66

Question 13. Your project, which previously had 10 stakeholders, now has 2 more. How many new communication channels would you now have to address? A. B. C. D.

45 66 21 26

Question 14. Suppose that a customer gives you a requirement document and asks your team study it. Who is the encoder in this communication? A. B. C. D.

The project manager A project team member The customer The performing organization

Question 15. Anything that interferes with the transmission and understanding of a communication is called A. B. C. D.

an encode. a decode. noise. a medium.

Question 16. All of the following are examples of push communication except A. B. C. D.

letters. reports. press release. knowledge repositories.

312 • PMP® Certification—Excel with Ease Question 17. Focus on distribution of information is more in a project’s A. B. C. D.

concept phase. execution phase. planning phase. closing phase.

Question 18. What percentage of a message is sent through non-verbal communications, such as facial expressions, hand gestures, and body language? A. B. C. D.

Less than 10 percent 10 to 20 percent Greater than 50 percent 20 to 30 percent

Question 19. In order to solve Conflict which form of communication type will be more useful? A. B. C. D.

Written Formal Written Informal Face-to-face Communication Non-verbal Communication

Question 20. In an appropriate communication model all the following statements are correct EXCEPT: A. Noise should be kept as minimal as possible B. Receiver must decode and reply back to the message C. Sender is called as Encoder of the message D. Receiver should acknowledge and agree with the message sent Question 21. Which of the following is not an example of causal/econometric method? A. B. C. D.

ARMA Regression analysis Nonlinear regression Forecast by analogy

Question 22. Forecast by analogy is an example of judgmental method. Which of the following is not an example of a judgmental method? A. B. C. D.

Composite forecasts Delphi method Scenario building ARMA

Question 23. Six months into a project, the customer complains that the status report is not complete although the format has not been changed. Which among the following documents would you refer after this complaint? A. B. C. D.

Scope management plan Stakeholder management plan Communication management plan Quality management plan.

Question 24. Suppose that a project manager has sent a status report on cost to the program manager concerned. What percentage of the status report can the project manager expect the latter to remember? A. B. C. D.

73% to 77% 23% to 27% 25% to 75% 85%

Question 25. People generally remember % of the spoken word in 1 to 2 days and % in 2 months. A. B. C. D.

25, 50 50, 25 75, 55 35, 20

Question 26. The most basic model for a communication process comprises which of the following three basic elements? A. Words, sentences, paragraphs B. people, medium, grammar C. Verbal messages, nonverbal messages, and facial expressions D. Sender, receiver, and message Question 27. Communication barriers lead to A. B. C. D.

increased cost. increased stress. increased conflict. decreased output.

Question 28. The primary communication skill of a project manager working in a functional organization would be A. B. C. D.

conflict management skill. negotiating skill. presentation skill. public relations skill.

Communication Management

Question 29. The following are the different dimensions of communication except A. B. C. D.

formal and informal. internal and external. written and oral. head and tail.

Question 30. A w o r k b r e a k d o w n s t r u c t u r e (WBD) can be an effective aid for which among the following types of communication? A. B. C. D.

Internal, within the management Internal, within the team External, with other stakeholders Internal and external to the project

Question 31. Suppose that you take over a project midway and you desire to review its status. Which among the following reports would you find helpful? A. B. C. D.

Forecast reports Progress reports Risk reports Communications reports

Question 32. All the following are processes of project communication management except A. B. C. D.

Plan Communication Manage Communication Control Communication Report Performance

Question 33. A scope change may affect project cost but may not affect the communication plans. A. True B. False Question 34. A scope change may affect project cost but may not affect product quality. A. True B. False Question 35. All the following are inputs to the C ontrol C ommunication pro cess except A. B. C. D.

Issue Log Work Performance data Communication Plan Reporting Systems

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Question 36. All the following are inputs to the Manage Communication process except A. B. C. D.

Performance Reports Project Management Plan Organisation Process Assets Communication methods

Question 37. Which one of the following is an output of Control Communication? A. B. C. D.

Trend analysis EVM Variance analysis Change requests

Question 38. When does lessons-learnt identification take place within a project? A. At the time of signing the contract. B. Immediately requirements are signed off C. At the end of project completion D. Through the course of the project Question 39. Phone calls and video conferencing are examples of A. B. C. D.

push communication. pull communication. interactive communication. ping communication.

Question 40. A knowledge repository is an example of A. B. C. D.

push communication. pull communication. interactive communication. ping communication.

Question 41. For transfer of large volumes of information, which among the following types of communication methods is used? A. B. C. D.

Push communication Pull communication Interactive communication Ping communication

Question 42. e-mails and faxes are examples of which among the following types of communication methods? A. B. C. D.

Push communication Pull communication Interactive communication Ping communication

314 • PMP® Certification—Excel with Ease Question 43. Of the following, which term describes the pitch and tone of an individual’s voice? A. B. C. D.

Effective listening Effective Speaking Para Lingual Active Speak

Question 44. An issue log may also be referred to as A. B. C. D.

an action item log. a change log. an understanding log. a communication log.

Question 45. Suppose that your manager asks you for a report and would like to know as to how many more months would be required for completion of a project, given that current project uncertainties continue. What type of report he is asking for? A. B. C. D.

An EVM report A performance report A trend analysis report A risk report

Question 46. Email communication is an example of A. Verbal Communication

B. Effective Communication C. Written Formal D. Written Informal Question 47. Variance analysis is A. B. C. D.

an after-the-fact look a before-the-fact look a trend-of-future look a future projections-of-fact

Question 48. Composite forecasts are an example of A. B. C. D.

time-series methods. econometric methods. probabilistic forecasts. judgmental methods.

Question 49. Extrapolation is an example of A. B. C. D.

time-series methods. econometric methods. probabilistic forecast. judgmental methods.

Question 50. A performance measurement baseline is A. B. C. D.

a work-in-process plan. a continuously changing plan. an approved plan. a verified plan.

Communication Management

Answer Sheet for Chapter 9 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

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316 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 9 Questions

Question Number

Answer

Question Number

Answer

Question 1

C

Question 26

D

Question 2

D

Question 27

C

Question 3

B

Question 28

B

Question 4

C

Question 29

D

Question 5

D

Question 30

D

Question 6

A

Question 31

B

Question 7

C

Question 32

D

Question 8

B

Question33

A

Question 9

A

Question 34

A

Question 10

B

Question 35

D

Question 11

C

Question 36

D

Question 12

C

Question 37

D

Question 13

C

Question 38

D

Question 14

C

Question 39

C

Question 15

C

Question 40

B

Question 16

D

Question 41

B

Question 17

B

Question 42

A

Question 18

C

Question 43

C

Question 19

C

Question 44

A

Question 20

D

Question 45

C

Question 21

D

Question 46

D

Question 22

D

Question 47

A

Question 23

C

Question 48

D

Question 24

A

Question 49

A

Question 25

B

Question 50

C

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Explanations for Chapter 9 Answers

1. Answer C The process required for ensuring timely and appropriate generation, collection, distribution, storage and retrieval and disposition of project information is called as “Project Communication Management”. Option D is not right because there is nothing called Project Information Management but we have a process called “Manage Communication”. 2. Answer D 92% of a project manager’s time is spent only on communication as per the survey. Why do we prepare WBS? It is for communication. Why do prepare Project Schedule? It is also to communicate to all stakeholders to get their buyin. Likewise, the activities of a project manager (which may be related to other knowledge areas also) are related with communication. 3. Answer B Manage Communication deals with implementing the communication management plan and also responding to unexpected request of information. 4.

Answer C Document detailing the information that is expected from the project stakeholders and to whom that information will be disseminated (Who needs what information when and whom). It is a part of Communication Management Plan.

5. Answer D Document detailing the information that is expected from the project stakeholders and to whom that information will be disseminated (Who needs what information when and how). Escalation Management Plan is also part of Communication Management Plan. 6. Answer A Project Status report is part of Formal Written Communication. Other examples of formal written communication include all communication related to a contract. Informal Written communication includes emails, notes, memos and letters.

7. Answer C The formula for number of communication channel = (N * (N − 1))/2 Number of communication channel before = (20 * 19)/2 = 190. Number of new communication channels after adding two new members = (22 * 21)/2 = 231. Thus, the difference is 231 − 190 = 41. Here, the key word is “more” and so, the answer is 41. If the question asks for the number of communication channels at present, then answer will be 231. 8. Answer B Document detailing the information that is expected from the project stakeholders and to whom that information will be disseminated (Who needs what information, when and how). Escalation Management Plan is also part of Communication Management Plan. 9. Answer A Effective communication is not only about communicating the message but also ensuring that it is well-timed and generates the desired response from the recipient. Effective communication consists of Right Format, Time and Making the Right Impact. 10. Answer B Efficient communication means providing only the needed information. It also means not providing unnecessary information. 11. Answer C Plan Communication process is closely linked to Enterprise Environmental Factors. Enterprise Environmental Factors include organizational culture, organizational structure, Infrastructure facilities, industry standards (if any) and market conditions. Communication Management plan depends on all these factors, especially infrastructure facilities; we cannot plan something in Communication Management that is not part of the infrastructure. For example, we cannot plan to have a video conference for daily meetings if the organization (infrastructure) does not have that facility.

318 • PMP® Certification—Excel with Ease 12. Answer C The formula for number of communication channel = (N* (N − 1))/2 Number of communication channel = (11 * 10)/2 = 55. 13. Answer C This is similar to Question 7. The formula for number of communication channel = (N * (N − 1))/2. Number of communication channel before = (10 * 9)/2 = 45. Number of New Communication channel after adding two new members = (12 * 11)/2 = 66 and so the difference is 66 − 45 = 21. Here, the key word is “more” and so the answer is 21. If the question asks for the number of communication channels now, then answer will be 66. 14. Answer C An encoder is the person who initiates a communication. Customer gives the requirement document and hence he is the encoder. Team receives the document and hence they are called decoders. 15. Answer C Anything that interferes with communication is called as Noise. It is a communication barrier. 16. Answer D Push communication, pull communication and interactive communication are the types of Communication Methods. In Push communication the information is sent (pushed) to the receiver without confirmation as to whether it has reached the recipient or not. Examples:Letters, press release, Reports etc. In Pull communication the receiver pulls out information from some source (intranet, internet) and this is used when large volumes of data are required to be transferred. Examples of Interactive Communication are Video Conference, Live meeting, etc. 17. Answer B Distribution of information occurs in Manage Communication process and is part of the Execution process group. 18. Answer C About 55% of total communication happens through non-verbal communication. Non-verbal communication includes facial expressions, hand movements, tone of voice while speaking.

19. Answer C Conflict can be best solved using face-to-face communication. The best method to solve conflict is problem solving. In order to solve a problem, the best method is meeting the people face-to-face to understand the situation and concerns from their perspective and meeting them in a group later. 20. Answer D In the communication model the receiver need not agree with the message sent, the receiver needs to just understand the message. Agree or disagree depends on the context. We cannot expect the receiver to always agree to the message of the sender. 21. Answer D Causal/Econometric method assumes that the underlying factors that influence the forecast variable may be identified with confidence. For Example:use of many trainees in a project as key resources would lead to more escalation in the project; ARMA, regression analysis and non-linear regression are examples of causal econometric methods. 22. Answer D Causal/Econometric method assumes that the underlying factors that influence the forecast variable may be identified with confidence. For Example:use of many trainees in a project as key resources would lead to more escalation in the project; ARMA, regression analysis and non-linear regression are examples of causal econometric methods. 23. Answer C In Judgmental methods, the judgment is based on opinions and subjective estimates. Forecast by analogy, composite forecasts, Delphi method and scenario building are examples of judgmental methods. 24. Answer A Generally, people remember 73% to 77% of what they read. People generally remember 50% of the spoken word in 1 to 2 days and 25% in 2 months. 25. Answer B Generally, people remember 73% to 77% of what they read. People generally remember 50% of the spoken word in 1 to 2 days and 25% in 2 months.

Communication Management

26. Answer D Sender, Receiver and Message are the basic elements of communication. 27. Answer C Communication barriers lead to confusion, which leads to Conflict. Conflict simply means difference of Opinion. 28. Answer B A project manager in a functional organization would generally be required to extensively negotiate with functional managers to get sufficient (required) project resources for the project. 29. Answer D There is nothing called head-and-tail dimension of communication. 30. Answer D Work Breakdown Structure (WBS) is mainly used for communication. It helps to convey (communicate) the project scope to people, internal and external to the project. External people may not understand if information is provided in written format and hence, diagrammatic representation is required. Diagrams help to convey the scope clearly and that is the purpose of WBS. It also helps internal team members to understand their individual scope. 31. Answer B Progress report helps to understand and help the Project Manager in this situation. 32. Answer D Report performance is not a process of communication management (as per PMBOK® 5th Edition). 33. Answer A Scope change may affect the cost but may not affect the communication plan. Scope means work. Increase or decrease in Scope will directly affect the Schedule and Cost, but we cannot say that it will affect the Communication plan or Quality of the Project. In most of the projects, communication plan will remain the same from the beginning to the end but other parameters (scope, time, cost etc) will keep changing.

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34. Answer A Scope change may affect the cost but may not affect the communication plan. Scope means work. Increase or decrease in Scope will directly affect the schedule and Cost but we cannot say that it will affect the Communication plan or Quality of the Project. In most of the projects, communication plan will remain the same from the beginning to the end but other parameters (Scope, time, cost etc) will keep changing. 35. Answer D Reporting system is a tool used in Control Communication. Communication Plan, Issue Log, and Work Performance data are inputs of the Control Communication process. 36. Answer D Communication method is a tool used in Manage Communication. All others are inputs. 37. Answer D Change Request is the output of Control Communication Process. Note:Change request is the output of all controlling processes including the Control Communication Process. 38. Answer D Lessons learnt is a continuous process and it happens throughout the lifecycle of the project. 39. Answer C Push communication, pull communication and interactive communication are the types of Communication Methods. In Push communication, the information is sent (pushed) to the receiver without confirmation as to whether it has reached the received or not. Examples Letters, press release, Reports, etc. In Pull communication, the receiver pulls information from some source (intranet, internet, etc.). This is used when large volumes of data are required to be transferred. Examples for Interactive communication include video conference, phone calls, live meeting etc. 40. Answer B In Pull communication, the receiver pulls information from some source (intranet, internet) or knowledge repository. This mode of communication is used when large volumes of data are required to be transferred.

320 • PMP® Certification—Excel with Ease 41. Answer B In Pull communication, the receiver pulls information from some source (intranet, internet) or knowledge repository. This mode of communication is used when large volumes of data are required to be transferred. 42. Answer A In Push communication, the information is sent (pushed) to the receiver without confirmation as to whether it has reached the recipient or not. Examples:Letters, emails, press release, reports, etc.

46. Answer D Email communication is classified as informal written communication. Note:Email communications are not being used in all projects; it is predominantly used in IT projects. 47. Answer A Variance Analysis is a method that looks at what caused the difference between the baseline and the actual performance.

43. Answer C Para lingual describes the pitch and tone of an individual’s voice.

48. Answer D In judgmental methods, the judgment is based on opinions and subjective estimates. Forecast by analogy, composite forecasts, Delphi method and scenario building are examples of judgmental methods.

44. Answer A Issue Log is also referred as Action Item Log because it contains the action for the issues identified in the project. Issue Log is used as an input to Control Communication.

49. Answer A Time series methods are used to make the forecasts on the basis of the past patterns in available data. Time is an independent variable to forecast demand.

45. Answer C Trend Analysis Report tries to predict the future based on the past data (information).

50. Answer D Performance measurement baseline is an approved plan.

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Key Terms

Formal Verbal Informal Verbal Nonverbal Formal Written Informal Written

Project Presentation Meetings Facial Expression Project Charter Email

Effective listening Watching and listening to the speaker to pick up physical gestures and facial expressions, asking questions, repeating and providing feedback. Para lingual means the pitch and tone of the voice. Active listening The receiver confirms listening,

confirms agreement and asks for clarification on the topic discussed. Administrative closure Collection and dissemination of information to formalize phase or project completion. Communications planning Determining the information and communications needs of the project stakeholders which include who needs it, when they will need it, and how it will be given to them. Communication blockers Distance, Noise, Hostility, Language, culture

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Project Human Resource Management CHAPTER COVERAGE 1. Organization Charts 2. Organizational Theories 3. The Five Phases of Team Building 4. Team Performance Assessment 5. Power 6. Conflict Management

10

INTRODUCTION Human resource management represents an important area of project management skills. Over the life cycle of a project, project managers are likely to be required to motivate the project team in times of temporary reverses, help resolve conflicts that may arise among stakeholders, or address team retention, labor relations, and performance appraisals. Therefore, project managers are expected to be effective leaders, communicators, negotiators, and problem solvers, capable of influencing stakeholders to behaviors and activities that would result in overall project success. Project human resource management thus comprises a set of processes required to make effective use of the people involved in a project: sponsors, customers, project team members, and subcontractors. The following lists important factors that project managers need to address as part of human resource management: • Selection of techniques that are appropriate for personal and organizational relationships. • Choice of techniques that are appropriate to the current needs of the project: project human resource requirements may change over the course of project execution, the number of project stakeholders may change as the project moves from one phase to another, and their impacts may over time. • Awareness of the administrative human resource requirements of the performing organization to ensure compliance. Project manager ensure team awareness. • Actions undertaken to influence project team members toward professional and ethical behavior.

324 • PMP® Certification—Excel with Ease In view of the aforementioned, effective project managers lead by example, follow through with their commitments, ensure transparent decision making, use a flexible interpersonal style, and invest in long-term collaborations. Discussion Points Did you use any of the above techniques in your projects for influencing people? Discuss how it helped you for projects? What are all the consequences of not using the above techniques?

The PMBOK has identified four key processes in human resource management (Figures 10.1 and 10.2): 1 Plan HR Management—Plan HR Management process is the processes of planning, identifying, documenting, and assigning project roles, responsibilities, and reporting relationships, which are used to determine and identify human resources with necessary skills required for project success. 2. Acquire Project Team—It is the process of obtaining the required human resources for work on a project. 3. Develop Project Team—Thus process helps to improve team member competencies, team interactions, and the overall team environment to enhance project performance. 4. Manage Project Team—It includes tracking team member performance, providing feedback on performance, and resolving issues and coordinating changes to raise project performance. We will now discuss each of these processes in detail.

Project Scope Statement

Define Scope

s Re ty e i v ti at Ac tim Es

Estimate Activity Resources

r ou

Plan HR Management ce

HR Management Plan Roles and Responsibilities Resource Availability Staffing Management Plan

Project Management Plan

Develop Project Management Plan

Approved CR

Acquire Project Team

Approved Corrective Actions

Project Staffing Assignment Resource Availability Staffing Management Plan(Update)

Control Communication

Close Project

Develop Project Team WP I

OPA Update

Team Performance Assessment

Manage Project Team

Recommended Corrective Actions Recommended Preventive Action

Figure 10.1 Human Resource management Work Flow

Perform Integrated Change Control

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Human Resource Management Executing

Planning

Acquire Project Team

Plan Human Resource Management

Develop Project Team

Manage Project Team

Figure 10.2 Four processes of HR Management Tools and Techniques • Organization Charts and position descriptions • Organization Theory • Networking • Expert Judgments • Meetings

Inputs • Project Management Plan • Activity Resource Requirements • Enterprise environmental factors • Organizational process assets

Outputs • Human Resource Management plan

Figure 10.3 The inputs, tools, techniques and outputs of the Plan Human Resource Management Process

PLAN HR MANAGEMENT PROCESS The Develop Human Resource Plan process (Figure 10.3 and Table 10.1) is one of planning, identifying, documenting, and assigning project roles, responsibilities, and reporting relationships, which are used to determine and identify human resources with necessary skills required for project success. The process may also include identification of training needs; plans for recognition, team building strategies and reward programs; safety issues; and the impact of the staffing management plan on the organization.

Inputs of Plan HR Management Process Activity resource requirements are the inputs for the plan HR management process. Enterprise environmental factors that can influence the development of a human resource plan are organizational culture and structure, existing human resources, and personnel administration policies. Market conditions affect the plan as well . Project Management plan used as an input for this process to maintain

326 • PMP® Certification—Excel with Ease Table 10.1 Plan Human Resource Management – Planning Process Group Planning

Plan Human Resource Management

Executing

Acquire Project Team

Executing

Develop Project Team

Executing

Manage Project Team

consistency across various plan. For Example HR Management plan should be consistent with Cost Management plan, Risk Management plan etc. Discussion Points How Organization Culture affect Human Resource Plan?

Tools and Techniques of the Plan HR Management Process Organization Charts and Position Descriptions There are generally three formats are available for documentation of roles and responsibilities of project stakeholders: hierarchical-type charts, matrix based charts, and text oriented formats. Discussion Points Why R&R is important for every team members? What is general R&R for a Project Manager?

Hierarchical-Type Charts The resource breakdown structure (RBS) (see Chapter 5) of a project is an important project management tool. It is a good example of hierarchical-type charts. A RBS, as we know, is a hierarchical structure of a project’s resources, classified by category and type, including human resources. Resources are subdivided into categories or resource-types. It is therefore an illustration of the overall resources and the amount or number of resources required for each activity. Each level in a RBS (Figure 10.4) is a subset of the resource category (or level) above it; each descending (lower) level represents an increasingly detailed description of the resource. The following RBS tools help in developing a human resource plan: • Activity list. This tool lists of all project-based activities. • Resource calendar. This tool is used to monitor resource availability over a period of time to ascertain whether they can be assigned for a particular project. • Resource estimating. This tool is used to estimate the type of resources to be deployed in a particular project.

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Project

Development

Anand

Balaji

Testing

Project Office

Kamal

Kannan

Figure 10.4 An example RBS

RACI CHART

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

Balaji

Krishna

Varshini

Plan

A

R

C

I

Define

C

A

R

I

C

A

R

I

A

R

Coding Testing

I

C

Manas

Figure 10.5 An example RACI chart Matrix Based Charts A responsibility assignment matrix (RAM) defines work allocations, whereas a staffing management plan (SAM) authorizes movement of resources into and out of projects. A RAM is usually depicted as a chart with resource names listed in each row or column and the WBS elements on the opposite side, with indicators in the intersections where the resources are needed. Figure 10.5 shows a RACI (R 5 Responsible, A 5 Accountable, C 5 Consult, I 5 Inform.)chart as an example of a RAM chart. In the above example (Figure 10.5), for a phase called “Plan”—Anand is accountable for the plan phase, Balaji is responsible for the same plan phase, Krishna should be consulted and Varshini should be informed about this phase. Since it assigns responsibility for each person, it is called as Responsibility Assignment Matrix (RAM). Text Oriented Charts The roles and responsibilities of a program manager can be described in text oriented format, as in following text: relationship building with customers, colleagues; and teams; commercial orientation especially in sales support and customer visit contexts; customer service orientation; drive and initiative; innovative approach in technical and managerial problem solving situations; verbal communication; planning with attention to details toward delivery commitments, confidence to manage large teams and handle new technologies.

328 • PMP® Certification—Excel with Ease

Networking Networking is a technique used to gather information on various political and interpersonal factors that will impact the effectiveness of staffing management options in a project. Networking includes interactions and proactive correspondence with members in an organization, for example, in luncheon meetings. Meetings In order to develop an HR management plan which is realistic and accepted by the entire team, it is better to conduct team meetings while drawing the HR management plan. This meeting should be attended by other stakeholders such as project sponsors and others who are associated with the HR management process. The project manager can also conduct this meeting with selected team members who have good knowledge of the HR Process. Expert Judgement The experience of experts may be utilized to chart an accurate HR Management Plan for the project. Expert skill level may be based on previous similar kind of activities, which could be considered as criterion for expert judgement. We can use their expertise to analyze already existing historical information to develop an effective HR management process. We can also use expert judgement to evaluate the various options available and choose the best one. Usually, senior management people, subject matter experts (SMEs) and external consultants are used for this purpose.

Organizational Theories Organizational theories explain how groups and individuals behave in differing organizational arrangements and are derived from organizational structures and procedures that took shape during the Industrial Revolution in England and Europe. Organizational theories provide information regarding the way people function and how organizations behave. Project managers apply these theories to identify strengths and weaknesses of teams, reduce the time and costs of projects. Organizational theories represent one of the bases for generating an effective human resources plan. Three such theories are now presented. McGregor’s theory of X and Y. This theory postulates that there are two types of employees. Theory X employees, who avoid work, do not take responsibility, and generally dislike work, are to be watched, cannot be trusted, and need to be micromanaged. Theory Y employees, who are motivated, take responsibility, and like work, are to be provided challenging assignments and encouraged to work independently. Z Theory. As per the Z theory, workers need to be involved in the decision making process; it will make them more responsible and accountable for their decisions. Maslow’s hierarchy of needs: This well-known organizational theory postulates that there exists a hierarchy of human needs. People seek higher-level needs only when their lower-level needs have been satisfied. The hierarchy of these needs, from the highest to lowest, are as follows: • Self-actualization needs—seek knowledge, maximize potential • Esteem needs—respect for others, self respect, freedom, recognition • Social needs—community and social anxieties

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• Safety needs—job security, financial security • Physiological needs—basic needs like water, shelter, food

Output of the Plan HR Management Process The main output of this process is the human resource plan, which describes the planned movement of human resources into and out of project teams. A human resource plan defines the following attributes of allotted resources: Role (e.g., business analyst, team leader) Authority (the right to apply project resources, make decisions, and sign approvals) Responsibility (the work that a project team member is expected to perform to complete the project’s activities) Competency (the skills and capacity required to complete project activities) A human resource plan also contains a staffing management plan, which describes the organization’s actions that will generate, allocate, and finally meet project resource requirements. It includes resource calendars and staff release plans and documents training needs, compliance needs, and safety of resources deployed in the project. PMP WATCH Understand the required contents of a human resource plan because there are likely to be a handful of questions on it. Many project managers wrongly believe that human resource plans are solely the responsibility of the human resources department.

THE ACQUIRE PROJECT TEAM PROCESS The Acquire Project Team process (Figure 10.6 and Table 10.2) is one of obtaining required human resources for work on a project. Because generally there always exist many organizational goals competing for organizational resources, obtaining project specific resources proves to be a difficult—and critical—process for project managers and project management teams. Project managers are required to extensively negotiate and influence others like peer project managers, functional managers, program managers etc to provide sufficient human resources required for project execution. Of course, inadequate resources or failure to acquire resources on time may lead to increased project risks, poor quality of deliverables, unhappy customers, and ultimately project failure. Discussion Points Explain your experience of negotiating with others for Resources required executing the project. What techniques you will follow to get the resources?

Tools and Techniques of the Acquire Project Team Process Project teams obtain resources using the tools of negotiation and acquisition. Pre-assignment refers to dedicated resources who are attached to specific project throughout.

330 • PMP® Certification—Excel with Ease

Tools and Techniques • • • • •

Inputs • Human Resource Plan • Enterprise environmental factors • Organizational process assets

Negotiations Pre-Assignment Acquisition Virtual Teams Multi Criteria decision Analysis

Outputs • Project Staff Assignments • Resource Calendar • Project Management Plan Update

Figure 10.6 The inputs , tools, techniques and outputs of the Acquire Project Team Process Table 10.2 Acquire Project Team – Executing Process Group Planning

Plan Human Resource Management

Executing

Acquire Project Team

Executing

Develop Project Team

Executing

Manage Project Team

Negotiations. Generally, negotiations occur between project management teams and functional managers to ensure assignment of appropriate resources within required time frames. As mentioned earlier, different organizational goals tend to have different priorities. This scenario sometimes results in different projects simultaneously requiring same or similar resources. Therefore, negotiations are important tools to obtain resources. Acquisition. Resources are sometimes acquired from outside the performing organization to perform project activities. Such acquisitions may be per the original project charter or may be a result of a later requirement. Pre-assignment. Some resources are assigned to a project as part of overarching project requirements, project charter requirements, or customer requirements. Pre-assigned resources are generally dedicated to a project and retained in the project even during temporary periods without work.

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Multiple Criteria Decision Analysis Multiple-criteria decision analysis is a sub-discipline of operations research that considers multiple criteria of the decision-making environments in order to take a decision. We acquire a resource based on strengths in various parameters like experience, technical skills, managerial skills, leadership levels (skills) etc. Most of the time, we consider conflictive criteria to make a decision. For example: A person with good technical knowledge may have less experience because of his low salary expectation. Weightage and sub-weightage in various parameters are used to take a decision. Exercise 10.1

List the activities required to develop a project team? (Assume that you have just acquired the team)

THE DEVELOP PROJECT TEAM PROCESS The Develop Project Team process (Figure 10.7 and Table 10.3) is one of improving team member competencies, team interactions, and the overall team environment to improve project performance. Team work, needless to say, is a critical factor for project success, is a prime responsibility of a project manager, and is achieved by open and effective communication, developing trust, and encouraging collaborative problem solving (Figure 10.8).

Inputs of the Develop Project Team Process Project staff assignments, project management plan, and resource calender are the inputs for this process. Project staff assignment is the primary output of the Acquire Project team process, which acts as input for the Develop Project team process. First, we need to know who are all the members assigned to the project before developing the project team. Project management plan is an input that talks about the actual process of developing a project team. Resource calendar gives details about the history of team members like which

Tools and Techniques

Inputs • Project Staff Assignment • Human Resource Plan • Resource Calendar

• Team Building Activities • Reward and Recognition Systems • Collocation • Training • Interpersonal Skills • Ground Rules • Personnel Assessment Tools

Outputs • Team Performance Assessments • Enterprise Environmental Factors update

Figure 10.7 The inputs , tools, techniques and outputs of the Develop Project Team Process

332 • PMP® Certification—Excel with Ease Table 10.3 Develop Project Team – Executing Process Group Planning

Plan Human Resource Management

Executing

Acquire Project Team

Executing

Develop Project Team

Executing

Manage Project Team

project they were in before, the dates until which the particular resource was blocked in project, and the training they have undergone. These inputs are required for developing the project team.

Tools and Techniques of the Develop Project Team Process The Five Phases of Team Building Five team building phases are defined in the PMBOK are forming, storming, norming, performing, adjourning. 1. Forming. Team members are introduced to each other in the forming phase. Team members begin to know each other. This phase is characterized by politeness and formality in the relationships between team members. 2. Storming. The team starts to move from “as is” to “to be.” Some team members may be in conflict with others in a clash for control or in a clash of individual identities or cultures; hence the term storming. During the storming phase, team members tend to disagree with each other. The team’s leadership or the management, however, exerts effort to overcome their differences, ensuring they are resolved.

Develop Trust

Effective Communication

Collaborative Environment

Team Work Factors

Figure 10.8 Teamwork factors

Problem Solving

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3. Norming. Following the “storm,” team members reach a consensus on the “to be” process and learn to work together. However, when issues or concerns surface, they may return to the storming phase. Also, when a new member joins the team, the phases of norming and storming would be reenacted for the entire team. It is in this phase that unique, team-specific norms assume shape and get entrenched with all team members; hence the term norming. 4. Performing. Once important team members have resolved their differences and established strong work relationships, the team is said to be ready for high performance. Once in the performing phase, the team seldom falls back into the storming phase. In this phase, a team is characterized by high levels of initiative. 5. Adjourning. Here, the team shares its improved processes with other teams. Many relationships formed within a team continue long after the team disbands following project completion. PMP WATCH List a project manager’s role in the different phases of team building?

Interpersonal Skills Project managers, especially in the formative stages of projects, make extensive use of interpersonal skills (Figure 10.9), also called soft skills. Interpersonal skills include empathizing with stakeholders’ needs, employing techniques of influencing others, creating an environment that fosters creative ideas, and encouraging group facilitation. Project team members can significantly reduce problems and enhance cooperation by understanding sentiments of each other, anticipating each other’s actions, acknowledging their concerns, and following up on their issues. Ground Rules A project manager’s prime responsibility in handling a team is to establish clearly expectations regarding acceptable standards or performance for team members. Once the ground rules are established clearly, team members share responsibilities. One of the ground rules in team meetings may be giving

Influence (Anticipate Actions)

Empathy (Understand Sentiments)

Creativity

Interpersonal Skills

Figure 10.9 Interpersonal skills

Group Facilitation (Follow-Up Issues)

334 • PMP® Certification—Excel with Ease a chance to everybody to talk or preparing minutes of meetings immediately after the meetings etc. People working as a team share other’s responsibilities as this forms part of accepted behavior, and this increases the productivity of the team Personnel Assessment Tools (Appraisal tools) Personnel assessment (generally called as individual appraisal) is a systematic approach to gather various information about individuals for a particular period (say one year). This information is used to make career progression decisions and also to identify areas of improvement. Personnel assessment is also used to select an employee for a particular job. We usually set the goal for the year and the assessment compares the goal with the current level identifying variances and areas of improvement. Most of the personnel assessment tool quantifies the data that is easy for measurement and comparison. In general, personnel assessment tool is used for selection, promotion, career exploration, succession planning, rotation planning. Discussion Points What are all the Ground Rules set for your Project? Discuss the advantages of these Ground Rules.

Output of the Develop Project Team Process: Team Performance Assessment A team performance assessment is the output of the Develop Project Team process. This assessment is performed by the project manager to evaluate and enhance the effectiveness of the team and the team building activities. The assessment includes analysis of how much team members’ skills have improved; how well the team as a whole is performing, interacting, and dealing with conflict; and the turnover rate. The evaluation of team effectiveness may include indicators such as improvement in skills, competencies, and team cohesiveness. Team performance assessment acts as an input to Manage Project Team process. Discussion Points What is the difference between Competencies and skills? How will you improve Competencies?

THE MANAGE PROJECT TEAM PROCESS The Manage Project Team process (Figure 10.10 and Table 10.4) includes tracking team member performance, providing feedback on performance, and resolving issues and coordinating changes to enhance project performance. The process involves combination of skills with special emphasis on communication, conflict management, negotiation, and leadership. Project managers provide challenging assignments to team members and provide recognition for high performance. As you may know, project management skills that relate to developing teams are quite different from those that relate to managing them.

The Tool Used in the Manage Project Team Process: Power Within the context of a project, project managers serve as primary sources of power. Power may be referred to as the ability to influence the behavior of others, here, other team members. Effective use of power can help project managers favorably influence project outcomes. In the same vein, project managers would need to understand the power of other project stakeholders and devise means to

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Tools and Techniques • Observation and Conversation • Project Performance Appraisals • Conflict Management • Interpersonal Skills

Outputs

Inputs

• Change Requests • Organization Process Assets (update) • Project Management Plan (update) • Enterprise environmental Factors (update)

• Project Staff Assignment • Human Resource Plan • Team Performance Report • Organization Process Assets • Issue Log

Figure 10.10 The inputs , tools, techniques and outputs of the Manage Project Team Process

using their powers to effect project success. There are different types of power available for use to project managers. Reward power. A project manager’s power to reward the team acts as a motivation for good team performance. Project managers reward compliance and use their reward powers to support other legitimate powers of team members. Rewards typically comprise recognition, a good job assignment, or a pay rise. Rewards can mean intangible benefits as well, for example, appreciation, which commonly leads to enhanced self-esteem for team members, and withdrawal of monitoring the work of improved team members. Coercive power. Also known as penalty powers, the coercive powers vested with project managers have a consequence on team members opposite to that of reward powers. Using coercive powers, project managers remove a benefit that a team member enjoys or sometimes take punitive action against them. Knowledge that project managers have such powers may coerce team members into compliance. Table 10.4 Manage Project Team – Executing Process Group Planning

Plan Human Resource Management

Executing

Acquire Project Team

Executing

Develop Project Team

Executing

Manage Project Team

336 • PMP® Certification—Excel with Ease Legitimate power. Also known as positional power, legitimate power refers to the power vested by the organization with particular positions in the organization. Project managers derive this type of power simply by virtue of their position of being in charge of projects. Referent power. Project managers derive referent power from their subordinates’ personally identifying themselves with them. Team members tend to comply simply because their project manager asked them to do so. Project managers themselves may refer to a superior authority, for example, a vice president, for enabling a task to be carried out. Expert power. Project managers enjoy expert power if they demonstrate knowledge or expertise required in the subject matter of the project currently under execution. Obviously, an individual who is seen to possess knowledge that is likely to lead to project success has power in that that individual can influence behaviors and activities of other team members toward project success. Although project managers seldom manage to hold this type of power, it is needless to say that when they do so, they have a significant positive impact on project outcome.

Discussion Points What type of power you used in what type of Situation? Discuss the implications of using other types of powers in the same scenario.

Exercise 10.2

Identify and match the types of powers as depicted in the following activities

Functional manager assigns an architect to work on your team

Reward power

A project manager creates a policy to award people who complete their activities ahead of schedule

Legitimate power

You are approached on many subjectmatter clarifications.

Punishment power

A project manager cuts 10% of team members’ salaries on account of poor performance

Expert power

Conflict Management Conflict in organizations is inevitable. Evading conflict can lead to consequences could be more negative or destructive than dealing with the conflict itself. Innovative ideas emerge when there is difference of opinion. The starting point for any healthy discussion is difference of opinion and hence, conflict is inevitable. Project managers address conflict early and usually engage the conflicting parties in private, using a direct, collaborative approach. They consider conflict as a team issue and, during the process of conflict resolution, focus (1) on the present and not the past and (2) on the issue involved in the conflict and not the individuals involved. Commonly used conflict resolution techniques are as follows:

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Problem solving. This technique confronts the problem head on, using research and objective analysis as its tools. It is widely considered the preferred approach and aims at a healthy win– win solution to the problem. Compromise. This technique searches for a solution that conflicting parties find moderately satisfying and entails both parties giving up a part of their demands. This approach generally leads to a lose– lose solution and is primarily used to avoid build up of conflict levels. Forcing. In this approach, the conflicting party with less power is simply asked to accept the other more powerful side’s demands, leading to a win–lose solution. Because this approach seriously damages relationships, it is adopted by project managers only rarely or when the gravity of the crisis calls for it. Smoothing. Project managers use this approach to emphasize areas of agreement—and aim to ignore areas of disagreement—between conflicting parties. Obviously, this approach leads only to a temporary solution. Collaborating. This technique incorporates multiple view points and insights from differing perspectives, leading to consensus and commitment. This approach may lead to a win–win solution. Withdrawing. Project managers use this approach when they believe that it is better that conflicting parties avoid each other. This technique generally does not solve a problem but may introduce a “cooling” period. PMP WATCH Major factors that influence conflict resolution technique: • • • •

Relative importance and intensity of the conflict Time pressure for resolving the conflict Position taken by the players involved Motivation to resolve conflict on a long- or short-term basis

Figure out what Conflict Resolution technique is being used in the below scenario and try to match it I have decided to use the solution by Project Leader and not going to listen from anybody.

Withdrawal

I don’t have time and you do whatever you want

Problem Solving

Let’s all sit together after 6pm and discuss to solve this

Forcing

You guys agree on all the points and only 2 points are differing. I am sure it’s not a big issue

Compromising

I request you to give-up the third point and take the point of Kumar as its valid it will be great.

Smoothening

338 • PMP® Certification—Excel with Ease

Answer I have decided to use the solution by Project Leader and not going to listen from anybody.

Forcing

I don’t have time and you do whatever you want Withdrawal Let’s all sit together after 6pm and discuss to solve this

Problem solving

You guys agree on all the points and only 2 points are differing. I am sure its not a big issue

Smoothening

I request you to give-up the third point and take the point of Kumar as its valid it will be great.

Compromising

Discussion Points List and discuss the characteristics of effective project teams. How will you develop the characteristics of an Effective Project Team?

Discussion Points Discuss the Conflicts you managed in your recent project recently

Exercise 10.1 Possible answers Hold team building activities for project team members Training for team members when needed Establish ground rules for team-member behavior. Set clear expectations for them Create and give recognitions and rewards Assess team-member performance continuously. Take steps to correct mistakes, if any. Place team members in the same location, that is, colocate if possible. Arrange for team meetings regularly Exercise 10.2 Answers A functional manager assigns an architect to work on your team

Legitimate power

A project manager creates a policy to award people who complete their activities ahead of schedule

Reward power

You are approached on many subject-matter clarifications.

Expert power

A project manager cuts 10% of team members’ salaries on account of poor performance

Punishment power

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Summary This chapter discussed the important factors project managers need to address as part of human resource management. We discussed the process of Develop Human Resource Plan, Acquire Project Team, Develop Project Team and Manage Project Team. We discussed organization theories like McGregorís theory of X and Y, Maslow Hierarchy of needs. Five team building phasesóforming, storming, norming, performing, adjourning were discussed. Interpersonal skills and the importance of this for a project manager were discussed. Different conflict management techniques were discussed in detail which is helpful for a project manager to manage the human resources efficiently and effectively.

Chapter 10 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. The process that organizes, manages, and leads the project team is the A. B. C. D.

Develop Human Resource Plan process. Acquire Project Team process. Develop Project Team process. Project Human Resource Management process.

Question 2. Which among the following is not true about project human resource management? A. Type and number of project team members can change frequently as the project progress. B. As the project progresses, the number of project team members can change frequently and not type project team members. C. The project team comprises people with assigned roles and responsibilities for completing the project. D. All team members contribute in the planning process.

Question 3. Which among the following processes clearly defines the roles and responsibilities of team members? A. B. C. D.

Acquire Project Team Plan HR Management Develop Project Team Manage Project Team

Question 4. Suppose that your manager has asked you to improve the competencies, team interaction activities, and the overall team environment to enhance project performance. Which among the following processes would he be referring to? A. B. C. D.

Plan HR Management Acquire Project Team Develop Project Team Manage Project Team

Question 5. A project management team may also be referred to as an executive or a leadership team. A. True B. False

340 • PMP® Certification—Excel with Ease Question 6. A project sponsor works with a project management team and assists in all of the following processes except A. B. C. D.

Clarifying Scope. Project Funding. Monitoring Progress. Updating Project Plan.

Question 7. A human resource plan includes all of the following processes except A. determination of project roles and responsibilities. B. team building strategies. C. identification of training needs. D. determination of activity resource requirements. Question 8. Plans for recognition and rewards in a project are made in which of the following processes? A. B. C. D.

Plan HR Management Acquire Project Team Develop Project Team Manage Project Team

Question 9. Compliance considerations and safety issues are addressed in which of the following processes? A. B. C. D.

Plan HR Management Acquire Project Team Develop Project Team Manage Project Team

Question 10. Roles are designated to all members or groups involved in project work. A. True B. False Question 11. Roles and Responsibilities of project team members is best made using all of the following formats except A. B. C. D.

matrix charts. text Oriented charts. hierarchical charts. projectized charts.

Question 12. A RAM belongs to which of the following types of formats? A. B. C. D.

Matrix charts Text oriented charts Hierarchical charts Projectized charts

Question 13. “C” in a RACI chart stands for A. B. C. D.

consumer. customer. consult. coder.

Question 14. Networking can be useful in which of the following stages of the project? A. B. C. D.

In the beginning of the project At the end of the project In execution phase of the project In controlling phase of the project

Question 15. Understanding of the manner in which team members, teams, and organizational units interact to execute projects entails study of which of the following theories? A. B. C. D.

Organization structures Organization theories Group theories Leadership theories

Question 16. The term used to describe the activity in a project that a team member is held accountable for is A. B. C. D.

accountability. responsibility. role. authority.

Question 17. The organizational right to apply project resources, make decisions, and sign approvals is called A. B. C. D.

accountability. responsibility. role. authority.

Question 18. The reliability with which a project team member is expected to perform activities in a project is called A. B. C. D.

accountability. responsibility. role. authority.

Question 19. The skill and capacity required to complete project activities is called A. B. C. D.

accountability. responsibility. role. competency.

Project Human Resource Management

Question 20. Allotting team members to a project in advance and generally for the duration of the project is called A. B. C. D.

assignment. pre-assignment. negotiation. acquisition.

Question 21. Developing an effective project team is the primary responsibility of the A. B. C. D.

resource manager. account manager. project manager. program manager.

Question 22. All of the following are the phases of typical team development except A. B. C. D.

forming. norming. adjourning. closing.

Question 23. When members of a project team have begun to work well together and as a team, the team is said to be in which of the following phases of typical team development? A. B. C. D.

forming. storming. norming. performing.

Question 24. When members of a project team have begun to work in an interdependent manner and work through issues among themselves effectively, the team is said to be in which of the following phases of typical team development? A. B. C. D.

Forming Storming Norming Performing

Question 25. Suppose that you are a project manager of a 100-member team and that, when the team has just reached its performing phase, 20 new team members are inducted into the team. Which of the following is true? A. The entire project team of 120 members would be in the performing phase.

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B. The 20 new team members would in the forming phase. C. The entire project team of 120 members would be in the forming phase. D. The entire project team of 120 members would move the norming phase. Question 26. All of the following are the indicators of team effectiveness except A. B. C. D.

reduced staff turnover. increased team cohesiveness. improvements in competencies. increased staff turnover.

Question 27. All of the following are objectives of conducting performance appraisals except A. clarification of roles and responsibilities. B. discovery of unknown issues. C. development of individual training plans. D. salary hike for team members. Question 28. Conflict is inevitable in a project environment. A. True B. False Question 29. All of the following can reduce the levels of conflict except A. B. C. D.

group norms. ground rules. communication planning. reducing project scope.

Question 30. Conflicts if managed properly can lead to better performance. Conflicts may be addressed using all of the following techniques except A. B. C. D.

early. in private. using an indirect approach using collaborative approach

Question 31. All but one of the following statements are true of conflict. Which one? A. Openness resolves conflicts. B. Conflict resolution is an individual issue. C. Conflict resolution is a team issue. D. Conflict resolution should focus on the present.

342 • PMP® Certification—Excel with Ease Question 32. The success of project managers in managing their project teams often depends a great deal on their A. B. C. D.

ability to resolve conflicts. ability to negotiate well. leadership ability. technical ability.

Question 33. Factors that influence conflict resolution methods include all of the following except A. time pressure for resolving the conflict. B. relative importance and intensity of the conflict. C. position taken by parties involved. D. a project manager’s personal style of conflict resolution. Question 34. Suppose that you as a project manager receive a phone call at 1:00 a.m. regarding a conflict on a prioritized proj e c t , w h i ch h a s an i mp or t ant deliverable to be made within the next 48 hours. Which of the following best describes your position? A. Time pressure for resolving the conflict B. Relative importance and intensity of the conflict C. Position taken by players involved D. Motivation to resolve conflict on a long term or a short-term basis Question 35. Suppose that your project is be moved to User Acceptance Testing (UAT) within 48 hours. Two key project-team members find themselves in conflict with each other on environment issues in a UAT production server. Suppose that, following a phone call from one of them at 1:00 a.m., you try to incorporate multiple viewpoints from other team members and insights from differing perspectives to lead the two conflicting members to a consensus and commitment. Which of the following conflict resolution techniques would you use?

A. B. C. D.

Confronting Collaborating Smoothing. Forcing

Question 36. Wh i c h of t h e fo l l ow i ng c on f l i c t resolution techniques would yield best results for project managers? A. B. C. D.

Collaborating Compromising Smoothing Confronting

Question 37. Refer to Question 35. In such a context, suppose that you try to emphasize areas of agreement rather than areas of difference between the conflicting project-team members. Which of the following conflict resolution techniques would you use? A. B. C. D.

Confronting Collaborating Smoothing Forcing

Question 38. An individual’s ability to influence others’ behavior and actions is generally referred to as A. B. C. D.

politics. power. conflict. negotiation.

Question 39. The power of a project manager to remove a benefit from or take action on a team member for failing to comply to directives is referred to as A. B. C. D.

coercive power. reward power. legitimate Power. referent power.

Question 40. A hugely successful project leader was promoted as project manager and assigned a complex, high priority project. This is an instance of a A. B. C. D.

super effect. halo effect. recognition effect. start effect.

Project Human Resource Management

Question 41. A project manager makes decisions without confirming whether team members would accept it. We could say that the project manager is A. B. C. D.

being autocratic. using legitimate powers. an expert. using referent powers.

Question 42. Supp os e t hat two te am memb ers approach you—their project manager— with a difference of opinion regarding a testing procedure. After analysis, you decide to ask one of them to accept the other’s opinion as correct. Which conflict resolution technique would you follow here? A. B. C. D.

Withdrawal Problem solving Forcing Escaping

Question 43. If all workers were to be involved in decision making with management, all the workers would have to be A. B. C. D.

Theory X workers. Theory Y workers. Theory Z workers. expectancy theory workers.

Question 44. Because of severe time constraints, a project that would require 6 months to complete needs to be completed in 4 months. You as the project manager communicate these stiff time lines to your team members and announce attractive allowances if the project is completed within 4 months. Which among the following theories have you assumed governs your team members? A. B. C. D.

Theory X Theory Y Theory Z Expectancy theory

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Question 45. Theory Z is similar to which of the following theories? A. B. C. D.

Expectancy theory Theory X Theory Y Goal setting theory

Question 46. People are in general disciplined and can direct and control themselves. This is the postulation of the A. B. C. D.

expectancy theory. Theory X. Theory Y. goal setting theory.

Question 47. Workers prefer to be directed and avoid taking responsibilities and initiatives themselves. This is the postulation of the A. B. C. D.

expectancy theory. Theory X. Theory Y. goal setting theory.

Question 48. Two conf licting parties decide to approach a third party for conflict resolution. This is an instance of A. B. C. D.

arbitration. negotiation. problem solving. court settlement.

Question 49. Which of the following processes is not a process of human resource management? A. B. C. D.

Plan HR Management Develop Project Team Manage Project Team Organization Development

Question 50. Wh i c h of t h e fo l l ow i ng c on f l i c t resolution techniques provides only a temporary resolution? A. B. C. D.

Problem solving Smoothing Compromising Forcing

344 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 10 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

Project Human Resource Management

Answer Sheet for Chapter 10 Questions

Question Number

Answer

Question Number

Answer

Question 1

D

Question 26

D

Question 2

B

Question 27

D

Question 3

B

Question 28

A

Question 4

C

Question 29

D

Question 5

A

Question 30

C

Question 6

D

Question 31

B

Question 7

D

Question 32

A

Question 8

A

Question33

D

Question 9

A

Question 34

A

Question 10

A

Question 35

B

Question 11

D

Question 36

D

Question 12

A

Question 37

C

Question 13

C

Question 38

B

Question 14

A

Question 39

A

Question 15

B

Question 40

B

Question 16

C

Question 41

A

Question 17

D

Question 42

C

Question 18

B

Question 43

C

Question 19

D

Question 44

D

Question 20

B

Question 45

C

Question 21

C

Question 46

C

Question 22

D

Question 47

B

Question 23

C

Question 48

A

Question 24

D

Question 49

D

Question 25

C

Question 50

B

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346 • PMP® Certification—Excel with Ease

Explanations for Chapter 10 Answers 1. Answer D The process that organizes, manages and leads the project team is the Project Human Resource Management. Options A, B and C are part of the Project Human Resource Management Process but Option D is the best available choice. 2. Answer B Type and number of project team members can change frequently as the project progresses (Option A). For example We need business analysts for the Requirement phase of the project and specialized designers for the Design phase of the project. All team members contribute to the planning process. It is not done just by the Project Manger. The Plan has to be realistic and the team has to be involved in that. The Project team comprises of people with assigned roles and responsibilities for completing the project (We have R&R defined for each team members of the project). Option B is the answer because it is False. 3. Answer B HR Management Plan defines the Roles and Responsibilities of the team members. HR Management Plan is the output of Plan HR Management process. 4. Answer C Improving the competencies happens through training and is part of the Develop Project Team process. 5. Answer A Project Management team refers to Executive or Leadership team. 6. Answer D A project sponsor works with a project management team, typically assisting in the process such as project funding, clarifying scope, monitoring progress, and influencing others in order to benefit the project. 7. Answer D Activity Resource requirements are an input to Plan HR Management process, which produces Human Resource Plan. Human Resource Plan consists of project roles and responsibilities, team building strategies (it is also a process), and the process of identifying training needs (the “how to” process).

8. Answer A Human Resource Plan consists of project roles and responsibilities, team building strategies (it is also a process), identifying the “how to” of training needs (process), plan and process of recognition and awards (Process). In general, Human Resource Plan consists of the Processes of “How to Acquire Project Team, How to Develop Project Team” and “How to Manage Project Team”. 9. Answer A Human Resource Plan consists of the Processes of “How to Acquire Project Team, How to Develop Project Team,” and How to Manage Project Team”. This includes compliance considerations and safety issues. Staffing management plan (part of HR Plan) takes care of security and safety issues of the resources. 10. Answer A Human Resource Plan consists of the Processes of “How to Acquire Project Team, How to Develop Project Team,” and “How to Manage Project Team”. Roles and responsibilities are also part of this document. Roles are assigned to individuals or to a Group of individuals. 11. Answer D Roles and responsibilities are part of HR Plan. Roles are assigned to individuals or to a Group of individuals. Roles and responsibilities can be defined in a text-oriented way (just description of the roles), hierarchical structure (resource breakdown structure), matrix chart (in tabular format, responsibility assignment matrix). 12. Answer A Roles and responsibilities can be defined in a text-oriented way (just description of the roles), hierarchical structure (resource break-down structure), matrix chart (in tabular format, responsibility assignment matrix). 13. Answer C RACI – Responsible, Accountable, Consult and Inform. 14. Answer A Networking can be more useful in the beginning of the project. Networking is a technique of “Plan HR Management” Process and is used to gather

Project Human Resource Management

information on various political and interpersonal factors that will impact the effectiveness of staffing management options in a project. 15. Answer B Organization theories explain how groups and individuals behave in different organizational arrangements and are derived from organizational structures and procedures that took shape during the industrial revolution in England and Europe. It represents one of the bases for generating an effective human resource plan. 16. Answer C Role describes the activity in a project that a team member is held accountable for. (It is not accountability). Authority is the right to apply project resources to make decisions and sign approvals. 17. Answer D Role describes the activity in a project that a team member is held accountable for. (It is not accountability). Authority is the right to apply project resources to make decisions and sign approvals. 18. Answer B Role describes the activity in a project that a team member is held accountable for. (It is not accountability). Authority is the right to apply project resources to make decisions and sign approvals. The reliability with which the project team members are expected to perform is called as responsibility. (Reliability and responsibility go together). 19. Answer D In our organization, we have different competencies like Java competency, Microsoft competency, Banking competency, Insurance competency etc. Competency represents the skill and capacity required to complete project activities. 20. Answer B Techniques used in “Acquire Project Team” process are Pre-assignment, Negotiation, Acquisition and Virtual Team. Pre-assignment helps to retain the team with a pre-work before we get the project (in order to retain the resource). 21. Answer C We think that developing a project team is the responsibility of somebody in the Organization

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like the HR team or senior management, etc. It is the responsibility of the project manager to develop the project team so as to utilize them properly in the project. Note “Develop Project Team” is one of the 42 processes of Project Management. 22. Answer D Forming, Storming, Norming, Performing and Adjourning are the stages of team development. Closing is not part of the team development stages. 23. Answer C Forming, Storming, Norming, Performing, Adjourning are the stages of the team development. When the team members begin to work well together, that stage is called as Norming stage. When the team works in an interdependent manner helping each other, they are in Performing stage. 24. Answer D Forming, Storming, Norming, Performing and Adjourning are the stages of team development. When the team members begin to work well together, that stage is called as Norming stage. When the team works in an interdependent manner helping each other, they are in Performing stage. 25. Answer C Forming, Storming, Norming, Performing and Adjourning are the stages of team development. Even if a team is in the performing stage, whenever a new member joins the team, it is like forming a new team and hence it starts from the “Forming” stage again. 26. Answer D For team effectiveness, the indicators are reduced staff turnover (not increase staff turnover), discovering unknown issues and improvements in skills (competencies). Increased staff turnover means that many people are leaving the organization indicating increase in attrition, which is bad for the organization. 27. Answer D Generally, a salary hike is not an objective of performance appraisal. Performance appraisal is a continuous process. The purpose of appraisal is something more than the salary. It is related to

348 • PMP® Certification—Excel with Ease individual performance, project performance and company performance. 28. Answer A Conflict is difference of opinion in general. In any project, conflict is inevitable. A Project manager has to track and manage the conflict, working towards the betterment of the project. There are different techniques such as smoothening, compromising and problem solving to tackle the conflicts. 29. Answer D Reducing project scope is not recommended because it would entail compromising on project objectives, which would not be approved by the customer/end user. Reduction or increase in project scope is not related with the conflict of the project, there is no guarantee that conflict will be reduced if we reduce the scope of the project. 30. Answer C Conflict need not be addressed early (it depends on the context). But conflict to be dealt with privately using collaborative and indirect approach. 31. Answer B Conflict is not an individual issue. It is a team issue. Note We need to choose the FALSE statement. Openness helps, and we need to concentrate on present while dealing with conflict. 32. Answer A Ability to resolve conflict is an important skill required for a project manager and it is more vital than any other skills. Other skills such as leadership skills and technical skills will not help the project manager if he/she does not have the ability to resolve conflict. 33. Answer D Factors that drive the method of conflict resolution (confronting, smoothing, compromising etc.) are time pressure, relative importance and intensity, and position taken by the parties involved. A project manger’s personal style may not be a factor in solving conflict. 34. Answer D Factors that drive the method of conflict resolution (confronting, smoothing, compromising etc.) are time pressure, relative importance and intensity, and position taken by the parties involved. In the example given, the

conflict arises at 1 AM and delivery is scheduled within 48 hours, we need to ensure that the conflict is being attacked and addressed within this timeline. 35. Answer B Multiple viewpoints from others considered to address conflict, is an example of collaborating. 36. Answer D Problem solving is the best method to tackle and address the conflict and all other methods work only temporarily. But solving it using confrontation takes longer time but gives the best result. 37. Answer C Emphasizing the areas of agreement rather than the areas of difference is called as Smoothing. It smoothens out the situation but does not solve the conflict. The same conflict may arise at a later point of time once again. 38. Answer B Ability to influence others is called as power. There are different types of power such as coercive power, reward power, expert power, referent power and legitimate power. 39. Answer A Ability to influence others is called as power. Coercive power is used to punish others. 40. Answer B A successful project leader may not necessarily be an effective project manager and vice versa. Just because a person is good in one factor (technically good), we cannot assume that he is good in all other factors (say Project Management). 41. Answer B Taking decision on one’s own without consulting others is called as autocratic decision. 42. Answer C Forcing is another way to address conflict. Forcing the other person to accept one’s view is called as forcing. The conflict is not solved permanently and it may surface back. 43. Answer C As per Z theory, workers need to be involved in the decision making process; it will make them more responsible and accountable for their decisions. (Note Theory X and Theory Y are different).

Project Human Resource Management

44. Answer D Expectancy Theory talks about setting expectation. We need to set the expectation of all stakeholders clearly, especially the team members. For example, if there is a bonus awarded based on activities, then describing the bonus and activities is called setting the expectation. Expectancy theory also talks about the corollary of being presented with rewards – if the target is not achieved, there is punishment. 45. Answer C As per Z theory, workers need to be involved in the decision making process; it will make them more responsible and accountable for their decisions. Y is nearer to Z than X. Z theory is similar to Y theory. 46. Answer C As per X theory people are considered as lazy, with a constant need to be monitored and controlled continuously. They are not self-motivated. As per Theory Y, people are considered as self-managed and self-disciplined. We need to just create an environment for the people to work and they will do their best job. As per Z theory, workers need to be involved in the decision making process; it will make them more responsible and accountable for their decisions. Y is nearer to Z than X. Z theory is similar to Y theory.

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47. Answer B As per X theory, people are considered as lazy with a constant need to be monitored and controlled continuously. They are not self-motivated. As per Theory Y, people are considered as self-managed and self-disciplined. We need to just create an environment for the people to work and they will do their best job. As per Z theory, workers need to be involved in the decision making process; it will make them more responsible and accountable for their decisions. Y is nearer to Z than X. Z theory is similar to Y theory. 48. Answer A Approaching a third neutral party to solve a problem is called as Arbitration. 49. Answer D There is no process called “Organizational Development” in PMBOK®. 50. Answer B Problem solving provides the permanent solution. Smoothing, Compromising and Forcing give temporary solution. However, out of the given options, smoothing gives only a temporary solution because here, we are just smoothening out the situation while the conflict is still unresolved. While compromising however, we are moving towards the solution.

350 • PMP® Certification—Excel with Ease

Key Terms

Concurrent engineering: An approach to project staffing that, in its most general form, calls for implementers to be involved in the design phase. (Sometimes confused with fast tracking) Halo effect is the assumption that because the person is good at a technology, he will be good as a project manager. Leadership styles: • Directing: Telling others what they need to do • Facilitating: Coordinating only with the input of others • Coaching: Instructing others clearly • Supporting: Providing assistance along the way to do work • Autocratic: Making decisions on own without input • Consultative: Inviting ideas from others before taking decision • Consensus: Problem solving in a group with decision-making based only on group agreement Matrix organization: Any organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of individuals assigned to the project. Organizational breakdown structure: A diagrammatic representation of the project organization arranged to relate work packages to organizational units.

Project management team: They are the members of the project team who are directly involved in day to day project management activities. On some smaller projects usually it includes virtually all of the project team members. Project manager: The person responsible for managing a project who is also responsible for the success and failure of the project. Projectized organization: Any organizational structure in which the project manager has full authority to assign priorities and to direct the work of individuals assigned to the project. Responsibility assignment matrix (RAM): It actually defines who does what and you should know that the Staffing Management Plan defines when will people get added and removed from the project. Expectancy theory: People are ready to work more energetically when the expectation is clearly set for them and usually People put in more efforts because they accept to be rewarded for their efforts. Same theory works not only for reward but also for punishment. When they know the punishment they get if they are doing the job, they will tend to work to finish the job as per expectation to avoid punishment. War room: is a technique for team building. As part of this the project team meets in this room daily at a specified time even if there are no issues to discuss. It actually helps to create a project identity.

Project Procurement Management CHAPTER COVERAGE 1. Contracts and Contract Types 2. Project Procurement Life Cycle 3. Make or Buy Analysis 4. Procurement Management Plan 5. Contract Statement of Work 6. Source Selection Criteria 7. Bidder Conference 8. Proposal Evaluation Techniques 9. Procurement Negotiation 10. Contract Change Control System 11. Third-Party Inspections and Audits 12. Payment Systems

11

INTRODUCTION Project procurement management refers to the purchase of products and services from third parties to meet requirements listed in the project scope. This knowledge area of project management, therefore, involves the processes of procurement planning, identification of sources, and administering and closing of contracts with identified sources. Here, effective administration of contracts is a critical skill required of project managers, because procurement management deals primarily with third parties. Project related products and services may be sourced from with a performing organization as well. Although procurement planning is best competed early in the project planning stages, changing project conditions, priorities, and uncertainties ensure that it is best executed as an iterative process, repeatedly performed almost over the entire project life cycle.

Contracts A contract is a formal legally binding agreement between two or more parties, individuals, businesses, organizations, or government agencies, by which the contracted parties exchange goods or services of value to each other. Contracts also specify restrictions on certain actions of the contracted parties during the tenure of the contract. The following lists the salient features of a contract. • A contract may be written, using formal or informal terms, or entirely verbal, although the former is generally preferred. The terms of a contract—the who, what, where, when, how, and which of the agreement—define the binding promises of each party to the contract. • A contract clearly states the acceptance criteria of the contracted product or service.

352 • PMP® Certification—Excel with Ease • A contract is generally deemed fulfilled only if all terms of the contract have been fulfilled. • Remedies for resolving differences that may arise during the period of a contract are also documented in the contract. The terms of a contract clearly define the actions—or inactions—of the contracted parties that constitute a breach of the contract, as well as force majeure conditions. • A contract may be used as a risk management tool, because it transfers risk from the buyer to the seller. Organizations typically handle contracts either through a centralized contracting offi ce, which handles all project contracts entered into by the organization, or through decentralized contract administrators, one of whom is assigned for each project executed by the organization. • The terms of a contract should meet applicable legal requirements governing contracts to establish the validity of the contract. • In a contract, a seller may be referred to as a contractor, subcontractor, vendor, service provider, or supplier. • In a contract, a buyer may be referred to as a client, a customer, a prime contractor, a contractor, an acquiring organization, a governmental agency, a service requestor, or a purchaser. • Depending upon the area of application, a contract is sometimes called an agreement, an understanding, a subcontract, or a purchase order. • The roles of a buyer and a seller are predetermined when teaming agreement document is present. A teaming agreement is an arrangement between different business entities to come together as a team in order to perform the activities of a particular project. • If a buyer wants a seller to begin a high-priority, business-critical project immediately then the seller needs “letter of intent” or “letter of contract” from the buyer to start work immediately. Discussion Points How would projects fare if project managers remained unaware of the contract details of their projects?

PMP WATCH Privity refers to contractual information between customer and vendor; it is common in contracted sale of goods or services. Horizontal privity refers to the contractual obligation whereby the benefits of a contract are to be given to a third party. Vertical privity involves a contract between two parties, with an independent contract between one of the parties and another individual or company.

The PMBOK has defined four project procurement management process: 1. Plan Procurement Management: The Plan Procurement Management process defines the approach to procurement, identifies potential sellers, and documents the project’s purchasing decisions. 2. Conduct Procurements: This process communicates to all concerned of the proposed contract, interacts with prospective sellers before the process of collection of submitted proposals begins, collects and evaluates prospective sellers’ proposals, selects a seller on the basis of predefined criteria, and awards the contract. 3. Control Procurements: It manages procurement relationships, monitors and manages the contractual performance of sellers, and makes changes and corrections as per the terms of the contract. 4. Close Procurements: It deals with completion of the contract, including resolution of outstanding items, if any. We will discuss these four processes in detail in the subsequent sections of this chapter.

Project Procurement Management

Make or Buy

Make

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No Procurement Required

Buy Create SOW

Formally Accept and Close Procurement

Issue RFQ

Receive Proposals

Administer Procurement

Award Project

Figure 11.1 A typical project procurement life cycle

The Project Procurement Life Cycle Figure 11.1 shows the steps involved in a typical procurement life cycle. Procurement Life Cycle explains the entire activities of procurement starting from the beginning (make or buy analysis) to the end of procurement (Close Procurement). As can be seen, depending on the output of the make or buy decision for the product or process under consideration, the steps involved in the procurement process changes considerably. In the procurement process, a prospective seller would be first called a bidder, then as a selected source, and finally a contracted supplier. Upon formally being awarded a contract, the seller’s project management team would be concerned with the project management of the contracted task, product, or service. In other words, the seller would act as the performing organization for execution of the contracted task, product, or service, and the overall project’s performing organization would act as the customer of the seller’s project.

THE PLAN PROCUREMENT MANAGEMENT PROCESS The primary objective of the Plan Procurement Management process (Figure 11.2 and Table 11.1) is to identify those parts, services, or activities of a project that should be procured from outside the organization (or from outside the project management team, if procurement is planned to be made from other entities of the performing organization). Procurement plans aim to answer the following questions: 1. What to acquire? 2. When to acquire? 3. How to acquire? 4. How much to acquire? The Plan Procurement Management process is therefore one of defining the approach to procurement, identifying potential sellers, and documenting the project’s purchasing decisions.

354 • PMP® Certification—Excel with Ease Plan Procurement Management Process Tools and Techniques • Make or Buy Analysis • Expert Judgment • Contract Types

Outputs

Inputs

• • • • • • • • • •

Scope Baseline Requirement documentation Teaming agreements Risk Register Risks related contractual agreements Project Schedule Activity Cost Estimates Cost Performance Baseline Enterprise Environmental factors Organization Process Assets

• Procurement Management Plan • Procurement SOW • Make -or-Buy decision • Procurement documents • Source Selection Criteria • Changes Requests

Figure 11.2 The inputs, tools, techniques and outputs of the Plan Procurement Management Process Table 11.1 Plan Procurement Management – Planning Process Group Planning

Plan Procurement Management

Executing

Conduct Procurements

Monitoring and Controlling

Control Procurements

Closing

Close Procurements

Tools and Techniques of the Plan Procurement Management Process Make or Buy Analysis The make or buy analysis is used to determine whether a particular product can be produced cost effectively by the performing organization or must be procured from outside the performing organization. The analysis includes consideration of

Project Procurement Management

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• the indirect and direct costs of in-house manufacture. • any extra capacity or resources that may available within the performing organization during the course of project execution. • possible use of proprietary or business critical activity of the performing organization that may represent its core business or core competency. PMP WATCH Project managers use a make or buy analysis estimate procurement requirements. Suppose that a project manager is required to decide on whether to make or buy a software product, which forms part of a parent project. Consider the following options: • The cost of procurement amounts to US$ 60,000 and that of integration with the parent project to US$ 2,000. • The cost of in-house development amounts to US$ 64,000 (the cost of seven team members paid US$ 3,000 a month working for 3 months, as well as overhead costs of US$ 1,000 over the 3-month period). Obviously, procurement would save the project manager US$ 2,000. However, real-life procurement decisions are seldom this simple.

Contract Types We all know that a contract is a formal legally binding agreement between two or more parties, individuals, businesses, organizations, or government agencies, by which the contracted parties exchange goods or services of value to each other. There are different types of contracts based on the pricing models agreed upon between two parties, namely, the buyer and the seller. Each contract type has its own pros and cons. The project manager needs to choose the appropriate contract type based on different parameters like scope of the project, and risk level of buyers and sellers. Fixed price (lump sum). This type of contract involves a fixed total price for the product the seller has been contracted to provide. Fixed-price contracts are often administered in projects with well-defined scope and no ambiguity regarding requirements exists. The buyer and the seller know clearly s what he is selling and there is no confusion between the buyer and the seller. FP EPA is a fixed price contract which takes into consideration inflation changes, especially when the project duration is high. Cost reimbursable. This category of contract involves reimbursement to the seller the actual costs incurred by the seller, plus a fee typically representing the seller’s profit. There are three types of cost-reimbursable contracts: Cost plus fee (CPF) or cost plus percentage of cost (CPPC). Here, the seller is reimbursed the allowable costs for performing the contracted work and paid a fee, which represents the profit for the seller, calculated as an agreed-upon percentage of the costs incurred. Cost plus fixed fee (CPFF). Here, the seller is reimbursed the allowable costs for performing the contract work and paid a fixed fee that is calculated as a percentage of the estimated project costs. This fixed fee represents the profit for the seller. It does not vary with variation in actual costs incurred by the seller; but, of course, it changes if the project’s scope changes.

356 • PMP® Certification—Excel with Ease Cost plus incentive fee (CPIF). Here, the seller is reimbursed the allowable costs for performing the contract work and receives a predetermined fee, an incentive bonus, based upon achieving predefined performance objective levels set in the contract. If the actual costs prove to be less than the estimated costs, both the buyer and the seller benefit from the cost savings, on the basis of a pre-negotiated sharing formula defined in the contract. Alternatively, there may be penalties imposed on the seller if the cost or time exceeds the units stipulated in the contract. An 80/20 split over/under target is used in the CPIF type of contract. For example, for every dollar over target cost, the contractor loses fee until minimum fee is reached. For every dollar under target cost, contractor gets additional fee until maximum fee reached. Actually CPIF converts to CPFF at minimum or maximum fee values. Time and material (T&M). Here, a hybrid contractual arrangement is agreed upon that contains aspects of both cost-reimbursable and fixed-price arrangements. The seller receives payment per unit of time spent on work activities irrespective of whether work is accomplished or not. Because this contract type presents no incentive to sellers to minimize costs or maximize efficiency, buyers generally insert a not-to-exceed total with respect to payments due to sellers. The following two tables provide a summary of the three types of contracts discussed. The first table compares their advantages and disadvantages; you may note that disadvantages listed represent advantages for sellers. The second table presents those features of the contracts discussed that would help project managers make good choices while handling contracts. Advantages and Disadvantages of Different Contract Types Contract type

Advantages

Disadvantages

Fixed price

Less work to manage

Seller may charge extra for change orders

Seller has incentive to control costs Seller may seek shortcuts to completing project work Cost is predictable for buyer

Buyer is required to define scope extensively to avoid ambiguity or misinterpretation Proves to be more expensive compared to other contract types as the seller adds the risk component to price quoted

Cost reimbursable

Costs lesser compared to cost of fixed-price contracts

Requires buyer to periodically audit the seller

Buyer may not spend resources to extensively define scope

Seller has only a moderate incentive to meet project scope requirements Total cost for the buyer is unknown

Time and materials

Simplest of all contracts in form

Costs incurred by the buyer on the basis of units of time, for example, hourly, daily

May be used for staff augmentation of labor

Seller has no incentive to control costs Appropriate only for small volumes to be contracted

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Salient Attributes of Different Contract Types Contract Type

Contract Scope Definition

Risk

Payment

Fixed price

Well defined

Seller assumes risk

Fixed total

Cost reimbursable

Not well defined

Buyer assumes risk

Per actual cost plus fee

Time and materials

Not well defined

Buyer assumes risk

Per unit of time seller spends on work activities

Exercise 11.1

Match the contract type on the basis of scenarios presented

A buyer agrees to pay the salaries of all the employees, rent for office space, and the actual cost of broadband and communication devices plus an additional US$ 35,000 per month.

Cost plus incentive fees

A customer agrees to pay a vendor a total of US$ 35,000 for 1 year for support services

Time and material

A customer agrees to pay US$ 25 per hour per Fixed price resource but not more than US$ 20,000 per month A customer agrees to pay the salaries of employees and meet the costs of Internet and other communication services and overheads including rent. The customer agrees to pay an additional US$ 4,000 per month for each month the vendor provides an average of 25 issues resolved per person per week with waiting time of the end users under 4 hours per issue.

Cost plus fixed fee

Discussion Points What would your approach be to the administration of a contract change per the type of the contract?

The Outputs of the Plan Procurement Management Process Procurement Management Plan The procurement management plan describes how the procurement processes will be managed and conducted, from developing procurement documentation through contract closure. The following are the contents of a typical procurement management plan: • • • • •

Identifying prequalified selected sellers, if any Defining a basis for selection of competent sellers Types of contracts to be used The process of managing multiple sellers Coordination of procurement activities and delivery of procured products with in-house project activities, schedules, and business operations

358 • PMP® Certification—Excel with Ease • • • •

Standardized documents to be used for procurement processes Constraints and assumptions of the planned procurement processes Evaluation criteria for procurements to be made from all sellers Procurement metrics to be used

Make or Buy Decisions As mentioned earlier, the decision to make or buy is the fundamental objective of procurement management. Make or buy decisions are mandated by a simple rule: The option that entails lesser cost while ensuring compliance to project scope requirements is taken. Although cost is the main criterion to decide the procurement, there are other factors to be considered like competency level, skill sets, capacity level, and intellectual properties involved in the product. For example, if the organization feels that it has the desired competency level, it can make the product by itself rather than outsource it. If the performing organization feels that a third party organization has better competency suitable for the product, then it can outsource the product instead of manufacturing the product in-house. The same is applicable for skill sets required for developing the product. If the organization does not have the capacity to produce the required product, then it has no option than to go for outsourcing. Tailoring shops outsource to smaller shops during heavy demand periods like Diwali etc. Demand level is also to be considered when taking a make or buy decision. If the organization does not have the required capacity then it needs to consider the cost of adding the required capacity before opting to outsource its business. The organization also needs to consider the Intellectual Property (IP) rights associated with the product. While outsourcing the organization needs to ensure that the product IP rights of the organization are not violated. If the product is very innovative, then it is better not to go for outsourcing. Contract Statement of Work A contract statement of work (SOW) is document wherein the seller describes the work to be completed and/or the product to be delivered. The description is in sufficient detail to enable prospective sellers to determine whether they are capable of effectively handling the contracted work. Issue of the procurement SOW is an important outcome of the Plan Procurements process, following which the buyer issues a request for quotations (RFQ). Interested sellers would return the RFQ with their proposals. The SOW document may not be complete in the beginning. It is further defined in the project scope statement in the initiating process group and planning process group. Procurement Documents Procurement documents are used to seek proposals from prospective sellers and serve to clarify the requirements of the buyer to the seller. Bids, tenders, or quotations are generally used when the decision to select sellers is expected to be based largely on the price quoted by sellers. Requests for proposal (RFP) are generally used when the decision to select sellers is expected to be based largely on prospective sellers’ technical skills or unique capabilities. The following are examples of procurement documents: Request for Quotation Requests for quotation (RFQ) are generally used when the decision to select sellers is expected to be based largely on quotation submitted. This is used for projects, usually of low dollar value and when the vendor’s other related information like their competency level, and unique capabilities are known in advance.

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Request for Proposal Requests for proposal (RFP) are generally used when the decision to select sellers is expected to be based largely on prospective sellers’ technical skills or unique capabilities. When an organization is submitting the proposals, it should include its unique capabilities like organization strength, competency level, number of projects executed similar to the proposed project, and other appropriate data like customer feedback. It takes more time for writing RFP compared to RFQ. Request for Information Requests for information (RFI) are generally used when the decision to select sellers is expected to be based largely on the information provided. Source Selection Criteria Once proposals from prospective sellers have been received, the performing organization has the task of analyzing the proposals and identifying and selecting sellers who seem to represent the best choice. Although price is generally the overwhelmingly dominant source selection criterion, this is not always so, depending on the nature of project work. Source selection criteria are defined for each contract and are used to rate or score proposals (objectively or subjectively). Source selection criterion is being set by the bid owners of the procurement department in consultation with the sponsor of the project. Weightage-based source selection criterion is popular and mostly used. The weightage of a criterion varies across projects. For example, in a particular project 45% weightage can be given to the overall cost, while in another project 45% weightage can be given to past performance in similar kind of projects. There are two types of selection processes, namely, overall selection based on ranking, and knock-out ratings. In the case of knock-out ratings the bidders are knocked out if a certain criterion is not met; this is also called as screening system. For example, technical capability of the seller can be one of the knock-out factors. If the sellers do not have the required technical capabilities they would be out of the race even if they do fairly well based on other factors. In selection based on ranking, the overall rating of factors based on weightage is taken into account. This is also called as seller rating system. The following are typical scoring criteria used by project managers to rate proposals received: • • • • •

Sellers’ understanding of project needs Overall or life cycle cost of executing the project Technical capability of the seller Applicable organizational policies of the performing organization Financial capacity of the seller

THE CONDUCT PROCUREMENTS PROCESS The Conduct Procurements process (Figure 11.3 and Table 11.2) is one of communicating to all concerned of the proposed contract, interacting with prospective sellers before the process of collection of submitted proposals begins, collecting and evaluating prospective sellers’ proposals, selecting a seller on the basis of predefined criteria, and awarding the contract. In this process, the performing organization advertises the contract; receives bids, quotes, or proposals; applies the selection criteria to select a seller; and awards the contract to the selected seller.

360 • PMP® Certification—Excel with Ease Conduct Procurements Tools and Techniques

Inputs Project management plan Procurement documents Source selection criteria Qualified seller list Seller proposals Project documents Make or buy decisions Teaming agreements Organization process assets

Bidders' conference Proposal evaluation Technique Independent estimates Expert judgment Advertising Internal search Procurement negotiations

Outputs Selected sellers Procurement contract award Resource calendars Change requests Project management plan update Project document update

Figure 11.3 The inputs, tools, and outputs of the Conduct Procurements process Table 11.2 Conduct Procurements – Executing Process Group Planning

Plan Procurement Management

Executing

Conduct Procurements

Monitoring and Controlling

Control Procurements

Closing

Close Procurements

The Tools and Techniques of the Conduct Procurements Process Advertising Advertisements in general-circulation or specialty publications, such as society or trade journals, serve to communicate the performing organization’s proposed contract to prospective sellers. Some government organizations, such as the Indian Railways, are mandated by their organizational policies to use newspaper advertisements as a mode of inviting proposals from prospective sellers. Some large organizations that have their own offsite development centers (ODCs), and their advertisements and accompanying processes are handled by the ODCs themselves.

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Bidder Conference The performing organization often meets bidders prior to the latter’s preparation of proposals. These meetings serve to clarify prospective sellers on contract scope requirements, procurement processes, and the like. The following list highlights the two main purposes of holding a bidder conference: A bidder conference ensures that all prospective sellers have a clear, common understanding of the product or service to be contracted and of procurement processes involved. Findings and clarifications made by the performing organization over the course of the bidder conference serve as a basis for amendments to the procurement documents, if any. Proposal Evaluation Techniques The criteria for evaluating and selecting a seller are defined well in advance and may be strongly based on the organizational process assets (OPAs) of the performing organization. The criteria may include price quoted, past performance of seller, seller’s technical capabilities, and/or years the seller has been in business. There exist many techniques to rate and score proposals. In addition to selection criteria defined earlier, expert judgment may be used to evaluate the proposals. Many organizations use a weighing system to evaluate proposals. To avoid personal bias in the process of evaluation, predetermined weights are assigned—before the review of proposals begins—to each attribute or value in the proposals. After all proposals have been scored using these weights, the highest-scoring proposal automatically receives the contract. Independent estimates represent a vital—and often mandatory—exercise in a performing organization’s evaluation of proposals received. Organizations often prepare their own independent estimates of the possible cost of deliverables to be contracted and associated time lines involved in the required activities. Sometimes, organizations contract this task as well! They have their independent estimates prepared by experts from outside the organization. Independent estimates represent an organization’s “should be” values, with which the organization typically expects the sellers’ figures to match. Without such independent estimates, organizations would not have a basis to validate sellers’ proposals. Procurement Negotiation The aim of procurement negotiation is to create a mutually acceptable framework in terms of scope, price, and other such criteria. Such agreements may be made prior to signing of the contract. A classic definition of procurement reveals the five rights of procurement, which are really the true preferences or interests of professionals during a procurement negotiation. Buyers expect to secure deliverables 1. 2. 3. 4. 5.

with the right quality as agreed. in the right quantity as agreed. at the right time as agreed. from the right place as agreed. at the right cost as agreed.

The aim of procurement negotiation in its barest form is to arrive at a mutually acceptable framework on the contractual applicability of these five procurement rights.

The Outputs of the Conduct Procurements process Selected Sellers Selection of a seller seen as competent to produce the product contracted is obviously the output of the Conduct Procurements process. Sellers selected are those who have been judged by the performing

362 • PMP® Certification—Excel with Ease organization to be competitive on the basis of the outcome of the evaluation of their proposals or bids and those who have negotiated a draft contract, which will be used as the actual contract when the award of contract is made. Procurement Contract Award Following completion of aforementioned processes, a contract is awarded to the selected seller. A project may be awarded to multiple sellers as well. The contract may be a complex document or a simple purchase order. In either case, it is a mutual legally binding agreement that obligates the seller to provide the specified products, services, or results and obligates the buyer to pay the seller per the terms defined in the contract.

THE CONTROL PROCUREMENTS PROCESS The Administer Procurements process (Figure 11.4 and Table 11.3) is one of managing procurement relationships, monitoring and managing the contractual performance of sellers, and making changes and corrections as needed per the terms of the contract. Effective contract administration ensures that the seller fulfils the terms of the contract. Fulfillment of contract obligations is an outcome toward which both the seller and the project management team must work together. The latter, especially in complex projects involving several contracts and several contractors, must ensure adequate coordination of schedules of contractors so that the ability of one contractor to deliver on time is not hampered by the failure of another to do so. In the execution of such processes, project team members must be aware of the legal implications of actions they may take and face. The main project management processes related to the administration of procurements are as follows:

Administer Procurements

Tools and Techniques

Inputs • • • • • •

Procurement documents Project Management Plan Contract Performance Reports Approved Change Requests Work Performance Information

• Contract Change Control Systems • Procurement performance review • Inspections and audits • Performance reporting • Payment System • Claims Administration • Records management System

Outputs • Procurement documentation • Organization Process Assets (updates) • Change Requests • Project Management Plan update

Figure 11.4 The inputs, tools, techniques and outputs of the Control Procurement Process

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Table 11.3 Control Procurements – Controlling Process Group Planning

Plan Procurement Management

Executing

Conduct Procurements

Monitoring and Controlling

Control Procurements

Closing

Close Procurements

• Managing project execution to authorize, evaluate, and validate the seller’s work at appropriate times • Reporting on seller’s performance to monitor continued compliance to contract scope, cost requirements, schedules, and technical standards • Performing quality control and integrated change control processes (see Chapter 7) • Monitoring and controlling risks (see Chapter 8) The Administer Procurements process also monitors prompt payment to the seller per time lines defined in the contract. The terms of the contract can be amended in accordance with the change control terms of the contract, a mandatory feature of most contracts.

The Tools and Techniques of the Control Procurements Process Contract Change Control System A contract change control system is an agreed-upon set of procedures that define step by step the processes to be followed while modifying the terms of a contract. The system generally includes definitions on • • • • • •

documentation requirements. a process to track systems for changes. dispute resolution procedures approval procedures of change requests (CRs). performance reporting procedures. payment procedures.

Third-Party Inspections and Audits Inspections and audits required by the buyer and supported by the seller as specified in the contract can be executed to identify any weaknesses in the seller’s work processes or deliverables. Audits of contractor facilities are mandated by several quality management standards as well. An important objective of inspections and audits is to report on seller performance. Performance reporting refers to the communication from the project management team to the performing organization’s management on the performance of contractors per contract terms. To this end, audits generate information on the effectiveness of the seller in delivering on contractual obligations, deviations if any from the

364 • PMP® Certification—Excel with Ease terms of the contract, and the performance levels of the seller with respect to the service level agreements spelled out in the terms of the contract. Payment System Payments due to the seller are handled by an accounts payable system of the performing organization and must follow appropriate reviews and approvals made by the project management team. The payments system, which is jointly implemented by the project management team and accounts payable department, tracks payment per the terms of the contract and reports on deviations if any. The project management team, in its own interest, should implement processes to ensure that payments due to compliant sellers are made on time: Obviously, sellers would appreciate on-time payments, which is likely to have a direct bearing on quality and schedule of deliverables. Claims Administration Contested changes are those changes to the contract requested by the buyer or the seller with regard to which the buyer and the seller have not been able to agree. These contested changes are called claims, disputes, or appeals. Claims are processed, monitored, and managed throughout the contract’s life cycle, usually in accordance with the terms of the contract. Outright disputes are best resolved through negotiated settlements; legal processes such as arbitration and litigation are generally least preferred among the dispute resolution options available. Records Management System A records management system refers to a specific set of processes mostly related with contract control functions and automation tools that are consolidated and combined into a whole, as part of a project management information system. It is used by the project manager to manage contract and procurement documentation and records.

Outputs of the Control Procurements Process Procurement documentation: It includes, but not limited to, the latest procurement contract with all supporting schedules and their different versions, requested unapproved contract changes and the reasons for not approving it or the stage of the approval process where it is pending, and approved change requests. It also includes work performance information such as deliverables, seller performance reports, financial documents including invoices and payment records, and the result of contract-related inspections along with the necessary documents which support these inspections. Project Management Plan (updates): The procurement management plan and the baseline schedule is updated to reflect the current expectations during administer procurement. Organization Process Assets (updates): OPA is updated with all the data available, to be used for archival purposes. This provides vital information for further planning of the same project or new projects of similar kind.

THE CLOSE PROCUREMENTS PROCESS The Close Procurements process (Figure 11.5 and Table 11.4) is one of effecting the final settlement and completion of the contract, including resolution of outstanding items, if any. The process includes product verification and administrative closeout. The following lists some of the documents that serve as inputs to the process:

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Close Procurements Tools and Techniques Procurement audits Negotiated settlements Records management system

Outputs

Inputs

Closed procurement Organizational process assets (updates)

Procurement management plan Procurement documentation

Figure 11.5 The inputs, tools, and outputs of the Close Procurements process

Table 11.4 Close Procurements – Closing Process Group

• • • • • • •

Planning

Plan Procurement Management

Executing

Conduct Procurements

Monitoring and Controlling

Control Procurements

Closing

Close Procurements

Signed contract Supporting schedules for the contract Requested and approved contract changes Seller-developed technical documentation for the project work carried out Seller performance reports for the contract Financial documents related to the contract Contract-related inspection results, if any

The Tools and Techniques of the Close Procurement Process Procurement Audits: Structured and well-established reviews of the procurement process, from procurement planning through administering procurements, help to identify lessons learned. A procurement audit is usually a planned audit. The dates of procurement audits are known in advance.

366 • PMP® Certification—Excel with Ease Negotiated Settlements: It is another term for out-of-court settlement. Settling disputes by negotiation is the primary goal, whenever there are issues between parties. When negotiation is not possible parties go for alternative dispute resolution (ADR), which includes mediation or arbitration. Litigation (going to court) is the least desirable option for settlements. Contract termination also comes under negotiated settlements, and hence, close procurement process to be followed for contract termination also. Records Management System: It refers to specific set of processes related with contract control functions and automations tools that are consolidated and combined into a whole, as part of the project management information system. It is also used by the project manager to close the procurement documentation and records formally.

Outputs of the Close Procurement Process Procurement audits. Structured and well-established reviews of the procurement process, from procurement planning through administering procurements, help to identify lessons learned. A procurement audit is usually a planned audit. Closed procurement. The buyer provides the seller, through the former’s authorized contract administrator, a formal written notice that the contract has been completed. Requirements for formal contract closure are usually defined in the terms of the contract and usually are part of the contract management plan. Updates to the OPAs. Updates are generated by “a complete set of indexed contract documentation, including the closed contract,” by adding the “deliverable acceptance” and by adding the “lessons learned and best practices documentation.” PMP WATCH A Project Manager’s Role in the Procurement Process The project manager must be involved in the creation of contracts. The project manager should understand the terms and conditions of a contract clearly. The project manager should ensure that a contract contains all project management requirements, such as reports, action plans, and communication processes deemed necessary for the contract. The project manager should identify and mitigate risks and incorporate residual risks into the term of a contract The project manager should perform contract negotiation to protect the interests of the performing organization The project manager should uphold the terms of a contract, not just those of the contract SOW Summary This chapter discussed the term Contract along with the salient features of a contract. Four procurement management processes namely Plan Procurements, Conduct Procurements, Administer Procurements, Close Procurements were discussed in detail. A typical project procurement life cycle discussed to understand the entire procurement management process. Different contract types like Fixed Price model, Time and Material model, Cost related models were discussed. Procedures to be followed in closing a procurement was discussed in detail.

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Answers to Exercise Questions Exercise 11.1 Answers A buyer agrees to pay the salaries of all the employees, rent for office space, and the actual cost of broadband and communication devices plus an additional US$ 35,000 per month.

Cost plus fixed fee

A customer agrees to pay a vendor a total of US$ 35,000 for 1 year for support services

Fixed price

A customer agrees to pay US$ 25 per hour per resource but not more than US$ 20,000 per month

Time and material

A customer agrees to pay the salaries of employees and meet the costs of Internet and other communication services and overheads including rent. The customer agrees to pay an additional US$ 4,000 per month for each month the vendor provides an average of 25 issues resolved per person per week with waiting time of the end users under 4 hours per issue.

Cost plus incentive fee

Chapter 11 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. D e f i n i n g p u r c h a s i n g d e c i s i o n s , specifying the approach, and identifying potential sellers refer to which of the following processes? A. B. C. D.

Plan Procurement Management Conduct Procurements Control Procurements Close Procurements

Question 2. A project manager, having decided to procure a product, is in the process of obtaining seller responses and selecting a seller. Which process is the project manager in? A. B. C. D.

Plan Procurement Management Conduct Procurements Control Procurements Close Procurements

368 • PMP® Certification—Excel with Ease Question 3. A project manager, having outsourced the manufacture of a product, is monitoring seller performance. In which process is the project manager? A. B. C. D.

Plan Procurement Management Conduct Procurements Control Procurements Close Procurements

Question 4. Which of the following documents represents mutually binding agreements that obligates the seller to provide specified products or services? A. B. C. D.

Procurement document Statement of work Contract Proposal

Question 5. Depending on the application area of contracted work, a seller may be referred to using all of the following terms except A. B. C. D.

contractor. vendor. service provider. purchaser.

Question 6. Depending on the application area of contracted work, a buyer may be referred to using all of the following terms except A. B. C. D.

client. prime contractor. contractor. vendor.

Question 7. Which of the following statements is true about a seller? A. A seller may be viewed during a contract life cycle first as a bidder, then as a selected source, and finally as a vendor. B. A seller may be viewed during a contract life cycle first as a vendor, then as a selected source, and finally as a bidder. C. A seller may be viewed during a contract life cycle first as a selected source, then as a vendor, and finally as a bidder. D. A seller may be viewed during a contract life cycle first as a selected source, then as a bidder, and finally as a vendor.

Question 8. Are the procurement management processes described in the PMBOK applicable to noncontractual intradivisional agreements between different units of a single organization? A. Yes. They are. B. No. They are not. Question 9. The process of determining what to acquire, how to acquire, how much to acquire, and when to acquire is called A. the Plan Procurements process. B. the Conduct Procurements process. C. the Administer Procurements process. D. the Close Procurements process. Question 10. All of the following are outputs of the Plan Procurement management process except A. B. C. D.

a procurement management plan. a procurement SOW. procurement documents. requirement documents.

Question 11. The roles of a buyer and a seller are predetermined when which of the following documents is present? A. B. C. D.

Teaming agreement SOW Procurement document Requirement documentation

Question 12. Which of the following types of contract is typically preferred by the Customer A. B. C. D.

Firm fixed price Time and material contract Cost reimbursable contract Cost plus percentage contract

Question 13. Which of the following typ es of contract is favored by many in the buyer organization? A. B. C. D.

Fixed-price contracts Time and material contracts Cost reimbursable contracts Cost plus percentage contracts

Project Procurement Management

Question 14. Which of the following types of contract is used whenever a seller’s performance period spans over many years? A. B. C. D.

Firm fixed price Fixed price plus (with) incentive Fixed price with EPA Cost reimbursable contract

Question 15. Which of the following types of contract takes into consideration inflation changes while fixing the pricing type? A. B. C. D.

Firm fixed price Fixed-price plus (with) incentive Fixed price with EPA Cost reimbursable contract

Question 16. Which of the following types of contract is intended to protect both buyer and seller from external conditions beyond their control? A. B. C. D.

Firm fixed price Fixed price plus (with) Incentive Fixed price with EPA Cost reimbursable contract

Question 17. All of the following are types of costreimbursable contracts except A. B. C. D.

CPFF. CPIF. CPAF. CPEF.

Question 18. An 80/20 split over/under target rule is used in which of the following types of contract? A. B. C. D.

CPFF CPIF CPAF CPEF

Question 19. Which of the following types of contract is hybrid contractual arrangement that contain aspects of both cost reimbursable and fixed-price contracts? A. B. C. D.

T&M Fixed price cost reimbursement CPIF CPAF

Question 20. Which of the following documents describes the item to be procured in sufficient detail to enable prospective sellers to determine whether they are

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capable of providing the contracted products, services, or results? A. B. C. D.

Procurement document Procurement management plan Procurement SOW Contract

Question 21. All of the following factors are selection criteria used in selecting sellers except A. B. C. D.

management approach. technical capability. technical approach. known company.

Question 22. A weighing system is used in which of the following procurement process? A. B. C. D.

Plan Procurements Conduct Procurements Administer procurements Close Procurements

Question 23: A ranking system is used in which of the following procurement processes? A. B. C. D.

Plan Procurements Conduct Procurements Administer procurements Close Procurements

Question 24. A qualified-seller list is used as an input to which of the following procurement processes? A. B. C. D.

Plan Procurements Conduct Procurements Administer procurements Close Procurements

Question 25. When are bidder conferences held? A. Prior to submission of bids B. After submission of proposals C. After contracts have been entered into D. After submission of proposals but before contracts have been entered into Question 26. A selected seller is the output of which of the following procurement processes? A. B. C. D.

Plan Procurements Conduct Procurements Administer procurements Close Procurements

370 • PMP® Certification—Excel with Ease Question 27. Which of the following types of contract places the greatest risk on the seller? A. B. C. D.

Cost plus fixed fee Cost plus incentive fee Fixed price plus incentive Fixed price

Question 28. Which of the following statement is true about the Control Procurement process? A. Both the Buyer and the seller would Control the procurement contract for similar purposes B. Both the Buyer and the seller would Control the Procurement contract for different purposes C. Only the Seller would control the procurement Contract D. Only the buyer would control the procurement Contract Question 29. Which of the following statements is true about the Administer Procurements process? A. Both the buyer and the seller would administer the procurement contract for similar purposes. B. Both the buyer and the seller would administer the procurement contract for different purposes. C. Only the seller would administer the procurement contract. D. Only the buyer would administer the procurement contract. Question 30. Which of the following statements is true about changing the terms of a contract midway through execution? A. Contracts can be amended any time prior to contract closure by the seller. B. Contracts can be amended any time prior to contract closure by the buyer. C. Contracts can be amended any time prior to contract closure by mutual consent. D. Contract amendments are usually equally beneficial to both the buyer and the seller.

Question 31. ADR in the context of procurement management stands for A. B. C. D.

alternative dispute resolution. alternative divided risk. administrative dispute resolution. alternative dividend risk.

Question 32. Documentation on evaluation of seller performance is prepared by A. B. C. D.

the seller. the buyer. a third party. a change controller.

Question 33. A CPPC contract has an estimated cost of US$ 140,000, with an agreed profit of 20% of the costs. The actual cost of the project is US$ 120,000. What is the total amount to be reimbursed to the seller on the basis of the above figures? A. B. C. D.

US$ 144,000 US$ 140,000 US$ 168,000 US$ 120,000

Question 34. A buyer has negotiated a fixed-price incentive contract with a seller. The contract has a target cost of US$ 200,000, a target profit of US$ 40,000, and a target price of US$ 240,000. The buyer has also negotiated a ceiling price of US$ 270,000 and a share ration of 70/30. If the actual cost proves to be US$ 170,000, how much the buyer would have to pay the seller over and above the actual cost? A. B. C. D.

US$ 40,000 US$ 45,000 US$ 49,000 US$ 51,000

Question 35. A seller is contracted by a CPIF contract to construct a bridge. The performance cost is estimated to be US$ 1,000, with $4,500 in materials and a 40% incentive fee. The contractor completes the work with a materials cost of US$ 4,000. How much the contractor will be paid? A. B. C. D.

US$ 4,500 US$ 5,000 US$ 5,200 US$ 4,000

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Question 36. Which of the following documents is a unilateral form of contract? A. B. C. D.

SOW Invoice Project plan Purchase order

Question 37. If a buyer pays a seller US$ 55 per hour plus material cost per actuals, what type of contract has been negotiated between the buyer and the seller? A. B. C. D.

T&M Fixed bid Cost plus incentive Cost plus cost

Question 38. What is privity? A. Open information between customer and vendor B. Contractual, confidential information between customer and vendor C. Noncontractual, confidential information between customer and vendor D. Contractual, nonconfidential information between customer and vendor Question 39. A cost-plus-percentage-cost contract has an estimated cost of US$ 140,000, with an agreed profit of x% of the costs. The actual cost of the project proves to be US$ 150,000. The total reimbursement to the seller is US$ 165,000. What is the profit percentage? A. B. C. D.

10% 18% 7.1% 20%

Question 40. A buyer expects a single price for a new project. What type of contract does the customer have in mind? A. B. C. D.

RFP RFI Proposal IFB

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Question 41. If a buyer wants to a seller to begin on a high-priority, business critical project immediately. What would the seller need from the buyer to start work immediately in such a situation? A. B. C. D.

RFP RFQ Letter of contract Letter of negotiation

Question 42. A cost-plus-incentive-fee (CPIF) contract has an estimated cost of $300K with a predetermined fee of $20K and a share ratio of buyer to seller equal to 60/40. The actual cost of the project is $ 240 K. How much savings did the seller make in total and out of total savings how much did he make because of the incentive? A. $60K, $24K B. $605K,$36K C. $30K, $26K D. $34K,$3.4K Question 43. You are in the process of selecting a seller from the short-listed ones and awarding a contract. All of the following are inputs to this process except? A. Bidder Conference B. Project Management Plan C. Procurement Documents D. Source selection criteria Question 44. Anand wants to construct a Bungalow for his son Srikrishnan. Anand engages an architect-cum-builder. What kind of contract should he choose to have minimum risk for himself? A. Cost plus fixed fee B. T&M C. Cost plus incentive fee D. Lump-sum Question 45. Anand wants to construct a Bungalow for his son Srikrishnan. Anand engages an architect-cum-builder. What kind of contract is most Risky type for Anand? A. Cost plus fixed fee B. Cost plus percentage of Cost C. Cost plus incentive fee D. Lump-sum

372 • PMP® Certification—Excel with Ease Question 46. Customer wants to negotiate the price with the Vendor before signing the Contract. What is the Objective of the Negotiation? A. Ask the Vendor just to increase the Price B. Ask the Vendor just to decrease the Price C. Ask the Vendor to decrease the efforts. D. Win – Win Situation for both the parties Question 47. Which of the following statement is true regarding Force majeure. A. It frees both the parties from liability of obligation when powerful unexpected even such as hurricane or Tsunami occurs. B. It forces the vendor to accept the view of the Customer C. It forces the customer to accept the view of the Vendor D. Force majeure is nothing to do with the Contract.

Question 48. Which of the following represents the condition where only very few sellers exist and the action of one seller will have impact on other seller’s prices. A. Monopoly B. Oligopoly C. Multi Buyer system D. Sole Source Question 49. Which of the following represents the market condition where only one qualified seller exists in the whole market? A. Single Buyer B. Oligopoly C. Multi Buyer system D. Sole Source Question 50. Which of the following represents the profit of the Vendor in a Fixed Price Contract (Choose the best option)? A. It is pre-determined B. It is high C. It is Low D. It is unknown

Project Procurement Management

Answer Sheet for Chapter 11 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

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374 • PMP® Certification—Excel with Ease

Answers for Chapter 11 Questions

Question Number

Answer

Question Number

Answer

Question 1

A

Question 26

B

Question 2

B

Question 27

D

Question 3

C

Question 28

A

Question 4

C

Question 29

A

Question 5

D

Question 30

C

Question 6

D

Question 31

A

Question 7

A

Question 32

B

Question 8

A

Question33

A

Question 9

A

Question 34

C

Question 10

D

Question 35

C

Question 11

A

Question 36

D

Question 12

A

Question 37

A

Question 13

A

Question 38

B

Question 14

C

Question 39

A

Question 15

C

Question 40

D

Question 16

C

Question 41

C

Question 17

D

Question 42

A

Question 18

B

Question 43

A

Question 19

A

Question 44

D

Question 20

C

Question 45

B

Question 21

D

Question 46

D

Question 22

B

Question 47

A

Question 23

B

Question 48

B

Question 24

B

Question 49

D

Question 25

A

Question 50

D

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Explanations for Chapter 11 Answers 1. Answer A: Defining the approach indicates it is a planning process and the answer is “Plan Procurement Management” Process. Potential Seller being identified here which will help us to send the RFP. Note: Selected Sellers is the outcome of Conduct Procurement process. Here, we are referring to identifying potential sellers only. 2. Answer B Selected Sellers is the outcome of Conduct Procurement process. Obtaining seller responses and deciding the contract is done as part of Conduct Procurement. Contract is getting signed as part of Conduct Procurement process. 3. Answer C Control Procurement is part of Controlling Process group in which the monitoring and controlling of the seller’s performance takes place. 4. Answer C Signed and legally bound agreement is called as Contract. So, mutually agreed contents are part of the contract. 5. Answer D Seller is referred as Vendor, Contractor, Service Provider, etc. Purchaser is a Buyer. 6. Answer D Seller is referred as Vendor, Contractor, Service Provider, etc. Buyer is a Purchaser, Client, Primer Contractor and Contractor. 7. Answer A Seller is referred as bidder (whoever bids is called as bidder) in the initial stage and then called as selected seller (selected source) and finally Vendor (contract established) 8. Answer A Procurement process is also applicable for the intra company projects which are on noncontractual agreement. All the processes are applicable in that case also. 9. Answer A Make or Buy decision is part of Plan Procurement management process. It determines what to acquire, how to acquire, and how much to acquire. We plan all these things and hence, it is part of Plan Procurement management process.

10. Answer D The main outputs of Plan Procurement management process are Make or Buy decision, SOW, Procurement Management Plan , Procurement Documents (RFP etc), source selection criteria (How we will select the seller) and Change request, if any. Requirement documentation is an output of “Collect Requirement” Process, which belongs to Scope Management Knowledge Area. 11. Answer A Role of the buyer and seller are pre-determined and is part of the Teaming Agreement. Teaming Agreement is an input of the Plan Procurement process. 12. Answer A Firm Fixed price contract is typically preferred by the Customer because it passes the risk to the Seller (Vendor). Even if the project is delayed, the customer need not pay extra money to the Vendor. 13. Answer A Firm Fixed price contract is typically preferred by the Customer (Buying Organization) because it passes the risk to the Seller (Vendor). Even if the project is delayed, the customer need not pay extra money to the Vendor (during Fixed Bid Contract). The seller prefers Time and Material (T&M) contracts as buyers assume risks in it. 14. Answer C EPA stands for Economic Price Adjustments. It is used whenever the seller’s performance spans over a period of time (Covering from the economic conditions like inflations, dollar value, etc.) 15. Answer C EPA stands for Economic Price Adjustments. It is used whenever the seller’s performance spans over a period of time (Covering from the economic conditions like inflations, dollar value, etc) 16. Answer C EPA stands for Economic Price Adjustments. It is used whenever the seller’s performance spans over a period of time (Covering from the economic conditions like inflations, dollar value etc). It helps both the buyer and seller due to external conditions.

376 • PMP® Certification—Excel with Ease 17. Answer D CPFF means Cost plus Fixed Fee. CPIF means Cost plus Incentive Fees. CPAF means Const plus Award Fee. There is no contract type called as CPEF.

25. Answer A Bidder conference is used after submitting the proposal and bidders are given an opportunity to correct the bid price based on the discussion. So, prior submission of bids is the best answer.

18. Answer B CPIF means Cost plus Incentive Fees. 80/20 rule is used in the Incentive Strategy. It is also called as over/under target rule. If the work gets over earlier than planned, we will get the incentives.

26. Answer B Conduct procurement is a process where we receive the proposal, evaluate the proposal and sign the contract for selected seller. A Qualified seller list is used as an input for this process and whose output is the selected sellers.

19. Answer A T&M is a hybrid contract where the cost is reimbursed. It also has a specific amount of profit. In T&M contract, the customer will pay in dollars for every hour worked on. 20. Answer C Procurement Management plan is the output of Plan Procurement management process, which contains the process of procurement. It is has the item to be procured. 21. Answer D Although all answers appear to be right, being a known company alone cannot be a selection criterion. However, a known company with legitimate parameters like managerial approach, etc. may be considered for selection. 22. Answer B Conduct Procurement is a process where we receive the proposal, evaluate the proposal and sign the contract for a selected seller. Weighing system will be used to evaluate the proposal based on the weightage to different parameters. 23. Answer B Conduct Procurement is a process where we receive the proposal, evaluate the proposal and sign the contract for a selected seller. Weighing system will be used to evaluate the proposal based on the weightage to different parameters. A Ranking system is also used as technique to evaluate the proposal submitted. 24. Answer B Conduct procurement is a process where we receive the proposal, evaluate the proposal and sign the contract for a selected seller. A qualified seller list is used as an input for this process and whose output is the selected sellers.

27. Answer D Firm Fixed Price contract is typically preferred by the Customer (Buying Organization) because it passes the risk to the Seller (Vendor). Even if the project is delayed, the customer need not pay extra money to the Vendor (during Fixed Bid Contract). 28. Answer A Conduct Procurement is a process where we receive the proposal, evaluate the proposal and sign the contract for the selected seller. Weighing system will be used to evaluate the proposal based on the weightage to different parameters. It helps to quantify the qualitative data that can be included in the weightage system. 29. Answer A Both the Buyer and Seller would control the procurement contract for similar purpose. Contract is written for executing the duties of both the buyer and seller. So, both the parties approach the contract to execute their duties. 30. Answer C A contract can be amended at any time if both the parties agree to do so. Changing the contractual terms mid-way through the project is possible. 31. Answer A ADR stands for Alternate Dispute Resolution in Procurement Management. It is also known as External Dispute Resolution and is used when the contracted parties have conflicts to be solved; it helps the disagreeing parties to come to an agreement. 32. Answer B Evaluation of seller performance is done by the Buyer. This process is very important for the seller and that is sellers are keen to get the customer feedback once in a Quarter or at the

Project Procurement Management

end of the Project. Third party will not do the evaluation unless such evaluation is asked for. If third parties do the evaluation of the seller, then it may lead to chaos. Moreover, since the contract is between two parties, evaluation by a third party may not be viable. 33. Answer A Estimated Cost = $140,000; Profit (estimated) = $28,000 (20% of 140,000). Actual Cost = $120,000 only. Actual profit = $24,000 (20% of 120,000). So, the seller will get $120,000 (Cost) + $24,000 = $144,000 34. Answer C Sure Profit = $40,000; Saved Cost = $(200,000 – 170,000) = $30,000; Incentive for seller on saved cost = $30,000 * 0.3 = $9,000; Payment due = $40,000 + $9,000 = $49,000 35. Answer C Total Cost = Performance Cost = Material Cost + 40% (Savings) = $1000 + $4000 + 40% (4500 – 4000) = $5200 36. Answer D Unilateral form of contract is referred to as Purchase Order and is predominantly used in IT Projects. It is a buyer generated document. Sending a purchase order to a Vendor constitutes a legal offer to buy products or services by the Customer. Purchase Order is signed only by the customer. It is also a legally bound contract and so, it is called as unilateral contract. 37. Answer A In T&M contract, the buyer agreed to pay $X per hour to the seller. If required, any other cost will be reimbursed on actual (For example, travel cost etc.). 38. Answer B Contractual and Confidential information between the buyer and seller is called as Privity. For example, while executing the contract, one party may come to know of some confidential information about the other party regarding the execution of the signed contract. This information which should not be spelt out and maintained with confidentiality is called as Privity. 39. Answer A Here, the Contract is Cost + Percentage of the Cost. Estimated Cost = $140,000 with an agreed

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profit of x% of Cost. The Actual Cost = $150,000 and so, Profit = $150,000 * (x/100) Total reimbursed amount = $150,000 + $150,000 *(x/100) = $165,000. Solving this, we get x = 10 % 40. Answer D FFB stands for Firm Fixed Bid Contract where a buyer expects a single price for a project. 41. Answer C Letter of Intent is used when the buyer wants to do the project but signing a contract is getting delayed. In this case, a document outlining an agreement between two or more parties is drafted before the agreement is finalized 42. Answer A The correct answer is A. The estimated cost of project is $200K; the actual cost of project is $240K. This implies a net savings of $60K. The sharing ratio is 30% for the seller, which is = $24K. 43. Answer A The correct answer is A. We are in the Conduct Procurements process. The inputs to this process are the project management plan, procurement documents, source selection criteria, qualified seller list, seller proposals and project documents, make or buy decisions, teaming agreements, and organizational process assets. Bidder conferences are a Tool and Technique of this process. 44. Answer D The correct answer is D. LumpSum contract minimizes the Risk of the buyer. Even if the construction of the bungalow is delayed, Anand need not pay anything extra. It is the responsibility of the contractor to finish the project (Bungalow Construction) on time. 45. Answer B The correct answer is B. LumpSum contract minimizes the Risk of the buyer. Cost plus Percentage of the Cost increases the Risk higher because the contractor will try to inflate the cost figure. 46. Answer D The objective of any negotiation is a mutual Cooperative Win–Win solution for both the parties. 47. Answer A Force majeure essentially frees both the parties from liability or obligation when an extraordinary event of circumstance occurs beyond the control of the parties under contract.

378 • PMP® Certification—Excel with Ease 48. Answer B It is a common market form that refers to a market condition, where very few sellers exist, and the action of one seller will have an impact on other sellers’ prices. 49. Answer D Sole Source is a market condition in which only one qualified seller exists in the whole market.

50. Answer D The best available answer is “unknown”. The real profit of the seller in a fixed bid contract is known only at the end of the project. It also depends on the cost spent on the whole project. Profit = Revenue – Cost. Revenue is fixed in a Fixed Bid Contract and since the Cost is unknown, the profit also is unknown.

Key Terms Buyer The acquirer of products, services, or results. Contract Mutually binding agreement that obligates the seller to provide the specified product or service or result and obligates the buyer to pay for the same. Contract administration It is the process of managing the contract and the relationship between the buyer and seller, reviewing and documenting how a seller is performing to establish required corrective actions and provide a basis for future relationships with the seller, managing contract related changes and, when appropriate, managing the contractual relationship with the outside buyer of the project. Contract management plan This document describes how a specific contract will be administered, basically defines the process of managing Contract. Contract statement of work (SOW) It is the narrative description of products, services, or results and it is usually being supplied under contract. Contract work breakdown structure (CWBS) A portion of the work breakdown structure for the project developed and maintained by a seller contracting to provide project component. Force majeure Relating to contracts, a powerful and unexpected event, such as hurricane or other disaster and is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties.

Oligopoly It is a common market form that refers to a market condition, where very few sellers exist, and the action of one seller will have impact on other sellers’ prices. Strategic planning by oligopolists always involves taking into account the likely responses of the other market participants as it may affect others also and this causes oligopolistic markets a nd industries to be at the highest risk for collusion. Procurement documents Those documents utilized in contract and proposal activities, which include buyer’s Invitation for Bid, Invitation for Negotiations, Request for Information, Request for Quotation, Request for Proposal and seller’s responses. Request for information A type of procurement document whereby the buyer requests a potential seller to provide various information related to a product or service or seller capability. Request for proposal (RFP) Document used to request proposals from prospective sellers. Request for quotation (RFQ) Document used to request price quotations from prospective sellers of common or standard products or services. Single source a market condition in which the Organization prefers to contract with only one seller. Sole source a market condition in which only one qualified seller exists in the whole market

Project Stakeholders Management CHAPTER COVERAGE 1. Stakeholders and their Characteristics 2. Plan Stakeholders Management 3. Manage Stakeholders Engagement 4. Control Stakeholders Engagement

12

STAKEHOLDERS AND THEIR CHARACTERISTICS Stakeholders, as we know, are those team members or entities who are actively involved in project execution or whose interests may be positively or negatively affected by project outcomes. The following list presents their salient characteristics: • Stakeholder interests may be either positively or negatively impacted by the project. • Alternatively, stakeholders may influence project execution and project results. • It is important for project planners to identify all stakeholders and their requirements. Sometimes individual stakeholder requirements may be implicit and not explicitly stated. For instance, in one of the requirements gathering workshop, a customer said that he wanted a “world class system.” When he was probed further, it came to be known that he wanted a system with background in golden color and transaction response time of 5 seconds. • Stakeholders may have conflicting interests and objectives—Managing stakeholders may not so easy. • Involving stakeholders in the initiation phase group improves the probability of a positive outcome for the project. • In general, differences among stakeholders must be resolved in favor of the customer or end user. Discussion Points 1. Discuss how stakeholders can negatively impact a project. 2. How did you manage the conflicting objectives of stakeholders? Give examples.

380 • PMP® Certification—Excel with Ease Tools and Techniques • Stakeholder Analysis • Expert Judgment • Meetings

Inputs • Project Charter • Procurement Documents • Enterprise Environmental Factors • Organization Process Assets

Outputs • Stakeholder Register

Figure 12.1 The inputs, tools, techniques and outputs of the Identify Stakeholders Process Identify Stakeholders “The process of identification of stakeholders (Figure 12.1 and Table 12.1)—identifying all team members”, organizations, or entities impacted by the project and documenting their interests, involvement, and impact—has the following two important outputs: the stakeholder register and a stakeholder management strategy (see Figure 12.1). There exists no hard-and-fast rule to be applied in stakeholder identification. Rules for judging stakeholder involvement is always situation specific: Rules that work in one situation may not work in another. The best way to identify stakeholders is by asking the right questions. The questions given in the following list are guidelines—a preliminary road map—and by no means exhaustive: 1. Who are the team members, entities, or organizations likely to be affected or to benefit from the intended project outcome? 2. Who would be assigned responsibility for the tasks entailed by the project? 3. Who is likely to move for or against the intended objective of the project? 4. Who can make improvements to the tasks entailed by the project? (Who can do it the better way?) 5. Who can contribute to the financial and technical resources required by the project?

Table 12.1 Identify Stakeholders – Initiation Process Group Initiation

Identify Stakeholders

Planning

Plan Stakeholders Management

Executing

Manage Stakeholders Engagement

Controlling

Control Stakeholders Engagement

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Answers to these questions, which would vary across organizations, would likely yield a list of stakeholders. Procurement documents are the main inputs of this process along with the project charter. Procurement documentation helps to identify stakeholders referred to in the contract and procurement documents. The PMBOK suggests three step processes to identify stakeholder: Step 1. Identify all potential stakeholders and relevant information Step 2. Identify the potential impact or support each stakeholder could generate and use a power/interest grid to classify them Step 3. Assess how the stakeholders are likely to react or respond in various situations to help plan influencing them to enhance support or mitigate negative impacts. Refer Chapter 2, Page 31 on “Stakeholders.”

Step 1 Project managers use group dynamic techniques, whereby key project team members are asked to identify all possible stakeholders of the project. The Crawford slip is another popular technique used for this purpose. This technique can be used to rapidly collate ideas from a large group of people. Crawford is actually one of the original forms of brain-writing. The sponsor who pays money for the project is a key stakeholder. Individuals who sign on the project deliverables (usually customers) are stakeholders. The organization that executes this project is also a stakeholder as it stands to benefit through project execution. The organization that buys the outcome of the project is also a stakeholder since its members are benefitted. The organization that provides resources for executing the project is a stakeholder. Project managers, team members, and functional managers are stakeholders. You can identify new stakeholders by asking the existing stakeholders. Discussion Points 1. Why do we need to identify stakeholders early in a project? 2. What are the difficulties you faced in identifying stakeholders in projects.

Step 2 Stakeholder register The stakeholder register carries the following elements: 1. Identification elements of stakeholder 2. Influencing stage of the stakeholder 3. Classification of stakeholder Refer Figure 12.2 for the contents of stakeholder register. Stakeholder register usually contains name, designation, influence stage, classification. Depending on their skill levels stakeholders will be involved in the appropriate life cycle of the project and this is called influence stage. For example, stakeholders having high proficiency level in designing will get involved only in the designing stage of the project. In Figure 12.2, R. Ramya and K. Balachandran seem to have high proficiency in design and so are being involved only in the design stage of the project. There are people who continuously involve

382 • PMP® Certification—Excel with Ease Name

Designation

Influence stage

Classification

S. Chandramouli

Application Manager

All

Supporter

Siva Ranjani

Technical Consultant

Design, Coding

Neutral

R. Ramya

Architect

Design

Resistor

Shri Krishna

Business Manager

All

Neutral

Figure 12.2 A Stakeholder Register Template throughout the life cycle of the project. In Figure 12.2, S. Chandramouli, the application manager, involves continuously throughout the life cycle of the project because of the nature of the work he handles. Stakeholder classification like “supporter”, “neutral”, and “resistor” depends on the nature of the stakeholders. If they are negatively impacted by the outcome of the project, they are classified as “Resistors.” They are classified as “neutral” if they are neither “supporters” nor “resistors”.

Step 3 Stakeholder management is a difficult task requiring the formulation of a comprehensive stakeholder management strategy. A stakeholder analysis matrix is a tool used to represent a project’s stakeholder management strategy. The following would be the contents of a stakeholder analysis matrix: 1. 2. 3. 4.

Stakeholder name Stakeholder impact level Stakeholder interest level Strategies for gaining support from this stakeholder

A typical stakeholder analysis matrix may be obtained by adding a column to the stakeholder register template (Figure 12.2) titled “Strategies for Gaining Support”. This strategy is based on the classification of the customer defined in Step 2 along with the influencing stage of the customer defined in Step 3.

PLAN STAKEHOLDERS MANAGEMENT Planning Stakeholder management is critical and vital to the success of projects. The project manager cannot execute a project alone. The contribution of the people (stakeholders) in executing the process laid down by the project manager is important, as it is difficult to execute the project without such

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Tools and Techniques • Analysis Techniques • Expert Judgment • Meetings

Inputs • Project Management Plan • Stakeholder Register • Enterprise Environmental Factors • Organization Process Assets

Outputs • Stakeholder Management Plan • Project document updates

Figure 12.3 The inputs , tools, techniques and outputs of the Plan Stakeholders Management Process contribution. Communication with stakeholders is vital to project management. The project manager needs to establish clear lines of communication with all stakeholders and keep them involved in and aware of the project’s progress from time to time. Plan Stakeholder management process (Figure 12.3 and Table 12.2) belongs to Planning Process group. Engaging the right kind of people (people with the right skills) in the right way in a project at the right time makes a big difference to the success of the Project. Stakeholder Management plan has to be shared and shaped by key stakeholders to ensure that it meets the needs of those interested in the successful outcome of particular project.

Inputs to the Plan Stakeholders Management Process Project Management Plan The project management plan is used as input to create the Stakeholder Management plan to ensure consistency. Contents already present in the project management plan that are related to how the stakeholders will be managed will be considered before writing the new Stakeholder Management Plan. For example, Communication Management plan and Risk Management plan will be considered Table 12.2 Plan Stakeholders Management – Planning Process Group Initiation

Identify Stakeholders

Planning

Plan Stakeholders Management

Executing

Manage Stakeholders Engagement

Controlling

Control Stakeholders Engagement

384 • PMP® Certification—Excel with Ease as inputs for drawing out the Stakeholder Management plan. If any other process talks about stakeholder-related aspects in the project management plan, it will also be considered to maintain consistency. The latest approved version of the project management plan will be considered. Scope Baseline and Schedule Baseline will also be taken into account while drawing the stakeholder management plan because the extent to which the stakeholder is engaged depends on the size and schedule of the project. Stakeholder Register Stakeholder Register is used to understand the stakeholders who are vital for the success of a project. The stakeholder register will have the contact details of the customer(s) and the end users. These details are classified and analyzed for effective stakeholder management. Enterprise Environmental Factors The following Enterprise Environmental (EE) factors are considered while framing the stakeholder management plan: • Organization’s structure and culture • Already existing infrastructure and other tools Organizational Process Assets The following assets are considered while framing the Stakeholder Management plan • Policies and procedures (related to the management of stakeholders and human resources) • Historical information (already existing Stakeholder Management plan) • Lessons learnt documents (from similar kind of projects)

Tools and Techniques of the Plan Stakeholders Management Process Expert Judgment Here, the experience gained from similar kind of projects in managing the stakeholders/ process of stakeholder management is put into use. Dos and Don’ts are implemented based on the expertise gained from previous projects. Meetings In order to develop a stakeholder management plan which is realistic and accepted by the entire team, it is better to conduct team meetings while drawing the stakeholder management plan. This meeting should be attended by stakeholders such as project sponsors and others who are responsible for the project and its success. The project manager can also conduct this meeting with selected team members who have good knowledge of the stakeholders. Stakeholder Analysis Stakeholders are classified on the basis of their interests, influence and involvement in the project. Such a classification helps a project manager to focus on the complementary functions and relationships among stakeholders necessary to ensure project success.

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Stakeholder Classification Model Figure 12.4 shows three stakeholder classification models based on the power and the interest, influence and impact grids. Model 1: Classifies the stakeholders based on Power and Interest Model 2: Classifies the stakeholders based on Power and Influence Model 3: Classifies the stakeholders based on Power and Impact Power indicates the level of authority of a person; Interest indicates the level of concern a person has on the project; Influence indicates the level of involvement shown on the project; Impact is the effect due to the level of involvement. Another popular stakeholder classification model is the Salience Model (Figure 12.5), which is based on the power, urgency and legitimacy grids. POWER (LEVELOF AUTHORITY) POWER

MODEL1

INTEREST INFLUENCE IMPACT

INTEREST (LEVEL OF CONCERN)

INFLUENCE (LEVELOF INVOLVEMENT) MODEL2

IMPACT (EFFECT OF INVOLVEMENT) MODEL3

MODEL1

MODEL2 MODEL3

Figure 12.4 Stakeholder Classification Model

URGENCY

POWER

LEGITIMACY

Figure 12.5 Salience Model of Stakeholder Classification

386 • PMP® Certification—Excel with Ease Power indicates the level of authority of a person; Urgency indicates the need for immediate action and Legitimacy indicates whether the involvement is appropriate or not. A grid (Venn diagram) is drawn based on the above three factors to find out the type of stakeholders.

Output of the Plan Stakeholders Management Process Stakeholder Management Plan The stakeholder management plan specifies the process of managing the stakeholders. Stakeholders are managed based on the classifications stipulated in the Stakeholder Management Plan. The purpose of the Stakeholder Management Plan is to provide a framework for the following: 1. Identify each stakeholder and the corresponding group (classification), both internal to and external to the Project; 2. Define roles and responsibilities of each group clearly so that the project can utilize them properly; 3. Define communication methods clearly and specify how the stakeholder groups will interact; 4. Define escalation mechanism clearly, if not already defined 5. Provide a means to set clear expectations among all stakeholders The amount of time allocated to Stakeholder Management depends on the complexity and schedule of the project and its corresponding goals.

MANAGE STAKEHOLDERS ENGAGEMENT Project Managers need to engage stakeholders throughout the lifecycle of a project in order to utilize them better for the success of the project. Most of the time, bringing in the right people will solve most of the problems. While we engage stakeholders, we may come across a few issues that need to be managed with our communication skills, management skills and interpersonal skills. Issues can be managed with proper planning by creating an issue log that helps to compile, analyze and manage the issues. Manage stakeholder engagement is part of the controlling process group as indicated in Figure 12.6 and Table 12.3.

Inputs of the Manage Stakeholder Engagement Process Stakeholder Management Plan Project communication with stakeholders is an important part of any project. A project manager needs to establish lines of communication with all stakeholders and also develop a mechanism to keep them involved and aware of the project’s progress and status. Stakeholder Management plan defines an approach to communications and a mechanism to provide project data to stakeholders. It may be necessary to develop different strategies for the different groups identified during the Collect Requirement process. Some possible methods of communication are: • Progress reports • Meetings and briefings • User groups (email groups) • Access to documentation (Requirements) The stakeholder management plan indicates how the different stakeholders can be managed (i.e., it outlines the process).

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Tools and Techniques • Communication Methods • Interpersonal Skills • Management Skills

Inputs • Stakeholder Management Plan • Communication Management Plan • Change Log • Enterprise Environmental Factors • Organization Process Assets

Outputs • Issue Log • Change Request • Project Management Plan • Project document Update

Figure 12.6 The inputs , tools, techniques and outputs of the Manage Stakeholders Engagement Process Communication Management Plan Who needs what information, when and how – these are the contents of the Communication Management plan. This is essential to engage the stakeholders at the appropriate time. This consists of communication strategy, communication methods, types of information to be passed etc. A well-defined communication management plan (that which has been agreed upon by all stakeholders), is essential to engage the stakeholders effectively. Change Log Change log will help us to trace and track the various changes and approaches that happened in the project from the time of its inception. It helps to track the various parameters such as scope, time, cost, quality, resources, etc. that were controlled during the lifecycle of the project. It helps to clarify the doubts and the changes in engagement model, if any. Table 12.3 Manage Stakeholders Engagement – Executing Process Group Initiation

Identify Stakeholders

Planning

Plan Stakeholders Management

Executing

Manage Stakeholders Engagement

Controlling

Control Stakeholders Engagement

388 • PMP® Certification—Excel with Ease Organizational Process Assets Organizational Performance Assets (OPA) factors that influence a project’s success are to be considered as an input to manage Stakeholder Engagement. This includes (but is not limited to) • • • • • •

Organizational procedures (related to stakeholders and their engagement) Organizational policies Organizational process (standards that are already available) Organizational templates (Stakeholder Engagement template, if any) Historical information (completed schedules, EV, risk data etc.) Lessons Learnt knowledge base

Tools and Techniques of the Manage Stakeholder Engagement Process Communication Methods There exist three types of communication methods: Push communication, Pull communication and Interactive communication. In Push communication, the communication is sent (pushed) to other party/parties. The receipt of the message is not confirmed by the recipient. In Pull communication, the receivers (message recipient) pull the communication at their discretion from systems/portals. When large volumes of information need to be passed, this method is used. In Interactive communication, both the parties interact and feedback is given back immediately. Interpersonal Skills Interpersonal skills are vital to engage the stakeholders continuously. These are skills that are practised and developed to communicate well with stakeholders. Interpersonal skills indicate our confidence level and our ability to listen to and understand other stakeholders. Interpersonal skills required for a project manager to manage stakeholder engagement include the talent for conflict management, negotiation, communication, leadership, problem solving, listening, stress management, cultural understandings, building trust and managing changes. Management Skills Management skills are required for a project manager to manage stakeholder engagement and execute the processes/tasks. Skills required to initiate, plan, allocate and execute the project are called as management skills. These skills are essential for engaging the stakeholders and include negotiation skills, writing styles, presentation skills and public speaking skills.

Outputs of the Manage Stakeholder Engagement Process Issue Log Issue Log is a LIVE updated document, which contains the list of On-going and Close issues of the Project. An Issue is an event/action that impacts project execution, which needs to be resolved. While managing the engagement of stakeholders, issues, if any, that may arise, are entered into this document. It can be used to organize the current issues of the project based on various parameters of the project (such as priority, status etc). The Issue Log may also contain customer remarks that the project team may want to track. It also includes details regarding the closure of a project. Challenges faced by project managers while executing the project are also tracked in the Issue Log.

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Change Request, Project Management Plan and Project Document Update These are the outputs of any controlling process. Depending on the type of change, it entails a modification either in the plan or in the execution or both. If there is any change in the process, we update the Project Management Plan. Likewise, if there is any change in the execution part (project-specific), then we update the Project documents.

CONTROL STAKEHOLDERS ENGAGEMENT Project Managers need to engage (Figure 12.7) the stakeholders throughout the lifecycle of the project to utilize them better for the project to succeed. Controlling Stakeholder Engagement is critical for the success of the project. Control Stakeholder Engagement is part of the controlling process group as indicated in Table 12.4

Tools and Techniques • Report Systems • Expert Judgments • Meetings

Inputs • Project Management Plan • Issue Log • Work Performance Data • Project Documents

Outputs • Work Performance Information • Change Request • Project Management Plan Update • Project document update

Figure 12.7 The inputs, tools, techniques and outputs of the Control Stakeholders Engagement Process

Table 12.4 Control Stakeholders Engagement – Executing Process Group Initiation

Identify Stakeholders

Planning

Plan Stakeholders Management

Executing

Manage Stakeholders Engagement

Controlling

Control Stakeholders Engagement

390 • PMP® Certification—Excel with Ease

Inputs of the Control Stakeholder Engagement Process Project Management Plan Project Management Plan is the main input of this process, which talks about the course (the how part) of controlling the engagement of stakeholders. Various subsidiary plans (including Stakeholder Management Plan), which are part of the main project management plan help in charting a suitable mechanism for stakeholder engagement. Issue Log It is a LIVE updated document, which contains a list of On-going and Close issues of the Project. The various issues related to the engagement of stakeholders are managed using this document. The Issue Log can also be used to organize the current issues of the project based on various parameters (such as its priority, status etc.) so as to control it in a systematic way. Work Performance Data Work performance data is the input for the stakeholder engagement process. It includes data associated with the degree of compliance and data related to managing and controlling the stakeholders, such as number of Issues, number of Open Issues and number of Challenges faced by the Project Team. Project Documents Controlling stakeholders is specific to a project and hence the project related documents are used as inputs to address the issues raised by stakeholders. For example, if the current issues are related to the scope of the project, then the documents related to the scope of the project such as WBS, WBS dictionary, Scope Statement etc. are invoked to arrive at a speedy resolution.

Tools and Techniques of the Control Stakeholder Engagement Process Expert Judgment The experience of experts is vital to control stakeholder engagement. Skill levels based on similar kind of previous activities are also considered as Expert Judgment. We may utilize the competence of experts to analyze existing historical information and use it to define better HR control and solve the current issues of stakeholders. We may also use expert judgment to evaluate the various options available and choose the best one. Usually, personnel of senior management, SMEs and external consultants are used for this purpose. Expert judgment is also available from other sources that include: 1. 2. 3. 4. 5. 6. 7.

Other units within the organization, Consultants, Stakeholders, including customers or sponsors, Professional and technical associations, Industry groups, Subject matter experts, and Project management office (PMO)

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Meetings To resolve an issue in a way that is realistic and accepted by the stakeholder, it is better to conduct team meetings while addressing issues. This meeting should also be attended by other stakeholders such as project sponsors and others who are responsible to contrive a solution to the problem at hand. The project manager can also conduct this meeting with selected team members who have good knowledge of the matter of contention. Report Systems Report Systems are standard tools that help to capture, store and distribute the information needed to manage and control stakeholders, thereby helping to resolve open issues. These also help managers to report the performance and progress of a project in resolving Issues.

Outputs of the Control Stakeholder Engagement Process Work Performance Information Work performance data related to the Issues are analyzed in context to derive information pertaining to issue resolution based on how the data is inter-related. This information is called as Work Performance Information (WPI). Examples: 1. 2. 3. 4.

Issue solving efficiency Accepted issues Rejected issues Trend in issue numbers

Change Request, Project Management Plan Update and Project Document Update These are outputs of any controlling process. Depending on the types of change, it requires a change either in the plan or in the execution or both. If there is any change in the process, we update the Project Management Plan. Likewise, if there is any change in the execution part (project-specific), then we update the Project documents.

Summary This chapter discusses the Stakeholder Management knowledge area. The process of identifying stakeholders involves identifying all team members, organizations or entities impacted by the project and documenting their interests and involvement. Stakeholder management has the following two important outputs: stakeholder register and a stakeholder management strategy. Plan Stakeholder management process belongs to Planning Process group. Engaging the right kind of people (people with the right skills) in the right way in a project at the right time makes a big difference to the success of the Project. Manage Stakeholder Engagement is part of the controlling process group. Project Managers need to engage the stakeholders throughout the project lifecycle and satisfy their interests in the project to ensure success. Controlling Stakeholder Engagement is critical for the success of the project.

392 • PMP® Certification—Excel with Ease

Chapter 12 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. The main output of the Identif y Stakeholder process is A. Risk Register B. Stakeholder Plan C. Stakeholder Register D. Stakeholder Management Strategy Question 2. Suppose that your manager has asked you to find an approach to increase organizational support to minimize the negative impacts of stakeholders throughout the project life cycle. What did he ask you to prepare? A. Risk Register B. Stakeholder Plan C. Stakeholder Register D. Stakeholder Management Strategy Question 3. Suppose that your manager asks you to demonstrate your plan to manage stakeholders in a project. Which of the following tools will you use? A. Risk Register B. Stakeholder Register C. Stakeholder Analysis Matrix D. Stakeholder Impact Matrix Question 4. When a stakeholder has additional information needs, which of the following would you update? A. Stakeholder Register B. Risk Register C. Stakeholder Management Strategy D. Issue Log Question 5. The following are the contents of Stakeholder Register except A. Assessment Information B. Identification Information C. Stakeholder Classification D. Urgency of the need of Information

Question 6. All but one of the following are the contents of Stakeholder Management strategy: A. Key stakeholders who can significantly impact the project B. Level of participation in project desired for each identified stakeholder C. Stakeholder Groups and their management D. Urgency of the need of Information of stakeholders Question 7. Who is responsible for Stakeholder Expectation management? A. Project Leader B. Customer C. Project Manager D. Project Sponsor Question 8. Of the following, who is not a key stakeholder for an internal project? A. Project Leader B. External Customer C. Project Manager D. Team members Question 9. You are the Project Manager of ABC Project, which is highly complex in terms of technology and size. Which stakeholder gives required support and money to start the Project? A. Project Sponsor B. External Customer C. Internal Customer D. Team members Question 10. You are the Project Manager of ABC Project, which is highly complex in terms of technology and size. Who Signs the Charter of the Project? A. Project Manager B. Project Leader

Project Stakeholders Management

C. Project Sponsor D. Team members Question 11. You are in the process of taking over a project from another project manager when the project is in between stages. You come to know that the customer will seek lot of changes in the project. What is the best approach for the Project Manager? A. Involve the Customer early into the project B. Ignore others’ view about the customer C. Escalate this to the customer’s boss D. Get away from this Project. Question 12. You are the Project Manger of ABC Project, which is complex in nature in terms of technology and size of the project. The business analyst at customer location complains that he is not able to collect the requirement fully as a group of stakeholders who are not willing to give their requirements keep passing negative comments about the project. What kind of stakeholders are they? A. Negative Stakeholders B. Positive Stakeholders C. Internal Stakeholders D. Poor Stakeholders Question 13. When will the stakeholder identification happen in a project? A. At the beginning of the project B. At the end of the project C. Throughout the lifecycle of the project D. At the end of every phase of the project Question 14. Stakeholders often have conflicting interest and objectives. A. True B. False Question 15. Involving stakeholders in the initiation phase group improves the probability of a positive outcome for the Project. A. True B. False

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Question 16. The following are t he to ols and techniques of Identify stakeholders, except: A. Stakeholder Analysis B. Expert Judgment C. Meeting D. Communication Methods Question 17. Stakeholder Analysis happens in which of the following process? A. Identify Stakeholders B. Plan Stakeholder Management C. Manage Stakeholder Engagement D. Control Stakeholder Engagement Question 18. Change Log is the input and Issue Log is the output in which of the following process? A. Identify Stakeholders B. Plan Stakeholder Management C. Manage stakeholder Engagement D. Control Stakeholder Engagement Question 19. This skill indicates our confidence level and our ability to listen to and understand other stakeholders. A. Interpersonal Skill B. Managerial Skill C. Communication Skill D. Technical Skill Question 20. This skill is required to initiate, plan, allocate and execute the project. A. Interpersonal Skill B. Managerial Skill C. Communication Skill D. Technical Skill Question 21. Issue Log is used as an input in which of the following process? A. Identify Stakeholders B. Plan Stakeholder Management C. Manage Stakeholder Engagement D. Control Stakeholder Engagement Question 22. ---------- indicates the level of authority of a person. ---------indicates the need for immediate action. -----------indicates whether the involvement is appropriate or not. A. Power , Urgency , Legitimacy B. Legitimacy, Urgency , Power C. Urgency , Legitimacy , Power D. Power , Legitimacy, Urgency

394 • PMP® Certification—Excel with Ease Question 23. Interpersonal skills and managerial skills are used as tools and techniques in which of the following process? A. Identify Stakeholders B. Plan Stakeholder Management C. Manage stakeholder Engagement D. Control Stakeholder Engagement Question 24. Project stakeholders should be involved in the following phases of the Project Life Cycle. A. In all phases of the lifecycle B. In the initial stage C. In the final stage D. In the execution stage Question 25. D e te r m i n i ng and d e l ive r i ng t he required level of quality and grade is the responsibility of which of the following stakeholder(s)? A. Project Sponsor B. Project Manager C. Project Team D. All the Stakeholders of the Project Question 26. The ability of stakeholders to influence the final characteristics of the product is highest at the beginning of the project and gets progressively lower as the project continues A. True B. False Question 27. Process of gathering stakeholder needs to the project objective is part of which of the following process? A. Collect Requirements B. Identify Stakeholder C. Plan Stakeholder Management D. Control Stakeholder Engagement Question 28. The major purpose of the status report is to A. Organize and summarize the information to key stakeholder B. Inform upper management about the problem faced in the project C. Provide information to the customer D. Inform the Client about the percentage of completion of the project Question 29. Which of the following document will help us to trace and track various changes and approaches that happened in the project from the time of its inception

A. B. C. D.

Approach Document Stakeholder Register Issue Log Change Log

Question 30. Which of the following document will have the customer remarks about the project? A. Approach Document B. Stakeholder Register C. Issue Log D. Change Log Question 31. Expert Judgment is available in all the following formats, except: A. Consultant B. Industry Groups C. Subject Matter Expert D. Team members Question 32. In general, differences among stakeholders must be resolved in favor of A. Consultant B. Customers C. Project managers D. Team members Question 33. The generic lifecycle structure shows the characteristics of all except which one of the following? A. Cost and Staffing levels are low at the start B. Cost and Staffing levels drop rapidly as the project nears completion C. Stakeholder influence is lowest at the start of the project D. Stakeholder influence is greatest at the start of the project Question 34. Who is usually responsible for portfolio management within an organization? A. Project Managers B. Project Sponsors C. Stakeholders D. Senior Management Question 35. The customer is not happy with the deliverables your team had recently supplied. What will be your first response? A. Speak to your team members B. Speak to the customer C. Rework on the deliverables D. Create a Change Request

Project Stakeholders Management

Question 36. Issue Log is an output to which of the following process? A. Identify Stakeholders B. Plan Stakeholder Management C. Manage stakeholder Engagement D. Control Stakeholder Engagement Question 37. Manage Stakeholder Engagement Process belongs to which of the following Process Group? A. Initiation B. Planning C. Execution D. Controlling Question 38. Crawford Slip is closely associated with which of the following process? A. Identify Stakeholders B. Plan Stakeholder Management C. Manage stakeholder Engagement D. Control Stakeholder Engagement Question 39. “Level of Involvement” shown by a stakeholder is called as A. Interest B. Influence C. Impact D. Power Question 40. “L e vel of C oncern” shown by stakeholder is called as A. Interest B. Influence C. Impact D. Power

a

Question 41. “Level of Authority” shown by a stakeholder is called as A. Interest B. Influence C. Impact D. Power Question 42. S a l i e n c e m o d e l o f S t a k e h o l d e r classification connects all of the following except: A. Legitimacy B. Influence C. Urgency D. Power Question 43. Negotiation skills , writing styles , presentation skills and public speaking skills are together classified as A. Management Skills B. Interpersonal Skills

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C. Leadership Skills D. Program manager Skills Question 44. Which of the following is an input to Manage Stakeholders engagement A. Management Skills B. Interpersonal Skills C. Work Performance Information D. Work Performance Data Question 45. “Level of Involvement” shown by a stakeholder is called as A. Interest B. Influence C. Impact D. Power Question 46. Which of the following processes belong to Initiation Process Group? A. Identify Stakeholders B. Plan Stakeholder Management C. Manage stakeholder Engagement D. Control Stakeholder Engagement Question 47. In order to develop a Stakeholder Management plan that is realistic and accepted by the entire team, the following technique is being used while drawing the Stakeholder Management plan. A. Expert Judgment B. Meetings C. Stakeholder Analysis D. Control Stakeholder Engagement Question 48. In which of the following techniques Stakeholders are classified on the basis of their interests, influence and involvement in the project? A. Expert Judgment B. Meetings C. Stakeholder Analysis D. Control Stakeholder Engagement Question 49. Following are the type of communication methods except: A. Push Communication B. Pull Communication C. Interactive Communication D. Formal Communication Question 50. Skill level based on similar kind of previous project activities are considered as A. Expert Judgment B. Pull Communication C. Meeting D. Reporting Systems

396 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 12 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

Project Stakeholders Management

Answers for Chapter 12 Questions

Question Number

Answer

Question Number

Answer

Question 1

C

Question 26

A

Question 2

D

Question 27

A

Question 3

C

Question 28

A

Question 4

C

Question 29

D

Question 5

D

Question 30

C

Question 6

D

Question 31

D

Question 7

C

Question 32

B

Question 8

B

Question33

C

Question 9

A

Question 34

D

Question 10

C

Question 35

B

Question 11

A

Question 36

C

Question 12

A

Question 37

D

Question 13

C

Question 38

A

Question 14

A

Question 39

B

Question 15

A

Question 40

A

Question 16

D

Question 41

D

Question 17

A

Question 42

B

Question 18

C

Question 43

A

Question 19

A

Question 44

D

Question 20

B

Question 45

C

Question 21

D

Question 46

A

Question 22

A

Question 47

B

Question 23

C

Question 48

C

Question 24

A

Question 49

D

Question 25

B

Question 50

A

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398 • PMP® Certification—Excel with Ease

Explanations for Chapter 12 Answers

1. Answer C Although stakeholder management strategy is also an output, the main output of the Identify Stakeholder process is a stakeholder register. Since we cannot form the Stakeholder Management strategy without Stakeholder Register, the best answer is Stakeholder Register. 2. Answer D Stakeholder Management Strategy is the document where we specify how we will manage the stakeholders based on their interest, influence and impact (Stakeholder Classification). The strategy depends on the combination of the above factors. 3. Answer C Stakeholder Analysis matrix is often used to represent an organization’s Stakeholder Management strategy. 4. Answer C Stakeholder Management strategy consists of details like stakeholder interest, influence and impact. Here, information needs have more to do with the interest the stakeholder has shown in the project. 5. Answer D Stakeholder Register consists of assessment information, identification information (name, etc), stakeholder classification (client, vendor etc) but it will not have the details of urgency of the need of the information. Urgency of the need of information will be part of the Communication Management plan. 6. Answer D Stakeholder Management strategy includes all the details of Options A, B, and C. Urgency of the need of information will be part of the Communication Management plan. 7. Answer C The project manager is responsible for Stakeholder Expectation Management. Managing stakeholder expectation is very critical for the execution of a project.

8. Answer B Identifying the key stakeholder is very important for the execution of a project. For an internal project, external customer is not important (Is he a stakeholder?) 9. Answer A Project Sponsor gives the money to start the project and he is the one who gives authority to the project manager through Project Charter. 10. Answer C The Project Sponsor, being the authorized signatory, signs on the Project Charter. The charter gives the authority to the project manager to start the project. 11. Answer A Involving the Customer early into the Project will help to solve the problem. Involving him early will help to reduce the changes and thereby avoid lot of rework in the project. 12. Answer A Negative Stakeholders. A negative stakeholder sees the negative outcome of the project; he may be negatively affected by the project and is less likely to see the project being finished successfully. 13. Answer C Stakeholder Identification process is part of the initiation process group, but this process is an iterative process and will be executed throughout the lifecycle of the process. 14. Answer A Stakeholders often have conflicting interest and objectives which make the project difficult to manage. For example, one stakeholder (Sponsor) may be interested only in the Cost parameter while another (Program Manager) may be interested in resource-related parameters. You, as Project Manager however, would be interested in finishing the project successfully. 15. Answer A Involving stakeholders in the initiation phase group improves the probability of a positive outcome for the Project. We need to call all the stakeholders in the kick-off meeting which happens before starting the project. All the stakeholders will come to know about the project

Project Stakeholders Management

objectives, as also about each other. This would help in the successful execution the project. 16. Answer D Identify Stakeholders uses Stakeholder Analysis, Expert Judgment and Meeting as Tools and Techniques. Communication method is the technique used in Manage Stakeholder engagement process. 17. Answer A Stakeholder Analysis is a technique used in Identify Stakeholder and hence, it is the answer. Stakeholders need to be analyzed as soon as they are identified. It may also happen in other stages but A is the best option. Stakeholders are classified on the basis of their interests, influence and involvement in the project. Such a classification helps a project manager to focus on the complementary functions and relationships among stakeholders to ensure project success. 18. Answer C Manage Stakeholder Engagement process is the correct answer. Project Managers need to engage stakeholders throughout the project lifecycle in order to utilize them well for the success of the project. Most of the time, bringing in the right people will solve most of the problems. While we engage stakeholders, we may come across a few issues that need to be managed with our communication skills, management skills and interpersonal skills. Issues can be managed with proper planning by creating an Issue Log that helps to compile, analyze and manage the issues. 19. Answer A Interpersonal skills indicate our confidence level and our ability to listen to and understand other stakeholders. Interpersonal skills are vital to engage the stakeholders continuously. These are skills that are practised and developed to communicate well with stakeholders. 20. Answer B Management skills are required for a project manager to manage Stakeholder Engagement and execute the processes/tasks. Skills required to initiate, plan, allocate and execute the project are called as management skills. These skills are essential for engaging the stakeholders and include negotiation skills, writing styles, presentation skills and public speaking skills.

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21. Answer D Issue Log, Project Management Plan and Work Performance Data are the inputs of Control Stakeholder Engagement Process. Issue Log is a LIVE updated document, which contains a list of On-going and Close issues of the Project. The various issues related to the engagement of stakeholders are managed using this document. The Issue Log can also be used to organize the current issues of the project based on various parameters (such as its priority, status etc.), so as to control it in a systematic way. 22. Answer A Power indicates the level of authority of a person; Urgency indicates the need for immediate action and Legitimacy indicates whether the involvement is appropriate or not. One of the popular stakeholder classification models is the Salience Model which is based on the power, urgency and legitimacy grids. 23. Answer C Interpersonal skills, managerial skills and communication methods are the tools and techniques used in Manage Stakeholder Engagement Process. Project Managers need to engage stakeholders throughout the lifecycle of a project in order to utilize them better for the success of the project. Most of the time, bringing in the right people will solve most of the problems. 24. Answer A Stakeholders are to be involved in all phases of the lifecycle from the beginning to the end of the Project. Proper stakeholder management will lead the project towards its success. Project Managers need to engage stakeholders throughout the lifecycle of a project in order to utilize them better for the success of the project. Bringing in the right people will solve most of the problems. 25. Answer B Stakeholders to be involved in all phases of the lifecycle from the beginning to the end of the Project. But determining the level of quality and grade to be delivered is the responsibility of the Project Manager and the Project management team. 26. Answer A The ability of the stakeholders to influence the final characteristics of the projects product is highest at the start and gets progressively lower as the project continues

400 • PMP® Certification—Excel with Ease 27. Answer A Gathering stakeholder needs is part of the Collect Requirement process which is part of the Scope Management knowledge area. 28. Answer A The main purpose of the status report is to inform key stakeholders of the project about the project status. Key stakeholders needs to be identified first. 29. Answer D Change log will help us to trace and track the various changes and approaches that happened in the project from the time of its inception. It helps to track the various parameters such as scope, time, cost, quality, resources, etc. that were controlled during the lifecycle of the project. It helps to clarify the doubts and changes in the engagement model, if any. 30. Answer C Issue Log is a LIVE updated document, which contains a list of On-going and Close issues of the Project. The Issue Log may also contain customer remarks that the project team may want to track. Challenges faced by project managers while executing the project are also tracked in the Issue Log. 31. Answer D Expert Judgment comes from various sources and out of the available sources, Option D is the answer. Experts usually come from the outside, from different sources. 32. Answer B In general, differences among stakeholders must be resolved in favor of the Customer/End Users. This is an important tip (clue) while attacking and addressing conflicts among various stakeholders. 33. Answer C Stakeholder influence is greatest at the beginning of the project; Cost and Staffing levels are low at the start, Peak at the execution phase, and drop rapidly towards the end of the project. 34. Answer D Project Manger may not be assigned at this stage and hence, senior management is responsible for it. The portfolio manager decides it based on the strategic objective of the organization. Strategic Objective of the Organization may change over a period of time.

35. Answer B As a project manager, we need to attack the problem where it exists. When the feedback is of negative nature, understand exactly the cause (reason) of customer dissatisfaction. A discussion with the customer is the most effective way of achieving this objective. 36. Answer C The outputs of Manage Stakeholder Engagement process are Issue Log, Change Request, Project Management Plan update and Project document update. 37. Answer D Manage Stakeholder engagement and Control Stakeholder engagement are part of the controlling Process Group. 38. Answer A Project managers use group dynamic techniques to identify stakeholders. The Crawford slip is another popular technique used for this purpose. This technique can be used to rapidly collate ideas from a large group of people. Crawford is actually one of the original forms of brain-writing. 39. Answer B Level of involvement is called as Influence. Level of concern is called as Interest. Effect of involvement is called as Impact. 40. Answer A Level of involvement is called as Influence. Level of concern is called as Interest. Effect of involvement is called as Impact. 41. Answer D Level of involvement is called as Influence. Level of concern is called as Interest. Effect of involvement is called as Impact. Level of authority is called as Power. 42. Answer B Power indicates the level of authority of a person. Urgency indicates the need for immediate action and Legitimacy shows whether the involvement is appropriate or not. A grid (Venn diagram) is drawn based on the above three factors to find out the type of stakeholders. It is called as Salience Model of Stakeholder Classification.

Project Stakeholders Management

43. Answer A Management skills are required for a Project Manager to manage Stakeholder Engagement and execute the processes/tasks. Skills required to initiate, plan, allocate and execute the project are called as management skills. These skills are essential for engaging the stakeholders and include negotiation skills, writing styles, presentation skills and public speaking skills. 44. Answer D Project Management Plan, Work Performance Data, Issue Log and Project Documents are the inputs to manage Stakeholder Engagement. 45. Answer C Level of involvement is called as Influence. Level of concern is called as Interest. Effect of involvement is called as Impact. Level of Authority is called as Power. 46. Answer A Identify stakeholder process belongs to Initiation Process Group. But this process is executed throughout the lifecycle of the project. 47. Answer B In order to develop a stakeholder management plan which is realistic and accepted by the entire team, it is better to conduct team meetings while drawing the stakeholder management plan. This meeting should be attended by stakeholders such as project sponsors and others who are responsible for the project and its success. The project manager can also conduct this meeting with select team members who have good knowledge of the stakeholders.

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48. Answer C Stakeholders are classified on the basis of their interests, influence and involvement in the project. Such a classification helps a project manager to focus on the complementary functions and relationships among stakeholders necessary to ensure project success. 49. Answer D There exist three types of communication methods: Push communication, Pull communication and Interactive communication. In Push communication, the communication is sent (pushed) to other party/parties. The receipt of the message is not confirmed by the recipient. In Pull communication, the receivers (message recipient) pull the communication at their discretion from systems/portals. When large volumes of information need to be passed, this method is used. In Interactive communication, both the parties interact and feedback is given back immediately. 50. Answer A The experience of experts is vital to control Stakeholder Engagement. Skill levels based on similar kind of previous activities are also considered as Expert Judgment. We may utilize the competence of experts to analyze existing historical information and use it to define better HR control and solve the current issues of stakeholders. We may also use expert judgment to evaluate the various options available and choose the best one. Usually, personnel of senior management, SMEs and external consultants are used for this purpose.

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Professional Responsibilities of a PMP CHAPTER COVERAGE 1. Professional Responsibilities of a PMP 2. The PMP Code of Professional Conduct 3. Business Ethics 4. Cultural Competence

13

INTRODUCTION This chapter highlights the professional responsibilities of a certified project management professional (PMP). From the exam perspective, this chapter is important as it is related to all the knowledge areas. Professional responsibilities need to be followed throughout the project lifecycle by the project manager. The PMP Code of Professional Conduct, a document provided by the Project Management Institute (PMI), is an authoritative guide to project managers on how to conduct themselves professionally in project management environments and serves as a basis for establishing standards on ethical practices and professionalism in a project environment. Generally, about 10% of the questions in the PMP exam cover this topic. The following list highlights the integrity and exemplary standards expected of a PMP: • PMPs must declare conflicts of interest, if any, and be fair to the interests of all stakeholders. • PMPs must respect the confidentiality of intellectual property (IP) information that they may handle as part of their professional duties. • PMPs must provide accurate information to members of the public. • PMPs must neither accept nor receive inappropriate gifts. • PMP aspirants must provide accurate information throughout the PMP application process. Any violations can lead to disciplinary action by the PMI. These standards expected of PMPs arise from the belief that PMPs’ decisions and actions should be not only right but also perceived as right and must be free of judgmental errors and intemperate statements that may yield room for misconceptions or misinterpretations of their integrity.

404 • PMP® Certification—Excel with Ease

PROFESSIONAL RESPONSIBILITIES As a PMP, professional responsibilities may be classified into the following three areas: • Adhering to the PMP Code of Professional Conduct • Maintaining high levels of business ethics • Developing cultural competence We will now discuss these responsibilities in detail.

The PMP Code of Professional Conduct The PMP code of professional conduct is not contained within the PMBOK® Guide. It is part of PMI code of ethics defined in “http://www.pmi.org/PDF/ap_pmicodeofethics.pdf ” from PMI. PMI found that there are four values project managers around the globe identified as being important: responsibility, respect, fairness, and honesty. These values have become the foundation of the Code and each of them is discussed at length in a separate sections called Chapters. For each of these values the code lists aspirational and mandatory standards. The aspirational standards describe the conduct that we strive to uphold as practitioners. Although adherence to the aspirational standards is not easily measured, conducting ourselves in accordance with these is an expectation that we have of ourselves (it is not optional). The mandatory standards establish firm requirements, and in some cases, limit or prohibit practitioner behavior. Practitioners who do not conduct themselves in accordance with these standards will be subject to disciplinary procedures before PMI’s Ethics Review Committee. However, even though we have this distinction of aspirational and mandatory standards, everything is considered for PMP Exam. Responsibility: Take ownership of the decisions you make or fail to make; Respect: It is our duty to show a high regard for ourselves and for others; Fairness: When we make any decision we should act impartially and objectively. Honesty: Employ truth in both your communication and conduct. Responsibility includes taking actions based on best interest of society, do what we say we will do, taking ownership for errors committed by self and make corrections promptly, protecting proprietary or confidential information, reporting unethical or illegal conduct to appropriate management. Respect includes approaching directly those persons with whom we have a conflict or disagreement, listening to others’ points of view and seeking to understand them, not acting in an abusive manner toward others. Fairness includes demonstrating transparency in decision making process, providing equal access to information to those who are authorized to have that information, making opportunities equally available to qualified candidates, proactively and fully disclose any real or potential conflicts of interest to the appropriate stakeholders, not discriminating against others based on, but not limited to, gender, race, age, religion, disability, nationality, or sexual orientation. Honesty includes seeking to understand the truth, truthful in communications and also in conduct, providing accurate information in a timely manner.

Business Ethics Ethical management refers to a process of reflection and dialogue that establishes standards such as codes, policies, and procedures. Application of ethics involves clearly distinguishing between right and wrong, but in the real world, the parting line between right and wrong is often difficult to identify. In

Professional Responsibilities of a PMP

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professional contexts, PMPs are often tested on their capacity for ethically sound decision making. The following list highlights guidelines that help PMPs ensure that the projects they execute have a strong ethical framework: • Avoid occurrences of ethical dilemmas; this technique represents the most effective one to manage them. • Involve team members in the ethical-decision making process, whenever appropriate. • Integrate the principles of ethical management with overall best practices followed in projects; define preferred ethical values in the project plan. • Recognize and address mistakes of project team members and support them in their endeavor to operate ethically.

Cultural Competence Cultural competence is the ability to interact effectively with people of different cultures. Cultural competence has assumed significance with the rapid globalization of the world’s economy. Project activities are now extensively outsourced, organizations—particularly in the services sector—oft en have a cross-cultural presence, and even team members within an organization’s facility hail from many cultures. Therefore, PMPs, as prime process leaders, are expected to set standards in cultural competency skills. The following list provides two important aspects that affect team members’ performance in cross-cultural work environments: • Culture shock. This term refers to the anxiety and uncertainty regarding normative behavior of a person in a new environment or country with a different or unknown culture. • Ethnocentrism. This term refers to a person’s belief that one’s culture is superior to another’s culture. In managing global projects, PMPs require to develop cultural self-awareness, that is, awareness of one’s own cultural orientations and the impact they can have in managing projects involving working with people of different cultures.

General Guidelines for Maintaining Professional Responsibility Do • • • • • • •

develop your levels of cultural self-awareness. set realistic expectations for yourself and your team. accept that you may make mistakes, but remain confident of your abilities. be patient and groom relationships. maintain your sense of humor. maintain your integrity. avoid blame games.

Don’t • adopt the orientations of other cultures. • compare another culture with yours. • rank or grade cultures.

406 • PMP® Certification—Excel with Ease

Summary This chapter discussed the professional responsibilities and PMP Code of professional Conduct. Responsibility to the profession and responsibility to customers and the public were discussed. Business ethics and cultural competencies were discussed. Do’s and don’ts checklist in managing global projects are listed out. Truthfully report information about your PMP status and PM experience. Project manager is responsible for the integrity of the PM process, the product. Avoid putting your own personal gain above project objectives. Report instances that might appear to be a conflict of interest.

Chapter 13 Questions and Answers • • • • • • •

Please set yourself a time clock of 1 hour to take this test Mark your answers using pencil in the answer sheet provided at the end of this question set The correct answers are provided at the end of this question set (after the answer sheet) Give one mark for each correct answer for evaluation purpose There is no negative marking for the wrong answers Practice this test multiple times for better results All the very best!

Question 1. Suppose that you received information that a close friend of yours managed to obtain a PMP certification by lying that he was the project manager for a project that was actually executed by you. You chose to ignore the information because your friendship with him. You have violated which of the following clauses of the PMP Code of Professional Conduct? A. Cooperate with the PMI concerning ethical violations. B. Report possible violations of the Code of Professional Conduct to the PMI. C. Protect individual IPs. D. Protect conflicts of interest. Question 2. Suppose that, in the scenario presented in Question 1, the PMI asked you for information you may possibly have regarding the circumstances of your friend’s certification. Suppose that you choose to not to divulge the facts. You have violated which of the following clauses of the PMP Code of Professional Conduct? A. Cooperate with the PMI concerning ethical violations. B. Report possible violations of the Code of Professional Conduct to the PMI.

C. Protect individual IPs. D. Protect conflicts of interest. Question 3. Suppose that a complex project, using a first-of-its-kind technology, consumes more time and work than planned and is planned to go live in a month. All project issues have been fixed; the schedule performance index (SPI) of the project stands at 0.80 and the cost performance index (CPI) at 1.34. Under these circumstances, a monthly status report on the project would report A. that the execution of this project is not in control. B. that the project will be completed behind schedule. C. that the project cost has exceeded its approved budget. D. on various project issues and options. Question 4. Suppose that an important customer of your current project, with whom you have good rapport and who has planned to provide an important project for your organization, wants you to perform a few more activities in your current project for him free of cost. This requested work clearly being out of the scope of your project, which of the following responses would you plan?

Professional Responsibilities of a PMP

A. Modify your current project’s scope and perform the extra activities free of cost because your organization would stand to benefit from the new project B. Perform the extra activities free of cost because you do not want to spoil the rapport with the customer C. Deny the request because it is clearly out of scope D. Ask him to initiate a Change Request to modify project scope Question 5. In the scenario presented in Question 4, suppose that you have decided to perform the extra activities without informing your organization because you want the personal rapport with the customer to be maintained. This indicates A. failure to satisfy the scope of professional services. B. something that is commonly performed in your industry. C. protection of individual IPs. D. protection of conflicts of interest. Question 6. Suppose that you have used content from your friend’s project presentation as your own in one of your projects. Your action indicates A. failure to satisfy the scope of professional services. B. something that is commonly performed in your industry. C. protection of individual IPs of others. D. protection of conflicts of Interest. Question 7. Which among the following entities is generally responsible for formally reviewing major changes to the project contract? A. B. C. D.

Senior management Project sponsor Project manager Change control board

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Question 8. Suppose that you, a portfolio manager, placed an order on behalf of your organization with a friend of yours, who runs a software company. Assume that no one in your organization knew about your friendship. This is an instance of A. failure to satisfy the scope of professional services. B. something that is commonly performed in your industry. C. protection of individual IPs of others. D. conflict of interest. Question 9. You submitted information you knew to be untrue in your PMP exam application. This is an instance of A. failure to satisfy the scope of professional services. B. something that is commonly performed in your industry. C. protection to be given to individual IP of others. D. failure to provide accurate information. Question 10. Upon taking over a project midway from a project manager who had resigned from the organization, you analyze the project and understand that project costs have been kept in control, the project’s customer is indeed happy over project execution, and that the customer has next planned a billion-dollar project with your organization. You, however, also come to know that the previous project manager had sanctioned a US$-4,500,000 discount to the customer, in violation of the organization’s policies. What would your action be in such a situation? A. Ignore the discount made as project costs are in control. B. Ignore the discount made as the previous project manager is well known to you. C. Ignore the discount made as your organization is due to get a billiondollar project. D. Contact your manager.

408 • PMP® Certification—Excel with Ease Question 11. Suppose that you gifted your client an expensive wristwatch on his birthday. This is an instance of A. failure to comply with PMP code of professional conduct. B. something that is commonly performed in your industry. C. protection to be given to individual IPs of others. D. failure to provide accurate information. Question 12. Suppose that you submitted your profile to a prospective client of your organization, manipulating your experience in a particular technology because you were sure that without this the prospective client would not award an important project to your organization. This is an instance of A. failure to satisfy the scope of professional services. B. something that is commonly performed in your industry. C. protection of individual IPs of others. D. failure to provide accurate information. Question 13. Suppose that a client, with whom you have a good rapport, wants you to alter a product’s configuration—a major change in the project’s scope—a favor for which he is ready to offer you money and recommend you for a promotion. Also, this client has promised to award an important project to your organization. What would your response be? A. Accept the money and perform the out-of-scope activity because your organization is likely to receive an important project from this client. B. Do not accept the money but perform the out-of-scope activity because you do not want to spoil your rapport with this client. C. Deny the request because it is clearly out of scope. D. Do not accept the money and ask the client to initiate a Change Request.

Question 14. Suppose that your project has many interfaces with other projects, managed by other project managers. Per your record, one project deliverable from another project is behind schedule by 2 weeks and so you put that on your status report. But the project manager concerned has reported that that deliverable is on schedule to the same program manager. What would you do? A. Complain about this to the program manager. B. Discuss with your team members. C. Discuss with stakeholders. D. Meet the project manager concerned asking for clarification. Question 15. A belief that one’s culture is superior to that of others is called A. B. C. D.

culture shock. ethnocentrism. culture wave. ethno shock.

Question 16. In your organization’s media release describing your project, you find information that you know to be untrue. Nevertheless, you authorize the media release, succumbing to your manager’s pressure in asking you to do so. You have violated which of the following standards established in the PMP Code of Professional Conduct? A. Be truthful at all times and in all situations B. Respect stakeholder’s IP rights C. Respect the confidentiality of sensitive information D. Refrain from gift or compensation giving/receiving where inappropriate Question 17. In a project that is of high priority for your organization as well as for the customer organization, the project manager’s most important activity to ensure customer satisfaction would be to A. execute the project on time. B. maintain control over project cost. C. generate timely weekly status reports to the customer. D. obtain signoffs on all requirements.

Professional Responsibilities of a PMP

Question 18. In a critical project that involves stakeholders from many organizations and is projected to have a peak-level team strength of 250, the most important leadership attribute required for a project manager would be A. B. C. D.

time management skills. cost management skills. problem solving skills. communication skills.

Question 19. In a multimillion-dollar project involving stakeholders from many organizations, there arises a conflict at the end of the requirement identification phase as to the number of functionalities to be covered by the project: Some stakeholders believe that 50 functionalities are to be covered by the project whereas most of the other stakeholders believe that this number should be 75. Suppose that you are of the view that the project should cover only 50 functionalities. What would be your primary responsibility in such a situation? A. Discuss with the stakeholders in a professional manner to resolve the conflict. B. Do not discuss with the stakeholders and simply go ahead with your view. C. Discuss with those stakeholders who oppose your view with an intention of forcing them to accept your view. D. Go ahead with the majority view. Question 20. Not Acting impartially and objectively is called A. B. C. D.

Responsibility Respect Fairness Honesty

Question 21. Suppose that your project involves stakeholders from many organizations. Peak-level team strength is estimated to be 250. You find that your team members are from different countries and they need to interact with each other

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daily. How would you ensure that team members’ cultural differences do not to interfere with the project performance? A. Ask one team member in each team meeting to describe something unique about his or her culture. B. Do not concentrate too much on the cultural differences. C. Colocate team members. D. Identify the culture of the majority of team members and ask others to follow it. Question 22. Suppose that, during the execution of a project multimillion-dollar project with an estimated project duration of 3.65 years, your project team encounters a unique technical problem. While struggling to find a solution, you come to know of a published research article written by a project manager of a another company, who has described a solution that he devised and implemented to a similar problem. What would you now do to solve your problem? A. Implement the solution given and solve the problem. B. Obtain permission from the author to use the solution. C. Modify the solution per your need and solve the problem. D. Do not use the solution described. Question 23. Suppose that you are in the middle of the execution of a project that has already presented many challenges. At one point in time, the project carried about 120 open issues. Now, that number has come down to 20, and the project seems back in control. What would you report in your project status report? A. Report that the project is back in control. B. Report on the 20 open issues and the steps under way to close them. C. Report that almost all issues are now closed. D. Report that all issues are now closed.

410 • PMP® Certification—Excel with Ease Question 24. Please refer the scenario presented in Question 19. Which among the following conflict resolution techniques is best to resolve this conflict? A. B. C. D.

Withdrawal Delay Smoothening Confrontation

Question 25. Suppose that you, a project manager, require work-in-process material to be moved from one work site to another. You realize that a fee is to be paid to a government’s administrative department, to provide security for the material to be moved. What would you do? A. Do not pay the fee. B. Do not pay the fee because it is unethical C. Pay the fee out of your pocket and have it reimbursed D. Give the required fee using formal organizational processes Question 26. Suppose that while preparing a bid for a contract on behalf of your organization you realize that another organization, one headed by your brother, has submitted a bid for the same contract. What will you do? A. Downscale your organization’s bid to enable your brother’s organization to win the contract B. Do nothing C. Give your brother some clues about your organization’s bid D. Ask your manager not to involve you in this bidding process Question 27. Please refer the scenario presented in Question 25, except that this time around a bribe is required to be paid. What would you do? A. Do not pay the bribe because it is illegal to do so B. Pay the bribe because not doing so would delay project execution C. Pay the bribe out of your pocket and have it reimbursed D. Pay the bribe using funds allocated for project execution

Question 28. Employing truth in communication and conduct is called A. B. C. D.

Responsibility Respect Fairness Honesty

Question 29. Suppose that you are unable to cope with the culture followed in another country in which you are temporarily residing. This is an instance of A. B. C. D.

culture shock. ethnocentrism. culture wave. ethno shock.

Question 30. Suppose that a customer requests a change to be incorporated into deliverable your project team provided and insists that the work performed be free of cost. What would you do? A. Follow established change control processes. B. Perform the work entailed by the changes requested. C. Simply say “no” to the customer. D. Wait for the customer to escalate this request. Question 31. In the scenario presented in Question 30, suppose that the Client initiate a Change Request but insists that the work be performed on an ASAP basis. What would you do? A. Acknowledge the request and forward the same to your organization’s change control board B. Acknowledge the request and perform the work entailed by the changes requested on an ASAP basis C. Do not acknowledge the request D. Wait for the customer to escalate this request. Question 32. What would your priority be when you have outsourced a part of your project work? A. Monitoring of the cost of outsourcing

Professional Responsibilities of a PMP

B. Monitoring of the seller’s work performance C. Monitoring of the compliance of seller’s processes and deliverables to the terms of the contract D. Monitoring of the time and cost consumed in the project work outsourced Question 33. When project managers handle global projects, they should not adopt any of the following behaviors except one. Which one? A. Adopting orientations of another’s culture B. Comparing another’s culture with theirs continuously C. Grading or ranking another’s culture D. Accepting that they may make mistakes, but remaining confident of their abilities Question 34. All but one of the following statements on ethical management are true. Which one? A. The goal of an ethical management initiative is to create preferred behaviors in the project environment. B. The best way to manage ethical dilemmas is to avoid their occurrence in the first place. C. Involve team members in the ethical-decision making process, whenever appropriate. D. Do not define preferred ethical values in the project plan. Question 35. Upon taking over a project midway that is faring poorly in cost, quality, team morale, and overall execution, you compare all aspects of execution of this project with those of a similar project that you had executed with success. Which type of power are you establishing here? A. B. C. D.

Legitimate Referent Expert Coercive

Question 36. Suppose that to resolve a conflict between two team members you decide to hold a meeting involving all team members.

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Which type of conflict resolution technique did you have in mind? A. B. C. D.

Arbitration Negotiation Problem solving Court settlement

Question 37. Suppose that to resolve a conflict between two team members you hold a meeting involving both of them and, after hearing the case, highlight to them that they actually agree on 80% percent of all disputed points. Which type of conflict resolution technique did you have in mind? A. B. C. D.

Problem solving Compromise Smoothing Withdrawal

Question 38. Negotiations yield A. B. C. D.

lose–lose solutions. win–win solutions. win–lose solutions. lose–win solutions.

Question 39. In another conflict between two team members, you chose to highlight the best proposals from both sides and establish an environment that avoids conflicts and emphasizes similarities. Which type of conflict resolution technique did you have in mind? A. B. C. D.

Confrontation Compromising Smoothing Withdrawal

Question 40. During a performance appraisal meeting with a critical, senior team member, you unexpectedly come to understand a weakness of that team member. What would you do? A. Keep it to yourself as the team member may get annoyed B. Remove the team member from the team immediately C. Communicate the weakness to the team member and prepare a performance improvement plan D. Recruit a new member

412 • PMP® Certification—Excel with Ease Question 41. Values described by PMI code of conduct are A. Responsibility, Respect, Fairness, Honesty B. Authority, Responsibility, Honesty, Fairness C. Responsibility, Legitimation, Honesty, Fairness D. Obedience, Respect, Honesty, Integrity Question 42. Where would you obtain organizationally defined variance limits for the purpose of performance reporting? A. B. C. D.

Project management plan Organization process assets Enterprise environmental factors Project management office

Question 43. As a PMP, professional responsibility involves all of the following except A. adhering to the PMP Code of Professional Conduct. B. maintaining high professional ethics in all situations. C. developing cultural competence. D. completing a project per wish of the customer. Question 44. Which of the following documents is provided by the PMI as a guide to project managers on how to discharge their professional responsibilities in a project management environment? A. PMP Code of Professional Conduct B. PMP Code of Ethical Conduct C. Project Management Professional Conduct D. Project Management Code of Professional and Ethical Conduct Question 45. Assume that you, a project manager, had signed an agreement to maintain the confidentiality of your organization’s sensitive information. Suppose that, per the mandates of the project, you had to access your organization’s financial transactions. On doing so, you came to understand that the organization’s financial stability was poor, because of which reason you resigned. What would you do immediately after having resigned?

A. Reveal the organization’s financial situation to the media B. Discuss the organization’s financial situation in an open-forum meeting C. Discuss the organization’s financial situation with a former colleague D. Maintain silence on matters related to the organization’s financial situation Question 46. Suppose that your organization’s management exerts pressure on you, a project manager, to begin work on a project without valid documentation from the prospective customer, one who has promised to offer multimillion-dollarworth in future. What would you do? A. Do not begin work on the project without valid documentation B. Begin work on the project per management’s instruction C. Ask for a letter of intent from the prospective customer D. Resign your position because you would violate approved organizational procedures if you began work on a project without valid documentation Question 47. Please refer the scenario presented in Question 19. Suppose that you have decided to set a proper communications management plan to set communication processes right. What would be your plan of action? A. Discuss options with the conflicting stakeholders to obtain their inputs B. Use a communication management plan of a past successful project C. Use a communication management plan with which you are familiar D. Proceed with project work on the basis of your analysis only Question 48. For each of the four values of responsibility, respect, fairness, honesty, the professional code lists aspirational and mandatory standards. Is aspirational standard not optional? A. True B. False

Professional Responsibilities of a PMP

Question 49. When managing global projects, you should do all of the following except A. B. C. D.

Be patient and groom relationships Maintain your sense of humor Minimize blame game Grade or rank another’s culture

Question 50. All but one of the following statements on ethics and ethical management are true. Which one? A. Application of ethics involves clearly distinguishing between right and wrong, but in the real

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world, the parting line between right and wrong is often difficult to identify. B. Ethical management refers to a process of reflection and dialogue that establishes standards such as codes, policies, and procedures. C. The goal of an ethical management initiative is to establish and communicate preferred behaviors in project environments. D. Do not involve team members in the ethical-decision making process.

414 • PMP® Certification—Excel with Ease

Answer Sheet for Chapter 13 Questions

Question Number

Answer

Question Number

Question 1

Question 26

Question 2

Question 27

Question 3

Question 28

Question 4

Question 29

Question 5

Question 30

Question 6

Question 31

Question 7

Question 32

Question 8

Question33

Question 9

Question 34

Question 10

Question 35

Question 11

Question 36

Question 12

Question 37

Question 13

Question 38

Question 14

Question 39

Question 15

Question 40

Question 16

Question 41

Question 17

Question 42

Question 18

Question 43

Question 19

Question 44

Question 20

Question 45

Question 21

Question 46

Question 22

Question 47

Question 23

Question 48

Question 24

Question 49

Question 25

Question 50

Answer

Professional Responsibilities of a PMP

Answers for Chapter 13 Questions

Question Number Question 1

Answer

Question Number

Answer

B

Question 26

D

Question 2

A

Question 27

A

Question 3

D

Question 28

D

Question 4

D

Question 29

A

Question 5

A

Question 30

A

Question 6

A

Question 31

A

Question 7

D

Question 32

B

Question 8

D

Question33

D

Question 9

D

Question 34

D

Question 10

D

Question 35

C

Question 11

A

Question 36

C

Question 12

D

Question 37

C

Question 13

D

Question 38

B

Question 14

D

Question 39

C

Question 15

B

Question 40

C

Question 16

A

Question 41

A

Question 17

D

Question 42

B

Question 18

D

Question 43

D

Question 19

A

Question 44

A

Question 20

C

Question 45

D

Question 21

A

Question 46

C

Question 22

B

Question 47

A

Question 23

B

Question 48

A

Question 24

D

Question 49

D

Question 25

D

Question 50

D

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416 • PMP® Certification—Excel with Ease

Explanations for Chapter 13 Answers 1. Answer B We need to report this kind of violations to PMI, Report possible violations of the Code of Professional Conduct to PMI. This is not related to Individual IPs (Intellectual Property Rights). There is no conflict of interest here and so, the best option is B 2. Answer A In this case, PMI has asked for the information and we need to co-operate with PMI concerning ethical violations. 3. Answer D Schedule-wise, we are lagging behind but Costwise we are doing well (CPI is greater than 1). Monthly status report usually will have the status of the project along with the issues and options; just showcasing that the project is behind schedule is not the right option. Moreover, with the provided data we cannot come conclude that the project will be completed behind schedule (Option B). Neither can we say that the project is out of our control (Option A). 4. Answer D Important customer, Good relationship and Waiting for new Project from the Customer are all given to confuse the reader. Whenever the customer asks for a change, we need to follow the Change Request process. Let the Change Control Board decide the implication of doing this extra work without money. The Project Manager should not take action initiation “YES” or “NO”. The impact analysis needs to be done immediately (as per Change Process) and the recommendations have to be forwarded to Change Control Board to take further decisions (Approve/Reject/Hold) 5. Answer A We should not do the work because of personal rapport with the customer. If we decided to do it on our own without informing the organization that means it is a failure to satisfy the scope of professional services. 6. Answer A When we use the content from a Friend and showcase that as ours, it is also a failure to satisfy the scope of professional services.

7. Answer D Change Control Board is responsible for reviewing the major changes to the Project Contract. Project manager does only the impact analysis of the change request. 8. Answer D Doing favor to know person (friends, relatives) is an instance of Conflict of interest. As a professional, we should not favor anybody. When we sit in an interview panel and interview relatives and friends, we need to declare it immediately and we need to ensure that somebody else interviews the relative/friends. 9. Answer D We need to provide clear and full information to PMI while submitting the application form. Failure to do so is the failure to provide accurate information. (This is applicable for the Project Status Report also). 10. Answer D The previous project manger sanctioned $4500 K discount to the customer. Even though the project is in control (cost perspective), this is against the Organization policies. The project manger needs to seek more information on this before taking any action. So, in order to determine the rationale behind this decision, the project manger needs to contact the reporting manager. 11. Answer A The project manager should not give and take gift at any circumstance. If we do so, it is a failure to comply with PMP code of professional conduct. 12. Answer D Manipulations of profile is clear failure to satisfy the scope of professional services. We should not say it is common. There is no IPs here. 13. Answer D No money transaction to be entertained it is a clear violation. When the customer needs something extra, the Change Request process has to be followed. 14. Answer D Attack the problem when it occurs and understand more about the situation and problem before taking any decision. Here, there

Professional Responsibilities of a PMP

is a difference of opinion between you and the other project manager. You need to meet the project manager and ask for clarifications before complaining or discussing with others (which may lead to more confusion). 15. Answer B A belief that one culture is superior to another is called as ethnocentrism. Ethnocentrism is the belief of superiority is one’s personal ethnic group 16. Answer A We need to be truthful at all times and in all situations. Giving some wrong information to media is not the right way to go. 17. Answer D Customer satisfaction reflects in the sign-off on the deliverables. The most important activity in a high-priority project is the sign-off, which ensure more control on all parameters of the project. Other options are important only but sign-off is the most important. 18. Answer D The most important skills required for any project manager is communication skill. More than 90% of a project manger’s time is spent only for communication. Moreover, we have 250+ people in this project with stakeholders from various organizations indicating that communication skill is important to execute. 19. Answer A Attack the problem (source) when it occurs. Here, it is a conflict between stakeholders and the best conflict management technique is problem-solving (confrontation). Discuss with the stakeholders involved in a professional way to resolve the conflict. 20. Answer C When we make any decision we should act impartially and objectively. This is called as Fairness. (Taking ownership for decision is called as Responsibility. Employing truth in both communication and conduct is called as honesty). 21. Answer A Not concentrating on the cultural difference will not help because the team members need to interact with each other frequently. Collocating team members also will not solve the cultural issues as the difference will persist even if the team members are in the same location.

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22. Answer B Whenever we use any data/information from other people’s work we need to seek their permission. (Even if it not IP Protected). If it is IP Protected, the need to get the permission is mandatory. Here, it is a published research and hence, it becomes imperative to obtain the necessary permission. 23. Answer B The project is in control because the open issues have come down from 120 to 20. However, the report needs to show all the open 20 issues and the steps taken to close them. Just reporting the project back in control (Option A) is not enough. Reporting almost all is also not the right option because almost all may indicate any number. All issues are closed (Option D) is a lie and is not acceptable. 24. Answer D Best conflict resolution technique is problemsolving. Another name for problem-solving is Confrontation. All the other techniques will not help to solve the problem permanently. The conflict may surface back at any time when we use other techniques. 25. Answer D Here, the fees are required to be paid to the government administrative department and so, we can remit the required amount through the formal organization process. This is not a bribe or gift but a fee (a legal one). Paying from the pocket is not a right option. 26. Answer D This is a conflict of interest. You are a bid manger for your company and your brother is representing another company. Hence, you should ask your manager not to involve you in this bidding process. If you are involved, it is a conflict of interest. 27. Answer A The project manager is responsible for all the activities from the beginning of the project, up to its closure. Also, the cost involved in transfer will be accounted into the project. Moreover, paying bribe is illegal and the project manager should not allow that.

418 • PMP® Certification—Excel with Ease 28. Answer D Employing truth in both communication and conduct is called as honesty. 29. Answer A Culture shock represents the condition in which a person is unable to cope up with another culture (unfamiliar way of life). 30. Answer A When the customer requests for a change, follow the Change Request mechanism. Whether the service has to be provided free of cost or the schedule has to be increased because of the change needs to be decided by the change control board. 31. Answer A When the customer requests for a change, follow the Change Request mechanism. Acknowledge the request to the Customer (Acknowledge does not mean whether you will do or you will not do). 32. Answer B Here, you have outsourced to some other vendor and so monitoring and controlling seller’s work performance will be the priority. 33. Answer D While executing the global projects, we need to accept that mistakes are bound to happen and be confident of their abilities (that is why they are part of the team). Note This question is a double negative question – Not and Except being used together. We need to choose the adopting behavior in a global project. 34. Answer D Option D is the best available option in an ethical management. Other options may be confusing. 35. Answer C Expert power is being used here, which compares one project with similar kind of project already executed by you (based on experience). We seek the help of the experience and hence it is an Expert Power 36. Answer C Problem-solving is the best conflict management technique. Here, you decided to hold a meeting with them to solve the problem and hence, it is a problem-solving technique.

37. Answer C Smoothing is also one of the conflict management techniques. In this technique, the positive aspects are highlighted more to smoothen out the situation. Here, highlighting that 80% of all dispute points are being agreed upon. 38. Answer B Negotiation is always a Win–Win situation. It happens with the cooperation and best interest of both the parties involved. 39. Answer C Smoothing is also one of the conflict management techniques. In this technique, the positive aspects are highlighted more to smoothen out the situation. Here, highlighting the best proposals from both the sides and establishing an environment happens. 40. Answer C When a performance appraisal meeting happens and we come to know of the weakness of a team member, it needs to be communicated to the team member and a performance improvement plan has to be prepared. (This is the purpose of the appraisal) 41. Answer A PMI Values are Responsibility, Respect, Fairness and Honesty. (Authority , Legitimating and Obedience are not part of it) 42. Answer B OPA (Organization Process Assets) defines the variance limit for the performance reporting. OPA consists of all the historical information data and also refers to quality Management System (QMS), which consists of Process, Procedure and Policies of the organization. It also has best practices and lessons learnt from similar kind of projects. 43. Answer D We need to do the project as per the needs of the customer defined in the requirement documentation and not as per the wish of the customer. (Bring customer wish to the requirement and do it, if required). 44. Answer A PMI provides the guide to project mangers on how to discharge their professional responsibilities in a project management environment called as “PMP Code of professional Conduct”

Professional Responsibilities of a PMP

45. Answer D We need to maintain silence in matters related to the Organization’s financial situation. We should not reveal the confidential information to outsiders. We also should not discuss it in an open forum meeting.

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with the conflicting stakeholders to obtain their inputs. 48. Answer A Aspiration standard is not optional

46. Answer C Letter of Intent can be used in place of the Contract. LOI is mostly used by the prospective customer to start the project and it has a validity period attached with it.

49. Answer D We should not grade or degrade another culture while working in global projects. (Who are we to rank others’ culture?). We need to maintain relationship and maintaining a sense of humor is not a problem as long as the other party understands it clearly.

47. Answer A For any conflict, we need to attack the problem and understand the problem before trying to solve it. We need to discuss various options

50. Answer D Option D is the right answer. Not involving team members in an ethical decision-making process is not the right option.

Key Terms Culture shock This term refers to the anxiety and uncertainty regarding normative behavior of a person in a new environment or country with a different or unknown culture. Ethical management It refers to a process of reflection and dialogue that establishes

standards such as codes, policies, and procedures. Ethnocentrism This term refers to a person’s belief that one’s culture is superior to another’s culture.

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Key Points

The following points encapsulate the essence of the concepts discussed in this book. 1. 2. 3. 4. 5. 6. 7. 8.

9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Perform Quality Assurance – Audit is the main Technique Best Practices and Lessons learnt are part of OPA Composite Organization – Representation from several departments in the project After preparation of Activities – Sequence the activities (network diagram) Implementation of approved changes is part of “Execution” process group When the functional managers pull out resources – Evaluate the impact A product can span multiple projects Contingency reserve: Contingency reserve is created to tackle unknown risks and accepted known risks and may be in the form of additional time, additional resources and additional billing from the customer. Projects supported by PMO need not be related to each other Strategic business objective-based decision is taken by Portfolio Manager Resource pool is mostly used in matrix structure Project Scope statement contents are – Deliverables, Work, Constraints and Assumptions Planned vs. Actual is part of Monitor and Controlling S-curve indicates that bulk of the project cost is spent in execution If the customer is not happy – ask the reason to the customer (Organize a meeting with the customer) Critical activity of project manager in closing – Obtain formal signoff from the customer First activity of Project Manager is closing – Measure Project Scope Vs Project Management Plan Resource histogram helps to decide on when to release the resource. Where NPV is greater, choose that option PDCA was advocated by Deming Bidder conference is a screening process Management by Objective – All the actions are based on Objective

422 • Key Points 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62.

Continuous improvement means Kaizen Contract, business case and SOW are the inputs for “Develop Project charter” Distribute the report to stakeholders only after verification Project manager is responsible for coordination in Weak matrix Balancing Time Cost Scope is called as Integration Start of the project – Kick-off meeting happens Creation of Project deliverables is part of Direct and Manage project execution Where the project stand is known from Gantt Chart Cost already spent (waste) is called as Sunk Cost If the customer complains about deliverable – Do Scope verification yourself In the final stage of the project – Control Scope is critical Formal acceptance happens every phase of the project Pareto rule is the 80/20 Rule Stakeholders’ needs are captured in requirement documentation How all the processes will be managed is part of Project Management Plan Conformance to standard is done through inspection Marginal Cost is a type of Variable Cost Limited resource is managed by – Critical chain method Trend analysis is part of Run chart Cost baseline is an output of “Determine Budget” Most common source of conflict in a project is – Schedule Email is a push method of communication Quality metrics is the output of Plan quality process Contract documents are stored in Record management system For good team building, commitment from top is important Statistical relationship is used in parametric estimation Compromising is essentially a bargaining process. Forcing is using the power to impose a solution on others. Forcing is sometimes necessary, but it can lead to antagonism. People are willing and eager to accept responsibility as per Theory Y People are inherently lazy and avoid work whenever possible as per Theory X The standard deviation Formula = (P − 0)/6 A heuristic is a rule of thumb Total float is the time an activity can be delayed without impacting the entire project Free float is the time an activity can be delayed without impacting the next activity. A Project can have multiple critical paths, but it adds risks to the project A milestone is a dummy activity with zero duration. Resource levelling will affect the resources PERT uses weightage average method Monte Carlo is a simulation technique, which also uses What–If analysis

Key Points

63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96.

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EAC (Estimate at Completion) = Budget at Completion (BAC)/Cost Performance Index (CPI) Analogous estimating is used most frequently during the planning Buyer has more risk in cost reimbursable contract Seller has more risk in fixed bid contract The process required to ensure that the project includes all the work required, and only the work required is called Project Scope Management Completion of the product scope is measured against the project requirements. Project scope is measured against the Project Management Plan Constraints limit the options. (Customer wants to finish the project by x date) Slack = Early Start – Late Start Fast Tracking is used in order to speed up tasks and entails doing activities parallel to one another. Developing an approximation (estimate) of the costs of resources needed to complete project activities – Estimate Cost Allocating overall cost estimate to individual work items is part of Determine Budget Statistical model used to assist in preparing cost estimates – Parametric Estimation Costs of not pursuing a course of action is called as Opportunity Cost One Standard Deviation = 68.3% of population Two Standard Deviations = 95.5% of population Three Standard Deviations = 99.7% of population Maslow’s Hierarchy of Needs: Physiological, Safety, Social, Esteem, and Self Actualization (in this order) Communication: The basic model has Sender, Receiver, and Message Risk Probability – How likely the event is to occur An aggregate or summary activity is called as Hammock A significant event in the project, usually completion of a major deliverable, is called as Milestone Sub-dividing project elements into smaller, more manageable components is called as Decomposition Portions of a network are referred to as subnets/fragnets. Other name of PDM is Activity On Node (AON) Lead is same as negative Lag GERT is used for conditional looping Contingency reserve is for “known unknown” and it is proportionate to the Risk we foresee Management reserve is a fixed percentage, which is for “unknown unknown” Unplanned response to a negative risk event is called as Work around The cost incurred to ensure quality is called as Cost of Quality A histogram ordered by frequency of occurrence of causes is called a Pareto diagram The overall quality intentions and direction of an organization as regards quality is called as Quality Policy The process of identifying which quality standards are relevant to the project is part of “Plan Quality”

424 • Key Points 97. Cost of evaluating the processes and the outputs of the processes to ensure that the product is error-free is called as Appraisal Cost 98. Cost incurred due to errors detected by the customer is called as External Failure Cost 99. A method for quantifying qualitative data in order to minimize personal prejudice on source selection is called as Weighing System 100. Product Scope is defined in Project Life Cycle 101. Features and functions that characterize a product or service are related to Product Scope. 102. Project Scope is based on project Management Life cycle 103. Doing more than what was desired is not a recommended practice and is called as Gold Plating 104. Inspection is a Tool and Technique for scope validation 105. Ultimate decision on how to deal with risk is based on part on Project Manager’s tolerance for risk – this is measured by Utility function. 106. Conflict level related to Cost is usually low in projects 107. Projects are executed by heterogeneous teams whereas operations may be executed by homogeneous teams 108. Collectively, phases of the projects are known as the project life cycle. 109. Project phases are collection of logically related project activities, usually related to the completion of a major project deliverable. 110. Stakeholders must be involved and their involvement must be managed by the project manager. 111. Functional organization is grouped by areas of specialization within different functional areas 112. A project phase (requirement analysis, design etc) is not a project management process group (initiation, planning etc) 113. After each phase is completed, authorization is generally needed to begin the next phase of the project (The end of the phase is known as “kill point”, “phase exit”, or “phase gate”). 114. The project manager has total control over the projects, full authority to assign priorities, apply resources, and direct the work of persons assigned to the project in a projectized environment. 115. In a strong matrix, power rests with the project manager. In a weak matrix, power rests with the functional manager. 116. Leadership is developing a vision and strategy, and motivating people to achieve that vision and strategy. 117. No Expert Judgement in Direct and Manage Project Execution (this is because, we are executing the Project Management Plan which we already developed) 118. The features and functions that characterize a product, service or result is called as product scope 119. The work that needs to be accomplished to deliver a product, service, or result with the specified features and functions is called as Project scope. 120. Estimation should be based on a WBS to improve accuracy and should be done by the person doing the work whenever possible. 121. Fixed Costs (costs that do not change as production changes) 122. The project manager must spend time trying to improve quality. 123. Precision is consistency that the value of repeated measurements are clustered and have little scatter. 124. Accuracy is correctness that the measured value is very close to the true value. Precise measurements are not necessarily accurate.

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125. A very accurate measurement is not necessarily precise. 126. The Cost of Quality (COQ) refers to the total cost of all efforts related to quality. 127. A company using JIT must have high quality; otherwise there will not be enough supplies or raw material to meet production requirements. 128. Quality Assurance determine if the project is complying with organizational and project policies and processes. 129. Quality Control measure specific project results against standards. 130. The WBS allows communication vertically and horizontally within the organization as well as outside the project. 131. Lessons learned are created throughout the project and then finalized during Project Closing or Project Phase Closing. 132. A project cannot be considered complete unless the lessons learned are completed. 133. A risk matrix is useful as a checklist of different types of risk that might arise over the life of a project, but it must always be supplemented by other ways of discovering risks. 134. Unknown risks cannot be managed proactively. 135. Workaround - unplanned response to negative risk events 136. Risk trigger is a symptom of risk. 137. Risk Identification is general, rather than specific. 138. Contracts are legally binding. Hence, they require formality 139. The WBS helps to ensure that everyone understands the scope of the work. 140. Changes are not listed in the Project Scope Management Plan (it has only the process) 141. The most appropriate thing to do during the Planning Process group is to conduct the kickoff meeting. 142. Trend Report, examining the project result over time to see if performance is improving or not 143. Forecasting Report, predict future project status or performance (Estimate at Completion and Estimate to Complete) 144. Variance Report, comparing actual results to baseline (schedule variance, Cost variance) 145. Maslow’s Hierarchy of Needs Theory (Physiological, Safety, Social/Belonging, Esteem, Self-Actualization) 146. Smoothing: Emphasizes areas of agreement rather than areas of difference 147. Compromising: Bring some degree of satisfaction to all parties. 148. Change Control Board (CCB): A formally constituted group of stakeholders responsible for reviewing, evaluating, approving, delaying, or rejecting changes to the project. 149. Users’ needs are related with Product Requirement and hence, it is part of Functional Requirement. 150. WBS is task-oriented grouping of project activities and it is required for all type of projects. WBS is not organization-oriented but is task-oriented. 151. Technical staff in a project works on the product specification to create the Product. So they can prepare the Product specification in a better way. 152. Customer Acceptance is the main output of Verify Scope Process. 153. The Delphi method is a systematic, interactive forecasting method which relies on a panel of independent experts.

426 • Key Points 154. One level above work package level is called Planning Package level. 155. One level above planning package level is called Control Account level. 156. Validated Deliverables are output of Perform Quality Control process and act as inputs to Verify Scope process 157. Scope Management Plan contains the “How” part of Scope Management Process. It actually defines the process of Scope Management. 158. A WBS dictionary contains detailed information about each element in the WBS. The information should include an unambiguous description of the WBS element along with cost, time and resource information that will be used to measure performance and completeness. 159. Project charter is usually issued by the senior manager external to the Project team. 160. Scope verification is related with the acceptance of the project work and is not related with the correction of the project work. 161. Expert Group Creativity Technique is called Delphi Technique 162. Observation Technique is also called as job shadowing 163. Prototype supports the concept of decomposition 164. Prototype is a tool used in Collect Requirement process 165. Scope is getting base lined in Create WBS process 166. Product Analysis includes techniques such as Product Breakdown, System Analysis, System Engineering, Value Engineering and Value Analysis. 167. An authorized budget assigned to the work to be accomplished for an activity is defined as Planned Value 168. Value of work completed compared to the actual cost or progress made on a project is called Cost Performance Index (CPI) 169. For calculating the schedule variance and cost variance we need to have Earned Value data (which is the basic to calculate any variance) 170. Statistical models are used in parametric estimation 171. Scope Management Plan: A document which describes how Project Scope will be managed and how Scope changes will be integrated into the project. 172. Technique used to define Scope process is Decomposition 173. Scope Management plan can be informal and also based on the Project needs 174. Process of gathering stakeholder needs to meet project objectives is part of Collect Requirement process 175. Project requirements include Business requirement, Project management requirement and Delivery requirements 176. Product requirements include technical requirement, security requirements, performance requirement and quality requirement. 177. Brainstorming, Delphi technique, Affinity diagram are examples of Group creativity technique 178. One individual making a decision for the group is called Dictatorship 179. The largest block in a group decides the decision even if majority is not achieved is called Plurality 180. Everyone agrees on a single course of action is called Unanimity 181. Risk Process Effectiveness and Re Assessment of Risks is happening in Risk Monitoring Control.

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182. The definition of Risks is “An uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives”. 183. Acceptance of varying degrees of risk is called Tolerance. 184. Risk is present in a Project from the beginning and until the time of its closure. But the effect and impact varies as the project progresses. 185. Risk Management Plan defines how part (process) of identifying Risks, Analyzing Risk and Controlling Risks. 186. List of Risks is part of “Risk Register” and not part of management Plan. 187. The project manager should involve all the stakeholders in the Risk Identification Process as the people who are performing the tasks know the Risks better. 188. Delphi is an anonymous technique whereas the brainstorming technique is open (involved by team) and everybody knows each other and their comments/views. 189. There is a biasing in brainstorming but Delphi technique helps to reduce the bias in the data and keeps any one person from having undue influence on the outcome. 190. Risk identification and analysis has to happen in the beginning stage itself. 191. An evaluation of the quality of information available on project risks helps clarify the assessment of the risk’s importance on the project. 192. Risk Probability Assessment (not Risk Impact Assessment) investigates the likelihood that each specific risk will occur. 193. Risk probability assessment investigates the likelihood that each specific risk will occur. Risk impact assessment investigates the potential effect on project objectives such as schedule, cost and quality. 194. If a random variable is a continuous variable, its probability distribution is called a continuous probability distribution. 195. The probability that a continuous random variable will assume a particular value is zero. 196. A continuous probability distribution differs from a discrete probability distribution in several ways. 197. The uniform distribution describes a variable where the probability of occurrence of any value between a range defined by the minimum and maximum values is equal. 198. A continuous distribution with Minimum = 0 and Maximum = 1 is often referred to as a standard uniform distribution. 199. An important application of the uniform distribution is a form of random number generator, which uses a cumulative probability curve to transform a uniform variable to a non-random one. 200. Sensitivity Analysis (SA) is the study of how the variation (uncertainty) in the output of a statistical model can be attributed to different variations in the inputs of the model. In other words, it is a technique for systematically changing variables in a model to determine the effects of such changes. 201. Tornado diagrams, also called tornado plots or tornado charts, is a special type of bar chart, where the data categories are listed vertically instead of the standard horizontal presentation, and the categories are ordered so that the largest bar appears at the top of the chart, the second largest appears second from the top, and so on. They are so named because the final chart appears to be one half of a tornado. 202. EMV requires a risk neutral assumption, neither risk-averse nor risk-seeing.

428 • Key Points 203. The EMV is calculated by multiplying each outcome value by its probability and adding all of the results together. 204. Risk avoidance includes not performing an activity that could carry risk. An example would be not buying a property or business in order to not take on the legal liability that comes with it. 205. Avoidance may seem the answer to all risks, but avoiding risks also means losing out on the potential gain that accepting (retaining) the risk may have allowed. Not entering a business to avoid the risk of loss also avoids the possibility of earning profits. 206. Risk can be transferred in two ways. The first is through insurance and the second one is outsourcing. 207. Use of a Cost plus Contract may transfer the cost risk to the buyer. A fixed price contract may transfer the risk to Seller. 208. Risk mitigation covers efforts taken to reduce either the probability or consequences of a threat. These may range from physical measures (protective fences) to financial measures (stockpiling cash, insurance). 209. Risk acceptance is used in risk management to describe an informed decision to accept the consequences and likelihood of a particular risk. 210. Accept is used both for negative and positive Risks. ATM (Avoid, Transfer, Mitigate) is used for negative Risks. SEE (Share, Enhance, Exploit) used for Positive Risks. 211. Risk exploitation is used on opportunities when the organization wishes to assure the opportunity is realized. Commonly used by hiring the best experts or assuring the most technologically advanced resources are available to the project team. 212. In probability theory, to say that two events are independent intuitively means that the occurrence of one event makes it neither more nor less probable that the occurrence of the other. 213. Plan Quality: The process of identifying quality requirements and or standards for the project and product, and documenting how the project will demonstrate compliance. 214. Perform Quality Assurance: The process of auditing the quality requirements and the results from quality control measurements to ensure appropriate quality standards and operational definitions are used. 215. Perform Quality Control: The process of monitoring and recording the results of executing the quality activities to assess performance and recommend necessary changes 216. Project Quality management addresses the management of the project and product of the project. 217. The degree to which a set of inherent characteristics fulfill requirements is called Quality. 218. Grade: Category assigned to products having same functional use but different technical characteristics. 219. Low quality is always a problem; but low grade may not be. For example, a software product can be of high quality (no obvious defects, readable manual) and low grade (a limited number of features), or of low quality (many defects, poorly organized user documentation) and high grade (numerous features). 220. Precision and accuracy are not equivalent. 221. Precision is consistency in having the value of repeated measurements clustered, with little scatter. Accuracy is correctness, with the measured value is very close to the true value. 222. Quality is planned in and not inspected in. 223. PDCA Cycle was defined by Shewhart

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224. PDCA Cycle was modified by Deming 225. A Pareto chart, named after Vilfredo Pareto, is a type of chart that contains both bars and a line graph, where individual values are represented in descending order by bars, and the cumulative total is represented by the line. 226. Ishikawa diagrams (also called fishbone diagrams, or herringbone diagrams, cause-and-effect diagrams, or Fishikawa are causal diagrams that show the causes of a certain event – created by Kaoru Ishikawa (1990). 227. Failure Cost is called as Cost of poor quality. 228. Failure cost is classified as Internal Cost, External Cost 229. While using control-charts we say Process is out of control if data point is out of upper or lower control limit /Seven consecutive points are on one side of the mean (Rule of Seven) 230. Prevention Cost: The cost incurred by actions taken to prevent a nonconformance from occurring; cost incurred to improve quality by preventing defects from occurring. 231. Internal failure costs come from deficiencies discovered before delivery. These include all the costs associated with the failure (nonconformities) to meet the needs of external and internal customers. This failure cost is one of the four key components of quality costs. 232. Any defective part and product should be caught as early as possible in the production process. 233. Appraisal costs, which are sometimes called inspection costs, are incurred to identify defective products before the products are shipped to customers. Unfortunately performing appraisal activates does not keep defects from happening again and most managers realize now that maintaining an army of inspectors is a costly and ineffective approach to quality control. 234. When a defective product is delivered to the customer, external failure cost is the result. External failure costs include warranty, repairs and replacements, product recalls, liability arising from legal actions against a company, and lost sales arising from a reputation for poor quality. Such costs can decimate profits. 235. Generally, the most effective way to manage quality costs is to avoid having defects in the first place. It is much less costly to prevent a problem from ever happening than it is to find and correct the problem after it has occurred. 236. Prevention costs support activities whose purpose is to reduce the number of defects. Companies employ many techniques to prevent defects; for example, statistical process control, quality engineering, training, and a variety of tools from total quality management (TQM). 237. Control charts, also known as Shewhart charts or process-behaviour charts, are tools used to determine whether or not a manufacturing or business process is in a state of statistical control. 238. A structured tool used to determine whether project activities comply with Organizational and project policies, processes and procedures is called as Quality Audit 239. Pareto diagram is a type of histogram 240. Pareto diagram is called 80/20 Rule 241. Quality policy is the overall intention and direction of an organization with regard to quality, as formally expressed by top management. 242. 12 to 20 percentage of sales is estimated to be the cost of non-quality 243. The concept of zero inventory is called JIT 244. Compliance consideration is part of Develop Human Resource plan. During the planning stage itself we identify the safety and compliance issues.

430 • Key Points 245. Matrix, text, hierarchical are forms of type to define roles and responsibilities. 246. RACI stands for “Responsible, Accountable, Consult, and Inform” 247. Networking is more useful in the beginning of the project as you will tend to know different unknown people. It helps during the project and even after the project is over. 248. Right to apply is Authority 249. Work expected to perform, is responsibility. 250. Selecting team members in advance for future assignment is called pre-assignment. Most of us are doing this due to fear of losing capable resources to outsiders. 251. Developing an effective Project team is the primary responsibility of a Project manager 252. Even when one team member is added to the team, the entire team will start from the forming stage. 253. Increased staff turnover indicates some problem in the project. Reduced staff turnover is an indicator of team effectiveness. 254. Salary hike is not the objective of performance appraisal. Actually, it is a continuous process. 255. We cannot say that reducing the scope of the project will reduce conflict, as the source of conflict can be from other areas. Sometimes, reducing the scope may increase conflict as the customer may not accept it easily. 256. Conflict resolution should focus on issues and hence it is a team issue and not a personality or individual issue. 257. Confrontation or problem-solving is always the best way to resolve conflict and will give permanent and effective result. 258. Power is the ability to influence others. 259. A star Project leader need not be a good Project manager as both require different skill sets. Most companies do this mistake and is called halo effect. 260. As per Z theory, the workers needs to be involved in the decision making process and it will make them more responsible and accountable for the decision. 261. Going for third party is called arbitration. 262. Smoothing provides temporary resolution and the same problem can surface at any time. 263. Estimate to completion calculates how much more of the budget is needed to complete the project if everything continues at the current level of performance. 264. Fast tracking is a compression technique that increases risk and potentially causes rework. Fast tracking is starting two projects previously scheduled to start one after the other, at the same time. 265. Benefit/cost analysis takes into consideration the initial costs to implement and future operating costs. 266. Pareto diagrams rank in order, the important factors for corrective action by frequency of occurrence. 267. The scope management plan outlines how project scope will be managed and how changes will be incorporated into the project. 268. Negotiation, influencing and problem-solving skills are all important for a project manager to possess; however, good communication skills are most important for a project manager 269. A. Project manager has the highest level of power and authority in a projectized organization. The Project manager also has high levels of power and authority in a strong matrix;

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270. Team building begins at the Planning process of a project. 271. Project managers spend about 90 percent of their time communicating through status meetings, team meetings, e-mail, verbal communications and so on. 272. Configuration management serves as a Change Control system; it describes the physical characteristics of the product and controls changes to the characteristics of the product or item. It tracks the changes requested and made and updates their status. 273. GERT is the only technique that allows for conditional branching and looping 274. Cost reimbursable contracts are used when the degree of uncertainty is high and when the project requires a large investment prior to completion of the project. 275. The scope statement contains an exhaustive list of the project deliverables, their requirements and measurable criteria used to determine project completion. The scope statement is used to create the WBS. 276. The primary function of the Closing process is to formalize project completion and disseminate this information to the project participants. 277. Estimate at completion estimates the total cost of the project at completion, based on the performance of the project to date. 278. When people work in unfamiliar environments, cultural shock can occur. Training and researching information about the country one will be working in can help counteract this. 279. Inspection involves physically looking at, measuring, or testing results to determine if they conform to quality standards. 280. Performance measurements are not part of the Quality Control process 281. Administrative Closure occurs at the end of the project phase and at the end of the project itself. 282. Administrative Closure is performed after Contract Closeout. It is the last process performed on any project. 283. Smoothing technique does not usually result in a permanent solution. The problem is downplayed to make it seem less important than it is, which makes the problem tend to resurface later. 284. According to the Guide to the PMBOK, the project manager is identified and assigned as an output of the Initiation process. 285. The arrow diagramming method (ADM), also called activity on arrow (AOA), and it uses more than one time estimate to determine project duration 286. Functional managers who have lots of authority and power working with project coordinators who have minimal authority and power characterizes a weak matrix organization. 287. Project managers in weak matrix organizations are sometimes called project coordinators, project leaders or project expediters. 288. Weak matrix organizational structures tend to experience the least amount of stress during the project closeout processes. 289. The Cost Estimating and Cost Budgeting process include bottom-up estimating techniques as well as analogous estimating, parametric modeling and use of computerized tools. 290. The cost baseline is an output of the Cost Budgeting process and is used to measure and track the project throughout the remaining process groups. 291. Variance at Completion (VAC): BAC–EAC. 292. Risk of the project is lowest during the Closing processes, as one would have completed the work of the project at this point.

432 • Key Points 293. Change requests are inputs to the Integrated Change Control process. The other Tools and Techniques of this process are Change Control system and project management information system 294. PERT is Program Evaluation and Review Technique that uses weighted average and standard deviation to determine project durations. It is used for large/ highly complex projects. 295. Analogous estimating, also called top-down estimating, is a form of expert judgment. Analogous estimating can be used to estimate cost or time and considers historical information from previous, similar projects. 296. The work package level is the lowest level in the WBS. Time and cost estimation is easily determined at this level, as are resource assignments. Quality control measurements can be determined at this level. 297. Statistical sampling is a Tool and Technique of the Quality Control process. 298. Constraints limit the options of the project team by restricting action or dictating action. Budget, time, and quality are the three most common constraints. Assumptions are presumed to be true for planning purposes. Always validate your assumptions. 299. Scope changes will cause schedule revisions, but schedule revisions do not change the project scope. 300. The Quantitative Risk Analysis process has four tools and techniques: interviewing, sensitivity analysis, decision tree analysis and simulation. 301. Critical path tasks are those with zero float time. Float time or slack time is the amount of time between an activity’s early start date and late start date. 302. Progressive elaboration is the process of determining the characteristics and features of the product of the project. Progressive elaboration is carried out in steps, in a detailed fashion. 303. A project is considered successful only when stakeholder needs and expectations are met or exceeded. 304. Conflicts between stakeholders should always be resolved in favor of the customer. 305. The most important skill for any project manager to have is communication skill. 306. The level of authority the project manager has is determined by the organizational structure. 307. An advantage for employees in a functional organization is that they have only one supervisor and a clear chain of command. 308. The team in a balanced matrix often report to two or more managers. Functional managers and project managers share authority and responsibility for projects. There is a balance of power between the functional managers and project managers. 309. The initiation process is where stakeholders have the greatest ability to influence outcomes of the project. Risk is highest during this stage because of the high degree of unknown factors. 310. Deliverables are tangible, verifiable outcomes or items that must be produced in order to complete the project or project phase. 311. Initiation formally recognizes the existence of a project. Stakeholders might be identified in the Initiation process but according to the Guide to the PMBOK, they are officially identified during the Planning process. 312. Historical information on projects of a similar nature can be very helpful when initiating new projects. 313. Constraints restrict the actions of the project team. 314. Benefit measurement methods include comparative methods, scoring models, and cash flow analysis, which are all part of the project selection method tools

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315. Projects with NPV greater than zero should be given an accept recommendation. 316. Projects with the highest IRR value are favored over projects with low IRR values 317. IRR assumes reinvestment at the IRR rate, whereas reinvestment is at the discount rate when NPV is equal to zero. 318. Project selection criteria can be objective or subjective. 319. Project costs are those costs directly related to the project. 320. Payback period does not consider the time value of money and is therefore the least precise of all the cash flow analysis techniques. 321. Project charter should be .published by a manager external to the project but with sufficient power and authority to carry it off. 322. When a project is performed under contract, the contract can serve as the project charter. 323. Project charters always include product descriptions. 324. The scope statement includes the following: project justification, project product, project deliverables, and- project objectives. 325. The Scope statement will change throughout the project as change requests are received and approved. 326. Decomposition subdivides the major deliverables into smaller components. It is a Tool and Technique of Scope Definition, along with WBS templates, and this process is used to create a WBS. 327. The code of accounts is assigned to the elements in the WBS. 328. WBS from previous projects can be used as templates on projects that are producing similar products or services. 329. It is up to the project manager to determine how many levels to detail on the WBS. Small projects can easily show activities on the WBS. 330. The communications management plan documents what information will be distributed, how and to whom it will be distributed, and the timing of the distribution. It also documents how to collect, store, file and make corrections to previously published material. 331. Each element in the WBS is assigned a unique identifier. These are collectively known as the code of accounts. Typically, these codes are associated with a corporate chart of accounts and are used to track the costs of the individual work elements in the WBS. 332. The WBS is the deliverables-oriented hierarchy of project work. 333. The Responsibility Assignment Matrix (RAM) links project roles and responsibilities with project activities. 334. The staffing management plan details how and when human resources will be added to and taken off the project. 335. The Activity sequencing process produces network diagrams and updates the activity list. The purpose of this process is to identify all activity dependencies. 336. Analogous estimating is not a qualitatively based technique. It is a top-down estimating technique that considers previous similar activities when calculating estimates. 337. Bottom-up techniques are the most time consuming and the most accurate estimates 338. Parametric modeling is a Cost Estimating technique. Parametric modeling uses variables or parameters to produce cost estimates. 339. Philip Crosby devised the zero-defects theory, meaning do it right the first time. 340. Proper Quality Planning leads to less rework and higher productivity.

434 • Key Points 341. The cause-and-effect flowcharts, also called fishbone diagrams or Ishikawa diagrams, show the relationship between the causes and effects of quality problems. 342. Design of experiments is an analytical technique that identifies the elements or variables that will have the greatest effect on the overall project 343. The Kaizen approach is a quality technique that says project team members and managers should always be on the lookout for quality improvement opportunities. 344. Quantitative Risk Analysis analyzes the probability of risks and their consequences using numeric probability assignments. The Quantitative Risk Analysis process evaluates risk impacts and assesses the range of possible project results. 345. Decision trees allow you to show the sequence of choices and their outcomes in a tree form, starting with the decision or risk event at the left and each option branching out from there to the right. 346. Internal failure costs are costs associated with not meeting the customer’s expectations while you still had control over the product. This results in rework, scrapping and downtime. 347. Triggers are also called risk symptoms. 348. The Tools and Techniques of Risk Response Planning are avoidance, transference, mitigation and acceptance 349. Mitigation tries to reduce the impact of a risk event, should it occur. Making plans to arrange for the leased equipment reduces the consequences of the risk. 350. The critical path is calculated by adding together the durations of all the tasks with zero float. The critical path can be compressed using crashing techniques. 351. The standard deviation is calculated by subtracting the optimistic time from the pessimistic time and dividing the result by six. 352. Sixty-eight percent probability is calculated using plus or minus one standard deviation, a 95 percent probability uses plus or minus two standard deviations, and a 99 percent probability uses plus or minus three standard deviation. 353. Crashing the schedule includes things like adding resources to the critical path tasks or limiting project requirements. 354. Fast tracking is starting two tasks that were previously scheduled to start one after the other, at the same time. 355. Resource leveling heuristics attempt to smooth out resource assignments by splitting tasks, assigning under-allocated team members to more tasks, or delaying the start of tasks to match team members’ availability. 356. The cost baseline is displayed as an S-curve because of the way project spending occurs. Spending begins slowly, picks up speed until the spending peak is reached, and then tapers off as the project winds down. 357. Work authorization systems are a Tool and Technique of the Project Plan Execution process. They formally initiate the work of each work package and clarify the assignments. 358. The executing process group and controlling process group serve as inputs to each other. 359. Teams in the Norming stage of Team Development exhibit affection and familiarity with one another and make joint decisions. 360. The Expectancy theory says that people are motivated by the expectation of good outcomes. Th e outcome must be reasonable and attainable.

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• 435

361. Collocation would bring your team members together at the same location and allow them to function more efficiently as a team. At a minimum, team members meeting in a common room, such as a war room, for all team meetings would bring the team closer together. 362. Confronting is a problem-solving technique that seeks to determine the facts and find solutions based on the facts and results in a win–win resolution for all parties. 363. Theory Y managers believe that people will perform their best if they’re provided with the proper motivation and the right expectations. 364. Fait accompli is a tactic used during contract negotiations where one party convinces the other that the particular issue is no longer relevant or cannot be changed. 365. Earned value is referred to as the value of the work that has been completed to date. 366. The CV is calculated by subtracting AC from EV. A positive CV means the project is coming in under budget, meaning you have spent less than what you planned, as of the measurement date. 367. The SV is calculated using the formula EV − PV. 368. Configuration control boards (CCBs) review Change Requests and have the authority to approve or deny them. Their authority is defined by the organization. 369. Changes to Product Scope should be reflected in Project Scope. 370. Project Scope change affects the performance measurement baselines, which may include schedule baselines and cost baselines. 371. Budget updates may require cost rebaselining. 372. Scatter diagrams use an independent and a dependent variable and display the relationship between these two elements as points on a graph. 373. Workarounds are unplanned responses. Workarounds deal with negative risk events, as they occur. 374. The project manager is responsible for documenting the formal acceptance. 375. Procurement audits are the only Tool and Technique of the Close Procurement process. They are used to review the procurement process and identify and document any lessons learnt during the procurement process for future reference. 376. Theory Y managers believe that people will give you their best if they know what is expected of them and they have proper motivations. 377. The PDM places activities on nodes, usually shown as boxes or rectangles, and connects the dependencies with arrows. The four dependency relationships used by the PDM are finish-tostart, finish-to-finish, start-to-start and start-to-finish. 378. Uncertainties are high at the start of the Project 379. In a matrix organization, the team members are reporting to and responsible for both the functional manager and project manager. 380. Requirement management plan – This is the output of Collect Requirement Process. This documents how requirements will be analyzed, documented and managed throughout the Project. 381. Value analysis defines a “basic function” as anything that makes the product work or sell and it cannot be changed. 382. Alternative Identification: It is a technique used to generate different approaches to execute and perform the work of the Project. 383. If a work is not in the WBS, it is not part of the project.

436 • Key Points 384. Components of Scope Baseline include Project Scope Statement, WBS and WBS dictionary. 385. Risk Breakdown Structure (RBS): Hierarchically organized diagrammatic representation of the identified project risks arranged by risk category. 386. Activity attributes are the set of properties that are associated with a particular type of activity. 387. Discretionary dependencies are flexible 388. A Lead allows the acceleration of the Successor Activity. For example, if we have decided to do two rounds of Code Review and the second Code Review can start even before the first Code Review is completed. 389. Reserve Analysis: It deals with Buffer in the calculation of duration estimation. Contingency Reserve or Buffer usually will be a percentage of the overall Activity duration estimation. 390. Critical chain: A technique that modifies the project schedule to account for and accommodate limited resources. 391. Free float (slack) – It is the time and amount of activity can be delayed without delaying the early start date of its successor(s). 392. Project float (slack) – It is the time by which a project can be delayed without delaying the externally imposed project completion date required by the customer. 393. Approved and accepted Project schedule is called Schedule Baseline. 394. Forward Pass: It is helpful to calculate the early start and early finish dates for the uncompleted portions of all network activities. 395. External dependencies: Relationships between project activities and non-project activities. 396. Cost estimation is done throughout the lifecycle of the Project from the beginning to the end and should be based on a WBS to improve accuracy. 397. Vendor bid analysis – Analysis of what the Project should cost, based on the responsive bids from the qualified vendors who submitted their quotes or bids for the project. 398. Probability and Impact Matrix: A matrix that assigns risk ratings (low, medium, high) to risks based on combining probability of occurrence of the risk and its impact on a project objective. 399. Ground rules: Establish clear expectations regarding acceptable behavior for each and every individual team member. All project team members share responsibilities once the ground rules are established clearly. 400. Procurement Management Plan: The procurement management plan describes how the procurement processes will be managed and carried out, from developing procurement documentation through contract closure.

Index A accuracy, 226–227 acquire project team process, 329–331 activities on node (AON), 160 activity cost estimate, 201 activity resource requirements, 162 adaptive life cycle model, 41–43 additional risk response planning, 280–281 adjourning, 333 administrative closure procedures, 89 alternative identification, 124 analogous estimating, 165, 199–200 analogous estimating, 199–200 apportioned effort, 156 appraisal tools, 334 B balanced matrix, 49 bill of material (BOM), 129 BOM. See bill of material (BOM) bottom–up estimating, 162, 200 brainstorming, 118, 266 breadboard. See proof-of-principle prototype budget estimate, 201 business ethics, 404–405 C change log, 387 checklist analysis, 267 claims administration, 364 client participant focus groups, 114 close procurement process, 364–369 close project, 88–89 closed procurement, 366 closing process, 68 coercive power, 335 collaborating, 337 collection requirement process, 111–113, 119–121 command style, 116 communication channels, 302 dimensions of, 298–299

management, 297–309 methods, 304 process of, 299–300 technologies, 303 communication management plan, 387 compromise, 337 concurrent engineering, 350 conduct procurement process, 359–362 conflict management, 336–337 consensus style, 116–117 consultative style, 116 contract, 72, 351–353 contract closure procedures, 89 control charts, 243 control cost process, 205–212 control monitor, 84–88 control risk process, 280–282 control schedule, 149 control schedule process, 172–175 control scope process, 131–134 control stakeholder engagement, 389–391 controlling, 66 COQ. See costs of quality (COQ) cost baseline, 204–205 cost estimating methods, 198 cost performance index (CPI), 209 cost plus fee (CPF), 355 cost plus fixed fee (CPFF), 355 cost plus incentive fee (CPIF), 356 cost plus percentage of cost (CPPC), 355 cost reimbursable, 355 cost variance (CV), 209 costs of conformance, 230 costs of nonconformance, 230 costs of quality (COQ), 200, 228–230 CPF. See cost plus fee (CPF) CPFF. See Cost plus fixed fee (CPFF) CPI. See cost performance index (CPI) CPIF. See cost plus incentive fee (CPIF) CPM. See critical path method (CPM) CPPC. See cost plus percentage of cost (CPPC) crashing, 170

438 • Index critical chain method, 171–172 critical path method (CPM), 158, 169 cultural competence, 405 CV. See cost variance (CV) D decision trees, 275 decomposition, 126, 154 define activities, 149 define scope process, 121–125 definitive estimate, 201 deflection, 295 deliverables, 83 Delphi technique, 117–118, 266–267 depreciation, 211 determine budget process, 202–206 develop project team process, 331–334 develop schedule, 149 develop schedule process, 164–167 diagramming techniques, 267–268 direct and manage project work, 80–81 outputs of, 84 tools and techniques of, 83 direct cost, 195 discrete effort, 156 discrete probability distributions, 275 dual-moderator focus group, 114 E EAC. See estimate at completion (EAC) earned value, 208 econometric methods, 307 EMV. See expected monetary value (EMV) enhance, 295 enterprise environmental factors, 19–20, 73 esteem needs, 328 estimate activity duration process, 149, 164–167 estimate activity resources process, 149, 161–163 estimate at completion (EAC), 209 estimate cost process, 198–202 estimate to complete (ETC), 209 ETC. See Estimate to complete (ETC) ethical management, 404–405 exclusions, 133 executing process group, 65 expected monetary value (EMV), 275 expert judgement, 79–80 expert power, 336 F facilitated workshops, 114, 125

fast tracking, 170 finish–finish relationship, 159 finish–start relationship, 159 fishbone diagrams, 239–242 fixed cost, 195 fixed price, 355 focus groups, 114 types of, 114 forcing, 337 form study prototype, 115 free float/slack, 167 functional prototype, 115 functional structure, 45–46 functionally structured organization, 45 funding limit reconciliation, 204 G ground rules, 333–334 group creativity techniques, 117 group decision making, 115–117 styles, 116–117 H halo effect, 350 hierarchical-type charts, 326 high grade product, 226 histograms, 242–243 human resource plan, 198 I idea/mind mapping technique, 118–119 identify risk process, 264–269 impact analysis, 295 incremental life cycle model, 40–41 indirect cost, 195 initiation process group, 65 insurable risk, 295 interactive communication, 304 interpersonal skills, 333 inter-relationship diagram, 238 interviews, 114 Ishikawa diagrams, 239–242 issue log, 388 iterative life cycle model, 40 J job shadowing, 117 K kill gates. See stage gates

Index

L lags, 160 law of diminishing returns, 208 leads, 160 learning curve, 207 legitimate power, 336 level of effort, 155 life cycle models, 40–41 adaptive life cycle model, 41–43 incremental life cycle model, 40–41 iterative life cycle model, 40 predictive life cycle model, 39–40 logical relationship, 159–160 finish–finish relationship, 159 finish–start relationship, 159 start–finish relationship, 159 start–start relationship, 159 lower grade product, 226 M manage communication process, 304–306 manage project team process, 334–337 Maslow’s hierarchy of needs, 328 matrix based charts, 327 matrix diagram, 238 matrix structure, 46–49 balanced matrix, 49 strong matrix, 49 weak matrix, 49 milestone list, 156 mini focus groups, 114 mitigation, 295 monitoring, 65 monitoring and controlling process group, 68 Monte Carlo analysis, 276, 295 multiple-criteria decision analysis, 331 N negotiated settlements, 366 networking, 328 norming, 333 O OBS. See organizational breakdown structure (OBS) observing, 117 online focus groups, 114 OPAs. See organization process assets (OPAs) opportunity cost, 195 order of magnitude estimate, 200 organization process assets (OPAs), 50–51 organizational breakdown structure (OBS), 129

• 439

organizational process assets (OPAs), 73–74, 90 organizational structure, 45–50 organizational theories, 328–329 P parametric estimating, 200 Pareto’s charts, 242 path convergence, 169–170 path divergence, 170 payment system, 364 PBS. See product breakdown structure (PBS) PDM. See precedence diagramming method (PDM) PDPC. See process decision program chart (PDPC) perform qualitative risk analysis process, 269–273 perform quantitative risk analysis process, 273–277 performing, 333 periodic project risk reviews, 280 personal assessment tools, 334 physiological needs, 329 plan communications management process, 301 plan cost management, 195–197 plan procurement management process, 353 plan quality management process, 230–236 plan risk management process, 262–264 plan risk responses process, 277–279 plan schedule management process, 149, 151 plan scope management process, 108–120 plan stakeholder management, 382–386 planned value, 208 planning process group, 65 PMBOK. See Project Management Body of Knowledge (PMBOK) PMP code of professional conduct, 404 portfolio management, 17–18 precedence diagramming method (PDM), 157 precision, 226–227 predictive life cycle model, 39–40 probability distributions, 275 problem solving, 337 process, 2–3 process analysis, 237–238 process capability index, 243 process decision program chart (PDPC), 238 process group interactions, 68 procurement audits, 365 procurement contract award, 362 product analysis, 123 product breakdown structure (PBS), 123 product scope, 107–108 program management, 16–17 project, 3–10

440 • Index outcome of, 6 progressive elaboration and, 6–7 strategic planning and, 9 temporary nature of, 5–6 unique nature of, 6 versus operations, 7–9 project assumptions, 75 project authority, 122 project budget, 123 project calendars, 161 project charter, 72 project constraints, 75 project cost management, 193–212 project dependencies, 157 project failure, 104–105 reasons for, 105 project float/slack, 167 project governance, 122 project human resource management, 323–338 project initiation process, 72 project integration management, 70 project life cycle, 35–37 characteristics of, 35–37 project management, 10–14 areas applied to training course, 13 organizational influence on, 44–45 Project Management Body of Knowledge (PMBOK), 1 project management office, 18–19 project management plan, 76–80 project management professional (PMP), 403–406 responsibilities of, 403–405 project managers, 14–16 need interpersonal skills, 14–16 project objectives, 122 project phases, 37–43 relationship between, 37–41 project procurement life cycle, 353 project procurement management, 351–366 project requirements, 105–106 challenges in, 105–106 project risk management, 259–282 project risk response audits, 280 project schedule network diagram (PSND), 158, 160 project scope management, 107–108, 104–134 project stakeholder management, 379–391 project time management, 149–175 projectized structure, 46 proof-of-principle prototype, 115 prototype, 114–115 advantages of, 115 steps for creation, 115

types of, 114–115 PSND. See project schedule network diagram (PSND) published estimating data, 162 pull communication, 304 push communication, 304 Q quality audits, 236–237 quality management, 225–246 quality policy, 228 questionnaires, 117 R RAM. See responsibility assignment matrix (RAM) RBS. See resource breakdown structure (RBS) records management system, 366 referent power, 336 regulation, 20 requests for information (RFI), 359 requests for quotation (RFQ), 358 requirement management plan, 112 requirement traceability matrix, 120 reserve analysis, 200, 282 resource breakdown structure (RBS), 129, 162 resource calendars, 161 resource leveling, 170–171 respondent moderator focus group, 114 responsibility assignment matrix (RAM), 327 reward power, 335 RFI. See requests for information (RFI) RFQ. See requests for quotation (RFQ) risk categorization, 273 risk data quality assessment, 272 risk management process, 260 risk probability, 269 risk register, 198 risk trigger, 264 risk urgency assessment, 272 run charts, 243 S safety needs, 329 SAM. See staffing management plan (SAM) schedule management plan, 152 schedule optimization, 170–172 schedule performance index (SPI), 209 schedule variance, 209 scope, 107–108 types of, 107–108 scope analysis, 125 scope baseline, 129, 198

Index

scope statement, 125 S-curve, 205 secondary function, 124 self-actualization needs, 328 sequencing activities, 156–160 smoothing, 337 social needs, 328 sole source, 378 SOW. See statement of work (SOW) SPI. See schedule performance index (SPI) staffing management plan (SAM), 327 stage gates, 37 stakeholders, 43–44, 76, 379 stakeholder management plan, 113 stakeholder register, 113, 381–382 stakeholder tolerance, 260 standard, 19 start–finish relationship, 159 start–start relationship, 159 statement of deliverables, 122 statement of milestones, 122 statement of work (SOW), 73 statistical sampling, 243 status meetings, 281–282 storming, 332 strong matrix, 49 SWOT analysis, 268 system analysis, 123 systems engineering, 124 T technical performance measurement, 280 teleconference focus groups, 114 templates, 156 text oriented charts, 327 third-party inspections, 363–364 threats, 268, 295

• 441

time-series methods, 307 total certainty, 295 total float/slack, 167 total uncertainty, 295 tree diagram, 238 two-way focus group, 114 U UAT. See user acceptance test (UAT) unification, 71 user acceptance test (UAT), 159 V validate scope process, 130–131 value analysis, 124 Value Engineering (VE), 124 variable cost, 195 VE. See Value Engineering (VE) vendor bid analysis, 200 visual prototype, 115 W war room, 350 WBS dictionary 128–129 WBS rules, 129 weak matrix, 49 WIP. See work performance information (WPI) withdrawing, 337 work authorization system, 79 work package, 128 work performance data, 51 work performance information (WPI), 51, 84 work-arounds, 281 working prototype. See functional prototype Z Z Theory, 328

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