Livre Blanc 10

PMP Certificate Exam preparation
Lecture Delivered By:
Taher A. Abdel-Aziz,
PMP, RMP, PMOC, IPMA-C, PMCE, Arbitrator
YOUR SUCCESS COMPASS

PMP Certification Exam Preparation Course
Course Outlines
Personnel involved with managing any project in any

Course Audience:
sector
Course Duration: 5 days 7H/Day
You will learn:

 Reduce study and preparation time by focusing on
exam topics
What will you learn?  Develop a personal study plan and evaluate progress
 Utilize useful tips and techniques in answering the
exam questions
 Understand the PM terminology which is used by
PMPs
Project Management Framework
 Definitions (Project/ Project Management/

Stakeholders/ Triple constraints)
 Project Life Cycle
 Forms of Organizations
 Project Office
 Project Management Processes
 Project Management Knowledge Areas
 Related Endeavors
Course Topics:
 Related Management Disciplines
 Summary and Review Questions
Project Integration Management
 Develop Project Charter

 Develop Preliminary Project Scope Statement
 Develop Project Management Plan
 Direct and Manage Project Execution
 Monitor and Control Project Work
 Integrated Change Control
 Close Project
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Project Scope Management
 Scope Planning
 Scope Definition
 Create WBS
 Scope Verification
 Scope Control
Project Time Management
 Activity Definition
 Activity Sequencing
 Activity Resource Estimating
 Activity Duration Estimating
 Schedule Development
 Schedule Control
Project Cost Management
 Cost Estimating
 Cost Budgeting
 Cost Control
Project Quality Management
 Quality Planning
 Perform Quality Assurance
 Perform Quality Control
Project Human Resources Management
 Human Resource Planning

 Acquire Project Team
 Develop Project Team
 Manage Project Team
Project Communication Management
 Communications Planning
 Information Distribution
 Performance Reporting
 Manage Stakeholders
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Project Risk Management
 Risk Management Planning

 Risk Identification
 Qualitative Risk Analysis
 Quantitative Risk Analysis
 Risk Response Planning
 Risk Monitoring and Control
Project Procurement Management
 Plan Purchases and Acquisitions

 Plan Contracting
 Request Seller Responses
 Select Sellers
 Contract Administration
 Contract Closure
Project Stakeholder Management
 Identify Stakeholders
 Manage Stakeholders Expectations
Professional Responsibility of the Project Managers
 Concept of Professional Responsibility

 What does the professional responsibility mean?
 Categories of Professional Responsibility
 Responsibilities to the Profession
 Responsibilities to Customers and the Public
 Questions & answers
Studying for Taking the Exam
 Nature of the Exam

 What to study and how to study it
 How to answer the questions
Tips and tricks for avoiding common mistake
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VBS MENA
Address: 20 Nasr St., New Maadi, Cairo, Egypt
Contact us Telephone: + 20 251 68 068
Fax: +20 251 68 069
E-mail: info@vbs-mena.com
Web: www.vbs-mena.com
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Course Material
Lecture Delivered By:
Taher A. Abdel‐Aziz, PMP, RMP, PMOC, IPMA‐C, PMCE, Arbitrator
Your success compass

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Tell us about yourself
• Who are you?
• What industry do you work in?
• What are your current roles & responsibilities?
• What project(s), if any, are you currently working on?
• What formal PM education/training have you had?

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1
PM Standards
• Project Management Institute (PMI®)
• Project Management Body Of Knowledge “PMBOK ® Guide”
– Issued by the PMI®
– The reference to PM practices
• PMI® Certifications:
– Project Management Professional (PMP)®
– Certified Associate Project Manager (CAPM)®
– Program Management Professional (PgMP)®
– PMI® Scheduling Professional (PMI–SP)®
– PMI® Risk Management Professional (PMI–RMP)®
– PMI Agile Certified Practitioner (PMI-ACP)®
– OPM3® Professional Certification
3 Your success compass

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PMBOK ® Guide 5th

Project Management Body of Knowledge
 A GUIDE to the generally accepted body of knowledge that defines

project management
 Provides a common language
 Serves as a reference resource
 Recognized as a standard
The International Organization for Standardization (ISO)

American National Standard Institute (ANSI)
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2
Why We Need Project Management

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1. PM Definitions and Concepts

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3
What is a Project?
• A temporary endeavor undertaken to produce a

unique product, services or result.
• Its plan is usually progressively elaborated.

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Rolling wave planning
• Process groups may overlap and cross phases.
• If a project is broken down into several phases (e.g.

design, implementation etc.), then the process groups will
occur in each of the phases .
• Rolling wave planning refers to the progressive detailing of

the project plan which is an iterative and ongoing process.

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4
Projects and Operations
Similarities between Operations and Projects

• Performed by people
• Constrained by limited resources
• Planned executed and controlled
Differences between Operations and Project

• Operations do not have any timelines. Projects are temporary and
have finite time duration.
• Objective of Operations is usually to sustain the business. Objective
of a project is to attain the objective and close the project.

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Project Management Context

• Project management exists in a broader context that
includes:
‒ Program management
‒ Portfolio management
‒ Project management office
• Frequently, there is a hierarchy of:
‒ Strategic plan
‒ Portfolio
‒ Program
‒ Project
‒ Subproject

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Project Management Context
Portfolio
Programs
Projects
Projects
Sub-projects
Related work

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Subprojects
• Projects are divided into more manageable components or

subprojects
• Usually contracted to an external enterprise or other

functional unit in performing organization.

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Programs
• Group of projects managed in a coordinated way to obtain

benefits not available from managing them individually, in
order to gain efficiencies on cost, time, technology, etc.
• A combination of related projects and includes associated
operational work which is not done as part of the individual
projects
• Developing several common components only once and
leveraging them across all of the projects that use those
components.

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Program Management
• Provides a holistic view of several related projects which, if

done together, will achieve more substantial results than an
individual project
• Satisfies a particular strategic objective, which will require

several projects

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Portfolio Management
• Portfolio is the collection of projects or programs and

associated operational work
• Portfolio Management is the selection and support of projects
or program investments.
• Portfolio Management is important because :
– It satisfies the strategic business objectives
– Helps in selecting of appropriate projects and programs to maximize
the value of the portfolio

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Project Portfolio

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Project Management Office (PMO) 1/3
• An organizational unit to centralize and manage a program
• Called Program Management Office, Project Office or Program

Office
• Project team members will report directly to the project

manager or, if shared, to the PMO.
• The project manager reports directly to the PMO.
• The PMO directly reports to the CEO.

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• Identification and development of project management
methodology, best practices and standards
• Clearing house and management for project policies,
procedures, templates and other shared documentation
• Centralized configuration management for all projects
administered by the PMO
• Centralized repository and management for both shared and
unique risks for all projects.
• Central office for operation and management of project tools,
such as enterprise-wide project management software
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• Central coordination for communication management across

projects
• A mentoring platform for project managers
• Central monitoring of all project timelines and budgets, usually

at the enterprise level
• Coordination of overall project quality standards between the

project manager and any internal or external quality personnel
or standards organization

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Strategic Planning
• Strategic planning is a practice by which a company looks into the future
for products or services it must have, typically three to five years in the
future.
• Projects are the tools that the company will use to implement these
strategic goals, because the operations of the company typically
encompass the day-to-day (repeatable) activities. Thus, when the strategic
goals are complete, they roll into the operations of the company.
• Projects can be initiated as a result of market demand, legal needs,
technology updates, and customer or organizational needs.
• PMI® has a tool and methodology approach called OPM3® (Organizational
Project Management Maturity Model) for aligning a company's goals and
strategic planning to project management.
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2. Project Life Cycle & Organization

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Knowledge Areas
1. Integration management (4)
2. Scope management (5)
3. Time management (6)
4. Cost management (7)
5. Quality management (8)
6. HR management (9)
7. Communication management (10)
8. Risk management (11)
9. Procurement management (12)
10.Stakeholder management (13)

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Process Groups
1. Initiation
2. Planning
3. Execution
4. Monitoring and Control
5. Closing

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Process Groups
• Project management processes are mapped onto the lifecycle and
organized into groups:
 Initiating processes: recognizing that a project or phase should begin and
committing to do so.
 Planning processes: devising and maintaining a workable scheme.
 Executing processes: coordinating resources to carry out the plan.
 Monitoring and Controlling processes: ensuring that project objectives are
met.
 Closing processes: formalizing acceptance and bringing it to an orderly end.
• The process groups are linked by the results they produce; the
results of one process group becomes input to another
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12
KA’s & Process Group

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Process Interactions
A process is “a series of actions bringing about a result”
Project Management Process Groups are linked by the objectives they produce,
with the results or outcomes of one generally becoming an input to another or is a
deliverable of the project
Note: Many of the Inputs, Tools & Techniques, and Outputs for the 47 Project Management processes
appear in more than one of the Project Management Process Groups; many of these will be addressed
only once in the following Units unless additional information specific to a Process Group needs to be
addressed
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13
Project Phase
• Project phase: “A collection of logically related project

activities usually culminating in the completion and approval
of a major deliverable.”

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Multi Phase Project

Monitoring &
Controlling Processes
Planning
Processes
Project
Closing
Process Initiating processes
processes
Group
Executing
Processes
Life Cycle
Phase Phase Phase Phase
Monitoring & Monitoring & Monitoring & Monitoring &

Controlling Processes Controlling Processes Controlling Processes Controlling Processes
Planning Planning Planning Planning
Processes Processes Processes Processes
Initiating Initiating Initiating Closing
Initiating processe Initiating processe Initiating processe Initiating processes
processe s processe s processe s processes
s s s
Executing
Processes
Executing
Processes
Executing
Processes
Executing
Processes

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Phase Reviews
Requirements Review
General Design Review

Proposal
Preparation Detailed Design Review
Requirements
Analysis Unit Test
General Design
Detailed Design
Code and Debug

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Kill Point

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Project Lifecycle, PM Lifecycle
• Project life cycle: “Collectively the project phases are known

as the project life cycle.” Project life cycle includes all the
phases required for a project – defines the beginning and end
of a project.
‒ What you need to do to DO the work
‒ It varies by industry and type of project
• Project management life cycle: describes what is required to
manage the project and follows PMI®’s process groups (i.e.
Initiating, planning, execution, control and closeout).
More than 20 questions in PMP® exam related to PM life cycle

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Typical Project Life Cycle

3
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2

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Life Cycle Interaction

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Project Life Cycle – features 1/5

• Defines the beginning and end of the project
• Includes the transitional activities at beginning and end of the
project (provides link with ongoing operations of the performing
organization).
• Define technical work and resources involved in each phase.
• When the deliverables are to be generated in each phase and how
each deliverable is reviewed, verified and validated?
• How to control and approve each phase ?
• Project life cycle may be just one phase of product life cycle
• Subprojects within projects have their own distinct life cycles

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Factors that increase with project duration, then
decrease sharply when project nears completion:
• Cost of project
• Staffing Levels
Start of project Project Duration End of project

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Factors increasing with project duration:
• Probability of successfully completing project
• Cost of changes
• Cost of Error Correction

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Factors decreasing with project duration:
• Uncertainty/Risks about the project
• Ability of stakeholders to influence

final characteristics of project’s product
• Ability of stakeholders to influence final

cost of project’s product

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3
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Product Life Cycle
• The cycle of a product’s life from conception to withdrawal.
• The natural grouping of ideas, decisions, and actions into

product phases, from product conception to operations to
product phase-out.
• Undertaken to launch a new product – a product life cycle may

have several projects (and hence multiple project life cycles)
e.g. a project undertaken to bring a new desktop computer to
market is only one phase in the product life cycle.

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Product / Project Life Cycles

Relationship Between the Product and the
Project Life Cycles
Upgrade
Product Business
Life Cycle Plan
Operations
Divestment
IDEA
Product
Project
Life Cycle
INITIAL INTERMEDIATE FINAL

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20
Project Management System
• The Project Management System is a set of procedures, tools

and techniques, processes, and methodologies that an
individual Project Manager, PMO, or company can use to
manage projects.
• This system can be formal or informal in nature.
• Typically, it is supported by the Project Management Plan as

the work on the project is executed.

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Project Methodology
• A methodology is a system of practices, techniques,

procedures, and rules used by those who work in a discipline.
• PMI® does not define what phases you should use on your
project.
• The PMBOK ® Guide does not describe a project

methodology. Instead, processes are defined that could fit
into your project methodology.

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2.2 Key Stakeholders & The Organization

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Stakeholders 1/3
• Anyone whose interests may be positively or negatively
impacted by the project.

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Stakeholders 2/3

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Stakeholders 3/3
It is important to
• Indentify all stakeholders
• Determine all of their requirements
• Determine all of their expectations
• Communicate with them
• Manage their influence

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Types of Organizations
• Functional
• Project Based
• Weak Matrix
• Balanced
• Strong Matrix
• Projectized
• Composite

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Functional Organization

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Functional Organization
• Potential Advantages
– Clear reporting relationships
– Highly specialized expertise
– Homogeneous group
– Drive for technical excellence
• Potential Disadvantages
– Project boundaries limited to discipline
– Barrier to customer influence and satisfaction
– Employee development opportunities limited
– Project manager dependent on personal influence
– Hierarchical decision and communication processes
– Overwork technical issues versus build to standard

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Project-Based Organization

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Weak Matrix Organization

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Balanced Organization

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Strong Matrix Organization

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Projectized Organization

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Projectized Organization
Advantages
– Strong project manager role – Cost and performance tracking
– Full-time administrative staff – Decision-making
– Clear accountability – Customer relationships
– Fosters co-location – Common processes
– Improved focus
Disadvantages
– Lessening of employee’s “profession” – Focus on administrative work versus
identity technical
– Reduced focus on technical – Devaluing of functional managers
competence – Process versus deliverable emphasis
– Leadership by the non-technically
skilled
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Composite Organization

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Power by Organization Type

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Organizational Structure:
Influences on Projects

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Comparison of Functional vs. Projectized Organization Structures
Functional Projectized
Project Manager's authority Virtually none High to almost total
Ability to get resources for Very difficult, because resources work

Easier to get resources
project in specific functional areas
Reporting hierarchy Resources report to functional manager Resources report to Project Manager
Dedication to the project Low High

Performance Evaluation Done by Functional Manager Done by Project Manager
Home for the resource after Available, resources go back to
No home after project completed
project completed functional Departments
Well developed, because resources Not as well developed, team members

Specialized skills place more emphasis on functional skill need to pay more emphasis to projects
set compared to project and not to develop functional skill sets
Efficiency of resource More inefficient - Duplication of job

Efficient allocation of resources
allocation functions
Well defined - along functional Dependent of type of project, no well
Career paths
specialization defined career path

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Roles & Responsibilities
• Project Manager
• Project Coordinator
• Project Expediter
• Functional Manager
• Senior Management
• Sponsor
• Project Team Members

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Roles: Project Manager
• The person ultimately responsible for the outcome of the project –
deliverables
• Not required to be a technical expert
• Formally empowered to use organizational resources in control of
the project
• Authorized to make decisions and spend the project's budget
• Found in a matrix or projectized organization. If they do exist in a
functional organization, they will often be only part-time and will
have significantly less authority than project managers in other
types of organizations.

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PM Key General Management Skills
• Leading
• Communicating
• Negotiating
• Problem Solving
• Influencing the Organization

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Roles: Project Coordinator
• In some organizations, project managers do not exist; instead,

they use the role of a project coordinator.
• Weaker than a project manager. This person may not be

allowed to make budget decisions or overall project decisions,
but they may have some authority to reassign resources.
• Acts as the communications link to Senior Management and

have some limited decision-making abilities.
• Found in weak matrix or functional organizations

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Roles: Project Coordinator

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Roles: Project Expediter
• The weakest of the three project management roles
• Staff assistant who has little or no formal authority
• This person reports to the executive who ultimately has
responsibility for the project
• Performs activities such as verifying that some assignment is
complete, checking on the status of some undertaking, and
communicating the information to senior management
• Usually found in a functional organization - may be only part-
time in many organizations

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Roles: Project Expeditor

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Roles: Functional Manager
• Departmental manager such as the manager of engineering,
director of marketing or information technology manager.
• Usually "owns" the resources that are loaned to the project,
and has human resources responsibilities for them.
• May be asked to approve the overall project plan.
• Functional managers can be a rich source of expertise and
information available to the project manager and can make a
valuable contribution to the project.
• Typically, you see this role conflicting with the Project Manager
and direction of the project.
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Roles: Senior Management

• Role on the project is to help
prioritize projects and make
sure the project manager has
the proper authority and
access to resources.
• Issues strategic plans and goals
and makes sure that the
company's projects are aligned
with them.
• May be called upon to resolve
conflicts within the
organization.
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Roles: Sponsor
• The person paying for the project.
• May be internal or external to the company.
• Called the project champion.
• The sponsor and the customer may be the same person, although the
usual distinction is that the sponsor is internal to the performing
organization and the customer is external.
• May provide valuable input on the project, such as due dates and other
milestones, important product features, and constraints and assumptions.
• If a serious conflict arises between the project manager and the customer,
the sponsor may be called in to help work with the customer and resolve
the dispute.

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Roles: Project Team Members (Project Staff)

• The people who actually do the work that goes toward meeting the
scope of the project.
• Can be analysts, programmers, technical writers, construction
personnel, testers, etc.
• Project Manager assumes that they know enough to manage their own
workload without the need for micromanagement. If team members
are unclear about their workload, they can contact the Project Manager
for direction.
• One main difference between team members and other stakeholders is
that a team member typically bills (is a cost) to the project.

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3. Project Management Processes

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Process Groups
1. Initiation
2. Planning
3. Execution
4. Monitoring and Control
5. Closing

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Knowledge Areas
1. Integration management (4)
2. Scope management (5)
3. Time management (6)
4. Cost management (7)
5. Quality management (8)
6. HR management (9)
7. Communication management (10)
8. Risk management (11)
9. Procurement management (12)
10.Stakeholder management (13)

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PM Processes Groups
Initiating Planning
Processes Processes
Controlling Executing
Processes Processes
Closing
Processes

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Initiating Process Group
• The Initiating Process Group consists of the processes that

facilitate the formal authorization to start a new project or
a project phase.
• The Initiating Process Group starts a project or project

phase, and the output defines the project’s purpose,
identifies objectives, and authorizes the project manager to
start the project.

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Involving Stakeholders in
the Initiating Processes
• Initiating processes are often done external to the project’s
scope of control by the organization or by program or
portfolio processes, which may blur (hazy) the project
boundaries for the initial project inputs.
• Involving the customers and other stakeholders during

initiation generally improves the probability of shared
ownership, deliverable acceptance, and customer and other
stakeholder satisfaction. Such acceptance is critical to project
success.
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Planning Process Group
• The project management team uses the Planning Process Group to
plan and manage a successful project for the organization.
• The planning processes develop the project management plan.
• These processes also identify, define, and mature the project

scope, project cost, and schedule the project activities that occur
within the project.
• As new project information is discovered, additional dependencies,

requirements, risks, opportunities, assumptions, and constraints
will be identified or resolved.

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Executing Process Group
• This Group consists of the processes used to complete the

work defined in the project management plan to accomplish
the project’s requirements.
• It involves coordinating people and resources, as well as

integrating and performing the activities of the project
• The vast (great )majority of the project’s budget will be

expended in performing its processes.

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Monitoring & Controlling Process Group 1/2
• This Group consists of those processes performed to observe

project execution so that potential problems can be identified
in a timely manner and corrective action can be taken, when
necessary, to control the execution of the project.
• The key benefit of this Process Group is that project

performance is observed and measured regularly to identify
variances from the project management plan. It also includes
controlling changes and recommending preventive action in
anticipation of possible problems.

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Monitoring & Controlling Process Group 2/2
• The continuous monitoring provides the project team insight

into the health of the project and highlights any areas that
require additional attention.
• It should not only monitor and control the work being done
within a Process Group, but also monitors and controls the
entire project effort. In multi-phase projects,
• This Group also provides feedback between project phases, in
order to implement corrective or preventive actions to bring
the project into compliance with the project management plan.

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Closing Process Group
• This Group includes the processes used to formally terminate

all activities of a project or a project phase, hand off the
completed product to others or close a cancelled project.
• This Process Group, when completed, verifies that the defined

processes are completed within all the Process Groups to
close the project or a project phase, as appropriate, and
formally establishes that the project or project phase is
finished.

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Common Definitions in the Project Processes

A process is “a series of actions bringing about a result”
Project Management Process Groups are linked by the objectives they produce,
with the results or outcomes of one generally becoming an input to another or is a
deliverable of the project
Note: Many of the Inputs, Tools & Techniques, and Outputs for the 47 Project Management processes
appear in more than one of the Project Management Process Groups; many of these will be addressed
only once in the following Units unless additional information specific to a Process Group needs to be
addressed
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Common Inputs:
Enterprise environmental Factors
• Appears as an input into most planning processes.
• Can be anything external to your project that affects your project.
• The things that impact your project that are not part of the project itself,
such as:
‒ Company's organizational structure
‒ Organization's values and work ethic
‒ Government standards, laws and regulations where the work is being
performed or where the product will be used
‒ The characteristics of project's stakeholders (their expectations and willingness
to accept risk)
‒ The overall state of the marketplace for the project
‒ Business infrastructure systems
‒ Personnel policies
‒ PMIS (Project Management Information Systems)
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Common Inputs:
Organizational Process Assets 1/2
• Information, tools, documents, or knowledge your
organization possess that can help you plan for your project:
‒ The project plan from a previous, similar project performed by
your organization
‒ Company policy: adds structure and lets you know the limits
your project can safely operate within, so you do not have to
waste time or resources discovering these on your own.
• Anything that your organization owns or has developed that

can help you on a current or future project.
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Common Inputs:
Organizational Process Assets 2/2
Examples:
– Templates for common project – Financial infrastructure
documents – Issue management
– Examples from a previous project plan – Change control processes
– Software tools – Risk management
– Databases of project information: – Work authorization
Project files and records – The corporate knowledge base
– Historical information – Process data
– Lessons learned – Configuration management
– Process definitions – Organizational policies, procedures, and
– Organization communication needs guidelines for any area (risk, financial,
– Criteria to complete (close) reporting, change control, etc)

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Common Inputs:
Project Management Plan 1/2
• The most important document for a project
• The culmination of all the planning processes.
• A single approved document that guides execution, monitoring and
control, and closure.
• It is actually made up of several documents; however, once these
component documents become approved as the project
management plan, they become fused together as one document.
• May be documented at a summary level, or it may be very detailed.

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Differentiation Between the Project
Management Plan and Project Documents
Project Management Plan Project Documents
Change management plan Activity attributes Project staff assignments
Communications management plan Activity cost estimates Project statement of work
Configuration management plan Activity duration estimates Quality checklists
Cost baseline Activity list Quality control measurements
Cost management plan Activity resource requirements Quality metrics
Human resource management plan Agreements Requirements documentation
Process improvement plan Basis of estimates Requirements traceability matrix
Procurement management plan Change log Resource breakdown structure
Scope baseline: Change requests Resource calendars
•Project scope statement
•WBS
•WBS dictionary
Quality management plan Forecasts Risk register
•Cost forecast
•Schedule forecast
Requirement management plan Issue log Schedule data
Risk management plan Milestone list Seller proposals
Schedule baseline Procurement documents Source selection criteria
Schedule management plan Procurement statement of work Stakeholder register
Scope management plan Project calendars Team performance assessments
Stakeholder management plan Project charter Work performance data
Project funding requirements Work performance information
Project schedule Work performance reports
Project schedule network diagrams

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Common Inputs:
Project Management Plan 2/2
List of the components that make up the project management
plan:
•Project scope management plan •The quality baseline
•Schedule management plan •Process improvement plan
•The schedule baseline •Staffing management plan
•The resource calendar •Communications management plan
•Cost management plan •Risk management plan
•The cost baseline •The risk register
•Quality management plan •Procurement management plan

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Common Inputs:
Approved Change Requests
• These are only requests until they are approved.
• If a change is requested, then the change is processed according to
the integrated change control system. This will ensure that the
change request is properly understood and considered and that the
right individuals or departments are involved before approving or
rejecting it.
• Used as an input into many processes to make sure that the change
gets executed and is properly managed and controlled.
• Examples: You may receive a change request to add functionality to
a computer application, to remove part of a building, or to change
materials.
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Common Tools:
Expert Judgment
• Can be used whenever the project team and the project

manager do not have sufficient expertise.
• Experts come from inside the organization or outside, can be

paid consultants or offer free advice.
• This tool is highly favored and is very commonly founded on

planning processes.

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45
Common Tools: Project Management
Methodology 1/2
• The PMBOK ® Guide does not describe a methodology.
• The PMBOK ® Guide describes 47 processes used to manage a

project, which are used by an organization's project
management methodology, but they are not the
methodology.
• Different organizations will employ different project

management methodologies, while they will all adhere to the
47 processes.

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Methodology 2/2
Example:
Consider the analogy of two baseball teams.
The Atlanta Braves and the New York Mets both have the
same set of rules when they play, but they have very different
strategies of how they will capitalize on those strengths and
use those rules to their advantages.
The rules would equate to the processes, and the strategy to

methodology.
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Information System (PMIS)
• The system that helps you produce and keep track of the
documents and deliverables.
• Example: a PMIS might help your organization produce the project
charter by having you fill in a few fields on a computer screen. It
might then generate the project charter and set up a project billing
code with accounting.
• While the PMIS usually consists primarily of software, it will often
interface with manual systems.
• PMIS will contain the configuration management system, which
also contains the change control system
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Common Outputs:
Updates (All Categories)
• Updates to just about every kind of plan come out of planning,

executing, and monitoring and controlling processes.
• Most of these are common sense.

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Project Information
• Throughout the life cycle of the project, a significant amount of data and information
is collected, analyzed, transformed, and distributed in various formats to project team
members and other stakeholders.
• Project data are collected as a result of various Executing processes and are shared
within the project team. The collected data are analyzed in context, and aggregated
and transformed to become project information during various Controlling processes.
• The information may then be communicated verbally or stored and distributed as
reports in various formats.
• The project data are continuously collected and analyzed during the dynamic context
of the project execution. As a result, the terms data and information are often used
interchangeably in practice.
• The indiscriminate use of these terms can lead to confusion and misunderstandings
by the various project stakeholders. The following guidelines help minimize
miscommunication and help the project team use appropriate terminology:
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Project Information
Work performance data
• Work performance data : the raw observations and
measurements identified during activities performed to carry
out the project work.
• Examples include reported percent of work physically

completed, quality and technical performance measures, start
and finish dates of schedule activities, number of change
requests, number of defects, actual costs, actual durations,
etc.

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Project Information
Work performance information
• Work performance information : the performance data

collected from various controlling processes, analyzed in
context and integrated based on relationships across areas.
• Examples of performance information are status of

deliverables, implementation status for change requests, and
forecasted estimates to complete.

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Project Information
Work performance reports
• Work performance reports: the physical or electronic
representation of work performance information compiled in
project documents, intended to generate decisions or raise
issues, actions, or awareness.
• Examples include status reports, memos, justifications,

information notes, electronic dashboards, recommendations,
and updates.

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4. Project Integration Management

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Integration Management
Initiation Planning Executing Monitoring Closing

&
Controlling
4.1 4.2 4.3 4.4 4.6
DEVELOP DEVELOP DIRECT AND MONITOR AND CLOSE PROJECT
PROJECT PROJECT MANAGE CONTROL OR PHASE
CHARTER MANAGEMENT PROJECT WORK PROJECT WORK
PLAN
4.5
PERFORM
INTEGRATED
CHANGE
CONTROL

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4.1 DEVELOP PROJECT CHARTER
TOOLS & TECHNIQUES

Expert judgement
Facilitation techniques
INPUTS
Project statement of work OUTPUTS
Business case Project charter
Agreements
Enterprise environmental factors
Organizational process assets

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4.1 DEVELOP PROJECT CHARTER
• Develop Project Charter is the process of developing a

document that formally authorizes the existence of a project
and provides the project manager with the authority to apply
organizational resources to project activities.
• The key benefit of this process is a well-defined project start

and project boundaries, creation of a formal record of the
project, and a direct way for senior management to formally
accept and commit to the project.

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4.1 OUTPUTS - 1. Project Charter
• The project charter documents the business needs, current
understanding of the customer’s needs, and the new product,
service, or result that it is intended to satisfy, such as:
– Project purpose or justification,
– Measurable project objectives and related success criteria,
– High-level requirements,
– High-level project description,
– High-level risks,
– Summary milestone schedule,
– Summary budget,
– Project approval requirements (what constitutes project success, who decides
the project is successful, and who signs off on the project),
– Assigned project manager, responsibility, and authority level, and
– Name and authority of the sponsor or other person(s) authorizing the project
charter.
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4.1 INPUTS – 1. Project Statement of Work

• The statement of work (SOW) is a narrative description of products or services to
be delivered by the project. For internal projects, the project initiator or sponsor
provides the statement of work based on business needs, product, or service
requirements. For external projects, SOW can be received from the customer as
part of a bid document, for example, request for proposal, request for
information, request for bid, or as part of a contract.
– Business need. An organization’s business need may be based on a market
demand,technological advance, legal requirement, or government regulation.
– Product scope description. This documents the characteristics of the product that the
Project will be undertaken to create. The description should also document the
relationship between the products or services being created and the business need that
the project will address.
– Strategic plan. All projects should support the organization’s strategic goals. The strategic
plan of the performing organization should be considered as a factor when making project
selection decisions and prioritization.
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4.1 INPUTS – 2. Business Case 1/2
• The business case or similar document provides the necessary information from a
business standpoint to determine whether or not the project is worth the required
investment.
• Typically business need and cost benefit analysis are contained in the business case
to justify the project.
• The requesting organization or customer, in the case of external projects, may write
the business case. The business case is created as a result of one or more of the
following:
– Market demand (e.g., a car company authorizing a project to build more fuel-efficient cars in
response to gasoline shortages),
– Organizational need (e.g., a training company authorizing a project to create a new course to
increase its revenues),
– Customer request (e.g., an electric utility authorizing a project to build a new substation to
serve a new industrial park),
– Technological advance (e.g., an electronics firm authorizing a new project to develop a faster,
cheaper, and smaller laptop after advances in computer memory and electronics technology),
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4.1 INPUTS – 2. Business Case 2/2

• Legal requirement (e.g., a paint manufacturer authorizing a project to
establish guidelines for handling toxic materials),
• Ecological impacts (e.g., a company undertakes a project to lessen its
environmental impact),
or
• Social need (e.g., a non-governmental organization in a developing
country authorizing a project to provide potable water systems, latrines,
and sanitation education to communities suffering from high rates of
cholera).
– In the case of multi-phase projects, the business case may be periodically
reviewed to ensure that the project is on track to deliver the business
benefits. In the early stages of the project lifecycle, periodic review of the
business case by the sponsoring organization also helps to confirm that the
project is still required.

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4.1 INPUTS – 3. Agreements
• A contract is an input if the project is being done for an

external customer.

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4.1 INPUTS –
4. Enterprise Environmental Factors
• The enterprise environmental factors that can influence the

Develop Project Charter process include, but are not limited
to:
– Governmental or industry standards,
– Organization infrastructure, and
– Marketplace conditions.

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4.1 INPUTS –
5. Organizational Process Assets
• The organizational process assets that can influence the
Develop Project Charter process include, but are not limited
to:
– Organizational standard processes, policies, and standardized
process definitions for use in the organization;
– Templates (e.g., project charter template); and
– Historical information and lessons learned knowledge base.

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4.1 TOOLS & TECHNIQUES –

1. Expert Judgment
• Expert judgment is often used to assess the inputs used to develop the
project charter. Such judgment and expertise is applied to any technical
and management details during this process.
• Such expertise is provided by any group or individual with specialized
knowledge or training, and is available from many sources, including:
– 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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2. Facilitation Techniques
• Facilitation techniques have broad application within project

management processes and guide the development of the
project charter.
• Brainstorming, conflict resolution, problem solving, and meeting

management are examples of key techniques used by facilitators
to help teams and individuals accomplish project activities.

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4.2 DEVELOP PROJECT MANAGEMENT PLAN
TOOLS & TECHNIQUES

Expert judgement
Facilitation techniques
INPUTS
Project charter
OUTPUTS
Outputs from other processes Project management plan


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4.2 DEVELOP PROJECT MANAGEMENT PLAN
• It is the process of defining, preparing, and coordinating all subsidiary plans and
integrating them into a comprehensive project management plan.
• The key benefit of this process is a central document that defines the basis of all
project work.
• The project management plan defines how the project is executed, monitored
and controlled, and closed.
• The project management plan’s content varies depending upon the application
area and complexity of the project.
• It is developed through a series of integrated processes extending through
project closure.
• This process results in a project management plan that is progressively
elaborated by updates, and controlled and approved through the Perform
Integrated Change Control (Section 4.5) process.

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4.2 INPUTS –
1. Outputs From other processes
• Outputs from many of the other processes described in
Chapters 5 through 13 are integrated to create the project
management plan.
• Any baselines and subsidiary management plans that are an

output from other planning processes are inputs to this
process.
• In addition, updates to these documents can necessitate

updates to the project management plan.

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4.2 INPUTS –
2. Organizational Process Assets 1/2
• The organizational process assets that can influence the
Develop Project Management Plan process include, but are
not limited to:
– Standardized guidelines, work instructions, proposal evaluation
criteria, and performance measurement criteria,
– Project management plan template—Elements of the project
management plan that may be updated include, but are not
limited to:
• Guidelines and criteria for tailoring the organization’s set of standard
processes to satisfy the specific needs of the project, and
• Project closure guidelines or requirements like the product validation and
acceptance criteria,
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4.2 INPUTS –
2. Organizational Process Assets 2/2
• Change control procedures including the steps by which official
company standards, policies, plans, and procedures, or any project
documents will be modified and how any changes will be approved
and validated,
• Project files from past projects (e.g., scope, cost, schedule and,
performance measurement baselines, project calendars, project
schedule network diagrams, risk registers, planned response
actions, and defined risk impact),
• Historical information and lessons learned knowledge base, and
• Configuration management knowledge base containing the versions
and baselines of all official company standards, policies,
procedures, and any project documents.
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1. Expert Judgment
• When developing the project management plan, expert
judgment is applied utilized to:
– Tailor the process to meet the project needs,
– Develop technical and management details to be included in the
project management plan,
– Determine resources and skill levels needed to perform project
work,
– Define the level of configuration management to apply on the
project, and
– Determine which project documents will be subject to the
formal change control process.
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4.3 DIRECT AND MANAGE PROJECT WORK

TOOLS & TECHNIQUES
Expert judgement
Project management Information
system
Meetings
INPUTS OUTPUTS
Deliverables
Project management plan
Approved change requests
Change requests
Project management plan (updates)
Project documents (updates)

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4.3 Direct and Manage Project Work 1/2
• Perform activities to accomplish project requirements,
• Create project deliverables,
• Staff, train, and manage the team members assigned to the project,
• Obtain, manage, and use resources including materials, tools, equipment,
and facilities,
• Implement the planned methods and standards,
• Establish and manage project communication channels, both external and
internal to the project team,
• Generate project data, such as cost, schedule, technical and quality progress,
and status to facilitate forecasting,
• Issue change requests and adapt approved changes into the project’s scope,
plans, and environment,
• Manage risks and implement risk response activities,
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4.3 Direct and Manage Project Work 2/2

• Manage sellers and suppliers, and
• Collect and document lessons learned, and implement approved
process improvement activities.
• Direct and Manage Project Execution also requires implementation of
approved changes covering:
– Corrective action. Documented direction for executing the project work to bring
expected future performance of the project work in line with the project
management plan.
– Preventive action. A documented direction to perform an activity that can reduce
the probability of negative consequences associated with project risks.
– Defect repair. The formally documented identification of a defect in a project
component with a recommendation to either repair the defect or completely
replace the component.

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4.3 OUTPUTS –
1. Deliverables
• An approved deliverable is any unique and verifiable product,

result, or capability to perform a service that must be
produced to complete a process, phase, or project.

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4.3 OUTPUTS –
2. Project Management Plan (updates)
• Requirements management plan,
• Schedule management plan,
• Cost management plan,
• Quality management plan,
• Human resource plan,
• Communications management plan,
• Risk management plan,
• Procurement management plan, and
• Project baselines.
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4.3 OUTPUTS –
3. Project Documents (updates)
• Requirements documents,
• Project logs (issue, assumptions, etc.),
• Risk register, and
• Stakeholder register.

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4.4 MONITOR AND CONTROL PROJECT WORK

TOOLS & TECHNIQUES
Expert judgment
Analytical techniques
Project management information system
Meetings
INPUTS
Schedule forecasts OUTPUTS
Cost forecasts Change requests
Validated changes Work performance reports
Work performance information Project management plan (updates)
Enterprise environmental factors Project documents (updates)

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• Monitor and Control Project Work is the process of tracking, reviewing, and
reporting the progress to meet the performance objectives defined in the project
management plan.
• The key benefit of this process is that it allows stakeholders to understand the
current state of the project, the steps taken, and budget, schedule, and scope
forecasts.
• Monitoring is an aspect of project management performed throughout the project.
• Monitoring includes collecting, measuring, and distributing performance
information, and assessing measurements and trends to effect process
improvements.
• Continuous monitoring gives the project management team insight into the health
of the project and identifies any areas that may require special attention.
• Control includes determining corrective or preventive actions or re-planning and
following up on action plans to determine whether the actions taken resolved the
performance issue.
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The Monitor & Control Project Work process is concerned with:
• Comparing actual project performance against the project management plan.
• Assessing performance to determine whether any corrective or preventive

actions are indicated, and then recommending those actions as necessary.
• Identifying new risks and analyzing, tracking, and monitoring existing project
risks to make sure the risks are identified, their status is reported, and that
appropriate risk response plans are being executed.
• Providing reports and information to support status reporting, progress

measurement, and forecasting to update current cost and current schedule
information.
• Monitoring implementation of approved changes as they occur.

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4.4 OUTPUTS - 1. Change Requests
• As a result of comparing planned results to actual results, change
requests may be issued which may expand, adjust, or reduce project
or product scope.
• Changes can impact the project management plan, project
documents, or product deliverables.
• Changes may include, but are not limited to the following:
– Corrective action. A documented direction for executing the project work to
bring expected future performance of the project work in line with the project
management plan.
– Preventive action. A documented direction to perform an activity that can
reduce the probability of negative consequences associated with project risks.
– Defect repair. The formally documented identification of a defect in a project
component with a recommendation to either repair the defect or completely
replace the component.
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4.4 OUTPUTS - 2. Work Performance Reports

• Work performance reports are the physical or electronic representation
of work performance information compiled in project documents,
intended to generate decisions, actions, or awareness.
• Project information may be communicated verbally from person to
person. However, in order to record, store, and sometimes distribute
work performance information, a physical or electronic representation in
the form of project documents is required.
• Work performance reports are a subset of project documents.
• Specific work performance metrics may be defined at the start of the
project and included in the normal work performance reports provided
to key stakeholders.
• Examples of work performance reports include status reports, memos,
justifications, information notes, recommendations, and updates.
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4.4 OUTPUTS –
• Project management plan elements that may be updated
include, but are not limited to:
‒ Schedule management plan,
‒ Cost management plan,
‒ Quality management plan,
‒ Scope baseline,
‒ Schedule baseline, and
‒ Cost performance baseline.

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4.4 OUTPUTS –
• Project documents that may be updated include, but are not

limited to:
‒ Forecasts,
‒ Performance reports, and
‒ Issue log.

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4.4 INPUTS - 5. Work Performance Information
• Work performance information is the performance data collected from
various controlling processes, analyzed in context, and integrated based on
relationships across areas.
• Thus work performance data has been transformed into work performance
information.
• Data in itself cannot be used in the decision-making process as it has only
out-of-context meaning.
• Work performance information, however, is correlated and contextualized,
and provides a sound foundation for project decisions.
• Work performance information is circulated through communication
processes.
• Examples of performance information are status of deliverables,
implementation status for change requests, and forecasted estimates to
complete.
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4.4 INPUTS –
The enterprise environmental factors that can influence the Monitor and
Control Project Work process include, but are not limited to:
‒ Governmental or industry standards (e.g., regulatory agency regulations,
product standards, quality standards and workmanship standards),
‒ Company work authorization system,
‒ Stakeholder risk tolerances, and
‒ Project management information systems (e.g., an automated tool suite,
such as a scheduling software tool, a configuration management system,
an information collection and distribution system or web interfaces to
other online automated systems).

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4.4 INPUTS –
The organizational process assets that can influence the Monitor
and Control Project Work process include but are not limited to:
‒ Organization communication requirements,
‒ Financial controls procedures (e.g., time reporting, accounting codes,
expenditure and disbursement reviews, and standard contract
provisions),
‒ Issue and defect management procedures,
‒ Risk control procedures including risk categories, probability definition
and impact, and probability and impact matrix,
‒ Process measurement database used to make available measurement
data on processes and products, and
‒ Lessons learned database.
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1. Expert Judgment
• Expert judgment is used by the project management team to

interpret the information provided by the monitor and control
processes.
• The project manager, in collaboration with the team,

determines the actions required to ensure project
performance matches expectations.

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2. Analytical Techniques
• Analytical techniques are applied in project management to forecast
potential outcomes based on possible variations of project or
environmental variables and their relationships with other variables.
• Examples of analytical techniques used in projects are:
‒ Regression analysis,
‒ Grouping methods,
‒ Causal analysis,
‒ Root cause analysis,
‒ Forecasting methods (e.g., time series, scenario building, simulation, etc.),
‒ Failure mode and effect analysis (FMEA),
‒ Fault tree analysis (FTA),
‒ Reserve analysis,
‒ Trend analysis,
‒ Earned value management, and
‒ Variance analysis.
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4.5 PERFORM INTEGRATED CHANGE CONTROL

TOOLS & TECHNIQUES
Expert judgement
Meetings
Change control tools
INPUTS
OUTPUTS
Approved Change requests
Work performance reports
Change log
Change requests
Project management plan (updates)

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Integrated Change Control 1/6
The Perform Integrated Change Control process includes the
following change management activities in differing levels of
detail, based upon the progress of project execution:
• Influencing the factors that circumvent integrated change control so that
only approved changes are implemented;
• Reviewing, analyzing and approving change requests promptly, which is
essential, as a slow decision may negatively affect time, cost, or the
feasibility of a change;
• Managing the approved changes;
• Maintaining the integrity of baselines by releasing only approved changes
for incorporation into the project management plan and project
documents;

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• Reviewing, approving or denying all recommended corrective and
preventive actions;
• Coordinating changes across the entire project (e.g., a proposed schedule
change will often affect cost, risk, quality, and staffing); and
• Documenting the complete impact of change requests.
• Changes may be requested by any stakeholder involved with the project.
• Although they maybe initiated verbally, they should always be recorded in
written form and entered into the change management and/or
configuration management system.
• Change requests are subject to the process specified in the change
control and configuration control systems.
• Those change request processes may require information on estimated
time impacts and estimated cost impacts.
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• Every documented change request must be either approved or rejected by
some authority within the project management team or an external
organization.
• On many projects the project manager is given authority to approve certain
types of change requests as defined in the project’s roles and responsibilities
documentation.
• Whenever required, the Perform Integrated Change Control process includes a
change control board (CCB) responsible for approving or rejecting change
requests.
• The roles and responsibilities of these boards are clearly defined within the
configuration control and change control procedures, and are agreed upon by
appropriate stakeholders.
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• Many large organizations provide for a multi-tiered board structure,
separating responsibilities among the boards.
• If the project is being provided under a contract, then some proposed
changes may need to be approved by the customer as per the contract.
• Approved change requests can require new or revised cost estimates,
activity sequences, schedule dates, resource requirements, and analysis
of risk response alternatives.
• These changes can require adjustments to the project management plan
or other project management plans/documents.
• The applied level of change control is dependent upon the application
area, complexity of the specific project, contract requirements, and the
context and environment in which the project is performed.

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• A configuration management system with integrated change control provides a
standardized, effective, and efficient way to centrally manage approved changes
and baselines within a project.
• Configuration control is focused on the specification of both the deliverables
and the processes while change control is focused on identifying, documenting
and controlling changes to the project and the product baselines.
• Project-wide application of the configuration management system, including
change control processes, accomplishes three main objectives:
– Establishes an evolutionary (developmental )method to consistently identify and request
changes to established baselines, and to assess the value and effectiveness of those
changes,
– Provides opportunities to continuously validate and improve the project by considering
the impact of each change, and
– Provides the mechanism for the project management team to consistently communicate
all approved and rejected changes to the stakeholders.

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Some of the configuration management activities included in the
integrated change control process are as follows:
• 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, changes are managed, and accountability is
maintained.
• Configuration status accounting. Information is recorded and reported as to
when appropriate data about the configuration item should be provided. This
information includes a listing of approved configuration identification, status of
proposed changes to the configuration, and the implementation status of
approved changes.
• Configuration verification and audit. Configuration verification and configuration
audits ensure the composition of a project’s configuration items is correct and
that corresponding changes are registered, assessed, approved, tracked, and
correctly implemented. This ensures the functional requirements defined in the
configuration documentation have been met.
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4.5 OUTPUTS -
1- Approved Change requests
• Change requests are processed according to the change
control system by the project manager or by an assigned team
member.
• Approved change requests will be implemented by the Direct

and Manage Project Execution process.
• The status of all changes, approved or not, will be updated in

the change request log as part of the project document
updates.

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4.5 OUTPUTS –
• Elements of the project management plan that may be updated
include
– Any subsidiary management plans, and
– Baselines that are subject to the formal change control process.
• Changes to baselines should only show the changes from the
current time forward. Past performance may not be changed.
• This protects the integrity of the baselines and the historical
data of past performance.

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4.5 OUTPUTS –
• Project documents that may be updated as a result of the

Perform Integrated Change Control process include the
change request log and any documents that are subject to the
formal change control process.

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1. Expert Judgment
• In addition to the project management team’s expert
judgment, stakeholders may be asked to provide their
expertise and may be asked to sit on the change control
board. Such judgment and expertise is applied to any technical
and management details during this process and may be
provided by various sources, for example:
– Consultants,
– Stakeholders, including customers or sponsors,
– Professional and technical associations,
– Industry groups,
– Subject matter experts, and
– Project management office (PMO).
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2. Meetings
• A change control board is responsible for meeting and
reviewing the change requests and approving or rejecting
those change requests.
• The roles and responsibilities of these boards are clearly

defined and are agreed upon by appropriate stakeholders.
• All change control board decisions are documented and

communicated to the stakeholders for information and follow-
up actions.

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3. Change control tools
• In order to facilitate configuration and change management,
manual or automated tools may be used. Tool
• selection should be based on the needs of the project
stakeholders including organizational and environmental
• considerations and/or constraints.
• Tools are used to manage the change requests and the
resulting decisions. Additional considerations should
• be made for communication to assist the CCB members in
their duties as well as distribute the decisions to the
• appropriate stakeholders.
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4.6 CLOSE PROJECT OR PHASE
TOOLS & TECHNIQUES

Expert judgement
Meetings
INPUTS
OUTPUTS
Final product, service or result transition
Accepted Deliverables
Organizational Process assets (updates)

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4.6 CLOSE PROJECT OR PHASE 1/2

• Close Project or Phase is the process of finalizing all activities across all of the Project
Management Process Groups to formally complete the project or phase.
• The key benefit of this process is that it provides lessons learned, the formal ending of
project work, and the release of organization resources to pursue new endeavors.
• When closing the project, the project manager reviews all prior information from the
previous phase closures to ensure that all project work is completed and that the
project has met its objectives.
• Since project scope is measured against the project management plan, the project
manager reviews the scope baseline to ensure completion before considering the
project closed.
• The Close Project or Phase process also establishes the procedures to investigate and
document the reasons for actions taken if a project is terminated before completion.
• In order to successfully achieve this, the project manager needs to engage all the
proper stakeholders in the process.

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4.6 CLOSE PROJECT OR PHASE 2/2
This includes all planned activities necessary for administrative
closure of the project or phase, including step by- step
methodologies that address:
• Actions and activities necessary to satisfy completion or exit
criteria for the phase or project;
• Actions and activities necessary to transfer the project’s products,
services, or results to the next phase or to production and/or
operations; and
• Activities needed to collect project or phase records, audit project
success or failure, gather lessons learned and archive project
information for future use by the organization.
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4.6 OUTPUTS –
1. Final Product, Service or Result Transition
• This output refers to the transition of the final product,

service, or result that the project was authorized to produce
(or in the case of phase closure, the intermediate product,
service, or result of that phase).

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4.6 OUTPUTS –
2. Organizational Process Assets (updates) 1/2
The organizational process assets that are updated as a result of
the Close Project or Phase process include, but are not limited
to:
• Project files. Documentation resulting from the project’s activities, for
example, project management plan, scope, cost, schedule and project
calendars, risk registers, change management documentation,
planned risk response actions, and risk impact.
• Project or phase closure documents. Project or phase closure
documents, consisting of formal documentation that indicates
completion of the project or phase and the transfer of the completed
project or phase deliverables to others, such as an operations group or
to the next phase.
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4.6 OUTPUTS –
2. Organizational Process Assets (updates) 2/2
• During project closure the project manager reviews prior phase
documentation, customer acceptance documentation from Validate Scope
(5.5) and the contract (if applicable), to ensure that all project requirements
are complete prior to finalizing the closure of the project.
• If the project was terminated prior to completion, the formal documentation
indicates why the project was terminated and formalizes the procedures for
the transfer of the finished and unfinished deliverables of the cancelled
project to others.
• Historical information. Historical information and lessons learned
information are transferred to the lessons learned knowledge base for use
by future projects or phases. This can include information on issues and risks
as well as techniques that worked well that can be applied to future projects.
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4.6 INPUTS –
3. Accepted Deliverables
• Those deliverables that have been accepted through the

Validate Scope process in Section 5.5.

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5. Project Scope Management

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PROJECT SCOPE MANAGEMENT

What does the scope knowledge area do?
• It includes the processes required to ensure that the project
includes all the work required and only the work required to
complete the project successfully.
• Managing the project scope is primarily concerned with
defining and controlling what is and is not included in the
project.
• Project Scope Management defines and controls all the of
work included and not included in the plan.
• It Makes sure that every one agrees with the scope.
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Things to know about scope management 1/4
• You must plan, in advance, how you will determine the scope, manage and
control it.
• Scope must be defined, clear, and formally approved before work starts.
• Requirements are gathered from all stakeholders, not just a person signed you.
• Requirements can take a substantial time, for large project many have 1000s of
people.
• A WBS is used on all projects, a benefit of it that you may find additional scope.
• Any changes to scope must be evaluated for its efforts on time, cost, risk,
quality resources, and customer satisfaction.
• No change to scope is allowed without an approved change request.
• Scope changes not approved if they relate to work doesn't fit within project
charters.
• You need to continuously determine what is and isn't included in the project.

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Gold Plating
• Scope = The work needed to successfully complete the project
and only that work.
• “Gold plating” = Many companies have a culture in which they

try to exceed customer expectations by delivering more than
was agreed upon.
• Gold Plating increases risk and uncertainty and may inject a

host of potential problems into the project.

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Product/Project Scope Management
• Product Scope: features & functions that characterize a
product or service. It is the end result which is wanted. It may
be created as a part of the project.
• Project Scope: the work that must be done to deliver a
product, service or a result with the specified features or
functions. This work is including planning, coordinate and
management activities. It is a part of scope management
which It is a part of project management plan. It is measured
against the project management plan.
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Project and Product Requirements

• Project requirements can include business requirements,
project management requirements, delivery requirements etc.
• Product requirements can include information on technical

requirements, security requirements, performance
requirements etc.

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Project Scope Management includes the following
processes:
Planning Monitoring &
Controlling
5.1 5.5
Plan Scope Verify Scope
Management
5.2 5.6
Collect Control Scope
Requirements
5.3
Define Scope
5.4
Create WBS

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SCOPE PROCESSES
5.1 Plan Scope Management
It is the process of Creating a project scope management plan that
documents how the project scope will be defined, verified, controlled,
and how the work breakdown structure (WBS) will be created and
defined.
5.2 Collect Requirements
It is the process of defining and documenting stakeholders’ needs to
meet the project objectives.
5.3 Define Scope
It is the process of developing a detailed description of the project and
product.
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SCOPE PROCESSES
5.4 Create WBS

Subdivide major project deliverables into smaller, more manageable
components
5.5Validate Scope
Formal acceptance of completed project deliverables, i.e. a signed
document
5.6 Control Scope
Control changes to the project scope

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PLAN SCOPE MANAGEMENT

WHAT HAPPENS IN PLAN SCOPE MANAGEMENT?
• The scope management plan is a component of the project or program
management plan that describes how the scope will be defined,
developed, monitored, controlled, and verified. The development of
the scope management plan and the detailing of the project scope
begin with the analysis of information contained in the project charter
(Section 4.1.3.1), the latest approved subsidiary plans of the project
management plan (Section 4.2.3.1), historical information contained in
the organizational process assets (Section 2.1.4), and any other
relevant enterprise environmental factors (Section 2.1.5). “PMBOK ®
Guide” This plan helps reduce the risk of project scope creep.

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5.1 PLAN SCOPE MANAGEMENT
TOOLS & TECHNIQUES

Expert Judgment
Meetings
INPUTS OUTPUTS
Project Management Plan
Scope Management Plan
Project charter
Requirements Management Plan
Enterprise Environmental Factors

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5.1 OUTPUTS - 1. Scope Management Plan

• It describes how the scope will be defined, developed, monitored, controlled,
and verified.
• It is a major input into the Develop Project Management Plan process, and
the other scope management processes.
• The components of a scope management plan include the processes for:
‒ Preparing a detailed project scope statement.
‒ Creation of the WBS from the detailed project scope statement.
‒ How the WBS will be maintained and approved.
‒ How formal acceptance of the completed project deliverables will be obtained.
‒ Controlling how requests for changes to the detailed project scope statement will be
processed.
• This process is directly linked to the Perform Integrated Change Control
process (Section 4.5).
• The scope management plan can be formal or informal, broadly framed or
highly detailed, based on the needs of the project.
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5.1 OUTPUTS - 2. Requirements Management Plan
Components of the requirements management plan can include,
but are not limited to:
• How requirements activities will be planned, tracked, and reported;
• Configuration management activities such as how changes to the product,
service or result requirements will be initiated, how impacts will be
analyzed, how they will be traced, tracked, and reported, as well as the
authorization levels required to approve these changes;
• Requirements prioritization process;
• Product metrics that will be used and the rationale for using them;
• Traceability structure, that is, which requirements attributes will be
captured on the traceability matrix and to which other project documents
requirements will be traced.
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1. Meetings
• Project teams may attend project meetings to develop
the scope management plan.
• Attendees at these meetings may include the project

manager, the project sponsor, selected project team
members, selected stakeholders, anyone with
responsibility for any of the scope management
processes, and others as needed.

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5.1 INPUTS –
1. Project Management Plan
• Described in Section 4.2.3.1. “PMBOK® Guide” Approved

subsidiary plans of the project management plan are used
to create the scope management plan and influence the
approach taken for planning scope and managing project
scope.

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5.1 INPUTS –
2. Project Charter
• Described in Section 4.1.3.1. “PMBOK® Guide” The project

charter is used to provide the project context needed to
plan the scope management processes.
• It provides the high-level project description and product

characteristics from the project statement of work.

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5.1 INPUTS –
Described in Section 2.1.5. “PMBOK ® Guide” The enterprise
environmental factors that can influence the Plan Scope
Management process include, but are not limited to:
• Organization’s culture,
• Infrastructure,
• Personnel administration, and
• Marketplace conditions.

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5.1 INPUTS –
Described in Section 2.1.4. “PMBOK ® Guide” The

organizational process assets that can influence the Plan
Scope Management process include, but are not limited to:
• Policies and procedures, and
• Historical information and lessons learned knowledge

base.

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COLLECT REQUIREMENTS
WHAT HAPPENS IN COLLECT REQUIREMENTS?
• The project’s success is directly influenced by the care taken in capturing
and managing project and product requirements.
• Requirements include the quantified and documented needs and
expectations of the sponsor, customer, and other stakeholders.
• The requirements need to be elicited, analyzed, and recorded in enough
detail to be measured once project execution begins.
• Collecting requirements is defining and managing customer expectations.
• Requirements become the foundation of the WBS.
• Cost, schedule, and quality planning are all built upon these requirements.
• The development of requirements begins with an analysis of the
information contained in the project charter and stakeholder register.

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5.2 COLLECT REQUIREMENTS

TOOLS & TECHNIQUES
• Interviews . Focus
groups
• Facilitated workshops
• Observations . Prototypes
• Benchmarking . Context
diagrams
• Document analysis
• Group creativity techniques
• Group decision-making techniques
• Questionnaires and surveys
INPUTS
• Scope management plan OUTPUTS
• Requirements management plan
• Stakeholder management plan • Requirements documentation
• Project charter • Requirements traceability matrix
• Stakeholder register

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5.2 OUTPUTS - 1. Requirements Documentation 1/2
• Requirements documentation describes how individual requirements
meet the business need for the project.
• Requirements may start out at a high-level and become progressively
more detailed as more is known.
• Before being baselined, requirements must be unambiguous
(measurable and testable), traceable, complete, consistent and
acceptable to key stakeholders.
• The format of a requirements document may range from a simple
document listing all the requirements categorized by stakeholder
and priority, to more elaborate forms containing executive summary,
detailed descriptions, and attachments.

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5.2 OUTPUTS – 1. Requirements Documentation 2/2

Components of requirements documentation can include, but, are not
limited to:
• Business need or opportunity to be seized, describing the limitations of the current situation
and why the project has been undertaken;
• Business and project objectives for traceability;
• Functional requirements, describing business processes, information, and interaction with the
product, as appropriate which can be documented textually in a requirements list, in models,
or both;
• Non-functional requirements, such as level of service, performance, safety, security,
compliance, supportability, retention/ purge, etc.;
• Quality requirements;
• Acceptance criteria;
• Business rules stating the guiding principles of the organization;
• Impacts to other organizational areas, such as the call center, sales force, technology groups;
• Impacts to other entities inside or outside the performing organization;
• Support and training requirements; and
• Requirements assumptions and constraints.

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5.2 OUTPUTS –
2. Requirements Traceability Matrix
• The requirements traceability matrix is a table that links requirements
to their origin and traces them throughout the project life cycle.
• The implementation of a requirements traceability matrix helps
ensure that each requirement adds business value by linking it to the
business and project objectives.
• It provides a means to track requirements throughout the project life
cycle, helping to ensure that requirements approved in the
requirements documentation are delivered at the end of the project.
• Finally, it provides a structure for managing changes to the product
scope.

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5.2 INPUTS - 1. Stakeholder Register

• The stakeholder register is used to identify stakeholders that can
provide information on detailed project and product requirements.
• This contains all details related to the identified stakeholders including,
but not limited to:
• Identification information: Name, organizational position, location,
role in the project, contact information;
• Assessment information: Major requirements, main expectations,
potential influence in the project, phase in the lifecycle with the most
interest; and
• Stakeholder classification: Internal/external,
supporter/neutral/resistor, etc.
• The stakeholder register is described in Section 10.1. “PMBOK® Guide”

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1. Interviews
• An interview is a formal or informal approach to discover
information from stakeholders by talking to them directly.
• Interviewing experienced project participants, stakeholders,
and subject matter experts can aid in identifying and defining
the features and functions of the desired project deliverables.
• These interviews can take place between individuals or group
setting.
• They can also be conducted via e-mail, phone calls, letters , or
others.
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2. Focus Groups
• Focus groups bring together prequalified stakeholders and
subject matter experts to learn about their expectations and
attitudes about a proposed product, service or result.
• It helps to get a specific set of stakeholders' or subject matter
experts opinions and requirements for product or an aspect
of the project.
• The members can discuss their ideas with each other, but the
conversation is directed by a moderator. designed to be more
conversational than a one on-one interview.

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3. Facilitated Workshops
• Requirements workshops are focused sessions that bring

key cross-functional stakeholders together to define
product requirements.
• Another benefit of this technique is that issues can be

discovered and resolved more quickly than in individual
sessions.

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4. Group Creativity Techniques 1/2
Several group activities can be organized to identify project and
product requirements. Some of the group creativity techniques
that can be used are:
• Brainstorming. A technique used to generate and collect multiple
ideas related to project and product requirements.
• Nominal group technique. This technique enhances brainstorming
with a voting process used to rank the most useful ideas for further
brainstorming or for prioritization.
• The Delphi Technique. A selected group of experts answers
questionnaires and provides feedback. reach to Consensus

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4. Group Creativity Techniques 2/2
Mind Maps:
• It is a diagram of ideas or notes to help generate, classify, or record
information.
• It looks like several trees radiating out a central core word. Color,
pictures and notations can be used to make the diagram more
readable.
Affinity diagram:
• The ideas generated from any other requirements gathering
techniques are sorted into group by similarities.
• Each group is then given a title. This sorting it easier to see additional
scopes(or risks) that have not been identified.
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5. Group Decision Making Techniques
• Group decision making is an assessment process of multiple alternatives
with an expected outcome in the form of future actions resolution. These
techniques can be used to generate, classify and prioritize product
requirements.
 Unanimously (everyone agrees) the decision is easy.
 Dictatorship (single person make a decision for the entire group).
 Majority (more than half)
 Plurality (if there is no majority; the largest numbers of supporters).
 Consensus (general agreement; the members who “first refuse” are willing
to accept.
 Almost any of the decision methods described previously can be applied to
the group techniques used in the requirements gathering process.
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6. Questionnaires and Surveys
• Questionnaires and surveys are written sets of questions
designed to quickly accumulate information from a wide
number of respondents.
• Questionnaires and/or surveys are most appropriate with

broad audiences, when quick turnaround is needed, and
where statistical analysis is appropriate.

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7. Observations
• Observations provide a direct way of viewing individuals in their
environment and how they perform their jobs or tasks and carry
out processes.
 It is a method of obtaining early feedback on requirements by

providing a working model of the expected product before
actually building it.
 It may be updated multiple times to incorporate the feedback

until the requirements have been solidified for product.
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9. Benchmarking
• Benchmarking involves comparing actual or planned practices,

such as processes and operations, to those of comparable
organizations to identify best practices, generate ideas for
improvement, and provide a basis for measuring performance.
• The organizations compared during benchmarking can be

internal or external.

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10. context diagram
• The context diagram is an example of a scope model. Context
diagrams visually depict the product scope by showing a
business system (process, equipment, computer system, etc.),
and how people and other systems (actors) interact with it.
• Context diagrams show inputs to the business system, the

actor(s) providing the input, the outputs from the business
system, and the actor(s) receiving the output.

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11. Document analysis
• Document analysis is used to elicit requirements by analyzing
existing documentation and identifying information relevant to the
requirements.
• Examples of documents that may be analyzed include, but are not
limited to:
business plans, marketing literature, agreements, requests for proposal,
current process flows, logical data models, business rules repositories,
application software documentation, business process or interface
documentation, use cases, other requirements documentation,
problem/issue logs, policies, procedures, and regulatory documentation
such as laws, codes, or ordinances, etc.

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DEFINE SCOPE
What happens in Define Scope?
• Define Scope is the process of developing a detailed description of
the project and product.
• The preparation of a detailed project scope statement is critical to

project success and builds upon the major deliverables,
assumptions, and constraints that are documented during project
initiation.
• During planning, the project scope is defined and described with

greater specificity as more information about the project is known.
• Existing risks, assumptions and constraints are analyzed for

completeness
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DEFINE SCOPE
What happens in Define Scope?
• Define Scope is the process of developing a detailed description of
the project and product.
• The preparation of a detailed project scope statement is critical to
project success and builds upon the major deliverables, assumptions,
and constraints that are documented during project initiation.
• During planning, the project scope is defined and described with
greater specificity as more information about the project is known.
• Existing risks, assumptions and constraints are analyzed for
completeness

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SMART Project Objectives

• Specific. Objectives must be clear and well defined. They must
define what the project includes and excludes.
• Measurable. Objectives must be defined in measurable terms
which the project manager must be able to measure and report
progress on.
• Agreed upon. The stakeholder must agree on project objectives and
end results.
• Realistic. Objectives must be achievable given the available
resources, knowledge, skills and time.
• Time (Cost) limited. Objectives must be framed within clear time
(cost) goals.
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5.3 DEFINE SCOPE
TOOLS & TECHNIQUES

• Expert judgement
• Product analysis
• Alternative identification
• Facilitated workshops
INPUTS
• Scope management plan
OUTPUTS
• Project charter • Project scope statement
• Requirements documentation • Project document updates
• Organizational process assets

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5.3 OUTPUTS –
1. Project Scope Statement 1/2
• It says "Here is what we will do on this project" or
• It says "Here is the approved project scope for this project".
• It can take time and involves the expert judgment from in and out of
organization.
• It must be identified "What is not in the project to make it clear that such
additions are not allowed.
• The PM should consider different approaches to performing the work and
incorporating the needs of the stakeholders into the project.
• The project scope statement, along with WBS & WBS dictionary, comprises
the scope baseline. (Part of project management plan).
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5.3 OUTPUTS –
1. Project Scope Statement 2/2
The project scope statement may include:
• Product scope.
• Deliverables.
• Product acceptance criteria.
• What is not part of the project?
• Additional risks.
• Constraints & Assumptions.
‒ Constraints: are factors that limit the team's options.
‒ Assumptions: are things that are assumed to be true but may not.
‒ They are identified and then managed.
‒ The sponsor, team, other stakeholders can identify them and review for validity
throughout the life of the project.
‒ If they change; the project management plan need to change.
‒ Assumptions analysis is a part of risk management process.
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5.3 OUTPUTS –
• Stakeholder register,
• Requirements documentation, and
• Requirements traceability matrix.

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1. Product Analysis
• For projects that have a product as a deliverable, as opposed
to a service or result, product analysis can be an effective tool.
• Each application area has one or more generally accepted

methods for translating high-level product descriptions into
tangible deliverables.
• Product analysis includes techniques such as product

breakdown, systems analysis, requirements analysis, systems
engineering, value engineering, and value analysis.

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2. Alternatives Identification
• Identifying alternatives is a technique used to generate

different approaches to execute and perform the work of the
project.
• A variety of general management techniques can be used such

as brainstorming, lateral thinking, pair wise comparisons, etc.

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Question
My company is researching on “clean energy on clean

transportation”. As the Project Manager, which of the following is
a valid assumption?
A. Project scope is to develop an alternative energy source or
electric drive for Off-road vehicles.
B. Project has to be completed in 24 months
C. Cost of the project is $ 17m
D. Gas will become a scarce commodity after 20 years

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Answer : D
Assumptions are factors that are considered true, real or certain

(PM needs to make assumptions at every stage of the project).
Constraints are limitations or restrictions. (given in Project

Charter).
D is the only assumption; all the others are constraints.

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CREATE WBS
WHAT'S A WORK BREAKDOWN STRUCTURE?
• Organizes & defines the total scope of the project.
• Subdivides the project work into smaller, more manageable pieces of
work.
• The WBS is created with the help of the team.
• The first level is completed before the project is broken down further.
• Each level of the WBS is smaller piece of the level above.
• The entire project is included in each of the highest level of WBS.
• The WBS includes only deliverables that are really needed.
• Deliverables not in the WBS are not part of the project.

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5.4 CREATE WBS
TOOLS & TECHNIQUES
• Decomposition
• Expert Judgement
INPUTS OUTPUTS
• Scope baseline
• Scope management plan
• Project document updates
• Project scope statement
• Requirements documentation

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5.4 OUTPUTS –
1. Scope Baseline
• WBS
• WBS dictionary

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5.4 OUTPUTS – 1. Scope Baseline

Work Breakdown Structure
• The WBS is a deliverable-oriented hierarchical decomposition of the work to be
executed by the project team, to accomplish the project objectives and create the
required deliverables, with each descending level of the WBS representing an
increasingly detailed definition of the project work.
• The WBS organizes and defines the total scope of the project.
• Each WBS component, including work package and control accounts within a WBS, is
generally assigned a unique identifier from a code of accounts.
These identifiers provide a structure for hierarchical summation of costs, schedule,
and resource information.
• Each WBS component, including work package and control accounts within a WBS, is
generally assigned a unique identifier from a code of accounts.
These identifiers provide a structure for hierarchical summation of costs, schedule,
and resource information.

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Example WBS
Information
System
1.
Project Systems Hardware Software Facilities Training

Management Engineering Acquisition Development Modifications Development
1.1 1.2 1.3 1.4 1.5 1.6
Project Product CPU Operating Facility Training

Planning Design Acquisition System Plans Plans
1.1.1 1.2.1 1.3.1 1.4.1 1.5.1 1.6.1
Project Systems Auxiliary Database Facility Training

Control Integration Equipment 1.4.2 Modification Courses
1.1.2 1.2.2 1.3.2 1.5.2 1.6.2
Project Test & Printer Application Facility

Data Evaluation Acquisition Development Installation
1.1.3 1.2.3 1.3.3 1.4.3 1.5.3

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Work package / Planning Package /

• Work packages: Control Account
‒ Lowest level of the WBS.
‒ May be further decomposed into subproject work breakdown structure.
‒ Used when project manager is assigning a scope of work to another organization
• A Planning Package
• It is a piece of the WBS between the control account and the work package, and
is used to plan known work content that lacks sufficient work level details
• A Control Account is a point placed

in the WBS above the work package
to help with planning when all the
details are not immediately available
at the work package level.

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Work Breakdown Structure
NODE
• A node may be considered a work package when it meets the
following criteria:
‒ The work package can not be easily decomposed any further
‒ The work package is small enough to be estimated for time (effort)
‒ The work package is small enough to be estimated for cost
‒ The work package may be assigned to a single person
• If the node is being subcontracted outside of the performing
organization, that node, regardless of size, may be considered a work
package, and the subcontracting organization builds a "sub-WBS“
from that node.
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Exercise
• Draw part of the first 3 levels of a WBS you worked with in the
last project.
• Keep your WBS to verify if it will satisfy the reasons for

creating a WBS.

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Why Use the WBS
• Help prevent work from slipping through the cracks.
• Provides the project team members with an understanding of their work.
• Facilitates communication and cooperation between project team & stakeholders.
• Help prevent changes.
• Focus the team experience on what needs to be done, resulting in higher quality
and a project that is easier to manage.
• Provides a basis for estimating staff, cost, and time.
• Provides proof of the need for staff, cost, and time.
• Get team buy-in and build the team.
• Helps people get their minds around the project.
• When there is a scope change to the project; WBS along with the scope statement,
can help to see if new scope within the planned scope of the project.
• As a way to control scope creep by reminding everyone what is to be done.

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Why Use the WBS

• As a communication tool.
• To help new team members see their roles.
• WBS from one project may be used as the basis for the next.
• The PMO should collect WBS examples and encourage the creation of
templates.
• Is a graphical picture of the hierarchy of the project.
• Identifies all the deliverables to be completed- if it isn't in the WBS it isn't part
of the project.
• It is the foundation upon which the project is built.
• It is very important.
• It Can be reused for other project.
• It Should exist for every project.
• It Doesn't show dependencies
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Project Network
Activity List
Control diagram
Risk
Management WBS Staffing
Quality Estimating &

Management . Scheduling
Budgeting

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5.4 OUTPUTS – 1 . Scope Baseline

WBS Dictionary 1/3
• Code of account identifier, • Cost estimates,

• Description of work, • Quality requirements,
• Responsible organization, • Acceptance criteria,
• List of schedule milestones, • Technical references, and
• Associated schedule activities, • Contract information.
• Resources required,

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WBS Dictionary 2/3
WBS dictionary:
Used to collect work component descriptions. Includes:
• Work package descriptions,
• Planning information such as schedule dates, cost budgets and staff assignments.
• Just as a language dictionary defines words, a WBS dictionary provides detailed information
about the nodes on a WBS.
• Because the WBS is graphical, there is a practical limit to how much information can be
included in each node.
• The WBS dictionary solves this problem by capturing additional attributes about each work
package in a different document that does not have the graphical constraints that the WBS
does.
• Uses as a part of a work authorization system to inform team members of when their work
package is going to start, schedule, milestones, etc.
• Increases the understanding of the effort for each work package.
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WBS Dictionary 3/3
For each WBS component, the
WBS dictionary includes:
1. Code of account identifier
2. Statement of work
3. Responsible organization
4. List of schedule milestones

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1. Decomposition 1/3
• Subdividing the major project deliverables or sub-deliverables into
smaller more manageable components until deliverables are
defined in sufficient detail to support development of the project
activities.

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• Every level is the detailed explanation of the level above it.
• When is decomposition enough? Ask 2 questions:
‒ Are your work packages small enough to be estimated for time
and cost?
‒ Are the project manager and the project team satisfied that the
current level of detail provides enough information to proceed
with subsequent project activities?
• If you can answer "yes" to those two questions, your work
packages are probably decomposed far enough.

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• The WBS structure can be created in a number of forms, such as:
‒ Using phases of the project life cycle as the first level of
decomposition, with the product and project deliverables inserted
at the second level,
‒ Using major deliverables as the first level of decomposition; and
‒ Using subprojects which may be developed by organizations
outside the project team, such as contracted work. The seller then
develops the supporting contract work breakdown structure as
part of the contracted work.

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VALIDATE SCOPE
HOW DO WE VALIDATE SCOPE?
• Getting the stakeholders' formal acceptance of completed or updated
scope & deliverables, i.e. the WBS or the software you delivered
• If a project terminates early, project scope verification should be
done next to establish & document the level & 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 verification but
can be performed in parallel as well
• It's unethical to ignore Scope validation because it adds risk to
meeting the customer's needs (see PMI® Code of Conduct)

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5.5 VALIDATE SCOPE
TOOLS & TECHNIQUES

• Inspection
• Group decision-making
techniques
INPUTS
•
•
Requirements documentation
OUTPUTS
• Accepted deliverables
• Requirements traceability matrix
• Change requests
• Verified deliverables
• Work performance information
• Work performance data
• Project documents updates

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validate scope 1/2

• It can be done at the end of each project phase in the project life
cycle (to verify the phase deliverables along the way).
• It can be done during monitoring & controlling process in project

management plan.
• You can verify the scope with the customer multiple time in one
project.
• Whereas, it results in formal acceptance by the customer of

interim deliverables, the part of close project or phase process is
to get final acceptance or sign-off from the customer for the
project as a whole.
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validate scope 2/2
Validate scope relates to perform Q.C:
A perform QC is done first to make sure the work meets the
quality requirements before meeting with the customer.
The two processes are very similar in that both involve checking
for the correctness of work.
The difference is the focus of the effort and who is doing the
checking.
• In perform Q.C, the Q.C department checks to see if the quality
requirements specified for the deliverables are met and makes sure
the work is correct.
• In verify scope, the customer check and hopefully accept
deliverables.

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5.5 OUTPUTS –
1. Accepted Deliverables
• Deliverables that meet the acceptance criteria are formally
signed off and approved by the customer or sponsor.
• Formal documentation received from the customer or

sponsor acknowledging formal stakeholder acceptance of the
project’s deliverables is forwarded to the Close Project or
Phase process (4.6). “PMBOK ® Guide”

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5.5 OUTPUTS –
2. Change Requests
• Those completed deliverables that have not been formally
accepted are documented, along with the reasons for non-
acceptance. Those deliverables may require a change request
for defect repair.
• The change requests are processed for review and disposition

through the Perform Integrated Change Control process.

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1. Inspection
• Inspection includes activities such as measuring, examining,
and verifying to determine whether work and deliverables
meet requirements and product acceptance criteria.
• Inspections are sometimes called reviews, product reviews,

audits, and walkthroughs. In some application areas, these
different terms have narrow and specific meanings.

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5.5 INPUTS –
1. Verified Deliverables
• Described in Section 8.3.3.3. “PMBOK ® Guide” ( Control

Quality ) Verified deliverables are project deliverables that are
completed and checked for correctness through the Control
Quality process.

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CONTROL SCOPE
WHAT HAPPENS DURING CONTROL SCOPE ?
(Change is inevitable)
• Influencing the factor that create project scope changes
• Controlling the impact of those changes
• Assures all requested changes and recommended corrective actions

are processed through the project Integrated Change Control process
• Project scope control is used to manage the actual changes when

they occur& integrated with other control processes
Note: Uncontrolled changes are often referred to as project scope creep

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5.6 CONTROL SCOPE
TOOLS & TECHNIQUES

• Variance analysis
INPUTS OUTPUTS
• Project management plan
• Change requests
• Requirements documentation
• Project management plan updates
• Requirements traceability matrix
• Organizational process assets updates

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CONTROL SCOPE
• It involves measuring project and product scope performance and managing scope baseline
changes.
• It is “How do you measure scope now, are you doing it frequently, are you sure at any point
in the project scope is completed as plan”.
• Original requirements recorded in the requirement documentation and requirement
traceability matrix.
Then:
• Measure scope performance against the scope baseline to see the magnitude of any
variance (variance analysis) and decide If corrective action or preventive action is required.
• Once that information is known, the next to determine any updates to scope baseline,
other parts of project management plan, project documentation are needed, and what
changes should be requested.
• PM looks for the impact of scope changes on all aspects of the project (through the perform
integrated change control process)
• Control scope can be done to prevent or remove the need for any more changes from the
source

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5.6 OUTPUTS –
1. Work Performance Information
• Work performance information produced includes
correlated and contextualized information on how the
project scope is performing compared to the scope baseline.
• It can include the categories of the changes received, the

identified scope variances and their causes, how they impact
schedule or cost, and the forecast of the future scope
performance.
• This information provides a foundation for making scope

decisions.
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5.6 OUTPUTS –
2. Project Documents Updates
• Project documents that may be updated include, but

are not limited to:
‒ Requirements documentation, and
‒ Requirements traceability matrix.

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5.6 OUTPUTS –
3. Organizational Process Assets Updates
• Organizational process assets that may be updated

‒ Causes of variances,
‒ Corrective action chosen and the reasons, and

‒ Other types of lessons learned from project scope
control.

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1. Variance analysis
• Project performance measurements are used to assess

the magnitude of variation from the original scope
baseline.
• Important aspects of project scope control include

determining the cause and degree of variance relative to
the scope baseline and deciding whether corrective or
preventive action is required.

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5.6 INTPUTS –
• The project management plan described in Section 4.2.3.1
“PMBOK ® Guide” contains the following information that is
used to control scope:
• Scope baseline: is compared to actual results to determine if a

change, corrective action, or preventive action is necessary.
• Scope management plan. describes how the project scope

will be managed and controlled.
• Change management plan: defines the process for managing

change on the project.
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6. Project Time Management

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PROJECT TIME MANAGEMENT
WHAT DOES THE TIME MANAGEMENT AREA ATTAIN?
• Manages the project schedule to ensure timely completion

of the project
• Utilizes the Schedule Management Plan from the Develop

Project Management Plan process

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Your success compass 1

TIME PROCESSES
DEFINITIONS : TIME PROCESSES
6.1 Plan Schedule Management
• The process of establishing the policies, procedures, and documentation for
planning, developing, managing, executing, and controlling the project
schedule.
6.2 Define Activities
• Identifying the specific actions to be performed to produce project
deliverables (at the lowest level in the WBS, which is called the work
package).
6.3 Sequence Activities
• Identifying & documenting relationships among the project activities.
6.4 Estimate Activity Resources
• Estimate the type & quantities of material, people, equipment, or supplies
required to perform each activity.
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TIME PROCESSES (Cont.)

DEFINITIONS : TIME PROCESSES
6.5 Estimate Activity Durations
• Estimate the number of work periods needed to complete individual activities
with estimated resources.
6.6 Develop Schedule
• Analyze activity sequences, durations, resource requirements, and schedule
constraints to create the project schedule. (The five processes above could be
viewed as a single process in small projects) .
6.7 Control Schedule
• Monitor the status of the project to update project progress and managing
changes to the schedule baseline.

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TIME PROCESSES
Planning Monitoring & Controlling
6.1 6.7
Plan Schedule Management Control Schedule
6.2
Define Activities
6.3
Sequence Activities
6.4
Estimate Activity Resources
6.5
Estimate Activity Durations
6.6
Develop Schedule

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PLAN SCHEDULE MANAGEMENT

WHAT HAPPENS IN Plan Schedule Management?
• Establishing the policies, procedures, and documentation for planning, developing,
managing, executing, and controlling the project schedule.
• The key benefit of this process is that it provides guidance and direction on how the
project schedule will be managed throughout the project.
• The schedule management plan is a component of the project management plan.
• The schedule management plan may be formal or informal, highly detailed or
broadly framed, based upon the needs of the project, and includes appropriate
control thresholds.
• The schedule management plan defines how schedule contingencies will be reported
and assessed.
• The schedule management plan may be updated to reflect a change in the way the
schedule is managed.
• The schedule management plan is a major input into the Develop Project
Management Plan process, as referenced in Section 6.1.3.1. “PMBOK ® Guide”
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6.1 PLAN SCHEDULE MANAGEMENT
TOOLS & TECHNIQUES

• Expert judgment
• Analytical techniques
• Meetings
INPUTS
•
•
Project charter
OUTPUTS
• Enterprise environmental factors • Schedule management plan

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6.1 OUTPUTS - 1. Schedule management plan 1/2

• A component of the project management plan that establishes the criteria and the
activities for developing, monitoring, and controlling the schedule.
For example, the schedule management plan can establish the following:
• Project schedule model development: The scheduling methodology and the
scheduling tool to be used in the development of the project schedule model are
specified.
• Level of accuracy : The acceptable range used in determining realistic activity
duration estimates is specified and may include an amount for contingencies.
• Units of measure: Each unit used in measurements (such as staff hours, staff days, or
weeks for time measures, or meters, liters, tons, kilometers, or cubic yards for
quantity measures) is defined for each of
• the resources.

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6.1 OUTPUTS - 1. Schedule management plan 2/2
• Organizational procedures links: The WBS (Section 5.4) provides the framework for
the schedule management plan, allowing for consistency with the estimates and
resulting schedules.
• Project schedule model maintenance: The process used to update the status and
record progress of the project in the schedule model during the execution of the
project is defined.
• Control thresholds: Variance thresholds for monitoring schedule performance may
be specified to indicate an agreed-upon amount of variation to be allowed before
some action needs to be taken. Thresholds are typically expressed as percentage
deviations from the parameters established in the baseline plan.
• Rules of performance measurement: Earned value management (EVM) rules or
other physical measurement rules of performance measurement are set.
• Reporting formats: The formats and frequency for the various schedule reports are
defined.
• Process descriptions: Descriptions of each of the schedule management processes
are documented.
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1. Analytical Techniques
• The Plan Schedule Management process may involve choosing
strategic options to estimate and schedule the project such as:
scheduling methodology, scheduling tools and techniques,
estimating approaches, formats, and project management
software.
• The schedule management plan may also detail ways to fast

track or crash (Section 6.6.2.7) “PMBOK® Guide” the project
schedule such as undertaking work in parallel.
• These decisions, like other schedule decisions affecting the

project, may affect project risks.
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6.1 INPUTS –
It includes, but is not limited to:
• Scope baseline: the scope baseline includes the project scope
statement and the work breakdown structure (WBS) details used
for defining activities, duration estimation, and schedule
management; and
• Other information: Other scheduling related cost, risk, and

communications decisions from the project management plan are
used to develop the schedule.

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DEFINE ACTIVITIES
WHAT HAPPENS IN DEFINE ACTIVITIES?
• The Create WBS process identifies the deliverables at the lowest level
in the Work Breakdown Structure (WBS), the work package.
• Decompose the work packages into smaller components called
activities that represent the work necessary to complete the work
package.
• Differentiate between a work package and an activity?
‒ A work package is a deliverable as a result of work
‒ An activity is an action that produces a deliverable alone or together with
other activities
• Activities provide a basis for estimating, scheduling, executing, and
monitoring & controlling the project work.
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6.2 DEFINE ACTIVITIES
TOOLS & TECHNIQUES

• Decomposition
• Rolling wave planning
INPUTS OUTPUTS
• Schedule management plan • Activity list
• Scope baseline • Activity attributes
• Enterprise environmental factors • Milestone list

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6.2 OUTPUTS –
1. Activity List
• The activity list is a comprehensive list including all schedule

activities required on the project.
• The activity list includes the activity identifier and a scope of

work description for each activity in sufficient detail to ensure
that project team members understand what work is required
to be completed.

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6.2 OUTPUTS –
2. Activity Attributes
• Activity attributes extend the description of the activity by
identifying the multiple components associated with each
activity. The components for each activity evolve over time.
‒ Activity ID, ‒ logical relationships,

‒ WBS ID, ‒ leads and lags ,
‒ Activity Name, ‒ resource requirements,
‒ activity codes, ‒ imposed dates,
‒ activity description, ‒ constraints,
‒ predecessor activities,
‒ assumptions
‒ successor activities,
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6.2 OUTPUTS - 3. Milestone List

• A milestone is a significant point or event in the project. It is not work
activity.
• A summary of the milestones are included in the project charter.
• A milestone list identifies all milestones and indicates whether the
milestone is mandatory, such as those required by contract, or
optional, such as those based upon historical information.
• The sponsor may impose milestones.
• The PM can impose addition milestones during sequence activity or
develop schedule as checkpoints to help to control the project.
• A list of milestones becomes part of project management plan and is
included in the project scope statement and WBS dictionary.
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• The technique of decomposition, as applied to defining
activities, involves subdividing the project work packages into
smaller, more manageable components called activities.
• Activities represent the effort needed to complete a work

package.
• The Define Activities process defines the final outputs as

activities rather than deliverables.

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• The activity list, WBS, and WBS dictionary can be developed
either sequentially or concurrently, with the WBS and WBS
dictionary as the basis for development of the final activity
list.
• Each work package within the WBS is decomposed into the

activities required to produce the work package deliverables.
• Involving team members in the decomposition can lead to

better and more accurate results.

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2. Rolling Wave Planning
• Rolling wave planning is a form of progressive elaboration planning
where the work to be accomplished in the near term is planned in
detail and future work is planned at a higher level of the WBS.
• Therefore, the work can exist at various levels of detail depending on
where it is in the project lifecycle.
• For example, during early strategic planning, when information is
less defined, work packages may be decomposed to the milestone
level. As more is known about the upcoming events in the near term
it can be decomposed into activities.

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• Project team members or other experts, who are experienced

and skilled in developing detailed project scope statements,
the WBS, and project schedules, can provide expertise in
defining activities.

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6.2 INPUTS –
1. Scope Baseline
• The project deliverables, constraints, & assumptions

documented in the project scope baseline are considered
explicitly while defining activities.
• Remember that:
Scope baseline = Scope statement + WBS + WBS dictionary.

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SEQUENCE ACTIVITIES
WHAT HAPPENS IN SEQUENCE ACTIVITIES?
• Identifies & documents logical relationship among the project activities.
• Every activity and milestone except the first and last are connected to at least
one predecessor and one successor.
• Defines precedence relationships and leads & lags to support development of a
realistic & achievable project schedule.
• Sequencing can be performed by using project management software or by
using manual or automated techniques.
• The result of this process is a network diagram. (project schedule network
diagram)
‒ The network shows just dependencies (logical relationship).
‒ If activity duration added (estimates), the network could show critical path.
‒ If plotted against time (calendar- based scale) it would be a time- scaled schedule
network diagram.
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6.3 SEQUENCE ACTIVITIES
TOOLS & TECHNIQUES

• Precedence diagramming method
(PDM)
• Dependency determination
• Leads & lags
INPUTS
• Schedule management plan
•
•
Activity list
Activity attributes
OUTPUTS
• Project schedule network diagrams
• Milestone list
• Enterprise environmental factors

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6.3 OUTPUTS –
1. Project Schedule Network Diagrams 1/2
• Project schedule network diagrams are schematic displays of the project’s
schedule activities and the logical relationships among them, also
referred to as dependencies.
• A project schedule network diagram can be produced manually or by

using project management software.
• It can include full project details, or have one or more summary activities.
• A summary narrative can accompany the diagram and describe the basic
approach used to sequence the activities

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6.3 OUTPUTS –
1. Project Schedule Network Diagrams 2/2
• Methods to draw network diagram:

‒ ADM (Arrow Diagramming Method).
‒ GERT: allows loops between activities (design and test and

redesign).
‒ PDM (Precedence Diagramming Method): most common.

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1. Precedence Diagramming Method
• PDM is a method used in Critical Path Methodology (CPM) for constructing a
project schedule network diagram that uses boxes or rectangles, referred to as
nodes, to represent activities, and connects them with arrows that show the
logical relationships that exist between them.
• This technique is also called Activity-On-Node (AON), and is the method used
by most project management software packages.
• PDM includes four types of dependencies or logical relationships:
‒ Finish-to-start (FS).
‒ Finish-to-finish (FF).
‒ Start-to-start (SS).
‒ Start-to-finish (SF).
• In PDM, finish-to-start is the most commonly used type of precedence
relationship. The start-to-finish relationship is rarely used but is included here
for a complete list of the PDM relationship types.
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Precedence Diagramming Method (PDM) TOOLS & TECHNIQUES

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2. Dependency Determination
Three types of dependencies are used to define the sequence among the
activities:
• Mandatory dependency (hard logic):
‒ The dependencies inherit in the nature of the work being done or required by contract.
‒ The project team determines which dependencies are mandatory during the process of
sequencing the activities.
• Discretionary dependencies. (Preferred)
‒ They are sometimes referred to as preferred logic, preferential logic, or soft logic.
‒ When fast tracking techniques are employed, these discretionary dependencies should be
reviewed and considered for modification or removal.
• External dependencies.
‒ involve a relationship between project activities and non-project activities.
‒ These dependencies are usually outside the project team’s control. (e.g. government or
suppliers)

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3. Leads and Lags
• Leads allow an acceleration of the successor activity.
For example, on a project to construct a new office building the
landscaping could be scheduled to start 2 weeks prior to the
scheduled punch list completion. This would be shown as a finish-
to-start with a 2 week lead.
• Lag direct a delay in the successor activity.

For example, a technical writing team can begin editing the draft
of a large document fifteen days after they begin writing it. This
could be shown as a start-to-start relationship with a fifteen-day
lag.
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EXERCISE
Draw the Network Diagram for the following activities:
Activity Pred. Relation Activity Pred. Relation
A H G–C F-S
B A F-S J H F-S
K E F-S
C B F-S
L K F-S
D A F-S M G F-S
E D F-S N M–L F-S
F D F-S O L F-S
P J–O F-S
G F F-S
Q P-N F-S
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6.4 ESTIMATE ACTIVITY RESOURCES
WHAT IS IN “ESTIMATE ACTIVITY RESOURCES”?
• Estimate Activity Resources is the process of estimating the type

and quantities of material, people, equipment, or supplies required
to perform each activity.
• For example. a construction project team will need to be familiar

with local building codes. Such knowledge is often readily available
from local sellers. However, if the local labor pool lacks experience
with unusual or specialized construction techniques, the additional
cost for a consultant might be the most effective way to secure
knowledge of the local building codes.

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6.4 ESTIMATE ACTIVITY RESOURCES

TOOLS & TECHNIQUES
• Expert judgment
• Alternative analysis
• Published estimating data
• Bottom-up estimating
• Project management software
INPUTS
• Activity list OUTPUTS
• Activity attributes • Activity resource requirements
• Resource calendars • Resource breakdown structure
• Risk register • Project document updates

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6.4 OUTPUTS –
1. Activity Resource Requirements
• Identifies the types and quantities of resources required for each
activity in work package.
• These requirements are aggregated to determine the estimated
resources for each package.
• The amount of detail and the level of specificity of the resource
requirement descriptions can vary by application area.
• The resource requirements documentation for each activity can
include the basis of estimate for each resource, as well as the
assumptions that were made in determining which types of resources
are applied, their availability, and what quantities are used.
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6.4 OUTPUTS –
2. Resource Breakdown Structure
• The resource breakdown structure is a hierarchical structure of the identified
resources by resource category and resource type.
• Resource categories can include:
– labor,
– material,
– equipment,
– supplies
• Resource types can include:
– skill level,
– grade level
• The resource breakdown structure is useful for organizing and reporting
project schedule data with resource utilization information.

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6.4 INPUTS –
1. Resource Calendars
• Resource calendars specify when and how long identified

project resources will be available during the project.
• This information may be at the activity or project level.

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6.4 INPUTS –
2. Risk Register
• Risk events may impact resource selection and availability.
• Updates to the risk register are included with project

documents updates, described in Section 11.5.3.2 “PMBOK ®
Guide” , from Plan Risk Responses.

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1. Alternatives Analysis
• Many schedule activities have alternative methods of

accomplishment.
• They include using various levels of resource capability or

skills, different size or type of machines, different tools (hand
versus automated), and make-or-buy decisions regarding the
resource

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2. Published Estimating Data
• Several companies routinely publish updated production rates

and unit costs of resources for an extensive array of labor
trades, material, and equipment for different countries and
geographical locations within countries.

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3. Bottom-up Estimating
• When an activity cannot be estimated with a reasonable

degree of confidence, the work within the activity is
decomposed into more detail. The resource needs are
estimated.
• These estimates are then aggregated into a total quantity for

each of the activity’s resources.

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4. Project Management Software
• Project management software has the capability to help plan,

organize, and manage resource pools and develop resource
estimates.

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6.5 ESTIMATE ACTIVITY DURATIONS
WHAT IS THERE IN ESTIMATE ACTIVITY DURATION?
The process of approximating the number of work periods needed to complete
individual activities with estimated resources.
The process uses information on:
• Activity scope of work ,Required resource types, Estimated resource Quantities & Resource
Calendars.
The duration estimate is:

• Progressively elaborated,
• The process considers the quality & availability of the input data
• All data and assumption that support duration estimating are documented for each
estimate of activity duration.
Most project management software for scheduling will handle this situation by using
a project calendar and alternative work-period resource calendars that are usually
identified by resources that require specific work-periods.

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6.5 ESTIMATE ACTIVITY DURATIONS

TOOLS & TECHNIQUES
• Expert judgment
• Analogous estimating
• Parametric estimating
• Three-point estimating
• Reserve analysis
INPUTS
• Activity list
• Activity attributes OUTPUTS
• Activity resource requirements • Activity duration estimates
• Resource calendars • Project document updates
• Risk register
• Resource breakdown structure
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6.5 OUTPUTS –
1. Activity Duration Estimates
• Activity duration estimates are quantitative assessments of

the likely number of work periods that will be required to
complete an activity.

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1. Analogous Estimating
• Analogous estimating uses parameters from a previous, similar
project
• Analogous duration estimating is frequently used to estimate project
duration when there is a limited amount of detailed information
about the project for example, in the early phases of a project.
• Analogous estimating uses historical information and expert
judgment.
• Less costly and time consuming than other techniques.
• Less accurate.

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2. Parametric Estimating
• Parametric estimating uses a statistical relationship between
historical data and other variables
• (e.g., square footage in construction) to calculate an estimate for
activity parameters, such as cost, budget, and duration.
• There are two ways an estimator might create it:
– Regression analysis (scatter diagram): track two variables to see if
they are related and creates a mathematical formula to use in future
parametric estimating.
– Learning curve: a 100th room painted will take less time than the first
room because of improved efficiency.
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3. Three-Point Estimating
• The accuracy of activity duration estimates can be improved by
considering estimation uncertainty and risk.
• This concept originated with the Program Evaluation and Review

Technique (PERT).
• PERT uses three estimates to define an approximate range for an

activity’s duration:
‒ Most likely (tM)
‒ Optimistic (tO)
‒ Pessimistic (tP)
• Expected activity duration tE = (tO + 4tM + tP)/6

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4. Group decision-making techniques
• Team-based approaches, such as brainstorming, the Delphi or
nominal group techniques, are useful for engaging team members
to improve estimate accuracy and commitment to the emerging
estimates.
• By involving a structured group of people who are close to the

technical execution of work in the estimation process, additional
information is gained and more accurate estimates obtained.
• Additionally, when people are involved in the estimation process,

their commitment towards meeting the resulting estimates
increases.
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5. Reserve Analysis
• Duration estimates may include contingency reserves,

(sometimes referred to as time reserves, or buffers) into the
overall project schedule to account for schedule uncertainty.

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6.6 DEVELOP SCHEDULE
HOW DO YOU DEVELOP A SCHEDULE ?
• Develop Schedule is the process of analysing activity sequences, durations,
resource requirements, and schedule constraints to create the project
schedule.
• Determine planned start & finish dates for all project activities
• Schedule development is iterative (repeats in cycles) & continues
throughout the project to modify duration & resource estimates as the:
‒ Work progresses
‒ Project Management Plan changes
‒ the nature of risk events evolves
• The schedule baseline (developed at the beginning of the project) is used to
track work progress and variance.

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6.6 DEVELOP SCHEDULE

TOOLS & TECHNIQUES
• Schedule network analysis
• Critical path method
• Critical chain method
• Resource optimization
techniques
• Modeling techniques
INPUTS • Leads and lags
• Schedule management plan • Schedule compression
• Activity list • Scheduling tool
• Activity attributes
• Project schedule network diagrams
• Activity resource requirements
•
•
Resource calendars
Activity duration estimates
OUTPUTS
• Project scope statement • Project schedule
• Risk register • Schedule baseline
• Project staff assignments • Schedule data
• Resource breakdown structure • Project calendars
• Enterprise environmental factors • Project management plan updates

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6.6 OUTPUTS –
1. Schedule Baseline
• A schedule baseline is a specific version of the project
schedule developed from the schedule network analysis.
• It is accepted and approved by the project management team

as the schedule baseline with baseline start dates and baseline
finish dates.
• The schedule baseline is a component of the project

management plan

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6.6 OUTPUTS –
2. Project Schedule
• The project schedule may be presented in summary form,
sometimes referred to as the master schedule or milestone
schedule, or presented in detail.
• Although a project schedule can be presented in tabular form,
it is more often presented graphically, using one or more of
the following formats:
‒ Milestone charts
‒ Bar charts (Gantt Charts)
‒ Project schedule network diagrams

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6.6 OUTPUTS –
3. Schedule Data
• The schedule data for the project schedule includes at least the
schedule milestones, schedule activities, activity attributes, and
documentation of all identified assumptions and constraints.
• The amount of additional data varies by application area.
Information frequently supplied as supporting detail includes,
but is not limited to:
‒ Resource requirements by time period, often in the form of a resource
histogram,
‒ Alternative schedules, such as best-case or worst-case, not resource-
leveled, or resource-leveled, with or without imposed dates, and
‒ Scheduling of contingency reserves.
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6.6 OUTPUTS –
4. Project Calendars
• A project calendar identifies working days and shifts that are
available for scheduled activities.
• It distinguishes time periods in days or parts of days that are

available to complete scheduled activities from time periods that
are not available.
• A schedule model may require more than one project calendar

to allow for different work periods for some activities to
calculate the project schedule.
• The project calendars may be updated.

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1. Schedule Network Analysis
• Schedule network analysis is a technique that generates the

project schedule.
• It employs various analytical techniques, such as critical path

method, critical chain method, what-if analysis, and resource
leveling to calculate the early and late start and finish dates
for the uncompleted portions of project activities.

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2. Critical Path Method
• The critical path method calculates the theoretical early start
and finish dates, and late start and finish dates
• A critical path is normally characterized by zero total float on
the critical path.
• Networks can have multiple critical paths.
• Once the total float for a network path has been calculated
then the free float (the amount of time that an activity can
be delayed without delaying the early start date of any
immediate successor activity within the network path)can
also be determined.
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3. Critical Chain Method
• Critical chain is a schedule network analysis technique that
modifies the project schedule to account for limited resources.
• Initially, the project schedule network diagram is built using

duration estimates with required dependencies and defined
constraints as inputs.
• The critical path is then calculated.

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4. Resource Optimization Techniques
• Resource leveling:
‒ Resource leveling is necessary when resources have been over-allocated, such as when
a resource has been assigned to two or more activities during the same time period,
when shared or critical required resources are only available at certain times or are only
available in limited quantities.
‒ Resource leveling can often cause the original critical path to change.
• Resource Smoothing:
‒ A technique that adjusts the activities of a schedule model such that the requirements
for resources on the project do not exceed certain predefined resource limits.
‒ In resource smoothing, as opposed to resource leveling, the project’s critical path is not
changed and the completion date may not be delayed.
‒ In other words, activities may only be delayed within their free and total float. Thus
resource smoothing may not be able to optimize all resources.
‒ The resource distribution in “smooth” following bell shape as much as possible.
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5. Modeling Techniques 1/2
What-If Scenario Analysis :
• This is an analysis of the question “What if the situation

represented by scenario ‘X’ happens?”
• Simulation involves calculating multiple project durations with

different sets of activity assumptions.
• The most common technique is Monte Carlo Analysis (Section

11.4) “PMBOK ® Guide” .

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5. Modeling Techniques 2/2
Simulation:
• Simulation involves calculating multiple project durations with
different sets of activity assumptions, usually using probability
distributions constructed from the three-point estimates
(described in Section 6.5.2.4 “PMBOK ® Guide” ) to account for
uncertainty.
• The most common simulation technique is Monte Carlo analysis
(Section 11.4.2.2 “PMBOK ® Guide” ), in which a distribution of
possible activity durations is defined for each activity and used
to calculate a distribution of possible outcomes for the total
project.
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6. Applying Leads and Lags
• See Appendix

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7. Schedule Compression
• Fast tracking. A schedule compression technique in which phases or
activities normally performed in sequence are performed in parallel.
‒ An example is constructing the foundation for a building before completing all
the architectural drawings.
‒ Fast tracking may result in rework and increased risk.
‒ Fast tracking only works if activities can be overlapped to shorten the duration.
• Crashing. A schedule compression technique in which cost and schedule
tradeoffs are analyzed to determine how to obtain the greatest amount of
compression for the least incremental cost.
‒ Crashing only works for activities where additional resources will shorten the
duration.
• Reduce scope,
• Cut quality
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8. Scheduling Tools
• Automated scheduling tools expedite the scheduling process

by generating start and finish dates based on the inputs of
activities, network diagrams, resources and activity durations.
• A scheduling tool can be used in conjunction with other

project management software applications as well as manual
methods.

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6.7 CONTROL SCHEDULE
WHAT HAPPENS IN CONTROL SCHEDULE?

• Schedule control is concerned with:
‒ Determining the current status of the project schedule
‒ Influencing the factors that create schedule changes
‒ Determining that the project schedule has changed
‒ Managing the actual changes as they occur
• Schedule Control is a portion of Integrated Change Control
process

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TOOLS & TECHNIQUES
• Performance reviews
• Resource optimization
techniques
• Modeling techniques
• Leads and lags
• Schedule compression
• Scheduling tool
INPUTS OUTPUTS
• Schedule forecasts
• Project schedule
• Change requests
• Project calendars
• Schedule data
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6.7 OUTPUTS –
• The calculated SV and SPI values for WBS components, in

particular the work packages and control accounts, are
documented and communicated to stakeholders.

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6.7 OUTPUTS –
2. Schedule Forecasts
• Schedule forecasts are estimates or predictions of conditions
and events in the project’s future based on information and
knowledge available at the time of the forecast.
• Forecasts are updated and reissued based on work

performance information provided as the project is executed.
• The information is based on the project’s past performance

and expected future performance, and includes earned value
performance indicators that could impact the project in the
future.
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1. Performance Reviews
• Performance reviews measure, compare and analyze schedule performance
such as actual start and finish dates, percent complete and remaining
duration for work in progress
• If earned value management (EVM) is utilized the schedule variance (SV)
(7.3) and schedule performance index (SPI) (7.3) “PMBOK® Guide” are used
to assess the magnitude of schedule variations.
• An important part of schedule control is to decide if the schedule variation
requires corrective action
• If using the critical chain scheduling method (6.6), comparing the amount
of buffer remaining to the amount of buffer needed to protect the delivery
data can help determine schedule status.
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2. Leads and Lags
• Adjusting leads and lags is used to find ways to bring project

activities that are behind into alignment with plan.

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APPENDIX
TIME MANAGEMENT FORMULAS

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Critical Path Method: Network Paths
• The term "network path" refers to a sequence of events that

affect each other on the project from start to finish.
• These activities form a path through the project.
• Paths illustrate the different sets of sequences in which
activities must be performed, and they are used to identify
areas of high risk on the project.
• In a real project plan, there will usually be numerous paths
through the network diagram, and software is typically used
to represent and calculate them.

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Critical Path Method: Critical Paths

• Critical path calculations show you where most of the
schedule risk will occur.
• The critical path is determined simply by identifying the

longest path through the system.
• It is not unusual to have more than one critical path on a

project. This occurs when two or more paths tie for the
longest path. In this event, schedule risk is increased because
there are an increased number of ways the project could be
delayed.

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The Critical Path
• The critical path is the longest duration path through a

network diagram and determines the shortest time to
complete the project.

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Near-Critical Activity
• A schedule activity that has low total float. The concept of

near-critical is equally applicable to a schedule activity or
schedule network path. The limit below which total float is
considered near critical is subject to expert judgment and
varies from project to project.

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CPM Schedule Calculation
• Forward Pass
• Backward Pass
• Float
• Critical Path

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Forward Pass Definitions

• Early Start Date (ES)
‒ Earliest possible point in time an activity can start, based on the
network logic and any schedule constraints
• Duration (DU)
‒ Number of work periods, excluding holidays or other nonworking
periods, required to complete the activity; expressed as workdays or
workweeks
• Early Finish Date (EF)
‒ Earliest possible time the activity can finish
• Forward Pass
‒ Starting at the beginning (left) of the network develop early start and
early finish dates for each task, progressing to end (right-most box) of
the network
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Scheduling Concepts (cont.)
Forward Pass
 The forward pass calculates an activity's early dates.
 Early dates are the earliest times an activity can start and finish
once its predecessors have been completed.
 The calculation begins with the activities without predecessors.
 Early Start (ES) + Duration - 1 = Early Finish (EF)

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A
5
ES 1 EF 5
C
15
ES 11 EF 25
B
10
ES 1 EF 10
Forward pass

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Backward Pass Definitions
• Late Start Date (LS)
‒ Latest point in time that an activity may begin without delaying that
activity’s successor
‒ If the activity is on the critical path, the project end date will be
affected
• Late Finish (LF)
‒ Latest point in time a task may be completed without delaying that
activity’s successor
‒ If the activity is on the critical path, the project end date will be
affected
• Backward Pass
‒ Calculate late start and late finish dates by starting at project
completion, using finish times and working backwards
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Backward Pass
 The backward pass calculates an activity's late dates.
 Late dates are the latest times an activity can start and finish without
delaying the end date of the project.
 The calculation begins with the activities without successors (activity
C in the graphic below).
 For projects without a Must Finish By date, activities without
successors are assigned a Late Finish equal to the latest calculated
Early Finish date (25 in the graphic below).
 Late Finish (LF) - Duration + 1 = Late Start (LS)

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Backward pass
LS6 LF 10
A
5
ES 1 EF 5 LS11 LF 25
C
15
LS 1 LF 10 ES 11 EF 25
B
10
ES 1 EF 10

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Free Slack and Total Slack
• Free slack (Float): The amount of time a task can be delayed

without delaying the early start date of its successor
• Total slack (Float): The amount of time a task can be delayed

without affecting a project’s required due date.

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Total Float
• The amount of time an activity can slip from its early start
without delaying the project
• The difference between an activity’s late dates and early

dates
• Activities with zero total float are critical
• Late Dates - Early Dates = Total Float

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Total Float
LS LF
Positive float
ES EF
Positive float
LS LF
Zero float
(critical)
ES EF
LS LF
Negative Float
(extremely
critical) ES EF
Negative float

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Backward pass
LS 6 LF 10
A
5
ES 1 EF 5 LS 11 LF 25
TF = 5
C
15
LS 1 LF 10 ES 11 EF 25
TF = 0
B
10
ES 1 EF 10
TF = 0
Forward pass

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Backward Pass with Required Finish
• One of the most common project scenarios is a required

finish date for the project.
‒ Used only during the backward pass.
‒ Required finish date specifies when the project must finish

regardless of the network's duration and logic.
‒ Late Finish - Duration + 1 = Late Start

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Backward pass
Critical
LS 1 LF 5 Activities
Must Finish By:
A 5
Day 20*
20
ES 1 EF 5 LS 6 LF 25*
TF = 0
C
15
LS -4 LF 5 ES 11 EF 25
TF =-5
B
10
 Which activities are critical based on
ES 1 EF 10 Total Float?
TF =-5
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Backward pass
LS 1 LF 5
Must Finish By:
A 5
Day 20*
20
ES 1 EF 5 LS 6 LF 25*
TF = 0
C 15
LS -4 LF 5 ES 11 EF 25
TF =-5
B 10  Which activities are critical based on Longest
Path?
ES 1 EF 10
TF =-5

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Exercise
• Calculate “Early Schedule”
• Calculate “Late Schedule”
• Calculate Total Float
• Calculate Critical Path

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CPM Exercise
It is required to draw the network diagram for the following case AON
technique, and calculating the TF and FF for each activity.
Activity Duration Pred. Activity Duration Pred.

A 1 H 4 G–C
J 7 H
B 3 A
K 2 E
C 6 B L 2 K
D 5 A M 4 G
E 2 D N 6 M–L
O 2 L
F 1 D
P 3 J–O
G 6 F Q 3 P-N
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Calculating the Critical Path (cont.)
ES EF
Duration
LS LF

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Factors that Affect Schedule Calculations
• Calendars
• Constraints
‒ Start Date Constraints
‒ Finish Date Constraints
‒ Float Constraints

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PERT
• Program Evaluation and Review Technique (PERT) : uses a

weighted average duration estimate to calculate activity
durations.

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PERT Calculations
Expected
(t e) Pessimistic
Optimistic (b)
(a)
Probability of time
Most
Likely
(m)
Beta
Distribution
Activity duration time
Expected Time = (o + 4*m + p) / 6 & Standard Deviation = (p – o) / 6

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Shortening The Schedule
• Re-estimating: Reduce the buffer allowed in activity duration
that contains the most unknowns.
• Fast Tracking: Doing critical path activities in parallel that
were originally planned in series.
• Process Improvement: Increasing productivity based on
different work process, technologies and/or machinery.
• Limited Overtime: Increasing the number of hours per
day/week available to work on tasks.
• Crashing: Adding more resources to critical path activities.

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What is fast tracking?
• Schedule compression by doing more critical path activities in

parallel.

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Fast Tracking (Overlapping) -1
A Project Duration
(Normal)=300 days
0 50 100 150 200 250 300 350

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Fast Tracking (Overlapping) -2
A Project Duration (Fast

tracked)=220 days
0 50 100 150 200 250

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What is crashing?
• Scheduling compression through analyzing costs and schedule

trade-offs to obtain the greatest compression for the least
incremental cost.
• Adding resources to critical path tasks.

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Crashing Steps 1 to 3
• Step 1: Calculate the Critical Path and list all critical activities
and the float of other paths. Calculate direct and indirect
costs.
• Step 2: Exclude critical activities, which can not be crashed

due to technical reasons
• Step 3: Rank the list of critical activities according to its cost

slope (cost of crashing unit time)

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Crashing Steps 4 to 6
• Step 4: Crash the activity with the least cost slope (from
the list in Step 3) until the total float of any of the parallel
paths first consumed. Calculate direct and indirect costs
for this case.
• Step 5: Recalculate the critical path and apply Step 1 to

Step 4 until all possible crashing is done.
• Step 6: Plot the different project durations and the

associated costs and determine the optimum crashed
project duration
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Crashing Example
Duration, Days Costs, $

Activity Dependency Normal Crash Normal Crash
A --- 6 4 6000 8000
B A 4 3 5000 5750
C ---- 8 7 8000 8500
D B&C 6 5 6000 8000
Which activities would you crash if your project budget was only $27000? What is the new
project duration?
What is the cost for a full compression? What is the project duration in this case?

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Ex. Normal Time & Cost
1 6 7 10
A B Normal:
du=6 du=4 Duration= 16 days
Cost= 25 000 $
1 6 7 10
0 0
start
1 8 11 16
C D
du=8 Finish
du=6
3 10 11 16 ES EF
2 0
Key
LS LF
TF
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Ex. Cost Slope – First run
R
Duration, Days Costs, $ Cost A
Slope N
K
A --- 6 4 6000 8000 1000 $/day 2
B A 4 3 5000 5750 750 $/day 1
Non-Critical
C ---- 8 7 8000 8500 500 $/day
D B&C 6 5 6000 8000 2000 $/day 3

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Ex. First Compression
1 5 6 8
A B B reduced 1 day at 750$,

du=5 du=3
A reduced 1 day at 1000$
1 5 6 8
0 0
Crashed (1):
start Duration= 14 days
Cost= 26 750 $
1 8 9 14
C D
du=8 Finish
du=6
1 8 9 14 ES EF
0 0
Key
Note: All activities are now critical and should be
considered for further crashing LS LF
TF
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Ex. Cost Slope – 2nd run
R
Slope N
K
A --- 6 4 6000 8000 1000 $/day 2
One day remains
B A 4 3 5000 5750 750 $/day

Fully Compressed
C ---- 8 7 8000 8500 500 $/day 1
D B&C 6 5 6000 8000 2000 $/day 3

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Ex. 2nd Compression
1 4 5 7
A B C reduced 1 day at 500$,

du=4 du=3 A reduced 1 day at 1000$
1 4 5 7
0 0
Crashed (2):
start Duration= 13 days
Cost= 28 250 $
1 7 8 13
C D
du=7 Finish
du=6
1 7 8 13 ES EF
0 0
Key
LS LF
TF
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Ex. Cost Slope – 3rd run
R
Slope N
K
A --- 6 4 6000 8000 1000 $/day
Fully Compressed
B A 4 3 5000 5750 750 $/day
Fully Compressed
C ---- 8 7 8000 8500 500 $/day
Fully Compressed
D B&C 6 5 6000 8000 2000 $/day 1

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Ex. 3nd Compression
1 4 5 7
A B D reduced 1 day at 2000$

du=4 du=3
Crashed (3):
1 4 5 7 Duration= 12 days
0 0 Cost= 30 250 $
start
1 7 8 12
C D
du=7 Finish
du=5
1 7 8 12 ES EF
0 0
Key
LS LF
TF
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Schedule Compression
• Focus on Critical Activities
• Logic Revisions
• Activity Duration Reduction
• Network Constraints

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Resource Leveling
Resource leveling – Any form of network analysis in which
scheduling decisions (start and finish dates) are driven by
resource management concerns (e.g., limited resource
availability or difficult-to-manage changes in resource levels).
PMI Definition provides one generic definition:

Includes ensuring that:
• The resource availability limits are not exceeded
• The resource distribution is “smooth” following the bell shape as

much as possible.

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Resource Leveling Steps

Step 1 – Allocate the resources to the critical activities first and
then allocate resources to other activities based on its early
dates.
Step 2 – If the max limit is exceeded, distribute the resources on

non-critical activities within its float time. If this is not satisfied,
you may need to extend the duration of the project or allocate
more resources to finish on time.
Step 3 – If the distribution is irregular, try to move the non-

critical activities within its float time or extend their duration so
that the resource histogram is simulating the bell shape.

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7. Project Cost Management

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COST MANAGEMENT
Planning Monitoring &

Controlling
7.1 7.4
Plan Cost Control Costs
Management
7.2
Estimate Costs
7.3
Determine
Budget

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PROJECT COST MANAGEMENT
WHAT DOES THE COST KNOWLEDGE AREA INCLUDE?

• Processes involved in estimating, budgeting, and controlling costs so
that the project can be completed within the approved budget.
• Primarily concerned with resource costs of schedule activities.
• The work involved in performing the three processes of Project Cost
Mgmt. is preceded by a planning effort of the project mgmt. team.
• This planning effort is the part of the Develop Project Mgmt. Plan
process, which produces a cost management plan that sets out the
format and establishes the criteria for planning, structuring,
estimating, budgeting, and controlling project costs.
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WHAT DOES THE COST KNOWLEDGE AREA INCLUDE?
• The cost management processes and their associated tools and
techniques are usually selected during the project life cycle
definition (read Sec. 2.1), and are documented in the cost mgmt.
plan.
• Life Cycle Costing
It is defined as the cost of using, maintaining & supporting the
product, service or result of the project, but it's not part of the
project's budget (will get many questions on life cycle costing).
• Uses the Cost Management Plan (which is a part of the Project
Management Plan)
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TYPES OF COSTS
Let us illustrate using an example: Seminar

• Fixed- rent of the seminar room is a fixed cost
• Variable – cost of drinks to participants varies with number of
participants
• Direct – hiring of PA system for the seminar
• Indirect – cost of electricity of the venue is shared by all the other
users

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COST PROCESSES
COST PROCESS DEFINITIONS
7.1 Plan Cost Management
• Establishes the policies, procedures, and documentation for planning, managing,
expending, and controlling project costs. It provides guidance and direction on how
the project costs will be managed throughout the project.
7.2 Estimate Costs
• Develop cost approximations of all monetary resources needed to complete project
activities.
7.3 Determine Budget
• Aggregating the estimated costs of individual activities or work packages to
establish an authorized cost baseline.
7.4 Control Costs
• The process of monitoring the status of the project to update the project budget and
managing changes to the cost baseline.
In smaller projects, Cost Estimating & Cost Budgeting can be one single process
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PLAN COST MANAGEMENT
• Plan Cost Management is the process that establishes the policies,
procedures, and documentation for planning, managing, expending,
and controlling project costs.
• The key benefit of this process is that it provides guidance and

direction on how the project costs will be managed throughout the
project.

techniques are documented in the cost management plan.
• The cost management plan is a component of the project

management plan.

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7.1 PLAN COST MANAGEMENT
TOOLS & TECHNIQUES

• Expert judgment
• Meetings
INPUTS OUTPUTS
• Cost management plan
• Project charter

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7.1 OUTPUTS – 1. Cost management plan 1/3
• The cost management plan is a component of the project
management plan and describes how the project costs will be
planned, structured, and controlled.
techniques are documented in the cost management plan.
• For example, the cost management plan can establish the
following:
‒ Units of measure: Each unit used in measurements (such as staff
hours, staff days, weeks for time measures; or meters; or lump sum in
currency form) is defined for each of the resources.
‒ Level of precision: The degree to which activity cost estimates will be
rounded up or down
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‒ Level of accuracy: The acceptable range (e.g., ±10%) used in
determining realistic activity cost estimates is specified, and may
include an amount for contingencies.
‒ Rules of performance measurement. Earned value management (EVM)
rules of performance measurement are set.
‒ Organizational procedures links: (WBS) provides the framework for the
cost management plan, allowing for consistency with the estimates,
budgets, and control of costs. The WBS component used for the project
cost accounting is called the control account. Each control account is
assigned a unique code or account number(s) that links directly to the
performing organization’s accounting system.

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‒ Control thresholds: Variance thresholds for monitoring cost
performance may be specified to indicate an agreed-upon amount of
variation to be allowed before some action needs to be taken.
Thresholds are typically expressed as percentage deviations from the
baseline plan.
‒ Reporting formats: are defined.
‒ Process descriptions:
‒ Additional details: Description of strategic funding choices, Procedure

to account for fluctuations in currency exchange rates, and Procedure
for project cost recording.

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7.1 TOOLS & TECHNIQUES – 1. Analytical Techniques

• Developing the cost management plan may involve choosing strategic
options to fund the project such as: self-funding, funding with equity,
or funding with debt.
• The cost management plan may also detail ways to finance project
resources such as making, purchasing, renting, or leasing.
• These decisions, like other financial decisions affecting the project,
may affect project schedule and/or risks.
• Organizational policies and procedures may influence which financial
techniques are employed in these decisions.
• Techniques may include (but are not limited to): payback period,
return on investment, internal rate of return, discounted cash flow,
and net present value.
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ESTIMATE COSTS
HOW DO YOU ESTIMATE COSTS?
• Get a cost approximation of the monetary resources needed to
complete each schedule activity
• Resources should include:
‒ Labour & services
‒ Materials, equipment & facilities
‒ Information technology
‒ Inflation, cost contingency reserves
• Cost estimates are generally expressed in units of currency (or hours)
• Possible causes of variations should be considered (risk).
• Accuracy should increase as project progresses
• Some organizations have formally trained project cost estimators.
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ESTIMATE COSTS
SALIENT (distinct) FEATURES
• Cost estimating includes identifying and considering various costing
alternatives
• Cost estimates are expressed in units of currency
• Cost estimates are normally refined during the course of the project.
The accuracy of a project estimate will increase as the project
progresses through the project life cycle.
• A project in initial phase could have a rough order of magnitude
(ROM) estimate in the range of -50 to +50%.
• Later in the project, as more info. Is known, estimates could narrow
to a range -10 to +10%.
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7.2 ESTIMATE COSTS
TOOLS & TECHNIQUES
• Expert judgement Analogous estimating
• Parametric estimating Bottom-up
estimating
• Three-point estimates Reserve
analysis
• Cost of quality
• Project management estimating software
• Vendor bid analysis
INPUTS
•
•
Cost management plan
Scope baseline
OUTPUTS
• Project schedule • Activity cost estimates
• Human resource management plan • Basis of estimates

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7.2 OUTPUTS –
1. Activity Cost Estimates
• Activity cost estimates are quantitative assessments of the

probable costs required to complete project work.
• Cost estimates can be presented in summary form or in detail

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7.2 OUTPUTS –
2. Basis of Estimates
• Supporting detail for activity cost estimates may include:
‒ Documentation of the basis of the estimate (i.e., how it was
developed),
‒ Documentation of all assumptions made,
‒ Documentation of any known constraints,
‒ Indication of the range of possible estimates (e.g., $10,000
(±10%) to indicate that the item is expected to cost between a
range of values),
‒ Indication of the confidence level of the final estimate
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7.2 INPUTS –
• Market conditions. Market conditions describe what products,
services, and results are available in the market, from whom, and
under what terms and conditions. Regional and/or global supply and
demand conditions greatly influence resource costs.
• Published commercial information. Resource cost rate information is

often available from commercial databases that track skills and
human resource costs, and provide standard costs for material and
equipment. Published seller price lists are another source of
information.

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1. Three-Point Estimates
• cE = (cO + 4cM + cP)/6

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2. Cost of Quality
• Assumptions about costs of quality (Section 8.1 “PMBOK ®

Guide” ) may be used to prepare the activity cost estimate.

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3. Project Management Estimating Software
• Project management cost estimating software applications,

computerized spreadsheets, simulation, and statistical tools are
becoming more widely accepted to assist with cost estimating.
• Such tools can simplify the use of some cost estimating

techniques and thereby facilitate rapid consideration of cost
estimate alternatives.

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4. Vendor Bid Analysis
• Cost estimating methods may include analysis of what the
project should cost, based on the responsive bids from qualified
vendors.
• Where projects are awarded to a vendor under competitive

processes, additional cost estimating work can be required of
the project team to examine the price of individual deliverables
and to derive a cost that supports the final total project cost.

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5. Group Decision-Making Techniques
• Team-based approaches, such as brainstorming, the Delphi or
nominal group techniques, are useful for engaging team members to
improve estimate accuracy and commitment to the emerging
estimates.
• By involving a structured group of people who are close to the
technical execution of work in the estimation process, additional
information is gained and more accurate estimates are obtained.
• Additionally, when people are involved in the estimation process,
their commitment towards meeting the resulting estimates increases.

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DETERMINE BUDGET
WHAT HAPPENS IN DETERMINE BUDGET?
• Aggregating the estimated costs of individual schedule activities or

work packages to establish a total cost baseline for measuring
performance. It establishes the Project's funding requirements.
• Remember that the project scope statement provides only the

summary budget.

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7.3 DETERMINE BUDGET
TOOLS & TECHNIQUES
• Cost aggregation
• Expert judgment
• Historical relationship
• Funding limit reconciliation
INPUTS
• Cost management plan
• Activity cost estimates OUTPUTS
• Basis of estimates • Cost baseline
• Scope baseline • Project funding requirements
• Project schedule • Project document updates
• Resource calendars
• Risk register
• Agreements
• Organizational process
assets
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7.3 OUTPUTS –
1. Cost Baseline
• The cost baseline is an authorized time-phased budget at completion

(BAC) used to measure, monitor, and control overall cost
performance on the project. It is developed as a summation of the
approved budgets by time period and is typically displayed in the
form of an S-curve.
• In the earned value management technique the cost baseline is a

part of the performance measurement baseline (PMB).

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7.3 OUTPUTS –
2. Project Funding Requirements
• Total funding requirements and periodic funding requirements (e.g.,
quarterly, annually) are derived from the cost baseline.
• The cost baseline will include projected expenditures plus anticipated

liabilities. Funding often occurs in incremental amounts that are not
continuous, which appear as steps.
• The total funds required are those included in the cost baseline, plus
management reserves, if any.

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7.3 INPUTS –
1. Agreements
• Applicable Agreements information and costs relating to

products, services, or results purchased are included when
determining the budget.

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1. Cost Aggregation
• Cost estimates are aggregated by work packages in accordance with

the WBS.
• The work package cost estimates are then aggregated for the higher
component levels of the WBS (such as control accounts) and
ultimately for the entire project.

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2. Historical Relationships
• Any historical relationships that result in parametric estimates or
analogous estimates involve the use of project characteristics
(parameters) to develop mathematical models to predict total
project costs.
• Such models can be simple (e.g., residential home construction is

based on a certain cost per square foot of space) or complex (e.g.,
one model of software development costing uses multiple separate
adjustment factors, each of which has numerous points within it).

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3. Funding Limit Reconciliation`1
• The expenditure of funds should be reconciled with any funding
limits on the commitment of funds for the project.
• A variance between the funding limits and the planned expenditures

will sometimes necessitate the rescheduling of work to level out the
rate of expenditures.
• This can be accomplished by placing imposed date constraints for

work into the project schedule.

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Cost Baseline, Expenditures,

and Funding Requirements

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Project Budget Components

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CONTROL COSTS
WHAT SHOULD YOU DO IN CONTROL COSTS?
• Influencing the factors that create changes to the cost baseline,
• Ensure that all change requests are acted on in a timely manner,
• Manage the actual changes when and as they occur,
• Make sure that cost expenditures don't exceed authorized funding (by
• period & in total) for the project,
• Monitor cost performance to isolate and understand variances from
• approved cost baselines,
• Monitor work performance against funds expended,
• Prevent unapproved changes from being included in the reported cost or
• resource usage,
• Inform appropriate stakeholders of approved changes and associated
• cost, and
• Act to bring expected cost overruns within acceptable limits
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7.4 CONTROL COSTS
TOOLS & TECHNIQUES
• Earned value management.
• Forecasting
• To-complete performance index
• Performance reviews
OUTPUTS
INPUTS • Work performance information
• Project management plan • Cost forecasts
• Change requests
• Project funding requirements
• Work performance data • Project document updates
• Organizational process assets • Organizational process assets
updates

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7.4 OUTPUTS –
• The calculated CV, SV, CPI, and SPI values for WBS components,
in particular the work packages and control accounts, are
documented and communicated to stakeholders. (See exercises)

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7.4 OUTPUTS –
2. Budget Forecasts
• Either a calculated EAC value or a bottom-up EAC value is

documented and communicated to stakeholders. (See forecasts)

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1. Earned Value Measurement
• See exercises

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2. Forecasting
• See exercises

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3. To-Complete Performance Index
• See exercises

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4. Performance Reviews
• Variance analysis. Variance analysis as used in EVM compares actual
project performance to planned or expected performance. Cost and
schedule variances are the most frequently analyzed.
• Trend analysis. Trend analysis examines project performance over
time to determine if performance is improving or deteriorating.
Graphical analysis techniques are valuable for understanding
performance to date and for comparison to future performance goals
in the form of BAC versus EAC and completion dates.
• Earned value performance. Earned value management compares the
baseline plan to actual schedule and cost performance.

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EARNED VALUE
SPECIAL FOCUS

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What Can Answer EV?
• Are we ahead or behind schedule?
• How efficiently are we using our time?
• When is this project likely to be completed?
• Are we currently under or over budget?
• How efficiently are we using our resources?
• How efficiently must we use our remaining resources?
• What is the remaining work likely to cost?
• What is the entire project likely to cost?
• How much we will be under or over budget at the end?
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Debits and Credits
• In a double entry accounting system, for every debit to one account,

there is a corresponding credit to another account.
• Earned value is similar in that if you spend a dollar on labor for your
project, that dollar doesn't just evaporate into thin air. You are
"earning" a dollar's value back into your project. If you buy bricks or
computers, write code or documentation, or perform any work on
the project, those activities earn value back into your project.

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Earned Value Management (EVM)
• A management methodology for integrating scope, schedule, and

resources, and for objectively measuring project performance and
progress.
• Performance is measured by determining the budgeted cost of work

performed (i.e., earned value) and comparing it to the actual cost of
work performed (i.e., actual cost).
• Progress is measured by comparing the earned value to the planned

value.

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Why Consider Earned Value?
• Because It…
– Allows for common understanding of the amount of work that
actually has been done
– Allows for objective assessment of variance
– Allows for forecast of future performance
– Is incorporated in all major modern project management
software packages
– Is consistent for all project managers
– Allows for point-in-time analysis
– Can be done at the work element, summary or project level
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Traditional Cost Management
60
Time Now
50
40
Dollars
30
Actual Cost (26)
20 Budget Plan (21)
10
0
J F M A M J J A S O N D
Time

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Earned Value Management
60
Time Now
50
40
Dollars
30
Actual Cost (26)
Budget Plan (21)

20
10
Earned Value (16)
0
J F M A M J J A S O N D
Time

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Earned Value (EV) Definition
A method of measuring project performance by comparing

the amount of work planned with that actually
accomplished, in order to determine if cost and schedule
performance are as planned

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EV Terms
Data Element Term Acronym

Scheduled Work Planned Value PV
Earned Value Earned Value EV
Actuals Actual Cost AC
Authorized Work Budget at Completion BAC
Forecasted Cost Estimate at Completion EAC
Work Variance Schedule Variance SV
Cost Variance Cost Variance CV
Completion Variance Variance at Completion VAC

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Performance Measurement Baseline
Time-Phased Budget
4500
4000
BAC
3500
3000
BCWS $K
2500
2000
1500
1000
500
0
Jan Feb Mar Apr May Jun
Reporting Period

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Planned Value (PV)
Work schedule to be accomplished
80000
70000
BAC
PV
60000
CURRENT
JANUARY 0
50000
PV
FEBRUARY 2500
40000 MARCH 8000
30000 APRIL 13000
20000 MAY 42000
10000
JUNE 62000
JULY 70700
0
JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY

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Earned Value (EV)
Budgeted value of completed or in-process work
80000
CURRENT
70000
60000
BCWS BCWP
50000 JANUARY 0 0
BCWS
FEBRUARY 2500 3600
40000 BCWP MARCH 8000 8000
APRIL 13000 10000
30000
MAY 42000 38000
JUNE 62000
20000
JULY 70700
10000
0

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Actual Cost (AC)
Actual expenditures for completed or in-process work
80000
CURRENT
70000
60000
50000
ACWP
BCWS BCWP ACWP
JANUARY 0 0 0
BCWS
40000 FEBRUARY 2500 3600 6000
BCWP
MARCH 8000 8000 8000
30000 APRIL 13000 10000 8000
MAY 42000 38000 48000
JUNE 62000
20000
JULY 70700
10000
0

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Earned Value Analysis (cont.)
EAC
ETC VAC
BAC
CV
SV
Schedule Time Projected

Slippage schedule
Key (to data) slippage
(at completion)
BCWS (Planned) - Budgeted Cost of Work Scheduled
BCWP (Earned) - Budgeted Cost of Work Performed
SV- Scheduled Variance
CV- Cost Variance
ETC - Estimate to Complete
BAC - Budget at Completion
EAC - Estimate at Completion
VAC - Variance at Completion

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Earned Value Analysis (cont.)

EAC
VAC
ETC
BAC
$
P
W
C
A
CV
W
C
B
SV
P
W
C
B

Slippage Schedule
(to date) Slippage
(at completion)
Data Date
Key

ACWP (Actual) - Actual Cost of Work Performed
SV - Schedule Variance
CV - Cost Variance

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EAC
VAC
ETC
BAC
P
W
AC
S
CV
W
C
B
SV
P
W
C
B

Slippage Schedule
(to date)
Slippage
(at completion)
Data Date
Key

ACWP (Actual) - Actual Cost of Work Performed
SV - Schedule Variance
CV - Cost Variance

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Variances and Indexes

• CV Cost Variance [CV = EV - AC]
• SV Schedule Variance [SV = EV - PV]
• CPI Cost Performance Index [CPI = EV / AC]
• SPI Schedule Performance Index [SPI = EV / PV]

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12 Formulas
• There are 12 key formulas

associated with earned value
management that often appear
on the test, and they require
both memorization and
understanding

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EVM Example
• You are the project manager for the construction of 20 miles of

sidewalk. According to your plan, the cost of construction will be
$15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk,
and you want to report performance and determine how much time
and cost remain.

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EVM Example – BAC
• Budgeted at Completion
– Budgeted at completion simply means, "how much we originally
expected this project to cost".
– BAC = 20 miles of sidewalk * $15,000 / mile.
– BAC = $300,000

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EVM Example - PV
• Planned Value
– The planned value is “how much work was planned for this point
in time”.
– Planned Value = Planned % complete * BAC
– We are 2 weeks complete on an 8 week schedule, which equates
to 25%.
– PV = $300,000 * 0.25 = $75,000.
– Therefore, we had planned to spend $75,000 after two weeks.

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EVM Example - EV
• Earned Value
– Earned value is based on the assumption that as you complete
work on the project, you are adding value to the project.
Therefore, it is simply a matter of calculating how much value
you have "earned" on the project. Planned value is what was
planned, but earned value is what actually happened.
– EV = Actual % Complete * BAC
– We have completed 4 miles of the 20 mile project = 20%.
– EV = $300,000 * 20% = $60,000.
– We have earned $60,000 of value for the project.
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EVM Example - AC
• Actual Cost
– Actual cost is the amount of cost you have incurred at this point,
and we are told in the example that we have spent $55,000 to
date.
– AC = $55,000

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EVM Example – CV 1/2
• Cost Variance
– Cost variance (CV) is how much actual costs differ from planned
costs. We derive this by calculating the difference between EV and
AC.
– The reason we use EV in this formula instead of PV is that we are
calculating how much the actual costs have varied. If we used PV, it
would give us the variance from our plan, but the cost variance
measures actual cost variance, and EV is based on actual
performance, whereas PV is based on planned performance.

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EVM Example – CV 2/2
• A positive CV is a good thing. It indicates that we are doing

better on costs than we had planned. Conversely, a negative CV
indicates that costs are running higher than planned.
• CV = EV-AC
• CV = $60,000 - $55,000
• CV = $5,000

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EVM Example – SV
• Schedule Variance
– Schedule variance (SV) is how much our schedule differs from
our plan, expressed in dollars. SV is derived by calculating the
difference between EV and PV.
– A negative variance (as in this case) reflects that we are not
performing as well as we had hoped in terms of schedule. A
positive SV would indicate that the project is ahead of schedule.
– SV = EV-PV
– SV = $60,000 – $75,000
– SV = -$15,000
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EVM Example – CPI 1/2
• Cost Performance Index

– The cost performance index gives us an indicator as to how much
we are getting for every dollar. It is derived by dividing Earned
Value by the Actual Cost.
– A CPI of 1 indicates that the project is exactly on track. A closer

look at the formula reveals that values of 1 or greater are good,
and values less than 1 are undesirable.

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EVM Example – CPI 2/2
• CPI = EV / AC
• CPI = %60,000/$55,000
• CPI = 1.09
• This figure tells us that we are getting $1.09 worth of

performance for every $1 .OO we expected.

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EVM Example – SPI 1/2
• Schedule Performance Index
– A corollary to the cost performance index is the schedule

performance index, or SPI. The schedule performance index tells us
how fast the project is progressing compared to the project plan. It
is derived by dividing earned value by the planned value.
• SPI = EV / PV
• SPI = $75,000 / $60,000
• SPI = 0.8

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EVM Example – SPI 2/2
• This tells us that the project is progressing at 80% of the pace that we
expected it to, and when we look at the example, this conclusion
makes sense.
• We had expected to lay 20 miles of sidewalk in 8 weeks.
• At that rate, after 2 weeks, we should have constructed 5 miles, but

instead the example tells us that we had only constructed 4 miles.
• That equates to 4/5 performance, which is 80%.
• Like the cost performance index, values of 1 or greater are good,

and values that are less than 1 are undesirable.

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EVM Example - EAC

• Estimate At Completion
– Estimate at completion is the amount we expect the project to
cost, based on where we are relative to cost and schedule.
– If you know you are half way through the project, and you are
currently 20% over budget, then the estimate at completion factors
that variance out to the end of the project. To calculate EAC, take
the BAC and divide it by our cost performance index.
– EAC = BAC / CPI
– EAC = $300,000 / 1.09
– EAC = $275,229.36
– This should make sense. We are doing better on costs than we had
originally planned, and this value reflects that.
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EVM Example - ETC
• Estimate To Completion
– Estimate to completion is simply how much more we expect to
spend from this point forward based on what we've done so far. It
can be easily backed into by taking our estimate at complete (what
we expect to spend) and subtracting what we have spent so far
(Actual Cost).
– ETC = EAC – AC
– ETC = $275,229.36 - $55,000
– ETC = $220,229.36
– This tells us that we expect to spend $220,229.36 more, given our
performance thus far.

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EVM Example - VAC
• Variance at Completion
– Variance at completion is the difference between what we
originally budgeted and what we expect to spend.
– A positive variance indicates that we are doing better than
projected, and a negative variance indicates that we expect the
project to run over on costs.
– VAC = BAC – EAC
– VAC = $300,000 - $275,229.36
– VAC = $24,770.64

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EVM Example - TCPI
This is a projection of cost performance that must be achieved on the

remaining work to meet a specified management goal, such as the
original BAC (if CPI is below 1) or the EAC (if the BAC is not attainable).
– To Complete Performance Index based on BAC
– TCPI based on BAC = (BAC – EV)/(BAC-AC)
– TCPI = ($300,000 - $60,000)/($300,000 - $55,000)
– TCPI = $240,000/$245,000 = 0.98
Here, we can see
that we do not need
much effort to
attain the BAC

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EVM Example - CPI & SPI Over Time
• A common way for the cost

performance and schedule
performance index to be used
is to track them over time.
• This graph may be easily

interpreted if you consider
that a value of 1 indicates that
the index is exactly on plan.

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EVM Review
• Planned Value (PV)
– (BCWS) is [Budgeted Cost of the Work Scheduled]
– Budgeted cost for the work scheduled to be completed on an activity or WBS
component up to a given point in time.
• Earned value (EV)
– (BCWP) is [Budgeted Cost of the Work Performed]
– Budgeted amount for the work actually completed on the schedule activity
or WBS comp. during a given time period.
• Actual cost (AC)
– (ACWP) is [Actual Cost of the Work Performed]
– AC is the total cost incurred in accomplishing work on the schedule activity or
WBS comp. during a given time period.

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Forecasts
• BAC
– Budget at completion - The sum of all the budget values established for the
work to be performed on a project or a work breakdown structure
component or a schedule activity.
• EAC
– Estimate at completion - Projected total final value for a schedule activity,
WBS comp. or project when the defined work of the project is completed.
• ETC
– Estimate to complete - The expected cost needed to complete all the
remaining work for a schedule activity, work breakdown structure
component, or the project.
• VAC
– Variance at completion - Difference between total estimated cost at
beginning and new estimated cost

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EVM Review
• Schedule Variance: SV = EV - PV (negative $=trouble)
– [SV = BCWP – BCWS]
• What’s the difference between value of what we really accomplished and
what was scheduled to be done?
• Cost Variance: CV = EV - AC (negative $=trouble)
– [CV = BCWP – ACWP]
• What’s the difference between the value of what we really accomplished and
what we spent to do it?
• Schedule Performance Index:
– SPI = EV/PV (<1=trouble) [SPI = BCWP/BCWS]
• Cost Performance Index:
– CPI = EV/AC (<1=trouble) [CPI = BCWP/ACWP]

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EVM Review
• BCWP [EV]– Earned Value

– PV [BCWS] can be compared only to EV [BCWP]
– AC [ACWP] can be compared only to EV [BCWP]
• Hints for EV calculations:

– Ratios greater than 1 are strong performances, typically:
• EV [BCWP] comes first when subtracting for variances
• EV [BCWP] is on top when dividing for ratios

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• Performance indexes are listed first (Vertically).
• Variances are listed last (Vertically).
• Performance indexes are calculated by division.
• Variances are calculated by subtraction.
• If a variance is negative, you are behind schedule or over budget.
• If a variance is positive, you are ahead of schedule or under budget.
• If a performance index is less than one, you are behind schedule or over budget.
• If a performance index is greater than one, you are ahead of schedule or under
budget.

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Guide to Mathematical Questions

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Net Present Value (NPV) and
Present Value (PV)
• Net Present Value (NPV) = (Present Value* of All Cash Inflows) -
(Present Value* of All Cash Outflows)
• Project Selection Criteria: Select the project with the maximum Net
Present Value. The time value of money is already taken into
account while calculating NPV
• Example: There are 2 projects. Project A has as NPV of $ 1,000 and
will be completed in 5 years. Project B has a NPV of $ 800 and will
be completed in 1 year. Which project will you select?
• Answer : Project A will be selected. <The fact that project B has a
smaller duration than project A does not matter because time is
already taken into account in NPV calculations>
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Present Value*(PV) = PV is the future value (FV) of a payment

discounted at a discount rate (r) for the delay in payment.
Example of PV: Assume that $ 1,100(FV – Future Value) is going to be
invested one year (n) from now. The discount rate (e.g. inflation) is 10%
(r) . What is the present Value? (PV)
Answer:
PV = FV .= $ 1,100 . = $ 1,100 = $ 1,000
(1 + r/100) n (1 + 10/100)1 1.1
What this means: If you are expecting to get $ 1,100 1 year from, its
present value is only $ 1,000 – this is because the value of money
decreases every year
Discount Rate: The interest rate used to calculate present value of
expected yearly benefits and costs.
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Future Value (FV)
• Future Value is the value of something such as cash or an

investment at a specific point in the future.
FV = PV*(1+r)n
PV=Present Value, r = interest rate, N= number of periods, and FV= Future Value.
• For example, if you had $5,000 now and could get 8% interest,
what would the Future Value be after 2 years?
‒ FV = $5000*(1+0.08)2
‒ FV = $5832

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Present Value (PV)
• Present Value is the value of something today that you need in order
to develop a certain amount in the future.
• Here's an example: if you wanted to have $10,000 in three years,

what amount of money would you need today to get this amount if
the money was earning 7%?
• Would you need more or less than a future amount now to have that
amount in the future?

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Internal Rate of Return (IRR)
• Internal Rate of Return (IRR)
– Discount Rate on an investment which makes present value of cash
inflows = present value of cash outflows
– Project Selection Criteria : Select a project with higher IRR.
• Example: There are 2 projects. Project A has an IRR of 15%
and will be completed in 5 years. Project B has an IRR of 10%
and will be completed in 1 year. Which project will you
select?
• Answer : Project A will be selected. <The fact that project B
has a smaller duration than project A does not matter
because time is already taken into account in IRR
calculations>
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Life Cycle Cost
• Life Cycle Cost: The overall estimated cost for a particular

program alternative over the time period corresponding to
the life of the program. Includes
– Direct and Indirect Costs
– Periodic or continuing costs of operation and maintenance
• Project Selection Criteria: For 2 projects having same

investment, select a project with lower Life Cycle Cost

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Payback Period
• Number of years required for an organization to recapture an initial
investment.
• Discount Rate is not taken into account in calculations for payback
period
• Project Selection Criteria: Select a project with lower payback period.
• Example: There are 2 projects. Project A has an investment of $
500,000 and payback period of 3 years. Project B has an investment
of $ 300,000 and payback period of 5 years. Using the payback period
criteria, which project will you select?
• Answer: Project A will be selected. <The fact that project B has a
smaller investment than project A will not impact the selection >

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Benefit Cost Ratio (BCR)

• BCR = Benefits (or Payback or Revenue)
Costs
• Selection Criteria: Select project with higher BCR
• BCR of > 1 means that benefits (i.e. expected revenue) is greater than the
cost. Hence it is beneficial to do the project.
• Project Selection Criteria : Select a project with the greater BCR
• Example: There are 2 projects. Project A has an investment of $ 500,000
and BCR of 2.5 Project B has an investment of $ 300,000 and BCR of 1.5
Using the Benefit Cost Ratio criteria, which project will you select?
• Answer: Project A will be selected. <The fact that project B has a smaller
investment than project A will not impact the selection >
Benefit / Payback / Revenue = Cost + Profit incurred OR Cost – Loss incurred

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Opportunity Cost
• The cost of passing up the next best choice when making a decision
• Once the best option is decided, the Opportunity cost of not doing
the other next option is determined – this is used to calculate
opportunity cost
• Example: There are 2 projects. Project A has as NPV of $ 1,000.
Project B has a NPV of $ 800. What is the opportunity cost if Project A
is selected?
• Answer : If project A is selected, NPV is $ 1,000. However, if project A
is selected, project B will be rejected i.e. a project with a potential
NPV of $ 800 will not be done. Hence the opportunity cost of Project
A = $ 800
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Sunk Cost
• The cost that has already been incurred – therefore cannot be
avoided going forward.
• Project Selection Criteria: When deciding the best option, ignore
the sunk costs, because they have already been incurred and
cannot be avoided.
– Example: Project A had initial budget of $ 1,000 out of which $ 800 has already
been spent. To complete project A, we will need additional $ 500. Another
Project B will require $ 1200 for completion. Which project do you want to
select?
– Answer : $ 800 spent in project A is sunk cost – hence should be ignored. So, at
this point of time,
• Cost of completing project A = $ 500
• Cost of completing project B = $ 1200
• Hence, we should select project A
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DEPRECIATION
STRAIGHT LINE DEPRECIATION (SLD)
• Equal amount of depreciation is taken out each period (year)
Example below shows depreciation for 5 years where:
Depreciable value is $140,000 (purchase price) - $40,000 (salvage Value) =
$100,000
Depreciation each year is $100,000 / 5 years = $20,000/year
Purchase Price Salvage Value Year Depreciation Depreciated Balance
$ 140,000 $40,000 0 0 $100,000
1 $20,000 $80,000
2 $20,000 $60,000
3 $20,000 $40,000
4 $20,000 $20,000
5 $20,000 0
Total $100,000

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DEPRECIATION
Double Declining Balance (DDB)
• Depreciation taken out each period (year) by double straight line depreciation
• Usually, applied on the initial purchase price (don’t subtract salvage value)
Example below shows depreciation for 5 years where:
Depreciation for 1st year is $140,000 / 5 years x 2 = $56,000 (or 40% of $140,000)
Depreciation for 2nd year is $84,000 / 5 years x 2 = $33,600 (or 40% of $84,000)
Purchase Price Depreciation % Year Depreciation Depreciated Balance

$ 140,000 0 0 $140,000
40% 1 $56,000 $84,000
40% 2 $33,600 $50,400
40% 3 $20,160 $30,240
40% 4 $12,096 $18,144
40% 5 $7,257 $10,886 (Salvage)
Total $100,000

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DEPRECIATION
Sum of Years Digits Depreciation (SYD)
• Accelerated depreciation amount taken out each period (year) based on year’s digits
Example below shows depreciation for 5 years where sum of years’ digits = 1+2+3+4+5 =
15
Depreciation factor for 1st year is 5 (reverse order of years) / 15 (sum of years)
Multiply factor by original balance to get depreciation for that year
Depreciation for 1st year is 5/15 x $100,000 = $33,333, 2nd year is 4/15 x $100,000 =
$26,667
Purchase Price Salvage Value Depreciation Year Depreciation Depreciated
Factor Balance
$140,000 $40,000 0 0 $100,000
5/15 1 $33,333 $66,667
4/15 2 $26,667 $40,000
3/15 3 $20,000 $20,000
2/15 4 $13,000 $6,667
1/15 5 $6,667 0
Total $100,000
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EV Exercise
Work Unit Completion Date Budget ($M) Work Performed Actual Cost
($M) ($M)
A 31JAN 10 10 12
B 28FEB 5 4 5
C 31MAR 6 8 8
D 12MAY 15 13 12
E 30JUN 20 20 30
F 18JUL 3
G 30AUG 35
H 22SEP 22
I 29OCT 22
J 30NOV 9

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EV Questions
1. What is the Cost Variance?
2. What is the Schedule Variance?
3. What is the CPI?
4. What is the SPI?
5. What is the BAC?
6. What is the EAC?
7. What is the ETC?
8. What is the Percent Complete?
9. What is the Percent Spent?
10.What can be said about this project?

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Answers
1. CV = EV – AC = $55 - $67 = -$12
2. SV = EV – PV = $55 - $56 = -$1
3. CPI = EV/AC = 55 / 67 = 0.82
4. SPI = EV/PV = 55 / 56 = 0.98
5. BAC = ΣPV = 147
6. EAC = BAC / CPI = 147 / 0.82 = $179.27
7. ETC = EAC - AC = $179.27 - $67 = $112.27
8. PC = EV / BAC = 55 / 147 = 0.37 = 37%
9. PS = AC / BAC = 67 / 147 = 0.46 = 46%
10.Over cost, a little behind schedule
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8. Project Quality Management

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PROJECT MANAGEMENT & QUALITY

MANAGEMENT
• “PMBOK ® Guide” and Quality Approaches
• PM and QM similarities and differences
• Quality Systems and Gurus

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1
PROJECT MANAGEMENT & QUALITY
MANAGEMENT
• The basic approach to project quality management described in the
PMBOK is intended to be compatible with that of The International
Organization for Standardization (ISO).
• This generalized approach should also be compatible with
proprietary approaches to quality management such as those
recommended by Deming, Juran, Crosby and others,
• It is also compatible with non-proprietary approaches such as Total
Quality Management (TQM), Six Sigma, Failure Mode and Effect
Analysis, Design Reviews, Voice of the Customer, Cost of Quality
(COQ), and Continuous Improvement.
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PM & QM SIMILARITIES
Both recognize the importance of:
• Customer satisfaction – Understanding, evaluating, defining, and
managing expectations so that customer requirements are met.
• Prevention over inspection – The cost of avoiding mistakes is much

less than the cost of correcting them
• Management responsibility – Success requires participation of all

members of the team, but it is the responsibility of management to
provide resources needed
• Continuous Improvement – Plan/Do/Check/Act cycle

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2
PM & QM DIFFERENCES?
• Focus – QM systems focus on the entire organization , while Project

Quality Management per the PMBOK Guide focuses on projects.
• Management Responsibility - The project manager has the ultimate

responsibility for the quality of the product of the project and the
Project Management deliverables, while Senior Management has the
ultimate responsibility for the quality in the organization as a whole.

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QUALITY SYSTEMS & GURUS
For the PMP Exam you need to know the paradigms and absolutes
of the main quality systems and gurus:
1. ISO
2. TQM
3. Deming
4. Crosby
5. Juran

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3
ISO 9000
• Part of the International Standards Organization to ensure that

companies document what they do and do what they document.
• ISO 9000 is not directly attributable to higher quality, but may be an
important component of Perform Quality Assurance, since it ensures
that an organization follows their processes.
• Generally IS0 comes down to the following three steps:
‒ Document what you do
‒ Do what you document
‒ Document any variance (from the normal processes)

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QUALITY MANAGEMENT PIONEERS
• Crosby = zero defects and prevention or rework results
• Juran = fitness for use, conformance
• Deming = quality is a management problem
• Kaizen = continuous improvement

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ZERO DEFECTS (CROSBY)
• Zero Defects is a concept developed by Philip Crosby.
• Its basic foundation is to do something right initially, and you

shouldn't have to repeat it. Implies that there is no tolerance for
errors within the system.
• The goal of all processes is to avoid defects in the product or service.
• Similar to six sigma: almost zero defects (99.9997% defect-free)

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FITNESS FOR USE (JURAN)
• The Fitness for Use concept was developed by Joseph Juran.
• It implies that the needs of the customers and Stakeholders are

defined and then attempted to satisfy.

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W. EDWARDS DEMING
Quality is continuous improvement through reduced variation.
Deming’s Five Principles:
1. The central problem is the failure of management to understand
variation.
2. It is management’s responsibility to know whether the problems
are in the system or in the behavior of the people.
3. Teamwork should be based on knowledge, design, redesign.
Constant improvement is management’s responsibility.
4. Train people until they are achieving as much as they can.
5. It is management’s responsibility to give detailed specifications.
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PLAN – DO – CHECK – ACT

(Shewhart-Deming)

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TOTAL QUALITY MANAGEMENT
(KAIZEN)
• Very proactive approach.
• Utilize leadership and accountability.
• Measure and strive for constant improvement.
• Focused on prevention over inspection - it costs more to fix an error
than it does to prevent one.
• Testing while developing provides an immediate feedback loop.
Process problems are more likely to be detected early on, instead of
at the end.
• Continuous improvement of the process is a key foundation of his
view on TQM.

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CONTINUOUS IMPROVEMENT PROCESS

(KAIZEN)
• Makes improvements throughout a process. A sustained, gradual
change to improve the situation.
• Corporate culture generally focuses on not accepting that things are
as good as they can be, but instead seeks process concepts. Applies
PDCA Cycle.
• Differs from innovation - does not make a sudden jump.
• Focuses on 11 principles:
Constancy of purpose, commitment to quality, customer focus and
involvement, process orientation, continuous improvement, system-
centered management, investment in knowledge, teamwork, conservation
of human resources, total involvement, and perpetual (endless)
commitment.
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GOALS OF QUALITY
• Fitness for use.

Is the product or service capable of being used?
• Fitness for purpose.

Does the product or service meet its intended purpose?
• Customer satisfaction.
Does the product or service meet the customer's expectations?
• Conformance to the requirements.
Does the product or service conform to the requirements?

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GRADE VS. QUALITY

• Grade deals with the characteristics of the product whereas quality deals
with the stability or predictability of the product.
• Examples of low grade could be a basic product without a lot of features

such as an inexpensive nail gun. It provides basic functionality, but
doesn't have a lot of extras, and likely would be used by a homeowner
instead of a construction company. A high-grade product could be an
automatic nail gun that can handle 10 kinds of nails, various levels of
pressure, essentially meeting any type of nailing need.
• Quality deals more with how well something works. How dependable is
the lower grade or higher grade product? If it breaks, doesn't have good
directions, or doesn't function as intended, it could be lacking quality.

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ACCURACY VS. PRECISION
• Accuracy deals with the values being measured aligning with the
target value.
• For example, if you are testing a process and the target is 300
milliliters output, accuracy would deal with how close the
measurement is to the 300 milliliters target.
• Precision deals with consistency of the output. If a test is acceptable

or not, the outcome being consistent is the desire if focusing on
precision.
• For example, how many of the outputs are 300 milliliters from the
accuracy example.
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PREVENTION VS. INSPECTION
• Prevention deals with eliminating defects and potential defects from

the process. This is the proactive approach to quality.
• Inspection deals with fixing errors or defects as they come up in the

process of making the product or whatever is being tested or
evaluated.
• Prevention is simply keeping defects from occurring, while inspection

is about catching the errors that have occurred before they impact
others outside the project.

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WHAT IS GOLD PLATING?
Gold Plating is the practice of providing more than what the

customer requested.
• Per PMI®, this practice is unacceptable and professionally

irresponsible.
• The Project Manager and team should provide only that which was
approved, exactly what the customer asked for and what they
approve in the Charter, no more or no less.

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CUSTOMER SATISFACTION
• Understanding, evaluating, defining and managing expectations so

that customer requirements are met.
Customer Satisfaction = What Is Delivered – Expectations

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VOICE OF THE CUSTOMER
• A planning technique used to provide products, services, and results

that truly reflect customer requirements by translating those
customer requirements into the appropriate technical requirements
for each phase of project product development.

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THE CUSTOMER IS THE NEXT PERSON IN THE

PROCESS
• The internal organization has a system that ensures the product or
service is transferred to the next person in the process in a complete
and correct manner.
• The product or service being built is transferred to another internal

party only after it meets all the specifications and all actions at the
current work station.
• Avoids incorrectly assembled components and poor workmanship.

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COST OF QUALITY

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CONCEPTS THAT PROVIDE OPPORTUNITIES

FOR REDUCING COST
• Just-in-Time
• Product Life Cycle Cost
• Product Maturity
• Areas of Waste in Projects

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JUST IN TIME (JIT)
• This is an approach to decrease the amount of inventory that a

company carries, thereby decreasing the investment in inventory.
• A JIT philosophy directs a company to improve quality (forces

attention to quality) because extra material is not available.
• Inventory costs money, thus, an increase in quality that lets you use
JIT can save your company money

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WHAT IS THE DIFFERENCE BETWEEN A

POPULATION AND A SAMPLE?
Population:
• The total number of individual members, items or elements
comprising a uniquely defined group.
• For example: all women
Sample:
• A subset of population members.
• For example: women over the age of 30 in England.

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STATISTICAL INDEPENDENCE
• When the outcomes of two processes are not linked together nor
dependent upon each other, they are statistically independent.
• Rolling a six on a die the first time neither increases nor decreases
the chance that you will roll a six the second time. Therefore, the two
rolls would be statistically independent.

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ATTRIBUTE SAMPLING
VS. VARIABLE SAMPLING
• Attribute sampling is binary; either a work result conforms to quality
or it does not.
• Variable sampling, measures how well something conforms to quality.
• Example: A production facility making prescription drugs:
‒ Using attribute sampling, they would define tolerances, a batch of product

would be tested, and it would either pass or fail that inspection.
‒ Using variable sampling, however, the batch of product would be rated on

a continuous scale (perhaps one parts per million) that showed how well
the batch conformed to ideal quality.

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STANDARD DEVIATION
• Standard deviation is a
statistical calculation
used to measure and
describe how data is
organized.
• The following graphic of

a standard bell curve
illustrates standard
deviation:

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STANDARD DEVIATION
If the data set is "normally distributed," as it is in the preceding

chart, the following statistics will be true:
• 68.25% of the data points (or values) will fall within 1σ from the
mean.
• 95.46% of the values will fall within 2σ from the mean.

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STANDARD DEVIATION
If the data set is "normally distributed," as it is in the preceding

chart, the following statistics will be true:
• The higher your standard deviation, the more diverse your data
points are.
• SD is used to set quality levels (Six Sigma)
• SD is used to set control limits to determine if a process is in

control (control charts)

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SIGMA
• Sigma is also known as standard deviation.
• The formula for standard deviation is (P-0)/6.
• P is Pessimistic, 0 is Optimistic.

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SPECIAL CAUSES
VS. COMMON CAUSES
• Special causes are considered preventable by process improvement,
while common causes are generally accepted.
• Example:
‒ If your manufacturing process produced 250 defects per 1,000,000 due

to assembly errors, that might be considered a special cause
‒ If your manufacturing process produced one defect in a million due to

bad raw materials, that might be considered a common cause.

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TOLERANCES VS. CONTROL LIMITS

• Tolerances deal with the limits your project has set for product
acceptance.
• For instance, you may specify that any product will be accepted if it
weighs between 12 and 15 grams. Those weights would represent
your tolerances for weight.
• Control limits are set at three standard deviations above and below
the mean. As long as your results fall within the control limits, your
process is considered to be in control.
• Tolerances focus on whether the product is acceptable, while control

limits focus on whether the process itself is acceptable.
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CONTROL CHARTS
Graphic displays of the results, over time, of a process; used to assess
whether the process is “in control”
This process is under control

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QUALITY PROCESSES
QUALITY PROCESS DEFINITIONS
8.1 Plan Quality Management
• The process of identifying quality requirements and/or standards for
the project & product, and documenting how the project will
demonstrate compliance.
8.2 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
8.3 Control Quality
• The process of monitoring and recording results of executing the
quality activities to assess performance and recommend necessary
changes.
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QUALITY PROCESSES
PROCESSES BY PROCESS GROUP
Planning Executing Monitoring &

Controlling
8.1 8.2 8.3
Plan Quality Perform Quality Control Quality
Assurance
Management

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8.1 PLAN QUALITY MAMAGEMENT

TOOLS & TECHNIQUES
• Cost-benefit analysis
• Cost of quality
• Seven basic quality tools
• Benchmarking
• Design of experiments
• Statistical sampling
• Additional quality planning tools
• Meetings
OUTPUTS
INPUTS • Quality management plan
• Project management plan • Process improvement plan
• Stakeholder register • Quality metrics
• Risk register • Quality checklists
• Requirements documentation • Project documents updates

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8.1 PLAN QUALITY PROCESS
• Involves identifying which quality standards are relevant to the

project & determining how to satisfy them

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8.1 OUTPUTS –
1. Quality Management Plan
• Describes how the quality policy will be implemented
• Provides input to the overall project plan
• Must address quality control, quality assurance and continuous

improvement for the project
• Should include all efforts necessary to ensure that the earlier

decisions (on concepts, design, tests, etc.) are correct

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8.1 OUTPUTS –
2. Process Improvement Plan
• Is a subsidiary of the Project Management Plan that details the steps
for analyzing processes that will facilitate the identification of waste
and non-value added activity, such as:
‒ Process boundaries (purpose, start, end, inputs, outputs, data required,
owner and stakeholder processes)
‒ Process configuration (flowchart of processes to facilitate analysis with
interfaces identified)
‒ Process metrics (maintain control over status of processes)
‒ Targets for improved performance
• Deals with how quality activities will be streamlined and improved.

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8.1 OUTPUTS –
3. Quality Metrics 1/2
• Metric = operational definition that describes in very specific terms,
what something is, and how quality control process measures it
• A measurement is an actual value
• Quality metrics are used in QA and QC processes
• Examples:
‒ Defect density, failure rate, availability, test coverage
‒ It is not adequate for the team to say that the system needs to have a
rapid response time. Instead, a quality metric might specify that a
system must respond within two seconds to 99% of all requests up to
1,000 simultaneous users.

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8.1 OUTPUTS –
3. Quality Metrics 2/2
• What is a variable?
‒ A characteristic to measure.
‒ Example:
• Size
• Shape
• What is an attribute?
‒ The measurement
‒ Example:
• Inches
• Meters
• Pounds
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8.1 OUTPUTS –
4. Quality Checklists
• A checklist is a Plan quality output put
to ensure that all steps were
performed, and that they were
Do this first
performed in the proper sequence. Do this second
Check this
• Establish a common reference for
Check that
quality management execution
Did you?
• Are especially effective when Have you?
developed and improved over several
projects
• They are developed here and used in

the process of Perform Quality Control.
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1. Cost Benefit Analysis
• Plan quality must consider cost-benefit trade-offs
• Primary benefit of meeting quality requirements is less rework

…higher productivity, lower costs, increased stakeholder satisfaction
• Primary cost = expenses associated with Project Quality Management

activities
• Quality can be expensive to achieve
• No activities should be performed that cost more (or even the same)
as the expected benefits.

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2. Cost of Quality 1/4
• Are total costs incurred by investment in preventing

nonconformance to requirements
• Appraising the product / service for conformance to requirements
• Failing to meet requirements (rework)
• Failure costs COpQ (costs of poor quality)

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• Typical project should have a goal of between 3-5% of total value as cost of
quality
• Cost of quality is often viewed as a negative cost because errors in work have
been traditionally accepted as a cost of doing business
• Types of Costs:
‒ Prevention Costs
‒ Appraisal Costs
‒ Failure Costs
• Internal
• External
• At least 85% of the costs of quality are the direct responsibility of
management
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• Cost of conformance
‒ Planning, training, process control, field testing, product design
validation, process validation, test and evaluation, inspection/
quality audits, maintenance and calibration
• Cost of non-conformance
‒ Scrap, rework, expediting, additional material or inventory,
warranty, complaint handling, liability judgments, product recalls,
product corrective actions

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• Cost of conformance: • Cost of non-conformance:
the cost of proactive quality the cost of quality failure
processes ‒ Scrap
‒ Planning ‒ Rework
‒ Training ‒ Additional material / inventory
‒ Process control ‒ Warranty repairs & service
‒ Product design evaluation ‒ Complaint handling
‒ Test & evaluation ‒ Liability judgments
‒ Quality audits ‒ Product recalls
‒ Maintenance ‒ Field service
‒ Inspection ‒ Expediting
‒ Field testing
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3.Seven basic quality tools
A. Cause-and-effect diagrams
B. Flowcharts
C. Checksheets
D. Histograms
E. Pareto diagrams
F. Control charts
G. Scatter diagrams
Seven basic quality tools will be described in Control Quality

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4. Benchmarking
• Involves comparing actual or planned project practices to those of
other projects to generate ideas for improvement and to provide a
basis to measure performance.
• “other projects” …within or outside the performing organization….in

the same or other application area
• These other projects may be from the industry, such as an automaker

setting quality standards based on those of other automobiles in their
class, or it may be based on projects previously executed by the
performing organization.

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5. Design of Experiments 1/2
• Statistical method that helps identify which factors may influence

specific variables of a product / process
• Plays a role in the optimization of products / processes
• Provides a statistical framework for systematically changing all of the

important factors instead of changing the factors one at a time

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5. Design of Experiments 2/2
• It uses data analysis to determine optimal conditions.
• For instance, rather than conducting a series of individual trials, an

information technology project may use design of experiments
analysis and optimize hardware and bandwidth needed to run an
Internet-based application, finding the optimal match of system
response time and overall cost.

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6. Statistical Sampling
• Statistical sampling involves choosing part of a population of interest

for inspection (for example, selecting ten engineering drawings at
random from a list of seventy-five).

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7. Additional Quality Planning Tools
• Brainstorming. This technique is used to generate ideas .
• Force field analysis. These are diagrams of the forces for and against
change.
• Nominal group technique. This technique is used to allow ideas to be

brainstormed in small groups and then reviewed by a larger group.
• Quality management and control tools. These tools are used to link
and sequence the activities identified (defined in Section 8.2).

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8.2 PERFORM QUALITY ASSURANCE
TOOLS & TECHNIQUES

• Quality management and control
tools
• Quality audits
• Process analysis
INPUTS OUTPUTS
• Quality management plan • Change requests
• Process improvement plan • Project management plan updates
• Quality metrics • Project documents updates
• Quality control measurements • Organizational process assets updates

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8.2 PERFORM QUALITY ASSURANCE
• Quality assurance (QA) is the application of planned, systematic

quality activities to ensure that the project employs all processes
needed to meet requirements
• Perform Quality Assurance is an executing process.
• Primarily concerned with overall process improvement.
• It is not about inspecting the product for quality or measuring

defects. Instead, Perform Quality Assurance is focused on steadily
improving the activities and processes undertaken to achieve quality.

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8.2 INPUTS –
1. Quality Control Measurements
• The quality control measurements can be thought of as a feedback
loop.
• As changes are evaluated here in the process of Perform Quality

Assurance, they are measured in Perform Quality Control and fed
back into this process for evaluation.
• Are the results of the quality control activities that are feedback to QA
process for use in re-evaluating and analyzing the quality standards
and processes of the performing organization

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1. Quality management and control tools 1/7
• Affinity diagrams: is similar to
mind-mapping techniques in that
they are used to generate ideas
that can be linked to form
organized patterns of thought
about a problem. In project
management, the creation of the
WBS may be enhanced by using
the affinity diagram to give
structure to the decomposition of
scope.
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• Process decision program charts
(PDPC) : Used to understand a
goal in relation to the steps for
getting to the goal.
• The PDPC is useful as a method

for contingency planning
because it aids teams in
anticipating intermediate steps
that could derail achievement of
the goal.
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• Interrelationship digraphs: An
adaptation of relationship diagrams.
‒ The interrelationship digraphs provide
a process for creative problem solving
in moderately complex scenarios that
possess intertwined logical
relationships for up to 50 relevant
items.
‒ The interrelationship digraph may be
developed from data generated in
other tools such as the affinity
diagram, the tree diagram, or the
fishbone diagram.
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Tree diagrams: Also known as systematic diagrams and may
be used to represent decomposition hierarchies such as the
WBS, RBS (risk breakdown structure), and OBS
(organizational breakdown structure).
• In project management, tree diagrams are useful in
visualizing the parent-to-child relationships in any
decomposition hierarchy that uses a systematic set of rules
that define a nesting relationship.
• Tree diagrams can be depicted horizontally (such as a risk
breakdown structure) or vertically (such as a team hierarchy
or OBS).
• Because tree diagrams permit the creation of nested branches that terminate into a
single decision point, they are useful as decision trees for establishing an expected
value for a limited number of dependent relationships that have been diagramed
systematically.
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Prioritization matrices: Identify the
key issues and the suitable
alternatives to be prioritized as a
set of decisions for
implementation.
• Criteria are prioritized and

weighted before being applied to
all available alternatives to
obtain a mathematical score that
ranks the options.

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• Activity network diagrams :
Previously known as arrow
diagrams. They include both the
AOA (Activity on Arrow) and, most
commonly used, AON (Activity on
Node) formats of a network
diagram. Activity network
diagrams are used with project
scheduling methodologies such as
program evaluation and review
technique (PERT), critical path
method (CPM), and precedence
diagramming method (PDM).
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Matrix diagrams: A quality management and
control tool used to perform data analysis
within the organizational structure created
in the matrix.
• The matrix diagram seeks to show the

strength of relationships between factors,
causes, and objectives that exist between
the rows and columns that form the
matrix.

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2. Quality Audits 1/2
• Audits (Key Tool) review the project to evaluate which activities

taking place on the project should be improved and which meet
quality standards
• The goal of the audits is both to improve acceptance of the product

and the overall cost of quality

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2. Quality Audits 2/2
• Structured, independent review to determine whether the project
activities comply with organizational and project policies, processes
and procedures
• Confirm the implementation of approved change requests, corrective

actions, defect repairs and preventive actions
• May be scheduled or at random, may be carried out by in-house or

external auditors

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3. Process Analysis
• Follow the steps outlined in the process improvement plan to ensure

that it is working efficiently and effectively
• Examines problems experienced, constraints and non-value added

activities identified during process operation
• Include: root cause analysis (specific technique to analyze a situation,

determine the underlying causes that lead to it and develop
preventive actions for similar problems

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8.3 CONTROL QUALITY
TOOLS & TECHNIQUES
• Seven basic quality tools
• Statistical sampling
• Inspection
• Approved change requests review
OUTPUTS
• Quality control measurements
INPUTS • Validated changes
• Project management plan • Validated deliverables
• Quality metrics • Work performance information
• Quality checklists • Change requests
• Work performance data • Project management plan updates
• Approved change requests
• Deliverables updates
• Project documents
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8.3 CONTROL QUALITY (1/3)
• Perform Quality Control looks at specific results to determine if they

conform to the quality standards.
• It involves both product and project deliverables, and it is done

throughout the project - not just at the end.
• Perform Quality Control typically uses statistical sampling rather than

looking at each and every output.
• This process uses the tool of inspection to make sure the results of
the work are what they are supposed to be.

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• Involves monitoring specific project results to determine if they

comply with relevant quality standards.
• Project Results include both product results such as deliverables and

project management results such as cost and schedule performance.
• Often performed by a Quality Control Department or similarly titled

organization.
• It is performed beginning with the production of the first product

deliverable and continues until all of the deliverables have been
accepted.

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• PM Team Requirements
‒ Should have working knowledge of SPC (Statistical Process
Control), especially sampling and probability, to help evaluate QC
outputs
‒ Should know differences between
• Prevention and inspection
• Attribute sampling and variables sampling
• Special causes and random causes
• Tolerances and control limits

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8.3 OUTPUTS –
1. Quality Control Measurements
• The quality control measurements can be thought of as a feedback
loop.
• As changes are evaluated here in the process of Perform Quality

Assurance, they are measured in Perform Quality Control and fed
back into this process for evaluation.
• Are the results of the quality control activities that are feedback to
QA process for use in re-evaluating and analyzing the quality
standards and processes of the performing organization

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8.3 OUTPUTS –
2. Validated Changes
• Any changed or repaired items are inspected and will be either

accepted or rejected before notification of the decision is provided.
Rejected items may require rework.

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8.3 OUTPUTS –
3. Validated Deliverables
• A goal of quality control is to determine the correctness of

deliverables.
• The results of the execution quality control processes are validated

deliverables.
• Validated deliverables are an input to Verify Scope (5.4) for

formalized acceptance.

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8.3 TOOLS & TECHNIQUES – 1.Seven basic quality tools

A. Cause and Effect Diagrams 1/2

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A. Cause and Effect Diagrams 2/2
• Cause and Effect Diagram (Ishikawa, Fishbone)
‒ Used to show how different factors relate together and might be

tied to potential problems.
‒ Used as part of an approach to improve quality by identifying quality

problems and trying to uncover the underlying cause.
‒ Used to explore the future or the past.
‒ May be used in Plan quality or control.

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B. Flowcharts
• Graphical representation of a process that helps analyze how
problems occur
• Shows activities, decision points and the order of processing

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C. Checksheets
• Checksheets, which are also known as
tally sheets and may be used as a
checklist when gathering data.
• Checksheets are used to organize facts
in a manner that will facilitate the
effective collection of useful data about
a potential quality problem.
• They are especially useful for gathering
attributes data while performing
inspections to identify defects.
• For example, data about the frequencies or consequences of defects collected in
checksheets are often displayed using Pareto diagrams.

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D. Histogram

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E. Pareto Chart 1/3
• Specific type of histogram ordered by the frequency of occurrence

(how many defects were generated by type / category of cause)
• It graphically prioritizes the causes of process problems (by frequency

of occurrence) to help focus attention on the most critical issues
affecting quality.

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E. Pareto Chart 2/3
• Pareto's Law
‒ Pareto diagrams are based on Pareto's Law, which is also known as
the 80/20 rule.
‒ This rule states that 80% of the problems come from 20% of the
causes
‒ Pareto chart is used to help determine the few root causes behind
the majority of the problems on a project.

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E. Pareto Chart 3/3
• This is a histogram showing

defects ranked from greatest
to least.
• It is used to focus energy on

the problems most likely to
change results.

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F. Control Charts 1/4
• Control charts are part of a set of quality practices known as (SPC)

Statistical Process Control - one way of depicting variations and
determining whether or not the process is in control.
• If a process is statistically "in control“, it does not need to be

corrected.
• If it is "out of control“, then there are sufficient variations in results

that must be brought back statistically in line.

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9
Rule of Seven
8 18
7
Range 9 12 14
6 2 8 10 11 13
5 3 6 16
4 1 5 7 15 19
3 Within Range
2 17
1 4
0
Out Of Control
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
• Mean at 5 • Lower Specification Limit at 17

• Upper Control Limit at 8 • Value 4: Out of Control and Assignable Cause
• Lower Control Limit at 2 • Values 8, 9, 10, 11, 12, 13, 14: Rule of Seven,
• Range, Normal Distribution Curve, will be Out of Control and Assignable Cause
between 2 and 8 • Other Values: Within Range
• Upper Specification Limit at 9
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• What does the Rule of Seven mean?
‒ Seven consecutive data points appearing on a control

chart on one side of the mean, suggesting that the
process is out of statistical control.

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G. Scatter Diagram 1/2
• Powerful tool for spotting trends in data.
• Shows the pattern of relationship / correlation between two
variables
• Helps identify the possible relationship in the changes observed in
two variables
• How it works?
‒ Dependent variables vs independent variables are plotted
‒ The closer the points are to a diagonal line, the more closely they
are related

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G. Scatter Diagram2
• Suppose that the horizontal, or X axis, represented hours of study, which is your independent
variable.
• The vertical, or Y axis, represented your score on the PMP Exam, which is the dependent
variable.
• The third graph would make sense, since the more people studied, the higher their scores
tended to be.
• The second graph, where the more the person studied, the lower their score, you might
deduce that the book they are reading is actually having a negative effect.
• The first example graph below might lead you to deduce that the study material being used
has no effect at all and therefore there is no correlation.
No Correlation Negative Correlation Positive Correlation

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2. Statistical Sampling
• Discussed earlier

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45
3. Inspection
• Is the examination of a work product to determine whether it

conforms to standards
• Includes measuring, examining and testing
• Performed at various points in the project
• Intensity level is dependent on the quality plan
• Also referred to as reviews, peer reviews, audits and walkthroughs

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4.Approved Change Request Review
• Action taken by the quality control department to ensure that

product defects are repaired and brought in compliance with
requirements / specifications

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9. Project HR Management

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PMI®’S PHILOSOPHY OF HRM

• The content is drawn from basic management theory, organizational
behavior, psychology and the field of human resources.
• Project Resource management defines the roles of the project

manager, senior management, sponsor and team while influencing
everyone who has a role on the project.
• PMI's philosophy of leadership and power are based on the

realization that the project manager is rarely given complete and
unquestioned authority on a project.
• The project manager must be able to lead, motivate and persuade

people to act in the best interest of the project and must be able to
build a team and lead members to give their best effort to the
project.
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PROJECT MANAGER’S ROLES
• Integrator
• Communicator
• Team Leader
• Decision Maker
• Climate Builder

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HR CONSIDERATIONS
• Temporary nature of projects
• Changing stakeholders
• Administrative responsibilities

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PROJECT MANAGER’S AUTHORITY

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HR PROCESSES
Planning Executing
9.1 9.2
Plan Human Resource Acquire Project Team
Management
9.3
Develop Project Team
9.4
Manage Project Team

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HR PROCESSES DEFINITIONS
• Plan Human Resource Management :
‒ Identifying and documenting project roles, responsibilities, and reporting
relationships, as well as creating the staffing management plan
• Acquire Project Team:
‒ Obtaining the human resources needed to complete the project
• Develop Project Team:
‒ Improving the competencies and interaction of team members to
enhance project performance.
• Manage Project Team:
‒ Tracking team member performance, providing feedback, resolving
issues, and coordinating changes to enhance project performance

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9.1 PLAN HUMAN RESOURCE MANAGEMENT
TOOLS & TECHNIQUES

• Organization charts and position
descriptions
• Networking
• Organizational theory
• Expert judgment
• Meetings
INPUTS
•
•
Activity resource requirements
OUTPUTS
• Enterprise environmental factors • Human resource management plan

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9.1 PLAN HUMAN RESOURCE MANAGEMENT
• Determine roles, responsibilities and reporting relationships. The
roles can be assigned to individuals or to groups.
• This process lays out how you will staff, manage, team-build, assess,
and improve the project team.
• Individuals and groups may be part of the organization performing
the project, or external to it.
• In most projects, majority of Develop Human Resource Plan is done in
the earliest project phases.
• Tightly linked with Plan Communications, since the project’s
organizational structure will have a major effect on the project’s
human resource requirements.

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9.1 OUTPUTS –
1. Human Resource management Plan
• Describes when & how human resources will be brought onto &
released off the project team and how they will be trained
• This is particularly important since reporting relationships that exist

on a project will often be different than those which exist in the
organization.
• Subset of overall project plan

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ROLES AND RESPONSIBILITIES 1/9
• Title: The label describing the position of a project for which a person
is accountable.
• Responsibility: The work that a project team member is expected to
perform in order to complete the project’s activities.
• Authority: The right to apply project resources, make decisions, and
sign approvals.
• Competency: Skill level needed to be able to perform this role.
• Accountability: Means being answerable for the successful
completion of specified objectives.
Accountability = Responsibility + Authority
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• Key Players In Project Environment
– The Project Sponsor
– The Project Manager
– The Resource Manager
– The Project Team Member

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• The Project Sponsor
‒ A single individual assigned by management to approved projects who

has sufficient organizational authority to determine the scope of a
project and approve the corresponding time and cost elements which
will deliver the approved scope.
‒ The role of the sponsor is to be focal point for project decisions that are
beyond the authority of the PM.

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• Role Of Project Sponsor

‒ Approve the business case for a project.
‒ Approve the business requirements for a project.
‒ Approve the negotiated scope, time, and costs and secure final approval
for the project.
‒ Approve project scope changes and consequent changes in time and/or
cost over the lifespan of the project.
‒ Review progress and provide strategic direction to the PM.
‒ Set priorities and resolve conflicts escalated by the PM, customer, or
functional managers.

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• The Project Manager
‒ Is responsible for the coordination of the project team and,

ultimately, for managing the project plan to enable the successful
completion of the project on time, within budget and at the
expected level of quality.

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• Role of Project Manager
‒ Identify the skills needed on the team, and negotiate with the resource
managers for assignment of appropriate people.
‒ Coordinate tasks on the work breakdown structure (WBS).
‒ Negotiate the time frames in which tasks are to be performed (with
technicians).
‒ Develop and consolidate project plans.
‒ Track milestones, deadlines, schedules, recourse utilization, budgets, risks,
changes of scope, quality of deliverables, and other project elements.
‒ Act as a liaison (relation)with top management and the project client.
‒ Issue status reports and conduct status review meetings.
‒ Coordinate with outside subcontractors, consultants, and vendors.
‒ Recommend changes to schedule, resource requirements, and budgets, when
required.
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• The Resource Manager
‒ Is responsible for having available a department of subject-matter

experts, engineers, software programmers, lawyers, or other
professionals and service providers. They form the resource pool from
which the manager of the project staffs his or her project.

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• The Project Team Member
‒ The project team member is a representative of a functional

department and a contributor to the project team.

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• Role of Project Team Member
‒ Provide input regarding project objectives and scope.
‒ Define/design/perform assigned tasks, or assign people to do so.
‒ Determine time estimates for tasks that are to be performed.
‒ Interact with other functional areas and other team members.

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1. Organization Charts and Position Descriptions 1/6
• Hierarchical-type charts
‒ Showing who reports to who
• Matrix-based charts
‒ Illustrates the connections between work that needs to be done and project
team members.
• Text-oriented formats
‒ Describes roles and responsibilities of each position on the project.

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• Hierarchical-type charts
‒ Work Breakdown Structure
‒ Organizational Breakdown
Structure
‒ Resource Breakdown Structure

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• Matrix-based charts
‒ RAM Responsibility Assignment
Matrix:
• Shows level of responsibility for
groups &/or individuals
• Graphically links the work to be done
to those doing it
‒ A structure that relates the project
organizational breakdown structure
to the work breakdown structure to
help ensure that each component of
the project’s scope of work is
assigned to a responsible person.
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• Matrix charts are used to illustrate which roles on the project will be
working with which work packages and what their responsibilities will
be.
• (RAM) Responsibility Assignment Matrix (RAM), displays work
packages in the rows and the roles in the columns. Each cell shows
how that role will work on that particular work package.
• RACI chart "ray-cee" derive their name from:
‒ 'R' for Responsible
‒ 'A' for Accountable
‒ 'C' for Consult
‒ 'I' for Inform
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• RACI Charts
– Only one person is assigned accountability for a work package, but more
than one person may be responsible for performing the work on a work
package.

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• Text-oriented formats
‒ Provide information such as
responsibilities, authority, competencies,
and qualifications.
‒ Follow the format of a position
description, detailing out what
responsibilities each position on the
project will involve and what
qualifications will be needed to fill these
positions.
‒ This tool is particularly useful in
recruiting.

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1. Networking
• Networking is the process of communicating with others within your

"network" of contacts. By tapping into his network of contacts, a
project manager can leverage (provide) his expertise on issues
related to human resources on the project.
• Informal interaction with others in an organization or industry to

understand political and interpersonal factors that will impact the
effectiveness of various staffing management options.

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2. Organizational Theory
• Provides information regarding the ways that people, teams, and

organizational units behave.
• Groups behave differently than individuals, and it is important to

understand how organizations and teams behave.

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9.2 ACQUIRE PROJECT TEAM
TOOLS & TECHNIQUES

• Pre-assignment
• Negotiation
• Acquisition
• Virtual teams
• Multi-criteria decision analysis
INPUTS OUTPUTS
• Human resource management plan • Project staff assignments
• Enterprise environmental factors • Resource calendars
• Organizational process assets • Project management plan (updates)

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9.2 OUTPUTS –
1. Project Staff Assignments
• Each defined role should have a resource assigned to it.
• These assignments may happen several times throughout the process

as resources are needed.
• For instance, it would typically be difficult to assign a particular

person to a role that will not be needed for a year.
• Staff assignments contain a list of all team members for the project.

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9.2 OUTPUTS –
• As resources are assigned to the project, the time they are assigned
to work on activities should be documented.
• Each resource's forecasted time on the project should be

documented.

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1. Pre-assignment
• It is normal on project for the roles to be defined first.
• Later, resources are assigned to perform those roles and fulfill the
responsibilities; however, occasionally specific resources will be pre-
assigned to fill a role.
• This may occur before the staffing management plan has been
developed and even before the project formally begins.

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2. Negotiation
• Negotiating is an important skill for project managers to cultivate

(encourage).
• Project managers often have to negotiate for resources, both inside

and outside the organization.

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3. Acquisition
• The tool of acquisition, as used here, can be a bit misleading, since

the overall process is "Acquire Project Team."
• The tool of acquisition refers to looking outside the organization for

resources when they cannot be provided by your organization.

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4. Virtual Teams
• Virtual teams have become much more popular over recent years.
• A virtual team is a group of individuals who may or may not see each
other in person.
• Instead, they typically use communication tools to meet online, share

information, and collaborate on deliverables.

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5. Multi-criteria decision analysis
By use of a multi-criteria decision analysis tool, criteria are developed and used to rate
or score potential team members.
The criteria are weighted according to the relative importance of the needs within the
team.
Some examples of selection criteria that can be used to score team members are
shown as follows:
• Availability.
• Cost.
• Experience.
• Ability.
• Knowledge.
• Skills.
• Attitude: Determine whether the member has the ability to work with others as a cohesive
team.
• International factors: Consider team member location, time zone and communication
capabilities.
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9.3 DEVELOP PROJECT TEAM
TOOLS & TECHNIQUES

Interpersonal skills
Training
Team-building activities
Ground rules Co-location
Recognition and rewards
Personnel assessment tools
INPUTS OUTPUTS
Human resource management plan Team performance assessment
Project staff assignments Enterprise Environmental Factors
Project management plan updates
Resource calendars

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9.3 DEVELOP PROJECT TEAM 1/2
• The process necessary for improving the competencies and

interaction of team members to enhance project performance
• Includes
‒ Enhancing the ability of stakeholders to contribute as individuals.
‒ Enhancing the trust and cohesiveness among team members in order to
raise productivity through better team work.
• Complicated in a matrix organizational structure, because individual

team members are accountable to both a functional manager and
project manager.

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9.3 DEVELOP PROJECT TEAM 2/2
• Objectives
‒ Improve skills of team members in order to increase their ability to

complete project activities
‒ Improve feelings of trust and cohesiveness among team members in

order to raise productivity through greater teamwork.

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9.3 OUTPUTS –
1. Team Performance Assessment
• The evaluation of a team’s effectiveness may include indicators such as:
‒ Improvements in skills that allow individuals to perform assignments more
effectively,
‒ Improvements in competencies that help the team perform better as a team,
‒ Reduced staff turnover rate, and
‒ Increased team cohesiveness where team members share information and
experiences openly and help each other to improve the overall project
performance.
• As a result of conducting an evaluation of the team’s overall performance,
the project management team can identify the specific training, coaching,
mentoring, assistance, or changes required to improve the team’s
performance.
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9.3 OUTPUTS –
2. Enterprise Environmental Factors updates
• They include, but are not limited to, personnel administration,

including updates for employee training records and skill
assessments.

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1. Interpersonal Skills
• These are sometimes known as “soft skills,” and are particularly
important to team development.
‒ Leading
‒ Communicating
‒ Negotiating
‒ Motivating
‒ Problem solving
‒ Influencing the organization

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2. Training
• Training can include a wide range of activities; any instruction or
acquisition of skills that increases the ability of the team or
individuals to perform their jobs.
• If a team member does not have the skills needed to carry out their
responsibilities, then training may be a good option.
• In most cases training should be paid for by the performing

organization or the functional manager and not by the customer or
the project.

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3. Team-Building Activities 1/3
• Any activity that enhances or develops the cohesiveness of the team.
Focusing on building bonds and relationships among team members.
• Although team-building may be treated as a special event, it can

occur while performing regular project responsibilities, and becomes
more important as the project progresses.
• Team-building cannot be forced. It should be modeled by the project

manager, who should work to include all members of the team and
produce a shared goal.

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• Why Team Building?
‒ People come together to solve mutual (shared) problems
‒ Conflict resolution
‒ Helps to motivate members
‒ Enhances productivity
‒ Creates a support base
‒ Interdependence
‒ Reduces communication problems
‒ Collective strength
‒ High quality decision-making
‒ Increased job satisfaction
‒ Synergy
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• Effective Team Communications
‒ Be an effective communicator.
‒ Be a communications expediter.
‒ Get rid of communication blockers.
‒ Use a tight matrix.
‒ Have a war room.
‒ Make meetings effective.

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TEAM DEVELOPMENT
One theory states that there are five stages of development that teams may go
through. Usually these stages occur in order. However, it’s not uncommon for a team
to get stuck in a particular stage or slip to an earlier stage. Also, projects with team
members who have worked together in the past could skip a stage.
• Forming. This phase is where the team meets and learns about the project and what their
formal roles and responsibilities are. Team members tend to be independent and not as
open in this phase.
• Storming. the team begins to address the project work, technical decisions, and the project
management approach. If team members are not collaborative and open to differing ideas
and perspectives the environment can become destructive.
• Norming. team members begin to work together and adjust work habits and behaviors that
support the team. The team begins to trust each other.
• Performing. Teams that reach the performing stage function as a well-organized unit. They
are interdependent and work through issues smoothly and effectively.
• Adjourning. In the adjourning phase, the team completes the work and moves on from the
project. (Reference “PMBOK ® Guide”)

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4. Ground Rules
• A list of acceptable and unacceptable behaviors adopted by a project
team to improve working relationships, effectiveness, and
communication.
• Formal or informal rules
• A link between performance & reward
• Authority appropriate for responsibility
• System specific to needs of project
• For instance, everyone on the project shares responsibility for
protecting the security of project data***

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5. Co-location
• Most active team members are placed in one physical location
• To enhance team members’ ability to perform as a team
• To encourage interaction
• Co-location can be temporary or for the entire project duration.
• When not viable, alternative is frequent face-to-face meetings

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6. Recognition and Rewards
• Formal management actions which promote or reinforce desired

behavior

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7. Personnel assessment tools
• Personnel assessment tools give the project manager and the project team
insight into areas of strength and weakness.
• These tools help project managers assess the team preferences, aspirations,
how they process and organize information, how they tend to make
decisions, and how they prefer to interact with people.
• Various tools are available such as attitudinal surveys, specific assessments,

structured interviews, ability tests, and focus groups.
• These tools can provide improved understanding, trust, commitment, and

communications among team members and facilitate more productive
teams throughout the project.

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9.4 MANAGE PROJECT TEAM
TOOLS & TECHNIQUES

Observation and conversation
Project performance appraisals
Conflict management
Issue log Interpersonal skills
INPUTS
Human resource management plan OUTPUTS
Project staff assignments Change requests
Team performance assessments Project management plan updates
Issue log Project documents updates
Work Performance reports Enterprise environmental factors updates
Organizational process assets Organizational process assets updates

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9.4 MANAGE PROJECT TEAM
• The process necessary for tracking team member performance,

providing feedback, resolving issues, and coordinating changes to
enhance project performance

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9.4 INPUTS –
1. Issue Log
• A point or matter in question or in dispute, or not settled and is under
discussion or over which there are opposing views or disagreements.
• Anything that threatens project progress.
• It could be specific, such as a technical concern, or general, such as a
personality conflict among team members.
• A place to record issues that require resolution.
• Along with each issue, the person or people responsible for resolving the issue
should be documented, as well as due dates for the desired resolution.
Issue Area of Impact Current Degree of Resolution Issue/ Strategy Next Review Date
Impact Strategy Owner
Full Specific individual, Current condition How the issue is Team member Date for
sentence function, customer, of the area of being handled or name reassessment of
narrative product or other impact, based on managed or will responsible for the issue, impact,
describing area of impact the issue be managed in the issue and and strategy
the problem the future strategy

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9.4 INPUTS –
2. Work Performance Reports
• Work Performance reports provide documentation about the current
project status compared to project forecasts.
• Performance areas that can help with project team management

include results from schedule control, cost control, quality control,
and scope verification.
• The information from performance reports and related forecasts

assists in determining future human resource requirements,
recognition and rewards, and updates to the staffing management
plan.

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1. Observation and Conversation
• Are used to stay in touch with the work and attitudes of project team
members.

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2. Project Performance Appraisals 1/2
• Where the project manager and other personnel managers meet

with the people who report to them on the project and provide
feedback on their performance and how they are conducting their
job.
• Using the tool of 360 degree, feedback is provided from all directions
and often from individuals both internal and external to the project,
and occasionally even vendors and external contractors

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2. Project Performance Appraisals 2/2
• Project Performance Appraisals
‒ Objectives for conducting project performance appraisals include:
• Re-clarification of roles and responsibilities
• Structured time to ensure team members receive positive feedback
• Discovery of unknown or unresolved issues
• Development of individual training plans
• Establishment of specific goals for future periods.

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3. Conflict Management 1/9
WHAT IS A CONFLICT?
Traditional View Contemporary View

• Caused By Trouble Makers • Inevitable (sure)Between
Humans
• Bad
• Often Beneficial
• Should Be Avoided
• Natural Result of Change
• Must Be Suppressed (forbid)
• Can and Should Be Managed

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CONFLICT MANAGEMENT 2/9
• Conflicts
‒ Conflicts are inevitable in project teams
‒ Conflicts between team members must be resolved to promote
team success
‒ Individuals are not usually aware of their behaviors in situations
when conflict arises
‒ It’s just as difficult for people to manage agreement as it is to
manage conflict

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SOURCES OF CONFLICT 3/9
• The greatest project conflict occurs between project managers and

functional managers.
• Most conflict on a project is the result of disagreements over

schedules, priorities, and resources. This finding runs contrary to a
commonly held belief that most conflicts are the result of personality
differences.

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• Causes of Project Conflicts / Intensity

Highest Intensity
‒ Conflict over schedule
‒ Conflict over project priorities
‒ Conflict over manpower resources
‒ Conflict over technical opinions
‒ Conflict over administrative procedures
‒ Conflict over cost objectives
Lowest Intensity
‒ Personality conflicts
Over 50 % of project conflicts result
from one of the first 3 causes

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• 5 Steps to Prevent Conflict
‒ Assume the other person has a different value relating style than yours
‒ Beware of the orientation of the other person
‒ Avoid overdoing personal strengths
‒ Think collaboratively
‒ Respect other’s value relating style

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METHODS OF CONFLICT MANAGEMENT 7/9

• Consider for a moment the problem of a door that is stuck shut. There are several
ways to approach this problem:
‒ You may want to throw your weight against the door, pounding it with your shoulder.
‒ You might elect to try to go in the room from another point of entry.
‒ You could try to take the hinges off the door to make it come apart.
‒ You might choose to ignore the problem of the stuck door, avoiding it altogether, or
hope someone else will take care of it.
‒ You could attempt to find out why the door was stuck in the first place and deal with
that problem.
• In the same way there are several ways to approach conflict resolution. Because
conflict is inevitable, you should be aware of the common ways of handling it

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METHODS OF CONFLICT RESOLUTION 8/9
• Withdrawal – Retreat or withdraw from actual or potential disagreement and
conflict
• Smoothing – De-emphasize differences (avoiding areas of differences) and
emphasize (focus on) commonalties over issues (emphasizing areas of
agreement).
• Compromising – Bargaining (trade) and searching for solutions which attempt
to bring some degree of satisfactions to the conflicting parties in a dispute.
Characterized by a “give and take” attitude.
• Forcing – Exerting one’s point of view at the expense of another party.
characterized by competitiveness (a win-lose solution to a conflict)
• Confrontation – Facing the conflict directly; address the disagreement and
utilize a problem solving approach whereby parties work through their
disagreements
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STYLES OF CONFLICT MANAGEMENT 9/9

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9.4 TOOLS & TECHNIQUES – 4.Interpersonal Skills 1/2
Project managers use a combination of technical, personal, and

conceptual skills to analyze situations and interact appropriately with
team members. Using appropriate interpersonal skills allows project
managers to capitalize on the strengths of all team members.
Examples of interpersonal skills that a project manager uses most often
include:
• Leadership: Successful projects require strong leadership skills.
‒ Leadership is important through all phases of the project life cycle.
‒ There are multiple leadership theories defining leadership styles that should be
used as needed for each situation or team.
‒ It is especially important to communicate the vision and inspire the project team
to achieve high performance.
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9.4 TOOLS & TECHNIQUES – 4. Interpersonal Skills 2/2

• Influencing: Because project managers often have little or no direct authority over
team members in a matrix environment, their ability to influence stakeholders on a
timely basis is critical to project success. Key influencing skills include:
‒ Ability to be persuasive and clearly articulate points and positions;
‒ High levels of active and effective listening skills;
‒ Awareness of, and consideration for, the various perspectives in any situation; and
‒ Gathering relevant and critical information to address important issues and reach
agreements while maintaining mutual trust.
• Effective decision making: This involves the ability to negotiate and influence the
organization and the project management team. Some guidelines for decision
making include:
‒ Focus on goals to be served ‒ Follow a decision-making process
‒ Study the environmental factors ‒ Analyze available information
‒ Stimulate team creativity ‒ Manage risk.
‒ Develop personal qualities of the team members
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MANAGEMENT/LEADERSHIP STYLES 1/4
• Autocratic (dictatorial)
‒ The PM solicits little or no information from team.
‒ Makes decision solely.
‒ Also referred to as Directing.
• Directing
‒ Managers tell people what tasks will be performed and when and how they will
be done
• Consultative Autocrat
‒ Intensive information input is solicited from the team.
‒ The PM still makes the decisions, solely.
‒ May also be referred to as Persuading.

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• Laissez faire
‒ Manager does not interfere with subordinates
‒ Subordinates are largely unsupervised, may lead to anarchy
(confusion )
• Democratic
‒ Manager allows subordinates to discuss issues and reach decisions
although he will guide and advise
• Discussing
‒ Two way communication and discussion between manager and
subordinates

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• Consensus Manager
‒ Problem presented to the team for open discussion and information
gathering.
‒ Team makes decision.
‒ Also referred to as Participating.
• Shareholder Manager
‒ Little or no information exchange takes place within the group.
‒ The team has the ultimate authority for the final decision.
‒ Also referred to as Delegating.
‒ This style is considered to be poor management.
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• Coaching
‒ Provides instruction to others
• Facilitating
‒ Coordinates inputs from several sources before taking a decision
‒ Supportive
‒ Task oriented
‒ Team-based
‒ Assertive

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FORMS OF POWER
• Project managers, especially those in matrix and functional
organizations, are often tasked with responsibility for the project
without much formal authority in the organization.
• Understanding the forms of power can help the project manager
maximize his ability to influence and manage the team:
‒ Reward Power
‒ Expert Power
‒ Legitimate
‒ Referent
‒ Punishment
• Best Forms of Power: PMI considers reward and expert the most
effective forms of power and punishment the least effective.

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CONSTRUCTIVE TEAM ROLES 1/5

• Initiators
‒ An initiator is someone who actively initiates ideas and activities on a
project.
‒ This role is considered positive because it is proactive and can be highly
productive.
• Information seekers
‒ Information seekers are people on the team who actively seek to gain
more knowledge and understanding related to the project.
‒ This is a positive role because fostering an understanding among the
team is important, and open communication should be valued.

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• Information givers
‒ Someone who openly shares information with the team.
‒ Although not all information may be shared (for instance Classified or

secret information must be kept confidential), the overarching principal is
to foster good communication and a good flow of information on the
project.
• Encouragers
‒ Encouragers maintain a positive and realistic attitude. On the project,

they focus on what can be accomplished, not on what is impossible.
‒ This is a positive role because it contributes to team morale.

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• Clarifiers
‒ Someone who works to make certain that everyone's understanding of
the project is the same.
‒ This is a positive role because it ensures that everyone has a common
understanding of the project goals and details.
• Harmonizers
‒ In music, harmony is not the same as the melody, but it complements
(complete) and enhances the melody. Similarly, a harmonizer on the
project will enhance information in such a way that understanding is
increased.
‒ This is a positive role because the overall understanding of the project
and the project context, or the details surrounding it, is enhanced.
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• Summarizers
‒ Summarizers take the details and restate them succinctly or relate them
back to the big picture.
‒ This is a positive role because details on the project may become

overwhelming, but the summarizer can keep things simple enough for
everyone to understand the higher purpose of the tasks.

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• Gate Keepers
‒ Someone who draws others in. Someone who says, "We haven't heard
from the other end of the table today"
‒ This is a very positive role because it encourages the entire team to
participate on the project.
‒ The other usage comes from someone who judges whether the project
should continue at different stages (known as the stage-gate approach).
‒ Makes decisions about whether the project is still achieving the business
need and if it is justified in continuing to a subsequent phase.
‒ Both are considered to be constructive roles on the project.

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DESTRUCTIVE TEAM ROLES 1/6
• Aggressors
‒ Someone who is openly hostile and opposed to the project.
‒ This is a negative role because it serves no productive purpose on the
project.
• Blockers
‒ Someone who blocks access to information and tries to interrupt the
flow of communication.
‒ This is a negative role because of the disruptive effect poor
communication can have on a project.

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• Withdrawers
‒ Does not participate in discussion, resolution, or even the fleshing out of

ideas. Instead, he is more likely to sit quietly or not participate at all.
‒ This is a negative role because it usually produces a team member that

does not buy in to the project and can have a negative effect on the
overall team morale.

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• Recognition (benefits) Seekers
– Looks at the project to see what is in it for him. He is more interested in

his own benefit rather than the project's success.
– This is a negative role because of the damaging effect on team morale

and because a recognition seeker may ultimately jeopardize the project if
doing so somehow personally benefits him.

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• Topic Jumper
‒ Disrupts (leave idle) effective communication by constantly changing the

subject and bringing up irrelevant (not convenient) facts.
‒ This is a negative role, because it prevents issues from being fully

discussed and brought to closure.

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• Dominator
‒ Someone who disrupts team participation and communication by

presenting opinions forcefully and without considering the merit of
others' contributions. He will likely talk more than the rest of the group
and will bully his way through the project.
‒ This is a negative role because valid opinions are often quashed, and the
project may take on a one-dimensional quality

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• Devil's Advocate
‒ Someone who will automatically take a contrary view to most statements

or suggestions that are made.
‒ This may be a positive or negative role on the project, but it is most often
associated with a negative role since it often disrupts and frustrates
communication, discourages people from participating, and stalls
progress.

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MCGREGOR'S THEORY X AND THEORY Y 1/2
(1960)
• McGregor's organizational theory states that there are two ways to
categorize and understand people in the workplace: Theory X and
Theory Y
• Theory X
‒ Managers who ascribe to Theory X presume that people are only interested
in their own selfish goals.
‒ They are unmotivated, they dislike work, and they must be forced to do
productive work.
‒ Theory X managers believe that constant supervision is necessary to achieve
desired results on a project.
‒ Example: An assembly line organization may treat everyone as an "X
Person“, monitoring and measuring every move
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MCGREGOR'S THEORY X AND THEORY Y 2/2
• Theory Y
‒ Those who practice Theory Y assume that people are naturally motivated
to do good work.
‒ "Y managers" believe that their team members need very little external
motivation and can be trusted to work toward the organization's or
project's goals.
‒ Example: Whereas an organization that encourages telecommuting might
be more prone to treat employees as "Y People."
• It is the manager, not the organization, that ascribes to Theory X or
Theory Y, and the style of management is not necessarily
determined by the type of work being performed.

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GOAL SETTING THEORY
• Working towards a goal is a major source of job motivation.
• Individuals have an internal desire to achieve goals.
• Clear, specific, concise, and challenging goals motivate team

members.
• Project participants must be allowed to participate in setting goals,

formulating plans and implementation strategies in order to gain
participants' acceptance and commitment to meeting project goals.

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MASLOW’S HIERARCHY OF NEEDS(1943)
• Basic theory of human

motivation, states that human
needs form a hierarchy, since
the needs at the bottom must
be satisfied before the upper
needs will be present.
• As an example, people cannot

reach their full potential if they
do not have sufficient food or
safety.
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HERZBERG'S MOTIVATIONAL
THEORY(BETWEEN 1959 AND 1968)
• Herzberg had two main areas for workplace success. The first was hygiene,
which focuses mainly on areas associated with the workplace factors, such as a
safe work environment, steady pay, and a stable job are examples of hygiene.
• Motivating agents were his second area of focus, which deals with the non-
financial characteristics of work. Examples can include the opportunity to
improve and do more, education, and responsibility.
• One basic assumption of Motivational Theory is that in most cases, money

does not produce motivation. Instead, endeavors like improving the
workplace, showing appreciation toward the worker, and additional
responsibility typically motivate workers more than simply throwing money at
them.

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HERZBERG'S THEORY OF MOTIVATORS AND

HYGIENE FACTORS
• Herzberg's theory is based on the assumption that workers want and
expect to find meaning through their work.

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HALO THEORY
• Halo Theory is the process (in project management) of assuming that

someone would make a good Project Manager because that person
is good in his or her technical field.
• The theory could also be used to imply that if someone was not good
in his or her technical field, that person wouldn't be good at project
management.
• This theory often becomes reality when someone is promoted to a

Project Manager from a technical or hands-on position and hasn't
had the opportunity to receive any project management training.

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10. Project Communications
Management

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PROJECT COMMUNICATIONS MANAGEMENT
• What do you mean we don’t • Just yesterday I left a voice

communicate? message in response to your e-
mail regarding the fax I sent
you....

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COMMUNICATIONS MANAGEMENT
• Why is Communications Management Important?
90% of project manager’s time is involved in communicating and
50% of that time is spent communicating with the project team.

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IMPORTANCE OF COMMUNICATIONS
MANAGEMENT
• Communicating is extremely important for the success of a project,
and the most important trait (effect) in a project manager.
• It is important to note that although the project manager should pay

a lot of stress to managing communication, he cannot control all the
communication – this is because there are just too many
communication channels.
• For N people,
the number of communication channels = (N2 – N)/2.

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COMMUNICATIONS MANAGEMENT
• Communications management requires accurate reports on:
– Project status
– Performance
– Change
– Earned value
• PM pays close attention to controlling the information to ensure that

the communication management plan is working as intended.

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PMI’S PHILOSOPHY OF COMMUNICATIONS

MANAGEMENT
• There is an old joke in project management circles about "mushroom
project management," in which you manage projects the same way
you grow mushrooms - by keeping everyone buried in manure, leaving
them in the dark, and checking back periodically to see what has
popped up.
• PMI's philosophy focuses on keeping the stakeholders properly
informed throughout the project.
• Communication is always proactive and thorough.
• It is essential that the project manager distribute accurate project
information in a timely manner and to the right audience.

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PROJECT MANAGER'S ROLE IN
COMMUNICATIONS
• The project manager's most important skill set is that of
communication.
• One individual cannot control everything communicated on a project,

nor should he try.
• Project managers who ask that every single e-mail or conversation

be filtered through them first are generally demonstrating that they
are not in control on the project.

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EFFECTIVE COMMUNICATION 1/2

• Provide complete, factual information with supportive data and
illustration
• Make an effort to insure the listener understanding
• Speak at a reasonable pace
• Use common language, simple words and phrases
• Use inflection, expressions and gestures
• Be specific and to the point
• Do not talk down to anyone
• Avoid an approach that may insult the listener

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EFFECTIVE COMMUNICATION 2/2
• Work at understanding the message

• Look to the speaker in the eye
• Repeat the key phrase at the end of the conversation
• Do not interrupt
• Observe expression, movements, and gestures
• Resist distractions
• Anticipate what is being communicated
• Be open minded

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COMMUNICATION PROCESSES
Monitoring and
Planning Executing
controlling
10.1
10.2 10.3
Plan
Manage Control
Communications
Communications Communications
Management

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10.1 PLAN COMMUNICATIONS
TOOLS & TECHNIQUES
Communications requirements
analysis
Communications technology
Communications models
Communications methods
Meetings
INPUTS
OUTPUTS
Communication management plan
Stakeholder register

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10.1 PLAN COMMUNICATIONS 1/3

• Planning the project communications is important to the ultimate success of any
project.
• Inadequate communications planning may lead to problems such as delay in
message delivery, communication of information to the wrong audience, or
insufficient communication to the stakeholders and misunderstanding or
misinterpretation of the message communicated.
• Communication planning is performed very early. This allows appropriate
resources, such as time and budget, to be allocated to communication activities.
• Effective communication means that the information is provided in the right
format, at the right time, to the right audience, and with the right impact.
• Efficient communication means providing only the information that is needed.
• While all projects share the need to communicate project information, the
information needs and methods of distribution may vary widely.

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Important considerations that may need to be taken into account
• Who needs what information, and who is authorized to access that information;
• When they will need the information;
• Where the information should be stored;
• What format the information should be stored in;
• How the information can be retrieved; and
• Whether time zone, language barriers, and cross-cultural considerations need to
be taken into account.
The results of the Plan Communications Management process should

be reviewed regularly throughout the project and revised as needed to
ensure continued applicability.

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• Determining the information and communications needs of the

project stakeholders: who needs what information, when will they
need it, and how will it be given to them.
• Identifying informational needs of all stakeholders and determining a

suitable means of meeting those needs.
• Mostly done as part of the earliest project phases.
• Linked with organizational planning, because project’s organizational

structure will have a major impact on the project’s communication
requirements.

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10.1 OUTPUTS –
1. Communication Management Plan
• Document that provides:
– Collection and filing structure that details what methods will be used to gather and store
various types of information.
– Distribution structure that details to whom information will flow, and what methods will
be used to distribute various types of information.
– Description of the information to be distributed, including format, content, level of detail,
and conventions /definitions to be used.
– Production schedules showing when each production will be produced.
– Methods of accessing information between scheduled communications.
– Method of updating and refining the communications management plan as project
progresses and develops.
• Communication management plan is formal or informal, highly detailed or broadly
framed – based on needs of the project.
• Subsidiary of project plan.

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1. Communications Requirements Analysis 1/4
• The goal of this technique is to identify which stakeholders should
receive project communications, what communications they should
receive, how they should receive these communications, and how
often they should receive them.
• Organizes responsibilities between project and stakeholder(s).
• People/departments involved in the project.

• Logistics of people and locations.
• External information needs, for example, communicating with the

media.

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• Communication Channels
– Adding a single person on a project can have a significant impact on the

number of paths or channels of communication that exist between
people.
– Channels = n(n-1)/2
– (Where n = the number of people on the project)

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• Communication Channels
– Four people produce six communication channels, as is confirmed by the

formulas:
• 4*(4-1)/2 = 6
– If there were five people, the formula would be applied as:
• 5*(5-1)/2 = 10

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• Official Channels of Communication
– If there are a large number of channels of communication on the project,

the project manager should work to define which communication
channels are official.
– For example, it may be necessary to determine who can officially

communicate with the customer or with key subcontractors.

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2. Communications Technology
• Technology is a tool, and the right tool should be selected for a given
communications need. Whereas formal face-to-face meetings may be
needed for some projects, a project web site may be more appropriate for
others.
• The technology should be tailored to the need.
• Factors that can affect the choice of communication technology include:
– Urgency of the need for information
– Availability of technology
– Ease of Use
– Project environment
– Sensitivity and confidentiality of the information.

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3. Communications Models

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COMMUNICATIONS MODEL
• The communications model is a formal way of understanding how

messages are sent and received.
• This model defines the responsibilities between the sender and the
receiver.

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• Key Definitions 1/2

– Communicator (sender): source of message
– Encode: communicator translation of message prior to sending
– Message: the thoughts, feelings and ideas that communicator wants to
convey
– Medium: the method, channel used to convey the message

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• Key Definitions 2/2
– Receiver (target audience): recipient of a given message
– Decode: the receiver’s translation of a given message prior to

internalizing its meaning
– Feedback: the reverse role of receiver and communicator
– Noise: anything that interferes with transmission of the message

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• 'The sender's responsibilities are to:
– Encode the message clearly
– Select a communication method
– Send the message
– Confirm that the message was understood by the receiver
• The receiver's responsibilities are to:

– Decode the message
– Confirm that the message was understood
– Messages can be conveyed in verbal and nonverbal ways.
– Below are some terms related to different ways of communicating.

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4. Communications Methods
• Interactive communication. Between two or more parties performing a
multidirectional exchange of information. It is the most efficient way to ensure
a common understanding by all participants on specified topics, and includes
meetings, phone calls, video conferencing, etc.
• Push communication. Sent to specific recipients who need to know the
information. This ensures that the information is distributed but does not
certify that it actually reached or was understood by the intended audience.
Push communication includes letters, memos, reports, emails, faxes, voice
mails, press releases etc.
• Pull communication. Used for very large volumes of information, or for very
large audiences, that requires the recipients to access the communication
content at their own discretion. These methods include internet sites, e-
learning, and knowledge repositories, etc.
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COMMUNICATIONS SKILLS
• General communications skills are not the same as project

communications management.
• General communications skills are concerned with getting your

message across to your audience as intended

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• Communicating should be aware of:
– Sender – receiver models
– Choice of media – formal vs. informal
– Writing style – active, passive
– Presentation techniques – body language, aids
– Meeting management techniques

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• Dimensions
– Written, oral, listening, speaking
– Internal – within the project
– External – customer, media, public
– Formal – reports, briefings
– Informal – memos, ad hoc conversations (assigned)
– Vertical – up/down the organization
– Horizontal – with peers

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• Active listening
– Active listening requires that the receiver takes active steps to ensure
that the sender was understood. It is similar to effective listening.
• Effective listening
– Effective listening requires the listener's full thought and attention.
– To be effective as a listener means to monitor non-verbal and physical

communication and to provide feedback indicating whether the
message has been clearly understood.

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• Non-Verbal
– Non-verbal communication takes place through body language such as
facial expressions, posture, hand motions, etc.
– Most communication between the sender and receiver is non-verbal.

(About 55% of total communication )
• Paralingual
– Paralingual communication is vocal but not verbal - for example, tone of
voice, volume, or pitch.
– A high-pitched squeal does not employ words, but it certainly

communicates!

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• Feedback
– Feedback refers to the verbal and nonverbal cues a speaker must

monitor to see whether the listener fully comprehends (understand)the
message.
– Nodding (cues) and smiling might be considered positive feedback and

indicate that the message is understood and received, whereas nodding
and a blank stare might indicate that the message needs to be re-coded
for better communication.
– Asking questions or repeating the speaker's words are also ways to give
feedback.

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• Communication Blockers
– A communication blocker is anything that interferes with the sender
encoding the message or the receiver decoding it. It can include
anything that disrupts the communication channels, such as:
• Noise
• Distance
• Improper encoding – misreading the message
• Negative Feedback - “That was a bad idea”
• Hostility
• Language
• Culture

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FORMS OF COMMUNICATION
Form of Characteristic Examples
Communication
Written Formal  Precise • Project Charter, Scope Statement, Project Plan, WBS, project
 Transmitted through the medium status
of correspondence • Complex issues
• Contract related communication
Written Informal • Email, Notes, Memos, Letters
• Regular communication with team members
Oral Formal  High Degree of Flexibility • Presentations, speeches,

 Use the medium of personal • Negotiations, conflict resolution
contact, group meetings or
Oral Informal telephone • Conversation with team members
• Project Meetings
• Break-room or war-room conversations
Non-verbal  About 55% of total • Facial expressions, hand movements, tone of voice while
communication communication speaking etc.

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TYPES OF PROJECT COMMUNICATION
• Interpersonal communication.
• Communication with public and community.
• Formal communication.
• Informal communication.

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INTERPERSONAL COMMUNICATION
• To ensure messages are received and understood, two-way

communication is necessary.
• Interpersonal communication is the process of sharing information
with others.
• Three basic elements of interpersonal communication:
– The sender (or encoder) of the message.
– The signal or the message.
– The receiver (or decoder) of the message.

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PROCESS OF INTERPERSONAL
COMMUNICATION
• Sender determines what information to share and with whom and
encodes the message.
• Sender transmits the message as a signal to the receiver.
• The receiver receives the message.
• The receiver decodes the message to determine its meaning and

then responds accordingly.
• Communication is successful if the decoded message is the same as

the sender intended.

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RESPONSES TO FEEDBACK
• Silence. Listening quietly, observing, and trying to understand the full
message in the feedback.
• Acknowledgment. Giving verbal indicators of understanding and
validation for the feedback.
• Inviting non-verbal (as apposed to the “are you crazy?” facial
expressions). Using expressions that invite additional information and
feedback.
• Paraphrasing.(Rewording) Restating the message as you understand
it to check the accuracy of communication.
• Active listing. Expressing understanding of the importance of the
message, as well as your feelings about it.
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MACRO-BARRIERS TO SUCCESSFUL
COMMUNICATION 1/2
• Information overload:
– Keep messages simple and direct.
– Provide sufficient information but not too much.
• Lack of subject knowledge:
– Must have sufficient knowledge to send message.
– Must know level of understanding of receiver.
• Cultural differences:
– Meanings and interpretations(explanations) may vary among different
cultures.
– Encourage team members to learn each other's cultures.

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MACRO-BARRIERS TO SUCCESSFUL
COMMUNICATION 2/2
• Organizational climate:
– Minimize the differences associated with status and ego within the
organization.
– Encourage open and trusting atmosphere.
• Number of links:
– Reduce the number of transmission links.
– The more links, the more opportunity for distortion.
– Be aware of entrapy. 23-27% of message is lost in upward
communication.

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10.2 MANAGE COMMUNICATIONS
TOOLS & TECHNIQUES

Communication technology
Communication models
Communication methods
Information management systems
Performance reporting
INPUTS OUTPUTS
Communications management plan Project communications
Work Performance reports Project management plan updates
Project documents updates
Organizational process assets updates

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10.2 MANAGE COMMUNICATIONS 1/2

• Manage Communications is the process of creating, collecting,
distributing, storing, retrieving, and the ultimate disposition of
project information in accordance to the communications
management plan.
• The key benefit of this process is that it enables an efficient and
effective communications flow between project stakeholders.
• This process goes beyond the distribution of relevant information and
seeks to ensure that the information being communicated to project
stakeholders has been appropriately generated, as well as received
and understood.
• It also provides opportunities for stakeholders to make requests for
further information, clarification, and discussion.
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10.2 MANAGE COMMUNICATIONS 2/2
Techniques and considerations for effective communications management
include, but are not limited to, the following:
• Sender-receiver models: Incorporating feedback loops to provide opportunities for
interaction/ participation and remove barriers to communication.
• Choice of media: when to communicate in writing versus orally, when to prepare
an informal memo versus a formal report, and when to communicate face to face
versus by e-mail.
• Writing style: Appropriate use of active versus passive voice, sentence structure,
and word choice.
• Meeting management techniques: Preparing an agenda and dealing with conflicts.
• Presentation techniques: Awareness of the impact of body language and design of
visual aids.
• Facilitation techniques: Building consensus and overcoming obstacles.
• Listening techniques: Listening actively (acknowledging, clarifying, and confirming
understanding) and removal of barriers that adversely affect comprehension.
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10.2 OUTPUTS–
1. Project Communications
The Manage Communications process involves the activities that are
required for information to be created, distributed, received,
acknowledged, and understood. Project communications may include
but are not limited to:
• performance reports, deliverables status, schedule progress, and cost
incurred.
• Project communications can vary significantly and are influenced by factors
such as,
‒ the urgency and impact of the message,
‒ its method of delivery, and
‒ level of confidentiality.

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1. Information Management Systems
• Project information can be distributed using a variety of tools,
including:
‒ Hard-copy document management: letters, memos, reports, and press
releases.
‒ Electronic communications management: e-mail, fax, voice mail,
telephone, video and web conferencing, websites, and web publishing.
‒ Electronic project management tools: web interfaces to scheduling and
project management software, meeting and virtual office support
software, portals, and collaborative work management tools.

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2. Performance Reporting 1/2
• Performance reports organize and summarize the information
gathered, and present the results of any analysis as compared to the
performance measurement baseline.
• Reports should provide the status and progress information, at the

level of detail required by various stakeholders, as documented in
the communications management plan.
• Common formats for performance reports include bar charts, S-

curves, histograms, and tables.

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2. Performance Reporting 2/2
• Performance reports are issued periodically and their format may range from a
simple status report to more elaborate(detailed) reports.
• A simple status report might show only performance information such as percent
complete, or status dashboards for each area (e.g., scope, schedule, cost, and
quality). More elaborate reports may include:
‒ Analysis of past performance,
‒ Current status of risks and issues,
‒ Work completed during the reporting period,
‒ Work to be completed during the next reporting period,
‒ Summary of changes approved in the period,
‒ Results of variance analysis,
‒ Forecasted project completion (including time and cost), and
‒ Other relevant information to be reviewed and discussed.

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10.3 CONTROL COMMUNICATIONS
TOOLS & TECHNIQUES

Expert judgment
Meetings
INPUTS OUTPUTS
Project management plan Work performance information
Project communications Change requests
Issue log Project management plan updates
Work performance data Project documents updates
Organizational process assets Organizational process assets updates

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10.3 CONTROL COMMUNICATIONS
• Control Communications is the process of monitoring and controlling
communications throughout the entire project life cycle to ensure the
information needs of the project stakeholders are met.
• It ensures an optimal information flow among all communication participants, at
any moment in time.
• The process can trigger an iteration of the Plan Communications Management
and/or Manage Communications processes.
• This iteration illustrates the continuous nature of the Project Communications
Management processes.
• Specific communication elements, such as issues or key performance indicators
(e.g., actual vs. planned schedule, cost, and quality), may trigger an immediate
revision, while others may not.
• The impact should be carefully evaluated and controlled to ensure that the right
message is delivered to the right audience at the right time.
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10.3 OUTPUTS–
• Work performance information organizes and summarizes the
performance data gathered. ( Described in 4.4. “PMBOK ® Guide”
Monitor and Control Project Work )
• This performance data typically provides status and progress

information on the project at the level of detail required by the
various stakeholders.
• This information is then communicated to the appropriate

stakeholders.

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• An information management system provides a set of standard tools
for the project manager to capture, store, and distribute information
to stakeholders about the project’s costs, schedule progress, and
performance.
• Some software packages allow the project manager to consolidate
reports from several systems and facilitate report distribution to the
project stakeholders.
• Examples of distribution formats may include table reporting,
spreadsheet analysis, and presentations.
• Graphic capabilities can be used to create visual representations of
project performance information.
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2. Meetings
• The Control Communications process requires discussion and
dialogue with the project team to determine the most appropriate
way to update and communicate project performance, and to
respond to requests from stakeholders for information.
• These discussions and dialogues are commonly facilitated through

meetings, which may be conducted face to face or online and in
different locations, such as the project site or the client’s site.
• Project meetings also include discussions and dialog with suppliers,

vendors, and other project stakeholders.

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11. Project Risk Management

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RISK AND UNCERTAINTY
• Types
‒ Known known Total certainty
RISK ! ‒ Known unknown Degree of uncertainty
‒ Unknown unknown Total uncertainty

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RISK COMPONENTS
• Risk – Events or consequences that have the probability of occurring

during a project and that are measured by their impacts on the
project
• Components
‒ Risk event
‒ Risk event probability
‒ Risk outcome or consequence (Amount at stake)
‒ Risk event status (Probability x amount at stake)

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RISK & PROJECT LIFE CYCLE
Risk varies throughout the life cycle
• Risk is high in the concept and development phases, decreasing as

work is accomplished

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PROJECT RISK MANAGEMENT
• Look for risks caused by things like poor project management,
dependency on uncontrollable external resources, concurrent
multiple projects, etc.
• Accept risks if they're in balance with a possible reward
• Communicate about risk information openly & honestly
• Provide risk responses in line with the organization's perceived

balance between risk-taking &risk-avoidance
• To be successful, an organization should be committed to addressing

the management of risk proactively & consistently throughout the
project
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RISK PROCESSES
RISK PROCESS DEFINITIONS
11.1 Plan Risk Management
• Process of deciding how to approach and conduct (plan & execute) the risk
management activities for a project.
11.2 Identify Risks
• Determine which threats/opportunities might affect the project &
document their details
11.3 Perform Qualitative Risk Analysis
• Assess each risk's chance of occurring & probable impact to get a
prioritized list of risks requiring more analysis or action

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RISK PROCESSES
11.4 Perform Quantitative Risk Analysis
• Numerically analyze identified risks' effect on overall project objectives
11.5 Plan Risk Responses
• Analyze risks and make a plan of actions & options to enhance

opportunities & reduce threats to project objectives
11.6 Control Risks
• Track identified & residual risks, identify new risks, execute risk response
plans & evaluate their effectiveness

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RISK PROCESSES
Processes by process group
Planning Monitoring and controlling
11.1 11.6
Plan Risk Management Control Risks
11.2
Identify Risks
11.3
Perform Qualitative Risk Analysis
11.4
Perform Quantitative Risk Analysis
11.5
Plan Risk Responses
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PLAN RISK MANAGEMENT
HOW DO YOU PLAN FOR RISK?
• Establish an agreed-upon approach for conducting risk management
activities & evaluating risk
• Ensure that the level, type, and visibility of risk management are
commensurate with both risk and importance of the project to the
organization
• Provide sufficient resources and time for risk management activities
• Planning Risk management should be completed early during project
planning, since it is crucial to successfully performing the other
processes

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11.1 PLAN RISK MANAGEMENT
TOOLS & TECHNIQUES

Expert judgment
Meetings
INPUTS
Project charter
OUTPUTS
Risk management plan

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11.1 OUTPUTS –
1. Risk Management Plan 1/2
• The risk management plan describes how risk management will be
structured and performed on the project. It becomes a subset of the
project management plan.
• The risk management plan includes the following:
‒ Methodology. Defines the approaches, tools, and data sources that may be
used to perform risk management on the project.
‒ Roles and responsibilities. Defines the lead, support, and risk management
team members for each type of activity in the risk management plan, and
clarifies their responsibilities.
‒ Budgeting. Assigns resources, estimates funds needed for risk management for
inclusion in the cost performance baseline, and establishes protocols for
application of contingency reserve.
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11.1 OUTPUTS –
1. Risk Management Plan 2/2
• Timing. Defines when and how often the risk management process will be
performed throughout the project life cycle, establishes protocols for application of
schedule contingency reserves, and establishes risk management activities to be
included in the project schedule (Section 6.5).
• Risk categories. Provides a structure that ensures a comprehensive process of
systematically identifying risks to a consistent level of detail and contributes to the
effectiveness and quality of the Identify Risks process. An organization can use a
previously prepared categorization framework which might take the form of a
simple list of categories or might be structured into a Risk Breakdown Structure
(RBS).
• The RBS is a hierarchically organized depiction of the identified project risks
arranged by risk category and subcategory that identifies the various areas and
causes of potential risks.

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Risk Breakdown Structure (RBS).

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11.1 INPUTS –
1. Organizational process assets
• The organizational process assets that can influence the Plan Risk
‒ Risk categories,
‒ Common definitions of concepts and terms,
‒ Risk statement formats,
‒ Standard templates,
‒ Roles and responsibilities,
‒ Authority levels for decision-making,
‒ Lessons learned, and
‒ Stakeholder registers, which are also critical assets to be reviewed as
components of establishing effective risk management plans.

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11.1 TOOLS & TECHNIQUES – 1. Analytical Techniques
• Analytical techniques are used to understand and define the overall risk
management context of the project.
• Risk management context is a combination of stakeholder risk attitudes and
the strategic risk exposure of a given project based on the overall project
context.
• For example, a stakeholder risk profile analysis may be performed to grade
and qualify the project stakeholder risk appetite and tolerance.
• Other techniques, such as the use of strategic risk scoring sheets, are used
to provide a high-level assessment of the risk exposure of the project based
on the overall project context.
• Depending on these assessments, the project team can allocate
appropriate resources and focus on the risk management activities.
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2. Meetings 1/2
• Project teams hold planning meetings to develop the risk
management plan. Attendees at these meetings may include the
project manager, selected project team members and stakeholders,
anyone in the organization with responsibility to manage the risk
planning and execution activities, and others, as needed.
• High-level plans for conducting the risk management activities are

defined in these meetings.

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2. Meetings 2/2
• Risk management cost elements and schedule activities will be
developed for inclusion in the project budget and schedule,
respectively. Risk contingency reserve application approaches may be
established or reviewed. Risk management responsibilities will be
assigned.
• General organizational templates for risk categories and definitions of
terms such as levels of risk, probability by type of risk, impact by type
of objectives, and the probability and impact matrix will be tailored
to the specific project. If templates for other steps in the process do
not exist they may be generated in these meetings.
• The outputs of these activities will be summarized in the risk
management plan.
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IDENTIFY RISKS
WHAT HAPPENS IN IDENTIFY RISKS?
• Identify Risks determines which risks might affect the project &
documents their characteristics
• Participants in identify risk activities can include the following, where
appropriate: project manager, project team members, risk management
team (if assigned), risk experts from outside, customers, end-users,
stakeholders, etc.
• All project personnel should be encouraged to identify risks.
• Identify risks - is an iterative process because:
‒ Risk events may happen, which may cause new risks
‒ Status of identified risks may change
‒ New risks may occur

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11.2 IDENTIFY RISKS
TOOLS & TECHNIQUES
• Documentation reviews
• Information gathering
techniques
INPUTS • Checklist analysis
• Risk management plan • Assumptions analysis
• Cost management plan • Diagramming techniques
• Schedule management plan • SWOT analysis
• Quality management plan • Expert judgement
• Human resource management plan
• Scope baseline
• Activity cost estimates
• Activity duration estimates OUTPUTS
• Stakeholder register • Risk register
• Project documents
• Procurement documents

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RISK AND PROJECT LIFE CYCLE
• When is the greatest degree of uncertainty encountered in a project?
‒ The Concept Phase, as decisions made by Project Sponsors have greatest

influence on ultimate scope, quality, time and cost.
• When is the most effective time for achieving the greatest impact of
project results?
‒ Early in the Planning / Development Phase

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THE THREE ELEMENTS OF RISK
• The perception that something could happen
• The likelihood or probability of something happening
• The consequences if it happens

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CHALLENGES IN IDENTIFYING RISKS

• Are we able to identify all risks?
‒ Unknown or Unforeseeable risks
‒ Future risks
‒ Emergent risks
‒ Invisible stakeholders
‒ Perceptually concealed (someone hide something)
• When a risk is not a risk?
‒ Risks versus issues. Issues due to difficulties, personality, political
or organizational matters.

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DISTINGUISHING BETWEEN
CAUSE AND EFFECT
Definite fact or sets of circumstances
CAUSE
about the project or environment
RISK Uncertainty that could affect project

objectives if it occurs
Contingent effect, either negative or

EFFECT
positive on project objective(s)

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DESCRIBING A RISK
• As a result of (definite cause), (uncertain event) may occur, which

would lead to (effect on objective or objectives).
‒ Causes will use present tense phrases such as “is, do, has, has not, are,”
‒ Risks are described with words like “may, might, could, possibly”
‒ Effect uses conditional future tense “will, would, could, ..”

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11.2 OUTPUTS –
1. Risk Register
• The preparation of the risk register begins in the Identify Risks process with the
following information, and then becomes available to other project management and
Project Risk Management processes.
• List of identified risks. The identified risks are described in as much detail as is
reasonable. A simple structure for risks in the list may be applied, such as EVENT may
occur, causing IMPACT, or If CAUSE, EVENT may occur, leading to EFFECT. In addition
to the list of identified risks, the root causes of those risks may become more
evident. These are the fundamental conditions or events that may give rise to one or
more identified risks. They should be recorded and used to support future risk
identification for this and other projects.
• List of potential responses. Potential responses to a risk may sometimes be
identified during the Identify Risks process. These responses, if identified in this
process, may be useful as inputs to the Plan Risk Responses process (Section
11.5).Now not later (response)
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1. Documentation Reviews
• A structured review may be performed of project

documentation, including plans, assumptions, previous
project files, contracts and other information.
• The quality of the plans, as well as consistency between
those plans and the project requirements and
assumptions, can be indicators of risk in the project.

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2. Checklist analysis
• Risk identification checklists can be developed based on historical
information and knowledge that has been accumulated from
previous similar projects and from other sources of information.
• The lowest level of the RBS can also be used as a risk checklist. While
a checklist can be quick and simple, it is impossible to build an
exhaustive one.
• The team should make sure to explore items that do not appear on
the checklist.
• The checklist should be reviewed during project closure to
incorporate new lessons learned and improve it for use on future
projects.
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3. Assumption Analysis
• Every project and every identified project risk is conceived and

developed based on a set of hypotheses, scenarios, or assumptions.
• Assumptions analysis explores the validity of assumptions as they

apply to the project.
• It identifies risks to the project from inaccuracy, instability,

inconsistency, or incompleteness of assumptions.

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4. Diagramming Techniques
• Cause-and-effect diagrams (Section 8.3). These are also known as
Ishikawa or fishbone diagrams, and are useful for identifying causes
of risks.
• System or process flow charts. These show how various elements of

a system interrelate, and the mechanism of causation (Section 8.3).
• Influence diagrams. These are graphical representations of

situations showing causal influences, time ordering of events, and
other relationships among variables and outcomes.

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5. SWOT
• SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis (increase
the breadth of considered risks)
• SWOT analysis can give another perspective on risk that will often help
identify most significant project risks factors.
Strengths Weaknesses
Internal
Build On Eliminate or Reduce
Opportunities Threats
External
Exploit Mitigate

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QUALITATIVE RISK ANALYSIS
HOW DO YOU PERFORM QUALITATIVE RISK ANALYSIS?
• Prioritize identified risks for further action, such as Quantitative Risk
Analysis or Risk Response Planning.
• Organizations can improve the project’s performance effectively by
focusing on high-priority risks .
• Assess the priority of identified risks using their probability of
occurring, the corresponding impact on project objectives if the risks
do occur.
• Also use factors such as time frame & risk tolerance of the project
constraints of cost, schedule, scope & quality

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11.3 PERFORM QUALITATIVE RISK ANALYSIS
TOOLS & TECHNIQUES

• Risk probability and impact assessment
• Probability and impact matrix
• Risk data quality assessment
• Risk categorization
• Risk urgency assessment
INPUTS
• Risk management plan OUTPUTS
• Scope baseline • Project documents updates
• Risk register
• Enterprise environmental Factors

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1. Risk Probability and Impact Assessment
• Risk probability assessment investigates the likelihood that each

specific risk will occur.
• Risk impact assessment investigates the potential effect on a

project objective such as schedule, cost, quality, or performance,
including both negative effects for threats and positive effects for
opportunities.

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2. Probability and Impact Matrix
Propability - Impact (P-I) Matrix
5 -5 -10 -15 -20 -25 25 20 15 10 5 5
LIKELIHOOD
LIKELIHOOD
4 -4 -8 -12 -16 -20 20 16 12 8 4 4
3 -3 -6 -9 -12 -15 15 12 9 6 3 3
2 -2 -4 -6 -8 -10 10 8 6 4 2 2
1 -1 -2 -3 -4 -5 5 4 3 2 1 1
-1 -2 -3 -4 -5 5 4 3 2 1
THREATS OPPORTUNITIES
(NEGATIVE IMPACT) (POSITIVE IMPACT)
RISK IMPACTS (CONSEQUENCES)

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CONSEQUENCES OF RISK ANALYSIS
• Pluses
‒ Greater information is made available during the course of planning
and decision-making
‒ Project objectives are verified
‒ Better communications
‒ Better probability of optimal project realization
‒ Increased chance of project success
• Minuses
‒ Belief that all risks have been accounted for
‒ Project could be shut down!

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RISK PROBABILITY AND IMPACT
• Risk probability is the likelihood that a risk will occur
• Risk impact (or consequence) is the effect on project objectives if the

risk event occurs

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IMPACT OF A RISK
• The impact of a risk is a numerical rating of the effect that the risk
would have on the project, should it occur. (Impact is sometimes
known as consequence).
• Typically a five-level scale is used to measure impact:
 1 very low
 2 low
 3 medium
 4 high
 5 very high

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RISK IMPACT SCALES FOR FOUR PROJECT

OBJECTIVES

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LIKELIHOOD
• The likelihood of a risk is a numerical rating of the extent to which the

effects of the risk are likely to occur.
• Typically a five-level scale is used to measure likelihood:
 1 very unlikely
 2 low likelihood
 3 likely
 4 highly likely
 5 near certain

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COMPONENTS OF LIKELIHOOD
• Likelihood is divided into two components:
‒ Probability of Occurrence: the probability that the risk events will occur
if we take no action
‒ Intervention Difficulty: the extent to which we are able to influence

events
• Likelihood is the lower of the two ratings for probability of

occurrence and intervention difficulty.

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PROBABILITY SCALES
• The probability of an event is defined, for risk management purposes,
as the probability of that event occurring in the absence of any
actions to forestall it.
• For consistency with other risk assessment terms, a 1-5 scale for
probability is used.
1 (Very Low) 0-20%
2 (Low) 20-40%
3 (Possible) 40-60%
4 (High) 60-80%
5 (Almost Certain) 80-100%

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PROBABILITY / IMPACT RISK RATING MATRIX
• Matrix that assigns risk ratings (or score) to risks or conditions based
on combining probability and impact scales
• P-I matrix can be based on ordinal or cardinal scales
• Risk score helps put the risk into a category that will guide risk
response actions

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P-I MATRIX APPROACH
• Organization determines which combinations of risk probability and

impact result in risks being classified as high, moderate, or low.
• Each risk gets a risk score.
• Risks with high probability and high impact will require further
analysis including quantification and aggressive risk management.
• Risk scores are then added up to calculate risk exposure for the
project.

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PROS AND CONS

(advantages and disadvantages(
• Helps identify risks that should be managed aggressively
• Limited use for assessing the overall level of risk for the project
• Limited use in determining budgets and timescales

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RISK SCORE
Risk Score = Probability X Impact
The higher the Risk score the more serious the risk

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PROBABILITY - IMPACT MATRIX
Propability - Impact (P-I) Matrix

5 -5 -10 -15 -20 -25 25 20 15 10 5 5
LIKELIHOOD
LIKELIHOOD
4 -4 -8 -12 -16 -20 20 16 12 8 4 4
3 -3 -6 -9 -12 -15 15 12 9 6 3 3
2 -2 -4 -6 -8 -10 10 8 6 4 2 2
1 -1 -2 -3 -4 -5 5 4 3 2 1 1
-1 -2 -3 -4 -5 5 4 3 2 1
THREATS OPPORTUNITIES
(NEGATIVE IMPACT) (POSITIVE IMPACT)
RISK IMPACTS (CONSEQUENCES)

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3. Risk Data Quality Assessment
• A qualitative risk analysis requires accurate and unbiased data if it is
to be credible.
• Analysis of the quality of risk data is a technique to evaluate the

degree to which the data about risks is useful for risk management.
• It involves examining the degree to which the risk is understood and

the accuracy, quality, reliability, and integrity of the data regarding
the risk.
• If data quality is unacceptable, it may be necessary to gather higher-

quality data.
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4. Risk Categorization
• Risks to the project can be categorized by sources of risk (e.g., using

the RBS), the area of the project affected (e.g., using the WBS), or
other useful category (e.g., project phase) to determine areas of the
project most exposed to the effects of uncertainty.
• Grouping risks by common root causes can lead to developing

effective risk responses.

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RBS HIERARCHY
 Level 0 Project Risks
 Level 1 Category
 Level 2 Sub-Category
 Level 3+ Risk Detail

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RISK BREAKDOWN STRUCTURE (RBS)

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THE USE OF RBS
The RBS can be used in these ways:
• Risk Identification Aid: Can be used as a prompt list to identify risks
• Risk Assessment: Can be used to categorize risks by their source
• Comparison Of Projects
• Risk Reporting: Roll-up of risks
• Lessons Learned.

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5. Risk Urgency Assessment
• Risks requiring near-term responses may be considered more urgent
to address.
• Indicators of priority can include time to affect a risk response,

symptoms and warning signs, and the risk rating.
• In some qualitative analyses the assessment of risk urgency can be

combined with the risk ranking determined from the probability and
impact matrix to give a final risk severity rating.

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PERFORM QUANTITATIVE RISK ANALYSIS
HOW DO YOU PERFORM QUANTITATIVE RISK ANALYSIS?
• Analyze priority risks (identified in Qualitative Risk Analysis)
• Analyzes the effect of those risk events and assigns a numerical(quantitative)
rating to those risks.
• It also presents a quantitative approach to making decisions in the presence
of uncertainty.
• The process uses techniques such as Monte Carlo simulation & decision tree
analysis to:
‒ Quantify possible outcomes for the project and their probabilities
‒ Assess probability of achieving specific project objectives
‒ Identify risks requiring the most attention
‒ Identify cost, schedule & scope targets in the light of risk
‒ Make best decisions when conditions or outcomes are uncertain
• Experienced risk managers sometime perform it directly after Identify Risk .
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11.4 PERFORM QUANTITATIVE RISK ANALYSIS
TOOLS & TECHNIQUES

• Data gathering & representation techniques
• Quantitative risk analysis & modeling
techniques
• Expert judgment
INPUTS
• Risk management plan
• Cost management plan OUTPUTS
• Schedule management Plan • Project documents updates
• Risk register
• Enterprise environmental Factors

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1. Quantitative Risk Analysis and Modeling Techniques
• Sensitivity analysis. Sensitivity analysis helps to determine which
risks have the most potential impact on the project.
‒ It examines the extent to which the uncertainty of each project element affects
the objective being examined when all other uncertain elements are held at
their baseline values.
‒ One typical display of sensitivity analysis is the tornado diagram, which is useful
for comparing relative importance and impact of variables that have a high
degree of uncertainty to those that are more stable.
• Expected monetary value analysis. Expected monetary value (EMV)
analysis is a statistical concept that calculates the average outcome
when the future includes scenarios that may or may not happen (i.e.,
analysis under uncertainty).

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DECISION TREE EXAMPLE

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EXPECTED MONETARY VALUE
Quantitative Risk Analysis
Decision Trees High Demand
Probability =0.3
$ 550,000
Production Successful
Probability = 0.7
Low Demand
Probability = 0.7
Decide to pursue - $100,000
Production Unsuccessful
Probability = 0.3 Expect Value of Pursuing Project A
Terminate = - $ 200,000 0.7 x 0.3 x $ 550,000 = $ 115,500
0.7 x 0.7 x – $ 100,000 = – $ 49,000
Decide not to pursue $ 0 0.3 x – $ 200,000 = – $ 60,000
The expected value of Project A is $6,500. The expected value of not preceding is $0.
Preceding is the lucrative option.
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SCHEDULE RISK SIMULATION

House Construction Example

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SCHEDULE RISK ANALYSIS

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RISK COST SIMULATION

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PLAN RISK RESPONSES
HOW DO YOU PLAN RISK RESPONSES?
• Develop options & determine actions to enhance opportunities and
reduce threats
• Risk responses must be:
o Appropriate to the significance of the risk
o Cost effective
o Timely
o Realistic
o Within the project context
o Agreed upon by all parties involved
o Owned by a responsible person

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11.5 PLAN RISK RESPONSES
TOOLS & TECHNIQUES

• Strategies for negative risks or threats
• Strategies for positive risks or Opportunities
• Contingent response strategies
INPUTS OUTPUTS
• Risk management plan • Project management plan updates

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1. Strategies for Negative Risks or Threats
CAUSE CAUSE CAUSE CAUSE
X Avoid = Mitigate
RISK RISK
Transfer RISK RISK Accept
Mitigate
X Avoid =
Accept
EFFECT EFFECT EFFECT EFFECT

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A. STRATEGIES FOR
NEGATIVE RISKS OR THREATS 1/8
• Avoid
‒ Eliminate the threat by eliminating the cause.
‒ Involves changing the project management plan to eliminate the threat of an
averse risk.
‒ For instance, a software project may choose to avoid the risk associated with
using a particular piece of cutting edge technology in favor of using a slower
but more reliable one
• Avoidance Actions
‒ Additional boreholes at selected locations
‒ Prototype and Modeling
‒ Carry out complete pre-qualification and short-listing for Consultants,
Contractors, Subcontractors, and Key Suppliers.
‒ Add contract clauses to deal with adverse weather conditions.
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A. STRATEGIES FOR
• Mitigate
‒ Reduction of the probability and / or impact of an adverse risk event to an
acceptable threshold (e.g. designing redundancy in a system)
‒ Mitigating a risk simply means to make it less.
‒ For instance, if you were concerned about the risk of weather damage to a
construction project, you might choose to construct the building outside of the
rainy season.
• Mitigation Actions
‒ Carrying out formal design review and document cleansing
‒ Increase material submittal review and approval
‒ Increase shop-drawings submittal review and approval
‒ Increase field inspection and testing
‒ Provide training for staff
‒ Adopt less complex processes
‒ Choose more stable seller
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A. STRATEGIES FOR
• Transfer (Deflection, Allocation)
‒ Requires shifting the negative impact of a threat, along with the
ownership, to a third party (e.g. insurance, warranties, guarantees).
‒ To transfer a risk to another party is to make it their responsibility.
‒ Make another party responsible for the risk through purchasing of
insurance, warranties, guarantees or outsourcing.
• Transference/ Deflection Actions
‒ Additional work to be outsourced
‒ Alternative project delivery methods such as Design-Build (EPC).
‒ Additional insurance coverage and policies to be purchased
‒ Additional warranties to be purchased
‒ Exclusion contract clauses
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A. STRATEGIES FOR
Questions To Ask Before Transferring Risks
• Who is source of risk, who can best control it?
• Who can best manage risk if it occurs?
• How much involvement should client retain?
• Who should carry the risk?
• Is premium charged reasonable?
• Will recipient be able to sustain risk consequences?

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A. STRATEGIES FOR
• Contracting/Outsourcing
‒ Hiring someone outside your organization to complete the work when it
would decrease risk.
‒ This is dealt with in detail in “Procurement Management”.
• Requirements for Contract Selection

‒ Identification of specific risks.
‒ Determination of risk sharing among parties.
‒ Insertion of clear legal language in contract.

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A. STRATEGIES FOR
Contract Type Vs. Risk Allocation
Scope v. little partial complete
Uncertainty High Moderate low
Degree of Risk High Medium low
Suggested Allocation Owner

Contractor
Contract Type CPPF CPIF CPFF FPPI FFP
CPPF-Cost Plus Percentage Fee, CPIF-Cost Plus Incentive Fee, CPFF-Cost

Plus Fixed Fee, FPPI-Fixed Price Plus Incentive, FFP-Firm Fixed Price
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A. STRATEGIES FOR
• Insurance
‒ A response to certain risks such as fire, property or personal injury is to
purchase insurance.
‒ Insurance exchanges an unknown risk for a known risk because the
consequences of the risk are known.
• Insurance Documents Required In Construction Contracts
‒ Contractor’s All Risks Policy (CAR) or Erection All Risks Policy (EAR) to
include General Third Party Liability
‒ Construction Plant and Machinery Policy to include all equipment at
various areas
‒ Workmen’s Compensation Insurance on Staff in accordance with
statutory Workmen’s Compensation ordinance.
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A. STRATEGIES FOR
• Transference Accept
‒ Recognizing that residual risks must be taken, and responding either

actively by allocating appropriate contingency (also known as
Containing), or passively doing nothing except monitoring the status of
risks (also known as Assuming).

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2. Strategies for Positive Risks or Opportunities
CAUSE CAUSE CAUSE CAUSE
Exploit + Enhance
RISK RISK
Share RISK RISK Ignore/
Accept
Enhance
Exploit +
Ignore
EFFECT EFFECT EFFECT EFFECT

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B. STRATEGIES FOR POSITIVE RISKS OR
OPPORTUNITIES 1/4
Exploit/Pursue (Instead Of Avoidance)
• Seeks to eliminate the uncertainty associated with a particular risk by
making the opportunity happen.
• For instance, if a positive risk of finishing the project early is identified,
then adding enough people to ensure that the project is completed early
would be an example of exploiting the risk.
Exploit/ Pursue Actions
• Value Engineering and Life Cycle Costing.
• Pre-defined supplier
• Adding bonus clauses for early project completion

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OPPORTUNITIES 2/4
Share (Instead Of Transfer Or Allocation)
• Sharing a positive risk involves allocating ownership to a third party who is best
able to capture the opportunity for the benefit of the project (e.g. risk sharing
partnerships, teams, joint ventures)
• For instance, if a defense contractor identifies a positive risk of getting a large
order, they may determine that sharing that risk by partnering with another
defense firm, or even a competitor, would be an acceptable strategy.
Share Actions
• Alternative project delivery methods that will allow share of revenue: BOOT, BOO,
etc.
• Assign independent project management firm to fast track project delivery.
• Including savings share clause in contractor’s agreements.
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OPPORTUNITIES 3/4
Enhance (instead of Mitigation)
• Modify the “size” of an opportunity by increasing probability (likelihood)
and/or positive impacts (consequences), and by identifying and maximizing
key drivers of these positive-impact risks.
• Requires that you understand the underlying cause(s) of the risk. By
working to influence the underlying risk triggers, you can increase the
likelihood of the risk occurring.
Enhance Actions
• Requesting multiple offers for expanding project scope.

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OPPORTUNITIES 4/4
Ignore (Instead Of Accept)
• Ignore minor opportunities by adopting a reactive approach without

taking explicit actions.

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3. Contingent Response Strategies
• Some responses are designed for use only if certain events occur.
• For some risks, it is appropriate for the project team to make a

response plan that will only be executed under certain predefined
conditions, if it is believed that there will be sufficient warning to
implement the plan.
• Events that trigger the contingency response, such as missing

intermediate milestones or gaining higher priority with a supplier,
should be defined and tracked.

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CONTROL RISK
WHAT HAPPENS IN MONITOR AND CONTROL RISK?
• Identify, analyze & plan for new or changed risks
• keep track of the identified risks and those on the watch list
• reanalyze existing risks
• Monitor trigger conditions for contingency plan
• Monitor residual & secondary risks
• Review the execution of risk responses while evaluating their
effectiveness.
• Monitor & Control Risk process applies techniques, such as variance
and trend analysis, which require the use of performance data
generated during project execution
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CONTROL RISK
Other purposes of Monitor & Control Risk are to determine if:
• Mid-course correction needed to handle the risk appropriately Project
assumptions are still valid
• Risk, as assessed, has changed from its prior state, with analysis of trends
• Proper risk management policies & procedures are being followed
• Contingency reserves of cost or schedule should be modified in line with
the risk of the project
• Monitor & Control Risk can involve choosing alternative strategies,
executing a contingency or fallback plan, taking corrective action &
modifying the project management plan
• Receive periodic reports from risk response owner on the effectiveness of
the plan, and any unanticipated effects.
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11.6 CONTROL RISK

TOOLS & TECHNIQUES
• Risk reassessment
• Risk audits
• Variance and trend analysis
• Technical performance measurement
• Meetings
INPUTS OUTPUTS
• Risk management plan
• Risk register
• Change Requests
• Work Performance reports

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1. Risk Reassessment
• Monitor and Control Risks often results in identification of new risks,

reassessment of current risks and the closing of risks that are
outdated. Project risk reassessments should be regularly scheduled.
• The amount and detail of repetition that is appropriate depends on

how the project progresses relative to its objectives.

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2. Risk Audits
• Risk audits examine and document the effectiveness of risk responses
in dealing with identified risks and their root causes, as well as the
effectiveness of the risk management process.
• The project manager is responsible for ensuring that risk audits are
performed at an appropriate frequency, as defined in the project’s
risk management plan.
• Risk audits may be included during routine project review meetings,
or separate risk audit meetings may be held.
• The format for the audit and its objectives should be clearly defined
before the audit is conducted.
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3. Variance and Trend Analysis
• Many control processes employ variance analysis to compare the
planned results to the actual results. For the purposes of monitoring
and controlling risk events, trends in the project’s execution should be
reviewed using performance information. Earned value analysis
(Section 7.3) and other methods of project variance and trend analysis
may be used for monitoring overall project performance. Outcomes
from these analyses may forecast potential deviation of the project at
completion from cost and schedule targets. Deviation from the
baseline plan may indicate the potential impact of threats or
opportunities.

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4. Technical Performance Measurement
• Technical performance measurement compares technical
accomplishments during project execution to the project management
plan’s schedule of technical achievement. It requires definition of
objective quantifiable measures of technical performance which can
be used to compare actual results against targets. Such technical
performance measures might include weight, transaction times,
number of delivered defects, storage capacity, etc. Deviation, such as
demonstrating more or less functionality than planned at a milestone,
can help to forecast the degree of success in achieving the project’s
scope, and it may expose the degree of technical risk faced by the
project.
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5. Reserve Analysis
• Throughout execution of the project some risks may occur, with

positive or negative impacts on budget or schedule contingency
reserves (Sections 6.5 and 7.1).
• Reserve analysis compares the amount of the contingency reserves

remaining to the amount of risk remaining at any time in the project
in order to determine if the remaining reserve is adequate.

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6. Meetings
• Project risk management should be an agenda item at periodic
meetings.
• The amount of time required for that item will vary, depending upon
the risks that have been identified, their priority, and difficulty of
response.
• Risk management becomes easier the more often it is practiced.
• Frequent discussions about risk makes it more likely that people will
identify risks and opportunities.

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12. Project Procurement Management

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PROJECT PROCUREMENT MANAGEMENT

WHAT DOES THE PROCUREMENT KNOWLEDGE AREA DO?
Purchases or acquires products, services or results needed to perform project work
(internal or external to the performing organization).
The procurement management determines what types of contract and procurement
document should be used.
PMI® often uses the terms Buyer & Seller.
Buyers = Owner = the default in the exam (if not mentioned) = Clients,
Customers, Contractors, or Purchasers.
Seller = Designer ,Contractor ,Subcontractor ,Service providers
,Suppliers/Vendors.
It is important to understand the situation/context and accordingly interpret – who is
a Buyer or Seller.
If required, seek early assistance from Specialists in contracting, purchasing within the
legal framework (so as to be fair to both).
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Contracts 1/2
• Contracts are formal. Also named as Agreements, Subcontracts, or Purchase
orders.
• Letters of intent are not considered as Contract.
• Contract is defined as an agreement between competent (equal) parties, for
valid (effective, well-grounded, logical and producing desired results )
consideration, to accomplish a lawful purpose with clearly defined terms.
• Contracts are a method of transferring risk for a fees (a strategy used in Risk
Response Planning)
• If internal to the Project Team’s organization, a non-contractual formal
agreement is prepared in form of a MOU(memo-random of understanding) with
other departments.
• PM team should prepare a tailor-made contract based on specific project needs.
• PM must know the contents of the contract & the purpose. PM must be
assigned before a contract is signed.
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Contracts 2/2
• The purpose of contract:
‒ Define roles and responsibilities.
‒ Make things legally binding.
‒ Mitigate or allocate risks.
• What do you need to have a legal contract:
‒ An offer.
‒ Acceptance.
‒ Consideration (something of value, not necessarily money)
‒ Legal capacity (separate legal parties, competent parties)
‒ Legal purpose (you cannot have a contract for the sale of illegal goods.)
• A contract, offer, or an acceptance may be written formal
(preferred) or verbal
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CENTRALIZED & DECENTRALIZED
CONTRACTING
Centralized contracting: there is a procurement department. Procurement manger may handle
procurements on many projects. The project manager contacts the department when he asks
questions.
Advantages Disadvantages
Higher level of expertise. Procurement manager may work in many project.
Improving training & shared lessons. Difficult for PM to obtain contracting help when he
Improving understanding. needed.
clearly defined career in procurement profession.
Decentralized contracting: procurement manager is assigned to one project full time and reports
directly to the project manager. PM has an availability and authority.
Advantages Disadvantages
PM has easier access cause the procurement No home for procurement manager after the end.
manages is a member of team. No high level of contracting expertise cause there is no
Procurement manager has more loyalty to the department.
project. Little standardization of procurement practices.
No career path as a procurement management in
company

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PROCUREMENT PROCESSES
Monitoring and
Planning Executing Closing
controlling
12.1
12.2 12.3 12.4
Plan
Procurements Conduct Control Close
Procurements Procurements Procurements
Management

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PROCUREMENT PROCESS DEFINITIONS
12.1 Plan Procurements Management
• Make a Procurement Management Plan: that defines What, When & How to buy goods
and services for the Project. Then, prepare SOW defining the purchase needs.
12.2 Conduct Procurements
• Document the requirements (for products, services & results from outside the project
organization)
• Identify potential Sellers
12.3 Control Procurements
• Obtain Information, Quotes, Bids, Offers or Proposals
• Review the Offers; Select the best out of the potential Sellers;
• Negotiate a written Contract.
• Manage the Contract & contract changes; the relationships between Buyer/Seller.
• Review & document the Seller performance.
• Manage contractual relationship with outside Buyer of the Project.
12.4 Close Procurements
• Complete & settle each contract
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12.1 PLAN PROCUREMENT MANAGEMENT

TOOLS & TECHNIQUES
• Make-or-buy analysis
• Market research
• Meetings
INPUTS
•
•
Requirements documentation
OUTPUTS
• Risk register • Procurement management plan
• Activity resource requirements • Procurement statements of work
• Project schedule • Procurement documents
• Activity cost estimates • Source selection criteria
• Stakeholder register • Make-or-buy decisions
• Enterprise environmental factors • Change requests
• Organizational process assets • Project documents updates

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The procurement management plan can include guidance for:
• Types of contracts to be used;
• Risk management issues;
• Whether independent estimates will be used and if they are needed as
evaluation criteria;
• Those actions the project management team can take unilaterally (single),
if the performing organization has a prescribed procurement, contracting,
or purchasing department;
• Standardized procurement documents, if they are needed;
• Managing multiple suppliers;
• Coordinating procurement with other project aspects, such as scheduling
and performance reporting;
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12.1 OUTPUTS –
1. Procurement Management Plan 2/3
Any constraints and assumptions that could affect planned
procurements;
• Handling the required lead times to purchase items from sellers and
coordinating them with the project schedule development;
• Handling the make-or-buy decisions and linking them into the Estimate
Activity Resource and Develop Schedule processes;
• Setting the scheduled dates in each contract for the contract deliverables
and coordinating with the schedule development and control processes;
• Identifying requirements for performance bonds or insurance contracts to
mitigate some forms of project risk;

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12.1 OUTPUTS –
1. Procurement Management Plan 3/3
• Establishing the direction to be provided to the sellers on developing and
maintaining a work breakdown structure (WBS);
• Establishing the form and format to be used for the procurement/contract
statements of work;
• Identifying pre-qualified sellers, if any, to be used; and
• Procurement metrics to be used to manage contracts and evaluate sellers.
• A procurement management plan can be formal or informal, can be highly
detailed or in simple form .
• Broadly (obviousness) framed, and is based upon the needs of each project.
The procurement management plan is a subsidiary component of the
project management plan (Section 4.2.3.1).

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12.1 OUTPUTS –
2. Procurement Statements of Work 1/3
The statement of work (SOW) for each procurement is developed from
the project scope baseline and defines only that portion of the project
scope that is to be included within the related contract.
The procurement SOW describes the work to be done on each

procurement must be clear, complete and concise as possible.
It must describe all the work and activities the seller is required to
complete. It is a part of contract.
Information included in a SOW can include specifications, quantity

desired, quality levels, performance data, period of performance, work
location, and other requirements.
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12.1 OUTPUTS –
• The procurement SOW is written to be clear, complete, and concise.
• It includes a description of any collateral services required, such as
performance reporting or post-project operational support for the
procured item.
• In some application areas, there are specific content and format
requirements for a procurement SOW.
• Each individual procurement item requires a SOW.
• However, multiple products or services can be grouped as one
procurement item within a single SOW.
• The procurement SOW can be revised and refined as required as it moves
through the procurement process until incorporated into a signed
contract award.
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12.1 OUTPUTS –
Types of Procurement Statements of Work :
There are many types of procurement statements of work. Your choice will depend on the
nature of the work and the type of industry.
• Performance: This type conveys what the final product should be able to
accomplish, rather than how it should be built or what its design characteristics
should be (e.g., "I want a car that will go zero to 120 kilometers per hour in 4.2
seconds").
• Functional :This type conveys the end purpose or result, rather than specific
procedures, etc. It is to be used in the performance of the work and may also
include a statement of the minimum essential characteristics of the product (e.g.,
"I want a car with 23 cup holders" [OK, why can't I try to be funny?]).
• Design: This type conveys precisely what work is to be done (e.g., "Build it exactly
as shown on these drawings").

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12.1 OUTPUTS –
3. Procurement Documents
Procurement documents are used to solicit proposals from prospective sellers.
Common terms are in use for different types of procurement documents and
may include:
• Request for information (RFI) ‫طلب كتالوج‬
• Request for proposal (RFP) ‫بيان عرض مقترحات‬
• Request for quotes (RFQ) ‫طلب عرض أسعار‬
• Invitation for bid (IFB) ‫دعوة لتقديم العطاء‬
• Invitation for negotiation (IFN) ‫ممارسة‬
• And Seller initial response ‫الرد المبدئي‬
Specific procurement terminology used may vary by industry and location of the
procurement.
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12.1 OUTPUTS –
4. Source Selection Criteria 1/3
• Are often included as a part of the procurement solicitation documents.
• Developed and used to rate or score seller proposals, and can be objective or
subjective.
• Selection criteria can be limited to purchase price if the procurement item is readily
available from a number of acceptable sellers. Purchase price in this context
includes both the cost of the item and all ancillary (additional) expenses such as
delivery.
• Other selection criteria can be identified and documented to support an assessment
for more complex products, services, or results. Some examples are shown below.
• Understanding of need. How well does the seller’s proposal address the
procurement statement of work?
• Overall or life-cycle cost. Will the selected seller produce the lowest total cost of
ownership (purchase cost plus operating cost)?
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12.1 OUTPUTS –
• Technical capability. Does the seller have, or can the seller be reasonably expected
to acquire, the technical skills and knowledge needed?
• Risk. How much risk is embedded in the statement of work, how much risk will be
assigned to the selected seller and how does the seller mitigate risk?
• Management approach. Does the seller have, or can the seller be reasonably
expected to develop, management processes and procedures to ensure a
successful project?
• Technical approach. Do the seller’s proposed technical methodologies, techniques,
solutions, and services meet the procurement documents requirements or are they
likely to provide more or less than the expected results?
• Warranty. What does the seller propose to warrant for the final product, and
through what time period?
• Financial capacity. Does the seller have, or can the seller reasonably be expected to
obtain, the necessary financial resources?
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12.1 OUTPUTS –
• Production capacity and interest. Does the seller have the capacity and interest to
meet potential future requirements?
• Business size and type. Does the seller’s enterprise meet a specific category of
business such as small, women-owned, or disadvantaged small business, as defined
by the buyer or established by governmental agency and set forth as a condition of
the contract award?
• Past performance of sellers. What has been the past experience with selected
sellers?
• References. Can the seller provide references from prior customers verifying the
seller’s work experience and compliance with contractual requirements?
• Intellectual property rights. Does the seller assert intellectual property rights in the
work processes or services they will use or in the products they will produce for the
project?

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12.1 OUTPUTS –
5. Make-or-Buy Decisions
• Make-or-buy decisions document the conclusions reached regarding
what project products, services, or results will be acquired from
outside the project organization, or will be performed internally by
the project team.
• This may also include decisions to require insurance policies or
performance bond contracts to address some of the identified risks.
• The make-or-buy decisions document can be as simple as a listing
that includes a short justification for the decisions.
• These decisions can be altered (changed) as subsequent procurement
activities indicate a requirement for a different approach.
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12.1 INPUTS – Organizational Process Assets

The various types of contractual agreements used by the organization
also influence decisions for the Plan Procurement Management process.
The organizational process assets that influence the Plan Procurement
• Formal procurement policies, procedures, and guidelines. Most organizations have
formal procurement policies and buying organizations. When such procurement
support is not available, the project team should supply both the resources and the
expertise to perform such procurement activities.
• Management systems that are considered in developing the procurement

management plan and selecting the contractual relationships to be used.
• An established multi-tier supplier system of prequalified sellers based on prior

experience.
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12.1 INPUTS – Organizational Process Assets
Contracts Types
• All legal contractual relationships generally fall into one of two broad
families,
‒ Fixed price
‒ Cost reimbursable
Also, there is a third hybrid-type commonly in use:

‒ Time and materials contract
• The more popular of the contract types in use are discussed below as
discrete types, but in practice it is not unusual to combine one or
more types into a single procurement.

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FIXED PRICE CONTRACTS (LUMP SUM) 1/4

• Fixed total price for a well-defined product
• If the product is not well-defined, both the buyer and seller are at risk
• There is generally a single fee, although payment terms may be specified so
that the cost is not necessarily a lump sum payable at the end. Fixed price
contracts may also include incentives
• This type of contract is very popular when the scope of work is thoroughly
defined and completely known. ; changes in the future will lead to
troublesome and sometimes costly extras.
• Contractor performs the work at negotiated value.
• If estimated target cost was low, profit for seller may be low or even vanish.
• Lowest risk to buyer, highest risk to seller.
• Usually requires a long period for preparation of bids; also seller add a lot of
contingency to protect themselves.
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• Fixed Price Incentive Fee (FPIF)
‒ The price is fixed, with an incentive fee for meeting a target specified in
the contract, (such as finishing the work ahead of schedule)
‒ Allows for adjustment of the total profit by a formula that depends on

the final total cost at the completion of the project.
‒ There is an incentive to the seller to decrease costs.
‒ For example : the contract + 10.000 L.E/month early finish.

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• Fixed Price Award Fee (FPAF)
‒ The buyer pays a fixed price (which includes fee) plus an award amount (a
bonus) based on performance.
‒ This is very similar to the FPIF contract, except the total possible award
amount is determined in advance and apportioned out based on performance.
‒ For example, the buyer might say that there is a maximum $50,000 award fee
available. It will be apportioned out at the rate of $5,000 for every month
production exceeds a certain amount.
‒ The cost to administer the award fee program versus the potential benefits
must be weighed in the decision to use this type of contract.
‒ For example : the contract +5000 L.E /15% over planned with max. 70.000

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• Fixed Price Economic Price Adjustment (FPEPA)
‒ If there is a question about future prices for multi year contract then
Fixed price with prospective price redetermination.
‒ Popular in cases where fluctuations in the exchange or interest rates
may impact the project
‒ An economic stipulation (condition) may be included to protect the
seller or the buyer - based on the interest rate, the consumer price
index, cost of living adjustments, currency exchange rates, or other
indices.
‒ Allows for price increases if the contract is for multiple years. (e.g. To
account for inflation).
Purchase order: is the simplest of FP contracts on party sign.
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COST REIMBURSABLE CONTRACTS 1/4

• They are used when the exact scope of work is uncertain.
• The buyer has the most risk because the total cost is unknown.
• Are suitable for R&D or IT projects in which the scope is unknown.
• Payment (reimbursement) to the seller for actual costs
• Costs are classified as direct costs or indirect costs
‒ Direct costs are costs incurred for the exclusive benefit of the project
‒ Indirect costs (overhead costs) are costs allocated to the project by the
performing organization.
• May include incentives for meeting or exceeding selected project

objectives
• All cost reimbursable contracts require that the seller’s books be
audited.
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• Cost contract: contract = cost (there is no profit)
• Cost Plus Percentage Of Costs (CPPC) = Cost plus fee (CPF) :
‒ Not preferred(not allowed in U.S) because there is no incentive for seller
to control costs.
‒ e.g.: contract = cost + 10% of costs as fee.
• Cost Plus Fixed Fee (CPFF):
– Cost may vary but the fee remains firm.
– Provides incentive to the contractor for quick completion of the job.
– The seller passes the cost back to the buyer and receives an additional
fixed fee upon completion of the project.
– e.g.: contract = Cost + 100.000 (fixed fee).
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• Cost Plus Award Fee (CPAF)
– The buyer pays all costs and a base fee plus an award amount (a
bonus) based on performance.
– This is similar to the CPIF contract, except the incentive is a potential
award, rather than a potential award or penalty The award amount in
a CPAF contract is determined in advance and apportioned out
depending on performance,
– Procedures must be in place in advance for giving out the award, and
a board is established to help make the decision fairly.
– As with a FPAF contract, the cost to administer an award fee program
vs. the potential benefits must be weighed in the decision to use this
type of contract.
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• Cost Plus Incentive Fee (CPIF) :
– A cost plus incentive fee contract provides for the seller to be paid for
actual costs plus a fee that will be adjusted based on whether the specific
performance objectives stated in the contract are met.
– Same as cost plus contracts, except they have provision for adjustment of
the fee that compares the total project cost to the target cost.
– The seller then gets a percentage of the savings if the actual costs are less
than the target costs or shares the cost overrun with the seller.
– The ratio will be expressed (if not mentioned) as buyer/seller e.g. 80/20 .
– Usually used for long term (e.g. R&D) contracts.
– The seller passes the cost back to the buyer and gets an incentive fee for
meeting a target (usually tied back to keeping costs low) specified in the
contract.
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HYBRID TYPE CONTRACTS
• Hybrid type with aspects of both cost-reimbursable and of fixed-price
• Cost-reimbursable because the contract is open ended.
• Fixed-price because unit rates are preset (ex. senior engineer is

$85/hour)

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TIME AND MATERIAL (T&M) CONTRACTS
(UNIT PRICE)
• In a time and materials contract, the seller charges for time plus the cost of any
materials needed to complete the work.
• It has elements of a fixed price contract (in the fixed price per hour) and a cost
reimbursable contract (in the material costs and the fact that the total cost is
unknown).
• The seller's profit is built into the rate, so they have no incentive to get the work
done quickly or efficiently,
• For these reasons, this type of contract is best used for work valued at small dollar
amounts and lasting a short amount of time.
• To make sure the costs do not become higher than budgeted, the buyer may put a
"Not to Exceed" clause in the contract and thus limit the total cost they are
required to pay.
• With a time and material contract, the buyer has a medium amount of cost risk
compared with cost reimbursable and fixed price contracts.
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CONTRACT TYPE SELECTION
Cost Time and
Fixed Price
Reimbursable Material
Definition of Well Defined Not well defined Not well defined
product
Risk of buyer Low High High
Risk of seller High Low Low
Type of Fixed total price Payment for actual Unit rates for
costs + a fee for seller payment fixed, but
payment
profit the cost increases
with time

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1. Make or Buy Analysis
• A make-or-buy analysis is a general management technique used to
determine whether particular work can best be accomplished by the
project team or must be purchased from outside sources.
• Sometimes a capability may exist within the project organization, but

may be committed to working on other projects, in which case the
project may need to source such effort from outside the organization
in order to meet its schedule commitments.

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QUESTION
You are trying to decide whether to lease or buy an item for your project, the daily
lease cost is $120. To purchase the item, the investment cost is $1,000 and the daily
cost is $20. How long will it take for the lease cost to be the same as the purchase
cost?
Answer : Let D equal the number of days when the purchase and lease costs are equal.
$120D = $1,000 + $20D
$120D - $20D = $1,000
$100D = $1,000 then D= 10
This calculation helps a project manager decide whether it is better to lease or buy.
The calculation says that the costs are the same after 10 days. Therefore, if you are
planning to use the item for fewer than 10 days, you should lease. If you are planning
to use it for more than 10 days, it would be cheaper to buy the item. These costs are
then included in the project cost estimate
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2. Market Research
• Market research includes examination of industry and specific vendor
capabilities.
• Procurement teams may leverage information gained at conferences,

online reviews and a variety of sources to identify market capabilities.
• The team may also refine particular procurement objectives to

leverage maturing technologies while balancing risks associated with
the breadth of vendors who can provide the materials or services
desired.

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CONDUCT PROCUREMENTS
WHAT HAPPENS IN CONDUCT PROCUREMENTS?
Conduct Procurements is the process of obtaining Seller responses, selecting a seller, and
awarding a contract
In this process, the team will receive bids or proposals and will apply previously defined
selection criteria to select one or more sellers who are qualified to perform the work and
acceptable as a seller.
On major procurement items, overall process of requesting responses from sellers and
evaluating those responses can be repeated.
A short list of qualified sellers can be established based on a preliminary proposal. A more
detailed evaluation can then be conducted based on a more specific and comprehensive
requirements document requested from the sellers on the short list. In addition, tools and
techniques described here can be used alone or in combination to select sellers.
For example, a weighting system can be used to:
• Select a single seller that will be asked to sign a standard contract, and
• Establish a negotiating sequence by ranking all proposals by the weighted
• Evaluation scores assigned to each proposal.
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CONDUCT PROCUREMENTS1
WHAT HAPPENS IN CONDUCT PROCUREMENTS?
This process allows buyer to maintain the integrity of proc. Process and
make sellers are bidding or proposing on the same risk.
It is an opportunity for the buyer to discover anything missing in the
procurement documents.
The project manager must watch out for in a bidder conference.
• Collusion.
• Sellers not asking question in front of competition.
• Make sure all answers & questions are put in writing and all sellers by
addenda to procurement documents.
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12.2 CONDUCT PROCUREMENTS
TOOLS & TECHNIQUES
• Bidder conferences
• Proposal evaluation techniques
• Independent estimates
• Advertising
• Procurement negotiations
INPUTS
• Procurement management plan
• Procurement documents OUTPUTS
• Source selection criteria • Selected sellers
• Seller proposals • Procurement contract award
• Project documents • Resource calendars
• Make-or-buy decisions • Change requests
• Procurement statement of work • Project Mgmt. Plan (updates)
• Organizational process assets • Project document (updates)
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12.2 OUTPUTS –
1. Selected sellers
The sellers selected are those sellers who have been judged to be in a
competitive range.
Based upon the outcome of the proposal or bid evaluation, and who
have negotiated a draft contract that will become the actual contract
when an award is made.
Final approval of all complex, high-value, high-risk procurements will

generally require organizational senior management approval prior to
award.

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12.2 OUTPUTS –
2. Agreements
• An agreement can also be called an understanding, a contract, a
subcontract, or a purchase order
• The contract can be in the form of simple purchase order or a
complex document.
• Regardless of the document’s complexity, a contract is a mutually
binding legal agreement that obligates the seller to provide the
specified products, services, or results, and obligates the buyer to
compensate the seller.
• A contract is a legal relationship subject to remedy (legal way) in the
courts.
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THE MAJOR COMPONENTS IN AN

AGREEMENT DOCUMENT
• Statement of work or deliverables, • Limitation of liability,
• Schedule baseline, • Fees and retainage,
• Performance reporting, • Penalties,
• Period of performance, • Incentives,
• Roles and responsibilities, • Insurance and performance bonds,
• Seller’s place of performance, • Subordinate subcontractor approvals,
• Pricing, • Change request handling, and
• Payment terms, • Termination and alternative dispute
• Place of delivery,
• Inspection and acceptance criteria,
• Warranty,
• Product support,
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12.2 OUTPUTS –
• The quantity and availability of contracted resources and those dates

on which each specific resource can be active or idle are
documented.

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12.2 INPUTS –
1. Source Selection Criteria
• Source selection criteria can include information on the supplier’s

required capabilities, capacity, delivery dates, product cost, life-cycle
cost, technical expertise, and the approach to the contract as
described in 12.1 “PMBOK® Guide”

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12.2 INPUTS –
2. Seller Proposals
• Seller proposal (or price quote or bid):
• A proposal is a seller's responded to the procurement documents.
• A proposal is the responded to a request for proposal (RFP)
• A price quote is the responded to a request for quote (RFQ)
• A bid is usually the responded to an invitation for bid (IFB)
• Seller proposals will be used by an evaluation body to select one or

more successful bidders (sellers).

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12.2 TOOLS&TECHNIQUES –
1. Bidder Conferences
• Bidder conferences (sometimes called contractor conferences, vendor
conferences, and pre-bid conferences)
• Bidder conferences are meetings with all prospective sellers and buyers
prior to submittal of a bid or proposal.
• They are used to ensure that all prospective sellers have a clear and
common understanding of the procurement (both technical and contractual
requirements), and that no bidders receive preferential treatment.
• Responses to questions can be incorporated into the procurement

documents as amendments (modifications). To be fair, buyers must take
great care to ensure that all prospective sellers hear every question from
any individual prospective seller and every answer from the buyer.

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2. Proposal Evaluation Techniques
• On complex procurements, where source selection will be made

based on seller responses to previously defined weighted criteria,
• A formal evaluation review process will be defined by the buyer’s

procurement policies.
• The evaluation committee will make their selection for approval by

management prior to the award.

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12.2 TOOLS & TECHNIQUES -

3. Independent Estimates
• For many procurement items, the procuring organization may elect to
either prepare its own independent estimate, or have an estimate of
costs prepared by an outside professional estimator, to serve as a
benchmark on proposed responses.
• Significant differences in cost estimates can be an indication that the

procurement statement of work was deficient, ambiguous, and/or
that the prospective sellers either misunderstood or failed to respond
fully to the procurement statement of work.

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4. Expert Judgment
• Expert judgment may be used in evaluating seller proposals.
• The evaluation of proposals may be accomplished by a multi-

discipline review team with expertise in each of the areas covered by
the procurement documents and proposed contract.
• This can include expertise from functional disciplines such as

contracting, legal, finance, accounting, engineering, design, research,
development, sales, and manufacturing.

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5. Advertising
• Existing lists of potential sellers can often be expanded by placing

advertisements in general circulation publications such as selected
newspapers or in specialty trade publications.
• Some government jurisdiction require public advertising of certain

types of procurement items, and most government jurisdictions
require public advertising of pending government contracts.

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6. Procurement Negotiations
• Negotiations clarify the structure, requirements and other terms of the purchases so
that mutual agreement can be reached prior to signing the contract.
• Final contract language reflects all agreements reached.
• Subjects covered should include responsibilities, authority to make changes,
applicable terms and governing law, technical, and business management
approaches, proprietary rights, contract financing, technical solutions, overall
schedule, payments, and price.
• Negotiations conclude with a contract document that can be executed by both buyer
and seller.
• For complex procurement items, contract negotiation can be an independent
process with inputs (e.g., issues or an open items listing) and outputs (e.g.,
documented decisions) of its own.
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CONTROL PROCUREMENTS
HOW DO WE ADMINISTER PROCUREMENT?
• It is the process of managing procurement relationships, monitoring

contract performance, and making changes and corrections as
needed.
• Both the buyer and the seller will administer the procurement
contract for similar purposes.
• Each must ensure that both parties meet their contractual

obligations and that their own legal rights are protected.

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CONTROL PROCUREMENTS
• The Control Procurements process ensures that the seller’s performance
meets procurement requirements and that the buyer performs according to
the terms of the legal contract.
• The legal nature of the contractual relationship makes it imperative
(essential) that the project management team is aware of the legal
implications (included) of actions taken when administering any
procurement.
• Due to varying org. structures, many organizations treat Control contract as
an administrative function separate from the project organization.
• While a procurement Controller may be on the project team, this individual
typically reports to a supervisor from a different department.
• This is usually true if the performing organization is also the seller of the
project to an external customer.
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12.3 CONTROL PROCUREMENTS

TOOLS & TECHNIQUES
• Contract change control system
• Procurement performance reviews
• Inspections & audits
• Performance reporting
• Payment systems
• Claims administration
• Records management system
INPUTS OUTPUTS
• Procurement documents
• Procurement documentation
• Agreements • Organizational process assets
• Approved change requests updates
• Work Performance reports • Change requests
• Work performance data • Project management plan updates

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12.3 OUTPUTS –
1. Procurement Documentation
• Procurement documentation includes, but is not limited to:
– The procurement contract with all supporting schedules,
– Requested unapproved contract changes,
– and Approved change requests.
• Procurement documentation also includes any seller-developed

technical documentation and other work performance information
such as deliverables, seller performance reports, warranties, financial
documents including invoices and payment records, and the results
of contract-related
• inspections.
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12.3 OUTPUTS –
2. Organization Process Assets updates
• Elements of the organizational process assets that may be updated
– Correspondence. Contract terms and conditions often require written
documentation of certain aspects of buyer/seller communications, such
as the need for warnings of unsatisfactory performance and requests for
contract changes or clarification.
– Payment schedules and requests. All payments should be made in
accordance with the procurement contract terms and conditions.
– Seller performance evaluation documentation. Seller performance
evaluation documentation is prepared by the buyer.

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12.3 OUTPUTS –
3. Project Management Plan updates
• Elements of the project management plan that may be updated
– Procurement management plan. The procurement management plan

(Section 12.1 “PMBOK® Guide”) is updated to reflect any approved
change requests that affect procurement management, including
impacts to costs or schedules.
– Baseline schedule. If there are slippages that impact overall project

performance, the baseline schedule may need to be updated to reflect
the current expectations.

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1. Contract Change Control System
• A contract change control system defines the process by which the
procurement can be modified.
• It includes the paperwork, tracking systems, dispute resolution

procedures, and approval levels necessary for authorizing changes.
• The contract change control system is integrated with the integrated

change control system.

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2. Procurement Performance Reviews
• A procurement performance review is a structured review of the seller’s
progress to deliver project scope and quality, within cost and on schedule,
as compared to the contract.
• It can include a review of seller-prepared documentation and buyer
inspections, as well as quality audits conducted during seller’s execution of
the work.
• The objective of a performance review is to identify performance successes
or failures, progress with respect to the procurement statement of work,
and contract non-compliance, which allow the buyer to quantify the seller’s
demonstrated ability or inability to perform work.
• Such reviews may take place as a part of project status reviews which would
include key suppliers.
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3. Inspection and Audits
• Inspections and audits required by the buyer and supported by the

seller as specified in the procurement contract can be conducted
during execution of the project to verify compliance in the seller’s
work processes or deliverables.
• If authorized by contract, some inspection and audit teams can

include buyer procurement personnel.

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4. Performance Reporting
• Performance reporting provides management with information about

how effectively the seller is achieving the contractual objectives.

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5. Payment System
• Payments to the seller are typically processed by the accounts

payable system of the buyer after certification of satisfactory work by
an authorized person on the project team.
• All payments should be made and documented in strict accordance

with the terms of the contract.

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6. Claims Administration
• Contested (discussed) changes and potential constructive changes are
those requested changes where the buyer and seller cannot reach an
agreement on compensation for the change, or cannot agree that a
change has occurred. These contested changes are variously called
claims, disputes, or appeals.
• Claims are documented, processed, monitored, and managed
throughout the contract life cycle, usually in accordance with the terms
of the contract.
• If the parties themselves do not resolve a claim it may have to be
handled in accordance with alternative dispute resolution (ADR)
typically following procedures established in the contract. Settlement of
all claims and disputes through negotiation is the preferred method.

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7. Records Management System
• A records management system is used by the project manager to
manage contract and procurement documentation and records.
• It consists of a specific set of processes, related control functions,

and automation tools that are consolidated and combined as part of
the project management information system (Section 4.3 “PMBOK®
Guide”).
• The system contains a retrievable archive of contract documents and

correspondence

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CLOSE PROCUREMENTS
WHAT HAPPENS IN CLOSE PROCUREMENTS?
Close procurements process supports the close project process
Verifies that all work and deliverables were acceptable.
Administrative activities, such as update records to reflect final results and
archive them for future use.
In multi-phase projects, the terms of a contract may only apply to a given
phase of the project.
Unresolved claims may be subject to litigation after close procurements.
Contract terms & conditions can prescribe specific procedures for close
procurements.
Early termination of a contract is a special case of close procurements & can
happen when the buyer & seller mutually agree or when there's contract
default
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12.4 CLOSE PROCUREMENTS
TOOLS & TECHNIQUES

• Procurement audits
• Procurement Negotiations
• Records management system
OUTPUTS
INPUTS • Closed procurements
• Procurement management plan • Organizational process assets
• Procurement documents • updates

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12.4 OUTPUTS –
1. Closed Procurements
• The buyer, usually through its authorized procurement administrator,

provides the seller with formal written notice that the contract has
been completed.
• Requirements for formal procurement closure are usually defined in

the terms and conditions of the contract and are included in the
procurement management plan.

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12.4 OUTPUTS –
2. Organizational Process Asset (updates)
• Elements of the organizational process assets that may be updated
– Procurement file. A complete set of indexed contract documentation,
including the closed contract, is prepared for inclusion with the final
project files.
– Deliverable acceptance. The buyer, usually through its authorized
procurement administrator, provides the seller with formal written
notice that the deliverables have been accepted or rejected.
Requirements for formal deliverable acceptance, and how to address
non-conforming deliverables, are usually defined in the contract.
– Lessons learned documentation. Lessons learned, what has been
experienced, and process improvement recommendations should be
developed for the project file to improve future procurements.
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12.4 INPUTS –
• To close the contract, all procurement documents is collected,
indexed, and filed.
• Information on contract schedule, scope, quality, and cost

performance along with all contract change documentation, payment
records, and inspection results are catalogued.
• This information can be used for lessons learned information and as

a basis for evaluating contractors for future contracts.

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1. Procurement Audits
• A procurement audit is a structured review of the procurement

process originating from the Plan Procurements process (Section 12.1
“PMBOK® Guide”) through Administer Procurements (Section 12.3
“PMBOK® Guide”).
• The objective of a procurement audit is to identify successes and

failures that warrant recognition in the preparation or administration.

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2. Procurement Negotiations
• In all procurement relationships the final equitable settlement of all
outstanding issues, claims, and disputes by negotiation is a primary
goal.
• Whenever settlement cannot be achieved through direct negotiation,

some form of alternative dispute resolution (ADR) including
mediation or arbitration may be explored.
• When all else fails, litigation in the courts is the least desirable
option.

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TERMS MUST BE KNOWN 1/5

• Incentives: are used to bring the seller objectives in line with buyer.
– Seller are usually focused on the profits on the project.
– Buyer concerned about total cost, performance and schedule.
– Therefore incentives are designed to motivate the seller's effort to ward the
scope of the buyer.
• Non disclosure agreement: need for confidentiality from the buyer or
seller. This is an agreement between buyer & seller.
• Master services agreement = retainer contract.
• Standard contract: the buyer creates standard format that is used over and
over for similar procurements.
• Letter of intent: it is not a contract but simply a letter without legal binding
that says the buyer intends to hire the seller contract can take time, then
the seller may need to start hiring people or ordering equipment and
materials before contract is sign.
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• Special provisions (special conditions): p.m reads & understand standard
terms and conditions to determine what need and added, changed or
removed from the standard provisions. Any addition changes can be a result
of:
– Risk analysis
– The requirements of the project.
– The types of project.
– Administrative, legal or business.
• Privity: means a contractual relationship. Company (A) hires company (B),
company (B) hires company (C) then company (A) can talk to company (C) if
there is a privity.

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• Noncompetitive Forms of Procurement Seller or the buyer wants to work
again for the seller. When it is used:
– The project is under extreme schedule pressure.
– A seller has unique qualifications.
– There is only one seller who can provide the goods or service.
– A seller hold a patent for the item you need.
• Types of noncompetitive procurements:

– Single source: type of procurements, contract directly with your preferred
seller without going through procurement process. Work with the company
before and you don't want to look for another.
– Sole source: there is only one seller. This might be a company that owns a
patent.
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• Noncompetitive forms: may saving time compared with competitive form
by not having to go through procurement process before bids are received,
you must to spend time in negotiations after proposal or bid is received to
finalize the contract.
• Presentations: it is a formal meeting of the buyer's team & seller's team. It
is used in cost reimbursable contracts. But they can be used in other
situation (working prime importance).
• Cost : This is how much an item costs the seller to create, develop, or
purchase. A buyer's costs can be a seller's revenue (and profits)
• Price : the amount the seller charges the buyer.
• Profit (fee): this is planned into the price the seller provides the buyer.
Sellers usually have an acceptable profit margin in mind.
• Target price : This term is often used to compare the end result of the
project with what was expected (the target price). It is a measure of
success. Target cost + Target fee = Target price.
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• Sharing ratio-Incentives : usually expressed as a ratio, e.g., 90/10., the first
number being the amount the buyer will keep and the second number
being the amount the seller will keep (buyer/seller).
• Ceiling price: This is the highest price the buyer will pay.
• Point of total assumption (PTA) This only applies to fixed price incentive
fee contracts and refers to the amount above which the seller bears all the
loss of a cost overrun, Costs that go above the PTA are assumed to be due
to mismanagement. Sellers will sometimes monitor their actual costs
against the PTA to make sure they are still receiving a profit for completing
the project.
PTA = ((Ceiling price - Target price)/Buyer's share ratio) + Target cost
• Remember, we are thinking from the buyer's point of view (if not
mentioned)
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NEGOTIATION

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NEGOTIATION
• Negotiations: are not usually need in fixed price contracts cause the
scope is completed and the lower price is selected.
– If it need for cover only parts of the proposed contract.
– CR & T.M contracts used negotiations.
• After the contract is signed there will be negotiations in all contract

type whenever there are proposed changes to any part of the
contract.
• The P.M must involved in contract negotiations because they are
responsible for facilitating project management and technical issues
on the project.

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NEGOTIATION
• Objectives
– Obtain a fair and reasonable price
– Develop a good relationship with the seller
– To protect company’s interests, assets and reputation
– Minimize risks
– Maintain options

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ITEMS TO NEGOTIATE
• Main items on a contract to negotiate ( in order ):
– Scope
– Schedule
– Price
• Things that need to be negotiated:
– Responsibilities
– Authority
– Applicable law for legal actions and arbitration
– Project management process to be used.
– Payments schedule.
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GUIDELINES FOR SUCCESSFUL NEGOTIATIONS
• Commitment to negotiate for mutual gain

• Separate the people from the problem
• Separate the relationship from the substance; deal directly with
people problems
• Don’t bargain over positions
• Focus on interest not positions
• Generate options for mutual gain
• Use objective criteria or standard

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NEGOTIATION PREPARATION
• Financial
– Minimal acceptable financial position given the schedule and
deliverables
– Target financial position
– Maximum (opening) financial position
– Proposal team uses during negotiation the min, max and target as
reference points
• Explore various positions
• Explore trade-offs

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NEGOTIATION TACTICS 1/4
• Deadline Tactic
– A powerful tactic because it implies a possible loss to both parties
– Other party does not have to accept deadline, but often does
• Surprise
– One party springs information such as a price change on the other party

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• Limited Authority
– One party may claim that an agreement cannot be finalized because he
has limited authority and cannot commit the company's resources.
• Missing Man
– A party may claim that the person with final authority is absent. The
"missing man" technique may also be used when the party does not
have the information asked for by the other party.
• Fair and reasonable

– Negotiator may claim the price for a computer is equitable because that
is what another company is paying.

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• Strategic Delays
– Useful when tempers are beginning to flare, a team member is going
astray, to divert from a subject, etc.
– Examples of delays: arrival of refreshments, request for recess, etc.
• Reasoning together
– Collaborating to work the problems out to the benefit of all
• Confusing the other party

– Deliberately (willfully )distorting (disfigure ) issues and figures.

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• Withdrawal
– Sometimes done to divert attention from an area of weakness
– One party may make an attack upon an issue, then retreat.
• Unreasonable
– Make the other party appear unreasonable by pointing out all the
concessions made by the party
• Arbitration
– A third party may be brought in when agreement cannot be reached.
• Fait accompli
– A party may claim that what is being asked for has already been
accomplished and cannot be changed

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13. Project Stakeholder Management

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STAKEHOLDER PROCESSES
Monitoring
Initiation Planning Executing
and controlling
13.2 Plan 13.3 Manage 13.4 Control

13.1 Identify
Stakeholder Stakeholder Stakeholder
Stakeholders
Management Engagement Engagement

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13.1 IDENTIFY STAKEHOLDERS
TOOLS & TECHNIQUES
Stakeholder analysis
Expert judgment
Meetings
INPUTS
Project charter
OUTPUTS
Procurement documents

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1. IDENTIFY STAKEHOLDERS
• The process of identifying all people or organizations impacted by

the project, and documenting relevant information regarding their
interests, involvement and impact on project success.
• A strategy can then be developed for approaching each stakeholder

and determining the level and timing of stakeholders’ involvement to
maximize positive influences and mitigate potential negative impacts.

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1. IDENTIFY STAKEHOLDERS
• Most projects will have a large number of stakeholders. As the

project manager’s time is limited and must be used as efficiently as
possible
• These stakeholders should be classified according to their interest,

influence and involvement in the project.

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13.1 OUTPUTS –
1. Stakeholder Register
• This contains all details related to the identified stakeholders
including, but not limited to:
– Identification information: Name, organizational position, location, role
in the project, contact information;
– Assessment information: Major requirements, main expectations,
potential influence in the project, phase in the lifecycle with the most
interest; and
– Stakeholder classification: Internal / external, supporter / neutral /
resistor, etc.

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13.1 INPUTS –
1. Project Charter
• The project charter can provide information about internal and

external parties involved in and affected by the project, such as
project sponsor(s), customers, team members, groups and
departments participating in the project, and other people or
organizations affected by the project.

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13.1 INPUTS –
• If a project is the result of procurement activity or is based on an

established contract, the parties in that contract are key project
stakeholders.
• Other relevant parties, such as suppliers, should also be considered

as part of the project stakeholders list.

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13.1 INPUTS –
• The enterprise environmental factors that can influence the Identify

Stakeholders process include, but are not limited to:
– Organizational or company culture and structure, and
– Governmental or industry standards (e.g. regulations, product

standards).

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13.1 INPUTS –
• The organizational process assets that can influence the Identify

Stakeholders process include, but are not limited to:
– Stakeholder register templates,
– Lessons learned from previous projects, and
– Stakeholder registers from previous projects.

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1. Stakeholder Analysis 1/3
• Stakeholder analysis is a process of systematically gathering and
analyzing quantitative and qualitative information to determine
whose interests should be taken into account throughout the project.
• It identifies the interests, expectations, and influence of the

stakeholders and relates them to the purpose of the project.
• It also helps identify stakeholder relationships that can be leveraged

(provided) to build coalitions and potential partnerships to enhance
the project’s chance of success.

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• Step 1: Identify all potential project stakeholders and relevant information,
such as their roles, departments, interests, knowledge levels, expectations,
and influence levels. Key stakeholders are usually easy to identify.
Identifying other stakeholders is usually done by interviewing identified
stakeholders and expanding the list until all potential stakeholders are
included.
• Step 2: Identify the potential impact or support each stakeholder could
generate, and classify them so as to define an approach strategy.
• In large stakeholder communities it is important to prioritize the key
stakeholders to ensure the efficient use of effort to communicate and
manage their expectations.
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• Step 3: Assess how key stakeholders are likely to react or respond in
various situations, in order to plan how to influence them to
enhance their support and mitigate potential negative impacts.
Power/Interest Grid

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2. Expert Judgment
• To ensure comprehensive identification and listing of stakeholders,
judgment and expertise should be sought from groups or individuals
with specialized training or knowledge on the subject area such as:
– Senior management,
– Other units within the organization,
– Identified key stakeholders,
– Project managers who have worked on projects in the same area
(directly or through lessons learned),
– Subject matter experts (SMEs) in business or project area,
– Industry groups and consultants, and
– Professional and technical associations.
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13.2 PLAN STAKEHOLDER MANAGEMENT
TOOLS & TECHNIQUES

Expert judgment
Meetings
INPUTS OUTPUTS
Project management plan Stakeholder management plan
Stakeholder register Project documents updates

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13.2 PLAN STAKEHOLDER MANAGEMENT 1/2

• It is the process of developing appropriate management strategies to
effectively engage stakeholders throughout the project life cycle,
based on the analysis of their needs, interests, and potential impact
on project success.
• It provides a clear, actionable plan to interact with project

stakeholders to support the project’s interests.
• Plan Stakeholder Management identifies how the project will affect

stakeholders, which then allows the project manager to develop
various ways to effectively engage stakeholders in the project, to
manage their expectations, and to ultimately achieving the project
objectives.
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13.2 PLAN STAKEHOLDER MANAGEMENT 2/2
• Stakeholder management is more than improving communications
and requires more than managing a team.
• Stakeholder management is about creation and maintenance of
relationships between the project team and stakeholders, with the
aim to satisfy their respective needs and requirements within project
boundaries.
• This process generates the stakeholder management plan, which
contains detailed plans on how effective stakeholder management
can be realized.
• As the project progresses, the membership of the stakeholder
community and required level of engagement may change,
therefore, stakeholder management planning is an iterative process
that is reviewed on a regular basis by the project manager.
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13.2 OUTPUTS –1. Stakeholder Management Plan

• The stakeholder management plan is a component of the project management plan.
• It identifies the management strategies required to effectively engage stakeholders.
• It can be formal or informal, highly detailed or broadly framed, based on the needs of
the project.
• In addition to the data gathered in the stakeholder register, the stakeholder
management plan often provides:
– Desired and current engagement levels of key stakeholders.
– Scope and impact of change to stakeholders.
– Identified interrelationships and potential overlap between stakeholders.
– Stakeholder communication requirements for the current project phase.
– Information to be distributed to stakeholders, including language, format, content, level of
detail.
– Reason for the distribution of that information and the expected impact to stakeholder
engagement.
– Time frame and frequency for the distribution of required information to stakeholders; and
– Method for updating and refining the stakeholder management plan as the project
progresses develops.
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13.2 TOOLS & TECHNIQUES – 1. Analytical Techniques 1/2
• The current engagement level of all stakeholders needs to be
compared to the planned engagement levels required for successful
project completion.
• Stakeholder engagement throughout the life cycle of the project is
critical to project success.
• The engagement level of the stakeholders can be classified as follows:
– Unaware: Unaware of project and potential impacts.
– Resistant: Aware of project and potential impacts and resistant to change.
– Neutral: Aware of project yet neither supportive nor resistant.
– Supportive: Aware of project and potential impacts and supportive to change.
– Leading: Aware of project and potential impacts and actively engaged in
ensuring the project is a success.
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13.2 TOOLS & TECHNIQUES – 1. Analytical Techniques 2/2

• The current engagement can be documented using Stakeholders
Engagement Assessment Matrix,
where C indicates the current engagement, and D indicates the desired engagement.
• The project team needs to identify the desired engagement level for
the current phase of the project, based on available information.
• The example shows that stakeholder 3 is at the desired engagement
level, while stakeholders
• 1 and 2 require further communications and additional actions to
move them to the desired level of engagement.
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13.3 MANAGE STAKEHOLDER ENGAGEMENT
TOOLS & TECHNIQUES

Communication methods
Interpersonal skills
Management skills
INPUTS OUTPUTS
Stakeholder management plan Issue log
Change requests
Communications management plan
Change log Project documents updates
Organizational process assets Organizational process assets
updates

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13.3 MANAGE STAKEHOLDER ENGAGEMENT 1/2

• It is the process of communicating and working with stakeholders to meet
their needs/expectations, address issues as they occur, and foster
appropriate stakeholder engagement in project activities throughout the
project life cycle.
• The key benefit of this process is that it allows the project manager to
increase support and minimize resistance from stakeholders, significantly
increasing the chances to achieve project success.
• Manage Stakeholder Engagement involves activities such as:
– Engaging stakeholders at appropriate project stages to obtain or confirm their
continued commitment to the success of the project;
– Managing stakeholder expectations through negotiation and communication,
ensuring project goals are achieved;
– Addressing potential concerns that have not yet become issues and anticipating
future problems that may be raised by stakeholders.
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13.3 MANAGE STAKEHOLDER ENGAGEMENT 2/2
• Managing stakeholder engagement helps to increase the probability of project
success by ensuring that stakeholders clearly understand the project goals,
objectives, benefits, and risks.
• This enables them to be active supporters of the project and to help guide
activities and project decisions.
• By anticipating people’s reactions to the project, proactive actions can be taken to
win support or minimize negative impacts.
• The ability of stakeholders to influence the project is typically highest during the
initial stages and gets progressively lower as the project progresses.
• The project manager is responsible for engaging and managing the various
stakeholders in a project and may call upon the project sponsor to assist as needed.
• Active management of stakeholder involvement decreases the risk of the project
failing to meet its goals and objectives.
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13.3 OUTPUTS –
1. Issue log
• Managing stakeholder engagement may result in the development of

an issue log.
• This log is updated as new issues are identified and current issues are
resolved.

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13.3 OUTPUTS –
2. Change Requests
• Managing stakeholder engagement may result in a change request to

the product or the project.
• It may also include corrective or preventive actions to the project

itself or to the interaction with the impacted stakeholders, as
appropriate.

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13.3 INPUTS –
1. Communications Management Plan
• The communications management plan provides guidance and
information on managing stakeholder expectations.
• The information used includes, but is not limited to:
– Stakeholder communications requirements;
– Information to be communicated, including language, format, content,

and level of detail;
– Reason for distribution of information;
– Person or groups who will receive information; and
– Escalation process.

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13.3 INPUTS –
2. Change Log
• A change log is used to document changes that occur during a

project.
• These changes and their impact on the project in terms of time, cost,
and risk are communicated to the appropriate stakeholders.

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1. Communication Methods
• The methods of communication (described in Section 10.1.Plan

Communications Management ) identified for each stakeholder in the
communications management plan are utilized during stakeholder
engagement management.
• Based on the stakeholders’ communication requirements, the project

manager decides how, when, and which of these communication
methods are to be used in the project.

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2. Interpersonal Skills
• The project manager applies interpersonal skills to manage
stakeholders’ expectations.
• For example:
– Building trust,
– Resolving conflict,
– Active listening, and
– Overcoming resistance to change.

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3. Management Skills
• The project manager applies management skills to coordinate and
harmonize the group toward accomplishing the project objectives.
• For example:
– Facilitate consensus toward project objectives.
– Influence people to support the project.
– Negotiate agreements to satisfy the project needs.
– Modify organizational behavior to accept the project outcomes.

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13.4 CONTROL STAKEHOLDER ENGAGEMENT
TOOLS & TECHNIQUES

Expert judgment
Meetings
INPUTS OUTPUTS
Work performance information
Issue log
Change requests
Project documents
Project documents updates
Organizational process assets updates

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13.4 CONTROL STAKEHOLDER ENGAGEMENT

• Control Stakeholder Engagement is the process of monitoring overall
project stakeholder relationships and adjusting strategies and plans
for engaging stakeholders.
• The key benefit of this process is that it will maintain or increase the
efficiency and effectiveness of stakeholder engagement activities as
the project evolves and its environment changes.
• Stakeholder engagement activities are included in the stakeholder

management plan and are executed during the life cycle of the
project. Stakeholder engagement should be continuously controlled.

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13.4 OUTPUTS –
1.Work Performance Information
• The work performance information is the performance data collected from
various controlling processes, analyzed in context, and integrated based on
relationships across areas.
• Thus work performance data have been transformed into work performance
information.
• Data are not used in the decision-making process, because the meaning may
be misinterpreted.
• Information, however, is correlated and contextualized and provides a sound
foundation for project decisions.
• Work performance information is circulated through communication
processes. Examples of performance information are status of deliverables,
implementation status for change requests, and forecasted estimates to
complete.
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13.4OUTPUTS –
2.Organizational Process Assets Updates
The organizational process assets, which may be updated include, but
are not limited to:
• Stakeholder notifications.
• Project reports.
• Project presentations.
• Project records: include correspondence, memos, meeting minutes, and
other documents describing the project.
• Feedback from stakeholders.
• Lessons learned documentation: includes the root cause analysis of issues
faced, reasoning behind the corrective action chosen, and other types of
lessons learned about stakeholder management. Lessons learned are
documented and distributed so that they become part of the historical
database for both the project and the performing organization.
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13.4 INPUTS –
1. Work Performance Data
• The work performance data are the primary observations and
measurements identified during activities being performed to carry out
the project work.
• Various measurements on project activities and deliverables are
collected during various controlling processes.
• Data are often viewed as the lowest level of abstraction from which
information is derived by other processes.
• Examples of work performance data include reported percentage of
work completed, technical performance measures, start and finish
dates of schedule activities, number of change requests, number of
defects, actual costs, actual durations etc.
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• An information management system provides a standard tool for the
project manager to capture, store, and distribute information to
stakeholders about the project cost, schedule progress, and
performance.
• It also allows the project manager to consolidate reports from several

systems and facilitate report distribution to the project stakeholders.
• Examples of distribution formats may include table reporting,

spreadsheet analysis, and presentations.
• Graphical capabilities can be used to create visual representations of

project performance information.
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Professional Responsibility (PR)

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PMI’s Philosophy of Professional

Responsibility 1/2
• The philosophy behind professional responsibility is that the
project
• manager should:
– Be a Leader
– Deal with issues in a direct manner
– Act ethically
– Act legally
– Be open and up front
• For each of these questions, don't ask, "What would I do in
my organization?" but rather, "What should I do?“
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1
PMI’s Philosophy of Professional
Responsibility 2/2
• The PMP is expected to be professional, and that means
following the processes outlined in the PMBOK Guide.
• Hard choices are a favorite tactic for these questions.
• You may be presented with a small ethical violation that will

be painful to resolve; always look for the answer that resolves
it quickly, openly, and fairly.
• You may be given a situation that lets you ignore a problem

instead of confronting it; always look for the choice that will
let you deal with the problem directly.

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Objectives
• Understand where the Professional Responsibility

performance domain fits within the Project Management
framework.
• Understand what culture is and how it impacts projects.
• Understand how culture affects communications and

negotiations.
• Recognize and understand the PMI Code of Professional

Conduct

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Relationship to PMBOK
• Indirect relationship
• Not individual domain in the exam
• Relates indirectly to the Knowledge Areas (Time, Cost, Quality,

Communications, Human Resources, Risk Management,
Procurement)
• No direct inputs, tools/techniques, or outputs
• Relates indirectly to the other Process Groups: how do

different cultures relate to the way they plan, execute, control
and Close Project or Phases
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Example 1
• You were part of a team that worked with Harry, one of the
company’s most popular and successful project managers, for
several years. Harry was well respected and had earned a
stellar reputation throughout the company and the industry
as a man of great expertise and integrity. When Harry left the
company to work for one of your major competitors, people
were shocked but recovered quickly.

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Example 1 (Cont.)
• Several months after he departed, Harry called and asked

whether you would send him a copy of an update of the
project charter he used on the MCCAW project. He said that
he simply wanted to compare his current charter with the one
he developed for the MCCAW project because it was very
detailed and worked well. In this situation you should ---

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Example 1 (Answer)
A. Send him the update because he developed the original

charter and basically knows what it includes.
B. Not send him the update; invite him to the office where he
can review it in your cubicle.
C. Send him the update along with a confidentiality agreement

to sign.
D. Not send him the update; he does not have a legitimate need
to know the contents of the document.

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Example 2
• You have reviewed the schedule and have discovered that the
project is going to be later than originally communicated. Your
boss has asked you not to tell this to your customer even
though he agrees that there is no way to shorten the
schedule. You have an upcoming status meeting with the
customer later on that same day. What should you do?

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Example 2 (Answer)
A. Cancel the status meeting with the customer.
B. Call the customer and explain your dilemma to them in

confidence.
C. Explain to your boss that it is unethical to knowingly report

an incorrect status to anyone on the project.
D. Ask your boss to put his request to you in writing

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Example 3
• You have started managing a project in a country that

observes nearly double the amount of holidays that your
home country takes. Additionally, each team member from
this country receives three more weeks of vacation each year
than you do. What is your MOST appropriate course of
action?

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Example 3 (Answer)
A. Authorize the same amount of vacation time for your team

in order to preserve team equality.
B. Use the other country’s vacation and holidays as schedule

constraints.
C. Allow the extra vacation for that country’s team, but

request that they produce the same or better results as
your team.
D. Try to get this part of the project relocated to a different

country with a stronger work ethic.

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Example 4
• Your customer instructs you that they would like to bypass

creating a work breakdown structure in favor of creating a
more detailed activity definition list. You have expressed
disagreement with the customer on this approach, but they
remain insistent. What is the BEST way to handle this
situation?

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Example 4 (Answer)
A. Document your disagreement with the customer and do

their way.
B. Follow the customer’s wishes, but create the activity list so

that it is as close as possible to a work breakdown
structure.
C. Have your project sponsor explain the necessity of the

work breakdown structure to the customer.
D. Have PMI® call your customer.

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Example 5
• You are working in a foreign country, trying to procure a piece

of expensive industrial machinery. As you evaluate the bids,
one of the potential sellers calls you and mentions that he
could probably get 25% of the price knocked off his bid,
making his bid by far the most attractive price. In return, he
asks you to pay him one fifth of that amount as a show of
your appreciation. What should you do?

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Example 5 (Answer)
A. Do what is necessary to secure the lowest bid for your

customer.
B. Ignore the offer and evaluate the bids as if this has not
happened.
C. Eliminate this seller’s bid, and notify the organization.
D. Ask the seller if he could reduce the price by even more

and assure him he will be well rewarded for his efforts.

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Example 6
• Your team needs to use various software programs to

complete a portion of the project involving new
application development. You call the IT manager and
request that he installs the software that the team
needs. He informs you that the company has only a
single subscription license to all the software you need.

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Example 6 (Cont.)
• He doesn’t have enough individual user licenses for all your

team members and asks that you use your project budget to
pay for the software. Your budget is already tight without this
cost factored into it, so the IT manager offers to install the
software on all computers from this single copy. This solution
would help the project budget. What is the preferred
approach?

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Example 6 (Answer)
A. Have the IT manager install the software on all systems.
B. Meet with your team and ask for recommendations.
C. Meet with your sponsor.
D. Cut another area in the budget.

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10

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PMP Certificate Exam preparation

Lecture Delivered By:

YOUR SUCCESS COMPASS

Personnel involved with managing any project in any

Course Duration: 5 days 7H/Day

You will learn:

Project Management Framework

 Definitions (Project/ Project Management/

Project Integration Management

 Develop Project Charter

PMP Certification Exam Preparation Course

Project Time Management

Project Cost Management

Project Quality Management

Project Human Resources Management

 Human Resource Planning

Project Communication Management

PMP Certification Exam Preparation Course

 Risk Management Planning

Project Procurement Management

 Plan Purchases and Acquisitions

Project Stakeholder Management

Professional Responsibility of the Project Managers

 Concept of Professional Responsibility

Studying for Taking the Exam

 Nature of the Exam

Tips and tricks for avoiding common mistake

PMP Certification Exam Preparation Course

PMP Certification Exam Preparation Course

Your success compass

Your success compass

Your success compass

3 Your success compass

PMBOK ® Guide 5th

 A GUIDE to the generally accepted body of knowledge that defines

The International Organization for Standardization (ISO)

Your success compass

Your success compass

1. PM Definitions and Concepts

Your success compass

Your success compass

• A temporary endeavor undertaken to produce a

Your success compass

Rolling wave planning

• Process groups may overlap and cross phases.

• If a project is broken down into several phases (e.g.

• Rolling wave planning refers to the progressive detailing of

Your success compass

Your success compass

Similarities between Operations and Projects

Differences between Operations and Project

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Project Management Context

Your success compass

Your success compass

Your success compass

• Projects are divided into more manageable components or

• Usually contracted to an external enterprise or other

Your success compass

Your success compass

• Group of projects managed in a coordinated way to obtain

Your success compass

• Provides a holistic view of several related projects which, if

• Satisfies a particular strategic objective, which will require