PMI Project Management Principles

A Point of Reference
(based on the 5th Edition PMBOK
Guide)

By Tom Tiede

Agenda
This material will cover the following project management topics:
What is PMI and the PMP?
Why PMI Project Management Principles are
Useful to Know
A Few Basic PMI Definitions
Five Process Groups
o Initiating
o Planning
o Executing
o Monitoring and Controlling
o Closing

Ten Knowledge Areas

o Integration
o Scope
o Time
o Cost
o Quality
o Human Resources
o Communication

Project Management Terms, such as:

o Triple Constraint
o Project Charter
o Project Management Plan
o Work Breakdown Structure (WBS)
o Predecessor Relationships
o Earned Value Management
o Gold Plating
o Responsibilities Assignment Matrix
o Forming, Storming, Norming, Performing,
o
o
o
o

Adjourning
Communication Noise
Risk Probability and Impact Matrix
Contract Type
Stakeholder Power vs. Interest Grid

Code of Ethics and Professional Conduct

o Honor
o Responsibility

o Risk
o Procurement

o Respect
o Fairness

o Stakeholders

o Honesty

What is PMI and the PMP?

The Project Management Institute (PMI) is the worlds largest
membership association for the advocacy of Project and Program
management.
Over 400,000 current members across 180 countries
Over 600,000 PMI certification holders
Their most widely recognized certification is the PMP (Project Management
Professional). The PMP credential recognizes your:
o Experience,
o Education, and
o Competency to lead and manage projects

Earning the PMP credential requires:

o A bachelors degree and 4,500 hours of documented project management experience, or a
secondary degree and 7,500 hours of documented project management experience
o 35 hours of certified project management training
o Passing the certification exam

Regardless of your inclination to pursue PMP certification, PMI project management

principles apply to your role as a project leader or stakeholder

The purpose of this material is to share a few PMI project

management principles that apply to your role as a project
leader or stakeholder

Why Is This Useful to Know?

Leveraging prescribed PMI project management principles
reduces the risk and impact of costly project omissions, changes,
and errors.
Cost of Resolving Project Omissions, Changes, or
Errors
(Illustrative)

Project
Initiation

Project
Planning

Project
Execution

Project
Closure

The PMI approach places great emphasis on project initiation and planning when
requirements are clearly defined and agreed upon and the full scope of the project
is planned
4

Lets Start with a Few PMI Definitions

A few basic definitions:
PMBOK - the Project Management Book of Knowledge from
which PMI defines terms, standards, and good practices
Portfolio Projects, programs, and operations managed as
a group to achieve strategic objectives
Program - A group of projects and program activities
managed in a coordinated way

Portfolio
Programs
Projects

Project a temporary endeavor undertaken to create a

unique product, service, or result
Project Management the application of knowledge, skills,
tools, and techniques to project management activities to
meet project requirements
Project Manager the person authorized by the performing
organization to direct the team accountable for realizing
project objectives
Project Stakeholder includes all project team members
and anyone impacted by or impacting the project
Triple Constraint the foundation of project management
is balancing scope, time, and cost. Quality is at the center of
the triple constraint

Time

Cost
Quality

Scope
5

Project Management Process Groups

Process
Groups

A process group is a logical grouping of activities, inputs, tools,

techniques, and outputs required for any type of project.
Initiating
Define a new project
or new phase,
identify
stakeholders, and
obtain authorization

Develop an
integrated project
management plan
to attain project
objectives

Authorize the
Work

Plan the Work

Activitie
s
Key
Outputs

Planning

Project Charter
Stakeholder
Register

Project Mgt. Plans

& Related
Documents

Executin
g

Monitorin
g&
Controllin
g

Closing

Complete the work

Track and review
Finalize all activities
and satisfy project project progress and and formally close
objectives
performance;
the project or phase
manage variance
and change
Work the Plan
End the Work
Control the Plan

Project
Deliverables
Work Performance
- Scope
Data
- Requirements
Team Performance
- Schedule
Assessments
- Cost
Project
- Quality
Communications
- Human Resources
(e.g. status
- Communication
reports)
- Risk
Selected Suppliers
- Procurement
& Agreements
- Change
Change Requests
- Stakeholders
Issue Log

Change Logs
Final Product,
Service, or Result
Approved Change
Requests
(i.e. purpose of
Work Performance
project)
Information
Closed
Schedule Forecasts Procurement (e.g.
formal signature of
Cost Forecasts
acceptance)
Updates to Project
Plan
Quality Control
Measurements
Verified
Deliverable
Accepted
6
Deliverables

Applying Project Management Process Groups

The five process groups overlap and follow a basic cycle of plan,
do, check, act until project closure.
Process Group Overlap
Executing
Planning

Closing

Monitoring & Controlling

Initiating

Time

Plan, Do, Check, Act

Initiating

Planning

No

Executing

Monitoring
&
Controlling

No
Change
?
Yes

Complet
e?
Yes

Closing
7

Knowledge Areas
A project manager is responsible for applying and managing the
following ten knowledge areas:
Integration

Identify, define, combine, unify and coordinate activities within the Project
Management Process Groups

Scope

Ensure the project includes all work required to complete the project successfully

Time

Manage the timely completion of the project

Cost

Manage the planning, estimating, budgeting, financing, funding, monitoring, and

controlling of cost to enable the project to be completed within the approved budget

Quality

Determine quality policies , objectives, and responsibilities so that the project will
satisfy the needs for which it was undertaken

Human
Resources

Organize, manage, and lead the project team, including the identification of roles,
responsibilities, required skills, and reporting relationships

Communication

Ensure timely and appropriate planning, collection, creation, distribution, storage,

retrieval, management, control, monitoring and disposition of project information

Risk

Identify and assess risks, plan responses, and control risk to increase the likelihood
and impact of positive events and decrease the likelihood and impact of negative
events on the project

Procurement

Purchase or acquire and control products, services, or results needed from outside the
project team

Stakeholders

Identify people, groups, or organizations that could impact or be impacted by the

project; analyze expectations, and develop strategies to engage stakeholders in
decisions and activities

Knowledge Areas & Process Groups

Activity within each knowledge area is applied based on the
appropriate process group.
Process Groups
Knowledge
Areas
(Below)

Initiating

Planning

Executing

Monitoring &
Controlling

Closing

Integration

Applicable

Applicable

Applicable

Applicable

Applicable

Scope

Applicable

Applicable

Time

Applicable

Applicable

Cost

Applicable

Applicable

Quality

Applicable

Applicable

Human Resources

Applicable

Applicable

Communication

Applicable

Applicable

Risk

Applicable

Procurement

Applicable

Stakeholders

Applicable

Applicable
Applicable

Applicable

Applicable

Each shaded intersection has defined activities,

Applicable
Applicable
inputs,Applicable
tools & techniques,
and outputs

Applicable

Applicable

1. Integration Management - Process Activities

Integration management connects all of the knowledge areas
together from beginning (project initiation) to end (project
closure).
Develop a document that
formally authorizes the project
Lead and perform the work to
accomplish project objectives
Track, review, and report
progress to meet performance
objectives
Review all change requests,
approve changes, and manage
changes to deliverables and
the project management plan

Define, prepare,
coordinate and
integrate all
subsidiary plans
into a
comprehensive
plan

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

Finalize all activities across all

Process Groups to formally
complete the project or phase

ote, additional inputs, outputs, tools and techniques not depicted may apply

10

Project Charter
A project charter formally authorizes the project and the project
manager to apply resources to project activities. Per PMI,
without a charter, there is no project.
A typical charter will identify:
o
o
o
o
o
o
o
o
o

Project Charter

Business need or justification

Scope (high level)
Objectives (such as the intended product, service, or result)
Requirements (high level)
Risks (high level)
Assumptions and constraints
Stakeholders (primary)
Timing (anticipated)
Costs (anticipated)

The charter must be signed by someone who can invest authority for
the project (typically senior management or a sponsor)

11

Project Management Plan

The project management plan is the collection of all plans and
related documents pertaining to planning, executing, monitoring,
controlling, and closing the project.
Procurement
Communicati
on

Change

Quality

Schedule

Scope

Project
Management
Plan

Cost

Process
Improvement

Configuration

Stakeholders

Risk

12

2. Scope Management - Process Activities

Scope

This area includes collecting requirements, defining scope,

creating the work breakdown structure (WBS), and validating
and controlling scope.
Create a plan that documents
how the project scope will be
defined, validated, and
controlled

Determine,
document, and
manage
stakeholder
needs and
requirements
to meet
objectives

Subdivide project
deliverables into
smaller, more
manageable
components
Develop a
detailed
description
of the
project and
product

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

Monitor
status of
the project
scope and
manage
changes to
the scope
baseline

Gain formal
acceptance of
completed project
deliverables

Project Scope is the work performed to deliver a product,

service, or result that satisfies specified features and
ote, additional inputs, outputs, tools and techniques not depicted may
apply
functions

13

Work Breakdown Structure (WBS)

The WBS is the decomposition of the work to be performed. The
output is called the Scope Baseline.
Scope Baseline:
Scope Statement description of project scope, major deliverables, assumptions,
and constraints
WBS hierarchical decomposition of the total scope of work
WBS Dictionary provides details regarding the deliverables, activities, and
scheduling information of each component of the WBS
Illustrative WBS
Project Title

Break down the

work into the
smallest level for
which cost and
time can be
assessed and
administered

Deliverable
1
Work
Packages

Deliverable
2
Work
Packages

Control
Account
Planning
Packages

Used when
insufficient detail
is available at
the work
package level

Work
Packages
14

3. Time Management Process Activities

Time management includes all activity related to developing and
managing the project schedule.
Define and document specific
actions to be performed to
produce project deliverables

Identify and document

relationships among project
activities
Estimate the type and quantities of
material, human resources, or
suppliers required to perform each
activity
Estimate the number of work
periods needed to complete
Key:
individual activities with estimated
Initiating
resources
Planning
Analyze activity sequences,
Executing
durations, resource requirements,
Monitoring & Controlling
and
schedule constraints to create
Closing
the project schedule

ote, additional inputs, outputs, tools and techniques not depicted may apply

Establish the policies,

procedures, and
documentation for
planning, developing,
managing, executing,
and controlling the
project schedule

Monitor the
status of
project
activities to
update project
progress and
manage
changes to
the schedule
baseline to
achieve the
plan

15

Time (Schedule) Management Terms

Below are a few of many terms project managers should know
when developing and managing a project schedule.
PMI Terms
3-Pt. Estimating
Analogous Estimating
Bottom-Up Estimating
Parametric Estimating

Descriptions
Based on estimated Pessimistic (P), Optimistic (O), and Most Likely (M) durations
High level, top down estimate based on similar projects (usually by a SME - subject matter expert)
Estimate at the lowest level of the WBS (level 3) and then roll up for the total project estimate
Based on an existing, comparable parameter (e.g. $/ft. in the same neighborhood)
Contingency (buffer based on known risk) & include in project budget or Managerial (buffer based on
Reserve Analysis
unknown risks)
An iterative technique used when future details aren't known; near term is planned in detail; future is higher
Rolling Wave Planning
level
Finish to Start (FS)
Finish to Finish (FF)
Start to Start (SS)
Start to Finish (SF)
Rare, A starts before B
Default relationship; B
B cannot finish until A is
B cannot start until A
finishes (e.g. when
cannot start until A is
finished
starts
replacing an old system B
Predecessor
finished
with a new system A)
Relationships
A
Free Slack
Total Slack
Float
Lag
Lead
Schedule
Compression
Fast Tracking
Resource Leveling
Resource Smoothing

A
B
B
B
The latest an activity can start without B
delaying next activities
The latest an activity can start without delaying project finish date
Often referred to as the same as Slack
Lag (a delay) = the successor must wait due to some delay after the predecessor is complete
Lead (an accelerant) = the successor can begin before the predecessor is complete
Crashing or fast tracking the schedule to adjust the schedule to align with the plan
Compression technique based on overlapping sequential activities (risky)
Adjusting peaks and valleys to create a level usage of resources
Adjusting peaks and valleys to create a level usage of resources AND also accounts for individual resource
limitations

16

4. Cost Management Process Activities

This area includes defining how project costs will be managed,
estimating activity costs, determining the budget, and
controlling costs.

Establish the
policies,
procedures,
and
documentation
for planning,
managing,
expending, and
controlling
project costs

Develop an
approximation of the
monetary resources
needed to complete
project activities

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

Aggregate estimated
costs of individual
activities or work
packages to establish an
authorized cost baseline

Monitor the status of the

project to update project
costs and manage
changes to the cost
ote, additional inputs, outputs, tools and techniques not depicted may apply baseline

17

Earned Value Management (EVM)

EVM is a means of measuring project cost and schedule vs. the
plan.
Estimate to Complete (ETC) = cost to
complete the project based on current
spending efficiency
ETC
ETC

Dollars

EAC
EAC

BAC
BAC

Actual Cost
(AC) at point in
time

Cost Baseline (S Curve)

Approved Time-Phased Budget

AC
AC
PV
PV
EV
EV

Estimate at Completion (EAC) =

current projected final cost
based on current spending
efficiency
Variance at Completion
(VAC)
Budget at Completion (BAC) =
total project budget

Schedule
Variance
(SV)

Cost Variance Cost Performance (CPI) = EV/AC

(CV)
Schedule Performance (SPI) =
EV/PV

Earned Value (EV) = budgeted cost for work actually completed

Planned Value (PV) = budgeted cost for work
scheduled
Point in Time

Time
18

5. Quality Management Process Activities

Quality management includes identifying quality requirements
and standards, auditing requirements and control
measurements, assessing quality performance, and
recommending changes, when needed.
Identify quality
requirements and/or
standards for the project
and its deliverables, and
document how the project
will demonstrate
compliance

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

Audit the quality

requirements and the results
from quality control
measurements to ensure
appropriate standards and
operational definitions are
used

Monitor and record results of

quality activities to assess
performance and recommend
necessary changes

19

Quality Management Philosophies and Principles

PMI quality management principles are based on a few popular
philosophies.
Quality Philosophies:

Quality Principles:

Total Quality Management (Deming)

proactive approach with statistical analysis

Define and satisfy customer

needs

Zero Defects (Crosby) Do it right the first time

Prevent rather than inspect

Fitness for Use (Juran) Satisfy customer

needs
Continuous Improvement (Kaizen) proactive
approach to process improvement
Gold Plating unacceptable practice of
providing more than requested
Cost of Quality cost of conforming is less than
cost of non-conforming

Be proactive rather reactive

Validate project processes
Measure against approved
standards
Continually improve
Take accountability

Design of Experiments isolate factors that

influence results
6 Sigma strive for 99.9997% error free
ISO 9000 document what you do; do what you
document
20

Quality Management Tools and Terms

Project managers should be familiar with common quality
management tools and terms.
Tools
Cause and Effect Diagrams
Flowcharts
Checksheets
Pareto Diagrams
Histograms
Control Charts
Scatter Diagrams
Terms
Benchmarking
Design of Experiments
Statistical Sampling
1.
2.
3.
4.
5.
6.
7.

Quality Audits
Process Analysis
Inspection
85/15 Rule
80/20 Rule
Rule of 7
Mean Time Before Failure
Mean Time to Repair
Grade vs. Quality
Upper Control Limit
Lower Control Limit
Upper Specification Limit
Lower Specification Limit

Description
Fishbone (Ishikawa) diagram
Basic flow chart or GERT diagram with feedback loop
Check list (e.g. pre-flight list to ensure you are "cockpit ready" before taking flight)
Cumulative histogram (e.g. 80/20 rule)
Depiction of volume or frequency of occurrences of several events
Depiction of process output over time with UCL & LCL at 3 sigma from mean
Depicts pattern of results across two variables
Description
Comparing actual or planned processes to comparable projects to identify best practices
Variable based analysis (freeze all variables but one and assess outcome)
Using a % of the population and extrapolating the results within an acceptable confidence level
Identify best practices; identify gaps; share best practices; offer assistance to improve; highlight lessons
learned
Assess process, identify root causes, alleviate root causes
Examination of work product and comparison to documented standards (e.g. reviews, audits)
85% of quality relates to mgt.; 15% is worker related
80% of problems come from 20% of the issues
Must have 7 consecutive data points above or below mean to consider process "out of control"
MTBF, example quality metric
MTTR, example quality metric
Not the same; you can have a lower grade product with high quality and vice versa (e.g. automobile
models)
UCL = 3 sigma above mean (average)
LCL = 3 sigma below mean (average)
USL is customer established and can be above or below UCL
USL is customer established and can be above or below LCL

21

6. Human Resource Management - Process

Activities

Human resource management consists of planning, acquiring,

developing, and managing the project team.
Define roles,
responsibilities,
required skills,
and reporting
relationships

Confirm
availability and
obtain the
necessary team

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

Improve
competencies, team
interaction, the team
environment, and
enhance project
team performance

ote, additional inputs, outputs, tools and techniques not depicted may apply

Track team member

performance, provide
feedback, resolve
issues, and manage
changes to the team to
optimize team
performance

22

Roles and Responsibilities

Responsibility assignment matrix (RAM) charts such as a RACI
let each team member know who is responsible for each activity
and deliverable.
RACI

Activity

Person

Ann

Ben

Carlos

Denny

Develop Schedule

Collect
Requirements

Develop Test Plan

Develop Training
Plan

(R) Responsible - those who do the work

(A) Accountable - The one who:
o Is ultimately answerable for the completion of the deliverable
o Delegates the work to those responsible
o Approves the work that the responsible person provides

(C) Consulted those whose opinions are sought (typically subject matter experts); typically this is
a two way communication
(I) Informed those who are kept up-to-date on progress; typically this is a one way communication

23

Project Life Cycle - Team Building & Leadership

Styles

Project managers should be aware of typical team building

dynamics and situational leadership styles across a project life
cycle.
Team Building:
Leadership Style:

Forming Storming Norming Performing Adjourning

Directing

Coaching

Initiating

Facilitating

Project Life Cycle

Supporting
Closing

Time

Team Building Stages

Situational Leadership Styles

Forming creating the team

Directing provide specific, clear

instructions and closely supervise

Storming team chaos as people

start working with one another
Norming team behavior starts to
normalize

Coaching solicit input, offer

rationale and examples

Performing team performs as a unit

Facilitating maintain team

progress; delegate day-to-day control

Adjourning team completes work

and disbands

Supporting support and motivate

the team to complete objectives
24

Conflict Management
Conflict is inevitable. A project manager should be aware of
typical sources of project conflict and recommended techniques
to resolve them.
Sources of Conflict
Conflict Resolution
Techniques
Higher
Recommended:
Scheduling Priorities
1. Collaborate/Problem Solve
Scarce Resources
2. Compromise/Reconcile
Probabilit
Personal Work Styles
3. Force/Direct
y of
Methodology/Details
Conflict
Cost/Budget
Not Recommended:
Personalities
Lower

4. Smooth/Accommodate
5. Withdraw/Avoid

25

7. Communication Management - Process

Activities

Roughly 90% of a project managers job is communication.

Develop a
communication
approach
based on
stakeholders
informational
needs

Create, collect,
distribute, store,
and retrieve
information

Monitor and control

communication
throughout the
entire project life
cycle

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

ote, additional inputs, outputs, tools and techniques not depicted may apply

26

Communication Management
Project managers should be aware of the basics of effective
communication across the broad stakeholder community.
Communication Methods

Communication Model

Interactive between two people

Push send to specific recipients
Pull recipient actively seeks information

Sender/Enco
de
Noise

Communication Types
Active listening receiver verifies correct
interpretation
Effective listening receiver observes visual
and vocal cues
Feedback sender receives feedback from
receiver
Nonverbal - ~55% of communication (e.g.
body and facial language)
Para-lingual Voice characteristics

Transmi
t

Noise

Decode/Receiver

Acknowledgement
Response

Communication Paths
N

# of Communication
Paths
equals [N x (N-1)]/2
N equals # of
Stakeholders
Example: [4 x (4-1)]/2
=6
27

8. Risk Management Process Activities

Risks are possible events that could impact the project in a
positive (an opportunity) or negative (a threat) way.
Define how to
conduct risk
management
activities
Determine and document
the characteristics of risk
which may affect the
project
Prioritize risks for further analysis
or action by assessing their
probability of occurrence and
impact

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

Analyze the effect of

identified risks on
overall project
objectives

Note, additional inputs, outputs, tools and

techniques not depicted may apply

Implement risk response plans, track

identified risks, monitor residual risks,
identify new risks, and evaluate risk

Develop options
and actions to
enhance
opportunities
and reduce
threats to
project
objectives

28

Risk Probability and Impact Matrix

A probability and impact matrix can be used to evaluate the
impact of a risk and the probability of its occurrence.
Probability and Impact
Matrix

High

Positive Risk Responses

ed

Probability
of
Occurrence
Moderate

Ne e
s
ity on
r
io esp
r
rP kR n
e
a
gh Ris Pl
i
H or
f

Share split the responsibility and

benefit to maximize the

opportunity
Exploit take steps to ensure

success
Enhance improve the size of the

risk event and impact

Accept do nothing

Negative Risk Responses

Avoid get rid of the potential

problem
Transfer re-assign to another

party

Low

Moderate

Level of Impact

High

Mitigate minimize the bad

characteristics of the risk

Accept do nothing

The higher the combined probability and impact of the

risk event the greater the need to develop a risk
response plan

29

Risk Management
Project managers should be aware of risk management terms.
Risk Management Terms
Monte Carlo simulation of possible outcomes
Risk Breakdown Structure breakdown by category (e.g. internal, external, technology,
organizational, etc.)
Risk Trigger an indicator that an event could occur
SWOT Analysis strengths, weaknesses, opportunities, and threats
Expected Monetary Value (EMV) summation of probability x impact of alternative decisions (
not to be confused with EVM earned value management)
Contingency Reserves for known risks (include in budget and schedule)
Management Reserves for unknown risks (excluded from baselines for budget and schedule)
Residual Risk risk remaining after risk response
Secondary Risk potential risk as a result of risk response
Workaround wing it response when other risk response plans dont work
Types of Risk Tolerance
o Averse Avoids risk
o Seeker Seeks risk
o Neutral Middle ground

30

9. Procurement Management Process Activities

Procurement management includes planning, selecting,
contracting, controlling, and closing outsourced products and
services.
Document
project
procurement
decisions,
specify the
approach, and
identify
potential
sellers

Obtain seller
response, select a
seller, and award a
contract

Manage procurement
relationship, monitor
contract performance, and
make changes and
corrections as appropriate

Complete each
project
procurement,
including finalizing
open claims,
updating records to
reflect final results,
and archiving
information

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

ote, additional inputs, outputs, tools and techniques not depicted may apply

31

Contract Types
Project managers should be aware of the benefits and risks of
different contract types from a buyers perspective and a sellers
perspective.
Low
High
Buyers Risk
FFP
High

FPIF FP EPA T&M

PO

CPFF

Sellers Risk

CPIF

CPAF

CPPC
Low

(FFP) Firm Fixed Price allows buyer to budget fixed price; requires seller to detail scope and accurately
estimate price; very common
(FFIF) Fixed Price Incentive Fee includes incentive to motivate seller to produce at greater speed
(FF EPA) Fixed Price Economic Price Adjustment compensates for year to year economic changes
(T&M) Time and Materials typically used for smaller initiatives
(PO) Purchase Order typically used for commodity items
(CPFF) Cost Plus Fixed Fee typically variable costs are cost-plus and predictable costs are fixed fee
(CPIF) Cost Plus Incentive Fee actual costs plus incentive to motivate seller to produce at greater speed
(CPAF) Cost Plus Award Fee actual costs plus award based on customer satisfaction with agreed criteria
(CPPC) Cost Plus Percent of Cost actual cost plus % of actual; the higher the cost, the higher the fees

32

Procurement Terms
Project managers should be familiar with additional procurement
terms in the table below:
Terms
Make or Buy Analysis
Bidder Conference
Independent Estimates
Contract (CCOLA)
Point of Total Assumption
Ceiling Price
Target Cost
Target Price
Share Ratio
RFP
RFQ
IFB
Design Scope of Work (SOW)
Functional Scope of Work
(SOW)
Sole Source
Single Source
Negotiation
Standard Terms & Conditions
Special Provisions
Claims Administration
ADR

Description
Is it more practical to insource or outsource (based on a cost comparison between the two)?
Prior to bid submission, offers opportunities for prospective sellers to obtain requirements clarification
from buyer
Used to validate proposal information
Must have 5 Components: Capacity, Consideration, Offer, Legal Purpose, Acceptance
Point at which seller is responsible for all cost overruns; PTA = (Ceiling Price - Target Price)/Buyer Share
+ Target Cost
% of Target Cost (e.g. Ceiling = 140% of target cost)
Expected cost of work in the contract
Equals Target Cost + Target Profit
Ratio of split between buyer and seller of cost savings or overruns (e.g. 70/30)
Request for Proposal, typically used for higher priced, customized services or products
Request for Quote, typically used for small dollar commodity type products
Invitation to Bid, used for government sealed bids (similar to RFP)
Buyer provides exact details; generally results in fixed price contract
Buyer provides functionality needed; generally results in cost plus contract
Go direct to a supplier without any available competition (e.g. supplier holds the patent)
Go direct to a supplier although competitors are available (e.g. "preferred supplier")
PMI prefers "win/win" negotiation approach
Typical common (non-negotiable) contract items with a tight range or parameters
Typically added to account for changes to standard terms and conditions
Means of administering contested changes or disagreements regarding compensation
Alternative dispute resolution (e.g. arbitration) used when claims cannot be negotiated between buyer
and seller

33

10. Stakeholder Management Process Activities

It is critical to project success to identify stakeholders, address
their requirements, meet their expectations, and foster their
engagement.
Identify the
people, groups, or
organizations that
could impact or
be impacted by
the decision,
activity, or
outcome of the
project.
Develop appropriate
management strategies to
effectively engage stakeholders
throughout the project life cycle
based on their needs and
potential impact on project
success
Communicate
and work with stakeholders to
meet their needs and expectations, address
issues as they occur, and foster appropriate
stakeholder engagement throughout the
project life cycle

ote, additional inputs, outputs, tools and techniques not depicted may apply

Key:
Initiating
Planning
Executing
Monitoring & Controlling
Closing

Monitor overall
project
stakeholder
relationships and
adjust strategies
and plans for
engaging
stakeholders

34

Stakeholder Power vs. Interest Grid

All stakeholders are different and, therefore, need to be
managed differently based on their relative authority (power)
and level of concern (interest).
Stakeholder
Power vs. Interest Grid
High
Power

Keep Satisfied

Manage Closely

Monitor

Keep Informed

Moderate

Low

Moderate

High

Interest
35

PMI Code of Ethics and Professional Conduct

All PMI members must agree to adhere to a high personal
standard of ethical and professional behavior.
Tenets of Code:
1. Honor
o Do what is right and honorable
o Set high standards for yourself and aspire to meet those standards is all aspects of life

2. Responsibility Take ownership of:

o The decisions you make or fail to make
o The actions you take or fail to take
o The consequences that result

3. Respect
o Show high regard for yourself, others, and the resources (e.g. people, money, reputation, safety)
entrusted to you
o Engender trust confidence, performance excellence, and mutual cooperation in an environment of
diverse perspectives and views

4. Fairness
o Make decisions and act impartially and objectively
o Conduct yourself in a way free from competing self interest, prejudice, and favoritism

5. Honesty
o Understand the truth
o Act in a truthful manner both in your communication and in your conduct
36

Summary
This material covered the following project management topics:
What is PMI and the PMP?
Why PMI Project Management Principles are
Useful to Know
A Few Basic PMI Definitions
Five Process Groups
o Initiating
o Planning
o Executing
o Monitoring and Controlling
o Closing

Ten Knowledge Areas

o Integration
o Scope
o Time
o Cost
o Quality
o Human Resources
o Communication

Project Management Terms, such as:

o Triple Constraint
o Project Charter
o Project Management Plan
o Work Breakdown Structure (WBS)
o Predecessor Relationships
o Earned Value Management
o Gold Plating
o Responsibilities Assignment Matrix
o Forming, Storming, Norming, Performing,
o
o
o
o

Adjourning
Communication Noise
Risk Probability and Impact Matrix
Contract Type
Stakeholder Power vs. Interest Grid

Code of Ethics and Professional Conduct

o Honor
o Responsibility

o Risk
o Procurement

o Respect
o Fairness

o Stakeholders

o Honesty

Thank you for taking the time to review this

material!

37