Project Management

- Principles and Practices

Nutek, Inc.
Bloomfield Hills, Michigan 48302, USA.
 Module 0 Introduction Page ii

Instructor’s Background

Ranjit K. Roy, Ph.D., P.E., PMP, (Mechanical Engineering, president

of NUTEK, INC.), is an internationally known consultant and trainer
specializing in quality engineering. Dr. Roy has achieved recognition for his
down-to-earth style of teaching of Taguchi’s experimental design and other
quality improvement techniques like Quality Operating Systems (QOS),
Production Problem Solving, Project Management, etc.
Dr. Roy began his career with The Burroughs Corporation as a senior project engineer
following the completion of graduate studies in engineering at the University of
Missouri-Rolla in 1972. At General Motors Corp. (1976-1987) Dr. Roy assumed various
engineering responsibilities, his last position being that of reliability manager. While at GM,
he consulted on a large number of documented quality improvement projects of significant
cost savings.
Dr. Roy established his own consulting company, Nutek, Inc. in 1987 and currently
offers consulting, training, and application workshops on product and process design
improvement. He is the author of the textbooks A Primer On The Taguchi Method,
published by the Society of Manufacturing Engineers in Dearborn, Michigan, Design of
Experiments Using the Taguchi Approach: 16 Steps to Product and Process
Improvement published (January 2001) by John Wiley & Sons, New York, and of Qualitek-
4 software for design and analysis of Taguchi experiments. Dr. Roy is a fellow of the
American Society for Quality and an adjunct professor at Oakland University, Rochester,
Michigan. Dr. Roy is listed in the Marquis Who’s Who in the world.

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Project Management - Principles and Practices

Course Outline
In today’s fast-paced business world, organizations that practice sound project
management principles secure competitive advantage over those who rely on experience
alone. Today, to get products and services to the market faster with a cost advantage, the
projects must be time-based as well as cost-based. Project Managers who understand how to
use the tools of Project Management are taking leadership roles in the constant drive toward
operating improvement.
This comprehensive 4-day seminar is an in-depth and participative course providing
project managers with the skills, knowledge and tools needed for project success. Seminar
attendees learn the essential steps in setting up project plans, scheduling work, exercising
appropriate control and monitoring progress to achieve desired project goals. Through class
exercises and realistic simulations, attendees learn how the principles are put into practice.
This course conforms to A Guide to the Project Management Body of Knowledge (PMBOK®
Guide, 3rd Edition) by Project Management Institute and reviews most materials included in
the Project Management Professional (PMP) exam. The topics covered in this session are
considered among the best practices in the field. Upon completion of this course, the
participants return to their own organizations prepared to meet time, budget and performance
objectives of their own projects.
Course discussions during the cover the following PMBOK® areas:
• Project Integration Management, Scope Management, Time Management, Cost
Management, Quality Management, Human Resource Management, Communication
Management, Risk Management, and Procurement Management

Benefits from the Session:

The participant will learn the skills necessary for planning, scheduling, controlling and
assessing risk in projects. Projects planned following the guidelines discussed in this course
will reduce the time it takes to get a new team up-to-speed, making your organization realize
the benefits of a team’s synergy more quickly, develop better solutions, generate more
innovative ideas, and secure greater buy-in. By attending this session, you will develop
working knowledge to calculate project duration and express it in terms of confidence
intervals using critical path method and PERT.

Who should attend this seminar/workshop?

• Managers and executives responsible for diverse projects
• Anyone seeking a structured project management method
• Project managers currently experiencing difficulty keeping projects on track
• Support function managers and supervisors who want a better understanding of the
project management process
• Individuals who want to prepare themselves for a project management exam

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Content
Day 1

Module 0: Introduction to Project Management ii

Course Outline iii
PM Overview & Introduction viii
Project Management Tasks ix
Source of Knowledge for Project Management x
What is Project Management? xii
Project Manager’s Work xiv
Structure of Organization Suited for Project Management xvi
Phases and Life Cycle of a Project xvii
PM Phases and Tasks xviii
Project Success and Failure Data xx
Exercises xxii

Module 1: Project Initiation (Concept & Definition) 1.1

Project Initiation Tasks (10 Tasks)

How do Projects Originate? 1.3
• Project Charter 1.5
• Assumptions and Constraints 1.7
• Cost and Price Relationship 1.8
• Overbid and Underbid 1.10
• The Scope Baseline 1.11
• Work Breakdown Structure (WBS) 1.12
• Change Management 1.15
• Project Justification 1.16
• Breakeven Chart 1.17
• Present & Future Value of Money 1.20
• Internal Rate of Return on Investment 1.23

Key Concepts Review 1 1.24

Exercises 1.25

Day 2

Module 2: Project Planning 2.2

Project Planning Tasks (7 Tasks) 2.2
Planning Purpose and Ingredients 2.3
2.1 Refine project Requirements 2.6
Problem Statement
Mission Statement
2.2 Create Work Breakdown Structure (WBS) 2.10

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2.3 Develop Resource Management Plan 2.15

2.4 Refine Project Time and Cost Estimate 2.15

Activity Duration 2.16

Activity Sequencing 2.17
Schedule Development 2.21
Critical Path Method 2.23
Program Evaluation and Review Technique (PERT) 2.34

Day 3

2.5 Establish Project Controls 2.44

Project Change Control

Quality Control & Management 2.45

(Managing Quality - PMBOK® Topic Highlights)
- Quality Planning
- Quality Assurance
- Quality Control

Project Human Resource Management 2.55

®
(Managing Human Resources - PMBOK Topic Highlights)
- Organizational Planning Tool
- Staff Acquisition Tool
- Team Development Technique

Communication management 2.59

(Managing Communications - PMBOK® Topic Highlights)
Communication Planning
- Information Distribution
- Performance & Status Reporting
Earned Value Analysis
Return on Sales
Depreciation

Risk Management 2.74

(Managing Risk - PMBOK® Topic Highlights)
Risk Management Planning
- Risk Identification
- Risk Analysis
- Quantitative Risk Analysis
- Risk Monitoring and Control
-
Procurement Management 2.82

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(Managing Procurement - PMBOK® Topic Highlights)

- Procurement Planning
- Solicitation Planning
- Source Selection
- Contract Administration
- Contract Closeout

2.6 Developing a Formal and Comprehensive Project Plan 2.88

2.7 Obtain Project Plan Approval 2.89

Key Concepts Review 2 2.90

Exercises 2.91 - 95

Module 3: Project Execution 3.2

Project Execution Tasks (5 Tasks)
- Commit Project Resources
- Implement Project Plan
- Manage Project Progress, etc. 3.9
Key Concepts Review 3 3.10

Day 4

Module 4: Project Control 4.2

Project Control Tasks (8 Tasks)
Project Control and Evaluation, etc.

Key Concepts Review 4 4.4

Examples 4.5

Module 5: Project Closeout 5.2

Project Closeout Tasks (5 Tasks)
Finishing Tasks, etc. 5.3

Key Concepts Review 5 5.4

Module 6: Professional Responsibilities 6.2

Professional Responsibilities Tasks (5 Tasks)
Implementing Project Management in Your Company 6.4

Key Concepts Review 6 6.5

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Appendix
• Glossary of Terms A.3
• References A.10
• Situation Studies A.11
• Solution to Module Exercise A.12
• Project Management Institute A.18
• Sample Project Management Documents A.20
• Self-Test Your Knowledge of PM A.22
• Course & Instructor Evaluations A.23
• Participant Information A.24
• PMI & Project Management Professional Exam. (PMP) A.46
• Course & Instructor Evaluations A.72
• Participant Information Survey A.74

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PM Overview & Introduction

“Project Management is all about how to successfully lead, conduct and manage a project”

It takes lots of common sense and a few techniques!

Com m on Sense Techniques

• Common sense items are too numerous

• All projects will make use of some of them
• Larger industrial projects make use of many of the techniques we will
discuss in this class
• But, industrial projects are too specific and technical for diverse
applications
• Simple & small projects are easy to understand by all, but do not usually
make use of techniques
• Thus, the most of our examples in the class will be simpler projects that all
attendees can relate to

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Minimum Planning Activities (Phases as per PMBOK® 3rd Edition)

Intermediate
Initial Final

With a few more activities

Planning Executing
Initiating Monitoring & Closing
(Doing) Controlling

Time
Spent

Planning Execution

Phases

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1. Wedding Ceremony & Reception (300 – 500 days of planning, 1 day of ceremony)

Project: Long Planning – Short Execution

Execution
T E
A
S
K Planning
S

Time

2. Powering Powerless Michiganders (Friday Aug. 14, 2003, 4:15PM, 2.2 Million households
lost power; Power restored by Sunday night. Planning 2 hours, Execution 70 hours)
Project: Short Planning – Long Execution

Planning, 2h
T
A
S Execution, 70 hours
K
S

Time

3. Lunar Exploration Project (Years to plan, years to execute)

Project: Long Planning – Long Execution

T Execution
A
S
K Planning
S

Time
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Project Management Tasks

Monitoring & Prof. Resp.

Initiating Planning Executing Controlling
Closing

Initiating the project Project Closeout

Executing the project
- Obtain Final Acceptance of
- Determine Project Goals - Commit Project Resources
Deliverables
- Determine Deliverable - Implement the Project Plan
- Document Lessons Leaned
Products and Services - Manage Project Progress
- Facilitate Administrative and
- Determine Project - Communicate Project Progress
Financial Closure
Management Process Outputs - Implement Quality Assurance
- Preserve Essential Project
- Document Project Procedures
Records
Constraints
- Release Project Resources
- Document Assumptions
- Define Project Strategy
- Identify Performance Criteria Controlling the Project
- Determine Key Resource - Measure Project performance
Requirements
Prof. Responsibilities
- Refine Control Limits on
- Estimate an Appropriate Performance - Maintain Individual Integrity
Project Budget - Take Timely Corrective and Professionalism
- Create a Comprehensive Action - Contribute to the Project
Document for Final - Evaluate the Effectiveness of Management Knowledge Base
Approval the Corrective Actions - Enhance Individual
- Ensure Compliance with Competence
Change Management - Balance Stakeholders Interest
Planning the project - Reassess Project Control - Respectfully Interact with
Plan Team Members and
- Refine Project Requirements - Respond to Risk Event Stakeholders
- Create the Work Breakdown Triggers
Structure (WBS) - Inspect Project Activities
- Develop the Resource Periodically
Management Plan
- Refine Project Time and
Cost Estimate
- Establish Project Control
- Develop a Formal and
Comprehensive Project Plan
- Obtain Project Plan
Approval

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Project Management - Principles and Practices

Source of Knowledge for Project Management Although people of all ages

have managed and
accomplished projects for
thousands of years, it has
- Project Management Institute (PMI), a been recognized as
professional organization founded in 1969, is discipline only a few
the main source of guidance in the practice of decades ago. Today the
project management. practice is standardized and
there are numerous
All who practice project management benefit from the computer aides to support
Guide to the Project Management Body of Knowledge the project success.
(PMBOK®) published by PMI.
® Projects of type:
- PMBOK represents the standard and accepted
Ancient projects – The
guidelines for project management
Egyptian pyramids, the
- Use PMBOK® as a master reference. Trojan horse, the Great
Wall, Alexander’s conquest
- PMBOK
®
contents will be discussed later in this of the east, etc.
session.
Projects of recent pasts –
Wright Brother’s flight,
construction of rail road,
the Statue of Liberty, the
Taj Mahal, the Eiffel
Tower, and the Empire
State Building, etc.

Projects of more recent time – The Moon Landing Mission, The Dessert Storm, The
Operation Iraqi Freedom, DTE Energy’s ability to bring Power back to Detroit, MI Aug. 14,
2004, 4:15PM), one of the large but short-lived project (72 hours, 2.2 M people out of power),
etc.

These projects were all completed by people at different times using their own method of
workings at different schedules and cost. Today’s project managers benefit from the best
practices of the past and use of standardized techniques allowing project completion with high
efficiencies in cost, time and scopes.

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What is a Project and what are its Characteristics? Project Types and
Characteristics:
A project is plan that needs to get done in a set Projects come in all sizes –
timeframe & within a deadline. Projects come in all building a deck in your
sizes and may involve one or more people. backyard, planning a
wedding reception, moving
“A project is a temporary endeavor undertaken to into a new office, creating
provide a unique product and service.” and implementing a new
– the Guide to the PMBOK customer support database,
or building a rail
“A project is a problem scheduled for solution.” transportation system to
- J. M. Juran connect two airport
terminals, etc.
A project is composed of multiple tasks including a
plan, proposal, or scheme to meet a designated A project could be a one-
performance, time, and cost requirement. man show or involve
thousands of people. Also,
A project has specific: like a well-written story, a
- goals successful project has a
- time frame beginning, middle, and
- final outcome or result end. A project often
- budget originates with an idea or
- resources concept by someone or a
- plan (what gets done when) group people to accomplish
- evaluations (option to be evaluated on their something. The middle part
own) of the project always has
lists of things to do, a plan,
or strategies for completing tasks, & schedules for getting the job done. The end of a project,
of course, results in achieving what all wanted and what all team members can be proud to
have accomplished.

Beginning Middle End Why?

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Project Management:
What is Project Management? Now that we know what a
project is, we can proceed
to understand what we
“Project Management is the application of knowledge, mean by project
skills and technique to project activities in order to management.
meet or exceed stakeholders need and expectation
from a project.” - Guide to the PMBOK The terms manage and
management are defined as
follows (- The Tormont
Project management is: Webster’s dictionary):
- facilitating the planning, scheduling, and
controlling of all activities that must be done Manage –
to achieve project objectives 1. To direct or control
- providing leadership toward achieving the the use of a tool,
project goals machinery, etc.
2. To exert authority to
discipline or
persuade…..
“Leadership is the art of getting others to want do 3. To direct or
something that you believe should be done.” administer the
- Vance Packard affairs of (an
organization, estate,
etc.)
4. To carry on or
supervise business
affairs …

Management –
The act, manner, or practice of managing, handling, or controlling something. …

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Example Project:
Kind of Work A Project Manager Needs to Do
To see what a project
manager needs to do,
A project manager is the conductor of the ‘show’. consider this example.
He/she organizes, runs, and brings the project
conclusion by doing the following: Project: Boost morale
and teamwork by
1. Define project goals arranging for a company
2. Determine desired results picnic
3. Ensure work completion within budget
4. Establish schedule Budget: $15 per
5. Select teams and establish individual role participating employee
6. Secure machines & tools
7. Monitor ongoing progress Time frame: May 15 –
8. Resolves conflicts and problems August 30th. (Assume
9. Communicate progress to stakeholders today’s date is April 15)
10. Boost team members morale
11. Brings project to completion 1. Goal: Organize a picnic
12. Close the project by documenting the for all team members to
lessons learned bolster company morale
and raise team spirit

2. Results expected:
Enjoy food, have fun, and
get to know your fellow
workers on personal level.

3. Working within budget: Do not exceed budgeted cost for food, transportation,
game/activity equipment, trophies, and other freebees.

4. Setting up schedule: Form the planning team eight weeks prior to the event, send out
invitations six weeks in advance, order food two weeks before the event, buy other
nonperishable goods a week in advance, send reminder for picnic every week for the last three
weeks, etc.

5. Selecting Team: Select a group of co-workers to form a team. In doing so, you will look
for people who have experience and enthusiasm to do special tasks to arrange the picnic.
Assign tasks to each individual, that is, decide who will bring chicken, who will bring drinks,
who will take care of games, and who will prepare the food.

6. Securing Machines & Tools: Make sure that the picnic location is reserved and that grills
for barbeque are available.

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7. Monitoring Progress: Check with team members to see if they are on schedule with
ordering supplies. On the day of the picnic, take notes of how the food was, was there
sufficient supplies, etc.

8. Resolving Conflicts and Problems: “Sally can’t bring the supplies to the picnic; she’s in
bed with an allergy attack.” Make arrangement for some one else to swing by Sally’s house.

9. Communicating Status: Tell the boss that everything is progressing well and that he can
relax.

10. Boosting Team Morale: Meet with team members for a dinner outing to see how
everyone is doing.

11. Bringing Project to Completion: Talk with team members the day before the event to
check on their status. On the day of the picnic, arrive at the picnic location early. Welcome all
and introduce team members with each other when appropriate (This is necessary in today’s
business with remote locations).

12. Closing the Project (Asses what went right and what went wrong): People enjoyed the
food very much. The picnic location being close to water was a great attraction for many. The
charcoal for the grill was not of good quality; we must be selective in buying charcoal next
year.

One-Person Projects
Many projects are one-person projects. Individual jobs qualify as projects, as they still definite
starting points, target end dates, specific performance requirements, & definite scopes of work
and budgets. But, managing these projects may not be classified as project management as
there are no coordination activities with other people. For one-person projects, all you need is
a to-do list.

Project Management Is Not Just Scheduling

A common misconception is that project management is synonymous with scheduling. If that
were true, project management computer programs for project management would make all
projects successful. Scheduling work is a tool used in project management. What is more
important is the leadership and development of a shared understanding of the project goals
and constructing a good Work Breakdown Structure (WBS) to identify all the work to be
done.

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Organizational Structure Suited for Project Management

Organizational Structure Suited for Project Matrix organization is the

Management most desirable structure for
successful. In this type, all
employees are organized
Three main organizational structures are most strictly by skills. In
commonly used. Often times, a combination of the traditional organization,
three types is utilized. there exists some flexibility
in organizing by skills. For
- The Projectized Organization example, an engineering
o Project manager with supreme analysis group may have a
authority number of employees for
o Fully dedicated personnel specific computer support,
o Difficulty securing special skills for while a mechanical test lab
short time may have an electrical
o Personnel reallocation at end of engineer. In matrix
project organization, people of the
same skill report to the
- The Traditional Organization same functional managers
o Set up based on people skills who are responsible for
o Specialization is encouraged providing the manpower
o Skill changes are difficult in response needed by the project
to support for project needs manager and take care of
the administrative needs of
- The Matrix Organization (Weak & Strong)
the employees the provide
o Introduced in 1970s
for the project.
o Attempt to combine best of
projectized with traditional structure
Project managers also have
an organization. Specifically, the project manager is responsible for work that is done by the
individuals assigned to the project. Since project managers are not responsible for
administrative work needed for their employees, they can concentrate their time and effort on
forming the right teams to get the job done.

Since people report to project managers and are responsible for their work to both functional
managers and project managers, there is a need for BALANCE OF POWER.

Strong Matrix Organization – In this set up, project managers are responsible for have more
people than the functional manager. This may result in more people assigned to a project than
needed. Also, employee skill may be underutilized.

Weak Matrix Organization – In this type of organization, the balance of power is tilted
toward the functional managers; the organization tends to be similar to a traditional
organization with separate project managers. The functional managers assign and monitor
work, while the project managers simply expedite the projects.

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Balance Matrix Organization – In this type of organizational structure, balance of power is

adjusted depending on the time spent by each employee. For example, the company could
institute a standard rule that if an employee spends more than a month on the project, all work
will be done under the direction of the project manager.

Project Office and Project Management Office - These terms are often used by companies
with larger projects. A project office maintains office supplies and other necessities in a
common location to be shared by all projects. A project management office is a separate
location for the employees in the project to be housed.

- In early 70’s General Motors’ five passenger car divisions planned to

develop future vehicles working in a common location called Project
Center in Warren, MI
Steps in Managing a Project
The Phases and Project Life Cycle
Project Initiation
- Define project
All projects, large or small, go through similar phases. - Develop solution
The project life cycle defines the beginning and end of
a project and various milestones within it. Different
people have defined the middle phases differently.
PMI describes the project life cycle in terms of
process groups like: initiating process (concept and Project Planning
- What needs to be done?
definition), planning process, execution process,
- Who will do it?
controlling process, and closing process. - How will it be done?
- When must it be done?
Project Project Project Project - How much will it cost?
Initiation Planning Execution & Closing - What is needed to do it?
(Concept & Control
Definition)

Planning Effort Project Execution

Project Controlling and

Cumulative Monitoring
Spending - Are we on target?
- What must be done if
not?
- Should the plan be
modified?
Time

PMI views projects as a process and describes the project life

cycle in terms of six major processes: like initiation process, Project Closing
planning process, executing, controlling process, and closing - What was done well?
process. - What did we learn?
- How should it be done
next time
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PM Phases & Tasks

Detail the list of tasks that needs to be done in each step of the project’s management. These
are the items a project manager has to address. The topics and methods that support
accomplishing these areas will be the subject of discussions in the upcoming modules.

You can use the following as a check list while progressing through project phases.

Project Initiation Tasks (10 Tasks) Project Control Tasks (8 Tasks)

1. Determine Project Goals 1. Measure Project Performance

2. Determine Deliverable Products and 2. Refine Control Limits on Performance
Services 3. Take Timely Corrective Action
3. Determine Project Management Process 4. Evaluate the Effectiveness of the
Outputs Corrective Actions
4. Document Project Constraints 5. Ensure Compliance with Change
5. Document Assumptions Management
6. Define Project Strategy by Evaluating 6. Reassess Project Control Plan
Alternative Approaches 7. Respond to Risk Event Triggers
7. Identify Performance Criteria 8. Inspect Project Activities Periodically
8. Determine Key Resource Requirements
9. Estimate an Appropriate Project Budget
10. Create a Comprehensive Document for Project Closing Tasks (5 Tasks)
Final Approval
1. Obtain Final Acceptance of Deliverables
2. Document Lessons Leaned
Project Planning Tasks (7 Tasks) 3. Facilitate Administrative and Financial
Closure
1. Refine Project Requirements (vision, 4. Preserve Essential Project Records
mission, scopes and objectives) 5. Release Project Resources
2. Create the Work Breakdown Structure
(WBS)
3. Develop the Resource Management Plan Professional Responsibilities (5 Tasks)
4. Refine Project Time and Cost Estimate
1. Maintain Individual Integrity and
5. Establish Project Control (Manage &
Professionalism
Control Changes)
2. Contribute to the Project Management
6. Develop a Formal and Comprehensive
Knowledge Base
Project Plan
3. Enhance Individual Competence
7. Obtain Project Plan Approval
4. Balance Stakeholders Interest
5. Respect and Interaction with Team
Project Execution Tasks (5 Tasks) Members and Stakeholders

1. Commit Project Resources

2. Implement the Project Plan
3. Manage Project Progress
4. Communicate Project Progress
5. Implement Quality Assurance Procedures

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The Guide to the PMBOK® describes NINE knowledge areas that help you accomplish the
tasks necessary (listed below) to manage the projects. Project managers need these collections
of knowledge to be successful. Each of these knowledge areas operates as a sub-process in
each of the major project processes. For example, the knowledge area of cost management is
helpful to estimate the cost of management in the project planning process. Project quality
management in the knowledge areas helps you monitor the progress and performance of the
project. The nine PMBOK® knowledge areas are summarized below.

1. Integration Management
Project integration helps you 2. Scope Management
with project planning,
execution, and control. It also Project scope definition is 3. Time Management
identifies procedure you need very important for the
to establish for project success of the project. This This helps develop a project
change control. area of knowledge helps you schedule that can be met and
develop scope statement, establish method to ensure
boundaries of project, etc. that the schedule is met.
(It is not to be confused with
personal time management)

4. Cost Management
You will need the 5. Quality Management
information here for
estimating cost of resources It offers tools for quality 6. Human Resource Mana..
(people, material, equipment, planning and assurance. It
travel, etc) for the project. also describes current This area helps you with
practices for evaluation and finding people for the project
monitoring of quality and defines their roles and
requirements. responsibilities. It also helps
you structure the appropriate
reporting relationships.

7. Communication Mang...
Deals with ways to plan, 8. Risk Management
execute and control gathering
and disseminating of all It describes the systematic 9. Procurement Manage..
information relevant to the process by which to identify,
needs of the project analyze, and respond to the It helps with methods for
stakeholders. project risk. It assures procurement of goods,
increase probability of project issuance of bids, selection of
success. vendors, administering and
closing contracts.

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Project Success and Failure Data

When principles and tools of
project management are
A Standish Group (www.standishgroup.com) report followed correctly, the
from 1994 shows that: project success rate can
significantly increase.
- 17 % of software projects done in the US
meet project goals Many organizations require
- 50% require changes to target completion that all projects be lead by
dates certified project managers.
- 33% are cancelled For many others, projects are
- $250 Billions are spent on software completed by people not
development projects each year skilled in project
- $80 Billion is lost on cancelled projects management. In absence of
planning, projects are
- The failure rate is similar for product managed by the seat-of-the-
development projects pants approach. Often this is
- An estimated 30% of product development the case as all senior
projects require rework management do not
understand what project
The single common reason for project failure is
management can do for the
inadequate PLANNING.
project. So, convincing the
upper management to adopt
formal project management
can be a challenge. As you
learn more about project management, you will be able to form your own rationale to justify
implementing project management in your area of work.

Project is a Balancing Act

All projects have four common constraints:
C = Cost or budget
T = Time to finish
P = Performance objective
S = Scope

These constraints bear a relationship like: C = f(P,T,S), where f represents a function.

This is read as “Cost is a function of Performance, Time, and Scope”

Often projects fail because sponsors demand that the project be finished within certain time,
within budget, and accomplish certain desired objective (scopes) while achieving specific
performance level. This would be like my spouse asking “Can we build three-level deck like
our neighbor’s with our $300 savings before our daughter’s graduation party next month?”
You can’t have it all. You can only satisfy three of the four constraints in a project.

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 Module 0 Introduction Page xxii

Here is a good example of how the balance of scope, cost, time, and performance
compromises may result in severe consequences if not done right.

The Detroit News

February 27, 2003

NASA culture is culprit in disaster:

Overconfidence, safety flaws must be
addressed to avoid another tragedy.
In a 248 page report based on the investigation
of the shuttle Columbia accident (Feb. 1, 2003,
seven crew members died), the Columbia
Investigation Board blamed NASA
administration for failure to implement
independent safety programs that could have
prevented the accident.

In response, NASA administration stated:

“NASA had conflicting goals of cost, schedule
and safety. Unfortunately safety lost out.”

Practice & Learn: Review and solve Exercise Q 0.1 - Q 0.5.

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Exercises

Q 0.1 what would you call a temporary endeavor you undertake to create something new or to
solve a problem?

a. Development Task
b. Program
c. Project
d. Charter

Q 02. Which project management phase takes the most effort (not time) on the part of the
project manager?

a. Execution
b. Closing
c. Planning
d. Approval

Q 0.3 A project scope defines:

a. Total budget of the project.

b. The magnitude or size of the job.
c. Project manager’s commitment to the project.
d. Manpower committed to the project.

Q 0.4 What is PMBOK® ?

a. It’s a special kind of analysis

b. It is a test administered by Project management Institute (PMI)
c. It is the body of knowledge available for project management
d. Project management book of rules

Q 0.5 What is a common problem that a working project manager will face?

a. Run short of time all the time.

b. You won’t know what priorities to set
c. Your management may think you are not putting full effort.
d. Your work is likely to take precedence, and managing will suffer.

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 Module 1
Project Initiation
Module 1 Project Initiation Page 1.2

Module - 1
Project Initiation
This is the phase where the project is born. Here you will determine the project goals,
products and services deliverable, document project constraints and assumptions. You will
also identify performance requirements and determine key resource requirements to produce
what the stakeholders want. At end of this phase, you will prepare a document complete with
all information the management will need to approve time and budget for the project and
authorize you to proceed with complete project planning activities.

Project Initiation Tasks Tasks Performed (10 Tasks)

Tasks Performed (10 Tasks) 1.1 Determine Project Goals

1. Determine Project Goals
2. Determine Deliverable Products and In this first step of the project, you will
Services work with the stakeholder to identify
3. Determine Project Management and determine the project’s goals. This
Process Outputs understanding of what the stakeholders
4. Document Project Constraints want would help you meet their
5. Document Assumptions requirements, expectations and/or
6. Define Project Strategy by Evaluating specifications.
Alternative Approaches
7. Identify Performance Criteria
8. Determine Key Resource
Requirements
9. Estimate an Appropriate Project
Budget
10. Create a Comprehensive Document for
Final Approval

1.2 Determine Deliverable Products and Services

In this step, you will determine the products and services that you will deliver to the
stakeholders at the completion of the project. This is achieved by examining and generating
the scope of work, requirements, and specification that will meet the stakeholders’
expectations.

1.3 Determine Project Management Process Outputs

The Guide to the Project Management Body of Knowledge urges one to consider project
management process, which like any other process, accepts inputs and processes them;
producing outputs. Of course, the project management process comprises of several sub-
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processes like the initiation process, the planning process, the execution process, and the
closeout process. In initiation process, you will make sure that project management process
outputs meet the products and service delivery required by the stakeholders.

1.4 Document Project Constraints

Each project has its own set of time, budget, manpower and availability. Coordinate with
stakeholders and review all policies and procedures to ensure that the project complies with
all constraints.

1.5 Document Assumptions

The goal is to list all assumptions, identify information that will need validation, & identify
situations to be observed or controlled during the project execution. These are items that will
have to be reviewed and refined before completing the planning process.

1.6 Define Project Strategy by Evaluating Alternative Approaches

If a project has more than one possible approach, evaluate each alternative that meet the
stakeholders’ requirements and specifications for the project.

1.7 Identify Performance Criteria

In this step, you will review the product and service specifications and process standard to
determine the performance criteria needed to evaluate the quality assurance effort.

1.8 Determine Key Resource Requirements

The availability and cost of key resources have direct influence on the project’s timing and
budget. Here, you will review the deliverable requirements and identify key resources. This
step is essential for the planning and decision-making process.

1.9 Estimate an Appropriate Project Budget

You will determine the project budget and schedule by estimating cost of all activities
associated with your in the project. AN accurate budget is crucial for the project’s approval.

1.10 Create a Comprehensive Document for Final Approval

This is the document that contains your complete project plan. You will submit this document
to stakeholders for their approval.

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How do Projects
How Do Projects Originate? Originate?

Self Initiated Project:

Projects come in to being in mainly two ways: either These are usually done
you initiate the project, or it is selected for you. at your own discretion
which allows you to
Self Initiated Project: select the project of your
choice and schedule its
- Personal projects like purchasing a new completion at your
computer system, planning a trip, convenience.
remodeling home, etc.
- Business owner’s projects like moving one’s Sponsored Project at
office location, launching a new ad Work: In the work
campaign, implementing new database environment, the project
software, etc. you will be responsible
for will likely result from
Sponsored Project at Work: These are project your boss selecting you
selected and approved by your boss/management. to lead a specific
- Building a new facility engine life test assignment. In some
- Launching a new web site for online project cases the idea for
management training project could be initiated
- Building a new power plant for Baghdad by you (e.g., you made
a proposal to improve
Other Kinds of Project: company cafeteria), but
- Community Projects your boss lets you run
- Ownership by default with it. You now have a
project at hand. We will
be most interested in this kind of projects.

Other Kinds of Project: Some projects are initiated for the benefits of others, while
you may have been drafted or volunteered your time to carry it out. Organizing a 100
mile bicycle ride to raise funds for breast cancer research, or organizing a
neighborhood cleanup committee, planning for your daughter’s wedding, or being
asked to plan your company sponsored retirement party are examples of such
project.

No matter how the project falls into your lap, it will have an expected end result. You
will need to identify a clear goal. To accomplish the goal you will need a plan and
set a schedule. You will also need to stay within your budget and utilize all available
resources. This will be true for a project like planning your daughter’s graduation
party with your wife or working with a team of 75 research scientists to come up with
a preventive drug for a new disease named SARS.

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Project Charter
Project Charter As we have seen, there are
several ways project could come
into existence. It is an important
- A formal document that initiates the formal document that authorizes
project formation and work on a project.

Project charter is created by some

- It authorizes project to begin and sort of document issued by the
names the project manager person authorizing the project
and one who appoints the project
- Project charter is written by the project manager. Usually such document
manager but is distributed bearing the will contain a brief description of
signature of the person who the justification for the project.
authorizes it. The project charter should be
written by the project manager
but must be distributed under the
signature of the person authorizing the project. By writing the charter, the project manager
avails the first opportunity to define the project as she/he sees it.

No matter how the project comes

Things Common to All Projects into being, whether it consists of
my two daughters helping you
with your party room decoration or
- Define clear goal or specific a team of engineers and computer
obtainable result scientists developing simulation
software, a clear goal is what you
will always work toward. No
- Plan and schedule matter the size and cost of the
project (vary from project to
- Stay within budget project) of the project, you will
also need to plan and set a
- Utilize resources to get desired schedule, stay within your budget,
and utilize your resources.
result

Notes on Project Characteristics:

Generally, projects have fixed life. This is not to say that that the goods and services project
produces end. For example, a project to build a shopping mall ends when the goals of the
construction and making ready for tenants have been achieved. The shopping mall continues
to operate, far into the future, even though the project has ended.

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For most projects, the goods and services that it provides are unique in nature. Of course, this
does not mean that they are totally and completely unique. Many projects build on the results
of other projects and commonality with other projects the organization has done before.

Projects are always temporary endeavors, as they are intentionally created to accomplish a
specific objective. This allows project managers the ability to form multidiscipline project
teams with right people at
Project and Program the right time.

Generally, projects have

The difference between program and project limited resources; still,
is subtle and depends on the activity. Often, some projects have what it
projects are part of a program. Also, many seems like unlimited budget
projects are subprojects of a larger project. and resource. For example,
Apollo project of the 1960s
“A program is a group of projects managed in a and Manhattan Project of
coordinated way to obtain benefits not able to be the 1940s were long
obtained by managing them separately.” projects with limited
- The guide to the PMBOK® constraints by the Congress.

Example Programs:

- Hydrogen Fuel Powered Automobile

Development Program (By an auto
manufacturer).

- The National Marrow Donor Program

- Mars Exploration by NASA

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Who Are Interested In The Project Outcome? The client or sponsor is the
originator of the project and is the
main stakeholder. The client is the
person or organization that bears
Customer Stockholders
Executives the cost of the project and has the
most interest in the success of the
project.
Clients
Upper Beyond the sponsor (those who
Management
requests the project be done) are
stakeholders who will have
Project
personal or financial interest in
Manager
the end result. As the leader of the
project team, the project manager
will need to satisfy the
Project stakeholders. The more the
stakeholders in a project, the more
Team you will need to appease a variety
of interests.

A stakeholder is a person or organization that has something at stake in the outcome of the
project. A project will always have at least one; each stakeholder may have different needs
and expectations.

Who Are Key Stakeholders?

Any party interested in or
affected by the outcome of the
- Project Manager (one who is project is a stakeholder. The
responsible for managing the project team members who
project) perform the work for the project
- Customer (uses projects are also stakeholders. Depending
on the project, stakeholders may
product/output)
contribute ideas to the project on
- Performing organization (whose a regular basis, be intricately
employee performs project work) involved in the project progress,
- Project Team (who does work for or not be involved in the actual
the project) work of the project at all. For
- Sponsor (individual or group within example, stakeholder for
development of a state funded
or external to the performing
prison system may be the
organization that provides financial community.
resource)

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Assumptions and Constraints Assumptions and Constraints

Constraints:
All project constraints may not be included
in the project charter. You will need to be
aware of constraints that may limit the
completion of any project activities.

- Holidays
- Labor unrest & strikes
- Start date
- Project completion date
- Budget restrictions
- Hiring restrictions

Common Assumptions

Assumptions:
While making plan for the project, you will
need to make certain assumptions.

- Resources are available

- Vendors are available
- Contract will be signed before
project commencement
- Start date will be agreed upon
- Utility will supply electricity, water,
etc.
- Communication and transportation
will be normal

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Price and Cost Relationship

Price and Cost Relationship
Price is the amount of money that a
customer (stakeholder) is willing to pay for Price:
the goods and services produced by the The outcome of a project is the goods
project. and services that the stakeholders
want. What the stakeholders receive
- A home buyer pays $250,000 for a after the project is completed is called
new 3 bedroom house from a deliverables. In exchange for the
builder goods and services the stakeholders
- A consulting firm develops a receive, the money that they give is
database for an insurance the price.
company for $5,500,000.

Cost of Products and Services Cost:

The dollar value of all resources used
to complete the project.
Cost is the monetary value of the
Obviously, cost needs to be less than
manpower, materials, equipment, etc.
the price to come out ahead.
consumed by the project to produce the
deliverables.
What is a reasonable profit?
- The dollar amount spent by the
builder to build the 3 bedroom Should we be satisfied with 15%
house ($220,000). profit?
- The expenses incurred by the
consulting firm to complete the Is there such a working rule?
database creation project
A fixed percentage over cost leaves
($3,900,000)
no challenge for sales people. They
will have no incentive to get the
PROFIT = Price - Cost highest price possible from a
customer, and is missed opportunity
for profit.

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Common Strategies for Pricing

Common Strategies for Pricing
and Maximizing Profit
The selling price is determined by what
Price – should be established based on the customers are willing to pay. If
the customer perceived value of the goods what the customer or stakeholders are
and services. willing to pay is known, then the
potential profit from the project can be
Cost – stay competitive and complete the calculated. Since, profit equals price
project with minimum cost. minus cost, the cost of the project must
be estimated.
Initial Projects
Global competition will require you to
Higher Price – Lower Cost = High Profit be cost competitive in all areas of the
project and accomplish it with
minimum cost.
Invest extra profit to be cost efficient in
future projects. This may seem like a sure recipe for
higher profit, but, it will not last long.
Excessive profit will attract
competition and lower cost, and will offer the same goods and service at a lower price. So the
company would be wise to invest its extra profit made from early projects in buying resources
that lowers the cost of the future projects. This way, as the price the customer is willing to pay
is lowered, a profit margin will be maintained.

Note: Eliyahu Goldratt was first to point out that price should be determined from the
“perceived value to the buyer” in his book It’s Not Luck.

The strategy is similar to the pricing strategy used by computer manufacturers.

1. In the mid 1970s, mini computer systems for CAD/Cam were sold for
$150,000/unit. The systems were more powerful than those available for under
$10,000 in 1990’s. This can only be possible by reducing the production cost and
increasing the volume of sales so that a satisfactory level of profit is maintained.
2. The first IBM PC was sold for about $4,000 in 1978. More powerful PC’s were in
the market selling for under $2,000 in the late 1980’s.

Overbid and Underbid

When submitting the project’s bid to stakeholders/customers, you face the risk of being higher
(Overbid) or lower (Underbid) than the average. Both scenarios have shortfalls. So, the best
practice is to submit a competitive bid with minimum cost. The exact cost of the project, of
course, is never known until it is completed.

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Underbid – Though it could land you

the contract, it may put you in a Overbid and Underbid
financial hole, quickly. An underbid
may also cause you to loose reputation
to the stakeholder temporarily. But, Underbid and get the job:
when the project is completed, even - Not enough money to cover the
with some loss, it could provide cost of all deliverables
valuable lessons for making more - Additional funds needed
accurate estimates in future projects. - Requirements reduced
- Tension, layoffs, other unhappy
Overbid – When a project is not won, things may result
one might sight favoritism as a cause,
when in reality, it may be that you Overbid and NOT get the project:
were too costly. If you do get the job, - Guesses follows as to why was the
you can set a comfortable profit job lost
margin, supplied with solvent budget,
the resources and schedule will be
created to utilize it. You will also
monitor the progress of the project
based on its allocated budget. When
the project is completed, the Overbid and Underbid (Contd.)
stakeholders will be happy, and all of
the team members will be rewarded.
Unfortunately, this may not last too Overbid and get the project:
long. Sooner or later, the competition - Set budget high with a comfortable
will be attracted by the large profit profit margin
potential as well. Be aware also that - Progress is measured against the
for a company accustomed to overbid, allocated budget
it is generally a difficult cultural - If project is completed in time, the
change from doing things in inefficient client is happy.
ways. - Soon competition joins the market
and takes jobs away. Eventually,
Example: An automotive engine-block the company is priced out of the
machining plant is comfortable with market.
18% reject rates while many of its
competitions produce similar product Overbid is bad for companies in the long
with only 2% scraps. run as it perpetuates inefficient practices.

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Scope Baseline
The base line is the starting reference
Scope Baseline requirements for the project. It is
analogous to the skeleton or rough
draft of the project. Until the scope
This is the preliminary set of requirements
baseline established, a rough cost or
that stakeholders want from the project.
schedule can not be estimated.
The scopes must be agreed upon by the
team and stakeholders. (Scope baselining
What do the stakeholders want?
must be done before COST and
What does the project team think the
SCHEDULE baselines)
stakeholders want? Often times the two
parties have different understandings.
- Make a long list of all parties wants
- Remove items not related to
To sort out the project’s
projects
accomplishments and separate any wild
- Identify similarities
expectations from required items, you
- Document reasons for exclusions
must come to an understanding with
of any requirements
the stakeholder. At this point, the
deliverable must be defined concisely
& clearly.

Example: If part of the project is to

supply a user’s manual, it should be clarified as to the level of details needed (5 pages manual
to instruct which button to press, or 500 pages document showing all about how to maintain
the system after it is delivered).

Example: One of our recent home projects was to simply replace the aging front doors in the
house. Before too long, after developing better understanding with the stakeholders (spouse),
our scope ended up being replacing the main entrance doors consisting of a more expensive
version made of mahogany wood with a pair of solid brass locks.

Doors come in all price ranges and materials

- Materials like pressed wood, fiberglass, steel, and solid wood (pine, oak
mahogany, etc.)
- Single door with side panels or double door with various styles of clear or
designer glass openings
- Costs vary between $400 - $8,000 plus installation.

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Work Breakdown Structure

(WBS) for Cost Estimation
Work Breakdown Structure (WBS)
The scope baselining process outlines
At the end of project’s initiation, you the projects deliverables expected by
should have estimated the: the stakeholders. However, a project
- Scope baseline plan cannot be created just by knowing
- Cost baseline the deliverables. A cost & time
- Schedule baseline estimates also play an important role in
planning a project. To determine how
To determine cost and schedule baseline, much work is involved in producing
a clear understanding of the work involved each deliverable, you need to convert
to produce the deliverables is required. the deliverable into individual pieces of
work. This process is obtained by work
To plan the project, these deliverables breakdown structure (WBS).
need to be broken into individual pieces of
work. This is done by a process known as Why do you need the cost and
work breakdown structure (WBS). schedule?

A project cost & schedule helps

determine how much of your budget
should be spent on each task, when you need the resources, and for how long you will need
them.

The idea of WBS is to divide and

WBS - Defined conquer. When work to be done is
broken down into smaller & individual
As per the Guide to the PMBOK, the WBS tasks, you can easily estimate cost &
is defined as “A deliverable oriented schedule. Adding costs of all such tasks
grouping of project components that readily gives you the total cost of the
organizes and defines the total scope of project.
the project work. Work outside the WBS is
outside the scope of the project.” Example: Door Replacement Project

Following the WBS, you should subdivide Scope: Mahogany exterior double door
a complicated (large) task into many - Visit store display and select style (two
smaller tasks, until you reach a size that week nights)
cannot be further subdivided. At this - Find cost of doors and cost of labor
stage, you are able to determine how long - Order doors (4 weeks delivery)
the smaller task will take and how much - Purchase locks (1/2 day)
will it cost. - Install Doors (1/2 day)
- Operate & test doors with locks (1
hour)
- Remove debris (1/2 day)

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WBS – How it is done WBS – How it is done

To create WBS, breakdown the project in The number and layers of sub-projects
the following order: a project will have depends on the size
- Break project into sub-projects of the project. Also the project
- Break sub-projects again and again manager’s span of control varies
into other sub-projects depending on the project. For smaller
- Continue breaking sub-projects projects, the project manager may be
until the desired level of detail, involved in the minute details of
called “work package” is reached individual activities. For larger project,
- Break work packages into the work package level may be many
“activities” levels above the task level.
- Break activities into “task” (bottom
level of project) Task level – it is the bottom level of
the project. This is where an individual
Work Package is the smallest task a or a group of individuals accomplish
project manager needs to manage. the work rather than managing it.

Regardless of what is called the lowest

level (task, activity, or work package),
it is important that this level has only one person or one group responsible for satisfying the
work component.

Faced with an obsolete airport &

WBS - Example increasing demand, executives of
Wayne County, MI put together a plan
to build a new terminal adjacent to the
Wedding existing Detroit Metro Airport. The
Planning terminal consists of over 120 gates to
allow loading and unloading of
passenger carriers of all sizes and
Find Hall Make Plan Prepare
Guest List Reception Invitation destinations. The airport involved
numerous subprojects including
building ticket counters, installing
Visits locations security check points, luggage
and get prices handling systems, automated
Compare value transportation system connecting all
and make gates, building parking structures,
selection constructing terminal building, etc.
Sign contract & Sub-projects like building
pay deposits transportation system within the
project were a large effort. Such sub-
projects are themselves projects in
their own right and have their own

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breakdown structure. The thing to remember is that project management is a powerful

methodology that applies to any sized project.

System Approach to WBS System Approach to WBS

All work is a system or process that In a system approach, sub-projects,

converts input to output work packages, and tasks are all viewed
as systems. In this structure, inputs are
converted to outputs. Viewed as system,
SYSTEM all tasks at the lowest level after WBS
Input Output must have an input and an output. When
Work done look at the whole project as a system, it
is a process that convert people’s effort,
Inputs – must come from somewhere money, and resources into outputs, the
inside the project or external sources deliverable the stakeholders want.

Output – from a task must go to another Input to a task would come from other
task in the project or directly contribute to task or from external sources. When it
the delivery of one of the deliverables cannot be found internally or externally,
tasks may need to be added to the
project. Likewise when output items of
a task is not utilized or needed by other
tasks in the project, that task becomes a
good candidate for elimination (extra work)

All project tasks should be reviewed to ensure that each has an input and an output. This is a
good way to uncover the need for additional tasks/sub-projects.

Example of tasks without output or input:

No output - In a project to clean the house, vacuuming, steam cleaning carpet and removing
spots on the carpet are some of the individual tasks. Since steam cleaning of carpet is
supposed to remove all spots from the carpet, an effort to remove spots before steam cleaning
will be considered extra work.

No Input – As part of the same project, cleaning backyard deck with high pressure water was
part of the sub-project. In the last moment, the company could not keep their appointment to
clean the deck. In this case, borrowing/renting a high pressure spray machine will be a task
that needs to be added to the project.

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Change Management
Change Management
Change management is formal process
Could the stakeholders ask for more/new that controls the project scope
deliverables? baseline. It must be in place early in
Who pays for the changes? the project, definitely before the
What is the process to incorporate completion of the scope baseline.
changes?
Demand for changes from stakeholders
Essential steps: can bog down projects. All changes
- Treat it like a miniature project plan must be evaluated in terms of their
- Evaluate time and effort that the impacts on project costs and schedule.
change brings (funded internally or Finally, if the change is justified and
externally) funding is authorized by the
- Identify who (stakeholder) bears stakeholder, only then should it be
the cost and who authorizes incorporated in to the project plan.
change
- Establish justification for change
- Incorporate change into project Example: In the door replacement
plan project mentioned earlier, the original
plan was to get a double entry door
system and so the order was placed with a local supplier. A few days later, one of the
stakeholders wondered if the doors could have a different glass panel. A trip to the supplier
revealed that such change will cost an additional 50% of the cost of the door already ordered.

Project Justifications
Project Justifications
Often, the challenge is not in determining
the reason for the project, but to decide Why do the project?
which projects should be done or whether Who benefits when the project is
a project should be undertaken at all. completed?
Which projects make sense to do?
Most project costs require up front
investment. (Assuming that such funds Reasons:
are available, it could also earn interest if - Opportunity for making money (new
invested in interest bearing account product development)
instead of spending on a project. Of - Public benefits (bridges, parks,
course, a large company has large pool of community hall, etc.)
manpower to be engage in project - Government mandate (airbags in
activities.) Lack of project may mean automobiles, early 1980s)
layoffs. So, whether to do a project and - Competitive advantage (websites for
not make profit or not do a project, earn online booking of airline tickets)
interest from money, is a decision must be - Product/process improvement and
made based on financial benefit. cost reduction (reduce cost of
production part, reduce weight, etc.)

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An Example Project Justification

The US Federal Government, through its Federal Gov. Grant Justification
national Institutes of Health (NIH) grants
close to a billion dollars in research
funding each year. In 2005 its 800 1. Significance: Merit of Project
million dollar funding supported over 2. Significance: Commercial Value
1000 research project. Grantors of the 3. Quality of Approach
money, in this case the stakeholders of
the project require that the competing
4. Innovation in Research
researchers justify their application for 5. Investigators Qualifications
grant in the following six areas. Such 6. Environment of Research
requirements change with time and focus
of the direction of the intended growth of
research and societal needs.

1. Significance: Merit of Project

o Does the study address an
important problem?
o If the aims are achieved how will scientific knowledge or clinical practice (in case of NIH
as grantor) be advanced?
o What will be the effect of these studies on concept, methods, technologies, treatments,
services, or preventing interventions that drive this field?

2. Significance: Commercial Value

o How strong is the commercial potential of the project in terms of leading to a marketable
product or process?
o What may the product or process be worth?
o Will the technology have a competitive advantage over existing or alternative technologies
in meeting the market needs?

3. Quality of Approach
o Are the conceptual or clinical framework, design, methods, and analyses adequately
developed, well integrated, well reasoned, and appropriate to the aim of the project?
o Does the applicants knowledge potential problem areas and consider alternative tactics?

4. Innovation in Research
o Is the project original and innovative?
o Does the project challenge existing paradigm or clinical practice; address an innovative
hypothesis or critical barrier to progress in the field?
o Does the project develop or employ novel concepts, approaches, methodologies, tools, or
technologies for this area?

5. Investigators Qualifications
o Are the investigators appropriately trained and are well suited to carry out this work?
o Is the work proposed appropriate to the experience level of the principal investigator or
other researchers?
o Does the investigating team bring complimentary and integrated expertise to the project?

6. Environment of Research
o Does the scientific environment in which the work will be done contribute to the
probability of success?
o Do the proposed studies benefit from the unique feature of the scientific environment, or
subjects populations, or employ useful collaborative arrangements?
o Is there evidence or institutional support?

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More common is the need to decide which

Method of Cost Justification
project will be more financially rewarding.
Cash flow analysis compares the financial
benefits of various projects. The idea is to Cash Flow Analysis – A measure of cash
compare projects based on which one flowing into and out of the organization
brings in more money than others. With over a period of time.
this analysis, one can compare: (1) two
options of a project, (2) the cost of project Which project should be undertaken?
A vs. project B, & (3) the pros and cons of Which one will bring more return?
taking on a new project.
Cash Flow Analysis utilizes one or more of
these techniques:

- Breakeven Chart
- Average Rate of Return
- Present Value of Money
- Internal Rate of Return

Break even Chart

Break
Price Even Chart
A Break Even Chart can be plotted for
many expense items & for many alternative
Break Even Chart provides cost
projects. Usually, the total cost of project,
information to help compare two
which is the sum of fixed cost and variable
alternative projects.
cost, is plotted. When comparing two
alternatives, the intersection of the two lines
is called the “break even point”. At this
Total
pint, the cost or benefit of the two Cost
alternatives is equal. Beyond this point, one
alternative becomes more attractive than the Variable Break
other. A
costs even point

The time when the break even point occurs Fixed cost: Proj. A
is called the “payback period” and is B
commonly meaningful in case where Fixed cost: Proj. B
option/project A is compared with Time
option/project B of not doing the project.

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Example: A supplier of a plastic part has an old molding machine that produces parts at a
cost of $7.0 per unit at a production rate of 5,000 units per month. The machine can be
repaired at a cost of $20,000. Alternatively, the same machine could be replaced with a new
one for a cost of $90,000 that is expected to produce the same part at a lower cost of $6.0 per
part. What should the supplier do if the current product life is expected to be five years?

The cost expressions at constant production

cost are:

CA = 20,000 + 7x5,000 x T where T = 500

time in months
CB = 90,000 + 6x5,000 x T
400
At break even point, the costs are equal.

Thus CA = CB 300

Or 20000 + 7x 5000 x T = 90000 + 6 x

200
5000 x T

Or T = 14 months 100

When T=20 months

2 4 6 8 10 12 14 16 Months
CA = $720,000 CB = $690,000

• Break even point is 14 months.

• Cost of production is lower with the new machine after 14 months.

Drawbacks of break even chart analysis are:

• Shortsightedness - Analysis stops at break even point
• Production cost is assumed to be constant

1.1 Practice & Learn: While shopping for a family vehicle, you found two
automobile of the following description and price:

Vehicle A (diesel) Vehicle B (Gasoline)

Purchase cost $24,000 $16,000
Annual maintenance cost $1,200 $2,000

If you are planning to drive the vehicle for 7 years, which vehicle will be cost effective for
you? (You may solve graphically or mathematically)
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1.2 Practice & Learn: A homeowner has two options to equip the home with a
new furnace. Determine the break even point when the option data are as follows.

Option 1; Cost of furnace $ 3,500, expected monthly fuel cost $150/month.

Option 2: Cost of furnace $ 8,500, expected monthly fuel cost $ 70/month.
(May solve graphically or mathematically)

Average Rate of Return on Average Rate of Return on Investment

Investment (ROI) (ROI)
Unlike Break Even Point analysis,
ROI is generally expressed as the
percentage of initial investment. this method can compare cost
benefit over the entire life of the
Suppose that the supplier of the plastic project.
part described in the preceding example
decides to replace the existing machine ROIs over a period of time are
by purchasing of a new one for $90,000. calculated and compared.
The supplier then sells the parts at
varying sales volume shown below.
The project with a higher average
ROI is preferred.

Annual revenue = $sales – cost to produce sales

Year Annual Annual Capital Inv. Cash Flow Cum.

Sales Vol. Revenue War. Cost Revenue

0 0 0 $90,000 -$90,000 - $90,000

1 $350,000 $140,000 $20,000 $120,000 $30,000
2 350,000 140,000 10,000 130,000 160,000
3 300,000 120,000 10,000 110,000 270,000
4 250,000 130,000 15,000 115,000 385,000
5 200,000 80,000 10,000 70,000 455,000

455,000 x 100
Average ROI = = 101.1 %
(90,000 x 5yr)

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1.3 Practice & Learn: Calculate the ROI at the end of the third year for the above
example.

Present and Future Value of Money Present and Future Value of

Money
Present value of a project cost & the
expected return (net present value) are Projects often require initial
important considerations. investments to produce cash flow.
Since money can also be invested to
P = Present value of money (principle) generate interest, the decision to use
F = Future value of money funds for a project instead investing in
i = Interest rate, interest earning account, can be
n = Number of years compared by calculating the start up
cost’s net present value. The same
F = P ( 1 + i )n . . . . . (1) principle can be used to compare two
different projects.
P = F / ( 1 + i )n . . . . . (2)
Future value of money:
i = (F/P)(1/n) - 1 . . . . (3) $ 100 at 6% interest is 100 + 100x.06 =
$106 one year later. The same money
is
106 + 106 x 0.06 = $ 112.36 the year after.

Example: What is the future value of $5000 in 4 years at 8% interest?

Ans: Using relationship (1)

P =5000, i = 0.08, n = 4 F = 5000 (1 + 0.0 8)4 = $ 6,802.44

Example: What is the present value of 12,000 expected 5 years later if the interest rate
remains fixed at7%?

Ans: Using relationship (2)

n = 5, i = 7, F = 12,000, P = 12,000 / (1 + 0.07 )5 = $ 8,555.83

Example: What is the interest rate at which $100,000 will double in 10 years?

Ans: Using relationship (3)

(1/10)
n = 10, P = 100,000, F = 200,000, i = (2) - 1 = 7.17%
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1.4 Practice & Learn: The local hospital wishes to set aside $350,000 for the
down payment necessary on the lease of new MRI (Magnetic Resonance Imaging)
machine that they will receive in 3 years. If the interest rate is 5.5%, how much should they
invest now? (Hint: use equation 2 above to calculate P)

1.5 Practice & Learn: In the example above, if the hospital wishes to buy a
similar MRI machine that costs $450,000 from another vendor who is willing to
accept the entire payment (delayed payment) with interest after 4 years. If the interest rate is
7.5%, what will be the total payment amount after 4 years?

1.6 Practice & Learn: What should be the rate of return (interest rate) for an
investment if you wish to double your amount in 6 years? (Hint: use equation 3
above to calculate P)

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Present Value – Project A

Present Value – Project A
This project requires an initial investment of
$200,000. The expected return is $120,000 for Sample calculations:
a period of 5 years.

Present value cash flow at interest rate of 9% Year, n =1, I =.09, F =120
(all amounts in thousands, add 000)
P = 120 /(1 + .09)1 = 110.09
Year Outflow Inflow PV NPV___
0 -200 0 0 -200
1 120 110.09 -89.90 Year, n =2, I =.09, F =120
2 120 101.00 11.10
3 120 92.66 103.76 P = 120 /(1 + .09)2 = 101.00
4 120 85.01 188.77
5 120 77.99 266.76__ Year, n =3, I =.09, F =120
Total 600 466.76 266.76
P = 120 /(1 + .09)3 = 92.66
etc.

Note: Both projects will have the same Net Present Value (NPV) if the interest rate were zero.

Present Value – Project B

Sample calculations: Present Value – Project B

Year, n =1, I =.09, F =200 This project also requires an initial investment
of $200,000. However, the expected return is
in varying amount over the 5 year period.
200
P = = 183.48
(1 + .09)1 Present value cash flow at interest rate of 9%
(all amounts in thousands, add 000)

Year, n =2, I =.09, F =150 Year Outflow Inflow PV NPV___

0 -200 0 0 -200
P = 150 /(1 + .09)2 = 126.25 1 200 183.48 -16.52
2 150 126.25 109.73
3 100 77.21 186.94
Year, n =3, I =.09, F = 100 4 75 53.13 240.07
5 75 48.74 288.81__
P = 100 /(1 + .09)3 = 77.21 Total 600 488.81 288.81

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Internal Rate of Return (IRR)

This method calculates a single number

that is highest for the most favorable
project, regardless of its size.

This method is more complicated than

ROI & may be studied further beyond the
conclusion of this seminar.

1.7 Practice & Learn: Determine the Net Present Value (NPV) after 5 year for a
project that requires an initial investment of $450,000, assuming that the interest
rate is 6.6%.

Year Cash Outflow Cash Inflow PV NPV_____

0 -450,000 0 0 -450,000
1 400,000
2 300,000
3 250,000
4 200,000
5 175,000

1.8 Practice & Learn: Review and solve Exercise Q 1.1 - Q 1.9

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Key Concepts Review - Module 1

R1.1 Project Integration Management - This process ensures that various project
elements are properly coordinated. It involves making tradeoffs among competing
objectives and alternatives. The integration management includes: project plan
development, project plan execution, and overall change control.

R1.2 Opportunity for influence - The project sponsors and stakeholders have the
greatest influence on the project scope, quality, and cost during the concept stage
of the project.

R1.3 Ideal means of Communication - The project manager has the option to adopt
one of several communication strategies. The ideal method of communication
between the project manager and the project team members is written and verbal
communication (Other forms of communications: daily status report, through
approved document/form, or through formal chain of commands).

R1.4 Project Payback Period - A project payback period ends when the
cumulative revenue (cash flow in) equals cumulative costs (cash flow out). It is
the time that it takes to generate enough revenue from the project to cover expenses.
.

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Exercises
Q 1.1 Who are project stakeholders?

Q 1.2 What do you call a group of related projects that are managed in a coordinated way?

Q 1.3 When does the project payback period end?

Q 1.4 A project typically goes through concept phase, development phase, execution phase,
and close-down phase. During which phase do the project sponsors have the most influence
on scope, quality, time and cost?

Q 1.5 Early in a project’s life cycle a project manager must complete a cost justification study
for the project. At this stage, very little information is available about the project. All
estimates are to be considered rough estimates. Cash flow estimates are shown in the table
below.

End of Year Cash Flow In Cash Flow Out Cum. Revenue

1 0 700,000 - 700,000
2 450,000 150,000
3 625,000 175,000
4 300,000 275,000
5 125,000 65,000
6 100,000 50,000

(a) What is the payback period for this project?

(b) What is the cumulative (net) cash flow at the end of 6 years?

(c) If the interest is assumed to be 10% for the period of the project, what will be the
present value of the cumulative cash flow at end year 6?

Q 1.6 What can a project manager do to verify the project scope? Explain by use of example.

Q 1.7 What document officially initiates the project and authorizes use of an organization’s
resources?

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Q 1.8 A project manager budgeted $ 950,000 for the original baseline of the project. After the
work on the project begun, several changes were authorized and approved. The cost of these
changes has been estimated at $60,000 and the cost of investigation of the changes prior to
approval was $5,000. What should the current budget for the project be?

Q 1.9 A project manager in charge of a software development project determines that a new
computer has the potential to save the firm money in the long run. The investment for the new
computer system including installation and delivery will require $ 75,000. Once installed and
functional, the new computer system is expected to produce $130,000 in savings at the end of
one year. Assuming that the interest rate is 10%, what is the net present value of the savings?

Q 1.10 What is a statement of work and what is a project plan?

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Project Planning
 Module 2 Project Planning Page 2.2

Module -2
Project Planning
In the project planning phase you refine project requirements, create work breakdown
structures, and develop resource management plans. You will also finalize your cost estimate
and establish project controls that will tell you how well the project is progressing. At end of
planning, you will have a comprehensive document to receive management’s approval to
proceed with the project.

Project Planning Tasks

Tasks Performed (7 Tasks)

1. Refine Project Requirements
(define problem to be solved:
vision, mission, scopes and
objectives)
2. Create a Work Breakdown
Structure (WBS)
3. Develop a Resource management
Plan
4. Refine Project Time and Cost
Estimate
5. Establish Project Controls
(manage & control changes)
6. Develop a Formal and
Comprehensive Project Plan
7. Obtain Project Plan Approval

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Planning Purpose and Ingredients

Why Plan?
Why Plan?
Managing a project requires full control
A major function of management is of project activities at all time. To have
making sure the desired project objectives control is to know at all time where you
are met. To do this, you need to have are and where you want to be. You can
CONTROL over your resources. only make such assessment of progress
only if you have a plan which tells you
• Knowing where you are and where where you should be at any point in
you want to be time.
• Power and domination over the
project not a desirable thing Another meaning of CONTROL is to
exercise power or authority to instill
No plan, no control! fear and intimidation among employees
to get the job done. This method works
“Predicting the future is easy. It’s knowing in some situation when people have not
what’s going on now that’s hard.” much choice about employment. But, it
- Fritz R. S. Dressler is not a desirable option to follow.

Planning is hard work, but it is not an

option. It must be done. Without a plan, you will have no control over the project.

Figure 2.1 Planning Pain Planning Pain

Pain Curves in Project Over Time Author J. Lewis in his Fundamental of
Project Management, described pain
suffered by people participating in
(1) planning and estimating. He recognized
that most people find the planning
process painful and resists the pain it
causes.

The two pain curves shown are typical.

The curve (1) is for reluctant
participants who suffer more towards
the end of a project.
(2)
Those who plan well, suffer pain early
Project Time (2), but face less hardship towards the
Ref: J. Lewis end of the project.

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What is Project Planning?

What is Project Planning?
Project planning is simply answering
Planning determines details about how
questions like:
and when activities are accomplished
(the task or activity is the lowest level
WHO of WBS).
WHAT WHO will do the task? Who else will
WHEN be in the group or help the person
WHY accomplish it?

HOW MUCH WHAT needs to be done?

HOW LONG HOW should it be done? What tools
and equipment will be needed?

WHEN must it be completed? What

other tasks will depend on activity’s
completion?

HOW much will it cost?

What quality level is needed for the final product?

Project Plan Ingredients Project Plan Ingredients

All projects plan must have the following Project plan ingredients are not planning
components. steps, but components that all plans must
address.
- Problem statement
- Mission statement Problem statement is an expression of
- Project objectives what the project is going to eliminate.
- Work requirement & deliverables
- Exit criteria Mission statement describes what is
- End-item specifications being done to satisfy the vision (what we
- Work Breakdown Structure (WBS) want to be).
- Work Schedules
- Resource requirements (people, Project Objectives specifically defines
equipment, materials, etc) results that must be achieved to
- Control systems accomplish the overall mission.
- Major contributors
- Risk areas with contingencies Work requirements & deliverables list
all items including reports, hardware,

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software, service manual, & maintenance instructions. It is recommended that all project
milestones have deliverables identified such that the progress can be monitored.

Exit criterion at each milestone is used to determine whether the preceding phase of work
has been finished or not. Exit criteria are particularly essential when a deliverable is not
associated with a milestone.

End-item specification refers to the engineering specifications, government

requirements, building codes, etc. that must be met.

Work Breakdown Structure (WBS) identifies all project tasks.

Schedules identify sequences and timing for all project tasks.

Resource requirements include all people, equipment, machine, materials and facilities
required to accomplish a project.

Control system defines the methods for project control that assures where a project is and
where it should be.

Major contributors are project contributors listed on the linear responsibility chart with
actual responsibility of tasks.

Project Plan Sign-Off Project Plan Sign-Off

Project plan sign-off is formal
A completed plan is submitted to approval step at the end of the project
stakeholders for approval, & allows work initiation phases.
to begin.
Project plan approval means that
- Stakeholder sign-off assumes that stakeholders agree with the scope and
they agree with the scope and accept all specifications.
accept specifications as valid.
The project contributors do not
- Contributor sign-off does not always have control over everything
guarantee performance, but a that is needed. Thus their signature is
commitment. a verification of their commitment,
and should not be interpreted as a
- All plan sign-off on the plan should guarantee.
occur in a review meeting.
The project plan review meeting is the
preferred venue for approval and sign-
off of a project plan. In this meeting,
all participants should be encouraged to review & critique the plan (“shoot hole in the plan”).
This is important in identifying any last minute corrections or deletions.

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Project Planning Steps

Project Planning Steps
The seven project planning steps will
be discussed in greater detail in the rest
of this module.
1. Refine Project Requirements (Define
problem to be solved by the project:
vision, mission, scopes and
2.1 Refine Project
objectives) Requirements
2. Create the WBS (Define problem to be solved by the
3. Develop the Resource management project: vision, mission, scopes and
Plan objectives)
4. Refine Project Time and Cost Estimate
5. Establish Project Control Many view projects as activities to
6. Develop a Formal and Comprehensive solve some kind of problem. Thus,
Project Plan describing the project is often to define
7. Obtain Project Plan Approval the problem it solves. In fact, the way
the problem is defined usually reveals
how it will be solved; it becomes
important that a proper project
definition be developed. (Vision,
mission and problem statements that help describe the project will be described later in this
course.)

Consideration for Effective Planning

Planning is a key task in managing any project. As project manager, you should expect to
spend a good amount of time. This includes planning for your team & ensuring they feel
ownership in the project process & outcome. Planning meeting should be held with all
contributors to discuss information needs including timeliness and estimate of task.

Problem statement, WBS, and risk analysis will be discussed in more details later in this
seminar.

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Examples:
Problem Statement Problem statement#1 (Home
Project): The front entry door to our
house has some weather damage and
does not allow enough light in the
“A problem is a gap between where you foyer. A new, modern door is expected
are and where you want to be, with to solve these problems.
obstacles existing that prevent easy
movement to close the gap.” Where we want to be: We would
- J. P. Lewis
have a new front door installed.
Where I am: I do not have a garden for
Where we are now: We have a
fresh vegetables.
damaged entry door.
Where I want to be: I would have
Problem statement#2 (Website): We
vegetable garden in my backyard.
have no website for customers to
register on-line for our seminar.
The Gap or problem: I have no vegetable
garden. (Same as where I am)
Where we want to be: We would
have a website where attendees could
register for our seminars.

Where we are now: We have no website.

Consideration for Effective Planning Problem statement#3 (Home project):

Our basement lacks insulation and
- Arrange a formal planning meeting sufficient ventilation. It also could
with a clear agenda and goals. benefit from some aesthetic appeal.

- Invite people who would implement the Where we want to be: We would have
plan. Secure contributors’ buy-in and a remodeled basement with proper
commitment. heating and air conditioning.

- Be prepared allow room for changes in Where we are now: We have a cold and
plan as unexpected things may crop stuffy basement.
up.

- Consider what could go wrong through Problem statement#4 (Database): Our

risk analysis. admission and registration system
currently does not keep track of students
- Develop a problem statement that withdrawing from the class. Lack of
incorporates the purpose of the such admission history makes financial
project. planning very difficult.

- Utilize WBS to divide work into smaller

tasks.
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Where we want to be: We would have a database that will keep record of students dropping
out of the class after the start of the semester.

Where we are now: We have a database that does not present a true picture of attendance.

Problem statement#5 (Restaurant): Lack of timely training before menu changes, makes
service staff unprepared to serve the guests. Recent indications are that it has resulted in loss
of customer satisfaction.

Where we want to be: We will have all staff prepared and knowledgeable on menu-items
before serving patrons.

Where we are now: We have no formal training of the waiter and waitresses.

Problem statement#6(Fund for Charity): We do not have funds to employ staff that can
solicit donations from international organizations. Additional staff in this area can provide the
needed financial stability.

Where we want to be: We will have volunteers soliciting donations from organizations
around the world.

Where we are now: We have nobody to market and solicit donation from organizations
outside the USA.

Mission Statement Mission Statement

Mission tends to satisfy the vision to
Problem: We have a damaged door
the greatest extent possible.
Vision:
Vision describes all the things that can
Must have - Double doors
be done that make the problem go
- Darker color
away.
- Wood Base
- Glass openings
Writing a mission statement:
Write vision items in the order (MUST
Wish to have - Mahogany wood
have, WISH to have, and NICE to
- 100% Wood
have). These are items that will solve
- Solid brass locks
the problem or satisfy stakeholder &
customer expectations. Then select as
Nice to have - Matching design
many as possible for mission
- Silver beaded
statement.
- Weather resistant stain

Mission: To find a door that meets all the MUSTs

Mission: The mission of the door
and as many of the others. replacement project is to install a
double door system made of Mahogany

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wood. The door system will be equipped with a pair of solid brass locks and have wide
opening with decorative glass.

Mission statement answers: What are we going to do & for whom we are going to do it?

Project Objectives
Project Objectives Objective clearly describes two issues:
• What is our desired outcome?
Project objectives are statements that • How will we know when we
define how the mission can be have achieved it?
accomplished in measurable terms. It has
the following characteristics: Examples of objectives:
• Our objective is to replace the
(SMART) entry door before my daughter’s
graduation party on July 19th,
2003.
Specific • My objective is to finish
Measurable developing the project
management training proposal
Attainable before the end of the month.
Realistic • My wife’s objective is to loose
Time-limited 10 pounds in next three weeks
on Atkins’ diet.
• Our objective is to raise $5000
in charitable donations for
RCFC before Christmas, 2003.

Strategy and Logistics

Strategy and Logistics
Setting up the project’s game plan is a
All good project plans must have a very important part of planning.
strategy based on the best way to
accomplish objectives.
Examples:
A Strategy refers to the overall method - Buying an old house and relocating it
you will employ to complete the project. It to a new plot of land, instead of
is also called the “game plan”. constructing a house from ground up.

Logistics provide the necessary tools,

equipment, living spaces, recreation, etc. - In the U.S. war against the Taliban in
Afghanistan, the strategy was to launch
air attacks rather than using ground
forces.

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- In 1940, Avondale Shipyard was first build ships upside down,

allowing the keel to be welded from outside resulting in a faster built
boat.

2.2 Create the Work

Work Breakdown Structure (WBS) Breakdown Structure
(WBS)
The WBS concept was introduced earlier
during the project initiation phase. WBS is Work breakdown Structure (WBS)
reviewed again during the planning
process to assure that: WBS is the key to accurately
determining cost, time and resource
- All work has been broken down to requirements. It is not always easy to
the lowest possible task level or estimate a task’s completion time, even
until a single individual or group is when the parameters of the task are fully
responsible for each task. known. Typically, in engineering,
- All tasks have input software, or hardware development
- All task outputs either contribute to projects, time estimates will be
deliverables or are input to other erroneous. Still, a complete WBS can
tasks. result in the most accurate estimate.

- Break project into sub-projects …

o sub-projects
ƒ work package
• Activities
o Task

WBS only shows tasks that are to be performed, not the sequence in which they need to be
done. Task sequence and duration are determined and represented in the project schedule.
However, the schedule can only be determined once the WBS is completed.

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Figure 2.2 Example: WBS Diagram to Steam Clean House

Steam Clean
House

Living Family Dining Library Furniture

Room Room Room Room

Move furniture

Vacuum carpet ---- (change filter, connect power, push around room, empty bag, etc.)

Apply spot removers

Steam clean

Replace furniture

WBS Guidelines and Uses WBS Guidelines and Uses

WBS is the step to estimating cost, time

- Create WBS prior to staring a and resources. It must be done first.
schedule
When developing a WBS, you should
- Do not try to identify the sequence avoid consideration of sequencing of
of activities when creating a WBS activities. This step will come later.
- Continue breaking down each task Depending on the project’s size, there
until the time can be accurately may be many levels, or just a few.
estimated (usually lowest level) Also, all paths in the WBS need not
have the same number of levels.
- All paths in WBS need not have the
same number of levels. WBS is a good place to show the scope
of the project. It also allows you to
- Utilize WBS to define scopes and assign responsibilities for all activities.
assign responsibilities.

Example: (WBS to determine scope)

Project Title: Backyard Landscaping and Beatification
Scopes: Must include DECK, BRICK PATHWAYS, FOUNTAIN, and FLOWER GARDEN

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WBS sub-projects:

DECK FOUNTAIN
- Design - Determine water source and
- Materials and cost connection
- Get Carpenter - Purchase fountain
- Order lumber
- Build deck FLOWER GARDEN
- Determine size & layout
BRICK PATHWAYS - Estimate power needs
- Design path layout - Purchase soil
- Estimate bricks needed
- Dig pathways

Here are a few examples of common projects.

Example Project: Put up the Outdoor Example Project: Get ready for Work
Christmas Lights

A. Put on outdoor clothing A: Get out of bed

B. Get lights and ladder out B: Start coffee machine
C. Connect power line C: Brush teeth, shave, and shower
D. Check lights D: Get dressed
E. Put lights on tree E: Drink coffee
F. Test to see if lights work

Example Project: Change Engine Oil Example Project: Bake Pound Cake for
Competition

A: Hoist Car A: Get recipe

B: Remove nut and drain oil out B: Gather ingredients
C: Replace filter C: Mix batter
D: Replace drain nut D: Bake cake
E: Add oil E: Prepare and apply icing
F: Run engine F: Inform judge if ready
G: Check oil G: Display cake for testing
H: Receive cake score

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2.1 Practice & Learn: Discuss among your group and select a project that you
already are thinking about doing, or already have done. After you agree on a
project that all group members can understand and appreciate, define it in terms of the
following project descriptions.

[Before finalizing project elements, brainstorm to identify: Who are the stakeholders? What is
it expected to do for your customer? What is the reasoning for undertaking the project? What
are the project’s deliverables? Who will actually use the deliverables? How are these
deliverables different from those already available to the customer? Write a problem
statement for the project (gap between where you want to be and where you are now). What
obstacles prevent easy movement to close the gap? Etc.]

Discuss among your team and document any information along the line of above items, then
prepare the following minimum items for your group project.
a. PROJECT TITLE
b. PROBLEM STATEMENT
c. OBJECTIVES (Vision, Mission, Strategy, and Logistics are optional descriptions)
d. WBS (8 - 12 tasks for the class project. You may exceed this number if it’s a real
project)

(Wait for further instruction before showing project activities in graphical form)

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The bar graph shown below (known as Gantt chart) was prepared for one of the examples.

Bar Graph (Gantt Chart) Project: Getting ready for Work

A: Get out of bed (5 min)
B: Make coffee (15 min)
C: Brush teeth, shave, and shower (25 min,
starts 5 minutes after coffee start)
Activity A D: Get dressed (5 min)
Wake E: Drink coffee (15 min)
Activity B
Make Coffee

Activity C Brush Teeth & Shave

Activity D Dress

Activity E Drink Coffee

0 5 10 15 20 25 30 35 40 45 50 Min

Gantt chart Characteristics:

1. X-axis represents time in unit suitable for your project (minute, hour, day,
week, years, etc)
2. Y-axis show the task/activity
3. The length of the bar is proportional to the duration of task
4. The height of the bar is arbitrary
5. The gap between the two bars is arbitrary

Information conveyed by the chart:

a. Numbers of tasks
b. Task start & finish times

Information not conveyed by the chart:

a. Which task is dependent on another

b. Which tasks are more important than others

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2.3 Develop the Resource management Plan

In this task, you will identify human
Human Resource Planning resources and other machines and
materials that must be procured to
• Identify, assign and document complete the project. After the
project roles and responsibilities requirements are identified, you will
(who does what?) need to secure commitments from all
internal and external sources.
• Establish reporting relationships
[Refer to Human Resource, Contract
• Acquire the right people and assign and Procurement Management in
them to the project PMBOK® for activities you will need
in this task]
• Develop your team by enhancing
individual and group skills to
maximize project performance

Procurement Planning 2.4 Refine Project Time and

Cost Estimate
• Determine what to procure and
when to procure them By this stage in the project, you should
have completed a WBS. You can now
examine all WBS tasks to refine project
• Review product requirements and
times and cost estimates using
identify sources from which you will
estimating tools and techniques. This
solicit quotes
exercise will produce the project
baseline schedule and budget.
• Obtain quotation by soliciting bids,
(To be discussed later under task 2.5
offers or proposals, as appropriate
Project Control)
• Elect sources from potential
suppliers.

• Sign contracts and issue purchase

orders for suppliers

• Finalize the contract after

settlement and resolution of any
open items

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[Refer to Project Time and Cost

Project Time & Schedule Management in PMBOK® ]

To complete a project schedule, you need

to know:

• Activity Duration – How long will

the activity take to complete?

• Activity Sequence – What are the

activities are before and after this
activity? On which activities does
this one depend? What other
activities depend on this one?

• Schedule of Activity – When

should an activity start? How long
does the entire project take? How
can the activities be arranged to
accomplish the project in minimum
time.

2.4.1 Estimating Activity Duration 2.4.1 Activity Duration

Once the work is broken down into tasks, Time Management has tools to help
you can proceed to estimate how long determine:
each task will take through:
Expert judgment – Estimates are
• Expert judgment obtained from people with special
• Analogous estimating skills, knowledge or training in the
• Quantitatively based duration subject, or expert judgment guided by
• Reserve time (contingency) historical knowledge.

Analogous estimating – Also known

as top-down estimating, where actual
times used in previous similar activities are used as the basis for estimating future activity. It
is frequently used to estimate project duration when a limited amount of detailed information
is available (e.g., in the project’s early phases). An analogous estimate may be considered a
form of expert judgment.

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Quantitatively based duration – In this method, the amount /quantity to be performed for
each specific work category is defined by its engineering/design effort, and is multiplied by
the productivity unit rate. For example, time in hours required to produce certain number of
drawings, tons of concrete in an hour, cost incurred for unit length of cable, etc. can be used
to estimate the cost of tasks utilizing such items.

Reserve time (contingency) – Using this approach, a project team will incorporate additional
time called the reserve, contingency, or buffer, the activity duration as an estimate into risk.
The reserve time can be a percentage of the estimated duration, or a fixed number of work
periods, and can later be reduced or eliminated. As more precise information about the project
becomes available such reserve time should be documented along with other data and
assumptions.

2.4.2 Activity Sequencing 2.4.2 Activity Sequencing

Activities should be sequenced to

There are four common techniques used support the development of realistic
for Activity Sequencing. and achievable schedule. In this task
one will identify and document logical
• Precedence Diagramming Method relationships of various activities.
(PDM)
The sequence diagram will show
• Arrow Diagramming Method (ADM) when, in relation to other activities, a
particular activity should be done. It
• Conditional Diagramming Method will also show how long the activity
takes, what should follow, and what
• Network templates should precede it.

Precedence Diagramming Method (PDM)

In this method, the project network diagram is constructed using boxes or rectangles (nodes)
that represent activities and connect them with arrows to show dependencies. This technique
is also known as activity on-node (AON) and is commonly utilized in project management
software packages. The PDM uses four types of dependencies or precedence relationships:

• Finish-to-Start (FS): The initiation of the work of the successor depends upon the
completion of the work of the predecessor. FS is the most commonly use dependency
symbol used in project management. For example, in a cake baking process, baking
must be completed before frosting can be applied.
• Finish-to-Finish (FF): The completion of the successor depends upon the completion
of the predecessor’s work. For example, in the cake baking process, the master chef
cannot supervise cake decoration until the frosting process is finished.

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• Start-to-Start (SS): The initiation of the work of the successor depends upon the
initiation of the work of the predecessor. For example, the baker cannot start
decorating the cake until the master chef is present.

• Start-to-Finish (SF): The completion of successor’s depends upon the initiation of the
predecessor’s work. For example, in the same cake baking process, the baker is to
finish frosting the cake only after the master chef is present. (The frosting may,
however, begin before the chef is present.)

Finish-to-start is the most commonly used type of logical relationship in PDM.

Start-to-Finish is seldom used relationship.

Leads and lags are imposed delays in relationship between independent and dependent
activities:

Lag – In a pair of activities, a lag causes a designated number of time periods to be added to
the start or finish of the dependent activity. For example, in the cake example described
earlier, the baking of the cake is to be completed before frosting it. If the baker decides that
one hour is necessary for the cake to cool, the relationship between baking & frosting will
change from FS to (FS + 1).

Lead – causes the dependent activity of the Figure 2.3 Precedence Relationships
pair of activities in the relationship to have
designated number of time periods
subtracted to its start or finish. For example,
FS + 2
in the frosting of the cake, if frosting were to
start a unit period ahead of the presence of
A B
A must finish before B starts + 2 Hours
the master chef, then the relationship
will be designated as (SS – 1)
C D
C must start before D starts

E F
E must finish before F can finish

G H
G must start before H can finish

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Example of Precedence Relationships

FS Relationship: A B
The independent activity (A) must finish before
the dependent activity (B) can start.

This is most common kind of precedence relationship. All tasks that are placed sequentially in
the schedule fall into this category. If there is no mention of the type of precedence relation, it
is assumed that the relationship is FS.

SS Relationship:
The independent activity (C) must start before the
dependent activity (B) can start. C D
Project: Wedding ceremony, C: Play bridal march, D: Walk the bride down aisle

FF Relationship:
The independent activity (E) must finish before the
dependent activity (F) can finish.
E F
Project: Deck Building, E: Building deck F: Cleaning debris

SF Relationship:
The independent activity (G) must start before the
dependent activity (H) can finish.
G H
Project: Dinner Party, G: Hostess to inspect kitchen
H: Cleaning kitchen,
FS +3
Lag Relationship: B must start 3 hours after A A B
finishes.

Project: Cake baking, A: Bake cake B: Frost cake

FS-1
Lead Relationship: B must start 1 hour before A
finishes.
A B
Project: Fill prescription drugs, A: Visit drug store B: Call pharmacist

Tasks in Parallel (A, C) A B

Tasks in Series (G, A, B) G
C
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The precedence diagram for the example “Getting Ready for work” project is shown below.

Project: Getting ready for Work

Precedence Diagram A: Get up from bed (5 min)
B: Make coffee (15 min)
C: Brush teeth, shave, and shower (25 min)
D: Get dressed (5 min)
E: Drink coffee (15 min)

Brush Teeth Dress Up

Wake Up
C 25 m D 5m
A 5 min 11 35 m 36 40
1 5 min

SS + 5
Drink
Make Coffee Coffee
E 15 m
B 15
41 55
6 20 m

Example: In a project to replace our home’s exterior and interior doors, the following were
major activities:

1. Planning (How many doors at what cost and when needed), 15 days, starting Monday
6/9 - 6/27/2003.
2. Approval (Securing wife’s agreement), 5 days, 6/30 – 7/6.
3. Order & Deliver Interior Doors, 3 days (in stock item), 7/7 – 7/9
3.1 Install, 1 day (but can only begin after the exterior doors are delivered as
both types of doors will be installed together by the same carpenters), 8/4 – 8/4
3.2 Finish, 10 days, 8/6 – 8/19 (only after exterior door is installed and the
carpenter is out of the way)
4. Order & Deliver Exterior Doors, 20 days (special order item), 7/7 – 8/1
4.1 Install, 1 day, (Done only after finishing interior door installation) 8/5 – 8/5
4.2 Finish, 15 days, 8/6 – 8/26
5. Reinstall Security & Doorbell Systems, Approval & Close. 1 day, (can only be done
after all doors are installed and finished) Wednesday 8/27/2003 9/9/2003

Use the calendar for June – August, 2003 shown below to indicate the time frame for the
above example. Unless otherwise stated, weekends (Saturday and Sunday) are excluded from
project working days.

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June 2003 July 2003 Aug 2003

S M T W Th F Sat S M T W Th F Sat S M T W Th F Sat
1 2 3 4 5 6 7 1 2 3 4 5 (31) 1 2
8 9 10 11 12 13 14 6 7 8 9 10 11 12 3 4 5 6 7 8 9
15 16 17 18 19 20 21 13 14 15 16 17 18 19 10 11 12 13 14 15 16
22 23 24 25 26 27 28 20 21 22 23 24 25 26 17 18 19 20 21 22 23
29 30 27 28 29 30 31 24 25 26 27 28 29 30

Finish
Figure 2.4 Precedence Diagram (Door Replacement Project) (Interior Doors)

Install 3.2 10 days

(Interior Doors) W 8/6 T 8/19
Develop Project Plan
(Year 2003) 3.1 1 day
M 8/4 M 8/4
1 15 days
M 6/9 F6/27

Order & Deliver

(Interior Doors)
Develop Project Plan
3 2003) 3 days
(Year Security System,
Doorbell, Close.
Plan Approval MM8/10
7/7 W 7/9

1 20 days 5 1 day
2 5 days W 8/27 W8/27
Order & Deliver
M 6/30 F 7/4 (Exterior Doors)

4 20 days
M 7/7 F 8/1 Install
Required Information: (Exterior Doors)
• List of activities 1 day Finish
4.1
• Duration of each activity T 8/5 T 8/5
(Exterior Doors)
• Predecessor for each activity 4.2 15 days
W 8/6 T 8/26

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Arrow Diagramming Method (ADM)

This method represents network diagram for projects using arrows that represent activities
and show their dependencies by connecting them at nodes. This method is also known as
activity-on-arrow (AOA). It is not as popular as PDM, but is available in many software
programs. ADM only uses finish-to-start dependencies, and may require the use of the
dummy activities to define all logical relationships correctly. Three things associated with
each activity are: the activity description, a starting event of the activity, and the ending event.

Figure 2.5 Arrow Diagramming Method

Event Name Activity Event Name

and Date and Date
Duration

Figure 2.6 Network Logic Diagram Using the Arrow on Node Diagramming Method
(Door Replacement Project)

3.1 3.2

Start 3 Finish
1 2

5
4 4.1 4.2

Note: 1, 2, 3, 3.1, 3.2, 4, 4.1, 4.2, and 5 are activities defined earlier. The length of the arrows is not
proportional to the activity duration. The dashed lines are dummy activity to maintain precedence relations.

Conditional Diagramming Method

Two techniques known as Graphical Evaluation and Review Technique (GERT) and System
Dynamics models allows loops (for tests that need to be repeated multiple times) and
conditional branches (e.g., design updates hat are required only if the inspection detects
errors) absent in both PDM and ADM. Discussion of this technique is beyond the scope of
this seminar.

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Network templates
Sometimes standardized network diagram can suit a project activity well. They may be used
for an entire project or for just a portion of the project (referred as subnets or fragnets).
Subnets prove valuable when the project includes several identical or nearly identical features,
such as floors on a high-rise office or apartment building, clinical trials on a pharmaceutical
research project, program modules on a software development project, or the start-up
procedure of a development project.

2.4.3 Schedule Development

When developing schedule, the start and finish dates for project activities are identified. It is
important to set realistic start & finish dates so that the project deadline can be met.

Before developing a schedule, you will need to complete a project network diagram, project
activity duration, and project resource requirements.

History of Scheduling
Prior to the 1960’s, bar charts were the only tools used for scheduling. Henry Gantt furthered
the effectiveness of bar charts when he developed a complete notational system for displaying
project progress. Known as Gantt charts, these bar charts are simple to construct and interpret
and effectively communicate task goals and deadlines.

Figure 2.7 Bar Chart (Gantt chart, Door Replacement Project)

3.1 Install interior doors

1 Project Plan (15

2. Plan Approval (5 days) 3.2 Finish (10 days)

T
2 3.2
a 3. Deliver Interior Door (5)
s 3
k
4 Deliver Exterior Door (20
5 Close (1 day)

4.1 Install (1 day)

4.2 Finish (15 days)

Time

Benefits: Easy to construct and communicate information

Drawbacks: No interdependencies; difficult to determine the impact of one task on the rest
of the project

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2.2 Practice & Learn: Continue with your group exercise (2.1 Practice and Learn)

a. Review with your group and refine WBS (8 -12) .

b. Establish and assign duration (2 or more units of time: sec, hour, days, etc) of each
task elements
c. Identify all applicable precedence requirements (Create at least 1 dependency
requirements in your class project.)
d. Show tasks in graphical form (Draw Gantt Chart)
e. Create the Precedence Diagram for your project using calendar days starting on
first Monday of next month (Ignore this step if your time is in min, or hour)
f. Create the Precedence Diagram for your project using the project activity days.

Schedule Development To overcome the lack of

A number of tools and techniques are used to interdependencies in the Gantt chart, the
develop schedules. two arrow diagramming methods of
scheduling were developed in the late
Mathematical Analysis early 1960’s. These techniques capture
• Critical Path Method (CPM) the sequential and parallel relationships
• Program Evaluation and Review among project activities.
Technique (PERT)
• Graphical Evaluation and Review
Technique (GERT) Critical Path Method (CPM) –
developed by Du Pont.
Duration Compression
Program Evaluation and Review
• Crashing (cost and schedule tradeoffs
Technique (PERT) - developed by the
analysis)
U.S. Navy and the Booze, Allen, and
• Fast Tracking (doing activities in
Hamilton Consulting Group.
parallel that would normally be done in
sequence)
Although, all arrow diagrams (PDM and
AON diagrams introduced earlier) are
Simulation (calculates multiple project
generally referred to as PERT networks,
durations with different sets of activity
strictly speaking, PERT methods use
assumptions – Monte Carlo Simulation)
statistical probability techniques, while
CPM does not. In other words, PERT
Resource Leveling Heuristics (allocation of
makes it is possible to calculate the
resources to critical path activities first.)
probability for an activity to finish to
finish by a certain time. CPM can not
Project Management Software (automates
calculate this probability.
calculation mathematical analysis and resource
leveling together)

Coding Structure (allows extraction/sorting

based on different activity attributes

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Critical Path Method (CPM)

Using the critical path, project managers use the notion of a float (or slack) to direct effort
where it’s most needed. This way, activities with more float can be less intensely managed
than other activities, optimizing a PM’s resources.

Remember that the purpose for scheduling is to identify the start and finish dates for each
project activity. In CPM, you start with the network diagram (PDM) witch utilizes the WBS
following these steps.

Sequence of Activities for Schedule Development

• Create a list of activities to be scheduled

• Assign each activity’s duration
• Determine the predecessor for each activity
• Calculate the forward pass, or the early schedule for each activity
• Calculate the backward pass, or the late schedule for each activity.
• Calculate the float for each activity
• Determine the critical path
• Determine if the project completion date is earlier than the promised
deliver date
• Adjust schedule or re-establish new completion date
• Apply resources and determine resource constraints
• Adjust schedule to allow for resource constraints
• Determine if the predicted project completion date is earlier than the
promise date
• Adjust the schedule or promise date
• Get approval on schedule

In the door replacement project, the first three steps as outlined above were previously in
Figure 2.4. To calculate the forward pass (step 4) and backward pass (step 5), we need to
work with a precedence diagram (Fig. 2.4).

Conventions and Notations:

• The first activity is always scheduled to start on the project’s start date
• Each activity is assumed to start at the beginning of its period and finish at the end of
the period identified. For an activity of one day duration, the start and the end day is
the same.

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Early Start date (ES) = Earliest date of the beginning of an activity

Early Finish date (EF) = Early start date + duration of the activity – 1
Late Start date (LS) = Latest date of the beginning of an activity
Late Finish date (LF) = Latest start date + duration of the activity – 1

Float or Slack = Late start date – early start date

Free Float is the amount of time that an activity can be delayed without delaying the early
start of any immediately following activities.

Forward pass is the process used to calculate early start and early finish dates for the
uncompleted portions of network activities. By reviewing the precedence diagram (Fig. 2.4),
we can identify the early start and finish dates shown below. The numbers under ES & EF in
Table 2.1 represent the number of days in a sequence.

Table 2.1 Precedence (Door Replacement Project)

Activity
# Description Duration Predecessor ES EF LS LF Float
1. Develop Project Plan 15 days - 1 15
2. Plan Approval 5 1 16 20
3. Order Interior Doors 3 2 21 23
3.1 Install 1 3, 4 41 41
3.2 Finish Doors 10 3.1, 4.1 43 52
4. Order Exterior Doors 20 2 21 40
4.1 Install Doors 1 4, 3.1 42 42
4.2 Finish Doors 15 4.1 43 57
5 Close Project 1 3.2, 4.2 58 58
Notations: ES – Early Start, EF – Early Finish, LS – Late Start, LF – Late Finish

- The entire project takes 58 days to complete (sum of the durations of activities 1, 2, 4,
4.1, 4.2, and 5).
- Activity 1 is completed during day 1 and day 15
- Activity 2 is completed during day 16 and day 20
- Activities 3 and 4 both start on day 21st, but finishes on day 23 and day 40
respectively.
- Activity 3.1 can only start after activity 4 is completed (same carpenter installs all
doors)
- Activity 3.2 can start on day 43 after 3.1 and 4.1 are done and finish on day 52 (43 +
10 – 1)
- Activity 4.1 can only start after 3.1 and 4 are done on day 42 and finish on day 42
- Activity 4.2 can start on day 43 and finish 15 days later on day 57
- The closing activity takes place on day 58 and ends on day 58

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Backward pass is the process used to calculate late finish and late start dates for the
uncompleted portions of network activities by working backward through the network
logic starting with the project’s end date. The calculated LS, LF, and Float are shown in
Table 2.2.

- The end activity has the LF date same as EF day

- Activity 3.2 has late finish date of day 57 and a late start date of day 48
- Activity 4.2 can finish as late as day 57 and have a late start date as day 43, and 0 float
- Activity 4.1 has the same LS and LF days as day 42 and 0 float
- Activity 3.1 can have LF day (41) as one day before LS day for Activity 4.1 (42) due
dependency between activities 3.1 and 4.1
- Activity 4 can have LF (40, calculated LS is 21) day as one day before LS day for
activity 3.1 (41)
- Activity 3 can have a LF day on day 40 (day before LS of Activity 3.1) and LS day as
38 with a float of 17 days
- Activity 4 will have LF day as day 40 (day before LS of Activity 3.1) and LS day as
day 21, and 0 float.
- The LF day for Activity 2 is 20 (day before LS of Activity 4) and LS for
- The LS and LF days for activities 1 remain same as the ES &EF

Table 2.2 Precedence with Floats (Door Replacement Project)

Activity
# Description Duration Predecessor ES EF LS LF Float

1. Develop Project Plan 15 days - 1 15 1 15 0

2. Plan Approval 5 1 16 20 16 20 0
3. Order Interior Doors 3 2 21 23 38 40 17
3.1 Install 1 3, 4 41 41 41 41 0
3.2 Finish Doors 10 3.1, 4.1 43 52 48 57 5
4. Order Exterior Doors 20 2 21 40 21 40 0
4.1 Install Doors 1 4, 3.1 42 42 42 42 0
4.2 Finish Doors 15 4.1 43 57 43 57 0
5 Close Project 1 3.2, 4.2 58 58 58 58 0
Total Project Duration = Sum of durations of all activities in CRITICAL PATH (15+5+1+20+1+15+1 = 58)

Notations: ES – Early Start, EF – Early Finish, LS – Late Start, LF – Late Finish

Critical path is the group of activities with zero float. In the Door replacement project (Table
2.2), the critical path is comprised of activities 1, 2, 3.1, 4, 4.1, 4.2, and 5. These activities
cannot be delayed without delaying the entire project completion date.

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Other items in schedule development are discussed briefly.

Once your schedule is complete, you should check to see if the project completion date is
earlier than the date committed to the stakeholders. Warning flags should be raised, if this is
not the case.

If the scheduled completion date is different from the promised date, you will need to either
adjust the schedule or change the promised date.

If the predicted date of the schedule is later than the promised date, crashing or fast tracking
should be implemented. Crashing a schedule reduces the scopes or adds additional resources
to the project. For example, in the Door Replacement project, crashing would reduce time
delay by ordering exterior door from alternate source, using multiple carpenters for
installation, etc.

Fast tracking is another option for schedule compression where activities originally
scheduled in sequence are rearranged to overlap instead. The use of leads in the logical
relationships between activities may be used for this purpose. For example, when staining
wooden doors, one crew completes the job in 30 hours as shown in Figure 2.8a. When a
second crew is used to start pre-staining 4 hour after the first crew started sanding, the total
project time can be reduced to 22 hours as shown in Figure 2.8b. Notice that the work content
(30 man hours) and the effort remain the same.

Figure 2.8a Wood Door Finishing

Sand surfaces Apply pre-stain Apply stain

(12 hours) wood conditioner (10 hours)
(8 hours)

Project duration 30 hours.

Although crashing and fast tracking schedules are useful in reassigning project timeliness, it
may increase costs and risks. In the example, the overall cost has not increased & the total
hours remain the same. However, I big projects, the real cost of the project is likely to go up.
For more people on the job, the cost of tool will increase, and the transportation and other
overhead cost of employee hiring will have gone up.

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The risk of the project is also likely to go up. This is because; human error with more people
will be greater.

Figure 2.8b Wood Door Finishing (Fast tracking)

Sand surfaces Apply stain

(12 hours) (10 hours)

Apply pre-stain
SS + 4 wood conditioner
(8 hours)

Total Project Duration = 22 hours.

In this Fast Tracking approach, the pre-stain application is done in parallel with the sanding
task, which results in a reduction of the total project completion time.

Buffering the Schedule

A much more pleasant problem is when the scheduled project completion date is much earlier
than the promised date. This problem is solved by adding float to a selected activity. The
schedule should be buffered only after allowing for reserve schedule time, normal fluctuations
in activity durations, and resource limitations. An example of a schedule with a completion
date before the promised date is shown in Figure 2.9a.

Figure 2.9a Schedule (completion date before promise date)

Start
March 1.

Finish Promise
June 30 Aug. 30

A project schedule should not be adjusted by increasing the duration of activities (Figure
2.9b). If this is done, individuals will be given extra allowances and could indeed set a
negative precedence for future projects. The schedule should also not left as is.

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Figure 2.9b Schedule with Increased Duration

Start
March 1

Finish Promise
June 30 Aug. 30

A better choice is buffering the schedule as shown in Figure 2.9c. One way to buffer is to
add a lag in the relationship. Suppose that the gap between activity A and B is 20 days. Then,
the relationship between A and B will be changed from normal FS to FS + 20 which adds 20
days of float to the activity and also shift the project completion date to ten days later.

Figure 2.9 Schedule (completion date before promise date)

A
B
Start C
March 1. D
E
F

Finish Promise
June 30 Aug. 30

Yet another way to buffer a schedule with an early completion date is to add in a dummy
activity for each activity that is to be buffered as shown in Figure 2.9d. The dummy activity is
created between the independent and the dependent activities. If there was originally a FS
relationship between A and B, the new relationship will show FS between A and A’ (dummy
activities).

How does one determine which activities should be buffered?

The amount of buffer time that is applied to activities can be proportional to the risk of the
activity, the dependencies that it follows, or other reasons deemed appropriate by the project
manager.

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Figure 2.9d Buffering by Dummy Activity

A A’ B
60 days 20 days 120 days

Project duration without buffer: 180 hours.

Project duration with buffer: 200 hours.

Resource availability is important consideration for project completion. There are times
when one person or machine is needed for several activities. In such a case, the schedule may
have to be adjusted to make resources available for all activities. The amount of resources and
duration for which it is required may also have an impact on the schedule.

Unexpected resource constraints may also require a schedule change. When managing a set
number of employees on a project, the project manager’s goal is to avoid underutilization or
over- utilization of resources. While underutilized resources may be reallocated to other
project tasks, over utilization (extra hours of work, overtime pay) may prove costly and
demoralizing to project members.

To adjust a schedule to accommodate resource constraints, resource–leveling task may be

performed. A common way to graphical display resource allocation is through a combined
plot activity chart or resource histogram, as shown in Figure 2.10a. Notice that during week 1
and week 2, the resource (Programmer 1) is underutilized, but is over utilized during weeks 5
and 6 when the higher combined time allocation is 60 hours/weeks.

Figure 2.10a Over-allocation of Resource (Resource Histogram), Programmer 1

Activity A 20 hours/week

Activity B 20 hours/week

Activity C 40 hours/week

Activity D 20 hours/week
50

40

30
20

10

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10

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This problem is easily resolved by allowing Activity B (6 weeks duration) to be interrupted

for two weeks, reducing this resource’s workload & eliminating overtime, as shown in Figure
2.10b.

Figure 2.10b Over-allocation of Resource Resolved (Resource Histogram),

Programmer 1
Activity A 20 hours/week

Activity B 20 hours/week 20 hours/week

40 hours/week
Activity C
20 hours/week
Activity D
50

40

30
20

10

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10

After adjusting for resource constraints, the schedule should be checked to ensure that the
scheduled date meets the promise date. If it does not match, continue to readjust the schedule
until they are equal. Of course, before a plan can be finalized, it is important that the schedule
base be approved through a formal sign-off by the stakeholders.

Once all time constraints are rectified, a final critical path method is used to display the
schedule as shown in Figure 2.11.

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Figure 2.11a Critical Path Method (Door Replacement Project, Project Days)

3.2 Finish
(Int. Doors), 10 days

43 52
3.1 Install
(Int. Doors), 1 day
48 57
1. Develop Project
Plan, 15 days 41 41

41 41
1 15 Early start & Finish
1 15
Late start & finish
3. Order & Deliver
(Int. Doors), 3 days

21 23 5. Sec. System,
Close, 1 day
2. Plan Approval, 38 40
5 days
58 58

16 20 58 58
4. Order & Deliver
16 20 (Ext. Doors), 20 days

21 40

21 40 4.1 Install
(Ext. Doors), 1 day

42 42 4.2 Finsih
(Ext. Doors), 15 days
42 42

43 57
Source & Related Information:
43 57
• Figure 2.4 Precedence Diagram
• Table 2.2 ES, EF, LS, LF data
Note:

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Figure 2.11b Critical Path Method (Door Replacement Project, Calendar Dates of 2003)

3.2 Finish
(Int. Doors), 10 days

3.1 Install W 8/6 T 8/19

(Int. Doors), 1 day T 8/14 W 8/26
1. Develop Project
Plan, 15 days M 8/4 M 8/4
M 8/11 M 8/11
M 6/9 F 6/27 Early start & Finish
M 6/9 F 6/27 Late start & finish

3. Order & Deliver

(Int. Doors), 3 days

M 7/7 W 7/9 5. Sec. System,

W 8/6 F 8/8 Close, 1 day
2. Plan Approval,
5 days W 8/27 W 8/27
M 6/30 F 7/4 W 8/27 W 8/27
4. Order & Deliver
M 6/30 F 7/4 (Ext. Doors), 20 days

M 7/7 F 8/1
M 7/7 F 8/1 4.1 Install
(Ext. Doors), 1 day

T 8/5 T 8/5 4.2 Finsih

(Ext. Doors), 15 days
T 8/5 T 8/5
Required Information: W8/6 T8/26
• Figure 2.4 Precedence Diagram
W8/6 T8/26
• Table 2.2 ES, EF, LS, LF data
Note: Day of work’s converted to dates of the month (excluding Saturday and Sunday). Day of the week notations are: M-
Monday, T- Tuesday, W-Wednesday, T –Thursday, and F-Friday.

Summary of CPM
What does Critical Path Method (CPM) do? By using CPM, you can:
- Establish early and late start and finish times and float for each activity.
- Tell whether it is possible to meet important project milestones.
- Determine exactly when various tasks must be finished in order to meet that deadline.
- Identify which tasks have some leeway and which do not.
- Allows prioritization of activities by float.
- Determine critical path (also in PERT), which is defined as the longest path through a
project, showing the shortest amount of time in which the project can be completed
with no slack or float. Many task relationship types are possible on the critical path,
and there may be many that are done in parallel.

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2.3a Practice & Learn: Critical Path method (CPM)

a. Review Family Vehicle Purchase Project (Pages A.70 – A.73)

b. For certain Home Building Project, the Precedence diagram is as shown below.

ƒ Make copies of the

PRECEDENCE DIAGRAM
and perform FORWARD
PASS with calendar dates
(Assume that the project
starts on January 4, 2010)

ƒ Perform FORWARD PASS

with project days (Early start
& Early finish dates)

ƒ Perform BACKWARD PASS with project days (Be sure to confirm

that the Late start times match for the starting activity )

ƒ Complete the Precedence Table and calculate the FLOATS.

Answer these questions:

a. Which activities are in CRITICAL PATH and what is their total duration?

b. If activity D2 is delayed by 2 days, would it affect the project outcome?

c. What would be the project completion time if the activity B1 delayed by 4 days?

Useful Relations

Finish Day = Start Day + Duration – 1

Start Day = Finish Day – Duration + 1
Take care of LEAD and LAG intuitively.

(Use start day of successor to subtract or add numbers)

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Exercise: Home Building Project

B1 8 B2 14 B3 12
FS - 5

A1 5 day C1 4 C2 19 A2 3

D1 7 D2 5
FS + 3

Precedence Data with Floats - Home Building Project

Activity # & Description Duration Predecessors ES EF LS LF Float
(days)
A1 5
B1 8
B2 14
B3 12
C1 4
C2 19
D1 7
D2 5
A2 3
Note: ES = Early Start, EF = early Finish, LS = Late Start, LF = Late Finish, Float = (Late Start – Early Start)

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Program Evaluation and Review Technique (PERT)

Like CPM, the PERT method also utilizes the critical path from the activity network diagram
(PDM) to establish the project’s completion time. However, with PERT, the probability for an
activity to be completed by a certain time may be calculated. Furthermore, PERT can estimate
the duration and probability of completing the project by adding the individual durations and
variances of the activities in the critical path. Most people use CPM instead of PERT today.

To estimate activity duration, PERT uses the distribution mean to estimate a weighted average
of duration. In this method, the expected value, or EV, replaces the estimate used in CPM.

A normal probability distribution relates an event to the probability that it will occur. The
duration and cost of a project activity comes close to matching a normal distribution. Like a
normal curve (bell –shaped curve), the beta distribution fits the project time and cost better.
However, the normal curve is close enough for practical purposes.

Figure 2.12 PERT Duration Calculation for a Single Activity

Higher

Most Likely (Used in original CPM calculations)

EV expected Value)
Probability of
Occurrence

Beta Distribution

Lower Optimistic Pessimistic

Shorter time Possible Duration Longer time

Expected Value, EV = [Optimistic + 4 x Most likely + Pessimistic]

(or PERT Weighted Average) 6
Note: Most likely, Optimistic and Pessimistic values are estimated by project team members.

In a normal distribution, 99.7% of occurrences will fall between the optimistic and
pessimistic estimates which are assumed to be the two extreme values at +/- 3 x standard

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deviation from the mean (See Figure 2.13). Thus, using the estimates of the pessimistic and
optimistic values, the standard deviation can be calculated as:

Standard deviation, SD = (Pessimistic – Optimistic) / 6

Also
Variance = SD 2 or SD = (Variance) ½

Figure 2.13 Area Under Normal Distribution Curve

-3σ -2σ -1σ 1σ 2σ 3σ

68.27 %

95.45 %

99.73 %

Where do the optimistic, pessimistic, and most likely values come from?

You will need these values to compute EV and SD. A good approximation of these values can
be obtained by asking the activity estimator to estimate three values instead of just one. Ask
the estimator to estimate:

Optimistic value – what will happen if things go well?

Most likely – what is most likely to happen?
Pessimistic – what will happen if things do not go well?

Example: Suppose that for a particular programming (coding) activity, the estimates are:

Most likely = 30 days

Pessimistic = 36 days

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Optimistic = 27 days

Then, Expected value, EV = (36 + 27 + 4 x 30)/6 = 30.5 days

SD = (36 – 27) / 6 = 1.50 and Variance = 2.25

You could now make a statement that this activity:

- has a 95 percent probability that it will be finished in 27.5 to33.5 days (EV +/- 2 x
SD), or
- has over a 99 % probability that the activity will be finished in 26 to 35 days (EV +/- 3
x SD).

Following the above sample calculations, the PERT calculation for the Door Replacement
example is (See Table 2.2 for duration values) based on estimated pessimistic and optimistic
activity duration values as shown in Table 2.3 below.

Table 2.3 PERT Statistics (Door Replacement Project)

< = (Estimated Duration)=> (Critical Path Activities)
Activity Description ML Opt. Pess. EV SD Var EV Var.

1. Develop Project Plan 15 14 19 15.5 0.833 0.69 15.5 0.69

2. Plan Approval 5 4 7 5.17 0.5 0.25 5.17 0.25
3. Order Interior Doors 3 2 4 3 0.333 0.11
3.1 Install 1 0.5 2 1.08 0.25 0.063 1.08 0.063
3.2 Finish Doors 10 8 12 10 0.67 0.44
4. Order Exterior Doors 20 18 25 20.5 1.17 1.36 20.5 1.36
4.1 Install Doors 1 0.5 2 1.08 0.25 0.063 1.08 0.063
4.2 Finish Doors 15 12 20 15.33 1.33 1.78 15.33 1.78
5 Close Project 1 0.5 3 1.25 0.42 0.17 1.25 0.17
(Critical Path) Total = 59.91 4.376

SD = (4.376)1/2 = 2.09

Notations: ML – Most Likely; Pess. – Pessimistic, Opt – Optimistic (estimated duration in days)
EV – Expected Value; SD – Standard Deviation; Var – Variance (calculated from estimates)

For Activity 1, EV, SD, and Variance are calculated as

EV = (19 + 14 + 4x15)/6 = 15.5

SD = (4.31)1/2 = (19 – 14)/6 = 0.833, and Variance = (SD)2 = 0.69

Likewise EV, SD, etc. for all other activities are calculated in Table 2.3.

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From the above PERT calculations, the project completion time (sum of all critical path
activities) is 59 (58.83) days and the standard deviation of the total project time is
approximately 2. Thus, it can be said that this project has over a 95% probability that it will
be completed in 55 to 63 days.

Steps for estimating project completion time expressed with confidence level
(Using PERT)

• List all tasks and associated durations (most likely, optimistic, and
pessimistic values)
• Draw precedence diagram showing early, late start, and finish times.
• Prepare Precedence table showing tasks with ES, EF, LS, LF, and float.
• Prepare PERT statistics table showing most likely time, optimistic time,
pessimistic time, expected value, standard deviation, and variance.
• Calculate project completion time by adding the expected values of all tasks
without float. Also, calculate the standard deviation of the entire project by
adding the variances of all tasks in the critical path, and then taking the square
root of the variance.
• Use standard deviation to express completion time at a 95% confidence
level (EV +/- 2xSD at 95% CL)

2.3 Practice & Learn: Based on the tasks identified in your own group project:

a. Refine and/redraw the PDM (similar to Figure 2.4 using project activity days) for
your project allowing room in the activity box for both forward pass and backward
pass.

b. Perform Forward and Backward Pass calculations and calculate Precedence Data
with FLOATS for your project (Similar to Table 2.2) and determine:

(i) Activities in the CRITICAL PATH and

(ii) Time to complete the project.

c. Review your WBS and assume or assign OPTIMISTIC and PESSIMISTIC

duration. You may assume the duration you used for Critical Path Method as the
MOST LIKELY task duration.

d. Prepare the PERT statistics (Complete Table) and determine the range of project
completion time with at (i) 65% and (ii) 95% confidence levels.

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Example: Deck Building Project

The activities and durations as part of a deck building project identified below are in no
particular order.

A. Planning Process (most likely: 5, Pessimistic: 10, Optimistic: 3 days)

– commence the project
B. Permit Application (10 days, 15, 8) – follows planning
C. Buy furniture for deck/patio (4 days, 8, 2) – start only after ordering
materials
D. Finish detailed deck design and identify material requirements (5
days, 10, 2) – follows planning
E. Ordering Materials & Delivery (5 days, 8, 3) – follows finish design
and permit
F. Install Posts (8 days, 15, 5) – follows Material delivery
G. Construct Deck (2 days, 4, 1.5) – follows post install
H. Clean up & close project.(2 days, 5, 1) – follows C and G

Complete the following activities assuming that the project begins on June 2, 2003 & using
the above activity information and June 2003 calendar:

1. Draw the project’s Precedence Diagram for the project

2. Calculate ES, EF, LS, LF, and float for the project activities
3. Show the project schedule network diagram with ES, EF, LS, LF calendar dates as per
the critical path method. (Hint: Assume that the project starts on first working day of
June in the current year)
4. Find the expected number of days for project completion?
5. Using PERT calculations, express the dates when the project can be finished with 95%
probability.

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Solution:
1. Precedence diagram shows dependencies and activity durations in their logical sequence of
completion.

To draw this diagram, make activity boxes with room for the activity’s description, number
(A, B, etc.), duration, start date, and finish date. Start with activity A on Monday the 2nd of
June (see Figure 2.14). Since activity B and D both follow activity A with five day durations,
draw FS (Finish- Start) relationships, starting on the sixth day of the project (6/9/03,
excluding Saturday and Sunday). Since E can only start after longer of B and C, it must begin
10 days after the start of activity B on 6/23/03. Since C and F can both start after E is finished,
they can start on the next available day, i.e., 6/30/03. Likewise G and H can be started and
finished in the given logical sequence as shown. Note that, since July 4th being a holiday, it is
excluded.

Figure 2.14 Precedence Diagram (Deck Building Project, Beginning on Monday, June 2, 2003)

Apply for Permit Buy Patio Furniture

B 10 days C 4 days

M 6/9 W 6/20 M 6/30 Th 7/4

Plan Deck Project

A 5 days
Clean up and Close
M 6/2 F6/6 Order Project
Materials/Lumber
H 2 days
Finish Detail Deck E 5 days
Design T 7/15 W 7/16
M 6/23 F 6/27
D 5 days
M 6/9 F 6/13

Install Posts for Deck

Required Information: F 8 days

• List of activities supplied M 6/30 T 7/10
• Duration of each activity Construct Deck
• Predecessor for each activities
Note: July 4 is excluded from work days as are Saturdays and Sundays G 2 days
F 7/11 M 7/14

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 Module 2 Project Planning Page 2.43

2. Calculation of precedence values

To calculate early start (ES), early finish (EF), late start (LS), and late finish (LF), it is
customary to use the number of days in a project rather than the calendar dates. Float is
calculated as the difference between ES and LS. To transform the LS, LF, etc. into a
precedence diagram, you will need to use calendar dates. The calendar for the project starting
on June 2, 2003, the day of the project is shown in Figure 2.15 below.

Figure 2.15 Calendars for June – August, 2003

1st day of the project (6/2) 22nd day of the project (7/1)
11th day (6/16) 30th day (7/11)

21st day (6/30) Holiday (excluded)

June 2003 July 2003 Aug 2003

S M T W Th F Sat S M T W Th F Sat S M T W Th F Sat
1 2 3 4 5 6 7 1 2 3 4 5 (31) 1 2
8 9 10 11 12 13 14 6 7 8 9 10 11 12 3 4 5 6 7 8 9
15 16 17 18 19 20 21 13 14 15 16 17 18 19 10 11 12 13 14 15 16
22 23 24 25 26 27 28 20 21 22 23 24 25 26 17 18 19 20 21 22 23
29 30 27 28 29 30 31 24 25 26 27 28 29 30

The project starting day is always counted as the first day. Thus, for activity A, the finish day
is the end of the 5th day, and may be demonstrated as:

EF = ES + Du ration – 1 or ES = EF + 1 – Du ration.

The calculation of ES and EF using the above formula and precedence diagram is called the
forward pass. Since Activity B starts on the 6th day and requires 10 days to complete (see
second line in Table 2.4), its EF is 15 (6 + 10 – 1). Likewise, EF can be calculated with
known ES values (Figure 2.14).

The last three columns in the table (Table 2.4), i.e., LS, LF, and Float are calculated by a
backward pass in which we start at the last activity (H) that was completed in the early
schedule (Figure 2.14). The object here is to determine the latest completion for each activity
so that the final project completion date can be maintained.

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Since we want the last activity to finish at the project’s finish date, its LS and LF remains the
same as it ES and EF (Last line in Table 2.4, 31 and 32). Float for this activity is zero as ES
and LS is the same.

Activity G can be finished as late as the day before the start of H (31st day) and can start two
days before (LS = 30 - 2 + 1 = 29). The early and late start & finish values for this activity
have the same values. Thus, activity G also has 0 float.

For activity C, its late finish can also be the 30th day of the project. However, since it has a
duration of 4 days, its late start day is 27 (30 - 4 + 1). The float for this activity is 6 (27 – 21).
Similarly, LS, LF, and float for all other activities are calculated as shown in Table 2.4.

Table 2.4 Precedence with Floats (Deck Building Project)

Activity Description Duration Predecessor ES EF LS LF Float

A. Develop Deck Plan 5 days - 1 5 1 5 0

B. Apply for Permit 10 A 6 15 6 15 0
C. Buy Patio Furniture 4 B 21 24 27 30 6
D. Finish Detail Design 5 A 6 10 11 15 5
E. Order Lumber 5 D, B 16 20 16 20 0
F. Install Posts 8 E 21 28 21 28 0
G. Construct Deck 2 F 29 30 29 30 0
H. Clean up Close Project 2 G, C 31 32 31 32 0

Note: ES = Early Start, EF= Early Finish, LS = Late Start, LF = Late Finish, Float = (Late start – Early start)

Observations:
Activities C & D only have floats.
Six activities, A, B, E, F, G, and H are part of the critical path.

3. Project Network Diagram

Using the ES, EF, LS, etc. calculated above, the network with critical path now can be
established by simply modifying the previous diagram (Precedence Diagram, Figure 2.14)
with early and late start & finish dates shown (Figure 2.16).The activity boxes (Nodes) now
contain a title box with Activity #, name, and duration. The lower two lines in the box contain
early start-finish and late start-finish dates with day of the week (M for Monday, F for Friday,
etc.)

For example, consider the box for activity C (Figure 2.14). The last line in the box is for late
start and finish dates. From our earlier calculation, LF is 30th day of the project (Table 2.4).
From the calendar (Figure 2.15), the 30th day of the project is July 11th. But since July 4th is a
holiday, 30th day is July 14th is the LF and Wednesday July 9th is the late start date for the

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activity. In the same manner late start and finish dates for all activities are shown (Figure
2.16)

Observations:
• The project is expected to be completed by July 16
• All activities in the critical path must be completed in their respective time
frames (LF)

Figure 2.16 Critical Path Method (Deck Building Project, Monday, June 2, 2003)

B. Apply for Permit C. Buy Patio

10 days Furniture, 4 days

M 6/9 W 6/20 M 6/30 Th 7/4

M 6/9 W 6/20 W 7/9 M 7/14

A. Plan Deck Project
5 days

M 6/2 F6/6
Early H. Clean up and
M 6/2 F6/6 Close Project, 2 days
Late E. Order
Matls/Lumber, 5 days
T 7/15 W 7/16
D. Finish Detail Deck M 6/23 F 6/27
Design, 5 days T 7/15 W 7/16
M 6/23 F 6/27
M 6/9 F 6/13
M 6/16 F 6/20

F. Install Posts for

Deck, 8 days

M 6/30 T 7/10
M 6/30 T 7/10
G. Construct Deck
2 days

F 7/11 M 7/14
F 7/11 M 7/14

4. Project completion times by Critical Path Method

32 days, June 2 – July 16, 2003.

5. PERT Calculations
Using the PERT method, expected completion dates, activity, and project completion time
variances are calculated based on an assumed normal distribution of the probability of
occurrences. Two basic quantities for each activity, such as expected value (EV) and standard
deviation (SD), are calculated from given the estimates (input values) of most likely,
pessimistic, and optimistic values of work duration for each activity. Notice that the estimates

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for these values are supplied in this problem and are shown in the 3rd, 4th, and 5th columns of
Table 2.5, respectively.

Sample calculations:

For activity A, estimated values are

Most likely = 5 days, Pessimistic = 10, and Optimistic = 3

EV = (4 x Most likely + Pessimistic + Optimistic)/6

= (4x5 + 10 + 3) /6
Or
EV = 5.5 days

Also, SD = (Pessimistic – Optimistic)/6

= (10 - 3)/6 = 1.17

And Variance = SD2 = (1.17)2 = 1.37

The last tow columns in the table repeat the listing of EV and Variance for only those
activities (0 float) that are in the critical path (5.5 and 1.36 for activity A). The EV & SD for
all other activities are calculated in a manner similar to Table 2.5.

Table 2.5 PERT Statistics (Deck Building Project)

< == (Estimated) ==> (Critical Path Activities)
Activity Description Likely Pes. Opt. EV SD Var EV Var.
A. Develop Deck Plan 5 days 10 3 5.5 1.17 1.36 5.5 1.36
B. Apply for Permit 10 15 8 10.5 1.17 1.36 10.5 1.36
C. Buy Patio Furniture 4 8 2 4.33 1.0 1.0
D. Finish Detail Design 5 10 2 5.33 1.33 1.78
E. Order Lumber 5 8 3 5.17 0.83 0.69 5.17 0.69
F. Install Posts 8 15 5 8.67 1.67 2.78 8.67 2.78
G. Construct Deck 2 4 1.5 2.25 0.42 0.17 2.25 0.17
H. Clean up Close Project 2 5 1 2.33 0.67 0.44 2.33 0.44
(Critical Path) Total = 34.42 6.8

SD = Sq. Rt (6.8 ) = 2.60

By adding the expected values of all activities in the critical path, we get 34.42 days as the
project completion time. Also, the total of variances (not standard deviation) for all the critical
path activities is 6.8. From variance, the SD is calculated to be 2.60. Using the SD value, the

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range of expected completion days for the project can be established. For 95% probability of
occurrence, the completion time is EV +/- 2 x SD. The expected project completion time can
be calculated as:

Expected Project Completion time = (34.42 – 2 x 2.6) and (34.42 + 2 x 2.6)

(Between 29.22 and 39.62 days)

2.4 Practice & Learn: Solve Problem Q2.1 (Page 2.91) & Problem Q2.6 (Page 2.93)

2.5 Establish Project Controls (manage & control changes)

In this task, you will establish project controls by identifying the procedures for managing
project change, quality, human resources, communication, risk, and procurement. This
activity will make you ready for project execution and the control process. It will also
ensure that the project complies with applicable industry standards.

2.5.1 Project Change Control:

Purpose of Change Management Project must have a change control

process, which is a formal process that
• Recognize and agree on scope maintains the agreed upon project
increases or decreases baseline. You will get the necessary help
• Acknowledge and approve costs and be aware of standard practices from
• Approve funding for both external two areas of PMBOK® : Integration
and internal sources Management and Scope Management.
Depending on the size of your project
• Investigate the effects of changes
and the organization, you will need to
on other aspects of the project
establish procedures for incorporating
changes in the project scopes.
Treat change management as a separate
sub-project within the project.
The change management process,
whether funded externally or internally,
Implement a new project plan when all
must include certain necessary items.
changes in cost, scope and schedule are
The proposed changes must first be
incorporated.
evaluated in terms time and effort to
implement the changes before its impact
on other activities can be determined
when stakeholders who ask for new items to be incorporated in the project, the activities
of the project team may be delayed. Obviously, the stakeholders must authorize the
funding to investigate the effects of change first, and then authorize the additional cost of
incorporating changes.

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2.5.2 Quality Control & Management

Managing the quality of the projects includes ensuring that all project objectives met. PMI
views the purpose of project management as a method for meeting stakeholders’
requirements. So far we discussed how the project time and cost are managed. Quality
management helps you control the scope.

Quality management is accomplished by three distinct processes:

Quality Planning – In this task you will identify quality standards that are relevant
to the project and will determine how to satisfy them

Quality Assurance – Here you will evaluate overall project performance on a

regular basis to develop confidence that the project will satisfy the relevant quality
standards.

Quality Control – In this process you will monitor specific project results to
determine if they comply with the relevant quality standard and will identify ways to
eliminate the causes of unsatisfactory performance.

Purpose of Quality Management

How is the quality management
processes accomplished? Are stakeholders getting what they require?
What tools and techniques are How can you assure that you are producing
available? what they expect?

Exceeding expectations – not a good idea:

- Can be costly and a waste of time
- Can create precedence unfavorable
for future projects
Quality is not to be confused with:
- Low grade is not a bad condition or
poor quality
- Inexpensive products may be
developed to appeal certain segment
of market.
Quality of an item means it is what it is
intended to be.

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Quality Panning Tools:

Benefit and Cost Analysis. The primary benefits of meeting quality requirements are:
- Less work with higher productivity at a lower cost)
- Increased stakeholder satisfaction
-
The primary cost of meeting quality requirements is the expense associated with project
quality management.

It goes without saying that the benefits quality outweighs the costs.

Example:
In an assembly & supply of instrument panel for a major auto manufacturer, the quality
department is maintained at a cost of $500,000/year. The increased customer satisfaction
(amounts to staying in business) is estimated to be worth $250,000/year and the value of
the reduced warranty return and scraps is worth $600,000/year.

Primary cost of meeting quality requirements: $500,000

Primary benefit of meeting quality requirements: $850,000 (600,000+250,000)

Benchmarking: Allows comparison of planned project practices to other projects that

generate ideas for improvement and help develop standards by which performance can be
measured. Other projects may be internal or carried out by other organizations in the same
area.

Example: In 1972, Burroughs Quality Planning

Corporation, the then second
largest computer company in the
US undertook a project to develop Tools & Techniques:
and produce 1500 lpm (lines per
minute) printer. In a race to
provide faster line printers to the • Benefits/cost Analysis
market, benchmarking exercise • Benchmarking
identified an IBM printer as a • Flowcharting
faster model to be held as the o Cause-and-effect
market standard to meet.
diagrams
Flowchart o Process flow chart
A flowchart is any diagram that • Design of Experiments
shows how various elements of a • Cost of Quality
system relates to each other. Two
flowcharting techniques are
commonly used in the quality

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management process as shown in Figure 2.17.

• System or process flow chart displays how various elements of a system

interrelate.

• Cause-and Effect diagram, also known as Ishikawa diagram or fishbone

diagrams, graphically shows how various factors might be linked to potential
problems or effect (result).

Figure 2.17
1. Clutch
ClutchPlate
PlateFabrication
Fabrications
Process
(Process Flow Diagram)

Stamping
Stamping// Deburring Rust
Hobbing Inhibitor
Clutch plates
Clutch plate are tumbled Parts are
made from in a large submerged
1/16 inch container to in a
thick rolled remove sharp chemical
steel edges bath
Clean and dry parts
are boxed for shipping.

Cause-and-effect diagram At end of the processes,

Inhibitor conc. Time the cleaned and dried
parts are boxed for
Rust in clutch plate
shipping
Airflow Drying temperature

Design of Experiments (DOE)

DOE is an experimental technique to study many factors (variables/input/parameters) at a
time using hardware or simulation. In this method, a selected set from all possible
experimental conditions are tested. When the experiments are carried out, analysis of the
results can identify how each factor influence the results (objectives) and what
combination of the factors (levels/values of the factors) produces the most desirable result.

Example: A baker can use DOE to perfect the recipe of a cake by determining the proper
combination of ingredients like sugar, flour, butter, etc. Using DOE, an automotive
engineer can adjust suspension parameters such as spring rate, shock, body structure, seat
cushion, etc. that produce the most desirable ride characteristics within a budgeted cost.

A project manager can apply DOE to help evaluate options in project plan. Objective
functions such as completion time or project costs can be optimized by taking different
factors such as type of employee, experience (junior engineer, senior engineer),

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compensation rate, etc. DOE can be applied to a project planning process only when
analytical simulations of the objective function(s) are available. If the project involves
developing products, the DOE technique should be included in the planned development
(design optimization purposes) process.

Cost of Quality
The total cost of all efforts to achieve product/service quality, which including the cost of
all work to ensure conformance with requirements as well as the cost of all work resulting
from nonconformance to requirements. Such costs are incurred in three areas:

- Prevention cost
- Appraisal cost
- Failure cost (internal and external)

Quality Assurance Tools Quality Assurance

Quality audits - Quality assurance is
accomplished mainly through quality
audits. Quality audit is a structured Quality audits - Quality assurance is
quality management activity. The often accomplished through quality
purpose of the audit is to ensure that all audits.
establish quality practices are being
followed. Quality audits may be
scheduled or random, and should be
conducted by properly trained in-house auditors (ISO 9000 terms Internal Auditors) or by
third parties such as quality system registration auditors.

Quality Control Methods

Quality Control
For quality control one should monitor
specific project performance (Results) Do specific project results comply with the
to find out if they comply with relevant relevant quality standard?
quality standards and identify ways to
eliminate causes of unsatisfactory • Inspection – examining conformity.
results. Quality control activity should • Control Charts – check to see if
be performed throughout the project to process is in control.
see that the product results • Pareto Diagram – rank ordering
(deliverables) and project management bar charts of item of interest.
results (cost and schedule) meet the • Statistical Sampling – checking a
standard. This function is often portion of the sample.
performed by a Quality Control • Flowcharting – shows how
Department or a similar functioning problems may have occurred in the
department within the organization. process.
• Trend Analysis – forecasting using
Some key quality control terms & math models.
definitions that project managers should

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know include:

Prevention – keeping errors out of the process

Inspection – keeping errors out of the hands of the customers

Attribute sampling – results conform or not, YES or NO, Go or No Go type results

Variable sampling – result is rated on a continuous scale that measures degree of
conformity

Special cause – an unusual event affecting changes in result

Random causes – normal process variations

Tolerance – results are acceptable when falling within the tolerance range
Control limits – the process is in control if the results fall within the control limits

Inspection
Inspecting is done by measuring, examining, and testing to find out whether the results
conform to requirements. Inspection may be conducted at the project level with individual
activity, or final product of the project. Inspection is also commonly termed as reviews,
product review, audits, and walkthroughs.

Figure 2.18 Typical Control Chart

2
UCL 1
3
7
4
__ __
X or R

5
LCL 6
Time

The number next to a point indicates the condition of out-of control

Key indicators for a process not “in control” are.

1. A point is beyond the upper or lower control limits

2. Seven points in a row on the same side of the midline (Rule of Seven)
3. Five points in a row headed in the same direction (Rule of Five)

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Control Charts
These are graphic displays of process performance (results) over time. The control charts help
identify if the process is “in control”, or if causes of variation is random or due to some
unusual events. The process should not be adjusted if it is “in control”. A typical control chart
and a few key criteria for out of control situation for a manufacturing activity are shown in
Figure 2.18 below.

Pareto Diagram
A Pareto diagram is a histogram, ordered by frequency of occurrence, that shows how
many results were generated by type or category selected for the study. When a plot is used to
show occurrences of problems, the project team should take action to fix problems that are
causing the greater number of defects.

Pareto diagram is guided by Pareto’s Law, which states that a relatively small number
of causes will typically produce a large majority of problems. This is commonly referred to as
the 80/20 principle, where 80% of the problems are caused by 20 percent of the causes.

_________________________________________________________________________
Pareto analysis is most frequently used data analysis tool.

In 1897, Italian scientist V. Pareto presented his findings that the distribution of
income is uneven. Similar observation also was reported by M. C. Lorenz in the U.S. in 1907.
Based on the arrangement of the income distribution bars, these scholars pointed out that by
far the largest share of wealth is held by a very small number of people. In the field of quality
control, in early part of the 20th century, Dr. J. M. Juran used the Pareto principles to isolate
the quality problems into vital few and trivial many.

Step 1. Decide the kind of problem you want to investigate.

Example: defects in an automobile, ages of people catching influenza, number of

projects done by departments, sales volume by months, etc.

Step 2. Sort data in descending order

Step 3. Calculate percentages and cumulative percentages.

Step 4. Plot frequency of occurrence and the cumulative percentage as shown in Figure 2.19.

_________________________________________________________________________

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Figure 2.19 Sample Pareto Chart

100
200
Pareto Diagram by Defective Items
Number investigated: 200
N 180 Categories: A, B, C, etc. 90
u
m C
80 u
b 160
e m
r u
140
70 la
o ti
f v
60 e
120
D
e P
100
f 50 e
e r
c c
ti 80 e
40
v n
e ta
30 g
60
U e
n
it 40
20
s

10
20

D B F A C E G

Construction of Pareto diagram: Sort items (Tasks A, B, C, etc.) in descending order before
calculating their percentages and plotting the cumulative values (Y-axis on right)

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Flowcharting
Flowcharting (see Figure 2.20) is used in quality control to help analyze how problems occur.
Figure 2.20 shows and example.

Figure 2.20 Sample Flowchart [registering in Benchmarking (BM) training]

Request registration Get

for ½ day overview supervisor - Attend ½ day
Learn about
approval overview session
BM class

Attend 2- Get
supervisor – Decide to attend 2- Look for
day BM application
class approval day BM class

Drawing Symbols
Start Activity Decision

Apply BM to Recycle Look for

own projects new projects

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2.5A Practice & Learn: The sales figures for a retail store are as shown below.

(1) Order the months in the list below with higher selling month first, the least
selling month last. Complete the last two columns of the table and plot the
Pareto Chart with cumulative sales/performances.
(2) Determine the three months with higher performances.
(3) Identify the months that makes up 85% of the total sales.

Month $Sales (+000) % Cum. %_______

January 120
February 105
March 90
April 85
May 60
June 65
July 70
August 70
September 82
October 118
November 160
December 290_______________________________________

2.5B Practice & Learn: In Michigan’s winter months, normal production data for a
particular brand of Salsa for Garden Fresh Gourmet Company is as shown below.

Volume (Boxes) Determine:

1. 1235
2. 1320
3. 1470
1. Average production volume ( Ans. 1385)
4. 1380 2. Standard Deviation (σ) for the production
5. 1490 volume (Ans. 104.33)
6. 1530 3. Plot a control chart showing average and +/-
7. 1510 1σ +/- 2σ , +/- 3σ
8. 1310
9. 1420
4. A routine check in recent time winter month
10. 1290 showed the following data: 1230, 1450, 1650,
11. 1335 1445, 1290, 1020, 1360 & 1480. What is your
12. 1355 conclusion about the nature of production
13. 1220 variation?
14. 1370
15. 1540

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2.6 Practice & Learn: Draw a Flow chart depicting the steps you will have to take
and procedure you will have to follow to register & attend a work related seminar in
London, England.

Statistical Sampling
In this approach, a small segment of the sample population of interest is selected for
inspection (e.g., selecting one small module of software codes at random from many lines of
codes for the entire software). Various methods may be used to select statistically valid
samples. One should select a method that best suits the ultimate objective of the study. Often,
sampling reduces the cost of inspection.

Trend Analysis
Trend analysis uses mathematical techniques to forecast future outcomes based on past or
present performances. Project managers use trend analysis to monitor:

• Technical performance – how many errors or rejects are found, how many corrective
actions remain to be taken, etc?
• Cost and schedule performance - how many activities were completed per period of
time, how much was the weekly payroll, etc.

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2.5.3 Project Human Resource (HR) Management

Making the most effective use of the people involved in your project, including project
stakeholder-sponsors, customers, partners, individual contributors and others, is key to project
management. The processes involved in HR Management are provided below.

Organizational Planning
Managing Project Human Resource This task involves identifying,
documenting, and assigning project
roles and responsibilities, and reporting
How can you make the most effective use relationships for individuals or group
of the people involved in your project? involved in the project. Such individuals
or groups may be part of the
• Organizational Planning – organization performing the project or
identifying and assigning project external to it. Four common tools and
roles and responsibilities techniques use for this purpose are:

• Staff Acquisition - getting needed 1. Templates – Most projects share

human resources many similar characteristics.
Organization planning can be made
• Team Development – developing easier by using reporting structures &
individual and group skills responsibility definitions from previous
projects.

2. Human Resource Practices – Organizational Planning Tools

Many organizations have well
established policies and • Templates – benefit from other
guidelines that can assist the similar project practices.
project management team. For • Human Resource Practices –
example, an organization that
views managers as “team leaders
Organization’s own policies and
or coaches” is likely to have guidelines.
documentation on how the role of • Organizational Theory – general
“coach” is to be performed. management and organizational
science.
3. Organizational Theory – A
• Stakeholder Analysis – knowing
substantial body of knowledge is
available on how the organization stakeholders and their demands.
should be organized in general,
and how to make it more efficient
for the type of project undertaken. The project management team should benefit by being
familiar with the subject of organizational theory so as to respond to the needs of the
project.

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4. Stakeholder Analysis – identification of stakeholders specific needs is assessed in

Stakeholder analysis is important in managing communications, as discussed later.

At the conclusion of organizational planning, you will have completed project roles and
responsibilities descriptions and develop a Responsibility Assignment Matrix, as shown in
Figure 2.21. You will document your staffing management plan in a Resource Histogram, as
shown in Figure 2.22.

Figure 2.21 Responsibility Assignment Matrix (RAM)

Person => PR PM WM KR RR AG BG
ACTIVITY PHASE

Requirements S R A P P

Concept Design S A P P

Design S R A P

Development R S A I P P

Testing & validation S P I A P

P = Participant, A = Accountable, R = Review Required

I = Input Required, S = Sign-off required

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Figure 2.22 Resource Histogram (Example)

Senior Project Engineer
R Staff Hours
e
s 300 –
o
u 250 –
r
c 200 –
e
150 –
U
s 100 –
a
g 50 –
e
1 2 3 4 1 2 3 4 1 2 3 4
January February March
Resource Usage Staff Hours

Staff Acquisition
During staff acquisition, you will secure needed human resources (individuals or groups)
assigned to the project. Often, the best people for the job may not be available, yet the
project management team must still make certain that the project’s requirements will be
met by the available resources.

Negotiations – Often project Staff Acquisition Tools

management team must negotiate staff
assignments with functional managers
who are responsible for staff • Negotiations – negotiate staff
administrative affairs. This becomes assignment with functional
increasingly important when there are managers.
other competing projects within the
organization competing for the same • Pre-assignment – Committed
resources. In this situation, the project
team’s influencing competency plays an resources prior to project
important role in negotiating staff approval.
assignments, as do the politics of the
organization. For example, if the • Procurement – procure outside
functional managers are rewarded support when needed.
strictly based on staff utilization, their
interest may be to fill available
resources regardless of their qualification for the job.

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Pre-assignment – Refers to situations where the project was secured by a competitive

bids and specific staff has been committed as part of the proposal. It may also refer to
internal projects where staff assignments are already defined as part of the charter of the
project’s charter.

Procurement – When the performing organization lacks the in-house staff needed to
complete a project, services be obtained or procured from outside sources. You may also
need to use procurement when in-house skills are already committed to other projects.
Procurement management will be discussed in more details under section 2.5.6.

Team Development
Good project managers will put effort into enhancing stakeholders’ ability to contribute
well as individuals while fostering the project team members’ ability to function as a
team. Often, the team development process becomes a challenge when team members are
made accountable to both the functional manager and the project manager. Effective
management of this dual reporting relationship is key to team building and project
success.

Team-building Activities – Team building activities are used to improve team

performance, and may take a number of forms, including:

- involving
management level Team Development Techniques
team members in
the planning
process; • Team-building Activities –
- establishing ground Actions to improve team
rules for surfacing performance.
and dealing with • General Management Skills – a
conflicts; broad range of management
- holding frequent,
but short status
skills.
meeting; • Reward and Recognition Systems
- Organizing off-site – action that promote desired
meetings, retreats, behavior.
and games; • Collocation – putting all active
- Facilitating
professional skill
project team members in the
building seminars same location.
to improve
interpersonal
relationships among key stakeholders.

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General Management Skills – Project manager should also consider building general skills
in areas like finance, accounting, strategic planning, negotiating, problem solving, that
often come useful in building teams and running projects.

Reward and Recognition Systems – To promote or reinforce a desired behavior

management can institute a formal recognition system. The reward system should only
reward actions that directly impact project performance. For example, a project manager
who is rewarded for timely project completion should have an appropriate level of control
over project planning. At the same time, a person who ends up working overtime as a
result of poor planning should not be rewarded.

Collocation – There are benefits to co-locating all active project team members. Though it
may not always be possible, co-location is a common practice on larger projects and can
be equally effective in smaller projects. The availability of modern communication
technologies including conference calls, video conferencing, e-mails, and cell phones has
made it convenient to work with remotely located project team members. When team
members in large projects are remotely located, one may establish a project center, war
room, etc. to provide a balance. Where collocation is not possible, frequent face-to-face
meetings may encourage interaction among team members.

[Other Topics for self study]

- Evaluation of Support Personnel
- Employee Motivation
- Supervisory Style and Delegation
- Job and Work Design
- Authority, Power and Leadership Style
- Conflict Resolution
- Effective Meeting Time
Management Communication Management

2.5.4 Project Communication How can you ensure timely and

Management appropriate generation and
communication of project information?
Project communication management
involves activities that ensure timely • Communication Planning –
generation, collection, dissemination, determine stakeholders
storage, retrieval, and ultimate communication needs
disposition of project information. • Information Distribution – make
Project communication provides the needed information available
vital link between the ideas, • Performance Reporting – collect
information, and people that is and distribute performance
necessary for the project success. All information
involved in the project must be • Administrative Closure – gather
prepared to send and receive and disseminate information about
information and understand how the project phase & closure
flow of information in which they are
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involved, affect the project outcome. There are four processes involved in communication
management: (1) Communication Planning; (2) Information Distribution; (3)
Performance Reporting & (4) Administrative Closure

(1) Communication Planning

In this process, you will determine your stakeholders’ communication needs. In other words,
you will find out who needs what information, when they need it, in what format they want it,
and who will provide it. On most projects, the majority of communication planning is done in
the project’s earlier phases, but it should be revised regularly and changes made as needed.

Stakeholder Analysis – Involves Communication Planning Tool

development of a methodical and logical
view of stakeholders’ information needs
and identification of sources to meet
these needs by seeking methods and • Stakeholder Analysis – analyze
technologies that meet these information the needs of the stakeholders and
needs in a timely manner. Avoid wasting determine how it can be met.
resources on generating information that
is unnecessary or on inappropriate
technology.

(2) Information Distribution

Making needed information available to project stakeholders in a timely manner requires that
the communication management plan be implemented. The plan should incorporate
provisions for unexpected requests of information or reporting on unexpected events.

Communication Skills – Project

manager should have proficient Information Distribution Methods
communication skills. During an
exchange of information, the sender is • Communication Skills – Skills for
responsible for communicating clearly exchanging information in a clear
and unambiguously, and for making and complete manner.
sure the receiver understand it
correctly. The receiver, on the other
hand, is responsible for making sure • Information Retrieval Systems -
the information is received in its Identify methods for storing and
entirety and understood correctly. retrieving information.
Facets of communication include:
- Written and verbal
• Information Distribution Methods
- Internal and external
- Formal or informal – establish method of information
- Vertical or horizontal distribution
(in the organization)

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Information Retrieval Systems - Information may be shared among team members and
stakeholders through: manual filing systems, electronic database, project management
software, engineering drawings, design specs, test plans and results, etc.

Information Distribution Methods – Information may be distributed through: meetings,

hard copy documents, shared databases, faxes, electronic mail, voice mail,
videoconferencing, project intranet, etc.

(3) Performance Reporting

In performance reporting, one plans for
the collection and dissemination of Performance Reporting Tools
performance information to provide
stakeholders with information on how • Performance Reviews – Meetings
resources will be used to achieve project
objectives.
to asses project status.
• Variance Analysis – Comparing
Performance Reviews- regularly project performance with
scheduled meeting held to review the expected results.
status and/or progress of the project. • Trend Analysis – Examine project
Such reviews are usually held in
results over time.
conjunction with one or more of the
performance reporting tools • Earned Value Analysis –
described below. Evaluates project performance in
terms of cost and schedule.
Variance Analysis- Variance analysis • Information Distribution Tools
is performed to see how the actual
project performance compares with
and Techniques – How to report.
the planned value. Although cost and
schedule are most commonly calculated, variances in scope, resource, quality and risk are
also of importance.

Trend Analysis – In trend analysis, performance is observed over time. Often, visual
observation or mathematical curve fit can indicate the trend of performance indicating
whether improvement or deterioration.

Earned Value Analysis – the most commonly used method of project’s performance.
Earned Value Analysis combines performance in terms of project scope, cost (resources),
and schedule to help the project management teams assess a project’s performance. Three
key values are calculated as part of this analysis.

Earned Value (EV) = the value of the work actually completed (Previously
called budgeted cost of work performed or BCWP)

Planned Value (PV) = the portion of the approved cost estimate that is planned
to be spent during given period (Previously called budgeted cost of work
scheduled or BCWS)
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Actual Cost (AC) = the total cost incurred when accomplishing work on the
activity during a given period (Previously called the actual cost of work
performed or ACWP)

From the above cost evaluation, several variance statistics are calculated:

Cost variance, CV = EV – AC
Schedule variance, SV = EV – PV

Also, Cost performance index, CPI = EV/AC (used for forecasting

cost)
And, Schedule performance index, SPI = EV/PV (used for forecasting
schedule)

Figure 2.23 below shows time duration and weekly spending for several tasks from which
the cumulative spending may be calculated. Figure 2.24 shows the plot of the cumulative
values calculated. Since this cumulative value (dollar, hours, etc.) is derived directly from
the schedule, it represents planned performance and therefore is called a baseline plan.
The baseline curve is used as the basis for comparisons of project’s performance and
establishes the status at any point in time. Examples of how such assessments are done
follow here.

Based on data collected at the end of 6 weeks when the planned value of the
project is $175,000, the actual cost of the project (money paid for resources
and materials) to date is $190,000 (AC), and the earned value, which is the
value of the work actually completed is $140,000 (EV) as shown in Table 2.6.
From PV, AC, and EV, variance values, CV & SV, and cost and schedule
performance indices CPI & SPI, are calculated for Tasks 1, 2, and 3 as shown
below:

CV = EV – AC = 140 – 190 = - 50 ($x000)

Or CV as percent of EV = - 50/ 140 = - 35.7%

Also, SV = EV – PV = 140 – 175 = - 35

And, SV as percent of PV = -35/175 = - 20

BAC (budget at completion = EV of all tasks) and EAC (Estimated project

cost at completion) bears relations as

EAC = BAC/CPI

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Figure 2.23 Bar Chart Schedule Showing Cumulative Spending

Task 1 $ 15,000/ week

Task 2
$ 10,000/ week

Task 3
$ 25,000/ week
Week ===> 1 2 3 4 5 6 7 8
Weekly
Spending $K* 15 15 25 50 35 35 25 25
Cumulative
Spending $ K 15 30 55 105 140 175 200 225

* $ values shown are in 1000’s (K = x 1000). Other units of measure can be in labor hours, tons of steel,
cubic yards of concrete, etc.

Likewise, performance indices can be calculated as

CPI = EV / AC = 140 /190 = 0.737

And SPI = EV / PV = 140 / 175 = 0.80 (Table 2.6)

Table 2.6 Tabular Calculated Performance Report

Calculated Values
Planned Earned Actual Cost Cost Schedule Sched. Cost Schedule
WBS Budget Value Cost Variance Var. Variance Var. CPI SPI
Element CV= CV/EV SV= SV/PV
PV $ EV $ AC$ (EV-AC)$ % (EV-PV)$ % (EV/AC) (EV/ PV)
Task 1,
Task 2, 175K 140K 190K - 50 -35.7 - 35 - 20 .737 .80
and
Task 3

Tasks
(abc) -- -- ---

Total=>
Data Date: 6 Weeks (individual task and their totals can be used for reporting ).
* $ values shown are in 1000’s (K = x 1000). Other units of measurement are labor hours, tons of steel,
cubic yards of concrete, etc.

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Although, only one data for each of AC and EV at 5 – 6 weeks is shown (Table 2.6),
assuming that such values are available for all other weeks prior to this point, the curves
for AC and EV can be drawn along with the PV (Figure 2.4). Depending on where AC
and EV are in relation to PV, different conclusions about the project progress and
expenditure can be made. Figure 2.25 represents four scenarios of EV, AC, and PV
configurations. Their individual assessments are described below.

Figure 2.24 Graphic performance Report in Terms of Earned Value

$ x 1000 Planned Value

C
u Actual Cost
m 200 –
.

S 150 –
Earned Value
p
e
n 100–
d
i
n 50 –
g
Data Date

1 2 3 4 5 6 7 8
TIME (Weeks)

Similar plots can me made with other types of units of measure (labor hours, amount of materials, etc)

Figure 2.25(a), AC >EV, AC>PV, and EV< PV indicates that the project is behind
schedule and overspent (over budget). Not being able to anticipate delays or
complexity of the activities, or otherwise incorrect estimate will cause this situation.
Unforeseen accidents and roadblock may also cause such delays and over expenditure.

Figure 2.25 (b), EV>AC, EV>PV, and AC<PV represents situation where the project
is ahead of schedule and under spent or under budget. This may have happened
because the original estimate was too conservative & perhaps padded for safety. It
may also be the result of a lucky break and everything will fall into place shortly. It
may also be that the people work as an efficient team and things got done sooner. The
drawbacks on such variance are the tying up of resources. In economic terms, this is
called opportunity cost.

Figure 2.25 (c), EV = AC, EV and AC >PV (EV and AC are almost equal and larger
than PV) shows a situation where the project is ahead of schedule, but is spending
correctly for the amount of work done. This usually happens when you apply extra
resources at the originally anticipated rates. For example, expected weather delays
may never have happened and you got things done sooner at the correct cost.

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Figure 2.25 (d), EV = AC, EV and AC <PV (EV and AC are almost equal and
smaller than PV) is indicative of performance for a project that is behind schedule, but
is spending correctly for the amount of work done. It shows that you have not applied
enough resources to the project. This could be because the resources were taken away
from you, or there was slow down for some reason (vacation, shut down, etc.). In the
end, you end up spending more when you try to catch up later.

Figure 2.25 Earned Value Analyses [Schedule: ahead/behind, Cost: under/over budget ]

(a) (b) EV
AC PV
C PV
C
u
u
m
m
.
.
V EV AC
V
al
al
u
u
e
e

Data Date
Data Date
TIME
TIME

What are Acceptable Variances?

(c) limit. Variances could range from +/- 3 –(d)
There is no fixed 5percent for construction, +/-
EV AC
10
C – 15 percent for development to a much higher level for R&D. PV
PV C
u
m
Example: u
Schedule for a part of a large highway construction project of the Department
m
. Transportation in the State of Michigan is shown in Figure 2.26. The project review at
of .
end of August showed that the work on Hwy I-75, Hwy I-94 was completed and the
V AC
reconstruction
al of Hwy I-275 is about to be completed V one month ahead of time.EVThe total
expenditure
u up to that point of time was reported toalbe $130M. Determine the cost
variance,
e schedule variance, and the earned value. u
e

Data Date
Data Date
TIME
TIME
Earned Value Actual Cost Planned Value

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Figure 2.26 Schedule Showing Michigan DOT ad Construction Expenditures

Hwy I-75 $ 15M/ Month

Hwy I-94 $ 15M/Month
Hwy I-275 $ 10M/ Month
Hwy M-23 $ 20M/ Month
Month ===> April May June July Aug. Sept. Oct. Nov.
Monthly
Spending $K* 15 30 30 40 25 30 20 20
Cumulative
Spending $ K 15 45 75 115 140 170 190 210

Solution:

Figure 2.27 Earned Value Analyses

(Michigan Hwy Construction Project)
Data Date: August 31, 2001
Actual cost (AC) = $130M EV
Planned value (PV) = $140M PV
Earned value (EV) = $150M C
(140M + 10M Sept. cost of Hwy I-275) u
m
Cost variance (CV) = 20 M (150 – 130) .
Schedule variance = 10 M (150 – 140) AC
V
al
u
e

Data Date

TIME

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2.7A Practice & Learn: For the building project expenditure shown, 1. Complete
table below, 2. Plot graph of planned value, 3. If at end of June, task (a) is
completed two months ahead of time. The actual cost of project at that point is $2,500K. What
is the status of the project?

2.7B Practice & Learn: Earned Value Analysis (page 2.57)

For the example above, the earned value and the actual cost in the month of
October are as shown below. What is the cost performance index (CPI) at this point in time?

EV = 185M and AC = 200M (Ans: CPI = 0.925)

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Common Business and Accounting Terms

Assets = Things a company owns, like cash, plants, & buildings, materials in
stock, and machineries.

Liabilities = Items a company owes, such as unpaid bills, short-term and

long-term debts, accounts payable, unpaid salaries & bonuses, and unpaid
taxes.

Owners Equity = the value of the assets after the liabilities have been
subtracted.

The fundamental accounting equation is: Assets = Liabilities + Owners equity

After a project is completed, the increase in assets is expected to be greater than the
liabilities incurred. Bigger the difference, the higher the owner’s equity.

An Income Statement shows where the cash flow into and out of the company comes
from. It also shows the net profit after taxes, which is the sum of all money flowing into
(+) and all money flowing out (-) of the company.

Table 2.6a Sample Income Statement

Money-in Money-out = Net Value

Gross sales - (less) Cost of goods sold = Gross profit

Gross profit - Operating expenses = Net operating income

Salaries & commissions
Rent & Royalties
Depreciation
Other operating expense

Net operating income - Other expense

+ Other income - Interest expense = Net income before taxes
+ Interest revenue

Net income before taxes - Income tax = Net income after taxes

A Balance Sheet displays the constituents terms in the fundamental accounting equation
(Assets = Liabilities + Owner’s Equity). In a company’s balance sheet, the assets must
balance the liabilities, and are shown in dollar amounts.

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Table 2.6 b Sample Balance Sheet

Assets Liabilities Owner’s Equity

Total asset = Liabilities = Owner’s Equity =

Current Assets: [Cash Current Liabilities: Common stocks
Accounts receivable, [Accounts payable, +
Inventory, Unpaid salaries] Preferred stocks
Prepaid expenses ] + +
+ Long-term Liabilities: [ Retained earnings
Fixed Assets: [ Long-term debt]
Plants and equipment,
Furniture and fixtures]
-
Accumulated
depreciation

Return on Sales (ROS): Return on sale is the ratio between the net profit after taxes or
net operating profit after taxes (NOPAT) and the gross sales. Thus, if a project generates
$600,000 at completion, and after paying all costs, expenses, and taxes, the income is
reduced to $550,000, with a net operating profit of $35,000, ROS can be calculated as:

ROS = NOPAT/Gross revenue

= [35,000/600,000] x 100
= 5.83% (Typical American business data is 5%)

Return on assets (ROA): ROA is calculated by dividing the net profit after taxes by total
assets, and indicates the profit generated for each dollar of investment into the company.

Suppose that to complete the above project, $360,000 worth of company’s assets were
used. After sharing all costs and expenses, the net profit was $35,000 (same data shown
before). Then,

ROA = NOPAT / Total asset

= [35,000/360,000] x 100
= 9.7% (Typical US company data is 9%)

Economic Value Added (EVA): EVA tells us whether the net profit generated (NOPAT)
is sufficient to cover maintenance cost the assets that it utilizes.

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Companies generally maintain assets by borrowing money or when it owes dividends to

stockholders who hold stocks in the company. Suppose that 75 dollars out of every $100
of company’s assets are financed by stockholders at 18 percent. This means that $13.5 (18
x 0.75) of every $100 of assets per year is financed by stakeholders. The other 30 dollars
of every $100 of company’s assets are financed by lenders at 8.5 percent, or $2.55 (8.5 x
0.30) per year. Thus, the total cost of capital per $100 is 13.5 + 2.55 = $16.05, or 16.05
percent of company’s assets.

Suppose that the capital used by the project is $750,000, and the cost of that capital is
16.05 percent. The weighted average cost of capital (WACC) = $750,000 x 0.1605 =
$120,375.

If the net operating profit after tax is $ 170,000, then

EVA = NOPAT – WACC

= $170,000 - $120,375
= $ 49,625 (Project economic value added, EVA)

Depreciation
Depreciation is the term used to describe the cost of new assets spread out over a period of
time. Suppose that you purchase a machine for $70,000. If you account the purchase cost
of the machine as an expense in the year it was purchased, your profit in that year will be
significantly lowered. Instead, if this expense is spread over the life of the machine, its
impacts impact on your profits will be much lower and more realistic.

There are two common methods of depreciation: straight line and accelerated
depreciation. Assuming that the machine purchase ($70,000) has a salvage value of
$6,000 at the end of 8 years of useful life, the value of the machine that must be
depreciated is $64,000 ($70,000 – $6,000).

Straight line Depreciation – In this method, the depreciated value of the asset is spread
equally throughout the entire life as shown in Table 2.6c.

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Table 2.6c Straight Line Depreciation

Year Purchase Salvage Depreciation Current
Price Value Book Value
0 (Start) 70,000 6,000 0 64,000
1 8,000 56,000
2 8,000 48,000
3 8,000 40,000
4 8,000 32,000
5 8,000 24,000
6 8,000 16,000
7 8,000 8,000
8 8,000 0
Total 64,000

Accelerated Depreciation – In this method the expenses are depreciated more in the
earlier years of the asset’s life. Commonly two schemes are followed.

Sum of Year’s Digits –For 8 years, the sum of all the year’s digits is calculated. For
example, in an eight year depreciation, 8 +7+6+5+4+3+2+1 equals 36. From this number,
depreciation for the first year is calculated as 8/36 of total. There is no specific basis or
financial justification for this strategy, as shown in Table 2.6d.

Table 2.6d Accelerated Depreciation (Sum of the Year’s Digits)

Year Purchase Salvage Sum Depreciation Current

Price Value Year’s Digit Book Value
0 70,000 6,000 0 64,000
1 8/36 14,222 49,778
2 7/36 12,444 37,334
3 6/36 10,667 26,667
4 5/36 8,889 17,778
5 4/36 7,111 10,667
6 3/36 5,333 5,334
7 2/36 3,556 1,778
8 1/36 1,778 0
Total 64,000

Double Declining Balances – In this method, 50% of the total depreciable amount is
accounted for in the first year, and same percent of the remaining amount is taken in the

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subsequent year as shown in Table 2.6e below. This method is used as a standard
accounting practice.

Table 2.6e Accelerated Depreciation (Double Declining Balances)

Year Purchase Salvage Depreciation Current

Price Value . (at 50%) Book Value
0 70,000 6,000 0 64,000
1 32,000 32,000
2 16,000 16,000
3 8,000 8,000
4 4,000 4,000
5 2,000 2,000
6 1,000 1,000
7 500 500
8 250 250
Total 64,000

2.8a Practice & Learn: A manufacturer of plastic molded parts purchases a

molding machine for $350,000. The salvage value for the machine after 6 years is
estimated to be $20,000. Using the sum of all year’s digits method, determine the depreciation
and the Book Values for the next 6 years.

2.8b Practice & Learn: A farmer buys equipment for $250,000. Following the
double declining depreciation method, prepare the depreciation and Book Value of
the equipment for next 8 years. Use $30,000 as the salvage value of the equipment at end of
its useful life.

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The information gathered and processed as part of the performance reporting are distributed
using Information Distribution Tools and Techniques discussed in the earlier.

(4) Administrative Closure

All projects or phase require closure once Administrative Closure Tools
the objective has been reached, or the
activities are terminated. Administrative • Performance Reporting Tools
closure requires documenting project
results to formalize stakeholders’ • Project Reports
acceptance of the product. It means that
you need to collect all project records to • Project Presentations
make sure that they reflect final
specifications, analysis of project
successes, effectiveness, and lessons These tools have been described earlier
learned, and should store them for future as part of the communication
reference. management earlier

2.5.5 Risk Management

Risk management is a systematic process of identifying, analyzing, and responding to project
risk. The aim in risk management is to increase the probability and consequence of positive
events and minimizing the probability and consequence of adverse factors effecting to the
project objectives.
Risk Management
What is project risk?
How can you identify, analyze, and Project risk is an uncertain event or
respond to project risks? condition that has a positive or negative
effect on the project’s objective. Each
• Risk Management Planning – risk has a cause and a consequence. For
decide how to approach and plan example, a cause in a software
for the risk management activities development project could be double
checking coding. The risk is that the
• Risk Identification – determining
release date of the project may have to
risk that may affect the project
be delayed.
• Qualitative Risk Analysis
• Quantitative Risk Analysis
Project risks may be a threat to the
• Risk Response Planning – develop project objectives or opportunities to
procedures to reduce threats from improve those objectives.
risks
• Risk Monitoring and Control –
monitor residual risks

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Risk Management Planning

You will need to decide how to
approach and plan for risk management Risk Management Planning Tool
activities. A common practice to
developing a risk management plan is Planning Meeting – helpful for developing
to hold planning meetings with each a risk management plan.
project team. Participants at such
meetings should include project
managers, project team leaders, those
with responsibility for managing risk
planning and execution activities, stakeholders, and others as needed. Risk management
templates from other projects may be used to initiate discussion & form a tailored plan for the
current project.

Risk Identification
Risk identification involves determining which risk might affect project objectives and the
manner in which they may affect the outcome of the project. Each risk must be described in
detail such that it will not be confused with any other risks or project tasks. It is customary to
assign a number to each risk, and as more information is gathered about the risk’s information
can be stored for easy retrieval.
Risk Identification Techniques
There are several ways to discover and
identify risks (See the list at right). • Document Reviews - structured project
plan review
Document Reviews – All project materials • Information Gathering –
that have been generated up to the date of brainstorming, Delphi technique,
review are examined. The lessons learned Nominal group technique, Crawford
from previous projects, contract slip, etc.
obligations, project baselines, schedules • Checklists – historical information and
and budget, resource availabilities, knowledge from other projects
staffing plan, suppliers, and assumption • Assumption Analysis – review and
lists are reviewed. validate assumptions
• Diagramming Technique - process
Information Gathering – There are a diagrams, cause-and –effect &
number of techniques used in gathering influence diagrams.
information about risks. A few popular
methods are discussed here.

Brainstorming is the most common technique for identifying risk. An idea number of
participants for such a meeting is between 8 to 15. Less than 8 participants do not
provide necessary interactions, and over 15 make the meeting too large and liable to
loosing focus.

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Ideas about risks are first identified without scrutiny, and once all ideas are listed, they
are slowly examined and descriptions clarified. All risks are then categorized by the
type of risks and their definitions sharpened.

Delphi Technique is similar to brainstorming. This approach differs in that it involves

participants who do not know each other. In fact this type of meeting may be held with
participants in remote locations via e-mail, video conferencing, etc. Participants can
freely and uninhibitedly by ranks and peer pressure offer ideas, which are then
classified and categorized by a facilitator.

In Nominal Group Technique, the participants are asked to write their ideas secretly
on to pieces of paper. The suggested ideas are listed, then scrutinized and categorized
by the facilitator.

In the technique known as Crawford Slip, 7 -10 Participants are asked 10 questions
one at a time. Participants are not allowed to use the same answer for different
question.

Expert Interviews method relies on interviewing a few external or internal experts

whose experience can be of great help the project team from not encountering the
same problem repeatedly.

Checklists – In its basic form, checklists are simply predetermined lists of risks that may
potentially occur for the given projects. These risks may have occurred in similar past
projects. Often, certain customers and stakeholders have particular risks associated with them
that can forewarn the new project’s manager.

Assumption Analysis – every project is developed based on certain assumptions, hypothesis,

or scenarios. In an assumption analysis, the validity of such assumptions is examined. This
analysis identifies risk due to inaccurate or inconsistent assumptions.

Diagramming Technique - diagrams, cause-and –effect & influence diagrams, etc. for various
activities are reviewed to identify risks.

Qualitative Risk Analysis

To assess the impact and likelihood of identified risks, risks are prioritized according to
potential effects on project objectives. This process helps determine the importance of
addressing specific risks and helps develop a risk response.

Risk Probability and Impact – Risk probability and consequences are described in this task in
qualitative terms like low, moderate, high, very high, etc.

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• Risk probability is a number (say Qualitative Risk Analysis Tools

0.25 or 25%) that represents the
chance for a particular outcome to • Risk Probability and Impact –
occur when the assumed describing risk probability and its
condition allows it to occur. All consequences in qualitative terms: low,
risk has a probability of moderate, high, etc..
occurrence greater than 0 and less • Probability/Impact Risk Rating Matrix
than 100 percent. Any risk event – Assigning risk ratings to risks.
that has probability of zero cannot • Project Assumptions and Testing –
occur and needs not be considered identified assumptions are tested
as a risk. On the other hand, a risk against assumption stability and the
event that has probability of 100 adverse consequences.
percent is not a risk. It has • Data Precision Ranking – evaluate the
certainty of occurring and must be degree to which the data about risks is
planned for in the project. useful.

• Risk consequence or impact is the

effect on project objectives if the risk event occurs.

Risk probability and risk consequence are two attributes of risk that are applied to specific
risk events and not to the overall project. Analysis of risk probability and consequence helps
identify those risks that should be managed aggressively.

Probability/Impact Risk Rating Matrix – Risk matrices constructed using risk probability and
its impact on the project, can help identify risks that require further analysis and attention.
Both risk probability and impact can be assigned ordinal or cardinal scales.

Ordinal scale: Very Low Low Moderate High Very High

Cardinal scale: .05 .10 .20 .40 .80

(Usually non-linear)

Figure 2.7 shows an example of how to evaluate risk impacts by project objective. You can
use descriptive impacts (ordinal: very low, low, etc.) or a numeric scale (cardinal: .05, .1 etc.)
to asses risk impact. Numeric values make it convenient to combine probability and impact.

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Table 2.7 Evaluating Impact of a Risk on Major Project Objectives

Very Low Low Moderate High Very High

Project .05 .10 .20 .40 .80
Objectives
Insignificant <5% cost 5 – 10% cost 10-20% cost >20% cost
Cost ($) cost increase increase increase increase
increase

Insignificant <5% 5–10% 10 – 20% Over 20%

Schedule schedule schedule overall overall overall project
(days) slippage slippage project project slippage
slippage slippage
Scope Minor areas Major areas Scope Project
Scope changes of scope of scope changes outcome is
barely affected affected unacceptable effectively
noticeable to client useless
Quality Only very Quality Quality Project
Quality degradation demanding degradation reduction outcome is of
barely applications requires unacceptable no use to client
noticeable are affected approval to client

Ref: Modified from PMBOK® Guide, 2000 Edition, Page 136

The probability-impact matrix illustrates the combined risk impact effect expressed as a risk
score (P x I), as shown in Figure 2.8. Using a numerical, non-linear scale for risk and impact,
the computed risk score can help separate high risk (red condition), moderate risk (yellow
condition), and low risk (green condition) using either an ordinal or cardinal scale.

Table 2.8 Probability Impact Matrix Showing Risk Score (P x I)

Risk Score = P x I
Impact (I)=> .05 .10 .20 .40 .80
Probability (P)

.10 0.005 0.01 0.02 0.04 0.08

.30 0.015 0.03 0.06 0.12 0.24

.50 0.025 0.05 0.10 0.20 0.40

.70 0.035 0.07 0.14 0.28 0.56

.90 0.045 0.09 0.18 0.36 0.72

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The risks that are high (shown in the RED based on risk score of 0.18 or higher) must be used
to prepare risk response.

____________________________________ _ ___________________________________
Notes on Probability Theory:
Probability is the likelihood of an event’s occurrence (expressed as a fraction or percentage).

Mutually Exclusive – A mutually exclusive event is one where the occurrence of one possibility
eliminates the possibility of others (in rolling of dice, all events are mutually exclusive).

Statistically Independent – Two events are statistically independent when the occurrence of one event is
independent of another (When two dice are rolled, probability of each showing 1, 2, 6 are statistically
independent).

Addition Rule for mutually exclusive events A & B

P(A or B) = P(A) + P(B)

In a roll of a single dice, the probability of 1, 2, .. 6 occurring is 1/6 each. The probability of occurrence
of either 1 or 2 is 1/6 + 1/6. Likewise the probability of any of 1,2 3, 4, 5, or 6 occurring is 1/6 + 1/6 +
1/6 + 1/6 + 1/6 + 1/6 = 1

Multiplication Rule applies to statistically independent events

P(A and B) = P(A) x P(B)

If two dice are rolled at a time, the probability of getting two 6, is 1/6 x 1/6, or 1/36. Similarly, the
probability of rolling 6 on a single dice three times in a row is 1/6 x 1/6 X 1/6, or 1/216. These events
are statistically independent events.

Examples:
A project’s major supplier has a 95% reliability or 5% chance of being late. As an unacceptable
situation, the project manager decides to split the order between two different vendors with the hope
that one of them will deliver on time. Now the probability that vendor A will be late is .05 and that for
vendor B is .05. The probability that both vendors will be late is: .05 x .05 = .0025.
____________________________________ _ ______________________________

2.9 Practice & Learn: The following risk impacts were assessed for the project to
prepare course materials and conduct the Project Management class for Kellogg
Community College in Battle Creek, Michigan. Determine the activities that would require a
risk response.

Task Probability (P) Impact (I) PxI__

A. Failing to prepare handout 0.05 0.90 0.045
B. Failing to ship on time 0.30 0.90 0.27
C. Forgetting to reserve hotel 0.50 0.30 0.15
D. Not taking driving direction 0.30 0.10 0.03
E. Forgetting seminar references 0.20 0.90 0.18
F. Missing personal clothing 0.30 0.10 0.03
Etc._____________________________________________________________
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2.10 Practice & Learn: Consider your own group project which you worked on
(Practice & Learn: 2.1, 2.2, & 2.3) and determined the schedule & time of
completion. Continue with the same project, discuss among your group and answer the
following questions in details (For project report preparation next) as they relate to your
project.

a. What procedure you would require to be followed for any CHANGE OF SCOPES for
the project?
b. Identity methods you would need to follow for QUALITY ASSURANCE and to
monitor that performance is on target.
c. What techniques would you recommend be used as a standard practice for QUALITY
CONTROL (name a few)?
d. How would you fill the manpower need for the project and what kind of organization
structure (REPORTING STRUCTURE) would you follow?
e. After you launch the project, what you undertake as TEAM BUILDING
ACITIVITIES?
f. What is your plan for communication project information to all and how would you
store and retrieve such information?
g. Show the anticipated expenditure for the project life and prepare a graph showing the
PLANNED VALUE.
h. Identify two or more risks and describe how you plan to deal with them (RISK
RESPONSE PLAN) should they occur.
i. What machinery or special equipment you will need your project and how do you plan
to PROCURE them?
j. What do you need to take care of (return manpower, move equipment, announce to the
organization, etc) when the project is completed (CLOSE PROJECT)

Project Assumptions and Testing –

identified assumptions are tested against
assumption stability and adverse
Quantitative Risk Analysis Tools
consequences. Assumption stability • Interviewing – interviewing project
indicates the assumption’s applicability stakeholders to quantify risks.
over time. If there are alternative • Sensitivity Analysis – examines impact
assumptions are applicable, they need to of the uncertainty of project elements
be reviewed for their impact on the to the project objectives.
project. • Decision Tree Analysis – evaluates
decisions under considerations and
their implications.
Data Precision Ranking – The use of • Simulation – a simulation model that
low precision data, or if the risk is not evaluates uncertainties specified into
well understood, may lead to qualitative their potential impact on objectives.
risk analysis of little or no use to the

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project manager. Data precision ranking is a technique used to evaluate the degree to which
the data about risks are useful for risk management, & involves examining:

• Extent of understanding of the risk

• Data availability about the risk
• Quality of the data
• Reliability and integrity of the data

Quantitative Risk Analysis

Quantitative risk analysis follows qualitative risk analysis and analyzes numerically the
numerical probability of each risk, its consequences on project objectives, and the extent of
overall project risks. This process commonly uses Monte Carlos simulation and decision tree
analysis techniques which are beyond the scope of this seminar.

Interviewing – interviewing project stakeholders to quantify risks.

Sensitivity Analysis – examines impact of the uncertainty of project elements to the project
objectives.

Decision Tree Analysis – evaluates decisions under considerations and their implications.

Simulation – a simulation model that evaluates uncertainties specified into potential impacts
on objectives.

Risk Response Planning

The main purpose of risk planning is to ensure that identified risks are properly addressed by
developing options and determining actions for opportunities and reducing threats to project
objectives.

Avoidance – A project plan should be changed to eliminate risks or to protect project

objectives. Typical actions include adding resources, adopting more standard approach, or
avoiding unfamiliar contractors.

Transference – Transferring the liability

Risk Response Planning Tools
of risk to another party is most effective • Avoidance – changing the project plan
in dealing with financial risk exposure. It to eliminate the risk or protect the
always involves risk paying risk premium project objectives from its impact.
like in use of insurance, performance • Transference – seeking to shift the
bonds, warranties, and guaranties. consequence of risk to a third party.
• Mitigation – seeking to reduce the
Mitigation – Changing risk conditions so probability and consequence of an
that the probability of its occurrence is adverse risk event to an acceptable
reduced. This may include introducing level.
redundancies into the system to reduce • Acceptance – deciding not to change
the project plan.
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impacts from a failure of the original component.

Acceptance – If risks are accepted, the project team decides to apply a contingency plan to the
risks. Risk triggers, such as missing intermediate millstones, should be defined and tracked. A
fallback plan is normally developed if the risk has high impact, or if the selected strategy may
not be fully effective.

Risk Monitoring and Control

During the final risk management Risk Monitoring & Control Methods
planning step, you plan to keep track of
identified risks by monitoring residual
• Risk Response Audits – examining and
risks, identifying new risks, ensuring the
documenting effectiveness of the risk
execution of risk plans, and by
responses
evaluating their effectiveness in
• Periodic Risk Reviews - regularly
reducing risk.
scheduled reviews
Risk Response Audits – Risk • Earned Value Analysis - monitoring
audits are performed throughout overall performance against baseline.
the life cycle of the project to • Technical performance Measurement -
control risk. Risk auditors comparing technical performance with
examine and document the planned baseline
effectiveness of risk responses in • Additional Risk Response Planning -
avoiding and mitigating risk addressing new risk that might emerge.
occurrences. [Safety related issues, local and federal
regulations, etc.]
Periodic Risk Reviews - Project
risk should be an agenda item in all team meetings and project risk review should be
done regularly. If there are changes in risk prioritization during the life cycle, it may
require additional qualitative and quantitative analyses.

Earned Value Analysis - Earned value (discussed earlier) is used to monitor overall
project performance with respect to a baseline plan. When project deviates
significantly from its baseline, updated risk identification and analysis should be
performed.

Technical performance Measurement - Evaluation of technical performance during the

project and comparison with baseline performance be good source for risk
identification. When technical performance deviates significantly, it may imply a risk
to achieving project scope.

Additional Risk Response Planning – If a risk emerges that was not anticipated in the
risk response plan, or if a risk impact is greater than expected, it may be necessary to
perform additional response planning to control the risk.

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2.5.6 Procurement Management

In procurement management planning, the project manager establishes procedures required to
acquire goods and services to attain project scopes, from outside the performing organization.
(Good or services are generally referred as product)

Procurement Planning
To accomplish a project, goods and services produced for stakeholders require resources,
tools, machineries, products, etc. In
procurement planning you will decide
Procurement Management which project needs can be best met by
procuring products or services outside
How can you acquire goods and service the project organization. It involves
from outside sources? deciding whether to procure, how to
procure, what to procure, how much to
• Procurement Planning – procure, and when to procure.
determine what to procure
• Solicitation Planning – find When a project obtains products and
product requirements and who can services (project scope) from outside the
supply them performing organization, the processes
• Solicitation – obtaining quotations. in procurement management such as
• Source Selection – Choosing from solicitation planning to contract closeout
potential suppliers would be performed once for each
• Contract Administration – product or service item. When a project
managing relationship with the does not obtain products or services
suppliers from outside, these processes will not
• Contract Closeout – settling have to be performed.
contracts at project completion Make-or-Buy Analysis – This analysis is
usually done during the scope definition
phase to determine whether a particular product can be cost effectively produced by
the performing organization.
Such analysis should include Procurement Planning Techniques
both direct and indirect costs of
managing purchased products. • Make-or-Buy Analysis – deciding
whether to buy or do inside. Done
Expert Judgments – during scope definition process.
Procurement planning processes • Expert Judgments – expert technical
often require specialized judgment to help decide outsourcing
knowledge from other issues.
departments, consultants, • Contract Type Selection – selecting
professional associations, or the most suitable contact.
other experts. o Fixed-price
o Cost – reimbursable
Contract Type Selection – o Time & Material
Different types of contracts may

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suit different products being purchased. The common forms of contracts are:

Fixed-price or lump-sum contracts – A total fixed price contracted may be used

with well defined products. To the extent that the product is not well defined,
both buyer and seller are at risk. A fixed price contract may also include
incentives for meeting or exceeding selected project objectives like scheduled
targets.

Cost-reimbursable contract – When payments are made to the seller for actual
cost plus a fee, representing seller’s profit, it is called cost-reimbursable
contract. The cost of the product includes direct cost (direct labor and materials
for project) and the indirect cost (overhead cost, cost of management such as
salaries of corporate executives). Often, indirect cost is a percentage of the
direct cost. This type of contract may also include incentives for meeting or
exceeding a project’s time scale.

Time & Material – This type of contract represents a combination of the above
two. They are open ended in terms of cost, but may have fixed rates for various
support personnel (i.e., hourly rates for a designer on the job).

Solicitation Planning
The following materials should be Solicitation Planning Tools
prepared for solicitation purchase • Standard Forms – standard forms and
materials: contracts
• Expert Judgments –help identify
Standard Forms – Many
outsourcing issues
corporations have standard
forms and procurement
documents to identify and
describe products to be
purchased.

Expert Judgments – expert technical judgment may be required to describe the product
requirement.

Solicitation
Obtaining information from Solicitation Methods
prospective suppliers on how product • Bidder Conferences – meetings with
needs can be met require solicitation. prospective sellers before proposal
Most of the actual effort in this preparation.
process is expended by prospective • Advertising – expanding existing list of
sellers at no cost to the project. potential sellers by advertising.

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Bidder Conferences – Also known as contractor conferences, vendor conferences, and

pre-bid conferences are meetings with prospective sellers prior to proposal
submission. They are a good way to ensure that all sellers have a common
understanding of the procurement needs.

Advertising – A good way to expand the existing list of potential sellers is to place
advertisements in business and trade magazines. Some government jurisdictions
require public advertising of certain types of procurement items.

Request for Proposal (RFP) – Guidelines for Open Bid Solicitation

Following is a format suggested by an experienced government supplier:

I. Scope of Work and Contact information

a. This can be bulleted rather than description
b. Short descriptive paragraph is alright when necessary

II. Response Requirements

a. Describe what specific items you wish the vendor to propose
b. Indicate if you will accept any additional items or offer vendor may wish to
make
c. Provide forms vendors must complete, sign & submit.
d. Indicate other materials vendors must read/be aware of and testify to that.
Enclose signature required forms here.
e. Describe clearly how you want vendors to propose cost proposal. For
comparative purposes, you would benefit by specifying the cost proposal
format:
1. Cost on daily rate, hourly rate etc.
2. Cost on the basis of total job
3. Itemized travel cost separately
4. Itemize material cost
5. One single cost for all
6. Etc.

III. Policies and Procedures

a. Enclose policies and agreement that you want vendors to read and agree, but
need not make part of the response.
b. To ensure that vendor agree to or have read such documents, enclose a form
for vendors to sign and return with the proposal.

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IV. Submission Requirements

a. Tell here how you wish to receive the proposals (Original and hard copies,
Electronic only, hard copy with electronic version in CD)
b. Indicate your preference if any (GO GREEN) to reduce papers.
c. If you must have PAPER copy, reduce size by separating to minimum
necessary information from those for instructions only.
d. If you need multiple copies, indicate whether you wish to have copies of
signed FORMS or not.

V. Bid Review & Evaluation

a. Tell potential suppliers how you wish to evaluate the bid
b. What you wish to do with the bid materials not selected
c. Indicate how you will report/post results of evaluation
d. Indicate TIME of selection

VI. Special Items or Instruction

a. Indicate here if you have any special areas or items vendor need to address.

Source Selection
Source selection follows the receipt of bids (proposals) from solicitation. An evaluation
criterion issued to select a provider, and includes factors aside from cost or price because:

- the lowest price may not be the Source Selection Methods

lowest cost if the seller is unable to
deliver on time • Contract Negotiation - clarifying
- proposals ma be separated into mutual agreement before signing.
technical and commercial • Weighting Systems - quantifying
categories for evaluation qualitative data for overall evaluation.
- multiple sources may be required • Screening System – based on minimum
for critical paths requirements.
- single source may be preferred for a • Independent Estimates - verifying cost.
single standard contract
- rank ordering of all contracts may
be required for negotiating sequence

Contract Negotiation – Before signing a contract, mutual agreement on the contract

structure and requirements of the contract (include responsibilities and authorities,
applicable terms and law, technical and business management approaches, contract
financing, and price.) must be clarified.

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Weighting Systems - Quantifying qualitative data helps minimize the effect of personal
prejudices on source selection. The steps for weighting scheme are as follows:
• Assign a numerical weight to each evaluation criteria ( say 1 – 5 )
• Rate, the prospective seller on each criterion (say in a scale of 0 – 10)
• Multiply weight by the rating for each criterion (R x W, weighted ratings)
• Add all weighted rating to compute an overall rating for the seller.

Screening System – Here you check to see if a seller meets minimum requirement of
performance for one or more of the evaluation criteria. For example, at a construction
project to rebuild Iraqi power plant, fluency in Arabic is a needed criterion for field
engineers to be hired for the project.

Independent Estimates - The procuring organization may prepare its own independent
estimates as a check on the proposed price. If a significant difference in estimates
appear, it may be an indication that the statement of work (SOW) was not adequate, or
that the prospective seller failed to understand or respond to the fully to the SOW.

Method of Weighted Evaluations

A single index (number) for evaluating multiple criteria is simpler, and hence, more
attractive. A common example is Grade Point Average in academic performance
where course scores are generally weighted equally.

GPA = (grade 1 + grade 2 + grade 3 …… )/n

A weighted evaluation for Contract, Vendor, Performance, Items of Study, etc. is

shown in the example below.

Example: Evaluation of Pound Cake

Criteria Range of Evaluation Weighting

Taste (T) 0–8 55%
Moistness (M) 0–5 33%
Smoothness (S) 0–4 12%

OEC = T x 55 + M x 33 + S x 12

Such evaluation offers a scheme to objectively compare multiple subjects with a group
consensus. The weighting above is determined subjectively by the group.

Contract Administration
Contract administration is the process used to ensure that the seller’s performance meets the
contractual requirements. On projects with multiple service providers, a key role played by
contract administration is to mange the interfaces among various providers.
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Contract Change Control System – This system defines the process by which a
contract may be changed, & includes paperwork, tracking system, dispute resolution
procedures, and approval levels necessary for authorizing changes. Contract change
control system should be integrated with project change control.

Performance Reporting – Seller

performance report provides Contract Administration Tools
management with information on • Contract Change Control System –
how effectively the seller is achieving defining a procedure by which contract
the contractual objectives, & should may be changed
be integrated with project • Performance Reporting – report on
performance reporting plan. how effectively a seller is meeting
contractual obligations
Payment System – Payment system • Payment System - review and approval
defines the procedure for approval of payments to the seller
and payment to a seller. In most
organization, payments are made by the accounts payable department. On larger
projects with many or complex procurement requirements, the project may develop its
own payment system.

Contract Closeout Contract Closeout Technique

Seller closeout is similar to administrative
closure described under the communication
planning section. It involves both product • Procurement Audits – a structured
verification (was all work completed review of the procurement process
correctly and satisfactorily?) and from planning to administration
administrative closeout (updating the
records to reflect final results and archiving
of such information for future reference).
The contract terms may specify closeout
procedures. Early termination is a special
case of contract closeout.

Procurement Audits – A procurement audit is a formal review of the procurement process

spanning procurement planning to contract administration. The purpose of this audit is to
identify successes and failures that can be passed on to other procurement items within this or
other project.

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2.5.7 Project Closeout

In addition to planning for your project’s execution, you must also think about how you will
bring the project to an end. It is a good idea to prepare a project-closure checklist of all
activities that you and your team must complete before the project can be closed.

Project Termination Checklist

• Deliverables – products and services produced

• Acceptance Tests – performed and test results

documented

• Required Approval - to be secured

• Final Reports – to be written and distributed

• Resources – to be re-assigned

• Administrative Tasks – that need to be taken care

of.

• Announcement – find a novel way to announce the

project closure

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2.6 Develop a Formal and Comprehensive Project Plan

When all planning tasks discussed in this module are completed, you should prepare a formal
and comprehensive project plan that is more detailed than the one prepared during the project
initiation phase. The project will document all project deliverables, acceptance criteria,
processes, procedures, risks, and tasks that will be executed, controlled completed in
subsequent processes.

Project Plan Development

Items that make up the project plan:

• Problem statement, mission statement, and objectives

• Project work requirements - including list of all deliverables (reports,

hardware, software, etc)

• Acceptance/exit criteria - milestone with associated completion criteria

• End-item specifications – including engineering specifications,

architectural specs, building codes, governmental regulations, etc.

• Processes - WBS, identification of all tasks that must be performed in

order to achieve the project objectives

• Schedules – include both milestones and working schedules

• Required resources - people, equipment, materials, and facilities, &

project costs

• Control systems - project status and performance evaluation methods,

earned value analysis, etc.

• Major contributors - use WBS and linear responsibility charts to identify

major tasks and responsibilities.

• Risks - Identify risks with contingencies

• Close out - items that must be done at the close of the project

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2.7 Obtain Project Plan Approval

Once the project plan is completed, you should review the plan with stakeholders & clients
to confirm that the project baseline meets their requirements and secure their approval. You
must have the project plan approved before proceeding with the project execution process.

The project plan should be

signed and approved in a
Obtain Project Plan Approval project plan review meeting,
Once the plan has been prepared, it should be reviewed not by mail.
with the stakeholders for their approval.
Approval and signature on
• Schedule a Project Plan Review Meeting the part of the client or
• Review plan stakeholder means that the
• Confirm project baseline individual is committed to
• Sign-off of the plan his/her contribution, agrees
with the scope of work to be
done and accepts the scopes
of the project. On the other
hand, a signature on the part
of a contributor (project
manager/team) does not mean
a guarantee of performance. It simply means that the contributor is committed to the task
and promises to do his/her best to fulfill the obligation.

Project Plan Change: Any need for project plan changes arising upon its review with
the stakeholders, must be done in an orderly manner following the procedures
established in the change control plan.

“Any plan is bad which is not susceptible to change.”

- Bartolommono de San Concodio (1475 – 1517)

2.11 Practice & Learn: Solve all exercises except Q2.1 and Q2.6.

2.12 Practice & Learn: For your own group project, (i) Prepare a report (8 – 12
pages), (ii) make copies for all participants in the class, and (iii) be prepared to present your
project to the class.

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Key Concepts Review - Module 2

R2.1 Team Development - Team development includes both enhancing the ability
of stakeholders to contribute as individuals as well as enhancing the ability of the
team to function as a team. While it is the project manager who should initiate team
building activities, team members can be highly constructive by playing roles as
encourager, initiator, and gatekeeper (rather than information giver, devil’s
advocate, withdrawer, harmonizer, blocker, summarizer, recognition seeker,
information seeker, etc.).

R2.2 Critical Path - Critical path (CP) activities have fixed start and finish dates.
If duration of any of the activities in CP changes, the total duration of the project
will also change.

R2.3 Risk Quantification - In this method, project risk is numerically quantified

by evaluating the probability and impacts.

R2.4 Project Deliverables - Deliverables are item that the project will produce to
satisfy the stakeholders’ requirements. The precise description of the deliverables is
called a specification.

R2.5 Risk Identification - Risks often repeat themselves from one project to
another. To identify potential risks or opportunities a project manager should review
lessons learned from other similar projects.

R2.6 Criticality Index - The Monte Carlo technique is a refinement of PERT. In the
PERT analysis, the range of values and the probability of their occurrences are
calculated for the project completion date or other specific date within the project.
The Monte Carlo technique allows a shift in the critical path in the duration of
activities. The criticality index is the percentage of time a particular activity is on
the critical path.

R2.7 Management Reserve - The management reserve is the time and money used
to offset the effect of unknown risks affecting cost and schedule. Usually, these risks
are not specifically identified.

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Exercises

Q 2.1 A contractor working for the local county road commission submitted the schedule
shown in Figure Q2.1 for repairing a highway bridge. Considering the urgency of the job, the
contractor agreed to work on a single shift basis continuously for all seven days each week
until the job is done. The project was to start on June 1.

Figure Q2.1 Precedence Diagram Bridge Repair Project

C 3 days G 4 days

A 1 day

Early H 5 days
E 7 days
Late dates

B 3 days D 2 days F 4 days

FS - 2

Complete the above diagram with early start (ES), early finish (EF), late start (LS), and late
finish (LF) dates for the activities A, B, C,….. and G shown (Fig. Q2.1). From your schedule
above, answer the following questions.

(a) Which activities have floats, and for how many days?

(b) What is a free float?

(c) What is the free float for activity F?

(d) What is the free float for activity D?

(e) What day in June will activity D have for its early finish date?

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(f) What is critical path and what is the critical path for the project?

(g) How many days will it take for the project to finish as scheduled?

(h) What is the late start date for activity F?

(i) What is the early start date for activity C?

(j) If for some reason activity C starts 5 days late, what will be the effect on the project’s
completion date?

(k) What is the early finish date of Activity A?

Q2.2 What does “crashing the schedule” mean?

a. Running project team on overtime

b. Redoing the entire schedule on a of shorter duration
c. Performing activities that were in sequence in parallel
d. Turning over project responsibilities to a new project manager

Q2.3 The original schedule for a project (sub-project, work package, or activity), plus or
minus approved changes, is known as:

a. Performance schedule
b. Working schedule
c. Nominal schedule
d. Baseline schedule

Q2.4 What does resource leveling generally mean?

a. Reduce resources to the lowest skill level

b. Reduce the over-utilization of available resources
c. Prolong the time needed to complete the project
d. Cut down the cost of more expensive work packages

Q2.5 Which of the following is considered to be a simulation technique?

a. PERT analysis
b. GERT analysis
c. Monte Carlo analysis
d. Critical path method

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Q2.6 In a project to install television cable lines in the city, the installation crews encountered
a lot of uncertainty as to how long each task would take. The project manager had decided to
use the PERT technique to evaluate the project’s completion date. The project was broken
down into seven major activities (A, B, C etc.). The precedence diagram of the activity and
their estimates of most likely duration are shown in Figure Q2.6. Along with the most likely
duration for each activity, the project team also estimated the pessimistic and optimistic
values, as shown in Table Q2.6.

Figure Q2.6 Precedence Diagram Cable Installation Project

C 12 weeks F 8 weeks

A 6 weeks G 4 weeks

B 5 weeks D 3 weeks E 6 weeks

Assuming that the project starts on the first Monday of next month, complete the precedence
diagram by showing early and late start and finish dates. Also, identify the critical path
activities, calculate the pert statistics, and answer the following questions.

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Table Q2.6 PERT Data (Cable Installation Project)

< == (Estimated) ==> (Critical Path Activities)
Activity Description Likely Pes. Opt. EV SD Var EV Var.
A. 6 wks 8 5
B. 5 6 4
C. 12 15 10
D. 3 3 3
E. 6 7 4
F. 8 11 6
G. 4 4 3 _________________________________
(Critical Path) Total =

SD = (Var) ½ =
Notations: EV = Expected Value, SD = Standard Deviation, Var = Variance

a. What is the expected number of weeks (EV) needed to complete the project?

b. Estimate the range of values for project completion (weeks) that have over a 95%
chance of being correct.

c. What is the expected value for the duration of activity C?

d. What is the standard deviation for the duration of activity C?

Q2.7 Using the PERT method of scheduling, a project manager determined that the project
would take 90 days to complete with the available resources. The variance for the project,
based on all activities in the critical path, was found to be 9 days. Determine the range of
values of completion duration (days) for 95% probability of success (at least 95% probability
that the project will be completed between the high and the low values).

Q2.8 Which of the following use the decomposition process for its construction.

a. Critical Path Method Diagram

b. Variance analysis
c. PERT technique
d. Work Breakdown Structure

Q2.9 A project is interrupted by a sudden loss of its contracted workforce. A new project team
is formed to replace the old team of contracted support. As project manager, what is the first
topic to discuss in the kick-off meeting?

a. Review detailed schedule

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b. Go over the budget

c. Identify team roles and responsibilities
d. Explain the reporting order

Q2.10 Which of the following actions will influence the duration of project completion?

a. The critical path is reduced by elimination of one activity

b. Project resources are reduced
c. Contingency is no longer available
d. Available float time in one activity is reduced

Q2.11 The project you were managing suffered delays due to conflict among team members,
but you just resolved the conflict. What should you consider doing to bring the project back
on schedule?

a. Perform resource leveling

b. Crashing the schedule
c. Put more people on the project
d. Adjust project scopes

Q 2.12 What is a statement of work and project plan?

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 Module 3
Project Execution
Module 3 Project Execution Page 3.2

Module - 3
Project Execution
Starting off your project in the correct manner is the key to your project’s ultimate success.
The project plan you prepared and received approval for, describe what you propose to
accomplish, the work you will do, how you will do it, when it will be done, and the resources
you will need to complete it. To prepare the plan, you relied on information that was available
to you, and where there was no information, you made assumptions. Now that the project
planning is complete, it is time to check and see if your information and assumptions are still
valid. The longer the time between your plan preparation and approval, the more likely it is
that these have changed. Before starting the project, you will need to reconfirm and update the
information you used in preparing the plan. (Ref. 1, 2 & 4)

Announcing Your Project

By the time you complete your project planning, most of your project audiences (team
members, drivers, and drivers) are all aware that the project has been approved and that the
project execution is to begin. Still, it is a good idea to formally announce the start of the
project and kick off the new effort. The following methods may be used:

- An announcement in your organization’s newsletter

- A flyer prominently displayed in company bulletin boards
- A formal kickoff meeting, particularly if your project is large and you desire to
have a broader impact on the organization
- An e-mail message to select individual and department heads

Project Execution Tasks Tasks Performed (5 Tasks)

3.1 Commit Project Resources
Tasks Performed (5 Tasks) You start the project execution by
securing and committing resources based
on your plan. Appropriate resources
1. Commit Project Resources assure that all activities will be
2. Implement the Project Plan performed as intended. Here area few
3. Manage Project Progress things to do:
4. Communicate Project Progress
5. Implement Quality Assurance Finalize Project Participants – In your
Procedures project plan, you described anticipated
roles and the amount of effort each team
member will have to invest. You also
identified team members by name, title
or position, or by the skills or knowledge

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they would need. As you begin your project, confirm the identities of the people who will
work to support your project, either by verifying that the specific people included are still able
to uphold their promised commitments or by recruiting new people to fill needs.

Contact Team Members – Inform team members that the project has been approved, inform
them of start date, & reserve the necessary time in their schedules to provide the support they
promised.
Commit Project Resources
Confirm Support - If there is long
delay between the planning and • Finalize Team Member Participation
approval process, the team members’ –
commitment and workload change. • Contact Team Members – Inform the
Confirm with each team member that team members
their availability is still valid. If
• Confirm Support - Confirm team
someone is no longer able to provide the members
planned support, recruit replacements as
• Reconfirm Work Details – Reconfirm
soon as possible.
with the team members about the type
of work they will do estimated
Reconfirm Work Details – Reconfirm
timeframe
the type of work team members will do
and how long it is estimated to take. • Explain Team Development Plan –
Clarify with them the nature of their Share your plan
activities and when these activities will
be performed. Depending on the size of the project and the appropriate communication mode,
this may be done by a quick e-mail or a formal work-order agreement.

Explain Team development Plan – Forming a well function project team is important to
your project. You need to share you’re your plan for developing the project team. Tell
everyone who will be actively involved in the project team members and who else will be on
the team. Tell all what you will do to kick off the project and when you wish to introduce the
team members to one another.

A work-order agreement is often used to formally confirm the project team’s commitment.
It is typically a written document with description of work a person agrees to perform on the
project, the dates the person agrees to start and finish, and the number of hours the person
agrees to spend on it. Such agreement should be between among you (the project manager),
the person involved, and the person’s supervisor. A typical work-order agreement, as shown
in Figure 3.1, should have the following minimum information.

Identifiers: Include the project name, project number, activity name, and work
Breakdown Structure code. The project name and number signify that the project is
approved and official. The activity and Work Breakdown Structure number is used to
record work progress and accounting information (time and resource).

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Work to be performed describes activities involved in the activity and its output.

Figure 3.1 A Typical work-Order Agreement

Work-Order Agreement
Project Name: Project number:

Activity name: Work Breakdown Structure code:

Description of work to be done:

Start date: End date: Number of hours to be spent

Approval
Project manager: Team member: Team member’s supervisor:
___________________ _____ ___________________ _____ ___________________ _______
Name Date Name Date Name Date

Activity Time and Duration contains the start date, end date, and number of hours to
be spent on activity. These dates and hours reaffirm:

- The importance of the work on schedule and within the specified time
period
- the person’s commitment that the work can be done within these time and
resource constraints
- the criteria you will use to asses the person’s performance

Approval signature is the written approval from person doing the work. It is evidence
that individual member’s supervisor and the project manager have read and
understood the elements of the agreement and commit to support it.

Others in the project are people who will play some role in the success of your
project. Such people will generally not charge their time to project and be of the types
described below.

Special Audience is your project champion, someone in a high position in the

organization and who strongly supports your project. This individual will advocate for
your project in disputes, planning meetings, and review sessions; and will take
whatever actions necessary to help ensure its successful completion.

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Drivers of the project are stakeholders who have some say in defining the results that
your project is to achieve.

Supporters of the projects are people who help you perform your project. These are
people who either authorize resources or work on your team.

Before start of the execution of the project, contact your project champion, drivers,
and supporters who are identified by name in the plan to

- Inform them about the project’s approval and planned start date
- Reconfirm the project’s objectives
- Reassure the drivers that the project’s planned outcome addresses their
needs
- Indicate to the identified supporters exactly the kind of help you need
- Share your specific plans to involve the audiences throughout the project
and how you will keep them informed

Team Members Roles and Responsibilities

Typically, your project team will include people from different parts of the organization with
different skill levels and operating styles; you may not have worked with all in the team
before. Your project goal will be to finish the project in a given time with team members who
may not all be 100% dedicated to your project due to other commitments. To assure project
success, you will need to quickly establish how you will work with your team and they will
work with each other. The following concepts help define and clarify how team members
relate to each other.

Authority defines the ability of one to make a binding decision about project schedule
and cost. i.e., the ability to sign purchase order not to exceed $2,500, ability to alter schedule
date by no more than a week.

Responsibility is a commitment from a member to achieve specific results. i.e., the

promise to complete and submit a report by end of the week.

Accountability brings to focus the consequence of people’s performance. It has both

positive as well as negative sides. i.e., the boss mentioning your effort to implement a new
marketing idea is a positive use of the concept. On the other hand, the boss bringing up your
missing an important schedule appointment is an example of negative use of the concept.

Note:
Authority and accountability are similar in that they are upfront agreements. But, they are
different in that authority focuses on process, while responsibility focuses on outcome.

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Both responsibility and accountability focus on results and are similar in this respect. But,
they are different in that responsibility is a before-the-fact agreement, and accountability is an
after-the-fact process.

Generally, if one is responsible, he/she will be held accountable. If one is not responsible,
he/she should not be held accountable.

3.2 Implement the Project Plan

In this early stage of the execution, you will review the project plan and authorize execution
of all tasks that produce project deliverables.

Reviewing Project Plan

During project plan preparation, team members have direct input. While reviewing the plan
you should ask these members to keep in mind project’s background, purpose, their individual
roles, and the work that need to be done. They may also be a good source of information with
regard to any changes in circumstances since the plan was prepared and take a second look at
the risks identified.

If team members are new to the project, you can encourage them to learn about the project’s
background and purpose; learn about their planned roles and assignments. They also might
voice concerns about how they will meet the established timeframes, budgets, etc.

Implement the Project Plan

Developing Team
As project manager one of your most
• Review Project Plan – with the team
important roles will be to become a
• Develop Team –.
cheerleader for your staff and
o Develop team and individual
constantly strive to develop members
goal
into a team. A team is just not a group
o Define team member role
or committee. A team is a collection of
o Define operating process
people who are committed to common
o Support member
goals and who depend on one another
relationships
to do their jobs.
o Facilitate sooth team
functioning
A group comprises people who
are assigned to a common task
and work individually to
complete their individual
assignments.

A committee is a group of people formed together to review and critique issues,

propose changes, etc. and occasionally are responsible for bringing about the
recommended changes.

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A team requires commitment from each member to reach a common goal; mutually
dependent work, and unique contribution from each member. For a team to work well,
each member of the team needs to be fully aware of project goals, their own role, the
operating process for the team to perform their tasks, and relationships they will
maintain with other team members.

Develop team and individual goals – Project team members are more likely to commit
to the project if knew how their work can help the project and how it can help achieve
some of their personal goals. As a project manager, you can help your team members
develop a shared sense of these goals and help them achieve it.

Develop team and individual goal -

• Discuss the purpose of the project, who is supporting the project, how it
will benefit the client, and the impact it will have on the organization
• Explain and emphasize how the results of the project may enhance the
organizations growth and stability
• Point out how the success of the project may influence each team
member’s job
• Encourage team members to consider how their participation can fulfill
personal goals like meeting new people, increased visibility, promotional
opportunities, etc.

Be aware of diversity of workforce – Your team members may be composed of

different ethnic and cultural background. They may also be located in different
countries or different parts of the world. As a project manager, you need to orient you
team to such realities and do everything possible to foster an effective and respectful
working environment. [Diversity in workplace: gender, racial, cultural, etc.]

Define team member roles – For a team to work well, their individual roles &
relationships must be defined. The team will need guidance in defining who will do
what portion of the job, who will see that work is progressing as scheduled, who will
decide when the job is done, and who will report about the status. If the roles are not
clearly defined, even the most qualified team members could be frustrated and
disillusioned.

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Typical Team Member Roles Include:

Primary responsibility: Person with responsibility to ensure that the job

is completed

Secondary or supporting responsibility: Team member with an

obligation to complete a part of an activity

Approval: An individual with the responsibility to approve the results of

an activity

Available for consultation: A member who can be called upon to provide

expert help and actual work support as needed

Must receive output: An individual who either reviews the activities

output or reports the results of an activity.

Defining operating processes are standard procedures that support day-to-day work. The
following are the minimum areas that should be established:

Reporting and communication: The project related information can be

shared within the team members in many different forms, like: face-to-face
communication, written reports, electronic mail, etc. These procedures
might address when e-mail can be issued to share project information, what
type of information should be written, when and how to document informal
discussions, how report project status, and how to address special issues
that arise.
Conflict resolution: Difference in opinion regarding project work is likely
to arise among project team members. You will need to establish standard
approaches to resolve differences, and also encourage people to develop
mutually agreeable solutions. You may also need to establish escalation
procedures to resolve issues that cannot be resolved by the parties
involved.

Decision making: Establish the procedure for making decisions when

faced with alternative options. (Consensus, majority rule, unanimous
agreement, decision by technical expert, etc.)

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Support team member relationships – As soon as the project starts, you

need to begin to help team members get to know each other. You goal will
be to build a high performance team where team members trust each other
and have cordial relationships. Building trust and developing effective
work practices takes time and concerted effort. Below are some suggested
practices.

Work through conflicts together: Participate in conflict resolution and try

to find a win-win situation among the parties involved.

Involve teams in challenging problems: Involve team to brainstorm and

solve problems of technical and administrative nature.

Arrange and take time for informal meetings: Sponsor informal

meetings and group activities (picnic, golfing, lunch, other sport events,
etc)

Facilitate sooth team functioning – As team members begin to perform

their individual tasks, you should work to help them professionally develop
and conform to standard modes of team functions. Key areas for
developing understanding are:

Forming: Meet individually with team members to discuss the project plan
and work assignments. In a meeting with your team, discuss their
background and introduce members to each other.

Storming: Discuss and resolve any personal conflicts about the project or
other team members. Encourage team members to share reservations they
may have about working with other team members and about other team
members’ abilities to complete their assigned tasks. While doing so, keep
the focus of discussions on project performance rather than unproductive
personal attacks.

Norming: Form and help team members set up their operating standards in
regards to meeting discussions (polite, aggressive,), format (how long),
attendance (on time), and participation (active, passive).

Performing: Let members do the work. Share with them the project’s
progress and evaluate project performance with regard to established
project schedules.

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3.3 Manage Project Progress

As the work progresses, you should check to see that all activities are being carried out as
planned and that the work being done will help achieve project objectives. To know the
progress of your project at all times, you will need to set up tracking systems for the following
areas.

Tracking Systems –

Schedule: Evaluates work progress and checks to see how well you are
meeting established dates.
Personnel Resource Usage: Indicates the level of effort people are
spending on each assignment.
Financial Expenditure: Tracks cash expenditures made for project
resources.

If you are part of a large organization with existing system that track project schedules, you
will need to register, obtain official project code numbers, and set up charge codes for labor
and financial systems.

Project Tracking System Set Up

As the project begins, you will need to establish performance tracking systems for the
following areas.

Meeting Schedule – Monitors how well you are meeting established completion
dates.

Personnel Resource Usage – Tracks the amount of time that people are spending on
their assignments. Sets up charge codes for labor tracking systems.

Financial Expenditures – Tracks other cash expenditures made for project resources
such as travel, tools, equipment, etc. Sets up charge codes for financial systems.

3.4 Communicate Project Progress

Stakeholders are dependent upon you to keep them apprised of the project progress. You can
do so on a regular basis by preparing project reports showing the project’s progress & status.
Timely and accurate status information is essential to helping stakeholders make decisions.

Establishing Schedules for Reports and Meetings

Early, at the start of the project, you will meet with the appropriate project audiences and
team members to develop a schedule for regular project meetings and progress reports. You
will need to determine and confirm the following items:

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• What meetings will be held, when and for what

• What kind of reports will be produced and when such reports be issued
• Who will attend such meetings and who will receive the reports
• What will be the format and content of the meeting

Preparing Your Project Teams for Post-Project Evaluation

At end of the project, you should have a post-project review to evaluate the experiences
gained, recognize team members for their contributions, and document and take corrective
actions of any problems that occurred. You will benefit from laying the ground work for the
post-project evaluation session soon after the start of your project.

- Make all team members aware that there will be a post-project evaluation
at the project’s completion
- Request that team members keep records of problems, ideas, and
suggestions throughout the project & clarify the criteria you will use to
assess the project success
- If the purpose of the project is to improve a condition (quality, delivery,
marketing effort, etc.), establish a way to measure this accomplishment
quantitatively so that progress can be tracked
- Encourage all team members to maintain a project log and keep a log
yourself. The project log should contain narrative record of project issues
and occurrence.

3.5 Implement Quality Assurance Procedures

To ensure that project objectives are met, you should perform the project control activities
that you planned as part of your quality assurance tasks.

Implement Quality Assurance Procedures

Review Plan: Appraise the project team with the quality management plan

Identify Activities: Identify activities responsible for meeting desired

quality levels & discuss quality control techniques to be employed

Identify Responsibilities: Identify who will determine when each quality

level is met and who will sign off on the quality achievement reports.

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Key Concepts Review 3

R3.1 Purchase Commitment - As a project manager, when you issue a purchase
order for a piece of equipment, it represents a commitment on your part.

R3.2 Forecast Project - CPI (Cost Performance Index) is a measure used to forecast
the project’s cost at completion.

R3.3 Risk Assessment - The process of determining how delays and other risks will
affect the project schedule is called risk assessment.

R3.4 Change Control - Suppose you assume responsibility of a project in the

middle of the execution phase and need to know who has approval authority for
revisions in scope, you can consult the Change control plan document.

R3.5 Conflict Avoidance - Among the many possible conflict resolution options,
avoidance is the most undesirable as it will have the least enduring positive results.

R3.6 Conflict Resolution - The most effective conflict resolution practices are:
smoothing, confronting, forcing, and withdrawing.

R3.7 Problem Solving to Resolving Conflicts - Although, compromise, withdrawals,

smoothing, and problem solving are used to resolve conflicts, problem solving has
most lasting effect. In problem solving more additional facts are gathered until it
becomes clear that there is one solution to the problem is found.

R3.8 Strong Matrix - When your project is large, complex and involves cross-
disciplinary efforts, it is most effectively managed by a strong matrix
organization.

R3.9 Stakeholder Management - An effective stakeholder management plan

includes a clear scope definition, scope change control, and timely status
information.

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Module 3 Project Execution Page 3.13

Exercises
Q 3.1 The project manager of a large project is interested in improving team morale and
saving cost. He is also particular about informing other project managers about releasing
individuals in his team so that they may be assigned to other projects. Which document would
be best to address this concern?

a. Project schedule
b. Staffing plan
c. Work breakdown structure
d. Project charter

Q 3.2 Which of the following practice makes one a good listener?

a. Helps the speaker finish his/her sentences

b. Agrees with the speaker
c. Is able to repeat some of the things speaker said
d. Concentrates on taking notes

Q 3.3 A project has a large number of people who needs to work together. To assure that his
team will perform as a team, which of the following should the project manager prefer?

a. Matrix management
b. Staffing plan
c. Work breakdown structure
d. Co-location

Q 3.4 A project manager is involved with a project involving manufacture of electronic

circuits. An area that is of recent concern is the soldering process which is suspected to be
influenced by a number of variables. Attempts to fix the problem by adjusted one or more
factors have failed. What technique or method should the project manager employ?

a. Design of experiments
b. Critical path method
c. System integration
d. Output processing

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 Module 4
Project Monitoring and
Controlling
Module 4 Project Control Page 4.2

Module - 4
Project Control
The project plan that you laid out and are executing represents a vision of what you believe
should work. Unfortunately, a project will not implement itself automatically. Successful
projects require continued care and management to ensure that your plans are implemented
and produce the expected results. Also, if unexpected events occur, you will want to be in a
position to promptly react and keep the project on track. Project control ensures that your
project proceeds according to its plan and produces desired results. Project control activities
are performed throughout the life of a project.

Project Control Tasks 4.1 Measure Project Performance

To manage your project, you will need
to know exactly where it is, at all
Tasks Performed (8 Tasks) times. To determine how far your
project has progressed, you will want
1. Measure Project Performance to measure performance and compare it
2. Refine Control Limits on Performance to the baseline. This allows you to
3. Take Timely Corrective Action establish the project performance trend
4. Evaluate the Effectiveness of the and determine how close or how far off
Corrective Actions it is from your projected path
5. Ensure Compliance with Change (Variances).
Management
6. Reassess Project Control Plan
7. Respond to Risk Event Triggers 4.2 Refine Control Limits on
8. Inspect Project Activities Periodically Performance
As the project work begins, you may
find that certain areas require more
control than others based on
importance to your stakeholders and
the organization. In fact, you may have to refine the control limits on certain performance
measures by applying established policies that would identify the need for corrective actions.

4.3 Take Timely Corrective Action

When performance trends indicate deviation from the plan, you will take corrective actions on
time. To do so, you will investigate and fix the root causes of the problem such that it either
eliminates the problem or minimizes adverse impacts.

4.4 Evaluate the Effectiveness of the Corrective Actions

Once a corrective action is in place, you will evaluate (measure) its subsequent performance
to learn whether the corrective action has fixed the problem, or if further actions are needed.

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Module 4 Project Control Page 4.3

4.5 Ensure Compliance with Change Management

When changes to the project are brought by either requirement change defined by
stakeholders, or from corrective actions, be sure to verify that these changes comply with your
change management plan. You should also monitor the response to change initiative and its
impact on your scopes.

4.6 Reassess Project Control Plan

Longer project have a large time gap between planning and execution, and will thus require
you to periodically review and reassess your project plan to make sure that it is effective and
that all plan items are currently valid.

4.7 Respond to Risk Event Triggers

The risk management part of the plan should have laid out triggers for risk items. This step
requires that you respond to risk event triggers as per the plan so that you can manage the
project outcome properly.

4.8 Inspect Project Activities Periodically

Periodic inspections to verify that authorized approaches and procedures are being followed,
and identify the need for corrective actions.

Other Control Events

- Team Member Self Evaluation
- Project Control Characteristics
- Taking Corrective Action
- Response Timeliness
- Project Review Meetings
- Project Evaluation
- Project Process Review
- Process Review Report

Project Control Using Earned Value Analysis

- Measuring Progress
- Measuring Performance and Quality
- Earned Value Analysis
- Variance Analysis
- Variance Response

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Module 4 Project Control Page 4.4

Project control is an important phase in the

Project Life Cycle Process (shown at right) Project Life Cycle Process
which includes:

Initiating Process: Recognizing that a

project phase should begin and committing Initiating
to do so. Processes
Planning Process: Creating and maintaining
Planning
a workable scheme to satisfy the business
Processes
needs for which the project was undertaken.
It also includes scheduling activities.

Executing Process: Carrying out the plan.

Controlling Process: Ensuring that the

project objectives are achieved by Executing
monitoring, evaluating and measuring Processes
progress and taking corrective actions when Controlling
necessary. Processes

Closing Process: Formalizing acceptance of

the project in order to bring it to an orderly
end. Closing
Processes
Note that the arrow from Initiating to
Planning and planning to Executing goes in
one direction. Where as the arrows from
executing to controlling go in both directions. This is because, during the Controlling process, you may need to
adjust part of your production and go back to execution. Often, you may need to re-plan (shown by arrow from
controlling to planning) and then re-execute. Of course, if you re-plan, you must execute first before controlling.

1-10-100 Rule
There are some observed facts about the
project life cycle processes. It is always much
1-10-100 Project Activities
less expensive to plan well and resolve all
Cost Consequence
problems during planning and scheduling
processes. The cost to solve the same problem 1 Concept development, Analysis
generally is 10 times during the execution and Design
phase, and it is 100 times as much to resolve it
during mature production. This is known as
the 1-10-100 rule. 10 Development

The 1-10-100 rule has been tested and found

to be true across many industries. The rule 100 Transition to production, Project
also represents the way things work in nature. Close, Production and
We all are familiar with: Maintenance, Obsolescence,
Decommissioning.
“An ounce of prevention is worth a pound of
cure”, “Measure twice, cut once”, etc.

The 1-10-100 rule is similar to common observation on return on investment (ROI) from every $100 invested in
quality improvement activities.

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Module 4 Project Control Page 4.5

Key Concepts Review 4

R4.1 Earned Value - A generally accepted method used to confirm the accuracy of
a task is earned value calculation.

R4.2 Quality Control - Pareto analysis, cause and effect, and flow charts are
common tools used in quality control.

R4.3 Schedule Change - To effectively change a project schedule, you will need to
obtain the appropriate levels of approval, submit the appropriate change
requests, and evaluate the impact of the changes to the schedule.

R4.4 Scope Change Impact - To best determine the impact of scope changes,
baseline, performance measurement, and milestones should be reviewed.

R4.5 Scope Change Control - The control processes, including schedule, cost, and
quality must take into consideration of scope changes.

R4.6 Configuration Management - Configuration management is a technique used

for overall change control.

R4.6 Scope Verification - The task of reviewing work products to ensure they were
completed satisfactorily and formally accepted is part of scope verification.

R4.7 Cost and Schedule Variances - A project which was estimated to cost
$800,000 and schedule to last 9 months, had an earned value analysis at five months
showing the following:

BCWP (Budgeted cost of work performed) = $450,000 (also, EV)

BCWS (Budgeted cost of work scheduled) = $550,000 (also, PV)
ACWP (Actual cost of work performed) = $600,000 (also, AC)

Then, SV (Schedule Variance) = BCWP – BCWS

= 450,000 – 550,000 = - 100,000

and CV (Cost Variance) = BCWP – ACWP

= 450,000 – 600,000 = - 150,000
[A positive variance is good, and a negative variance is bad.]

Also SPI (Schedule performance index) = BCWP/BCWS

And, CPI (Cost performance index) = BCWP/ACWP

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Module 4 Project Control Page 4.6

Exercises
Q 4.1 What are the activities performed to bring future project performance into line with the
project plan called?

a. Cost revision
b. Budget update
c. Contingency planning
d. Corrective action

Q4.2 Earned value calculation and reporting considers a project complete when:

a. The EV (earned value) equals to the AC (actual cost)

b. The AC become s equal to the PV
c. BAC (budget at completion) is equal to the PV (planned value)
d. The BAC is equal to the EV

Q4.3 Which of the following is life cycle costing?

a. A government required accounting practice

b. A method that considers all costs associated with the project over its entire life.
c. A method used to determine project cost efficiency
d. A method of evaluating project status

Q4.4
The project manager of a medium sized project used the earned value reporting method to
manage her project. The table below shows the planned value of the project for the 10 week
life of the project, and the AC and EV data collected for the project’s first five weeks. The
figures shown in the table below are all cumulative values in dollars.

Week PV AC EV________
1 10,000 10,000 10,000
2 30,000 20,000 25,000
3 50,000 50,000 60,000
4 70,000 90,000 70,000
5 130,000 160,000 140,000
6 170,000
7 190,000
8 200,000
9 210,000
10 215,000

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Module 4 Project Control Page 4.7

a. What is the cost performance index at the end of week 3?

b. What is the schedule performance index for week 5?

c. What is the BAC for the project during week 5?

d. What is the EAC (Estimated project cost at completion) for the project at week 5?

Q4.5 The purpose of the contingency budget is to:

a. Reduce chances of scope changes

b. Increase probability of changes in cost baseline
c. Reduce probability of cost overruns
d. Reduce risk factors

Q4.6 In an office building construction project there is a senior designer on the team
dedicated to the project full time for 36 weeks (40 hour/week). The following statistics are
available for individuals of this skill level from the human resource department.

Utilization = 70% (amount of time worked on project)

Productivity = 85%
Wage rate = $45 per hour at work (project)
Fringe benefits = 30% of wages
Overhead = 50% of wages + benefits

a. What is the cost of this employee for the project?

b. In one of the design tasks, this individual utilized 60 hours. What is the cost of that
task to the project?

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 Module 5
Project Closing
Module 5 Project Closeout Page 5.2

Module - 5
Project Closeout
Unlike other assignments, a project has a determined beginning and end. Like the start of the
project, the project also has a distinct finish, at which time all tasks are completed.
Unfortunately, responsibilities associated with other projects or tasks, some times the
completed projects simply fade away rather than being recognized with a clear announcement
of completion. These silent ends are damaging to both the organization and the people who
performed the work. If there is no assessment of the project outcome, then there is no way for
team members to evaluate whether the project was well planned or well executed. Also, the
lack of a formal closure deprives team members of a sense of achievement, or of a job well
done.

To close out your project, the following

Project Closeout Tasks tasks should be implemented.

5.1 Obtain Final Deliverable

Project Closeout Tasks Approval
As the project nears completion, you
1. Obtain Final Deliverable Approval will meet with stakeholders to secure
2. Document Lessons Learned their approval that indeed the project
3. Facilitate Administrative and Financial has delivered what was expected. This
Closure formal approval is required for the
4. Preserve Essential Project Records project’s closeout.
5. Release Project Resources
Create a Detailed Plan for Project
Termination – Together with team
members, prepare a plan for termination
that clarifies your objectives, activities
and resources. You would benefit by
making a check list of things you and
your team must complete before the
project can be closed. The checklist may
include:

- Products that must be produced

- Acceptance test that must perform
- Approvals that are required
- Final report that you need to prepare
- Resources that you will need to release and/or reassign
- Administrative tasks that you may need to perform

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Module 5 Project Closeout Page 5.3

Reestablish Team Identity and Spirit – The following acts may help to reestablish team
identity and spirit:

- Meet with team members to reaffirm & recognize their commitment to successfully
completing the project
- Be accessible to team members for discussions and updates
- Monitor final activities more closely and give team members frequent feedback on
performance

To finish the project smoothly, you would benefit from the inclusion of project closing events
in your project plan.

- Lay the groundwork for closure when you prepare the project plan and just before
the t of the project
- Include project closing activity in the project plan. Specify all closing activities in
the project plan’s WBS.

5.2 Document Lessons Learned

New lessons are learned in each projects due to numerous & unexpected events. To learn
from these experiences, you should survey project team members and relevant
stakeholders to record lessons leaned. These lessons learned can be beneficial for future
projects.

5.3 Facilitate Administrative and Financial Closure

Many administrative, financial, and organizational tasks are needed to closeout projects.
In addition, there may be special requirements determined by the stakeholders and the
organization that you must take care of.

5.4 Preserve Essential Project Records

Every project will generate documents or deliverables such as plans, authorizations,
expense records, resources, etc. In addition, most projects require legal documents such as
contracts or fee schedules. It is in your benefit to preserve these essential records.

5.5 Release Project Resources

Once project is completed, you will no longer need the manpower and resources your
organization assigned to this project. So, you should release team members & resources
by following your organization’s procedure as soon as the project is over such that they
can be utilized in other projects.

Finishing Tasks
- Finish all uncompleted deliverables
- Hold team meetings to evaluate project
- Meet with stakeholders
- Return equipments
- Reassign team members

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- Conduct post-project evaluation

- Determine, “What did we do well?”
- Identify, “What could we do differently next time?
- Record and save information on evaluations

Key Concepts Review 5

R5.1 Formal Acceptance - The project manager should document the formal
acceptance process during the contract close-out.

R5.2 Project Termination - If for some reason (cuts in funding), your project is
terminated, you should always establish and document the level and extent of
completion.

R5.3 Key closing Activity - When closing a project, one of your key activities is
should be to disseminate information to formalize project completion.

R5.4 Usefulness of Closing Document – Consider the following example.

You are the project manager of a large project with approved cost over $3,000,000.
Your earned value calculations indicate that the project will be completed under
budget by about $250,000. Based on this calculation, your personal profit (bonus)
will decrease by $5,000.

At end of this project, you will document and archive all of the project’s
information. Such information may be used in the future for many tasks like
estimating activity duration, administering contracts, and allocating resources.

R5.5 Close-out Communication Management - The project close-out process must

be included as part of the communication planning, which includes determining
stakeholder information and communication needs. Communication planning helps
establish who needs what information, when will they need it, and how it will be
given to them. The plan addresses the following three areas:

• Information distribution – making needed information available to

project stakeholders in a timely manner.
• Performance reporting – collecting and disseminating performance
information like status reporting, progress measurement, and
forecasting.
• Administrative closure – generating, and disseminating information to
formalize phase or project completion.

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Module 5 Project Closeout Page 5.5

Project Management Key Concepts Review (Knowledge Areas, PMBOK 3rd Edition, 2004)

INTEGRATION MANAGEMENT
IM00: Project integration management has seven processes: Develop Project Charter,
Develop Preliminary Project Scope Statement, Develop Project management Plan, Direct &
manage project Execution, Monitor and Control Project Work, Integrated Change Control,
and Close Project.

SCOPE MANAGEMENT
SM00: Project scope management has five processes: Scope Planning, Scope Definition,
Create WBS, Scope Verification, and Scope Control.

SM01: A coordinated undertaking of interrelated activities directed toward a specific goal that
has a finite period of performance is called a Project.

SM02: The document that is proof of upper management's commitment to the project and
gives the authority to manage the project to the project manager is called The Project
Charter.

SM03: The organization in a company that favors the weakest authority for the project
manager is known as Weak Matrix Organization.

SM04: A manager that manages a group of related projects is called the Program Manager.

SM05: The set of procedures developed to ensure that the project design (in terms of form, fit
and function) criteria are met is called Configuration Management..

SM06: PScope Definition is the process of decomposing the major deliverables into smaller,
more manageable components to provide better control.

SM07: Any numbering system used by a company to monitor project costs by category such
as labor, supplies, or materials is called Chart of Accounts.

SM08: Any individual who is involved in or may be affected by the activities or anyone who
has something gain or lose by the activity of the project is called a Stakeholder.

SM09: A group of related projects that are managed in a coordinated way that usually include
an element of ongoing activity is called a Program.

SM10: A temporary endeavor undertaken to create a new product or service is called a

Project.

SM11: The process of establishing clear and achievable objectives, measuring their
achievements, and adjusting performance in accordance with the results of the measurement is
called Management by Objectives.

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SM12: A narrative description of the work that must be done (made by the project manager)
for the project is called a Statement of Work.

SM13: The document that recognizes the existence of the project is called the Project
Charter.

SM14: The WBS represents all the work that must be completed for the project.

SM15: Execution phase of the project is likely to have the greatest amount of its funding
spent.

SM16: The lowest level of the breakdown for the project manager (in the breakdown
structure) is Work Package. (work packages are usually broken down into tasks, and tasks
can be further broken down into activities. However, project manager is usually concerned
about things down to the work package level)

SM17: As per the PMBOK®, the lowest level of the work breakdown structure (WBS) is the
Task.

SM18: What distinguishes PERT from CPM is that PERT probabilistic and CPM is
deterministic.

SM19: The WBS, the scope statement, and historical information that supports applicable
activity are key inputs to Activity Definition.

SM20: The original plan (for a project, a work package, or an activity) plus or minus
approved changes is called the Scope Baseline.

SM21: The Change Management Plan is a document of procedure that is normally included
in the Scope Management Plan.

SM22: “The first rule of project management is that the people who must do the work should
help plan it.” – J. Lewis.

SM23: The project scope defines the magnitude or size of the job.

TIME MANAGEMENT
TM00: Time management is divided into six processes: Activity Definition, Activity
Sequencing, Activity Resource Estimating, Activity Duration estimating, Schedule
Development, and Schedule Control.

TM01: The original schedule for a project ( a work package or an activity) plus or minus
approved changes is called the Baseline Schedule.

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TM02: A tool that project managers use to show the scheduled activities in a way that it is
easy to see when ac activity starts and finishes and which activities are taking place at the
same time is known as Gantt Chart.

TM03: Crashing the schedule means making the project shorter by any economical means.

TM04: In Fast Tracking several of the activities that were scheduled to be done in sequence
are done in parallel to improve the predicted project completion time.

TM05: Resource Leveling is used to reduce overutilization of resources.

TM06: Overall duration of project schedule is not influenced by using the Arrow
Diagramming method instead of Precedence Diagramming method (PDM).

TM07: PERT differs from CPM in that PERT uses weighted average of activity durations to
calculate project duration.

TM08: According to PMBOK®, work package can be divided into Tasks.

TM09: A project manager should use CPM to manage the project in such a way that she/he
will be able to identify specific tasks that should be watched and managed more closely than
others.

TM10: To mange project in a manner that allow more accurate prediction of project duration
even though the estimates of activity durations have a lot of variability, the project manager
should use PERT.

TM11: According to the Guide to the PMBOK®, the lowest level of the work breakdown
structure is the Work Package. (Work package is a unit of work that can be assigned to a
person or organization. The work package can be broken down into tasks, and tasks can be
broken down into activities)

TM12: The problem with being a working project manager is that, in a conflict between
working and managing the work tend to take precedence, and managing suffers.

COST MANAGEMENT
CM00: Cost management has three processes: Cost Estimating, Cost Budgeting, and Cost
Control.

CM01: It is generally accurate to say that Bottom Up. Estimate is more accurate than Top
Down estimate.

CM02: Corrective Action. Is the act of doing anything that helps bring the future project
performance in line with the project plan.

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CM03: In Earned Value Reporting a project is considered complete when AC equal to the
PV.

CM04: Time phased budget best describes the characteristic of the Cost Baseline.

CM05: The time phased cost of the project that reflects the expenditures rather than
consumption of resources that will be used to measure and monitor cost performance on a
project is the Spending Plan.

CM06: The emphasis in Learning Curve Theory while producing many goods is that the
average unit cost decreases as more units are produced.

CM07: While preparing budget for the project, a project manager uses Project Schedule, Cost
Baseline, and WBS.

CM08: Contingency Budget Is created to reduce cost overruns.

QUALITY MANAGEMENT
QM00: Project quality management is divided into three processes: Quality Planning,
Perform Quality Assurance, and Perform Quality Control.

QM01: In early 1980’s Edward Deming along with Joseph Juran concluded that Upper
Management .is responsible for most of defects or failure in processes.

QM02: The Quality Plan is part of the overall project plan and is an important input to the
project plan.

QM03: The Quality Assurance is the planned and systematic activities that are implemented
within the quality system to develop confidence that the project will satisfy the relevant
quality standards.

QM04: The Quality Plan is part of the overall project plan and is an important input to the
project plan.

QM05: The Quality Management and Project management are both very concerned about
customer satisfaction.

QM06: Kaizen is a Japanese word that means improvement.

QM07: Modern quality management believes making small incremental

HUMAN RESOURCE MANAGEMENT

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HR00; Project human resource management is divided into four processes: Human Resource
Planning, Acquire Project Team, Develop Project Team, and Manage Project Team.

HR01: The organization that is formalize structure directed toward the support of the project
community within the organization is called Project Office.

HR02: The Advantages of Functional type of organization is that it represents a stable

organization structure.

HR03: Matrix Organization. Is suitable for a company that undertake new work that is
different from that they have done before , and whose strategic plan calls for much of this
kind of work in the future.

HR0: An American company undertook a project to build an automotive assembly plant in

Kolkata , India. The project is expected to take several years to build and test. The
organization best for managing this project is Pure Project Organization.

HR05: The organization that is a formalized structure where the project teams and the project
managers reside is called Project Management Office.

HR06: The beginning and end of the project is defined by the Project Life Cycle.

HR07: One of the characteristics of good listeners is that he or she Repeats some of the things
said.

HR08: For achieving long lasting solution to project issues involving difficult design
problems, Problem Solving is the best approach.

HR09: A key barrier to developing project team is Team Members who are accountable to
both functional and project managers.

HR10: According to McGregor’s concept of theory, X and theory Y, the statement “Theory Y
managers view their subordinates as creative, imaginative, and agreeable to change”.

HR11: The Functional Manager in a balance matrix organization is responsible for making
should be the person responsible for raining the people within his/her organization.

HR12: As person responsible for all that goes on in the project, one of the most important
duties the project manager can perform is the function of Integration.

HR13: In a matrix organization, the person most responsible for seeing that proper people are
assigned to the projects where they are used most effectively is the Functional Manager.

HR14: To overcome difficulty in communication under matrix organization, a project

manager can make communicating with people on his or her project team easier is by
publishing a Project Team Directory.

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HR15: One of the major attractions of matrix management style of organization is Pressure
of Shared Resources.

HR16: A formal employee reward system works well when Relationship between reward
and performance is explicit.

COMMUNICATION MANAGEMENT
COM00: Project Communication management has four major processes: Communication
Planning, Information Distribution, Performance Reporting, and Manage Stakeholders.

COM01: Effective communication, ability to reconstruct why decisions were made, and
historical value are the three principal interests in maintaining good document control.

COM02: Language, distance, culture, and knowledge are filters the receiver uses to filter
messages.

COM03: Among the ideas to generate ideas, Delphi technique allows participants to be
anonymous.

COM04 The project manager is responsible for communicating with the project team.

COM05: During Administrative Closure, the project sponsors or client signs off a document
expressing their acceptance of project deliverables.

COM06: In a project team of seven (including project manager), there are 21 lines of
communications for communicating information to each other [ 7 x (7-1)/2 ].

COM07: Verbal, Written, and Electronic .type are the main form of communications today.

RISK MANAGEMENT
RM00: Project risk management is accomplished by six processes: Risk Management
Planning, Risk Identification, Qualitative Risk Analysis, Quantitative Risk Analysis, Risk
Response Planning, and Risk Monitoring & Control.

RM01: Risk Avoidance is the process of eliminating risk from consideration by implementing
something that will eliminate it as a possibility.

RM02: Risk Acceptance allows the risk to happen and deal with it should it occur. Risk
Tolerance is the measure of the client to take risks.RM03: Risk Deflection or Transfer is the
process of transferring the risk to someone other than the project team, such as an insurance
company or outside supplier.

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RM04: Risk Mitigation is the process of reducing risk to an acceptable level due to reduced
impact, probability, or both.

RM05: Management Reserve is a fund set aside to manage unidentified risks which PMI
refers as “unknown unknowns”. It is time and money used to offset the effect of unknown
risks affecting cost and schedules.

RM06: When management reserve is in the project, it is used from the management reserve to
the cost or schedule baseline.

RM07: Risk Triggers (also called risk symptoms) are indications that risk is about to occur.

RM08: The Monte Carlo Technique .is a simulation technique that assigns a value to
duration for each activity in the schedule. It is also used to refine PERT where range of values
and the probability hat they can occur are calculated for the project completion date or parts
of the project.

RM09: A Workaround is the work that was not planned ahead of time to take care of a threat
that occurs.

RM10: A project manager should do risk analysis with his/her project team on a regular
basis throughout the project.

PROCUREMENT MANAGEMENT
PM00: Project Procurement managements divided into six major processes: Plan Purchase
and Acquisitions, Plan Contracting, Request Seller Responses, Select Sellers, Contract
Administration, Contract Closure.

PM01: Under blanket order arrangement, payments for all of the materials are made at one
time.

PM02: The contracts similar to cost reimbursable contracts are frequently termed as Cost Plus
Contract.

PM03: Forward buying generally The narrative description made by the project manager to
cover the items to be supplied under the contract with the client is called The Statement of
Work.

PM04: When a project manager discovers that a subcontracted job on a firm fixed price
contract contains some risk, he or she should: (a) (a) expect the supplier to include an
allowance for the risk in the contracted price and (b) make sure that the supplier
understands the risk before the contract is signed.

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PM05: A formal invitation by a buyer that contains a scope of work that seeks a response
describing methodologies and results that will be provided to the buyer is called Request for
Proposal.

PM06: When subcontracting a work that has a great deal of risk associated with it which also
cause difficulty to find contractor willing to take the job, the type of contract offers most
incentive to the contractor is Cost Plus Percentage of cost as an award fee.

PM07: A Contract is an agreement between competent parties, for valid consideration, to

accomplish some lawful purpose with clearly established terms.

PM08: A Solicitation Is an advertised intention by purchasing department expressing

intention to let a contract part of the project work.

PM09: Purchase of standard items like nuts, bolts, screws, etc. are example of Commodity
Purchase.

PROFESSIONAL RESPONSIBILITY
PR01: Intellectual property belongs to the author of the property. If you create a presentation
based on your own work, you have right to receive credit for it.

PR02: As a project manager you may receive unsupported allegations by a third party which
often may be rumors or mistaken facts. It is best to investigate before making any changes.

PR03: Unless an employee has signed nondisclosure agreement with his or her former
employer, there is no obligation or him or her not to share knowledge gained while employed
with the competitor. As a project manager you can accept such information when offered by
the employee.

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Professional Responsibilities
Module 6 Professional Responsibilities Page 6.2

Module - 6
Professional Responsibilities
This module contains project manager professional skills building suggestions that can benefit
you as a project management professional. A project manager is expected to guide and direct
the project with highest of professional and ethical standards and to maintain individual
integrity. He/she must be familiar with organizational standards & procedures and should be
able to contribute to the team’s knowledge base by sharing innovative ideas and best
practices.

Responsibilities (5 Areas)

6. 1 Maintain Individual Integrity

Professional Responsibilities (Tasks) and Professionalism

As a project manager, you must maintain

1. Maintain Individual Integrity and your personal integrity and
Professionalism professionalism while dealing with all
2. Contribute to the Project Management aspects of project management. You will
Knowledge Base be expected to adhere to applicable legal
3. Enhance Individual Competence requirements and follow ethical standards
4. Balance Stakeholders Interest that protect your team, the community
5. Respect and Interaction with Team and the project’s stakeholders.
Members and Stakeholders
Example: If the project requires
constructing a building, you will need to
adhere to city procedures & codes to
building plan approved.

Example: If you have a FUND RASING

project for a charitable organization, you
will need to be aware of city codes
regarding solicitation and planning for fund raising accordingly.

6.2 Contribute to the Project Management Knowledge Base

To enrich your project management knowledge base, you should share lessons learned, best
practices, research, etc. with professional organization such as PMI. You can also learn a

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great deal from other project managers like yourself. The idea is to promote and improve
quality of project management practices within your industry and the profession.

Example: In the early 80’s a computer data management system of a large consulting
company with resource locations in various parts of the world, the routine project status
review took place by telephone conference call coupled with computer slide shows. This form
of communication was found so effective that the manager shared the concept with people
who maintain a project management knowledge base. Now, use of telephone conferencing &
computer slide shows is common practice among many such organizations.

6.3 Enhance Individual Competence

While managing the project, you are to enhance your individual competency by learning and
applying advanced knowledge to improve project services.

An ambitious project manager will benefit by undertaking self-assessment periodically and

developing plans to reach improvement and professional competence goals.

Example: Even for a small and personal project, WBS, bar chart of work schedules and
duration are good tools to use. They give the project a professional & more organized
representation and enhance communication with other team members.

6.4 Balance Stakeholders Interest

Often during projects, the P.M. must find a satisfactory balance between the competing
needs of stakeholders. You would attempt to do so by finding approaches that seek fair
resolution of the conflicting and competing demands from project objectives.

Example: Although, overwhelming data shows that passengers seat airbag in automobiles
save lives, accident data reveals high levels of children fatalities from front seat airbag. So,
stakeholders may want a vehicle with front seat active airbags for safety, but may also want
the option to make it inactive for child passengers. A compromised solution is to include a
switch to disconnect the airbag and a sticker notifying the passenger that the option is
present.

6.5 Respect and Interaction with Team Members and Stakeholders

Project manager should be professional and cooperative when interacting with the team
members and stakeholders. As project manager, you should encourage a collaborative
environment by respecting personal, ethnic, and cultural differences among all team members.

Example:
• Find backup support for team member needing to take time off for family
emergencies.

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• Accommodating the wishes of a group of team members to celebrate special holiday,

by not holding important meetings on that day.

Implementing Project Management in Your Company

• Top Management
Implementing Project Management in Involvement – In the early
Your Company 1950’s, Dr. Deming first
insisted that chief executives be
• Top Management Involvement involved in projects to assure
• Key Job Elements in Appraisal System success. The chief executive
must take time to learn about
• Basic Training for All Involved in the
project management, sit on the
Project
planning meetings, participate
• Overview Training for Senior
in project review meetings and
management
ask questions about project
• Initial Projects with High Probability performances.
of Success
• Change Organization Structure for • Key Job Elements in
project Management Appraisal System – Include
• Assign Champions for Sub-Projects project performance
• Encourage Team Members to Join achievement as part of the key
Project Management Institute job element and recognize and
reward explaining
performances.

• Basic Training for all team members – Provide training for anyone who needs it.
Provide Overview Training for Senior management

• Initial Projects with High Probability of Success

• Change Organization Structure for Project Management

• Assign Champions for Sub-Projects

• Encourage Team Members to Join Project Management Institute

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Key Concepts Review 6

R6.1 Culture Shock - The disorientation experienced by people who suddenly find
themselves living and working in a different environment is known as culture shock.

R6.2 Multi-national Projects - The most effective way to ensure that cultural and
ethical differences do not impede the success of a multi-national project is training.

R6.3 Requirements Definition - A project success is determined by how well you

satisfy the stakeholder’s needs. A key activity for satisfying the customers
(stakeholders) is to define the requirements in clear terms.

R6.4 Alternative Solutions - During the project performance, when a design error
interferes with meeting the technical performance objectives, the preferred course of
action should be to develop alternative solutions to the problem.

R6.5 Personal Gain/Loss – The project manager of $3,000,000 project calculates

that the project will be completed under budget by about $250,000. Based on this
calculation, your personal profit (bonus) will decrease by $5,000.

Given such estimated decrease in your personal benefit, what action should you
take? You should definitely communicate the project financial outcome to the
project sponsor.

R6.6 Societal Obligations – Suppose that as a project manager, you are building a
state government funded sewer treatment facility for the city. Routine test reveals
that there is some seepage to the nearing grounds and water sources but they have
extremely low risks for causing any harm. What should you communicate to the
people? You should inform the public that a detailed examination has been ordered
to determine the extent to which the problem exist. (Doing nothing or hiding the
situation is not an option.)

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 Module 7
Appendix & References
Appendix Page A.2

Appendix
(Module 7, Reference Materials)

Project Management – Supporting Documents

CONTENT

• Glossary of Terms A.3

• References A.9
o Textbooks
o Information at Web Sites
o Example Project Charter
o Example Project Plan

• Project Situation Studies A.10

• Solution to Module Exercises A.11

• Self-Test Your PM Knowledge & Example Project Phases A.17

• PMI & Project Management Professional (PMP) Exam. A.37

• Sample PMP Q&A A.42

• Project Management Body of Knowledge (PMBOK) A.62

• Worksheets and Reference PDM & PERT Tables A.65

• Course & Instructor Evaluations A.84

• Participant Experience & Expectations A.85

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Appendix Page A.3

Glossary of Terms (Ref. PMBOK® 3rd Edition, 2004, PMI)

Activity. A unit of work performed as part of the project. An activity usually has a duration, a cost,
and resource requirements. An activity can be subdivided into tasks.

Activity definition. Identifying the specific activities that must be performed in order to produce
various project deliverables.

Activity duration estimating. Estimating the number of work periods that will be needed to
complete individual activities.

Actual cost (AC or ACWP). The amount of cost accumulated by doing work on the project; the
actual cost that was performed during a given time period. The Guide to the PMBOK® has changed
this term from ACWP to AC.

AD. Activity Description is a label used in network diagrams. The activity description normally
describes the scope of work of the activity.

ADM. Arrow Diagramming Method is a network diagramming method in which activities are
represented by arrows. The tail represents the start and the arrow head represents the finish of the
activity (the lengths DOES NOT represent the duration of the activity). Activities in ADM are
connected at points called nodes (small circle) to illustrate sequence.

AF. Actual Finish date is the actual date a task or activity was completed.

AS. Actual Start date is the point in time that work actually started on an activity.

BAC. Budget at Completion is the estimated total cost when the project is completed.

Backward Pass. The calculation of late finish dates and late start dates for the uncompleted portion
of all network activities is determined by working backward through the network logic from the
project’s end date. The end date may be calculated in a forward pass or may be set by the customer or
sponsor.

Bar Chart. A graphic display of schedule-related information. In the typical bar chart, activities or
other projects elements are listed on the left side of the chart, dates are shown across the top, and
activity duration are shown as dates–placed horizontal bars. These are also known as Gantt charts.

Baseline. The original approved plan (for a project, a work package, or an activity), plus or minus
approve scope changes. Usually used with a modifier (e.g., cost baseline, schedule baseline,
performance measure baseline).

Buffer (Reserve). A provision in the project plan to mitigate cost and or schedule risk. Often used
with a modifier (e.g., management reserve, contingency reserve) to provide further details on what
types of risk are meant to be mitigated. The specific meaning of the modified term varies by
application area.

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Budgeted Cost of Work Performed (BCWP, Earned Value). This term has been replaced by
earned value.

Budgeted Cost Work Scheduled (BCWS, Planned Value). This term has been replaced by the
term planned value.

Calendar Unit. The smallest unit of time used to schedule a project. Calendar units are generally
hours, days, or weeks, but can also be shifts or even minutes. Used primarily in relation to project
management software.

Change Control Board. A formally constituted group of stakeholders responsible for approving or
rejecting changes to the project’s baseline.

Chart of Accounts. Any numbering system used to monitor project costs by category (e.g., labor,
supplies, materials, and equipment). The project chart of accounts is usually based upon the primary
performing organization’s corporate chart of account. (also known as code of accounts.)

Charter (or Project Charter). A document issued by senior management that formally authorizes
the existence of a project provides the project manager with the authority to apply organizational
resources to project activities.

Checklist. A listing of many possible risks that might occur during a project is used as a tool in the
risk identification process. Checklists are comprehensive, listing several types of risk that have been
encountered on prior projects.

Contingency (or Contingency Planning). Development of a management plan that identifies

alternative strategies that ensure a project’s success if a specified risk event occurs.

Contingency Reserve. The amount of money or time needed above the estimate to reduce the risk of
project overruns.

Contract. A mutually binding agreement that obligates the seller to provide the specified products
and obligates the buyer to pay for it. Contracts generally fall under the following three broad
categories:

• Fixed-price or lump-sum contracts – Includes a fixed total price for a well defined product
or service may also include additional incentives for meeting or exceeding project objectives
such as schedule targets.
• Cost-reimbursable Contract – involves payment to the contractor for actual costs incurred.

o Direct costs - wages of team members and materials utilization as cost of doing
business, such as salaries of the corporate executives are usually calculated as a
percentage of direct cost.
o Incentives – for meeting or exceeding selected project objectives such as project
schedule or cost.

• Time and Material Contracts – A hybrid contractual arrangement that contain aspects of
both cost-reimbursable and fixed-price-type arrangements. It resembles cost-type in that they
are open ended, as the full value of the project is not defined at the time of the award. It Why?
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can grow in contract value as the cost-type arrangement. Conversely, time and material
arrangement resemble fixed-unit arrangements, when, for example, the unit rates are preset by
the buyer and seller, like when both parties agree on the rates of a “senior engineer” in the
project.

Control Charts. A graphic display of the results, over time and against established control limits, of
a process. They are used to determine if the process is “in control” or in need of adjustment.

Corrective Actions. Changes made to bring expected future performance of the project in line with
the plan.

Cost Budgeting. Allocating the overall cost estimates to individual work activities.

Cost Control. Controlling changes to the project budget.

Cost Estimating. Developing an approximate (estimate) of the cost of the resources needed to
complete project activities.

Cost of Quality. The cost incurred to ensure quality. The cost of quality includes quality planning,
quality control, quality assurance, and rework.

Cost Performance Index (CPI). The cost efficiency ratio of earned value to actual cost. CPI is
often used to predict the magnitude of a possible cost overrun using the following formulas:
BAC/CPI = projected cost at completion. CPI = EV/AC. (BAC = Budgeted/estimated cost of project,
AC = actual cost of worked performed, EV = earned value)

Cost Variance (CV). Any difference between the budgeted cost of any activity and the actual cost
of that activity. In earned value, EV – AC = CV

Crashing. Taking action to decrease the total project duration after analyzing an alternatives for how
to get the maximum duration compression for the least cost.

Critical Activity. Any activity on a critical path. Most commonly determined by using the critical
path method.

Critical Path. The series of activities that determine the project’s duration. In a deterministic model,
the critical path is usually defined as those activities with float less than or equal to specified value,
often zero. It is the longest path through the project.

Critical Path Method (CPM). A network analysis technique used to predict project duration by
analyzing which sequence of activities (which path) has the least amount of scheduling flexibility
(least amount of float). Early dates are calculated by means of a forward pass, using a specified start
date. Late dates are calculated by means of a backward pass, starting from a specified completion
date (usually the forward pass calculated project early finish date).

Decision Tree Analysis. The decision tree is a diagram that charts out a decision under
consideration and the implications of choosing one or another of the available alternatives. It
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incorporates probabilities or risk and the cost or rewards of each logical path of events and future
decisions.

Deliverables. Any measurable, verifiable outcome, tangible, result, or item that must be produced to
complete the project or part of a project. Often used more narrowly in reference to an external
deliverable subject to approval by project sponsor or customer.

Dummy Activity. An activity of zero duration used to show a logical relationship in the arrow
diagramming method. Dummy activities are used when logical relationships cannot be completely or
correctly described with regular activity arrows. Dummies are shown graphically as a dashed line
headed by an arrow.

Duratuion (DU). The number of work periods (not including holidays or other nonworking days)
required to complete an activity or other project element usually expressed as workdays or
workweeks. Sometimes incorrectly equated with elapsed time.

Duration Compression. Shortening the project schedule without reducing the project scope.
Duration compression is not always possible and often requires an increase in project cost.

Early Finish Date (EF). In the critical path method, the earliest possible point in time in which the
uncompleted portion of an activity (or the project) can finish, based on the network logic and any
schedule constraints. Early finish dates can change as the project progresses and changes are made to
the project plan.

Early Start Date (ES). In the critical path method, the earliest possible point in time on which the
uncompleted portions of an activity (or the project) can start, based on the network logic and any
schedule constraints. Early start dates can change as the project progresses and changes are made to
the project plan.

Earned Value (EV, BCWP) - The physical work accomplished plus the authorized budget for this
work. The sum of approved cost estimate (may include overhead allocation) for activities (or a
portion of activities) completed during a given period (usually project to date). Previously called
budgeted cost of work performed (BCWP).

Event –on-Node. A network diagramming technique in which events are represented by boxes (or
nodes) connected by arrows to show the sequence in which the events are to occur. Used in the
original program evaluation and review technique (PERT).

Exception Report. Document that includes only major variations from the plan (rather than all
variations)

Fast Tracking. Compression of the project schedule by overlapping activities that would normally
be done in sequence, such as design and construction.

Float. The amount of time that an activity may be delayed from its early start without delaying the
project finish date. Float is a mathematical calculation, and can change as the project progresses and
changes are made to the project plan. Also called slack, total float, path float, or free float.

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Free Float. The amount of time that an activity can be delayed without delaying the early start of
any immediately following activities.

Functional Manager. Manager responsible for activities in a specialized department or function

(e.g., engineering, manufacturing, marketing)Lessons Learned

Lessons Learned. The learning gained from the process of performing the project Lessons learned
may be identified at any point. Also considered a project record.

Level of Effort (LOE). Support-type activity (e.g., vendor or customer liason) that does not lend
itself to measurement of discrete accomplishment. It is generally characterizedby a uniform rate of
activity over a period of time determined by the activities it supports.

Life–Cycle Costing. The concept of including acquisition, operating, and disposal when evaluating
various alternatives.

Logical Relationship. A dependency between two project activities, or between a project activity
and a milestone (Used in precedence diagram). The four possible dependency relationships are:
• Finish-to start – the initiation of the work of the successor depends on the completion of
work of the predecessor.
• Finish-to-finish – the completion of the work of successor cannot finish until the completion
of work of the predecessor.
• Start-to-start – the initiation of work of the successor depends upon the initiation of the work
of the predecessor.
• Start-to-finish – the completion of the work of the successor is dependent upon the initiation
of work of the predecessor.

Loop. A network path that posses the same node twice. Loops cannot be analyzed using the
traditional network analysis technique such as critical path method and program evaluation and
review technique (PERT). Loops are allowed in graphical evaluation and review technique.

Milestone. A significant event in the project; usually the completion of major deliverables.

Monte Carlo Analysis. A technique that performs a project simulation many times to calculate a
distribution of likely results. A simulation use a project model that translates the uncertainties
specified at a detailed level into their potential impact on objectives that are expressed at the level of
the total project.

Near-Critical Activity. An activity that has low total float.

Network Analysis. The process of identifying early and late start and finish dates for the
uncompleted portions of the project activities. (see critical path method, PERT, and graphical
evaluation and review technique)

Network Logic. A collection of activity dependencies that make up a project network diagram.

Network Path. Any continuous series of connected activities in a project network diagram.

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Organizational Breakdown Structure (OBS). A depiction of thee project organization arranged so

as to relate work packages to organizational units.

Organizational Planning. Identifying, documenting, and assigning project roles, responsibilities,

and reporting relationships.

Parametric Estimating. An estimating technique that uses statistical relationships between

historical data and other variables (e.g., square footage in construction, lines of codes in software
development) to calculate an estimate.

Pareto Diagram. A histogram, ordered by frequency of occurrence, that shows how many results
were generated by each identified causes.

Planned Value (PV, BCWS). The physical work scheduled, plus the authorized budget to
accomplish the scheduled work. Previously this was called as budgeted cost of work scheduled
(BCWS)

Precedence Diagramming Method (PDM). A network diagramming technique in which activities

are represented by boxes (or nodes). Activities are linked by precedence relationships to show the
sequence in which the activities are to be performed.

Product Scope. Features and functions that characterize a product or service.

Program Evaluation and Review Technique (PERT). An event-oriented network analysis

technique used to estimate program duration when there is uncertainty in the individual activity
duration estimates. PERT applies to the critical path method using durations that are compute by
weighted average of optimistic, pessimistic, and most likely duration estimates. PERT computes the
standard deviation of the completion date from those of the path’s activity durations. Also known as
method Moments Analysis.

Project. A temporary endeavor undertaken to create a unique product, service, or result.

Project Life Cycle. A collection of generally sequential project phases whose name and number are
determined by the control needs of the organization or organizations involved in the project.

Project management. The application of knowledge, skills, tools, and technique to project activities
to meet the project requirements.

Project management Body of Knowledge (PMBOK®). An inclusive term that describes the sum of
knowledge within the profession of project management PMBOK® includes proven, traditional
practices that are widely applied, as well as innovative and advanced ones that have seen more
limited use.

Project management Professional (PMP). An individual certified by the Project Management

Institute (PMI)

Project Phase. A collection of logically related project activities usually culminating in the
completion of a major deliverable.
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Project Plan. A formal, approved document used to guide both execution and project control. The
primary uses of the project plan are to document planning assumptions and decisions, facilitate
communication among stakeholders, and document approved scope, cost, and schedule baselines. A
project plan may be summary or detailed.

Projectized Organization. An organizational structure in which the project manager has full
authority to assign priorities and to direct the work of individuals assigned to the project.

Statement of Work (SOW). An SOW describes the work to be performed and usually includes a
timeline and level of effort so that a vendor or contractor can respond to the RFQ with a proposal and
cost estimate. SOWs should include the following: work to be performed, location of the work,
period of performance and timeline, deliverable schedule, any special requirements (such as security
clearances, travel required, special skills or knowledge)

Team Development. Developing individual and group competencies to enhance project

performance.

Team Member. People who directly or indirectly report to the project manager.

Total Quality Management. A common approach to implementing a quality improvement program

within an organization

Triggers. Triggers, sometimes called the risk symptoms, or warning signs, are indications that a risk
has occurred or is about to happen. Triggers may be discovered in the risk identification process and
watched in the risk monitoring and control process.

Value Engineering. It is a creative approach used to optimize life-cycle cost, save time, increase
profit, improve quality, expand market share, solve problems, and/or use resources more effectively.

Work Breakdown Structure (WBS). A deliverable-oriented grouping of project elements that

organizes and defines the total work scope of the project. Each descending level represents an
increasingly detailed definition of the project work.

Work Package. A deliverable at the lowest level of the WBS that may be assigned to another
project manager to plan and execute. This may be accomplished through the use of a subproject
where the work package may be further decomposed into activities.

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References:
1. A Guide to the Project Management Body of Knowledge, Project Management Institute, 2000 Edition.
2. Preparing for the Project Management Professional (PMP) – Certification Exam by Michael W. Newell,
PMP, ENP, American Management association, 2002.
3. Fundamentals of Project Management by James P. Lewis, American Management Association2001.
4. Project Management for Dummies by Stanley E. Portney, Wiley Publishing, Inc. New York, 2001.
5. Everything Project Management Book by Rich Mintzer, Adams Media Corporation, Avon, MA.
6. Action Tools for Effective Managers: A Guide for Solving Day-to-Day Problems on the Job by Margaret Mary
Gootnick and David Gootnick

Project Management (PM) Information Sites: Example PM documents:

http://www.dhs.state.or.us/admin/ois/pmo/publications/template_examples.html (Last visited: 1/20/2004)

Project Situation Studies

Situation # 01 Conflict Resolution
Jane and John are two senior software development specialists supporting a project managed by Dennis for a large
consulting firm. Jane and John are from the same area of activities providing software development support to various
projects on as needed basis. As project manager, Dennis is new to the project as the project has been on hold for last six
months after the original project manager retired. Within a few weeks on the job, Dennis sent an e-mail announcing that
Jane would be responsible for developing the database. In a time when projects are hard to come by, this made John very
unhappy, as he had a verbal understanding from the previous manager that he would be the choice for the job when the
project came alive.

Q1: What did Dennis do right?

Q2: What would you do if you were the project manager?

Situation # 02 Stakeholders
In the project to rebuild World Trade Center (WTC, Twin Towers) which was attacked and demolished by terrorist on
September 11, 2001 (known as 9-11), there are many stakeholders with numerous interests.

The property around the WTC is owned by the New York – New Jersey Port Authority, an entity created by the then
governors of the two states. In the early 70’s, the Port Authority built WTC as a business center that housed businesses,
retail, and underground Mass Transit Stations. Before 9-11, in June of 2001, the Port Authority signed a 99-year NNN
(Triple net) lease of the WTC properties to a wealthy developer named Larry Silverstein. The agreement provides Mr.
Silverstein the right and obligation to rebuild the towers as they were. The lessee did not foresee or cover the collapse of
any buildings.
As the lessee, Mr. Silverstein definitely is interested in realizing his financial commitment as per the agreement
he has with the Port Authority.
The families of the victims and concerned citizens all around the nation have some demands and expectations as
to the new use of the site, called ground zero after the attack.. A popular demand is that some sort of memorials be built at
the ‘foot print’ of the WTC.
New York City, even though does not own the property, also has ideas to convert the area into a livable
integration into the surrounding city with active retail, & busy 24/7 commercial and housing uses. They want to build
housing complexes along with office buildings.
The MTA, Metropolitan Transportation Authority, also has interest in what happens with the location as their
New Jersey and lower Manhattan underground commuter lines have the junction point at the WTC area.
The state of New York representing the residents of the state have vested interest in the new shape and form of
the center around the WTC.
Finally, the LMDC, or Lower Manhattan Development Corporation has been created to reinvest federal funds
into the site & lead the redevelopment effort.
Other Stakeholders: The President and the White House, the Congress of the US, the State of New Jersey, etc.

Q1: If you were the project manager, where would you anticipate most of your time will be spent in the early stage of the
project initiation?
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Appendix Page A.11

Answers to Module Exercises

Module 0 Introduction
Ans.Q0.1 c. Ans.Q0.2 c. Ans.Q0.3 b. Ans.Q0.4 c. Ans.Q0.5 d.

Module 1
Ans.Q1.1 A stakeholder is an individual or organization that is involved in or may be affected by the
outcome of the project.

Ans.Q1.2 Program (From Guide to PMBOK®)

Ans.Q1.3 When cumulative revenue equals cumulative costs.
Ans.Q1.4 Concept phase.

Ans.Q1.5a The net cumulative cash flow is the sum of cash flow in and cash flow out.
Payback period is the point in time when the net cumulative cash flow (CCF) equals zero. The
cumulative cash flow at end of year 1 is - 700,000; 2, -400,000, 3, + 50,000, etc.

End of Year Cash Flow In Cash Flow Out Cum Cash Flow
1 0 700,000 - 700,000
2 450,000 150,000 - 400,000
3 625,000 175,000 + 50,000
4 300,000 275,000 + 75,000
5 125,000 65,000 + 135,000
6 100,000 50,000 + 185,000

Cum Cash Flow (CCF) = Past year CCF + Cash Flow In – Cash Flow Out

Since the CCF at end of year 2 is - 400,000 and that at end of year 3 is +50,000, the payback
period is close to 3 year.

The exact time location for payback in months is:

Year + (400/450) x 12months = 24 + 10.66 = 35 months

Ans.Q1.5b + 185,000 (see table above)

Ans.Q1.5c The formula for present value (P) calculation from given interest rate and future
value is
P = F / ( 1 + 0.10 )n , where F = 185,000, I = 0.10, and n = 6

Thus P = 185000 /(1.10)6 = 104,428

Ans.Q1.6 The scope is verified by checking to see that the project outcome is produced and
delivered to what the stakeholders asked for. For example, in a project to develop software, reviewing
the performance of an installed software module will be a way of verifying the scope.
Ans.Q1.7 One of the first things a project manager should do is to write a project charter.
According to Guide to the PMBOK®, Project Charter is the document issued by senior management
that provides the project manager with the authority to apply organizational resources to project
activities.
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Ans.Q1.8 The cost of the project goes up based on the cost of changes and the cost of investigating
the effect of changes. These two together, in this case is $ 65,000. Therefore, the cost of the project
now will be $1,015,000 ($ 950,000 + $ 65,000).

Ans. Q1.9 The formula for the present value of money is

P = F / ( 1 + i )n where F = future value, i = interest rate, n = number of years

Present value of savings = 130,000/ (1.10) = 118,182

Note that the negative cash flow occurs at the beginning of the year when the computer
system is purchased. The positive cash flow, on the other hand takes place at the end of one
year, which is then transformed to its present value.

Net Present Value (NPV) = - 75,000 + 118,182 = $ 43,182

Ans. Q1.10 A statement of work describes the project in terms of what it is all about and what will
be delivered at completion of the project. A project plan is a comprehensive document that contains
detailed work that the project will do, complete with tasks descriptions and schedule, cost, and scope
baseline containing real schedule and budget.

Module 2
Ans.Q2.1 To complete the precedence diagram with dates of start and finish, you will need to
calculate the precedence data (prepare the precedence data table) shown below. Perform the forward
pass to calculate ES and EF and perform the backward pass to calculate LS and LF shown in Table
Q2.1.

(a) Which activities have floats and how many days? (BDF)?
Ans. Activities C, D, and F have floats. All of them have 7 days of float.

(b) What is a free float?

Ans. The FREE FLOAT or SLACK is the amount of time that an activity can be delayed before it
affects the schedule of any other activity. Activities F and D both have 7 days of free floats (total
float or plain old float). Activity F has free float, activity D does not. When calculating schedules
and floats with lead and lags, it is best to look at the next activity with no lead or lag and, after
determining the dates, change them by the amount of the lead or lag.

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 Appendix Page A.13

Table Q2.1 Precedence Data (Bridge Repair Project)

Activity Description Duration Predecessor ES EF LS LF Float

A. 1 days - 1 1 1 1 0
B. 3 A 2 4 2 4 0
C. 3 A 2 4 9 11 7
D. 2 B 5 6 12 13 7
E. 7 B 5 11 5 11 0
F. 4 D 5 8 12 15 7
G. 4 E,C 12 15 12 15 0
H. 5 F,G 16 20 16 20 0

Note: ES = Early Start, EF= Early Finish, LS = Late Start, LF = Late Finish, Float = (Late start – Early start)

Figure Q2.1A Precedence Diagram Bridge Repair Project

C 3 days G 4 days
6/2 6/4 6/12 6/15
6/9 6/11 6/12 6/15
A 1 day
6/1 6/1 Early
E 7 days H 5 days
6/1 6/1 Late dates
6/5 6/11 6/16 6/20

6/5 6/11 6/16 6/20

B 3 days D 2 days F 4 days

FS - 2
6/2 6/4 6/5 6/6 6/5 6/8
6/2 6/4 6/12 6/13 6/12 6/15

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(c) What is the free float for activity F? Ans. 7 days. (See answer to previous question.)
(d) What is the free float for activity D? Ans. 0 days.
(e) What day in June will activity D have for its early finish date? Ans. June 6
(f) What is critical path and what is the critical path for the project?
Ans. Critical path is the list of activities that have zero total float. Path A B E G H
is the critical path for this project.

(g) How many days will the project take to finish as scheduled?
Ans. 20 days. The first work of the project is done on June1, and the last work for the project is
completed on June 20th.

(h) What is the late start for activity F?

Ans. June 12. It has a late start that is calculated to be two days before the late finish of activity
D. With leads and lags, it is best to calculate the LS of the dependent activity (F in this case), then
the LF of the independent activity (6/11 for D), and then adjust the LF of the independent activity
to consider the FS lead/lag (adjust LF for D from 6/11 to 6/13, see Fig. Q2.1A).

(i) What is the early start date for activity C? Ans. June 2
(j) If for some reason activity starts 5 days late, what will be the effect on project completion
date?
Ans. No effect at all.

(k) What is the early finish and late dates of Activity A? Ans. June 1 for both.

Ans. Q2.2 c
Ans. Q2.3. d. The baseline schedule as well as the baseline budget and baseline scope is the original
project plans plus or minus any approved changes.

Ans. Q2.4 b. In resource leveling an attempt is made to reduce overutilization of resources to their
normal level.

Ans. Q2.5 c. Monte Carlo analysis is a simulation technique that assigns durations to tasks in a
schedule and then calculates the schedule information. It repeats this task duration assignments and
the subsequent calculation many times, and then reports statistical results, including the percent of
time a task is on the critical path.

Ans.Q2.6. By completing the precedence diagrams (forward and backward passes); you will find that,
activities B, D, and E have floats and that activities A, C, F, and G make up the critical path. The
duration for the project is obtained by adding expected values (EV) of all activities in the critical
path.

Using the formula for the expected value (EV) and standard deviation (SD), the PERT statistics can
be calculated as shown in Table Q2.6a.

Expected Value, EV = [Optimistic + 4 x Most likely + Pessimistic]

(or PERT Weighted Average) 6
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Appendix Page A.15

Standard deviation, SD = (Pessimistic – Optimistic) / 6

Also Variance = SD 2 or SD = (Variance ) ½

Sample calculation for activity A:

EV = (4 x 6 + 8 + 5 )/6 = 6.17,
SD = ( 8 – 5 )/6 = 0.5, and Var = ((0.5) 2 = 0.25

Table Q2.6a PERT Statistics (Cable Installation Project)

< == (Estimated) ==> (Critical Path Activities)
Activity Likely Pes. Opt. EV SD Var EV Var.
A. 6 wks 8 5 6.17 0.5 0.25 6.17 0.25
B. 5 4 6 5.0 0.33 0.11
C. 12 15 10 12.17 0.83 0.69 12.17 0.69
D. 3 3 3 3 0 0
E. 6 7 4 5.83 0.5 0.25
F. 8 11 6 8.17 0.83 0.69 8.17 0.69
G. 4 4 3 3.83 0.167 0.028 3.83 0.028
(Critical Path) Total = 30.34 1.658

SD = (1.658) ½ = 1.29
Notations: EV = Expected Vlaue, SD = Standard Deviation, Var = Variance

Ans Q2.6a. EV = 30.34 Weeks.

Ans Q2.6b. Range of EV for 95% confidence level is found by 30.34 +/- 2 x SD Weeks.

Or 30.34 +/- 2 x 1.29 Î 27.76 and 32.92 weeks.

Ans Q2.6c. Duration of C is 12.17 weeks.

Ans Q2.6d. Standard deviation of C is 0.83.
Ans Q2.7 Range of project completion duration: 90 +/- 2x3 = 84 and 96 days.

Ans Q2.8 d. Work Breakdown Structure

Ans Q2.9 c. Identify team roles and responsibilities
Ans. Q2.10 a. Critical path is reduced.
Ans. Q2.11 b. Crashing the schedule
Ans. Q2.12 See answer in Glossary of Terms.

Module 3
Ans. Q3.1 b. Staffing Plan
Ans. Q3.2 c. Is able to repeat some of the things speaker said
Ans. Q3.3 d. Co-location
Ans. Q3.4 a. Design of experiments

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Appendix Page A.16

Module 4
Ans. Q4.1 d.
Ans. Q4.2 The project is considered done when all of the work is completed. EV is an indication of
the work that is completed, and BAC represents the total of all the work that is planned to be done.
Thus, when EV equals BAC, all of the work must have been done.

Ans. Q4.3 b.
Ans. Q4.4a. 60/50 = 1.2
Ans. Q4.4b. 140/130 = 1.077

Ans. Q4.4c. $215,000. The BAC for the project does not change from week to week. It will also be
the same as the sum of all EV earned each week.

Ans. Q4.4d. EAC is the estimated cost of the project that is expected at the end of the project based
on what we know about the cost performance today.
EAC = BAC/CPI = 215 / (140/160) = $ 245,714

Ans. Q4.5 A contingency budget is some amount of money set aside for known, identified risks. This
gives more control to the project and reduces the problem of known risks using budget that was set
aside for the work of the project, which may potentially cause cost overruns in the project.

Ans. Q4.6a.
36 weeks x 40 hour/week x $45 per hour x 1.3 fringe benefits x 1.5 overhead = $126,360.

In this case, the designer works 36 weeks full time as a team member and is paid for 36 weeks. The
productivity and utilization factors affect the amount of time paid in comparison to the hours of effort
required to complete the job. These factors do not come into play in this calculation.

Ans. 4.6b.
[60 hours / (0.70x0.85)] x $45 per hour x 1.3 fringe benefits x 1.5 overhead = $8,848.74

Here, the cost of 60 hours of effort must be adjusted for person’s utilization and productivity. People
of lower productivity takes proportionally longer time as they more mistakes, but usually cost less

Module 5 (No exercises)

Module 6 (No exercises)

P&P-T Answers: 1c, 2d, 3c, 4a, 5b, 6c, 7c, 8c, 9b, and 10d

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Self-Test Your PM Knowledge

Y Not N
e Su o
How well are you managing your projects? s re
To test, answer the following questions:

1. I have identified and assigned title to all projects under my responsibilities or the
ones I’m involved.
2. Budgets for all projects have been approved
3. All projects have clearly defined and agreed upon goals
4. Schedules for all projects have been established and published
5. Resources for all projects have been allocated
7. Personnel and vendors in the projects have the adequate skills and are trained to do
the job
8. All individuals in the team are aware of the project goals and are enthusiastic about
achieving the objectives
9. We have clear communication among the team and any potential conflicts are easily
resolved
10. Potential problems are often easily identified and corrective actions are
implemented before it gets out of hand.
11. I am always clear on the current progress and status of the project I am involved
with.
12. Other project participants are cooperative and respond to my requests related to the
project in time
13. When conflicts arise new agreements are reached quickly and with minimum
disruption of work
14. Project modifications are regularly communicated and are always understood by
the teams
15. My projects always meet specifications and are consistently completed within time
and budget

Scoring: 0 point for “No” or “I don’t know”, 1 point for “Yes”. 13 – 15

Congratulation. You are an excellent project manager (Find new material in this
seminar). 9 – 2 You are doing OK. But, there are define areas of weakness. Below 9
– you are perceptive and honest about the affairs in your company. This seminar will
definitely help you complete project in a timelier manner and with less anxiety.

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Appendix Page A.18

Example Project Charter (CEP Payment Project)

PURPOSE: The purpose of this Charter is to define the mission, authority, conduct of operations or responsibilities, and
membership for the CEP Payments project team.

SCOPE AUTHORITY: This Charter applies to all personnel assigned to, directing, or supporting the CEP Payments
project.

AUTHORITY: Ultimate authority lies with Dinah Smith, SDSD Application Technical Manager and Meg
Killgorecathcart, SDSD Information Systems Coordination Unit Manager.

PROJECT PURPOSE: To research alternative payment process solutions, recommend a solution, and ensure the
successful implementation of the solution that addresses the business objectives.

CONDUCT OF OPERATIONS:

1. The delivery of the solution will be planned and managed loosely as a project using the standard set of the Project
Management Institute’s project management phases – Initiating, Planning, Executing, Controlling, and Closing.

2. The project will identify, communicate, and obtain agreement of other affected groups or individuals who will be
needed to support the project’s solution in the project plan.

3. The solution will be delivered in three phases. Phase one will incorporate processing daily check runs and checks
printing at the DAS print plant. Phase two will incorporate removing SDSD CEP accounting from OMAP and
process accounting functions through SDSD. Phase three will incorporate direct deposit processing.

4. Provide informal status to and receive guidance from the sponsors as called for by the Project Manager or Sponsor.
Provide a weekly formal status to the SDSD Application Technical Manager.

5. The members of the core project team will track project time and submit to the SDSD Application Technical
Manager.

MEMBERSHIP:

a. Core Members are dedicated 100 percent of their time upon joining the project, excluding leave and required
overhead duties. The core members shall perform the majority of the project work. The proposed Core Members and
their primary roles are:

Natalie Rodgers Project Manager/Systems Analyst

Two (2) FTE Developers

b. CEP Payments Sponsor provides the executive leadership, priority, and commitment to the project, its goals and
objectives. The sponsor assures appropriate resources, funding, and the final decision on issues irresolvable by the
project. The CEP Payments Sponsor is:

Dan Kaplan Associate Director, SDSD

c. CEP Payments Business Partners participate as required providing insight, additional data, and verification of the
work of the project.

Preliminary estimated time commitment is 0-8 hours per week for length of project. The CEP Payments Business
Partners are:

Meg Killgorecathcart SDSD Information Systems Coordination Unit (ISCU) Manager

Joan Larson Provider and Consumer Services Unit (PCSU) Manager
Gene Sundet SDSD-LTCQ-CEP Program Manager
Wayne Breach DO-FSS-Accounting/SDSD Manager Why?
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d. Other Support is the individuals or groups that the project will interface with to provide the solution. Their roles are
varied and include supporting the development infrastructure and processes, providing technical assistance,
answering questions that may arise during the course of development regarding specific functionality and processes,
to assist in testing CEP Payment system enhancements and additions to insure the business objectives are met, and to
test data passed from the SDSD systems to their respective systems.

Preliminary estimated time commitment is 0-4 hours per week for length of project. The known contacts are:

Katherine Allen SDSD ISCU Business Systems Analyst

Tish Powers SDSD ISCU Business Systems Analyst
Dianne Finn OIS-ISE-SDSD Senior Systems Analyst
Jim Mlynczak DO-FSS-Accounting/AFS
Roberta Laux DO-FSS-Accounting/SDSD/DO/OMAP
Dave Hillier DO-FSS-Accounting/SDSD
Terrance Alley MHDDSD
AFS Application Team
OMAP Application Team
Computer Resource Management (CRM)
Data Resource Management (DRM)
DAS Print Plant
State Treasury

REVISION: This charter will be reviewed, communicated, and revised as deemed necessary by the Project Manager and
the SDSD ISCU Manager.

_____________________ _____________________
Name, Name,
Title Title
Hardcopy with signatures, dated mm/dd/yyyy filed in CEP Payment Project Notebook

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Appendix Page A.20

Example Project Plan

Oregon Department of Human Services, Office of Information Services
Initial Client Contact Information, Client Demographic Display
CCAP – Centralized Client Access Project
Integrated Project Plan

Planning

Determine work Determine work

activities, resources, controls to ensure
schedule, costs project performance
(Core work Plans) (Facilitating Plans)
Project Plan

Incorporate planning
outputs into one coherent
document
(Integrated Project Plan)

Executing

Purpose of the Document

The Integrated Project Plan is used to guide both project execution and project control. It is required to ensure that the
various elements of the project are properly coordinated. It is a document or collection of documents, which
communicate the project’s plan. The integrated plan should be expected to change over time, as more information
becomes available to the project.

The amount of planning performed should be commensurate with the scope of the project and the usefulness of the
information developed.

Document Change Activity

The following is a record of the changes that have occurred on this document from the time of its original approval
# Change Description Author Date
1 Misc. changes per input from Kristen Duus Debra 7/6/01
2 Misc. changes per input from Julie Mallord and Bryan Nealy Debra 7/10/01
3 Changes regarding assumptions, issues, and developers per project team meeting Debra 7/11/01
7/10/01
4 Add assumption regarding no updates during ICC Debra 7/16/01
5 Update plan with new implementation date Debra 8/21/01

Contents:
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Appendix Page A.21

1 Background ....................................................................................................................................... 21
1.1 Problem/Opportunity ................................................................................................................... 21
1.2 Context or Alignment .................................................................................................................. 21
1.3 Planning Inputs or References ..................................................................................................... 22
2 Scope ................................................................................................................................................. 22
2.1 Statement ..................................................................................................................................... 22
2.2 Objectives & Measurements ........................................................................................................ 22
2.3 Major Deliverable Milestones...................................................................................................... 22
2.4 Assumptions.................................................................................. Error! Bookmark not defined.
2.5 Issues............................................................................................................................................ 23
2.6 Completion Criteria ..................................................................................................................... 23
3 Work Plan .......................................................................................................................................... 23
3.1 Work Breakdown Structure (WBS) ............................................................................................. 23
3.2 Schedule ....................................................................................................................................... 24
3.3 Technical Feasibility and Recommendations............................................................................... 24
3.4 Budget Projection......................................................................................................................... 24
4 Organization ...................................................................................................................................... 25
Project Team Composition...................................................................................................................... 25
4.2 Internal Roles & Responsibilities ................................................................................................ 25
4.3 Other Group Roles & Responsibilities ......................................................................................... 27
5 Facilitating Controls .......................................................................................................................... 27
5.1 Risk Management Plan ................................................................................................................ 27
5.2 Change Management ................................................................................................................... 28
5.3 Project Document Standards, Approval, and Controls................................................................. 28
5.4 Communication Plan & Management .......................................................................................... 28
5.5 Status Reporting ........................................................................................................................... 28
5.6 Procurements & Contracts ........................................................................................................... 28
5.7 Quality Assurance ........................................................................................................................ 29
5.8 Time Tracking.............................................................................................................................. 29
5.9 Issue & Decision Management .................................................................................................... 29

1 Background
1.1 Problem/Opportunity
Initial Client Contact Information:

As DHS moves to an integrated approach to service delivery, and a “no wrong door” policy is pursued, it is critical that
the initial client information be captured only once, as close to the point of entry as possible, and then used by multiple
systems.

Currently, each specific program area captures client information individually. This requires the entry and storage of the
same information multiple times in multiple DHS systems.

Client Demographics Display

DHS workers need the ability to serve the client in an integrated fashion by having easy access to DHS client information.

Currently, they do not have easy access to this information, including information on the DHS Divisions from which the
client may be receiving services. This creates a hardship for workers who must look up client information on several
different systems, and who may not have the authority to look at some systems to gain this information.
1.2 Context or Alignment
These initiatives have been identified as IT projects that can be launched in the short term to support the DHS
reorganization effort.

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1.3 Planning Inputs or References

The primary inputs to this project are the DHS Reorganization Plan, the Initial Client Contact Information Executive
Summary and the Client Demographics Display Executive Summary. In addition, numerous Project Management
documents outlining and tracking the project will be stored on the DHS Pky-co server in the CCC directory using the
Project Management directory structure.

2 Scope
2.1 Statement
The scope of this project is to develop user-friendly, Graphical User Interfaces (GUI) to enter initial client information
and display basic client demographic and service level information.

The initial client contact information data collection will interface with the Client Information System (CI) through the
TRACS system.

The client demographics data will be pulled from CI and will only display information for Divisions and/or clients whose
information currently resides on this system. The information displayed will be read-only.

These GUIs will be developed as client-server applications using Powerbuilder development tools. They will be
developed for one pilot site only. After implementation at the pilot site, they will be evaluated for future potential release.

2.2 Objectives & Measurements

Objective-1

Provide an integrated, user-friendly tool to be used by staff and partners to gather basic client and service-level
information and display client demographics.

Measurement-1:
Upon completion of the project, staff and partners will be presented with GUIs that provide consistency of approach and
help to minimize time and number of questions asked.

Objective-2

Provide an “initial point of entry” and a client demographic display via DHS systems that have the potential to be
common to all clients.
Measurement-2:
Upon completion, a pilot site will have the use of a GUI “Initial point of Entry” and use of a GUI client demographic.
Both will be based on existing data.

Objective-3

Determine a schedule for other DHS applications to also access and utilize this same information.
Measurement-3
Deliverable will be an evaluation of the pilot site and a plan for a new project to address the long-term need for Initial
Client Contact Information and Client Demographics Display functions. The plan will include a proposed roll-out
schedule.

2.3 Major Deliverable Milestones

Milestone Description Planned Completion

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Business Analysis; Application and System Design September 1st, 2001

Completion of Development October 15th, 2001

Testing and Training November 1st, 2001

Implementation at Pilot Site November 1st, 2001

2.4 Assumptions

Any policy decisions that affect this project made after August 1, 2001 will not be included for consideration in the
project design.

The deliverable will be installed at one pilot site only by the November 1st delivery date. The pilot site will be selected by
the Steering Committee.

This project does not address ongoing support that will be required once the proposed solution has been implemented.
Instead, an evaluation of the pilot and a plan for a new project to address the long-term need for this functionality will be
prepared.

Confidentiality polices regarding ownership and access to data has not been established by the Business Entities. As a
result, no user security levels based upon user profiles will be included in the scope of this project. Users with
authorization to the system will have access to all data available in the system.

The Initial Client Contact Information program will add clients to the Client Index ONLY, there will be no updating of
existing information in the scope of this project.

2.5 Issues

Determine responsibility for user administration policies and processes. Information Technology will provide the tools
for administration but the persons selected to do it need to be determined.

2.6 Completion Criteria

This project will be considered complete when an application meeting the objectives and measurements has been installed
at one pilot site and a plan for future deployment and integration has been presented to and approved by the Steering
Committee.

3 Work Plan
3.1 Work Breakdown Structure (WBS)
The Work Breakdown Structure (WBS) dictionary is a grouping of project elements that organizes and defines the
total scope of the project: work not in the WBS is outside the scope of the project. This WBS dictionary is intended
to confirm a common understanding of project scope. Each descending level of the WBS dictionary represents an
increasingly detailed description of the work required to manage the project and deliver the customers request.

The WBS Dictionary is located in the appendix of this document due to the page orientation and size.

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Appendix Page A.24

3.2 Schedule

Phase Duration Assigned to

7/1 to 7/15 Debra, Bryan, Pete

Project Planning

7/1 to 8/24 Business Analysts, Bryan, Pete, a Powerbuilder

Requirements Analysis
resource & others as needed (CRM, DRM, etc.)

8/15 to 9/15 Bryan, Pete, and Tina (1/2 time)

Application and System Design

8/27 to 10/15 Bryan, Pete, and 4 contract developers

Development

10/1 to 10/31 Bryan, Pete, Users (for user acceptance testing)

Testing

10/21 to 11/1 (not identified yet)

Training

10/28 to 11/1 Bryan and Pete

Implementation (Pilot Site Only)

11/10 to 11/20 Steering Committee, Project Team, Sponsor

Project Evaluation

3.3 Technical Feasibility and Recommendations

Due to the tight timeframe for development and implementation, it is necessary to carefully manage the scope and choice
of the technical solutions for this project to be feasible.
There are three basic categories available for a technical solution for this project – 1) Traditional 3270 mainframe “green
screen”, 2) web based or 3) client server.

1) While the mainframe green screen solution would be the most expedient, cheapest and least risky, it would not be well
received by the users and therefore is being eliminated as a possibility.

2) The web-based solution is probably the best strategic choice, but neither the technical nor the organizational
infrastructure is in place to support this technology, so this solution must also be eliminated.

Recommendation:
3) This leaves us with a client server solution with some of the technical aspects definitely set, but with the flexibility for
several variations within our current operating environment:
The user interface will be coded in Powerbuilder.
The database will be either Sybase on UNIX or DB2 on the mainframe, or a combination of both.
The application will either reside on the desktop as a “fat client”, or will run on Met frame, or a combination of
both.

Further technical details will be determined when a better understanding of the business requirements has been acquired.
3.4 Budget Projection

Resource Initial Client Contact Client Demographics Total

Information Display

State Staff: IS Engineering 1560 Hours 1440 Hours 3000 Hours

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Where?

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Design

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State Staff: Business Analysts 3120 Hours 1560 Hours 4680 Hours

Contractors $170,000 $270,000 $440,000

Hardware/Software $0 $0 $0

Total $440,000

4 Organization
4.1 Project Team Composition

Policy and Practice

Team (Steering
Committee)

Kristen Duus Maureen Casterline

OIS Oversight Business Sponsor

Debra Herrli
Project Manager
(100%)

Bryan Nealy Tina Seshadri Pete Hale

System Technical Application
Architecture Team Resource(as Development Team
Lead (50%) needed) Lead (100%)

1 Contract Systems
4 Business 3 Contract
Integration/
Analysts Developers
Database
Developer

4.2 Internal Roles & Responsibilities

Steering Committee – Policy and Practice Team

The Policy and Practice Team is the steering committee for the project. They will be responsible for approval
of the Project Charter and Project Plan. All changes in scope and implications thereof must be approved by
the Steering Committee.

Members of the Policy and Practice Team are Maureen Casterline, Chair, Bill Fink, Shirley Iverson, Don
Probasco, Jeanette Toninato, Charlotte Hartwig, Debbie Bowers, and Cecile Bentley.

Business Sponsor Why?

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Where?

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Maureen Casterline, the Business Sponsor, will be responsible for providing the leadership, priority, and
commitment to the project from the Business perspective. Serves as liaison to the Business, communicating
the goals and objectives of the project and assures appropriate resourcing.

OIS Oversight

Kristen Duus, the OIS Oversight, will be responsible for providing the leadership, priority, and commitment to
the project from the perspective of OIS. Assures appropriate resourcing and interfaces with the Steering
Committee. Makes the final decision on escalated issues, with the approval of the Steering Committee.

Project Coordinator

Robert Green, the Project Coordinator, is responsible for coordinating all of the OIS reorganization initiatives.

Project Manager

Debra Herrli, the Project Manager, will be responsible for the project plan, organization, work execution, and
controls to ensure successful project performance relating to cost, schedule and quality. Delivers the agreed-
upon business goals and objectives on time, within budget, and with the expected level of quality. Works
closely with the sponsors to plan the project, resolve issues, and monitor team activities. Manages day to day
project activities and supervises project team.

System Architecture Team Lead

Brian Nealy, the System Architecture Team Lead, will be responsible for the system design and the leadership
of the Business Analysts and the Systems Integration/Database Developer during the Requirements, Design,
and Development phases. He provides knowledge of the TRACS and Client Index projects and uses that
knowledge to guide the integration of this project with TRACS.

Application Development Team Lead

Pete Hale, the Application Development Team Lead, will be responsible for assisting in system design and
leading the Powerbuilder developers during the Development, Testing, and Implementation phases of the
project. Pete has broad experience leading development staff and designing and developing systems, including
extensive experience developing Internet and Internet/interactive applications. He will apply his expertise in
developing seamless user-friendly systems to this project.

Technical Resource

Tina Seshadri, the Technical Resource, will be responsible for assisting with the system design, specifically in
regards to the Powerbuilder development environment. She will provide advice and oversight of the design so
that it is feasible within the Powerbuilder environment and that it maximizes the use of the technology.

Business Analysts

The Business Analysts will be responsible for gathering business requirements while keeping a vision of long-
term needs in mind, writing requirements documents, creating and executing test plans, and training. They will
also act as an ambassador and facilitator to the business for the project.

Note: The final testing and training does not require a Business Analyst, but if a Business Analyst is not used,
another business resource with appropriate testing and training skills would be required.

Developers

The project will need one Systems Integration/Database Developer to provide expertise on integration, one
COBOL programmer who can take the WEBM Find program and turn it into an Open Server program, Why?
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Optimize products

Where?

Manufacturing
Development
Design

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and two Powerbuilder Developers who will be responsible for programming the system to meet the design
specifications. All developers will be responsible for unit testing of their code and system testing.
4.3 Other Group Roles & Responsibilities

Networking and Desktop Services (NDS)

Responsible for providing network and desktop support, primarily during implementation planning and rollout.

Computer Resource Management (CRM)

Responsible for providing computer resource support, primarily during implementation planning and rollout.

Data Resource Management (DRM)

Responsible for providing data management support, primarily during implementation planning and rollout.

5 Facilitating Controls
5.1Risk Management Plan

Risk #1 – Aggressive Project Completion Target Date

Time frame for project completion is very tight. Possibility of missing targeted completion date is high.

Rating: High

Trigger: Slippage of any of the major milestones will be a signal that the risk may occur.

Mitigation Plan: Define scope of project tightly. Use proven technology. Manage expectations to match
what is feasible. Immediately raise a warning flag if any of the major milestones are missed.

Risk #2 – Business involvement has been low

The involvement of the business in defining the project objectives has been limited to a very small group of
people. Information regarding the project has not been widely disseminated. Support from the business is
weak. There is a perception, true or not, that this is an OIS project. If the business is responsible for judging
the success or failure of the project, without their buy-in the probability of success of the project is low.

Rating: High

Trigger: Lack of cooperation from the business entities during project design.

Mitigation Plan: Have the OIS Sponsor and Business Sponsor establish a communications (public relations)
campaign targeting the business entities to inform them of the project. Get numerous business representatives
involved in the project. Have Bobby Mink communicate to the business (all levels) about the purpose and
importance of these projects.

Risk #3 – Differing and Vague Objectives

The Project Manager has observed differing expectations from various individuals involved in creating the
Executive Summary. Although it has been communicated that the application being delivered is not a long-
term solution, some team members have indicated that there will be a roll-out of the developed solution, while
others have indicated that the solution will be installed at a pilot site only. In addition, although there is no
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Where?

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indication in the Executive Summary of selected technology, there is a clear direction toward certain
technology.

Rating: High

Trigger: Observation of disparate executive expectations.

Mitigation: Clearly define objectives, including technology decisions. Present the objectives in writing and
get full executive and business approval. Manage the project scope to the specific objectives. Get OIS
Sponsor and Business Sponsor to be responsible for communication and enforcement of objectives.

Risk #4 – Involvement of multiple OIS Groups

It will be necessary to obtain support from NDS, CRM, and DRM (possibly others) during the duration of the
project. Exact resources needed will not be known until the project is more specifically designed. Resources
in all units are tight; therefore it may be difficult to get skilled assistance at short notice, which may be
necessary.

Rating: Medium

Trigger: Resources from other units not available when needed.

Mitigation: Communicate with each unit that their resources may be needed at the beginning of the project.
Keep each contact informed as to the project progress. Alert units ahead as much as possible for needed
resources. Obtain OIS upper management support for allocation of resources on short notice if needed.
5.2Change Management
All changes will be logged and evaluated for impact to the scope, schedule, and cost of the project. OIS, the
Business Sponsor, and the Project Manager will recommend whether to incorporate the changes or hold changes
for a future release. Because the scope of this project must be tightly managed, the impact of changes will be
carefully considered, communicated, and approved by the Steering Committee or sponsors prior to approval and
incorporation.
5.3 Project Document Standards, Approval, and Controls
Document Standards – the project will use a consistent document style and layout for internal and external
products produced.

Changes to documents will be tracked via a change activity log located in the document.

All internal work products being drafted or revised will be in located on Pky-co server in directory CCC. No
project products will be stored on an individual’s hard drive.

An electronic project notebook or folder using the standard project management directory structure established
by the Project Management Office will organize the project documentation. A copy of the folder will produce
the project notebook. A hardcopy of document approvals will be included in the hardcopy notebook.

5.4 Communication Plan & Management

5.5 Status Reporting

The Steering Committee meets each Tuesday from 8:30 to 11:00AM at HSB. The Project Manager and OIS
Oversight person will report to them on a weekly or bi-weekly basis as needed.

In addition, the Project Manager and OIS Oversight person will report to the OIS Executive Management team
as requested.
5.6 Procurements & Contracts
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Where?

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A contract for procurement of outside Powerbuilder developers will be created for this project.
5.7 Quality Assurance
No formal QA will be conducted on this project.
5.8 Time Tracking
Time tracking will be informal. The Technical Team Lead will track time expended on the development effort.
Rough estimates of all other tasks will be tracked.
5.9 Issue & Decision Management
Issues raised formally or informally that impact the scope, schedule, cost, or quality of the project will be tracked
by the Project Manager on a formal issue-tracking document. Issues that the Project Manager can not resolve will go
to the sponsors and ultimately the Steering Committee for a final resolution or decision.

Appendix A – WBS Dictionary

The Work Breakdown Structure (WBS) is a grouping of project elements that organizes and defines the total scope of
the project: work not in the WBS is outside the scope of the project. This WBS dictionary is intended to confirm a
common understanding of project scope. Each descending level of the WBS dictionary represents an increasingly
detailed description of the work required to manage the project and deliver the selected PMO functions.

The Layout or description of the template is as follows:

First Column – Indicates the WBS grouping and numbering convention. The groupings are a hierarchy of Phase,
Activity, Task, and Milestone.

The numbering convention is standard engineering numbering.

The Phase level is represented by a single number (i.e. 1.).

The Activity level is represented by a 2 digit number (i.e. 1.1),

The Task level is represented by a 3 digit number (i.e. 1.1.1).

The Milestone is represented by a four digit number (1.1.1.1)

Second Column – Indicates the Phase, Activity, Task, or Milestone name and a brief description that describes the work
at each level. The activity level is the level for status and change control. The task and milestone level describe the
specific work assignment to be accomplished.

Third Column – Indicates, at the task and milestone levels only, the assigned deliverable name.

Fourth Column – Indicates, at the task level only, the anticipated “effort in hours” to fully accomplish the defined task.

Fifth Column – Indicates, at the task and milestone levels only, the other tasks that this task or milestone is critically
dependent on.

Sixth Column – Indicates, at the task and milestone levels only, the type of resource recommended, or most likely kills to
have to complete the assignment.

Appendix A – WBS Dictionary

The Work Breakdown Structure (WBS) is a grouping of project elements that organizes and defines the total scope of
the project: work not in the WBS is outside the scope of the project. This WBS dictionary is intended to Why?
Solve Problems
Optimize products

Where?

Manufacturing
Development
Design

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confirm a common understanding of project scope. Each descending level of the WBS dictionary represents an
increasingly detailed description of the work required to manage the project and deliver the selected PMO functions.

The Layout or description of the template is as follows:

First Column – Indicates the WBS grouping and numbering convention. The groupings are a hierarchy of Phase,
Activity, Task, and Milestone.

The numbering convention is standard engineering numbering.

The Phase level is represented by a single number (i.e. 1.).

The Activity level is represented by a 2 digit number (i.e. 1.1),

The Task level is represented by a 3 digit number (i.e. 1.1.1).

The Milestone is represented by a four digit number (1.1.1.1)

Second Column – Indicates the Phase, Activity, Task, or Milestone name and a brief description that describes the work
at each level. The activity level is the level for status and change control. The task and milestone level describe the
specific work assignment to be accomplished.

Third Column – Indicates, at the task and milestone levels only, the assigned deliverable name.

Fourth Column – Indicates, at the task level only, the anticipated “effort in hours” to fully accomplish the defined task.

Fifth Column – Indicates, at the task and milestone levels only, the other tasks that this task or milestone is critically
dependent on.

Sixth Column – Indicates, at the task and milestone levels only, the type of resource recommended or most likely to have
the skills to complete the assignment.

# WBS Dictionary Del Name & # Eff Critical Resp

Est ly
Depend
N/A
1. Phase Initiate – Obtaining agreement on the business requirement and charting the
project.
N/A
1.1. Activity Determine the Business and OIS Sponsors

Project Sponsors OIS

1.1.1. Task Acquire project sponsorship from both the Business and OIS. Sponsor
N/A
1.2. Activity Charter the Project – Obtain the commitment and agreement between the
sponsor and project team indicating how the project will be conducted and who
needs to be involved.
N/A
1.3. Activity Conceptualize the Project – Determine the type and size of project and rough
order magnitude (ROM) estimates.
N/A
2. Phase Plan – Creation and approval of the core work plan and facilitating plans,
which will guide project execution and control.
N/A
2.1. Activity Develop the Core Work Plan (CWP) – Develop the work scope, supporting
schedule, budget, and project organization that focuses and guides the project
work effort.
Resource PM
2.1.1. Task Create Implementation and Resource Planning Group – To include Planning Group
representatives from the Help Desk, DRM, CRM, and NDS.
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Where?

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# WBS Dictionary Del Name & # Eff Critical Resp

Est ly
Depend
Formal Database PM
2.1.2. Task Database Support – Acquire database administration support Support
Organization PM
2.1.3. Task Organize Project & Staff Acquisition – provide an overall framework to
describe the roles, responsibilities and membership of the Project. Obtain the
staff needed for the core team. Obtain management commitment regarding
utilization of core team.

Obtain Business Analysts - Obtain BAs needed from other groups in the
organization that will be cross-committed to the project. Obtain from
management commitment regarding utilization of the BAs.
N/A
2.2. Activity Develop the Facilitating Plans for Controls (FPC) – The plans for ongoing
work required to ensure that the project can anticipate possible problems,
solve, and make coordinated work plan adjustments.
FPC – Risk Id PM
2.2.1. Task Risk Management – Determine which risks are likely to affect the project, and Mgmt
evaluate potential risk outcomes and indicators, define plan to respond to key
risks indicators.
FPC – Stds, PM
2.2.2. Task Project Standards, Approval, And Document Controls – Define and setup Apvls, Cntls
the documentation standards, document storage locations, project notebook,
document approval and promotion process, and securities. Determine the
approval process for technical decisions.
FPC – Comm. PM
2.2.3. Task Communication Plan and Management – Outline a plan that identifies Plan & Mgmt
“who” needs “what” communications, in “what” media, “how” often and by
“whom”. Define how status will be reported, by whom, how often, and in what
formats and media.
FPC – Proc. & PM
2.2.4. Task Procurements & Contracting – Determine resources to procure and when, Cntrkg
document requirements and identify potential sources.
FPC – Iss. & PM
2.2.5. Task Change Management – Outline a simple change management process to Decision Mgmt
coordinate approved changes in the project plan.

Issue and Decision Management – Determine process for raising and

resolving project issues that impact the scope, schedule, cost or quality of the
project.
N/A
2.3. Activity Develop the Project Plan – Integrating the results of the other planning
activities into a coherent document to guide the project execution and control.
Project Plan PM
2.3.1. Task Plan Integration – Summarize and incorporate the outputs of the planning
activities into a single reference document – the Initial Client Contact
Information and Client Demographics Display Project Plan. The plan is the
reference document for work to be performed by all involved in the project and
must be made easily accessible to all in electronic format.
Presentation, & PM,
2.3.2. Task Plan Presentation and Review – Distribute, review and obtain approval of Document Sponsors
the project plan from the project directing authoritie(s) and managers who have Approval
staff assigned to the project.
Approved Project 0 PM,
2.3.2.1. Miles Plan and Schedule Approved by Steering Committee Plan Steering
Com.,
Sponsors
N/A
3. Phase Execute – Definition of the required work activities to define, construct, pilot,
and implement the product scope or selected system functions.
N/A
3.1. Activity Requirements Analysis (RA)

RA – System BN and
3.1.1. Task System Solution – Develop application and system architecture solution. Solution BAs
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# WBS Dictionary Del Name & # Eff Critical Resp

Est ly
Depend
RA – Data and BN and
3.1.2. Task Client Demographics – Determine client demographics screen specifications Screen BAs
– data and characteristics requirements
RA – Client Info BN and
3.1.3. Task ICCI – Define basic client information elements. Elements BAs
Policies BN and
3.1.4. Task Data Ownership and Security - Determine who is the owner of the data. BAs
Determine security and access policies.
Requirements BN and
3.1.5. Task RA Document - Compile Requirements Into Requirements Analysis Analysis BAs
Document
Approved 0 PM,
3.1.5.1. Miles Requirements Analysis Document Approval Requirements Sponsors
N/A
3.2. Activity Application Design – Create technical design of the system. (AD)

AD – BN
3.2.1. Task Develop application and system architecture solution Architecture
solution
AD – Client BN
3.2.2. Task Client Demographics Display – Design client demographics screen, data, and Demo Design
characteristics.
AD – ICCI BN
3.2.3. Task ICCI Design – Design Initial Client Contact screen, data, and characteristics. Design
AD – Integration BN
3.2.4. Task Integration Design – Design system integration components. Design
Approved PM,
3.2.4.1. Miles Application Design Document Approval System Design Sponsors
N/A
3.3. Activity Construct the System – Create the system according to the Application
Design
Programs per PH,
3.3.1. Task Technical System Development – Construct screens, tables, and system Design Develop
integration processes. ers
Unit tests PH,
3.3.2. Task System Unit Testing – Internally test system components. Develop
ers
Untested
3.3.2.1. Miles Application ready for Testing Application
N/A
3.4. Activity System Testing – Test integrated system, conduct user acceptance testing

Test Plan BN, PH,

3.4.1. Task Create test plan – Create system testing plan. Bas
Testing and BN, PH
3.4.2. Task Environment – Set up testing and training environment. Training
Environment
Technically BN, PH
3.4.3. Task Integrated systems test – Test screens, tables, and system integration process. tested system
Test all components of the system as an integrated unit.
User tested and BN, BAs
3.4.4. Task User Acceptance Testing – Conduct acceptance testing of system by users. accepted system
Tested System
3.4.4.1. Miles Tested System Ready for Implementation

3.5. Activity Training – Train users on new system

Training BN, Bas

3.5.1. Task Environment – Confirm training environment (should have been set up prior Environment
to testing.)
Training Plan BAs
3.5.2. Task User Training Strategy – Create training plan.

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Where?

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# WBS Dictionary Del Name & # Eff Critical Resp

Est ly
Depend
User Training BAs
3.5.3. Task User Training – Conduct user training.

Trained Users
3.5.3.1. Miles Users Have been Trained

N/A
3.6. Activity Implementation – Implement system at one pilot site

Impact Analysis BN, PM

3.6.1. Task Impact Analysis – Develop impact analysis of Implementation

Pilot Site BN, PM

3.6.2. Task Pilot Site Selection – Select Pilot Site.

Installed system BN, PH

3.6.3. Task System implementation – Install system at Selected Pilot Site. Deploy to
users. Support users during implementation phase.
Implemented
3.6.3.1. Miles System Installed and Operational at Pilot Site System
N/A
4. Phase Controls – Administer and manage work controls to ensure project
performance.
N/A
4.1. Activity Project Procedures and Controls –

FPC – Risk Id PM
4.1.1. Task Risk Management – Manage risks by responding to identified risk indicators and Mgmt
as they occur.
FPC – Chg PM
4.1.2. Task Change Management – Identify, plan, and conduct ongoing change control Mgmt
of the project. Ensure that the requirements, budget, and schedule milestones
remain in line with the current approved project plan or are changed officially
providing new requirements, budget, or schedule milestones.
FPC – Stds, PM
4.1.3. Task Project Standards, Approval, And Document Controls – Conduct Approvals, &
administration of approvals, project library, administrative filing, and Cntls
securities.
FPC – Comm. PM
4.1.4. Task Communication Management – Deliver communications or facilitate Plan & Mgmt
communication delivery and conduct ongoing administration of
communications
FPC – Status PM
4.1.5. Task Status Reporting –Conduct ongoing project status reporting of work Rptg
activities, budgets achievements and issues.
FPC – PM
4.1.6. Task Procurements & Contracting Management – obtain quotations, bids, offers, Procurements &
or proposals, choose from among potential vendors, administer the contract, Contracting
and close.

Obtain Contract Developers – Create contracts and obtain approval to hire

contract developers needed for the projects.
FPC PM
4.1.7. Task Quality Assurance – monitor and identify way to eliminate causes of
unsatisfactory quality performance.
FPC – Time PM, BN,
4.1.8. Task Time Tracking – administer the time tracking activities and team recording of Tracking PH
individual time
FPC – Issue and
4.1.9. Task Issue and Decision Management – Administer the issue and decision process. Decision Mgmt
N/A
5. Phase Close – Evaluate the projects achievement of scope, objectives, and
measurements. Identify the maintenance plan, turn-over to maintenance, and
release project resources.

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Why? Optimize products

Where?

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# WBS Dictionary Del Name & # Eff Critical Resp

Est ly
Depend
N/A
5.1. Activity Project Evaluation – Recognize the achievements and lessons learned of the
project, and determine readiness to close the project.
Deliverable for PM, BN,
5.1.1. Task Evaluate Pilot Implementation and Determine a schedule for other DHS Milestone #4 PH
applications to also access and utilize this same information - Evaluate the pilot
site and create a plan, including a schedule, for other DHS applications to
access and utilize the Initial Client Contact Information and Client
Demographics Display.
Project PM
5.1.2. Task Prepare a project evaluation – Review the project’s completion criteria, Evaluation &
scope, objectives, measurements, and lessons learned. Document and analyze Lessons Learned
the information and review with the sponsors. Obtain agreement from the
sponsors on readiness to proceed with project closure.
Project PM
5.1.3. Task Close out Project – Prepare for and celebrate project closure. Release Celebration
project resources. Closing
N/A 0
5.1.3.1. Miles Project successfully closed

5.1.4. Task

Sample Closing Letter

From: Smith, Robin R Sent: Monday, May 19, 2003 12:50 PM
To: Cc:

Subject: RE: GMAC Mortgage AIX Upgrade to FNETSD-May 17-18 CMWO: 7010406005

Thanks to all of you for successfully completing the GMAC Mortgage AIX Upgrade project this past weekend.
Once again you all proved that you are a skilled and supporting team of people.

Thanks again everyone for a great job.

Robin Smith, PMP

Project Manager, Solutions Consulting Application Services-FPM Application Delivery
MS 6266, 1800 Tower Drive, Troy MI 48098

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Where?

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Sample Project Description

The Shuttle Small Payloads Project (SSPP)

designs, develops, tests, integrates and flies
a group of small payload carrier systems for
the Space Shuttle. These carriers - the
Hitchhiker, Get Away Specials (GAS),
Space Experiment Module (SEM) support
payloads supplied by NASA, other US
government agencies, universities, high
schools, domestic commercial customers,
and foreign nationals and governments.
These carriers can support payloads that
range in size between 50 lbs (23 kg) and
4000 lbs (2270 kg).

But the
carriers are only one part of the SSPP. We have
an experienced and knowledgeable staff that will
work right along with you, every step of the
way, until your experiment is safely in space.

You build it. We launch it. You control it

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Why? Optimize products

Where?

Manufacturing
Development
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Space Flight Mission Station Programs

"NASA is deeply committed Skylab

to spreading the unique Designed for long duration missions,
knowledge that flows from Skylab program objectives were
its aeronautics and space twofold: To prove that humans could
live and work in space for extended
research..." periods, and to expand our knowledge
of solar astronomy well beyond
Earth-based observations.
Launch Programs
Shuttle-Mir
Phase 1 was a NASA program
Project Mercury encompassing 11 space shuttle flights
Initiated in 1958, completed in 1963, over a four-year period. It used
Project Mercury was the United existing assets - primarily U.S. shuttle
States' first man-in-space program. orbiters and the Russian Space Station
Mir - to build joint space experience
Project Gemini and start joint scientific research.
The second U.S. manned space
program was announced in January Project Apollo International Space
1962. Gemini involved 12 flights, Station
including two unmanned flight tests "I believe this nation should The most complex engineering and
of the equipment.
commit itself to achieving the goal, before construction project in the world is
taking place in space. 16 countries
this decade is out, of landing a man on the
Apollo-Soyuz and over 100,000 people are
The mission started with the Russian Moon and returning him safely to Earth. contributing to this monumental
Soyuz launch on July 15, 1975, No single space project in this period will achievement.
followed by the U.S. Apollo launch be more impressive to mankind or more
on the same day. Docking in space of
the two craft occurred on July 17, and important in the long-range exploration of
joint operations were conducted for space; and none History Reference
two full days. Both spacecraft landed will be so difficult or expensive
safely and on schedule.
to accomplish." NASA's History Office
Space Shuttle Since its inception in 1958, NASA
The Space Shuttle is a viable part of John F. Kennedy has accomplished many great
American History. Standing as one of Special Joint Session of Congress scientific and technological feats in
NASA's foremost projects, the shuttle air and space.
May 25, 1961
has accomplished many tasks that
have enhanced the quality of life on NASA Histories On-line
Earth. View archives of every shuttle On-line versions of more than 100
mission here. NASA history publications are
available at this Web site.

Walking to Olympus: An
EVA Chronology
An online PDF (3.5M) chronicle of
EVAs conducted since the dawn of
the space age.

Yesterday's Space Facts

Search the Human Space Flight Web's
archive of Space Facts.

Curator: Kim Dismukes | Responsible NASA Official: Kylie Moritz | Updated: 07/16/2002
Web Accessibility and Policy Notices

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Appendix Page A.37

PMP Exam Preparation Materials

This section contains materials on content and preparation for Project Management Professional
(PMP) certification examination and is included for discussion in the seminar extending beyond the
standard 4 days.

PMI & Project Management Professional (PMP®) Examination

Visit http://www.pmi.org
To be eligible for the PMP certification, you must first meet specific education and experience
requirements and agree to adhere to a code of professional conduct. The final step in becoming a
PMP is passing a multiple-choice examination designed to objectively assess and measure your
project management knowledge. This computer-based examination is administered globally.

In addition, those who have been granted the PMP credential must demonstrate an ongoing
professional commitment to the field of project management by satisfying PMI’s Continuing
Certification Requirements Program.

Steps for preparation:

1. Read books, practice PM, and attend seminar (35 hours or more) on PM
2. Visit http://www.pmi.org and get application forms and download sample questions and
review questions included in this section.
3. Read preparatory books like
• A Guide to the Project Management Body of Knowledge, Project Management
Institute, 2003 Edition.
• Preparing for the Project Management Professional (PMP) – Certification Exam
by Michael W. Newell, PMP, ENP, American Management association, 2002.
4. Take exam (allow 4 weeks or more for preparation)

Free PMP exam prep toolkit: http://www.cheetahlearning.com.

June 2009 – Fees (Current Information): http://www.pmi.org/Pages/default.aspx

Membership Status: PMI global community - more than 265,000 professionals in over 170
countries. http://www.pmi.org/CareerDevelopment/Pages/PMP_Expiration_Date_Change.aspx

PMI Membership Fee: membership for just $119 (US) plus a $10 (US) application fee for new
members.

PMP Certification Exam Fee: http://www.pmi.org/CareerDevelopment/Pages/AboutCredentialsPMP.aspx

$405 for members, $555 for non-members

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Appendix Page A.38

http://www.pmi.org/Pages/default.aspx (Nov. 2007)

Click here for PMP

Certification
Click here for
PMP Details

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Appendix Page A.39

The Project Management Professional (PMP®) Credential (Nov. 2007)

http://www.pmi.org/CareerDevelopment/Pages/Obtaining-Credential.aspx

Individuals who hold PMI’s PMP credential demonstrate a proficient level of project
management leadership skills, and as a result are able to command salaries that exceed
those of their non-credentialed counterparts.

To be eligible for a PMP credential, you must meet specific guidelines that objectively
measure experience, education and professional knowledge. You also must agree to adhere
to the PMI Code of Ethics and Professional Conduct and pass a rigorous multiple-choice
examination that assesses your abilities in project management.

Eligibility

• • Applicants must have 35 hours of specific project management education.

• • With a Bachelor’s Degree (or the global equivalent): Applicants must have a
minimum three years’ professional project management experience, during which
4,500 hours are spent leading and directing project tasks, up to eight years from the
time of application.

• • Without a Bachelor’s Degree (or the global equivalent): Applicants must have a
minimum five years’ professional project management experience, during which at
least 7,500 hours are spent leading and directing project tasks, up to eight years from
the time of application.

The PMP Credential Examination

This four-hour examination composed of 200 multiple-choice questions measures your ability
to apply knowledge, skills and techniques used in project management. The examination is
developed by groups of individuals from around the globe who hold the PMP credential and is
routinely reviewed and revised to ensure the best and consistently objective assessment.

Examination preparation tips:

1. • Review the PMP credential handbook, the PMP Examination Specification and the
PMP Sample Questions document (not for commercial use).

2. • Study the PMBOK® Guide—Third Edition and other texts that discuss the
management of communications, cost, human resources, integration, procurement,
quality, risk, scope and time, as well as a project manager's social and professional
responsibilities.

3. • Enroll in formal study courses.

You should download the PMP Credential handbook,

print, and review these two PDF files for complete
information about the content, preparation and learn
how to take the PMP exam. PMP Credential Handbook
contains detail description of the requirements for the
certification process.

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Appendix Page A.40

The Project Management Professional (PMP) certification, sponsored by the Project Management Institute
(PMI), is the most recognized and respected certification credential in the field of project management.

To achieve PMP certification, each candidate must satisfy all educational and experiential requirements
established by PMI, agree to adhere to a code of professional conduct, and must demonstrate an acceptable
and valid level of understanding and knowledge of project management. The PMP certification examination
tests this knowledge. PMP-certified professionals must also demonstrate ongoing professional commitment to
the project management field by satisfying PMI continuing certification requirements program. For more
information, check the certification page on the PMI Web site.

Tips on taking the PMP exam

The PMP certification examination is a computer-based exam that is offered at PMI locations in the United
States, Canada, and in other countries worldwide.

The exam is based on information from the entire project management body of knowledge. The “Guide to the
®
Project Management Body of Knowledge” (PMBOK ), which is published by PMI, provides an outline of the
topics covered.

The examination covers the five groups of project management processes and professional responsibility.
(See Figure below).

Breakdown of Questions by Process Group (New: 175 + 25 pre-test questions)

Approximate Number of Percentage
Process Group
Questions

Initiating 17 of 200 8.50

Planning 47 23.50

Executing 47 23.50

Controlling 46 23.00

Closing 14 7.00

Professional Responsibility 29 14.50

PMI PMP Exam Q&A: http://www.pmi.org/info/PDC_Cert_FAQ_Exam_Prep.asp

The 2005 PMP exam will contain 25 pretest questions. Although the overall number of questions will still remain at 200, 25 of these
questions will not count toward your overall score.

Questions on the PMP exam are grouped by project management processes:

The basic PMP exam is not industry specific. The PMI Certificate of Added Qualification (CAQ), which tests
your knowledge of a particular industry, can be added to certify your expertise in Information Technology
Project Management, Establishing a Project Management Office, and Project Management in the Automotive
Industry.

Tips for taking the PMP exam

Passing the PMP exam requires extensive preparation. Use the following tips and techniques as part of that
®
preparation, which should also include developing a comprehensive understanding of the PMBOK concepts
and terminology, practicing previous exam questions when possible, and attending a few project management-
training courses.

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Appendix Page A.41

Good site for info: Visit this site for detail PMP exam and how to prepare for it.
http://www.whizlabs.com/articles/pmp-certification-article.html

30 November 2005 announcement from PMI

http://allpm.com/modules.php?op=modload&name=PNphpBB2&file=viewtopic&t=547

PMI lowered the passing mark to 61%.

PMI Adjusts Passing Score for New PMP® Exam Originally Announced on November 30, 2005
http://www.rmcproject.com/about/20051130-pmp-exam-scoring-changes.aspx
RMC has been notified by the Project Management Institute that they have lowered the passing score
for the new PMP exam to 61% (106 correct out of 175 possible +25 Pretest questions). We have also
been informed that this new score will be retroactively applied to all examinations taken since
September 30th of 2005. Note that this change in passing score is a permanent act on behalf of PMI,
and will remain until the exam is changed in four to five years.

PMI® Adjusts the Passing Score for the PMP® Exam

http://www.cheetahlearning.com/newsletter/happenings3.htm
Cheetah Learning recently received official notice from PMI® that they have recalibrated the pass
score for the new PMP® exam, based on statistical analysis done on the over 800 exams taken since
they began giving the new exam September 30th, 2005. The passing score for the new exam has
now been changed from 81% to 61%. PMI® has applied the new passing score to all examinations
taken since September 30th, 2005, by candidates who sat for the new exam.

PROFESSIONAL DEVELOPMENT UNITS (PDUs)

PMP Certification is granted for a period of 3 years, during which you will need to register with PMI that you
have an on-going commitment to the project management profession and log up 60 Professional Development
Units (PDUs).

These are usually achieved through training courses accredited by PMI or by attending Chapter Meetings
and numerous other methods as outlined in the Continuing Certification requirements handbook (CCR).

PMP Exam Online Self Assessment Test - 75 Sample Questions -

http://www.vl-p.net/free-pmp-self-test/pmp-free-exam-test-questions.htm

General Observations & Recommendations:

1. If you have a bachelor level education and 5 or more years of experience, you are most
likely to enough project management experience to satisfy requirements for qualifying to
take exam.
2. Regardless of positions you worked, you probably have enough project experience. The
challenge, however, is to view your experience as projects and express them in written
format in line with project management practices.
3. You will require project management education (35 hours of seminar/training). This will
help you articulate your project experience.
4. The rest is up to how you prepare for the exam. A preparatory text with questions and
answers will be of help. Allow about 2 hours/day for 2 months for preparation.

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Appendix Page A.42

PMP EXAM TYPE SAMPLE QUESTIONS

COMMUNICATION

1. Due to the cost overruns, Diane has sent a status report to the CEO of her company. Assuming he
reads it, she can expect him to remember what percent of the report?

A. 73% to 77%
B. 23% to 27%
C. -25% to 75%
D. 50%
Answer: A

2. Which of the following methods to resolve conflict is most likely to create a "wounded
warrior"?

A. Forcing
B. Compromising
C. Accommodation
D. Avoidance
Answer: D

3. "Decoder" is not synonymous with "receiver" because

A. the decoder interprets based on his or her frame of reference

B. the decoder is not a position on the team
C. the decoder evaluates, uses assumptions and self-interest while the receiver sees or hears
D. the decoder uses skills and credibility to challenge the encoder
E. a and c
Answer: E

4. People generally remember __ % of the spoken word in 1-2 days and __ % in 2 months.

A. +50, +75
B. +50, +25
C. +75, -25
D. +10, -5
Answer: B

5. In a simple, interactive, one-on-one communication process, there are the sender and receiver of
information. The sender is the one who transmits the signals, while the receiver ________ the signals.

A. accepts
B. mixes
C. rejects Why?
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Appendix Page A.43

D. interprets [PMBOK® ]
Answer: D

6. The communication process must have a medium to convey information between two or more
parties. The three common media are ________.

A. written, spoken, and signalized

B. visual, audio, and tactile
C. seeing, talking, and listening
D. seeing, listening, and touching
Answer: B

7. Communications between two individuals can be affected by either the attitude of either party or
an external source disrupting the flow of information. An example of a barrier between the parties
involved in verbal communications and an example of a disruptive influence could be ________.

A. a wall between desks and a difference in language skills

B. a third party injecting comments and a fourth party attempting to change the subject
C. an attitude of hostility by the receiver or sender and a ringing telephone nearby
D. a confrontation over schedules and a lack of a scheduling tool
Answer: C

8. Of the five basic approaches to conflict resolution that characterize an individual's human resource
management style, the one that produces a "win-lose" outcome whereby the project manager uses
his/her power to overrule the participant in the conflict is ________.

A. confrontation
B. compromise
C. smoothing
D. forcing
Answer: D

9. Management styles affect the confidence level given a project manager by subordinates, peers, and
superiors. When a project manager is judicial in his/her management style, s/he is ________ .

A. honest, sincere, able to motivate and to press for the best and fairest solution, and one who
generally goes "by the books"
B. marked by an eagerness to fight or be disagreeable over any given situation
C. encouraging subordinates to realize their full potential, cultivates team spirit, and lets
subordinates know that good work will be rewarded
D. one who exercises sound judgment in most areas of the project
Answer: D

10. Communications between individuals while talking may also involve nonverbal communications,
or body language. Body language is most commonly associated with ________.

A. twisting and shrugging

B. gestures and facial expressions
C. toe tapping and foot shuffling Why?
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Appendix Page A.44

D. dancing and waltzing

Answer: B

11. Communication, as the key to successfully implementing a project, is reflected in many forms
and styles. The communication medium/media used in the project can be a ________.

A. budget
B. schedule
C. configuration management plan
D. meeting agenda
E. all of the above
Answer: E

12. In negotiations, there are always ongoing communications in an attempt to reach a position that is
mutually agreeable to all parties. One means (facilitator) of communication during the negotiation
phase is to ________.

A. obtain written concurrence at the end of each session

B. be calm, poised, and patient
C. use surprise as required
D. not be afraid to say no
E. all of the above
Answer: E

13. Communication includes understanding the other person and reaching a consensus as to what was
said. The use of ________ is a means of giving feedback to the speaker by rephrasing the speaker's
words to ensure there is a level of understanding.

A. give-back
B. active listening
C. double talk
D. double speak
Answer: B

14. Communications between the project manager and a team member take many forms, but it would
not include a ________.

A. memorandum announcing a meeting of the team

B. letter of commendation to a team member
C. performance appraisal for a team member
D. newsletter article reviewing the project's progress
Answer: D

15. In face-to-face communications, individuals send two messages when they speak. The two
message aspects are content and command. The first contains that part of the message about which
two or more persons can agree, and the second contains ________.
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Appendix Page A.45

A. that portion that is intentionally meant to be misunderstood

B. that portion that imposes behavior and the relationship between the parties
C. inferences as to future messages to be sent
D. reinforcement of prior messages
Answer: B

16. Barriers to communication can be invisible to the casual observer but can often be greater
obstacles than physical barriers. However, barriers do not include ________.

A. semantic ordinates, or absolute words

B. differences in frames of reference
C. lack of credibility or trust
D. an overly technical approach to communicating
Answer: D

17. Team members may "filter" information to the project manager for several reasons. Filtering, a
selective reduction in the quantity and quality of information, is promoted through all of the
following except when the team member ________.

A. does not believe the information to be important

B. receives an adverse reaction when "bad news" is given
C. fails to understand the information in the context given
D. takes too long in obtaining the correct information
Answer: D

18. The factors of the structural environment can be manipulated (positively and negatively) to
improve or degrade the effective communications within a project team. Of the following factors, the
one that can be manipulated the most to change the level of communications is ________.

A. mobility opportunity
B. status
C. organizational climate
D. autonomy
Answer: C

19. Project managers must strive to improve communications within the project team as well as with
external elements. The project manager can improve communications by removing ________ of the
information.

A. delays, impediments, and barriers

B. filtering, distortion, and blockage
C. haste, waste, and redundancy
D. pushing, pulling, and putting aside
Answer: B

20. The most basic model for the communication process consists of three basic elements ________.
When these three elements are present, communication may result.

A. words, illustrations, and mathematics Why?

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Appendix Page A.46

B. people, transmission medium, and information processor

C. verbal, nonverbal, and physical
D. sender, receiver, and message
Answer: D

COST

001. The relationship between the budgeted actual cost, actual work completed and work planned
will determine the
A. Schedule estimate at completion
B. Cost estimate at completion
C. Cost Performance Index
D. Schedule Performance Index
Answer: A

002. All work packages are complete

A. at EAC time
B. when BAC is equal to EAC
C. when BCWP intersects BCWS
D. when schedule variance is zero
Answer: B

003. Earned value is

A. the base line plan

B. completed work value
C. cost/cost variance
D. percent over or under budget
Answer: B

004. You could tell Diane was worried about her project. Her folks had been working on the project
since Independence Day. Here it was already Halloween and they were just finishing up work that
was supposed to have been completed by Labor Day. "Oh dear", she confided to her friend, "Instead
of completing by Christmas, at this rate I expect we won't be done until

A. New Year's Day

B. St. Patrick's Day
C. Easter
D. the 4th of July
Answer: D

005. Diane was so concerned about her project that she woke up dreaming about it. She thought to
herself, "Well, our BCWP is 2, our ACWP is 4 and our BCWS is 6, so that means
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Appendix Page A.47

A. our productivity was less than planned

B. our cost estimate at completion is 6
C. our CPI and SPI are both positive
D. our cost variance is negative
E. a, c and d
Answer: E

006. The measurement which best shows the difference between actual work and actual costs is

A. Cost variance
B. Percent over or under
C. Schedule variance
D. CPI
Answer: A

007. Rework costs ____ times budgeted costs.

A. +75, -25
B. +25, -10
C. 25 to 50
D. 10 to 15
Answer: C

008. If part of a project's costs will be paid in future years, the best way to determine the value
of those costs in today's dollars is

A. estimated project payout

B. return on investment
C. net present value
D. discounted cash flow
Answer: D

009. If the ACWP exceeds the BCWP, the cost estimate at completion will

A. increase
B. decrease
C. depend on the BCWS
D. exceed the schedule estimate at completion
Answer: A

010. If the BCWS = $1,000,000, the BAC = $2,000,000, the ACWP = $1,500,000, the BCWP =
$500,000 and you're halfway through the project after two years, what is the cost estimate at
completion?
A. $2,000,000
B. $4,000,000
C. $6,000,000
D. $8,000,000
Answer: C
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Appendix Page A.48

011. Cost management requires a critical look at future expenditures and the controls exercised over
those expenditures. The three types of cost estimates through which project expenditures are made
are ________.

A. rough order of magnitude, guestimate, and actual

B. traditional, classical, and contemporary
C. order of magnitude, budget, and definitive
D. concept, budget, and design
Answer: C

012. The cost estimate with the most precise estimate (i.e., the smallest range of error) is the
________ estimate.

A. engineering
B. budget
C. concept
D. definitive
Answer: D

013. The cost estimate that has a range for error of minus 10 percent to plus 25 percent is the
________ estimate.

A. budget
B. definitive
C. parametric
D. analogy
Answer: A

014. There are usually two types of reserves in a project's budget. The ________ reserve is for cost
variances from the plan because of inaccurate estimates or pricing and costs overruns, while the
________ is to accommodate costs for project work that were not included in the plan through error
or oversight.

A. project; budget overrun allowance

B. engineering; management allowance
C. management; contingency allowance
D. management; mismanagement allowance
Answer: C

015. Feasibility studies are evaluations of both the technical and economic aspects of a potential
project. In the economic area, one would look at such items as interest rates, present worth factors,
capitalization costs, and ________.

A. human resource skills

B. depreciation costs
C. prospective projects managers
D. implementation of cost controls
Answer: B
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Appendix Page A.49

016. Project financing can be extremely complex and can come from a variety of sources. However,
________ is not a potential source of financing for a project.

A. borrowing money from a bank

B. selling stocks in the project or corporation
C. selling bonds on the project
D. selling lottery tickets on the project
Answer: D

017. Life cycle costing is a concept whereby all costs for a system are computed to determine the
total cost of ownership. Life cycle cost categories include ________.

A. purchase, repair, and operation

B. development, procurement, and operation/maintenance
C. procurement, lease, and disposal
D. procurement, operation, and disposal
Answer: B

018. The integration of cost and schedule to provide measures of the project's performance is the
earned value system, or contract performance measurement. The baseline for the earned value system
is depicted as a slight "S" curve because ________.

A. there are fewer costs at project initiation until the work force is fully staffed
B. there are workers who have not been paid, so the expense is not shown on the chart
C. there are more expenses to get a project started than are required on a normal operating basis
D. this is just a traditional method of plotting the costs and has no relationship to the actual
expenditures
Answer: C

019. The pricing of a project can be extremely complex in the development of valid cost estimates
and price quotes from vendors. The tool that facilitates the pricing of a project by a structured
decomposition of the total into individual elements of labor, material, and equipment is the
________.

A. project management plan

B. budget
C. work breakdown structure
D. configuration management plan
Answer: C

020. In estimating the cost of work, the best source of cost information can be obtained from the
________.
A. customer
B. historical records
C. senior engineers
D. top management
Answer: B
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Appendix Page A.50

PROCUREMENT

001. Which is not an element of procurement management?

A. Purchasing
B. Expediting
C. Acquisition
D. C and D
Answer: D

002. The purchasing cycle consists of all the following elements except?
A. Defined Need
B. Transmit Need
C. Inspection
D. Price & Terms
Answer: C

003. The cost of corrective action taken by the purchaser and chargeable to the supplier under the
terms of the contract is

A. Payment authorization
B. Bid cost considerations
C. Release payment
D. Back charge
Answer: D

004. __________ is a narrative description of the work to be accomplished or resource to be supplied.

A. Purchase order
B. Level of effort work
C. Scope of work
D. Contract stipulation
Answer: C

005. By which means is a contractor able to control costs overruns due to changing requirements?
A. Project Data review
B. Change order
C. Change Control
D. Contract negotiations
Answer: C

006. _________ is a written order directing the contractor to make changes according to the
provisions of the contract documents.
A. Change order/purchase order Amendment
B. Contract order Modifications.
C. Contractor claim
D. Owner Directive
Answer: A
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Appendix Page A.51

007. _________ defines when the work is ready for or is being used for the purpose intended and is
so certified.
A. Final Completion
B. Substantial Completion
C. Final Acceptance
D. Mechanical Completion
Answer: B

008. _________ is a request for interim stoppage of work due to non conformance, funding or
technical considerations

A. Bid Protest
B. Stop Work order
C. Notice to Proceed
D. Supplier Default Notice
Answer: B

009. The process that may be used by an unsuccessful supplier to seek remedy for a non award of
work is
A. Bid Protest
B. Stop Work Order
C. Back charge
D. Contract Dispute
Answer: A

010. The __________ specification describes, defines or specifies the goods/services to be supplied.
A. Performance
B. Functional
C. Technical
D. Bid
Answer: C

011. The Bid Evaluation process is characterized by all of the following activities except?
A. Evaluation of suppliers financial resources
B. Ability to comply with technical specifications,
C. Competitors' method of sourcing
D. Performance Record

Answer: C

012. Which is not a consideration in a make or buy decision?

A. Cost factors
B. Sales Volume
C. Existence of sufficient administration/technical personnel
D. Political and, social factors with the organization
Answer: B
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Appendix Page A.52

013. There are four methods of government procurement. Which is not one of these methods?
A. Assistance
B. Sealed Bidding
C. Competitive proposals
D. Acquisition
Answer: D

014. A purchasing operation does not contain this classification of work

A. Management
B. Buying
C. Follow up and expedition
D. Marketing
Answer: D

015. __________ is a register of suppliers invited to submit bids for goods/services as specified.
A. Procurement invitation
B. Bid List
C. Resource Identification
D. Supplier's Rankings
Answer: B

016. __________ is a formal invitation to submit a price for goods and/or services as specified.
A. Request for Quotation
B. Bid Response
C. Intention for Bid
D. Invitation for Bid
Answer: A

017. Which contract type should be used by the owner on a high risk project?
A. Cost Plus Percentage of Cost
B. Cost Plus Incentive Fee
C. Lump Sum
D. Fixed Price Plus Incentive Fee
Answer: C

018. Cost Reimbursable contracts are equivalent to

A. Progress Payment Contracts
B. Extra Work Order Contracts
C. Cost Plus Contracts
D. Fixed Price Contracts
Answer: C

019. Fixed price and incentive type contracts place responsibility for performance and financial risks
associated with delay or non performance on the

A. Contractor Why?
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B. Owner
C. Lending Institution
D. Project Manager
Answer: A

020. __________ is based on information gathered and analyzed about demand and supply. This
forecast provides a prediction of short and long term prices and the underlying reasons for those
trends.
A. Sales forecast
B. Consumer Price Index
C. Production forecast
D. Price forecast
Answer: D

QUALITY

1. A project manager is monitoring specific project results to determine if they comply with relevant
standards and eliminate causes of unsatisfactory results. This activity is a part of quality:

A. planning.
B. assurance.
C. work results.
D. control.

ANS: D

2. A project is in progress and the project manager is working with the quality assurance department
to improve stakeholders' confidence that the project will satisfy the quality standards. Before they
can begin this process, which of the following do they need to have?
A. Quality problems
B. Results of quality control measurements
C. Quality management plan
D. Quality audits

ANS: C

3. Which of the following is an example of the cost of conformance to quality?

A. Rework
B. Quality training
C. Scrap
D. Warranty costs

ANS: B

4. All of the following are outputs of quality planning EXCEPT?

A. Quality management plan
B. Quality improvement Why?
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C. Creation of checklists
D. Metrics

ANS: B

5. A project manager has access to a tremendous amount of historical information on projects and
wants to use this information to mathematically forecast the future outcome of projects. Which of the
following is the project manager MOST likely to use?
A. Benchmarking
B. Trend analysis
C. Variance analysis
D. Decision trees

ANS: B

6. Standard deviation is a measure of how:

A. far the estimate is from the average estimate.

B. far the measurement is from the mean.
C. correct the sample is.
D. much time remains in the project.

ANS: B

7. A project manager needs to determine how the manufacturing is going for the new micro satellites.
Each satellite takes about three days to manufacture and costs US $125,000. The inspection process
has been a source of concern. The satellites are so small that inspection would destroy them. Under
these circumstances, what should the project manager do?
A. Outsource the inspection to another firm with more expertise
B. Evaluate the attributes of the population
C. Inspect a sample of the satellites
D. Decrease the costs of quality

ANS: C

8. A project manager decides to change the paint color of his new hand-held computer to see if the
different color provides increased end-user satisfaction. In doing this, the project manager is
performing a:
A. fishbone analysis.
B. design of experiments.
C. benchmark.
D. statistical analysis.

ANS: B

9. A cause-and-effect diagram and an Ishikawa diagram are both:

A. flow charts.
B. fishbone diagrams.
C. control charts. Why?
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D. Pareto charts.

ANS: B

10. During project execution a project team member informs the project manager that based on her
observations, the project cannot meet the quality standards set for it. The project manager meets with
all parties concerned to analyze the situation. In which step of the quality management process is the
project manager involved here?
A. Quality analysis
B. Quality assurance
C. Quality control
D. Quality planning
ANS: B

11. A Pareto diagram helps the project manager:

A. focus on the most critical issues to improve quality.
B. focus on stimulating thinking.
C. explore a desired future outcome.
D. determine if a process is out of control.

ANS: A

12. Some organizations are now using 6-sigma for quality control. Which method is usually used?
A. 2-sigma
B. 3-sigma
C. 4-sigma
D. 5-sigma

ANS: B

13. During the completion of the project, a project manager wants to ensure that the quality of the end
product is acceptable. The BEST way to do this is by:
A. checking quality levels against the standards set in the quality plan.
B. identifying the quality standards you want the end product to meet.
C. performing cost/benefit analyses.
D. determining the cause of a problem using a fishbone diagram.

ANS: A

14. Warranty and inventory costs are going up causing the project manager to worry about the costs
of non-conformance. What is the BEST advice you can give the project manager?
A. Increase scrap
B. Increase rework
C. Perform a quality audit
D. Look for benchmarks

ANS: C

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15. During the execution of the project a new ISO version of standard 9000 is issued and the project
team is meeting with the quality department to determine how the standard will apply to the project.
This is part of which quality process?
A. Quality planning
B. Quality control
C. Quality analysis
D. Quality assurance

ANS: D

16. A project manager is working with quality professionals in the quality assurance phase of the
project. Which of the following activities is being performed?
A. Quality control
B. Determining if the right quality standards are being used
C. Determining what quality standards should be used
D. Evaluating quality against the standards

ANS: B

17. The line in the middle of a control chart is called the:

A. mean.
B. specification limit.
C. rule of seven.
D. upper and lower control limit.
ANS: A

18. Which statement BEST explains the phrase "quality is planned in, not inspected in."
A. It is more expensive to determine quality by inspection than by planning.
B. Quality activities occur during the planning phase of the project.
C. Quality is part of planning, not inspection.
D. Planning for quality is after the fact.
ANS: A

19. Management as a policy regularly evaluates project performance. This is done in order to ensure
quality product standards. This is an example of?
A. Quality planning
B. Quality assurance
C. Quality control
D. Quality management

ANS: B

20. All of the following are part of quality control EXCEPT?

A. Cost of quality
B. Inspection
C. Control charts
D. Flowcharting
ANS: A
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PROFESSIONAL RESPONSIBILITY

001. You have just found out that a major subcontractor for your project consistently delivers items
late. You decide that you have bigger problems to address, so you do nothing. What conflict
resolution mode are you using?
A. Ignoring
B. Compromise
C. Smoothing
D. Withdrawal

ANS: D

002. You are a new project manager for company B. You previously worked for company A that had
an extensive project management practice. Company B has its own procedures, but you are more
familiar with those from company A. You should:
A. use the practices from company A but include any forms from company B.
B. use the forms from company B and begin to instruct them on ways to upgrade their own.
C. talk about changes to the change control board of company B.
D. interact with others in an ethical way by sharing the good aspects of company A's procedures.

ANS: B

003. Payment for any decision made or encouraged by a foreign official with respect to whether a
company will be awarded business is BEST described as:
A. common practice.
B. a sunk cost.
C. a bribe.
D. a progress fee.

ANS: C

004. In the initiation phase of your project, it is apparent that factions within the client's company
have significantly different views on how the project should be structured and how the deliverables
should be defined. Which of the following is the BEST thing to do?

A. Ask the client when they will be in agreement on the project requirements
B. Work with leadership from each area to collaboratively engineer a mutually acceptably solution
C. Make sure the terms and conditions of the contract are clear
D. List the consequences of changes in the contract's requirements section

ANS: B

005. While testing the strength of concrete poured on your project, you discover that over 35% of the
concrete does not meet your company's quality standards. You feel certain the concrete will function
as it is, and you don't think the concrete needs to meet the quality level specified. What should you
do?
A. Change the quality standards to meet the level achieved
B. List in your reports that the concrete simply "meets our quality needs" Why?
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C. Ensure the remaining concrete meets the standard

D. Report the lesser quality level and try to find a solution

ANS: D

006. Another project manager in your company is having difficulty managing his project. You have
found that he has not used a project charter and that is probably the cause of the problem. How can
you help?
A. Provide him with a copy of an article about project charters
B. Work with his boss to get him a mentor
C. Develop a draft charter for his use
D. Talk to him about his project and offer help in creating a project charter

ANS: D

007. You are the project manager for a new international project, and your project team includes
people from four countries. Most of the team members have not worked on similar projects before,
but the project has strong support from senior management. What is the BEST thing to do to ensure
that cultural differences do not interfere with the project?
A. Spend a little more time creating the work breakdown structure and making sure it is complete
B. As the project manager, make sure you choose your words carefully whenever you communicate
C. Ask one person at each team meeting to describe something unique about their culture
D. Carefully encode all the project manager's communications

ANS: C

008. You are four months into a three year project when your project team makes significant
discoveries on your project. What is the BEST thing to do?
A. Make certain the discoveries are included in the project lessons learned
B. Make certain the discoveries are in the monthly status report
C. Make certain you mention them at the senior management meeting in two months
D. Make certain you tell the other project managers involved in this program at the weekly meeting

ANS: D

009. During a meeting with some of the project stakeholders, the project manager is asked to add
work to the project scope of work. The project manager had access to correspondence about the
project before the charter was signed and remembers that the project sponsors specifically denied the
scope of work mentioned by these stakeholders. The BEST thing for the project manager to do
would be to:
A. let the sponsors know of the stakeholders' request.
B. evaluate the impact of adding the scope of work.
C. tell the stakeholders the scope cannot be added.
D. add the work if there is time available in the project schedule.

ANS: C

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0010. You have just been assigned project manager for a new telecommunications project. There
appear to be many risks on this project, but no one has evaluated them to assess the range of possible
project outcomes. What needs to be done?

A. Risk identification
B. Risk quantification
C. Risk response planning
D. Risk monitoring and control

ANS: A

011. You are the project manager for a large project under contract with the government. The
contract for this two year, multi-million dollar project was signed six months ago. You were not
involved in contract negotiations or setting up procedures for managing changes, but now you are
swamped with changes from the sponsor and from people inside your organization. Who is normally
responsible for formally reviewing major changes to the project/contract?
A. The change control board
B. The contracting/legal department
C. The project manager
D. Senior management

ANS: A

012. While preparing your risk responses, you realize that you have not planned for unknown risk
events. You need to make adjustments to the project to compensate for unknown risk events. These
adjustments are based on your past project experience when unknown risk events occurred and
knocked the project off track. What should you do?
A. Apply a general contingency to try to compensate
B. Document the unknown risk items and calculate the expected monetary value based on probability
and impact that result from the occurrence
C. Determine the unknown risk events and the associated cost, then add the cost to the project budget
as reserves
D. Add a 10% contingency

ANS: A

013. There are over 30 stakeholders on your project. The project is being done in another country
with people from three countries as team members. Which of the following is the MOST important
thing to keep in mind?
A. The communication channels will be narrow.
B. Many competing needs and objectives must be satisfied.
C. There must be one sponsor from each country.
D. Conflicts of interest must be disclosed.

ANS: B

014. Which of the following is NOT a measure that determines whether a business practice used by
another country is an unfair business practice? Why?
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A. It hurts the right to physical movement.

B. It is a common practice in the other country.
C. It does not supply a decent wage for the country and the type of work.
D. It discriminates against women.

ANS: B

015. A company puts a new product into the marketplace without any reports of problems. However,
your internal research indicated that there is a possibility of two serious injuries per year and would
cost US $20,000,000 to fix. What should you do?

A. Make the modifications necessary in current products

B. Recall all existing product
C. Wait until an injury to verify the impact
D. Obtain insurance to cover the anticipated damages

ANS: B

016. You are approached by company A to produce certain software. During the middle of the
project a competitor of company A asks you to produce similar software. What should you do?
A. Do not do the new project since it is a conflict of interest
B. Do the project using some of the material created for company A
C. Do the project with all new work
D. Review the intellectual property clause for the first project to help determine the approach

ANS: D

017. You've been assigned to take over managing a project that should be half-complete according to
the schedule. You discover that the project is running far behind schedule, and that the project will
probably take double the time originally estimated by the previous project manager. However, upper
management has been told that the project is on schedule. What is the BEST course of action?
A. Try to restructure the schedule to meet the project deadline
B. Report your assessment to upper management
C. Turn the project back to the previous project manager
D. Move forward with the schedule as planned by the previous project manager and report at the first
missed milestone

ANS: B

018. What is the project manager's KEY role during negotiations?

A. Protect the relationship between buyer and seller
B. Negotiate a price under the seller's estimate
C. Ensure that all project risks are thoroughly delineated
D. Ensure that an effective communication plan is established

ANS: A

019. A major negotiation with a potential subcontractor is scheduled for tomorrow when you discover
there is a good chance the project will be canceled. What should you do? Why?
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A. Do not spend too much time preparing for the negotiations

B. Cut the negotiations short
C. Only negotiate major items
D. Postpone the negotiations

ANS: D

020. Payment for routine government action by a foreign official is:

A. a bribe.
B. allowed.
C. not payable upon violation of government law.
D. allowed only if they process the project schedule.

ANS: B

[Ref. Sample by CyberTech Solutions – http://cybertechsoln.s5.com/ ]

Process Interactions – The project Management Process Groups are related to each other by the
output they produce. Generally, output of one process is the input to the next or it is the deliverable of
the project.

Project Management Process Groups Interaction in a Project (PMBOK® 3rd Edition, 2004, page 80)

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Released: Dec. 2008 Why?

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A guide to the
Project Management Body of Knowledge
(PMBOK® 4th Edition, released Dec. 2008, 42 Major Tasks in NINE knowledge areas)

Integration Scope Time Cost

4.1 Develop Project Charter 5.1 Collect 6.1 Define Activities 7.1 Estimate Costs
4.2 Develop Project Management Requirement 6.2 Sequence Activities 7.2 Determine
Plan 5.2 Define Scope 6.3 Estimate Activity Budget
4.3 Direct and Manage Project 5.3 Create WBS Resource 7.3 Control Costs
Execution 5.4 Verify Scope 6.4 Estimate Activity
4.4 Monitor and Control Project 5.5 Control Scope Duration
Work 6.5 Develop Schedule
4.6 Perform Integrated Change 6.6 Control Schedule
Control
4.7 Close Project

Quality Human Resource Communication Risk Procurement

8.1 Plan 9.1Deevelop 10.1 Identify 11.1 Plan Risk 12.1 Plan
Quality Human Stakeholders Management Procurement
8.2 Perform Resource Plan 10.2 Plan 11.2 Identify Risks 12.2 Conduct
Quality 9.2 Acquire Communication 11.3 Perform Qualitative Procurements
Assurance Project Team 10.3 Distribute Risk Analysis 12.3 Administer
8.3 Perform 9.3 Develop Information 11.4 perform procurements
Quality Project Team 10.4 Manage Quantitative Risk 12.4 Close
Control 9.4 Manage Stakeholder Analysis Procurements
Project Team Expectations 11.5Plan Risk Responses
10.5 Report 11.6 Monitor & Control
Performance Risks

Plan-Do-Act Cycle (Defined by Walter A. Shewhart and modified by Edward Deming, ASQ Handbook, ASQ 1999)
depicts concept of interactions among Project Management Processes.

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Mapping of Project Management Processes to the Project Management Process Groups and the
Knowledge Areas (PMBOK® 4th Edition, 2008)

As a PMI member, you have the access to the current version of PMBOK® (2008, 4th Edition) from
www.PMI.org . In addition, you can also freely download a set of presentation slides, and over 400
samples Q&A from Nutek site: http://www.nutek-us.com/wp-pmp.html .
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1
Girded Paper for Break-Even-Chart and Other Graphs

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Practice Drawing Precedence Diagram

2a
Tips on drawing Precedence Diagram:

• Start first activity/box at left

• End activity at most right
• Place other activities as appropriate
• Start and End activities always have the same early and late START
FINISH dates

Project: Oil Change at Jiffy Lube

S: Drive into garage (1 min)

A: Drain oil (7 min, first mechanic in the pit)
B: Change filter (3min, first mechanic in the pit)
C: Fill Engine oil (2 min, first mechanic in the pit)
D: Check Air Filter & PCV valve (second technician, 4 min, and finish before F starts)
E: Check Tire pressure (third technician, 3 min, finish before G starts)
F: Start engine and check oil (1 min, first mechanic in the pit)
G: Pay and drive out (2 min)

Draw the Precedence Diagram by placing the activities properly and connecting them with
precedence relationships (Arrows).

A: Drain B: Change C: Fill F: Start E

D: Check

E: Check T

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Precedence Diagram – I. Repaint Garage Floor 2b

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Precedence Diagram – II. Grocery Shopping and Prescription Drug Pick Up 2c

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Practice Forward & Backward Pass (Precedence Diagram – Oil Change at Jiffy Lube)
3a

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Family Vehicle Purchase Project

4a
Determine activities in the CRITICAL PATH analysis: Based on the tasks and duration for this project, PRECEDENCE
DIAGRAMS and PRECEDENCE TABLE are shown below. (Assume that the project starts on Monday Jan. 9, 2006)

Precedence Data with Floats - Family Vehicle Purchase Project

Activity Description Duration Predecessors ES EF LS LF Float
(days)
A0: Decide to Purchase 20
Vehicle
A1: Select Vehicle Type 12

A2: Visit Dealers 8

A3: Decide to Purchasing 5

A4: Pick up Vehicle 1

A5: Receive Vehicle Title 12

B1: Call for Insurance 1

B2: Drop Insurance for 1

Old Car

C1:Clean Old Car 1

C2: Place Ad for Sale 1

C3: Show and Sell Old 20

Car
Note: ES = Early Start, EF = early Finish, LS = Late Start, LF = Late Finish, Float = (Late Start – Early Start)

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4b

Completed (forward Pass)

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Practice Backward Pass (Precedence Diagram – Vehicle Purchase Project) 4c

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4d

Completed (Forward Pass)

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Practice Forward & Backward Pass (Precedence Diagram – Door Replacement Project) 5a

Practice Forward & Backward Passess (Precedence Diagram – Vehicle Purchase Project)
6

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5b

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Practice Forward Pass (Precedence Diagram – Deck Building Project)

6a

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6b

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Precedence Data with Floats (Proj: _______________________________________ )

Activity Description Duration Predecessors ES EF LS LF Float

(days/other)

Note: ES = Early Start, EF = early Finish, LS = Late Start, LF = Late Finish, Float = (Late Start – Early Start)
Activities in CRITICAL PATH:

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PERT Statistics (Proj: ________________________________________________ )

Activity Description ML Pess. Opt. EV STD VAR EV-CP VAR-CP

Note: ES = Early Start, EF = early Finish, LS = Late Start, LF = Late Finish, Float = (Late Start – Early Start)

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9
Pareto Chart (Project/Exercise:__________________________________________)
100

90

C
u
80 m

u
l
70 a
t
i
v
P 60 e

e
r P
f e
o 50 r
r c
m e
a n
n 40
t
c a
e g
e
30

20

10

Data Type

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10

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Appendix Page A.82

Class Project Report Preparation and Presentation Guidelines

a. Prepare a summary report of ONE page. Include additional pages when needed
b. Make copies/(or PDF) for all attendees + instructor
c. Be prepared to present your group project to the class (with report or visual aides)

Report Content:
Page 1 (include answers to items 1 – 9 below in this cover page)
1. PROJECT TITILE
2. Project participants (name and contact email and/or phone number)
3. Course title, location, instructor’s name, and date.
4. PROJECT DESCRIPTION (Problem statement in 2 – 4 connected sentences)
5. Project Objectives (at least two bulleted description, SMART)
6. List all ACTIVITIES in the CRITICAL PATH and their durations.
7. Indicate the FINISH TIME for the last activity in the project.
8. State the PROJECT COMPLETION TIME with 95% confidence level.
9. Identify the activity in the critical path that has the longest duration and establish the
completion time with 99% confidence level.

Page 2 and more

10. WBS for the project with durations

11. PDM showing FORWARD and BACKWARD passes.
12. PRECEDENCETABLE with FLOATS
13. Additional descriptions such as: VISION, MISSION, PURPOSE, BENEFITS,
ASSUMPTIONS, planned DELIVERABLES, HR, RISKS, PROCUREMENT,
COMMUNICATIONS, etc.

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A. Notes: (Blank Page)

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Appendix Page A.84

Program Evaluations
Program Title_____________________________________ ____________________________________________
Program completion date

Instructor ____________________________ Training Location/host.____________________________________

We appreciate your comments and suggestions. Please take a moment to let us know how we can improve and serve you better.
(Please use the following numbers for evaluation purposes).

[6] Excellent [5] Very Good [4] Satisfactory [3] Poor [2] Unsatisfactory [1] Needs Improvement

1. Overall Reaction to Program: 6 5 4 3 2 1 (Circle one number)

Comments: ______________________________________________________________________________________

_______________________________________________________________________________________________

2. Reaction to Instructor: 6 5 4 3 2 1 (Circle one number)

Comments: ______________________________________________________________________________________

_______________________________________________________________________________________________

3. What should be added and/or deleted to improve this program? (Please be specific)

_______________________________________________________________________________________________

4. What portions of this program do you feel will be most helpful at your work? How?

_______________________________________________________________________________________________

___________________________________________________________________________________________

5. Do you feel the training provided you enough understanding of the technique for you to be able to start applying it to your
own projects if opportunities were available?
[ ] Yes [ ] No [ ] May be

6. Would you consider/recommend us for training at your facility? [ ] yes [ ] No [ ] May be

Who should we contact for training at your facility __________________________ Ph: ___________________

7. Would you recommend that others attend this seminar? [ ]YES [ ]NO

8. Portion of class sessions you attended [ ] 100% [ ] Over 90% [ ] over 75% [ ] Over 50%

9. Percent of class problems and assignment you completed and/or took active part: [ ] 100% [ ] Over 80% [ ] 50%

(Optional)
Your Name_______________________________ Your Ph#/ & E-mail:__________________________________
THANK YOU for taking the time to complete this evaluation.

Solve Problems
Why? Optimize products

Where?

Manufacturing
Development
Design

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Appendix Page A.85

Notes: (Blank Page)

Solve Problems
Why? Optimize products

Where?

Manufacturing
Development
Design

Nutek, Inc. www.Nutek-us.com Project Management – Principles and Practices Version 1001
Appendix Page A.86

Pre and Post Test Questions

(Please write your answers in right two columns)

Questions Answers Pre- Post-

1. a. Product Description
A project manager is employed by an IT b. Work Breakdown Structure
c. Project Charter
company for developing a new application d. Project Plan
software package. One of the first things
he/she must do for the project is to write a:
2. a. Project Manager
A manger that manages a group of related b. Senior Project Manager
c. Program Coordinator
projects is called a: d. Program Manager
3. a. The target Schedule
The original schedule for a project or a b. The working Schedule
c. The Baseline Schedule
work package, plus or minus approved d. The Performance Schedule
changes, is called:
4. a. Monte Carlo Analysis
Which of the following is known as a b. GERT Analysis
c. PERT analysis
simulation technique? d. Critical Path Method (CPM)
5. a. Pay for scope increases
The main purpose for contingency budget b. Reduce probability of cost
overruns
is to: c. Minimize scope changes
d. Maintain project cost
6. a. Better project orientation
The primary advantage of the functional b. Easy team formation
c. Stable organization structure
type of organization is: d. Well defined point of contact

7. a. Offset missing schedule objective

The fund set aside under management b. Cover for missing cost objectives
c. Offset missing cost and schedule
reserve is to: objectives
d. Avoid unknown risks
8. a. The purchasing manager
In view of quality leaders Deming and b. Project manager
c. Upper management
Juran, quality problems in production d. Team members
floors are due to faults controlled by:
9. a. XYZ
The Deming cycle is generally denoted b. PDCA
c. TQM
by: d. ISO
10. a. Crawford Slip
Identify the group activity that allows b. Nominal Group
c. Brainstorming
participants to be anonymous. d. Delphi Technique

Solve Problems
Why? Optimize products

Where?

Manufacturing
Development
Design

Nutek, Inc. www.Nutek-us.com Project Management – Principles and Practices Version 1001
Appendix Page A.87

Solve Problems
Why? Optimize products

Where?

Manufacturing
Development
Design

Nutek, Inc. www.Nutek-us.com Project Management – Principles and Practices Version 1001
Appendix Page A.88

Participant’s Experience & Expectation Survey

(Please take a few minutes and complete this page before the start of the session)

Your Name ____________________________________________________________

(First) (Last)

1. Name a recent work-related project you were a team member/leader or project manager.

Project Title: ___________________________________________________________

How long __________________________ Start Date __________ End Date ________

2. Name a personal/family project you completed recently.

Project Title: ___________________________________________________________

How long __________________________ Start Date __________ End Date ________

3. How many years of school/college/university education do you have? Ans. _____ Years.

Please indicate your reasons for attending this seminar (Check all correct answers):

[ ] Learn to apply PM in projects at work

[ ] Refresh PM application knowledge

[ ] Audit course for evaluation purposes

[ ] I have immediate PM application needs (describe if you wish)

[ ] I was asked to attend this class by my management

[ ] Not sure why I’m here

[ ] Other ______________________________________________________

Solve Problems
Why? Optimize products

Where?

Manufacturing
Development
Design

Nutek, Inc. www.Nutek-us.com Project Management – Principles and Practices Version 1001