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GAF PMP Prep Participant Manual

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PMP® PREPARATION

A blended approach to successfully passing the PMP® Exam

For Burckhardt Compression

Sept./Oct. 2021

BY: GAF SWISS MANAGEMENT TRAINING

©2021 Max Langosco PMP®


Table of Contents

Focus on Value and on the Business ....................................................................................................... 3

Life Cycles ............................................................................................................................................ 4

Business Value .................................................................................................................................... 6

Economic Project Selection Methods ............................................................................................. 8

Building the Team ................................................................................................................................. 10

Stakeholder Management ................................................................................................................ 11

Resource Management ..................................................................................................................... 17

From Kick-Off to Closing ....................................................................................................................... 24

PMBOK® Overview ............................................................................................................................ 25

PMBOK ® Process Summary Table: ............................................................................................... 28

The Competing Constraints: ......................................................................................................... 29

Managing the Project Integration ..................................................................................................... 30

Choosing the right Methodology ...................................................................................................... 39

Planning Scope, Schedule and Cost .................................................................................................. 44

Planning Scope .............................................................................................................................. 44

Planning Schedule ......................................................................................................................... 56

Schedule Compression Methods .................................................................................................. 64

Planning Cost ................................................................................................................................ 66

Running the Show ................................................................................................................................. 70

Risk management .............................................................................................................................. 70

Quality Management ......................................................................................................................... 80

Procurement Management ............................................................................................................... 95

Keeping it all in line ............................................................................................................................. 110

Monitoring and Controlling ............................................................................................................. 110

Earned Value Management ............................................................................................................. 117

Managing Conflict ........................................................................................................................... 132

Managing Communications ............................................................................................................. 136

The Communication Management Plan ...................................................................................... 137

Managing Change ............................................................................................................................ 140

Afterword: In closing ........................................................................................................................... 143

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 1


Welcome Note

Welcome to this preparation course for your PMP® Certification. Contributing to your success is our

aim and our goal.

This material is meant to support your step-by-step preparation to make it as smooth as possible. This

is however an important certification, the amount of effort to be invested is therefore very

relevant. Preparing for the PMP® exam is challenging, demanding and will need commitment

both on your part and on part of your management. For this reason, we highly recommend

following these basic preparatory ground rules to maximize the likelihood of your success.

• Participation to all the sessions is mandatory for receiving the 35-contact hour (these

are necessary to apply for the PMP® exam).

• In addition to the time spent in the seminar sessions, you will need to add about 60 to

100 hours of self-study. Would your manager agree for you to take some hours per week

from your worktime? Try asking!

• Pre-reading the relevant chapters of the Workbook before class is highly recommended,

and enables a better focus in class on the more challenging aspects of the PMI®

methodology,

• The exam itself should be taken as soon as possible after the last session. If studying

diligently during the preparation period, knowledge will peak directly after the class.

• The exam simulator should be used regularly for preparation. Just a few questions at the

beginning of your preparation, and then progressively more. Towards the end of the

preparation all work should be done through the question simulator while the texts

should be used as reference.

• Towards the end of the preparation, you should run at least two full exams on the

simulator (these are beyond the smaller “pulse check” tests).

We wish you success! Of course, you may count on your trainer to have your back and to help you

with any questions you may have. You may reach out to your trainer via email or other dedicated

channel we have set up for this specific purpose!

All the best!

Max Langosco, MSC PMP

PS.:

Updates and corrections of this material can be found at: www.crowrider.com/PMP-errata

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 2


Focus on Value and on the Business

Focus on Value and on the Business

PMP Preparation

Focus on Value and on the Business

1. Life Cycles

2. Business Value

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Life Cycles

Life Cycle

• Product Life Cycle: A series of phases that

represent the evolution of a product, from

concept through delivery, growth, maturity, and

to retirement.

• Project Life Cycle: The series of phases that a

project passes through from its start to its

completion.

The definitions are taken from the PMBOK Glossary

Product and Project Life cycles

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Ability to

change /

uncertainty

Progress of

effort, cost /

knowledge

Initiation Planning Execution Closing

The Project Life Cycle (PLC)

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Business Value

Business Value

• Business Value: The net quantifiable benefit

derived from a business endeavor that may be

tangible, intangible, or both.

• Business Case: A value proposition for a

proposed project that may include financial and

nonfinancial benefits.

The definitions are taken from the PMBOK Glossary

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A business case should

contain key business

information to justify the

project such as:

Why should we be doing the project?

The alternative business options which were considered,

The Business

Case

Cost Benefit Analysis

a Rough Order of Magnitude estimate of the Project (and

operational) costs;

Project timescales

Major risks and constraints

Key Stakeholders

A business case is compiled in the early Business Analysis phase when define alternative

concepts to meeting the business/customer need. It describes the information necessary to

determine whether the project is worth the investment.

It may be created in response to a:

• Market demand,

• Organizational need,

• Customer request,

• Technological advance,

• Legal requirement,

• Ecological impacts, or

• Social need.

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 7


Economic Project Selection Methods

What’s a

Break-even

Analysis?

Payback Period

Payback Period

Pay Back

Period

Pay Back

Period

NOW Period 1 Period 2 Period 3 Period 4 Period 5 Period 6

NOW Period 1 Period 2 Period 3 Period 4 Period 5 Period 6

Net Cash Flow -500 100 50 200 150 100 200

Net Cash Flow -500 100 50 200 150 100 200

Cumulative: 100 150 350 500 600 800

Cumulative: 100 150 350 500 600 800

In period 4, the cumulative net cash flow reaches the value invested up-front (500);

In period 4, the cumulative net cash flow reaches the value invested up-front (500);

Therefore, the Payback Period = 4 years

Therefore, the Payback Period = 4 years

This value does NOT take the time value of money in consideration.

This value does NOT take the time value of money in consideration.

Net Present

Value

NOW Period 1 Period 2 Period 3 Period 4 Period 5 Period 6

Net Cash Flow -500 100 50 200 150 100 200

Present Value 90,91 41,32 150,26 102,45 62,09 112,89

Net Present

Value (P6)

59,93

(example is is using a discount rate i i of of 10%)

PV = FV / (1+i) p

NPV is the sum of all PV vs. the initial investment.

NPV(n) = PV(1) + PV(2) + ...PV(n) – (Initial Inv.)

When i i is is chosen as as to to create NPV = 0, 0, i i is is the Internal Rate of of Return (IRR)

Net Present Value

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Projects often include elements of their product or process which

are subject to legal and/or regulatory constraints. Examples of

such requirements:

• privacy laws,

• handling of sensitive information,

• technical and/or safety related, and many more.

Compliance

Requirements

These compliance related requirements must be identified,

tracked, and managed throughout the project.

Common Compliance Categories are:

• Environmental Risk

• Workplace Health and Safety

• Corrupt Practices

• Social Responsibility

• Quality

• Process Risks

Types of compliance categories vary based on industry and solution scope. The appropriate

categories will vary for each project based on the unique legal and regulatory exposure.

Threats to compliance, or compliance related risks may be:

• Identification of new vulnerabilities.

• Changes in legal or regulatory requirements.

• Errors in testing and validation to confirm compliance.

• Errors or bugs in deliverables.

• Lack of awareness of compliance requirements.

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 9


Building the Team

Building the Team

PMP® Preparation

Building the Team

1. Stakeholder Management

2. Resource Management

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Stakeholder Management

Stakeholder

Management

• Stakeholder: an individual, group, or

organization that may affect, be affected by, or

perceive itself to be affected by a decision,

activity, or outcome of a project, programs, or

portfolio.

The definitions are taken from the PMBOK

Glossary

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 11


Steps of Stakeholder Analysis

1. “Identify all

potential

stakeholders”

2. “Analize the

potential

impact or

support each

stakeholder

could

generate”

3. “Assess how

key

stakeholders

are likely to

react or

respond in

various

situation.”

HINT:

• Be generous! Be inclusive! Most changes during execution

come from stakeholders initially excluded.

• Once you have them all... prioritize, prioritize, prioritize!

Step 1: Identify potential stakeholders and associated information (e.g., role, department,

interests, knowledge level, expectations, influence.

Step 2: Identify potential impact or support stakeholders could generate and classify them to

help define an approach strategy.

Step 3: Assess potential stakeholder reactions to use in developing a plan for influencing

them and eliciting their support.

The information needs of the various stakeholders should be analyzed to develop a

methodical and logical view of their information needs and sources to meet those needs.

The analysis should consider methods and technologies suited to the project that will

provide the information needed. Care should be taken to avoid wasting resources on

unnecessary information.

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The

Power/Interest

Grid:

POWER: the potential to create an impact,

INTEREST: the likelihood that the stakeholder will use their power (may be positive or

negative).

• Identifying stakeholders tends to start as the project charter is being developed.

• List of identified stakeholders should be reviewed and modified as changes occur

throughout the project.

• The project plans that are developed should describe stakeholders and the planned

engagement model.

• As the project progresses, documents such as change logs, issue logs, or requirement

documents can reveal additional stakeholders.

• The stakeholder list may be affected by organizational environment factors.

• Referring to stakeholder lists from previous projects might be useful.

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 13


The Salience

Model:

• Mitchell, R., Agle, B.,

Wood, D: Toward a Theory

of Stakeholder

Identification and Salience:

Defining The Principle of

Who and What Really

Counts, Academy of

Management Review 1997,

Vol. 22, No. 4, pp.853-886.

1 - Dormant Stakeholder

2 - Discretionary Stakeholder

3 - Demanding Stakeholder

4 - Dominant Stakeholder

5 - Dangerous Stakeholder

6 - Dependent Stakeholder

7 - Definitive Stakeholder

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The Stakeholder Management Plan describes:

how stakeholders will be managed,

What strategies will be adopted in order to increase the

chances of project success,

How new stakeholders will be identified,

An actionable plan to interact with project success.

Stakeholder Unaware Resistant Neutral Supportive Leading

Stakeholder 1 C D

Stakeholder 2 C D

Stakeholder 3

D C

• C: C: Current attitude

• D: D: Desired attitude

Stakeholder Engagement Assessment Matrix

Social Styles of Stakeholders

Task-Directed Responsiveness

ANALYTICAL

DRIVER

Ask-Directed

Assertiveness

Tell-Directed

Assertiveness

AMIABLE

EXPRESSIVE

People-Directed Responsiveness

Adapted Adapted from from The The Social Social Styles Styles Handbook Handbook by by Wilson Wilson Learning Learning Corporation, Corporation, p. p. 88

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 15


Design Construct Hand-Over

Work

Package 1

Work

Package 2

Work

Package 3

WP

1

WP

2

WP

3

WP

1

WP

2

WP

3

Delivery Insta lation Commiss.

WP

1

WP

2

WP

3

WP

1

WP

2

WP

3

WP

1

WP

2

WP

3

Managing Stakeholders:

Building a tailored communication stream (1)

Stakeholder

Assessment Grid

Power

Gathering key

requirements

Interest

Managing Stakeholders:

Building a tailored communication stream (2)

WBS

Stakeholders

Requirements

Level 1

Project

Level 2

Building A Building B Access Road Equipment Hand-Over

Level 3

Level 4

= Topics of a tailored

communication stream

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Resource Management

Resource

Management

• Project team: a set of individuals who support

the project manager in performing the work of

the project to achieve its objectives.

The definitions are taken from the PMBOK

Glossary

Project Resource Management includes:

• Estimate, acquire, and manage teams of people.

• Estimate the other resources those team members will need to carry out the work.

• Obtain the people.

• Develop the team, improve their competencies, facilitate interactions, and create an

effective teaming environment.

• Track team performance, create and execute improvements based on feedback, resolve

issues, and manage team personnel changes

Main Organizational Structures:

Funct iona l

Pr oj ect iz ed

Mat r ix

IT HR F&C

Prj.1 Prj.2 Prj.3 PMO IT Bus.

Project team members

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Stages of Team Building

Guarded

Confront

St or mi ng

Resolve

Trust

Regret

For mi ng

Nor mi ng

PM role:

High

Direction

High Direction

High Support

Less Direction

High Support

Per f or mi ng

Self Direction

Less Support

Adj our ni ng

High Direction

High Support

Adapted from Tuckman/Jensen Model

Emotional

Intelligence

(EQ)

(adapted from: Goleman, Emotional intelligence)

«Know Thyself, Control Thyself, Give Thyself»

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Cultural

Intelligence

(CQ)

• "Within any culture,

intelligence can be defined

as the possession of key

valued skills and behaviors

in the eyes of the members

of that culture. [...]

• cultural intelligence is

what allows us to

transcend our cultural

programming and function

effectively in cross-cultural

situations.“

(Klenke)

CQ is based on EQ and makes EQ possible across cultural boundaries (i.e.: CQ is necessary for

EQ to be useful in a cross-cultural context).

Key CQ skills:

Cognitive: The actual knowledge about cultural differences. This is the "head" of CQ.

Physical: Skills at using the right gestures, the right body language, adopting the right habits

and mannerisms.

Emotional/Motivational: The self confidence that will bring success.

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 19


Diversity and Inclusion

Cultural

backgrounds

Industry

experiences

Spoken language

What else?

Project teams are becoming more global and therefore more diverse because of reasons

such as:

• Cultural backgrounds

• Industry experiences

• Spoken language

Therefore, creating an environment that takes advantage of the diversity and builds climate

of mutual trust is more and more relevant.

Team development objectives might include:

• Improving team knowledge and skills to reduce cost and time and improve quality.

• Improving trust to raise team morale, reduce conflict, and improve teamwork.

• Creating a collaborative culture to improve individual and team performance and

facilitate cross-training and mentoring.

• Empowering the team to participate in decision making and own the solutions

they create.

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Maslow’s Hierarchy of Needs

Common

organizational

theories

McGregor’s Theory X and Theory Y

McClelland’s Achievement Theory

Herzberg’s Motivation Theory

Maslow:

Hierarchy of

needs

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 21


Herzberg: Motivation Theory

Hygene

Factors

Motivating

factors

McGregor: Theory X and Theory Y

Theory X:

employee style

proactive

Theory Y:

employee style

reactive

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 22


McClelland:

Achievement

Theory

Dominant Motivator:

Achievement

Affiliation

Power

Dominant Motivator: Achievement

Individual’s Characteristics:

• Has a strong need to set and accomplish challenging goals.

• Takes calculated risks to accomplish their goals.

• Likes to receive regular feedback on their progress and achievements.

• Often likes to work alone.

Dominant Motivator: Affiliation

Individual’s Characteristics:

• Wants to belong to the group.

• Wants to be liked and will often go along with whatever the rest of the group wants to

do.

• Favours collaboration over competition.

• Doesn't like high risk or uncertainty.

Dominant Motivator: Power

Individual’s Characteristics:

• Wants to control and influence others.

• Likes to win arguments.

• Enjoys competition and winning.

• Enjoys status and recognition.

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From Kick-Off to Closing

PMBOK® Overview,

Managing the project integration

PMP® Preparation

From Kick-Off to Closing

1. PMBOK® Overview

2. Managing the Project Integration

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PMBOK® Overview

PMBOK® Guide

• PMBOK® Guide: A Guide to the Project

Management Body of Knowledge is PMI’s

flagship publication and is a fundamental

resource for effective project management in

any industry.

• Includes The Standard for Project Management.

The standard is the foundation upon which the

vast body of knowledge builds, and the guide

serves to capture and summarize that

knowledge

This definition is taken from: https://www.pmi.org/pmbok-guide-standards/foundational/pmbok

What is the PMBOK ® Guide?

The PMBOK ® Guide identifies that subset of the project management body of knowledge

that is generally recognized as good practice. It is an essential component of your

preparation for the PMP® Certification Exam.

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 25


A common vocabulary?

Let’s start with the basics

•Project – A temporary endeavor undertaken to create a

unique product, service or result.

•Project Management (PM) – The application of knowledge,

skills, tools, and techniques to project activities to meet the

project requirements.

•Program – A group of related projects, subprograms, and

program activities managed in a coordinated way to obtain

benefits not available from managing them individually.

•Project Life Cycle – The series of phases that a project

passes through from its initiation to its closure.

The 5 Process Groups

PMBOK ® Guide

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Process Group

interaction

throughout the

PLC

PMBOK ® Guide

Remember!

The 10

Knowledge

Areas:

The 10 project management knowledge areas are:

1. Project Integration Management

2. Project Scope Management

3. Project Time Management

4. Project Cost Management

5. Project Quality Management

6. Project Human Resources Management

7. Project Communications Management

8. Project Risk Management

9. Project Procurement Management

10.Project Stakeholder Management

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 27


PMBOK ® Process Summary Table:

GAF by GAF Swiss Management Training - ©2021 Max Langosco PMP® Page | 28


The Competing Constraints:

Balancing the

Competing project Constraints

Scope Quality Schedule

Budget Resources Risk

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Managing the Project Integration

Provides a systematic approach

Project

Integration

Management

Ensures common focus to project needs

Defines and manages the product and project scope in a

coordinated manner

Aligns resources with project needs and priorities

Ensures work on the project is blended into ongoing operations

or work within a phase is blended into work in subsequent

phases

Project Integration Management entails:

• Making choices about resource allocation, making trade-offs among competing objectives

and alternatives, and managing the interdependencies among the project management

Knowledge Areas.

• Assessment and coordination of all plans and activities that are built, maintained, and

executed throughout a project.

• It is a holistic, integrated view which ties plans together, aligns efforts, and highlights how

they depend on each other.

• It is an integrated view of all plans. It helps to identify and correct gaps or conflicts.

• It consolidates plans and encapsulates the overall project plan and its intended business

value.

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Organizational

Process Assets

(OPA)

OPA: Plans, processes,

policies, procedures, and

knowledge bases specific to

and used by the performing

organization. These assets

influence the management of

the project.

Organizational Process Assets need to be considered, as well and enterprise environmental

factors when developing a project charter. These assets are comprised of Processes and

Procedures and Corporate Knowledge Base. The process related assets are from all

organizations that are involved in the project that can and are being used to impact the

project’s success. The process assets include:

• Formal and informal plans

• Policies

• Procedures

• Guidelines

• Knowledge bases

• Lessons Learned database

• Other historical information

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Enterprise

Environmental

Factors (EEF)

EEF: Conditions (internal or

external) not under the

control of the project team,

that influence, constrain, or

direct the project at

organizational, portfolio,

program, or project level.

Enterprise Environmental Factors need to be considered when developing a project charter.

These are comprised of both the internal and external environmental factors that influence a

project’s success and may come from any or all the enterprises involved in the project. These

factors may enhance or constrain project management options and may have positive or

negative impacts, and include but are limited to:

• Organizational culture, structure and processes

• Government or industry standards

• Infrastructure

• Existing Human Resources

• Work Authorization Systems

• Stakeholder risk tolerance

• Political Climate

• Project management information system

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The Integration

Management

Knowledge

area:

Authorizes a project or phase

Documents initial requirements

The Project

Charter

Establishes a partnership between the performing

organization and the requesting organization or customer

Initiates the project

Provides the project manager with authority to apply

organizational resources to project activities

Creates or documents delegation by project initiator or

sponsor

When a need is identified, and an idea for a project emerges, a project request is prepared

for approval by the governance board.

The information about the project must address the following questions:

• What is the driving need for the project?

• What is the connection to the corporate strategy?

• What problem will it solve?

• What benefits will be realized?

The project charter is the instrument that documents the decision to proceed and kick off

the project and empowers the project manager.

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The Project Plan and its components

Subsidiary Plans

Project Baselines

Project

Management

Plan

The project management plan integrates and consolidates all the subsidiary management

plans and baselines from the planning processes. Project baselines include, but are not

limited to:

• Schedule baseline

• Cost performance baseline

• Scope baseline

Subsidiary plans include but are not limited to:

• Scope management plan

• Schedule management plan

• Cost management plan

• Quality management plan

• Process improvement plan

• Human resource plan

• Stakeholder Engagement Plan

• Communications management plan

• Risk management plan

• Procurement management plan

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Integrated Change Control

Influence

Influence factors so that only approved changes are implemented

Receive

Receive change requests from project and from external sources (customer, steering committee…)

Identify

Review, analyze,

and approve

Update

Identify the Change Control Board (CCB) correctly

Review, analyze, and approve change request promptly

Update all relevant documentation according to the approved change,

Disseminate

Disseminate change related information appropriately.

The desired outcome of Integrated Change Control is to appropriately process change

requests and to maintain the project baseline.

Change Control Board (CCB): the designated responsible(s) to review and approve or reject

a change. A change control board is responsible for meeting and reviewing the changes

requests and approving or rejecting those change requests. The roles and responsibilities of

these boards are clearly defined and are agreed upon by appropriate stakeholders. All

change control board decisions are documented and communicated to the stakeholders for

information and follow-up actions.

The Change Management Plan: Provides direction for managing the change control process

and documents the roles and responsibilities of the change control board (CCB). It answers

the following questions:

• Who can propose a change?

• What exactly constitutes a change?

• What is the impact of the change on project objectives?

• What are steps to evaluate a change request before approving or rejecting it?

• When a change request is approved, what project documents will record the next

steps (actions)?

• How will you monitor these actions to confirm completion and quality?

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Think: VERSION CONTROL

Configuration

Management

Establishes an evolutionary method that

results in consistency in change management

Provides opportunities for continuous

validation of impacts and improvement of

assessing impacts

Provides the mechanism to consistently

communicate changes.

A configuration management system with integrated change control provides a

standardized, effective, and efficient way to centrally manage approved changes and

baselines. Configuration management is focused on the specification of both the

deliverables and the process (to identify and account for project artifacts, and to record and

report changes to them).

Configuration identification selects and identifies the configuration item provided, which is

the basis for the product configuration, definition and verification, labeling of products and

documents, management of changes, and maintaining accountability

Configuration status accounting records and reports on when appropriate data about the

configuration item should be provided. The information that is recorded and reported

includes the approved configuration identifications, the statuses of proposed changes to

configuration items, and the implementation statuses of approved changes.

Configuration verification and audit ensures correctness of the composition of

configuration items and that corresponding changes are documented, assessed, approved,

tracked, and correctly implemented. This enhances the certainty that the functional

requirements defined in the configuration documentation are satisfied.

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The Project Management Information Systems

(PMIS)

Communications Plan

Stakeholder Analysis

Project Baselines

The Project

Management

Information

Systems

(PMIS)

Change Control

• Change requests

• Approved changes

• Rejected changes

Actual

Results

Re-Plan

Forecasting

Status

Progress

Analysis

• Performance Reviews

• EVM, Trend, Variance

Performance

Reporting

Contract

Closure

Admin.

Closure

The PMIS is comprised of many automated tools, such as a scheduling software,

configuration management system, information collection and distribution system, or web

interfaces to other online systems.

The project manager and project team will leverage the PMIS in to:

• Produce deliverables

• Collect and distribute work performance information

• Manage change

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Project Closing

Hand-Over to

production,

Product Final

Acceptance,

Administrative

closure,

Financial

closure,

Lessons

learned,

Releasing

resources

Project Closure objectives:

• Satisfy completion or exit criteria for the phase or project

• Transfer the project’s products, services or results to the next phase or to production

and/or operations

• Collect project or phase records, audit project success or failure, gather lessons learned.

Key questions are:

• What did we do right? What did we do wrong?

• What were the KPIs and CSFs

• What future recommendations can be made?

• How, when, and to whom should the information be disseminated?

• Archive project information for future use by organization: the organizational process

assets that need updated are:

• Project files

• Project or phase closure documents

• Historical information

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Choosing the right Methodology

Choosing the right methodology,

Planning Scope, Schedule & Cost

PMP® Preparation

Choosing the right methodology

1. Predictive,

2. Agile,

3. Hybrid

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The Product

Life Cycle:

selecting the project

methodology

Where is the

value?

Project success

defined

Fixed

Traditional

Scope

Plan

Driven

Schedule

Adaptive

Value

Driven

Budget

Estimated

Schedule

Budget

Scope

Source: Dynamic System Development Method

PM methods and methodologies

Predictive

Plan based

Change is

managed by

exception

Agile

Iteration based

Change is

embedded into

the process

Hybrid

Plan based and

iteration based

approaches are

combined to fit

specific project

needs.

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Predictive Life Cycle

Iterative Life Cycle

Life Cycles:

Incremental Life Cycle

Agile Life Cycles

Progressive elaboration

Predictive Life Cycle* A form of project life cycle in which the project scope, time, and cost

are determined in the early phases of the life cycle.

Iterative Life Cycle* A project life cycle where the project scope is generally determined

early in the project life cycle, but time and cost estimates are routinely modified as the

project team's understanding of the product increases.

Incremental Life Cycle* An adaptive project life cycle in which the deliverable is produced

through a series of iterations that successively add functionality within a predetermined

time frame. The deliverable contains the necessary and sufficient capability to be considered

complete only after the final iteration.

Agile Life Cycles* A project life cycle that is iterative or incremental. Also referred to as

change-driven or adaptive.

Progressive elaboration* The iterative process of increasing the level of detail in a project

management plan as greater amounts of information and more accurate estimates become

available.

* The definitions are taken from the PMBOK® Guide Glossary.

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How are

the results

delivered?

Deliverables may be

delivered all at once at

the end of the project.

Project outputs may be

delivered throughout

the project.

The Project

Implementation

Plan.

When delivering

outputs,

consider:

• Will the outputs be implemented in a new business

environment?

• Will the outputs be implemented in an existing business

environment?

• Will the outputs be transitioned into a live environment?

• Will you be decommissioning or removing old systems,

processes, or materials?

• Will you need to ensure training and knowledge transfer is

complete or satisfactory?

• All stakeholders, schedules, risks, budgets, and quality

standards should be considered in the Project

Implementation Plan.

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Business case:

Business

needs:

• Documented economic feasibility study

• Used to establish the benefits of project

components

• Provides a basis for authorization of

further project activities

Business needs documents:

• Provides the high-level deliverables

• Written prior to the formal business case

• Describes what needs to be created and

what needs to be performed

Assessment of Project Needs, Complexity, and Magnitude

Methodology Best Suited When Examples

Agile

• Changes are relatively easy, and waste is not costly.

• Complex environment where end product is not fully known

and user feedback is very valuable.

Software projects or projects based on

intellectual property and research.

Predictive /

Plan Driven

• Changes are expensive due to scrap and waste.

• Predictability and coordinated timing is important.

Construction projects or projects that have many

physical assets or have similar projects that been

completed in the past.

Iterative

• Dynamic requirements and activities are repeated until they

are deemed correct.

Projects where learning and correction is

expected to eventually get to the ideal solution.

Incremental

• Dynamic requirements, as well as frequent small deliveries.

• Speed to deliver small increments is a major goal.

Projects where customers or business is wanting

or expecting to see outputs or partial outputs

early and often.

Hybrid

• There are some costs to changes.

• Stakeholders are interested in another method, but not

comfortable to fully adopt one method.

Projects with a mix of resources and experience

levels or projects seeking or willing to learn new

methods or techniques.

69

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Planning Scope, Schedule and Cost

Planning Scope, Schedule & Cost

1. Scope Management

2. Schedule Management

3. Cost Management

Planning Scope

Scope

Management

• Scope: The sum of the products, services and

results to be provided as a projects.

• Scope management plan* A component of the

project management plan or program

management plan that describes how the scope

will be defined, developed, monitored,

controlled, and validated.

The definitions are taken from the PMBOK

Glossary

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Product Scope to Project Scope

PRODUCT SCOPE

Project Charter

Stakeholder analysis

Collecting Requirements

Scope Definintion

WBS

PROJECT SCOPE

Stakeholder

Assessment Grid

Power

Gathering key

requirements

Interest

Collecting Requirements

Project requirements: The agreed-upon conditions or capabilities of a product, service, or

outcome that the project is designed to satisfy.

High-level requirements might be documented in the project charter.

Project manager must verify all requirements are determined and documented.

Provide the foundation for building the WBS.

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Requirements elicitation:

Document

analysis

Focus groups Questionnaires Benchmarking

Interview

Observation

Facilitated

workshops

Prototype

Storyboarding

Document analysis: A technique used to gain project requirements from current

documentation evaluation.

Focus groups* An elicitation technique that brings together prequalified stakeholders and

subject matter experts to learn about their expectations and attitudes about a proposed

product, service, or result.

Questionnaires* Written sets of questions designed to quickly accumulate information from

many respondents.

Benchmarking* The comparison of actual or planned products, processes, and practices to

those of comparable organizations to identify best practices, generate ideas for

improvement, and provide a basis for measuring performance.

Interview* A formal or informal approach to elicit information from stakeholders by talking

with them directly.

Observation: A technique used to gain knowledge of a specific job role, task, or function in

order to understand and determine project requirements.

Facilitated workshops: Organized working sessions held by project managers to determine

what a project's requirements are and to get all stakeholders together to agree on the

project's outcomes.

Prototype* A method of obtaining early feedback on requirements by providing a working

model of the expected product before actually building it.

Storyboarding* A prototyping method that can use visuals or images to illustrate a process

or represent a project outcome.

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Unanimity

Decision

making

approaches

Majority

Plurality

Autocratic

Documentation:

Business

requirements

Stakeholder

requirements

Solution

requirements

Project

requirements

Transition

requirements

Assumptions lists,

dependencies, and

constraints

The Requirements

Management Plan

The Requirements

Traceability

Matrix

Requirements management plan* A component of the project or program management

plan that describes how requirements will be analyzed, documented, and managed.

Components of the Requirements Management Plan include:

• How requirements activities will be planned, tracked, and reported

• Configuration management activities such as how version control of project documents

and changes to the product will be initiated, how impacts will be analyzed, how they

will be traced, tracked, and reported, and what authorization level is required to

approve these changes

• Requirement prioritization process, which defines how project requirements will be

analyzed and prioritized

• Product metrics that will be used and the rationale for using them

• Traceability structure stating which requirement attributes will be captured on the

traceability matrix

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Product Scope description

Define Scope:

The Project Scope

Statement, key

elements

Acceptance Criteria

Deliverable

Project exclusion

Constraints

Assumptions

Project Scope Statement* The description of the project scope, major deliverables,

assumptions, and constraints.

Product analysis* A tool to define scope that generally means asking questions about a

product and forming answers to describe the use, characteristics, and other relevant aspects

of what is going to be manufactured.

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The Scope Baseline

The Scope Baseline includes:

✓ WBS

✓ WBS dictionary

✓ Project Scope Statement

Scope baseline* is the approved version of a scope statement, WBS, and its associated WBS

dictionary, that can be changed using formal change control procedures and is used as a

basis for comparison to actual results.

WBS* A hierarchical decomposition of the total scope of work to be carried out by the

project team to accomplish the project objectives and create the required deliverables.

WBS dictionary* A document that provides detailed deliverable, activity, and scheduling

information about each component in the work breakdown structure.

The WBS dictionary might include the following:

• Code of account identifier

• Description of work

• Assumptions and constraints

• Responsible organization

• Schedule milestones

• Associated schedule activities

• Resources required to complete the work

• Cost estimations

• Quality requirements

• Acceptance criteria

• Technical references

• Agreement information

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WBS based on the PLC:

Level 1

Project

Level 2

Design Construction Installation Commissioning Hand-Over

Level 3

Step1 Step2 Step3 StepA StepB StepC

Work

Package 1

WP 1

WP 1

WP 1

WP 1

WP 1

Level 4

Work

Package 2

WP 2

WP 2

WP 2

WP 2

WP 2

Work

Package 3

WP 3

WP 3

WP 3

WP 3

WP 3

WBS based on the Project deliverables:

Level 1

Project

Level 2

Building A Building B Access Road Equipment Hand-Over

Level 3

Design Construct Hand-Over Delivery Installation Commiss.

Work

Package 1

WP 1

WP 1

WP 1

WP 1

WP 1

Level 4

Work

Package 2

WP 2

WP 2

WP 2

WP 2

WP 2

Work

Package 3

WP 3

WP 3

WP 3

WP 3

WP 3

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Design Construct Hand-Over

Work Package 1

Work Package 2

Work Package 3

WP 1

WP 2

WP 3

WP 1

WP 2

WP 3

Delivery Insta lation Commiss.

WP 1

WP 2

WP 3

WP 1

WP 2

WP 3

WP 1

WP 2

WP 3

Decomposition

WBS

definitions:

Control account

Planning package

Code of accounts

Decomposition* A technique used for dividing and subdividing the project scope and project

deliverables into smaller, more manageable parts.

Control account* A management control point where scope, budget, actual cost, and

schedule are integrated and compared to earned value for performance measurement.

Planning package* A WBS component below the control account with known work content

but without detailed schedule activities.

Code of accounts* A numbering system used to uniquely identify each component of the

WBS.

Control Accounts:

• Control Accounts enable the

overview and tracking by

transversal cost aggregators

(often known as cost centres)

Level 1

Level 2

Project

Building A Building B Access Road Equipment Hand-Over

Level 3

Level 4

Control Account A

Control Account B

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Agile: The

Product

Backlog

A product backlog is essentially a list of the expected work to deliver the product which

changes throughout the project.

Grooming and refining the product backlog is an ongoing exercise, typically scheduled in

weekly or monthly intervals.

Product backlog items (PBI) drop off when work is completed. They are edited and clarified

as more becomes known or as product requirements change and are continually added as

necessary when more work must be done.

The iteration backlog (i.e.: the Sprint Backlog, in Scrum) includes items from the product

backlog that can be completed within the iteration (i.e.: Sprint) based on the team’s capacity

(i.e.: Velocity).

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User Stories

A user story is written in three parts:

1. Role – the user role for the story

2. Goal – what the user is trying to accomplish

3. Benefit – why the user wants to accomplish it

User Request: Something that benefits the user directly or enables a future benefit.

User Stories: help teams focus on that value provided to the user. User stories frame who is

to benefit from the work of the team. Framing the user’s desire as a story instead of a

detailed requirement or specification enables the team to focus on the user and what they

value.

Other types of Stories:

• Spike/Enabler: Research, prototype, risk reduction, knowledge acquisition

• Technical Debt: Things we should have done correctly the first time, but likely took a

shortcut to meet a deadline

• Defect: Something that is causing an impact and needs to be fixed

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Definition of Ready

Definition of Done

Definition of Done* A team's checklist of all the criteria required to be met so that a

deliverable can be considered ready for customer use.

Definition of Ready* A team's checklist for a user-centric requirement that has all the

information the team needs to be able to begin working on it.

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Other Scope Definitions:

Acceptance

Criteria

Validate

Scope

Iteration

Reviews

Variance

Analysis

Trend

Analysis

Acceptance Criteria* A set of conditions that is required to be met before deliverables are

accepted.

Validate Scope* The process of formalizing acceptance of the completed project

deliverables.

Iteration Reviews At or near the conclusion of a timeboxed iteration, the project team

shares and demonstrates all the work produced during the iteration with the business and

other stakeholders.

Variance Analysis* A technique for determining the cause and degree of difference between

the baseline and actual performance.

Trend Analysis* An analytical technique that uses mathematical models to forecast future

outcomes based on historical results.

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Planning Schedule

Planning Scope, Schedule & Cost

1. Scope Management

2.Schedule Management

3. Cost Management

The Schedule Management

Plan describes how

activities will be defined

and progressively

elaborated. It identifies a

scheduling method and

scheduling tool to be used,

determines the format of

the schedule, and

establishes criteria for

developing and controlling

the project schedule.

Schedule

Management

Schedule

Management

• Project schedule* An output of a schedule

model that presents linked activities with

planned dates, durations, milestones, and

resources

• Schedule management plan* A component of

the project or program management plan that

establishes the criteria and the activities for

developing, monitoring, and controlling the

schedule.

• Project schedule* An output of a schedule

model that presents linked activities with

planned dates, durations, milestones, and

resources

• Schedule management plan* A component of

the project or program management plan that

establishes the criteria and the activities for

developing, monitoring, and controlling the

schedule.

The definitions are taken from the PMBOK

Glossary

The definitions are taken from the PMBOK

Glossary

Possible elements of the

Schedule Management Plan are:

• Project schedule model used

• Accuracy of activity duration estimates

• Units of measure to be used

• Organizational procedure links used with the WBS

• Control thresholds to be used for monitoring schedule performance

• Rules of performance measurements to be used

• Reporting formats to be used

• Process descriptions to explain how schedule management processes are to be

documented throughout the project.

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Level 1

Project

Level 2

1.

Design

2.

Construction

3.

Installation

4.

Commissioning

5.

Hand-Over

Further

decomposition:

the activities

Work

Package

Level

3.1.

Equipment

Delivery

3.2.

Installation

3.3.

Integration

3.1.1.Release from Warehouse

3.1.2.Delivery to site,

3.1.3.Acceptance at site

< End of WBS

Activity

List

Work Packages are

broken down into

the composing

activities

3.2.1.First Site visit

3.2.2.Equipment installations

3.2.3.Bar code reading of single units

3.3.1.Installation of cable trays

3.3.2.Laying fiber

3.3.3.Material Integration

Activity* A distinct, scheduled portion of work performed during the course of a project.

While the terms activities, work packages, and tasks might be used interchangeably in

different industries, in the PMI methodology each has the following distinct meaning:

• A work package is the lowest level of the WBS.

• An activity is a smaller component of a decomposed work package.

• A task is used when referring to project management software.

Milestone* A significant point or event in a project, program, or portfolio.

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Dependency types:

Finish-to-Start

Start-to-

Start

Start-to-Finish

Finish-to-

Finish

LAG

LEAD

• Mandatory vs. Discretionary dependency,

• External vs. Internal dependency.

An activity dependency is a logical relationship that exists between two project activities.

Relationship indicates whether the start of an activity is contingent on an event or input

from outside the activity. Activity dependencies determine the precedence relationships.

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Margin of Error

Main estimating approaches:

Parametric

Estimating

50%

Initiation

+/- 50% or more

Analogous

Estimating

Three-point

Estimating

40%

30%

20%

10%

Requirements Definition

+/- 30% to 50%

High-Level Design

+/- 15% to 25%

Project Life Cycle

Functional Design

+/- 10%

Margin of error varies with project type

Parametric estimating: Based on creating a parameter which is the multiplied by the

number of times it is estimated to be needed (ex.: price/sqm, or time/km of cable)

Analogous estimating: Based on analogy with values from past projects. Used frequently

when there is a limited amount of information available.

Three Point Estimating: Based on averaging most likely (M), Optimistic (O) and pessimistic

(P) estimates.

Examples:

• Triangular distribution (3 point average): Estimate = (M+O+P)/3

• Beta distribution (PERT): Estimate =(4M+O+P)/6

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Example: a 10-day work package

Duration: 10 days

10 days

Activities:

3 days 4 days 3 days

Effort: 6 person/days 1 person 0 person 1 person

Effort: 18 person/days 3 person 0 person 3 person

Effort: 3 person/days 0.5 person 0 person 0.5 person

Duration vs. Effort

Activity duration estimate* The quantitative assessment of the likely number of time

periods that are required to complete an activity.

Elapsed time: The actual calendar time required for an activity from start to finish.

Effort* The number of labor units required to complete a scheduled activity or WBS

component, often expressed in hours, days, or weeks. Contrast with duration.

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Scheduling techniques

Start Reviewed Approved

Start Reviewed Approved

Milestone

Chart

Complete

Gantt

Chart

Start

A

C G H Finish

B

D

F

E

Precedence

Network

Diagram

Milestone Chart: Provides the summary level view of a project’s milestones.

Uses icons or symbols.

Useful for upper management, who are not interested in fine details.

Gantt chart* A bar chart of schedule information where activities are listed on the vertical

axis, dates are shown on the horizontal axis, and the activity durations are shown as

horizontal bars placed according to start and finish dates.

Shows start and end dates, duration, and order.

Shows precedence relationships.

Shows percentage completion and actual progress.

Used to present project status to the project team and management.

Precedence relationship* A logical dependency used in the precedence diagramming

methods.

Assigns start and finish dates to activities.

Communicates the project status in terms of activity precedence relationships.

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How long will this project take?

A-7

B-6

C-8

D-6

E-8

F-7

J-2

G-3

H-6

I-4

K-3

(the letters are the task name and the numbers the task duration)…

Precedence relationship* A logical dependency used in the precedence diagramming

methods.

Forward and backward pass (with 0):

0 -- 7 7 -- 13

A-7

B-6

9 9

9 -- 16

16 -- 22

(the letters are the

task name and the

numbers the task

duration)…

0 -- 8 8 -- 14

14 -- 22 22 -- 29

C-8

D-6

E-8

F-7

0 0 0 0

0 -- 8

8-- 14

14 -- 22 22 -- 29

H-6

I-4

14 -- 16

J-2

0 -- 6 6 – 10 27 -- 29 10 -- 13

16

K-3

16 -- 22

22 -- 26

26 -- 29

16

13

16

29 -- 32

G-3

29 -- 32

0

Critical path* The sequence of activities that represents the longest path through a project,

which determines the shortest possible duration.

Float on the critical path is zero.

Critical path activity* Any activity on the critical path in a project schedule.

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Forward and backward pass (with 1):

1 -- 7 8 -- 13

A-7

C-8

D-6

B-6

9 9

10 -- 16

17 -- 22

1 -- 8 9 -- 14

15 -- 22 23 -- 29

E-8

F-7

0 0 0 0

1 -- 8

9 -- 14

15 -- 22 23 -- 29

(the letters are the

task name and the

numbers the task

duration)…

15 -- 16

J-2

1 -- 6 7 – 10 28 -- 29 11 -- 13

13

30 -- 32

G-3

30 -- 32

0

H-6

16

I-4

16

K-3

16

17 -- 22

23 -- 26

27 -- 29

Total Float and Free Float:

ES

0

4.2.1

EF

10

ES

10

4.2.2

EF

15

LS

0

Activity A

DU

10

LF

10

LS

10

Activity B

DU

5

LF

15

Total Float (A) = LF(A) – EF(A)

Free Float (A) = ES(B) – EF(A)

Total float* The amount of time that a schedule activity can be delayed or extended from its

early start date without delaying the project finish date or violating a schedule constraint.

Free float* The amount of time that a schedule activity can be delayed without delaying the

early start date of any successor or violating a schedule constraint.

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Schedule Compression Methods

Fast Tracking:

By “cutting out” a dependency,

the activities are done in parallel,

reducing schedule.

This can only be done with

discretionary dependencies.

Remember: What are you going to

PAY for it???

Crashing:

5 resources x 20 20 days:

Duration: 20 20 days

10 10 resources x 10 10 days:

Duration: 10 10 days

By By adding resources to to a task (including

simple overtime), some activities can be be

done faster, reducing schedule.

Remember: What are you going to to PAY for for

it???

Prioritization:

If If there is is nothing else possible. Scope reduction may be be the option.

What is is priorty vs. vs. what may be be moved to to a next phase?

Remember: What are you going to to PAY for for it???

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Scheduling in Agile, two main approaches:

Iterative scheduling

with backlog

(ex.: Scrum)

On-demand

scheduling

(ex.: Kanban)

Iterative Scheduling with a Backlog (example: Scrum)

Progressive elaboration (rolling wave) techniques used to schedule activities

Uses a specific time window (often two weeks)

Requirements defined in user stories & Stories prioritized, selected based on priority

Remaining stories added to backlog, constructed later based on their priority

Delivers business value early and incrementally

Allows changes/adaptations during entire project

Does not work well when there are complex dependency relationships

On-Demand Scheduling (Example: Kanban)

Does not use traditional schedules

Team members “pull” work from a queue when available

Based on Kanban and Lean methodologies

Provides incremental business value

Levels out work of team members

Does not work well when there are complex dependency relationships

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Planning Cost

Planning Scope, Schedule & Cost

1. Scope Management

2. Schedule Management

3.Cost Management

Cost

Management

• Cost baseline* The approved version of the

time-phased project budget, excluding any

management reserves, which can be changed

only through formal change control procedures

and is used as a basis for comparison to actual

results.

The definitions are taken from the PMBOK Glossary

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Cost Activities

Building the baseline: activity cost aggregation

buffer

Reserve

time

The Cost Baseline is a time-phased budget unique to the project. It monitors and measures

cost performance and it includes a budget contingency.

Budget Estimation: Estimating the project budget consists of aggregating the estimated

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

This budget contains all the funding needed to complete the project as defined in the scope

baseline and the project schedule.

The project cost performance is then measured against this cost baseline.

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Cost Baseline

• Time-phased budget

• Monitors and measures

cost performance

• Includes a budget

contingency

• Varies from project to

project

A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, Project Management Institute,

Inc., 2017, Page 255.

Funding limit reconciliation* The process of comparing the planned expenditure of project

funds against any limits on the commitment of funds for the project to identify any variances

between the funding limits and the planned expenditures.

Most budgets assume steady incoming and outgoing flows. Large, sporadic expenditures are

usually incompatible with organizational operations. Funding limits help regulate the

outgoing capital flow to protect against overspending.

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Project

Budgeting

Components

• A Guide to the Project Management Body

of Knowledge (PMBOK® Guide) – Sixth

Edition, Project Management Institute, Inc.,

2017, Page 255.

106

Budget Challenges:

Ideally, budget is set during project planning and does not change. Projects do not exist in a

perfect world and the following can pose a challenge to the project manager:

• New or changed project requirements.

• New risks, or changes to the probabilities or impacts of existing risks.

• Changes to cost estimates resulting from economic factors, procurement contract

modifications, resource costs, etc.

When any of these things occur, one or more of the following must change: The project

budget, the project cost, the project schedule, or the scope

If the budget remains fixed and additional funds are not available, then the project must

change.

Anticipate Future Budget Challenges

1

2

3

4

Keep the the stakeholder

register current and and be be

aware of of changes to to

project requirements if if

new stakeholders are are

added to to the the project.

Monitor risks frequently

to to look for for new risks

and changes to to existing

ones.

Monitor the the

performance of of

suppliers and and vendors.

Monitor all all changes to to

the the project and and follow

the the Change

Management System to to

try try to to keep them within

budget.

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Running the Show

Risk management

PMP Preparation

Risk management

Risk Management

1. Risk management Planning

2. Risk Identification

3. Risk Analysis (qualitative and quantitative)

4. Risk response planning

5. Risk response implementation

6. Risk Monitoring and Controlling

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Risk

Management

• Risk: an uncertain event or condition that, if it

occurs, has a positive or negative effect on one

or more project objectives.

The definitions are taken from the PMBOK

Glossary

What

evolves

during the

PLC?

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What is included a Project Charter?

✓Project Purpose or justification,

✓Measurable project objectives and success criteria,

✓High-Level requirements,

✓Assumptions and constraints,

✓High-Level project description and boundaries,

✓High-Level Risks,

✓Summary Milestone Schedule,

✓Summary Budget,

✓Stakeholder list

✓Project Approval requirements,

✓Assigned Project Manager,

✓Name and authority of the sponsor approving the project Charter

Identify

risks

The risk

management

cycle

Risk

monitoring

&

controlling

Qualitative

analysis

Response

planning

Quantitative

analysis

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Identify Risks through brainstorming

Risk breakdown structure.

Checklists, historical lists of risks,

memory joggers.

Check your ASSUMPTIONS!!!

Focus on what has impact

on the project objectives.

Refer to contracts, plans, estimates...

…Review External Dependencies

Identify Risks using the WBS

Level 1

Project

Level 2

Design Construction Installation Commissioning Hand-Over

Level 3

Step1 Step2 Step3 StepA StepB StepC

Work

Package 1

WP 1

WP 1

WP 1

WP 1

WP 1

Level 4

Work

Package 2

WP 2

WP 2

WP 2

WP 2

WP 2

Work

Package 3

WP 3

WP 3

WP 3

WP 3

WP 3

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Identify Risks

through a

SWOT analysis

Internal Factors >

Strength

Weakness

External Factors >

Opportunity

Threat

Identify Risks through Cause-and-Effect analysis

Category 1 Category 2 Category 3

Effect

---

(impact on

project

objectives)

Category 4 Category 5 Category 6

Cause/Risk

Cause/Risk

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PROBABILITY

Qualitative risk analysis &

the Probability/Impact Matrix

IMPACT

Quantitative risk analysis techniques

MONTECARLO

SIMULATIONS

SENSITIVITY ANALYSIS

DECISION TREE (EXPECTED

MONETARY VALUE)

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Threats

Opportunities

Transfer

Mitigate

Avoid

Accept

Escalate

Share

Enhance

Expliot

Risk Response options

How do Risk Response options impact the budget?

Accept: will only impact CR

CONTINGENCY

RESERVE

Mitigate: will impact both cost and CR

Avoid: will only impact COST

COST

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Cost Activities

What are Reserves?

Contingence

Reserve

Management

Reserve

Determining the Baseline from the Schedule

buffer

Reserve

time

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Time

Balancing

Project

Constraints

is an art!

Customer

satisfaction

Risk

The

Project

Resources,

Team

Motivation

Quality

Scope

Cost

Variance Analysis

Sources of

Change

• Scope

• Time

• Cost

• Resources

• Quality

• Risk

Identify

Areas of

Variances

• Scope

• Time

• Cost

• Quality

• Resources

• Communication

• Risk

• Stakeholders

• Vendors

Gain

agreement

and replan

• Negotiate with

stakeholders

• Re-baseline and

update project plan

How often do you reassess risks?

REGULAR MONITORING

AND AND CONTROLLING OF OF

OPEN OPEN RISK. RISK.

HAVE HAVE THE THE ACTIONS

TAKEN TAKENMITIGATED THE THE

RISKS RISKS AS AS EXPECTED?

AUDITING FOR FOR NEW NEW

RISKS. RISKS.

MAKE MAKE IT IT PART PART OF OF

REGULAR STATUS

REVIEWS.

MANAGING RISKS, RISKS, IS IS

PART PART OF OF REGULAR

PROJECT WORK!

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Final take away 1:

Self confidence in dealing with risks

• Uncertainty is the defining element in all project work,

• Uncertainty means taking advantage of opportunities and dealing with threats by

integrating response actions into the project plan. This way the overall project is more

resilient.

Final take away 2:

Harness adversity

• Recontextualize failiure as a source of learning.

• Examine old norms, procedures that punish mistakes, eliminating the chance to take

advantage of the renewal content in the failiure.

• Ex.1: can you think of processes in your context which eliminate or reduce the chance of

taking advantage of failiure? (think of mistake avoidance, mistake hiding, finger pointing,

blaming, loss of bonuses,...)

• Ex.2: can you think of processes which enhance the habit of harnessing adversity?

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Quality Management

Quality management

PMP Preparation

Quality Management

1. Quality management Planning

2. Quality Management

3. Quality Control

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Quality

• Quality: The degree to which a set of inherent

characteristics fulfill requirements.

The definitions are taken from the PMBOK

Glossary

Key contributors to quality theory:

Contributor

Key-word description

W. Edwards Deming • Plan/Do/Check/Act Cycle

• Statistics and sampling

• Rule of 85: 85% of the cost of quality is the responsibility of management

Joseph M. Juran • Quality improvement, planning, and control, fitness for use, cost of quality

Philip B. Crosby • Conformance to requirements, prevention, zero defects, cost of nonconformance

Dr. Genichi Taguchi • Design of experiments; quality designed in, not inspected in; minimize deviations from target; measure cost of

quality from standard

Dr. Kaoru Ishikawa • Cause-and–effect, fishbone diagram

Dr. Armand V. Feigenbaum • Well-defined products, efficient distribution capability, Excellent marketing techniques

• Customer service, on-site support

Dr. Shigeo Shingo • Error proofing, mistake proofing, poka-yoke

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quality requirements

Quality

Management

Plan:

standards for the project and its deliverables

documenting how the project will demonstrate

compliance with requirements

Plan both quality assurance and quality control

processes,

Reference to a Quality Policy

Quality management applies to all projects, regardless of the nature of their product.

However, quality measures are specific to the type of product produced by the project (for

example, quality management of software vs. power plants).

The Quality management Plan describes which policies, procedures, and guidelines

will be implemented to achieve the quality objectives. It describes the activities and

resources necessary for the project management team to achieve the quality objectives. It

may be formal or informal, detailed or broad.

A quality policy is a statement by senior management as to the company’s attitude and

approach toward quality.

Standard: A document established by an authority, custom, or general consent as a model or

example (ISO 9000 Series: A quality system standard that can be applied to any product,

service, or process in the world).

Regulations: Requirements imposed by a governmental body. These requirements can

establish product, process, or service characteristics, including applicable administrative

provisions that have government-mandated compliance:

• De facto regulations: Regulations that are widely accepted and adopted through use.

• De jure regulations: Regulations that are mandated by law or have been approved by a

recognized body of experts.

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Review

Review the documents for quality language.

Identify

Identify a quality team and leader.

The Quality

Planning

Process

Define

Negotiate

Plan

Educate

Define plan components and owners.

Negotiate specific quality assurance (QA) requirements.

Plan the (QA and quality control (QC)) steps for the project.

Educate the project team on QA/QC guidelines.

Incorporate

Incorporate QA/QC tasks into the project plan.

Get

Get client sign-off.

Implement

Implement plans for QA/QC data

Plan to Assure the Process is Right: Understanding how quality of the deliverables will be

accepted in the acceptance process is key to making sure the plan reflects the requirements

and the criteria of stakeholders.

Quality metrics: A description of a project or product attribute and how to measure it.

Tolerance: The quantified description of acceptable variation for a quality requirement.

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Cost of Quality

A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 283.

Cost of Quality: All costs incurred over the life of the product by investment in preventing nonconformance to

requirements, appraisal of the product or service for conformance to requirements, and failure to meet requirements.

Prevention refers to designing quality in—allowing for project team member, end user or customer training and mapping

out a quality strategy before you jump in to keep you on course. Design reviews, training, and quality planning are

associated with the costs associate of prevention activities.

Appraisal refers to pre- and production inspections, tests, or sampling that is done to assure the final product will be

within the product specification levels. Inspections, lab tests, and in-process testing are costs associated with appraisal

activities.

Internal failures are those that occur before leaving the organization and include scrap, rework, repair, and defect

evaluation. This causes costs to rise and employees to get disgruntled about having their efforts wasted. The goal is to

design quality in, so there is little to catch at the inspection phase.

External failures are those discovered by the customer and include returns, complaints, corrective action, and field

maintenance. There is no way to know the true cost of external failures. Unhappy customers may complain, and you will

never know what the loss of that business might be. If loss of life occurs because of an unsafe product, the cost is

immeasurable (In the 1930s, Juran was one of the pioneers who first considered the idea that there were legal implications

associated with the lack of quality, such as civil or criminal liability, appropriate remedies in court and the notion of express

or implied warranties).

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Proactive

Quality Assurance

vs.

Quality Control

Reactive

Cause and

effect

diagrams

Flowcharts

Checklists /

sheets

Tools of

Quality

Control:

Pareto

diagrams

Scatter

diagrams

Histograms

Statistical

Sampling

Control charts

Design Of

Experiments

(DOE)

Performance

Reviews /

Benchmarking

Cost-Benefit

Analysis

Questionnaires

/ Surveys

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The process of translating the quality management

plan into executable quality activities that

incorporate the organization’s quality policies into

the project

PMBOK ® Guide – Sixth Edition, Glossary

Quality

Management

Quality management actions:

• Ensure that quality audits are conducted as

planned by qualified auditors,

• Use the quality tools to determine the causes of

quality problems,

• Identify and implement actions to ensure and

increase project success.

Objectives of a quality audit:

Identify where

you are

Identify good

practices

Do a gap analysis

Aid in improving

productivity

Planned project

quality is met

Products are safe

and fit for use

All laws and

regulations are

followed

Data systems are

accurate and

adequate

Proper corrective

action is taken

when required

Improvement

opportunities are

identified

Quality audit: A structured, independent process to determine if project activities comply

with organizational and project policies, processes, and procedures.

Audits may be performed by:

• a Quality Assurance Department,

• by the PMO,

• by an external organization or

• by selected individuals or teams within line organizations

A quality audit:

• Is a structured independent review of project activities

• It identifies lessons learned

• It may be scheduled or random

• It may be in-house or independent

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Quality

Control

The process of monitoring and recording

results of executing the quality

management activities to assess

performance and ensure the project

outputs are complete, correct, and meet

customer expectations

PMBOK ® Guide – Sixth Edition, Glossary

Inspection:

• Measuring, examining, and testing deliverables,

• Used to determine whether results conform to requirements

• Can be conducted at any level

• Approved change requests are also reviewed to verify they were done as approved

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Pareto

Diagram

Most quality problems result from a small number of causes. Quality experts often refer to

the principle as the 80/20 rule, which means that 80% of problems are caused by 20% of the

potential sources.

A Pareto diagram puts data in a hierarchical order from most occurrences to fewest

occurrences, suggesting that the highest number of occurrences, if resolved, would produce

the greatest improvement.

When seeking operational or process improvement project opportunities within an

organization, this can be a helpful tool in deciding what to fix first. While the Pareto diagram

will point to the biggest culprit of failed throughput, the other factor to consider is the cost

of correcting that error. Although it can summarize all types of data, the Pareto analysis

technique is used primarily to identify and evaluate nonconformities.

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Scatter

Diagrams &

Correlation:

Scatter diagrams organize date using two variables and the relationship or correlation is shown on a simple graph with X

and Y coordinates. The correlation can be negative, positive, or curvilinear, or the data might be represented as having no

correlation at all.

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Statistical Sampling

1

Attribute sampling: attributes

are discreet, result either

conforms or not

2

Variable sampling: attributes

are continuous, result rated on

a scale to measure the degree

of conformity

Statistics are a tool that can help us make sense of available data. While measuring if the

final product of the project will meet the customer’s critical to quality characteristics (CTQ),

we may choose to select only a portion of the final lot to confirm we met the mark.

Testing some, rather than all, can help substantially reduce the cost of conforming to quality,

if we get a valid representation of the whole in the sample size we select.

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Control Charts

Display of data over time and against established control limits,

which has a centerline that assists in detecting a trend.

Adapted from: PMBOK® Guide – Sixth Edition, Glossary

Overview:

the quality control chart contains a line in the center that represents the average of the data

(the upper control limit (UCL) and the lower control limit (LCL) are often located at +/-3 ).

These control limits determine whether the process is in or out control. If the points plotted

are within the control limits and the data points with the limits do not exhibit a “Rule of

Seven” or “Hugging”, the process is assumed to be in statistical control, and no action is

necessary. Otherwise, an investigation and corrective action is required to find and eliminate

the assignable, or special causes responsible for this result.

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Control chart with values out of the control limits

A process may be out of statistical control when the data points exceed either the upper or lower control limits.

Control chart breaking the “rule of seven” (1)

“If there is a continued rise of all in a series of points, this pattern is called a trend. In general, if seven

consecutive points continues to rise or fall, there is an abnormal condition.”

Project Management: A Systems Approach to Planning, Scheduling, and Controlling,

11th Edition, by Harold Kerzner, Ph.D., p. 1050

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Control chart breaking the “rule of seven” (2)

“When several successive points line up on one side of the central line, this pattern is called a run. The number

of points in that run is called the length of the run.”

There is abnormality in the process if the run has a length of seven points.

Project Management: A Systems Approach to Planning, Scheduling, and Controlling,

11th Edition, by Harold Kerzner, Ph.D., p. 1049

Control chart with a “hugging pattern”

“Hugging” the centre line

“Hugging” the UCL

A control chart displays a hugging

pattern when several points are near a

limit. “There is abnormality if 2 out of 3

points, 3 out of 7 points, or 4 out of 10

points lie within the outer one-third

zone.”

Project Management: A Systems Approach to

Planning, Scheduling, and Controlling,

11th Edition, by Harold Kerzner, Ph.D., p. 1051

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Quality management model

Strategy using statistical tools within a structured methodology to improve processes

Six standard deviations (99.999%) from the mean in normal distribution

3.4 defects per million opportunities (DPMO)

Traces defects to their causes and changes the process to eliminate the cause

Six Sigma

Six Sigma = six standard deviations (99.999%) from the mean in normal distribution, i.e.: 3.4

defects per million opportunities (DPMO).

The main goal when applying the Six Sigma approach, is to improve quality, in terms of

processes, customer experience, cost levels, and more, by deploying measurement-based

improvement projects. These focus on process improvement and on variation reduction by

tracing defects to their causes.

To do this, Six Sigma deploys two sub-methodologies: DMAIC and DMADV:

• The Six Sigma DMAIC process (define, measure, analyze, improve, control) is for

existing processes falling below specification.

• The Six Sigma DMADV process (define, measure, analyze, design, verify) is used to

develop new processes or products.

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Procurement Management

Procurement management

PMP Preparation

Procurement Management

1. Plan Procurements

2. Conduct Procurements

3. Control Procurements

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Procurement

Management

Plan

Procurement Management Plan: A component of the

project or program management plan that describes how

a project team will acquire goods and services from

outside of the performing organization.

• Summarizes make-or-buy decisions,

• Specifies the preferred contract types to be used,

• Describes the process for running and evaluating bids

• Identifies how and when to obtain independent

estimates

• Defines the procurement documents that must be used

• Describes how multiple providers will be evaluated and

managed

• Specifies Procurement related risks

The definitions are taken from the PMBOK Glossary

Procurement planning and source selection follow a logical, ordered process that begins

early in the overall project planning effort. When it has been determined that the project

would benefit from outside assistance, a contract statement of work is created in sufficient

terms to allow prospective sellers to determine whether they can provide the required

product, service, or result.

The project manager may use a scoring system based on weights assigned to the contract

drivers of the project in order to establish evaluation criteria.

Additional items that may be addressed in a procurement management plan:

• If standard procurement documents are needed, where can they be found?

• How will multiple providers be managed?

• How will procurement be coordinated for project?

• Handling lead times

• Handling make-or-buy decisions

• Setting the scheduled dates for contract deliverables

• Identifying performance bonds

• Identifying pre-qualified selected sellers

• Procurement metrics

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Make-or-Buy

decisions

Make-or-buy analysis: The process of

gathering and organizing data about product

requirements and analysing them against

available alternatives including the purchase

or internal manufacture of the product.

Make-or-buy decisions: Decisions made

regarding the external purchase or internal

manufacture of a product.

Make-or-buy decision considerations:

• What is the impact on cost, time, or quality?

• Is there an on-going need for the specific skill set?

• How steep is the learning curve?

• Are required resources readily available within the organization?

Understanding of need

Source

Selection

Criteria

Source selection criteria

are used to rate or score a

proposal.

These criteria must be

defined during the

procurement planning

phase, before the

negotiations start:

Examples of common

source selection criteria

are:

Overall or life-cycle costs

Production capacity and

interest

Technical capability

Management approach

Financial capacity

References & past

performance

Source selection criteria: A set of attributes desired by the buyer which a seller is required to meet or exceed to be

selected for a contract.

Source selection criteria help clarify what is important to the buyer. While many features may be of interest and nice to have, a weighting

system can help isolate those most critical to the purchaser. Weights and evaluation criteria should be clearly detailed in the request.

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Procurement

documents,

examples

RFI – request for information

RFP – request for proposal

RFQ – request for quote

IFB – invitation for bid

RFI: Often used to discover potential bidders by asking, “How would you solve our

problem?” Cost is usually not discussed in this format.

RFP: Would ask for suggested solution and pricing.

RFQ: Typically used to request pricing of goods and materials rather than services or

solutions.

IFB: Usually a sealed bid process that is looking for the best or lowest price from known

sources.

Qualified Vendor List

Is a list which includes all vendors approved to deliver the products, the services, or the results

needed by the project. They are selected according to the procurement requirements of the project.

The Qualified Vendor List may be created also through:

• Historical information and previous experience

• Market Research

• Trade journals

• Consultants in industry

• Professional and technical associations

• Industry groups

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Cost reimbursable

contracts

Contract Types

Fixed price (or lump sum)

contracts

Time and Materials

contracts

Contract: A mutually binding agreement that obligates the seller to provide the specified

project or service or result and obligates the buyer to pay for it.

Contracts may be bilateral, such as an agreement, or unilateral, such as a purchase order.

Different types of contracts are appropriate for different types of purchases. Contracts

generally fall into one of three broad categories:

• Cost reimbursable contracts – this category of contract involves payment

(reimbursement) to the seller for its actual costs, plus typically a fee representing seller

profit. Cost reimbursable contracts often include incentives for meeting or exceeding

selected project objectives, such as schedule targets or costs.

• Fixed price or lump sum contracts – this category of contracts involves a fixed total price

for a well-defined product. To the extent that the product is not well defined, both the

buyer and the seller are at risk. The buyer may not receive the desired product, or the

seller may need to incur additional costs to provide it. Fixed price or lump sum contracts

may also include incentives for meeting or exceeding selected project objectives, such as

schedule targets.

• Time and Materials contracts – these contracts are commonly used for contracting work.

They entail a fixed part paid per a fixed period (ex.: per day, per week, or per month), and

a variable part which is meant to reimburse costs incurred while performing the required

work.

A Letter Of Intent (LOI) is a form of contract which authorizes work to begin before the

definitive contract has been completely negotiated and finalized

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Risk allocation of contract types

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Capped Time and

Materials Contracts

Agile Contract

Types

Target Cost Contracts

Incremental Delivery

Contracts

Agility imposes a different collaboration style with between buyer and seller this creates

different challenges. For example, the buyer may be overexposed to risks such as scope

changes due to the increased flexibility towards change. New contract forms are therefore

emerging to deal with these issues. The following are examples:

Capped Time and Materials Contracts:

• Works like traditional Time and Materials contracts.

• However, an upper limit is set on customers’ payment.

• Customers pay up for the capped cost limit.

• Suppliers benefit in case of early time-frame changes.

Target Cost Contracts

• Supplier and customer agree on final price during project cost negotiation.

• Primarily for mutual cost savings if contract value runs below budget.

• These contracts may allow both parties to face additional costs if it exceeds

budget.

Incremental Delivery Contracts

• Customers review contracts during the contract life cycle at pre-negotiated

designated points of the contract lifecycle.

• Customers can make required changes, continue or terminate the project at

these points.

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Conduct

Procurement

1

Obtaining

responses

2

Selecting a

seller

3

Awarding

the contract

Meeting or conference with

all the bidders

Bidder

Conference

Conducted before the

responses to the bid are

compiled

Ensures a clear and common

understanding of the scope of

the bid

The Bidder Conferences are meetings conducted by the buyer prior to submissions of a bid

or proposal by the vendors. All bidders are present at the meeting at the same time. At the

meeting or conference, the buyer explains the requirements, proposed terms, and

conditions, and answers questions which the bidders have.

The objective of the bidder conference is to ensure that all prospective vendors have a clear

and common understanding of the technical and contractual requirements of the

procurement.

Bidder Conferences may also be known as vendor conferences, pre-bid conferences, preproposal

conferences, or contractor conferences.

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Selecting the short list

Screening:

Weighting:

• Binary, yes/no

criteria, either in or

out,

• Establishes

minimum

requirements

• Example:

certification

required, minimum

experience level,

minimum quality

grade…

• Assign numerical

weight per criteria,

• Rating sellers on

each criteria,

• Multiply weight by

rating to obtain an

overall score,

• Example: cost

levels, years of

experience,

meeting a KPI

range…

Negotiation

with the

shortlisted

parties

Negotiation is “the process of

discussing something with someone in

order to reach an agreement with

them”

From: Cambridge Dictionary

Before: Planning the Negotiation:

• Develop objectives – minimum, maximum, objective

• Evaluate opponent – what motivates?

• Define strategy and tactics

• Gather facts

• Complete price/cost analysis

• Arrange “hygiene” factors

During: Five Stages of the negotiation:

1. Protocol – 2. Probing – 3. Scratch bargaining – 4. Closure - 5. Agreement

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Control

Procurement

1

managing

the vendor

relationship

2

monitoring

contract

performance

3

managing

vendor

claims

4

making

changes to

the contract

as needed

5

closing the

vendor

agreement

Control Procurements process: The process of managing procurement

relationships, monitoring contract performance, making changes and

corrections as appropriate, and closing out contracts.

Should be continuous throughout the duration

of the procurement

Communication

with the vendors

Is particularly frequent when the work is

deployed using an Agile approach

Must be included into the communication

plan, and updated as needed

May reduce risks throughout the procurement

work

Critical component of the procurement process due to the people involved.

The Communication Plan should include provisions for working with vendors or suppliers,

such as:

• Periodic progress reports of supplier activities.

• Advance notification of potential supplier cost overruns or schedule delays, and

acknowledgement by the project manager to the supplier.

• Formal acceptance by the project manager of supplier’s contract deliverables.

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Performing:

Change management

Specifications interpretation

Adherence to quality

Subcontractor management

Production surveillance

Managing:

Waivers

Contract breach

Resolution of disputes

Project termination

Payment schedules

Project close-out

Contract Administration

While managing a contract, interpretation plays a key role. There are factors that influence

how a contract is interpreted, for example:

Patent ambiguity: Courts rule against the person who drafted the contract when it is not

clear.

Standard terms and conditions: Courts use the standard definitions in the construction

industry, for instance, when determining meaning.

Stated versus implied language: A contract should not imply. Courts assume everything is

stated (written) and give little weight to implied requirements.

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Is the system used to collect, track, adjudicate, and

communicate changes to a contract.

Contract change

control system:

The system used

to collect, track,

adjudicate, and

communicate

changes to a

contract.

It is integrated with overall project change control

It defines how contracts may be modified

• Dispute resolution procedures

• Approval levels for changes

Examples of types of changes:

• Change order

• Contract modification

• Supplemental agreement

The contract administrator is responsible for administering the following types of changes:

Change order: A written order, signed by the contracting officer, directing the contractor to make a change.

Contract modification: Any written change in the terms of the contract.

Supplemental agreement: A contract modification that is accompanied by the mutual action of both parties.

Other types of changes include:

Administrative change: A unilateral contractual change, in writing, that does not affect the substantive rights of the parties

(i.e., a change in a bank account number or in an address).

Constructive change: Any effective change to the contract caused by the actions or inaction of personnel in authority or by

circumstances that cause a contractor to perform work differently than required by written contract. The contractor may

file a claim for an equitable adjustment in the contract.

Typical cause of constructive changes include:

• Defective specification with impossibility of performance

• Late or unsuitable customer supplied equipment

• Acceleration of performance

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Changes: formal modification of contract

Specifications: minimum acceptable requirements

Useful legal

terms

Warranties: express or implied

Waivers: relinquish rights to which you are entitled

Bonds: bid, performance, payment

Confidentiality and patent rights

Termination

Warranties: Project contracts should address the duration of the warranty, when the

coverage begins, and what is covered by the warranty.

Warranties apply to owners (buyers) and sellers:

Owner’s implied warranty: An owner’s implied warranty exists when the project owner

extends an implied warranty to the general contractor that all documents relating to the

project are accurate, complete, and legal. If they are not, the contractor is entitled to

recovery of damages.

Contractor’s warranty: There are three contractor warranties:

• Materials/equipment will be of good quality and new unless otherwise permitted.

• Work will be free of defects not inherent in the quality permitted.

• Work will conform to requirements of the contract document.

Bonds: There are three different types of bonds that might be used, for example, in a

construction contract:

Bid bonds: Compensate the owner for the additional costs incurred because of the low

bidder’s failure to honour its bid. It is customary for public project owners to require bidders

to submit a bid bond with their bid. The bond is usually around 10% of the total bid amount.

Options to a bid bond include cash, a certified check, or an irrevocable letter of credit.

Performance bonds: Legal instruments in which a third party, usually a corporate surety,

guarantees the project contractor’s performance to the project owner. The surety’s

responsibility cannot exceed that owed by the principal to the obligee. The issues relative to

performance bonds have to do with understanding the owner’s role, the magnitude of the

bond, and when it is enforced.

Payment bonds: Offer security for unpaid subcontractors and suppliers. The purpose is to

avoid liens against the owner’s property. Issues related to payment bonds include

understanding who benefits from the payment bond, who furnishes the money for them,

and when they may be recovered.

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Closing the vendor agreement

COMPLETING THE PROJECT PROCUREMENT

PRODUCT VERIFICATION – WAS ALL WORK

COMPLETED CORRECTLY AND SATISFACTORILY?

ADMINISTRATIVE CLOSURE – UPDATING ALL

RECORDS AND ARCHIVING FOR FUTURE USE

Contract Termination:

A contract is terminated when it is closed before the work is completed. This may occur in two

ways:

Termination for Convenience: Termination at any time for any reason. Compensation due

seller for work completed and accepted to date.

Termination for Default (Breach): If seller fails to perform or make substantial progress.

Compensation due only for work accepted to date. The contractor liable for additional

procurement costs.

Termination for default is often caused by delays. Delays can be excusable, non-excusable, or

compensable:

Excusable delays occur due to factors beyond the control of any party involved in the project,

e.g., inclement weather. The contractor may be afforded extra time without penalty, but no

additional money.

Non-excusable delays occur due to the contractor failing to live up to contractual obligations.

For example, if materials are not obtained in time or if there is insufficient labour, the

contractor is due neither additional time nor money.

Compensable delays are caused by the owner’s failure to live up to their contractual

obligations. For example, the owner fails to provide access to a building. The contractor is due

additional time and money.

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Successes

Procurement

Audit

Failures

Information to share

with other projects

A procurement audit is a structured review of the procurement process:

• It may address any step from procurement planning through contract administration,

• It may be performed during or after the project

• It is different to the quality assurance related audits

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Keeping it all in line

Keeping it all in line

PMP Preparation

Monitoring and Controlling

Keeping it all in line

1. Monitoring and Controlling

2. Earned Value Management

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Monitoring &

Controlling

• Monitor: collect project performance data,

produce performance measures, and report and

disseminate performance information.

• Control: the process of comparing actual

performance with planned performance,

analyzing variances, assessing trends to effect

process improvements, evaluating possible

alternatives, and recommending appropriate

corrective action as needed.

The definitions are taken from the PMBOK

Glossary

It’s about the Variance! Actual vs. Plan

Actual

Plan

Project control is associated with any activity that will produce a result.

Desired results are identified during planning and then, during implementation, actual

results are reviewed to determine if they have satisfactorily met the specific need.

It is, therefore, necessary to ensure that project controlling processes are addressed early in

project planning and used repeatedly throughout the project life cycle.

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Comparing Actual to Planned performance, and…

Recommending and implementing corrective action

Project Control

is also about:

Recommending and implementing preventive action

Re-planning and following up on new action plans

Determining if implemented actions brought about

resolutions on performance issues

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Performance Tracking Tools:

Scrum/Agile/Kanban boards

Throughput Metrics

Cycle Time

Quality Metrics

Earned Value

Bar Charts (Gantt)

Velocity

Scrum/Agile/Kanban boards

Based on the Japanese management method of pulling cards to various stages as they are

worked on, physical or electronic boards can track work as it progresses across various stages

or categories.

Throughput Metrics

Measurement of the team’s work that has moved from one stage to another stage over a

certain time.

Cycle Time

Measurement of work that has progressed all the way from plan to completed or delivered.

Quality Metrics

Various measurements to track quality deliverables, defects, and acceptable output.

Earned Value

Tracking cost and effort performance against a planned value.

Bar Charts (Gantt)

Using the project schedule to track performance over time.

Velocity

Measurement of total output from an iteration to attempt to predict future iteration outputs.

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Information Radiators

Burndown Chart

Examples of

Performance

Reports

Burnup Chart

Earned Value Management Reports

Variance Analysis Reports

Work performance reports

Quality Reports

Dashboards

Task Boards

Information Radiators: Big visual boards to display in high traffic public locations about the

project and the advancement of the project. The aim is to radiate information to all about the

project work.

Burndown Chart: A graph to show the progress by plotting the burning down of work during

an iteration or other time period.

Burnup Chart: A graph to show the progress and gains made by the project team over time.

Earned Value Management Reports: Graphs and values based on the earned value

management (EVM) equations.

Variance Analysis Reports: Graphs and their analysis comparing actual results to planned or

expected results.

Work performance reports: The physical or electronic representation of work performance

information compiled in project documents, intended to generate decisions, actions, or

awareness.

Quality Reports: Charts and reports based on the quality metrics collected.

Dashboards: Physical or electronic summaries of the progress, usually with visuals or graphics

to represent the larger data set.

Task Boards: Physical or electronic depictions of the work that must be done and their current

state.

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KPI: A predefined metric used to evaluate

performance against the project objectives.

KPIs should be “SMART”.

Key

Performance

Indicators (KPI):

Specific

Achievable

Measurable

Relevant

Time-bound

Managing Schedule delays:

Crashing: Overtime

Fast-Tracking – “soft logic”

Crashing: Add resources

Reduction in scope – Prioritize

Accept the change – adjust the baseline

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Escalation

Escalate issues outside the project scope (outside the

authority of the PM):

• To Ensure project success,

• To Resolve issues around constraints, conflicts,

business issues

• When a project jeopardy condition is detected.

• Establish and present an escalation process/policy

• Escalation must be a proactive process

Establish and present an escalation process/policy:

Issues are prioritized > Required action is defined > Accountable person is identified >

Alternatives are identified > Date that action must be resolved is identified

Define the escalation policy in the Project Team Charter amongst the Ground Rules!

Escalation must be a proactive process: Identify issue, required action, and time it must be

resolved before it impacts the project.

Common items which may require escalation:

• Risks, project jeopardy,

• Lack of skilled resources / Requirement for additional funding,

• Incomplete scope definition,

• Failure of a vendor to complete an assignment / Customer dissatisfaction,

• Violation of a code of conduct principle

• Uncooperative functional manager

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Earned Value Management

Keeping it all in line

1. Monitoring and Controlling

2. Earned Value Management

Earned Value

• Earned Value (EV): the value of work performed

expressed in terms of the budget authorized for

that work.

• Earned Value Analysis (EVA): an analysis method

that uses a set of measures associated with scope,

schedule and cost to determine the cost and

schedule performance of a project.

• Earned Value Management (EVM): A methodology

that combines scope, schedule, and resource

measurements to assess project performance and

progress.

The definitions are taken from the PMBOK

Glossary

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Earned Value?

Project Baseline

We are here

Wk 1 2 3 4 5 ... 10

Vol: 10 20 30 40 50 100

Cost: 5 10 15 20 25 50

EVM Weekly Report

Week 5 Volumes Unit cost EVM Data

PLAN 50 0.5 PV=25

ACTUAL 45 0.6 AC=27

Imagine a project in which you repeat the same work package 100 times, or even better: imagine a project in which you

only have 1 work package of which you track the percentage of completion from 1% to 100%.

This project is to be run in 10 weeks and each week you are scheduled (i.e., you plan) to complete 10 work packages, or

10% of the project.

Each week you send a report to your management. This report includes two numbers: the planned value (PV) compared

against the actual costs (AC).

Objective of management is naturally to understand if the project is proceeding in line with the expected budget.

We are now in week 5 and as we prepare the report, we recall how many hours it took to explain the report to our sponsor

last week! We would like to avoid that going forward.

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Earned Value?

Vol. Unit cost EVM Data

PLAN 50 0.5 PV=25

Previous

Report

ACTUAL 45 0.6 AC=27

Earned Value 45 0.5 EV = 22.5

This report shows that by week 5 we have only produced 40 units (instead of the planned

50) and that each unit has cost us 0.6 (instead of 0.5), therefore the AC is 24: Without EV, PV

and AC are useless!!!

Our objective is to identify where the work actually performed is represented on the

baseline. In order to verify this, we multiply the work done (40 in this example) with the unit

cost used to estimate the baseline (0.5). The result is called the Earned Value.

A meaningful report to management would include EV alongside PV and AC. This will permit

a better understanding of the project status.

The correct way to read this simple earned value report is the following: “By week 5 we had

planned to produce 25 worth of work (PV). In reality we only produced 20 worth of work

(EV), therefore we are late; however, to produce 20 worth of work (EV), we actually spent 24

worth of real money (AC), we are therefore over budget!”

Now we can use these values to build schedule and volumes related metrics.

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PV, AC, and EV on a graph

BAC

27

AC

25

PV

22.5

EV

time

PV: The authorized budget assigned to scheduled work.

EV: The measure of work performed expressed in terms of the budget authorized for that

work.

AC: The realized cost incurred for the work performed on an activity during a specific time

period.

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EV metrics and KPIs

EV

-

PV

=

SV

EV

-

AC

=

CV

SV, CV: > 0 «good», < 0 «bad»

EV

/

PV

=

SPI

SPI,CPI: > 1 «good», < 1 «bad»

EV

/

AC

=

CPI

SV, CV:

If variances are zero, the project is on track, since EV will be equal to PV and/or to AC.

However, if a variance is positive, it will indicate either that the project is ahead of schedule

(a positive SV) or under budget (a positive CV).

SPI, CPI:

Similarly, if a Performance Index is equal to 1, it will indicate a project performance which is

on track. If the performance index is higher than one, the variance will be positive, while if

lower than one it will indicate a negative variance.

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Examples:

EVM Metric Formula Value Status

SV EV – PV 22.5 – 25 = -2.5 Late

CV EV – AC 22.5 – 27 = -4.5 Over Budget

SPI EV / PV 22.5 / 25 = 0.90 Late

CPI EV / AC 22.5 / 27 = 0.83 Over Budget

SV, CV: > 0 «good», < 0 «bad»

SPI, CPI: > 1 «good», < 1 «bad»

Variances: positive is good; negative is bad

Performance Indexes: above 1 is good; below 1 is bad

Performance indices are easy to interpret because they are relative to the value of 1, being

right on plan. You can set up tables based on your stakeholder’s risk tolerance, to determine

thresholds for when corrective action needs to be taken, e.g.:

• > 0.85: acceptable performance

• > 0.75, and <= 0.85: requires corrective action

• <= 0.75: requires urgent corrective action

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PV, AC, and EV on a graph

BAC

27

AC

25

PV

CV

SV

22.5

EV

time

Schedule Variance: is a measure of schedule performance expressed as the difference

between the earned value and the planned value. (SV=EV-PV)

Cost Variance: is the amount of budget deficit or surplus at a given point in time, expressed

as the difference between the earned value and the actual cost. (CV=EV-AC)

Schedule Performance Index: is a measure of schedule efficiency expressed as the ratio of

earned value to planned value. (SPI=EV/PV)

Cost Performance Index: is a measure of the cost efficiency of budgeted resources

expressed as the ratio of earned value to actual cost. (CPI=EV/AC)

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EAC

EAC ?

BAC

27

AC

25

22.5

PV

EV

2 easy

Approaches

(beyond a new

bottom-up estimate)

time

EAC: The current projected final cost of the project.

ETC: The amount of money needed to complete the project.

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EAC 1… we can fix it!

EAC1 →

EAC = BAC + (AC - EV)

EAC 2… we cannot fix it!

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EAC 2… we cannot fix it!

EAC/BAC = AC/EV

EAC = BAC*(AC/EV)

EV/AC = CPI

EAC = BAC/CPI

oh,… and EAC 3

EAC1 can also be re-written in the following way:

EAC1 = BAC + (AC - EV) = AC + BAC - EV

Remember EAC2:

EAC 3:

EAC2 = BAC/CPI

Including both CPI and SPI creates a worst-case

schenario (if both are < 1):

EAC = AC + (BAC – EV)/(CPI*SPI)

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TCPI

To Complete Performance Index

TCPI

CPI

=

EV (work done) / AC (money spent)

TCPI

=

BAC-EV (work left to complete)/

BAC-AC (money left to spend)

TCPI

TCPI = BAC-EV / BAC-AC

But… If Ifan EAC has already been approved?...

TCPI = BAC-EV / EAC-AC

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EV with multiple Work Packages

WP1

90%

100%

Actual PoC

75%

Planned PoC

WP2

30%

WP3

40%

25%

Budget:

WP1: 20

time

now

WP2: 40

WP3: 100

EV with multiple Work Packages

PV

EV

WP1 20*100% 20 20*90% 18

WP2 40*75% 30 40*30% 12

WP3 100*25% 25 100*40% 40

Tot Project Sum= 75 Sum= 70

SV 70-75 -5

SPI 70/75 0.933

Negative SV,

or

SPI < 1

= Project is late

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EV with multiple Work Packages

Assuming the

following

actual costs

(AC) had

been

incurred:

EV

AC

WP1 20*90% 18 20

WP2 40*30% 12 10

WP3 100*40% 40 55

Tot Project Sum= 70 85

CV 70-85 -15

CPI 70/85 0.823

Negative CV,

or

CPI < 1

= Project is

over budget

It works the same way with cost. Assume these actual costs and calculate by aggregating the

values of each work package.

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The trouble with Estimating Work Percent Complete…

Has anyone ever told you: “the work is at 90%”....

And then it stayed that way for weeks?

Avoid subjective evaluation of PoC.

There are some guidelines which can help...

Estimating Work Percentage of Completion

Weighted Milestone: 40% 70%

100%

With predefined % allocations

Instal. comm. Accept.

Fixed Formula:

With predefined Start/End % allocations, for

example:

0%/100% also: 20%/80%

50%/100% or: 25%/75%

100%

50%

50%

0%

now

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EVM Formulas Summary Table

Description Result: Formula “positive” “negative”

Cost Variance CV = EV – AC +ve -ve

Schedule Variance SV = EV – PV +ve -ve

Cost Performance Index CPI = EV / AC >1 <1

Schedule Performance Index SPI = EV / PV >1 <1

Cost Variance Percentage CV% = CV / EV +ve -ve

Schedule Variance Percentage SV% = SV / PV +ve -ve

EAC if ETC will perform at Budgeted Rate EAC = AC + BAC - EV <BAC >BAC

EAC if ETC will perform at Current CPI EAC = BAC / cumulative CPI <BAC >BAC

EAC if ETC will perform at “worst case” EAC = AC+[(BAC-EV)/(CPI*SPI)] <BAC >BAC

Variance at Completion VAC = BAC – EAC +ve -ve

To-Complete Performance Index (against BAC) TCPI = (BAC-EV)/(BAC-AC) <1 >1

To-Complete Performance Index (against EAC) TCPI = (BAC-EV)/(EAC-AC) <1 >1

Interpret the following scenarios, are the projects ahead or behind schedule? Are

they under or over budget?

Scenario 1 - Project “A”, 10-week project life cycle, has a BAC of $225,000 and the

following cumulative performance results through the 5th week, at the report date:

❑ PV = $124,500

❑ EV = $142,000

❑ AC = $110,500

Scenario 2 - Project “B”, 20-week project life cycle, has a BAC of $450,000 and the

following cumulative performance results through the 12th week, at the report date:

❑ PV = $250,000

❑ EV = $315,000

❑ AC = $375,000

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Managing Conflict

Managing Conflict,

Managing Communications,

Managing Change,

PMP Preparation

Keeping it all in line

1. Managing Conflict,

2. Managing Communications,

3. Managing Change,

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Conflict

Management

• Conflict Management: Application of one or

more strategies to deal with disagreements

from the PMBOK Glossary

• Conflict management is the use of techniques

to resolve disagreements or control the level of

discord. Conflict resolution techniques include

facilitating meetings for the conflicting parties

to identify the problem, discuss resolutions and

create superordinate goals that require

cooperation from conflicting parties

Gartner Human Resources

Differing

objectives

Competing

priorities

Causes of

Conflict

Inefficient

communication

Different values

Competition

Unspoken goals

or priorities

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Who’s role is it?

In traditional projects, the project manager supports

the resolution of conflicts within the project team by:

• Influence the direction and handling of conflict

• Use interpersonal and team skills to ensure positive results

In Agile projects this role is typically assigned to an

Agile Coach (in Scrum this will be the Scrum Master):

• Facilitate resolution: remove roadblocks & empower the team,

• Key role of servant leadership.

In both Traditional and Agile the leader(s) will use key

skills such as:

• Emotional Intelligence

• Influencing/Leadership

• Decision-Making

• Negotiation

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Dictate / Force / Direct

Collaborate / Problem Solve

Conflict

Management

Approaches

Compromise

Avoid / Withdraw

Smooth / Accommodate

Withdraw/Avoid: Retreat from conflict situation - Postpone the issue

Smooth/Accommodate: Emphasize areas of agreement - Concede position to maintain

harmony and relationships

Compromise/Reconcile: Search for solutions that bring some degree of satisfaction to

everyone - Temporarily or partially resolve the conflict through compromise

Force/Direct: Pursue your viewpoint at the expense of others - Offer only win/lose solutions

Collaborate/Problem Solve: Incorporate multiple viewpoints - Enable cooperative attitudes

and open dialog to reach consensus and commitment

Conflict Resolution Diagram (CRD)

Conflict Resolution Diagram (CRD)

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Managing Communications

Keeping it all in line

1. Managing Conflict,

2. Managing Communications,

3. Managing Change,

Communication

Management

• Communication methods: A systematic procedure,

technique, or process used to transfer information

among project stakeholders.

• Communication Management Plan: A component

of the project, program, or portfolio management

plan that describes how, when, and by whom

information about the project will be administered

and disseminated.

The definitions are taken from the PMBOK Glossary

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The Communication Management Plan

What? When? How? Storage? Responsible? Stakeholders?

Project

Kick-off

Meeting

Project Team

Meetings

Project

Status

Reports

Steering

Committee

Updates

Project Plan

Updates

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Design Construct Hand-Over

Work

Package 1

Work

Package 2

Work

Package 3

WP

1

WP

2

WP

3

WP

1

WP

2

WP

3

Delivery Insta lation Commiss.

WP

1

WP

2

WP

3

WP

1

WP

2

WP

3

WP

1

WP

2

WP

3

Communication Requirement Analysis

Stakeholder

Assessment Grid

Power

Gathering key

requirements

Interest

Building a tailored communication stream

WBS

Stakeholders

Requirements

Level 1

Project

Level 2

Building A Building B Access Road Equipment Hand-Over

Level 3

Level 4

= Topics of a tailored

communication stream

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Communication

models:

A description, analogy, or

schematic used to represent

how the communication

process will be performed for

the project.

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Managing Change

Keeping it all in line

1. Managing Conflict,

2. Managing Communications,

3. Managing Change,

Change

Management

• Change Management Plan: A component of the

project management plan that establishes the

change control board, documents the extent of

its authority, and describes how the change

control system will be implemented.

The definitions are taken from the PMBOK Glossary

The Change Management Plan answers questions such as the following:

• Who can propose a change?

• What constitutes a change?

• What is the impact of the change on the project's objectives?

• How to evaluate the change request before approving or rejecting it?

• After a change request is approved, what project documents must be amended?

• How will these actions be monitored to confirm that they have been completed?

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Integrated Change

Control System

Customer or steering committee change the

products specifications,

Causes for

project

change

Vendor is not able to deploy as expected,

The original planning was inaccurate,

Stakeholders and/or their requirements were

initially missed,

External changes, such as a new regulation…

Receives all change requests

Defines how changes are approved

or rejected

Identifies the appropriate CCB to

analyse the change request

Deal with the configuration

management issues

Change control system: A set of procedures that describes how modifications to the project

deliverables and documentation are managed and controlled.

Change Control Board (CCB): A formally chartered group responsible for reviewing,

evaluating, approving, delaying, or rejecting changes to the project, and for recording and

communicating such decisions.

Approved change requests: Requests that have been received and approved in accordance

with the integrated change control plan and are ready to be scheduled for implementation.

Approved changes can include: Corrective or Preventive action, Defect repair, Update.

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Backlog Items

Backlog Re-prioritization

PRODUCT BACKLOG

Change in Agile:

• Shift priorities in the backlog

• Embedded into the standard

work process

• Product Owner allocates the

priorities

• Focus on business and

customer value.

In an Agile context, change to the scope is managed by shifting the priorities in the backlog.

This re-prioritization is embedded into the standard work process and is therefore not

managed as an exception.

The Product Owner allocates the priorities in the Backlog based on business and customer

value.

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Afterword: In closing

Congratulations! We have gone through a long journey together. The material

is long, and it has taken a lot of your effort and time in the past weeks to learn

it all. I trust you will take the exam soon, without letting too much time elapse,

risking your efforts.

Rather than as a point of arrival, I invite you to see the PMP® preparation and

the certification as the starting point of your next professional phase. You are

certifying that you have a solid knowledge of the whole of the project

management arena. It is now up to you to choose in which direction you wish

to develop yourself. Will it be in leadership, or in risk management? Will it be in

change management or in developing PMOs. Will it be all the above? It is only

up to you! In the words of Ralph Waldo Ellison: “the end is in the beginning and

lies far ahead” (Invisible Man).

I wish you all the best in your future growth and development!

Kind Regards!

Max Langosco

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