Pmbok 5th Edition

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Process Framework

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Definition of Project Definition as per PMBOK® Guide A project is a temporary endeavor undertaken to create a unique product or service.

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Project Definition 

A temporary endeavor – means that every project has a definite beginning and end.



Unique means that the product or service or result is different from other product or service or result.



Progressively elaborated - proceeding in steps

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Examples of Project         

Building a Software A Major Enhancement to the software Filming a Motion Picture Building a new office Designing a new product or service Creating an advertisement campaign Creating a new process with a business unit Moving from one building to another Designing a space vehicle

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Project vs Operation

PROJECTS

OPERATIONS

Temporary

Ongoing

Unique

Repetitive

Closes after attaining the objectives

Objective is to sustain business

Prototyping the new car model

Assembly line production

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Project Constraints 

Risk



Scope



Budget

Scope

Cost Quality



Resources



Quality



Schedule

PM Triangle

Schedule

Source: A Guide to the Project Management Body of Knowledge, Fourth Edition (PMBOK® Guide) ©2008 Project Management Institute, Inc. All Rights Reserved. Pankaj Sharma, 9810996356

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Why Projects Fail ?         

Lack of clearly defined purpose Inexperienced project Managers Poor estimation of duration and cost Cultural and ethical misalignment Poor requirements and scope management Lack of coordination of resources and activities Poor communication Inadequate planning of scope, schedule, resources, cost, risk and quality Lack of progress and quality control

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What Is Project Management ? Project management is the application of knowledge, skills, tools and techniques to project activities to meet the project requirements - PMBOK® Guide 4th edition (Glossary)

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Project Management Benefits

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Project Management Process Groups 

Process Groups  Project management processes have been bundled into 5 groups and these groups are called project management process groups  Initiating  Planning  Executing  Monitoring and controlling  Closing  These process groups are common to most of the projects across various domains – construction, technology, IT, life sciences etc.  Process groups are different than the Phases  Process groups may overlap / repeat based on the activities in the project

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Initiating Process Group

 

Processes within this group launches the project or a project phase Key activities associated with Initiation includes:  Identifying business needs  Creating a feasibility study  Creating a Product description  Creating Detailed Business Case  Creating a Project Charter  Selecting a Project Manager

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Planning Process Group

It involves creation of Project Management Plan that acts as a roadmap for project execution Key activities would include:          

Collect Requirements Define Scope Create Work Breakdown Structure Define and Sequence Activities Estimate Activity Resource Requirement and Duration Creating Schedule Estimate Cost and Determine Budget Planning Human Resource, Quality, Communications Identify, Analyze and Prepare Risk Response Plan Planning Procurement Pankaj Sharma, 9810996356

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Executing Process Group   

Executing process group consists of processes to complete the work in each of the phases Helps the PM coordinate and direct project resources to meet the objectives of the project plan Key activities would include:  Direct and manage project execution  Acquire project team  Perform quality assurance  Manage Stakeholders Expectation  Distributing project information  Develop and Manage project team  Conduct Procurement

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Monitoring and Controlling Process Group



 

Controlling processes are the activities that  ensure that the project goes according to plan  the actions to implement when project is not going as per the plan Variances from the project baselines are identified and necessary corrective measures are undertaken Key activities would include:  Ensuring Quality Control  Providing scope verification  Implementing change control  Configuration management  Controlling key parameters like cost, schedule and scope  Monitor and Control Risks

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Closing Process Group   

This process group includes all processes to close all activities in a project or project phase Closing activities to be performed even for the aborted / terminated projects Key activities would include:  Auditing procurement documents  Scope verification  Closing vendor contracts  Closing administrative duties  Submitting final reports  Archiving project records  Celebrating!!! Pankaj Sharma, 9810996356

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Process Group Interaction Executing Processes

Level

Planning Processes

Of

Activity

Phase Start

Initiating Processes

Controlling Processes

Time

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Closing Processes

Phase Finish

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Project Life Cycle 

Projects are divided into phases



The project will have at least a beginning, intermediate and ending phase



Number of phases depends on complexity and size of the project



Reviews are conducted at the end of each phase to measure performance



Phase end reviews allows to decide if the project should continue



The collection of phases is called project life cycle



The project life cycle defines the beginning and end of a project

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Characteristics of Project Phase  The completion of one or more deliverables marks the project phase  Deliverables are reviewed and formally accepted by customer at phase end  Phase end reviews are also called phase exits, stage gates or kill points  Rolling wave planning summarizes the future phases at high level

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Characteristic of Project Life Cycle

Source : PMI PMBOK® Fifth Edition

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Project Management Knowledge Areas  

There are 10 Knowledge Areas covered in PMBOK® Guide 5th edition These 10 Knowledge Areas are:  Project Integration management  Project Scope Management  Project Time Management  Project Cost Management  Project Quality Management  Project Human Resource Management  Project Communications Management  Project Risk Management  Project Procurement Management  Project Stakeholder Management Pankaj Sharma, 9810996356

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Project Stakeholders

 Individuals and organizations involved in the project  Those who will be directly or indirectly impacted  Stakeholders should be identified throughout the project  They may have a positive or negative influence on the outcome  Stakeholder influence goes down as the project progresses

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Project Stakeholders

 Key stakeholders include: Project Manager  Customer / User  Performing organization  Project team members  Project management team  Sponsor  Influencers  PMO

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Project Manager – Skill Set

      

Communication Skills Organizational and Planning skills Budgeting Skills Conflict Management Skills Negotiation and Influencing Skills Leadership Skills Team Building and Motivating skills

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Project, Program & Portfolio Management 

Programs    



Collection of related projects Controls are implemented and managed in a coordinated way Collective benefits are realized Each project has a project manager

Portfolios   

Collection of programs and projects Projects meet a specific business goal or objective Includes weighing the value of each project against the portfolios strategic objective

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Project Management Office (PMO) 

Project Management Office [PMO]   

Centralized units to oversee project and programs within the organization Establishes and maintains the standards of project management methodologies Support managers in planning, estimating, risk management and provide trainings

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Organization Type - PM Influence

Pankaj Sharma,Fifth 9810996356 Source: A Guide to the Project Management Body of Knowledge, Edition.

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Organization Type – Functional Organization

Source: A Guide to the Project Management Body of Knowledge, Fifth Edition.

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Organization Type – Weak Matrix

Source: A Guide to the Project Management Body of Knowledge, Fifth Edition.

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Organization Type – Balanced Matrix

Source: A Guide to the Project Management Body of Knowledge, Fifth Edition.

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Organization Type – Strong Matrix

Source: A Guide to the Project Management Body of Knowledge, Fifth Edition.

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Organization Type – Projectized

Source: A Guide to the Project Management Body of Knowledge, Fifth Edition.

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Organization Type – Composite

Source: A Guide to the Project Management Body of Knowledge, Fifth Edition.

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Organization Types – Advantages & Disadvantages

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Process Framework

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PM Knowledge Area – Process Mapping

Source: A Guide to the Project Management Body of Knowledge, Fifth Edition

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Project Integration Management

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Project Integration Management Processes and activities needed to identify, define, combine, unify, and coordinate the various processes and project management activities within the Project Management Process Groups

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Project Integration Management 

Develop Project Charter—the process of developing a document that formally authorizes a project or a phase and documenting initial requirements that satisfy the stakeholder’s needs and expectations.



Develop Project Management Plan—the process of documenting the actions necessary to define, prepare, integrate, and coordinate all subsidiary plans.



Direct and Manage Project Work—the process of performing the work defined in the project management plan to achieve the project’s objectives.



Monitor and Control Project Work—the process of tracking, reviewing, and regulating the progress to meet the performance objectives defined in the project management plan.



Perform Integrated Change Control—the process of reviewing all change requests, approving changes, and managing changes to the deliverables, organizational process assets, project documents, and the project management plan.



Close Project or Phase—the process of finalizing all activities across all of the Project Management Process Groups to formally complete the project or phase.

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Develop Project Charter

Inputs

Tools and Techniques

Outputs

 Project statement of work

 Expert Judgment

 Project Charter

 Business case

 Facilitation Techniques

 Agreements  Enterprise environmental factors Organizational Process Assets

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Project Charter           



.

Project Title and Description Measurable project objectives and related success criteria, High-level requirements Assumptions and Constraints High level project descriptions and boundaries High Level Risks Summary milestone schedule Summary budget Stakeholder list Project Approval Requirements( i.e. What constitutes the project success, who decide that the project is successful, and who signs off the project) Project Manager Assigned and Authority Level (Who is given authority to lead the project, and can he / she determine, manage and approve changes to budget, schedule, staffing, etc.?) Name and Authority of the sponsor or other persons authorizing the project charter.

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Project Selection Methods Numeric Methods 

Benefit Measurement Model (also called Comparative approach ) • Payback Period • Cost Benefit Analysis • Scoring Models • Net Present Value (NPV) • Internal Rate of Return (IRR)



Mathematical Models (also called Constrained Optimization) • Use linear, dynamic, non-linear, multi-objective programming to solve problem

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Project Selection Methods Non Numeric Method Sacred cow Operating necessity Murder Board

Competitive necessity

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Project Selection Methods 

Payback period – the amount of time to recover your cost. It compares the initial investment to the cash inflows expected over the life of the product. •

• •

•

For example, Initial investment on a project is Rs. 4,00,000, Expected cash inflows: Rs. 50,000 per quarter for first two years, Rs. 100,000 per quarter thereafter. What is the payback period? Cash inflows = Rs. 50,000 x 4 (quarters in a year) = Rs. 2, 00,000 per year for first two years. Hence, year 1 inflow = Rs. 2, 00,000, year 2 inflow = Rs. 2, 00,000. Total Rs. 4, 00,000 in 2 years So payback is reached in 2 years.

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Project Selection Methods 

Benefit Cost Ratio (BCR) or profitability Index . This is the ratio of project benefit and the project cost. • BCR = Revenue / Cost • Select the project with a higher BCR

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Project Selection Methods 

Present Value (PV) is the expected future cash flows expressed in today’s monetary value PV = FV / (1+r)

n

• For example, Calculate the Present Value of $ 100,000 received three years from now. The interest rate is 10 percent. • PV = 100000 / (1+10/100)3 = $ 75,131

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Project Selection Methods 

Net Present value (NPV) is the sum total of the Present Value of Cash Inflows – Cash Outflows TIME PERIOD

INCOME/REVENUE

PRESENT VALUE AT 10% INT RATE

COSTS

PRESENT VALUE AT 10% INT RATE

0

0

0

200

200

1

50

45

100

91

2

100

83

0

0

3

300

225

0

0

TOTAL

NPV of the Project is 353-291 = 62 Select the project with higher NPV

353

291

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Project Selection Methods



Internal Rate of Return (IRR): The rate of interest at which the revenues and costs are equal. • Select the project with a higher IRR.



Return On Investment (ROI) – A return ratio that compares the net benefits of a project/ product, verses its total cost. • ROI = Operating Income / Investments

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Item Criteria

Weight

Scoring Model Weighted Criteria (example, using scale of 1-5)

Project A

4 Good ROI

5

12

3

4

20

4

3

Our Winner!! (hmmmm…)

0

0

25

0

0

8

0

0

2

16

4 Match New Initiatives of Competition

9 5

15

5 Provide Better Service

3

3

10

5

Project C

15

2 CEO Likes It

Project B

4

5

12

12

15

0

0

0

0

0

0

0

Total:

54

Total:

58

Total:

57

Total:

0

Total:

0

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Sacred Cows and Pressing Needs

 “Sacred Cow” selection—Senior Management wants it! (it may often turn out well; many visionary projects start here)  Business opportunity (make more $$$)  Savings potential (save $$$)  Keeping up with competition (example, many ecommerce projects were in response to competitor’s initiatives)  Risk management (examples: disaster recovery initiatives, Y2K)  Government or regulatory requirements

URGENT!

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Murder Board “Murder Board" is a term often used for the team created to see if they can push hard on a project plan to see where it will break. This process is called by other names as well, depending on the subject of the scrutiny and type of firm in which it is employed. For a hard review of a proposal, it is usually called a "red team." Some consulting firms call final briefing reviews "gauntlet drills."

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Exercise 1: Which Project Will You Select Method

Project A

Project B

Which One?

Scoring Model

17

20

B

Payback Period

24 Months

25 months

A

Benefit Cost Ratio

3.5

4.5

B

Net Present Value (NPV)

£95,000

£80,000

A

9.5%

11.5%

B

IRR

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Project Management Plan The project management plan defines how the project is executed, monitored and controlled, and closed. The project management plan content will vary depending upon the application area and complexity of the project.

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Develop Project Management Plan

Inputs

Tools and Techniques

Outputs

 Project Charter

 Expert Judgment

 Project Management Plan

 Outputs from other Process

 Facilitation techniques

 Enterprise environmental factor  Organizational Process Assets

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Components of Project Management Plan            

Requirements Management Plan Scope management plan Schedule management plan Cost management plan Quality management plan Process improvement plan Human Resource management plan Communication management plan Risk management plan Procurement management plan Stakeholder management plan Project baselines (include but not limited to scope, schedule and cost baselines)

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Components of Project Management Plan The project management plan may also include the following.  Life cycle selected for the project and the processes that will be applied to each phase  Details of the tailoring decisions specified by the project management team as follows   



 



Project management processes selected by the project management team Level of implementation for each selected process Description of the tools and techniques to be used for accomplishing those processes and Description of how the selected processes will be used to manage the specific project, including the dependencies and interactions among those processes and the essential inputs and outputs.

Description of how work will be executed to accomplish the project objectives Change management plan that documents how the changes will be monitored and controlled Configuration management plan that documents how the configuration management will be performed

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Components of Project Management Plan 

Description of how the integrity of the project baselines will be maintained



Requirements and techniques for communicating among stakeholders



Key management reviews for the content, the extent of, and timing to address, open issues and pending decisions

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Direct and Manage Project Work Direct and Manage Project Work is the process of performing the work defined in the project management plan and implementing approved changes to achieve the project’s objectives.

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Activities in Direct and Manage Project Work The activities include, but are not limited to:

 Perform activities to accomplish project requirements;  Create project deliverables  Staff, train, and manage the team members assigned to the project

 Obtain, manage, and use resources including materials, tools, equipment, and facilities

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Activities in Direct and Manage Project Work The activities include, but are not limited to:  Establish and manage project communication channels, both external and internal to the project team  Generate project data, such as cost, schedule, technical and quality progress, and status to facilitate forecasting  Issue change requests and adapt approved changes into the project’s scope, plans, and environment  Manage risks and implement risk response activities  Collect and document lessons learned, and implement approved process improvement activities

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Direct and Manage Project WorkInputs

Tools and Techniques

Outputs

 Project Management Plan

 Expert Judgment

 Deliverables

 Project Management Information System

 Work Performance Data

 Meetings

 Change Requests

 Approved Change Requests  Enterprise environmental factor  Organizational Process Assets

 Project Management Plan updates  Project Document Updates

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Monitor and Control Project Work Monitor and Control Project Work is the process of tracking, reviewing, and regulating the progress to meet the performance objectives defined in the project management plan. Continuous monitoring gives the project management team insight into the health of the project, and identifies any areas that may require special attention. Control includes determining corrective or preventive actions or re-planning and following up on action plans to determine if the actions taken resolved the performance issue.

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Monitoring and Control Project Work Inputs

Tools and Techniques

 Project Management Plan

Expert Judgment

 Change requests

 Schedule Forecasts

Analytical techniques

 Work Performance Reports

 Cost Forecasts

Project Management Information Systems

 Validated Changes  Work Performance Information  Enterprise environmental factors  Organizational Process Assets

Meetings

Outputs

 Project management plan updates  Project document updates

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Perform Integrated Change Control Perform Integrated Change Control is the process of review in all change requests, approving changes and managing changes to the deliverables, organizational process assets, project documents and the project management plan. The Perform Integrated Change Control process is conducted from project inception through completion. The project management plan, the project scope statement, and other deliverables are maintained by carefully and continuously managing changes, either by rejecting changes or by approving changes thereby assuring that only approved changes are incorporated into a revised baseline.

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Perform Integrated Change Control Inputs

Tools and Techniques

 Project management Plan

 Expert judgment

 Work performance reports

 Meetings

 Change requests

 Enterprise environmental factors  Organizational process assets

 Change control tools

Outputs  Approved change requests  Change log  Project management plan updates  Project documents updates

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Close Project or Phase Close Project or Phase is the process of finalizing all activities across all of the Project Management Process Groups to formally complete the project or phase. When closing the project, the project manager will review all prior information from the previous phase closures to ensure that all project work is complete and that the project has met its objectives.

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Close Project or Phase Inputs  Project Management Plan

Tools and Techniques Expert Judgment

 Accepted Deliverables

Analytical techniques

 Organizational Process Assets

Meetings

Outputs Final product, service, or result transition Organizational process assets updates

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Exercise 2: Integration Management Revising Key Terms 1. The project management plan is the collection of ______ Plans 2. Work Culture and company policies are called Enterprise__________ Factors 3. ___________ is a document that gives the project manager authority over the team

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Answer to Exercise 2: Integration Management Revising Key Terms 1. The project management plan is the collection of Subsidiary Plans 2. Work Culture and company policies are called Enterprise Environmental Factors 3. Project Charter is a document that gives the project manager authority over the team

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QUIZ !

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Project Scope Management

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Project Scope Management Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. Managing the project scope is primarily concerned with defining and controlling what is and is not included in the project.

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Why Manage Project Scope? 

Some of the issues faced in projects  Project teams believe the additional work is a change request, but the client insists it is part of the original scope  The project suddenly finds itself crunched for time. A number of additional requirements are coming up along with the continuing development work  The client talks about a high level vision which the project is expected to achieve, but the stakeholders are either unable to articulate this vision in concrete objectives and deliverables or provide conflicting views  Contradicting requirements. Different interpretation of the same statement by different people  Commitment made to the customer without understanding the application portfolio

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Project Scope Management Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. Managing the project scope is primarily concerned with defining and controlling what is and is not included in the project.

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Project Scope Management 

    

Plan Scope Management – The process of creating a scope management plan that documents how the project scope will be defined , validated and controlled Collect Requirements—The process of defining and documenting stakeholders’ needs to meet the project objectives Define Scope—The process of developing a detailed description of the project and product Create WBS—The process of subdividing project deliverables and project work into smaller, more manageable components Validate Scope—The process of formalizing acceptance of the completed project deliverables Control Scope—The process of monitoring the status of the project and product scope and managing changes to the scope baseline

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Plan Scope Management Plan Scope Management is the process of creating a scope management plan that documents how the project scope will be defined , validated and controlled. The key benefit of this process is that it provides guidance and direction on how scope will be managed throughout the project.

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Plan Scope Management

Inputs

Tools and Techniques

Outputs

 Project Management Plan

 Expert Judgment

 Scope Management Plan

 Project Charter

 Meetings

 Enterprise environmental factors  Organization process assets

 Requirements Management Plan

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Scope Management Plan The scope management plan is a component of the project or program management plan that describes how the scope will be defined, developed, monitored, controlled, and verified. The scope management plan is a major input into the Develop Project Management Plan process, and the other scope management processes.

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Scope Management Plan The components of a scope management plan include: • Process for preparing a detailed project scope statement • Process that enables the creation of the WBS from the detailed project scope statement

• Process that establishes how the WBS will be maintained and approved • Process that specifies how formal acceptance of the completed project deliverables will be obtained and

• Process to control how requests for changes to the detailed project scope statement will be processed.

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Requirements Management Plan The requirements management plan is a component of the project management plan that describes how requirements will be analyzed, documented, and managed.

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Requirements Management Plan Components of the requirements management plan can include, but are not limited to: • How requirements activities will be planned, tracked, and reported; • Configuration management activities such as: how changes to the product will be initiated, how impacts will be analyzed, how they will be traced, tracked, and reported, as well as the authorization levels required to approve these changes; • Requirements prioritization process; • Product metrics that will be used and the rationale for using them; and • Traceability structure to reflect which requirement attributes will be captured on the traceability matrix.

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Collect Requirements (Planning Process Group)

Collect Requirements is the process of defining and documenting stakeholders need to meet the project objectives Many organizations categorize requirements into project requirements and product requirements. Project requirements can include business requirements, project management requirements, delivery requirements, etc. Product requirements can include information on technical requirements, security requirements, performance requirements etc.

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Product Scope and Project Scope

Product Scope:

The features and functions in a product, service, or result.

Project Scope:

The work that needs to be done in order to deliver a product, service or result with the specified features and functions.

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Collect Requirements

Inputs

Tools and Techniques

Outputs

 Scope management plan

 Interviews  Focus Groups  Facilitated Workshop  Group Creativity Techniques  Group Decision Making Techniques  Questionnaires and surveys  Observations  Prototypes  Benchmarking  Context Diagrams  Document analysis

 Requirements Documentation

 Requirements management plan  Stakeholder management plan  Project Charter  Stakeholder Register

 Requirements Traceability Matrix

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Collect Requirements – Requirement Traceability Matrix

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Define Scope

Define Scope is the process of developing a detailed description of the project and product. The preparation of a detailed project scope statement is critical to project success and builds upon the major deliverables, assumptions, and constraints that are documented during project initiation.

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Define Scope -

.

Inputs

Tools and Techniques

Outputs

 Scope management plan

 Expert Judgment

 Project Scope Statement

 Project Charter  Requirements Documentation  Organizational Process Assets

 Product Analysis  Alternatives Identification  Facilitated Workshops

 Project Document Updates

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Project Scope Statement Project scope statement describes, in detail, the project’s deliverables and the work required to create those deliverables  Project Objectives

Project constraints/assumptions

 Product scope description

 Initial identified risk

 Project requirement

 Schedule milestones

 Project boundaries

 Initial project organization

 Project deliverables

 Fund limitation

 Product acceptance criteria

 Configuration management requirement  Approval requirement

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Create WBS

(Planning Process Group)

Create WBS is the process of subdividing project deliverables and project work into smaller, more manageable components. The planned work is contained within the lowest level WBS components, which are called work packages. A work package can be scheduled, cost estimated, monitored, and controlled.

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Create WBS

(Planning Process Group)

Inputs

Tools and Techniques

Outputs

 Scope management plan

Decomposition

 Scope Baseline

Expert judgment

 Project Document Updates

 Project Scope Statement  Requirements Documentation  Enterprise environmental factors  Organizational Process Assets

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Create WBS  The Work Breakdown Structure breaks down deliverables  Work Packages are deliverables / work packages, NOT activities

A sample WBS for a car manufacturing project

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Phase-Based WBS Partial WBS for Software Project Based on Phase Customer Relationship Management System

Project Management

Requirements

Planning

Client Interviews

Reporting

Review of Current Workflows

Administration Meetings Documentation Planning

Design

Logical Design

Build

Logical Design

Process Models

Process Models

Use Cases

Use Cases

Logical Data Models

Physical Data Models

Business Objectives Preliminary Test Planning Documentation Planning Training Requirements

etc.

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Component-Based WBS Partial WBS for Luxury Townhouse Complex by Component IYHTAYCAI* Village Project (*If you have to ask, you can't affort it)

Project Management

Buildings

Land Planning

Sales and Marketing

Planning

Townhouse Units

Water and Sewers

Advertising

Reporting

Clubhouse

Roads and Access Lanes

Association Declarations

Administration

Gatehouses

Retention Ponds

General Legal

Meetings

Pro Shop

18-Hole Golf Course

Documentation Planning

Documentation Planning

Permits and Inspections

Maintenance Staffing Requirements

Permits and Inspections

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WBS Dictionary Template

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WBS Dictionary Project Name: WBS Owner:

WBS Name:

WBS Id:

Parent Id:

Start Date:

End Date:

WBS Detail: WBS Element Description: Acceptance Criteria: Assumptions: Resources Assigned: WBS dependencies: Cost: Approved by:

Date:

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Scope Baseline



Definition: An approved specific version of the detailed scope statement, work breakdown structure (WBS), and its associated WBS dictionary



When finalizing scope baseline, the items that are eliminated from the project must be formally documented as exclusions to the project.



If their exclusion is not properly documented, they may return again and again as new requirements to be considered.

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Validate Scope

Validate Scope is the process of formalizing acceptance of the completed project deliverables. This process includes reviewing deliverables with the customer or sponsor to ensure that they are completed satisfactorily and obtaining formal acceptance of deliverables by the customer or sponsor.

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Validate Scope 

Once the scope of the project has been defined and delivered, the scope of the project delivered must be verified.



This means getting approval of the delivered scope of the project from all of the stakeholders.



It is a good practice to get the stakeholders to agree to the acceptance criteria at the beginning of the project rather than at the end of it.



A set of acceptance criteria is drawn up and the acceptance criteria are agreed to when the project scope is accepted by the stakeholders.

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Validate Scope Inputs

Tools and Techniques

 Project Management Plan

Inspection

 Accepted deliverables

 Requirements Documentation

Group decision making techniques

 Change requests

 Requirements Traceability Matrix  Verified Deliverables  Work performance data

Outputs

 Work performance information

 Project document updates

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Control Scope

(Monitoring and Controlling Process Group)

Monitoring the status of the project and product scope and managing changes to the scope baseline.

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Control Scope

(Monitoring and Controlling Process Group ) Inputs

Tools and Techniques

 Project Management Plan

Variance Analysis

 Requirements Documentation  Work Performance Data

 Requirements Traceability Matrix  Organizational Process Assets

Outputs  Work Performance Information  Change Requests  Project Management Plan Updates  Project Document Updates  Organization Process Assets Updates

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Exercise 1: Correct Order Arrange the following activities in correct order

Define scope

Create WBS

Collect Requirements

Validate Scope

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Exercise 2: Scope Management Crossword

Revising Key Terms : Complete the following 1.

____________ Scope means the features or functions of the thing or service that you are building

2.

The process where you write the project scope statement is called _________ Scope

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Exercise 2: Scope Management Crossword Revising Key Terms : Complete the following 1. Product Scope means the features or functions of the thing or service that you are building 2. The process where you write the project scope statement is called Define Scope

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QUIZ !

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Project Time Management

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Project Time Management Project Time Management includes the processes required to manage timely completion of the project.

Plan schedule management – The process of establishing the policies, procedures and documentation for planning, developing, managing, executing and controlling the project schedule Define Activities—The process of identifying the specific actions to be performed to produce the project deliverables. Sequence Activities—The process of identifying and documenting relationships among the project activities. Estimate Activity Resources—The process of estimating the type and quantities of material, people, equipment, or supplies required to perform each activity. Estimate Activity Durations—The process of approximating the number of work periods needed to complete individual activities with estimated resources. Develop Schedule—The process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule. Control Schedule—The process of monitoring the status of the project to update project progress and managing changes to the schedule baseline. Pankaj Sharma, 9810996356

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Plan Schedule Management Plan schedule Management is the process of establishing the policies, Procedures, and documentation for planning, developing, managing and controlling the project schedule The key benefit of this process is that it provides direction on how the project schedule will be managed throughout the project.

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Plan Schedule Management

Inputs

Tools and Techniques

Outputs

 Project management plan

 Expert Judgment

 Schedule management plan

 Project charter  Enterprise Environment Factors

 Analytical techniques  Meetings

 Organization Process Assets

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Plan Schedule Management

The schedule management plan can establish the following: • Project schedule model development. The scheduling methodology and the scheduling tool to be used • Level of accuracy. The acceptable range used in determining realistic activity duration estimates is . • Units of measure. Each unit used in measurements (such as staff hours, staff days, or weeks for time • Organizational procedures links. The WBS provides the framework for the schedule . • Project schedule model maintenance. The process used to update the status and record progress of

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Plan Schedule Management

• Control thresholds. Variance thresholds for monitoring schedule performance may be specified to indicate An agreed-upon amount of variation to be allowed before some action needs to be taken. Thresholds are typically expressed as percentage deviations from the parameters established in the baseline plan.

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Define Activities Define Activities is the process of identifying and documenting the specific actions to be performed to produce the project deliverables. The key benefit of this process is to break down work packages into Activities that provide a basis for estimating, scheduling, executing, Monitoring , and controlling the project work.

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Define Activities

Inputs

Tools and Techniques

Outputs

 Schedule management plan

 Decomposition

 Activity List

 Rolling Wave Planning

 Activity Attributes

 Expert Judgment

 Milestone List

 Scope Baseline  Enterprise Environment Factors  Organization Process Assets

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Define Activities : Inputs Schedule Management Plan - provides direction on how the project schedule will be managed throughout the project. Scope Baseline provides the project deliverables, assumptions and constraints Enterprise Environmental Factors that can influence the Define Activities process include, but are not limited to, the project management information system (PMIS).

Organizational Process Assets that can influence the Define Activities process include, but are not limited to:  Existing formal and informal activity planning-related policies, procedures, and guidelines, such as the scheduling methodology, that are considered in developing the activity definitions, and  Lessons-learned knowledge base containing historical information regarding activities lists used by previous similar projects.

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Define Activities : Tools and Techniques Decomposition involves subdividing the project work packages into smaller, more manageable components called activities. Rolling Wave Planning is a form of progressive elaboration planning where the work to be accomplished in the near term is planned in detail and future work is planned at a higher level of the WBS. Templates is a standard activity list or a portion of an activity list from a previous project is often usable as a template for a new project. The related activity attributes information in the templates can also contain other descriptive information useful in defining activities.

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Define Activities : Outputs Activity List is a comprehensive list including all schedule activities required on the project. Activity attributes depicts the multiple components associated with each activity  Activity ID, WBS ID, Activity Name, activity description, predecessor activities, successor activities, logical relationships, leads and lags, resource requirements, imposed dates, constraints, and assumptions.  Activity attributes can be used to identify the person responsible for executing the work, geographic area, or place where the work has to be performed, and activity type such as level of effort (LOE), discrete effort, and apportioned effort (AE). Milestone List identifies all milestones and indicates whether the milestone is mandatory, such as those required by contract, or optional, such as those based upon historical information.

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Sequence Activities

Sequence Activities is the process of Identifying and documenting relationships among the project activities. The key benefit of this Process is that it defines the logical sequence of Work to obtain the greatest efficiency given all project constraint.

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Sequence Activities

Inputs

Tools and Techniques

Outputs

 Schedule management plan  Activity List  Activity Attributes  Milestone List Project Scope Statement  Enterprise environmental Factors  Organization Process Assets

 Precedence Diagramming Method (PDM)  Dependency determination  Leads and Lags

 Project Schedule Network Diagrams

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 Project Document Updates

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Sequence Activities - Inputs Schedule Management Plan - provides direction on how the project schedule will be managed throughout the project. Activity List – Output of Define Activities process Activity Attributes – Output of Define Activities process Milestone List - Output of Define Activities process Project Scope Statement – Output of Define Scope Process Organizational Process Assets - The organizational process assets that can influence the Sequence Activities process include, but are not limited to, project files from the corporate knowledge base used for scheduling methodology.

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Sequence Activities – Tools and Techniques Precedence Diagramming Method (PDM)- Also known as activity on node (AON) as the activities are represented on nodes and the logical relationship between activities is represented through arrows The relationship in the figure below represents that the Activity B is dependent on Activity A. i.e. Activity B can only start after the completion of activity A

A

B

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Sequence Activities – Tools and Techniques Types of dependencies in PDM

Finish – to – Start (FS) – This relationship means Task A must complete before Task B can begin. This is the most common relationship. Finish – to – Finish (FF) - Finish of successor activity depends on finish of the predecessor Start-to-Start (SS) – Start of a successor activity depends on start of a predecessor activity. Start- to – Finish (SF) – Finish of Successor depends on the start of preceding activity.

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Sequence Activities – Tools and Techniques Dependency Determination

There are three kinds of dependencies, Mandatory dependency, Discretionary dependency and external dependency Mandatory dependencies referred as hard logic are natural order of activities or which are contractually required. Discretionary dependencies referred as preferred logic, soft logic or preferential logic are defined as best practices and are considered the preferred choice among the other alternatives. External dependencies are external to the project and are not in project’s control. E.g. Deliverable from other project or expected new law etc

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Estimate Activity Resources Estimate Activity Resources is the process of estimating the type and quantities of material, human resources, Equipment, or supplies required to perform each activity. The key benefit of this process is that it identifies the type, Quantity, and characteristics of resources required to Complete the activity which allows more accurate cost and duration estimate

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Estimate Activity Resources Inputs

Tools and Techniques

 Schedule Management Plan  Activity List  Activity Attributes  Resource Calendars  Risk Register  Enterprise Environmental Factors  Organization Process Assets

    

Expert judgment Alternatives analysis Published estimating data Bottom-up estimating Project management software

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Outputs  Activity resource requirements  Resource breakdown structure  Project management updates

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Estimate Activity Resources - Inputs Schedule Management Plan – Identifies the level of accuracy and the units of measure for the resource to be estimated Activity List – Identifies the activities which will need resources Activity Attributes – Provide the primary data input for use in estimating those resources required for each activity in the activity list. Resource Calendar – Resource calendars specify when and how long identified project resources will be available during the project Enterprise Environmental Factors- The enterprise environmental factors that can influence the Estimate Activity Resources process include but are not limited to resource availability and skills Organizational Process Assets – that influence this process include but are not limited to; Policies and Procedures related to staffing, policies and procedures related to rental purchase of supplies and equipments, Historical information regarding types of resources used for similar work on previous projects Pankaj Sharma, 9810996356

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Estimate Activity Resources –Tools and Techniques Expert Judgment is often required to assess the resource-related inputs to this process. Any group or person with specialized knowledge in resource planning and estimating can provide such expertise. Alternatives Analysis Many schedule activities have alternative methods of accomplishment. They include using various levels of resource capability or skills, different size or type of machines, different tools (hand versus automated), and make-or-buy decisions regarding the resource. Published Estimating Data Several companies routinely publish updated production rates and unit costs of resources for an extensive array of labor trades, material, and equipment for different countries and geographical locations within countries.

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Estimate Activity Resources –Tools and Techniques Bottom-Up Estimating When an activity cannot be estimated with a reasonable degree of confidence, the work within the activity is decomposed into more detail. The resource needs are estimated. These estimates are then aggregated into a total quantity for each of the activity’s resources. Activities may or may not have dependencies between them that can affect the application and use of resources. If there are dependencies, this pattern of resource usage is reflected and documented in the estimated requirements of the activity. Project Management Software Project management software has the capability to help plan, organize, and manage resource pools and develop resource estimates. Depending on the sophistication of the software, resource breakdown structures, resource availability, resource rates and various resource calendars can be defined to assist in optimizing resource utilization.

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Estimate Activity Resources – Outputs Activity Resource Requirements identifies the types and quantities of resources required for each activity in a work package. These requirements can then be aggregated to determine the estimated resources for each work package. The amount of detail and the level of specificity of the resource requirement descriptions can vary by application area. The resource requirements documentation for each activity can include the basis of estimate for each resource, as well as the assumptions that were made in determining which types of resources are applied, their availability, and what quantities are used. Resource Breakdown Structure is a hierarchical structure of the identified resources by resource category and resource type. Examples of resource categories include labor, material, equipment, and supplies. Resource types can include the skill level, grade level or other information as appropriate to the project. The resource breakdown structure is useful for organizing and reporting project schedule data with resource utilization information. Project Documents may be updated include, but are not limited to:  Activity list,  Activity attributes, and  Resource calendars.

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Estimate Activity Duration Estimate Activate Durations is the process of estimating the Number of work periods needed to complete individual Activities with estimated resources. The key benefit of this process is that it provides the amount of time each activity will take to complete, which is a major input to Develop schedule process.

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Estimate Activity Duration Inputs

Tools and Techniques

Outputs

 Schedule management plan Activity List  Activity Attributes  Activity Resource Requirements  Resource Calendars  Project Scope Statement  Risk Register  Resource Breakdown Structure  Enterprise Environmental Factors  Organization Process Assets

 Expert judgment  Analogous Estimating  Parametric Estimating  Three point estimates  Group decision making techniques  Reserve Analysis

Activity duration updates Project document updates

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Estimate Activity Duration - Inputs Schedule Management Plan – defines the method used and the level of accuracy along with other criteria required to estimate activity durations including the project update cycle. Activity List – Defines activity list that will need duration estimates. Activity Attributes- Output of Define Activities process Activity Resource Requirements –The number of resources allocated will impact the duration of most of the activities. Resource Calendars - can include the type, availability, and capabilities of human resources. The type, quantity, availability, and capability, when applicable, of both equipment and material resources, which could significantly influence the duration of schedule activities, are also considered. Examples such as Existing conditions, Availability information and length of the reporting periods. Examples of constraints include , Available skilled resources and contract terms and requirement.

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Estimate Activity Duration - Inputs Project Scope Statement- The assumptions and constraints from the project scope statement are considered when estimating the activity durations. This includes  Existing conditions  Availability of information  Length of the reporting periods Examples of constraints include, but are not limited to  Available skilled resources  Contract terms and requirements Enterprise Environmental Factors that can influence the Estimate Activity Durations process include, but are not limited to: Duration estimating databases and other reference data, Productivity metrics, and Published commercial information. Organization Process Assets that can influence the Estimate Activity Durations process include but are not limited to: Historical duration information, Project calendars, Scheduling methodology and Lessons learned.

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Estimate Activity Duration – Tools and Techniques Expert Judgment guided by historical information, can provide duration estimate information or recommended maximum activity durations from prior similar projects. Expert judgment can also be used to determine whether to combine methods of estimating and how to reconcile differences between them. Analogous estimating uses parameters such as duration, budget, size, weight, and complexity, from a previous, similar project, as the basis for estimating the same parameter or measure for a future project. Parametric Estimating Parametric estimating uses a statistical relationship between historical data and other variables (e.g., square footage in construction) to calculate an estimate for activity parameters, such as cost, budget, and duration. Reserve Analysis include contingency reserves, (sometimes referred to as time reserves or buffers) into the overall project schedule to account for schedule uncertainty. The contingency reserve may be a percentage of the estimated activity duration, a fixed number of work periods, or may be developed by using quantitative analysis methods.

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Estimate Activity Duration – Tools and Techniques Three-Point Estimates (PERT) is based on statistical methods in particular normal distribution. The estimation of activity duration is done based on the following three points Most likely (M). The duration of the activity, given the resources likely to be assigned, their productivity, realistic expectations of availability for the activity, dependencies on other participants, and interruptions. Optimistic (O). The activity duration is based on analysis of the best-case scenario for the activity. Pessimistic (P). The activity duration is based on analysis of the worst-case scenario for the activity. PERT analysis calculates an Expected (E) activity duration using a weighted average of these three estimates: Double Triangular or Beta Distribution - E = O + 4M + P/6 , Standard Deviation SD= P-0/6 Triangular Distribution – E= 0+M+P/3 , Standard Deviation =√ 02+M2+P2-OM-MP-PO/18

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Develop Schedule Develop schedule is the process of analyzing activity sequences, durations, resource requirements, and schedule constraints to create the project schedule model. The key benefits of this process is that by entering schedule activities , durations, resources, resource availabilities and Logical relationships into the scheduling tool , it generates a schedule model with planned dates for completing project activities

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Develop Schedule

Inputs             

Schedule management Activity List Activity attributes Project schedule network diagrams Activity resource requirements Resource calendars Activity duration estimates Project scope statement Project staff assignments Resource Breakdown Structure Risk Register Enterprise Environmental Factors Organizational Process Assets

Tools and Techniques        

Schedule network analysis Critical path method Critical chain method Resource optimization techniques Modeling techniques Leads and lags Schedule compression Scheduling tool

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Outputs Project schedule Schedule baseline Schedule data  Project Calendars  Project Management Plan updates Project document updates

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Develop Schedule - Inputs Schedule Management Plan – Identifies the scheduling method and tool used to create the schedule and how schedule is to be calculated. Activity List – Identifies the activities that will be included in the schedule model Activity attributes – Provide the details used to build the schedule model. Project schedule network diagram – contains logical relationship between predecessor and successor that will be used to build the schedule. Activity resource requirements – Identify the types and quantities of resources required for each activity used to create the schedule model. Resource calendars- specify when and how long identified project resources will be available during the project Activity duration estimates contain the quantitative assessment of the likely number of work periods that will be required to complete an activity that will be used to calculate the schedule.

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Develop Schedule - Inputs Project scope statement- contains assumptions and the constraints that can impact the development of the schedule. Enterprise Environmental Factors that can influence the Develop Schedule process include, but are not limited to, a scheduling tool that can be used in developing the schedule. Organizational Process Assets The organizational process assets that can influence the Develop Schedule process include, but are not limited to: Scheduling methodology and Project calendar.

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Develop Schedule Tools and Techniques The critical path method calculates the theoretical early start and finish dates, and late start and finish dates, for all activities without regard for any resource limitations, by performing a forward and backward pass analysis through the schedule network. Critical Chain Method is a schedule network analysis technique that modifies the project schedule to account for limited resources. The resource-constrained critical path is known as the critical chain. The critical chain method adds duration buffers that are non-work schedule activities to manage uncertainty.

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Develop Schedule Tools and Techniques Resource Optimization Techniques – that can be used to Adjust the schedule model due to demand and supply of resources include. Resource Levelling - Is necessary when resources have been overallocated, such as when a resource has been assigned to two or more activities during the same time period, when shared or critical required resources are only available at certain times or are only available in limited quantities. Resource leveling can often cause the original critical path to change. Resource Smoothing – A technique that adjusts the activities of a schedule model such that the requirements for resources on the project do not exceed certain predefined resource limits. There is no change in the project completion date the activities may only be delayed within their free and total float.

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Develop Schedule Tools and Techniques Modeling Techniques include

What-If Scenario Analysis- A schedule network analysis is performed using the schedule to compute the different scenarios, such as delaying a major component delivery, or introducing external factors, such as a strike The outcome of the what if scenario analysis can be used to assess the Feasibility of the project schedule under adverse conditions Simulation involves calculating multiple project durations with different sets of activity assumptions. The most common technique is Monte Carlo Analysis in which a distribution of possible activity durations is defined for each activity and used to calculate a distribution of possible outcomes for the total project.

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Develop Schedule Tools and Techniques Applying Leads and Lags - Leads and lags are refinements applied during network analysis to develop a viable schedule. Schedule Compression Crashing. A schedule compression technique in which cost and schedule tradeoffs are analyzed to determine how to obtain the greatest amount of compression for the least incremental cost. Examples of crashing could include approving overtime, bringing in additional resources, or paying to expedite delivery to activities on the critical path. Crashing only works for activities where additional resources will shorten the duration. Crashing does not always produce a viable alternative and may result in increased risk and/or cost. Fast tracking. A schedule compression technique in which phases or activities normally performed in sequence are performed in parallel. An example is constructing the foundation for a building before completing all of the architectural drawings. Fast tracking may result in rework and increased risk. Fast tracking only works if activities can be overlapped to shorten the duration. Pankaj Sharma, 9810996356

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Develop Schedule Tools and Techniques Scheduling Tool - Automated scheduling tools expedite the scheduling process by generating start and finish dates based on the inputs of activities, network diagrams, resources and activity durations. A scheduling tool can be used in conjunction with other project management software applications as well as manual methods.

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Develop Schedule Outputs Schedule Baseline - is a real or theoretical construct that captures the approved schedule. It is used to provide a comparison or contrast with the actual progress of work against the schedule and to determine if performance to date is within acceptable parameters. Project schedule displays the start and end dates of all the activities in the project and the same for overall project. It can be represented in the form of Gantt Chart, Milestone Chart or a project network diagram. Schedule data is the data on the basis of which schedule was developed. It includes resource requirements by time period, alternative schedules such as best-case or worst case, not resource leveled or resource leveled with, or without imposed dates and scheduling of contingency reserves

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Develop Schedule Outputs Project Calendars – A project calendar identifies working days and shifts that are available for scheduled activities. It distinguishes time period in days or part of days that are available to complete scheduled activities from time period that are not available. Project Management Plan Updates – Elements of the project management plan that may be updated include  Schedule baselines  Schedule management plan Project document updates includes updates to resource requirement, activity attributes, risk registers and calendars

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Exercise : Critical Path

For the network diagram below find Critical Path, float for activity A and E

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Exercise : Critical Path

For the network diagram below find Critical Path, float for activity A and E

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Exercise : Forward and Backward Pass

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Exercise : Critical Path

Complete the following Project Network Diagram

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Exercise : Critical Path

Based on the portion of network diagram shown below find ES and LF for activity F

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Control Schedule (Monitoring and Controlling Process Group)

Control Schedule is the process of monitoring the status of the project to update project progress and manage changes to the schedule baseline.

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Control Schedule Control Schedule is the process of monitoring the status of project activities to update project progress and manage changes to the schedule baseline to achieve the plan. The key benefit of this process is that it provides the means to recognize deviation from the plan and take corrective action and preventive actions and thus minimizes risk.

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Control Schedule Inputs

Tools and Techniques

 Project management plan  Project schedule  Work performance data  Organizational process assets

 Performance reviews  Project management Software  Resource optimization techniques  Modeling techniques  Leads and lags  Schedule compression  Scheduling tool

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Outputs  Work performance information  Schedule forecasts  Change Requests  Project Management Plan updates  Project document updates  Organization Process asset updates

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Control Schedule- Inputs Project Management Plan is a formal, approved document that defines how the project is executed, monitored and controlled. Project Schedule is the primary input to this process, since it is the source against which the results are controlled. Work Performance Data details the work that is being executed, recently completed, and next steps. This information is gathered from the Direct and Manage Project execution process. Project Calendars - A schedule model may require more than one project calendar to allow for different work periods for some activities to calculate the schedule forecasts.

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Control Schedule- Inputs Schedule Data will be reviewed and updated in the Control Schedule process.

Organizational Process Assets can be a system for formally evaluating schedule change, or a software system to help detect changes or measuring variance

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Control Schedule- Tools and Techniques Performance Reviews keeps project manager updated on how project is progressing against the base lined schedule. Some of the techniques that can be used for performance reviews are :  Trend analysis – examines project performance over time to determine whether performance is improving or deteriorating.  Critical path method – Comparing the progress along the critical path can help determine schedule status. The variance on the critical path will have a direct impact on the project end data. Evaluating the progress of activities on near critical paths can identify schedule risk.  Critical Chain method- Comparing the amount of buffer remaining to the amount of buffer needed to protect the delivery date can help determine schedule status. The difference between the buffer needed and the buffer remaining can determine whether corrective action is appropriate.  Earned Value Management - Measurements such as SV and SPI helps you to know whether you are ahead or behind in terms of the schedule. Pankaj Sharma, 9810996356

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Control Schedule- Tools and Techniques Project Management Software automates the other tools and techniques in control schedule Resource optimization techniques involves the scheduling of activities and resources required by those activities while taking into consideration both the resource availability and the project time. Modeling techniques are used to review various scenarios guided by risk monitoring to bring the schedule model into alignment with the project management plan and approved baseline.

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Control Schedule- Tools and Techniques Leads and lags have impact on the schedule and as the project progresses lead and lags need to be adjusted to reflect reality so as to provide the most realistic view of the schedule possible

Schedule compression includes shortening the duration of the plan through Crashing and Fast tracking Scheduling tool provides various features (Views, reports etc) that helps in managing the schedule

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Control Schedule- Outputs Work Performance Information– The updated schedule performance index (SPI) , Schedule variance (SV) and other earned value measurements relevant to the schedule need to be calculated and communicated out. Change Requests – Any change in the schedule due to change in scope or due to any other valid reason requires Change Request. Project Management Plan Updates - As the schedule changes, the project management plan is updated. Project Document Updates – This includes any project document (Other than project management plan) that has changed as a result of Control Schedule. For example Scheduled data such as revised planned start and finish dates, Project schedule and the Risk register

Organization Process Updates – Any times a lesson is learned in Control Schedule, it becomes a reusable asset for the performing organization. Pankaj Sharma, 9810996356

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Exercise 3: Time Management Complete the following 1. Adding more resources to a project so you can get it done faster is called____________ . 2. _________ is the process where you put the activities in order.

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Answers to Exercise 3: Time Management

1. Adding more resources to a project so you can get it done faster is called Crashing . 2. Sequence Activities is the process where you put the activities in order.

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Project Cost Management

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Project Cost Management Project Cost Management includes the processes involved in estimating, budgeting, and controlling costs so that the project can be completed within the approved budget.

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Cost Management Processes

Process

Process Group

Plan Cost Management

Planning

Estimate Costs

Planning

Determine Budget

Planning

Control Costs

Monitoring and Controlling

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Estimate Costs Estimate Costs is the process of developing an approximation of the monetary resources needed to complete project activities. The table below shows five different types of estimates that can be used based on the need. Estimate Type

Range

Order of Magnitude Estimates

-50% to +50%

Conceptual Estimate

-30% to +50%

Preliminary Estimate

-20% to +30%

Definitive Estimate

-15% to +20%

Control Estimate

-10% to +15%

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Types of Cost 

Direct Cost- Any cost that is identified specifically with a particular final cost objective.

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Indirect Cost- Any cost not directly identified with a single, final cost objective (more than one project)

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Fixed Cost - Periodic charge that does not vary with business volume

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Variable Cost - Cost that fluctuates based on the business volume

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Opportunity Cost: When there is a decision to be made between two opportunities, the opportunity cost is the value / money forgone for the not doing the project. pankaj sharma, 9810996356

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Types of Cost •

Lifecycle Costing: Takes into account cost of development of a project and also the cost of supporting during the lifecycle.

•

Sunk Cost - Cost already incurred which cannot be recovered regardless of future events

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Plan Cost Management The process that establishes the policies, procedures , and documentation for planning , managing , expending , and controlling project costs.

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Plan Cost Management Inputs

Tools and Techniques

Outputs

 Project Management Plan  Project Charter Enterprise Environmental Factors  Organizational Process Assets

 Expert Judgment  Analytical Techniques  Meetings

 Cost Management Plan

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Plan Cost Management- Inputs

Project Management Plan component that is important for this process are primarily the scope and cost baselines. Project Charter provides the summary budget from which the detailed project costs are developed . It also defines the project approval requirements that will influence the management of the project costs. Enterprise Environmental Factors include factors such as Organization structure/culture, Market conditions, currency exchange rates (for project sourced from more than one country) that influence the project cost. Organizational Process Assets include financial control procedures , historical information . Existing formal and informal cost estimating and budgeting related policies, procedures and guidelines.

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Plan Cost Management- Tools and Techniques

Expert Judgment – Guided by historical information, provides valuable insight about the environment and information from prior similar projects. Judgment based upon expertise in an application area, knowledge area , discipline, industry can be useful in this process. Analytical Techniques – Some of the techniques payback period, return on investment, internal rate of return, discounted cash flow and net present value can be useful in this process Meetings - Project teams may hold meetings planning meetings to develop the cost management plan. These meetings may include, project sponsor, project manager, selected team members , selected stakeholders, anyone with responsibility for project costs.

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Plan Cost Management- Outputs Cost Management Plan – is a component of the project management plan and describes how the project costs will be planned, structured , and controlled. The cost management plan can establish the following.  Units of measure - Each unit of measure for each resource.  Level of precision – The degree to which activity cost estimates will be rounded up or down.  Level of accuracy - The acceptable range (e.g. +_ 100%) used in determining realistic activity cost estimates is specified , may include an amount for contingencies.  Control threshold – Variance threshold for monitoring cost performance may be specified to indicate an agreed – upon amount of variation to be allowed before some action need to be taken.

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Plan Cost Management- Outputs

The cost management plan also contains.  Rules of performance measurement – Earned value management (EVM) rules of performance measurement are set. For example  Define the points in the WBS at which measurement of control accounts will be performed  Establish the earned value measurement techniques (e.g. weighted milestones, fixed formula, percent complete, etc) to be used and  Specify tracking methodologies and the earned value management computation equations for calculating projected estimate at completion (EAC) forecasts to provide a validity check on the bottom-up EAC

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Estimate Cost Estimate cost is the process of developing an approximation of the monetary resources needed to complete project activities. The key benefit of this process is that it determines the amount of cost required to complete project work.

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Estimate Costs Inputs

Tools and Techniques

Outputs

 Cost Management Plan  Human Resource Management Plan  Scope baseline  Project Schedule  Risk Register  Enterprise Environmental Factors  Organizational Process Assets

 Expert Judgment  Analogous Estimating  Parametric estimating  Bottom-up estimating  Three-point estimates  Reserve Analysis  Cost of Quality  Project management estimating software  Vendor bid analysis  Group decision – making techniques

 Activity Cost estimates  Basis of estimates  Project document updates

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Estimate Costs - Inputs

Cost management plan – The cost management plan defines how project costs will be managed and controlled . It includes the method used and the level of accuracy required to estimate activity cost. Human Resource Plan provides detail on Project staffing attributes, personnel rates, and related rewards/recognition, these are necessary components for developing the project cost estimates.

Scope baseline include inputs from scope statement, Work Breakdown Structure and WBS dictionary. Project Schedule provides detail on the type and quantity of resources and the amount of time which those resources are applied to complete the work of the project, all these factors directly impact the cost Risk Register provides input related to costs associated with risk response

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Estimate Costs - Inputs

Enterprise Environmental Factors include availability of resources, published commercial information Organizational Process Assets – include cost estimating policies, historical information, cost estimating templates and lesson learned

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Estimate Costs -Tools and Techniques Expert Judgment guided by historical information, provides valuable insight about the environment and information from prior similar projects. Expert judgment can also be used to determine whether to combine methods of estimating and how to reconcile differences between them. Analogous Estimating relies on historical information (Previous projects executed by the organization) to predict the cost of current project. This is a top-down approach is good for fast estimates to get a general idea of what the project may cost. The accuracy depends upon how similar the two projects actually are. Parametric estimating uses a mathematical model based on known parameters to predict the cost of a Project. A parameter can be cost per unit, cost per cubic yard etc. Two Parametric estimating techniques are Regression Analysis and Leaning curve.

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Estimate Costs -Tools and Techniques Bottom-up estimating produces a separate estimate for each scheduled activity. The detailed cost is then summarized or “rolled up” to higher levels for subsequent reporting and tracking purposes. The cost and accuracy of bottom-up cost estimating is typically influenced by the size and complexity of the individual activity or work package. Three-point estimates concept originated with the program evaluation and review technique (PERT). PERT uses three estimates to define an approximate range for an activity’s cost:

Triangular Distribution Estimated Cost = Optimistic + Most Likely + Pessimistic)/ 3 Beta Distribution ESTIMATED COST = (Optimistic + 4*(Most Likely) + Pessimistic) / 6

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Estimate Costs -Tools and Techniques Reserve Analysis adds reserve amount (Contingency) to the cost. This is done to take care of uncertainties in the project. Cost of Quality includes assumptions related to Cost of Quality Project management software is helpful in performing calculations, Organizing and storing large amount of information needed for preparing cost estimates and for reporting purpose Vendor bid analysis may include analysis of what the project should cost, based on the responsive bids from qualified vendors. Group Decision Making Techniques Team – based approaches , such as brainstorming, the Delphi or nominal group techniques, are used for engaging team members to improve estimate accuracy and commitment to the emerging estimates.

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Estimate Costs - Outputs

Activity Cost estimates details how much it would cost to complete each schedule activity on the project Basis of estimates include supporting documentation of the cost estimates and it may include documentation of the basis of estimates , documentation of all assumptions made , documentation of any known constraint , indication of the range of possible estimates and indication of the confidence level of the final estimates Project document updates include project risk register and cost management plan

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Exercise : Estimate Cost Revise Tools to Estimate Cost 1. You figure out a best case scenario and , a likely scenario and a worst case scenario. Then you use a formula to come up with an expected cost for the project. The tool used by you is ________ 2. John creates a document with all the historical information from similar project he had done in past and also takes input from a contractor who provides his input. The tool used by John is_________

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Answers to Exercise : Estimate Cost Revise Tools to Estimate Cost 1. You figure figures out a best case scenario and , a likely scenario and a worst case scenario. Then you use a formula to come up with an expected cost for the project. The tool used by you is Three-point estimate 2. John creates a document with all the historical information from similar project he had done in past and also takes input from a contractor who provides his input. The tool used by John is Expert Judgment

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Determine Budget Determine Budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. This baseline includes all authorized budgets, but excludes management reserves.

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Determine Budget Inputs

Tools and Techniques

 Cost management plan Activity cost estimates  Basis of estimate  Scope baseline  Project Schedule  Resource Calendars  Risk register  Agreements  Organizational Process Assets

    

Cost Aggregation Reserve Analysis Expert Judgment Historical relationship Funding limit reconciliation

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Outputs  Cost baseline  Project funding requirements  Project document updates

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Determine Budget - Inputs Cost Management Plan - describes how the project costs will be managed and controlled Scope baseline refers to collection of approved project scope statement and its associated WBS and WBS dictionary. Activity cost estimates of a work package is a summation of the activity cost estimates of activities under the work package Basis of estimate includes supporting detail for cost estimates contained in the basis for estimates should specify any basic assumptions Project Schedule helps in mapping the cost back to time for planning purpose

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Determine Budget - Inputs Resource Calendars along with Project schedule will help plan for when the costs will be incurred Agreements Applicable agreement information and costs relating to products, services or results that have been or will be purchased are included when determining the budget. Organizational Process Assets include cost budgeting policies procedures , guidelines and reporting method

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Determine Budget – Tools and Techniques Cost Aggregation involves aggregating the costs of individual activities to work packages that are further aggregated to higher levels of WBS and finally into the project cost Reserve Analysis include contingency reserve and management reserves for the project. Contingency reserves are allowances for response plan strategized for the identified risks. These are also known as “known unknowns” . Management reserves are allowance for unplanned changes to thee project scope and cost. The are also known as “unknown unknowns”. Reserves are not the part of the project cost baseline. Expert Judgment can be taken from experienced consultant in the project application area. This can be from an internal organizational resource or external sources

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Determine Budget – Tools and Techniques Historical relationship result in parametric estimates or analogous estimates that involve parameter to develop mathematical models to predict total project costs. Funding limit reconciliation refers to reconciliation of planned spending with the funding limit

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Determine Budget – Outputs Cost performance baseline is an authorized time-phased budget at completion (BAC) used to measure, monitor, and control overall cost performance on the project. It is developed as a summation of the approved budgets by time period and is typically displayed in the form of an S-curve, as is illustrated in Figure below (Reference PMBOK 4th edition). In the earned value management technique the cost performance baseline is referred to as the performance measurement baseline (PMB).

Reference PMBOK 5th Edition

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Determine Budget – Outputs Project funding requirements are derived from cost baselines. Total funding requirement is sum of cost baseline and management reserve. Project document updates include updates to risk register, cost estimates and project schedule

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Project Budget Components

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Exercise 2: Determine Budget Revise Tools to Determine Budget Monika reads a newspaper article that says there has been sharp increase in steel cost recently. She knows this was not in her contractor’s original plan and decides to put a few hundred dollars aside to deal with the price hike if it should happen. The tool used by Monika is • Parametric estimating • Reserve analysis • Cost aggregation • Fund Limit Reconciliation

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Answers to Exercise 2: Determine Budget Revise Tools to Determine Budget Monika reads a newspaper article that says there has been sharp increase in steel cost recently. She knows this was not in her contractor’s original plan and decides to put a few hundred dollars aside to deal with the price hike if it should happen. The tool used by Monika is • Parametric estimating • Reserve analysis • Cost aggregation • Fund Limit Reconciliation

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Control Costs

Control Costs is the process of monitoring the status of the project to update the project budget and managing changes to the cost baseline.

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Control Costs Inputs

Tools and Techniques

Outputs

 Project management plan  Project Funding Requirements  Work Performance data  Organizational Process Assets

□ □ □

 Work performance Information  Cost forecasts  Change Requests  Project management plan updates  Project document updates  Organizational Process assets updates

□ □ □

Earned value management Forecasting To-complete performance index TCPI Performance reviews Project management software Reserve analysis

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Control Costs - Inputs Project Management Plan contains Cost management plan and Cost performance Baseline, these are helpful in controlling the cost. Project Funding Requirements As explained earlier include projected expenditures plus anticipated liabilities Work Performance Data provides information on the status and cost of project activities and ensures that the project goals and objectives are met as per the project management plan Organizational Process Assets that can influence this process include cost budgeting policies, procedures, guidelines , cost budgeting tools and reporting methods

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Control Costs – Tools and Techniques Earned value management is used to measure the performance of the project, It integrates project scope, cost, and schedule measures to help the project management team assess and measure project performance and progress. The EVM technique involves evaluating the planned value , Earned Value and the Actual cost for each schedule activity , work package or control account. 1. Planned Value (PV) is the authorized budget assigned to the scheduled work to be accomplished for a schedule activity or work breakdown structure component. It is also known as Budgeted Cost of Work Scheduled (BCWS) 2. Earned Value (EV) is the value of work performed expressed in terms of the approved budget assigned to that work for a schedule activity or a WBS component. It is also known as Budgeted cost of Work Performed (BCWP) 3. Actual Cost (AC) is the total cost actually incurred and recorded in accomplishing work performed for an activity or work breakdown structure component.

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Control Costs – Tools and Techniques Variance Analysis helps in analyzing the performance of the project vis-à-vis cost and schedule baselines Schedule Variance (SV) is a measure of schedule performance on a project. It is equal to the earned value (EV) minus the planned value (PV). SV= EV-PV. Cost variance (CV) is a measure of cost performance on a project. It is equal to the earned value (EV) minus the actual costs (AC). CV = EV-AC Schedule performance Index (SPI) in addition to project status is used to predict the completion date. SPI = EV/PV Cost Performance Index (CPI) measures the cost efficiency for the work completed, it is the ration of EV to AC. CPI = EV/AC.

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Control Costs – Tools and Techniques Forecasting Techniques are used to calculate Estimate at completion (EAC) and Estimate to complete (ETC). EAC = AC + ETC EAC forecast for ETC work performed at the budgeted rate EAC = AC + BAC – EV EAC forecast for ETC work performed at the present CPI EAC = BAC / cumulative CPI EAC forecast for ETC work considering both SPI and CPI factors. AC + [(BAC – EV) / (cumulative CPI x cumulative SPI)].

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Control Costs – Tools and Techniques To-complete performance index (TCPI) is the calculated projection of cost performance that must be achieved on the remaining work to meet a specified management goal, such as the BAC or the EAC. TCPI based on the BAC: Work Remaining (BAC – EV) / Fund Remaining (BAC – AC). TCPI based on EAC : (BAC-EV)/(EAC-AC) Performance reviews involves following three types of analysis 1. Variance Analysis compares actual project performance to planned or expected performance. Cost and schedule variances are the most frequently analyzed. 2. Trend Analysis examines project performance over time to determine if performance is improving or deteriorating. 3. Earned value management compares the baseline plan to actual schedule and cost performance.

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Control Costs – Tools and Techniques Project management software is often used to monitor the three EVM dimensions (PV, EV, and AC), to display graphical trends, and to forecast a range of possible final project results. Reserve Analysis – During cost control, reserve analysis is used to monitor the status of contingency and management reserves for the project to determine if these reserves are still needed or if additional reserves need to be requested.

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Control Costs – Outputs Work Performance Information includes the calculated CV, SV, CPI, and SPI values for WBS components, in particular the work packages. Cost Forecasts includes a calculated EAC value or a bottom-up EAC value. Organizational Process Assets Updates include Causes of variances, Corrective action chosen and the reasons, and Other types of lessons learned from project cost control. Change Requests include change request to the cost performance baseline or other components of the project management plan. Change requests can include preventive or corrective actions and are processed for review and disposition through the Perform Integrated Change Control process

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Control Costs – Outputs Project Management Plan Updates Elements of the project management plan that may be updated include Cost performance baseline, Cost management plan. Project Documents Updates include updates to cost estimates, basis of Estimates Organizational Process Assets Updates

Organizational Process Assets that may be updated include, but are not limited to :    

Cause of variances Corrective action choosen and the reasons Financial databases Other types of lesson learned from project cost control

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Exercise 1 : EVM Practice Earned Value Formulae Your current project is an $800,000 software development effort, with two teams of programmers that will work for six months, at a total of 10,000 hours. According to the project schedule your team should be done with 38% of the work. You find that the project is currently 40% complete. You have spent 50% of the budget so far. Calculate the following 1. 2. 3. 4.

BAC EV, PV SV, CV SPI, CPI

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Answer to Exercise - 1 : EVM Practice Earned Value Formulae 1. BAC = $ 800,000, AC = $ 400,000 2. PV = $ 80,000 * 38 / 100 = $ 304,000 EV = $ 80,000 * 40 / 100 = $ 320,000

3. SV = EV – PV = $ 16,000 CV = EV – AC = - $ 80,000 4. SPI = EV / PV = 1.05 CPI = EV / AC = 0.8

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Exercise – 2 : EVM Practice Earned Value Formulae You’re managing a highway construction project. Your total budget is $650,000, and there are a total of 7,500 hours of work scheduled on the project. You check with your accounting department, and they tell you that you’ve spent a total of $400,000. According to the schedule, your crew should have worked 4,500 hours, but your foreman says that the crew was allowed to work some overtime, and they’ve actually put in 5,100 hours of work. Based on this Calculate the following Earned Value numbers: PV = EV = CV = BAC = AC = SV = SPI = , CPI = pankaj sharma, 9810996356

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Answer to Exercise - 2 : EVM Practice Earned Value Formulae BAC = $ 650,000 AC = $ 400,000 PV = 650,000 x 60% = $390,000 EV = 650,000 x 68% = $ 442,000 CV =442,000 – 400,000 = $42,000 SV = $ 52,000 SPI = 1.13 , CPI = 1.11

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Exercise - 3 : EVM Practice Earned Value Formulae It’s nine months into your project. The total budget for your project is $4,200,000. You’ve spent $1,650,000 so far, and you’ve got a CPI of .875. Use the Earned Value Management formulas from forecasting to figure out where things stand. Find the following EAC = ETC = VAC =

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Answer to Exercise - 3 : EVM Practice Earned Value Formulae EAC = $ 4,200,000 / 0.875 = $ 4,800,000 ETC = $ 4,800,000 – $ 1,650,000 = $ 3, 150,000 VAC = $ 4,200,000 – $ 4,800,000 = $ 600,000

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QUIZ !

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Project Risk Management

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What is Risk? 

Project risk is an uncertain event that can have a positive or a negative impact on the result

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If a project risk materializes and has a negative impact on the project, it is called “Threat” to the project e.g.  Unproven technology impacting project schedule  Loosing critical resource from project

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If an uncertain event has a positive impact on the project, it is called “opportunities”. E.g.  Emergence of new tool to increase productivity  New resource replacing the lost resource is a better one! Not all risks are bad, however most of them are perceived as “Threat” to success

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Risk Vs Issue Risk  Risk is an uncertain event or event that might happen in future

Issue  Issue is an event that has already occurred

 Once risk is identified, its impact should be analyzed and the response plan should be prepared  Examples:  Lack of Business/Application knowledge which may impact the quality of work products

 Once the impact of Issue is analyzed, the same should be resolved or escalated  Examples:  Client contact is not providing review comments on deliverables in spite of repeated reminders

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Project Risks – Key characteristics 

Some of the risks are known risks e.g.  Working in a project with competitor (multi-vendor scenario)  Doing a project in a new geography (cultural differences)  Project attracting environmentalists attention  Accident during Travel

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To manage “known risks”, risk response plan is prepared

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Known risks are predicted / identified based on the past experience of similar projects

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Project Risks – Key characteristics 

All the risks can not be predicted and such risks are known as “unknown risks”. e.g.  Natural disaster

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Unknown risks cannot be managed proactively

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Most of the organizations address such risks through “Business continuity” and “Disaster Recovery” plan



What is the difference between “Risk” and “Issue”?

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Project Risk Management Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning and monitoring and control on a project. The objectives of Project Risk Management are to increase the probability and impact of positive events, and decrease the probability and impact of negative events in the project.

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Project Risk Management Processes

Process

Process Group

Plan Risks Management, Identify Risks, Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis , Plan Risk Responses

Planning

Control Risks

Monitoring and Controlling

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Plan Risk Management Plan Risk Management is the process of defining how to conduct risk management activities for a project. The Plan Risk Management process should begin as a project is conceived and should be completed early during project planning.

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Plan Risk Management Inputs

Tools and Techniques

Outputs

 Project management plan  Project charter  Stakeholder register  Enterprise Environmental Factors  Organizational Process Assets

Analytical techniques Expert Judgment Meetings

 Risk management plan

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Plan Risk Management - Inputs

Project Management Plan . All approved subsidiary plans and baselines should be taken into consideration in order to make the risk management plan consistent with them. The project management plan provides baseline or current state of riskaffected areas including scope, schedule and cost. Project Charter can provide various inputs such as high level risks, high – level project descriptions and high – level requirements.

Stakeholder Register , which contains all details related to the project’s stakeholder , provide an overview of their role.

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Plan Risk Management - Inputs Enterprise Environmental Factors include the company culture and existing systems that are dealt with and used by the project manager to run the project. The other factors that can influence this process are risk attitudes and tolerances that describe the degree of risk that an organization will withstand Organizational Process Assets that can influence this process include risk categories, common definitions of concepts and terms, risk statement formats, standard templates, roles and responsibilities, authority levels for decision making, lessons learned and stakeholder register

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Plan Risk Management -Tools and Techniques Analytical Techniques

Analytical techniques are used to understand and define the overall risk management context of the project. Risk management context is a combination of stakeholder risk attitudes and the strategic risk exposure of a given project based on the overall project Context. Some of the examples of these techniques are , use of strategic risk scoring Sheets, a stakeholder risk profile analysis may be performed to grade and qualify the project stakeholder appetite and tolerance. Expert Judgment To ensure that a comprehensive risk management plan is developed expert advice should be taken from groups or individuals with specialized knowledge on the subject area.

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Plan Risk Management -Tools and Techniques Meetings helps in development of the risk management plan. The meeting will consist of the project manager, project team members, selected relevant Stakeholders, and anyone other than these who will be performing the risk management Activities The following decisions can be taken at the meeting 1. Basic plans for conducting the risk management 2. Risk, cost elements and schedule activities are developed for inclusion in the project budget and schedule respectively 3. Risk contingency reserve application approaches may be established or reviewed 4. Risk management responsibilities should be assigned 5. General organizational templates for risk management will be tailored as per the project

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Plan Risk Management - Outputs

Risk management plan describes the various risk management processes that will be implemented, monitored and controlled throughout the project lifecycle. It can include the following 1. Methodology – Defines the approaches, tools and the data sources that may be used to perform risk management on the project 2. Roles and Responsibilities – Defines the lead, support and risk management team membership for each type of activity in the risk management plan, assigns people to these roles and clarifies their responsibilities 3. Budgeting - Assigns resources and estimates costs needed for risk management for inclusion in the project cost baseline 4. Timing – Defines when and how often the risk management process will be performed throughout the project life cycle and establishes risk management activities to be included in the project schedule.

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Plan Risk Management - Outputs

5. Risk Categories provides a structure that ensures a comprehensive process of systematically identifying risks to a consistent level of detail and contributes to the effectiveness and quality of Identify risks process. An organization can use a previously prepared categorization of typical risk. A risk breakdown structure (RBS) is one approach to providing such a structure, but it can also be addressed by simply listing the various aspects of the project. The risk categories may be revisited during the Identify risks process. A good practice is to review the risk categories during the Risk Management Planning process prior to their use in Identify risks process. Risk categories based on prior projects may need to be tailored, adjusted or extended to new situations before those categories can be used on the current project.

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Plan Risk Management - Outputs Risk Breakdown Structure (RBS)

Source : PMI PMBOK® Fourth Edition

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Plan Risk Management - Outputs 6. Definition of Risk Probability and Impact

Source : PMI PMBOK® Fourth Edition

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Plan Risk Management - Outputs 7. Definition of Risk Probability and Impact matrix, A grid mapping of probability of happening of risk and the impact if happens, Based on the probability and impact values the risks are rated as High, Moderate and Low. 8. Revised stakeholder’s tolerance, based on the project may be revised in the risk management process. 9. Reporting formats, define how the outcomes of the risk management process will be documented , analyzed and communicated. It describes the content and format of the risk register as well as any other risk report required. 10. Tracking. Tracking documents how risk activities will be recorded for the benefit of the current project and how risk management processes will be audited.

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Sources of Project Risks

C om

e op Sc

m un ic at io n

Project Initiation

Lifecycle and Environment Variables

Availability Productivity

Expectation Feasibility

Project Risk

Performance Services Materials

Requirement Standards

Time Objectives Restraints

Q

t en m re cu

ua lit y

o Pr

Restraints Cost Objectives

Time

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Cost

Human Resource

Ideas Directives Data Accuracy

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Identify Risks Process Risk Identification process determines which risks may affect the project and documenting their characteristics. It is an iterative process as risk can be identified at any levels in the project. Irrespective of risks having positive or negative consequences, all risks events and their consequences should be identified.

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Identify Risks Inputs

Tools and Techniques

 Risk management plan Cost management plan  Schedule management plan  Quality management plan  Human resource management plan  Scope baseline  Activity cost estimates  Activity duration estimates  Stakeholder register Project documents  Procurement documents  Enterprise environmental factors  Organizational Process Assets

      

Documentation reviews Information gathering techniques Checklist analysis Assumptions analysis Diagramming techniques SWOT analysis Expert Judgment

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Outputs  Risk Register

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Identify Risks - Inputs Risk Management Plan provides inputs regarding the assignment of roles and responsibilities, provision for risk management activities in the budget and schedule, and categories of risk, which are sometimes expressed in a Risk Breakdown Structure. Cost Management Plan provides processes and controls that can be used to help identify risks across the project Schedule Management Plan provides insight to project time / schedule objectives and expectations which may be impacted by risks (Known and Unknown) Quality management plan contains information related to the quality management plan which is an important input to Identify risk process as the project specific approach may generate or alleviate risk by its nature or structure

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Identify Risks - Inputs Human Resource Management Plan . The human resource management plan provides guidance on how project human resource should be defined , staffed , and eventually released. It can also contain roles and responsibilities, project organization charts, and the staffing management plan, which forms a key input to identify risk process. Scope baseline is a component of scope statement which should be evaluated as potential causes of project risk Activity Cost Estimates provide a quantitative assessment of likely cost to complete schedule activities and ideally are expressed as a range, with the width indicating the degree of risk Activity duration estimates are useful in identifying risks related to the time allowances for activities or project as a whole, with the width of the ranges of these estimates indicating the relative degree of risk. Stakeholder register contains information on stakeholders, which will be useful in interviewing the key stakeholders for their inputs to this process Pankaj Sharma, 9810996356

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Identify Risks - Inputs Project Documents that may be useful while identifying risks are assumptions log, work performance reports, network diagrams, baselines and other project information that may be useful in identifying risks. Procurement Documents , If the project requires external procurement of resources , procurement documents become a key input to the identify Risks process. The complexity and the level of detail of the procurement documents should be consistent with the value of, and risks associated with, planned procurement. Enterprise Environmental Factors that can influence this process are published information which consists of commercial database, academic studies, published checklists, benchmarking, industry studies and risk attitudes. Organizational Process Assets that can influence this process are project files, organizational and project process controls, risk statement templates and lessons learned

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Identify Risks– Tools and Techniques Documentation reviews includes structured review of the project documentation, which may include project files, project plans, assumptions, historical information, and other information from the project level as well as individual activity level. It is also essential to identify the quantity of plans and the consistency between the plans Information gathering techniques – There are five key techniques for information gathering

□ Brainstorming session is conducted by a facilitator and a group of Subject Matter Expert (SMEs), who perform brainstorming and arrive at a comprehensive list of project risks. Identified risks are categorized by the type of risks. A risk breakdown structure (RBS) can be used as a framework for risk identification.

□ Delphi Technique is conducted by a facilitator and a group of experts, who are

given a questionnaire to fill. The results are collected and summarized and the results are again circulated to get feedback from the experts.

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Identify Risks– Tools and Techniques 

Interviewing is one of the main sources of risk gathering techniques where experienced project managers, stakeholders and subject matter experts are interviewed for risk identification.



Root Cause identification involves identifying the causes of risks and improves the understanding of the risk. It sharpens the definition of the risk and allows grouping risks by causes. Effective risk response can be developed if the root cause of the risk is addressed

Checklist Analysis can be based on historical information gathered from previous similar projects. The lowest level of Risk Breakdown Structure (RBS) can also be used as a checklist. Checklists can be updated at the end of the project completion to add new risks, if any. Checklists are not a very much efficient method of identifying risks.

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Identify Risks– Tools and Techniques Assumption Analysis reviews the validity of assumptions defined in the project to ensure that risks are not missed due to inaccuracy or incompleteness of the assumption. Assumptions are tested against their strength. The consequences that might occur if the assumptions were false are also analyzed. In such cases the assumptions are considered as risks. Diagramming Techniques may include Cause and effect diagrams also known as Ishikawa or fishbone diagrams, System or process flowcharts, and influence diagrams, which are graphical representation of situations showing causal influences SWOT Analysis examines the project from its Strengths, Weaknesses, Opportunities and Threats to identify the probable risk events.

Expert Judgment involves participation of SMEs based on their previous experience and area of expertise Pankaj Sharma, 9810996356

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Identify Risks– Outputs Risks Register The identified risks are mentioned in the document called a Risk Register, which becomes a component of the project management plan. Following items can be included in the Risk Register

□

List of identified risks – The list can state the EVENT that may occur , the IMPACT and if CAUSE, EVENT may occur , then listing of EFFECT. Root causes of the risk events can also be listed

□

List of potential responses – If identified during the process of risk identification, responses should be documented and it may be a useful input to the plan Risk Responses process

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Perform Qualitative Risk Analysis Prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact.

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Perform Qualitative Risk Analysis Inputs

Tools and Techniques

Outputs

 Risk Management Plan  Scope baselines  Risk Register  Enterprise environmental factors  Organizational Process assets

 Risk probability and impact assessment  Probability and impact matrix  Risk data quality assessment  Risk categorization  Risk urgency assessment  Expert judgment

 Project document updates

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Perform Qualitative Risk Analysis - Inputs Risk Management Plan documents the roles and responsibilities for :  Budgets and schedule activities for risk management  Risk Categories  Definition of probability and impact  The probability and impact matrix  Revised stakeholder’s risk tolerances These inputs are documented during Perform Qualitative Risk analysis if not defined during the risk management process. Scope Baseline mentions the project deliverables, assumptions and constraints. Depending on the project type, i.e. whether it is a state-of-the-art project or a common recurring project type, the risks and level of uncertainty can be evaluated. A project which is more complex than the ones the team has handled earlier and where the uncertainty level is high requires more diligence during the process.

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Perform Qualitative Risk Analysis - Inputs Risk Register contains all the identified risks, it’s a component of the project management plan Enterprise Environmental Factors, may provide insight and context to the risk assessment such as :  Industry studies of similar projects by risk specialists and  Risk databases that may be available from industry or proprietary sources

Organizational Process assets that can influence this process are information of similar previous projects, studies of similar projects by risk specialists and risk databases that may be available from industry or proprietary sources.

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Perform Qualitative Risk Analysis– Tools and Techniques Risk probability and impact assessment examines the likelihood that each specific risk will occur and evaluates the potential effect of any of the project objectives such as time, cost, scope or quality. It also evaluates the positive opportunities and negative threats. To assess the probability and impact of each risk, a meeting or interview with subject matter experts either internal or external to the organization is conducted where levels are assigned to each risk and also the potential effects of these risks is evaluated in case the risk occurs Probability and impact matrix assigns ratings to each risk and classifies them for either perform quantitative risk analysis or plan risk responses. Ratings are assigned to risks based on the combination of probability and impact. The risk may guide in providing risk responses as indicated below

□ Risks that have a negative impact on the project objectives if they occur (threats) and that are

in the high – risk (black zone of the matrix), may require priority action and aggressive response strategies. □ Threats in low – risk (medium gray zone) may not require proactive management action beyond being placed on a watch list or adding a contingency reserve. □ For opportunities, those in the high-risk (black zone) that can be obtained most easily and offer the greatest benefit should, therefore be targeted first □ Opportunities in the low-risk (Medium gray zone) should be monitored

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Perform Qualitative Risk Analysis– Tools and Techniques Probability Impact Matrix

Source : PMI PMBOK® Fourth Edition

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Perform Qualitative Risk Analysis– Tools and Techniques Risk data quality assessment involves determining the quality or usefulness of the data collected to evaluate the risk as per the risk management plan. It involves examining degree to which the risk is understood, and the accuracy, quality, reliability and integrity of the data about risk. If data quality is unacceptable, it may be necessary to gather higher-quality data. Risk categorization – Project risks can be categorized by the source of risk (e.g., using the RBS), areas of the project affected (e.g. ,using the WBS) or other useful category (e.g. , project phase, etc.) to determine areas of the project most exposed to the effects of uncertainty. Grouping risks by common root causes can lead to developing effective risk responses. Risk urgency assessment determines how soon the potential risks may occur, and it also identifies near- term responses for those risks. Expert judgment is required to assess the probability and impact of each risk to determine its location in the probability impact matrix

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Perform Qualitative Risk Analysis – Outputs Risk Register Updates – Risk register is initiated during identify risk process ,and is updated with information from Perform Qualitative Risk Analysis. Following are the updates from Perform Quantitative Risk Analysis:  Relative ranking or priority list of the project risks. The probability and impact matrix can be used to classify risks according to their individual significance. The project manager can then use the prioritized list to focus attention on those items of high significance to the project, where responses can lead to better project outcomes. Risk may be listed by priority separately for cost, time, scope and quality as organizations may value one objective over another. A description of the basis for the assessed probability and impact should also be included for the assessed risks.  Risk grouped by categories can reveal common root cause of the risk or project areas requiring particular attention.  Cause of risk or project areas requiring particular attention. Discovering concentrations of risk may improve the effectiveness of risk.  List of risks requiring response in the near-term. Those risks that require an urgent response and those that can be handled at a later date may be put into different groups.

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Perform Qualitative Risk Analysis – Outputs  List of risks for additional analysis and response. Some risks might warrant more analysis , including perform qualitative risk analysis as well as response action  Watch-lists of low priority risks. Risks that are not assessed as important in the Qualitative Risk Analysis process can be placed on a watch-list for continued monitoring  Trends in qualitative risk analysis results. As the analysis is repeated , a trend for particular risks may become apparent and can make risk response or further analysis more or less urgent/important

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Perform Quantitative Risk Analysis Process Numerically analyzing the effect of identified risks on overall project objectives.

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Perform Quantitative Risk Analysis Process Inputs

Tools and Techniques

Outputs

 Risk management plan  Cost management plan  Schedule management plan Risk register  Enterprise environmental Factors Organizational process assets

 Data gathering and representation techniques  Quantitative risk analysis and modeling techniques  Expert Judgment

 Project document updates

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Perform Quantitative Risk Analysis -Inputs Risk management plan provides guidelines , methods and tools to be used in quantitative risk analysis. Cost management plan contains baseline data related to cost, this may help to determine the approach for Quantitative analysis for the project. Schedule management plan contains baseline data related to schedule, this may help to determine the approach for Quantitative analysis for the project. Risk register is used as a reference point for performing quantitative risk analysis Organizational process assets that can influence this process are information of previous projects, studies of similar projects by risk specialists and risk databases that may be available from industry or proprietary sources.

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Perform Quantitative Risk Analysis -Inputs Enterprise Environmental Factors may provide insight and context to the risk analysis, such as :  Industry studies of similar projects by risk specialists, and  Risk databases that may be available from industry or proprietary sources.

Organizational process assets that can influence this process are information of previous projects, studies of similar projects by risk specialists and risk databases that may be available from industry or proprietary sources.

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Perform Quantitative Risk Analysis - Tools and Techniques Data gathering and representation techniques

 Interviewing : Experienced project managers , stakeholders and subject matter experts are interviewed to quantify the probability and impact of risks on project objective. During interviewing different kind of probability distribution are used. In case a triangular one is used then the three values for 3 point estimates are taken as input from the SMEs which is used to quantify risk for each element.  Probability distributions : are basically of two types – Asymmetrical distribution or Uniform distributions Asymmetrical distribution depicts shape which are compatible with the data typically developed during project risk analysis. Asymmetrical distributions are of two types- Continuous probability distributions represent the uncertainty in values, such as durations of schedule activities and costs of project components, whereas Discrete probability distributions can be used to represent uncertain events, such as the outcome of a test or a possible scenario in the decision tree.

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Perform Quantitative Risk Analysis -Outputs Uniform distributions can be used if there is no obvious value that is more likely than any other between specified high and low bounds Quantitative risk analysis and modeling techniques Commonly used techniques in Quantitative Risk Analysis and Modeling techniques include:  Sensitivity analysis. This aid in determining which risks have the most potential impact on the project. It examines the extent to which the uncertainty of each project element affects the objective being examined when all other uncertain elements are held at their baseline values. Sensitivity analysis can be done by using the Tornado diagram.  Expected monetary value (EMV) analysis is a statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen (i.e. analysis under uncertainty). The EMV of opportunities will generally be expressed as positive values while those of risks will be negative. EMV is calculated by multiplying the value of each possible outcome by its probability of occurrence and adding them together. Pankaj Sharma, 9810996356

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Perform Quantitative Risk Analysis - Tools and Techniques

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Perform Quantitative Risk Analysis - Tools and Techniques

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Perform Quantitative Risk Analysis

Source: A Guide to the Project Management Body ofPankaj Knowledge, Fourth Edition Sharma, 9810996356 (PMBOK® Guide) ©2008 Project Management Institute, Inc., All Rights Reserved.

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Perform Quantitative Risk Analysis –Tools and Techniques  Modeling and simulation. A project simulation uses a model that translates the uncertainties or potential risks specified at a detailed level of the project into their potential impact on project objectives. Simulation techniques compute the project model using the inputs such as cost or schedule to determine the probability distribution. Simulation techniques should be the preferred one for predicting schedule or cost risks as compared to other techniques Simulations are typically performed using the Monte Carlo technique. In a simulation, the project model is computed many times (iterated) with the input values randomized from a probability distribution function (e.g. cost of project elements or duration of schedule activities) chosen for each iteration from the probability distribution of each variable. A probability distribution is then calculated. Expert Judgment – Subject matter experts internal or external to the organization such as Engineering or statistical experts are required to identify potential cost and schedule impacts , to evaluate probability and to define inputs to tools

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Perform Quantitative Risk Analysis – Outputs Risk Register Updates – The register initiated in the Identify Risks process and is updated in Perform Qualitative Risk Analysis process. The risk register is a component of the project management plan. Updates include the following components : 

Probabilistic analysis of the project. Estimates are made of potential project schedule and cost outcomes, listing the possible completion dates and costs with their associated confidence levels. This output typically expressed as a cumulative distribution is used with stakeholder risk tolerances to permit qualification of the cost and time contingency reserves



Probability of achieving cost and time objectives. With the project facing the risks, the probability of achieving project objectives under the current plan can be estimated using quantitative risk analysis results



Prioritized list of quantified risks. This list of risks includes those that pose the greatest threat or present the greatest opportunity to the project. These include the risks that require the greatest cost contingency and those that are most likely to influence the critical path.



Trends in quantitative risk analysis results. As the analysis is repeated a trend may become apparent that leads to conclusions affecting risk responses

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Plan Risk Responses Developing options and actions to enhance opportunities and

reduce threats to project objectives

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Plan Risk Responses Inputs

Tools and Techniques

Outputs

 Risk management plan Risk register

 Strategies for negative risks or threats  Strategies for positive risks or opportunities  Contingent response strategy  Expert Judgment

 Project management plan updates  Project document updates

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Plan Risk Responses - Inputs Risk management plan include roles and responsibilities, risk analysis definitions, risk thresholds for low, moderate and high risks and the time and budget required to conduct the project Risk Management Processes. Some components of the Risk Management Plan that are important inputs to Plan Risk Responses may include risk thresholds for low, moderate and high risks to help understand those risks for which responses are needed, assignment of personnel and scheduling and budgeting for risk response planning. Risk register provides important inputs related to this process and this include the relative rating or priority list of project risks, a list of risk for additional analysis and response, trends in qualitative risk analysis results, root causes, risk grouped by categories and a watch list of low priority risks.

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Plan Risk Responses – Tools and Techniques Strategies for negative risks or threats

 Avoid. Risk avoidance involves changing the project management plan to eliminate the threat posed by an adverse risk, to isolate the project objectives from the risk’s impact or to relax the objective that is in jeopardy, such as extending the schedule or reducing scope. Some risks that arise early in the project can be avoided by clarifying requirements, obtaining information, improving communication or acquiring expertise.  Transfer. Risk transference requires shifting the negative impact of a threat, along with ownership of the response to a third party. Transferring the risk simply gives another party responsibility for its management, it doesn’t eliminate it. Risk transference nearly always involves payment of a risk premium to the party taking on the risk. Transference tools can be quite diverse and can include but are not limited to the use of insurance, performance, bonds, warranties, guarantees etc.  Mitigate. Risk Mitigation implies a reduction in the probability and impact of an adverse risk event to an acceptable threshold. E.g. Conducting more tests, a more stable supplier etc

 Accept. This includes passive or active acceptance. Passive acceptance requires no action , the most common active acceptance strategy is to establish a contingency reserves, including amounts of money or resources to handle known or unknown threats/ opportunities Pankaj Sharma, 9810996356

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Plan Risk Responses – Tools and Techniques Strategies for positive risks or opportunities

 Exploit .This strategy may be selected for risks with positive impacts where the organization wishes to ensure that the opportunity is realized. This strategy seeks to eliminate the uncertainty associated with a particular upside risk by making the opportunity definitely happen. Directly exploiting responses include assigning more talented resources to the project to reduce time to completion or to provide better quality than originally planned.  Share. Sharing a positive risk involves allocating ownership to a third party who is best able to capture the opportunity for the benefit of the project. E.g. forming risk-sharing partnerships, teams, special-purpose companies or joint ventures, which can be established with the express purpose of managing opportunities.  Enhance . This strategy modifies the size of an opportunity by increasing probability and /or positive impacts and by identifying and maximizing key drivers of these positive-impact risks. Seeking to facilitate or strengthen the cause of the opportunity and proactively targeting and reinforcing its trigger conditions, might increase the probability

 Accept. Accepting an opportunity is being willing to take advantage of it if it comes along, but not actively pursuing it.

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Plan Risk Responses – Tools and Techniques Contingent response strategy. Some responses are designed for use only if certain events occur. For some risks, it is appropriate for the project team to make a response plan that will only be executed under certain predefined conditions, if it is believed that there will be sufficient warning to implement the plan. Events that trigger the contingency response such as missing intermediate milestones or gaining higher priority with a supplier, should be defined and tracked Expert Judgment. Expertise may be provided by any group or person with specialized education, knowledge, skill, experience or training in establishing risk responses.

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Plan Risk Responses – Outputs Project Management Plan Updates- Elements of the project management plan that may be updated include        

Schedule management plan Cost management plan Quality management plan Procurement management plan Human resource management plan Scope baseline Schedule baseline Cost baseline.

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Plan Risk Responses – Outputs Project Document Updates. This include components of the Risk register such as

 Identified risks their descriptions, areas of the project (e.g. WBS element) affected, their causes (e.g. RBS element) and how they may affect project objectives  Risk owners and their assigned responsibilities  Output from the Perform Qualitative and Perform Quantitative Risk Analysis processes, including prioritized lists of project risks and probabilistic analysis of the project  Agreed – upon response strategies  Specific actions to implement the chosen response strategy  Symptoms and warning signs of risks’ occurrence

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Plan Risk Responses – Outputs  Budget and schedule activities required to implement the chosen responses

 Contingency reserves of time and cost designed to provide for stakeholders risk tolerance.  Contingency plans and trigger that call for their execution  Fallback plans for use as a reaction to a risk that has occurred and the primary response proves to be inadequate  Residual Risks that are expected to remain after planned response have been taken as well as those that have been deliberately accepted  Secondary risks that arise as a direct outcome of implementing a risk response  Contingency reserves that are calculated based on the quantitative analysis of the project and the organization’s risk thresholds. Pankaj Sharma, 9810996356

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Control Risks Implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.

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Control Risks Inputs    

Project management plan Risk register Work performance data Work performance reports

Tools and Techniques      

Risk reassessment Risks audits Variance and trend analysis Technical performance measurement Reserve analysis Status meetings

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Outputs  Work Performance Information  Change requests  Project management plan updates  Project document updates  Organizational process assets updates

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Control Risks- Inputs Project management plan consists of the risk management plan which includes the assignment of people, time, and resources to the project risk management process. Risk register which is a subset of the project management plan, includes a list of identified risks agreed upon risk responses, specific implementation actions, symptoms and warning signs of risk, residual and secondary risks, watch-list of low priority risks and cost contingency reserves. Work Performance Data includes information such as project deliverables status , schedule progress and incurred costs. Work Performance reports gather and summarize the information required by the stakeholders. This information is an analysis of the work performed during the execution process vis-à-vis project baseline and is relevant to the risk management process.

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Control Risks- Tools and Techniques Risk reassessment indicates reassessing the identified risks and identification of new risks as defined in the risk management plan. Project risk reassessment should be performed regularly and it can be included as an agenda item at the project status meetings. Risks audits are scheduled audits that document the effectiveness of risk responses with respect to their dealing with identified risks and their associated root causes. This aids in determining the effectiveness of the risk management process. Variance and trend analysis Performance data provides the data for variance and trend analysis. Using this data and applying the earned value analysis and similar methods of project variance and trend analysis; it is possible to monitor the overall project performance. Technical performance measurement. This involves identifying the variance in the technical performance from the planned technical schedule. Any variance from the defined milestone(s) can aid the project team to forecast the degree of success in achieving the project’s scope. Reserve analysis. During the planning phase, contingency reserves are defines as a part of risk response plan. During execution some of the reserves get exhausted. This tool determines if the remaining reserves are sufficient to tackle the remaining risks. Meetings. Status review meetings help in monitoring the risks Pankaj Sharma, 9810996356

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Control Risks- Outputs Work Performance Information , as a Control Risks output , provides a mechanism to communicate and support decision making. Change requests - During this process, there may be requested change due to implementation of the contingency plans or workarounds. These changes are reviewed and approved through the integrated change control process. Project management plan updates may arise as a result of the approved change requests Project document updates- Project documents that may be updated as a result of this process are assumptions log updates and technical documentation updates. Organizational process assets updates- The risk management processes produce information that should be documented for future reference. The organizational process assets may be updated to include templates for the risk management plan, including the probability and impact matrix and risk register, risk breakdown structure and lessons learned from the project risk management activities. Pankaj Sharma, 9810996356

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QUIZ !

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Project Quality Management

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What is Quality?  Standard Definition:  Quality is “the degree to which a set of inherent characteristics fulfil requirements” – PMBOK® Guide (Glossary)

 “Conformance of requirements of the customer” – Philip Crosby  “Fitness for use” – Joseph Juran

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What is Grade? Grade is a category or rank given to entities having the same functional use but different technical characteristics. (as per PMBOK® Guide ).

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Importance of Quality? Why is quality important?      

Quality = Customer Satisfaction = Business growth Quality = Pride in delivery = Higher Team Morale Lack of quality = Cost Lack of quality = Loss of customer confidence Lack of quality = Loss of Reputation = Difficulty in gaining new business Lack of quality could lead to loss of life

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Quality Principles 

Quality is concerned with Prevention over Inspection.



Inspection is typically used to prove that the system works (because you’ve put good quality practices in place), rather than a way to reject the failures.



A good quote to remember is, “Quality should be planned in not inspected in” because the cost of rework can be very high.

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Project Quality Management Processes and activities of the performing organization that determine quality policies, objectives, and responsibilities so that the project will satisfy the needs for which it was undertaken

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Quality Management Processes

Process

Process Group

Plan Quality Management

Planning

Perform Quality Assurance

Executing

Control Quality

Monitoring and Controlling

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Plan Quality Management Identifying quality requirements and/or standards for the project and product, and documenting how the project will demonstrate compliance. This process is important to ensure that the resulting product is of acceptable quality. This is performed in parallel with the development of the project management plan and other planning process

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Plan Quality Management Inputs

Tools and Techniques

Outputs

Project Management Plan □ Stakeholder register □ Risk register □ Requirement documentation □ Enterprise Environmental Factors  Organizational Process Assets

 Cost-benefit analysis  Cost of quality (COQ)  Seven basic quality tools  Benchmarking  Design of experiments  Statistical sampling  Additional quality planning tools  Meetings

Management Plan □Process improvement plan □ Quality Metrics □ Quality Checklists □ Project document updates

□

□ Quality

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Plan Quality Management - Inputs Project Management Plan – The following contents of the project management plan are useful in creating Quality management plan



Scope baseline include Project scope statement, Work breakdown structure and WBS dictionary.



Schedule baseline contains the accepted schedule performance measures , including start and finish dates



Cost Base line documents the accepted time interval being used to measure cost performance



Other management plans . These plans contribute to the overall project quality and may highlight actionable areas of concern with regard to the project quality

Stakeholder register aids in identifying those stakeholders possessing a particular interest in, or having an impact on quality Risk register will list all the risks that may have impact on the quality

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Plan Quality Management - Inputs Requirement Documentation .Requirement documentation captures the requirements that the project shall meet pertaining to stakeholder expectations. The component of the requirements document include but is not limited to project and quality requirement Enterprise Environmental Factors that influence the plan quality management process include , Government agency regulation, standard & guidelines and rules specific to the application area, operating conditions that may impact the quality and cultural perception that may influence expectations about quality Organizational Process Assets that influence the Plan Quality Management process include Organizational quality policies, procedures and guidelines. The performing organization’s quality policy, as endorsed by senior management , sets the organization’s intended direction on implementing its quality management approach; Historical databases and lesson learned from previous phases or projects

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Plan Quality -Tools and Techniques

Cost-benefit analysis considers the cost benefit trade offs, the benefit of quality activities must outweigh the costs e.g. higher productivity, less rework and lower cost. Cost of quality (COQ) considers the expense of all the activities within a project to ensure quality and is the sum of the following  Appraisal Cost includes cost related to Audit, Inspection and Testing  Prevention Cost includes cost related Training, documentation , quality planning and process reviews  Internal Failure Cost includes cost related to rework , scrap etc  External Failure Cost is related to the defects found by the customer. It includes liabilities, Warranty work and lost business

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Plan Quality -Tools and Techniques

Seven Basic Quality Tools – The seven basic QC tools include

Control chart determines whether or not the process is stable or has predictable performance. It illustrates the performance of project over time and is typically used in projects , or operations , where there are repetitive activities (Help desk, manufacturing , a series of testing). Upper (UCL) and lower(LCL) control limits together form the acceptable range of variation in the process. The UCL is typically set at +3 or +6 sigma while the LCL is set at -3 0r -6 sigma. The table below shows the four sigma values representing normal distribution. Tolerances means the result is acceptable if it falls within the range specified and, Control Limits means that the process is in control if the result falls within the control limits.

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Plan Quality -Tools and Techniques Single Point outside the UCL is an indication of process breakdown

7 points on one side of CL could indicate a change in the actual mean of the process i.e the prediction interval would have changed.

7 points moving in one direction also indicates possible appearance of a special cause that needs investigation

UCL

90 80

CL

70 60 50

LCL

40 30 20 10 0 1

3

5

7

9

11

Source : http://en.wikipedia.org/wiki/Control_chart

13

15

17

19

21

23

25

27

29

31

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Plan Quality – Tools and Techniques Cause and effect diagram (Ishikawa diagram or Fishbone diagram) is a graphical representation that depicts how different factors relate together and how these relations may contribute to inadequate quality.

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Plan Quality – Tools and Techniques Flowcharting depicts the sequence of operation, inspection ,decisions etc in a system. This help in analyzing where quality problem may happen

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Plan Quality – Tools and Techniques Histogram is a statistical tool used in the analysis and determination of possible solutions to quality control problem. It depicts how often the problem happens or its frequency

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Plan Quality – Tools and Techniques Pareto Chart A Pareto chart is a specific c type of histogram, ordered by frequency of occurrence. It shows how many defects were generated by type or category of identified cause . Rank ordering is used to focus corrective action. The project team should address the causes creating the greatest number of defects first.

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Plan Quality – Tools and Techniques Check sheets, which are also known as tally sheets and may be used as a checklist when gathering data. Check sheets are used to organize facts in a manner that will facilitate the effective collection of useful data about a potential quality problem.

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Plan Quality - Tools and Techniques

Benchmarking is a technique where project’s quality standards are compared to best practices of other projects . Based on the difference corrective actions are made to the current project Design of experiments approach relies on statistical what-if scenarios to determine what variables within project will result in the best outcome Statistical sampling is used to test a random sample instead of testing the entire population. Attribute Sampling is the results conforms, or it does not where as, Variable Sampling is when the result is rated on a continuous scale that measures the degree of conformity. Flowcharting depicts the relationship between the process steps graphically. It can be used to predict where quality problems may happen Proprietary quality management methodologies includes methodologies such as Six Sigma, QFD, CMMI etc Additional planning tool includes brainstorming, affinity diagrams and nominal group techniques

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Plan Quality - Outputs

Quality Management Plan defines how the project team will implement the organization’s quality policy Process improvement plan explains how quality activities will be streamlined and improved. The areas to consider include process boundaries, process configuration, process metrics and targets for improved performance Quality Metrics define how the quality will be measured. Quality metrics is also called as operational definitions Quality Checklists ensures that a set of required steps have been performed and they were performed in the proper sequence Project document updates that may be updated as plan quality is performed are Stakeholder register and responsibility assignment matrix.

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Perform Quality Assurance Auditing quality requirements and the results from quality control measurements to ensure appropriate quality standards and operational definitions are used. This is performed as an ongoing activity in the project life cycle

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Perform Quality Assurance Inputs

Tools and Techniques

Outputs

 Quality management Plan  Process improvement plan  Quality Metrics  Quality control measurements  Project documents

 Quality management and control tools  Quality Audits  Process Analysis

 Change Requests  Project Management Plan Updates  Project Document Updates  Organizational Process Asset Updates

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Perform Quality Assurance - Inputs Quality Management Plan describes the quality assurance and continuous process improvement approaches for the project. Process Improvement Plan The project’s quality assurance activities should be supportive of and consistent with the performing organization’s process improvement plan. Quality Metrics provide an objective means of measurement Quality control measurements are used to analyze and evaluate the quality standards and processes of the performing organization Project documents may influence quality assurance work and should be monitored within the context of a system for configuration management.

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Perform Quality Assurance– Tools and Techniques Quality Management and Control Tools The perform Quality Assurance uses the tools and techniques of the Plan Quality Management and Control quality process. In addition, other tools that are available include  Affinity Diagram. Similar to mind-mapping techniques in that they are used to generate ideas that can be linked to form organized patterns of thought about a problem. The creation of WBS may be enhanced by using the affinity diagram to give structure to the decomposition of scope.  Process decision program charts (PDPC). Used to understand a goal in relation to the steps for getting to the goal. The PDPC is a useful method for contingency planning because it aids teams in anticipating intermediate steps that could derail achievement of the goal.  Interrelationship digraphs. Provide a process for creative problem solving in moderately complex scenarios that posses intertwined logical relationships for up to 50 relevant items.

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Perform Quality Assurance– Tools and Techniques Quality Management – Other tools  Tree Diagrams. Also known as systematic diagrams and may be used to represent decomposition hierarchies such as the WBS, RBS (Risk breakdown structure), and OBS (Organizational breakdown structure ). As the tree diagrams permit the creation of nested branches that terminates into a single decision point , they are useful as decision trees for establishing an expected value for a limited number of dependent relationships that have been diagrammed systematically.  Prioritization matrices. Identify the key issues and the suitable alternatives to be prioritized as a set of decisions for implementation. Criteria are prioritized and weighted before being applied to all available alternatives to obtain a mathematical score that ranks the options.

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Perform Quality Assurance– Tools and Techniques Quality Management – Other tools  Activity networks diagrams . Previously known as arrow diagrams. They include both the AOA (Activity on Arrow) and , most commonly used , AON (Activity on Node) formats of a network diagram.  Matrix diagrams. A quality management and control tool used to perform data analysis within the organizational structure created in matrix. The matrix diagram seeks to show the strength of the relationships between factors , causes , and objectives that exist between the rows and columns that form the matrix.

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Perform Quality Assurance– Tools and Techniques Quality Audits - A quality audit is a structured , independent process to determine if project activities comply with organizational and project policies , processes , and procedures. Process Analysis - follows the steps outlined in the process improvement plan to identify needed improvements . This analysis also examines problems experienced , constraints experienced , and non – value – added activities identified during process operations. Process analysis includes root cause analysis – a specific technique used to identify a problem , discover the underlying causes that lead to it, and develop preventive actions.

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Perform Quality Assurance – Outputs Change Requests are the outcome of updating quality standards and processes to improve organization’s effectiveness and efficiency Project Management Plan Updates includes updates in Quality management plan, Schedule management plan, Cost management plan as a result of Quality assurance activities Project Document Updates include updates to training plans , process documentation and quality audit report Organizational Process Asset Updates includes updating quality standards and processes to improve organization's effectiveness and efficiency

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Control Quality Monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes. This process takes place throughout the project lifecycle , involves inspection , measurement and testing of deliverables and their comparison with the baseline

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Control Quality Inputs        

Project management plan Quality Metrics Quality Checklists Work Performance data Approved change requests Deliverables Project documents Organizational Process Assets

Tools and Techniques

Outputs

□ □ □ □

 Quality Control measurements  Validated changes  Validated deliverables  Work performance information  Change requests Project management plan updates  Project document updates  Organization process assets updates

Seven basic quality toold Statistical sampling Inspection Approved change requests review

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Control Quality- Inputs Project management plan contains the quality management plan, which describes how quality control will be performed within the project Quality Metrics will be used to measure whether the work result meet quality specification Quality Checklists will assist in assessing conformance of the deliverables to quality Work Performance Data evaluate actual progress against the planned progress. Approved change requests include modification such as defect repairs, revised work methods and revised schedule Deliverables of the project are primary input to this process

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Control Quality - Inputs Project Documents such as Agreements , Quality audit reports and change logs supported with corrective actions plans, Training plans and assessments of effectiveness. Organizational Process Assets that influence the control quality process include, but are not limited to:  The organization’s quality standard and policies  Standard work guidelines  Issue and defect reporting procedures and communication policies

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Control Quality – Tools and Techniques Seven Basic Quality Tools

Statistical sampling is based on selecting and testing a random sample instead of the entire population. Inspection is the examination (reviews, peer reviews, audits, or walkthroughs) of a work product to determine whether it conforms to documented standards.

Approve Change Request Review – All approved change requests should be reviewed to verify that they were implemented as approved

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Control Quality – Outputs Quality control measurements are the documented results of quality control activities in the format specified during quality planning. Validated changes involve inspection of any changed or repaired items and they will be either accepted or rejected before notification of the decision is provided. Rejected items may require rework. Verified deliverables - A goal of quality control is to determine the correctness of deliverables. The results of the execution quality control processes are validated deliverables. Work Performance Information – is the performance data collected from various controlling processes, analyzed in context and integrated based on relationship across areas

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Control Quality – Outputs Change requests as a result of corrective or preventive action. These changes should be initiated in accordance with the Integrated change control Process Project management plan updates includes update to quality management plan and the process improvement plan Project documents that may be updated include, but are not limited to, quality standards, Agreements , Quality audit report and change log supported with corrective action plans. Organization process assets updates includes updates to Completed checklists, lesson learned documentation etc.

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Exercise 4: Quality Management

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Revising Key Terms : Complete the following 1. ___________ is more important than inspection in Quality Management 2. When a process has data points above the upper limit or blow the lower limit , those data points are out of _________ 3. ______________ is the process of monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes.

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Answers to Exercise 4: Quality Management Revising Key Terms : Complete the following 1. Prevention is more important than inspection in Quality Management 2. When a process has data points above the upper limit or below the lower limit , those data points are out of Control 3. Perform Quality Control is the process of monitoring and recording results of executing the quality activities to assess performance and recommend necessary changes.

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Project Communications Management

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Project Communications Management Processes required to ensure timely and appropriate generation, collection, distribution, storage, retrieval and ultimate disposition of project information. This knowledge area is made up of five processes to determine what to communicate, to whom, how often, and when to reevaluate the plan An effective project manager spends about 90% of his time communicating and 50% of that time is spent communicating with the project team

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Communication Model – Various Elements Sender

The person who needs to initiate the communication

Receiver

The person who gets the message

Medium

The thing used to transmit the message

Feedback

A response to a message

Noise

Something that interferes with the message

Encode

Modify a message so that it can be sent

Decode

Modify a message that has been sent so that it can be understood

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Exercise 1: Communication Model Revising Key Terms : Communication Model

1. _____________ is used to transmit the message 2. The person who gets the message is _____________ 3. Something that interferes with the message is _______________

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Answers to Exercise : Communication Model Revising Key Terms : Communication Model

1. Medium is used to transmit the message. 2. The person who gets the message is Receiver. 3. Something that interferes with the message is Noise.

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Kinds of Communication

    

Formal vs Informal Verbal vs Non-verbal Official vs Non-official Written vs Oral Vertical vs Horizontal

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Kinds of Communication Communication Type

Example

Formal Written

RFP, Project Charter

Informal Written

E-mail, Memos

Formal Verbal

Speech

Informal Verbal

Conversations

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Additional Information 

Nonverbal Communication  Means gestures, facial expressions, and physical appearance while you are communicating your message



Para lingual Communication  Is the tone and pitch of your voice when you are telling people what’s going on with your project



Feedback  Is when you respond to communication.

 Active listening  When you give feedback to someone who is speaking Pankaj Sharma, 9810996356

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Exercise 2: Kinds of Communication Revising Key Terms : Kinds of Communication 1.

The Project manager writes a requirement specification for your project. This is an example of ___________ kind of communication. A. Informal verbal B. Informal written C. Formal verbal D. Formal written

2.

You sent an email to some of your team members to get more information about an issue that has been identified on your project. This is an example of ___________ kind of communication A. Informal verbal B. Informal written C. Formal verbal D. Formal written

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Answers to Exercise 2: Kinds of Communication Revising Key Terms : Kinds of Communication 1.

The Project manager writes a requirement specification for your project. This is an example of ___________ kind of communication. A. Informal verbal B. Informal written C. Formal verbal D. Formal written

2.

You sent an email to some of your team members to get more information about an issue that has been identified on your project. This is an example of ___________ kind of communication A. Informal verbal B. Informal written C. Formal verbal D. Formal written Pankaj Sharma, 9810996356

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Communication Management Processes

Process

Process Group

Plan Communications management

Planning

Manage Communications

Executing

Control Communications

Monitoring and Controlling

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Plan Communication Management Determining the project stakeholder information needs and defining a communication approach. It entails:

□ How often communication will be distributed and updated □ Mode of communication (email, teleconference etc) □ Information that will be included in the project communications □ Stakeholders that will receive this information

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Plan Communications Management Inputs

Tools and Techniques

Outputs

 Project management plan Stakeholder Register  Enterprise Environmental Factors  Organizational Process Assets

 Communications requirements analysis  Communications technology  Communication models  Communication method  Meetings

 Communications Management Plan  Project document updates

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Plan Communications Management - Inputs Project Management Plan provides information on how the project will be executed , monitored , controlled , and closed. Stakeholder Register provides the information needed to plan the communication with project stakeholders. Enterprise Environmental Factors , plan communication management process is tightly linked with enterprise environmental factors, since the structure of an organization will have a major effect on the project’s communication requirements. Organization Process Assets, Lesson learned and historical information are of particular importance because they can provide insights on both the decision taken regarding communication issues and the result of the decision in previous similar project Pankaj Sharma, 9810996356

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Plan Communications Management - Tools and Techniques Communication Requirements Analysis , The analysis of the communication requirements determine the information needs of the project stakeholders. The project manager should also consider the number of potential communication channel or paths as an indicator of the complexity of a project’s communications. For Example if there are n people involve in a project communication. The total number of channels would be n(n-1)/2

4 people – 6 channels

6 people – 15 channels

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Plan Communications Management - Tools and Techniques Communication Technology, The method used to transfer information among project stakeholder may vary significantly. For example, a project team may use technique from brief conversation to extended meetings, or from simple written documents to extensive materials which are accessible online as a method of communication . Factors that can affect the choice of communication technology include :     

Urgency of the need for information Availability of technology Ease of use Project environment Sensitivity and confidentiality of the information

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Plan Communications Management - Tools and Techniques Communication Models, Basic model of communication includes following parameters  Encode : Thoughts and ideas translated to a language which can be understood by other  Message & Feedback Message : Output of encoding  Medium : The method used to convey the message  Decode : Converting feedback back to understandable form

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Plan Communications Management - Tools and Techniques Communication Methods are broadly classified into  Interactive communication  Push Communication  Pull Communication Meetings , The plan communication process requires discussion and dialogue with the project team to determine the most appropriate way to Update and communicate project information and to respond to request from various stakeholders for that information. These discussions and dialogue are commonly facilitated through meetings, which may be conducted face to face or online and in different locations, such as the project site or customer’s site.

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Plan Communications Management - Outputs Communication Management Plan contains the following information         

Stakeholder communication requirements Information to be communicated including language , format , content and level of detail; Reason for distribution of that information Time frame and frequency for the distribution of required information and receipt of acknowledgement or response , if applicable Person responsible for communicating the information Person responsible for authorizing release of confidential information Person or groups who will receive the information Person or groups who will receive the information Methods or technologies used to convey the information, such as memos, e-mail, and /or press releases; Pankaj Sharma, 9810996356

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Plan Communications Management - Outputs Communication Management Plan contains the following information   



Methods or technologies used to convey the information, such as memos, e-mail, and /or press releases; Glossary of common terminology Flow charts of the information flow in the project, workflows with possible sequence of authorization , list of report, and meeting plans etc and Communication constraints usually derived from a specific legislation or regulation , technology , and organization policies etc

The communications management plan can also include guidelines and templates for project status meetings , project team meetings , emeetings and e-mail messages. Pankaj Sharma, 9810996356

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Communication Plan Communication Team Briefing

Format Restricted Intranet

Weekly Web Bulletin

Internal Intranet

Technical Incident Report Budget and Schedule Detail Accomplishments and Setbacks Schedule Milestones Cost-to-Date Milestones Current Top 5 Risks

Email

Frequency Daily at 9:00

Distribution Team and stakeholders with access to secure project info area Weekly Team, sponsor, senior management Immediately after Incident Webmaster, IT Department

Spreadsheets and Detailed Gantt Chart Email and Intranet

Bi-Weekly Weekly

Sponsor, Senior Management All internal stakeholders

Email and Intranet Email and Intranet

Weekly Weekly

All internal stakeholders All internal stakeholders

Email and Intranet

Weekly

All internal stakeholders

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Manage Communications This process updates stakeholders on the progress of the project as per the communications management plan. The information that gets distributed includes status reports, review meetings etc

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Manage Communications Inputs

Tools and Techniques

Outputs

 Communication management plan  Work performance reports  Enterprise environmental factors  Organizational process assets

□

 Project communications  Project management plan updates  Project document updates Organizational Process assets updates

□ □ □

□

Communication technology Communication models Communications method Information management system Performance reporting

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Control Communications Process

This process tracks how the project is progressing against the plan and provide report to stakeholders on status, progress metrics (Schedule and Cost variance) and forecasts

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Control Communications Process Inputs

Tools and Techniques

Outputs

 Project management plan  Project communications  Issue log  Work performance data  Organizational Process assets

□

 Work performance information  Change requests  Project management plan updates  Project document updates  Organizational Process assets updates

□ □

Information management system Expert Judgment Meetings

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Project Communication Management Communication Channels  Channels = n(n-1)/2 Where n is the number of people on the project  If there are five people on the project, then we have 10 communication channels.  This is calculated as follows: 5*(5-1) /2 = 10

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Communication Filtering When a portion of the message is lost in communication.

Common reasons of filtering: Ambiguous language Predefined mindset Hidden agenda in message content

Senders reputation Senders status in the organization Dysfunctional emotional behavior Environmental Background

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Exercise : Communication Management

Revising Key Terms : Complete the following 1. 2. 3.

A contract is always __________ communication A stakeholder with high interest and low power must be kept _______ of your project’s progress Information should be distributed to all _______

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Answers to Exercise : Communication Management

Revising Key Terms : Complete the following 1. 2. 3.

A contract is always formal communication A stakeholder with high interest and low power must be kept Informed of your project’s progress Information should be distributed to all stakeholders

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Exercise 4: Number of Lines of Communication

Practicing the concept You are managing a project with five team members and one sponsor. Draw all the channels of communication on this picture. Solution: Lines of Communication = 6 * (6 – 1)/2 = 15

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Project Human Resource Management

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Project Human Resource Management Processes that organize, manage and lead the project team. Project team is comprised of the

people with assigned roles and responsibilities for completing the project.

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Human Resource Management Processes

Process

Process Group

Plan Human Resource Management

Planning

Acquire Project Team

Executing

Develop Project Team

Executing

Manage Project Team

Executing

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Plan Human Resource Management

Identifying and documenting project roles, responsibilities and required skills, reporting relationships and creating a staffing management plan.

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Plan Human Resource Management Inputs

□ Project Management

Plan □ Activity Resource Requirement  Enterprise Environmental Factors  Organizational Process Assets

Tools and Techniques  Organization charts and position descriptions  Networking  Organizational theory  Expert Judgment  Meetings

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Outputs

□ Human Resource Plan

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Plan Human Resource Management- Inputs Project Management Plan provides useful information such as , how work will be executed to accomplish the project objectives, A change management plan that documents how changes will be monitored and controlled, how integrity of the project baselines will be maintained . Need and method of communication among stakeholders. Activity Resource Requirements provides information on the preliminary resource requirement of the project. These requirements are progressively elaborated during the Human resource planning phase. Enterprise Environmental Factors that can influence this process include Organization culture and structure , Existing human resources, Personnel administration policies and marketplace condition. Organizational Process Assets that can influence this process include Organizational standard processes and policies and standardized role descriptions, Templates for organizational charts and position descriptions, and Historical information on organizational structures that have worked in previous projects.

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Plan Human Resource Management -Tools and Techniques

The objective of Organization charts and position descriptions is to ensure that each work package has an unambiguous owner and all the team members have clear understanding of their roles and responsibilities. Three formats that are most common for creating this document are hierarchical, matrix, and text-oriented

Fig Reference PMBOK 4th Edition

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Plan Human Resource Management -Tools and Techniques

Sample RACI Chart

Fig Sample RACI Chart-Reference PMBOK 4th Edition

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Plan Human Resource Management-Tools and Techniques

Networking is the process of communicating with others (within Organization, industry or professional environment). It includes luncheon meetings, informal conversations including meetings and events, trade conferences, and symposia. Networking within the organization helps project manager in understanding the political and organizational force that will influence the project. Organizational theory -Different organizational structures have different individual response, individual performance, and personal relationship characteristics. Organizational theory provides information regarding the way in which people, teams, and organizational units behave. This information helps in effective planning and in reducing the amount of time, cost and effort needed to create the plan

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Plan Human Resource Management - Outputs

Human Resource Plan has three components roles and responsibility, organization charts and the staffing management plan.

□ □

□

Roles and responsibility details role, authority, responsibility and competency for the resource requirement of the project. Project Organization Chart is a graphic display of project team members and their reporting relationships. It can be formal or informal, highly detailed or broadly framed, based on the needs of the project. Staffing Management Plan details how and when the project will be staffed, released, training needs of resources, recognition & rewards, compliance and resource calendar. It also includes policies and procedures that protect team members from safety hazards.

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Acquire Project Team Confirming human resource availability and obtaining the team necessary to complete project assignments

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Acquire Project Team Inputs

Tools and Techniques

 Human resource management plan  Enterprise environmental factors  Organizational process assets

    

Pre-assignment Negotiation Acquisition Virtual Teams Multi- criteria decision analysis

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Outputs  Project Staff Assignments  Resource Calendars  Project Management Plan Updates

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Acquire Project Team - Inputs Human Resource Management Plan provides information on how project human resource should be identified, staffed, managed, controlled and eventually released. It also contains details on skills required , roles and responsibilities for a particular position and the competency level that a project demands. Enterprise Environmental Factors that can influence this process are existing information for human resources including who are available, competency levels, prior experience personnel administration policies, processes and procedures Organizational Process Assets that can influence the Acquire Project Team process include, but are not limited to, organization standard policies, processes, and procedures.

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Acquire Project Team– Tools and Techniques Pre-assignment refers to assigning the project team members in advance, this is needed when specific skilled resources are required or the resources are defined in the project charter Negotiation with functional managers and other project managers is required if project manager needs specific skills for the project Acquisition is needed when specific skills are not available in the organization. This can involve hiring individual consultants or subcontracting work to another organization Virtual teams can be defined as groups of people with a common goal who fulfill their roles with little or no time spent meeting face to face. Communication is important in such teams, the availability of electronic communication such as e-mail, audio conferencing, web-based meetings and video conferencing has made such teams feasible.

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Acquire Project Team– Tools and Techniques Multi – Criteria Decision Analysis, Selection criteria are often used as a part of acquiring the project team . By use of a multi- criteria decision analysis tool, criteria are developed and used to rate or score potential team members. The criteria are weighted according to the relative importance of the needs within the team. Some examples of selection criteria that can be used to score team members are:  Availability . Identify whether the team member is available to work on the project within time period needed. If there are any concerns for availability during project timeline.  Cost. Verify if the cost of adding the team member is within the prescribed budget.  Experience, Verify that the team member has the relevant experience that will contribute to the project success.  Ability, Verify that the team member has the competencies needed by the project.  Knowledge and Skills. The team member has relevant knowledge of the customer, similar implemented projects, nuances of the project environment and relevant skills to use a project tool.  Attitude that includes his ability to gel with other members of the team.  International factors such as location of the team member, time zone and communication capabilities pankaj sharma, 9810996356

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Acquire Project Team – Outputs

Project Staff Assignments includes assignment of resource to each role defined initially. The documentation of these assignments can include a project team directory, memos to team members, and names inserted into other parts of the project management plan, such as project organization charts and schedules. Resource Calendars documents the time periods that each project team member can work on the project. This should be created keeping in mind each person’s schedule conflicts, involvement in other projects and his/her holiday Project Management Plan Updates Elements of the project management plan that may be updated include, but are not limited to the human resources plan.

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Develop Project Team Process of improving competencies, team interaction, and the overall team environment to enhance project performance.

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Develop Project Team Inputs

Tools and Techniques

Outputs

 Human resource management plan Project staff assignments  Resource Calendars

□ □ □ □ □ □ □

 Team Performance assessments  Enterprise Environmental Factors updates

Interpersonal Skills Trainings Team building activities Ground rules Co-location Recognition and rewards Personnel assessment tools

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Develop Project Team - Inputs Human Resource Management Plan provides guidance on how project human resource should be defined , staffed , managed , controlled , and eventually released. It identifies training strategies and plans for developing the project team. Items such as rewards, feedback, additional training and disciplinary actions can be added to the plan as a result of ongoing team performance assessments and other form of project team management.

Project staff Assignments details the assignments or activities to be performed by the Project team Resource Calendars identify the times when the project team members can participate in team development activities.

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Develop Project Team – Tools and Techniques Interpersonal Skills also referred to as soft skills are very critical for team development. It include skills such as empathy, influence, creativity, and group facilitation, these are valuable assets when managing the project team. Trainings help in enhancing the competencies of the project team members. Training can be formal or informal. Training can be formal or informal ; classroom based ,on line, instructor-led or on the job training.

Team building activities are critical to improve interpersonal relationships, resolving team issues and to keep the team motivated so that team members work together effectively . They are critical for the team members who operate virtually from remote locations . Project managers should obtain top management support, obtain commitment of team members, introduce appropriate rewards and recognition, create a team identity, manage conflicts effectively, promote trust and open communication among team members, and, above all, provide good team leadership to build effective teams.

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Develop Project Team– Tools and Techniques Traditionally, a team goes through five stages of development.

Forming: a group of people come together to accomplish a shared purpose. Storming: Disagreement about mission, vision, and approaches combined with the fact that team members are getting to know each other can cause strained relationships and conflict.

Norming: The team has consciously or unconsciously formed working relationships that are enabling progress on the team’s objectives. Performing: Relationships, team processes, and the team’s effectiveness in working on its objectives are synching to bring about a successfully functioning team.

Adjourning : In the adjourning phase, the team completes the work and moves on from the project. pankaj sharma, 9810996356

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Develop Project Team – Tools and Techniques Histogram is a statistical tool used in the analysis and determination of possible solutions to quality control problem. It depicts how often the problem happens or its frequency Ground Rules define the acceptable behavior by the project team members. This allows team members to discover values that are important to one another Co-Location involves placing many or all of the most active project team members in the same physical location to enhance their ability to perform as a team. E.g. create a war room where all the team members work, or co-locate the project team at the customer’s site. Recognition and Rewards helps in keeping the team motivated and to boost their spirits. People are motivated if they feel they are valued in the organization and this value is demonstrated by the rewards given to them.

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Recognition and Rewards – Theories of Motivation Abraham Maslow’s Hierarchy of Needs (1954) (In order of priority)

Self Actualization

Self fulfillment, growth, learning

Esteem

Accomplishment, Respect, Attention, Appreciation

Social

Love, affection, approval, friends, association Security, stability, freedom from threat and physical harm

Safety Physiological

Air, water, food, house, clothing

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Recognition and Rewards – Theories of Motivation McGregor’s Theory X



The average worker is inherently lazy and needs supervisions



The average worker dislikes work and avoids work whenever possible



To induce adequate effort, the supervisor must threaten punishment and exercise careful supervision



The average worker avoids increased responsibility and seeks to be directed

Theory X relies on Strict Rules, Performance incentives, Rewards, Threats to job security

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Recognition and Rewards – Theories of Motivation McGregor’s Theory Y



Workers are willing to do the job without continuous supervision



The average worker wants to be active and finds the physical and mental effort on the job satisfying



Greatest results come from willing participation which will tend to produce self-direction towards goals without coercion and control



The average worker seeks opportunity for personal improvement and self respect

Theory Y relies on worker participation in decisions, cordial manager-worker relationships, worker designed job methodology, worker individualism

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Recognition and Rewards – Theories of Motivation William Ouchi’s

Theory Z

According to Theory Z, people who don’t fit either Theory X or Theory Y are really a combination of the two.

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Recognition and Rewards – Theories of Motivation Herzberg’s Motivation – Hygiene Theory As per this theory presence of hygiene factors doesn’t motivate someone , however their absence de-motivates. Motivation factors will motivate but they will not work without the hygiene factors in place. I.

Motivating factors I.

Achievements

II.

Recognitions

III. Work Itself IV.

Responsibility

V.

Advancement

VI.

Possibility for growth

Hygiene Factors are Company Policy, Paycheck, status, Relationship with co-workers

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Recognition and Rewards – Theories of Motivation

Expectancy Theorem of Motivation by Victor Vroom 1. You need to give people an expectation of a reward in order to motivate them 2. The rewards or awards should be achievable, if they are impossible to achieve, they will de-motivate them

3. People are motivated by achievements 4. People “expect” to be rewarded for achievements

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Recognition and Rewards – Theories of Motivation

McLelland’s Achievement Theory 1. 2. 3. 4.

People need achievement, power and affiliation to be motivated. Achievement is when someone performs well and is recognized for it Power means he or she has a lot of control or influence in the company Affiliation , a strong sense from being a part of a working team and having good relationships with coworkers

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Recognition and Rewards – Theories of Motivation Ouchi’s Theory

1. Formulated from Quality movement and Quality circles 2. Both Management and Workers need to be involved, and they should trust each other

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Recognition and Rewards – Theories of Motivation The Oldham-Hackman job characteristics model

I.

Skill Variety – the number of job skills that the job holder has the opportunity to exercise

II.

Task Identity – the degree to which your work and its result are identifiable as belonging to you

III. Task Significance – the degree to which your job has an influence on others IV. Autonomy – the discretion you have about the way that you do the job V.

Feedback – the information that you get back about the result of your work

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Forms of Power Below are the five Kinds of Power that can help the project managers maximize his ability to influence and manage the team 

Formal – positional, granted by organizational/upper mgmt



Expert – power earned through a recognized level of knowledge or skill in a specific area



Reward – the power to give a positive consequences, like promotions, salary rise etc.



Penalty – the power to provide negative consequences, like suspension, termination, reprimands



Referent – power gained when team members admire, and willingly follow an individual as a role model

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Exercise : Forms of Power at Work Revising Key Terms : Forms of Power at Work 1. A functional manager assigns a tester to work on the project manager’s team. This is an example of _________ power 2. The programmers always listen to the team lead because he’s really a good software architect. This is an example of _________ power

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Answers to Exercise : Forms of Power at Work Revising Key Terms : Forms of Power at Work 1. A functional manager assigns a tester to work on the project manager’s team. This is an example of Legitimate power 2. The programmers always listen to the team lead because he’s really a good software architect. This is an example of Expert power

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Leadership Style Following are the leadership style that managers can use to interact with organizational members 

Autocratic – traditional figure of a boss who makes binding decisions regardless of what subordinates think or desire



Laissez-Fare – Other extreme of autocratic, the staff can pursue anything they wish, enhances free thinking



Democratic – participative, decisions made jointly by management and staff

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Develop Project Team– Outputs Team Performance assessments gives insight to project manager on areas that need improvement.

Enterprise Environmental Factors Updates The Enterprise environmental factors that may be updated as a result of the Develop Project Team process include, but are not limited to, personnel administration, including updates for employee training records and skill assessments.

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Manage Project Team Tracking team member performance, providing feedback, resolving issues and managing changes to optimize project performance.

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Manage Project Team Inputs

Tools and Techniques

Outputs

 Human resource management plan  Project staff assignments  Team Performance Assessments  Issue log  Work performance reports  Organizational process assets

□

 Change Requests  Project management plan updates  Project document updates Enterprise Environmental Factors updates  Organizational process assets updates

□ □ □

Observation and Conversation Project performance appraisals Conflict management Interpersonal skills

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Manage Project Team - Inputs Human Resource Management Plan contains the human resource plan which includes roles and responsibilities, project organization and staffing management plan Project staff assignments provide a list of team members assigned to the project that needs to be evaluated under the appraisal process Team Performance Assessment is done on continuous basis formally or informally by the project management team. This helps in issues and conflict resolution Issue Log, Issues arise in the course of managing the project team. An issue log can be used t document and monitor who is responsible for resolving specific issues by a target date. Work Performance Reports provide information on project performance vis-à-vis project management plan. It aids in determining the future resource requirements, recognition and rewards and updates to the staffing management plan. Organizational process assets that can influence this process include certificates of appreciation, newsletters, website, bonus structure, corporate apparel and organizational perquisites

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Manage Project Team – Tools and Techniques Observation and Conversation are used to stay in touch with the team member’s work and attitudes. The project management team monitors progress toward project deliverables, accomplishments that are a source of pride for team members, and interpersonal issues. Project performance appraisals helps in clarification of roles and responsibilities, constructive feedback to team members, discovery of unknown or unresolved issues, development of individual training plans, and the establishment of specific goals for future time periods.

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Manage Project Team – Tools and Techniques Interpersonal skills use a combination of technical, human and conceptual skills to analyze situations and interact appropriately with team members. E.g. Leadership, Influence and effective decision making Conflict Management results in greater productivity and positive working relationships. When managed properly, differences of opinion can lead to increased creativity and better decision making. Below are the source of conflicts on the Project More than 50% conflicts on the projects are due to disagreement over schedules, priorities and resources) 1. Schedules 2. Project Priorities 3. Human Resources 4. Technical Opinions 5. Procedures 6. Cost 7. Personality pankaj sharma, 9810996356

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Manage Project Team – Tools and Techniques Conflict Resolution Methods

     

Confronting/Problem Solving. Treating conflict as a problem to be solved by examining alternatives; requires a give-and-take attitude and open dialogue. Withdrawing/Avoiding. Retreating from an actual or potential conflict situation. Smoothing/Accommodating. Emphasizing areas of agreement rather than areas of difference. Compromising. Searching for solutions that bring some degree of satisfaction to all parties. Forcing. Pushing one’s viewpoint at the expense of others; offers only win-lose solutions. Collaborating. Incorporating multiple viewpoints and insights from differing perspectives; leads to consensus and commitment.

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Manage Project Team – Outputs Change Requests due to change in staffing. The change request should be processed and approved through integrated change control process. Staffing changes may include moving people to different assignments , outsourcing some of the work, and replacing the team member who leave. Project Management Plan Updates may include changes in the human resource management plan Project Documents Updates that may be updated include  Issue Log  Role description  Project staff assignment Enterprise Environmental Factors updates include input to organizational performance appraisals and personnel skill updates Organizational process assets updates include Historical information and lessons learned documentation Templates, and Organizational standard processes. pankaj sharma, 9810996356

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Manage Project Team – Outputs Enterprise Environmental Factors updates include input to organizational performance appraisals and personnel skill updates Organizational process assets updates include Historical information and lessons learned documentation Templates, and Organizational standard processes. Change Requests due to change in staffing. The change request should be processed and approved through integrated change control process Project management plan updates include updates to staffing management plan

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Exercise 2: Resolving Conflict Revising Key Terms : Conflict Management Figure out the conflict resolution technique that is being used in the cases below: 1. I don’t really have time to deal with this right now. Just figure it out and get back to me. 2. Hold on a second. Let’s sit down and figure out what the real problem is.

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Exercise 2: Resolving Conflict Revising Key Terms : Conflict Management Figure out the conflict resolution technique that is being used in the cases below: 1. I don’t really have time to deal with this right now. Just figure it out and get back to me - Withdrawal 2. Hold on a second. Let’s sit down and figure out what the real problem is – Problem Solving / Confronting

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Halo Effect Extending the impression of a particular outstanding trait to influence the total judgment of a person E.g. : Assuming that a person who is good in technology will be a good project manager

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Exercise 3: HR Management Revising Key Terms : Complete the following 1. 2.

The main output of the Acquire Project Team process is ___________ assignments The _________ effect causes people with technical expertise to be put in the position for which they are unqualified

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Exercise 3: HR Management Revising Key Terms : Complete the following 1. 2.

The main output of the Acquire Project Team process is Project Resources assignments The Halo effect causes people with technical expertise to be put in the position for which they are unqualified

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Project Stakeholder Management

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 Key Learning Objectives  Who are Stakeholder and effective way to manage them  Project Stakeholder Management processes    

Identify Stakeholder Plan Stakeholder Management Manage Stakeholder Engagement Control Stakeholder Engagement

 Quiz Quarter

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What is Stakeholder Management? Stakeholder Management includes the processes required to identify people, groups or organizations that could impact or be impacted by the project, to analyze stakeholder expectations and their impact on the project and to develop appropriate management strategies for effectively engaging stakeholder in project decisions and execution.

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Identify Stakeholders Identify Stakeholders is the process of identifying the people, groups or organizations that could impact or be impacted by decision, activity or outcome of the project analyzing and documenting relevant information regarding their interest , involvement, interdependencies, influence and potential impact on project success. The key benefit of Identify stakeholder process is that it allows the project manager to identify the appropriate focus for each stakeholder or group of stakeholders

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Identify Stakeholders Inputs •

Project Charter

•

Procurement

•

•

Stakeholder

analysis

documents

•

Expert judgment

Enterprise

•

Meetings

Environmental Factors •

Tools & Techniques

Organizational process assets

Outputs 1. Stakeholder

Register

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Identify Stakeholders - Inputs Project Charter - can provide information about internal and external parties related with the project and affected by the result or the execution of the project, such as project sponsor(s), customers, team members , groups and departments participating in the project, and other people or organizations affected by the project. Procurement Documents – If the project is the result of a procurement activity or is based on an established contract , the parties in that contract are key project stakeholders. Other relevant parties such as suppliers should also be considered as part of the project stakeholder list.

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Identify Stakeholders - Inputs Enterprise Environmental Factors – relevant to Identify stakeholders are: • Organizational culture and structures • Governmental or industry standards (e.g. Regulations, product standards); and • Global , regional or local trends and practices or habits. Organizational Process Assets – relevant to Identify stakeholder are : • Stakeholder register templates • Lessons learned from previous projects or phases and • Stakeholder register from previous projects.

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Identify Stakeholders -Tools and Techniques 1. Stakeholder Analysis - Identifies the interests, expectations and influence of the stakeholders and relates them to the purpose of the project. There are multiple classification models used for stakeholders analysis , such as : • Power /Interest grid, grouping the stakeholders based on their level of authority (“power”) and their level or concern (“interest”) regarding the project outcomes • Power /Influence grid, grouping the stakeholders based on their level of authority (“power”) and their active involvement (“influence”) in the project. • Influence/ Impact grid , grouping the stakeholders based on their active involvement (“ Influence” ) in the project and their ability to effect changes to the project’s planning or execution (“ impact “). • Salience model, describing classes of stakeholders based on their power (ability to impose their will), urgency (need for immediate attention), and legitimacy (their involvement is appropriate).

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Identify Stakeholders -Tools and Techniques 2. Expert Judgement include suggestions and recommendations of Subject Matter Experts such as : • Senior Management • Other units within the organization • Identified key stakeholders • Project managers who have worked on projects in the same area • Subject Matter Experts in the business project area • Industry groups and consultants • Professional and technical associations , regulatory bodies and non governmental organizations (NGOs) 3. Meetings – Project meetings designed to develop an understanding of major project stakeholders and they an be used to exchange and analyze information about roles , interest , knowledge and the overall position of each stakeholder facing the project.

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Power Grid Matrix

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Identify Stakeholders - Output The main output of Identify Stakeholder process is stakeholder register. It contains following details. Identification Information : Name, Organizational Position, Location, Role in the project, Contact info Assessment Information: Major Requirement, Main expectation, Potential Influence Stakeholders Category: External/Internal, Supporter, Neutral, Resister

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Plan Stakeholder Management Plan Stakeholder Management is the process of developing appropriate management strategies to effectively engage stakeholders throughout the project life cycle, based on the analysis of their needs, interests and potential impact on the project success.

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Plan Stakeholder Management Inputs

Tools & Techniques

Outputs

Project Management

•

Expert judgment

Plan

•

Meetings

Management Plan

•

Stakeholder Register

•

Analytical Techniques •

Procurement document

•

Enterprise

•

Environmental Factors •

Organizational process assets

•

Stakeholder

updates

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Plan Stakeholder Management –Inputs Project Management Plan - The information that is taken from Project Management Plan to create stakeholder plan includes • Life cycle selected for the project and the processes that will be applied to each phase; • Description of how work will be executed to accomplish the project objectives; • Description of how human resources requirements will be met and how roles and responsibilities, reporting relationships, and staffing management will be addressed and structured for the project; • Change management plan that documents how changes will be monitored and controlled • Need and techniques for communicating among stakeholders .

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Plan Stakeholder Management –Inputs Stakeholder Register – Provides the information needed to plan appropriate ways to engage project stakeholders. Enterprise Environmental Factors - such as organizational culture, structure, and the political climate. These factors help in determining the best options to support a better adaptive process for managing stakeholders Organizational Process Assets – such as lessons learned database and historical information are of particular importance as they provide insight into previous stakeholder management plans and their effectiveness. These can be used to plan the stakeholder management activities for the current project.

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Plan Stakeholder Management – Tools and Techniques Expert Judgment – Suggestions and guidance should be sought from groups or individuals with specialized training or subject matter expertise or insight into the relationships within the organization, such as • Senior Management • Project Team Members • Other units or individuals within the organization • Identify key stakeholders • Project managers who have worked on the projects in the same area • Industry groups and consultants • Professional and technical associations , regulatory bodies and non governmental organizations.

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Plan Stakeholder Management – Tools and Techniques Meetings Should be held with experts and the project team to define the required engagement levels of all stakeholders. This information can be used to prepare the stakeholder management plan

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Plan Stakeholder Management – Tools and Techniques Analytical Techniques includes comparison of the current engagement level of stakeholder to the planned engagement levels required for successful project completion. Stakeholder engagement throughout the lifecycle of the project is critical to project success. The engagement level of the stakeholders can be classified as follows:

• Unaware – Unaware of project and potential impacts • Resistant – Aware of project and potential impacts and resistant to change • Neutral – Aware of project yet neither supportive nor resistant • Supportive – Aware of project and potential impacts and supportive to change • Leading – Aware of project and potential impacts and actively engaged in ensuring the project is a success.

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Stakeholders Engagement Assessment Matrix

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Plan Stakeholder Management Outputs Stakeholder Management Plan

is a component of the project management plan that explains the management strategies required to effectively engage stakeholders. In addition to the data gathered in the stakeholder register it provides. • Desired and current engagement levels of key stakeholders • Scope and impact of change to stakeholders • Identified interrelationships and potential overlap between stakeholders • Stakeholder communication requirements for the current project phase; • Information to be distributed to stakeholders, including language, format, content , and level of detail; • Reason for the distribution of that information and the expected impact to stakeholder engagement; • Time frame and frequency for the distribution of required information to stakeholders. • Method for updating and refining the stakeholder management plan as the project progresses and develops.

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Plan Stakeholder Management - Outputs Project Document Updates includes project schedules and stakeholder register

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Manage Stakeholder Engagement Manage Stakeholder Engagement is the process of communicating and working with stakeholders to meet their need/expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities throughout the project life cycle.

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Manage Stakeholder Engagement Inputs • •

Tools & Techniques

Outputs

Stakeholder Management •

Communication Methods • Issue Log

Plan

•

Interpersonal skills

•

Change Requests

Communication

•

Management Skills

•

Project Management

Management Plan •

Change Log

•

Organizational process assets

Plan updates •

Project documents updates

•

Organizational process assets updates

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Manage Stakeholder Engagement - Inputs Stakeholder Management Plan – This plan explains the management strategies required to effectively engage stakeholders. Communication Management Plan – This plan explains what to be communicated o whom and at what frequency. What to be communicated to external stakeholders or not Change log – Document changes that occur during a project. It is important to communicate . The impact of these changes on cost, time and quality should be communicated to the relevant stakeholders. Organizational Process Assets - The organizational process assets that can influence the Manage Stakeholder Engagement process include Issue management procedures, Change management procedure and Organizations communication requirement.

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Manage Stakeholder Engagement – Tools and Techniques Communication Methods – The methods of communication identified for each stakeholder in the communications management plan are utilized during stakeholder engagement management. Based on the stakeholders’ communication requirements, the project manager decides how, when, and which of these communication methods are to be used in the project Interpersonal skills - This include conflict management skills, communication skills, ability to overcome resistance to the change.

Management Skills - The project manager applies management skills such as negotiation, facilitation and ability to influence people to coordinate and harmonize the group toward accomplishing the project objectives

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Manage Stakeholder Engagement – Outputs Issue Log – It is good to maintain an issue log for managing stakeholder issues. This log is updated as new issues are identified and current issues are resolved. Change Requests - Managing stakeholder engagement may result in a change request to the product or the project. It may also include corrective or preventive actions to the project itself or to the interaction with the impacted stakeholders, as Appropriate Project Management Plan updates - Stakeholder management plan or communication management plan might be updated when new stakeholder is identified Project documents updates Organizational process assets updates

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Manage Stakeholder Engagement – Outputs Project documents updates - Project documents that may be updated include, but are not limited to, the stakeholder register. This is updated as information on stakeholders change, when new stakeholders are identified, or if registered stakeholders are no longer involved in or impacted by the project, or other updates for specific stakeholders are required. Organizational process assets updates - The organizational process assets that may be updated include, • Project records. Project records include correspondence, memos, meeting minutes, and other documents describing the project. • Lessons learned documentation. Documentation includes the root cause analysis of issues faced, reasoning behind the corrective action chosen, and other types of lessons learned about stakeholder management. Lessons learned are documented and distributed, and become part of the historical database for both the project and the performing organization.

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Control Stakeholder Engagement Control Stakeholder Engagement is the process of monitoring overall project stakeholder relationship and adjusting strategies and plans for engaging stakeholders.

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Control Stakeholder Engagement Inputs 1. Project Management Plan 2. Issue Log

Tools & Techniques 1. Information Management

Outputs 1. Work Performance

Systems

Information

3. Work Performance Data

2. Expert Judgment

2. Change Requests

4. Project Documents

3. Meetings

3. Project Management Plan updates 4.

Project documents updates

5. Organizational process assets updates

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Inputs - Control Stakeholder Engagement 1. Project Management Plan - The information related to Project Management that will be utilized include • The lifecycle selected for the project and the processes that will be applied to each phase. • How work will be executed to accomplish the project objectives • How human resources requirements will be met, how roles and responsibilities , reporting relationships, and staffing management will be addressed and structured for the project; • A change management plan that documents how change will be monitored and controlled • Needs and techniques for communication among stakeholders 2. Issue Log – The issue log is updated as new issues are identified and current issues are resolved 3. Work Performance Data – include reported percentage of work completed , technical performance measures, start and finish dates of schedule activities, number of change requests, number of defects , actual costs, actual durations etc. 4. Project Documents – Multiple project documents originating from initiation , planning, execution , or control processes may be used as supporting inputs for controlling stakeholder engagement. These include • Project schedule • Stakeholder register • Issue Log • Change Log • Project Communications

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Tools and Techniques - Control Stakeholder Engagement 1. Information Management Systems – An information management system provides a standard tool for the project manager to capture , store, and distribute information to stakeholders about the project cost, schedule progress, and performance. 2. Expert Judgement - Suggestions should be sought from subject matter expert such as : • Senior Management • Other units or individuals within the organization • Identified key stakeholders • Project Managers who have worked on projects in the same area • Subject matter experts in the business or project area • Industry groups and consultants • Professional and technical associations, regulatory bodies and non governmental organization

3. Meetings – Status review meetings are used to exchange and analyze information about stakeholder engagement

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Outputs- Control Stakeholder Engagement 1. Work Performance Information is the performance data collected from various controlling processes, analyzed in context , and integrated based on relationships across areas. Thus work performance data have been transformed into work performance information. 2. Change Requests - Analysis of project performance and interactions with stakeholders often generates change requests. These change requests include • Recommended corrective actions include changes that bring the expected future performance of the project in line with the project management plan and ; • Recommended preventive actions can reduce the probability of incurring future negative project performance.

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Outputs- Control Stakeholder Engagement 1. Project Management Plan Updates – Elements of the project management plan that may be updated include : • Change Management Plan • Communication management plan • Cost Management Plan • Human resource management plan • Procure management plan • Quality management plan • Requirements management plan • Risk management plan • Schedule management plan • Scope management plan • Stakeholder management plan

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Outputs- Control Stakeholder Engagement 1. Project Documents Updates – Following documents may be updated. • Stakeholder register - This is updated as information on the stakeholders change, when new stakeholders are identified, or if registered stakeholders are no longer involved in or impacted by the project, or other updates for specific stakeholders are required. • Issue log – This is updated as new issues are identified and current issues are resolved.

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Outputs- Control Stakeholder Engagement 1. Organizational Process Assets Updates – Following are the organization process assets that may be updated. • Stakeholder notifications - Information may be provided to stakeholders about resolved issues, approved changes and general project status. • Project reports - Formal and informal project reports describe project status and include lessons learned, issue logs, project closure reports , and outputs from other knowledge areas • Project presentations - Information formally or informally provided by the project team to any or all project stakeholders

• Project records – Project records include correspondence, memos, meeting minutes, and other documents describing the project. • Feedback from stakeholders – Information received from stakeholders concerning project operations can be distributed and used to modify or improve future performance of the project. • Lesson learned documentation - Documentation includes the root cause analysis of issues faced, reasoning behind the corrective actions chosen, and other types of lessons learned about stakeholder management. Lesson learned are documented and distributed so that they become part of the historical database for both the project and performing organization.

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Project Procurement Management

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Project Procurement Management Processes necessary to purchase or acquire products, services or results needed from outside the project team.

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Procurement Management Processes

Process

Process Group

Plan Procurements

Planning

Conduct Procurements

Executing

Control Procurements

Monitoring and Controlling

Close Procurements

Closing

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Plan Procurements Plan Procurements is the process of documenting project purchasing decisions, specifying the approach, and identifying potential sellers

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Plan Procurements Inputs

Tools and Techniques

 Project management plan  Requirements documentation  Teaming agreements  Risk Register  Project Schedule  Activity cost estimates  Stakeholder register  Enterprise Environmental Factors  Organizational Process Assets

   

Make or buy analysis Expert Judgment Market research Meetings

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Outputs  Procurement management plan  Procurement statements of work  Make or buy decisions  Procurement documents  Source selection criteria  Change requests  Project document updates

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Plan Procurements - Inputs Project Management Plan - describes the need, justification, requirements, and current boundaries for the project. It consists of Scope statement, WBS and WBS dictionary. Requirements documentation include Important information about project requirements that is considered during planning for procurements. Risk Register include risk-related information such as identified risk, risk owners and risk responses Activity resource requirements state the type and quantities of resources needed for project activities Project Schedule provides information on project timelines and milestones Activity cost estimates are used to evaluate the price quoted in the bids or proposals received from potential sellers Stakeholder Register describes the details on the participants and their interest in the project

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Plan Procurements - Inputs Enterprise Environmental Factors includes condition of marketplace, what product and service are available in the market, who is the seller and what are his terms and condition Organizational Process Assets includes policies and procedures , standards ,guidelines, performance measurement criteria, defect management procedures, change control procedures and historical information. Some organizations may define certain constraint on procurement decisions. This also include the various types of contractual agreements used by the organization, All legal contractual relationships generally fall into one of two broad families: either fixed – price or cost reimbursable. Also, there is a third hybrid type commonly in use called the time and materials contract. The next slides describes the different contract types in details

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Plan Procurements -Tools and Techniques Types of Contract Time & Material – T & M

The seller is paid for the amount of time it takes to accomplish the work and he is also reimbursed for the materials used for the project

Firm Fixed Price - FFP

The seller is paid a fixed price for an agreed upon unit of work done by him

Fixed Price Incentive Fee – FPIF

The seller is paid a fixed price plus an incentive amount for achieving pre-agreed project metrics

Fixed Price with Economic Price Adjustment Contracts – FP-EPA

The seller is paid a fixed price. The contract is reviewed at pre-defined intervals in the project for adjustments to the contract price based on certain parameters

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Plan Procurements -Tools and Techniques Types of Contract Cost Plus Fixed Fee – CPFF

The contractor is reimbursed its cost plus an additional fixed fee. Not desirable from the buyer’s point of view

Cost Plus Incentive Fee - CPIF

Seller is reimbursed for an agreed upon performance cost along with a preestablished fee plus an incentive bonus. In this case, the buyer and seller share the uncertainty to a certain degree

Cost Plus Award Fee

Seller is reimbursed for an agreed upon performance cost plus all legitimate cost

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Plan Procurements -Tools and Techniques Make or buy analysis helps project management team to decide whether it is beneficial (in terms of cost and quality) to procure a product or service or it can be produced within the organization.

Market Research includes examination of industry and specific vendor capabilities. Procurement teams may leverage information gained at conferences , online reviews and a variety of sources to identify market capabilities. Meetings , by collaborating with potential bidders , the organization purchasing the material or service may benefit while supplier can influence a mutually beneficial approach or product.

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Plan Procurements - Outputs

Procurement management plan describes how the procurement process will be managed from planning procurement to close procurement. It contains detail on 1. Types of Contracts to be used 2. Risk management issues 3. Whether independent estimates will be used and whether they are needed as evaluation criteria 4. Standardized procurement documents, if needed 5. Process of managing multiple providers (sellers) 6. Coordination with other project aspects 7. Any constraints and assumptions that could affect planned procurements 8. Handling the long lead times to purchase certain items from sellers and coordinating the extra time needed to procure these items with the development of the project schedule 9. Handling make – or – buy decision and linking them to the Estimate Activity Resources and Develop schedule process.

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Plan Procurements - Outputs

Procurement statements of work defines the products, services , or result to be procured in details so that the seller can be sure that he can provide appropriate products , services, or results. It is developed from the project scope baseline and defines only that portion of the project scope that needs to be procured and stated in the contract. Procurement documents define the buyer’s requirements and facilitate complete and correct response from the prospective sellers in the form of a proposal, which aids in the selection of the seller(s). The most commonly used procurement documents are RFP (Request for Proposal), IFB (Invitation for Bid and RFI (Request for Information

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Plan Procurements - Outputs

Source selection criteria are the set of guidelines on the basis of which a particular seller is selected from among the proposals received. Some of the source selection criteria are seller’s understanding of need , overall- life-cycle cost, technical capability, Risk, past performance of the seller, Financial capacity, Warranty etc Make –or - Buy Decisions, A make-or- buy analysis results in a decision of whether particular work can best be accomplished by the project team or needs to be purchased from outside sources. Change requests may be there during this process due to updates in the project plan or its subsidiary plan and other components. These changes are reviewed and approved through the integrated change control process. Project Documents Updates that may be updated include requirement documentation, requirements traceability matrix and risk register.

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Exercise 1: Make or Buy Analysis Practicing Key Concepts You’ve been contracted by a construction company to manage their contracting. They have a choice of either buying an excavator or renting it. To buy it, the company would have to pay $105,000, but owning it will require approximately $10,000 in maintenance costs per year. The price to rent the excavator is $5000 per month, with a one-time service charge of $2000. What’s the minimum number of months the company needs to use the excavator in order for it to make sense to buy it rather than rent? 1. 2. 3. 4.

8 months 16 months 21 months 25 months

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Exercise 2: Plan Procurements

Which document are we referring below? 1. A type of procurement document used to request proposals from prospective sellers of products or services. 2. A type of procurement document used to request price quotations from prospective sellers of common or standard products or services.

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Exercise 2: Plan Procurements

Which document are we referring below? 1. A type of procurement document used to request proposals from prospective sellers of products or services. RFP 2. A type of procurement document used to request price quotations from prospective sellers of common or standard products or services. RFQ

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Conduct Procurement Conduct Procurements is the process of obtaining seller responses, selecting a seller, and awarding a contract

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Conduct Procurement Inputs

Tools and Techniques

 Project Management Plan  Procurement documents  Source selection criteria  Seller proposals  Project documents  Make or buy decisions  Teaming agreements  Organizational Process Assets

      

Bidder conferences Proposal evaluation techniques Independent estimates Expert Judgment Advertising Analytical Techniques Procurement negotiation

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Outputs  Selected sellers  Agreements  Resource calendars  Change requests  Project management plan updates  Project document updates

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Conduct Procurement - Inputs Project Management Plan contains procurement management plan and this describes how the procurement process will be managed from preparing procurement documentation through close procurements Procurement Documents as explained earlier provide an audit trail for contracts and other agreements Source Selection criteria are set of guidelines, either subjective or objective, that are used by the performing organization to select a particular contract/ vendor (seller) from among the proposals received. Seller proposals are responses to the procurement document package that will be used for selection of the sellers by the organization’s evaluation body

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Conduct Procurement - Inputs Project documents that are important inputs to this process include risk register and risk related contract decisions. Make- or -buy decisions as explained earlier is based on the outcome of Make –orbuy- Analysis. The factors that influence the decision making include , core competencies of the organization, value delivered, risk associated with meeting the need in a cost=effective manner and internal capability as compared to the vendor community. Procurement Statement of Work provides suppliers with a clearly stated set of goals , requirements, and outcomes from which they can provide a quantifiable response. The statement of work include    

Specifications Quantity desired Quality levels Performance data, period of performance, work location and other requirements

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Conduct Procurement - Inputs Organizational Process Assets that can influence this process include listings of prospective and previously qualified sellers and information on relevant past experience with sellers, prior agreements

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Conduct Procurement – Tools and Techniques Bidder conferences are meetings wherein the prospective supplier (sellers) are called in to ensure that all the supplier have a clear understanding of the work defined in the procurement documents. Proposal evaluation techniques are used to evaluate the proposals by giving a rating score to each proposal Independent estimates are sometimes prepared by the procuring organization using internal expert in estimation or an outside professional estimator Expert Judgment includes a team of experienced and skilled experts for evaluation of proposals under various areas of expertise as mentioned in the procurement documents and contract

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Conduct Procurement – Tools and Techniques Advertising is used by the performing organization to invite the potential sellers to be Contracted Analytical Techniques, procurements involve defining a need in such as way that vendors can bring value through offerings. To ensure that the need can be and is met, analytical techniques can help organizations identify the readiness of a vendor to provide the desired end state. By examining past performance information, teams may identify areas that may have more risk and that need to be monitored closely to ensure success of the project Procurement negotiations between the buyers and the potential sellers are performed with the goal of reaching mutual agreement on the contractual terms and conditions. The goal is to reach a win-win scenario between the buyer and seller.

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Conduct Procurements– Outputs Selected Sellers are those who have met the evaluation criteria and negotiated a draft contract with the buyer, which will become the actual contract when the contract is awarded Agreement is a formal document governing the relationship between the buyer and the seller. The contract describes the work to be performed and perhaps the way in which the work will be performed. An important to include with the contract is how disputes will be resolved. Depending upon the application area, an agreement can also be called an understanding , a contract, a subcontract, or a purchase order. Regardless of the document complexity , a contract is a mutually binding legal agreement that obligates the seller to provide the specific products, services, or results and obligates the buyer to compensate the seller. The major component of agreement are:

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Conduct Procurements– Outputs Major components of an agreement

             

Statement of work or deliverables Schedule baselines Performance reporting Period of performance Roles and responsibilities Seller’s place of performance Pricing Payment Terms Place of delivery Inspection and acceptance criteria Warranty Product Support Limitation of liability Fees and retainer pankaj sharma, Mobile 9810996356

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Conduct Procurements– Outputs Major components of an agreement

 Penalties  Incentives  Insurance and performance bonds  Subordinate subcontractor approvals  Change request handling and  Termination clause and alternative dispute resolution (ADR) mechanism. The ADR method can be decided in advance as a part of the procurement award.

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Conduct Procurements– Outputs Resource Calendar state the availability and the quantity of contracted resource and the project period (dates) during which the resources are active or idle Change Requests to the project management pan, its subsidiary plans and other components are processed for review and disposition through the Perform Integrated Change Control process. Project Management Plan Updates, the elements of the project management plan that may be updated include Cost baseline, Scope baseline, Schedule baseline, Communication management plan, and Procurement management plan. Project Document Updates, the project documents that may be updated include, requirement documentation, requirement traceability documentation, risk register and stakeholder register.

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Conduct Procurements– Outputs Selected Sellers are those who have met the evaluation criteria and negotiated a draft contract with the buyer, which will become the actual contract when the contract is awarded Procurement Contract Award is a formal document governing the relationship between the buyer and the seller. The contract describes the work to be performed and perhaps the way in which the work will be performed. An important to include with the contract is how disputes will be resolved. Resource Calendar state the availability and the quantity of contracted resource and the project period (dates) during which the resources are active or idle Change Requests As discussed earlie Project Management Plan Updates As discussed earlier Project Document Updates As discussed earlier pankaj sharma, Mobile 9810996356

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Control Procurements Managing procurement relationships, monitoring contract performance and making changes and corrections as needed.

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Control Procurement Inputs

Tools and Techniques

Outputs

 Project Management Plan  Procurement documents  Agreement  Approved change requests  Work Performance reports  Work performance Data

 Contract change control system  Procurement performance reviews  Inspections and audits  Performance reporting  Payment system  Claims administration  Records management system

 Work performance information  Change requests  Project management plan updates  Project document updates  Organizational process assets update

•

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Control Procurement - Inputs Project Management Plan describes how the procurement process will be managed from developing procurement documentation through contract closure. Procurement documents contain complete supporting records for administration of the procurement processes; this includes procurement contract awards and the statement of work Agreements As Explained earlier Agreements are understanding between parties, including understanding of the duties of each parties. Approved change requests include modifications to the terms and condition of the contract including the procurement statement of work, pricing and the description of the products , services or results.

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Control Procurement - Inputs Work Performance Reports – is a seller performance related documentation that include  Technical documentation. Sellers- developed technical documentation and other deliverable information are provided in accordance with the terms of the contract.  Work performance information. The seller’s performance reports indicate which deliverables have been completed and which have not. Work Performance Data includes information on a regular basis of the performance and status of the seller’s project work activities. It includes information such as which deliverables have been completed and which have not, whether the quality standards defined for the project are being adhered to and the payment is being made for the costs that have been stated in the contract.

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Control Procurement – Tools and Techniques Contract change control system is a component of integrated change control system and it describes the process of updating the contract Procurement performance reviews are periodic reviews initiated by the buyer to measure the project’s progress against the plan Inspections and audits are done by the buyer and supported by the seller to identify any non-compliance to the project’s process or deliverables. Performance reporting provides information to management about how effectively the seller is achieving his contractual objective. Payment system helps to ensure that invoices and payments match up and that the right amount is being invoiced for the right deliverables at the right time.

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Control Procurement – Tools and Techniques Claims administration are basically disagreements (about scope or change request). It is preferred that the claims should be resolved by the parties involved as per the dispute resolution procedure . If not resolved by the parties involved, then the disputes are resolved by the process of Arbitration whereby a third neutral party is given the task of getting the dispute resolved. Records management system is a part of the project management information systems (PMIS). In addition to the documentation, it also consists of processes, control functions, and automated tools. This system should index various documents for their easy retrieval and archival.

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Control Procurement – Outputs Work Performance Information provides a basis for identification of current or potential problems to support later claims or new procurements. By reporting on the performance of a vendor, the organization increases the knowledge of the performance of the procurement , which supports improved forecasting , risk management and decision making. Performance reports also assist in the event there is a dispute with the vendor. Change requests, changes to the project management plan, its subsidiary plans, and other components , such as the cost baseline, schedule baseline, and procurement management plan may result from the control procurement process. Project management plan updates includes update to the procurement management plan ,schedule baseline and cost baseline

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Control Procurement – Outputs Project Documents Updates include updates to procurement documentation, it include the procurement contract with all supporting schedules, requested unapproved contract changes , and approved change requests. It also includes any seller developed technical documentation and other work performance information such as deliverable s, seller performance reports and warranties, financial documents including invoices and payment records, and the result of contract – related inspections. Organizational process assets updates that will be updated as a result of this process includes documentation related to seller’s unsatisfactory performance, request for contract changes or clarifications, payments made by the buyer to the seller and also the documents related to seller’s performance.

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Exercise : Control Procurements Revising Tools and Techniques 1. ___________________ involves process to change the procurement contract. It can involve the approvals, paperwork and the dispute resolution mechanism required for the change control. 2. ______________ system refers to how the payments are made to the seller.

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Answer to Exercise : Control Procurements Revising Tools and Techniques 1. Contract Change Control System involves process to change the procurement contract. It can involve the approvals, paperwork and the dispute resolution mechanism required for the change control. 2. Payment system refers to how the payments are made to the seller.

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Close procurements Process of completing each project procurement. It involves administrative activities such as updating the project records with results and archiving the information for future use and finalizing open claims in accordance with the terms and conditions stated in the contract document Close Procurement process closes the procurement applicable to that phase of the project

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Close procurements Inputs

Tools and Techniques

Outputs

 Project Management Plan  Procurement documentation

 Procurement audits  Procurement Negotiations  Records management system

 Closed procurements  Organizational process assets updates

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Close procurements- Inputs Project Management Plan Discussed Earlier

Procurement documentation includes information on contract schedule, scope, quality and cost performance along with all contract change documentation, payment records and inspection results. This information can be used for lessons learned information and as a basis of evaluating contractors for future contracts.

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Close procurements- Tools and Techniques Procurement Audits is a structured review of the procurement processes from the plan procurements process through administer contracts process. The purpose of procurement audit is to identify the improvement areas and the flawed procurement processes and/ or procedure. This will assist in reusing the successful/updated procedures in other projects. Procurement Negotiations refers to the settlement for any outstanding issues, claims and disputes through negotiation. Whenever the settlement cannot be achieved through direct negotiation, some form of alternative dispute resolution(ADR) including mediation or arbitration can be explored Records Management System is used by the project manager to manage contract and procurement documentation and records. Contract documents and correspondence are archived through the records management system as part of the close procurement process

pankaj sharma, Mobile 9810996356

Author - Pankaj Sharma

Connoisseur Solutions

Close procurements- Outputs Closed Procurements is the process in which the buyer’s contract administrator sends formal written notice to the seller that the contract is complete. Organizational Process Assets Updates will be updated due to modification in the procurement files and lessons learned documentation. Also, deliverable acceptance and rejection will be stated in the final contract documentation with supporting reasons.

pankaj sharma, Mobile 9810996356

Author - Pankaj Sharma

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Exercise 5: Contract Type Reviewing Associated Risks to Buyers & Sellers Explain the risks from buyer and seller perspective in case of the following types of contracts 1. 2. 3. 4. 5. 6.

Firm fixed price Fixed price plus incentive fee (FPIF) Cost plus fixed fee Cost plus award fee Cost plus incentive fee Time and Material (T&M)

pankaj sharma, Mobile 9810996356

Author - Pankaj Sharma

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Project Procurement Management 

Negotiations Techniques

– Deadline: imposing a deadline to reach an agreement – Stalling: one party may claim that an agreement cannot be finalized because of his limited authority

– Fair and Responsible: a negotiator may claim that the price for a product is equitable because that’s what another company is paying. – Delay: are useful when tempers are beginning to flare, to divert from a subject, etc (Ex: arrival of refreshments, request for recess etc) – Withdrawal: one party may attack an issue, then retreat pankaj sharma, Mobile 9810996356

Author - Pankaj Sharma

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Project Procurement Management 

Negotiations Techniques

– Arbitration: a third party may be brought in when agreement cannot be reached. (out of court settlement)

– Fait Accompli: a party may claim that what is being asked for has already been accomplished and cannot be changed

pankaj sharma, Mobile 9810996356

Author - Pankaj Sharma

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Exercise 5: Procurement Management

Revising Key Terms : Complete the following 1. An Invitation for __________ is a document that ask sellers for the price of work 2. The buyer selects the __________ selection criteria before contacting potential sellers 3. The ___________contract has high risk to the seller because the seller must cover costs that go beyond the price

pankaj sharma, Mobile 9810996356

Author - Pankaj Sharma

QUIZ !

pankaj sharma, Mobile 9810996356

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