blue the pmp exam made easy your 24 hour

The PMP Exam Made Easy Your 24-Hour Study Guide to

Passing, 2013 Edition

by Ron Ponce and Christopher Scordo

SSI Logic © 2013 (337 pages) Citation

ISBN:9780982576885

Containing expert tips for exam success, this all-in-one

study guide offers top-notch tips, tools and techniques to

help you prepare for and pass the PMP exam, while

making it easy for you to focus on just the information you

need to succeed.

Table of Contents

The PMP Exam Made Easy—Your 24-Hour Study Guide to Passing

Accessed 1 days ago

A Brief Introduction to this Guide

A Concise Overview of the PMP Exam

PMI Code of Ethics and Professional Conduct

The Project Management Framework

The Project Life Cycle & Organization

All About Project Management Processes

Deep Dive into Project Integration Management

Deep Dive into Project Scope Management

Deep Dive into Project Time Management

Deep Dive into Project Cost Management

Deep Dive into Project Quality Management

Deep Dive into Project Human Resource Management

Deep Dive into Project Communications Management

Deep Dive into Project Risk Management

Deep Dive into Project Procurement Management

Deep Dive into Project Stakeholder Management

A Review of Critical PMP Exam Formulas

Quick Guide to Important PMP Exam Acronyms

Quick Study Checklist for the PMP Exam

Helpful Hints for Taking the PMP Exam

More Exam Taking Tips

List of Figures

List of Tables

List of Cheat Sheets

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A Brief Introduction to this Guide

Overview

Congratulations on deciding to take and pass the PMP® exam! This guide will walk

you through the process to apply for the exam and, most importantly, what you will

need to know in order to pass the exam. You will find numerous references in this

study guide to the Project Management Body of Knowledge, or PMBOK Guide. These

terms are interchangeable. At the time of this writing, the PMBOK® Guide – Fifth

Edition is the most recent version and is the standard upon which the PMP exam is

based from 31st of July, 2013. It is expected that the PMBOK Guide - Fifth Edition

will remain the standard text upon which the exam is based until 2017.

Important Note The page references indicated in this book refer to the PMBOK

Guide - Fifth Edition.

Why Take the PMP Exam?

Today more than ever, organizations are looking at more than just a person's

experience. They want to know that you are well versed in the best project

management fundamentals and standards. Those standards are set by the Project

Management Institute (PMI). The PMI provides several certifications around project

and program management, but the flagship is the Project Management Professional or

PMP® certification. The PMP® certification shows that you are part of an elite group

of professionals that have been trained and credentialed in project management best

practices recognized worldwide.

A Concise Overview of the PMP Exam

Qualification to Take the Exam

To take the PMP® exam, one needs to meet the requirements as stated by the Project

Management Institute. The current requirements are described in the table below:

Category General

Education

Project

Management

Education

Project

Management

Experience

Experience

One 4-Year Degree

(bachelor's degree

or equivalent)

35 contract hours

within the last

eight years

4,500 hours Three years

within the last

eight years

Two Secondary Degree

(high school

diploma or

equivalent)

35 contract hours

within the last

eight years

7,500 hours Five years

within the last

eight years

The qualifications show that you have not only been provided the proper education

about project management but that you have the practical experience needed to apply

the knowledge properly.

Application

You need to first go to the PMI.org site in order to begin the application process.

There are two ways that you can apply for the PMP certification:

Online

By mail

The recommendation is that you complete the application online at the PMI.org

website. The processing and notification process is much faster than sending the

application through the mail. You can print a copy of the application in order to help

you capture your thoughts and experiences before you enter it online. It will be a time

saver for you.

The PMI does occasionally audit the information that is presented in applications in

order to ensure that all the requisites are in order. You want to make sure that you are

honest about the information that is being presented. If your application is audited

your approval will be delayed until the audit is completed. Up to 10% of PMI

applications are audited.

Cost

At the time of this publishing, the exam fee for the electronic exam is $405 for PMI

members in good standing and $555 for non-PMI members. The current costs can

always be found at the PMI.org website.

Quick Overview of PMP Exam Details

The PMP® exam includes 200 multiple-choice questions.

Each question will have four answer choices.

You must complete the exam in four hours.

Twenty-five of the 200 questions are "pretest (unscored) questions" which the

PMI uses to validate the questions for inclusion in future exams.

You will not be able to distinguish the "pretest questions" from the questions

that will count toward your score.

These pretest questions will appear randomly throughout the exam and will

not be included in your score for the exam.

Your score will then be calculated based on the response to the remaining 175

questions.

Try to answer every question, since unanswered questions are considered

wrong answers.

The passing score for the exam is based on psychometric analysis and

varies with exam difficulty. Although it is hard to determine an absolute

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passing point, it would be safe to say that having 75% of the questions

correctly answered will have a high probability of passing the exam.

The current exam is centered on the material covered within the Fifth Edition of the

Project Management Body of Knowledge also known as the PMBOK Guide. While

the PMBOK Guide represents the standard for the industry, the exam is not a test on

how much you memorized from the guide. The exam may also include questions

related to topics and concepts that are not directly covered in the PMBOK Guide.

The Exam

The exam covers the following five key Process Groups:

1. Initiating

2. Planning

3. Executing

4. Monitoring & Controlling

5. Closing

In addition to these five Process Groups, the exam will take into consideration the ten

Knowledge Areas as outlined in the PMBOK Guide. The ten Knowledge Areas

include:

Integration Management

Scope Management

Time Management

Cost Management

Quality Management

Human Resource Management

Communications Management

Risk Management

Procurement Management

Stakeholder Management

The table below breaks out by each process group the percentage of scored questions

on the PMP exam:

Open table as spreadsheet

Project Management Process Group Percent of Questions

Project Initiating 13%

Project Planning 24%

Project Executing 30%

Project Monitoring & Controlling 25%

Project Closing 8%

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The Project Management Institute does make changes periodically to the exam, the

application process, and the qualifications. You should always make sure to get the

latest information directly from the PMI at their website www.pmi.org.

Be Ready for the Exam

As we mentioned previously, the PMP exam does not just cover the content of the

PMBOK Guide. Although it tests your knowledge of how to apply the content of the

guide, it is not a test that measures how much of the guide you have been able to

memorize. There are parts of the exam where memorization will be important and

come in very handy. Those areas will be clearly called out for you.

In addition to a thorough knowledge of the PMBOK Guide, the exam also factors in

how a project manager uses that knowledge when managing projects. While your

project management experience may differ from that outlined by the PMI, it is

important to keep the recommendations of the PMBOK Guide in mind when

answering the questions rather than basing your answer only on your real world

experience.

You will find that many of the questions are situational or based on specific scenarios.

This type of question is designed to see whether you can apply the information

provided and determine which of the selections "is the best answer". These types of

questions allow for confusion, because in some instances they contain information

that has nothing to do with determining the answer. The sole reason the information is

provided is to confuse you and lead you away from the best answer. The best answer

also could signify that you were presented with two valid choices, but only one is the

best selection for the specific situation described in the question.

Read carefully! Don't confuse yourself by assuming you know what is being asked.

Take the time to make sure you know exactly what is being asked, and review each

answer choice in its entirety. We tend to read the first and second and then skim the

third and fourth. That would be a huge mistake, because all you need to do is not read,

or misread, a single word that can make the difference between choosing the correct

or the incorrect selection.

The first tip for the exam is this: Review and study the PMBOK Guide – Fifth Edition.

This first step is the key, since most of the questions on the exam reside within the

guide. For many people, the terms and definitions that are provided within the guide

are new or at least different from what they have experienced in the real world. That

is why reading the guide and becoming familiar with what is being presented is so

important even before going forward with this guide.

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PMI Code of Ethics and Professional

Conduct

Overview

The Code of Ethics and Professional Conduct (the Code) get to the core of who we

are as a profession. We are project professionals with the objective of doing the best

we can for our projects and our teams. The terms and concepts in the Code are in

many cases intuitive, but for some they may be a change from the norm. In August

2011, the PMI incorporated the concept and terms from this section into the body of

the questions within the PMP exam. Before that, there was a 6th

category of test

questions that focused on this section. With the change, I wanted to bring the code

front and center so that it is the first area we cover.

It is important to realize that the Code touches all aspects of a project. As you look at

the test, you will see questions that are related to the Code in each of the five Process

Groups. As you read the important aspects of the Code, remember them as we move

forward in each section of the guide.

Vision and Purpose

Describes the expectations that we have of ourselves and our fellow project

managers in the global project management community.

Articulates the ideals to which we aspire as the behaviors that are mandatory

in the many roles we play.

Instills confidence in the project management profession and helps an

individual become the best project manager they can be.

Assists us in making wise decisions when faced with difficult situations that

challenge our integrity or place us in a position of compromise.

Persons to Whom the Code Applies

All PMI Members

Non-members of PMI who fall into one of the following categories:

o Who hold a PMI certification

o Who apply to commence a PMI certification process

o Who serve PMI in a voluntary capacity

Aspiration and Mandatory Conduct

Aspirational standards describe the conduct that we strive to uphold.

o This is not easily measured

o It is an expectation that the standards are upheld

o They are not optional

Mandatory standards establish firm requirements

o Must adhere to the standards or face disciplinary action

Structure of the Code

Divided into sections that contain standards of conduct that are aligned with

four values

Values that Support this Code

Responsibility

Respect

Fairness

Honesty

Responsibility

Description

Is our duty to take ownership for the decisions we make or fail to make, the

actions we take or fail to take, and the resulting consequences.

Responsibility - Aspirational Standards

We make decisions and take actions based on the best interests of society,

public safety, and the environment.

We accept only those assignments that are consistent with our background,

experience, skills, and qualifications.

We do what we say we will do.

We take ownership for our work and our team by

o Making corrections promptly

o Communicating errors to appropriate body

We protect proprietary or confidential information that has been entrusted to

us.

We uphold this Code and hold each other accountable to it.

Responsibility - Mandatory Standards

We inform ourselves and uphold the policies, rules, regulations and laws that

govern our professional work and volunteer activities.

We report unethical or illegal conduct to appropriate management and, if

necessary, to those affected by the conduct.

We bring violations of this Code to the attention of the appropriate body for

resolution.

We only file ethics complaints when they are substantiated by facts.

We pursue disciplinary action against an individual who retaliates against a

person raising ethics concerns.

Comments

Specifically, we do not engage in any illegal behavior, including but not

limited to: theft, fraud, corruption, embezzlement, or bribery.

Further, we do not take or abuse the property of others, including

intellectual property, nor do we engage in slander or libel. In focus groups

conducted with practitioners around the globe, these types of illegal

behaviors were mentioned as being problematic.

Respect

Description

Our duty to show a high regard for ourselves, others, and the resources

entrusted to us.

Resources entrusted to us may include people, money, reputation, the safety of

others, and natural or environmental resources.

Respect - Aspirational Standards

We inform ourselves about the norms and customs of others and avoid

engaging in behaviors they might consider disrespectful.

We listen to others' points of view, seeking to understand them.

We approach directly those persons with whom we have a conflict or

disagreement.

We conduct ourselves in a professional manner, even when it is not

reciprocated.

Respect - Mandatory Standards

We negotiate in good faith.

We do not exercise the power of our expertise or position to influence the

decisions or actions of others in order to benefit personally at their expense.

We do not act in an abusive manner toward others.

We respect the property rights of others.

Fairness

Description

To make decisions and act impartially and objectively. Our conduct must be

free from competing self-interest, prejudice, and favoritism.

Fairness - Aspirational Standards

We demonstrate transparency in our decision-making process.

We constantly reexamine our impartiality and objectivity, taking corrective

action as appropriate.

o One of the biggest problems practitioners report is not recognizing

when we have conflicted loyalties and recognizing when we are

inadvertently placing ourselves or others in a conflict-of-interest

situation. We as practitioners must proactively search for potential

conflicts and help each other by highlighting each other's potential

conflicts of interest and insisting that they be resolved.

We provide equal access to information to those who are authorized to have

that information.

We make opportunities equally available to qualified candidates.

Fairness - Mandatory Standards

We proactively and fully disclose any real or potential conflicts of interest to

the appropriate stakeholders.

When we realize that we have a real or potential conflict of interest, we refrain

from engaging in the decision-making process or otherwise attempting to

influence outcomes, unless or until: we have made full disclosure to the

affected stakeholders; we have an approved mitigation plan; and we have

obtained the consent of the stakeholders to proceed.

We do not hire or fire, reward or punish, or award or deny contracts based on

personal considerations, including but not limited to, favoritism, nepotism, or

bribery.

We do not discriminate against others based on, but not limited to, gender,

race, age, religion, disability, nationality, or sexual orientation.

We apply the rules of the organization (employer, Project Management

Institute, or other group) without favoritism or prejudice.

Honesty

Description

Duty to understand the truth and act in a truthful manner both in our

communications and in our conduct.

Honesty - Aspirational Standards

We earnestly seek to understand the truth.

We are truthful in our communications and in our conduct.

We provide accurate information in a timely manner.

We make commitments and promises, implied or explicit, in good faith.

We strive to create an environment in which others feel safe to tell the truth.

Honesty - Mandatory Standards

We neither engage in nor condone behavior that is designed to deceive others,

including but not limited to, making misleading or false statements, stating

half-truths, providing information out of context or withholding information

that, if known, would render our statements as misleading or incomplete.

We do not engage in dishonest behavior with the intention of personal gain or

at the expense of another.

The Project Management Framework

What is a Project? (Page 3)

You may think this is a trick question. Everyone knows this or they shouldn't be

thinking about taking the exam. While that may be true, what is critical is that you

know the right answer. So the correct way to answer the question is this:

A project is a temporary endeavor undertaken to create a unique product,

service, or result.

The temporary nature of projects indicates a definite beginning and end.

The key here is the word temporary. While the deliverables of a project may be

lasting, the project activities involved in creating those deliverables, whether they be a

product, a service, or a result, have a clear beginning and ending. For the exam, it will

be critical to think of a project as being large in scale. The reason is that larger

projects are more likely to provide the opportunity to cover all five Process Groups

and all ten Knowledge Areas, whereas a smaller project may not require the need to

deal with them all.

What is Project Management? (Page 5)

Project management involves managing the activities required in order to meet the

project objectives. This includes application of specific knowledge, skills, tools and

techniques. There is systematic process that ties the activities of a project together in

order for them to be accomplished successfully during the lifecycle of the project. The

PMBOK Guide tells us that project management is accomplished through the

appropriate application and integration of 47 logically grouped project management

processes compromising the 5 Process Groups.

Although project management is part science with its logic of step-by-step

progression, it is also an art. It is an art, because you are dealing with people that need

to execute those logical steps. Anytime you deal with people, their own opinions may

overpower the logical steps necessary for successful completion of the project and its

deliverables. As the project manager, you may feel more like a baby sitter in these

situations, but we'll touch on that more in the upcoming pages.

Relationship between: Portfolio Management,

Program Management, and Project Management

In most cases, project management is leveraged to serve a broader purpose or set of

objectives. A single project can be part of a group of projects that are within a

program or portfolio of projects. Organizational structures and strategies are formed

in order to support program and portfolio management. It is important for the exam to

understand this strong relationship as well as the differences between each.

Portfolio Management (Page 9)

Projects or programs may be combined into a portfolio in order to facilitate more

effective management of those projects and help the organization achieve specific

business goals. Portfolio management focuses on ensuring that projects and programs

are reviewed to prioritize items like resource allocation in order to keep them aligned

to organizational strategies. It is important to note that the collection of projects or

programs within the portfolio may not be directly related or interdependent in any

way. Depending on the organization, there is the flexibility to construct the portfolio

in the best way to support the organizational objectives. Portfolio management helps

to centralize the management of all the projects within the portfolio. There is a

consistency in dealing with prioritization, authorization, and controlling of the

projects.

Program Management (Page 9)

Individual related projects may be combined into a larger program. This allows

management in a coordinated manner and provides a level of control that would not

be available by managing them on an individual basis‥ This coordination may

provide decreased risk, economies of scale, and improved management that could not

be achieved if the project were managed individually. Program management, unlike

Portfolio Management, focuses on making sure there are ties or interdependencies

between each of the projects within the program related to having a common outcome

or collective capability.

Projects and Strategic Planning (Page 10)

Each organization is out to accomplish a set of objectives as part of a strategic plan or

vision that ensures continued growth and success. At least that is the hope, otherwise

that organization won't be around for very long. Projects play a critical role in the

execution of that strategic plan. The strategic objectives can center on some of the

following topics

Business opportunities

Customer requests

Legal / Regulatory

Market trends

The projects that are created in order to achieve the objectives of the strategic plan

can then be placed in programs or portfolios in order to gain the greatest economies of

scale to ensure their successful execution. The strategic plan provides the guidelines

on how the project is assigned to a program or portfolio, the prioritization of the

resources that get assigned, and so much more. The key is recognizing the connection

between the individual project, and the benefits that project's success can add to the

organization.

Project Management Office (Page 10)

The Project Management Office (PMO) is a centralized organizational entity that

provides coordinated management of the projects that are under its control. The

projects under the PMO may or may not be related. Each organization has the

flexibility to define how the PMO will function in order to best meet its needs. The

typical responsibilities of the PMO can range from

Terminating projects

Managing the interdependencies between projects

Providing resources

Monitoring compliance with organizational processes

Providing templates and define standards

Centralizing communication about the projects under its control

Being a member of the change control board

Being a stakeholder

Prioritizing projects

Project Management and Operations Management

(Page 12)

Operations management focuses on the requirements needed for ongoing execution of

activities after the project is complete. These activities in many cases are more

repetitive in nature unlike a project with a definitive beginning and end. There is a

tight tie between a project and with operations during varying points such as:

Close out phase

The development of a new product or enhancing an existing one

Lessons learned

These points in time are examples of when information is transferred between the

project team that creates and the operations team that manages the ongoing

requirements. The communication during these transfer points is critical to ensure that

the necessary information is passed between the two groups to mitigate any ongoing

issues.

Role of Project Manager (Page 16)

In order to achieve the project objectives, the performing organization assigns a

project manager. The project manager's responsibilities are unique when compared

with other roles in the organization such as a functional manager or operations

manager. Many of the tools and techniques for managing projects are specific to

project management. Effective project management requires that the project manager

possess the following characteristics:

Knowledge

Performance

Personal

As a project manager you need to have knowledge about project management and

how best to apply that knowledge to successfully deliver the project. At the end of the

day, project managers are judged on how well they and their team were able to meet

the objectives of the project. As a project manager, your performance is based on your

ability to take your knowledge about project management and apply it to successfully

deliver on the objectives of the project at hand. It also involves how successfully you

deal with the project team and stakeholder as well as your own behavior during the

project. Challenges abound with any project and your ability to get through them

personally as well as a team are also data points where your performance is judged.

Your leadership abilities, the effectiveness of how you manage a project, the attitude

that you have, day in and day out, provide measurements of your personal

performance.

Enterprise Environmental Factors (Page 29)

This may be one of those terms that make you go, "What?" As you read the list of

items included in the guide or listed below, you begin to get a better idea of what this

term means. Most organizations that have been executing projects have a history.

They may have developed a way projects should be executed. The PMBOK Guide

calls these items "enterprise environmental factors." They are inputs to the Develop

Project Charter and many other processes as we will see in more detail. While they

can have a positive influence on the project outcome by helping you as a project

manager not have to reinvent the wheel for each project, they can also be a constraint

to your project. Although the standards in place may not be appropriate for your

project, you still need to adhere to them.

They include but are not limited to:

Organizational culture, structure, and process

Government or industry standards

Infrastructure

o Facilities

o Capital equipment

Existing human recourses

o Skills

o Disciplines

o Knowledge

Personal administration

o Staffing

o Retention guidelines

Company work authorization systems

Marketplace conditions

Stakeholder tolerances

Political climate

Organizational established communication channels

Project Management information systems

o Automated tools (scheduling software, configuration management

system, etc.)

Organizational Process Assets (pg. 27)

Enterprise Environmental Factors have a counterpart called Organizational Process

Assets. This term is a lot clearer about what it means. Project managers in most cases

deal with existing processes, procedures, and historical information that is available to

them when managing their projects. These assets help the project benefit from past

organizational experience.

The following are some examples of organizational process assets:

Processes, Procedures, and Policies –

o Over time, organizations develop processes, procedures, and policies

as they mature based on past projects. These items have been tested

and considered to be best practices for project managers to follow.

o They include items like:

Standards or guidelines

Templates

Processes

Procedures

Policies

Corporate Knowledge Base – o Organizations have information such as historical records and lessons

learned from previous projects. The organization sees the value of this

information and then invests to centralize that data into an indexed

corporate knowledge base that is available to all.

Hint – In the real world, an organization may or may not have

such a knowledge base. For the exam you can assume that a

database will be available to all project managers unless stated

otherwise.

o The items stored in the knowledge base may include but are not limited

to:

Measurement data points –

Metrics that have been captured to evaluate projects,

products, processes

Project files

Plans

Financial data

Risk registers

Diagrams

Issues and defect management databases

Configuration management

Baseline & Versions

Historical Information – o Historical information (or data) is a record of past projects. It is

used to plan and manage future projects, thereby improving the process

of project management. Historical information can include:

Activities

Lessons Learned

WBS

Benchmarks

Reports

Risks

Estimates

Resources needed

Project management plans

Correspondence

Lessons Learned o Project initiating involves looking up past lessons learned for use on

the current project.

The Project Life Cycle & Organization

When we look at projects and how they are managed, we need to consider that they

take place in a much broader landscape. Each project is one piece in an overall puzzle

for any organization. As a project manager, the success of your project may depend to

some extent on your understanding of your project's context in that full puzzle. This

chapter describes the importance of understanding the basic structure of a project.

You will also know the importance of the relationship between a Project Life Cycle

and a Product Lifecycle, as well as project work and ongoing operational work.

Finally, we will focus on the importance of stakeholders and the influence they have,

as well as the effect an organizational structure can have on a project.

Project Life Cycle – Overview

A life cycle is a progression through different stages of development. We can apply

that general definition to both a project as well as a product as we will soon see.

PMBOK Guide Definition – Page 38

A project life cycle is the series of phases that a project passes through from its

initiation to its closure. The phases are generally sequential, and their names and

numbers are determined by the management and control needs of the organization or

organizations involved in the project, the nature of the project itself, and its area of

application.

In order to successfully manage a project you need to have not only the structure of

the project lifecycle but also partner that with a methodology of how that will be

done.

Characteristics of the Project Life Cycle (Page 38)

Regardless of the size or complexity of a project, there are four basic characteristics

of a Project Life Cycle including:

Start

Planning – Organizing

Executing – Carry out the work

Closing out

The fact that these characteristics are common in all project life cycles makes it

simpler to communicate the project status with all project team members and

stakeholders. You are able to quickly provide a status without having to go too deeply

into the details, especially when those details will not be meaningful to the audience.

The types of information you can use a life cycle to help graphically display would

be:

Cost and Staffing levels –

o showing how they grow at the start, and how they drop rapidly as the

project comes to a close

Risk & Stakeholder influence

o Both are highest at the start of a project, decreasing over the life cycle

of the project

Cost of change

o Being able to show that it is best to make changes early in a project

since the cost is low compared to the end where the cost can be very

high.

Product vs. Project Life Cycle Relationship

The product life cycle consists of generally sequential, non-overlapping product

phases determined by the manufacturing and control need of the organization.

The life cycle lasts from the conception of a new product to its withdrawal from the

market place. During that life cycle a product will require many different projects

from the initial one to give it life to those that are done as it declines.

Project Life Cycle Chart

There is a tight relationship between the product life cycle and the project life cycle.

From a product perspective, given that there can be numerous projects created to

support the product, the organization may decide that it is best to manage the project

collectively in order to gain the most efficiency possible.


Project Phases are divisions within a project where extra control is needed to

effectively manage the completion of a major deliverable.

In many cases you will see that phases in a project are completed in a

sequential pattern, but there can also be overlap. This will depend in part on

the type of methodology the organization has chosen to manage projects.

Phases allow a project to be broken down into logical chunks to make it easier

to plan and manage. Project phases also help with mitigating the complexity or

size of a project, thus making the larger project less overwhelming to a project

manager. In the end, each phase has a beginning and an end. This gives all

phases similar characteristics. Finally, it is possible to have just one phase.

Don't be surprised if you are presented with a single phase for a project. It may

be that it is a simple and straight forward project so it only needs a single

phase.

Exam Hint A project phase is not a Project Management Process Group

Project Governance Across the Life Cycle

Project governance provides a comprehensive, consistent method of controlling the

project and ensuring its success.

Governance is important for all projects. Each organization, as part of it

Organizational Process Assets, has a philosophy of how programs, portfolios and

individual projects should be controlled. The phase structure allows a project manager

to have stronger controls within each phase and thus over the entire project.

Phase to Phase Relationships (Page 42)

When involved with large and complex projects consisting of multiple phases,

arranging the phases sequentially is not always the best approach because there could

be constraints with respect to the timeline. As a result, the best approach may be to

have the phases overlapping or concurrent. There are two basic types of phase-to-

phase relationships:

Sequential Relationship

o Phase can only start once the previous phase is complete.

Overlapping Relationship

o Phase will start prior to the completion of the previous phase.

Phase-to-Phase Relationships and Project Life Cycles

The phase to phase relationship between the project phases heavily depend upon the

selected project life cycle for the project. Three basic types of project life cycles that

influence the phase to phase relationship of a project are:

Predictive Life Cycles (page 44)

o These are also known as fully plan-driven life cycles.

o The project scope, time and cost requirements, and other project plans

are developed early in the project life cycle.

o Project phases are usually sequential in such project life cycles.

o Rolling wave planning, where project plans are progressively

elaborated as the project progresses and more and more project

information becomes available, may be used in such life cycles.

Iterative and Incremental Life Cycles (page 45)

o Project phases are intentionally repeated as the project team's

understanding of the product increases.

o The product is iteratively and incrementally developed during these

repeated cycles.

o Such life cycles are preferred for projects where changes to the

project's scope and objectives are expected during the life cycle.

Adaptive Life Cycles (page 46)

o Adaptive life cycles are also known as change-driven or agile methods.

o Such life cycles are preferred for complex projects where changes to

the project are expected to be very frequent and highly likely and

stakeholder involvement is very critical for the success of the project.

o The overall scope of the project is broken down into a set of

requirements. During every iteration, the project team will select a

subset of the requirements to be developed.

o Adaptive methods are ideally suited for rapidly changing

environments.

Projects vs. Operational Work

Many times we don't think about how to categorize work because it is just work. We

just need to do it. That said, many organizations find that there are two main buckets

that work can fall into. They are project or operational work.

Operational work is made up of ongoing and repetitive tasks of a product or service

that need to be executed in order to sustain that product or service. That is in contrast

to the project work that is temporary and has a definitive beginning and end.

Project Stakeholders (Page 30)

Stakeholders are persons or organizations (e.g., customers, sponsors, the performing

organization, or the public), who are actively involved in the project or whose

interests may be positively or negatively affected by the project performance or

completion of the project.

For the exam, stakeholders have varying levels of responsibility and authority when

participating on a project, and these can change over the course of the project life

cycle. Stakeholders may include individuals or groups that you had not really thought

about before as having a role or being impacted. The bottom line is that a stakeholder

can be anyone or anything. Here are some examples:

Customer

User

Sponsor

PMO

Functional Managers

Business Partners

Project Team Members

Project Manager

Operations Manager

Stakeholders also have varying levels of influence. Remember that the influence can

be both positive as well as negative toward your project. It will be important to

determine which stakeholders are behind you and which ones will be possible

obstacles. As a project manager, a major responsibility will be to manage these

stakeholders and their expectations. This is not an easy task, as each will have their

own opinions and requests.

Organizational Influences on Project Management

()

As a project manager, it is hard enough to take the requirements of any project and

successfully deliver them even without any outside influences. In addition to the

project requirements, there are always outside influences that a project manager must

be aware of in order to deliver any project successfully.

Every organization will have a different culture, structure, and style, and each of these

areas may have an influence on the success or failure of a project. In addition, an

organization's project management maturity will have a major impact on success or

failure as well.

Organizational Cultures and Styles (Page 20)

Organizational culture is one of the Enterprise Environmental Factors. As a project

manager, you need to know and understand the culture in detail. It is important to

understand areas like:

Shared vision

Organizational values & beliefs

Work ethic & hours

Policies

Procedures

In addition to the above items, an organization's authority structure is a key area the

project manager needs to understand

Organizational Structures (Page 21)

One of the major influences on any project is how an organization is organized

structurally. The structure will dictate who the project manager goes to for resources,

how communications will be distributed, and much more.

Exam Hint When you see questions on the exam regarding organizational structure,

be sure you know which structure the question is related to. The right

answer will depend on it.

Organizational structures have a direct correlation to the extent of the project

manager's level of authority. This is an important concept to understand. Remember

that we are taking an exam focused on project management, so it is critical to have

that focus.

Here are the three types of organizations:

Functional (Page 22)

This is the most common form of organization. The organization is grouped by areas

of specialization within different functional areas (i.e., Sales, Marketing, and

Technology). In a functional organization each individual has one immediate superior.

Projects generally occur within a single department. If information or project work is

needed from another department, the request is sent from the head of the department

to the head of the other department.

Projectized (Page 25)

In a projectized organization, the entire company is organized by projects. The project

manager has control of projects. Personnel are assigned and report to a project

manager. Team members do not have a department they belong to; they have projects.

Once they finish one project, they move on to the next project.

Matrix (Page 23)

A matrix organization attempts to maximize the strengths of both the functional and

projectized structures. In this structure, when team members are assigned to a project,

they will typically report to the project manager for project work and to their

functional manager for their organizational duties.

In a strong matrix organization, power will rest with the project manager. Remember

that the exam is focusing on project management, so it should not be a surprise that

the project manager will be positioned front and center. In a weak matrix

organization, the power rests with the functional manager. In the balance matrix

organization, the power is split between the project manager and the functional

manager.

Now that we have seen the three different structures, you need to think of how these

structures will impact your ability as a project manager. The following shows how to

determine the impact of the organizational structure:

Who has the power in each type of organization? Is it the project manager or

functional manager?

What are the advantages of each type of organization?

What are the disadvantages of each type of organization?

The following recaps the three different structures:


Functional

Matrix

Projectized Weak

Matrix

Balanced

Matrix

Strong

Matrix

Project

Manager's

Authority

Little or

None Low

Low to

Moderate

Moderate

to High

High to

Almost

Total

Resource

Availability Little or

None Low

Low to

Moderate

Moderate

to High

High to

Almost

Total

Who Controls the

Project Budget

Functional

Manager

Functional

Manager Mixed

Project

Manager

Project

Manager

Project

Manager's Role Part-time Part-time Full-time Full-time Full-time

Project

Management

Administrative

Staff

Part-time Part-time Part-time Full-time Full-time

All About Project Management

Processes

We need to start from the beginning with a definition for a process.

PMBOK Guide Definition – Page.47

A process is a set of interrelated actions and activities performed to create a pre-

specified product, result, or service.

As a project manager, processes help to provide structure to managing a project. The

processes encompass the tools, techniques, inputs, and outputs as described in the

Knowledge Areas of the PMBOK Guide. The focus of this section is solely on the

process of managing a project. It will describe in detail what should be done, when it

should be done, and it summarizes the information that is critical for the exam.

According to the PMBOK Guide in order for a project to be successful, the project

team must:

Select appropriate processes required to meet the project objectives,

Use a defined approach that can be adopted to meet requirements,

Comply with requirements to meet stakeholders needs and expectations, and

Balance the competing demands of scope, time, cost, quality, resources, and

risk to produce the specified product, service, or result.



Project processes performed by the project team will typically fall into one of two

major categories:

Project Management Processes. These processes help to ensure the project

moves through its lifecycle in an effective manner.

Product-Oriented Processes. These processes are necessary to define and

create the project's product.

Project Management Process Groups (Page 49)

Project management processes are grouped into five different categories which are

officially known as the Project Management Process Groups. Each of the five Process

Groups contains individual processes associated with that group. There are a total of

47 project management processes that comprise the five Project Management Process

Groups and the Project Management Knowledge Areas.

Exam Hint This chapter is one of the most important to know and fully understand

for the exam. Within the PMBOK Guide, page 61 is key. The table on

this page shows the relationship between each process and its associated

Knowledge Area and Process Group. I recommend that you "Memorize"

this page or know it very, very well. In many cases, the majority of the

exam questions you will see will be related in some way to having

knowledge about the Process Groups and Knowledge Areas.

The following are the five Project Management Process Groups:

Initiating Process Group

o The processes in this group:

Define a new project or new phase of an existing project

Provide the authorization to start the project or phase

Planning Process Group


Establish and define the scope of the project

Refine the project objectives

Define the course of action

Executing Process Group


Ensure that the work defined for the project and noted in the

project plan are performed and completed to satisfy the project

objectives.

Monitoring and Controlling Process Group


Track

Review

Regulate progress and performance

Identify areas where change is required

Initiate the approved change

Closing Process Group


Finalize all the activities across all the Process Groups to

formally close a project or phase.

How Do These Processes Work Together?

The diagram shows how the project management process groups fit together.

The first step, Initiating, must be completed for the project to be approved. During

this stage there is normally a rough high-level plan that is used to provide duration

and impact in order to help with the selection process. Once the project is approved it

moves on to the next step.

Detailed planning of the project takes place in the Planning process. Details related to

how the project will be executed and monitored and controlled are finalized.

The project then moves into Executing. This is when the work is performed according

to the processes and procedures detailed in the project management plan.

While the work is being done, the results are fed into Monitoring and Controlling to

make sure the project is tracking according to the baseline plan. If there are variances

that require changes, the changes are fed into a change control process to determine if

the change should be approved. If approved, the change will then be fed back into

planning.

Ultimately when the work is done (or the project is terminated), the project moves

into the closing process group.

Common Project Management Process Interaction

Within the PMBOK Guide, you will see the presentation of the Process Groups and

Knowledge Area as distinct entities. In practice, they are interdependent and overlap

over the life cycle of a project. The Process Groups and their associated processes

provide a guide to the project manager to determine how to apply the knowledge and

skills within them for their project. While there are many ways one can manage a

project to a successful completion, as a project manager, you need to determine how

to best leverage these elements for your unique project.

The application of the Process Groups is an iterative process as shown within the

diagram, and in many cases many processes are repeated during the project. We will

soon see that each process creates outputs. In most cases, those outputs are inputs to

new processes.

Initiating Process Group (Page 54)

The Initiating Process Group formally starts by defining a new project or project

phase through obtaining the necessary authorization to begin the project or phase. In

many organizations, there is a formal project selection process with established

selection criteria. Once a project is selected, a project charter is created and

authorized. Initiating a project also involves the identification of stakeholders so their

needs can be incorporated into the project. During the Initiating Process Group, large

projects may be divided into separate phases. In that case, the initiating processes are

enacted during each phase to validate the decisions made during the original Develop

Project Charter and Identify Stakeholders processes. This helps keep the project

focused on the original objectives.

Planning Process Group (Page 55)

It is the Planning Process Group that goes through the project in detail by determining

the total scope of the effort, defining and refining the objectives, and developing the

course of action required to achieve the stated objectives. The planning processes

organize the work through the development of the project management plan and

project documents that will be used to carry out actual work. It is during the planning

process that you begin to see the likelihood of success of the project in achieving its

stated objectives. It is during the execution of the processes within this group that the

project team may discover opportunities to save on resources, time, and costs based

on the high-level plan and assumptions made during the initiating process.

Project planning addresses all the appropriate project management processes and

knowledge areas. This means that the project manager and the project team will

determine what processes in the PMBOK Guide are appropriate in order to avoid

needless activities that are not relevant to the current project.

The results of Project Planning are the project plan and supporting project documents

that will be used to manage the project. A key point to remember is that planning is

iterative. There are constant changes and adjustments that take place and need to be

accounted for by the project manager and the team. The plan and supporting

documents are the best way to detail, execute, and track those changes.

Exam Hint In the real world and for the exam, you want to follow the processes in

the planning group and attempt to complete each one as fully as possible.

For the exam, the project planning process involves everyone. The

project plan and documents are compiled by the project manager with

input from stakeholders. Don't forget that you have Enterprise

Environmental Factors and Organizational Process Assets. These contain

items such as historical records from previous projects, company policies,

and other similar information that may also be utilized in planning the

project.

At this point, since everything is in hand, the project manager may think they are

finished planning. If such is the case, they have failed to recognize one very important

aspect of project management: Risk. It is critical to consider risk identification,

analysis, and response planning into the planning process. Once the risk is in hand,

you then need to go back to finalize all the components of the project management

plan and documents. The risk management process may uncover necessary changes

that could impact the plan and project resources, including the final cost and any

impact on schedule or resource allocation. This approach to planning is the most

efficient way to proceed.

I am sure each of you has experience where people don't understand the importance

that planning has for a project. They are of the mindset that is in line with "Fire Ready

Aim". They see action as being the primary driver, and they are not concerned with

how the action happens. You would not be reading this guide nor wanting to pass the

PMP if you had that mindset. As a project manager, you will need to help influence

others to see the importance planning has to the success of the project. There is also a

sense of balance that must be achieved in that the amount of time spent in the

planning process group should be appropriate to the needs of the project. Projects in

which the schedule requires a high level of confidence will require more planning

time to reduce the possibility of schedule variance to the minimum level.

Executing Process Group (Page 56)

The Executing Process Group is where all the work is done. Officially it is made up of

processes that complete the work defined in the project management plan to meet the

project objectives. The focus is now on managing people, following processes, and

distributing information, all in accordance with the project management plan and

project documents.

During the project execution, the project results may require planning changes and

updates. These updates can include changes in resource availability, activity

durations, and unidentified risks. These changes or variances to the project

management plan may result in change requests being created, which if approved,

would require updating the project management plan and documents.

Exam Hint For the exam, you must assume proper project planning was done before

the project work began. You need to get your mind around the critical

difference planning makes and assume the project has been properly

planned as you answer the questions. It is surprising how few project

managers create a realistic plan or get it officially approved. In the real

world, and in the world of the exam, that would be a huge mistake.

A project manager should be spending time preventing problems, so he

or she does not have to spend time solving them. Meetings are an activity

that can consume a great deal of the project team's available time. Many

project managers do not realize that proper planning can decrease the

number of meetings they need, making meetings only a minor activity.

You don't want to meet for meeting sake nor do you want to waste the

time of a meeting on simple status updates when that can be captured in

other more efficient ways.

Exam Hint It is in this section that you need to be able to identify what you are not

doing, or what you are doing wrong in the real world and leave those

practices at the door. You will be penalized in the exam if you follow

your poor real world practices. You want to keep the words "work to the

project management plan," "be proactive," "manage," and "guide," in

mind as a way to summarize executing activities while you take the

exam. This frame of mind will ensure you have your PMI hat on when

taking the exam.

Monitoring and Controlling Process Group (Page 57)

The Monitoring and Controlling Process Group comprises processes that focus on

measuring the performance of the project to the project management plan and

approving change requests, including any recommended corrective and preventive

actions and defect repair. The key benefit of this set of processes is that the project

performance is tracked and measured in a consistent way to identify any variances

from the project management plan. The monitoring gives management and the project

team insight into the status and health of the project, and more importantly where

added attention may be required.

Note: Exam Hint

You have a project management plan that is realistic and complete.

You have plans already in place for how and where you will measure time,

cost, and scope performance against the performance measurement baseline.

You are accountable for meeting the performance measurement baseline.

You also measure against the metrics you have determined for the project and

included in the project management plan to see how the project is performing.

You can act to correct any variances that warrant action.

Any deviation from the plan should be made up, rather than requesting a

change to the project to accommodate them. Submitting a change request

should be the very last resort and only used if there is no other way to make up

the deviation.

Closing Process Group (Page 57)

The Closing Process Group consists of the processes needed to finalize all activities in

order to formally complete the project, phase, or contractual obligations. This is one

of the most ignored parts of the project management process because many project

managers incorrectly believe that the project is complete when the final product scope

is done. The project is completed only when the closure is completed.

The closing processes will include administrative activities such as collecting and

finalizing all the paperwork needed to complete the project, and technical work to

validate that the product of the project is acceptable. It will also include any work

needed to transfer the completed project to those who will use it and return all

resources back to the performing organization and /or the customer.

In many real world situations, projects never really end; they just seem to fade away.

Sometimes the project manager goes on to another project, sometimes the project's

priority decreases, or sometimes the work on the project just stops. In any situation,

ignoring the closing processes is a real mistake, as the work to be done during closure

is extremely important to the performing organization and to the customer.

Project Management Knowledge Areas (Page 60)

The PMBOK Guide documents 47 processes in the above mentioned five process

groups. These 47 processes are further grouped into ten separate Knowledge Areas or

project management fields/areas of specialization. The ten project management

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

These ten knowledge areas are managed in most projects. However, depending upon

the complexity and the need of a project, the project manager can decided which

project management processes from these ten knowledge areas must be applied on the

project.

Exam Hint Within the PMBOK Guide, page 61 is key. The table on this page shows

the relationship between each process and its associated Knowledge Area

and Process Group. I recommend that you "Memorize" this page or know

it very, very well. In many cases, the majority of the exam questions you

will see will be related in some way to having knowledge about the

Process Groups and Knowledge Areas.

Deep Dive into Project Integration

Management

Project Integration Management – (Page 63)

The project manager's main role is to pull all the pieces of a project together into a

cohesive whole. Integration Management has characteristics of unification,

consolidation, and integrative actions that help to manage a project successfully

between the team and the stakeholders.


Project Integration Management includes the processes and activities need to

identify, define, combine, unify, and coordinate the various processes and project

management activities within the Project Management Process Groups.

Many people have trouble with this knowledge area on the exam because they do not

currently perform integration management on their project in the real world, or they

don't think about integration management from a large project perspective. The

project manager is responsible for integration – putting all the pieces of the project

puzzle together into one cohesive whole that gets the project done faster, cheaper, and

with fewer resources, while meeting the project objectives.

Think about integration as balancing all the processes in the knowledge areas with

each other. These project management processes do not happen independently. In

order to add a new resource to a project, it may require cost and schedule changes. In

dealing with each situation that comes up on a project, the project manager is

integrating the processes of project management. Given that integration management

incorporates all the different groups and knowledge areas it is a difficult area of the

exam.

Always remember that the project management processes are iterative. Any process

can be revisited as required


The Integration Management Process Done During

Develop Project Charter Initiating Process Group

Develop Project Management Plan Planning Process Group

Direct and Manage Project Work Executing Process Group

Monitor and Control Project Work Monitoring and Controlling Process Group

Perform Integrated Change Control Monitoring and Controlling Process Group

Close Project or Phase Closing Process Group



Develop Project Charter

The first part of integration management is creating a project charter. A project

charter establishes a partnership between the performing organization and the

requesting organization (or customer, in the case of external projects). The approved

project charter formally initiates the project.


Develop Project Charter is the process of developing a document that formally

authorizes the existence of a project and provides the project manager with the

authority to apply organizational resources to project activities.

Don't underestimate the value of the project charter. The project charter is such an

important document that a project can't be started without one. This is not always a

best practice in the real world. If the project charter is your target for the project and

serves as a definition of how success will be measured, then without a project charter,

the project and project manager can't be successful.

Exam Hint You need to know the following about a Project Charter for the exam:

The project charter formally recognizes/authorizes the existence

of the project, or establishes the project.

It gives the project manager authority to spend money and

commit corporate resources.

The project charter provides the high-level requirements for the

project.

It links the project to the ongoing work of the organization.

Guide Hint There will be inputs, tools and techniques, and outputs for the processes

as we go forward. The guide will highlight and provide additional

details on some of the terms as we move forward through the upcoming

chapters. The additional details will help to explain the term and its use.

Inputs

Project Statement of Work (page 68)

The project statement of work or SOW is a description of the product or services that

are to be delivered by the project. The SOW can be used for both internal project as

well as external projects. The SOW typically references the following:

Business need

o The following are examples of areas that may influence the business

need

Market demand

Technological advances

Regulations

Legal requirements

Product scope description

o Documents the characteristics of the product and the relationship to the

ongoing services and the tie in to the business need.

Strategic plan

o Documents the organization's strategic objectives. As a project

manager, it is important to make sure that your project is in line with

those objectives.

Business Case (page 69)

The business case documents all the information to help determine if a project is

worth the organization's investment in time and resources. A key component within

the business case is a financial analysis with a quantifiable justification for the project.

The following items are drivers to create a business case:

Market demand

Organizational Need

Customer request

Technological advance

Legal requirement

Ecological impact

Social need

Agreements, memorandums of understanding (MOUs), service level agreements

(SLAs), letters of agreement and letters of intent are all forms of legal documents

establishing a contractual engagement between two parties

Agreements

Enterprise Environmental Factors

Organizational Process Assets

Do not confuse organizational process assets and enterprise environmental factors as

internal and external project factors. Enterprise environmental factors can be

internal to the performing organization, e.g., existing human resources and project

management information system

Tools and Techniques

Guide Hint The Tools and Techniques are meant to be a practical application of

how the process is derived and leveraged for the good of the project.

Whenever the PMBOK Guide mentions "Expert Judgment", do not assume it is

referring to an executive decision being taken by the project manager. Expert

judgment is usually obtained from the subject matter experts and this may include the

project manager

Expert Judgment (page 71)

Expert judgment is used a great deal, and is based on the expertise from an individual

or groups that have special knowledge or training.

The following are some examples of sources of expert judgment:

o Stakeholders

o Consultants

o Subject matter experts

Facilitation Techniques (page 71)

Facilitation techniques are used by project managers collect and define the high level

requirements from the project stakeholders. At this stage, facilitation techniques play

a key role since the stakeholder influence and project risk is high.

The following are examples of some facilitation techniques:

o Brainstorming

o Conflict resolution

o Problem solving

o Meeting management

Outputs

Project Charter (page 71)

The project charter is the document that describes the business need, the customer

need, and the new product, service, or result the project is intended to satisfy. There is

a generic sample below just to show what a Project Charter might include:

Project Title and Description

Detail out at a high-level what the project is all about and what it is trying to

accomplish.

Project Manager Assigned and Authority Level

Formally communicate the project manager for the effort.

Provide details on the authority and decision making capabilities when it

comes to budget, schedule, staffing, etc.

Business Case

Detail why the project is being done.

Specify the financial or other justification for the project.

Outline high-level objectives that are going to be used to track success for the

project.

Resources Assigned

Provide the details on the size of the team and justification.

Outline the names of known resources assigned.

Stakeholders

Detail the names and roles of each of the stakeholders affected by the project.

Product Description/ Deliverables

Detail the high-level description of the product to be delivered.

Highlight the key deliverables needed and their timing in order to meet

business objectives.

Measureable Project Objectives

Define the project objectives and their tie in to the business objectives.

Define measurable metrics to support and track the project objectives.

Approval Requirements

Detail the specific requirements that need to be met in order for the project to

be approved by all the stakeholders.

High-Level Project Risks

Determine the known key risks that could impact the project as well as any

plans to mitigate them.

Develop Project Management Plan (Page 72)


Develop Project Management Plan is the process of defining, preparing, and

coordinating all subsidiary plans and integrating them into a comprehensive project

management plan.

Project managers must plan before they act. Management plans are the strategy for

managing the project and the processes in each knowledge area. The concept of

management plans is very important to understand. These plans are created for each

project management knowledge area.

You need to think ahead and document how you will plan this particular project based

on the needs of the project, how you will manage the project, and how you will

control it. This effort to think through the project in advance should cover all aspects

of the project management process. A management plan is a necessity and unique to

each project in order to address its particular needs. The creation of management

plans is an integral part of the project manager's job. To reiterate to make sure we are

all on the same page, a management plan covers how you will:

Define

Plan

Execute

Monitor & Control

Close

Exam Hint Here is a trick to understanding the topic of management plans for

the exam. Know that management plans look forward in time, and

that there are management plans for each knowledge area:

o Scope

o Schedule

o Cost

o Quality

o Human Resources

o Communications

o Risk

o Procurement Management

o Stakeholder Management

There are also the following management plans:

Change Management Plan

Configuration Management Plan

Requirements Management Plan

Process Management Plan

Inputs

Project Charter

"Outputs from Other Processes" is an input to the Develop Project Management Plan

process. This refers to the subsidiary project management plans developed during

planning processes across each knowledge area

Outputs from Other Processes (page 74)

These are the management plans from the other planning processes described

above

Enterprise Environmental Factors that can influence, include but are not limited

to:

Governmental and/or industry standards

Project management information systems

Organizational structure and culture

Infrastructure

Personnel administration

Organizational Process Assets (OPA) that can influence, include but are not

limited to:

Standardized guidelines

Project management plan template

Change control procedures

Past project files

Historical information and lessons learned

Configuration management knowledge base


Expert Judgment

Make sure you are taking the unique aspects of your project into consideration

including the project needs, resources and skills required, documentation and

configuration, and much more.

Facilitation Skills

Outputs

Project Management Plan

Integrates and consolidates all subsidiary management plans & baselines.

Project management plans can be either summary level or detailed, depending on the

level of information that you and the project team have available to you at the time.

Baselines

Baselines are established when the project plan has been approved. Once the baseline

is established, the key management plans as noted below can only be changed via a

change request and approval through Perform Integrated Change Control process.

Schedule

Cost

Scope

The project manager must be able to clearly, completely, and realistically define the

scope, schedule, and cost budget to derive baselines. The project performance and the

performance of the project manager will be measured against those baselines. The

project manager needs to be aware of any deviations from the baselines while the

work is being done. If a deviation is discovered, the project manager needs to see if

adjustments can be made to keep the project on track while dealing with the problem.

If the adjustment is not sufficient to correct the variance, a formal change request to

the baseline might be necessary.

Direct and Manage Project Work(Page 79)

This is the integration part of the executing process group. In Direct and Manage

Project Work, the project manager integrates all the executing processes into one

coordinated effort to accomplish the project management plan and product

deliverables. In addition, it involves requesting changes and completing the work

accompanying approved change requests.

Exam Hint Please note the confusing terms. If the exam talks about Direct and

Manage Project Work, it is NOT talking about the entire executing

process group. Instead, it is just talking about the integration piece of

executing.

The PMBOK Guide does not say too much about the Direct and Mange Project Work

process, but this and the Monitor and Control Project Work process make up the

majority of the project work. You want to make sure you remember that the Direct

and Manage Project Work process involves managing people, doing the work, and

implementing approved changes.

The following are examples of possible Direct and Manage Project Work

activities:

Perform activities designed to accomplish the project requirements

Create the project deliverables

Staff, train, and manage team members

Obtain, manage, and use resources assigned to the project, including materials,

tools, equipment

Implement the planned methods and standards

Establish and manage the internal and external project communication

channels

Generate project data

Issue change requests and implement approved changes

Manage risks and risk responses

Manage procurement

Collect and document lessons learned

During the executing of any project there are going to be changes that materialize

throughout the lifecycle of the project. The only time that changes can be executed is

when they have been approved. There are different types of approved changes to be

aware of for the exam.

Always remember that a corrective action fixes some of project work to bring it back

in alignment the project management plan. On the other hand, a preventive action

ensures that a mistake will not happen or be repeated in the future

Corrective Action

o A corrective action is any action taken to bring project performance in

line with the project management plan.

o Any corrective actions that would change the project management

plan, baselines, policies or procedures, charter, contract, or scope of

work require formal change requests, to be reviewed and approved or

rejected as part of the Perform Integrated Change Control process.

Preventative action

o Preventive action deals with anticipated or possible deviations from the

performance measurement baseline.

o A preventive action ensures the future project performance is in line

with the project management plan.

Defect repair

o This is when quality issues or defects have been identified and need to

be corrected in order for them to meet the defined requirement

standards.

Each type has a different impact on a project and each plays an important role in the

project success.

Inputs


Approved Change Requests (page 82)

The Integrated Change Control Process will facilitate which changes are

approved and which are not. The approved changes can then be assessed in

terms of the impact they will have on the project.


Enterprise environmental factors which can influence Direct and Manage

Project Work can include, but are not limited to:

o Organizational and customer culture and structure

o Infrastructure

o Personnel administration

o Risk tolerance of stakeholders

o Project management information systems if available


Organizational process assets that may influence the Direct and Manage

Project Execution can include, but are not limited to:

o Work instructions and guidelines

o Requirements defining communications media, record retention an

security

o Defect management procedures

o Database of process measurements

o Prior project files

o Historical records regarding defect management


Expert Judgment

Expert judgment may be available from various areas in the organization.

Some of these areas include but are not limited to:

o Other organizational units

o Internal and external consultants

o Stakeholders including sponsors and customers

o Technical and professional associations

Project Management Information System (PMIS) (page 84)

This is considered to be part of the Enterprise Environmental Factors. It is an

automated tool such as a configuration management system, scheduling

software, or other online tool that may be used to help the project execution be

more efficient.

Meetings

Project activities and issues are discussed during meetings. Key objectives of a

typical meeting are:

o Information exchange

o Brainstorming, option analysis, design review

o Decision making

Outputs

Deliverables (page 84)

We generally have a good idea of what a deliverable means, but it is important

to make sure there is no doubt, especially for the exam. First the final

deliverable needs to be approved. A deliverable is a verifiable result that can

come in the form of a product or service.

Work Performance Data

This can take many forms. As project managers, we capture project data in

status reports, budget reports, and progress per the plan.

Change Requests

Corrective action

Preventative action

Defect repair

Updates

o This is an added component to the above three that we covered

previously. Every project's approved changes need to be incorporated

into the controlled documentation created by the project. These updates

are made to the control documents to ensure they are kept up to date.

Project Management Plan Updates

The following are examples of the different management plans that would be updated

during the life cycle of the project to reflect the progress in each area:

Scope management plan

Requirements management plan

Schedule management plan

Cost management plan

Quality management plan

Human resource plan

Communication management plan

Risk management plan

Procurement management plan

Stakeholder management plan

Project baseline

Project Document Updates

The different types of project documents that can be updated include but are not

limited to:

Requirements documents

Project logs (issue, assumptions, etc)

Risk register

Stakeholder register

Monitor and Control Project Work (Page 86)

Monitoring and controlling project work is a control function that is done from project

initiating through project closing. When you think of a large project, it makes sense

that the project manager would need to monitor and control how the processes are

going, because he or she would not typically be personally involved in performing all

the project functions. The results of Monitor and Control Project Work are change

requests, work performance reports, as well as updates to the project management

plan and documents.


Monitor and Control Project Work is the process of tracking, reviewing, and

reporting the progress to meet the performance objectives defined in the project

management plan.

Monitor and Control Project Work is an integration function because the project

manager must balance the demands of the different knowledge areas to control the

project. This process also involves monitoring any other performance measures that

the project manager has created for the project and distributing that information to

stakeholders as needed.

Exam Hint Keep in mind that a project must be controlled. If the exam asks what you

should do if a work activity on the project takes longer than estimated,

the answer is to take corrective action to make up for the schedule

variance. Such action always keeps the project on or close to schedule

and allows the project manager to feel comfortable that the scope will be

completed according to the budget and schedule agreed to. This is the

value of controlling the project.

The Monitor and Control Project Work Process is Concerned with:

Comparing actual project performance against project plan

Assessing work performance to determine if corrective or preventive actions

are required

Identifying new risks and monitoring existing risks to make sure the risks are

identified

Maintaining accurate and timely information concerning the project's products

and associated documentation

Providing the information necessary for status reports, progress measurements,

and forecasting

Providing forecasts to update current cost and schedule information

Monitoring implementation of approved changes

Inputs


Schedule Forecasts (page 89)

Schedule forecasts are obtained after analyzing the project progress against the

schedule baseline. Earned Value Management Techniques (EVM) are used to

measure the schedule performance. We will discuss these techniques in detail later in

the guide.

Cost Forecasts

The cost forecasts are obtained after analyzing the project's spending against the cost

performance baseline. Earned Value Measurements such as Earned Value (EV), Cost

Variance (CV), Estimate to Complete (ETC), and Cost Performance Index (CPI) are

some of the measures used to predict future costs. We will discuss these topics in a

greater detail later in the guide.

Validated Changes

Approved change request, that result from the Perform Integrated Change Control

process and implemented during the Direct and Manage Project Work process, require

validation to ensure that the change was appropriately implemented.

Work Performance Information

The work performance information is obtained by analyzing the work performance

data collected from various controlling processes. The project management team

transforms the work performance data into work performance information. The work

performance information helps the project management team take well informed

decisions.


Enterprise Environmental Factors that can influence this process include, but are not

limited to:

Governmental or industry standards

Company work authorization system

Stakeholder risk tolerance

Project Management Information systems


Organizational Process Assets that can influence the process include, but are not

limited to:

Organization communication requirements

Financial controls procedures

Issue and defect management procedures

Risk control procedures

Process measurement database

Lessons learned database


Expert Judgment

The project team may rely on expert judgment to interpret the information

provided by the process.

You should remember the names of the analytical techniques mentioned as the tools

and techniques of the Monitor and Control Project Work process. While these tools

and techniques may not explicitly be mentioned in the PMBOK Guide, it is valuable to

familiarize yourself with them via external sources (online search, etc)

Analytical Techniques

The project management team can utilize various analytical techniques to forecast

potential outcomes on possible variations or environment factors and their

interrelationships. Some of the examples of such techniques are:

Regression analysis

Grouping methods

Root cause analysis

Simulations

Trend analysis

Earned value management

Variance analysis

Project Management Information System

Meetings

Outputs

Change Requests

Corrective action

Preventative action

Defect repair

Work performance reports are not the same as work performance information. The

work performance report is a physical or electronic representation of the work

performance information. The work performance information is the processed form of

the work performance data

Work Performance Reports

Work performance reports are the physical or electronic representation of work

performance information obtained by transforming the work performance data. These

reports play a critical role in providing key project information to the project

stakeholders and enable them to take well-informed decisions.

Project Management Plan Update examples include, but are not limited to:




Scope baseline

Schedule baseline

Cost performance baseline

Project Document Update examples include, but are not limited to:

Forecasts

Performance reports

Issue log

Perform Integrated Change Control (Page 94)

During the executing, and monitoring and controlling processes, changes may be

requested that affect any part of the project. These changes are accepted or rejected

and handled in the Perform Integrated Change Control process. A key aspect of

integrated change control is looking at the impact the change may have on each of the

knowledge areas and the resulting impact a scope change may have on quality, risk,

time, costs, human resource, etc.


Perform Integrated Change Control is 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; and communicating

their disposition.

Exam Hint Integrated change control is an important topic to know. Nearly 10% of

the questions on the exam can touch on this one topic from different

angles.

As we have said, every project has changes. Integrated Change Control process starts

with a review of those changes. In order to evaluate the impact of change, it is

necessary to have:

A realistic project management plan to measure against

A complete product scope and project scope

In the event that Integrated Change Control is a new concept to you or one that your

organization does not follow, the following is a generic look from a high-level as well

as detailed level on the steps you need to take from start to finish of the process:

High-level Process for Making Changes

Evaluate the impact

o Evaluate the impact of the change to the project

o Consider the project constraints against the change

Create options

o This can include cutting other activities, crashing, fast tracking, etc., as

described in Time Management.

Get the change request approved internally

Get customer buy-in

Now that you know the high-level process, let's take a look at the more detailed

process for making changes.

Detailed Process for Making Changes

Prevent/Remove the root cause of changes

o The project manager should not just focus on managing changes, but

proactively eliminate the need for changes.

Identify change

o Changes can come from the project manager, as a result of measuring

against the project performance measures, or from the sponsor, the

team, management, the customer, or other stakeholders.

o The project manager should actively be looking for changes from all

the different sources, because discovering a change early will decrease

the impact of the change.

Assess the impact of the change

o If it is a scope change, how will it affect the rest of the scope of the

project? If it is a time change, how will it affect the rest of the schedule

for the project?

Create a change request

o Changes can be made to the product scope, contract, charter, or a host

of other areas of the project. The process of making a change should

follow the change management plan.

Perform integrated change control

o Assess the change

o Look for options

Options include actions to decrease threats further; increase

opportunities; or compress the schedule.

Change is approved or rejected

Update the status of the change in the change control system

Adjust the project management plan, documents, and baselines if approved.

Manage stakeholders' expectations by communicating the change to the

stakeholders affected by the change

Manage the project to the revised project management plan and project

documents.

Changes can have both a positive as well as negative effects on a project. Depending

on the timing of the change, the later in the project life cycle the higher the probability

is for the change to be more expensive and disrupt the project. Generally the project

manager should do their best to prevent the root cause of the need for changes or do

their best to mitigate the impact. In order to help you as a project manager you want to

make sure you to do the following:

Work to obtain final requirements as soon as possible

Spend enough time in risk management to comprehensively identify the

project's risks

Come up with time and costs reserves

Have a process in place to control changes

Follow the process to control changes

Have a process and templates in place for creating change requests

Have clear roles and responsibilities for approving changes

Reevaluate the business case if the number of changes becomes excessive

Consider terminating a project that has excessive changes and starting a new

project with a more complete set of requirements

Allow only approved changes to be added to the project baselines

Update the project documents accordingly.

Change in any project can produce an administrative nightmare in terms of being able

to keep up with the documentation necessary in order to keep it in sync with the

changes. In many organizations there are more formal tools in place such as a

Configuration Management System.

A Configuration Management System with integrated change control offers an

effective and efficient method for managing change within a project. Project

wide application of the configuration management system including change

control processes, accomplishes three main objectives:

o Establishes a method for consistently identifying and requesting

changes to established baselines while assessing the value of

effectiveness of those changes

o Provides opportunities for validating and improving the project by

evaluating the impact of each change

o Provides a communication mechanism the project management team

can use to communicate approved and rejected changes to the

stakeholders

Configuration Management activities included in Integrated Change Control

process are as follows:

o Configuration identification

o Configuration status accounting

o Configuration verification and audit

Inputs



Change Requests


Organizational Process Assets that can influence this process include, but are not

limited to:


Procedures for approving and issues change authorizations

Process measurement database

Project files

Configuration management knowledge base


Expert Judgment

Stakeholders may be asked to provide expertise and/or sit on the change

control board.

Meetings

If a change control board is created, its responsibility will include meeting to

review the change requests to either approve or reject them.

Change Control Board (Page 96)

Depending on the project manager's level of authority, their role might be to facilitate

decisions about some changes, rather than actually make the decisions. For these

reasons, many projects have change control boards. The board is responsible for

reviewing and analyzing change requests. It then approves or rejects the changes. The

board may include the project manager, customer, experts, the sponsor, and others.

Exam Hint For the exam, assume that all projects have change control boards.

Change Control Tools

Various manual and automated tools can be used during this process in order to

facilitate the configuration and change management. Such tools handle change

requests and track the subsequent decisions and implementation.

Outputs

Approved Change Requests

Change Log



Close Project or Phase (Page 100)

Many high-level concepts of closing have already been touched on in the Project

Management Process. What remains is to realize that this process finalizes all

activities across all process groups to formally close out the project or project phase.

It is critical to get formal acceptance of the project, issuing a final report that shows

that you have been successful, issuing the final lessons learned, and archiving all the

project records.

Exam Hint Be sure to remember for the exam that as project manager you always

close out a project, no matter the circumstances under which it stops, is

terminated, or is completed. Here is a quick reminder of the closing

activities:

Confirm work is done to requirements

Complete procurement closure

Gain formal acceptance of the product

Complete final performance reporting

Index and archive records

Update lessons learned knowledge base

Hand off completed product

Release resources

Inputs


Accepted Deliverables


limited to:

Project or phase closure guidelines or requirements

Historical information and lessons learned knowledge base


Expert Judgment


Meetings

Outputs

Final Product, Service, or Result Transition

This refers to the transitions from the project to the ongoing servicing of the

product or service once the project is approved and completed.

Organization Process Assets that can influence this process include, but are not

limited to:

Project files

Project or phase closure documents

Historical information

With the completed project, all the materials and documents that were created during

the life cycle of the project need to be gathered and officially stored. This way other

project managers and project teams can leverage this information to help them with

their projects.

Other Key Concepts

Project Selection

There are various ways to select which project to initiate from among the many

possible choices. The projects that were considered before a particular project was

chosen, as well as the process used to select the project, may have some influence

how the project is planned and managed.

Know the following two categories of project selection methods and their subsets for

the exam:

1. Benefit measurement method (Comparative Approach) a. Peer Review

b. Scoring Models

c. Economic models – more details below

2. Constrained optimization methods (Mathematical approach) a. Linear programming

b. Integer programming

c. Dynamic programming

d. Multi-objective programming

Economic Models from Project Selection

The following are economic models for selecting a project:

Present Value

Net Present Value

Internal Rate of Return

Payback Period

Benefit- cost ration

Present Value

Historically, Present Value has only been mentioned once or twice on the exam. You

will not have to calculate it, nor know the formula. You will just need to understand

the concept behind it.

Present value means the value today of future cash flow and is defined by the

formula:

PV = FV

(1+r)n


FV = future value

R = interest rate

N = number of time periods

Watch out! PV also stands for planned value (described in the Cost Management

section). You want to avoid confusing these terms.

Net Present Value (NPV)

You will not have to calculate NPV for the exam. You will need to know that it is the

present value of the total benefits (income or revenue) minus the costs over many time

periods. NPV is useful because it allows for a comparison of many projects to select

the best project to initiate. Generally, if the NPV is positive, the investment is a good

choice unless an even better investment opportunity exists. The project with the

greatest NPV is selected.

Internal Rate of Return (IRR)

IRR does get confusing when you give it a formal definition such as: The rate (as in

interest rate) at which the project inflows (revenues) and project outflows (costs) are

equal. Calculating IRR is complex and requires the aid of a computer. You will not

have to perform and IRR calculations on the exam. You will need to understand the

definition and be able to answer questions related to the following:

Payback Period

This term refers to the number of time periods it takes to recover you investment in

the project before you can start accumulating profits.

Benefit Cost Ratio

This term is one of many that is not in the PMBOK Guide, but may be on the exam.

Benefit cost ratio relates to costing projects and determining what work should be

done. This ratio compares the benefits to the costs of different options.



A benefit costs ratio of greater than 1 means the benefits are greater than the costs. A

benefit cost ratio of less than 1 means the costs are greater than the benefits. A benefit

cost ratio of 1 means the costs and the benefits are the same. Benefit cost ratios can be

expressed as decimals or ratios.

Additional Accounting Terms:

Economic Value Added (EVA)

In terms of project selection, this concept is concerned with whether the project

returns to the company more value that it costs. (Note that this is a different concept

than earned value analysis, which can also have the acronym of EVA. Earned value,

discussed in the Cost Management section, is frequently mentioned on the exam,

whereas economic value added should rarely appear in questions or choices.) For the

exam, simply remember that economic value added is the amount of added value the

project produces for the company's shareholders above the costs of financing the

project.

Opportunity Costs

This term refers to the opportunity lost by selecting one project over another.

Sunk Costs

Sunk costs are expended costs. Be aware that accounting standards say that sunk costs

should not be considered when deciding whether to continue with a troubled project.

Law of Diminishing Returns

The law states that after a certain point, adding more input (e.g., resources) will not

produce a proportional increase in productivity.

Working Capital

This term refers to current assets minus current liabilities for an organization, or the

amount of money the company has available to invest, including investment in

projects.

Depreciation

Large assets purchased by a company lose value over time. Accounting standards call

this depreciation. Several methods are used to account for depreciation.

1. Straight Line Depreciation – the same amount of depreciation is taken each

year.

2. Accelerated Depreciation – For many years, the exam has not asked detailed

questions about this topic. For the exam you need to know the following:

a. There are two forms of accelerated depreciation. You do not have to

understand what these two forms mean or do any calculations.

i. Double Declining Balance

ii. Sum of Years Digits b. Accelerated depreciation depreciates faster than straight line.

Project Integration Management Cheat Sheet


Process Descripti

on

Group Input Tools &

Technique

Output

Develop

Project

Charter

Formal

authoriza

tion of

the

project or

phase

Initiatin

g

Project

SOW

Business

case

Agreeme

nts

EEF

OPA

Expert

judgment

Facilitati

on

techniqu

es

Project

Charter

Develop

Manage

ment

Plan

Documen

t actions

to define,

prepare,

integrate,

and

coordinat

e

subsidiar

y plans

into the

PMP

Plannin

g

Project

charter

Outputs

from

other

processes

EEF

OPA

Expert

judgment

Facilitati

on

techniqu

es

Project

managem

ent plan

Direct &

Manage

Project

Work

Execute

the work

defined

in the

project

managem

ent plan

to

achieve

requirem

ents in

scope

statement

.

Executi

ng

Project

managem

ent plan

Approved

changed

requests

EEF

OPA

Expert

judgment

PMIS

Meetings

Deliverab

les

Work

performan

ce data

Change

requests

Updates –

project

plan; docs

Monitor

&

Monitor

and

Controll

ing

Project

managem

Expert

judgment

Change

requests



Process Descripti

on

Group Input Tools &

Technique

Output

Control

Work

control

the

processes

to meet

the

performa

nce

objective

s.

ent plan

Schedule

forecasts

Cost

forecasts

Validated

changes

Work

performa

nce

informati

on

EEF

OPA

Analytic

al

techniqu

es

PMIS

Meetings

Work

performan

ce reports

Updates:

project

managem

ent plan;

document

s

Perform

Integrate

d Change

Control

Reviewin

g change

requests,

approvin

g change

requests

and

controllin

g

changes.

Controll

ing

Project

managem

ent plan

Work

performa

nce

reports

Change

requests

EEF

OPA

Expert

judgment

Meetings

Approved

change

requests

Change

log

Updates:

project

plan;

document

s

Close

Project

or Phase

Finalize

all

activities

to

formally

close the

project or

phase.

Closing Project

managem

ent plan

Accepted

deliverabl

es

OPA

Expert

judgment

Analytic

al

techniqu

es

Meetings

Final

product/se

rvice

Updates:

OPA

Deep Dive into Project Scope

Management

Project scope is the work that is required to be completed. Always remember; scope =

work


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.

Exam Hint How the PMBOK Guide outlines the best practice for scope management

and how you manage it in the real world might be different. There are a

lot of acceptable ways to manage scope. For the exam, you want to be in

the mindset of what the PMBOK Guide describes as the scope

management process, which is:

Make sure all requirements support the business need of the

project as described in the charter.

Sort through and balance the needs of the stakeholders to

determine product scope and project scope.

Create a WBS (Work Breakdown Structure) to break the scope

down to small, more manageable pieces.

Validate that the scope of work planned is actually being done.

Measure scope performance, and adjust as needed.

The following are the more formal scope management processes:


The Scope Management Process Done During

Plan Scope Management Planning Process Group

Collect Requirements Planning Process Group

Define Scope Planning Process Group

Create WBS Planning Process Group

Validate Scope Monitoring and Controlling Process Group

Control Scope Monitoring and Controlling Process Group



Key Terms to be familiar with:

Product Scope (Page 105)

Product scope are the features and functions that define the product or service Product

scope may be supplied as a result of a previous project to determine requirements, or

it may be created as part of the project.

Project Scope (Page 105)

This is the work the project will do to deliver the product scope or product of the

project. The work includes the planning, coordination, and management activities

(such as meetings and reports) that ensure the product scope is achieved. Scope

management involves managing both product scope and project scope.

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 scope management plan is a component of the project management plan. It

contains specifics about how the project scope will be defined, developed, monitored,

controlled and validated. The completion of project scope is measured against the

scope management plan. The scope management plan must be well integrated with

other knowledge area management plans to ensure the successful delivery of the

product scope.

Exam Hint Scope creep refers to uncontrolled changes to the project scope during a

project. The first step to prevent scope creep is the definition of a well-

structured project scope management plan.

Inputs


The approved subsidiary plans of the project management plan are used to create the

scope management plan. Please note that neither the scope management plan nor the

other management plans are developed in isolation. These processes are iterative in

nature and the Develop Project Management plan from the Integration Management

Knowledge Area coordinates this effort.

Project Charter

The project charter provides the initial inputs to this process. The high level project

and product scope are documented in the project charter. This can serve as the

primarily input to this project during the first few iterations when none of the other

knowledge area management plan have been developed.


The enterprise environmental factors that can influence the development of the scope

management plan include, but are not limited to:

Organization's culture

Infrastructure

Personnel administration

Marketplace conditions


The organizational process assets that influence the Plan Scope Management process

include, but are not limited to:

Organizational policies and procedures

Historical information and lessons learned knowledge base


Expert Judgment

Meetings

Outputs

Always remember that the scope management plan doesn't contain the project scope.

The scope management plan is a project plan that tells how scope will be identified,

managed and controlled

Scope Management Plan

The scope management plan is a subsidiary plan of the overall project management

plan. It is the major input to the Develop Project Management Plan process. Typical

components of a scope management plan include:

Project scope statement development procedures

Work Breakdown Structure (WBS) development procedures

WBS maintenance and approval methods

Formal project deliverables acceptance methods and criteria

Scope change control procedures


The requirements management plan is also a component of the project management

plan and supports the project scope management plan. It documents how the project

requirements will be collected, analyzed, documented, and managed. Typical

components of a requirements management plan include:

Project requirements collection procedures

Procedures regarding requirements activities planning, tracking and reporting

Configuration management activities

Requirements prioritization process

Requirements traceability structure

Collect Requirements (Page 110)

The Collect Requirements process looks for all requirements as defined by the

stakeholders that are necessary to meet the project objectives. Work should not be

included in a project just because someone wants it. Instead, the requirements should

relate to solving problems or achieving objectives.

The high-level project and product requirements should have already been defined in

the project charter, giving you and your project a leg up. The Collect Requirements

process involves gathering more specific input on those requirements from all

stakeholders. This process is critical to project success, as missed requirements could

mean significant changes and conflict throughout the remainder of the project and

could possibly result in project failure.

The first step in collecting requirements to is to know who the stakeholders are. This

is not an easy task since large project may contain a vast number of possible

stakeholders. As a project manager, collecting requirements from such a large number

of stakeholder may require using more than just one method, because missing a

needed requirement can be expensive and may result in other problems later. The

techniques described next can help in this process. The project manager needs to

choose the techniques that are most appropriate for the project and the stakeholders

they have identified. Many of these techniques can also be used in the risk

management process to identify risks.

Inputs

Scope Management Plan


Stakeholder Management Plan

This provides stakeholder communication requirements and the level of

stakeholder engagement. This helps in assessing the level of stakeholder

participation in requirements activities.

Project Charter

Stakeholder Register

This is used to identify and track the stakeholder information that is collected.

There are many tools and techniques associated with the Collect Requirements

process. The PMBOK Guide does not discuss these tools and techniques in great

detail. While these tools and techniques may not explicitly be mentioned in the

PMBOK Guide, it is valuable to familiarize yourself with them via external sources

(online search, etc.)


Interviews

This technique may also be called "expert interviewing" on the exam. The

team or project manager interviews project stakeholders to identify their

requirements for a specific element of the product or project work, or for the

overall project. These interviews can take place between individuals or in

group settings. Interviews can also be conducted via email, phone calls, letter,

or other methods.

Facilitated Workshops

Facilitated workshops bring together stakeholders with different perspectives

to talk about the product and ultimately arrive at consensus regarding the

requirements. A key benefit with all the players in the room is that issue

resolution can be done more quickly than through other techniques.

Group Creativity Techniques

Brainstorming

o Use to generate and collect multiple ideas related to the requirements.

Nominal Group Technique

o This technique is usually, but not always, done during the same

meeting as brainstorming. The meeting participants rank the most

useful ideas generated during the brainstorming session.

The Delphi Technique

o With this technique, a request for information is sent to experts who

participate anonymously, their responses are complied, and the results

are sent back to them for further review until consensus is reached.

Idea/Mind Mapping

o A mind map is a diagram of ideas or notes to help generate, classify, or

record information. It looks like several trees radiating out of a central

core word. Colors, pictures, and notations can be used to make the

diagram more readable.

Affinity Diagram

o In this technique, the ideas generated from any other requirements

gathering techniques are sorted into groups by similarities. Each group

of requirements is then given a title. This sorting makes it easier to see

additional scope (or risks) that have not been identified.

Group Decision Making Techniques

Soliciting input on requirements from all stakeholders may result in too many or

conflicting requirements. These need to be reviewed, analyzed, accepted or rejected,

and prioritized before recording them in project documents. There are different ways

to make decisions in a group setting such as:

Unanimity

Majority

Plurality

Dictatorship

Questionnaire and Surveys

Questionnaires or surveys are typically used for large groups. These tools

present questions for the respondents that can help identify their requirements.

Observations

This technique involves job shadowing, allowing an opportunity to watch a

potential user of the product at work, and through hands on experience,

identify requirements.

Prototypes

A prototype is a model of the proposed product. In this technique, the

prototype is presented to stakeholders for feedback. The prototype may be

updated multiple times to incorporate the feedback until the requirements have

been solidified for the product.

Benchmarking

Benchmarking helps the requirements collection and definition process by analyzing

comparable organizations to identify best practices, new ideas, and standards for

performance measurements.

Context Diagrams

These diagrams visually display the product scope by showing business systems and

their interactions. They show the inputs and outputs of these business systems and

their sources.

Document Analysis

Analyzing existing documentation elicit requirements. There are a wide range of

documents that may be reviewed and analyzed including:

Business plans

Marketing literature

Agreements

Request for proposals

Process flows

Logical data models

Business rules

Software documentation

Use cases

Problem/issue logs

Policies and procedures

Laws, codes or ordinances etc.

Outputs

Requirements Documentation

After the requirements have been collected and finalized, they are documented. This

documentation helps to make sure the requirements are clear and unambiguous. You

will have a lot of requirements that could easily be misunderstood. Therefore, one of

the important aspects is to make sure the stakeholders are in agreement with the

requirements.

Components of requirements documentation can include, but is not limited to:

Business need or opportunity

Business and project objectives for traceability

Functional requirements describing business processes

Non-functional requirements

Quality requirements

Acceptance criteria

Impacts to other entities

Requirements assumptions and constraints

Requirements Traceability Matrix

There are many instances of a requirement being lost in the details, and the customer

receiving one thing when they expected another. The requirements traceability matrix

helps track requirements over the life of the project to ensure they are accomplished.

The matrix usually takes the form of a table containing information such as the source

of each requirement and its status. The concept is similar to risk or issue management,

making sure there is an owner who is accountable for managing and controlling the

work.

The following are possible data points that requirements can be traced against:

Business needs, opportunities, goals, objectives

Project objectives

Scope/WBS deliverables

Product design

Product development

Test strategy and test scenarios

High-level requirements to more detailed

Define Scope (Page 120)

The Define Scope process is primarily concerned with what is and is not included in

the project and its deliverables. This process uses the scope management plan,

requirements documentation created in the Collect Requirements process, the project

charter, the organizational process assets, and any information about the project risks,

assumptions, and constraints to define the project and product scope.

It is imperative to remember that planning is iterative. When the requirements have

been determined, the project manager follows the project management process to

determine the schedule and budget. If the budget and/or schedule do not meet with the

sponsor's approval, the project manager needs to balance the requirements against all

other constraints. The iteration process involves coming up with options for meeting

the scope, time, or cost objectives of the project and presenting those options to

management for a decision. The result is a realistic schedule and budget that can

achieve the project's scope.

Exam Hint The Define Scope process is important on the exam for the following

reasons:

Project managers complain about unrealistic schedule and do not

realize the unrealistic schedules are their fault because they have

not followed the iterations process described previously.

Project managers spend a large portion of their time, while the

work is being done, looking for options to adjust the project and

still meet the project schedule and budget. Therefore, all the tools

used in planning to come up with a realistic schedule and budget,

such as negotiating scope and fast tracking, are also major

activities while the work is being done.

Inputs


Project Charter



limited to:

Policies, procedures and templates

Project files from previous projects

Lessons learned


Expert Judgment

Product Analysis

The purpose of product analysis is to analyze the objectives and description of

the product stated by the customer or sponsor and turn them into tangible

deliverables. The analysis may include a detailed breakdown of the product,

systems analysis, requirements analysis, and more.

Alternatives Generation

Important to be able to generate ideas on different approaches to completing

the requirements.

Facilitated Workshops

Outputs

Project Scope Statement (page 123)

The primary result, or output, of the Define Scope process is the project scope

statement.


The project scope statement is the description of the project scope, major

deliverables, assumptions, and constraints. The project scope statement documents

the entire scope, including project and product scope. It describes, in detail, the

project's deliverables and the work required to create those deliverables.

The creation of the project scope statement can take a lot of time and involve the

expert judgment of many stakeholders and even experts from outside the organization.

While defining requirements and defining scope, the project manager will identify

areas where people want scope but it was not approved to be included in the project.

The project manager should also clarify areas where the work could easily be

misunderstood. It is a waste of project time and money to create scope that is not

needed or approved, yet it is easy for this to occur.

The project manager should also consider different approaches to performing the

work and incorporating the needs of stakeholders into the project. The project scope

statement, along with the WBS and WBS dictionary, comprise the scope baseline,

which is part of the project management plan. The scope statement may reference the

following other documents:

Product scope description

Product acceptance criteria

Project deliverables

Project exclusions

Project constraints

Project assumptions

Project document updates can include, but are not limited to:


Requirements documentation

Requirements traceability matrix

The Create WBS process is the process that defines the scope of the project. The

scope baseline is the output of this process

Create WBS

Although the WBS may look like a corporate organizational chart, it is not. It is a

cornerstone to building a realistic project plan.


Create WBS is the process of subdividing project deliverables and project work into

smaller, more manageable components.

This is a top-down effort to decompose the deliverables, and the work required to

produce them, into smaller pieces called work packages. Note that generally each

work package consists of nouns – things, rather than actions. The work package can

then be scheduled, estimated, monitored and controlled.

A WBS is deliverable-oriented. This does not mean that only customer deliverables

are included in the WBS. The complete scope of the project, including product scope,

project scope, and project management efforts, are included. The total scope of the

project is included in the WBS. Watch out for the word "task." In the real world, it

means one thing, but for the exam that level of detailed information is called

"activity."

Understand that there are a few rules that would be good to know for creating a WBS,

especially for those that don't have a great deal of experience with WBS. There is

more than one way to create a WBS, and two WBS documents for the same project,

each created by a different person, will look different. That's acceptable, provided

they comply with the following rules.

The WBS is created with the help of the team.

The first level is completed before the project is broken down further.

Each level of the WBS is a smaller piece of the level above.

The entire project is included in each of the highest levels of the WBSs.

Eventually some levels will be broken down further than others.

The WBS includes only deliverables that are really needed.

Deliverables not in the WBS are not part of the project.

Work packages are reached when they include deliverables that:

Can be realistically and confidently estimated

Can be completed quickly

Can be completed without interruption (without the need for more

information)

May be outsourced or contracted out

The work packages in the WBS are divided further into scheduled activities, or

activities for short, with the help of the WBS dictionary. Note that dividing the work

package into activities is part of the time management process of Define Activities.

Exam Hint There can be many references to the WBS on the exam. In short,

remember the following. A WBS:

Is a graphical picture of the hierarchy of the project

Identifies all the deliverables to be completed – if it is not in the

WBS, it is not part of the project

Is the foundation upon which the project is built

Is VERY important

Should exist for every project

Forces you to think through all aspects of the project

Can be reused for other projects

Does NOT show dependencies

Inputs


Project scope statement


Enterprise environmental factors that can influence this process include

industry-specific WBS standards.

Organizational process assets that can influence this process include, but are not

limited to:

Policies, procedures and templates

Project files from previous projects

Lessons learned

Tools & Techniques

Decomposition (page 128)

Decomposition is the exercise of subdividing the project deliverables into smaller,

more manageable components on the way to getting to the work package level.

The following activities are involved in decomposition:

o Identifying and analyzing

o Organizing the WBS

o Decomposing WBS

o Validating that decomposition has gone to the appropriate level

WBS structure creation

o There are several forms that the structure of the WBS can take such as:

Use the phases of the project as a guide for first level of WBS

Use the major deliverables as the guide for first level

Use subprojects that are independent and complete packages of

work that could be outsourced if needed.

Expert Judgment

Outputs

Scope baseline

The scope baseline is the approved version of a scope statement, work breakdown

structure (WBS), and its associated WBS dictionary.


WBS

WBS dictionary (page 132)

The WBS dictionary provides a description of the work to be done for each

WBS work package and helps make sure the resulting work matches what is

needed. It can be used as part of the work authorization system to inform team

members of when their work package is going to start, schedule milestones,

and other information. The WBS dictionary helps the project by putting

boundaries on what is included in the work package. Information in the WBS

dictionary may include:

o Code of account identifier

o Description of work

o Assumptions and constraints

o Responsible organization

o Schedule milestones

o Associated schedule activities

o Resources required

o Cost estimates

o Quality requirements

o Acceptance criteria

o Technical references

o Agreement information

Project Documents Updates

Requirements documentation might get updated during this process.

The Validate Scope process should be performed for every project deliverable, or a

group of deliverables, being presented to the customer or sponsor

Validate Scope

The Validate Scope process is very time intensive because the project team will be

dealing with the clients.


Validate Scope is the process of formalizing acceptance of the completed project

deliverables.

During this process you are reviewing the deliverables with the client to ensure that

they are completed to their satisfaction. Another aspect of the Validate Scope process

is it can be done at the end of each project phase in the project life cycle (to verify the

phase deliverables along the way) and during the monitoring and controlling process

group in the project management process. You can validate scope with the customer

multiple times in one project.

The last area that we'll cover here is how Validate Scope relates to Control Quality.

Although Control Quality is generally done first (to make sure that work meets the

quality requirements before meeting with the customer), the two processes are very

similar in that both involve checking for the correctness of work. The difference is the

focus of the effort and who is doing the checking. In Control Quality, the quality

control department checks to see if the quality requirements specified for the

deliverables are met and makes sure the work is correct. In Validate Scope, the

customer checks and either accepts or rejects the deliverables.

Inputs



WBS

WBS Dictionary



Verified deliverables

Work performance data


Inspection (Page 135)

This includes validation activities involving measuring, examining, and

verifying that the deliverables are completed to the specification of the

requirements.

The inspections can take on different forms such as:

o Audits

o Product reviews

o Walkthroughs

Group decision-making techniques

Outputs

Accepted Deliverables (page 135)

This must include a formal signoff.

The formal documentation is then used in the Close Project or Phase process.

Change Requests



Control Scope

The Control Scope process involves measuring project and product scope

performance and managing scope baseline changes. This control ensures that any

approved changes are accounted for and managed into the scope successfully. It also

ensures that any recommendations for change go through the formal Perform

Integrated Change Control process.

As a project manager, in order to control scope, you need to:

1. Have work completed with a clear definition of what the scope on the project

is, which is captured in the project scope baselines from the project

management plan.

2. Be aware of the original requirements recorded in the requirements

documentation and the requirements traceability matrix.

3. Measure scope performance against the scope baseline to see the magnitude of

any variances (variance analysis) and decide if corrective action or

preventative action is required.

4. Determine if any updates to the scope baseline, other parts of the project

management plan, or the project documents are needed, and what changes

should be requested.

5. Look for the impact of scope changes on all aspects of the project (through the

Perform Integrated Change Control process).

The Control Scope process is an extremely proactive process for the project manager.

It will involve thinking about where changes to scope are coming from on the project,

and what can be done to prevent or remove the need for any more changes from that

source going forward.

The project manager's job is to control the project in accordance with the project

management plan and to meet all the baselines. Therefore, the project manager should

not be easily swayed or influenced and let others add scope or change scope without

following the approved change management process.

Inputs

Project Management Plan – contains information from the following:

Scope baseline


Change management plan

Configuration management plan

Requirements management plan


Requirements Traceability Matrix


Organization Process Assets


Variance Analysis (page 139)

As project manager you will be capturing project performance measurements.

If variance exists, it is important to recognize its cause, and to determine at

what point corrective or preventive action is necessary for the success of the

project.

Outputs


Change Requests


Scope baseline updates

Other business updates




Organizational Process Assets Updates

Project Scope Management Cheat Sheet


Process Descript

ion

Gro

up

Input Tools &

Technique

Output

Plan

Scope

Managem

ent

Develop

a scope

manage

ment

plan

Plan Project

manageme

nt plan

Charter

EEF

OPA

Expert

Judgment

Meetings

Scope

manageme

nt plan

Requireme

nts

manageme

nt plan

Collect

Requirem

Defining

and

Plan Scope

manageme

Focus

groups

Requireme

nts



Process Descript

ion

Gro

up

Input Tools &

Technique

Output

ents documen

ting

stakehold

ers'

needs to

ensure

project

objective

s are

met.

nt plan

Requireme

nts

manageme

nt plan

Stakehold

er

manageme

nt plan

Charter

Stakehold

er register

Interviews

Facilitated

workshops

Group

creativity

techniques

Group

decision-

making

techniques

Questionna

ires &

Surveys

Observatio

ns

Prototypes

Benchmark

ing

Context

diagrams

Document

analysis

documenta

tion

Requireme

nts

traceabilit

y matrix

Define

Scope

Developi

ng

detailed

descripti

on of the

project

and

product

as a basis

for future

decisions

.

Plan Scope

manageme

nt plan

Charter

Requireme

nts doc

OPA

Expert

judgment

Alternative

s

Generation

Product

analysis

Facilitated

workshops

Scope

statement

Updates:

docs

Create

WBS

Subdivid

ing

major

deliverab

les into

smaller

compone

nts

Plan Scope

manageme

nt plan

Scope

statement

Requireme

nts doc

EEF

OPA

Decomposi

tion

Expert

judgment

Scope

baseline

Updates:

docs

Process Descript

ion

Gro

up

Input Tools &

Technique

Output

Validate

Scope

Formal

acceptan

ce of the

complete

d project

deliverab

les.

Cont

rol

Project

mgmt plan

Requireme

nts docs

Requireme

nts

traceabilit

y matrix

Verified

deliverabl

es

Work

performan

ce data

Inspection

Group

decision-

making

techniques

Accepted

deliverabl

es

Change

requests

Work

performan

ce

informatio

n

Updates:

docs

Control

Scope

Monitori

ng status

of the

project

and

product

scope

and

managin

g

changes

to scope

baseline.

Cont

rol

Project

mgmt plan

Requireme

nts docs

Requireme

nts

traceabilit

y matrix

Work

performan

ce data

OPA

Variance

analysis

Work

performan

ce

informatio

n

Change

requests

Updates:

OPA;

docs; plan

Deep Dive into Project Time

Management

Overview

Project Time Management includes seven processes. These processes are required to

manage the timely completion of the project. On simpler and smaller projects, most of

the planning processes (defining activities, sequencing activities, estimating activity

resources, estimating activity durations, and developing schedule) can be viewed as a

single process. Make sure you realize there is no such thing as true project

management software. The software is only as good as the data that is provided to it.

You can't follow the software; as a project manager you need to lead it. You need to

make it conform to your needs, because the software does not always conform to

proper project management methods.

The following should help you understand how each part of time management fits

into the project management process:


Time Management Process Done During

Plan Schedule Management Planning Process Group

Define activities Planning Process Group

Sequence Activities Planning Process Group

Estimate Activity Resources Planning Process Group

Estimate Activity Durations Planning Process Group

Develop Schedule Planning Process Group

Control Schedule Monitoring and Controlling Process Group

The Plan Schedule Management process produces the project's schedule management

plan. It does not contain the project's schedule. It only describes how the project's

schedule will be developed, managed and controlled

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 only output of this process is the schedule management plan. The schedule

management plan is a component of the project management plan. It can be detailed

or broadly framed, based on the needs of the project.



Inputs


Project Charter


Organizational culture and structure

Resource availability and skills

Project management software

Published commercial information

Organizational work authorization systems


Monitoring and reporting tools


Schedule control tools

Schedule control policies and procedures

Templates

Project closure guidelines


Risk control procedures


Expert Judgment


Scheduling tools and techniques

Estimating techniques

Rolling wave planning

Alternative analysis

Meetings

Outputs

Schedule Management Plan (Page 148)

Project time management processes and their associated tools and techniques are

documented in the schedule management plan. The schedule management plan will

help make the schedule estimating process faster by providing guidelines on how

estimates should be stated. During monitoring and controlling, the schedule

management plan can help determine if a variance is over the allowable threshold and

therefore must be acted upon. The schedule management plan can also help determine

the types of reports required on the project relating to schedule.

The schedule management plan includes:

The scheduling methodology and scheduling software to be used on the

project

Procedures to establish the schedule baseline; Identification of the

performance measures that will be used on the project, to identify variances

early

Planning how schedule variances will be managed

Identification of schedule change control procedures

A schedule management plan requires that progress be measured along the way by the

project manager. The project manager is playing an active role in gathering the data.

Measures of performance are determined in advance so the project manager can plan

to capture the necessary data. The schedule management plan can be formal or

informal, but again it is part of the project management plan.

The Define Activities process decomposes the work packages into project activities.

However, care must be taken such that activities are decomposed up to a level that

they do not complicate the project schedule and eliminate the room for creativity for

the project team

Define Activities

This process involves taking the work packages created in the WBS and breaking

them down further (decomposing) in order to reach the activity level, which is a level

small enough to estimate, schedule, monitor, and manage.


Define Activities is the process of identifying and documenting the specific actions to

be performed to produce the project deliverables.

In order to define the activities, the project manager must know the key inputs. This

requires the schedule management plan, the scope baseline (scope statement, WBS,

WBS dictionary), and the project team. Involving the project team helps define

activities completely and accurately and therefore makes the estimates more accurate.

When completed, the Define Activities process will result in an activity list and the

details of the activities being completed. It will also result in the determination of

milestones to be used on the project.

Inputs


Scope Baseline




Decomposition

Rolling Wave Planning (page 152)

This is a form of progressive elaboration where the activities that need to be

completed in the near term are planned in detailed, while those activities

targeted for the future are planned at a higher level.

Expert Judgment

Outputs

Activity List (page 152)

This is a comprehensive list of all the activities required on the project. The

detail of the information on the list can vary so long as there is sufficient detail

so that the team understands what needs to be completed.

Activity Attributes (page 153)

The attributes allows for additional data points to be added to the description

of the activity. The data points evolve over time as more information is

known. Examples include:

o Activity ID

o WBS ID

o Activity name

o Predecessor

o Successor

Milestone Lists (page 153)

The list identifies all the milestones and can also provide additional

information in terms of the milestone being required by a contract term, if it is

optional, or if it is mandatory.

Milestones Milestones are significant events within the project schedule. They are

not work activities. If a checkpoint or milestone in the schedule arrives

and all the planed work has been completed, it indicates that the project

may be progressing as planned.

Sequence Activities

The next process involves taking the activities and milestones and starting to sequence

them into how the work will be performed.


Sequence Activities is the process of identifying and documenting relationships among

the project activities.

It is important to remember that every activity, except for the first and last, are

connected in the project schedule. There are many ways to show the connection by

using software or manually. A manual best practice is to use a network diagram (also

referred to as a project schedule network diagram), which can look like the following

picture.

Example of a Network Diagram

Methods to Draw Network Diagrams

In the past, the Precedence Diagramming Method (PDM), the Arrow Diagramming

Method, and the Graphic Evaluation and Review Technique (GERT) method were

commonly used to draw network diagrams. Today most network diagrams are

creating using PDM.

Inputs


Activity Lists

Activity Attributes

Milestone List

Project Scope Statement

Enterprise environmental factors



Precedence Diagramming Method (PDM) (page 156)

PDM is a method that is used in Critical Path Methodology (CPM). In this method,

nodes (or boxes) are used to represent activities, and arrows show activity

dependencies and relationships as follows:

The start-to-finish relationship confuses many PMP candidates and should be

thoroughly understood prior to entering the exam. While this relationship may not

explicitly be detailed in the PMBOK Guide, it is valuable to familiarize yourself with

it via external sources (online search, etc.)

PDM can have four types of logical relationships between activities:

Finish-to-start (FS) – An activity must finish before the successor can start.

o Example: You must finish digging a hole before you can start the next

activity of planting a tree.

o The most commonly used of the types

Start-to-start (SS) – An activity must start before the successor can start.

o Example: You must start designing and wait for two weeks lag in order

to have enough of the design completed to start coding.

Finish-to-finish (FF) – An activity must finish before the successor can

finish.

o Example: You must finish testing before you can finish documentation.

Start-to-finish (SF) – An activity must start before the successor can finish

o Rarely used.

Dependency Determination (page 157)

The sequence of activities is determined based on the following dependencies.

Mandatory and external dependencies may not be removed. During fast-tracking, the

internal and discretionary dependencies are usually considered and removed. This

increases the project risk as a tradeoff

Mandatory Dependency o The dependency is inherent in the nature of the work being done or

required by the contract.

o The project team will determine if the dependency is mandatory during

sequencing.

o This is also referred to as "hard logic"

Discretionary Dependency o This dependency is determined by the project team during the

sequencing of activities.

o Discretionary dependencies can be changed if needed, while the other

types of dependencies cannot easily be changed.

o Discretionary dependencies are important when analyzing how to

shorten the project to decrease the project duration (fast track the

project).

o Also referred to as Preferred logic, Preferential logic, or Soft logic

External Dependency o This dependency is based on the needs or desires of a party outside the

project.

o The project team will determine which dependencies are external

during the sequencing of activities.

Internal Dependency

o This dependency is generally under the project team's control. The

project team determines which dependencies are internal during the

sequence activities process.

Leads and Lags (page 158)

Leads

o A lead may be added to start an activity before the predecessor activity

is completed.

o For example, coding might be able to start five days before the design

is finished.

Lags

o A lag is a delay or waiting time between activities.

o For example, needing to wait three days after design before coding can

begin.

Outputs

Project Schedule Network Diagrams (page 159)

Standard network diagrams are schematic displays of the project's schedule

activities and the logical dependencies among them.

These can be produced manually or via software.


Activity lists

Activity attributes

Milestone list

Risk register

Exam Hint The next two management processes (Estimate Activity Resources and

Estimate Activity Durations) involve estimating. The following are

important points to understand about estimating for the exam:

Estimating should be based on a WBS to improve accuracy.

Estimating should be done by the person doing the work

whenever possible to improve accuracy.

Historical information from past projects (part organizational

process assets) is a key to improving estimates.

The schedule baseline (as well as the cost and scope baselines)

should be kept and not changed except for approved project

changes.

The project schedule should be managed in the schedule baseline

for the project.

Changes are approved in integrated change control.

Estimates are more accurate if smaller size work components are

estimated.

A project manager should never just accept constraints from

management, but should instead analyze the needs of the project,

come up with his or her own estimates, and reconcile any

differences to produce realistic objectives.

A project manager may periodically recalculate the estimate to

complete (ETC) for the project in order to make sure there is

adequate time (and funds, etc.) available for the project.

Plans should be revised during completion of the work as

necessary with approved changes.

Padding is not acceptable project management practice.

The project manager must meet any agreed upon estimates.

Estimates must be reviewed when they are received to see if they

are reasonable and to check for padding and risks.

Estimates must be kept realistic through the life of the project by

re-estimating and reviewing them periodically.

Estimates can be decreased by reducing or eliminating the risks.

The project manager has a professional responsibility to provide

estimates that are as accurate as feasible and to maintain the

integrity of those estimates throughout the life of the project.

Estimate Activity Resources

Once the activities are sequenced, the type and quantity of needed resources is

determined. Remember that resources include equipment and materials, as well as

people. Resources must be planned and coordinated in order to avoid common

problems such as lack of resources and resources being taken away from the project.


Estimate Activity Resources is the process of estimating the type and quantities of

material, human resources, equipment, or supplies required to perform each activity.

Inputs

Schedule Management Plan

Activity List

Activity Attributes

Resource Calendars (page 163)

The calendar provides information regarding availability of resources.

It will also provide how long the resource will be available.

Additional information around experience and skill level may also be

incorporated into the calendar.

Risk Register

Activity Cost Estimates

The activity cost estimates are obtained during the Estimate Costs process of the Cost

Management Knowledge Area. The cost of resources may impact the resource

selection.




Expert Judgment

Alternative Analysis

Published Estimating data (page 164)

Data that is published from an outside vendor.

Data that includes production rates and unit costs for materials and equipment

Bottom-up Estimating

Project Management Software

Outputs

Activity Resource Requirements (page 165)

Details the types and quantities of resources required to support the project.

Resource Breakdown Structure (page 165)

This is a graphical representation using a hierarchical structure of the

identified project resources.

The resources can be categorized or shown by skill level, grade level, or other

category.

Project Document Updates can include, but are not limited to:

Activity lists

Activity attributes

Resource calendars

Estimate Activity Durations

In order to estimate well, you will need to know activity resource requirements,

resource calendars, project scope, resource breakdown structure, organizational

process assets (historical data and lessons learned about activity durations, past

project calendars, and the defined scheduling methodology), and enterprise

environmental factors (company culture and existing systems that the project will

have to deal with or can make use of, such as estimating software and productivity

metrics). Other inputs that guide this process include the schedule management plan,

activity list, activity attributes and risk register. Keep in mind that the time estimates

and any other information gathered during estimating will be an input to the risk

management process.


Estimate Activity Durations is the process of estimating the number of work periods

needed to complete individual activities with estimated resources.

Sometimes in the real world, you hear the concept of padding a schedule. Padding is a

sign of unprofessional project management. A "pad" is an extra time or cost added to

an estimate because the estimator does not have enough information. In the cases

where the estimator has many unknowns, the need for a pad should be addressed

through the risk management process, and the uncertainties should be turned into

identifiable opportunities and threats (risks). Uncertainties should not remain hidden;

instead they need to be identified and addressed openly with the project manager.

Successful estimators have a WBS that they and their team created. They also have a

description for each work package (the WBS dictionary). They may even have helped

create the activity list from the work packages, and they may know there will be time

reserves on the project. With that information, they should not need to pad estimates,

since they have all the needed information and no reason to guess.

Inputs


Activity List

Activity Attributes

Activity Resource Requirements

Resource Calendars


Assumptions

Constraints

Risk Register

This is described in a greater detail in the Risk Management knowledge area.

The risk register provides the list of project risks and their corresponding

planned responses. Considering project risks during the activity duration

estimated provides more reliable estimates.

Resource Breakdown Structure




How Is Estimating Done?

Activities can be estimated using the following techniques:

Single-Point Estimate (SPE)

When estimating time using a single-point estimate, the estimator submits one

estimate per activity.

The time estimate can be made based on expert judgment, by looking at

historical information, or even by just guessing.

Single-point estimates per activity can have the following negative effects on the

project:

It can force people into padding their estimates.

It hides important information about risks and uncertainties from the project

manager, which is needed to better plan and control the project.

It creates a schedule that no one believes in, thus losing buy-in to the project

management process.

It has the estimators working against the project manager to protect

themselves, rather than with the project manager to help all involved in the

project.

The role of the project manager in estimating is to:

Provide the team with enough information to properly estimate each activity.

Let the team know how refined their estimating must be.

Complete a sanity check of the estimates.

Prevent padding.

Formulate a reserve

Make certain any assumptions made during estimating are recorded for later

review and possible input into Risk Management.

Single-point estimates should be used for projects that are smaller and not complex in

nature. If single-point estimates are used, it is critical that the project manager

provides the estimator with as much information as possible or the estimate will likely

be unreliable. This information should include the WBS, the WBS dictionary, and the

activity list,

Expert Judgment

Although the PMBOK Guide does not mention it, Analogous Estimating is also

referred to as "Top-Down Estimating".

Analogous Estimating (Page 169)

Analogous estimating can be done for a project or an activity. Analogous estimating

uses data points such as duration, budget, size, and complexity from past projects as

the basis for estimating. It is used to estimate project duration when there is limited

data. It is an inexpensive method to use, but it is not a very accurate one.

Heuristics A heuristic means a rule of thumb. An example of a heuristic is the

80/20 rule. This rule applied to quality, suggests that 80 percent of

quality problems are caused by 20 percent of the potential sources of

problems.

Parametric Estimating (Page 170)

Parametric estimating calculates projected time for an activity based on historical

records from previous projects and other information. The result is an activity

estimate based on measures like time per line of code, time per linear meter, or time

per installation. This technique can produce a higher level of accuracy depending on

the quality of the data points used in the calculations.

Always remember that both the PERT average and Simple Average are two

approaches for Three-point Estimating. Most people associate only the PERT average

with a Three-point Estimate

Three-Point Estimating –(Page 170)

In creating estimates, remember that things do not always go according to

plan. Analyzing what could go right and what could go wrong can help

estimators determine an expected range for each activity. This technique tries

to factor in the uncertainty and risk inherent in any project.

With three-point technique, estimators give an estimate for each activity:

o Optimistic (O),

Best case scenario

o Pessimistic (P), and

Worst case scenario

o Most likely (M)

Exam Hint For the exam, you MUST memorize these formulas and know that they

can be used for both time and cost estimates.

Expected Activity Duration = (P + 4M+ O) / 6

Activity Standard Deviation = P-O/6

Activity Variance = [P-O/6]2

Knowing the ranges of individual activity duration estimates is not enough to manage

a project successfully, because you need to understand how these ranges affect the

overall project duration estimate in order to effectively address variations on your

project.

Finding the range for the overall project duration estimate is not as simple as finding

the range for an individual activity estimate. You start by:

Finding the expected project duration

o This is the sum of the PERT estimates (EADs or Expected Activity

Durations) for each activity on the critical path.

You then find the standard deviation for the project

o You can't simply add the standard deviations for each activity on the

critical path

o You must calculate the variance for each critical path activity, add

those variances, and then take the square root of the sum of the activity

variance.

The project duration estimate range is the expected project duration (the sum

of the EADs) plus or minus the project standard deviation (the square root of

the sum of the activity variance).

Exam Hint For the exam, you need to be able to do simple calculations using the

formulas, have general understanding that estimates of time (or cost)

should be in a range, and know the concept of three-point time (or cost)

estimates per activity. You could also see a PERT total project duration

used in questions without requiring calculation. The exam addresses

standard deviation and variance in many different ways (Schedule, Risk,

etc.). Make sure you have a general understanding of these concepts,

which you will, based on these sessions.

Group Decision-Making Techniques

Reserve Analysis (page 171)

It is important for you to connect estimating to risk management, as estimating will

help determine risks, and completing the risk management process will reduce the

range of time and cost estimates and make them more accurate. Successful project

management involves having a reserve to accommodate the risks that remain in the

project after the completion of risk management activities.

Outputs

Activity Duration Estimates


Exam Hint You will frequently see a single-point estimate per activity used on the

exam. This method is not always best, but it is an easier way to improve

your understanding of finding critical paths and drawing network

diagrams. Using single-point estimates also allows for quick calculations

and proof that you understand those concepts.

Develop Schedule

Once a network diagram and estimates are completed, it is time to put the information

into a schedule. The difference between a time estimate and a schedule is that the

schedule is calendar based.


Develop Schedule is the process of analyzing activity sequences, durations, resource

requirements, and schedule constraints to create the project schedule model.

During schedule creation, the project manager may need to review the duration

estimates and resource estimates. Many times a scheduling tool will be used to

capture the data points needed for a project schedule, such as the activities, durations,

and resources.

Exam Hint It is critical that any project schedule be realistic and that it is created

with the full input from the entire project team.

Inputs


Activity List

Activity Attributes

Project Schedule Network Diagrams


Resource Calendars



Risk Register

Project Staff Assignments

Resource Breakdown Structure




Schedule Network Analysis (page 176)

This is a technique that employs various analytical techniques to calculate the

early and late start and finish dates for the uncompleted portion of the project

activities. The different techniques are:

o Critical path method

o Critical chain method

o Resource optimization techniques

o Modeling techniques

o Schedule compression

Practice the forward pass and the backward pass on a schedule network and make

yourself comfortable with it. Many people struggle with this and incorrectly compute

the early and late start and finish dates

Critical Path Method (page 176)

The critical path method includes determining the longest path in the network diagram

(the critical path), the earliest and latest an activity can start, and the earliest and latest

it can be completed. A critical path is characterized by zero float on the critical path.

Become very comfortable with the Critical Chain Method. While it may not explicitly

be mentioned in the PMBOK Guide, it is valuable to familiarize yourself with

examples via external sources (online search, etc).

Critical Chain Method (page 178)

This is a technique that will alter the project schedule to account for limited resources.

This is also known as resource-constrained critical path. This technique will add

duration buffers that are non-work schedule activities to manage uncertainty.

Resource Optimization Techniques (page 179)

Resource leveling: The schedule first needs to be analyzed by the critical path

method. In situations where required resources are only available at certain

times, or when it's necessary to keep resource usage at a constant level, a

project manager may use resource leveling. The technique can also be used

where resources have been over allocated on a project. Resource leveling often

alters the project's critical path and delays the project's completion date.

Resource smoothing: This technique adjusts the activities in a schedule model

such that the resource requirements on the project do not exceed a defined

limit. In resource smoothing, the project's critical path in not changed and the

completion date is not delayed.

The Monte Carlo simulation technique is not discussed in the PMBOK Guide in great

detail but is a critical exam concept. While this technique may not explicitly be

mentioned in the PMBOK Guide, it is valuable to familiarize yourself with it via

external sources (online search, etc.)

Modeling Techniques (page 180)

What If Scenario Analysis

In creating a finalized, realistic schedule, it is helpful to ask "What if a

particular thing changed on the project? What would happen?" The

assumptions for each activity can change, and therefore the activity durations

can also change.

Simulation

This method of estimating uses computer software to simulate the outcome of

a project, making use of the three-point estimates (optimistic, pessimistic, and

most likely) for each activity and the network diagram. The simulation can tell

you:

o The probability of completing the project on any specific day

o The probability of completing the project for any specific cost

o The probability of any activity actually being on the critical path

o The overall project risk

Monte Carlo analysis, a simulation technique, is a way of putting together the

details of a three point estimate into a project estimate that is more accurate

than other methods, because it simulates the actual details of the project and

takes into account probability.

Leads and Lags

Schedule compression (page 181)

One of the most common problems projects have is an unrealistic timeframe. This can

occur during project planning when the customer requires a completion date that

cannot be met, or during project executing when the project manager needs to bring

the project back in line with the schedule baseline or to adjust the project for changes.

This method of schedule network analysis is done during project planning to see if the

desired completion date can be met and what can be changed to make that date. It is

also done during integrated change control to look at the schedule impact of the

changes to time, scope, risk, resources, and customer satisfaction. The objective is to

try to compress the schedule without changing project scope.

Crashing

o This technique involves making cost and schedule trade-offs to

determine how to compress the schedule the most for the least

incremental cost while maintaining project scope. In crashing or fast

tracking, it is best to see all potential choices and then select the choice

or choices that have the least negative impact on the project. If you

have negative project float, (the estimated completion date is after the

desired date), you would analyze what could be done about the

negative float by compressing the schedule. For the exam, remember

that you need to identify all the possible options and, if given a choice

between crashing or fast tracking options, select the choice or

combination of choices with the least negative impact on the project.

Fast tracking

o This technique involves doing critical path activities in parallel that

were originally planned in series. Fast tracking often results in rework,

usually increases risk, and requires more attention to communication.

Network Diagram Showing the Effect of Fast Tracking

Scheduling Tool

Outputs

Schedule Baseline (page 181)

A schedule baseline is the approved version of the schedule model. Once approved,

the schedule baseline can only be changed through the Integrated Change Control

process. The schedule baseline is used to manage the project and the schedule that the

project team's performance is measured against. Meeting the schedule baseline is one

of the measures of project success.

Project Schedule (page 182)

A project schedule includes key data points such as a planned start date and a planned

end date for each activity. The project schedule can be presented in different formats

such as:

Milestone charts

o These are similar to bar charts, but they only show major events.

Remember that milestones have no duration. They are simply the

completion of activities. Milestones may include "requirements are

complete" or "design is finished" and are part of the inputs to the

Sequence Activities process. Milestone charts are good tools for

reporting project status to management and the customer.

Bar charts

o Bar charts are not project management plans. Bar charts do not help

organize the project as effectively as a WBS and a network diagram

can. They are completed after the WBS and the network diagram in the

project management process.

Project schedule network diagrams

Schedule Data (page 184)

The schedule data for the project model is the collection of information for describing

and controlling the project schedule. This typically include:

Resource requirements

Alternative schedules

Scheduling for contingency reserves

Project Calendars (page 184)

The project calendar identifies the working times of the project. This includes the

working days and shifts that are available for scheduling the project activities.

Project management

Schedule baseline


Project document updates can include, but are not limited to:

Activity resource requirements

Activity attributes

Calendars

Risk register

Control Schedule

A major component of Control Schedule is knowing the current status of the project.

The effort goes beyond measuring, because it looks at taking corrective and

preventative action over and over again during the life of the project.

Schedule control also means looking for things that are causing changes and

influencing them to change. So, if there is one person or one piece of work causing a

lot of changes, the project manager must do something about it. If the project can no

longer meet the agreed-to completion date (the schedule baseline), the project

manager might recommend the termination of the project before any more company

time is wasted. You have to think of it as someone protecting the hard work of the

stakeholders in planning to make sure what was planned occurs as close to the plan as

possible.

The following are some additional activities involved in controlling the schedule:

Re-estimate the remaining components of the project partway through the

project

Conduct performance reviews by formally analyzing how the project is doing

Adjust future parts of the project to deal with delays, rather than asking for

time extension

Measure variances against the planned schedule, and determine if those

variances warrant attention

Level resources to distribute work more evenly among the resources

Continue to play "What if?" with the project schedule to better optimize it

Adjust metrics that are not giving the project manager the information needed

to properly manage the project

Adjust progress reports and reporting

Utilize the change control process

Identify the need for change requests, including recommended preventive

actions

Inputs


Project Schedule


Project Calendars

Schedule Data



Performance reviews (page 188)

The reviews provide a way to measure, compare, and analyze the schedule

performance. The reviews help determine schedule variance as well as what type of

corrective action may be needed to address the variance.


Resource Optimization Techniques

Modeling Techniques

Leads and Lags

Schedule Compression

Scheduling Tool

Outputs


Schedule Forecasts

Change Requests

Project Management Plan Updates can include, but are not limited to:

Schedule baseline


Cost baseline


Schedule data

Project schedule

Risk register


Causes of variances

Corrective actions chosen and reasons

Lessons learned

Project Time Management Cheat Sheet


Process Descripti

on

Grou

p

Input Tools &

Technique

Output

Plan

Schedule

Managem

ent

Develop a

schedule

managem

ent plan

Plan Proj.

Mgt.

Plan

Charter

EEF

OPA

Expert

judgment

Analytical

techniques

Meetings

Schedule

manageme

nt plan

Define

Activities

Activity

list

Milestone

list

Plan Schedul

e mgt.

plan

Scope

baseline

EEF

OPA

Decomposit

ion

Rolling

wave

planning

Expert

judgment

Activity

list

Activity

attributes

Milestone

list

Sequence

Activities

Identify

and

document

the

logical

relationsh

ips and

dependen

cies

Plan Schedul

e mgt.

plan

Activity

list

Activity

attribute

s

Milesto

ne list

Scope

stateme

nt

EEF

OPA

Precedence

diagrammin

g methods

Dependency

determinatio

n

Leads &

lags

Network

diagrams

Updates:

docs

Estimate

Activity

Resource

s

Estimatin

g the type

and

quantities

of

resources

required

Plan Schedul

e mgt.

plan

Activity

list

Activity

attribute

s

Resourc

e

calendar

s

Expert

judgment

Alternatives

analysis

Published

estimating

data

Bottom-up

estimating

PM

software

Activity

resource

requireme

nts

RBS

Updates:

docs



Process Descripti

on

Grou

p

Input Tools &

Technique

Output

Resourc

e

calendar

s

Risk

register

Activity

cost

estimate

s

EEF

OPA

Estimate

Activity

Durations

Estimate

# of work

periods

per

activity

Plan Schedul

e mgt.

plan

Activity

list

Activity

attribute

s

Resourc

e

require

ments

Resourc

e

calendar

s

Scope

stateme

nt

Risk

register

RBS

EEF

OPA

Expert

judgment

Analogous

estimating

Parametric

estimating

3-point

estimating

Group

decision

making

techniques

Reserve

analysis

Activity

duration

estimates

Updates:

docs

Develop

Schedule

Analyze

sequences

,

durations,

resources

and

constraint

s to

document

Plan Schedul

e mgt.

plan

Activity

list

Activity

attribute

s

Networ

Schedule

network

analysis

Critical path

method

Critical

chain

method

Resource

Schedule

baseline

Project

Schedule

Schedule

data

Project

calendars

Updates:

Process Descripti

on

Grou

p

Input Tools &

Technique

Output

project

schedule

k

diagram

s

Activity

resource

require

ments

Resourc

e

calendar

s

Activity

duration

estimate

s

Scope

stateme

nt

Risk

register

Project

staff

assignm

ents

RBS

EEF

OPA

optimization

Modeling

techniques

Leads and

lags

Schedule

compression

Scheduling

tool

Proj. mgt.

plan

Updates:

docs

Control

Schedule

Controllin

g changes

Contr

ol

Project

mgmt

plan

Project

schedul

e

Work

perf

data

Project

calendar

s

Schedul

e data

OPA

Performanc

e reviews

Project

managemen

t software

Resource

optimization

Modeling

techniques

Leads and

lags

Schedule

compression

Scheduling

tool

Work perf

informatio

n

Schedule

forecasts

Change

requests

Updates:

docs; plan;

OPA

Deep Dive into Project Cost

Management

Overview

Cost Management is all about the planning, estimating, budgeting, and controlling

costs related to the project in order to keep the project within the approved budget. As

with the other Knowledge Areas, the processes within Cost Management interact and

are interdependent. The processes are completed at least once and may be completed

multiple times in phased projects.


Cost Management Process Done During

Plan Cost Management Planning Process Group

Estimate Costs Planning Process Group

Determine Budget Planning Process Group

Control Costs Monitoring and Controlling Process Group

Plan Cost Management

The Plan Cost Management process produces a cost management plan for the project.

The cost management plan is part of project management plan, and the project

manager and project team need to spend the time required to determine the cost of the

project. This is a concept that many project managers miss.


Plan Cost Management is the process that establishes the policies, procedures, and

documentation for planning, managing, expending, and controlling project costs.

The sole benefit of this process is to develop guidelines and direction on how the

project costs should be managed and controlled during the project life cycle.

Inputs:


Scope baseline

Schedule baseline



Project Charter


Organizational culture and structure

Market conditions

Currency exchange rates


Project management information system


Financial control procedures


Financial databases

Cost estimating and budgeting policies and procedures

Tools & Techniques:

Expert Judgment


Strategic options identification and selection

Financing options analysis

Financial techniques: payback period, return on investment, internal rate of

return, discounted cash flows, net present value

Meetings

Outputs:

Cost Management Plan (page 198)

Like other management plans, the cost management plan can be formal or informal. It

is part of project management plan, and the project manager and project team need to

spend the time required to determine the cost of the project

The cost management plan includes:

Level of accuracy

o Define the level of rounding that is acceptable to monitor project data

Units of measure

Organizational procedures links

o These are links that tie into the existing organizational infrastructure,

such as the accounting system, to assist with cost management.

Control thresholds

o Defined data points to assist with determining variances in

performance measurement.

Rules of performance measurement

o Define WBS and points at which measurement of control accounts are

performed

o Establish the Earned Value Measurement techniques

o Specify the Earned Value Measurement computation equations

Reporting formats

Process descriptions

Estimate Costs

The Estimate Cost process is where the estimates for each activity are made. This

process does not combine all the estimates into one time-phased spending plan or the

cost budget. That happens in the next process, Determine Budget.


Estimate Costs is the process of developing an approximation of the monetary

resources needed to complete project activities.

This process takes into account the best information available at the time. Given the

iterative nature of a project, we know that information may change and so the

potential is there to update the estimates as well. As a project manager, you will need

to refine and keep current cost estimates based on the latest information at hand. In

most cases, the communication of the estimates is generally expressed in some unit of

currency or unit of time such as hours.

Types of Cost

There are several ways to look at costs when creating an estimate. Historically, the

exam has only asked about three questions regarding types of cost. The following

information should help you answer such questions.

A cost can be either variable or fixed:

Variable Costs – These costs change with the amount of production or the

amount of work.

o Examples include the cost of material, supplies, and wages.

Fixed Costs – These costs do not change as production changes.

o Examples include the costs of set-up, rental, etc.

A cost can be either direct or indirect:

Direct Costs – These costs are directly attributable to the work on the project.

o Examples are team travel, team wages, recognition, and costs of

material used on the project.

Indirect Costs – Indirect costs are overhead items or costs incurred for the

benefit of more than one project.

o Examples include taxes, fringe benefits, and janitorial services.

Inputs

Cost Management Plan

Human Resource Management Plan (page 202)

The human resource management plan is discussed in detail in the Project Human

Resource Management knowledge area. The human resource management plan

provides information regarding staffing attributes, hourly rates, and related rewards

and recognition. These costs must be considered during the Estimates Costs process.

Scope Baseline (page 202)

In order to estimate, you need to know the detail of what you are estimating, what is

out of scope, and what constraints might have been placed on the project. These can

be found by looking at all the components of the scope baseline:

Scope statement

Work breakdown structure

WBS dictionary

Project Schedule (page 203)

This is one of the key inputs to cost management, as it contains the activities, the type

and quantity of resources needed to complete the work, and when the work will occur.

Keep in mind that you need a schedule before you can come up with a budget.

Risk register


Market Conditions



Cost estimating policies

Cost estimating templates


Lessons learned


Expert Judgment

Analogous estimating is the weakest estimating technique. However, at times, this is

the only available option for the project team due to time and cost constraints

Analogous Estimating

Parametric Estimating

Bottom-up Estimating

Three Point Estimating

Most likely

Optimistic

Pessimistic


It is a good project management practice to accommodate the cost and time risk in a

project estimate through the use of reserves. In risk analysis, you identify which

activities on your project have significant risks and determine how much time and

money to set aside to deal with the risks if they happen.

Cost of Quality (page 206)

The costs of work added to the project to accommodate quality planning should be

added to the project estimate.


Vendor Bid Analysis (page 207)

This is where project work may be awarded to a vendor under a competitive process.

This will require the project team to factor in the additional costs the vendor selection

process may incur.

Group Decision-Making Techniques

Outputs

Activity cost estimates

Basis of Estimates (page 208)

The more information that is known about the costs and how they were derived, the

easier those costs are to justify. The following are some of the supporting detail that

may be included in the estimate:

Documentation of the basis of the estimate

Documentation of all assumptions made

Documentation of any known constraints

Indication of the range of possible estimates

Indication of the confidence level of the final estimate


Additional Estimate Concepts:

Accuracy of Estimates

As a project manager, it is important to set the right expectation around estimates.

Estimates made in the early part of the project will be less accurate than those made

later in the project. Because of this, it is best to communicate estimates early in the

project as a range. As the project progresses, these estimates can become more

refined.

The Rough Order of Magnitude (ROM) estimate, as defined by the current PMBOK

Guide (5th Edition), is in the range of -25% to +75%. The older PMBOK Guide (4th

Edition) defined it to be in the range of -50% to +50%. For the exam, remember the

correct ROM is in the range of -25% to +75% range

Exam Hint These ranges do show up on the exam. Make sure to MEMORIZE the

following:

Rough Order of Magnitude (ROM) Estimate

o This type of estimate is usually made early during the

project.

o A typical range from ROM estimate is from -25% to

+75% from the actual, but this range can vary depending

on how much is known about the project when creating

the estimates.

Budget Estimate

o This type of estimate is usually made during the planning

phase and is in the range of -10% to +25% from the

actual.

Definitive Estimate

o Later during the project, the estimate will become more

refined. Some project managers use the range of +/- 10%

from actual, while others use -5% to +10% from actual.

Determine Budget

In this part of cost management, the cost of the project needs to be calculated in order

to determine the amount of funds the organization needs to set aside or have available

for the project. The result of this calculation is called the budget or the authorized cost

baseline. Meeting the cost baseline will be a measure of project success, so the budget

should be in a form the project manager can use while the work is being done to

control costs and therefore make sure the overall project is controlled.

Exam Hint A project estimate cannot be completed without risk management

activities and the inclusion of reserves. Make sure you note this for the

exam, especially if you do not do this in the real world.

Two types of reserves to be aware of are:

Contingency Reserves o Address the cost impacts of the risks remaining during risk response

planning.

Management Reserves o Are any extra funds to be set aside to cover unforeseen risks or change

to the project

These reserves make up the difference between the cost baseline and the cost budget.

The cost baseline contains the contingency reserves. It represents the funds authorized

for the project manager to manage and control. The cost budget is the cost baseline

plus the management reserves. Remember, an unrealistic budget is the project

manager's fault, given that it was built off an unrealistic schedule.

Inputs


Scope Baseline

Scope statement

WBS

WBS dictionary


Basis of Estimates

Project Schedule

Resource Calendars

Risk Register

Agreements(page 211)

It is important to review any contractual costs and factor them into the overall project

costs.



Cost Aggregation (page 211)

This is the roll up of project costs. To create a budget, activity costs are rolled up to

work package costs. Work package costs are then rolled up to control account costs

and finally into project costs.

Reserve Analysis

Expert Judgment

Consultants

Stakeholders (including customers)

Professional and technical associations

Historical relationships (page 212)

These are the historical data points that are used in parametric or analogous estimates.

It is important to call those relationships out to determine the potential accuracy of the

estimate based on the data.

Funding Limit Reconciliation

Outputs

Always remember: Cost baseline = work package estimate (project estimate) +

contingency reserves. On the other hand, the total project budget = cost baseline +

management reserves

Cost Baseline (page 212)

This is an authorized budget at completion (BAC). It is time-phased and used to

measure, monitor, and control overall cost performance on the project.

When plotted graphically over time, the project budget takes the form of an S-curve.

On the other hand, the funding requirements take the shape of a ladder

Project Funding Requirements


Risk register

Cost estimates

Project schedule

Control Costs

You and the team have worked hard to create a realistic budget. Now, as project

manager, you need to make sure that the budget is tracked and met.


Control Costs is the process of monitoring the status of the project to update the

project costs and managing changes to the cost baseline.

With resources entering actual cost data, be it hours and expenses, the project

manager spends a great deal of their time analyzing the data to determine the amount

of the budget that has been consumed and the quantity of work that still remains to be

done.

They key to being a successful project manager who can control costs is to be able to

keep a tight grip on the performance baseline data and the changes to those baselines.

When you think of project cost, you should think about the following factors.

According to the PMBOK Guide, these factors may include: (page 216):

Influencing the factors that create changes to the authorized cost baseline

Ensuring that all change requests are acted on in timely manner

Managing the actual changes when and as they occur

Ensuring that expenditures do not exceed the authorized funding, both by

period and in total for the project

Monitoring cost performance to isolate and understand variances from the

approved cost baseline

Monitoring work performance against funds expended

Preventing unapproved changes from being included in the reported cost or

resource usage

Informing appropriate stakeholders of all approved changes and associated

costs

Acting to bring expected costs overruns within acceptable limits

Inputs


Cost baseline


Project Funding Requirements




Earned Value Management (page 217)

Yes, earned value is on the exam. Many of you get worried when you hear or see

earned value, and I realize that is it because for many the concept is not typically used

in the real world. We need to begin with a clear definition so we are all starting from

the same point. It is best to start from the high-level and then go into the detail.

PMBOK Guide Definition – pg. 217

Earned value management (EVM) is a commonly used method of performance

measurement for projects. It integrates the scope baseline with the cost baseline,

along with the schedule baseline, to form the performance baseline, which helps the

project management team assess and measure project performance and progress.

Results from an earned value analysis indicate potential deviation of the project from

the scope, schedule, and cost baselines (the performance measurement baseline).

Many project managers manage their project performance by comparing planned to

actual results. With this method, you could easily be on time but overspend according

to your plan. Using earned value measurement is better, because it integrates cost,

time, and the work done (or scope) and can be used to forecast future performance

and project completion dates and costs.

Earned value will lead to budget forecasts, change requests, and other items that will

need to be communicated. Since the results of earned value measurement should be a

major part of project reporting, you will also see earned value mentioned in

Communications Management.

Cost Management Terminology and Acronyms

Acronym Term Interpretations

PV Planned Value As of today, what is the estimated value of the

work planned to be done?

EV Earned Value As of today, what is the estimated value of the

work actually accomplished?

AC Actual Cost (total

cost)

As of today, what is the actual cost incurred for the

work accomplished?

BAC Budget at Completion

(the budget)

How much did we BUDGET for the TOTAL

project effort?

EAC Estimate at

Completion

What do we currently expect the TOTAL project to

cost (a forecast)?

ETC Estimate to Complete From this point on, how much more do we expect

it to cost to finish?

VAC Variance at

Completion

As of today, how much over or under budget do we

expect to be at the end of the project?

Planned value: (page 218)

The authorized budget assigned to the work to be accomplished for the

project.

It is sometimes referred to as the Performance Measurement Baseline (PMB).

The total planned value for the project is also known as Budget At Completion

(BAC).

Earned value (page 218)

Earned value represents the value of the work performed expressed in terms of

approved budget assigned to that work.

Actual costs

These are the cost that have been incurred and reported for the work that has

been performed.

Positive values for Schedule Variance (SV) and Cost Variance (CV) are good project

health indicators

Schedule variance


Concept Formula Result Interpretation

Schedule Variance (SV)

Provides schedule performance of

the project.

Helps determine if the project

work is proceeding as planned.

SV = EV -

PV

Negative = behind

schedule = bad

Positive = ahead of

schedule = good

Cost variance



Cost Variance (CV)

Provides cost performance of the

project.

Helps determine if the project is

proceeding as planned.

CV = EV -

AC

Negative = over

budget = bad

Positive = under

budget = good





Schedule performance index



Schedule Performance Index (SPI)

Measure of schedule efficiency

on a project. Ratio of earned

value to planned value.

Used to determine if a project is

behind, on, or ahead of

schedule.

Can be used to help predict

when a project will be

completed.

SPI = EV

/ PV

1 = good. We are

progressing at the

originally planned rate.

>1 = good. We are

progressing at a faster

rate than originally

planned.

<1 = bad. We are

progressing at a slower

rate than originally

planned.

Be very careful when interpreting the SPI and CPI values. Although values greater

than 1.0 are desirable, values greater than 1.5 means the project was not properly

estimated earlier

Cost performance index



Cost Performance Index (CPI)

Measure of cost efficiency on a

project.

Ratio of earned value to actual

cost.

CPI = EV / AC 1 = good. We are

getting $1 for

every $1 spent.

Funds are used as

planned.

>1 = good. We are

getting >$1 for

every $1 spent.

Funds are used

better than

planned.

<1 = bad. We are

getting <$1 for

every $1 spent.

Funds are not

used as planned.

Exam Hint Make sure to also MEMORIZE the

following:

Notice the EV comes first

in every formula.






Remembering this one fact

alone should help you get

about half the earned value

question right.

If it is variance, the formula

is EV minus something.

If it is an index, it is EV

divided by something.

If the formula relates to

cost, use AC.

If the formula relates to

schedule, use PV.

For variance interpretation:

o Negative is bad and

positive is good

For indices interpretation:

o Greater than one is

good

o Less than one is bad

Forecasting (page 220)

As a project manager we will constantly need to take performance measurements

comparing the current information about the project as well as the planned

information for the work left to be done. The following equations can assist the

project manager in correctly forecasting for the project:

Understand the concepts behind the EAC formulas. This will help you select the right

formula to crack a question on your exam



Estimate at Completion

(EAC)

Expected final and

total cost of an

activity or project

based on project

performance.

Helps determine an

estimate of the total

costs of a project

based on actual

costs to date.

There are several

EAC = BAC / CPI

Assumption: use

formula if current

variances are thought

to be typical in the

future.

This is the formula

most often required on

the exam.

Original budget

modified by the

cost performance.

The result is a

monetary value.

EAC = AC + ETC

Assumption: use

Actual Cost plus a

new estimate for

the remaining




ways to calculate

EAC depending on

the current project

situation and how

the actual work is

progressing as

compared to the

budget.

Look for certain

keywords to

determine what

assumptions were

made.

formula if original

estimate was

fundamentally flawed

or conditions have

changed and

invalidated original

estimating

assumptions.

work. Result is a

monetary value.

EAC = AC + BAC - EV

Assumption: use

formula if current


to be atypical in the

future and the original

budget is more

reliable.

Actual cost to date

(AC) plus

remaining budget

(BAC - EV).

Result is a

monetary value.

EAC = AC + ((BAC - EV)

/(CPI * SPI))

Assumption: use

formula if project is

over budget but still

needs to meet a

schedule deadline.

Actual cost to date

(AC) plus

remaining budget

(BAC -

EV)modified by

both cost

performance and

schedule

performance.

Result is a

monetary value.

Estimate to Complete

(ETC)

Expected cost

needed to complete

all the remaining

work for a schedule

activity, a group of

activities or the

project.

Helps predict what

the final cost of the

project will be upon

completion.

ETC = EAC - AC

Inversion of the same

formula from the EAC

calculations.

Expected total

cost minus actual

cost to date.

Result is a

monetary value

that will tell us

how much more

the project will

cost.

ETC = BAC - EV

Assumption: use

formula if current

The planned

budget minus the

earned value.

Result is a


There are many

ways to calculate

ETC depending on

the assumptions

made.


to be atypical in the

future.

monetary value

that will tell us

how much more

the project will

cost.

ETC = (BAC - EV) / CPI

Assumption: use

formula if current


to be typical in the

future.

The planned

budget minus the

earned value

modified by

project

performance.

Result is a

monetary value

that will tell us

how much more

the project will

cost.

ETC = We create a new

estimate when it is thought

that the original estimate was

flawed.

This is not the

result of a

calculation or

formula, but

simply a new

estimate of the

remaining cost.

CPI tells you your current cost performance. On the other hand, TCPI tells you the

required cost performance in order the meet the approved budget

To-Complete Performance Index (TCPI) (page 221)



To-Complete Performance

Index (TCPI)

The calculated project of

cost performance that

must be achieved on the

remaining work to meet a

specific management goal

(e.g. BAC or EAC).

It is the work remaining

divided by the funds

Based on BAC:

TCPI =

(BAC - EV)

/ (BAC -

AC)

Based on EAC:

TCPI =

(BAC - EV)

The TCPI is

compared to the

cumulative CPI to

determine if a target

EAC is reasonable.

A target EAC is

assumed to be

reasonable if the

TCPI is within plus or

minus 0.05 of the

cumulative CPI EVM




remaining. / (EAC -

AC)

metric.

Performance Reviews (page 222)

Variance analysis

Trend analysis

o Examines project performance over time to determine if performance

is improving or deteriorating.

Earned value performance

Variance analysis



Variance at Completion (VAC)

Anticipates the difference

between the originally

estimated BAC and a newly

calculated EAC.

In other words, the cost we

originally planned minus the

cost that we now expect.

VAC =

BAC -

EAC

Result is a monetary value

that estimates how much

over or under budget (the

variance) we will be at the

end of the project.

<0 = over budget

0 = on budget

>0 under budget


Reserve Analysis

Outputs


Cost Forecasts

Change Requests


Cost performance baseline





Cost estimates

Basis of estimates


Causes of variances

Corrective actions chose and reasons

Financial databases

Lessons learned

Project Cost Management Cheat Sheet


Process Descriptio

n

Gro

up

Input Tools &

Technique

Output

Plan Cost

Managem

ent

Develop

the cost

manageme

nt plan

Plan Project

mgt. plan

Charter

EEF

OPA

Expert

judgment

Analytical

techniques

Meetings

Cost

manage

ment

plan

Estimate

Costs

Develop an

approximat

ion of the

costs of the

resources

to

complete

project

activities

Plan Cost mgt.

plan

Human

resource

mgt. plan

Scope

baseline

Project

schedule

Risk

register

EEF

OPA

Expert

judgment

Analogous

estimating

Parametric

estimating

Bottom-up

estimating

3-point

estimating

Reserve

analysis

Cost of

quality

Project

mgt.

software

Vendor bid

analysis

Group

decision

making

techniques

Activity

cost

estimate

s

Basis of

estimate

s

Updates

: docs

Determin Aggregatin Plan Cost mgt. Cost Cost



Process Descriptio

n

Gro

up

Input Tools &

Technique

Output

e Budget g estimated

costs to

establish

an

authorized

cost

baseline.

plan

Scope

baseline

Activity

cost

estimates

Basis of

estimates

Project

schedule

Resource

calendars

Risk

register

Agreemen

ts

OPA

aggregatio

n

Reserve

analysis

Expert

judgment

Historical

relationshi

ps

Fund limit

reconciliati

on

baseline

Funding

Require

ments

Updates

: docs

Control

Costs

Monitoring

status of

the project

to update

the project

budget and

managing

changes to

the cost

baseline

Plan Project

manageme

nt plan

Funding

requireme

nts

Work

performan

ce data

OPA

Earned

value

manageme

nt

Forecastin

g

TCPI

Performan

ce reviews

Project

mgt.

software

Reserve

analysis

Work

perform

ance

informa

tion

Cost

forecast

s

Change

requests

Updates

: project

plan,

docs,

OPA

Deep Dive into Project Quality

Management

This section will get you familiar with what quality is, why you need it, and how to

get it. It is important to understand that the lack of attention to quality means more

rework or defects. The more rework you and your project team are required to do, the

more time and money you are wasting, and the less likely you are to meet the project

time and cost baselines. You are also wasting your time as a project manager if you're

not preventing, rather than dealing with problems.


Project Quality Management includes the 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.

Performing the quality management processes well will prevent many issues that can

arise later in the project. The following should help you understand how each part of

quality management fits into the project management process:


The Quality Management Process Done During

Plan Quality Management Planning Process Group

Perform Quality Assurance Executing Process Group

Control Quality Monitoring and Controlling Process Group

Definition of Quality

Know the short definition for quality.

Quality is defined as the degree to which the project fulfills requirements.

Quality Theorists

The following people are known for their theories on quality:

Joseph Juran o He developed the 80/20 principal, advocated top management

involvement, and defined quality as "fitness for use."

W. Edwards Deming o He developed 14 points to total quality management and advocated the

Plan-Do-Check-Act cycle as the basis for quality improvements.

Philip Crosby



o He popularized the concept of the cost of poor quality, advocated

prevention over inspection, and "zero defects." He believed that quality

is "conformance to requirements."

Key Concepts (Page 228)

Remember the difference between grade and quality. Grade refers to the

characteristics of a product, while quality refers to conformance to customer

requirements

Quality & Grade definition

It is also important to know the difference between quality and grade. We have the

definition of quality above to reference. Grade is a category assigned to products or

services having the same functional use but different technical characteristics.

Precision is different than accuracy. Accuracy is the closeness of a measure against

the target, while precision is the closeness of the repeated measurements with each

other

Precision & Accuracy definition

Precision indicates that after repeated measurement the data points are all clustered

together. Accuracy indicates the measured value is very close to the true value. It is

the project team that determines the appropriate definition for both as it relates to the

project.

International Organization for Standardization (ISO)

ISO 9000 – This family of standards was created by the International Organization for

Standardization (ISO) to help ensure that organizations have quality procedures and

that they follow them. Many people incorrectly believe that ISO 9000 tells you what

quality should be, or describes a recommended quality system.

Always remember: prevention is always preferred over inspection

Cost of Quality

Refers to the total cost of all the efforts related to quality throughout the product life

cycle.

Quality management requires the partnership of other key concepts in order to be

successful. These key concepts may include:

Customer satisfaction

Prevention over inspection

Continuous improvement

Management responsibility

Quality management is the responsibility of the full team, but the project manager has

the ultimate responsibility to ensure that the quality standards are met by the project

and that the client is satisfied by the project deliverables.

Additional Quality Terms:

Continuous Improvement

Continuous improvement involves continuously looking for small improvements in

quality. It can also be referred to as Kaizen. Kaizen is a general term, while

continuous improvement is a quality movement.

Just In Time (JIT)

Many companies are finding that holding raw materials in inventory is expensive and

unnecessary. Instead, they have their suppliers deliver raw materials just when they

are needed or just before they are needed, thus decreasing and maintaining a minimal

inventory. A company using JIT must have high quality practices; otherwise, there

will not be enough raw materials to meet production requirements because of waste

and rework. A JIT system forces attention to quality.

Total Quality Management (TQM)

This philosophy encourages companies and their employees to focus on finding ways

to continuously improve the quality of their business practices and products.

Exam Hint

The project manager should recommend improvement to the performing

organization's standards, policies, and processes. Such recommendations are

expected and welcomed by the management.

Quality should be considered whenever there is a change to any component of

the project constraints.

Quality should be checked before an activity or work package is completed.

The project manager must spend time trying to improve quality.

The project manager must determine metrics to be used to measure quality

before the project work begins.

The project manager must put in place a plan for continually improving

processes.

The project manager must make sure authorized approaches and processes are

followed,

Some quality activities may be done by a quality assurance or quality control

department.

Some project managers have issues with trying to really understand the difference

between the three processes of Quality Management. The following table will help in

better understanding the difference before we go into detail on the three processes:

Focus of Quality Processes


Plan Quality Management Perform Quality Assurance Control Quality

High-Level description of What Each Process Focuses On

What is high quality?

How will we ensure it?

Are we following the

processes?

Are we meeting the

standards?

More Detailed Description of What Each Process Focuses On

Find existing quality

standards and

requirements for

product and project

management

Create additional

project specific

standards

Determine what

work you will do to

meet the standards

Determine how you

will measure to

make sure you meet

the standards

Balance the needs of

quality with scope,

cost, time, risk,

resources, and

customer

satisfaction

Create a quality

management plan as

part of the project

management plan

Use management from

quality control

Perform continuous

improvement

Determine if project

activities comply with

organizational and

project policies,

processes, and

procedures — quality

audit

Find good practices

Share good practices

with others in the

organization

Measure quality

Identify quality

improvements

Validate

deliverables

Complete

checklists

Update lessons

learned

Submit change

requests

Update the

project

management

plan and project

documents

Process Group

Planning Executing Monitoring and

Controlling



Plan Quality Management (Page 231)

The objective of the Plan Quality Management process is to identify all relevant

standards and requirements for the quality of the project, the product of the project,

and the project management efforts. The main result of this process is a quality

management plan.

In addition, the project manager must plan the project so that it meets the customer's

quality standards. Once the existing standards are identified, the project manager must

create additional standards needed by the project that are not covered by any other

standard. This is a point to remember for the exam, as this is not always the case in

the real world.

When all the standards have been identified or created, the Plan Quality Management

process involves determining what work will need to be done to meet those standards.

For example, perhaps additional testing needs to be added to the project activities, or

resources need to be moved around. The project manager determines the specific

requirements that will be made throughout the life of the project to ensure compliance

with all standards.

The Plan Quality Management process will result in additions or changes to the

iterating project management plan and project documents to make sure the standards

are met. Quality must be balanced with the other project constraints.

Inputs


Scope baseline

Schedule baseline

Cost baseline

Other management plans


Risk Register





Cost-Benefit Analysis (page 235)

In this technique, the project manager weighs the benefits versus the costs of meeting

quality requirements.

Cost of Quality (page 235)

This technique helps make sure that the project is not spending too much to assure

quality. Cost of quality involves looking at what the costs of conformance and

nonconformance to quality will be on the project and creating the appropriate balance.

Keep in mind that Cost of Conformance is money spent during the project to avoid

failures. Cost of Nonconformance is money spent during and after the project

because of failures.

Some examples are:


Cost of Conformance Cost of Nonconformance

Quality training Rework

Studies Scrap

Surveys Inventory costs

Testing Warranty costs

Inspections Lost business

Seven Basic Quality Tools (page 236)

1. Cause-and-effect diagrams

These are also known as fishbone or as Ishikawa diagrams. This tool is used to

identify the root cause of a problem.

2. Flowcharts

A flowchart is a graphic representation of how a process or system flows from

beginning to end and how the elements interrelate. In the Plan Quality

Management process, it can be used to see a process and find potential quality

issues. Flowcharts are a tool that can be used in many parts of project

management.

3. Checksheets

These are also known as tally sheets. These are used as a checklist when

gathering data. For example, data about the frequency of defects are collected

through checksheets.

4. Pareto diagrams

This is a special form of a vertical bar chart that sorts items or categories

based on their frequencies.

5. Histograms

6. Control charts



Control charts are typically set up in the Plan Quality Management process.

However, they are utilized in Control Quality process, where they help

determine if a process is within acceptable limits.

Control charts can also be used to monitor things like project performance

figures, such as cost and schedule variances. Most commonly, however, a

control chart helps monitor production and other processes to see if these

processes are within acceptable limits, or if any actions are required.

o Other Charting Terms

o Upper and Lower Control Limits

These limits define the acceptable range of variation of a process. They

are often shown as two dashed lines on a control chart. Every process

is expected to have some variation. The acceptable range of

measurements between the upper and lower control limits is set by the

project manager and stakeholders based on the organization's quality

standard.

Normally this range is calculated based on a +/-3 sigma, or

standard deviations. Data points within this range are generally

thought of as "in control." When a data point is outside the

control limits, or if seven consecutive points are above or

below the mean, the process is considered to be "out of

control."

The concept of control limits is also important outside of a control

chart. A project manager can have control limits for many things.

o Mean (Average)

The mean is indicated by a line in the middle of the control chart. It

shows the middle of the range of acceptable variation of a process.

o Specification Limits

While control limits represent the performing organization's standards

for quality, specification limits represent the customer's experience or

contractual requirements for performance and quality on the project.

Specification limits are characteristics of the measured process and are

not inherent.

o Out of Control

A process is considered to be out of a state of statistical control under

either of two circumstances:

A data point falls outside the upper or lower control limit.

There are nonrandom data points; these may be within the

upper and lower control limits, such as the rule of seven

Think of Out of Control as a lack of consistency and predictability in

the process.

o Rule of Seven

The rule of seven is a rule of thumb or heuristic. It refers to nonrandom

data points grouped together in a series that total seven on one side of

the mean. The rule of seven tells you that, although none of these

points are outside of the control limits, they are nonrandom and the

process may be out of control. The project manager should investigate

this type of situation and find a cause.

Always remember: a correlation between two variables do not imply a

causal relationship between the two variables

7. Scatter diagrams

Scatter diagrams are used to determine if some sort of correlation exists

between two project variables. For example overtime and defects etc.

Benchmarking (page 239)

This technique involves looking at other projects to identify best practices and get

ideas for improvement on the current project. It can also provide a basis to use in

measuring quality performance.

Design of Experiments is a complex statistical technique. While this technique may

not explicitly be mentioned in the PMBOK Guide, it is valuable to familiarize yourself

with it via external sources (online search, etc)

Design of Experiments (page 239)

This technique is a statistical method that allows you to systematically change all of

the important factors in a process and see which combination has a lower impact on

the project. This technique is faster and more accurate than changing the variables one

at a time.

Statistical sampling (page 240)

It is best to take a sample of a population if you believe there are not many defects, or

if studying the entire population would:

Take too long

Cost too much

Be too destructive

Additional Quality Planning Tools (page 240)

Brainstorming

Force field analysis

Nominal group technique

Quality management and control tools

Meetings

Outputs

Quality Management Plan (page 241)

Remember that the purpose of the Plan Quality Management process is to determine

what quality is and to put a plan in place to manage quality. A Quality Management

Plan usually includes some of the following:

The quality standards that apply to the project

Who will be involved in managing quality; when and what their specific duties

will be

The meetings to be held addressing quality

What metrics will be used to measure quality

What parts of the project or deliverables will be measured and when

Process Improvement Plan (page 241)

The process improvement plan is a component of the project management plan. This

plan describes the steps, actions and activities required to analyze the project

management processes in order to improve and optimize them.

The process improvement plan can include the following areas:

Process boundaries

Process configuration

Process metrics

Targets for improved performance

Quality Metrics (page 242)

The following are some examples of quality metrics:

The number of changes

The number of resources used

The number of items that fail inspection

The variances of the weight of a product produced by the project compared to

the planned weight

Quality Checklist (page 242)

A Quality Checklist is a list of items to inspect, a list of steps to be performed, or a

picture of the item to be inspected, with space to note any defects found.



Responsibility assignment matrix

WBS and WBS dictionary

The Perform Quality Assurance process is usually performed by someone outside of

the project team

Perform Quality Assurance

This is the process of auditing the quality requirements and results of the quality

control measurements to make sure that the project team is adhering to the quality

standards defined for the project. It is important to remember that this is an execution

process that leverages data created during Control Quality. The execution may

actually, depending on the organization, be done by a quality assurance team or

another team that is dedicated to ensuring quality.

Inputs

Quality Management Plan

Process Improvement Plan

Quality Metrics

Quality Control Measurements

Project Documents


There are many quality management techniques listed in the PMBOK Guide but are

not covered in a great detail. While these techniques may not explicitly be mentioned

in the PMBOK Guide, it is valuable to familiarize yourself with them via external

sources (online search, etc.)

Quality Management and Control Tools (page 245)

All of the Plan Quality Management and Control Quality tools and techniques are

considered the tools and techniques for the Perform Quality Assurance process as

well. In addition the following tools are also used during this process:

Affinity diagrams

Process decision program charts (PDPC)

Interrelationship digraphs

Tree diagrams

Prioritization matrices

Activity network diagrams

Matrix diagrams

Quality Audits (page 247)

Audits are structured, independent reviews to determine if the project deliverables or

activities are in line with the organizational policies and procedures. The standards

can also be external, coming from contracts supporting the project. The objectives of

an audit are generally:

Identify all the good/best practices being implemented

Identify all the gaps/shortcomings

Share the good practice introduced or implemented in similar projects in the

organization

Proactively offer assistance in a positive manner to improve implementation of

processes to help the team raise productivity

Highlight contributions of each audit in the lessons learned repository of the

organization

Process Analysis (page 247)

Process analysis is a part of the continuous improvement and identifies improvements

that might be needed in processes.

Outputs

Change Requests




Always remember that the Control Quality process is performed for every project

deliverable before the Validate Scope process. However, these two processes can also

be performed in parallel

Control Quality (Page 248)

Control Quality is the process of ensuring a certain level of quality in a product or

service. It looks for products or services that do not meet the standards of quality.

Control involves measuring, and that is the major function of the Control Quality

process. It is a process that is performed throughout the project.

Although a project manager must be involved and concerned about quality control, a

quality control department may complete much of this work in a large organization.

This department then sends the results to the project manager in the form of change

requests, with the appropriate documentation and reports.

There are different concepts about quality control that are important to know and

understand, and they are: (page 250)

Prevention and Inspection

Attribute sampling and Variable sampling

Tolerances and Control Limits

Key Terms:

Probability

This term refers to the likelihood that something will occur. Probability is usually

expressed as a decimal or a fraction, on a scale of zero to one.

Normal Distribution

A normal distribution is the most common probability density distribution chart. It is

in the shape of a bell curve and is used to measure variations

Mutual Exclusivity

You may see statistical reference on the exam. One that often confuses people is

mutual exclusivity. Two events are said to be mutually exclusive if they cannot both

occur in a single trial.

Statistical Independence

Another confusing statistical term often showing up on the exam is statistical

independence – the probability of one event occurring does not affect the probability

of another event occurring (i.e., the probability of rolling a six on a die is statistically

independent from the probability of getting a five on the next roll).

Standard Deviation (or Sigma)

A measure of a range is its standard deviation. This concept is also sometimes stated

as a measure of how far you are from the mean (not the median).

3 or 6 Sigma

Sigma is another name for standard deviation. 3 or 6 sigma represents the level of

quality that a company has decided to try to achieve. The graphic below is commonly

referred to as a bell curve and shows standard deviation from the mean by

percentages. For the exam, it is important to remember that a ±2 sigma deviation will

account for 95.46% of all data points while 99.73% will fall within a deviation of ±3

sigma.

A plot of a normal distribution (or bell curve). Each colored bandhas a width of

one standard deviation.

Sigma is taken on both sides of the mean. Half of the curve is to the right of

the mean, and half of the curve is to the left of the mean.

+/- 1 sigma (or one standard deviation) is equal to 68.26%, which is the

percentage of occurrences to fall between the two control limits.

+/- 2 sigma (or two standard deviations) is equal to 95.46%, which is the


+/- 3 sigma (or three standard deviations) is equal to 99.73%, which is the


+/- 6 sigma (or six standard deviations) is equal to 99.99985% which is the


Inputs


Quality Metrics

Quality Checklists

Work Performance Data can include, but are not limited to:

Planned vs. actual technical performance

Planned vs. actual schedule performance

Planned vs. actual cost performance


Deliverables

Project Documents



Seven Basic Tools of Quality (Page 252)

The following tools are known as Ishikawa's seven basic tools of quality. Each is used

during quality control.

Cause and effect diagram

Flowchart

Histogram

Pareto chart

Checksheets

Scatter diagram

Control chart

Cause & Effect Diagram (Fishbone diagram, Ishikawa diagram)

This diagram highlights how various factors might be linked to potential problems or

the root cause. Cause and effect diagrams can be used in quality control to help the

project manage look backwards at what has contributed to quality problems on the

project.

Fishbone or Ishikawa Diagram

Control Charts

Data are collected and analyzed to indicate the quality status of project processes and

products. The charts can illustrate many different factors based on the data, as well as

show if the values from the data fluctuate or are consistent.

Flowchart

Flow charts can be used in the Plan Quality Management and Control Quality

processes.

Histogram

A histogram displays data in the form of bars and columns. This tool shows what

problems are worth dealing with. A typical histogram arranges data in no particular

order.

Histogram

Pareto Chart (Pareto Diagram)

A Pareto chart or diagram is a type of histogram, but it arranges the results from most

frequent to least frequent to help identify which root causes are resulting in the most

problems.

Exam Hint Remembering the following phrases about Pareto charts should help you

on the exam:

Help focus attention on the most critical issues

Prioritize potential "causes" of the problems

Separate the critical few from the uncritical many

Checksheets

A checksheet is a form of a checklist that is used for collecting quality data. For

example a team can use a standard checksheet to collect defect details (type, location,

magnitude etc.) for each project deliverable.

Scatter Diagram

This diagram tracks two variables to see if they are related.

Statistical Sampling

Inspection

Approved Change Requests Review

Outputs

Quality Control Measurements

Validated Changes

Verified Deliverables


Change Requests



Process improvement plan



Quality in the Real World

For those that are not as familiar with Quality processes and how they are applied in

the real work, take a look at these generic steps to see the full life cycle and the role of

the project manager in the process:

Foundation:

The customer determines their requirements.

The project team clarifies those requirements.

The project team determines what work will be done to meet those

requirements.

Quality Begins:

The project manager determines the existing standards, policies, plans, and

procedures that might be available for the project. He or she might approach a

quality assurance or quality control department for help in finding standards.

The project manager creates other standards and processes that may be

needed.

Quality becomes one of the knowledge areas that the project manager must

integrate.

Project planning work and project execution gets underway by the team.

The following will happen

a. Quality Control Department

i. Measure the performance of the project

b. Quality Assurance Department

i. Audits periodically as part of the executing process, looking at

the quality control measurements to see if there is any

indication that the standards, polices, plans, and procedures are

not being followed.

ii. Looks for best practices that can be used throughout the

organization.

iii. Looks to improve processes being used throughout the

organization.

Change requests are issued, including notification of areas that need

preventive actions, corrective actions, or defect repair.

The change control board

c. Evaluates all change requests

The team adjusts plans and work as needed and returns to step seven until

done.

The organization has improved processes.

Project Quality Management Cheat Sheet


Process Descripti

on

Grou

p

Input Tools &

Technique

Output

Plan

Quality

Manage

ment

Identifyin

g quality

Requirem

ents

and/or

standards

for the

project

and

product

and

documenti

ng how

the project

will

demonstra

te

complianc

e.

Plan Project

mgt. plan

Stakeholde

r register

Risk

register

Requireme

nts

documenta

tion

EEF

OPA

Cost

benefit

analysis

Cost of

quality

(COQ)

Seven basic

quality

tools

Benchmark

ing

Design of

experiment

s

Statistical

sampling

Additional

quality

planning

tools

Meetings

Quality

mgmt

plan

Process

improv

ement

plan

Quality

metrics

Quality

checklis

ts

Updates

: docs

Perform

Quality

Assuranc

e

Auditing

the quality

Requirem

ents and

the results

from

quality

control

measurem

ents to

ensure

appropriat

e quality

standards

and

operations

definitions

are used.

Exec

ute

Quality

manageme

nt plan

Process

improveme

nt plan

Quality

metrics

QC

measureme

nts

Project

docs.

Quality

audits

Process

analysis

Plan

Quality

Mgt. T & T

Control

Quality T

& T

Change

requests

Updates

: docs,

plan,

OPA



Process Descripti

on

Grou

p

Input Tools &

Technique

Output

Control

Quality

Monitorin

g and

recording

results of

executing

the quality

activities

to assess

performan

ce and

recommen

d

necessary

changes.

Monit

or &

Contr

ol

Project

manageme

nt plan

Quality

metrics

Quality

checklists

Work perf

data

Approved

change

requests

Deliverabl

es

Project

docs.

OPA

7 basic

quality

tools

Statistical

sampling

Inspection

Approved

change

requests

review

QC

measur

ements

Validat

ed

changes

Verifie

d

delivera

bles

Work

perf

informa

tion

Change

requests

Updates

: docs,

plan,

OPA

Deep Dive into Project Human Resource

Management

The human resource management process takes time and effort to plan how you will

use people, identify the people you will need, define everyone's role, create rewards

systems, improve team members' performance individually and as a team, and track

performance. It is much a more involved process on a large project for those that have

only worked on small projects.


Project Human Resource Management includes the processes that organize, manage,

and lead the project team.

Human resources can be divided into administrative and behavioral management

topics. The following should help you understand how each part of human resource

fits into the project management process:


The Human Resource Management Process Done During

Plan Human Resource Management Planning Process group

Acquire Project Team Executing Process Group

Develop Project Team Executing Process Group

Manage Project Team Executing Process Group

As a project manager, you are looked upon as a leader, and leading a project team

includes;

Influencing the project team using the following:

o Team environment

o Location

o Communication

o Politics (internal & external)

Professional and ethical behavior

o The project manager sets the tone that the team will follow.

Exam Hint The following is a list of the responsibilities project managers need to

know before they take the exam.

Determine what resources you will need

Negotiate with resource managers for the optimal available

resources

Create a project team directory

Create project job descriptions for team members and other

stakeholders



Make sure all roles and responsibilities on the project are clearly

assigned

Understand the team members' needs for training related to their

work on the project, and make sure they will perform - a human

resource management plan

Insert reports of team members' performance into their official

company employment record

Send out letters of commendation to team members and their

bosses

Make sure team members' needs are taken care of

Create recognition and rewards systems – described in the Human

Resource Management Plan

Plan Human Resource Management (Page 258)

Making sure roles and responsibilities are clear occurs in the Plan Human Resource

Management process. Project work often includes more than just completing work

packages. For example, it may include assisting with risk, quality, and project

management activities.


Plan Human Resource Management is the process of identifying and documenting

project roles, responsibilities, required skills, reporting relationships, and creating a

staffing management plan.

Team members need to know what work packages and activities they are assigned to,

what skills they need to have, when they are expected to report, what meetings they

will be required to attend, and any other "work" they will be asked to do on the

project.

Inputs

Project management plan


Determine the human resource needs of the project



Tool and Techniques

Organization Charts and Position Descriptions (page 261)

There are lots of ways to record and communicate roles and responsibilities, including

responsibility assignment matrices, organizational breakdown structures, resource

breakdown structures, and position descriptions. They generally fall into three types:

Hierarchical-type charts

Traditional organization chart structure is an example of a top down format

Matrix-based charts

Responsibility Assignment Matrix (RAM)

This chart cross-references team members with activities or work packages they are to

accomplish.


Activity Jess Paul Erica

A P S

B S P

Key; P = Primary responsibility, S = Secondary Responsibility

RACI Chart

This chart is a type of responsibility assignment matrix that defines role assignments

more clearly than the previous example. Instead of the P and S shown in the previous

matrix, the letters:

R = Responsible

A = Accountable

C = Consult

I = Inform

Text-oriented formats

Other sections of the project management plan

Details are placed within the plan rather than within stand-alone documents.

Proactive correspondence, luncheon meetings, informal conversations, trade

conferences and symposia are all examples of networking



Networking (page 263)

This is the formal as well as informal interaction with others in the organization, the

project team, or other bodies. Relationships that can benefit the project can be formed

and cultivated.

The PMBOK Guide doesn't discuss organizational theory in much detail. However,

expect some questions on this area. While this may not explicitly be mentioned in the

PMBOK Guide, it is valuable to familiarize yourself with organizational theory via

external sources (online search, etc.)

Organizational Theory

Expert Judgment

Meetings

Outputs

Human Resource Management Plan

The result (output) of the Plan Human Resource Management process is, of course, a

human resource management plan. The Human Resource Management Plan includes:

Roles and responsibilities

o Role definition

o Authority

o Responsibility

o Competency

Project organization charts

Staffing management plan

o Staffing acquisition

o Resource calendars

o Staff release plan

o Training needs

o Compliance

o Safety

o Recognition and rewards

Planning a system to reward resources on a large project can involve a significant

effort. A project manager must be able to motivate the team, especially when working

on a project in a matrix organization. To create a recognition and rewards system, ask

yourself how you will motivate and reward not the team, but each member

individually. This involves asking and knowing what your team members and

stakeholders want to get out of the project, on a professional and personal level.

The project manager takes his or her knowledge of the needs of the stakeholders and

then creates a recognition or rewards system. Such a system might include the

following actions:

Say "thank you" more often

Award prizes such as Team Member of the Month recognition

Award prizes for performance

Recommend team members for raises or choice work assignments

Send notes to team members' managers about great performance

Plan milestone parties or other celebrations

Acquire Project Team (Page 276)

The Acquire Project Team process occurs during the Executing Process group. Some

of you might question that statement. Again, remember the PMBOK Guide is

referring to large projects. In those cases, there are so many resources that they are not

selected until just before the work is to begin. The final team might include

contractors or others that are not employed by the organization. As a result, for the

exam, you should read "acquire project team" as "acquire FINAL project team."

Remember that on a properly managed project, team members need to have input into

the project, including what work needs to be done, when, and at what cost, no matter

when they get involved in the project. It is important that the following factors be

considered when acquiring the team:

The project manager or project management team needs to negotiate and

influence others who are in a position to provide the required human resources

for the project

Failure to acquire the necessary human resources for the project may affect

project schedules, budgets, customer satisfaction, quality, and risk. It could

decrease the probability of success and ultimately result in project cancelation.

Be prepared when resources are not available; have an alternative plan that

may take into consideration resources that are not as skilled.

Inputs


Roles and Responsibilities

Project organization charts indicating the number of people needed for the

project

Staffing management plan delineating the time periods each project team

member will be needed and other information important to acquiring the

project team



Exam Hint Acquiring the project team involves the following:

Knowing which resources are pre-assigned and confirming their

availability

Negotiating for the best possible resources

Hiring new employees

Hiring resources through the contracting process from outside the

performing organization – outsourcing

Understanding the possibilities and problems with using virtual

teams - teams made up of people who never or rarely meet

Managing the risk of resources becoming unavailable


Please note that pre-assignment is also considered a project constraint since it limits

the human resource options for the project management team

Pre-Assignment (page 270)

Sometimes resources are assigned in advance, and the project manager has to work

with the resources he or she is given as part of the team.

Negotiation

Resources may be acquired through negotiation. You will see negotiation frequently

referenced on the exam related to gaining resources from within your organization

and in contract situations. To negotiate for resources from within the organization, the

project manager should:

Know the needs of the project and its priority within the organization

Be able to express how the resource manager will benefit from assisting the

project manager

Understand that the resource manager has his or her own work to do and that

the individual may not gain benefit from the supporting project

Do not ask for the best resources if the project does not need them

Be able to prove, by using the tools of project management such as the

network diagram and project schedule, why the project requires the stated

quantity and quality of resources

Build a relationship so that the project manager can call on the resource

manager's expertise later in the project if necessary.

Acquisition

Going outside the organization to gain the needed resources.

Virtual Teams

Virtual teams are groups of people that share a common goal who fulfill the goal with

little to no face to face time.

Multi-Criteria Decision Analysis

The use of multi-criteria decision analysis a project manager can sort and filter the

best resources for the project. Such criteria are used to rate and score potential team

members. The criteria are weighted based on the needs and the requirements of the

project.

Outputs


Resource Calendars


Develop Project Team (Page 273)

The Develop Project Team process is done as part of executing the project. This

process results in decreased turnover, improved individual knowledge and skills, and

improved teamwork by improving the team skill set, interaction, and overall team

performance. Teamwork and a single team identity are critical to a project's success. It

is up to the project manager to ensure that the team is always motivated to perform at

its best. Don't be afraid to be proactive in influencing stakeholders and management

in order to get their support to ensure the team has what it needs to be successful.

Inputs



Resource Calendars


Interpersonal skills (page 275)

These are known as the soft skills. As project manager, it is important to take the time

to get to know the team and learn what makes each person tick. Using skills like:

Influencing

Empathy

Listening

Training

Team-Building Activities (page 276)

Team building is forming the project team into a cohesive group working for the best

interest of the project, to enhance project performance. The project manager should:

Guide, manage, and improve the interactions of the team members.

Improve trust and cohesiveness among the team members.

Incorporate team-building activities into all project activities.

Provide concerted effort and continued attention throughout the life of the

project.

Involve the team when creating the WBS.

Begin team-building early in the life of the project.

There are even formally identified stages of team formation and development, which

can show up on the exam. These stages are:

It is very important to understand Tuckman's Ladder or the Tuckman's Team

Development Stages. There will almost certainly be a question on the PMP exam

around it

Forming o People are brought together as a team.

Storming o There are disagreements as people learn to work together.

Norming o Team members begin to build good working relationships.

Performing o The team becomes efficient and works effectively together. This is the

point when the project manager can give the most attention to

developing individual team members.

Adjourning o The project ends, and the team is disbanded.

Ground Rules (page 277)

Ground rules provide the structure for the team that is to be followed during the

project. They are simply the project rules. Some project managers have addressed

such things as:

The team will be honest in all communications.

How should a team member resolve a conflict with another team member?

When should a team member notify the project manager that he or she is

having difficulty with an activity?

Is it allowable for people to interrupt one another in a meeting?

Is it allowable for people to join a meeting late?

Who is allowed to talk to the vice president about the project?

Who is authorized to give direction to contractors?

Colocation and virtual teams are two totally opposite techniques. You must

understand the pros and cons of both, and be able to identify the most suitable option

for any given situation

Co-location

A project manager might try to arrange for the entire team in each city to have offices

together in one place or one room. This is called co-location and helps to improve

communication, decrease the impact of conflict (since all parties are right there), and

improves project identity for the project team and for management in a matrix

organization. A war room is a central location for project coordination, usually with

the WBS, network diagram, schedule, etc. posted on the walls.

Recognition and Rewards

In the Develop Project Team process, the project manager appraises performance and

give out team-member-appropriate recognition and rewards, which were planned in

the Plan Human Resource Management process.

Personnel Assessment Tools

These tools help the project team assess their strengths and weaknesses. These tools

include:

Attitudinal surveys

Specific assessments

Structured interviews

Ability tests

Focus groups

Outputs

Team Performance Assessments (page 278)

Among the outputs or results of developing the project team are formal and informal

team performance assessments. These assessments are done by the project manager

and meant to evaluate and enhance the effectiveness of the team. This may include an

analysis of how much team member's skills have improved; how well the team is

performing, interacting, and dealing with conflict; and the turnover rate.

The results of the assessment provide the project team with specific areas where the

team can improve their performance by leveraging additional training, coaching, and

mentoring.

Enterprise Environmental Factors updates

Manage Project Team (Page 279)

Managing a project team is different from developing the team. The Manage Project

Team process is done during the executing process group and involves all the day-to-

day management of people that are part of the project team.


Mange Project Team is the process of tracking team member performance, providing

feedback, resolving issues, and managing team changes to optimize project

performance.

Managing the project team is not an easy task. A project manager needs to undertake

the following actions to help challenge the team members to be part of a superior

performing team:

Encouraging good communication

Working with other organizations

Using negotiation skills

Observing what is happening

Using an issue log

Communicating openly

Completing project performance appraisals

Making good decisions

Influencing the stakeholders

Being a leader

Inputs



Team Performance Assessments

Issue Log




Observation and Conversation (page 282)

As project manager you need to pay attention to the tone of the e-mails and phone

conversations of your team as they will tell you more about what is going on than

simply looking at reports. A project manager must be aware of what is happening

with the team. You also need to spend time talking with the team members. Walk the

floor if you can, assuming the team is not all virtual. Firsthand information is

important to help validate the data that is coming from other sources.

Project Performance Appraisals (page 282)

Evaluation of employees' performance by those who supervise them is a common

business practice around the world. This evaluation should include the employees'

work on projects. The project manager can adjust the project to handle changes in

performance based on these appraisals.

A more sophisticated way to complete performance appraisals is to include the input

of coworkers and subordinates, as well as supervisors. This may result in a clearer

picture of actual performance and is called a 360-degree review.

Always remember, the team members having a conflict are initially responsible for its

resolution

Conflict Management (page 282)

Though many may think conflict is bad, it actually can present an opportunity for

improvement. As most project managers know, conflict is inevitable.

Conflict is INEVITABLE because of the:

Nature of the project trying to address the needs and requirements of many

stakeholders

Limited power of the project manager

Necessity of obtaining resources from functional managers

The project manager's professional responsibility in managing the project includes

minimizing conflict through the following actions:

Informing the team of:

o Exactly where the project is headed

o Project constraints and objectives

o The contents of the project charter

o All key decisions

o Changes

Clearly assigning work without ambiguity or overlapping responsibilities

Making work assignments interesting and challenging

Following good project management and project planning practices

Many project managers think that the main source of conflict on a project is

personality differences. They may be surprised to learn that this is rarely the case. It

only becomes personal if the root cause of the problem is not resolved.

Exam Hint The following describes the seven sources of conflict in order of

frequency. For the exam, MEMORIZE the top four and remember that

Personality is last.

1. Schedule

2. Project priorities

3. Resources

4. Technical opinions

5. Administrative procedures

6. Cost

7. Personality

Conflict is best resolved by those involved in the conflict. The project manager should

generally try to resolve problems and conflict as long as he or she has authority over

those in conflict or the issues in conflict. If not, the sponsor or functional managers

may be called in to assist. There is one exception. In the instances of professional and

social responsibility (breaking the law, ethics, etc.) the project manager must go over

the head of the person in conflict.

Exam Hint The following are the main conflict resolution techniques you will need

to know for the exam. Make sure you notice that some have more than

one title and you should know both.

Always remember, there is no silver bullet technique for conflict management. Each

approach has its own place and use

Collaborate – Problem Solve o Incorporating multiple viewpoints and insights.

o Requires a cooperative attitude and open dialogue typically leading to

consensus and commitment.

Compromise - Reconcile o This technique involves finding solutions that bring some degree of

satisfaction to both parties.

o Temporarily or partially resolves the conflict.

Withdraw – Avoid o In this technique, the parties retreat or postpone a decision on a

problem.

o This is not usually the BEST choice for resolving conflict.

Smooth – Accommodate o This technique emphasizes agreement rather than differences of

opinion.

Force - Direct o This technique involves pushing one viewpoint at the expense of

another.

Do not forget to read Appendix X3 in the PMBOK Guide where interpersonal skills

are covered in great detail

Interpersonal Skills (page 283)

Projects involve people, and people have their own ways of going about their work as

well as their own opinions. In order to be able to move the team in the same direction,

a project manager needs to be able to have a strong set of interpersonal skills. Some of

the most used skills are:

Leadership

You will likely need to use many leadership styles throughout the life of a project.

The term "situational leadership" refers to a manager using different leadership styles,

based on the people and project work they are dealing with. During the beginning of a

project, a project manager must provide more leadership to the team in order to get

them off the ground and moving towards the objectives of the project. During the

project executing, the project manager needs to do more coaching, facilitating, and

supporting.

You should be aware of the following terms related to leadership and management

styles. You should understand how the following terms are used if you see them on the

exam:

Directing o This style involves telling others what to do.

Facilitating o This style involves coordinating the input of others.

Coaching o In coaching, the manager helps others achieve their goals.

Supporting o This style involves providing assistance along the way.

Autocratic o This is a top-down approach where the manager has power to do

whatever he or she wants. The manager may coach or delegate, but

everyone is doing what the manager wants them to do.

Consultative o This bottom-up approach uses influence to achieve results. The

manager obtains others' opinions and acts as the servant for the team.

Consultative-Autocratic o In this style, the manager solicits input from team members, but retains

decision-making authority for him or herself.

Consensus o This style involves problem solving in a group, and making decisions

based on group agreement.

Delegating o In delegating, the manager establishes goals and then gives the project

team sufficient authority to complete the work. For basic project

management, the manager would involve the team in the planning

process and assign or delegate planning work and executing work to

team members.

Bureaucratic o This style focuses on following procedures exactly. It may be

appropriate for work in which detail is critical or in which specific

safety or other regulations must be strictly adhered to.

Charismatic

o Charismatic managers energize and encourage their team in

performing project work. With this style, project success may become

dependent on the presence of the charismatic leader, and the team

relies on the leader for motivation.

Democratic or Participative o This style involves encouraging team participation in the decision-

making process. Team members "own" the decisions made by the

group, which results in the improved teamwork and cooperation.

Laissez-faire o The French term has been translated as meaning "allows to act," "allow

to do, " or "leave alone." A laissez-faire manager is not directly

involved in the work of the team, but manages and consults as

necessary. This style can be appropriate with a highly skilled team.

Analytical o This style depends on the manager's own technical knowledge and

ability. Analytical managers often make the technical decisions for the

project, which they communicate to their teams. Interview style

communication, in which the project manager asks questions to get the

facts, is common with this style.

Influencing

Ability to persuade by articulating points clearly

Active listening skills

Be willing to understand all sides of a situation

Gather all the information that is available

Effective decision making

Determine the goal that you need to accomplish

Develop your team to allow them to make their own decisions

Manage opportunity and risk

Follow a consistent process

Outputs

Change Requests



Enterprise Environmental Factors Updates


Other Important Terms, Topics, and Theories

One of the things that drive people crazy about the exam is that they see terms they do

not know. You should realize that the exam does have made-up terms and processes

as choices on the exam. The following should help you get more familiar with some

real terms that have been on the exam that you may not have run across previously.

Arbitration

In arbitration, a neutral party hears and resolves a dispute.

Perks

Some employees receive special rewards, such as assigned parking spaces, corner

offices, and executive dining.

Fringe Benefits

These are the "Standard" benefits formally given to all employees, such as education

benefits, insurance, and profit sharing.

McGregor's Theory of X and Y

McGregor believed that all workers fit into one of two groups, X and Y. The exam

describes this concept in many different ways. It can be confusing to determine which

answer is correct or even what the choices are saying.

Theory X

o Managers who accept this theory believe that people need to be

watched every minute. People are incapable, avoid responsibility, and

avoid work whenever possible.

Theory Y

o Managers who accept this theory believe that people are willing to

work without supervision and want to achieve. People can direct their

own efforts.

Maslow's Hierarchy of Needs

Maslow's message is that people are not most motivated to work by security or

money. Instead, the highest motivation is to contribute and to use their skills. Maslow

calls this "self-actualization." He created a pyramid to show how people are motivated

and said that one cannot ascend to the next level until the levels below are fulfilled.

Exhibit—Maslow's Hierarchy of Needs

David McClelland's Theory of Needs (or Acquired Needs Theory)

This theory states that people are most motivated by one of the three needs listed in

the following table. A person falling into one category would be managed differently

than a person falling into another category.


Primary Need Behavioral Style

Need for

Achievement

These people should be given projects that are challenging

but are reachable.

They like recognition

Need for

Affiliation

These people work best when cooperating with others.

They seek approval rather than recognition.

Need for Power People whose need for power is socially oriented, rather

than personally oriented, are effective leaders and should be

allowed to manage others

These people like to organize and influence others.

Herzberg's Theory

This theory deals with hygiene factors and motivating agents.



Hygiene Factors

Poor hygiene factors may destroy motivation, but improving them, under most

circumstances, will not improve motivation. Hygiene factors are not sufficient

to motivate people.

Examples of these are:

Working conditions

Salary

Personal life

Relationships at work

Security

Status

Motivating Agents

Responsibility

Self-actualization

Professional growth

Recognition

The lesson to project managers is that motivating people is best done by rewarding

them and letting them grow. Giving raises is not the most effective motivator. This is

generally good news for project managers, as they often do not have any influence

over the pay raises of their team members.

Project Human Resource Management Cheat Sheet


Process Descripti

on

Grou

p

Input Tools & Technique Output

Plan HR

Managem

ent

Identify,

document,

assign R

& R &

reporting

structure.

Plan Proj

Mgt.

Plan

Activity

resource

require

ments

EEF,

OPA

Organization

charts

Position

descriptions

Networking

Organization

al theory

Expert

judgment

Meetings

Human

resource

manage

ment

plan

Acquire

Project

Team

Obtaining

required

project

Execu

te

HRmgm

t plan

EEF,

Negotiation

Preassignme

nt

Staff

assignm

ents



Process Descripti

on

Grou

p


resources. OPA Acquisition

Virtual

teams

Multi-

criteria

decision

analysis

Resourc

e

calendar

s

Proj.

plan

updates

Develop

Project

Team

Develop

individual

or group

skills to

enhance

project

performan

ce.

Execu

te

HR

mgmt.

plan

Staff

assignm

ents

Resourc

e

calendar

s

Interpersonal

skills

Training

Recognition

& rewards

Team

building

Ground rules

Colocation

Assessment

tools

Team

perform

ance

assessm

ents

Updates:

EEF

Manage

Project

Team

Track

team

performan

ce,

providing

feedback,

resolving

issues,

managing

changes

to

optimize

project

performan

ce.

Execu

te

HRmgm

t plan

Staff

assignm

ents

Team

perform

ance

assessm

ents

Issue

log

Work

perf.

reports

OPA

Observation

&

conversation

Project

performance

appraisals

Conflict

mgmt

Interpersonal

skills

Change

requests

Updates:

EEF,

plan,

OPA,

docs

Deep Dive into Project Communications

Management

Project Communications Management (Page 287)

You will see in this section that the project manager spends the majority of their time

communicating.


Project Communications Management includes the processes that are required to

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

retrieval, management, control, monitoring, and the ultimate disposition of project

information.

Project communication happens informally and formally at all times during the life

cycle of the project. Successful communicators are effective because they have found

a way to bridge the gap between the stakeholder preferences, the team's cultural

differences, and many more obstacles to successful completion of the project.

The following should help you understand how each part of communications

management plan fits into the project process:


The Communications Management

Process

Done During

Plan Communications Management Planning Process Group

Manage Communications Executing Process Group

Control Communications Monitoring and Controlling Process

Group

Communication activity has many potential dimensions, including:

Internal

Formal

Vertical

Official

Written

Verbal

Common communication skills that are important to any project manager:

Listening actively and effectively

Questioning

Educating



Fact finding

Setting and managing expectations

Persuading

Negotiation

Resolving conflict

Summarizing, recapping and identifying next steps

Plan Communications Management (page 289)

When you initiate a project you go through the process of identify stakeholders (from

the Stakeholder Management knowledge area) and their communication requirements

and preferences. In the Plan Communications Management, you determine how to

apply that information.


Plan Communications Management is the process of developing an appropriate

approach and plan for project communications based on stakeholders' information

needs and requirements, and available organizational assets.

The Plan Communications Management process involves determining what effective

and efficient communication will be planned for the project, to whom, when, with

what method, and how frequently. Communications in a project occur internally and

externally to the core project team, vertically (up and down the levels of the

organization), and horizontally (among peers). Many people forget communications

between projects in their plan. That is a mistake because the other projects could take

resources, cause delay, or cause some other problem on the project.

In order to have clear, concise communications, the project manager must handle

communications in a structured way and choose the best type of communication for

the situation. Communications can be expressed in different ways – formally or

informally, written or verbal. The decision to determine which type to use needs to be

made for each instance of communication. Take a look at the following chart:


Communication

types

When Used

Formal written Complex problems, project management plans, project charter,

memos, communication over long distance

Formal verbal Presentations, speeches

Informal written Email, handwritten notes

Informal verbal Meetings, conversations

Inputs



Project Management plan





Communication Requirements Analysis (page 291)

The requirements are determined by the project stakeholders based on the type and

format of the information they need about the project. The following are examples of

different pieces of information that can be leverage for the requirements:

Org charts

Project organization and stakeholder responsibilities

Disciplines, departments, and specialties

Internal information needs

External information needs

Communication Channels

A project manager needs to understand the number of stakeholders that need

to be in the communication loop. Understand that communications are

complex and need to be managed, especially when you consider that there are

multiple paths or channels that communication must pass through

Communication channels can be calculated with the following formula:

o [n(n-1)]/2

Where N = number of people

You should understand this formula. It is the only formula with the letter

"N" in it on the exam.

Communication Technology (page 292)

There are many different methods to distribute information to the stakeholders and

project team. The following are factors that will influence the technology choices:

Urgency of the need for information

Availability of technology

Expected project staffing

Duration of the project

Project environment

Communication Models (page 293)

Project management requires more formality with communications than simply

sending an email and hoping it is read and interpreted properly. It is critical that

communications are understood by the recipient. Because of this, it is important that

you understand communication models. A communication model shows how

information is sent and received between two parties.

Communication models are framed around three parts:

The sender

The message

The receiver

Each message is encoded by the sender and decoded by the receiver. Factors like the

receiver's education, experience, language, and culture affect the way the receiver

decodes the message. Communication models often call these types of factors "noise."

Communication models have several key components including:

Encoding

Message and feedback message

Medium

Transmitting

Noise

Decoding

Acknowledging

Feedback/Response

Communication Methods (page 294)

When planning communications, it is also important to determine the communication

method. These methods can be grouped into the following categories:

Interactive Communications o The method is reciprocal and can involve just two people or many

people.

o Examples include conversations, meetings, and conference calls

Push Communications o This method involves a one-way stream of information.

o The sender provides the information to the people who need it, but the

sender does not expect feedback on the communication.

o Examples include status reports and emailed updates

Pull Communication o With this method, the project manager places the information in a

central location. The recipients are then responsible for retrieving or

"pulling" the information from the location.

Meetings

Outputs

Communications Management Plan (page 296)

The primary output of the Plan Communications Management process is a

communications management plan. A communications management plan documents

how you will manage and control communications. Since communications are so

complex, the communications management plan should be in writing in order for the

plan to be understood by all project team members and stakeholders. As with other

management plans, the communications management plan becomes part of the project

management plan. The communications management plan usually provides some of

the following:

Time frame and frequency of communication

Defines who will receive information

Technology that will be used to distribute the information

Define how communications will be updated

Stakeholder requirements

Format and content guidelines


Project schedule


Manage Communications (page 297)

While the project is being executed, many stakeholders will need to receive

information about the project. The project manager is responsible for providing this

information. It is important to remember that different stakeholders need to receive

different information in various formats, and at different times.


Manage Communications is the process of creating, collecting, storing, retrieving,

and the ultimate disposition of project information in accordance to the

communications management plan.

This process involves making sure the communications are received, effective, and

efficient. There are many ways that information can be distributed. The following are

techniques for effective information distribution:

Sender-receiver models

Choice of media

Writing style

Meeting management techniques

Presentation techniques

Facilitation techniques

Listening techniques

Inputs

Communications Management Plan





Communication Technology

Communication Models

Communication Methods

Information Management Systems (page 300)

Project communications can be varied in the types as well as the tools used to

distribute them. As project manager, these tools need to be documented and well

understood. The tools available are:

Hardcopy

Electronic communication - examples

o Email

o Fax

o Voicemail

Electronic tools for project management

o Project management software

Performance Reporting

This includes collecting and distributing project performance information, including

status reports, progress measurements, and forecasts. Typical activities involve:

Analysis of past performance

Analysis of project forecasts

Current status of risks and issues

Work completion during the period

Work to be completed in the next period

Summary of approved changes

Performance reports provide information that the team and stakeholders need to

know. The level of reporting needs to meet the needs of the audience. The following

are examples of what performance reports can convey:

Reports should be designed for the needs of the project

Reports should provide the kinds of information and the level of detail

required by stakeholders.

The best way to have a report read and acted on is to use the most appropriate

communication method in sending it.

Reports should include measurements against the performance measurement

baseline included in the project management plan.

Reports must be truthful and not hide what is really going on.

Reports help the team members know where they need to recommend and

implement corrective actions.

Outputs

Project Communications

The Manage Communications process requires distributing project information to

project stakeholders. This includes:

Performance reports

Deliverables status

Schedule progress

Cost incurred



Organizational Processes Assets that may be updated can include, but are not

limited to:

Stakeholder notifications

Project reports

Project presentations

Project records

Feedback from stakeholders

Lessons learned documentation

This should have a title (Control Communications)

Control Communications (page 303)

The Control Communications process ensures an optimal, smooth, and steady

information flow is maintained among all project stakeholders. This process is closely

linked with the Control Stakeholder Engagement process from the Stakeholder

Management Knowledge area. Together with the Control Stakeholder Engagement

process, the Control Communications process looks at the project stakeholders'

changing communications needs and accordingly adjusts the project communications

management plan.


Control Communications is the process of monitoring and controlling

communications throughout the entire project life cycle to ensure the information

needs of the project stakeholders are met. The Control Communications process can

initiate a revisit to the Plan Communications Management and Manage

Communications processes to review the communications management plan, and

implement the revised plan respectively. Controlling the project communications and

ensuring timely, effective and smooth communications is critical for the success of

any project.

Inputs

Project Management plan

Project Communications

Issue Log




Information Management Systems

An information management system contains a set of standard tools for the project

manager to capture, store and distribute project information to stakeholders. These

tools may also information analysis and facilitate reports creation. Graphical

capabilities allow project information to be visually represented.

Expert Judgment

Meetings

Outputs


Change Requests




Project Communications Management Cheat Sheet


Process Descripti

on

Gro

up

Input Tools &

Technique

Output

Plan

Commutat

ions

Managem

ent

Determine

what,

when,

who and

how to

communic

ate with

project

stakehold

ers

Plan Project

mgmt.

plan

Stakehold

er register

EEF

OPA

Requirem

ents

analysis

Communi

cation

methods,

models,

&

technolog

y

Meetings

Communi

cations

mgmt plan

Updates:

docs

Manage

Communi

cations

Process to

communic

ate with

the

stakehold

ers in a

timely

manner

Exec

ute

Communi

cations

mgmt plan

Work

performan

ce reports

EEF

OPA

Communi

cation

technolog

y

Communi

cation

models

Communi

cation

methods

Informati

on

managem

ent

systems

Performa

nce

reporting

Project

communic

ations

Updates:

Plan,

Docs,

OPA

Control

Communi

cations

Ensure

effective

communic

ations in a

project.

Cont

rol

Project

mgmt.

plan

Project

communic

ations

Issue log

Work

performan

ce data

OPA

Informati

on

managem

ent

systems

Expert

judgment

Meetings

Work

performan

ce

informatio

n

Change

requests

Updates:

Plan,

Docs,

OPA



Deep Dive into Project Risk

Management

Overview

Remember that the project risk is always in the future. If a risk occurs, it is no longer

a risk; it is either an issue or a realized opportunity

Risk Management is a critical topic of the exam as well as for any successful project.

If there is one area to be absolutely sure you know well, this is it! When Risk

Management is truly an integral part of project planning and carried out throughout

the project, some of the following are no longer issues:

There are no longer huge fires to put out every day – they are eliminated in the

risk response plan

Risks are brought up in every meeting to be addressed before they happen

If the risk events do happen, there is a plan in place to deal with them,

meaning no more hectic meetings to develop a response

PMBOK Guide Definition – page 309

Project Risk Management includes the processes of conducting risk management

planning, identification, analysis, response planning, and controlling risk on a

project.

"Known-unknowns" are the risks that the project team has already identified. The

"Unknowns-unknowns" are the risks that have not been identified

Risk is all about the uncertainty of data or situations that a project will face. The team

and project manager look out into the future and see if they can identify the problems

or obstacles the project will face. The ability to look into the future is possible

because as a project manager you have planned well during the early stages of the

project with a focus on risk. The time spent here allows for you to not, as we

mentioned above, spend time during the project fighting fires. That time is spent

looking out at what is coming and focusing on the future because the present is

moving forward.

The definition and perception of risk is as variable as the people involved on the

project. As project manager, it is very important that you and the project team develop

a consistent approach to how risk will be managed. Make sure that from top to

bottom, everyone agrees on the risk management approach. Be sure that includes the

project team as well as the stakeholders.


The Risk Management Process Done During

Plan Risk Management Planning Process group

Identify Risks Planning Process group

Perform Qualitative Risk Analysis Planning Process group

Perform Quantitative Risk Analysis Planning Process group

Plan Risk Responses Planning Process group

Control Risks Monitoring and Controlling

Plan Risk Management (page 313)

Plan Risk Management, a process that defines how risk management will be

structured and performed for the project, is something that everyone and every

organization that is impacted by the project should actively participate. Risk

management efforts should be appropriate to the size and complexity of the project, as

well as the experience and skill level of the project team. Risk management requires

time and thought.


Plan Risk Management is the process of defining how to conduct risk management

activities for a project.

Successful risk management cannot be done with just a standardized checklist of risks

from past projects. Each project is different and the uniqueness of the project needs to

be accounted for in the Plan Risk Management process. The more time spent, the

higher the probability of successfully managing the risks for the project.

Inputs


Project Charter



Organizational Process Assets that can influence Plan Risk Management can

include, but are not limited to:

Risk categories

Common definition of concepts

Risk statement formats

Standard templates




Authority levels of decision making

Lessons learned



Stakeholder risk profile analysis

Strategic risk scoring sheets

Expert Judgment

Meetings (page 316)

We talked about the importance of planning to make sure that Plan Risk Management

had been thorough. Similar to what was done to create the requirements management

plan, the project team should hold planning meetings to develop the risk management

plan. During the meeting, the team should outline the risk activities as well as outline

the possible costs associated with the activities. Risk contingency reserves may be

established based on the identified risks. The outputs of these activities will be

incorporated into the Risk Management Plan.

Outputs

Risk Management Plan (page 316)

Like other management plans, the risk management plan will describe how risk

management will be structured and performed on the project by the team. The plan

includes the following:

Methodology o This section defines how you will perform risk management for the

particular project. Remember to adapt to the needs of each project.

Roles and Responsibilities o Defines who will do what from leadership to support.

o Outlines the responsibilities for each role

o Remember that non-team members may have roles and responsibilities

Budgeting o This section includes the cost for the risk management process.

Timing o This section talks about when and how often to do risk management

for the project.

o Risk management should start as soon as you have the appropriate

inputs and should be repeated throughout the life of the project, since

new risks can be identified as the project progresses and the degree of

risk may change.

Risk Categories o Categories help to structure the risks that have been identified.

o These categories can include things like technology changes, lack of

resources, or cultural issues.

o Companies and project management offices can have standard lists of

risk categories that all project teams can use to help identify risks.

Definition of Risk Probability and Impact o Given that each person has a different perception of risk, it is important

to have a standard baseline for the team to judge each risk as well as

how to measure and quantify the impact of a potential risk.

Stakeholder Tolerances o Tolerance should not be implied, but uncovered in project initiating

and clarified or refined continually.

Reporting Formats o This describes any reports related to risk management that will be used

and what they will include.

Tracking o Take this to mean how the risk process will be audited, and documents

what happens with risk management activities.

More on Risk Categories and Types

There are many ways to classify or categorize risk, such as:

External o Regulatory, environmental, governmental, market shifts

Internal o Time cost, or scope changes; inexperience; poor planning; people;

staffing; materials; equipment

Technical o Changes in technology

Unforeseeable o Only a small portion of risks (some say about 10%) are actually

unforeseeable

A better way to categorize or classify risks is based on specific categories of risk that

may occur on your projects. There is research on risk that shows over 300 potential

categories of risk.

These include risks caused by or generated by:

The customer

Lack of project management effort

Lack of knowledge of project management by the project manager and

stakeholders

The customer's customers

Suppliers

Resistance to change

Cultural differences

Another way to categorize risks is by source:

Schedule

Cost

Quality

Scope

Resources

Customer satisfaction

Stakeholder satisfaction

Exam Hint Expect the phrases "source of risk" and "risk categories" to be

used interchangeably on the exam. Risk categories or sources of

risk can be organized in an organizational chart or WBS-like

format called a risk breakdown structure, also referred to as an

RBS.

Types of Risk

In addition to risk categories, risk can be classified under two main types:

Business Risk

o Risk of gain or loss

Pure (Insurable) Risk

o Only a risk of loss

Please note that, although the Identify Risks is a process from the planning process

group, it is an iterative process. This process must be periodically visited until the

closure of the project

Identify Risks (Page 319)

Risks are present in every project and can come from any areas. That is why it is

critical that everyone participate in the process to identify project risks. That is

because each person has a different perspective of the project and can provide thought

on opportunities and threats.


Identify Risks is the process of determining which risks may affect the project and

documenting their characteristics.

As a project manager, you need to begin looking for risks as soon as a project is first

discussed. In fact, the PMBOK Guide lists high-level risks as an output of the creation

of the project charter in integration management. The majority of risk identification

effort takes place during planning, as the information becomes clearer during scope

baseline (the project scope statement, WBS, and WBS dictionary) which is an

important input to risk identification.

Exam Hint Even though the majority of risks will be identified during the initiating

and planning of a project, don't forget that a smaller numbers of risk may

also be identified during later parts of the project. Risks should be

continually reassessed. The exam will specifically look for you to include

risk identification during such activities as integrated change control,

when working with resources, and when dealing with project issues.

Risks generally are considered to be negative impacts to a project, but that is not

always the case. There are positive risks that will be identified. Be sure to be on the

lookout for both.

Inputs

Risk Management Plan



Quality Management Plan


Scope Baseline


Team should undertake reviews of cost estimates. Based on the reviews, risk will be

identified if the cost estimate is not deemed sufficient to complete the activity.



Project Documents including, but not limited to:

Assumptions log

Work performance reports

Earned value reports

Network diagrams

Baselines

Other project information

Procurement Documents




Documentation Reviews

Information Gathering Techniques (page 324)

Remember Collect Requirements? In that section we mentioned that many of the

techniques used to collect requirements can be used to help identify risks. The

following are some examples of the techniques available:

Remember that the Delphi technique is preferred when influential stakeholders can

introduce bias into the risk data

Brainstorming

Delphi technique

Interviewing

Root cause analysis

Checklist Analysis (page 325)

The checklist of risk categories was previously described in the Plan Risk

Management process. This checklist is used to help identify specific risks within each

category.

Assumptions Analysis (page 325)

Analyzing what assumptions have been made on the project and if they are valid may

lead to the identification of more risks.

Diagramming Techniques (page 325)

Some of the tools described in the Quality Management section can also be used to

analyze the root causes of issues. These include cause and effect diagrams and

flowcharts. When used as part of risk identification, they help identify additional risks

for the project. The techniques are:

Cause and effect diagrams

Fishbone & Ishikawa diagrams

System or process flow charts

Influence diagrams

SWOT Analysis (page 326)

This analysis looks at the project to identify its Strengths and Weaknesses and thereby

identify risks (Opportunities and Threats).

Expert Judgment

Outputs

Risk Register (page 327)

The risk register is where most of the risk information is collected and managed.

Think of it as one document for the entire life of the risk management process. It is a

document that will be constantly updated with information as Identify Risks and later

risk management processes are completed.

Exam Hint Notice that an updated risk register is the only output of several of the

risk management processes. Read exam questions carefully, as the risk

register contains different information depending on when in the risk

management process the question is referencing

At this point in the risk management process, the risk register includes:

List of identified risks

List of potential responses o Though risk response planning occurs later, one of the things

experienced risk managers know is that it is not always logical to

separate work on each part of the risk management process.

o There will be times when a response is identified at the same time as a

risk.

o These responses should be added to the risk register as they are

identified, and analyzed later as part of risk response planning.

Root causes of risk o The root causes of risk are documented.

Updated risk categories o Make sure you are aware that lessons learned does not just happen at

the end of the project.

Remember that the Perform Qualitative Risks analysis is quicker but less accurate

than the Perform Quantitative Risk Analysis process

Perform Qualitative Risk Analysis (Page 328)

Qualitative risk analysis involves creating a short list of previously identified risks.

The shortlisted risks will then be further analyzed in the Perform Quantitative Risk

Analysis process or will move into the Plan Risk Response process.


Perform Qualitative Risk Analysis is the process of prioritizing risks for further

analysis or action by assessing and combining their probability of occurrence and

impact.

Remember that qualitative risk analysis is a subjective analysis of the risks identified.

The analysis is usually a very cost effective means of establishing priorities given that

you are just asking for people's opinions. To perform this analysis, the following are

determined:

The probability of each risk occurring, using a standard scale such as Low,

Medium, High or 1 to 10.

The impact (amount at stake or consequences, positive or negative) associated

with the occurrence of each risk, using a standard scale such as Low, Medium,

High or 1 to 10.

Inputs


Scope Baseline

Risk Register




Risk Probability and Impact Assessment (page 330)

The assessment examines the likelihood of the risk occurring. Then the impact looks

at the potential effect on the project if the risk materializes.

Probability and Impact Matrix (page 331)

Because qualitative risk analysis is based on subjective evaluation, the rating of any

one risk can vary depending on the bias of the person doing the rating and how risk

averse they are. Therefore, organizations frequently have a standard rating system to

promote a common understanding of what each risk rating means. This standard is

shown in a probability and impact matrix.

Qualitative Risk Analysis Matrix


Likelihood Consequences

Insignificant Minor Moderate Major Severe

Almost certain M H H E E

Likely M M H H E

Possible L M M H E

Unlikely L M M M H

Rare L L M M H

This matrix may be used to sort or rate risks to determine which ones warrant an

immediate response and which ones should be put on the watch list. The matrix may

be standardized within the organization or department, or customized to the needs of

the project. Such a matrix results in a consistent evaluation of scale being used for all

projects.

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Risk Data Quality Assessment (page 332)

A risk data quality assessment requires having accurate and unbiased data. The

analysis examines the quality of the data and determines if that data quality is

sufficient to continue to assess the risk or if better data is needed. The assessment may

include determining the following for each risk:

Extent of the understanding of the risk

Data available about the risk

Quality of the data

Reliability and integrity of the data

Risk Categorization

Risk Urgency Assessment (page 333)

We look at risk from many different angles. As a project manager, we create a short

list of risks, but even those risks are not created equal. We need a way to determine

which risks require our near term attention. This is the urgency assessment. Urgent

risks may then move independently into risk response planning, while the rest

continue through quantitative risk analysis, or they may simply be the first ones for

which you plan a response in risk response planning. A project manager may consider

both the urgency of the risk and the risk's probability and impact rating to determine

the overall severity of the risk.

Expert Judgment

Outputs


Risk Register Updates o Relative ranking or priority list of project risks (page 294)

Qualitative risk analysis can lead to a number to be used to rank

the project in comparison to others.

The impact of this is that once you complete risk response

planning, you can then redo qualitative risk analysis and

PROVE the value of your efforts

o Risks grouped by categories

o Cause of risk or project areas requiring particular attention o List of

risks requiring response in the near term

o List of risks for additional analysis and response o

o Watch lists of low-priority risks

o Trends in qualitative risk analysis results

Assumptions log updates

Always remember that the Perform Quantitative Risk Analysis process is performed

on the risks already analyzed and prioritized by the Perform Qualitative Risks

Analysis process

Perform Quantitative Risk Analysis (Page 333)

This involves a numerical analysis of the probability and impact (likelihood of

occurrence as well as the amount at stake or consequences) of the risks moved

forward to this process from qualitative risk analysis. Quantitative risk analysis also

looks at how risks affect the objectives of the project. The purpose of quantitative risk

analysis is to:

Determine which risk events warrant a response

Determine overall project risk (exposure)

Determine the quantified probability of meeting project objectives

Determine cost and schedule reserves

Identify risks requiring the most attention

Create realistic and achievable costs, schedule, or scope targets

Many people get confused between qualitative and quantitative risk analysis.

Remember that qualitative risk analysis is a subjective evaluation, even though

numbers could be used for the rating. In contrast, quantitative risk analysis is a more

objective or numerical evaluation: rating of each risk is based on an attempt to

measure the actual probability and amount at stake (impact).

Inputs




Risk Register




Data Gathering and Representation Techniques (page 336)

Interviewing

Probability distributions (page 337)

Quantitative probability and impact can be determined in various ways,

including the following:

o Interviewing

o Cost and time estimating

o Delphi technique

o Use of historical records from previous projects

o Expert judgment

o Expected monetary value analysis

o Monte Carlo analysis

o Decision tree

Quantitative Risk Analysis and Modeling Techniques

Sensitivity analysis (page 338)

This analysis helps to determine which risk can have the most potential impact

on the project.

Practice the expected monetary value analysis and decision tree analysis

techniques. You can expect to see questions which cover these techniques on

the exam

Expected monetary value analysis (page 339)

To evaluate a risk, you can look at the probability or the impact, but

calculating the expected monetary value is a better measure to determine an

overall ranking of risks. Expected monetary value (EMV) is simply

probability (P) times impact (I)

o EMV = P x I

Decision Tree:

o A decision tree takes into account future events in trying to make a

decision today.

o It calculates the expected monetary value (probability x impact) in

more complex situations than the expected monetary value example

previously presented.

o It involves mutual exclusivity (previously explained in the Quality

Management section)

Some examples of decision trees have the costs occurring only at the end of

the project, while others have costs occurring in the middle or early in the

project. Because a decision tree models all the possible choices to resolve an

issue, costs can appear anywhere in the diagram, not just at the end. On the

exam, don't get confused when you look at different decisions trees. Pay

attention to the data provided in the question in order to correctly interpret the

answer.

Modeling and Simulation (page 340)

Simulation and modeling allows the project team to process the volume of

data required to assess the risk. A technique that is often used is Monte Carlo.

Monte Carlo analysis (or other simulation techniques) uses the network

diagram and estimate to "perform" the project many times and to simulate the

cost or schedule results of the project. This technique can be extremely

valuable, but there have traditionally been only one or two questions about

Monte Carlo analysis on the exam. It is mentioned as a choice a little more

frequently, however.

Exhibit—Sample Decision Tree illustration

Exam Hint Monte Carlo analysis:

Is usually done with a computer-based Monte Carlo program

because of the intricacies of the calculations

Evaluates the overall risk in the project

Provides the probability of completing the project on any specific

day, or for any specific costs

Provides the probability of any activity actually being on the

critical path

Expert Judgment

Outputs

Project Documents Updates Including Risk Register Updates

Plan Risk Responses (Page 342)

In risk response planning, you find ways to reduce the threat or eliminate it entirely,

as well as find ways to make opportunities more likely or increase their impact.

Responses may include doing one or all of the following for each top risk:

Do something to eliminate the threats before they happen

Do something to make sure the opportunities happen

Decrease the probability and/or impact of threats or increase the probability

and/or impact of opportunities

PMBOK Guide Definition – page 342

Plan Risk Responses is the process of developing options and actions to enhance

opportunities and to reduce threats to project objectives.

This process takes the prioritized list and determines the activities needed to address

the risk as well as the resources responsible for the activities. The response needs to

be appropriate to the significance of the risk.

Exam Hint Qualitative risk analysis, quantitative risk analysis, and risk

response planning do not end once you begin work on a project.

You need to review risks throughout the project and then return to

planning to determine what to do about any newly identified risks.

Risk ratings and response strategies for existing risks can also

change later in the project as more information about the risks and

the selected strategies becomes known.

Ratings and response strategies must be reviewed for

appropriateness over the life of the project as well.

Inputs


Risk Register


Strategies for Negative Risks or Threats (page 344)

We respond to risks, as we have said, in many different ways depending on the risks.

As we look to how we are going to respond to a risk, we can look to different

strategies that can be employed to help. It is important to remember that a single

strategy per risk is not the only approach. There can be a mix of strategies that are

deployed that can be effective for each risk.

Responding to threats or opportunities:

Strategies must be timely.

The effort selected must be appropriate to the severity of the risk – avoid

spending more money preventing the risk than the impact of the risk would

cost if it occurred.

One response can be used to address more than one risk.

More than one response can be used to address the same risk.

A response can address a root cause of risk and thereby address more than one

risk.

Involve the team, other stakeholders, and experts in selecting a strategy.

There are four negative risk management approaches. None of the four approaches is

best; each approach has its place and use

The following are strategies that can be used:

Avoid o Eliminate the threat by eliminating the cause.

o The most radical option would be to shut down the project

Mitigate o Reduce probability or the impact of a threat, thereby making it a small

risk and removing it from the list of top risks on the project.

o Options for reducing the probability are looked for separately from

options for reducing the impact.

o Any reduction will make a difference, but the option with the most

probability and/or impact reduction is often the option selected.

Transfer o Make another party responsible for the risk by purchasing insurance,

performance bonds, warranties, guarantees, or outsourcing work.

o One must complete risk assessment before a contract can be signed.

o Transfer of risk is included in terms and conditions of the contract.

Strategies for Positive Risks or Opportunities (page 345)

You need to remember again that risks can have a positive impact on the project. The

following are ways we can take advantage of those positive risks:

Exploit

o Be able to add work or change the project to make sure the opportunity

occurs

Share

o Allocate ownership of the opportunity to a third party (forming a

partnership, team, or joint venture) that is best able to achieve the

opportunity

Enhance

o Increase the probability that the opportunity will occur

Accept

o Take advantage of the opportunity without having to actively pursue it.

Contingent Response Strategies

Expert Judgment

Outputs

Project Management Plan Updates that may be impacted and need an update





Human resource management plan

Work breakdown structure

Scope baseline

Schedule baseline

Cost baseline


Risk Register Updates

The risk register should be an accurate reflection of the current state of the

project and the risks that have been identified. The content of the register

should be written so that the high to moderate risks have the most details so it

response to them is clear. The Risk Register should include information on

items such as:

o Identified Risks Description of each risk

Impact to project objective

o Response plans Response plans are plans describing the specific actions that

will be taken if the opportunity or threat occurs.

o Risk response owners A key concept in risk response planning is that the project

manager does not have to do it all and neither does the team.

Each risk must be assigned to someone who may help develop

the risk response and who will be assigned to carry out the risk

response or "own" the risk.

The risk response owner can be a stakeholder other than a team

member.

o Secondary risks An analysis of the new risks created by the implementation of

selected risk response strategies should be part of risk response

planning.

Frequently what is done to respond to one risk will cause other

risks to occur.

o Risk triggers These are events that trigger the contingency process. The early

warning signs (indirect manifestations of actual risk events) for

each risk on a project should be identified to know when to take

action.

o Contracts A project manager must be involved before a contract is signed.

Before the contract is finalized, the project manager will have

completed a risk analysis and included opportunities.

Any contract issued to mitigate risks should be noted in the risk

register.

o Fallback plans These are specific actions that will be taken if the contingency

plan is not effective.

o Reserves There can be two kinds of reserves for time and costs:

contingency reserves and management reserves. Contingency

reserves are kept for the unknown and are a perfect fit for risks.

Make sure you realize that reserves are not an additional cost to

the project.

o Assumptions log updates

The assumptions need to be kept up to date as information becomes available. This is

an area that many times does not get updated.

Technical documents updates

Change requests

Control Risks (Page 349)

Given the amount of time that is invested in Risk Management during initiating and

planning a project, you can't let up once the project gets underway. Monitoring and

controlling the executing side and keeping up with the impact to the risks are critical.


Control Risks is the process of implementing risk response plans, tracking identified

risks, monitoring residual risks, identifying new risks, and evaluating risk process

effectiveness throughout the project.

The purpose of the process is to help determine if:

o Project assumptions are valid

o Analysis shows an assessed risk changed or can be retired

o Risk management policies and procedures are being followed

o Contingency reserves of cost or schedule should be modified in

alignment with the current risk assessment

By ensuring that a project manager is on top of managing the risks, the team will be

prepared to address any obstacle that is presented. The project manager will be able to

implement a contingency or fallback plan. They will know who exactly to go to

because clear ownership and responsibility has been created. Finally, the information

that was gathered from this project will be leveraged by the organization on future

projects.

Inputs


Risk Register

Work performance data needs to be current. Getting up to date data on such as

those listed below is important:

Deliverable status

Schedule progress

Costs incurred



Risk Reassessment (page 351)

It is important that the team periodically review the risk management plan and the risk

register and adjust them as required. A good opportunity to do that could be a team

meeting or even a separate meeting. Remember, a result of such reviews may be

additional qualitative or quantitative risk analysis, as well as further risk response

planning.

Risk Audits (page 351)

A risk audit will ask your project team to prove that you have identified all the risks

that can be or should be identified for your project, that you have plans for each of the

major risks, and that risk response owners are prepared to take action. The audit is

arranged by the project manager and results in identification of lessons learned for the

project and for other projects in the organization.

Variance and Trend Analysis

Technical Performance Measurement


This compares the amount that was set aside in the contingency reserve and the

remaining amount of risk remaining at any time on the project in order to see if the

reserve is adequate.

Meetings

Outputs


Change Requests (Page 353)

When response plans are implemented, those activities may result in change requests

being created. Don't forget that the actions taken may require their own contingency

plans.

Recommended corrective actions

Recommended preventive actions


Risk monitoring and control can result in updates to the schedule, cost, quality, and

procurement management plans, as well as the human resource management plan, the

WBS, and the time and cost baselines for the project.


Risk Register Updates examples are: o Outcomes of the risk reassessments and risk audits

o Updates to previous parts of risk management, including the

identification of new risks

o Closing of risks that are no longer applicable

o Details of what happened when risks occurred

o Lessons learned

Organizational Processes Assets Updates

Exam Hint The following are examples of Risk Management errors that you want to

avoid or be aware of for the exam:

Risk identification is completed without knowing enough about

the project.

Risk identification ends too soon, resulting in a brief list rather

than an extensive list.

The processes of Identify Risks through Perform Quantitative

Risk Analysis are blended, resulting in risks that are evaluated or

judged as they come to light. This decreases the number of total

risks identified and causes people to stop participating in risk

identification.

The risks identified are general rather than specific.

Some things considered to be risks are not uncertain; they are

facts, and are therefore not risks.

Whole categories (technology, cultural, marketplace, etc.) of risks

are missed.

Only one method is used to identify risks rather than a

combination of methods. A combination helps ensure that more

risks are identified.

The first risk response strategy identified is selected without

looking at other options and finding the best option or

combination of options.

Risk management is not given enough attention during project

executing.

Project managers do not explain the risk management process to

their team during project planning.

Project Risk Management Cheat Sheet


Process Descriptio

n

Grou

p


Plan Risk

Managem

ent

Determine

approach

and plan

risk mgmt

activities

Plan Project

mgmt.

plan

Charter

Stakehold

er register

EEF

OPA

Analytical

techniques

Expert

Judgment

Meetings

Risk

manage

ment

plan

Identify

Risks

Determine

and

document

characteris

tics of

potential

risks

Plan Risk,

cost,

schedule,

Quality,

HR

managem

ent plans

Scope

baseline

Activity

cost

estimates

Activity

duration

estimates

Stakehold

er register

Project

Documen

ts

EEF and

OPA

Documentati

on reviews

Info

gathering

techniques

Checklist

analysis

Assumption

analysis

Diagrammin

g techniques

SWOT

analysis

Expert

judgment

Risk

register



Process Descriptio

n

Grou

p


Qualify Conduct

qualitative

analysis of

risks and

conditions

and

prioritize

their

effects

Plan Risk

managem

ent plan

Scope

baseline

Risk

register

EEF

OPA

Risk P/I

assessment

P/I matrix

Risk data

quality

assessment

Risk

Categorizati

on

Risk

urgency

assessment

Expert

judgment

Update

s: Docs

(risk

register

)

Quantify Measure

probability

and

consequen

ces of

risks and

estimate

implicatio

ns for

project

objectives

Plan Risk

managem

ent plan

Cost

managem

ent plan

Schedule

mgmt

plan

Risk

register

EEF

OPA

Data

gathering &

representatio

n techniques

Risk

analysis &

modeling

techniques

Expert

judgment

Update

s: Docs

(risk

register

)

Response

s

Develop

options

and

actions to

enhance

opportunit

ies and

reduce

threats to

the

project's

objectives

Plan Risk

managem

ent plan

Risk

register

Strategies

for positive

risks

Strategies

for negative

risks

Contingent

response

strategies

Expert

judgment

Update

s: plan;

docs

(risk

register

)

Control Monitor

residual

risks,

identifying

new risks,

Contr

ol

Project

mgmt.

plan

Risk

register

Risk

reassessment

s

Audits

Variance,

Work

perform

ance

informa

tion

Process Descriptio

n

Grou

p


executing

risk

response

plans and

evaluating

their

effectiven

ess.

Work

performa

nce data

Work

performa

nce

reports

Trend &

Reserve

analysis

Technical

performance

measuremen

t

Meetings

Change

request

s

Update

s: plan,

OPA,

docs

(risk

register

)

Deep Dive into Project Procurement

Management

Like formulas, this is an area of the exam that concerns many people. The main

reason is that there are project managers that don't have a great deal of experience

with procurements. They have other people in their organization that handle that stuff.

Unfortunately, it is an important part of the exam and one that you must know and

know well. Fortunately, you have all the information you need in the coming pages..


Project Procurement Management includes the processes necessary to purchase or

acquire products, services, or results needed from outside the project team.

The Project Procurement Management Knowledge Area in the PMBOK Guide is

targeted towards the "buyer" of a contract. The "seller" should apply all ten

knowledge areas processes for contract management

The following should help you understand how each part of procurement management



The Procurement Management Process Done During

Plan Procurement Management Planning Process Group

Conduct Procurements Executing Process Group

Control Procurements Monitoring and Controlling Process

Group

Close Procurements Closing Process Group

General Overview:

Procurement is a formal process by which many organizations obtain goods and

services. In addition to contracts, outputs of the procurement management process

include:


Procurement statements of work (SOW)

Procurement documents

Change requests

Additional procurement documentation

Lessons learned

In most organizations, there is a department that handles and controls procurements. It

is important to note that private companies have a lot of flexibility in their



procurement practices, whereas government entities normally have to comply with

laws, rules, and regulations. This department is often called the procurement,

contracting, purchasing, or legal department. Project managers may not take the lead

in many of the steps within the process but they must be familiar with all the steps.

At the start of the project during planning, the work is analyzed to determine if

internal resources can do everything. If not, then the work will be outsourced. The

project manager will then decide how many procurements are needed. In most cases,

the procurement department gets involved in the project to manage the procurements

process. A project manager must understand what these procurement experts will

need from them, provide the experts with that information, and then work with the

procurement department throughout the life of the procurement.

Once the decision has been made to procure goods or services from an outside source,

the project manager will facilitate creating a plan for how the procurement process

will proceed (a procurement management plan) and will create a description of the

work to be done by the seller (a procurement statement or work).

In addition, the procurement manager determines what type of contract and

procurement documents should be used. Some of the most common procurement

documents are:

Request for Proposals (RFP)

Invitation for Bid (IFB)

Request for Quotation (RFQ)

The type of procurement document used is connected to the contract type selected and

the form of the procurement statement of work. The procurement department may

review the scope of work for completeness, and the project manager might add scope

related to the project management activities, resulting in the finalized procurement

statement of work. This procurement statement of work is then combined with the

contract terms to form the finalized procurement documents, which are sent to

prospective sellers.

At this point, the seller needs to take action and the buyer just waits. The prospective

sellers will review the procurement documents and determine whether they are

interested in submitting a bid or proposal to try to win the work. They may have the

opportunity to submit questions relating to the procurement documents as part of the

process. They would need to do that before the deadline for bids or proposals.

It is important to note that the time that prospective sellers need to prepare a response

to the procurement documents can be substantial (sometimes taking months), and so

the project manager must plan this time into the project schedule.

In most cases, procurement is competitive. There will generally be multiple sellers

who can do the work and who are invited to submit a response to the procurement

documents. Organizations may use several different methods to select a seller, but in

the case of government agencies these methods may be dictated by law or internal

policies. If the buyer receives competing submissions from many perspective sellers,

the buyer might ask for presentations from all of the sellers or a select group of

sellers. The buyer will then move into negotiations with the preferred seller or with

more than one seller. All terms and conditions in the proposed contract, the entire

procurement statement of work, and any other components of the procurement

documents can be negotiated. Negotiations can take a lot of time, and they require the

involvement of the project manager. At the end of the negotiations, one or more of the

sellers are selected, and a contract is signed. The procurement management plan

created earlier may also be updated.

Notice that the procurement process doesn't end when the contract is entered into.

Once the contract is signed, the procurement must be controlled. This involves

making sure all the requirements of the contract, even ones that seem unimportant, are

met. It also means keeping control of the contract and making approved changes.

Once the procurement work is complete, the procurement will be closed. This

includes the completion of a procurement audit to determine lessons learned. Since

there can be many different procurements involved with any one project, the process

of closing a procurement can occur many times on a project. Because there is only

one project, the overall project is closed just once, upon completion of all the project

work, unless the project is managed in phases. In that case, the Close Project or Phase

process occurs at the end of each phase, after procurements completed in that phase

have been closed out. Make sure you understand the difference between closing

individual procurements and closing the project or project phase. During procurement

closure, final reports are submitted, lessons learned are documented, and final

payment is made.

See now you are an expert!

Exam Hint Seller and Buyer:

In the real world, the company or person who provides services and

goods can be called a "contractor," "subcontractor," "designer," or other

titles. The PMBOK Guide uses only one term, "seller," but the exam may

use any of these terms to describe the seller.

The company or person who purchases the services is called the "buyer."

Plan Procurement Management

An important aspect of plan procurement management is to determine if any outside

support will be needed. If so, then during the plan procurement management all the

details that a seller will need in order to determine if they can meet the requirements

will need to be defined and communicated.


Plan Procurement Management is the process of documenting project purchasing

decisions, specifying the approach, and identifying potential sellers.

Don't forget about risks. In Plan Procurement Management, the team will need to

identify and consider the risks that are involved in each make-or-buy decision that is

made. Review items in the contracts of the sellers to manage those risks or ensure that

risks that had been identified are being mitigated by transferring them to the seller.

Inputs


Scope statement

WBS

WBS dictionary


Risk Register


Project Schedule



Enterprise Environmental Factors can include, but are not limited to:

Market conditions

Product, services, and results that are available

Suppliers, including past performance

Typical terms and conditions for products and services

Unique local requirements


Formal procurement policies and procedures

Management systems

Supplier system

Contract types

There are three basic types of contracts. Each one has its place and use. You

must understand the differences and especially understand how different

contract types determine the final costs of a contract

There are many different types of contracts that can be chosen to acquire the

goods and services needed on a project. The procurement manager will select

the contract type based on the following considerations:

o What is being purchased (a good or a service)

o The completeness of the scope of work

o The level of effort and expertise the buyer can devote to managing the

seller

o Whether the buyer wants to offer the seller incentives

o The marketplace or economy

o Industry standards for the type of contract used

There are sometimes different names for the same type of contract. This can

make it very difficult to learn the contract types. So here is a trick. Start out

thinking that there are just three main categories of contract types, as shown in

the following list. Then, when the exam asks a question relating to contract

type, first see if knowing which category it is in helps you answer the

question. The three categories of contracts are:

Fixed-price contracts are more risky for the seller; Cost-reimbursable

contacts are more risky for the buyer

o Fixed Price (FP)

o Time and Materials (T&M)

o Cost Reimbursable (CR)

You must understand the contract types and be able to recognize the

differences between them. You should be able to answer situational questions

describing what you would do differently depending on the contract type.

There may also be questions that require you to pick the most appropriate

contract type based on a described situation.

Fixed Price (Page 362)

A fixed price contract is used for acquiring goods or services with well-

defined specifications or requirements, and when there is enough competition

to determine a fair and reasonable fixed price before the work begins. This is

the most common type of contract. If the costs end up being more than the

agreed upon amount, the seller must bear the additional costs. Therefore, the

buyer has the least cost risk in this type of contract, provided the buyer has a

completely defined scope. It could be said that the seller is most concerned

with the procurement statement of work (SOW) in this type of contract.

There are many organizations that are not informed about contracts, they often

ask the seller to provide a fixed price, even when the scope of work is

incomplete. Think for a minute about the consequences of doing this:

o Seller is forced to accept a high level of risk.

o The seller would need to add a huge amount of reserve to their price to

cover their risks, and the buyer, therefore, pays more than they might

otherwise have.

o The seller can more easily try to increase profits by cutting scope or

claiming that work the buyer wants is outside the contract and thus

requires a change. The buyer will not be able to state with certainty if

something is within the scope of the work as specified by the

procurement statement of work or outside of it if there is not a

complete procurement statement of work.

Fixed Price Incentive Fee (FPIF)

In a FPIF contract, profits (or financial incentives) can be adjusted based on

the seller meeting specific performance criteria such as getting work done

faster, cheaper, or better. The final price is calculated by the formula based on

the relationship or final negotiated costs to the total target cost. A variation on

a FPIF is a FPIF successive target contract, in which the target for the

incentive is changed after the first target is reached.

Fixed Price Award Fee (FPAF)

In a FPAF contract, the buyer pays a fixed price (which includes the fee) plus

an award amount (a bonus) based on performance. This is very similar to the

FPIF contract, except the total possible award amount is determined in

advance and appropriated based on performance. In many instances, the award

amount is judged subjectively. Therefore, procedures must be in place in

advance for giving out the award, and a board must be established to help

make the decision fairly. The cost to administer the award fee program versus

the potential benefits must be weighed in the decision to use this type of

contract.

Fixed Price Economic Price Adjustment (FPEPA)

If there are questions about future economic conditions (future price) for

contracts that exist for a multi-year period, a buyer might chose a fixed price

contract with economic price adjustment. Future costs of supplies and

equipment that the seller might be required to provide under contract might

not be predictable.

Purchase Order

A purchase order is the simplest type of fixed price contract. This type of

contract is normally unilateral (signed by one party) instead of bilateral

(signed by both parties). It is usually used for simple commodity procurement.

Purchase orders become contracts when they are "accepted" by performance.

Time and Material or Unit Price (Page 364)

In this type of contract, the buyer pays on a per-hour or per-item basis. It is

frequently used for service efforts in which the level of the effort cannot be

defined at the time the contract is awarded. It has elements of a fixed price

contract (in the fixed price per hour) and the cost reimbursable contracts (in

material costs and the fact that the total cost is unknown).

Cost Reimbursable (Page 363)

A cost reimbursable contract is used when the exact scope of the work is

uncertain and, therefore, costs cannot be estimated accurately enough to

effectively use a fixed price contract. This type of contract provides for the

buyer to pay the seller allowable incurred costs to the extent prescribed in the

contract. This type of contract requires the seller to have an accounting system

that can track costs by project. Here the buyer has the most cost risk because

the total costs are unknown. Research and development or information

technology projects in which the scope is unknown are typical examples of

cost reimbursable contracts.

The following are common forms of cost reimbursable contracts.

Cost Contract

A cost contract is one which the seller receives no fee (profit). It is appropriate

for work performed by nonprofit organizations.

Cost Plan Fee or Cost Plus Percentage of Costs

A CPF or CPPC contract requires the buyer to pay for all costs plus a

percentage of costs as a fee. This type of cost reimbursable contract is not

allowed for U.S. federal acquisitions or procurement under federal acquisition

regulations and is bad for buyers everywhere.

Cost Plus Fixed Fee (CPFF)

A cost plus fixed fee contract provides for payment to the seller of the actual

costs plus a negotiated fee that is fixed before the work begins. The fee does

not vary with actual costs, thus providing some incentive for the seller to

control costs. The fee may be adjusted as a result of changes to the

procurement statement of work.

Cost Plus Incentive Fee (CPIF)

A cost plus incentive fee contract provides for the seller to be paid for actual

costs plus a fee that will be adjusted based on whether the specific

performance objectives stated in the contract are met. In this type of contract,

an original estimate of the total costs is made (the target cost) and a fee for the

work is determined (a target fee). The seller then gets a percentage of the

savings if the actual costs are less than the target costs or shares the cost

overrun with the seller. The ratio is usually 80 percent to the seller and 20

percent to the buyer.

Cost Plus Award Fee (CPAF)

In a cost plus award fee contract, the buyer pays all costs and a base fee plus

an award amount (a bonus) based on performance. This is similar to CPIF

contract, except the incentive is a potential award, rather than a potential

award or penalty. The award amount in a CPAF contract is determined in

advance and apportioned depending on performance. This is a type of

incentive contract. In some instances, the award given out is judged

subjectively.


Make or buy analysis (page 365)

This decision may be influenced by:

Resources

Budget

Capabilities

Expert Judgment

Market Research

Meetings

Outputs

Procurement Management Plan (page 366)

Once the decisions have been made about what to procure from outside sources, the

project manager can create a plan to manage those procurements. Like all

management plans, the procurement management plan will describe how the

procurement process will be planned, executed, and controlled. Make sure you

understand the concept of management plans. They should be familiar, as they have

been a part of almost every section so far.

Procurement Statements of Work (page 367)

The work to be done on each procurement is called the "procurement statement of

work." It must be as clear, complete, and concise as possible, and must describe all

the work and activities the seller is required to complete.

If the procurement statement of work is not complete, the seller will need to

constantly request clarification or ask for change orders, which may increase project

costs. The project manager and procurement manager could be constantly dealing

with issues of whether a specific piece of work is contained within the original cost or

time submitted by the seller.


The following are types of procurement documents:

Request for Information

Request for Proposal

Request for Quotation

Tender notice

Procurement Statement of Work

There are many types of procurement statements of work. Your choice will depend on

the nature of the work and type of industry.

Performance o This type conveys what the final product should be able to accomplish,

rather than how it should be built or what its design characteristics

should be.

Functional o This type conveys what the end purpose or result, rather than specific

procedures.

o It is to be used in the performance of the work and may also include a

statement of minimum essential characteristics of the product.

Design o This type conveys precisely what work is to be done.

Performance and functional procurement statements of work are commonly used for

information system, information technology, high-tech, research and development,

and projects that have never been done before. Design procurement statements of

work are most commonly used in construction and equipment purchasing

Components of procurement statement of work can include:

Drawings

Specifications

Technical and Descriptive Wording

Source Selection Criteria

Source selection criteria are included in the procurement documents to give the seller

an understanding of the buyer's needs and to help the seller decide whether to make a

proposal on the work. When the buyer receives the sellers' responses during the

Conduct Procurements process, source selection criteria become the basis by which

the buyer evaluates the bids or proposals.

If the buyer is purchasing a commodity like linear meters, the source selection criteria

may just be the lowest price. If the buyer is procuring construction services, the

source selection criteria may be price plus experience. If the buyer is purchasing

services only, the source selection criteria will be more extensive. In the latter case,

such source criteria may include:

Understanding of need

Overall or life cycle cost

Technical capability

Risk

Management approach

Technical approach

Warranty

Financial capacity

Production capacity and interest

Business size and type

Past performance of sellers

References

Intellectual property rights

Proprietary rights

Make-or-Buy Decisions

Change Requests




Risk register

Conduct Procurements

The process involves getting the procurement documents created in the Plan

Procurement Management process to the seller, answering the sellers' questions,

having them prepare responses, and reviewing the responses to select the seller or

sellers.


Conduct Procurements is the process of obtaining seller responses, selecting a seller,

and awarding a contract.

Before you can send procurement documents to prospective sellers, you need to know

who those sellers are. A buyer may use techniques such as advertising or Internet

searches to find sellers, or send the procurement documents to a select list of

prequalified sellers.

Inputs

Procurement Management Plan


Source Selection Criteria

Seller Proposals

Project Documents

Make-or-Buy Decisions

Procurement Statement of Work



Remember that all potential vendors must be invited for a bidder conference

Bidder Conference (page 375)

Once the prospective sellers have been identified and have received the procurement

documents, the buyer controls who can talk to the seller and what can be said. This

control allows the buyer to maintain the integrity of the procurement process and to

make sure all sellers are bidding or proposing on the same work.

A bidder conference can be the key to making sure the pricing in the seller's response

matches the work that needs to be done and is, therefore, the lowest price. Bidder

conferences benefit both the buyer and the seller. Many project managers do not

attend these meetings nor realize their importance.

Proposal Evaluation Techniques (page 375)

After reviewing the proposals, the buyer uses the source selection criteria identified in

the Plan Procurement Management process to assess the potential sellers' ability and

willingness to provide the requested products or services. The criteria are

measureable; therefore, they provide a basis to quantitatively evaluate proposals and

minimize the influence of personal prejudices. To select a seller:

The buyer may simply select a seller and ask them to sign a standard contract.

The buyer may ask a seller to make a presentation and then, if all goes well,

move on to negotiations.

The buyer may narrow down (short list) the list of sellers to a few.

The buyer may ask the short-listed sellers to make presentations, and then ask

the selected seller to go on to negotiations.

The buyer can negotiate with more than one seller.

The buyer can use some combination of presentations and negotiations.

The choice of method in most cases depends on the importance of the procurement,

the number of interested sellers, and the type of work to be performed.

Independent Estimates (page 376)

The buyer may compare the seller's proposed cost with an estimate created in-house

or with outside assistance. This allows the buyer to discover significant differences

between what the buyer and seller intended in the procurement statement of work.

The buyer must have their own estimate to check reasonableness and cannot rely

solely on the seller's cost estimates.

Expert Judgment

Advertising (page 376)

To attract sellers, an advertisement may be placed in newspapers, in magazines, on

the Internet, or in other types of media. Note: The U.S. government is required to

advertise most of its procurements.


Procurement Negotiations (page 377)

It is important for everyone involved in negotiations to understand that the objectives

of negotiation are to:

Obtain a fair and reasonable price

Develop a good relationship with the seller

Negotiation Tactics

This topic is often included on the exam, though it is not covered in the

PMBOK Guide. You should be familiar with the following types of

negotiation tactics. Do not memorize them. Simply be able to pick the

negotiation tactic being used in a situation.

o Attacks

o Personal insults

o Good guy / bad guy

o Deadline

o Lying

o Limited authority

o Missing man

o Fair and reasonable

o Delay

o Extreme demands

o Withdrawal

Main Items to Negotiate

The main items to address while negotiating a contract can be vastly different,

depending on what is being purchased. To achieve a signed contract, the

following are usually negotiated in order.

o Scope

o Schedule

o Price

There are other things that need to be negotiated, however. These

include: o Responsibilities

o Authority

o Applicable law

If you are working with a seller from a different state, country

or region, you need to agree upon whose law will apply to the

contract.

o Project management process to be used

o Payments schedule

Outputs

Selected Sellers

Agreements (page 377)Once the seller has been determined, the procurement contract

or agreement can take many forms. The key is that the contract is a mutually binding

legal agreement. The contract can only be remedied in court if there are issues.

Contract or agreement documents typically include some of the following items:

Memorize the typical components of a procurement agreement

Statement of work

Schedule baseline

Performance reporting

Period of performance


Seller's place of performance

Pricing

Payment terms

Place of delivery

Inspections and acceptance criteria

Warranty

Product support

Limitation of liability

Fees and retainer

Penalties

Incentives

Insurance and performance bonds

Subordinate subcontractor approvals

Change request handling

Termination clause and alternative dispute resolution (ADR) mechanisms.

Resource Calendars

Change Requests


Cost baseline

Scope baseline

Schedule baseline

Communication management plan




Requirements traceability documentation

Risk register


Control Procurements (Page 379)

The Control Procurements process involves managing the relationship between the

buyer and the seller and assuring that the performance of both parties to the

procurement meets contractual requirements.

Both the buyer and the seller will administer and control the procurement, each

looking out for their interests as it relates to the project while making sure the other is

meeting their contractual obligations. As project manager you must be aware of the

legally binding commitments and what the project team needs to do to meet them or

what the seller needs to do to meet them.

The following project management processes play a role in helping to Control

Procurements:

o Direct and Manage Project Work

o Control Quality

o Perform Integrated Change Control

o Control Risks

An important item to remember is that there is also a financial aspect to procurement

that needs a project manager's attention. Payments need to be monitored to ensure

they are being paid in a timely manner. The budget will need to be tracked to ensure

the seller is on track. These are just additional items to the monitoring and controlling

needed to keep watch over the buyer' and seller's activities.

Inputs



Agreements





Contract Change Control System (page 383)

Procurements, like all projects, have changes. To handle these changes, a contract

change control system is established. This system includes change procedures, forms,

dispute resolution processes, and tracking systems, and is specified in the contract.

Procurement Performance Reviews (page 383)

During the Control Procurements process, the project manager should analyze all

available data to verify that the seller is performing as they should. This is called a

procurement performance review. Often the seller is present to review the data and,

most importantly, to talk about what the buyer can do differently to help the work

progress. The purpose of the review is to determine if changes are needed to improve

the buyer/seller relationship and the processes being used.

Inspections and Audits

Performance Reporting

Payment Systems

Claims Administration (page 384)

A claim is an assertion that the buyer did something that has hurt the seller and the

seller is asking for compensation. Claims can get nasty. They are usually addressed

through the contract change control system. The best way to settle them is through

negotiation or the use of the dispute resolution process specified in contract. Many

claims are not resolved until after the work is completed.

Records Management System (page 384)

A contract or an agreement is a formal, legal document, so thorough records relating

to the contract must be kept. Record keeping can be critical if actions taken or

situations that occurred during a procurement are ever in question after the work is

completed, such as in the case of unresolved claims or legal actions. Records may also

be necessary to satisfy insurance requirements.

On large or complex projects, a records management system can be quite extensive,

with one person assigned just to manage these records. A records management system

can include indexing systems, archiving systems, and information retrieval systems.

Outputs


Change Requests



Schedule baseline

Cost baseline


Organizational Process Assets Updates can include, but are not limited to:

Correspondence

Payment schedules and requests

Seller performance evaluation documentation

Always remember that the Close Procurement process is conducted for every

procurement contract that has completed and delivered the required products or

services. This can be done during any stage of the project

Close Procurements (Page 386)

This process consists of completing and verifying that all work and deliverables are

accepted, finalizing any open claims, and making final payments for each of the

procurements on the project. The buyer will provide the seller with formal notice that

the contract has been completed.

Procurements are closed:

When a contract or an agreement is completed

When a contract or an agreement is terminated before the work is completed

All procurements must be closed out, no matter the circumstances under which they

stop, are terminated, or are completed. Procurements are closed through negotiated

settlements between the buyer and the seller.

Exam Hint There may be many procurements in one project, so there will be

many procurement closures, but only one project closure. All

procurements must be closed before the project is closed.

Procurement closure needs to happen before project closure.

Some projects are managed by phase, such as a design phase,

testing phase, and installation phase. For such project, the Close

Project or Phase process can technically occur at the end of each

project phase.

o Remember that project closure may be done at the end of

each project phase and at the end of the project as a whole.

Procurement closure requires more record keeping and must be

done more formally than is generally required for project closure,

to make sure to protect legal interests of both parties.

Inputs




Procurement Audits

Always remember that negotiation is the preferred procurement conflict resolution

technique

Procurement Negotiations Records Management System

Outputs

Closed Procurements

Organizational Process Assets Updates can include, but are not limited to:

Procurement file

Deliverable acceptance

Lessons learned documentation

Project Procurement Management Cheat Sheet


Process Descript

ion

Grou

p

Input Tools &

Technique

Output

Plan

Procurem

ent

Managem

Determin

e what,

how and

when to

Plan Project

mgmt. plan

Requireme

nts

Make-or-

buy

analysis

Expert

Procurem

ent mgmt

plan;

Procurem



Process Descript

ion

Grou

p

Input Tools &

Technique

Output

ent procure.

Prepare

procure

ment

documen

ts to

support

vendor

selection

and

develop

the

procure

ment

SOW.

documenta

tion

Risk

register

Activity

resource

requiremen

ts

Project

schedule

Activity

cost

estimates

Stakeholde

r register

EEF

OPA

judgment

Market

Research

Meetings

ent SOW

Procurem

ent

document

s

Source

selection

criteria

Make/buy

decisions

Change

requests

Updates:

docs

Conduct

Procurem

ents

Select

from

potential

sellers

Exec

ute

Procureme

nt

manageme

nt plan

Procureme

nt

documents

Source

selection

criteria

Seller

proposals

Project

documents

Make or

buy

decisions

Procureme

nt

statement

of work

OPA

Bidder

conferenc

e

Proposal

evaluation

technique

s

Independe

nt

estimates

Expert

judgment

Advertisin

g

Analytical

technique

s

Procurem

ent

negotiatio

ns

Selected

sellers

Agreemen

ts

Resource

calendars

Change

requests

Updates:

docs; plan

Control

Procurem

ents

Manage

seller

relations

hip,

review

seller

Contr

ol

Project

mgmt. plan

Procureme

nt docs

Agreement

s

Contract

CC

system

Performan

ce

reviews

Work

performan

ce

informatio

n

Change

Process Descript

ion

Grou

p

Input Tools &

Technique

Output

performa

nce and

manage

contract

related

changes

Approved

changes

Work

performan

ce data

Work

performan

ce reports

Inspection

s & audits

Performan

ce

reporting

Payment

systems

Claims

administra

tion

Records

managem

ent

system

requests

Updates:

plan;

docs;

OPA

Close

Procurem

ents

Select

from

potential

sellers

Close Project

mgmt plan

Procureme

nt

documents

Procurem

ent audits

Procurem

ent

negotiatio

ns

Records

mgmt

system

Closed

procurem

ents

Updates:

OPA

Deep Dive into Project Stakeholder

Management

The Project Stakeholder Management is closely connected with the Project

Communications Management as it focuses on continuous communications with

stakeholders to understand their needs and expectations.

PMBOK Guide Definition - Page 391

Project Stakeholder Management includes the processes required to identify the

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 stakeholders in project

decisions and execution.

Please note that the project stakeholders' influence is at the maximum during the start

of the project and reduces gradually as the project progresses

Project Stakeholder Management also involves resolving stakeholder issues,

managing conflicting interests, and fostering stakeholder engagement. Effective

stakeholder management is the key to success of many projects, especially complex

and large projects. Effective communications and stakeholder engagement with the

project activities and decisions are the two key stakeholder management techniques.

The following should help you understand how each part of stakeholder management



The Procurement Management Process Done During

Identify Stakeholders Initiating Process Group

Plan Stakeholder Management Planning Process Group

Manage Stakeholder Engagement Executing Process Group

Control Stakeholder Engagement Monitoring and Controlling Process Group

Every project has both positive and negative stakeholders. Effectively managing both

types of stakeholders is critical for the success of any project

Projects have both positive and negative stakeholder and both need to be managed

carefully. Many project managers take negative stakeholders for granted and in the

end pay hefty price for it. On some projects, especially large and complex projects,

negative stakeholders need to be more closely managed than the positive stakeholders.

Negative stakeholders are the ones who are negatively impacted by the outcome of

the project, e.g., resistant users of a new software application, resistant employees of a

new performance management system etc.



The Identify Stakeholders process is an initiating process. However, it must be

periodically revisited to ensure that the project's Stakeholder Register is always up to

date

Identify Stakeholders (Page 393)

It is important to clearly understand who a stakeholder is on a project. They are

persons and organizations like a customer, project sponsor, or a team member who are

actively involved in the project or whose interests may be positively or negatively

impacted by the execution or completion of the project.


Identify Stakeholders is the process of identifying the people, groups, or organizations

that could impact or be impacted by a decision, activity, or outcome of the project,

analyzing and documenting relevant information regarding their interests,

involvement, interdependencies, influence, and potential impact on process success.

As a project manager and a project team it is critical to the overall success that

stakeholders are identified as early as possible during the project life cycle.

Stakeholder management must be well thought out to maximize the effort by the team

given the number of stakeholder on the project.

Stakeholders – How can you use them during the project?

Determine the requirements o This is neither easy nor fast, but the project manager must make every

effort to obtain "ALL" the requirements before works begins.

o The requirements should not just relate to how stakeholders want the

product of the project to function, but should also include their

communications requirements.

Determine their expectations o Expectations tend to be much more ambiguous than stated

requirements, or they may be undefined requirements. They may be

intentionally or unintentionally hidden.

o Naturally, expectations that go unidentified will have major impacts

across all constraints.

o Expectations are converted to requirements and become part of the

project.

Determine their interest o Stakeholders may be particularly interested in working on some part of

the project, getting a chance to learn new skills, getting a chance to

prove their skills, or even getting out of working on certain parts of the

project.

Determine their level of influence o To some degree, each stakeholder will be able to negatively or

positively affect a project. This is their level of influence, and it should

be identified and managed.

Plan how you will communicate with them

o Project management focuses on planning before taking action. Since

communications are the most frequent cause of problems on projects,

planning communications is critical.

Communicate with them o Stakeholders are included in project presentations and receive project

information, including progress reports, updates, changes to the project

management plan, and maybe even changes to the project documents.

Manage their expectations and influence o Managing stakeholders doesn't end during initiating. They must be

managed throughout the life of the project.

A key to your success as a project manager is how you handle stakeholders.

Stakeholders must be engaged, and their engagement must be managed by the project

manager. That engagement may be either extensive or minor, depending on the needs

of the project and the performing organization.

Inputs

Project Charter





Stakeholder Analysis (page 395)

Stakeholder Analysis involves systematically identifying all the stakeholders. The

project manager can use the initial list of stakeholders from the project charter and, if

applicable, any contracts related to the project as a starting point or input to the

process. As new stakeholders are identified, they may be able to suggest other

stakeholders to add to the list.

The project manager then needs to analyze each stakeholder's potential impact or

influence and identify ways to manage those impacts effectively. Classification tools

such as power/interest grids and salience models can be used to group stakeholders by

qualifications like authority level, impact or influence, or requirements. These

classifications can then help the project manager determine how, what, and when to

communicate with each stakeholder.

Stakeholder analysis can follow some of these steps:

Identify stakeholders and their relevant information such as:

o Roles

o Interests

o Knowledge level

o Influence level

Memorize the Power/Interest Grid given at PMBOK page 397. There will most

certainly be questions that pertain to this grid on the exam

Identify the potential impact or support each stakeholder could generate and

classify them in order to determine a strategy to manage them. The following

are examples of classification models:

o Power/interest grid

o Power/influence grid

o Influence/impact grid

o Salience model

Assess how key stakeholders are likely to react or respond

Expert judgment

Meetings

Outputs

Stakeholder Register (page 398)

All the information about stakeholders is compiled in the stakeholder resister. The

information about stakeholders can be categorized in the following way:

Identification information

Assessment information

Stakeholder classification

Plan Stakeholder Management (Page 399)

The objective of the Plan Stakeholder Management process is to develop an

actionable plan to interact with project stakeholders in order to enhance the chances of

the project's success.


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 project success.

The Plan Stakeholder Management process is an iterative process and must be

frequently reviewed by the project manager. You must also remember the following

regarding the Plan Stakeholder Management process:

Identifies how project will affect stakeholders, and developing approaches to

effectively engage stakeholders

Manages stakeholder expectations to achieve project objectives

It is more than improving stakeholder communications

It requires more than managing a team

It is about maintaining relations between the stakeholders and the project team

The aim is to satisfy each stakeholder within the project boundaries

Inputs






Expert Judgment

Meetings

Analytical Techniques (page 402)

The Plan Stakeholder Management is an iterative process and the project manager

must periodically revisit this process to keep the stakeholder management plan

updated. During every review, the project stakeholders' current and planned

engagement levels need to be determined. One good way of presenting stakeholders'

current and planned engagement levels is stakeholder engagement assessment matrix

as shown below:


Stakeholder Unaware Resistant Neutral Supportive Leading

Stakeholder 1 C D

Stakeholder 2 C D

Stakeholder 3 C, D

This analytical process helps identify the gaps between the current and the desired

states, and hence facilitate determining ways to close these gaps.

Outputs

Stakeholder Management Plan (page 403)

The stakeholder management plan can be detailed or broadly framed based on the

needs and requirements of the project. It is a subsidiary plan of the project

management plan. Typical components of a stakeholder management plan include:

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

Reason for the information distribution

Time frame, frequency, methods, language, format, content and level of detail

of the information


Project schedule

Stakeholder register o

Exam Tip Please remember that a project manager is required to share the project

plans, project documents and reports with the project stakeholder as

defined by the communications management plan. The project manager

must be honest and open. However, due to the sensitive nature of the

stakeholder management plan, it shouldn't be shared with every

stakeholder, at times and some situations, even with the project team

members.

Manage Stakeholder Engagement (Page 404)

Managing stakeholder engagement is a primary responsibility of the project manager.

Stakeholders' needs must continue to be met and their issues resolved throughout the

project. It is important to be proactive and make stakeholders feel that their needs and

concerns are at least being considered, even if they are not agreed to. It is important to

keep open communication channels with the stakeholders, which will keep the project

manager informed of potential changes, added risks, and other information.


Manage Stakeholder Engagement is the process of communicating and working with

stakeholders to meet their needs/expectations, addressing issues as they occur, and

foster appropriate stakeholder engagement in project activities throughout the project

life cycle.

Expectations are tricky as they are beliefs about the future. People create a mental

picture many times of the end result of their expectations. Such a difference between

what he or she thinks will happen and what actually happens might causes conflicts,

rework, and those dreaded changes. Managing stakeholders' engagement/expectations

will require taking the time with stakeholders to ensure they are clear about what will

occur. That time and effort to make sure they do not have unrealistic expectations will

pay off tremendously.

Managing stakeholder engagement requires attention to the stakeholders' needs while

the work is being done and making sure trust is built, conflicts are resolved, and

problems are prevented. As project manager ensure you are doing the following when

dealing with your stakeholders:

Actively managing the expectations and engagement

Addressing concerns before they become issues

Clarifying and resolving identified issues promptly

Successfully managing expectations with the stakeholders will increase the

probability of the overall success of the project. As project manager, take the time and

effort necessary to make this process a primary responsibility.

Many project managers unknowingly introduce communication blockers into their

projects. Communication blockers include:

Noisy surroundings

Distance between those trying to communicate

Improper encoding of messages

Making negative statements

Hostility

Language

Culture

Inputs

Stakeholder Management Plan

Communications Management Plan

Change Log



Communication Methods

Interpersonal Skills (page 407)

Managing stakeholder engagement requires strong interpersonal skills. The skills will

be applied in different ways with different stakeholders. Some of the skills needed

are:

Building trust

Resolving conflict

Listening actively

Overcoming resistance to change

Management Skills (page 408)

Trying to influence people in order to ensure that the expectations are in line requires

a strong set of management skills. A project manager should have some of the

following skills:

Facilitation skills

Influencing skills

Negotiating skills

Change management skills

Outputs

Issue Log

Change Requests




Control Stakeholder Engagement (Page 409)

The target of the Control Stakeholder Engagement process is to increase the

efficiency and effectiveness of stakeholder management and engagement activities.

The stakeholders' needs and expectations change over time as the project progresses

and its environment changes. The Control Stakeholder Engagement process ensures

that the stakeholder management strategy is realistic, effective and updated.


Control Stakeholder Engagement is the process of monitoring overall project

stakeholder relationships and adjusting strategies and plans for engaging

stakeholders.

Inputs


Issue Log


Percentage work completed

Technical performance measurements

Start and finish of scheduled activities

Summary of change requests

Defects reports

Actual costs

Actual durations

Project Documents

Project schedule


Issue log

Change log

Project communications


Information Management Systems (page 412)

Information management systems provide a set of standard tools for the project

manager to capture, store and distribute project information. It allows the project

manager to analyze information and create consolidated reports.

Expert Judgment

Meetings

Outputs:

Work Performance Information (page 413)

The work performance information is the work performance data collected from

various sources and processes, analyzed in context, and integrated based on

relationships. The work performance information is the transformation of the work

performance data. The work performance information is an output of the Control

Stakeholder Engagement process, however, it is circulated through the

communication processes.

Change Requests


All of the subsidiary plans



Issue log


Stakeholder notifications

Project reports

Project presentations

Project records

Feedback from stakeholders

Lessons learned

Project Stakeholder Management Cheat Sheet

Process Description Group Input Tools &

Technique

Output

Identify

Stakehol

ders

Identify

people

impacted by

the project

Initiati

ng

Charter

Procureme

nt docs

EEF

OPA

Stakehold

er analysis

Expert

judgment

Meetings

Stakeho

lder

register

Plan

Stakehol

der

Manage

ment

Develop

appropriate

stakeholder

managemen

t strategies

Plannin

g

Project

mgmt. plan

Stakeholde

r register

EEF

OPA

Expert

judgment

Meetings

Analytical

techniques

Stakeho

lder

manage

men t

plan

Update

s: Docs

Manage

Stakehol

der

Engage

ment

Communica

ting and

working

with

stakeholders

to meet their

needs/expec

tations

Executi

ng

Stakeholde

r mgmt.

plan

Communic

ations

mgmt. plan

Change log

OPA

Communi

cation

methods

Interperso

nal skills

Managem

ent skills

Issue

log

Change

request

s

Update

s: Plan;

Docs;

OPA

Control

Stakehol

der

Engage

ment

Monitoring

overall

project

stakeholder

relationship

Monito

ring

and

Control

ling

Project

mgmt. plan

Issue log

Work

performanc

Informatio

n

manageme

nt systems

Expert

Work

perform

ance

informa

tion

Process Description Group Input Tools &

Technique

Output

s and

adjusting

stakeholder

engagement

strategies

e data

Project

documents

judgment

Meetings

Change

request

s

Update

s: Plan;

Docs;

OPA

A Review of Critical PMP Exam

Formulas

The Formula Table Explained

On the following pages you will find the essential formulas that you will need to

know and apply in order to pass the PMP® Exam. The formulas are listed in a table

with three columns. For each entry we explain the concept, list the formula(s), and

explain how to interpret the result of the calculation.

Here are some explanations to help you better understand what you will find in each

of the three columns:



The first column contains the

"concept" behind the formula.

Instead of just giving you the

formula "CV=EV - AC" we

want to make sure that you

understand what the formula is

trying to achieve. The best way

to do that is by explaining its

concept.

We list the actual formula

in the second column. For

some concepts multiple

formulas are needed so we

list them all. When helpful

we also add examples for

better understanding.

The formula won't do you much good if

you cannot explain what the result is or

means. That is why we include an

interpretation in the third column. PMP

questions may require interpretation.

Example:

Cost Variance (CV)

Provides cost performance of

the project. Helps determine if

the project is proceeding as

planned.

Example

CV = EV - AC

Example

Negative = over budget = bad

Positive = under budget = good

Exponentiation

A number of formulas needed on the PMP® Exam require exponentiation. The

exponent is usually shown as a superscript to the right of the base. For instance: 34.

This exponentiation can be read as 3 raised to the 4th power or as 3 raised to the

power of 4. And 34 would be calculated as 3*3*3*3=81.

The superscript notation 34 is convenient in handwriting but can lead to errors when

you are in a hurry like on the PMP® Exam. For instance it is very easy to forget to

"raise" the exponent in a formula when you are hurriedly writing it down in the

minutes before you start the exam. So it could easily happen that the formula PV =

FV / (1+r)n gets written down as PV = FV / (1+r)n. The difference may seem trivial

but the result is disastrous.



Therefore, we chose to use an accepted, alternative way of expressing the

exponentiation by using the ^ character. When using this character, 34 is now

expressed as 3^4 and PV = FV / (1+r)n is expressed as PV = FV / (1+r)^n. This

removes any margin for visual errors.


Concept Formula Result

Interpretation

Cost Variance (CV)

Provides cost

performance of

the project.

Helps determine

if the project is

proceeding as

planned.

CV = EV - AC Negative =

over budget

= bad

Positive =

under

budget =

good

Cost Performance

Index (CPI)

Measure of cost

efficiency on a

project.

Ratio of earned

value to actual

cost.

CPI = EV / AC 1 = good.

We are

getting $1

for every $1

spent. Funds

are used as

planned.

>1 = good.

We are

getting >$1

for every $1

spent. Funds

are used

better than

planned.

<1 = bad.

We are

getting <$1

for every $1

spent. Funds

are not used

as planned.

Schedule Variance

(SV)

Provides

schedule

performance of

the project.

SV = EV - PV Negative =

behind

schedule =

bad

Positive =

ahead of

schedule =




Interpretation

Helps determine

if the project

work is

proceeding as

planned.

good

Schedule

Performance Index

(SPI)

Measure of

schedule

efficiency on a

project. Ratio of

earned value to

planned value.

Used to

determine if a

project is

behind, on, or

ahead of

schedule.

Can be used to

help predict

when a project

will be

completed.

SPI = EV / PV 1 = good.

We are

progressing

at the

originally

planned

rate.

>1 = good.

We are

progressing

at a faster

rate than

originally

planned.

<1 = bad.

We are

progressing

at a slower

rate than

originally

planned.

Estimate at

Completion (EAC)

Expected final

and total cost of

an activity or

project based on

project

performance.

Helps determine

an estimate of

the total costs of

a project based

on actual costs

to date.

There are

several ways to

calculate EAC

EAC = BAC / CPI

Assumption:

use formula if

current

variances are

thought to be

typical in the

future.

This is the

formula most

often required

on the exam.

Original

budget

modified by

the cost

performance

. The result

is a

monetary

value.

EAC = AC + ETC

Assumption:

use formula if

Actual Cost

plus a new

estimate for

the


Interpretation

depending on

the current

project situation

and how the

actual work is

progressing as

compared to the

budget.

Look for certain

keywords to

determine what

assumptions

were made.

original

estimate was

fundamentally

flawed or

conditions have

changed and

invalidated

original

estimating

assumptions.

remaining

work. Result

is a

monetary

value.

EAC = AC + BAC -

EV

Assumption:

use formula if

current

variances are

thought to be

atypical in the

future and the

original budget

is more reliable.

Actual cost

to date (AC)

plus

remaining

budget

(BAC - EV).

Result is a

monetary

value.

EAC = AC + ((BAC -

EV) / (CPI * SPI))

Assumption:

use formula if

project is over

budget but still

needs to meet a

schedule

deadline.

Actual cost to

date (AC) plus

remaining

budget (BAC -

EV) modified

by both cost

performance

and schedule

performance.

Result is a

monetary value.

Estimate to Complete

(ETC)

Expected cost

needed to

complete all the

remaining work

for a schedule

activity, a group

ETC = EAC - AC

Inversion of the

same formula

from the EAC

calculations.

Expected

total cost

minus actual

cost to date.

Result is a

monetary

value that

will tell us

how much

more the


Interpretation

of activities or

the project.

Helps predict

what the final

cost of the

project will be

upon

completion.

There are many

ways to

calculate ETC

depending on

the assumptions

made.

project will

cost.

ETC = BAC - EV

Assumption:

use formula if

current

variances are

thought to be

atypical in the

future.

The planned

budget

minus the

earned

value.

Result is a

monetary

value that

will tell us

how much

more the

project will

cost.

ETC = (BAC - EV) /

CPI

Assumption:

use formula if

current

variances are

thought to be

typical in the

future.

The planned

budget

minus the

earned value

modified by

project

performance

.

Result is a

monetary

value that

will tell us

how much

more the

project will

cost.

ETC = We create a new

estimate when it is

thought that the original

estimate was flawed.

This is not

the result of

a calculation

or formula,

but simply a

new

estimate of

the

remaining

cost.


Interpretation

Percent Complete

How much of

the planned

budget do we

have

completed?

Percent Complete = EV

/ BAC * 100

The result is

a

percentage.

What is

currently

completed

divided by

the original

budget times

100.

To-Complete

Performance Index

(TCPI)

The calculated

project of cost

performance

that must be

achieved on the

remaining work

to meet a

specific

management

goal (e.g. BAC

or EAC).

It is the work

remaining

divided by the

funds

remaining.

Based on BAC:

TCPI = (BAC -

EV) / (BAC -

AC)

Based on EAC:

TCPI = (BAC -

EV) / (EAC -

AC)

The TCPI is

compared to

the

cumulative

CPI to

determine if

a target

EAC is

reasonable.

A target

EAC is

assumed to

be

reasonable if

the TCPI is

within plus

or minus

0.05 of the

cumulative

CPI EVM

metric.

Variance at

Completion (VAC)

Anticipates the

difference

between the

originally

estimated BAC

and a newly

calculated EAC.

In other words,

the cost we

originally

planned minus

VAC = BAC - EAC Result is a

monetary

value that

estimates

how much

over or

under

budget (the

variance) we

will be at

the end of

the project.

<0 = over


Interpretation

the cost that we

now expect.

budget

0 = on

budget

>0 under

budget

Earned Value (EV)

A quick formula

for calculating

the Earned

Value on a

project.

EV = % complete *

BAC

The result is the

EV, a monetary

value.

Program Evaluation

and Review

Technique (PERT)

Three point

estimate for the

expected

duration of a

schedule

activity using

pessimistic,

optimistic and

most likely

durations.

A probabilistic

approach, using

statistical

estimates of

durations.

(Pessimistic + (4 *

Most Likely) +

Optimistic) / 6

The result is

the

estimated

duration of a

schedule

activity

expressed as

a weighted

average.

PERT Standard

Deviation (Single

Activity)

The standard

deviation (σ) is

a reflection of

the uncertainty

in the estimates.

It is a good

measure of the

statistical

σ = (Pessimistic -

Optimistic) / 6

The result is

the standard

deviation

from the

mean of a

schedule

activity.

For

instance, the

duration +/-

1 standard

deviation


Interpretation

variability of an

activity.

will give

you a

68.26%

confidence

that you can

meet the

estimated

duration.

PERT Activity

Variance

Every activity

has a variance,

which is a

statistical

dispersion. Here

is an example:

The PERT three

point estimate

gives a 15-day

duration.

The variance

formula tells

you that you

have a two-day

variance.

Therefore the

activity duration

is 15 days +/- 2

days.

Variance =

((Pessimistic -

Optimistic) / 6)^2

The Activity

Variance

will give

you the

expected

variance in

the activity's

duration.

For

instance: +/-

3 days.

PERT Standard

Deviation (All

Activities)

You may be

required to

calculate the

duration of

multiple

activities and

give their

standard

deviation.

This is done by

taking the

Sum ((Pessimistic -

Optimistic) / 6)^2

(Add up the

variances of all

the activities

and then take

the square root.)

The result is

one standard

deviation (or

variance)

from the

mean of the

given series

of activities.


Interpretation

square root of

the total

variance.

Activity Duration

Determines how

long an activity

lasts.

There are two

formulas both

will give the

same result.

Duration = EF - ES + 1

Duration = LF - LS + 1

Number of

days this

activity

lasts.

Free Float

Determines how

many days you

can delay an

activity without

delaying the

early start of the

next activity.

On most sample

PMP exam

questions, the

network

diagrams are

too small to

show activities

where free float

and total float

are different. In

most sample

questions they

will be the

same.

Free Float = Earliest

ES of Following

Activities - ES of

Present

Activity - Duration of

Present Activity

Number of

days this

activity can

be delayed

without

delaying the

early start of

the next

activity.

Note: If the

present

activity has

more than

one

following

activities,

then use the

Earliest ES

of any of the

following

activities.

Total Float

Determines how

many days you

can delay an

activity without

delaying the

project.

Total Float = LS - ES

Total Float = LF - EF

Number of

days this

activity can

be delayed

without

delaying the

project.


Interpretation

There are two

formulas both

will give the

same result.

Early Finish (EF)

Determine

when an activity

will finish at the

earliest.

EF = (ES + duration) -

1

Early Start (ES)

Determine

when an activity

can start at the

earliest.

ES = (EF of

predecessor) + 1

Late Finish (LF)

Determine

when an activity

should finish at

the latest.

LF = (LS of successor)

- 1

Late Start (LS)

Determine

when an activity

should start at

the latest.

LS = (LF - duration) +

1

Present Value (PV)

Receiving

money in the

present (today)

has a different

value than

receiving

money in the

future (in three

years).

This formula

PV = FV / (1+r)^n The result is

the amount

of money

you need to

invest today

(PV) for n

years at r %

interest in

order to end

up with the

target sum

(FV).


Interpretation

calculates how

much.

Also described

as value today

of future cash

flows.

PV in this case

should not be

confused with

the Planned

Value (PV).

The higher

the PV the

better.

Net Present Value

(NPV)

Method for

financial

evaluation of

long-term

projects.

Also described

as Present value

of cash inflow /

benefits minus

present value of

cash outflow /

costs.

Positive

NPV is

good.

Negative

NPV is bad.

The project

with the

higher NPV

is the

"better"

project.

Return on Investment

(ROI)

Ratio of money

gained or lost

on an

investment

relative to the

amount of

money invested.

The amount of

money gained

or lost is often

referred to as

interest,

profit/loss,

gain/loss, or net

income/loss.

The project

with the

higher ROI

is better and

should be

selected.


Interpretation

Internal Rate of

Return (IRR)

Interest rate at

which the

present value of

the cash flows

equals the initial

investment.

More precise

and more

conservative

than NPV.

The project

with the

higher IRR

is better and

should be

selected.

Payback period

Rough tool to

estimate the

time it takes to

recover the

initial

investment by

adding up the

future cash

inflows until

they are equal

to the initial

investment.

Add up the

projected cash

inflow minus

expenses until

you reach the

initial

investment.

The project

with the

shorter

payback

period is

better and

should be

selected.

Benefit Cost

Ratio (BCR)

Ratio that

describes

the cost

versus

benefits of

a project.

Benef

it /

Cost

BCR < 1 is

bad.

BCR >

1 is

good.

The

project

with

the

bigger

BCR is

the

"better

" one.

Cost Benefit Ratio

(CBR)

Ratio that

describes the

benefits versus

cost of a

project.

This is simply

the reverse of

the Benefit Cost

Ratio

Cost / Benefit CBR > 1 is

bad.

CBR < 1 is

good.

The project

with the

lower CBR

is the

"better" one.

Opportunity Cost

Opportunity

cost is the cost

For the PMP

exam the

opportunity

cost is


Interpretation

incurred by

choosing one

option over an

alternative one.

Thus,

opportunity cost

is the cost of

pursuing one

choice instead

of another.

usually a

monetary

value

Note that

NO

calculation

is required.

Communication

Channels

The number of

communication

channels on a

team.

n * (n-1) / 2 Total

number of

communicati

on channels

among n

people of a

group

Expected Monetary

Value (EMV)

Gain or loss that

will result when

an event occurs.

Takes

probability into

account. For

instance:

If it rains we

will lose $200.

There is a 25%

chance that it

will rain,

therefore the

EMV is: 0.25 *

$200 = $50.

A monetary

value that

represents

the expected

gain or loss

of an event

should it

come to be.

Point of Total

Assumption (PTA)

The point of

total assumption

(PTA) is a price

determined by a

fixed price plus

PTA = ((Ceiling Price -

Target Price) / Buyer's

Share Ratio) + Target

Cost

The result is

a monetary

value.

When

reached then

the seller

covers all of

the cost risk


Interpretation

incentive fee

contract (FPIF)

above which the

seller pays the

cost overrun. In

addition, once

the costs on an

FPIF contract

reach PTA, the

maximum

amount the

buyer will pay

is the ceiling

price.

beyond.

Straight-line

Depreciation

A method that

depreciates the

same amount

(or percent)

each year by

dividing the

asset's cost by

the number of

years it is

expected to be

in service.

The simplest of

the depreciation

methods.

Depreciation

Expense =

Asset Cost /

Useful Life

Depreciation

Expense =

(Asset Cost -

Scrap Value) /

Useful Life

Depreciation

Rate = 100% /

Useful Life

The result is

either the

Depreciation

Expense (the

yearly

depreciation

amount:

$200) or the

Depreciation

Rate (the

yearly

depreciation

percentage:

5%).

If a Scrap

Value is

given then

this can also

be factored

in by

subtracting

it.

Double Declining

Balance

Most common

depreciation

method that

provides for a

higher

depreciation

Depreciation

Rate = 2 *

(100% / Useful

Life)

Depreciation

Expense =

Depreciation

Rate * Book

Value at

The

Depreciation

Rate stays

the same

over the

years, but

the

Depreciation

Expense


Interpretation

charge in the

first year of an

asset's life and

gradually

decreasing

charges in

subsequent

years.

It does this by

depreciating

twice the

straight-line

depreciation

rate from an

assets book

value at the

beginning of the

year.

Beginning of

Year

Book Value =

Book Value at

beginning of

year -

Depreciation

Expense

gets smaller

each year

because it is

calculated

from a

smaller book

value each

year.

Sum-of-Years' Digits

Method

Sum-of-Years'

Digits is a

depreciation

method that

results in a

more

accelerated

write-off than

straight line, but

less than

declining-

balance method.

Under this

method annual

depreciation is

determined by

multiplying the

Depreciable

Cost by a

schedule of

fraction based

on the useful

life of the asset.

Quick Guide to Important PMP Exam Acronyms


Acronym Term Description

AC Actual Cost Total cost expended and reported during the

accomplishment of a project task or project.

This can be labor hours alone; direct costs alone; or

all costs, including indirect costs.

BAC Budget at

Completion

The sum of all budgets allocated to a project.

BCR Benefit Cost Ratio Ratio that compares benefits to cost

CBR Cost Benefit Ratio Ratio that compares cost to benefit (Inversion of

BCR)

CPI Cost Performance

Index

The CPI is a cost efficiency rating on a project,

expressed as a ratio of AC to EV.

CV Cost Variance A measure of cost performance on the project,

expressed as the difference between earned value

and actual cost.

EAC Estimate at

Completion

The expected total cost for scheduled activity, a

group of activities, or the project when the work will

be completed.

EF Early Finish

ES Early Start

ETC Estimate to

Complete

ETC is the expected cost needed to complete all the

remaining work for a scheduled activity, a group of

activities, or the project.

ETC helps project managers predict what the final

cost of the project will be upon completion.

EV Earned Value EV is the value of completed work expressed in

terms of the approved budget assigned to that work

for a scheduled activity or work breakdown structure

component.

FV Future Value Value of money on a given date in the future

IRR Internal Rate of A capital budgeting metric used by firms to decide



Acronym Term Description

Return whether they should make investments. It is an

indicator of the efficiency of an investment.

LF Late Finish

LS Late Start

NPV Net Present Value Standard method for the financial appraisal of long-

term projects.

Measures the excess or shortfall of cash flows, in

present value (PV) terms, once financing charges are

met.

PERT Program

Evaluation and

Review Technique

Method that allows the estimation of the weighted

average duration of tasks

PV Planned Value PV is the authorized budget assigned to the

scheduled work to be accomplished for a scheduled

activity or work breakdown structure component.

ROI Return on

Investment

Ratio of money gained or lost on an investment

relative to the amount of money invested

SPI Schedule

Performance Index

Ratio of work accomplished versus work planned,

for a specified time period.

The SPI is an efficiency rating for work

accomplishment, comparing work accomplished to

what should have been accomplished.

SV Schedule Variance A measure of schedule performance on the project,

expressed as the difference between earned value

and planned value.

TCPI To-Complete

Performance Index

The calculated project of cost performance that must

be achieved on the remaining work to meet a specific

management goal (e.g. BAC or EAC).

It is the work remaining divided by the funds

remaining.

VAC Variance at

Completion

VAC forecasts the difference between the Budget-at-

Completion and the expected total costs to be

accrued over the life of the project based on current

trends.

Quick Study Checklist for the PMP Exam

Read the PMBOK Guide

Read through this study guide thoroughly

Take many PMP practice exams (see other books by SSI Logic, or visit

www.PMPerfect.com for a great set of PMP practice exams)

Know the material thoroughly, but do not approach the exam assuming it tests

the memorization of facts. The exam tests knowledge, application, and

analysis. You must understand how to use the concepts and processes in the

real world, and how they work in combination with each other. You must also

have real world experience applying those concepts and procedures to larger

projects.

Have real world experience using all the major project management tools and

techniques.

Make sure you are thinking larger projects when taking the actual exam.

Understand the areas PMI emphasizes

Be familiar with the types of questions you can expect on the exam

Be prepared to see ambiguous and wordy questions on the exam that might be

multiple paragraphs long. Practice interpreting these types of questions.

Decide in advance what notes you will write down when you are given a scrap

piece of paper at the actual exam. You can use it as a download sheet for

formulas or gaps in your project management knowledge.

Deal with stress before you take the exam.

Plan and use your strategy for taking the exam. This may mean taking a 10-

minute break every 50 questions to clear your head.

Expect that there will be questions you cannot answer or even understand.

This happens to everyone.

Visit the exam site before the exam if possible to determine how long it will

take to get there and park.

Don't expect the test taking environment to be quiet. There could be outside

noise to deal with during the exam.

Don't over study!

Don't study the night before the exam! Get a good night sleep and be prepared

and confident that you have done all you can do ahead of that last night.

Helpful Hints for Taking the PMP Exam

You must bring your authorization letter from the PMI to the test site, as well

as two forms of ID with exactly the same name you entered on the exam

application.

Make sure you are comfortable during the exam.

As soon as you are given scratch paper when you arrive at the exam, create

your "download sheet" by writing down everything you were having trouble

with or formulas.

When you take the exam you will see one question on the screen at a time.

You can answer a question and/or mark it to return to it later. You will be able

to move back and forth throughout the exam.

Use deep breathing techniques to help relax. This is particularly helpful if you

are very nervous before or during the exam.

http://www.pmperfect.com/

Use all the exam time. Do not leave early unless you have reviewed each

question twice.

Remember your own unique test taking quirks and how you plan to deal with

them while taking the test.

Control the exam: do not let it control you.

Control your frustration and maintain focus on each question.

Answer each question from PMI's perspective, not the perspective you have

acquired from your real world or life experience.

First identify the actual question in the words provided, and then read the rest

of the question. This should help you understand what the question is asking

and reduce the need to reread questions.

Practice reading the questions and all four choices when you take the practice

exams. It is best to read the choices backwards.

Practice quickly eliminating answers that are highly implausible. Many

questions only have two plausible options.

There may be more than one "correct" answer to each question, but only one

BEST answer.

Write things down that you do not understand as you take the exam.

Watch out for choices that are true statements but do not answer the question.

Assume proper project management was done.

Notice where you are in the story as the answer may vary depending on

situation (planning vs. execution)

The following tips will help you pick the right answer for questions that ask

what you should do and for many other questions where there seems to be

more than one answer.

o Determine the immediate problem to address

o Deal with the root cause first

o Deal with the problem with the greatest NEGATIVE impact first

o Solve the problem that occurred the earliest

o Look for a proactive solution

More Exam Taking Tips

Studying for a multiple choice exam entails preparing in a unique way as opposed to

other types of tests. The PMP exam asks one to recognize correct answers among a set

of four options. The extra options that are not the correct answer are called the

"distracters"; and their purpose, unsurprisingly, is to distract the test taker from the

actual correct answer among the bunch.

Students usually consider multiple choice exams as much easier than other types of

exams; this is not necessarily true with the PMP exam. Among these reasons are:

Most multiple choice exams ask for simple, factual information; unlike the

PMP exam which often requires the student to apply knowledge and make a

best judgment.

The majority of multiple choice exams involve a large quantity of different

questions – so even if you get a few incorrect, it's still okay. The PMP exam

covers a broad set of material, often times in greater depth than other

certification exams.

Regardless of whether or not multiple choice testing is more forgiving; in reality, one

must study immensely because of the sheer volume of information that is covered.

Although four hours may seem like more than enough time for a multiple choice

exam, when faced with 200 questions, time management is one of the most crucial

factors in succeeding and doing well. You should always try and answer all of the

questions you are confident about first, and then go back about to those items you are

not sure about afterwards. Always read carefully through the entire test as well, and

do your best to not leave any question blank upon submission– even if you do not

readily know the answer.

Many people do very well with reading through each question and not looking at the

options before trying to answer. This way, they can steer clear (usually) of being

fooled by one of the "distracter" options or get into a tug-of-war between two choices

that both have a good chance of being the actual answer.

Never assume that "all of the above" or "none of the above" answers are the actual

choice. Many times they are, but in recent years they have been used much more

frequently as distracter options on standardized tests. Typically this is done in an

effort to get people to stop believing the myth that they are always the correct answer.

You should be careful of negative answers as well. These answers contain words such

as "none", "not", "neither", and the like. Despite often times being very confusing, if

you read these types of questions and answers carefully, then you should be able to

piece together which is the correct answer. Just take your time!

Never try to overanalyze a question, or try and think about how the test givers are

trying to lead astray potential test takers. Keep it simple and stay with what you know.

If you ever narrow down a question to two possible answers, then try and slow down

your thinking and think about how the two different options/answers differ. Look at

the question again and try to apply how this difference between the two potential

answers relates to the question. If you are convinced there is literally no difference

between the two potential answers (you'll more than likely be wrong in assuming

this), then take another look at the answers that you've already eliminated. Perhaps

one of them is actually the correct one and you'd made a previously unforeseen

mistake.

On occasion, over-generalizations are used within response options to mislead test

takers. To help guard against this, always be wary of responses/answers that use

absolute words like "always", or "never". These are less likely to actually be the

answer than phrases like "probably" or "usually" are. Funny or witty responses are

also, most of the time, incorrect – so steer clear of those as much as possible.

Although you should always take each question individually, "none of the above"

answers are usually less likely to be the correct selection than "all of the above" is.

Keep this in mind with the understanding that it is not an absolute rule, and should be

analyzed on a case-by-case (or "question-by-question") basis.

Looking for grammatical errors can also be a huge clue. If the stem ends with an

indefinite article such as "an" then you'll probably do well to look for an answer that

begins with a vowel instead of a consonant. Also, the longest response is also

oftentimes the correct one, since whoever wrote the question item may have tended to

load the answer with qualifying adjectives or phrases in an effort to make it correct.

Again though, always deal with these on a question-by-question basis, because you

could very easily be getting a question where this does not apply.

Verbal associations are oftentimes critical because a response may repeat a key word

that was in the question. Always be on the alert for this. Playing the old Sesame Street

game "Which of these things is not like the other" is also a very solid strategy, if a bit

preschool. Sometimes many of a question's distracters will be very similar to try to

trick you into thinking that one choice is related to the other. The answer very well

could be completely unrelated however, so stay alert.

Just because you have finished a practice test, be aware that you are not done

working. After you have graded your test with all of the necessary corrections, review

it and try to recognize what happened in the answers that you got wrong. Did you

simply not know the qualifying correct information? Perhaps you were led astray by a

solid distracter answer? Going back through your corrected test will give you a leg up

on your next one by revealing your tendencies as to what you may be vulnerable with,

in terms of multiple choice tests.

It may be a lot of extra work, but in the long run, going through your corrected

multiple choice tests will work wonders for you in preparation for the real exam. See

if you perhaps misread the question or even missed it because you were unprepared.

Think of it like instant replays in professional sports. You are going back and looking

at what you did on the big stage in the past so you can help fix and remedy any errors

that could pose problems for you on the real exam.

List of Figures


Management

Exhibit—Maslow's Hierarchy of Needs


Exhibit—Sample Decision Tree illustration

List of Tables


Qualitative Risk Analysis Matrix

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List of Cheat Sheets

Deep Dive into Project Integration Management

Project Integration Management Cheat Sheet

Deep Dive into Project Scope Management

Project Scope Management Cheat Sheet

Deep Dive into Project Time Management

Project Time Management Cheat Sheet

Deep Dive into Project Quality Management

Project Quality Management Cheat Sheet


Management

Project Human Resource Management Cheat Sheet

Deep Dive into Project Communications Management

Project Communications Management Cheat Sheet


Project Risk Management Cheat Sheet

Deep Dive into Project Procurement Management

Project Procurement Management Cheat Sheet

Deep Dive into Project Stakeholder Management

Project Stakeholder Management Cheat Sheet




















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