Project Management Dr. Anbang Qi Prof. of International Business School of Nankai University

Project Management

Dr. Anbang Qi

Prof. of International Business School of Nankai University

The Resources of the Materials

• The main content is from “A Guide To The Project Management Body Of Knowledge” (PMBOK).

• The copyright belongs to the Project Management Institute.

• Its website is www.pmi.org

1. The history of project management• There are three different times

– Old times-before 1940’s– Traditional times-1940’s-1980’s– Modern times-1980’s till now

• There are two main association:– PMI-Project Management Institute– IPMA-International Project Management

Association, before called Internet.

Chapter 1 – Introduction

2. Modern Project Management

• There are two characteristics for MPM– Enlarged management area-from 3 to 9 areas– Expended to all projects not only the

construction and engineering projects.

• Become a discipline of Management– Operation or routine management– Project and program management


3. The importance of learning MPM• All things start with project and then may

or may not transit into operations.• The project become the great means for a

company to make profit in the knowledge economy since all innovations are realized through projects.

• The top management should deal with exceptions and that need PMP.



4. The Definition of Project• Project – temporary endeavor undertaken to

create a unique product or service• Has a definite beginning and end and

interrelated activities• Under the restriction of resources• For some purpose of a organization or even a

person.

5. Typical Projects• R & D projects• BPR and Reorganization• Information system integration • Construction and Engineering• Scientific research and Dissertation • Olympic Games and other sports games• Every kind shows and performance



6. The Characteristics of a Project• Products or Service are unique – characteristics

are progressively elaborated– Progressively: proceeding in steps– Elaborated: worked with care and detail

• The work is temporary. – Time limited – There are resource restriction.

7. The Definition of Project Management • Project Management is the overall planning,

control and coordination of project from inception to completion.

• Project Management focus on completing project on-time, within the allotted budget and defined scope, and satisfying the required quality standard.

Chapter 1 - Introduction


8. The Methods and Tools of PM

• Project Management should apply of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a defined project –balancing and integrating the following:– Scope, time, cost, and quality– Stakeholders’ expectations– Requirements (needs) vs. unidentified requirements

(expectations)


9. The difference between Program and Project• Programs adopt new set of objectives and continue to

work; Projects cease when declared objectives have been attained

• Programs are groups of projects managed in a coordinated way to obtain benefits not available from managing the projects individually

• Most programs have elements of ongoing operations– Series of repetitive or cyclical undertakings

• Projects is no ongoing operation, are often divided into “subprojects” for more manageability– Often contracted out to external organizations

10. Project Management Body of Knowledge– Project integration management– Project scope management– Project time management– Project cost management – Project quality management– Project human resource management– Project communication management– Project risk management– Project procurement managementAll these make up a knowledge system of PM


Project Cost Management, Project Time Management,

Project Quality Management

Project Risk Management

Project Communication Management

Project Procurement Management

Project Integration Management

Project Human Resource Management

Project Scope Management

The System of PMBOK

General management knowledge

and practices

Application area

knowledge and practices

Generally accepted PM knowledge

and practices

PMBOK

The relationship of the knowledge

Chapter 2 – Project Management Context

1. Project Life Cycle• Project Life Cycle defines or tells:

– The phases of the project (time)– The work performed in each phase (work)– The input and output of each phase (result)– The milestone of each phase (end sign)

• Common Characteristics of Project Life Cycles:– Cost and Staffing levels are low at start and move higher towards the

end– Probability of successfully completing project is low at beginning, higher

towards the end as project continues– Stakeholder influence is high at the beginning and progressively lowers

as project continues

Phase 1 Phase 2 Phase 3 Phase 4

Project ”go” decision

Major contract let

Installation substantially complete

Full operation

Feasibility study

－ suggestion － feasibility － pre-design－ approve

Planning & Design

－ tech-design－ cost estimate－ scheduling－ contracting－ plan details

Execution

－ fabrication－ construction－ installation－ trial

Turnover － final testing－ maintenance

Percentage Complete 100%

Project Life Cycle of DOD of USA for Acquisition

Milestone 2Development

Approval

Milestone 0Concept Study

Approval

Milestone 1Concept

Demonstration Approval

Milestone 3Production Approval

Milestone 4Major

Modification Approvals

Concept Exploration

and Definition

Demons-tration and Validation

Engineering and

Manufacturing Development

Production and

Development

Operation and

Supporting

Determi-nation of the

Mission Need

Phase 1Phase 0 Phase 2 Phase 3 Phase 4


2. Phases of a Project• Project Phases are marked by the completion of

a deliverable– Tangible, verifiable work product– Review of deliverables and approval/denial are

“phase exits, stage gates, or kill points”

• Phases are collected into the Project Life Cycle– Set of defined work procedures to establish

management control


3. Stakeholders of projects• Stakeholders: individuals and organizations who

are actively involved in the project– Often have conflicting expectations and objectives– In general, differences should be resolved in favor of

the customer – individual(s) or organization(s) that will use the outcome of the project

– Stakeholder management is a proactive task• Project Mangers must determine all stakeholders and

incorporate their needs into the project


3. Stakeholders of projects• Stakeholders are:

– Owners – Sponsor– Customers– End User– Contractor (Performing Organizations) – Supplier – Project Managers– Project Teams– Society and Citizens– Others: government agent and so on

Owners

Project Manager

Supplier

End User

Customer

Sponsor

Society,Citizens

Project Teams

Others

The relationship of stakeholders of projects

4. The Hierarchy

of Project

Organization

Management


Stakeholders Management

Performing Org. Mana.

Project Team Mana.

Project Manager


5. Organizational Systems• The organizational system of Performing

Organization is an very important environment factor for a project.

• Project based vs. Non-Project Based– Project Based – derive revenues from performing

projects for others (consultants, contractors), “management by projects”

– Non-Project Based – seldom have management systems designed to support project needs (manufacturing, financial services)


5. Organizational Systems

• Organizational Cultures and Styles: – Entrepreneurial firms more likely to adopt

highly participative Project Manager – accept higher risk/reward

– Hierarchical firms less likely to adopt participative Project Manager – take fewer risks


6. Organizational Structures• Functional Organization

– More emphasis on functions, Specialists– 1 supervisor – No career path in PM

• Projectized Organization– Efficient Organization – Lack of Professionalism– Effective Communication, Duplication of functions

• Matrix Organization– Visible Objectives – PM Control – More than 1 boss, Potential for conflict – More support – More complex to control– Tough resource allocation,Information distribution – Coordination – Policies & Procedures

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Project Coordination Matrix Organization

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epartment

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Manager of Project

Managers

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7. Project Management Skills• General Business Management (consistently producing

results expected by stakeholders)• Leading (establishing direction, aligning resources, motivating)

• Communicating (clear, unambiguous, and complete)• Negotiating (conferring with others to reach an agreement)

• Problem Solving (definition and decision making)– Distinguish causes and symptoms– Identify viable solutions

• Influencing Organization (understanding power and politics)


8. Socioeconomic Influences• Standards – document approved that provides

common, repeated use, rules and guidelines• Regulations – document that identifies products,

services or characteristics– Standards often become actual regulations

• Internationalization• Cultural Influences

Chapter 3 – Project Management Processes

• Project Management requires active management of Project Processes– Series of actions that achieve a result– Project Management Processes

• Describing and organizing the work

– Product-Oriented Processes• Specifying and creating the product

1. The Processes of Project Life Cycle• Production oriented process• Management oriented process • Total Project Life Cycle

Production oriented process

Management oriented process

Turnover

Project life cycle including the operation phases

General project LC Operation phases



2. Management Process Groups:• Initiating processes: recognizing a project or phase

should begin• Planning processes: devising and maintaining a

workable plan• Executing processes: coordinating resources to execute

the plan• Controlling processes: ensuring project objectives are

met; monitoring, correcting and measuring progress• Closing processes: formalized acceptance


3. The Relationship of Process Groups• Process Groups are linked by the results each

produces• Process Groups are overlapping activities with

various levels of intensity• Process Group interactions cross phases –

“rolling wave planning”• Individual processes have inputs, tools and

techniques, and outputs (deliverables)

Links Among Process Groups in a Phase

Closing Processes

Controlling ProcessesExecuting Processes

Planning Processes

Initiating Processes


Closing Processes

Controlling Processes

Executing Processes

Planning Processes


Closing Processes

Controlling Processes

Executing Processes

Planning Processes


Design Phase Implementation Phase

Interaction between Phases of a project


控制过程

Planning Process

Executing Process

Closing Process

Initiating Process

Level of Activity

Phase Start Phase Finish

Overlap of Process Groups in a Phase of a project

Controlling Process



4. The Initiating Processes• Committing the organization to begin a project or

a phase of a project– Decision,– Initiation,– High-level planning,– Charter Making

5. Planning Processes• Core Planning

– Scope Planning – written statement– Scope Definition – subdividing major deliverables into

more manageable units– Activity Definition – determine specific tasks needed

to produce project deliverables– Activity Sequencing – plotting dependencies – Activity Duration Estimating – determine amount of

work needed to complete the activities (continued)



5. Planning Processes• Core Planning

– Schedule Development – analyze activity sequences, duration, and resource requirements

– Resource Planning – identify what and how many resources are needed to perform the activities

– Cost Estimating – develop resource and total project costs– Cost Budgeting – allocating project estimates to individual work

items– Project Plan Development – taking results from other planning

processes into a collective document


5. Planning Processes• Facilitating (Planning) Processes

– Quality Planning – standards that are relevant to the project and determining how to meet standards

– Organizational Planning – identify, document, and assigning project roles and responsibilities

– Staff Acquisition – obtaining the human resources– Communications Planning – determining rules and

reporting methods to stakeholders(continued)


5. Planning Processes• Facilitating (Planning) Processes

– Risk Identification – determining what is likely to affect the project and documenting these risks

– Risk Quantification – evaluating risks and interactions to access the possible project outcomes

– Risk Response Development – defining enhancement steps and change control measures

– Procurement Planning – determining what to buy and when

– Solicitation Planning – documenting product requirements and identifying possible sources


5. Planning Processes• The order of planning events :

– Scope Statement– Create Project Team– Work Breakdown Structure– WBS dictionary– Finalize the team– Network Diagram– Estimate Time and Cost– Critical Path– Schedule

– Budget (continued)

5. Planning Processes• The order of planning events (continued)

– Procurement Plan– Quality Plan– Risk Identification, quantification and response development– Change Control Plan– Communication Plan– Management Plan– Final Project Plan– Project Plan Approval– Kick off



6. Executing Processes– Project Plan Execution – performing the activities– Complete Work Packages– Information Distribution– Scope Verification – acceptance of project scope– Quality Assurance – evaluating overall project

performance on a regular basis; meeting standards

– Team Development – developing team and individual skill sets to enhance the project

– Progress Meetings(continued)


6. Executing Processes– Information Distribution – making project

information available in a timely manner– Solicitation – obtaining quotes, bids, order,

proposals as appropriate– Source Selection – chooseing appropriate

suppliers– Contract Administration – managing vendor

relationships


7. Controlling Processes • To regularly measure project performance and

to adjust project plan• Take preventive actions in anticipation of

possible problems– Overall Change Control – coordinating changes

across the entire project plan– Scope Change Control – controlling “scope creep”– Schedule Control – adjusting time and project

schedule of activities

(continued)


7. Controlling Processes– Cost Control – managing project budget– Quality Control – monitoring standards and

specific project results; eliminating causes of unsatisfactory performance

– Performance Reporting – status, forecasting, and progress reporting schedule

– Risk Response Control – responding to changes in risk during the duration of the project


8. Closing Processes• Administrative Closure – generating necessary

information to formally recognize phase or project completion

• Contract Close-out – completion and delivery of project deliverables and resolving open issues

• Procurement Audits• Product Verification• Formal Acceptance• Lessons Learned• Update Records• Archive Records• Release Team


9. The Skills for Process of Groups– Influencing the organization– Leading– Problem Solving– Negotiating– Communicating– Meetings– Project Selection Techniques

• Comparative Approach (similar projects)• Constrained Optimization (mathematical approach)


10. Customizing Process Integration • Not all of the processes will be needed on

all projects, and not all of the interactions will apply to all projects.

• Key aspect of scope verification is customer acceptance

• Remember that only 26 % of projects are succeed

1. Project Scope Management– It is the processes required to ensure that the project

includes all, and only, work required– It is used to define what “is/is not” included in the

project– The project scope shows the work that must be done

and measured against project plan– The product scope defines features and functions

included in the product or service, and that is measured against requirements

– It is primarily concerned with defining and controlling what is or is not included in the project.

Chapter 4 – Project Scope Management

1. Project Scope Management

Defined project scope

Owner’s expectation

Actual result


The philosophy of project scope management

1. Project Scope Management • There are 5 project scope management processes.

They are:– 1. Initiation-committing the organization to begin the next phase of the

project.– 2. Scope Planning-developing a written scope statement as the basis

for future project decisions.– 3. Scope Definition-subdividing the major project deliverables into

smaller, more manageable components.– 4. Scope Verification-formalizing acceptance of the project scope.

– 5. Scope Change Control-controlling changes to project scope.


1. Project Scope Management • These processes interact with each other and

with the processes in the other knowledge areas

as well. • Each process may involve effort from one or

more individuals or groups of individuals based

on the needs of the project. • Each process generally occurs at least once in

every project phase.


2. Initiation Process• A process of formally recognizing that a new

project exists, or an existing project continue to next phase

• It involves feasibility study, preliminary plan, or equivalent analysis

• Authorized as a result of:– Market Demand, Business Need;– Customer Request, Technological Advance;– Legal Requirement or others


2. Initiation Process• Inputs:

– Product Description – characteristics of the product/service that the project was to create

• Less detail in early phases, more comprehensive in latter• Initial product description is usually provided by the buyer

– Strategic Plan – supportive of the organization's goals– Project Selection Criteria – defined in terms of the

product and covers range of management concerns (finance, market)

– Historical Information – results of previous project decisions and performance should be considered


2. Initiation Process• Tools & Techniques

– Project Selection Methods:• Benefit measurement models – comparative approaches,

scoring models, economic models• Constrained operation models – programming mathematical• Decision models – generalized and sophisticated techniques

– Expert judgment• Business Units with specialized skills• Consultant• Professional and Technical Associations• Delphi Technique


2. Initiation Process• Outputs

– Project Charter – formally recognizes project, created by senior manager, includes:

• Business need/Business Case• Product description & title• Signed contract• Project Manager Identification & Authority level• Senior Management approval• Project’s Goals and Objectives • Constraints – factors that limit project management team’s

options• Assumptions – factors that are considered true for planning

purposes. Involve a degree of risk (continued)


3. Scope Planning• Scope Planning – a process of developing a

written statement as basis for future decisions– Criteria to determine if the project or phase is

successful

• Inputs:– Product description– Project Charter– Constraints– Assumptions


3. Scope Planning• Tools & Techniques

– Product Analysis - - developing a better understanding of the product of the project

– Cost/Benefit Analysis – estimating tangible/intangible costs and returns of various project alternatives and using financial measures to assess desirability

– Alternatives Identification – generate different approaches to the project; “brainstorming”

– Expert Judgment


3. Scope Planning• Outputs

– Scope Statement – documented basis for making project decisions and confirming understanding among stakeholders. Includes:

• Project justification –evaluating future trade-offs• Project Product – summary of project description• Project Deliverables – list of summary of delivery items• Project Objectives – quantifiable criteria met for success.

– Supporting detail – includes documentation of all assumptions and constraints

– Scope Management Plan – how project scope is managed, change control procedure, expected stability, change identification and classification

• Control what is/is not in the project; prevents delivering “extra” benefits to the customer that were not specified/required


4. Scope Definition– Subdividing major deliverables into smaller,

manageable components– Improve accuracy of cost, time, and resource

estimates– Define a baseline for performance measurement– Clear responsibility assignments– Critical to project success – reduces risk of higher

cost, redundancy, time delays, and poor productivity– Defines “what” you are doing; WBS is the tool


4. Scope Definition• Inputs:

– Scope Statement– Constraints – consider contractual provisions– Assumptions– Other Planning Outputs– Historical Information


4. Scope Definition• Tools & Techniques

– Work Breakdown Structure Templates– Decomposition

• The main works in scope definition– Major project deliverables and management approach– Decide cost and duration estimates – Tangible and verifiable results to enable performance

management, how the work will be accomplished– Verify correctness of decomposition-All items necessary and

sufficient? Clearly and completely defined? Appropriately scheduled, budgeted, assigned?


4. Scope Definition • Outputs

– Work Breakdown Structure (WBS) • a deliverable-oriented grouping of project assignments that

organizes and defines the scope of the project • Each descending level represents further detail; smaller and

more manageable pieces• Each item is assigned a unique identifier collectively known as

“code of accounts”

– Work Breakdown Structure Dictionary (WBSD)• All work element descriptions included in a WBSD (work,

schedule and planning information)

– Other formats:Contractual WBS, Organizational (OBS) , Resource (RBS) , Bill of Materials (BOM) , Project (PBS) – similar to WBS


Software Development Project

Project Management

Product Requirement

System Design

Training and Transmitting

Construction& Integration

Time

quality

Cost

Owner’s Requir.

End User’s Requir.

Analysis Result

Logic Sys Design

Physic Sys design

System Design

Prog-ramming

Integ-rating

Testing

User Docu-mentation

Training Program

TransmittingProgram

An illustration of the WBS for a software development project

Scope

5. Scope Verification • Inputs

– Scope Definition Work Results – WBS, WBSD– Product Documentation – description available for

review (requirements)

• Tools & Techniques– Inspection – measuring, examining, testing to

determine if results conform to requirements

• Outputs– Formal acceptance – documentation identifying client

and stakeholder approval, customer acceptance of efforts


6. Scope Change Control

• Influencing factors to ensure that changes are beneficial

• Determining scope change has occurred

• Managing changes when they occur

• Thoroughly integrated with other control processes


6. Scope Change Control• Scope Change Control Inputs:

– Work Breakdown Structure– Performance Reports- issues reported– Change Requests – expansion/shrink of scope

derived from :• External events (government regulations)• Scope definition errors of product or project• Value adding change – new technology

– Scope Management Plan


6. Scope Change Control• Scope Change Control Tools & Techniques

– Scope Change Control System – defines procedures how scope change can occur

• All paperwork, tracking systems, approval levels• Integrated with overall change control procedures

– Performance Measurement – determine what is causing variances and corrective actions

– Additional Planning


6. Scope Change Control

• Scope Change Control Outputs:– Scope Changes – fed back through planning

processes, revised WBS– Corrective Actions – Lessons Learned – cause and reasoning for

variances documented for historical purposes


Chapter 5 – Project Time Management

1. Project Time Management• It includes the processes required to ensure

timely completion of the project. • The major processes are:

– Activity Definition-identifying the specific activities that must be performed to produce project deliverables.

– Activity Sequencing-identifying and documenting interactivity dependencies.

– Activity Duration Estimating-estimating the work periods needed to complete individual activities.

– Schedule Development-analyzing activity sequences, durations,and resource requirements for the schedule.

– Schedule Control-controlling changes to the schedule.

Activity Definitionidentifying the specific activities

Schedule Developmentanalyzing sequences, durations,

and resource requirements

Activity Duration Estimatingestimating work periods needed to complete individual activities

Activity Sequencingidentifying and documenting

interactivity dependencies

Schedule Control-controlling

changes to the schedule

WBS Activity Breakdown Analysis

Activity Sequencing

interactivity dependencies

Critical Path Analysis

estimating work periods needed

Measures for time management

Arrange activity time schedule

Actual change control

Change requirement control

2. Activity Definition

• Identifying and documenting specific activities to produce project deliverables identified in the WBS

• Must be defined to meet the project objectives



• Inputs– WBS – primary input– Scope Statement – project justification &

project objectives– Historical Information – Constraints– Assumptions



• Tools & Techniques– Decomposition – outputs are expressed as

activities rather than deliverables– Templates – reuse from previous projects


Plant construction project

Construction M.

Scope M.

Time M.

Cost M.

The illustration of activity definition of a construction project

Design subproject Building subproject

Integration M.

Construction work

·····

Construction

Installation

Hand over

Site preparing

Design management

Scope M.

Time M.

Cost M.

Integration M.

Design work

·····

Structure D.

Shop Drawing

Installation D.

Architecture D.

···

···

Estim

ate

Budge

t Payme

nt Contr

ol

Settleme

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Foundation Fram

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2. Activity Definition• Outputs

– Activity List – all to be performed; extension to the WBS and includes description to ensure team members understand work to be performed

– Supporting Detail – organized as needed and include all assumptions and constraints

– WBS Updates – identify missing deliverables and clarify deliverable descriptions. WBS updates often called refinements; more likely using new technologies in project


3. Activity Sequencing

• Identifying and documenting interactive dependencies among activities.

• Support later development of a realistic schedule


3. Activity Sequencing• Inputs:

– Activity List– Product Description – Mandatory Sequencing

physical limitations, hard logic, inherent in nature of work being done

– Discretionary Dependencies defined by project management team; “best practices” or unusual

aspects of project – soft logic, preferred logic, preferential logic

– External Dependencies relationship between project activities and non-project activities

– Constraints– Assumptions


3. Activity Sequencing• Tools & Techniques

– Precedence Diagramming Method (PDM) constructing network diagram using Activity On Node (AON) or

Arrow Diagramming Method (ADM), to indicate dependencies• Includes 4 types of dependencies:

– Finish to Start – “from” activity must finish before “to” activity can begin

– Finish to Finish – “from” activity must finish before the next may finish

– Start to Start – “from” activity must start before next “to” activity can start

– Start to Finish – task must start before next activity can finish

– Project Time Management Software– Network Templates – standardized networks be used.


3. Activity Sequencing

• Outputs:– Project Network Diagram

• schematic display of project activities and relationships (dependencies).

• Should be accompanied by a summary narrative that describes the diagram approach

– Activity List Updates


C

F

End Start

A B

D E

Project Network Diagram with Activity On Node (AON)

B

Project Network Diagram with Arrow Diagramming Method (ADM)

Start A

DE

C

F

End

4. Activity Duration Estimating

• Involves assessing number of work periods needed to complete identified activities

• Requires consideration of elapsed time, calendars, weekends, and day of week work starts


4. Activity Duration Estimating• Inputs:

– Activity Lists– Constraints– Assumptions– Resource Requirements– Resource Capabilities

• human and material resources, expertise

– Historical Information• Previous Project Files, • Commercial Duration Estimates,• Project Team Knowledge


4. Activity Duration Estimating• Tools & Techniques

– Expert Judgment • guided by historical information should be used whenever possible;• high risk without expertise avail.

– Simulation• using different sets of assumptions (Monte Carlo Analysis) to drive

multiple durations

– Analogous Estimating • “top down estimating” – use actual, similar, previous known

durations as basis for future activity duration. • Used when limited knowledge is available. • Form of expert judgment


Illustration of the duration simulations

Probability

±3δ

Time 1

Time 2Time 3

Time 1

Time 2

Time 3

An activityCritical path

Time 1--Optimistic time

Time 2- Most Likely time

Time 3-Pessimistic time

Time

C5 days

F5 days

End Start

A5 days

B5 days

D10 days

E5 days

Project Network Diagram with time duration estimate using Activity On Node (AON)

Path No.1

Path No.2 (critical path)

Path No.3

4. Activity Duration Estimating

• Outputs:– Activity Duration Estimates

• Quantitative assessments of work periods to complete an activity.

• Should indicate a range +/- of possible results

– Basis of Estimates • all assumptions should be documented

– Activity List Updates


5. Schedule Development

• Determining start and finish dates for project activities

• Schedule development process often repeat as more information becomes available (process inputs)

• Without realistic dates, project unlikely to be finished as scheduled


5. Schedule Development• Inputs:

– Project Network Diagram– Activity Duration Estimates– Resource Requirements– Resource Pool Description – Calendars

• Project Calendars and Resource Calendars

– Constraints• Imposed Dates, Key Events or Milestones that are required

– Assumptions– Lead and Lag Time

• dependencies may specify time in order to satisfy relationship (example – 2 weeks to receive order)


5. Schedule Development• Tools & Techniques

– Critical Path Method• One time estimate per task (Most Likely)• Emphasis on controlling cost and leaving schedule flexible

– Graphical Evaluation and Review Technique (GERT) • probabilistic treatment of network and activity duration estimates

– Program Evaluation and Review Technique (PERT)• Sequential network and weighted average duration.• Using 3 Time estimates per activity:Optimistic, Pessimistic and Most

Likely time.• Using weighted average duration( (T1+4T2+T3)/6) to calculate

project duration (continued)


5. Schedule Development• Tools & Techniques

– Monte Carlo Simulation – It tells:– Probability of completing a project on any specific day– Probability of completing a project for any specific amount of cost– Overall Project Risk

– Resource Leveling Heuristics – leveling resources that apply to critical path activities– “resource constrained scheduling” or “Resource Based Method”

– Project Management Software– Project Manger’s role

• Provide the team with necessary information to properly estimate the task• Complete a right check of the estimate and formulate a reserve

– Project Team should be involved in determining task estimates with:• Historical Records, Personal Guesses and Judgments.


5. Schedule Development• Outputs:

– Project Schedule –Usually in following formats:• Project Network Diagrams (with date information added) • Bar or Gantt charts – activity start and end dates, expected

durations– Supporting Detail – all assumptions and constraints. Also

include:• Resource requirement by time period (resource histogram)• Alternative schedules (best/worst case)• Schedule reserve/risk assessments

– Schedule Management Plan – how updates are managed– Resource requirement updates – leveling and activity impact


6. Schedule Control

• Influencing factors which create schedule changes to ensure changes are beneficial

• Determining that schedule has changed

• Managing actual changes as they occur


6. Schedule Control

• Inputs – Project Schedule

• baseline approved, measure against project performance

– Performance Reports • planned dates met, issues

– Change Requests– Schedule Management Plan


6. Schedule Control• Tools & Techniques

– Schedule Change Control System • defines procedures for schedule changes,

paperwork, approval, tracking systems

– Performance Measurement • assess magnitude of variations to baseline;

determine if corrective action is needed

– Additional Planning – Project Management Software


6. Schedule Control• Outputs:

– Schedule Updates • for any modifications or stakeholder notification• Revisions change scheduled start and finish dates • “Re-baseline” may be needed in drastic situations

– Corrective Action• re-align performance with project plan

– Lessons Learned


7. General Comments• Projects can have more than 1 critical path (increases

risk) and can involve dummy tasks• Resource Leveling involves possibly letting schedule and

cost slip• Schedules are calendar based – makes this different

than a time estimate• To shorten project schedule with the critical path

• add more resources to the critical path tasks--usually results in increased cost

• performing tasks in parallel--can result in re-work and increased risk

• Best to select method that has least impact on the project (is the importance on cost, risk or schedule?)


7. General Comments • Different techniques have different advantages and disadvantages • Bar (Gantt) Charts

• Weak Planning Tool, effective progress and reporting tool• Does not show interdependencies of tasks• Does not help organize the project more effectively

• Network Diagrams (PERT, CPM, PDM)• Shows task interdependencies• Aids in effectively planning and organizing work• Provides a basis for project control

• Milestone Charts• Only shows major events• Good for reporting to management and customer

• Flow Charts• tell workflow and not commonly used for project management


Chapter 6 – Project Cost Management

1. Project Cost Management• Project Cost Management :

– Ensure that the project is completed within budget– Concerned with cost of resources needed to complete

activities; – Consider effect of project decisions on cost of using

product “life-cycle costing”– Most prospective financial impact of using the product

is outside the project scope– Consider information needs of stakeholders,

controllable and uncontrollable costs (budget separately for reward and recognition systems)

1. Project Cost Management• Project Cost Management:

– Estimating should be based on WBS to improve accuracy– Estimating should be done by the person performing the work– Having historical records is key to improving estimates– Costs (schedule, scope, resources) should be managed through

estimates, budgeting and controlling– A cost (schedule, scope, baseline) should be kept and not

changed– Plans should be revised as necessary during completion of work– Corrective action should be taken when cost problems

(schedule, scope and resources) occur.


1. Project Cost Management• Project Cost Management consists of:

– Resource Planning– Cost Estimating– Cost Budgeting– Cost Controlling– Earned Value Analysis


2. Resource Planning– Determining what physical resources and quantities

are needed to perform work

• Inputs :– Work Breakdown Structure and Activity List– Network Diagram– Schedule and Risks– Historical Information– Scope Statement

• justification & objectives

– Resource Pool Description • what resources are potentially available for resource planning

– Organizational Policies • staffing, procurement


2. Resource Planning

• Tools & Techniques– Expert Judgment– Alternatives Identification

• Outputs:– Resource Requirements

• what type & how many resources are needed for each activity in the Work Breakdown Structure


3. Cost Estimating– Develop approximate costs of resources– Distinguish estimating from pricing

• Estimating – likely amount• Pricing – business decision

– Identify alternatives and consider realigning costs in phases to their expected savings


3. Cost Estimating• Inputs:

– Work Breakdown Structure and Activity List– Resource Requirements– Resource Rates (if known)– Activity Duration Estimates– Historical Information –project files, commercial cost

databases, team knowledge– Chart Of Accounts – coding structure for accounting;

general ledger reporting


3. Cost Estimating• Tools & Techniques

– Analogous Estimating – “top down”; using actual costs from previous project as basis for estimate

• Quick - Less Accurate

– Parametric Modeling – uses project characteristics in mathematical models to predict costs (e.g.building houses)

• 2 types: Regression analysis, Learning Curve.

– Bottom Up Estimating – rolling up individual activities into project total with quantity survey and its list.

• More Accurate, Requires that project be defined and understood

– Computerized tools – spreadsheets, software


3. Cost Estimating• Outputs

– Cost estimates – quantitative assessments of likely costs of resources required to complete tasks

• For all resources (labor, materials, supplies, inflation allowance, reserve)• Expressed in units of currency

– Supporting Detail• Description of scope (reference to the WBS)• Documentation how estimate was developed• Indication of range of possible results• Assumptions

– Cost Management Plan• how cost variances will be managed

– Cost Risk• Associated to seller for Fixed Price;• Associated to buyer for Time and Materials budget (cost plus profit)


3. Cost Estimating

• Accuracy of Estimates– Cost Estimate: -25% - 75%; usually made

during Initiation Phase– Budget Estimate: -10% - 25%; usually made

during the Planning phase– Definitive Estimate: -5% - 10%; usually made

during the Planning phase


4. Cost Budgeting– Involves allocation of total estimate to individual work

to establish a cost baseline to measure performance

• Inputs– Cost Estimate– Work Breakdown Structure and Activity List– Project Schedule – includes planned start and finish

dates for items costs are allocated to• Needed to assign costs during the time period when the

actual cost will be incurred


4. Cost Budgeting• Tools & Techniques

– Same as Cost Estimating Tools and Techniques– Management Reserve – Contingency for all risks

• Outputs– Cost Baseline – time phased budget to measure and

monitor cost performance• Developed by summing estimated costs by period (S curve

of values vs. time)• Larger projects have multiple baselines to measure different

aspects of cost performance


Unexpected Situation

Expected Situation

The illustration of project budgeting

C1

C2

C3

Schedule （ calendars

）

Project Budget（ Baseline ）

S3S2

S1

5. Cost Control– Concerned with influencing factors that create

changes to the cost baseline that are beneficial– Determining that the cost baseline has changed– Managing actual changes as they occur

• Monitor cost performance to detect variances• Record all appropriate changes accurately• Preventing incorrect, unauthorized changes being included in the

cost baseline• Informing stakeholders of authorized changes

– Determine the “why’s” of positive and negative variances– Integrated will all other control processes (scope, change, schedule,

quality)


5. Cost Control• Inputs

– Cost Baseline– Performance Reports with 3 methods:

– 50/50 Rule – task is considered 50% complete when it begins and gets credit for remainder 50% only when completed

– 20/80 Rule - task is considered 20% complete when it begins and gets credit for remainder 80% only when completed

– 0/100 Rule – task only credited when fully completed– Change Requests– Cost Management Plan


5. Cost Control• Tools & Techniques

– Cost Change Control System • defines the procedures by which the cost baseline may be

changed– Performance Measurement

• assess magnitude of cost variations (Earned Value Analysis) and what is causing the variance

– Additional Planning• examine alternatives

– Computerized Tools• forecast planned costs, track actual costs, forecast effect of

cost changes


5. Cost Control• Outputs

– Revised Cost Estimate• Modifications to cost information; require stakeholder approval and

adjustments to other project areas– Budget Updates

• changes to approved cost baseline; revised in response to scope changes– Corrective Action– Estimate at completion (EAC) – forecast of total expenditures

• Actual to date plus remaining budget modified by a factor (cost performance index)

– Current variances are seen to apply to future variances• Actual to date plus new estimate for remaining work

– Original estimates are flawed, or no longer relevant• Actual to date plus remaining budget

– Current variances are typical and similar variances will not occur in the future

– Lessons Learned


6. Earned Value Analysis– Integrates cost and schedule– Better that comparing projected vs. actual because

time and cost are analyzed separately– Terms:

• BCWS – Budgeted Cost of Work Scheduled (Plan Value)• BCWP – Budgeted Cost of Work Performed (Earned Value) [(Work

actually Performed)× (Budgeted Cost of that work) • ACWP – Actual Cost of Work Performed (Actual Cost)• BAC – Budget at Completion (total budget for the whole job)• EAC – Estimate at Completion (what do we expect the total project

to cost); EAC refers to when job is completed.• ETC – Estimate to Completion (how much more do we expect to

spend to finish the job), ETC refers to “this point on”• VAC – Variance at Completion (how much over/under budget do

we expect to be)


6. Earned Value Analysis • Earned Value Analysis Formulas

– Variance (Plan – Actual)• Cost Variance (CV): BCWP – ACWP; negative is

over budget• Schedule Variance (SV): BCWP – BCWS; negative

is behind schedule• Cost Performance Index (CPI): BCWP

ACWP--I am only getting x¢ out of every $.

(continued)


• Earned Value Analysis– Formulas

• Schedule Performance Index (SPI): BCWP BCWS

– I am only progressing x % of the planned rate• Estimate at Completion (EAC): BAC

CPI– As of now we expect the total project to cost x$

• Estimate to Complete (ETC): EAC – ACWP; – how much will it cost from now to completion

• Variance at Completion: BAC – EAC; – when the project is over how much more or less did we spend

(most common way of calculating EVA)– Negative is bad; positive results are good


SV=EV-PV

= BCWP – BCWS

The illustration of EV Analysis

Cost

Actual Cost

Earned Value

Schedule （ calendars

）

Budget（ Baseline ）

Work performed

Actual time spend

PV

2 years 4 years

EV

AC

CV= EV-AC

= BCWP – ACWP

Time Variance Variance at Com:

BAC – EAC

ETC= EAC – ACWP

EAC

1. Quality Definition • Quality is the totality of characteristics of an

entity that bear on its ability to satisfy stated or implied needs– Critical aspect is to turn implied needs into stated

needs through project scope management– Customer satisfaction – conformance to specifications

(must produce what is stated) and fitness for use (must satisfy real needs)

– Management responsibility – requires participation of team; responsibility of management to provide resources

– Quality objectives are approved in conceptual stage by project owner

Chapter 7 – Project Quality Management

1. Quality Definition– Responsibility to project quality

• Entire organization• Ultimate – employee or owner• Overall or Primary – Project Manager• Design and Test Specifications – engineer

– Prevention over inspection• Quality must be planned in not inspected in

– Quality attributes • can be subjective, objective and are specific characteristics

for which a project is designed and tested



2. Project Quality Management– Processes required to ensure that the project

will satisfy the needs for which it was designed

– Includes all activities of the overall management function that determine the quality policy, objectives, and responsibilities.

– These are implemented by quality planning, quality control, quality assurance, and quality improvement

2. Project Quality Management• 3 major processes:

– Quality Planning • identifying quality standards that are relevant to the project (Plan),

by Project Manager, Project Owner

– Quality Assurance • evaluating overall project performance to provide confidence that

project will satisfy relevant quality standards (Implement or Execution); by Project Team

– Quality Control • monitoring specific results to comply with quality standards and

eliminating unsatisfactory performance causes (Check or Control); by Project Manager, Project Team

• Must address(do) the management of the project and the product of the project


3. Quality Planning– Identifying which standards are relevant to

project and how to satisfy – done during Project Planning Phases

• Inputs– Quality Policy

• the overall intentions and direction of an organization with regard to quality as expressed by management

– Scope Statement– Product Description– Standards and Regulations– Other Process Outputs

• processes from other knowledge areas (procurement planning)


3. Quality Planning• Tools &Techniques

– Benefit/Cost Analysis• consider trade-offs, benefit is less rework; cost is expense of project

management activities– Benchmarking

• comparing actual or planned practices to those of other projects– Flowcharting

• Cause and effect diagramming (fishbone diagrams) illustrate how causes relate to potential problems or effects

• System or Process flowcharts – show how various elements of the system interrelate

– Design of Experiments • analytical technique which defines what variables have most

influence of the overall outcome


Economic Quality Cost

C

Q

Quality

Cost

C0

Economic Quality

Illustration of Benefit/Cost Analysis

Quality Failure Cost

Quality Assurance Cost

Total Quality Cost

Quality L2Quality L1

3. Quality Planning• Outputs

– Quality Management Plan • describes how team will implement its quality policy; describes the

project quality system – organizational structures, responsibilities, procedures, processes and resources needed to implement quality management

– Operational Definitions• defines how an item is measured by the quality control process.

– Checklists• structured tool used to verify that a set of required steps has been

performed

– Inputs to other processes • may identify a need for further activity in another area


4. Quality Assurance• All planned activities implemented within the

quality system to provide confidence that the project will satisfy quality standards– done during Project Execution phases

• Inputs– Quality Management Plan– Results of quality control measurements (testing)– Operational definitions(how an item is measured by the

quality control process)


4. Quality Assurance• Tools & Techniques

– Quality planning tools & techniques– Quality Audits

• structured review of quality management activities to identify lessons learned

• Outputs– Quality improvements

• taking action to increase the effectiveness and efficiency of the project to provide added benefits to the stakeholders

• Most likely will involve change control


5. Quality Control • Monitoring specific results to determine if they

comply with quality standards, and identifying ways to eliminate causes of unsatisfactory results, take corrective actions to keep the compliancy of quality standards --done during project Control phases

• Process of monitoring specific project results to determine if they comply with relevant quality standards and identify ways of eliminating unsatisfactory performance

• Performance of the measurement or process


5. Quality Control

• Inputs– Work results

• include process and product results

– Quality Management Plan– Operational Definitions– Checklists


5. Quality Control• Tools & Techniques

– Inspection – Control Charts (see the chart on next page)– Pareto diagrams – Statistical sampling – Flowcharting– Trend Analysis

• forecast future outcomes based on historical results– Technical performance (# of errors identified; # of errors

that remain)– Cost and Schedule performance (activities per period

with significant variances)


Upper Control Limit

Upper Specification Limit

Mean

Lower Control Limit

Lower Specification Limit

Numbers of Sample

Quality Specification

Illustration of Control Chart

Rule of 7

5. Quality Control• Outputs

– Quality Improvement– Acceptance Decisions (accept/reject)– Rework

• action to bring defective item into compliance

– Completed checklists– Process Adjustments

• immediate corrective/preventive actions• Most likely involves change control


Chapter 8 – Project Integration Management

1. Project Integration Management– Ensures that the project processes are properly

coordinated– It is needed for overall project management and the

communication within a project– It is needed to perform project management well and

systematically– There are three processes in PIM

• Project Plan Development• Project Plan Execution• Overall Change Control

– These processes may occur repeatedly over the project duration

Project Scope

Project Cost

Project Quality

Project Time

The interactive relationship of project factors for integration management

2. Project Plan Development– Uses outputs from other planning processes to create

consistent document to guide project execution and control

– Iterated (repeated) several times– Documents planning assumptions– Documents planning decisions that are chosen– Facilitates communication– Defines key management reviews(point/time)– Provides a baseline to track progress measurement

and project control


2. Project Plan Development• Inputs

– Other planning outputs: primarily the planning process outputs (WBS, base documents, application area inputs)

– Historical information – verify assumptions, records of past project performance

– Organizational policies – quality management, personnel administration, Financial controls

– Constraints – factors that limit performance, contractual provisions, budget

– Assumptions – risk factors


2. Project Plan Development• Tools & Techniques

– Project Planning Methodology – any structured approach (software, templates, forms, start-up meetings

– Stakeholder Skills & Knowledge – tap into plan development; use expertise for reasonableness

– PMIS – Out of the box approach to support all project aspects through closure


2. Project Plan Development• Outputs

– Project Plan ( or PIP/master plan/main plan) is a collection that changes over time as more information about the project becomes available (see the details on next page)

– Baseline (for performance measurement) will change only in response to approved scope change

– Supporting Details to the Project Plan• Outputs from planning processes• Technical documentation• Business requirements, specifications, and designs• Relevant standards• Additional information not previously known


2. Project Plan Development• Project Plan includes some or all of the following:

– Project Charter– Project Management approach or strategy– Scope statement– Work Breakdown Structure (WBS)– Key Staff, Major Milestones– Change Control Plan, – Communication Management Plan– Budget, scheduled and quality responsibility assignments– Required Staff– Risks, constraints and assumptions– Subsidiary management plans (scope, schedule)– Open Issues and Pending Decisions


3. Project Plan Execution– Primary process for carrying out the project

plan– Most costly aspect of project management– Direction of organizational resources and

interfaces


3. Project Plan Execution

• Inputs:– Project Plan– Supporting Detail– Organizational Policies– Corrective Action – anything to bring expected

performance in line with the project plan


3. Project Plan Execution• Tools & Techniques

– General Management Skills– Product Skills and Knowledge – defined as part of

planning, provided by staffing– Work Authorization System – formal procedure for

sanctioning work to ensure completion – written or verbal authorization

– Status review meetings – regular exchanges of information

– Project Management Information System– Organizational Procedures


3. Project Plan Execution

• Outputs– Work results – the outcome of activities

performed is fed into the performance reporting process

– Change Requests – expand/shrink project scope, modify costs and schedule estimates


4. Overall Change Control– Influencing factors that create change to

ensure beneficial results; ensure that change is beneficial

– Determining that change has occurred– Managing actual changes as they occur

• Evaluate impact of change• Meet with team to discuss alternatives• Meet with management to present decision


4. Overall Change Control • Change control requires

– Maintaining integrity of performance measurement baselines (project plan)

– Ensuring changes to scope are accurately recorded– Coordinating changes across knowledge areas

(scheduling, risk, cost, quality, etc.)– Determine all factors that control change and pro-

actively preventing the occurrence; evaluate the impact of change


4. Overall Change Control

• Inputs– Project Plan – baseline performance– Performance Reports – issue tracking, risk

management– Change Requests – orally or written,

externally or internally initiates, legally mandated or optional


4. Overall Change Control• Tools & Techniques

– Overall Change Control System – collection of formal procedures, paperwork, tracking systems, approval levels. Including:

• Change Control Board, Change Control Plan and Procedures, • Performance Statistics, Reports, Change forms• Specification reviews, Demonstrations, Testing, Meetings

– Configuration Management – documented procedure to apply technical and administrative direction

• ID and document functional and physical characteristics• Control changes to these characteristics• Record and report change and implementation status• Audit items and system to verify requirements


4. Overall Change Control• Outputs

– Project Plan Updates– Corrective Actions– Lessons Learned

• variance causes and reasoning documented for historical purposes

• What have we done, how can we do it better– Technical Aspects of the project– Project Management (WBS, plans, etc.)– Overall Management (communications, leadership)– Best to have whole team complete and made available


Chapter 9 – Project Risk Management

1. Project Risk Management• Definition of risk: a discrete occurrence that

may affect the project for good or bad. • Definition of uncertainty: an uncommon state

of nature, characterized by the absence of any information related to a desired outcome.

• Definition of risk management: The process involved with identifying, analyzing, and responding to risk. maximizing results of positive events and minimizing consequences of negative events.

1. Project Risk Management• Risk Management includes :

– Risk Identification • Find out which are likely to affect the project

– Risk Quantification • Evaluate the risk to assess the range of possible outcomes

– Risk Response Development• define enhancement steps for opportunities and response.

Sometimes called response planning/mitigation

– Risk Response Control • respond to changes in risk over course of project. May be

combined as risk management


2. Risk Identification– Determine which risks are likely to affect the project

and documenting them– Performed on a regular basis; address internal and

external risks• Internal –project team has control/influence over• External – beyond project team’s control

– Identify cause and effect and effects and causes; what could happen vs. what outcomes should be avoided


2. Risk Identification • Inputs

– Product Description • There are more risks associated with unproven technologies

(innovation/invention). Often described in terms of cost and schedule impact

– Other Planning Reports• WBS (any non-traditional approaches)• Cost/Duration Estimates – aggressive schedules; limited

information• Staffing Plan – hard to replace/source skilled persons• Procurement Management Plan – market conditions

– Historical Information• previous projects: Project Files, Commercial Databases,

Project Team Knowledge(members’ experiences)


2. Risk Identification• Tools & Techniques

– Checklists • organized by source of risk, included project

context, process outputs, product and technology issues, internal sources

– Flowcharting • understand cause and effect relationships

– Interviewing • conversations with stakeholders


2. Risk Identification• Outputs

– Sources of Risk• categories of possible risk events, all-inclusive (Changes in

requirements, Design errors, omissions, misunderstanding, poorly defined roles and responsibilities, Insufficiently staff)

– Sources:» External: Regulatory, environmental, government» Internal: Schedule, cost, scope change, inexperience,

planning, people, staffing, materials, equipment» Technical: Changes in technology» Unforeseeable: small (only about 10%)» Risk I, Risk II

• Include estimate of probability, range of possible outcomes, expected timing, anticipated frequency

(continued)


The Whole Risks of

a Project

Classified by serious of results

Classified by causes

of risks

Classified by risks

conjunction

Classified by Unfore-

seeing

Classified by

probability

Classified by objects

of risks

Classification of the Risks

2. Risk Identification• Outputs

– Potential Risk Events• Discrete (unusual) occurrences that may affect project• New technologies obsolete needed by product• Socio, Political and Economic events• Include estimate of probability, range of possible outcomes,

expected timing, anticipated frequency– Risk Symptoms

• Early warning signs– Risk Tolerances

• amount of risk that is acceptable– Input to other management process (time, cost ,quality etc.)


2. Risk Identification• Common Stumbling Blocks

– Risk identification is completed without knowing enough about the project

– Project Risk evaluated only by questionnaire, interview or Monte Carlo; does not provided a per task analysis of risk

– Risk identification ends too soon– Project Risk identification and Evaluation are combined – results

in risks that are evaluated when they appear; decreased total number of risks and stops identification process

– Risks are identified too generally– Categories of risks are forgotten (technology, culture)– Only 1 identification method is used– First risk response strategy is used without other consideration– Risks are not devoted enough attention during the Execution

phase


3. Risk Quantification– Assess risks to determine range of possible

outcomes; which risk events warrant (must have ) a response. This will involve:

• Opportunities and threats can provide unanticipated results (e.g. schedule delay is considered for a new strategy)

• Multiple effects from a single event• Singular stakeholder’s opportunity may force suffering in

other areas• Reliance (based on ) on statistics and forecasting• Probability and Amount of Impact• Develop a ranking (priority) of risks

– Qualitative – take an educated guess– Quantitative – estimation by calculation


3. Risk Quantification

• Inputs– Stakeholder risk tolerance

• More capital to expend; perceptions of severity

– Sources of Risk (from RI)– Potential Risk Events(from RI)– Cost Estimates– Activity Duration Estimates


3. Risk Quantification• Tools & Techniques

– Expected Monetary Value • Product of 2 numbers P×V• Risk Event Probability – estimate that event will occur• Risk Event Value – estimate of gain or loss

– Statistical Sums • Calculate range of total costs from cost estimates for individual work

items with probabilities– Simulation

• representation or model; provide statistical distribution of calculated results (Monte Carlo, Critical Path, PERT techniques)

– Decision Trees – Expert Judgment – Sensitivity Analysis

• estimate the effect of change of one project variable on overall project


3. Risk Quantification• Outputs

– Risk probability,– Range of possible outcomes,– Expected timing, – Anticipated frequency– Priorities of project risks– Opportunities to pursue and threats to respond– Opportunities to ignore and threats to accept


The Process of Risk Assessment ( Risk Identification + Risk Quantification)

Documents of risk

identification End

YesEnd

No

No.

Collect all the information for risk identification

Analysis and judgment of project risk

Classification of project risks

Analyze and value project risk probabilities

Analyze and value risks & range of possible outcomes

Analyze and value the serious of project risks results

Analysis & value risks timing & causes

Document the result of all analysis

Risk ？

Project end ？

Develop PMIS for risk management

Knowledge and experience

of the team

Report of Risk Identification

Yes

4. Risk Response Development– Defining enhancement steps for opportunities and

responses to threats. Main responses are as follows:• Avoidance – eliminating threat by eliminating the cause• Mitigation – reducing expected monetary value of event by

reducing the probability of occurrence• Acceptance – accept the consequences (active -

contingency plan - or passive response)

– Determine what will be done, how to make risk smaller or eliminate (not all risks can be eliminated)


4. Risk Response Development• Inputs

– Opportunities to pursue– Threats to respond– Opportunities to ignore– Threats to accept


4. Risk Response Development• Tools & Techniques

– Procurement • acquire resources (exchange 1 risk for another)

– Contingency Planning • defining action steps should a risk event occur

– Alternative Strategies(change planned approach)• Avoidance – eliminate the cause• Mitigation – effect the probability or impact of risk• Acceptance – do nothing• Deflection (transfer, allocate) – make another party

responsible, outsourcing– Insurance


4. Risk Response Development• Outputs

– Risk Management Plan

• documents risks identified and how they are addressed; non-critical risks should be recorded to revisit during the execution phase

• Addresses risk identification and quantification processes, personnel responsible for managing areas of risk, maintenance of identification and quantification process, implementation of contingency plans and allocation of reserve

– Inputs to other processes • alternative strategies, contingency plans, anticipated procurements

– Contingency Plans • recommend total of 10% to account for known and unknown risks

– Contractual Agreements • insurance, services and other functions to avoid and mitigate

threats.


5. Risk Response Control– executing and updating the Risk Management Plan in

order to respond to risk events during the project• Control and iteration (repeat) are required; not all risks can

be identified in one time.

• Inputs– Risk Management Plan– Actual Risk Events

• recognize occurrence

– Additional Risk Identification (repeat) • surfacing of potential or actual risk sources


5. Risk Response Control• Tools & Techniques

– Workarounds• unplanned responses to negative risk events that were

unanticipated(response was not defined in advance)

– Contingency Plans • Take planned responses according to contingency plans

– Additional Risk Response Development • Do the risk response development once more

– Three phases risk control method• Potential phase • Risk occurring phase• Reduce the risk impact phase


5. Risk Response Control

• Outputs– Corrective Action

• performing the planned risk response– Updates to Risk Management Plan


Establish the risk control system according to the RI report

Determine the risk respond control activities needed for the project

Assign the responsibility of the risk control to specific persons

Make up Risk Management Plan and Contingency Plans

Execute the plans and change the plans

Take Corrective Action and do Workarounds

Monitoring the risk respond control result

Project end ？

Risk control end

Return to RI&RQ

yes

No

Project risk respond development and control process

Chapter 10 – Human Resource Management

1. Project Human Resource Management

– Processes required to make the most efficient use of people involved with the project (stakeholders)

– 3 major processes:• Organizational Planning• Staff Acquisitions• Team Development

– Keep in mind of transient (time limited and only one time) nature of projects for its HRM

– Ensure HR compliance with project management activities


1. Project Human Resource Management– 1,9 manager = good relationship with team– Project Organization

• Conflict between PM and Functional Managers• Dual allegiance (two boss) of team members

– Compromise =otherwise both sides will lose– Delegation– If there is a team of experts, PM decisions will

promote high satisfaction– Functional/Project Managers likely to exercise:Power,

Authority and Influence


2. Organizational Planning– Identifying, documenting and assigning

project roles, responsibilities, and reporting relationships

• Individual and group assignments• Internal and external employees• Linked with communication planning


2. Organizational Planning• Inputs

– Project Interfaces • Organizational interfaces – formal and informal reporting

relationships among organizational units (the enterprise)• Technical interfaces - formal and informal reporting relationships

among technical disciplines,Engineers, manufacturers(stakeholder)• Interpersonal interfaces – formal and informal reporting relationships

among individuals (project)

– Staffing Requirements – define skill sets for individual/group in particular time frames

– Constraints – factors that limit project team’s options• Organizational structure (strong vs. weak matrix)• Collective bargaining agreements – contractual arrangements• Preferences of project management team• Expected staff assignments


2. Organizational Planning• Tools & Techniques

– Templates – reuse a similar project’s role and responsibility definitions

– Human Resource Management Practices – corporate policies, guidelines, and practices

– Organizational Theory – how organizations are structured (functional, projectized,matrix)

– Stakeholder Analysis – needs of stakeholders are ensured


2. Organizational Planning• Outputs (continued)

– Role and Responsibility Assignments • Utilizes a Responsibility Assignment Matrix (RAM) to define

responsibility for each item in the Work Breakdown Structure/task or activity list

• Roles and responsibilities– Project Manger – plan, estimate and schedule of project– Team – help prepare the WBS, Network Diagrams, and

estimate time for tasks, complete tasks– Senior Management – approve Overall project plan,

budget and schedule and to approve any changes that are made to those figures

– The person experiencing the problem must try to solve it themselves as long as means are in their control

2. Organizational Planning • Outputs (continued)

– Staffing Management Plan• when and how personnel are included and removed from the

project team.• Resource leveling, reduce transition periods, eliminate “dead

time” between assignments, sensitivity to morale– Organizational Chart

• Organization chart can display the project reporting relationships.

• An Organizational Breakdown Structure (OBS) is a specific type of organization chart that shows which organizational units are responsible for which work items.

– Supporting Detail• Organizational impact,Job descriptions,Training needs



3. Staff Acquisition– Ensure labor and human resources are available for project work– Involve getting the human resources needed (individuals or

groups) and assigned to or working on the project.

• Inputs– Staffing Management Plan– Staffing Pool Description

• Previous experience• Personal interests• Personal characteristics• Availability

– Recruitment Practices


3. Staff Acquisition• Tools & Techniques

– Negotiations with functional managers and other teams (Staff utilization and corporate politics)

– Pre-assignment – result of a competitive proposal, or an internal initiative

– Procurement – outside services are needed (lacking internal skills or availability can not be met)

3. Staff Acquisition• Outputs

– Project staff assigned– Project Team Directory – contact list



4. Team Development – Enhancing stakeholders to contribute along

with maintaining the project team’s functionality

– Personal development is the foundation– Team members often balance responsibilities

to a functional manager and project manager– Critical to success of project


4. Team Development

• Inputs– Project Staff– Project Plan– Staffing Management Plan– Performance Reports– External Feedback

• Periodic measurements of performanc


4. Team Development• Tools & Techniques

– Team-building activities– General Management Skills– Reward and recognition systems

• Promote desired behavior• Must be achievable; apply to the project• Cultural differences recognition

– Co-location – place members in physical location– Training – enhance skills, knowledge, and capabilities

of project team• Must be factored in cost analysis of project


4. Team Development

• Outputs– Performance Improvements

• Individual skills• Team Behavior• Identify more efficient methods of work

– Input for performance appraisals

5. Other things for HRM– Conflict

• Inevitable consequence of organizational interactions• Can be beneficial• Resolved by identifying the causes and problem solving by

people that are involved & their immediate manager• Nature of project• Limited power of the project manager• Necessity for obtaining resources from functional managers

– Conflict Sources (in order of frequency)• 1)Schedules, 2)Project Priorities, 3)Resources,4)Technical

opinions, 5)Administrative Procedures,6)Cost,7)Personality



5. Other things for HRM• Conflict Avoiding

– Informing the team– Clearly assigning tasks without ambiguity– Challenging and interesting work assignments

• Leadership Skills– Directive, Facilitating, Coaching, Supportive

• Projectized Organization– Conflict between PM and Functional Managers– Dual Allegiance of team members– Complex prioritization of resources– Loss of developed procedures on project dissolution

Chapter 11 – Project Communications Management

1. Project Communications Management– Processes to ensure timely and proper generation,

collection, dissemination and disposition of project information

– General communications management• Communications Planning – determining informational

needs, who needs what and when; 90% of PM’s time is spent on communicating

• Information Distribution – making information available• Performance Reporting – collecting and disseminating

project information• Administrative Closure – formalize project/phase completion

(continued)

1. Project Communications Management– Communication Methods

• Pick the form of communication that is best for the situation

– Formal Written – complex problems, all plans, communicating over long distances

– Formal Verbal – presentations, speeches– Informal Written – memos, e-mail, notes– Informal Verbal – meetings, conversations

– Communication Blockers• Noise, Distance, Improper en-coding, “bad idea”, Hostility,

Language, Culture



2. Communications Planning– Determining information requirements of stakeholders– Tightly linked with organizational planning– There are 5 directions of communication

• Top down• Bottom up• The peer• Internal • External

– Complex messages need oral, written and non verbal methods

– Least effective form of communication for complex situations is verbal and formal


2. Communications Planning• Inputs

– Communication requirements• Internal and External communication needs (media)

– Communication Technology – used to transfer information

• Immediacy of need for information• Availability of technology• Expected project staffing

– Constraints • factors that limit project team’s options

– Assumptions


2. Communications Planning• Tools & Techniques

– Stakeholder analysis• informational needs should be analyzed to develop methodology

suited for the project; eliminate unnecessary information or technologies

– Communications model

Send process Receive proce.

Transit proce.

Info.Transit

noise

Illustration of Communication Model

idea encode receive decode Unders.

feedback

2. Communications Planning• Outputs

– Communication Management Plan• Collection and filing structure to detail the gathering and

storage of information; updating and dissemination• Distribution structure – who gets info in certain format;

compatible with project organization chart• Description of information included – format, level of detail,

conventions• Production schedules of each type of communication• Methods for accessing information• Method for updating and refining communications plan



3. Information Distribution– making information available in a timely manner by

implementing the communications plan;– responding to requests for information by

stakeholders

• Inputs– Work Results– Communication Management Plan– Project Plan


3. Information Distribution• Tools & Techniques

– Communication Skills• used to exchange information. Sender is responsible for

clarity; receiver is responsible for receipt and understanding

– Information retrieval systems • filing systems, software

– Information distribution systems • meetings, correspondence, networked databases,

video/audio conferencing

• Outputs– Project Records

• maintained in an organized fashion


4. Performance Reporting– Collecting and disseminating performance indicators

to provide stakeholders information how resources are achieving project objectives

• Status reporting• Progress reporting• Forecasting• Variance Report (actual results vs. planned)• Earned Value • Project scope, schedule, cost and quality, risk and

procurement


4. Performance Reporting

• Inputs– Project Plan– Work Results – deliverables completed, %

completed, costs incurred– Other Project records


4. Performance Reporting• Tools & Techniques

– Performance review meetings(to assess status)– Variance Analysis (comparing actual results to planned)– Trend Analysis (to determine future performance)– Earned Value Analysis

• integrates scope, cost and schedule measures • calculate 3 keys:

– Budgeted Cost of Work (BCWS)– Actual Cost of Work Performed (ACWP) – Earned Value (Budgeted Cost of Work Performed – BCWP)

» Cost Variance (CV) = BCWP – ACWP» Schedule Variance (SV) = BCWP – BCWS» Cost Performance Index (CPI) = BCWP/ACWP

– Information Distribution Tools & Techniques


4. Performance Reporting

• Outputs– Performance Reports – organize and

summarize information gathered and present results

• Bar charts, Gantt charts, S-curves, etc.

– Change Requests – handled as part of change control


5. Administrative Closure– Projects/phases after achieving results or

terminated require closure– Verifying and documenting project results to

formalize acceptance– Collection of project records, analysis of

effectiveness, reflect final specifications and archiving of material


5. Administrative Closure• Inputs

– Performance Measurement Documentation• includes planning docs; • all information that records and analyzes

performance– Documentation of product and project– Other project records

5. Administrative Closure

• Tools & Techniques– Performance Reporting tools & techniques

• Outputs– Product Archives

• complete index of all records, database updates– Formal Acceptance

• signoffs from client or sponsor– Lessons Learned


Chapter 12 – Project Procurement Management

1. Project Procurement Management– Processes required to acquire goods and services from outside

the organization– Processes including Procurement Planning, Solicitation

Planning, Source Selection, Contract Administration and Contract Close Out

– Discussed from the perspective of the buyer• Terms and conditions of the contract is a key input to many

processes

• Buyer is the customer, thus a key stakeholder

• Seller’s project management team must be concerned with all processes of project management, not just their knowledge area

– Most questions are from the buyer’s perspective

2. Procurement Planning– Identify project needs that can best be met by

acquiring resources– Consideration whether to procure, how to,

how much, when to purchase– Subcontractor decisions may provide flexibility

• Internal procurement does not involve formal solicitation and contract


2. Procurement Planning• Inputs

– Scope Statement – boundary for needs and strategies– Product Description – broad technical issues, not to be confused

with a statement of work– Procurement Resources – formal contracting group (RFP)– Market Conditions – supply and demand, what services are

available – Other Planning Outputs – preliminary cost and schedule, quality

management plans, cash flow, WBS, risks, staffing– Constraints – factors that limit buying options– Assumptions


2. Procurement Planning• Tools & Techniques

– Make or Buy analysis – determine if the service can be provided from within

• Include direct and indirect costs• Factor ongoing need for items vs. 1-time usage

– Expert Judgment – assess input– Contract type selection

• Fixed Price (lump sum) – incentives for meeting targets• Cost Reimbursable Contracts – Time and Materials basis• Unit Price – preset amount per unit of service


2. Procurement Planning• Outputs from Procurement Planning

– Procurement Management Plan – describes how procurement process will be managed. Including:

• Type of contract• Independent estimates needed?• Autonomy of project team• Standardized documents• Multiple provider management?• Incorporate with other project aspects (scheduling and performance

reporting)– Statement of Work (SOW) – describes the procurement in detail

– clear, concise description of services• Can also be a Statement of Requirements for problem-solving

activities


3. Solicitation Planning– To seek to obtain with enquiry, quotation, offer and

counteroffer– Preparing documents needed for procurement

• Inputs– Procurement Management Plan– Statement of Work– Other Planning Outputs

• Tools & Techniques– Standard Forms and Procedures for buying & bidding

• Contract, bid documents standard descriptions of procurement items

– Expert Judgment


Standard Procedures for Buying

Standard Procedures for Bidding

enquiry quotation counterofferoffer accept

Form a work group for bid

Prepare bid documents

Invitation for Negotiation

Discussion of bids

Invitation for tendering

Collect tendering files and deposit

Examine the tenderers

Evaluate and Choose


3. Solicitation Planning• Outputs

– Procurement Documents – used to solicit proposals from prospective sellers

• Bids, Request for Proposal, Request for Quotation, Contractor Initial Response, etc.

• Structure to receive complete and accurate responses– Description of desired form of response and any required

contractual provisions (e.g. non-disclosure statements)– Flexible to allow seller suggestions

– Evaluation Criteria – rate proposals; objective or subjective• Price, Understanding of need by seller• Overall/Life Cycle cost (purchase plus operating cost)• Technical Capability, Management Approach• Financial Capacity

– Statement of Work Updates


4. Solicitation– Obtaining information(bids and proposals) from

prospective sellers

• Inputs– Procurement Documents– Qualified Seller Lists – preferred vendors

• Tools & Techniques– Bidder Conferences – mutual understanding meetings– Advertising – primarily with Government projects

• Outputs– Proposals – seller prepared documents describing willingness

and ability to provide the service


5. Source Selection– Apply evaluation criteria (seldom straight-forward)

• Price (lowest price may not always result in lowest project cost)

• Technical (approach) vs. commercial (price)• Multiple sourcing may be needed for same service

– Select the suppliers or contractors

• Inputs – Proposals– Evaluation Criteria– Organizational Policies


5. Source Selection• Tools & Techniques

– Contract Negotiation – clarification and mutual agreement on structure and requirements of contract prior to signature

• Responsibilities and authorities• Applicable terms and law• Financing and Price• Technical and business management

– Weighting – quantifying data to minimize personal prejudice of source selection

• Assign numerical weight to evaluation criteria• Rating sellers• Multiply weight by rating and totaling overall score

– Screening System – establish minimum performance criteria– Independent Estimates – “should cost” estimates


5. Source Selection• Outputs from Source Selection

– Contract – mutually binding agreement obligates seller provide goods and services and buyer to make payment.

– It may be called, among other names, a contract, an agreement, a subcontract, a purchase order, or a memorandum of understanding

– That establish:• Legal relationship• Legal review is most often necessary


6. Contract Administration– Ensuring that the seller’s performance meets

contractual requirements• Project Team must be aware of legal affaires of all actions

taken• Apply project management processes to contractual

relationships and integrate outputs within the project– Project Plan Execution (authorize work)– Performance Reporting (monitor cost, schedule)– Quality Control (verify contractor’s output)– Change Control– Financial Management


6. Contract Administration• Inputs to Contract Administration

– Contract, centralized vs. decentralized contracting– Work Results – seller’s deliverables, quality

standards, actual costs– Change Requests – modify contract, or description of

product/service• May result in disputes, claims, appeals

– Seller Invoices • The seller must submit invoices from time to time to request

payment for work performed. • Invoicing requirements, including necessary supporting

documentation, are usually defined in the contract.


6. Contract Administration• Tools & Techniques

– Contract Change Control System – defines how a contract may be modified

• Includes paperwork, tracking system, dispute resolution procedures and approval levels

– Performance Reporting • provides management with information about how effectively

the seller is achieving the contractual objectives.

– Payment System – Accounts Payable • Payments to the seller are usually handled by the accounts

payable system of the performing organization or the owner. • The system must include appropriate reviews and approvals

by the project management team.


6. Contract Administration• Outputs • Correspondence

– Contract terms and conditions of written documentation of certain aspects of buyer/seller communications.

• Contract changes– Changes (approved and unapproved) are fed back through the

appropriate project planning and project procurement processes, and the project plan or other relevant documentation is updated as appropriate.

• Payment requests or payments– “Payment requests” for when using an external payment system,

“payments.” for when using own internal system.


7. Contract Close Out– Similar to administrative closure; involves product

verification and administrative paperwork– The contract terms and conditions may prescribe

specific procedures for contract close-out. • Early termination is a special case

• Inputs– Contract Documentation

• the contract itself along with all supporting schedules, requested and approved contract changes, any seller-developed technical documentation, seller performance reports, financial documents such as invoices and payment records, and the results of any contract-related inspections.


7. Contract Close Out• Tools & Techniques

– Procurement Audits – structured review of entire procurement process; identify successes and failures that warrant transfer to other procurement items

• All documentation must be preserved and filed

• Outputs– Contract File – complete index of records– Formal Acceptance and Closure

• contract administration responsibility to provide a formal notice that contract has been completed

• Requirements for formal acceptance and closure are usually defined in the contract.


8. Other things related to Procurement– What forms a contract

• An offer, counteroffer,• An acceptance• Consideration - something of value,V=F/C• Legal Capacity – separate legal parties, competent

parties• Legal Purpose – can not perform illegal goods or

services


• 8. Other things related to Procurement– Project Manager’s role for procurement

• Risk identification and evaluation• Work within the procurement process

– Contract Type Selection – reasonable risk between the buyer and seller and greatest initiative for seller’s efficient and economic performance

• Scope – well defined?• Amount or frequency of changes expected after start date• Amount of effort and expertise the buyer can devote to

manage the seller• Industry standards


8. Other things related to Procurement– Cost Reimbursable (CR) contracts; seller’s

cost are reimbursed; buyer bears highest risk.• CPFF – cost plus fixed fee, buyer pays all costs –

fee (profit) established(fixed)• CPPC – cost plus percentage of costs; bad for

buyers (seller not motivated to control costs)• CPIF – cost plus Incentive Fee; seller costs + fee +

bonus for meeting/exceeding target (incentive clause)


8. Other things related to Procurement– Cost based on Time and Materials; priced on per hour

basis, elements of fixed price contract and cost reimbursable contracts – buyer has medium risk

– Fixed Price (lump sum, or firm fixed price) - most common (1 price for all work), risk of costs is upon seller

• FPIF – Fixed Price Incentive Fee• FPEPA – Fixed Price Economic Price Adjustment – long

duration projects– Incentives – help bring seller’s objectives in line with

buyer’s


• 8. Other things related to Procurement– Incentive Fee and Final Price Calculations

• Must Have:– Target Cost

– Target Fee

– Target Price

– Sharing Ratio (buyer/seller)

– Actual Cost

• Fee = (Target Cost – Actual Cost) x Seller Ratio (%) (incentive fee) • Total Fee = Fee + Target Fee• Final Price = Actual Cost + Total Fee


• 8. Other things related to Procurement– Solicitation

• Bidder’s Conference– Benefit both buyer and seller

– Can be used for watching out the Collusion

• Negotiation Objectives– Obtain a fair and reasonable price– Development a good relationship with seller

» Project manager must be involved– Main Terms to negotiate

» Responsibilities, Authority, Applicable Law» Technical and Business Management approaches» Contract Financing, Price


8. Other things related to Procurement• assure seller’s performance meets contractual

requirements • Project Managers must understand the contract and manage

its completion• Sometimes contract is in conflict with Scope of Work• Only the contracting officer (CO) can change contract

language– It is often a source of conflict– Need to deal with a different company’s set of

procedures– It is not as easy to “see” problems– Greater reliance on reports to determine if a problem

exists– Greater reliance on relationships between buyer and

seller’s project managers


Supplement – Professional Responsibility

1. Understand Project Management Professional Code of Conduct

– Ethics– Legal Issues– Cultural Sensitivity– Managing conflicts of interest


2. Integrity(honesty) and Professionalism– Understand the legal requirements surrounding the

practice of projects– Know ethical standards that should govern the

behavior of project managers– Comprehend the values of the community and the

various project stakeholders– Practice proper judgment in the pursuit of successful

project work– Compliance with all organizational rules and policies

• Upon a reasonable and clear factual basis report violations• Responsibility to disclose circumstances that could be

construed as a conflict of interest or appearance of impropriety


2. Integrity and Professionalism– Provide accurate and truthful representation to the

public– Maintain and satisfy the scope and objectives of

professional services– Maintain the confidentiality of sensitive information– Ensure a conflict of interest does not compromise

legitimate interests of client/customer or interfere with professional judgment

– Refrain from accepting gifts, inappropriate payments, compensation for personal gain unless in conformity with applicable laws or customs


3. Contribute to advancing the project management profession

– Overall understanding of project management principles

– Understand the community and media surrounding projects

– Knowledge of research strategies available and proper communication techniques

– Learn to communicate and transfer knowledge effectively as a coach and mentor and to use available research strategies

– Respect and recognize intellectual property


4. Enhance Individual Competence– Understand the project manager’s strengths and

weaknesses and learning style – become aware of instructional processes and tools

– Know the useful competencies for project managers and possible training

– Be able to perform self-assessment and competencies development plan

– Ability to apply lessons learned


5. Balance Stakeholder’s Objectives– Understand the various competing

stakeholders’ interests and needs– Comprehend the conflict resolution

techniques useful in handling differing objectives

– Be able to resolve conflicts in a fair manner– Exercise negotiation skills based on proper

information


6. Interact with team and stakeholders in a professional and cooperative manner

– Understand cultural diversity, norms and stakeholders’ communication styles

– Show flexibility towards diversity, tolerance and self control

– Becoming empathetic to differences

Thank you for your patient and your work