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Project Communication Management Summary 6th Edition

An effective communications management plan is developed early in project life cycle.
Misunderstandings can be reduced using the 5C’ (Correct grammar and spelling, Concise expression and elimination for excess words, Clear purpose and expression, Coherent logical flow of ideas and Controlling flow of words and ideas).

Communication Requirements Analysis:

✓ Determines the information needs of the project stakeholders. These requirements are defined by combining the type and format of information needed with an analysis of the value of that information .

✓ Sources of information include (Stakeholder information, Number of potential communication channels, Organizational charts, Development approach, Internal and external information and Legal requirements).

Communication Technology:

✓ Methods includes (Conversation, meetings, Written documents, Databases and Websites).

✓ Factors that affect the choice of communication include (Urgency of the need for information, Availability and reliability of technology, Ease of use, Project environment (face-to-face or virtual) and Sensitivity and confidentiality of the information).

Communication Models:

✓ Sample basic sender/receiver communication model: This model consists two parties (sender and receiver). This model is concerned with ensuring that message is delivered, rather than understood.

▪ Encode: The message is coded into symbols, such as text, sound or some other medium.

▪ Transmit message: The message is sent via a communication channel.

The transmission of this message may be compromised by various physical factors (unfamiliar technology) or inadequate infrastructure. Noise may result in loss of information in transmission/reception .

▪ Decode: Data received is translated by the receiver back into a form useful to the receiver.

✓ Sample Interactive communication model: This model consists two parties (sender and receiver), but recognizes the need to ensure the message has been understood.

▪ Acknowledge: Upon receipt of a message, the receiver may signal (acknowledge) receipt of the message, but this does not necessarily mean agreement with or comprehension of the message.

▪ Feedback/response: When the received message has been decoded and understood, the receiver encodes thoughts and ideas into a message and then transmits this message to the original sender. If the sender perceives that the feedback matches the original message, the communication has been successful. Feedback can be achieved through active listening.

✓ The sender is responsible for the transmission of the message, ensuring the information being communicated is clear and complete and confirm the message is correctly interpreted.

✓ The receiver is responsible for ensuring that the information is received in its entirety, interpreted correctly and acknowledged or responded to appropriately.

Communication Methods:

✓ Interactive communication: Between two or more parties performing a multidirectional exchange of information in real time like (Meetings, phone calls, video conferencing and instant messaging).

✓ Push communication: Sent or distributed directly to specific recipients who need to receive the information. Like (letters, memos, reports, emails, faxes, voicemail and blogs).

✓ Pull communication: Used for large complex information sets, or for large audiences, and requires the recipients to access content at their own discretion subject to security procedure. Like (web portals, intranet sites, e-learning, lessons learned databases or knowledge repositories).

Interpersonal and Team Skills:

✓ Communication style assessment: A technique used to assess communication styles and identify the preferred communication method for planned communication activities.

✓ Political awareness: Helps the project manager to plan communications based on the project environment as well as organization’s political environment. Political awareness concerns the recognition of power relationships, both formal and informal and also the willingness to operate within these structures.

✓ Cultural awareness: Understanding of the difference between individual and groups and adapting the project’s communication strategy in the context of these differences. This minimize misunderstandings and miscommunications that may result in cultural differences.

Communication Management Plan:

✓ The communications management plan is a component of the project management plan that describes how project communications will be planned, structured, implemented, and monitored for effectiveness.

✓ This communication management plan can include guidelines and templates for project status meetings, project team meetings, e-meetings, and email messages.

✓ It also contains “Escalation processes”.

The Manage Communications process ensure that the information has been generated is appropriately generated and formatted and received by the intended audience. Also provides opportunities for stakeholders to make requests for further information and clarification.

Communication Skills:

✓ Communication competence: A combination of tailored communication skills that considers factors such as clarity of purpose in key messages, effective relationships and information sharing, and leadership behaviors.

✓ Feedback: information about reactions to communications or a deliverable. Feedback supports interactive communication between the manager, team and stakeholders. Example (coaching, negotiating and mentoring).

✓ Nonverbal: Examples of nonverbal communication include appropriate body language to transmit meaning through gestures, tone of voice, and facial expressions, eye contact and Mirroring.

✓ Presentation: Formal delivery of information and/or documentation. Clear and effective presentations of project information to relevant stakeholders include (Progress reports, Background information, General information about the project and specific information on a subject).

Project Reporting:

✓ Project reporting is the act of collecting and distributing project information.

✓ Reporting format may range from a simple communication to more elaborate custom reports.

✓ While work performance reports are the output of the Monitor and Control Project Work process, this process develops ad hoc reports, project presentations blogs.

Interpersonal and Team Skills:

✓ Active Listening: Involve acknowledging, clarifying and confirming, understanding and removing barriers that adversely affect comprehension .

✓ Meeting management: taking steps to ensure meetings meet their intended objectives effectively and efficiently.

✓ Networking: interacting with others to exchange information and develop contacts. Networks provide the manager and the team access to informal organizations to solve problems, influence actions of their stakeholders, and increase stakeholder support for the work and outcomes.

✓ Political awareness: assists the project manager in engaging stakeholders appropriately to maintain their support throughout the project.

Project Communications: Project communications artifacts includes: performance reports, deliverable status, schedule progress, cost incurred, presentations, and other information required by stakeholders.

Monitor Communications process can trigger an iteration of the Plan Communications Management and/or Manage Communications processes to improve effectiveness of communication.

Observation/Conversation: Discussion and dialogue with the project team helps determine the most appropriate way to update and communicate project performance, and to respond to requests from stakeholders for information. Also help the manager to detect any conflicts between people.

Project Scope Management Summary 6th Edition

Project Scope is measured against the Project Management Plan. Product Scope is measured against the Product Requirements.

Business Analysis are used in some organizations to defining, managing, and controlling requirements activities. The relationship between a project manager and a business analyst should be a collaborative partnership.

Scope Management Plan that describes how the scope will be defined, developed, monitored, controlled, and validated. Components includes processes that help (Preparing project scope statement, create WBS, how the baseline will be approved and maintained and how formal acceptance will be obtained).

Requirements Management Plan (Business Analysis Plan) is a component of the project management plan that describes how project and product requirements will be analyzed, documented, and managed. Components may include (Configuration management activities, Requirements prioritization, Metrics, Traceability structure and how requirements will be planned, tracked and reported).

Configuration management shows how changes will be initiated, how impacts will be analyzed, how they will be traced and reported and authorization levels to approve changes.

D.G:

✓ Brainstorming: used to generate and collect multiple ideas related to project.

✓ Interviews: are useful for obtaining confidential information.

✓ Focus Groups: (Interactive Discussion) Bring together prequalified stakeholders and subject matter experts to learn about their expectations and attitudes about proposed product/service. Need trained moderator.

✓ Questionnaires: designed to get quickly information of large number of respondents.

✓ Benchmarking: to generate ideas for improvement and new practices. Compare actual & planned.

Decision making:

✓ Voting: Used to classify and prioritize product requirements. (unanimity, majority and plurality).

✓ Autocratic decision making: one individual takes responsibility for making the decision.

✓ Multicriteria decision analysis: decision matrix to provide a systematic analytical approach for establishing criteria to evaluate and rank many ideas.

Data Presentation:

✓ Affinity diagrams: allow large numbers of ideas to be classified into groups for review and analysis.

✓ Mind mapping: Ideas created through individual brainstorming sessions to generate new ideas.

Interpersonal and Team Skills:

✓ Nominal group technique: Enhances brainstorming with a voting process used to rank the most useful ideas for prioritization. (Generate & prioritize).

✓ Observation and conversation (Job Shadowing): To cover hidden requirement.

✓ Facilitation: bring key stakeholders together to define product requirements. Workshops can be used to quickly define cross-functional requirements.

Context Diagram: Example of Scope model. Context diagrams visually depict the product scope by showing a business system and how people and other systems (actors) interact with it.

Prototypes: Method of obtaining early feedback. Examples (computer generated 2D, 3D models, mock-ups and simulations). Storyboarding is a prototyping technique showing sequence or navigation through a series of images. (Risk Mitigation).

Requirements should be unambiguous & can be classified into: Business, Stakeholder, Solution, Transition and readiness, Project & Quality requirements.

Requirements Traceability Matrix:

✓ Grid that links requirements to the deliverables that satisfy them.

✓ Ensure that each requirement adds business value.

✓ Provides a structure for managing changes to the product scope.

Product Analysis: Used to define products and services. Requirements are captured at a high level and decomposed to the level of detail needed to design the final product.

Project Scope Statement:

✓ Project Scope Statement include (Product scope description + deliverables + acceptance criteria + project exclusions).

✓ Project charter contains high level information while project scope statement includes detailed description of the scope components. They are progressively elaborated throughout the project.

Decomposition: Technique used for dividing and subdividing the project scope and project deliverables into smaller, more manageable parts. Popular methods to create WBS structure: top-down approach. Agile approaches decompose epics to user stories.

Decomposition may not be possible for a deliverable or subcomponent that will be accomplished far into the future the project team usually waits until the deliverable or subcomponent is agreed on, so the details of the WBS can be developed. This technique called rolling wave planning.

The total of the work at the lowest levels should roll up to the higher levels so that nothing is left out and no extra work is performed. This is sometimes called the 100 percent rule.

Scope baseline includes:

✓ Project scope statement: description of the project scope, major deliverables and constraint.

✓ WBS: Hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables.

❖ Work package: The lowest level of the WBS is work package with a unique identifier. Each work package is part of a control account which is a management control point where scope, budget, and schedule are integrated and compared to the earned value for performance measurement. Each control account has two or more work packages. But work package is associated with a single control account.

❖ Planning package: Include one or more planning packages. A planning package is a WBS component below the control account and above the work package with known work content but without detailed schedule activities

✓ WBS dictionary: document that provides detailed deliverable, activity, and scheduling information about each component in the WBS. It’s a document that support the WBS because you can’t include all the information in the WBS.

Validate Scope concerned with acceptance of the deliverables. Control Quality concerned with correctness of the deliverables. The verified deliverables obtained from the Control Quality process.

Inspection: Includes activities such as measuring, examining, and validating to determine whether work/deliverables meet requirements and product acceptance criteria. They might be called reviews and walkthroughs.

Verified deliverables Validate Scope Accepted Deliverables.
The uncontrolled expansion to product or project scope without adjustments to time, cost, and resources is referred to as scope creep.

Performance measurement baseline (PMB): When using earned value analysis, the performance measurement baseline is compared to actual results to determine if a change, corrective action, or preventive action is necessary.

Variance analysis: compare the baseline to the actual results and determine if the variance is within the threshold amount.

Trend analysis: examines project performance over time to determine if performance is improving or deteriorating.

Project Schedule Management Summary 6th Edition

The detailed project schedule should remain flexible throughout the project life cycle.
There are two main practicing for scheduling methods:

✓ Iterative scheduling with a backlog:

➢ It is a form of rolling wave planning based on adaptive life cycles.

➢ The benefit of this approach is that it welcomes changes throughout the development life cycle.

✓ On-demand scheduling:

➢ Used in a Kanban system. On-demand scheduling does not rely on a schedule that was developed previously but pulls work from a backlog as resources become available.

➢ It’s used in projects that evolve the product incrementally in operational environment.

If a business analyst is assigned to a project, requirement-related activities are the responsibility of that role.

Release and iteration length: In adaptive life cycle the time-boxed periods for releases, waves and iterations are specified.

Time-boxed periods: durations which the team works steadily toward completion of a goal, and this helps to minimize scope creep.

Define Activities Outputs:

✓ Activity List :

➢ Includes the schedule activities required on the project.

➢ Projects that use agile/rolling wave techniques the activity list will be updated periodically.

➢ Activity list includes activity identifier and scope of work description for each activity.

✓ Activity Attributes :

➢ Identifies component associated with each activity which evolves over time.

➢ At early stages it will include activity identifier, WBS ID, and activity name.

➢ At later stages/completed will include descriptions, predecessor, activities, successor activities, logical relationships, leads and lags resource requirements, constraints, and assumptions.

✓ Milestone List:

➢ Significant point or event in a project which has zero duration.

➢ They can be mandatory (required by contract) or optional.

Precedence Diagramming Method (PDM):

✓ Technique used for constructing a schedule model in which activities are represented by nodes and are graphically linked by one or more logical relationships to show the sequence in which the activities are to be performed.

✓ Finish-to-start (FS) is the most commonly used type of precedence relationship .

✓ Two activities can have two logical relationships at the same time. However Multiple relationships between the same activities are not recommended.

Dependency Determination and Integration:

✓ Mandatory dependencies: are legally or contractually required. They often involve physical limitations. They often called “hard logic or hard dependencies”.

✓ Discretionary dependencies: are established based on knowledge of best practices. Discretionary dependencies also called “logic, preferential logic, or soft logic).

✓ External dependencies: involve a relationship between project activities and non-project activities and usually outside the project team’s control.

✓ Internal dependencies: involve a precedence relationship between project activities and are generally inside the project team’s control.

Leads and Lags:

✓ Lead is the amount of time a successor activity can be advanced with respect to a predecessor activity. Lead is often represented as a negative value for lag in scheduling software.

✓ Lag is the amount of time a successor activity will be delayed with respect to a predecessor activity. And it is often represented as a Positive value for lag in scheduling software.

Activities that have multiple predecessor activities indicate a path convergence. Activities that have multiple successor activities indicate a path divergence.

There are factors to consider when estimating the duration:

✓ Law of diminishing returns: When one factor used to determine the effort required to produce a unit of work is increased while all other factors remain fixed a point .

✓ Number of resources: Increasing the number of resources to twice the original number of the resources does not always reduce the time by half, as it may increase extra duration due to risk.

✓ Advances in technology: Increase in the output of a manufacturing plant may be achieved by procuring the latest advances in technology may impact duration and resource needs.

✓ Motivation of staff: Project manager also needs to be aware of Student Syndrome (procrastination), when people start to apply themselves only at the last possible moment before the deadline.

❖ Parkinson’s Law where work expands to fill the time available for its completion.

Analogous Estimating :

✓ Technique for estimating the duration or cost of an activity or a project using historical data. It uses parameters from previous projects.

✓ This technique is used when there is a limited amount of detailed information about the project.

✓ Less costly and less time-consuming than other techniques but it is also less accurate.

Parametric Estimating:

✓ Technique in which an algorithm is used to calculate cost or duration based on historical data and project parameters .

✓ Uses a statistical relationship between historical data and other variables to calculate activity duration and cost.

Three-Point Estimating:

✓ Using three-point estimates helps define an approximate range for an activity’s duration.

✓ Most likely (TM), Optimistic (TO) and Pessimistic (TP).

✓ Expected duration:

❖ Triangular distribution: TE= (TO + TM + TP) / 3

❖ Triangular distribution is used when there is insufficient historical data or when using judgmental data. This technique provides an expected duration and clarify the range of uncertainty

❖ Beta Distribution (PERT): TE= (TO + 4TM +TP) / 6

Bottom-Up Estimating:

✓ Method of estimating project duration or cost by aggregating the estimates of the lower level components of the WBS.

✓ If an activity duration can’t be estimated with reasonable confidence, the work within the activity is decomposed into more detail.

✓ These estimates are then aggregated into a total quantity for each of the activity’s durations.

Reserve analysis:

✓ Determine the amount of contingency and management reserve needed for the project.

✓ Contingency reserves are associated with the known-unknowns (unknown amount of work). It may be a percentage of estimated activity duration or fixed number of work periods.

✓ Management reserves are a specified amount of the project budget withheld for management control purposes and are reserved for unforeseen work that is within scope of the project. It addresses unknown-unknowns that can affect a project.

❖ Management reserve is not included in the schedule baseline but it is part of the overall project duration requirements.

Schedule Network Analysis:

✓ Technique used to generate the project schedule model and it’s an iterative process.

✓ Assessing the need to aggregate schedule reserves to reduce the probability of a schedule slip.

✓ Employs several other techniques such as critical path method, resource optimization techniques and modeling techniques.

Critical Path Method (CPM):

✓ The critical path estimates the minimum project duration and determine the amount of schedule flexibility on the logical network paths within the schedule model.

✓ The critical path is the sequence of activities that represents the longest path through a project, which determines the shortest possible project duration.

✓ Total float (slack) is the amount of time an activity can be delayed without delaying the project completion date. On a critical path the total float is zero.

✓ Free float is the amount of time that a schedule activity can be delayed without delaying the early start date of any successor or violating a schedule constraint.

✓ Positive total float is caused when the backward pass is calculated from a schedule constraint that is later than the early finish date that has been calculated during forward pass calculation.

✓ Negative total float is caused when a constraint on the late dates is violated by duration and logic. Negative float analysis is a technique that helps to find possible accelerated ways of bringing a delayed schedule back on track.

Resource Optimization:

✓ Resource leveling: A technique in which start and finish dates are adjusted based on resource constraints with the goal of balancing the demand for resources with the available supply. Resource leveling can often cause the original critical path to change. Available float is used for leveling resources.

✓ Resource Smoothing: A technique that adjusts the activities of a schedule model such that the requirements for resources on the project do not exceed certain predefined resource limits. Critical path is not changed and the completion date may not be delayed. Resource smoothing is very similar to resource leveling except smoothing uses total and free float.

What-if scenario analysis:

✓ process of evaluating scenarios in order to predict their effect (positive or negative) on the project.

✓ It helps in assessing the feasibility and address the impact on unexpected situations.

Schedule Compression: techniques are used to shorten or accelerate the schedule duration without reducing the project scope in order to meet schedule constraints, imposed dates, or other schedule objectives. Techniques that can be used:

✓ Crashing: Technique used to shorten the schedule duration for the least incremental cost by adding resources. Examples (overtime, additional resources). Crashing works only for activities on the critical path where additional resources will shorten the activity’s duration. Crashing does not always produce a viable alternative and may result in increased risk and/or cost.

✓ Fast Tracking: compression technique in which activities or phases normally done in sequence are performed in parallel for at least a portion of their duration. Fast tracking may result in rework and increased risk.

Fast tracking only works when activities can be overlapped to shorten duration at critical path. Fast tracking may also increase project costs.

Agile Release Planning : Provides a high-level summary timeline of the release schedule. determines the number of iterations or sprints in the release, and allows the product owner and team to decide how much needs to be developed .

Develop Schedule Outputs:

✓ Schedule Baseline: Approved version of a schedule model that can be changed only through formal change procedure and used as comparison to actual results.

✓ Project Schedule: Output of a schedule model that presents linked activities with planned dates, durations milestones, and resources. The project schedule may be presented in summary form, sometimes referred

to as the master schedule or milestone schedule.

Project schedule is usually presented in graphical form (Bar charts (Gantt Charts), Milestone charts and Project schedule network diagrams (Pure logic diagram)).
Schedule Data: collection of information for describing and controlling the schedule incudes (milestones, activities, attributes and documentation for assumptions and constraints).

Earned Value Analysis: Schedule performance measurements such as schedule variance (SV) and schedule performance index (SPI) are used to asses magnitude of variation to original baseline.

Iteration Burndown Chart: This chart tracks the work that remains to be completed in the iteration backlog.

Performance reviews: Measure, compare, and analyze schedule performance against the schedule baseline.

Schedule Forecasts:

✓ Estimates or predictions of conditions and events in the project’s future based on information and knowledge available at the time of the forecast.

✓ The information is based on the project’s past performance and expected future performance based on corrective or preventive actions.

✓ This can include earned value performance indicators, and schedule reserve information.

Important Notes:

➢ Involving team members in decomposition process can lead to better and more accurate.

➢ Three-point estimating >>>> takes risk and uncertainty into consideration.

➢ Prevention action >>>> reduce probability of negative schedule.

➢ Divergence & convergence >>>> increase schedule slip.

➢ Summery narrative >>>> can accompany diagram, approach used to sequence activities.

➢ Schedule reserve = Contingency reserve

➢ Parkinson’s Law >>>> using motivation system.

➢ Negative float analysis >>>> find possible accelerated ways to bring delay back on track.

➢ File change request >>>> if no option to recover schedule delay.

Project Cost Management Summary 6th Edition

Cost estimates include the identification and consideration of costing alternatives to initiate and complete the project.

Cost trade-offs and risks should be considered to achieve optimal costs for the project.
The accuracy of a project estimate will increase as the project progresses through project life cycle.

In project initiation phase have a rough order of magnitude (ROM) estimate in the range of (-25% to +75%). Later in projects when more information is known definitive estimate could narrow the range to (-5% to +10%).

Analogous Estimating, Parametric Estimation, Bottom-UP Estimating & Three-Point Estimating. In schedule summary.

Reserve Analysis. In schedule summary.
Cost of Quality: Assumptions about costs of quality may be used to prepare the estimates.

Estimate Costs Outputs:

✓ Cost Estimates:

➢ Cost estimates include quantitative assessments of the probable costs required to complete project work and contingency amounts to account for identified risks, and management reserve to cover unplanned work.

➢ Cost estimates can be presented in summary form or in detail.

✓ Basis of Estimates:

➢ Supporting documentation should provide a clear and complete understanding of how the cost estimate was derived (assumptions, constraints, …).

Determine Budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.

Project budget includes all the funds authorized to execute the project.
Business Documents:

✓ Business case: identifies the critical success factors for the project like financial success factors.

✓ Benefits management plan: includes the target benefits, such as net present value calculations, timeframe for realizing benefits, and the metrics associated with the benefits.

Cost Aggregation: Cost estimates are aggregated by work packages in accordance with the WBS. The work package cost estimates are then aggregated for the higher component levels of the WBS and ultimately for the entire project.

Historical Information Review:

✓ Reviewing historical information can assist in parametric or analogous estimates.

✓ Historical information may include project characteristics (parameters) to develop mathematical models to predict total project costs.

Funding limit Reconciliation:

✓ The expenditure of funds should be reconciled with any funding limits on the commitment of funds for the project.

Financing: Financing entails acquiring funding for projects for long lasting projects. External funding may require certain requirements.

Cost Baseline:

✓ Approved version of the time-phased project budget, excluding any management reserves. is used as a basis for comparison to actual results.

✓ The work package cost estimates, along with any contingency reserves estimated for the work packages, are aggregated into control accounts. The summation of the control accounts makes up the cost baseline.

✓ Time-phased view of the cost baseline is typically displayed in the form of an S-curve.

Project Funding Requirements : Total funding requirements and periodic funding requirements are derived from the cost baseline.

Any increase to the authorized budget requires an approved change.
Earned value analysis (EVA):

✓ compares the performance measurement baseline to the actual schedule and cost performance.

✓ EVM integrates the scope baseline with cost and schedule baselines to form the performance measurement baseline (PMB).

Variance Analysis:

✓ Cost and schedule variances are the most frequently analyzed measurements.

✓ Cost performance measurements are used to assess the magnitude of variation to the cost baseline and decide whether corrective or preventive action is required.

Trend Analysis:

✓ examines project performance over time to determine if performance is improving or deteriorating.

✓ Graphical analysis techniques are valuable for understanding performance and comparison to future performance goals in the form of BAC vs EAC.

✓ Charts: In earned value analysis, three parameters of planned value, earned value, and actual cost can be monitored and reported.

✓ Forecasting: Project team may develop a forecast for the estimate at completion (EAC) that may differ from the budget at completion (BAC).

Reserve Analysis:

✓ Reserve analysis is used to monitor the status of contingency and management reserves for the project to determine if these reserves are still needed or if additional reserves need to be requested.

✓ This reserve may be used as planned to cover cost of risk response.

✓ when opportunities are captured and resulting in cost savings, funds may be added to the contingency amount, or taken from the project as margin/profit.

To-Complete Performance Index (TCPI):

✓ Measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal expressed as the ratio of the cost to finish the outstanding work to the remaining budget.

Work Performance Information:

✓ Includes information on how the project work is performing compared to the cost baseline.

✓ Variances in the work performed and the cost of the work are evaluated at the work package level and control account level.

Equations:

✓ Earned value analysis (EVA): 4 Key terms.

➢ PV =Planned Value: The value of the work planned to be completed to a point in time, usually the data date, or project completion.

➢ EV=Earned Value: The planned value of all the work completed (earned) to a point in time, usually the data date, without reference to actual costs.

➢ AC=Actual Cost : The actual cost of all the work completed to a point in time, usually the data date.

➢ BAC=Budget at Completion: The value of total planned work, the project cost baseline.

✓ Variance Analysis:

➢ Schedule Variance (SV): The difference between Earned Value and Planned Value.

❖ SV = EV – PV

❖ SV< 0, Behind schedule

❖ SV>0, Ahead of schedule

❖ SV=0, On schedule

➢ Cost Variance (CV): The difference between Earned Value and Actual Value.

❖ CV = EV – AC

❖ CV< 0, Over budget (Over planned cost)

❖ CV>0, Under budget (Under planned cost)

❖ CV=0, On budget (On planned cost)

➢ Schedule Performance Index (SPI): A measure of schedule efficiency expressed as the ratio of earned value to planned value.

❖ SPI = EV / PV

❖ SPI< 1, Behind schedule

❖ SPI> 1, Ahead of schedule

❖ SPI= 1, On schedule

➢ Cost Performance Index (CPI): A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost.

❖ CPI = EV / AC

❖ CPI< 1, Over planned cost

❖ CPI> 1, Under planned cost

❖ CPI= 1, On planned cost

✓ Trend Analysis:

➢ Estimate at Completion (EAC): The expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete.

❖ EAC = BAC/CPI If the CPI is expected to be the same for the remainder of the project.

❖ EAC = AC + BAC – EV If future work will be accomplished at the planned rate.

❖ EAC = AC + Bottom-up ETC If the initial plan is no longer valid.

❖ EAC = AC + [(BAC – EV) / (CPI x SPI)] If both the CPI and SPI influence the remaining work.

➢ Estimate to Completion (ETC): The expected cost to finish all the remaining project work.

❖ ETC = EAC – AC Assuming work is proceeding on plan, the cost of completing the remaining authorized work.

❖ ETC = Re-estimate Re-estimate the remaining work from the bottom up.

➢ Variance at Completion (VAC): The estimated difference in cost at the completion of the project.

❖ VAC = BAC – EAC

❖ Positive = Under planned cost

❖ Neutral = On planned cost

❖ Negative = Over planned cost

✓ To-Complete Performance Index (TCPI):

➢ A measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the budget available.

➢ TCPI = (BAC – EV) / (BAC – AC) The efficiency that must be maintained in order to complete on plan ❖ Greater than 1.0 = Harder to complete

❖ Exactly 1.0 = Same to complete

❖ Less than 1.0 = Easier to complete

➢ TCPI = (BAC – EV) / (EAC – AC) The efficiency that must be maintained in order to complete the current EAC.

❖ Greater than 1.0 = Harder to complete

❖ Exactly 1.0 = Same to complete

❖ Less than 1.0 = Easier to complete

Important Notes:

➢ Three-point estimate is more accurate than parametric estimate.

➢ Assessment is proper action that should be taken by project manager.

➢ Regression analysis >>>> based on one line estimation.

➢ Parametric estimate >>>> depend on expert judgement technique.

➢ Light weight estimation >>>> high level forecast project.

➢ Scope and schedule are adjusted to stay with cost constraint >>>> Strick budget.

Roads Project Schedule Primavera XER File

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Monthly Project Dashboard Spreadsheet Template

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Hotel Construction Projet Primavera XER File

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Primavera Sample Project Schedule XER Construction File

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Types of Contracts according to PMBOK® Guide – Sixth Edition

The nature of the relationship between a buyer and seller in a procurement setting will be dictated by the type of contract that’s used.

Generally speaking, there are three main types of contracts that are common in procurement situations :

Fixed price contracts
Cost-reimbursable contracts
Time & Material Contracts

1. Fixed price contracts

In a fixed price situation there is a precise price that’s paid for work and this price is predetermined before work on a project begins. You’ll find this price within the contract and it will agreed to by both the buyer and the seller from the outset.

The seller will be legally required to deliver procurement objectives at that set price. Conditional incentives can be incorporated into fixed price contracts.

So we can have bonuses for things like completing the project on time or meeting secondary objectives related to feature set or quality. However these incentives are just that. Bonuses that can be stacked on top of a set baseline that is meant to cover the vast majority of work within the contract.

When the scope changes for what procurement work is to be completed, cost can be revised and a new fixed price can then be set.

There are advantages and disadvantages for both customers and sellers when it comes to the fixed price model.

For the customer, the exact cost for the work has been pre-negotiated and the customer is shielded from any cost overrun liability that might emerge. Here we might even be willing to pay a slight premium over what we might be able to pay if we simply paid on a time and material or on some sort of other basis. But we know that we’ve locked in our cost and that that’s all we are going to be responsible for as a project team.

Some of the advantages for the seller are that they can receive some or all of the money upfront, depending on the terms of the contract they sign. In many cases you can even have terms as simple as receiving half upon signing of the contract, and half upon completion.

Furthermore the seller is in a position to financially plan for the entire project, which is more difficult in a time and material sort of setting where perhaps there are limits on a time rolling basis.

For example only being able to spend a certain amount each week or month without an idea of exactly how long it will take to complete all project work given those sort of limitations, especially if those limitations shift over time.

Disadvantages of this approach for the customer, include the fact that scope changes can be challenging to implement and that the seller may be more likely to default especially in cases where we’ve done a poor job of selecting our seller or in creating our contract.

Scope changes are challenging to handle because if we want additional work to be done, the seller has a legitimate right to both refuse and to object to this notion. They’re receiving a certain amount of money to complete a certain amount of work. If you want them to complete more work on a project, then well, you’d better expect to pay them more to do so.

Further because we have detached ourselves from any cost overrun liability, and placed it all on the seller, if things were to go wrong during procurement, or during their project from the seller’s point of view, they’re more likely to default rather than go additionally into debt or take additional losses, in order to complete project work.

This is especially true if we haven’t been upfront with all of the requirements or if we haven’t answered all of the seller’s questions, such that they can create an estimate that’s both fair to us as customers and reasonable for the amount of money they should expect it to cost to complete the procurements they’re agreeing to.

From a seller’s side, these disadvantages are clear. Scope changes can be challenging to handle because we end up disappointing our customers if we disagree with making additional changes without additional money.

In many cases you may have run into circumstances where a client has been disappointed or where you’ve received pushback from a vendor of your own, when it comes to accomplishing more work than was initially found within a contract plan.

It’s important to realize that sellers aren’t necessarily just being argumentative when they don’t agree to scope changes but instead simply looking out for their own organization’s best interest.

That’s especially the case since the seller inherits all liability for cost overruns on the procurement. If you go back and change the terms of the contract to pay the seller more, then they’ll certainly be more amenable to making any additional changes or expansions to scope.

Because of this, expect to make changes to your contract and to the amount paid if expansion and scope is to occur.

There are three main types of fixed price contracts that are often employed by organizations :

a) Firm Fixed Price Contract (FFP) :

This is the most common type of contract, where the seller is liable for all cost increases unless they’re related to changes in scope, that would require us to renegotiate our contractual terms. Here we are paying a set amount for a set solution. And it’s just that simple.

b) Fixed Price Incentive Fee Contract (FPIF) :

In a fixed price incentive fee contracts or FPIF, the price ceiling may include performance bonuses that are set during contracting. However a set floor is also already in place, guaranteeing that a minimum amount will be paid to the seller simply for completing project objectives.

The seller may earn bonuses on top of that initial floor, by meeting price, schedule, or other objectives that might arise so it can all be negotiated prior to the contract being signed.

c) Fixed Price with Economic Adjustment Contract (FP-EPAs) :

These contracts are used in long-term contracting situations most normally. They allow for payments to be adjusted based on inflation, commodity pricing, or other factors that can be objectively measured and tracked over time.

For example, we might’ve agreed to a long-term shipping contract with a procurement source. But as part of this we agree to not only pay a set fee, but also a fuel surcharge based on a common published commodity pricing source that gives us an idea of how much oil or another sort of fuel index might rise or fall over the course of the project.

2. Cost reimbursable contracts :

In this case the seller is paid for all eligible costs that they incur and they are also paid a fee, which represents the seller’s margin for the project work. Conditional incentives can be incorporated in these kinds of contracts as well.

Cost reimbursable contracts are often favored because they allow for more flexibility and changes to scope than would be possible within the fixed price model. Looking at advantages for the customer, this is one of the primary ones.

There’s more flexibility on the scope and objectives of what needs to be completed. So in cases where we may not go in from the beginning knowing exactly what we want the seller to accomplish, we often will turn to cost reimbursable contracts.

Furthermore the transparency related to how these costs are accounted for allows for greater cost control. Potentially leading to additional savings versus what would be possible in the relatively black box environment of a fixed price contract, where we don’t necessarily have the right to know how much it costs the seller to accomplish their work.

From a seller’s point of view, there’s a guaranteed level of profit built into the contract either at a percentage or at a set dollar level, depending on when the project work will be completed.

The seller is also shielded from cost overruns because if the project continues to cost more than anticipated, the customer simply has to pay this difference based on the terms of the contract.

That’s one of the key disadvantages from a customer standpoint. Cost may and almost certainly will rise beyond the initial expectations for many different reasons. There can be delays in work, changes in scope, additional objectives laid into our contract, or more over time all making it more difficult to estimate how much we’ll end up spending in this relationship.

From a seller’s point of view, the disadvantages primarily that there may be a need to adapt the changes and project scope more often. We may be compensated for this but it may be against some of our own strategic objectives as a seller, when these sort of changes have to occur.

As was the case with fixed price contracts, there are three main types of cost reimbursable contracts as well.

a) Cost plus fixed fee contract or CPFF :

Here all allowed costs are reimbursed from the buyer to the seller. In addition a flat fee is paid on completion to the seller, either in the form of a set dollar amount or a percentage of total cost incurred.

This fee will represent a percent of the initial budgetary estimate so there’s still some incentive built in for the seller to complete work as originally scheduled, as their profit won’t be set to increase even if additional cost rise.

b) Cost plus incentive fee contract or CPIF :

In this case all allowed costs are again reimbursed from the buyer to the seller, and performance bonuses are awarded when certain objectives are met. Typically these relate to completing project work at a certain time, under a certain cost threshold, or with a certain level of quality.

A common example of this type of contract is when cost-savings are shared in between the buyer and the seller. For example the buyer may wish to further incentivize the seller to find ways to save money on the project by offering them a 50/50 split of any money that’s saved, that allows the project to be completed below the initial budget.

c) Cost Plus Award Fee contracts, or CPAF :

These are a little bit different in that all allowable costs are once again reimbursed, but an award fee is granted based on performance. This is different than the flat fee that might be paid in a CPFF standpoint, or the incentive fees that might be paid with CPIF structure.

The criteria for this sort of award fee to be paid, is typically more subjective in nature, and often times is exclusively up to the discretion of the buyer. So the buyer gets to determine whether or not this award has been earned based on the work completed by the seller.

3. Time and Material contracts:

This is a hybrid of the fixed and cost reimbursable contract types. Often times time and material contracts are used for external staffing such as when working with consultants.

The scope of work to be completed is typically not fully known at the outset of work or when we put in an agreement into action. As such we can either use more or less of our procurement sources time based on what work we determine must be completed.

Most of the time, time and material contracts will include limits that help to protect the buyer from cost upsides. For example, once we hit a certain rate of funding for a certain month, we may simply have hired that team or that consultant on a full-time basis and use all of their time and not be liable for any additional hours they have to work beyond that maximum that’s been set.

There are some advantages and disadvantages to this approach as well. From a customer standpoint it allows for more flexibility and scope and objectives to be completed, just like with our previous cost reimbursable contract structure.

The transparency also allows cost control to take place. We know how many hours we’re being billed for and we can make certain that work is being completed at a rate we find satisfying for that time.

From a seller perspective, it’s very clear that the seller is compensated based on the amount of work performed. If I work four hours as a seller, I will receive four hours pay and so on and so forth.

From a customer standpoint cost may rise beyond initial expectations for many different reasons. Especially if work takes longer than initially expected, or requires more materials than we’ve accounted for.

From a seller’s point of view, the scope of the work and the extent of financial opportunity is typically uncertain.

Think about entering a project as a consultant without much understanding of whether there’s one, three, six months or years worth of work to be completed. Because the buyer doesn’t really know what it is they’re looking for exactly at the outset.

Without that in mind we often see that consultants might have higher hourly rates given that they’re not certain to continue working on a long-term and stable basis, and instead must plow more of their time into developing additional relationships and finding additional work opportunity

Organizational Structures & Influences according to PMBOK® Guide – Sixth Edition

Even when working with the most independent project team, it’s important to remember that projects still take place within larger organizations and structures. Our project work needs to align with an organization’s goals, their expectations, policies they may have, as well as any practices that they may maintain in the ways that they go about doing their work.

It should be expected that our project team and its work will largely conform to the values of our organization as a whole. If, for example, our organization is not very tolerant of risk, then we should expect risk management to be an area of emphasis for us in our project planning purposes. Similarly, if we pride ourselves on the quality of the products that we develop, then we should expect quality management to take a prominent role within our project planning, as well.

Three different organizational components that can influence the way we go about managing our project’s work include an organization’s culture, the style, and the way that it goes about its work, as well as the organization’s formal structure.

This includes, but is not limited to the organization’s project management style, which may differ somewhat, and is separate from the organization’s overall style or structure. Whether your organization uses project management offices, program management, portfolio management, or some combination thereof, in order to better manage its many different projects, we also need to consider an organization’s culture and structure at large as part of the way we go about designing our project’s work.

External factors can also make an impact on the way we go about our projects. Our relationships with any clients, joint venture partners we may be working with, or other types of partnerships might necessitate us conforming to different structures in the way we approach our project than we might otherwise do.

For example, if we’re completing work for a client, we may ideally prefer to not have a certain component of our project’s work completed until later in the schedule, because we find it to be more efficient. We believe that it might be in the project’s best interests and so on.

But what really matters is what the client thinks in this regard. And so, if having a certain component complete is necessary for us to pass a vital milestone as part of our agreement with the client, we need to structure our project’s work accordingly.

Organizational structures can affect how projects develop and progress, how our resources are allocated, as well as how resources are made available for project work to take place.

Generally speaking, organizational structures can be found on a continuum, ranging from purely functional to purely projectized in nature. The farther we go on this spectrum from left to right, the greater a project manager’s authority and level of autonomy will be in their decision making.

In a purely functional organization, the organizational chart will likely look something like this, with a CEO with number of direct reports, each looking over a functional area of the company, be it finance, engineering, legal, and so on. Underneath each of these top line lieutenants, we would have a variety of other staff.

Of course, additional levels of complexity could exist here, as well, but we would find an organizational chart generally conforming to this structure. In this case, project coordination would typically take place at a functional manager level, where the functional managers serve as the conduit between various staff that have different talents to offer to the project team.

In a functional organization structure, project managers tend to have little to no formal authority, and their control over resources is also rather minimal. From a budget control standpoint, the functional managers are the ones that would hold the keys. In this case, the project manager may act more like a coordinator working to rally resources together, but without the formal authority necessary to actively direct work.

In a projectized organization, this is different. We see that underneath the CEO, there are a variety of different project managers focused on accomplishing specific tasks for the organization. Each of their staffs may have all of the talent necessary in order to complete their objectives. As such, project coordination would take place within each of these different project team cells, rather than across the top line board of several different key executives.

In the fully projectized organization, the level of authority that a project manager has to bring to bear is high to total in nature. Their control over resources similarly is extremely high. And they are directly responsible for the control of both budget, as well as schedule, and other components, rather than answering to a functional manager of some sort. It’s rare to find organizations that purely conform to either a functional or a projectized nature.

Rather, most organizations fall into what we call a matrix blend, where functional and projectized structures come together at some level. The precise structure will vary based on the relative influence of project managers and of project initiatives in general, versus that of functional managers within the organization, across the same sort of spectrum we saw earlier.

There are three different types of matrix structures we refer to, weak matrix, balanced matrix, and strong matrix.

In the case of weak matrix organizations, project managers hold little power over personnel. Although, they may have more than any purely functional organization. Still, their work is more akin to that of an expeditor or coordinator, rather than a manager who can lead and direct their team explicitly.

Weak matrix organizations are situations where project managers will find themselves unable to make or enforce many project decisions individually. And as such, it’s of particular importance for project managers to work with others, negotiate, and to help them see how the project can be a benefit to them and their division within the company.

In the case of balanced matrix organizations, authority is, well, balanced between the project and functional managers. Project managers typically focus on the project full-time, but their resources often will not. Split up across several different projects, or perhaps lending a few hours here and there to project work while continuing to exercise day-to-day operational duties.

In a strong matrix organization, the project manager holds most control and has budgetary authority. And further, they may select staff directly or in conjunction with functional managers. In a strong matrix, projects managers have broad authority over resources and utilization, but it may not be complete.

For example, an organization where a project manager has the authority to decide the number of staff that they need, but the authority to assign specific staff still lies with the functional manager, would still be considered a strong matrix organization.

As detailed above said, few organizations are purely functional or projectized in nature. And organizational structure may even appear to vary at different levels of the organization.

There are plenty of stories of large companies where a small skunkworks team working under the radar was able to accomplish great things in part because they were outside of the typical norms and structure of that organization.

However, if we were to look higher up within that same organization, we might find it more difficult for work to continue. Just the same, within some organizations, we might find that only at that higher level do we have the discretion and authority necessary to do things differently than might happen elsewhere in the organization.

Some of the key factors to keep in mind when it comes to a project and organizational structure are the strategic importance of the project to the business overall.

The more important the project is, the more likely the project manager is to be infused with the authority to make changes, or to buck the norms as we see them within the organization or company.

The ability of stakeholders to influence the project is also important. If key stakeholders outside of the project sponsor still have the ability to control resources, that diminishes the authority and purview of the project manager.

The degree of organizational project management maturity is also important. In some companies, you may have project management offices, program management initiatives, or even portfolio management taking place where there are some strict guidelines in place about how projects are managed within the organization.

In other more organic or newer companies, we might find that there simply is no precedent for the project we’re undertaking in the company’s past work. As such, we may very well be the project team that helps to generate some of those assets, those policies and procedures that could then later guide future project work.

The project management systems that we have to rely upon can also have an impact here, depending on the sophistication both from a tool standpoint and from a policy standpoint of what project management systems we have in place.

Additionally, organizational communication tools and techniques can also come into play. Additional factors include a project manager’s level of formal authority, as explicitly listed by either the project sponsor, project management office, or other key executives within the organization who have the ability to define this role.

Resource availability and accountability can matter here, as well. If, for example, a project manager might require certain resources but they simply don’t exist within the organization, their power to actually do something about this is relatively low unless they also have the power to hire from the outside.

Similarly, if the project manager is unable to remove members who are unproductive from the project team, then they lack the ability to hold project team members accountable to a full extent within the project.

Control of project budget might reside with the project manager directly, with the project sponsor, or be directly overseen by a project management office. Depending on where this buck stops, project managers may have more or less authority when it comes to budget related issues.

The overall role of the project manager should also be considered, as should the composition of the team and allocation of project resources.

Regardless of what your organization chart might formally say, understanding where strategic resource and budgetary authority lie is key to your role as a project manager, and how you can best meet project objectives.