Tag: pmp

Project Resource Management Summary 6th Edition

Project Resource Management Summary 6th Edition

 

  1. Physical resources include equipment, materials, facilities, and infrastructure. Human resources include Team resources or personnel.
  1. Trends in resource management lean management, just in time (JIT), manufacturing,Kaizen, total productive maintenance (TPM), theory of constraints (TOC).
  1. Resources can be obtained from the organization’s internal assets or from outside the organization through a procurement process.
  1. Data Representation: The Objective is to ensure that each work package has an unambiguous owner and that all team members have a clear understanding of their roles and responsibilities.

✓  Hierarchical  charts:  The traditional organizational chart structure can be used to show positions and relationships in a graphical, top-down format.

▪   Work  breakdown  structure  (WBS):  designed to show how project deliverables are broken down into work packages and provide a way of showing high-level areas of responsibility.

▪   Organizational  breakdown structure (OBS):   is arranged according to an organization’s existing departments, units, or teams,  with  the  project  activities  or  work  packages  listed under each     department.You may see all project responsibilities by looking at OBS.

▪   Resource breakdown structure:  hierarchical list of team and physical resources related by category and resource type that is used for planning, managing and controlling project.

✓  Assignment Matrix:

▪   Responsibility Assignment Matrix (RAM) shows the project resources  assigned  to  each  work  package.  It  is  used  to illustrate the connections  between work packages, or activities, and project team members.

▪   High-level RAM can define the responsibilities of a project team, group, or unit within each component of the WBS.

 

Project Quality Management Summary 6th Edition

Project Quality Management Summary 6th Edition

 

  1. Quality as a delivered performance or result is the degree to which a set of inherent characteristics fulfill requirements.
  1. Grade as  a  design  intent  is  a  category assigned to deliverables having the same functional use but different technical characteristics.
  1. Prevention (keeping errors out of the process) and inspection (keeping errors out of the hands of the customer).
  1. Failure costs also called cost of poor quality and they can be internal (found by the team) and external (found by the customer).
  1. Effective quality management can be done in five ways:

✓  Let the customer find defects.

✓  Detect them before product sent to customer.

✓  Use quality assurance to examine.

✓  Incorporate quality into the planning and designing of the project and product.

✓  Create a culture at organization.

  1. Continual improvement: The plan-do-check-act (PDCA) cycle is the basis for quality improvement as defined by Shewhart and modified by Deming. Also, TQM, Six Sigma and Lean Six Sigma can improve project and product quality.
  1. Data Gathering:

✓  Benchmarking:  comparing  actual or planned project practices or the project’s  quality  standards  to  those  of  comparable  projects  (Internal or external) to identify best practices & generate ideas for improvement.

✓  Brainstorming:  gather data creatively from a group of team  members or subject matter experts.

  1. Data Analysis:

✓  Cost-benefit   analysis:  Financial analysis tool used to estimate the strengths and weaknesses of alternatives in order to determine the best alternative in terms of benefits provided. It will help Project manager to

determine if the planned quality is cost effective.

✓  Cost of Quality (COQ): consists one or more of the following costs >>

Cost of  Conformance

❖  Prevention costs: (Training, Document process, Equipment and  Time to do the right).

❖  Appraisal  costs:    (Testing,      Destructive      testing     loss    and  Inspection).

Cost of Nonconformance

❖  Internal Failure costs: (Rework & Scrap).

❖  External  Failure  costs:   (Liabilities,  Warranty  work  &  Lost business).

  1. Data Representation:

✓  Flow Charts (process maps):

❖  Display the sequence of steps and the branching possibilities that exist for a process that transforms one or more inputs into one or more outputs.

❖  It shows activities, decision points, loops, parallel paths, and the overall order of processing by mapping the operational details of  procedures that exist within a horizontal value chain. One version of  value  chain  is  called  SIPOC  (suppliers,  inputs,  process,  outputs and customers) model.

❖  Flowcharts are useful in understanding and  estimating the cost of quality for a process.

❖  They can be called (process flows or process flow diagrams) when they used to represent the steps in a process. Which is used  for process improvement and identify quality defects .

✓  Logical data model:

❖  Visual  representation  of  an  organization’s  data, described in business language and independent of any specific technology. Can  be  used  to  identify  where  data  integrity  or  other  quality issues can arise.

✓  Matrix diagrams:

❖  Help find the strength of relationships among different factors.

✓  Mind mapping:

❖  The mind-mapping technique may help in the rapid gathering of project quality requirements, constraints and relationships.

  1. Test and Inspection planning: During planning phase, the project manager and the team determine how to test/inspect the product to meet the stakeholders’ expectations and meet product’s performance and reliability goal.
  1. Quality Management Plan:  Describes  the  activities  and  resources  necessary  for  the  project management team to achieve the quality objectives set for the project.
  1. Quality Metrics: Describes a project or product attribute and how the Control Quality process will verify compliance to it. Examples  (percentage of completed tasks, failure rate, defects number and errors found).
  1. Manage Quality is sometimes called quality assurance. although Manage Quality has a broader definition than quality assurance as it is used in non-project work.
  1. Quality assurance focuses  on  the  processes  used  in  the  project  and  using  these processes effectively by follow and meeting standards.
  1. Manage quality includes all the quality assurance activities and also concerned with the product design aspects and process improvements.
  1. Manage Quality is  considered  the  work  of  everybody.  In  agile  projects  quality management is performed by all team members. However, in traditional projects only specific members does it.
  1. Checklists: structured tool,  usually  component-specific,  used  to  verify  that  a  set  of required steps has been performed or to check if a list of requirements has been satisfied.

Quality checklists should incorporate with scope baseline. Usually developed based on historical information.

  1. Data Analysis:

✓  Document analysis: analysis of different documents produced as part of the output of project control processes.

✓  Process analysis:  identifies opportunities for process improvements also examines  problems,  constraints,  and  non-value-added  activities  that occur during a process.

✓  Root  cause  analysis  (RCA):  analytical  technique  used  to  determine  the basic  underlying  reason  that  causes  a  variance,  defect,  or  risk.  It  may underlie more than one variance and it may also use to solve these root                    causes.

  1. Data Representation:

✓  Affinity diagrams: organize potential causes of defects into groups.

✓  Cause-and-effect   diagrams:   (known   as   fishbone   diagrams,   why-why diagrams, or Ishikawa diagrams). These diagrams break down the causes of the problem, helping to identify the main or root cause of the problem.

✓  Flowcharts: show a series of steps that lead to a defect.

✓  Histograms:  graphical  representation  of numerical  data. Histograms  can show the number of defects per deliverable, a  ranking of the cause  of defects,  the  number  of  times  each  process  is  noncompliant  or  other

representations of project or product defects .

✓  Matrix  diagrams:  show  the  strength  of  relationships  among  factors, causes, and objectives that exist between the rows and columns that form the matrix.

✓  Scatter   diagrams:  graph   that   shows   the   relationship   between   two variables.

  1. Audits :

✓  Structured, independent process used to  determine if project activities comply  with  organizational       and project policies, processes, and procedures .

✓  Usually conducted by a team external to the project such as (organization’s internal audit department, PMO or an external auditor to the organization).

✓  The subsequent effort to correct any deficiencies should result in a reduced cost of quality  and  an increase in sponsor or customer acceptance  of the product.

✓  Quality audits may be conducted by internal or external auditors.

  1. Design for X (DfX):

✓  Technical guidelines that may be applied during the design of a product for the optimization of a specific aspect of the design.

✓  DfX can control or even improve the product’s final characteristics .

✓  DfX result in cost reduction, quality improvement, better performance, and customer satisfaction.

  1. Problem Solving:

✓  Finding solutions for issues or challenges.

✓  Effective  and  systematic  problem  solving  is  a  fundamental  element  in quality assurance and quality improvement.

✓  Problems can arise as a result of the Control Quality process or from quality audits and can be associated with a process or deliverable.

  1. Quality Reports:

✓  Reports can be graphical, numerical, or qualitative.

✓  Reports  information can  be  used  by  other  processes  to  take  corrective actions to achieve quality expectations

✓  Reports may include all quality management issues escalated by the team; recommendations  for   process, project,  and product improvements; corrective  actions  recommendations  the  summary  of  findings  from  the  Control Quality process.

  1. Test and Evaluation Documents:

✓  Inputs  to  the  Control  Quality  process  and  are  used  to  evaluate  the achievement of quality objectives.

✓  They      may    include     dedicated      checklists     and    detailed    requirements  traceability matrices.

✓  They  can  be  created  based  on  industry  needs  and  the  organization’s templates.

  1. Control quality in agile projects can be performed by all team members throughout the project life cycle. However, in waterfall projects it’s performed at specific times, toward the end of the project or phase, by specified team members.
  1. Deliverables that are outputs from the Direct and Manage Project Work process are inspected and compared to the acceptance criteria defined in the project scope statement.
  1. Data Gathering:

✓  Check sheets (Tally sheets): organize facts in a manner that will facilitate the effective collection of useful data about a potential quality problem.

They are especially useful for gathering attributes data while performing  inspections to identify defects.

✓  Statistical sampling: involves choosing part of a population of interest for inspection. The  sample  is  taken  to  measure  controls  and  verify  quality. Sample frequency and sizes should be determined during the Plan Quality Management process.

✓  Questionnaires and Surveys: gather data about customer satisfaction after the  deployment  of  the  product  or  service.  The  cost  regarding  defects identified in the surveys may be considered external failure costs in the COQ model and can have extensive cost implications for the organization .

  1. Performance reviews: measure, compare, and analyze the quality metrics defined by the Plan Quality Management process against the actual results.
  1. Inspection:

✓  Determine if the product conforms to documented standards .

✓  They can be done on single activity or at final product.

✓  Inspection can be called reviews, peer reviews, audits, or walkthroughs.

✓  Inspections also are used to verify defect repairs.

  1. Control charts:

✓  Determine   whether   or   not   a   process   is   stable   or   has   predictable performance.

✓  Upper and lower specification limits are based on the requirements and reflect the maximum and minimum values allowed.

✓  Upper and lower control limits are different from specification limits .

✓  The control limits are determined using standard statistical calculations and principles to ultimately establish the natural capability for a stable process .

✓  Project manager and appropriate stakeholder use controlled control limits which corrective action will be taken to prevent performance that remains outside control limits.

✓  Control charts can be used to monitor various types of output variables to help determine if the project management process is in control.

✓  The sample out of control if there are 7 values either above or below the mean. Or if there is any value outside the control limits .

  1. Quality Control Measurements:

✓  Documented results of Control Quality activities. They should be captured in the format that was specified in the quality management plan.

  1. Verified Deliverables:

✓  The  results  of  performing  the  Control  Quality  process  are  verified deliverables  that  become  an  input  to  the  Validate  Scope  process  for formalized acceptance.

✓  If  there  were  any  change  requests  or  improvements  related  to  the  deliverables, they may be changed, inspected, and reverified.

  1. Important Notes:

✓  Processes and quality plan>>>>Manage quality.

✓  Deliverable>>>> Control quality.

✓  Defect  repair>>>>  weak  performance  is  in  product  under  operational conditions which means quality problem is in product will require.

✓  Prevention action>>>> New changes to ensure the future performance will change.

Project Communication Management Summary 6th Edition

Project Communication Management Summary 6th Edition

 

  1. An effective communications management plan is developed early in project life cycle.
  2. 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).
  1. 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).

  1. 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).

  1. 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.

  1. 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).

  1. 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.

  1. 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”.

  1. 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.
  1. 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).

  1. 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.

  1. 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.

  1. Project Communications: Project  communications  artifacts  includes:  performance reports, deliverable  status,  schedule  progress, cost  incurred, presentations,  and  other information required by stakeholders.
  1. Monitor Communications process can trigger an iteration of the Plan Communications Management and/or Manage Communications processes to improve effectiveness of communication.
  1. 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 Management Summary 6th Edition

 

  1. Project Scope is measured against the Project Management Plan. Product Scope is  measured against the Product Requirements.
  1. 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.
  1. 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).
  1. 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).
  1. 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.
  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.
  1. 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).
  1. Requirements should be unambiguous & can be classified into: Business, Stakeholder, Solution, Transition and readiness, Project & Quality requirements.
  1. 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.

  1. 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.
  1. 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.

  1. 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.
  1. 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.
  1. 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.
  1. 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.

  1. 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.
  1. 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.
  1. Verified deliverables Validate Scope Accepted Deliverables.
  2. The uncontrolled expansion to product or project scope without adjustments to time, cost, and resources is referred to as scope creep.
  1. 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.
  1. 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

Project Schedule Management Summary 6th Edition

 

  1. The detailed project schedule should remain flexible throughout the project life cycle.
  2. 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.

  1. If a  business  analyst  is  assigned  to  a  project,  requirement-related  activities  are  the  responsibility of that role.
  1. Release and iteration length: In adaptive life cycle the time-boxed periods for releases, waves and iterations are specified.
  1. Time-boxed periods: durations which the team works steadily toward completion of a  goal, and this helps to minimize scope creep.
  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. Activities that have  multiple  predecessor  activities  indicate  a  path  convergence. Activities that have multiple successor activities indicate a path divergence.
  1. 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.

  1. 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.

  1. 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.

  1. 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

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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 .
  1. 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.

  1. Project schedule is usually presented in graphical form (Bar charts (Gantt Charts), Milestone charts and Project schedule network diagrams (Pure logic diagram)).
  2. Schedule Data: collection of information for describing and controlling the schedule incudes  (milestones, activities,  attributes and documentation for assumptions and constraints).
  1. 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.
  1. Iteration Burndown Chart: This chart tracks the work that remains to be completed in the iteration backlog.
  1. Performance reviews: Measure, compare, and analyze schedule performance against the  schedule baseline.
  1. 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.

  1. 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

Project Cost Management Summary 6th Edition

 

  1. Cost estimates  include  the  identification  and  consideration  of  costing  alternatives  to initiate and complete the project.
  1. Cost trade-offs and risks should be considered to achieve optimal costs for the project.
  2. The accuracy of a project estimate will increase as the project progresses through project life cycle.
  1. 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%).
  1. Analogous Estimating, Parametric Estimation, Bottom-UP Estimating &  Three-Point Estimating. In schedule summary.
  1. Reserve Analysis. In schedule summary.
  2. Cost of  Quality:  Assumptions  about  costs  of  quality  may  be  used  to  prepare  the estimates.
  1. 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, …).

  1. Determine Budget  is  the  process  of  aggregating  the  estimated  costs  of  individual activities or work packages to establish an authorized cost baseline.
  1. Project budget includes all the funds authorized to execute the project.
  2. 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.

  1. 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.
  1. 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.

  1. Funding limit Reconciliation:

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

  1. Financing: Financing entails acquiring funding for projects for long lasting projects. External funding may require certain requirements.
  1. 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.

  1. Project Funding Requirements :   Total  funding  requirements  and  periodic  funding requirements are derived from the cost baseline.
  1. Any increase to the authorized budget requires an approved change.
  2. 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).

  1. 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.

  1. 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).

  1. 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.

  1. 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.

  1. 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.

  1. 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

  1. 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.

 

Types of Contracts according to PMBOK® Guide – Sixth Edition

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

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.

Project Management Offices according to PMBOK® Guide – Sixth Edition

Project Management Offices according to PMBOK® Guide – Sixth Edition

 

The PMBOK Guide defines project management offices as an organizational structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques.

Simply put, PMOs are in place to help project teams succeed by providing some best practices and unified standards that help to comply with the organization’s needs and by helping to direct and flow project work in a variety of ways that can benefit both the project team and the organization.

Generally speaking, there are three types of PMOs that we most often see. These include supporting, controlling, and directing project management offices.

In the case of supporting project management offices, we see a relatively low level of control at the PMO level; rather, the project teams remain largely autonomous in nature. The project management office in these sorts of organizations supplies best practices, training, information, data, and templates that can help the project team to succeed, and also acts as a repository for project information, which is important, given the fact that our project team will disband once we’ve met our objective successfully or have decided to move on from the project for other reasons.

A controlling project management office, on the other hand, institutes a moderate level of control over the project teams that work through it. This includes required compliance to methodologies, frameworks, or governance styles that might exist within the organization rather than simply providing templates that serve as an option but still leaves management within those boundaries to the project manager.

Third is a directing project management office, which assumes a higher level of control than the other two within each project team. There’s a high degree of direct control over each project’s management.

This could include directly assigning project managers to each individual project as well as controlling the resources available to those project managers and setting the tone and direction for how those project managers should manage their work. Regardless of which type of PMO most closely fits the one you might be familiar with in your organization, project management offices work to facilitate project success.

They may assign project managers to projects directly and certainly serve as a resource for project teams. Among the various functions that project management offices offer include maintaining standards and practices for project teams as well as curating tools and templates that can be used by them, archiving documents are artifacts for future use by either this project team or others in the organization, as well as developing key performance indicators and metrics that can be used to understand project performance and control.

In addition, project management offices can define governance policies for each project team as well as coordinate overall resources within the organization. Project management offices may also establish deliverables, especially if they serve as the project sponsor.

Finally, measuring the aggregate performance of projects is also an important role of PMOs, helping to rank how well projects are doing and to understand where additional attention by the organization might be necessary, either in the form of better leadership or an increased level of resources to help that project team meet their goals.

One thing project management offices don’t do is manage projects directly. That, of course, is the purview of the project manager, who focuses on completing specified objectives, while the project management office is more concerned with major changes in scope and direction that may take place as the result of shifting priorities, different changes in the product environment and so forth.

From a control perspective, the project manager has some level of a direct authority over the resources that have been assigned to their project, while the project management office focuses on dispensation and optimization of these resources between a variety of project teams.

As far as management goes, the project manager focuses on managing their project constraints: time, cost, quality, resources, scope, and so forth, while the project management office, on the other hand, focuses on creating the tools and methodologies that can be used to help project managers achieve those goals, establishing the standards that might be in place for the organization, understanding risks that impact the project and the organization at large, and the interdependencies that we may see between various projects.

Programs and Portfolios according to PMBOK® Guide – Sixth Edition

Programs and Portfolios according to PMBOK® Guide – Sixth Edition

 

According to the PMBOK Guide, program management focuses in the interdependencies within a project in order to determine the optimal approach for managing the project. Simply put, programs are bunches of projects that are all together and interrelated in some sort of capacity.

We see them roll into a program for more efficient management and so that resources can be shared between them. Oftentimes, by working in a program management structure, we can obtain benefits that are not available by simply managing projects on an individual basis.

These focus on project interdependencies, areas where resources might be able to be combined or used, areas where scope might interlap between projects and more. Program management finds the optimal combined approach to accomplishing several interrelated projects in the way that’s most efficient for the organization as a whole.

Portfolio management, on the other hand, is defined as the centralized management of one or more portfolios in order to achieve strategic objectives.

These portfolios can consist of both programs and of projects. Oftentimes, we may see a complex program broken down into not only several different projects but also subprograms as well that may have projects of their own.

In other cases, the structure may be more simple in nature with a single program and several projects running underneath it. In other case, we may have projects that are important to the organization but don’t share enough in common with other projects in order to merit a program relationship.

As such, we could consider those projects part of the portfolio, just as much as we do those that roll through a program first.

Let’s take a look at a more real-world example here using our fictitious rocket company, Apogee Ventures. Here, we might see that there are a number of different large-scale programs within our organization.

We’re focusing on manned launches in the future as well as on commercial payloads like satellites that we can take to orbit in addition to shared systems that may be able to help both of these as well as other opportunities that we may have to grow the business in the future.

Further, we may have a separate project that doesn’t roll directly into any of these but instead is focused on building our brand, both with the public at large as well as with the government agencies and corporations that may serve as our customers for launch missions moving forward. Within each of these different programs, we might see a variety of separate projects, as well as a variety of different subprograms.

Here, the capsule, life support system and platform integration might all be considered separate projects under the manned program, while under mission development, a subprogram, we might also see mission training and orbital science listed as separate projects.

As far as commercial payload goes, we may have payload certification, satellite development, and pricing model generation all serving different project teams within this program, while for shared systems, launchpad construction might be its own project, while two different phases of rocket development, both on control systems and propulsion, are interrelated enough that we consider using a program to manage both of them together.

Portfolio management works to maximize the value of projects across both programs and projects for the organization. It helps to align programs and projects to what top-level organizational objectives might exist, and help to set organization-wide policies, procedures, and resource allocations that all different project teams and programs would subscribe to.

As you might guess, there’s no optimal method to the way that we structure projects, programs, and portfolios for every organization. Instead, this will vary based on what the organization’s needs might be, the organization structure at large, and what best fits the strategies and objectives that the organization holds.

Achieving objectives using project frameworks, however, leads to more sustainable performance and results, which is why we often see projects working through these program and portfolio hierarchies in order to better manage our resources and to better meet the larger strategic objectives of organizations.

error: Content is protected !!
Exit mobile version