Transcript Program Management Professional (PMP)

Project Management
Dr. Anbang Qi
Prof. of International Business
School of Nankai University
The Resources of the Materials
• The main content is from “A Guide To The
Project Management Body Of Knowledge”
(PMBOK).
• The copyright belongs to the Project
Management Institute.
• Its website is www.pmi.org
Chapter 1 – Introduction
1. The history of project management
• There are three different times
– Old times-before 1940’s
– Traditional times-1940’s-1980’s
– Modern times-1980’s till now
• There are two main association:
– PMI-Project Management Institute
– IPMA-International Project Management
Association, before called Internet.
Chapter 1 – Introduction
2. Modern Project Management
• There are two characteristics for MPM
– Enlarged management area-from 3 to 9 areas
– Expended to all projects not only the
construction and engineering projects.
• Become a discipline of Management
– Operation or routine management
– Project and program management
Chapter 1 – Introduction
3. The importance of learning MPM
• All things start with project and then may
or may not transit into operations.
• The project become the great means for a
company to make profit in the knowledge
economy since all innovations are realized
through projects.
• The top management should deal with
exceptions and that need PMP.
Chapter 1 – Introduction
•
•
•
•
4. The Definition of Project
Project – temporary endeavor undertaken to
create a unique product or service
Has a definite beginning and end and
interrelated activities
Under the restriction of resources
For some purpose of a organization or even a
person.
Chapter 1 – Introduction
•
•
•
•
•
•
•
5. Typical Projects
R & D projects
BPR and Reorganization
Information system integration
Construction and Engineering
Scientific research and Dissertation
Olympic Games and other sports games
Every kind shows and performance
Chapter 1 – Introduction
6. The Characteristics of a Project
• Products or Service are unique – characteristics
are progressively elaborated
– Progressively: proceeding in steps
– Elaborated: worked with care and detail
• The work is temporary.
– Time limited
– There are resource restriction.
Chapter 1 - Introduction
7. The Definition of Project Management
• Project Management is the overall planning,
control and coordination of project from
inception to completion.
• Project Management focus on completing
project on-time, within the allotted budget and
defined scope, and satisfying the required
quality standard.
Chapter 1 - Introduction
8. The Methods and Tools of PM
• Project Management should apply of knowledge,
skills, tools and techniques to project activities in
order to meet or exceed stakeholder needs and
expectations from a defined project –balancing
and integrating the following:
– Scope, time, cost, and quality
– Stakeholders’ expectations
– Requirements (needs) vs. unidentified requirements
(expectations)
Chapter 1 - Introduction
9. The difference between Program and Project
• Programs adopt new set of objectives and continue to
work; Projects cease when declared objectives have
been attained
• Programs are groups of projects managed in a
coordinated way to obtain benefits not available from
managing the projects individually
• Most programs have elements of ongoing operations
– Series of repetitive or cyclical undertakings
• Projects is no ongoing operation, are often divided into
“subprojects” for more manageability
– Often contracted out to external organizations
Chapter 1 - Introduction
10. Project Management Body of Knowledge
– Project integration management
– Project scope management
– Project time management
– Project cost management
– Project quality management
– Project human resource management
– Project communication management
– Project risk management
– Project procurement management
All these make up a knowledge system of PM
Project Procurement
Management
Project Human
Resource Management
Project Risk
Management
Project Scope
Management
Project Cost
Management,
Project Time
Management,
Project Quality
Management
Project Communication
Management
Project Integration
Management
The System of PMBOK
PMBOK
Generally
accepted PM
knowledge
and
practices
General
management
knowledge
and practices
Application
area
knowledge
and practices
The relationship of the knowledge
Chapter 2 – Project Management
Context
1. Project Life Cycle
• Project Life Cycle defines or tells:
– The phases of the project (time)
– The work performed in each phase (work)
– The input and output of each phase (result)
– The milestone of each phase (end sign)
• Common Characteristics of Project Life Cycles:
– Cost and Staffing levels are low at start and move higher towards the
end
– Probability of successfully completing project is low at beginning, higher
towards the end as project continues
– Stakeholder influence is high at the beginning and progressively lowers
as project continues
Full operation
Installation
substantially complete
Percentage
Complete
100%
Major contract let
Project ”go” decision
Phase 1
Feasibility
study
－suggestion
－feasibility
－pre-design
－approve
Phase 2
Planning &
Design
－tech-design
－cost estimate
－scheduling
－contracting
－plan details
Phase 3
Execution
－fabrication
－construction
－installation
－trial
Phase 4
Turnover
－final testing
－maintenance
Phase 0
Phase 1
Phase 2
Phase 3
Phase 4
Determi
-nation
Concept
Engineering
Production Operation
Demonsof the Exploration
and
and
and
tration
and
Mission
and
Manufacturing Development Supporting
Validation
Need
Definition
Development
Milestone 0
Concept
Study
Approval
Milestone 1
Concept
Demonstration
Approval
Milestone 2
Development
Approval
Milestone 3
Production
Approval
Project Life Cycle of DOD of USA for Acquisition
Milestone 4
Major
Modification
Approvals
Chapter 2 – Project Management
Context
2. Phases of a Project
• Project Phases are marked by the completion of
a deliverable
– Tangible, verifiable work product
– Review of deliverables and approval/denial are
“phase exits, stage gates, or kill points”
• Phases are collected into the Project Life Cycle
– Set of defined work procedures to establish
management control
Chapter 2 – Project Management
Context
3. Stakeholders of projects
• Stakeholders: individuals and organizations who
are actively involved in the project
– Often have conflicting expectations and objectives
– In general, differences should be resolved in favor of
the customer – individual(s) or organization(s) that will
use the outcome of the project
– Stakeholder management is a proactive task
• Project Mangers must determine all stakeholders and
incorporate their needs into the project
Chapter 2 – Project Management
Context
3. Stakeholders of projects
• Stakeholders are:
–
–
–
–
–
–
–
–
–
–
Owners
Sponsor
Customers
End User
Contractor (Performing Organizations)
Supplier
Project Managers
Project Teams
Society and Citizens
Others: government agent and so on
Supplier
Owners
Project
Manager
Sponsor
Others
Project
Teams
Customer
End User
Society,
Citizens
The relationship of stakeholders of projects
Chapter 2 – Project Management
Context
4. The Hierarchy
of Project
Organization
Management
Stakeholders Management
Performing Org. Mana.
Project Team Mana.
Project
Manager
Chapter 2 – Project Management
Context
5. Organizational Systems
• The organizational system of Performing
Organization is an very important environment
factor for a project.
• Project based vs. Non-Project Based
– Project Based – derive revenues from performing
projects for others (consultants, contractors),
“management by projects”
– Non-Project Based – seldom have management
systems designed to support project needs
(manufacturing, financial services)
Chapter 2 – Project Management
Context
5. Organizational Systems
• Organizational Cultures and Styles:
– Entrepreneurial firms more likely to adopt
highly participative Project Manager – accept
higher risk/reward
– Hierarchical firms less likely to adopt
participative Project Manager – take fewer
risks
Chapter 2 – Project Management
Context
6. Organizational Structures
• Functional Organization
– More emphasis on functions, Specialists
– 1 supervisor – No career path in PM
• Projectized Organization
– Efficient Organization
– Lack of Professionalism
– Effective Communication, Duplication of functions
• Matrix Organization
–
–
–
–
–
Visible Objectives
PM Control – More than 1 boss, Potential for conflict
More support – More complex to control
Tough resource allocation,Information distribution
Coordination – Policies & Procedures
Project
Coordination
Chief
Executive
Functional
Manager
Line Depart.
Director
STAFF P
STAFF P
STAFF
Line
Departmen
t
Line
Departmen
t
STAFF P
STAFF
STAFF
STAFF P
STAFF
STAFF P
STAFF
STAFF P
STAFF P
Functional and
Liner Organization
Functional
Manager
Chief
Executive
Project
Coordination
Functional
Manager
Project
Manager
Project
Manager
Project
Manager
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
STAFF
Projectized Organization
Chief
Executive
Functional
Manager
Functional
Manager
Functional
Manager
STAFF
P
STAFF
P
Project
Manager
STAFF
P
STAFF
P
STAFF
P
Project
Manager
STAFF
P
STAFF
P
STAFF
P
Project
Coordination
Matrix Organization
Line Department
STAFF
P
Line Department
Project
Manager
Line Depart.
Director
Chief
Executive
Line Depart.
Director
Line Department
Line Department
Project
Coordination
Functional
Manager
STAFF
P
STAFF
P
STAFF
P
Functional
Manager
STAFF
P
STAFF
P
STAFF
P
Composite
Organization
Functional
Manager
Manager of
Project
Managers
STAFF
P
Project
Manager
STAFF
P
Project
Manager
STAFF
P
Project
Manager
Project
Coordination
Chapter 2 – Project Management
Context
7. Project Management Skills
• General Business Management (consistently producing
results expected by stakeholders)
• Leading (establishing direction, aligning resources, motivating)
• Communicating (clear, unambiguous, and complete)
• Negotiating (conferring with others to reach an agreement)
• Problem Solving (definition and decision making)
– Distinguish causes and symptoms
– Identify viable solutions
• Influencing Organization (understanding power and politics)
Chapter 2 – Project Management
Context
8. Socioeconomic Influences
• Standards – document approved that provides
common, repeated use, rules and guidelines
• Regulations – document that identifies products,
services or characteristics
– Standards often become actual regulations
• Internationalization
• Cultural Influences
Chapter 3 – Project Management
Processes
• Project Management requires active
management of Project Processes
– Series of actions that achieve a result
– Project Management Processes
• Describing and organizing the work
– Product-Oriented Processes
• Specifying and creating the product
Chapter 3 – Project Management
Processes
1. The Processes of Project Life Cycle
• Production oriented process
• Management oriented process
• Total Project Life Cycle
Turnover
Production oriented process
Management oriented process
Project life cycle including the operation phases
General project LC
Operation phases
Chapter 3 – Project Management
Processes
2. Management Process Groups:
• Initiating processes: recognizing a project or phase
should begin
• Planning processes: devising and maintaining a
workable plan
• Executing processes: coordinating resources to execute
the plan
• Controlling processes: ensuring project objectives are
met; monitoring, correcting and measuring progress
• Closing processes: formalized acceptance
Chapter 3 – Project Management
Processes
•
•
•
•
3. The Relationship of Process Groups
Process Groups are linked by the results each
produces
Process Groups are overlapping activities with
various levels of intensity
Process Group interactions cross phases –
“rolling wave planning”
Individual processes have inputs, tools and
techniques, and outputs (deliverables)
Chapter 3 – Project Management
Processes
Initiating Processes
Planning Processes
Executing Processes
Controlling Processes
Closing Processes
Links Among Process Groups in a Phase
Chapter 3 – Project Management
Processes
Design Phase
Initiating
Processes
Planning
Processes
Executing
Processes
Controlling
Processes
Closing
Processes
Implementation Phase
Initiating
Processes
Planning
Processes
Executing
Processes
Controlling
Processes
Closing
Processes
Interaction between Phases of a project
Chapter 3 – Project Management
Processes
Level of
Activity
Executing
Process
Initiating
Process
Phase Start
Planning
Process
Controlling
控制过程
Process
Closing
Process
Phase Finish
Overlap of Process Groups in a Phase of a project
Chapter 3 – Project Management
Processes
4. The Initiating Processes
• Committing the organization to begin a project or
a phase of a project
–
–
–
–
Decision,
Initiation,
High-level planning,
Charter Making
Chapter 3 – Project Management
Processes
5. Planning Processes
• Core Planning
– Scope Planning – written statement
– Scope Definition – subdividing major deliverables into
more manageable units
– Activity Definition – determine specific tasks needed
to produce project deliverables
– Activity Sequencing – plotting dependencies
– Activity Duration Estimating – determine amount of
work needed to complete the activities
(continued)
Chapter 3 – Project Management
Processes
5. Planning Processes
• Core Planning
– Schedule Development – analyze activity sequences, duration,
and resource requirements
– Resource Planning – identify what and how many resources are
needed to perform the activities
– Cost Estimating – develop resource and total project costs
– Cost Budgeting – allocating project estimates to individual work
items
– Project Plan Development – taking results from other planning
processes into a collective document
Chapter 3 – Project Management
Processes
5. Planning Processes
• Facilitating (Planning) Processes
– Quality Planning – standards that are relevant to the
project and determining how to meet standards
– Organizational Planning – identify, document, and
assigning project roles and responsibilities
– Staff Acquisition – obtaining the human resources
– Communications Planning – determining rules and
reporting methods to stakeholders
(continued)
Chapter 3 – Project Management
Processes
5. Planning Processes
• Facilitating (Planning) Processes
– Risk Identification – determining what is likely to affect
the project and documenting these risks
– Risk Quantification – evaluating risks and interactions
to access the possible project outcomes
– Risk Response Development – defining enhancement
steps and change control measures
– Procurement Planning – determining what to buy and
when
– Solicitation Planning – documenting product
requirements and identifying possible sources
Chapter 3 – Project Management
Processes
5. Planning Processes
• The order of planning events :
–
–
–
–
–
–
–
–
–
Scope Statement
Create Project Team
Work Breakdown Structure
WBS dictionary
Finalize the team
Network Diagram
Estimate Time and Cost
Critical Path
Schedule
– Budget
(continued)
Chapter 3 – Project Management
Processes
•
5. Planning Processes
The order of planning events (continued)
–
–
–
–
–
–
–
–
–
Procurement Plan
Quality Plan
Risk Identification, quantification and response development
Change Control Plan
Communication Plan
Management Plan
Final Project Plan
Project Plan Approval
Kick off
Chapter 3 – Project Management
Processes
6. Executing Processes
–
–
–
–
–
Project Plan Execution – performing the activities
Complete Work Packages
Information Distribution
Scope Verification – acceptance of project scope
Quality Assurance – evaluating overall project
performance on a regular basis; meeting
standards
– Team Development – developing team and
individual skill sets to enhance the project
– Progress Meetings
(continued)
Chapter 3 – Project Management
Processes
6. Executing Processes
– Information Distribution – making project
information available in a timely manner
– Solicitation – obtaining quotes, bids, order,
proposals as appropriate
– Source Selection – chooseing appropriate
suppliers
– Contract Administration – managing vendor
relationships
Chapter 3 – Project Management
Processes
7. Controlling Processes
• To regularly measure project performance and to
adjust project plan
• Take preventive actions in anticipation of
possible problems
– Overall Change Control – coordinating changes
across the entire project plan
– Scope Change Control – controlling “scope creep”
– Schedule Control – adjusting time and project
schedule of activities
(continued)
Chapter 3 – Project Management
Processes
7. Controlling Processes
– Cost Control – managing project budget
– Quality Control – monitoring standards and
specific project results; eliminating causes of
unsatisfactory performance
– Performance Reporting – status, forecasting, and
progress reporting schedule
– Risk Response Control – responding to changes
in risk during the duration of the project
Chapter 3 – Project Management
Processes
8. Closing Processes
• Administrative Closure – generating necessary
information to formally recognize phase or
project completion
• Contract Close-out – completion and delivery of
project deliverables and resolving open issues
•
•
•
•
•
•
•
Procurement Audits
Product Verification
Formal Acceptance
Lessons Learned
Update Records
Archive Records
Release Team
Chapter 3 – Project Management
Processes
9. The Skills for Process of Groups
–
–
–
–
–
–
–
Influencing the organization
Leading
Problem Solving
Negotiating
Communicating
Meetings
Project Selection Techniques
• Comparative Approach (similar projects)
• Constrained Optimization (mathematical approach)
Chapter 3 – Project Management
Processes
10. Customizing Process Integration
• Not all of the processes will be needed on
all projects, and not all of the interactions
will apply to all projects.
• Key aspect of scope verification is
customer acceptance
• Remember that only 26 % of projects are
succeed
Chapter 4 – Project Scope
Management
1. Project Scope Management
– It is the processes required to ensure that the project
includes all, and only, work required
– It is used to define what “is/is not” included in the
project
– The project scope shows the work that must be done
and measured against project plan
– The product scope defines features and functions
included in the product or service, and that is
measured against requirements
– It is primarily concerned with defining and controlling
what is or is not included in the project.
Chapter 4 – Project Scope
Management
1. Project Scope Management
Owner’s
expectation
Defined
project
scope
Actual
result
The philosophy of project scope management
Chapter 4 – Project Scope
Management
1. Project Scope Management
• There are 5 project scope management
processes. They are:
– 1. Initiation-committing the organization to begin the next phase
of the project.
– 2. Scope Planning-developing a written scope statement as the
basis for future project decisions.
– 3. Scope Definition-subdividing the major project deliverables
into smaller, more manageable components.
– 4. Scope Verification-formalizing acceptance of the project scope.
– 5. Scope Change Control-controlling changes to project scope.
Chapter 4 – Project Scope
Management
1. Project Scope Management
• These processes interact with each other and
with the processes in the other knowledge areas
as well.
• Each process may involve effort from one or
more individuals or groups of individuals based
on the needs of the project.
• Each process generally occurs at least once in
every project phase.
Chapter 4 – Project Scope
Management
2. Initiation Process
• A process of formally recognizing that a new
project exists, or an existing project continue to
next phase
• It involves feasibility study, preliminary plan, or
equivalent analysis
• Authorized as a result of:
– Market Demand, Business Need;
– Customer Request, Technological Advance;
– Legal Requirement or others
Chapter 4 – Project Scope
Management
2. Initiation Process
• Inputs:
– Product Description – characteristics of the
product/service that the project was to create
• Less detail in early phases, more comprehensive in latter
• Initial product description is usually provided by the buyer
– Strategic Plan – supportive of the organization's goals
– Project Selection Criteria – defined in terms of the
product and covers range of management concerns
(finance, market)
– Historical Information – results of previous project
decisions and performance should be considered
Chapter 4 – Project Scope
Management
2. Initiation Process
• Tools & Techniques
– Project Selection Methods:
• Benefit measurement models – comparative approaches,
scoring models, economic models
• Constrained operation models – programming mathematical
• Decision models – generalized and sophisticated techniques
– Expert judgment
•
•
•
•
Business Units with specialized skills
Consultant
Professional and Technical Associations
Delphi Technique
Chapter 4 – Project Scope
Management
2. Initiation Process
• Outputs
– Project Charter – formally recognizes project, created
by senior manager, includes:
•
•
•
•
•
•
•
Business need/Business Case
Product description & title
Signed contract
Project Manager Identification & Authority level
Senior Management approval
Project’s Goals and Objectives
Constraints – factors that limit project management team’s
options
• Assumptions – factors that are considered true for planning
purposes. Involve a degree of risk
(continued)
Chapter 4 – Project Scope
Management
3. Scope Planning
• Scope Planning – a process of developing a
written statement as basis for future decisions
– Criteria to determine if the project or phase is
successful
• Inputs:
–
–
–
–
Product description
Project Charter
Constraints
Assumptions
Chapter 4 – Project Scope
Management
3. Scope Planning
• Tools & Techniques
– Product Analysis - - developing a better
understanding of the product of the project
– Cost/Benefit Analysis – estimating tangible/intangible
costs and returns of various project alternatives and
using financial measures to assess desirability
– Alternatives Identification – generate different
approaches to the project; “brainstorming”
– Expert Judgment
Chapter 4 – Project Scope
Management
3. Scope Planning
• Outputs
– Scope Statement – documented basis for making project
decisions and confirming understanding among stakeholders.
Includes:
•
•
•
•
Project justification –evaluating future trade-offs
Project Product – summary of project description
Project Deliverables – list of summary of delivery items
Project Objectives – quantifiable criteria met for success.
– Supporting detail – includes documentation of all assumptions
and constraints
– Scope Management Plan – how project scope is managed,
change control procedure, expected stability, change
identification and classification
• Control what is/is not in the project; prevents delivering “extra”
benefits to the customer that were not specified/required
Chapter 4 – Project Scope
Management
4. Scope Definition
– Subdividing major deliverables into smaller,
manageable components
– Improve accuracy of cost, time, and resource
estimates
– Define a baseline for performance measurement
– Clear responsibility assignments
– Critical to project success – reduces risk of higher
cost, redundancy, time delays, and poor productivity
– Defines “what” you are doing; WBS is the tool
Chapter 4 – Project Scope
Management
4. Scope Definition
• Inputs:
– Scope Statement
– Constraints – consider contractual provisions
– Assumptions
– Other Planning Outputs
– Historical Information
Chapter 4 – Project Scope
Management
4. Scope Definition
• Tools & Techniques
– Work Breakdown Structure Templates
– Decomposition
• The main works in scope definition
– Major project deliverables and management approach
– Decide cost and duration estimates
– Tangible and verifiable results to enable performance
management, how the work will be accomplished
– Verify correctness of decomposition-All items necessary and
sufficient? Clearly and completely defined? Appropriately scheduled,
budgeted, assigned?
Chapter 4 – Project Scope
Management
4. Scope Definition
• Outputs
– Work Breakdown Structure (WBS)
• a deliverable-oriented grouping of project assignments that
organizes and defines the scope of the project
• Each descending level represents further detail; smaller and
more manageable pieces
• Each item is assigned a unique identifier collectively known as
“code of accounts”
– Work Breakdown Structure Dictionary (WBSD)
• All work element descriptions included in a WBSD (work,
schedule and planning information)
– Other formats:Contractual WBS, Organizational (OBS) , Resource
(RBS) , Bill of Materials (BOM) , Project (PBS) – similar to WBS
Software Development Project
Project
Management
Time
Product
Requirement
System
Design
Construction
& Integration
Training and
Transmitting
Owner’s
Requir.
Logic Sys
Design
Programming
User Documentation
quality
End User’s
Requir.
Physic
Sys design
Integrating
Training
Program
Cost
Analysis
Result
System
Design
Testing
Transmitting
Program
Scope
An illustration of the WBS for a software development project
Chapter 4 – Project Scope
Management
5. Scope Verification
• Inputs
– Scope Definition Work Results – WBS, WBSD
– Product Documentation – description available for
review (requirements)
• Tools & Techniques
– Inspection – measuring, examining, testing to
determine if results conform to requirements
• Outputs
– Formal acceptance – documentation identifying client
and stakeholder approval, customer acceptance of
efforts
Chapter 4 – Project Scope
Management
•
•
•
•
6. Scope Change Control
Influencing factors to ensure that changes
are beneficial
Determining scope change has occurred
Managing changes when they occur
Thoroughly integrated with other control
processes
Chapter 4 – Project Scope
Management
6. Scope Change Control
• Scope Change Control Inputs:
– Work Breakdown Structure
– Performance Reports- issues reported
– Change Requests – expansion/shrink of scope
derived from :
• External events (government regulations)
• Scope definition errors of product or project
• Value adding change – new technology
– Scope Management Plan
Chapter 4 – Project Scope
Management
6. Scope Change Control
• Scope Change Control Tools & Techniques
– Scope Change Control System – defines procedures
how scope change can occur
• All paperwork, tracking systems, approval levels
• Integrated with overall change control procedures
– Performance Measurement – determine what is
causing variances and corrective actions
– Additional Planning
Chapter 4 – Project Scope
Management
6. Scope Change Control
• Scope Change Control Outputs:
– Scope Changes – fed back through planning
processes, revised WBS
– Corrective Actions
– Lessons Learned – cause and reasoning for
variances documented for historical purposes
Chapter 5 – Project Time
Management
1. Project Time Management
• It includes the processes required to ensure
timely completion of the project.
• The major processes are:
– Activity Definition-identifying the specific activities that
must be performed to produce project deliverables.
– Activity Sequencing-identifying and documenting
interactivity dependencies.
– Activity Duration Estimating-estimating the work
periods needed to complete individual activities.
– Schedule Development-analyzing activity sequences,
durations,and resource requirements for the schedule.
– Schedule Control-controlling changes to the schedule.
WBS
interactivity
dependencies
estimating work
periods needed
Arrange activity
time schedule
Actual change
control
Activity Definition
identifying the specific activities
Activity Sequencing
identifying and documenting
interactivity dependencies
Activity Duration Estimating
estimating work periods needed
to complete individual activities
Schedule Development
analyzing sequences, durations,
and resource requirements
Schedule Control
-controlling
changes to the schedule
Activity Breakdown
Analysis
Activity
Sequencing
Critical Path
Analysis
Measures for
time management
Change requirement
control
Chapter 5 – Project Time
Management
2. Activity Definition
• Identifying and documenting specific
activities to produce project deliverables
identified in the WBS
• Must be defined to meet the project
objectives
Chapter 5 – Project Time
Management
2. Activity Definition
• Inputs
– WBS – primary input
– Scope Statement – project justification &
project objectives
– Historical Information
– Constraints
– Assumptions
Chapter 5 – Project Time
Management
2. Activity Definition
• Tools & Techniques
– Decomposition – outputs are expressed as
activities rather than deliverables
– Templates – reuse from previous projects
Plant construction project
Building subproject
Design subproject
Design management
Design work
Construction work
Construction M.
Integration M.
Architecture D.
Site preparing
Integration M.
Scope M.
Structure D.
Construction
Scope M.
Time M.
Shop Drawing
Cost M.
Installation D.
Installation
Time M.
Hand over
Cost M.
·····
·····
The illustration of activity definition of a construction project
Changing
Executing
planning
··
·
a component
Framework
Foundation
a component
Framework
Foundation
Settlement
Control
Payment
Budget
Estimate
··
·
Chapter 5 – Project Time
Management
2. Activity Definition
• Outputs
– Activity List – all to be performed; extension to the
WBS and includes description to ensure team
members understand work to be performed
– Supporting Detail – organized as needed and include
all assumptions and constraints
– WBS Updates – identify missing deliverables and
clarify deliverable descriptions. WBS updates often
called refinements; more likely using new
technologies in project
Chapter 5 – Project Time
Management
3. Activity Sequencing
• Identifying and documenting interactive
dependencies among activities.
• Support later development of a realistic
schedule
Chapter 5 – Project Time
Management
3. Activity Sequencing
• Inputs:
– Activity List
– Product Description
– Mandatory Sequencing
physical limitations, hard logic, inherent in nature of work being done
– Discretionary Dependencies
defined by project management team; “best practices” or unusual
aspects of project – soft logic, preferred logic, preferential logic
– External Dependencies
relationship between project activities and non-project activities
– Constraints
– Assumptions
Chapter 5 – Project Time
Management
3. Activity Sequencing
• Tools & Techniques
– Precedence Diagramming Method (PDM)
constructing network diagram using Activity On Node (AON) or
Arrow Diagramming Method (ADM), to indicate dependencies
• Includes 4 types of dependencies:
–
–
–
–
Finish to Start – “from” activity must finish before “to” activity can begin
Finish to Finish – “from” activity must finish before the next may finish
Start to Start – “from” activity must start before next “to” activity can start
Start to Finish – task must start before next activity can finish
– Project Time Management Software
– Network Templates – standardized networks be used.
Chapter 5 – Project Time
Management
3. Activity Sequencing
• Outputs:
– Project Network Diagram
• schematic display of project activities and
relationships (dependencies).
• Should be accompanied by a summary narrative
that describes the diagram approach
– Activity List Updates
A
B
C
Start
End
D
E
F
Project Network Diagram with Activity On Node (AON)
B
A
C
Start
End
D
E
F
Project Network Diagram with Arrow Diagramming Method (ADM)
Chapter 5 – Project Time
Management
4. Activity Duration Estimating
• Involves assessing number of work
periods needed to complete identified
activities
• Requires consideration of elapsed time,
calendars, weekends, and day of week
work starts
Chapter 5 – Project Time
Management
4. Activity Duration Estimating
• Inputs:
–
–
–
–
–
Activity Lists
Constraints
Assumptions
Resource Requirements
Resource Capabilities
• human and material resources, expertise
– Historical Information
• Previous Project Files,
• Commercial Duration Estimates,
• Project Team Knowledge
Chapter 5 – Project Time
Management
4. Activity Duration Estimating
• Tools & Techniques
– Expert Judgment
• guided by historical information should be used whenever possible;
• high risk without expertise avail.
– Simulation
• using different sets of assumptions (Monte Carlo Analysis) to drive
multiple durations
– Analogous Estimating
• “top down estimating” – use actual, similar, previous known
durations as basis for future activity duration.
• Used when limited knowledge is available.
• Form of expert judgment
Time 1--Optimistic time
Time 2- Most Likely time
Probability
Time 3-Pessimistic time
An activity
Critical path
Time 1
Time
Time 2
±3δ
Time 3
Time 1
Time 2
Time 3
Illustration of the duration simulations
Path No.1
A
5 days
B
5 days
C
5 days
Path No.3
Start
End
D
10 days
E
5 days
F
5 days
Path No.2 (critical path)
Project Network Diagram with time duration estimate
using Activity On Node (AON)
Chapter 5 – Project Time
Management
4. Activity Duration Estimating
• Outputs:
– Activity Duration Estimates
• Quantitative assessments of work periods to
complete an activity.
• Should indicate a range +/- of possible results
– Basis of Estimates
• all assumptions should be documented
– Activity List Updates
Chapter 5 – Project Time
Management
5. Schedule Development
• Determining start and finish dates for
project activities
• Schedule development process often
repeat as more information becomes
available (process inputs)
• Without realistic dates, project unlikely to
be finished as scheduled
Chapter 5 – Project Time
Management
5. Schedule Development
• Inputs:
–
–
–
–
–
Project Network Diagram
Activity Duration Estimates
Resource Requirements
Resource Pool Description
Calendars
• Project Calendars and Resource Calendars
– Constraints
• Imposed Dates, Key Events or Milestones that are required
– Assumptions
– Lead and Lag Time
• dependencies may specify time in order to satisfy relationship
(example – 2 weeks to receive order)
Chapter 5 – Project Time
Management
5. Schedule Development
• Tools & Techniques
– Critical Path Method
• One time estimate per task (Most Likely)
• Emphasis on controlling cost and leaving schedule flexible
– Graphical Evaluation and Review Technique (GERT)
• probabilistic treatment of network and activity duration estimates
– Program Evaluation and Review Technique (PERT)
• Sequential network and weighted average duration.
• Using 3 Time estimates per activity:Optimistic, Pessimistic and Most
Likely time.
• Using weighted average duration( (T1+4T2+T3)/6) to calculate
project duration
(continued)
Chapter 5 – Project Time
Management
5. Schedule Development
• Tools & Techniques
– Monte Carlo Simulation – It tells:
– Probability of completing a project on any specific day
– Probability of completing a project for any specific amount of cost
– Overall Project Risk
– Resource Leveling Heuristics
– leveling resources that apply to critical path activities
– “resource constrained scheduling” or “Resource Based Method”
– Project Management Software
– Project Manger’s role
• Provide the team with necessary information to properly estimate the task
• Complete a right check of the estimate and formulate a reserve
– Project Team should be involved in determining task estimates with:
• Historical Records, Personal Guesses and Judgments.
Chapter 5 – Project Time
Management
5. Schedule Development
• Outputs:
– Project Schedule –Usually in following formats:
• Project Network Diagrams (with date information added)
• Bar or Gantt charts – activity start and end dates, expected
durations
– Supporting Detail – all assumptions and constraints. Also include:
• Resource requirement by time period (resource histogram)
• Alternative schedules (best/worst case)
• Schedule reserve/risk assessments
– Schedule Management Plan – how updates are managed
– Resource requirement updates – leveling and activity impact
Chapter 5 – Project Time
Management
6. Schedule Control
• Influencing factors which create schedule
changes to ensure changes are beneficial
• Determining that schedule has changed
• Managing actual changes as they occur
Chapter 5 – Project Time
Management
6. Schedule Control
• Inputs
– Project Schedule
• baseline approved, measure against project
performance
– Performance Reports
• planned dates met, issues
– Change Requests
– Schedule Management Plan
Chapter 5 – Project Time
Management
6. Schedule Control
• Tools & Techniques
– Schedule Change Control System
• defines procedures for schedule changes,
paperwork, approval, tracking systems
– Performance Measurement
• assess magnitude of variations to baseline;
determine if corrective action is needed
– Additional Planning
– Project Management Software
Chapter 5 – Project Time
Management
6. Schedule Control
• Outputs:
– Schedule Updates
• for any modifications or stakeholder notification
• Revisions change scheduled start and finish dates
• “Re-baseline” may be needed in drastic situations
– Corrective Action
• re-align performance with project plan
– Lessons Learned
Chapter 5 – Project Time
Management
7. General Comments
• Projects can have more than 1 critical path (increases
risk) and can involve dummy tasks
• Resource Leveling involves possibly letting schedule and
cost slip
• Schedules are calendar based – makes this different
than a time estimate
• To shorten project schedule with the critical path
• add more resources to the critical path tasks--usually results
in increased cost
• performing tasks in parallel--can result in re-work and
increased risk
• Best to select method that has least impact on the
project (is the importance on cost, risk or schedule?)
Chapter 5 – Project Time
Management
7. General Comments
• Different techniques have different advantages and disadvantages
• Bar (Gantt) Charts
• Weak Planning Tool, effective progress and reporting tool
• Does not show interdependencies of tasks
• Does not help organize the project more effectively
• Network Diagrams (PERT, CPM, PDM)
• Shows task interdependencies
• Aids in effectively planning and organizing work
• Provides a basis for project control
• Milestone Charts
• Only shows major events
• Good for reporting to management and customer
• Flow Charts
• tell workflow and not commonly used for project management
Chapter 6 – Project Cost
Management
1. Project Cost Management
• Project Cost Management :
– Ensure that the project is completed within budget
– Concerned with cost of resources needed to complete
activities;
– Consider effect of project decisions on cost of using
product “life-cycle costing”
– Most prospective financial impact of using the product
is outside the project scope
– Consider information needs of stakeholders,
controllable and uncontrollable costs (budget
separately for reward and recognition systems)
Chapter 6 – Project Cost
Management
1. Project Cost Management
• Project Cost Management:
–
–
–
–
Estimating should be based on WBS to improve accuracy
Estimating should be done by the person performing the work
Having historical records is key to improving estimates
Costs (schedule, scope, resources) should be managed through
estimates, budgeting and controlling
– A cost (schedule, scope, baseline) should be kept and not
changed
– Plans should be revised as necessary during completion of work
– Corrective action should be taken when cost problems (schedule,
scope and resources) occur.
Chapter 6 – Project Cost
Management
1. Project Cost Management
• Project Cost Management consists of:
– Resource Planning
– Cost Estimating
– Cost Budgeting
– Cost Controlling
– Earned Value Analysis
Chapter 6 – Project Cost
Management
2. Resource Planning
– Determining what physical resources and quantities
are needed to perform work
• Inputs :
–
–
–
–
–
Work Breakdown Structure and Activity List
Network Diagram
Schedule and Risks
Historical Information
Scope Statement
• justification & objectives
– Resource Pool Description
• what resources are potentially available for resource planning
– Organizational Policies
• staffing, procurement
Chapter 6 – Project Cost
Management
2. Resource Planning
• Tools & Techniques
– Expert Judgment
– Alternatives Identification
• Outputs:
– Resource Requirements
• what type & how many resources are needed for
each activity in the Work Breakdown Structure
Chapter 6 – Project Cost
Management
3. Cost Estimating
– Develop approximate costs of resources
– Distinguish estimating from pricing
• Estimating – likely amount
• Pricing – business decision
– Identify alternatives and consider realigning
costs in phases to their expected savings
Chapter 6 – Project Cost
Management
3. Cost Estimating
• Inputs:
–
–
–
–
–
Work Breakdown Structure and Activity List
Resource Requirements
Resource Rates (if known)
Activity Duration Estimates
Historical Information –project files, commercial cost
databases, team knowledge
– Chart Of Accounts – coding structure for accounting;
general ledger reporting
Chapter 6 – Project Cost
Management
3. Cost Estimating
• Tools & Techniques
– Analogous Estimating – “top down”; using actual
costs from previous project as basis for estimate
• Quick - Less Accurate
– Parametric Modeling – uses project characteristics in
mathematical models to predict costs (e.g.building
houses)
• 2 types: Regression analysis, Learning Curve.
– Bottom Up Estimating – rolling up individual activities
into project total with quantity survey and its list.
• More Accurate, Requires that project be defined and understood
– Computerized tools – spreadsheets, software
Chapter 6 – Project Cost
Management
3. Cost Estimating
• Outputs
– Cost estimates – quantitative assessments of likely costs of resources
required to complete tasks
• For all resources (labor, materials, supplies, inflation allowance, reserve)
• Expressed in units of currency
– Supporting Detail
•
•
•
•
Description of scope (reference to the WBS)
Documentation how estimate was developed
Indication of range of possible results
Assumptions
– Cost Management Plan
•
how cost variances will be managed
– Cost Risk
• Associated to seller for Fixed Price;
• Associated to buyer for Time and Materials budget (cost plus profit)
Chapter 6 – Project Cost
Management
3. Cost Estimating
• Accuracy of Estimates
– Cost Estimate: -25% - 75%; usually made
during Initiation Phase
– Budget Estimate: -10% - 25%; usually made
during the Planning phase
– Definitive Estimate: -5% - 10%; usually made
during the Planning phase
Chapter 6 – Project Cost
Management
4. Cost Budgeting
– Involves allocation of total estimate to individual work
to establish a cost baseline to measure performance
• Inputs
– Cost Estimate
– Work Breakdown Structure and Activity List
– Project Schedule – includes planned start and finish
dates for items costs are allocated to
• Needed to assign costs during the time period when the
actual cost will be incurred
Chapter 6 – Project Cost
Management
4. Cost Budgeting
• Tools & Techniques
– Same as Cost Estimating Tools and Techniques
– Management Reserve – Contingency for all risks
• Outputs
– Cost Baseline – time phased budget to measure and
monitor cost performance
• Developed by summing estimated costs by period (S curve of
values vs. time)
• Larger projects have multiple baselines to measure different
aspects of cost performance
C1
Unexpected
Situation
Project Budget
（Baseline）
C2
C3
Expected
Situation
Schedule
（calendars ）
S3
S2
The illustration of project budgeting
S1
Chapter 6 – Project Cost
Management
5. Cost Control
– Concerned with influencing factors that create
changes to the cost baseline that are beneficial
– Determining that the cost baseline has changed
– Managing actual changes as they occur
• Monitor cost performance to detect variances
• Record all appropriate changes accurately
• Preventing incorrect, unauthorized changes being included in the
cost baseline
• Informing stakeholders of authorized changes
– Determine the “why’s” of positive and negative variances
– Integrated will all other control processes (scope, change, schedule,
quality)
Chapter 6 – Project Cost
Management
5. Cost Control
• Inputs
– Cost Baseline
– Performance Reports with 3 methods:
– 50/50 Rule – task is considered 50% complete when it
begins and gets credit for remainder 50% only when
completed
– 20/80 Rule - task is considered 20% complete when it
begins and gets credit for remainder 80% only when
completed
– 0/100 Rule – task only credited when fully completed
– Change Requests
– Cost Management Plan
Chapter 6 – Project Cost
Management
5. Cost Control
• Tools & Techniques
– Cost Change Control System
• defines the procedures by which the cost baseline may be
changed
– Performance Measurement
• assess magnitude of cost variations (Earned Value Analysis)
and what is causing the variance
– Additional Planning
• examine alternatives
– Computerized Tools
• forecast planned costs, track actual costs, forecast effect of
cost changes
Chapter 6 – Project Cost
Management
5. Cost Control
• Outputs
– Revised Cost Estimate
• Modifications to cost information; require stakeholder approval and
adjustments to other project areas
– Budget Updates
• changes to approved cost baseline; revised in response to scope changes
– Corrective Action
– Estimate at completion (EAC) – forecast of total expenditures
• Actual to date plus remaining budget modified by a factor (cost performance
index)
– Current variances are seen to apply to future variances
• Actual to date plus new estimate for remaining work
– Original estimates are flawed, or no longer relevant
• Actual to date plus remaining budget
– Current variances are typical and similar variances will not occur in the future
– Lessons Learned
Chapter 6 – Project Cost
Management
6. Earned Value Analysis
– Integrates cost and schedule
– Better that comparing projected vs. actual because
time and cost are analyzed separately
– Terms:
• BCWS – Budgeted Cost of Work Scheduled (Plan Value)
• BCWP – Budgeted Cost of Work Performed (Earned Value) [(Work
actually Performed)× (Budgeted Cost of that work)
• ACWP – Actual Cost of Work Performed (Actual Cost)
• BAC – Budget at Completion (total budget for the whole job)
• EAC – Estimate at Completion (what do we expect the total project
to cost); EAC refers to when job is completed.
• ETC – Estimate to Completion (how much more do we expect to
spend to finish the job), ETC refers to “this point on”
• VAC – Variance at Completion (how much over/under budget do
we expect to be)
Chapter 6 – Project Cost
Management
6. Earned Value Analysis
• Earned Value Analysis Formulas
– Variance (Plan – Actual)
• Cost Variance (CV): BCWP – ACWP; negative is
over budget
• Schedule Variance (SV): BCWP – BCWS; negative
is behind schedule
• Cost Performance Index (CPI): BCWP
ACWP
--I am only getting x¢ out of every $.
(continued)
Chapter 6 – Project Cost
Management
• Earned Value Analysis
– Formulas
• Schedule Performance Index (SPI): BCWP
BCWS
– I am only progressing x % of the planned rate
• Estimate at Completion (EAC): BAC
CPI
– As of now we expect the total project to cost x$
• Estimate to Complete (ETC): EAC – ACWP;
– how much will it cost from now to completion
• Variance at Completion: BAC – EAC;
– when the project is over how much more or less did we spend
(most common way of calculating EVA)
– Negative is bad; positive results are good
Cost
Work performed
ETC=
EAC –
ACWP
Time Variance
Variance at Com:
BAC – EAC
Actual Cost
Budget
（Baseline）
Earned Value
CV= EV-AC
E
A
C
P
V
E
V
A
C
= BCWP – ACWP
SV=EV-PV
= BCWP – BCWS
Schedule
（calendars ）
Actual time spend
2 years
The illustration of EV Analysis
4 years
Chapter 7 – Project Quality
Management
1. Quality Definition
• Quality is the totality of characteristics of an
entity that bear on its ability to satisfy stated or
implied needs
– Critical aspect is to turn implied needs into stated
needs through project scope management
– Customer satisfaction – conformance to specifications
(must produce what is stated) and fitness for use
(must satisfy real needs)
– Management responsibility – requires participation of
team; responsibility of management to provide
resources
– Quality objectives are approved in conceptual stage
by project owner
Chapter 7 – Project Quality
Management
1. Quality Definition
– Responsibility to project quality
•
•
•
•
Entire organization
Ultimate – employee or owner
Overall or Primary – Project Manager
Design and Test Specifications – engineer
– Prevention over inspection
• Quality must be planned in not inspected in
– Quality attributes
• can be subjective, objective and are specific characteristics
for which a project is designed and tested
Chapter 7 – Project Quality
Management
2. Project Quality Management
– Processes required to ensure that the project
will satisfy the needs for which it was
designed
– Includes all activities of the overall
management function that determine the
quality policy, objectives, and responsibilities.
– These are implemented by quality planning,
quality control, quality assurance, and quality
improvement
Chapter 7 – Project Quality
Management
2. Project Quality Management
• 3 major processes:
– Quality Planning
• identifying quality standards that are relevant to the project (Plan),
by Project Manager, Project Owner
– Quality Assurance
• evaluating overall project performance to provide confidence that
project will satisfy relevant quality standards (Implement or
Execution); by Project Team
– Quality Control
• monitoring specific results to comply with quality standards and
eliminating unsatisfactory performance causes (Check or Control);
by Project Manager, Project Team
• Must address(do) the management of the project and the product of
the project
Chapter 7 – Project Quality
Management
3. Quality Planning
– Identifying which standards are relevant to
project and how to satisfy – done during Project
Planning Phases
• Inputs
– Quality Policy
• the overall intentions and direction of an organization with regard to
quality as expressed by management
–
–
–
–
Scope Statement
Product Description
Standards and Regulations
Other Process Outputs
• processes from other knowledge areas (procurement planning)
Chapter 7 – Project Quality
Management
3. Quality Planning
• Tools &Techniques
– Benefit/Cost Analysis
• consider trade-offs, benefit is less rework; cost is expense of project
management activities
– Benchmarking
• comparing actual or planned practices to those of other projects
– Flowcharting
• Cause and effect diagramming (fishbone diagrams) illustrate how
causes relate to potential problems or effects
• System or Process flowcharts – show how various elements of the
system interrelate
– Design of Experiments
• analytical technique which defines what variables have most
influence of the overall outcome
C
Cost
Quality L1
Quality L2
Total Quality Cost
Quality Assurance Cost
C0
Economic Quality Cost
Quality Failure Cost
Q
Economic Quality
Illustration of Benefit/Cost Analysis
Quality
Chapter 7 – Project Quality
Management
3. Quality Planning
• Outputs
– Quality Management Plan
• describes how team will implement its quality policy; describes the
project quality system – organizational structures, responsibilities,
procedures, processes and resources needed to implement quality
management
– Operational Definitions
• defines how an item is measured by the quality control process.
– Checklists
• structured tool used to verify that a set of required steps has been
performed
– Inputs to other processes
• may identify a need for further activity in another area
Chapter 7 – Project Quality
Management
4. Quality Assurance
• All planned activities implemented within the
quality system to provide confidence that the
project will satisfy quality standards– done
during Project Execution phases
• Inputs
– Quality Management Plan
– Results of quality control measurements (testing)
– Operational definitions(how an item is measured by the
quality control process)
Chapter 7 – Project Quality
Management
4. Quality Assurance
• Tools & Techniques
– Quality planning tools & techniques
– Quality Audits
• structured review of quality management activities to identify
lessons learned
• Outputs
– Quality improvements
• taking action to increase the effectiveness and efficiency of
the project to provide added benefits to the stakeholders
• Most likely will involve change control
Chapter 7 – Project Quality
Management
5. Quality Control
• Monitoring specific results to determine if they
comply with quality standards, and identifying
ways to eliminate causes of unsatisfactory
results, take corrective actions to keep the
compliancy of quality standards --done during
project Control phases
• Process of monitoring specific project results to
determine if they comply with relevant quality
standards and identify ways of eliminating
unsatisfactory performance
• Performance of the measurement or process
Chapter 7 – Project Quality
Management
5. Quality Control
• Inputs
– Work results
• include process and product results
– Quality Management Plan
– Operational Definitions
– Checklists
Chapter 7 – Project Quality
Management
5. Quality Control
• Tools & Techniques
– Inspection
– Control Charts (see the chart on next page)
– Pareto diagrams
– Statistical sampling
– Flowcharting
– Trend Analysis
• forecast future outcomes based on historical results
– Technical performance (# of errors identified; # of errors
that remain)
– Cost and Schedule performance (activities per period
with significant variances)
Quality Specification
Upper Specification Limit
Upper Control Limit
Mean
Rule of 7
Lower Control Limit
Lower Specification Limit
Numbers of Sample
Illustration of Control Chart
Chapter 7 – Project Quality
Management
5. Quality Control
• Outputs
– Quality Improvement
– Acceptance Decisions (accept/reject)
– Rework
• action to bring defective item into compliance
– Completed checklists
– Process Adjustments
• immediate corrective/preventive actions
• Most likely involves change control
Chapter 8 – Project Integration
Management
1. Project Integration Management
– Ensures that the project processes are properly
coordinated
– It is needed for overall project management and the
communication within a project
– It is needed to perform project management well and
systematically
– There are three processes in PIM
• Project Plan Development
• Project Plan Execution
• Overall Change Control
– These processes may occur repeatedly over the
project duration
Project Cost
Project Time
Project
Scope
Project Quality
The interactive relationship of project factors for integration management
Chapter 8 – Project Integration
Management
2. Project Plan Development
– Uses outputs from other planning processes to create
consistent document to guide project execution and
control
– Iterated (repeated) several times
– Documents planning assumptions
– Documents planning decisions that are chosen
– Facilitates communication
– Defines key management reviews(point/time)
– Provides a baseline to track progress measurement
and project control
Chapter 8 – Project Integration
Management
2. Project Plan Development
• Inputs
– Other planning outputs: primarily the planning
process outputs (WBS, base documents, application
area inputs)
– Historical information – verify assumptions, records of
past project performance
– Organizational policies – quality management,
personnel administration, Financial controls
– Constraints – factors that limit performance,
contractual provisions, budget
– Assumptions – risk factors
Chapter 8 – Project Integration
Management
2. Project Plan Development
• Tools & Techniques
– Project Planning Methodology – any structured
approach (software, templates, forms, start-up
meetings
– Stakeholder Skills & Knowledge – tap into plan
development; use expertise for reasonableness
– PMIS – Out of the box approach to support all project
aspects through closure
Chapter 8 – Project Integration
Management
2. Project Plan Development
• Outputs
– Project Plan ( or PIP/master plan/main plan) is a collection that
changes over time as more information about the project
becomes available (see the details on next page)
– Baseline (for performance measurement) will change only in
response to approved scope change
– Supporting Details to the Project Plan
• Outputs from planning processes
• Technical documentation
• Business requirements, specifications, and designs
• Relevant standards
• Additional information not previously known
Chapter 8 – Project Integration
Management
2. Project Plan Development
• Project Plan includes some or all of the following:
–
–
–
–
–
–
–
–
Project Charter
Project Management approach or strategy
Scope statement
Work Breakdown Structure (WBS)
Key Staff, Major Milestones
Change Control Plan,
Communication Management Plan
Budget, scheduled and quality responsibility assignments
–
–
–
–
Required Staff
Risks, constraints and assumptions
Subsidiary management plans (scope, schedule)
Open Issues and Pending Decisions
Chapter 8 – Project Integration
Management
3. Project Plan Execution
– Primary process for carrying out the project
plan
– Most costly aspect of project management
– Direction of organizational resources and
interfaces
Chapter 8 – Project Integration
Management
3. Project Plan Execution
• Inputs:
– Project Plan
– Supporting Detail
– Organizational Policies
– Corrective Action – anything to bring expected
performance in line with the project plan
Chapter 8 – Project Integration
Management
3. Project Plan Execution
• Tools & Techniques
– General Management Skills
– Product Skills and Knowledge – defined as part of
planning, provided by staffing
– Work Authorization System – formal procedure for
sanctioning work to ensure completion – written or
verbal authorization
– Status review meetings – regular exchanges of
information
– Project Management Information System
– Organizational Procedures
Chapter 8 – Project Integration
Management
3. Project Plan Execution
• Outputs
– Work results – the outcome of activities
performed is fed into the performance
reporting process
– Change Requests – expand/shrink project
scope, modify costs and schedule estimates
Chapter 8 – Project Integration
Management
4. Overall Change Control
– Influencing factors that create change to
ensure beneficial results; ensure that change
is beneficial
– Determining that change has occurred
– Managing actual changes as they occur
• Evaluate impact of change
• Meet with team to discuss alternatives
• Meet with management to present decision
Chapter 8 – Project Integration
Management
4. Overall Change Control
• Change control requires
– Maintaining integrity of performance measurement
baselines (project plan)
– Ensuring changes to scope are accurately recorded
– Coordinating changes across knowledge areas
(scheduling, risk, cost, quality, etc.)
– Determine all factors that control change and proactively preventing the occurrence; evaluate the
impact of change
Chapter 8 – Project Integration
Management
4. Overall Change Control
• Inputs
– Project Plan – baseline performance
– Performance Reports – issue tracking, risk
management
– Change Requests – orally or written,
externally or internally initiates, legally
mandated or optional
Chapter 8 – Project Integration
Management
4. Overall Change Control
• Tools & Techniques
– Overall Change Control System – collection of formal
procedures, paperwork, tracking systems, approval
levels. Including:
• Change Control Board, Change Control Plan and Procedures,
• Performance Statistics, Reports, Change forms
• Specification reviews, Demonstrations, Testing, Meetings
– Configuration Management – documented procedure
to apply technical and administrative direction
•
•
•
•
ID and document functional and physical characteristics
Control changes to these characteristics
Record and report change and implementation status
Audit items and system to verify requirements
Chapter 8 – Project Integration
Management
4. Overall Change Control
• Outputs
– Project Plan Updates
– Corrective Actions
– Lessons Learned
• variance causes and reasoning documented for
historical purposes
• What have we done, how can we do it better
–
–
–
–
Technical Aspects of the project
Project Management (WBS, plans, etc.)
Overall Management (communications, leadership)
Best to have whole team complete and made available
Chapter 9 – Project Risk
Management
1. Project Risk Management
•
•
•
Definition of risk: a discrete occurrence that
may affect the project for good or bad.
Definition of uncertainty: an uncommon state
of nature, characterized by the absence of any
information related to a desired outcome.
Definition of risk management: The process
involved with identifying, analyzing, and
responding to risk. maximizing results of
positive events and minimizing consequences
of negative events.
Chapter 9 – Project Risk
Management
1. Project Risk Management
• Risk Management includes :
– Risk Identification
• Find out which are likely to affect the project
– Risk Quantification
• Evaluate the risk to assess the range of possible outcomes
– Risk Response Development
• define enhancement steps for opportunities and response.
Sometimes called response planning/mitigation
– Risk Response Control
• respond to changes in risk over course of project. May be
combined as risk management
Chapter 9 – Project Risk
Management
2. Risk Identification
– Determine which risks are likely to affect the project
and documenting them
– Performed on a regular basis; address internal and
external risks
• Internal –project team has control/influence over
• External – beyond project team’s control
– Identify cause and effect and effects and causes;
what could happen vs. what outcomes should be
avoided
Chapter 9 – Project Risk
Management
2. Risk Identification
• Inputs
– Product Description
• There are more risks associated with unproven technologies
(innovation/invention). Often described in terms of cost and
schedule impact
– Other Planning Reports
• WBS (any non-traditional approaches)
• Cost/Duration Estimates – aggressive schedules; limited
information
• Staffing Plan – hard to replace/source skilled persons
• Procurement Management Plan – market conditions
– Historical Information
• previous projects: Project Files, Commercial Databases,
Project Team Knowledge(members’ experiences)
Chapter 9 – Project Risk
Management
2. Risk Identification
• Tools & Techniques
– Checklists
• organized by source of risk, included project
context, process outputs, product and technology
issues, internal sources
– Flowcharting
• understand cause and effect relationships
– Interviewing
• conversations with stakeholders
Chapter 9 – Project Risk
Management
2. Risk Identification
• Outputs
– Sources of Risk
• categories of possible risk events, all-inclusive (Changes in
requirements, Design errors, omissions, misunderstanding,
poorly defined roles and responsibilities, Insufficiently staff)
– Sources:
» External: Regulatory, environmental, government
» Internal: Schedule, cost, scope change, inexperience,
planning, people, staffing, materials, equipment
» Technical: Changes in technology
» Unforeseeable: small (only about 10%)
» Risk I, Risk II
• Include estimate of probability, range of possible outcomes,
expected timing, anticipated frequency
(continued)
Classified
by
probability
Classified
by risks
conjunction
Classified
by serious
of results
The Whole
Risks of
a Project
Classified
by Unforeseeing
Classified
by causes
of risks
Classified
by objects
of risks
Classification of the Risks
Chapter 9 – Project Risk
Management
2. Risk Identification
• Outputs
– Potential Risk Events
• Discrete (unusual) occurrences that may affect project
• New technologies obsolete needed by product
• Socio, Political and Economic events
• Include estimate of probability, range of possible outcomes,
expected timing, anticipated frequency
– Risk Symptoms
• Early warning signs
– Risk Tolerances
• amount of risk that is acceptable
– Input to other management process (time, cost ,quality etc.)
Chapter 9 – Project Risk
Management
2. Risk Identification
• Common Stumbling Blocks
– Risk identification is completed without knowing enough about
the project
– Project Risk evaluated only by questionnaire, interview or Monte
Carlo; does not provided a per task analysis of risk
– Risk identification ends too soon
– Project Risk identification and Evaluation are combined – results
in risks that are evaluated when they appear; decreased total
number of risks and stops identification process
– Risks are identified too generally
– Categories of risks are forgotten (technology, culture)
– Only 1 identification method is used
– First risk response strategy is used without other consideration
– Risks are not devoted enough attention during the Execution
phase
Chapter 9 – Project Risk
Management
3. Risk Quantification
– Assess risks to determine range of possible outcomes;
which risk events warrant (must have ) a response.
This will involve:
• Opportunities and threats can provide unanticipated results
(e.g. schedule delay is considered for a new strategy)
• Multiple effects from a single event
• Singular stakeholder’s opportunity may force suffering in
other areas
• Reliance (based on ) on statistics and forecasting
• Probability and Amount of Impact
• Develop a ranking (priority) of risks
– Qualitative – take an educated guess
– Quantitative – estimation by calculation
Chapter 9 – Project Risk
Management
3. Risk Quantification
• Inputs
– Stakeholder risk tolerance
• More capital to expend; perceptions of severity
– Sources of Risk (from RI)
– Potential Risk Events(from RI)
– Cost Estimates
– Activity Duration Estimates
Chapter 9 – Project Risk
Management
3. Risk Quantification
• Tools & Techniques
– Expected Monetary Value
• Product of 2 numbers P×V
• Risk Event Probability – estimate that event will occur
• Risk Event Value – estimate of gain or loss
– Statistical Sums
• Calculate range of total costs from cost estimates for individual work
items with probabilities
– Simulation
• representation or model; provide statistical distribution of calculated
results (Monte Carlo, Critical Path, PERT techniques)
– Decision Trees
– Expert Judgment
– Sensitivity Analysis
• estimate the effect of change of one project variable on overall
project
Chapter 9 – Project Risk
Management
3. Risk Quantification
• Outputs
–
–
–
–
–
–
–
Risk probability,
Range of possible outcomes,
Expected timing,
Anticipated frequency
Priorities of project risks
Opportunities to pursue and threats to respond
Opportunities to ignore and threats to accept
Develop PMIS for risk management
Collect all the information for risk identification
Knowledge
and experience
of the team
Analysis and judgment of project risk
Documents of
risk
identification
Risk？
No.
Yes
End
Classification of project risks
Analyze and value project risk probabilities
Analyze and value risks & range of possible outcomes
Analyze and value the serious of project risks results
Analysis & value risks timing & causes
Report of Risk
Identification
End
Document the result of all analysis
Yes
No
Project end？
The Process of Risk Assessment ( Risk Identification + Risk Quantification)
Chapter 9 – Project Risk
Management
4. Risk Response Development
– Defining enhancement steps for opportunities and
responses to threats. Main responses are as follows:
• Avoidance – eliminating threat by eliminating the cause
• Mitigation – reducing expected monetary value of event by
reducing the probability of occurrence
• Acceptance – accept the consequences (active contingency plan - or passive response)
– Determine what will be done, how to make risk
smaller or eliminate (not all risks can be eliminated)
Chapter 9 – Project Risk
Management
4. Risk Response Development
• Inputs
– Opportunities to pursue
– Threats to respond
– Opportunities to ignore
– Threats to accept
Chapter 9 – Project Risk
Management
4. Risk Response Development
• Tools & Techniques
– Procurement
• acquire resources (exchange 1 risk for another)
– Contingency Planning
• defining action steps should a risk event occur
– Alternative Strategies(change planned approach)
•
•
•
•
Avoidance – eliminate the cause
Mitigation – effect the probability or impact of risk
Acceptance – do nothing
Deflection (transfer, allocate) – make another party
responsible, outsourcing
– Insurance
Chapter 9 – Project Risk
Management
4. Risk Response Development
• Outputs
– Risk Management Plan
• documents risks identified and how they are addressed; non-critical
risks should be recorded to revisit during the execution phase
• Addresses risk identification and quantification processes,
personnel responsible for managing areas of risk, maintenance of
identification and quantification process, implementation of
contingency plans and allocation of reserve
– Inputs to other processes
• alternative strategies, contingency plans, anticipated procurements
– Contingency Plans
• recommend total of 10% to account for known and unknown risks
– Contractual Agreements
• insurance, services and other functions to avoid and mitigate threats.
Chapter 9 – Project Risk
Management
5. Risk Response Control
– executing and updating the Risk Management Plan in
order to respond to risk events during the project
• Control and iteration (repeat) are required; not all risks can
be identified in one time.
• Inputs
– Risk Management Plan
– Actual Risk Events
• recognize occurrence
– Additional Risk Identification (repeat)
• surfacing of potential or actual risk sources
Chapter 9 – Project Risk
Management
5. Risk Response Control
• Tools & Techniques
– Workarounds
• unplanned responses to negative risk events that were
unanticipated(response was not defined in advance)
– Contingency Plans
• Take planned responses according to contingency plans
– Additional Risk Response Development
• Do the risk response development once more
– Three phases risk control method
• Potential phase
• Risk occurring phase
• Reduce the risk impact phase
Chapter 9 – Project Risk
Management
5. Risk Response Control
• Outputs
– Corrective Action
• performing the planned risk response
– Updates to Risk Management Plan
Establish the risk control system according to the RI report
Determine the risk respond control activities needed for the project
Assign the responsibility of the risk control to specific persons
Make up Risk Management Plan and Contingency Plans
Execute the plans and change the plans
Take Corrective Action and do Workarounds
Return to RI&RQ
Monitoring the risk respond control result
No
Project end？
yes
Risk control end
Project risk respond development and control process
Chapter 10 – Human Resource
Management
1. Project Human Resource Management
– Processes required to make the most efficient use of
people involved with the project (stakeholders)
– 3 major processes:
• Organizational Planning
• Staff Acquisitions
• Team Development
– Keep in mind of transient (time limited and only one
time) nature of projects for its HRM
– Ensure HR compliance with project management
activities
Chapter 10 – Human Resource
Management
1. Project Human Resource Management
– 1,9 manager = good relationship with team
– Project Organization
• Conflict between PM and Functional Managers
• Dual allegiance (two boss) of team members
– Compromise =otherwise both sides will lose
– Delegation
– If there is a team of experts, PM decisions will
promote high satisfaction
– Functional/Project Managers likely to exercise:Power,
Authority and Influence
Chapter 10 – Human Resource
Management
2. Organizational Planning
– Identifying, documenting and assigning
project roles, responsibilities, and reporting
relationships
• Individual and group assignments
• Internal and external employees
• Linked with communication planning
Chapter 10 – Human Resource
Management
2. Organizational Planning
• Inputs
– Project Interfaces
• Organizational interfaces – formal and informal reporting
relationships among organizational units (the enterprise)
• Technical interfaces - formal and informal reporting relationships
among technical disciplines,Engineers, manufacturers(stakeholder)
• Interpersonal interfaces – formal and informal reporting
relationships among individuals (project)
– Staffing Requirements – define skill sets for individual/group in
particular time frames
– Constraints – factors that limit project team’s options
•
•
•
•
Organizational structure (strong vs. weak matrix)
Collective bargaining agreements – contractual arrangements
Preferences of project management team
Expected staff assignments
Chapter 10 – Human Resource
Management
2. Organizational Planning
• Tools & Techniques
– Templates – reuse a similar project’s role and
responsibility definitions
– Human Resource Management Practices – corporate
policies, guidelines, and practices
– Organizational Theory – how organizations are
structured (functional, projectized,matrix)
– Stakeholder Analysis – needs of stakeholders are
ensured
Chapter 10 – Human Resource
Management
2. Organizational Planning
• Outputs (continued)
– Role and Responsibility Assignments
• Utilizes a Responsibility Assignment Matrix (RAM) to define
responsibility for each item in the Work Breakdown
Structure/task or activity list
• Roles and responsibilities
– Project Manger – plan, estimate and schedule of project
– Team – help prepare the WBS, Network Diagrams, and
estimate time for tasks, complete tasks
– Senior Management – approve Overall project plan,
budget and schedule and to approve any changes that
are made to those figures
– The person experiencing the problem must try to solve it
themselves as long as means are in their control
Chapter 10 – Human Resource
Management
2. Organizational Planning
• Outputs (continued)
– Staffing Management Plan
• when and how personnel are included and removed from the
project team.
• Resource leveling, reduce transition periods, eliminate “dead
time” between assignments, sensitivity to morale
– Organizational Chart
• Organization chart can display the project reporting
relationships.
• An Organizational Breakdown Structure (OBS) is a specific
type of organization chart that shows which organizational
units are responsible for which work items.
– Supporting Detail
• Organizational impact,Job descriptions,Training needs
Chapter 10 – Human Resource
Management
3. Staff Acquisition
– Ensure labor and human resources are available for project work
– Involve getting the human resources needed (individuals or
groups) and assigned to or working on the project.
• Inputs
– Staffing Management Plan
– Staffing Pool Description
•
•
•
•
Previous experience
Personal interests
Personal characteristics
Availability
– Recruitment Practices
Chapter 10 – Human Resource
Management
3. Staff Acquisition
• Tools & Techniques
– Negotiations with functional managers and other
teams (Staff utilization and corporate politics)
– Pre-assignment – result of a competitive proposal, or
an internal initiative
– Procurement – outside services are needed (lacking
internal skills or availability can not be met)
Chapter 10 – Human Resource
Management
3. Staff Acquisition
• Outputs
– Project staff assigned
– Project Team Directory – contact list
Chapter 10 – Human Resource
Management
4. Team Development
– Enhancing stakeholders to contribute along
with maintaining the project team’s
functionality
– Personal development is the foundation
– Team members often balance responsibilities
to a functional manager and project manager
– Critical to success of project
Chapter 10 – Human Resource
Management
4. Team Development
• Inputs
– Project Staff
– Project Plan
– Staffing Management Plan
– Performance Reports
– External Feedback
• Periodic measurements of performanc
Chapter 10 – Human Resource
Management
4. Team Development
• Tools & Techniques
– Team-building activities
– General Management Skills
– Reward and recognition systems
• Promote desired behavior
• Must be achievable; apply to the project
• Cultural differences recognition
– Co-location – place members in physical location
– Training – enhance skills, knowledge, and capabilities
of project team
• Must be factored in cost analysis of project
Chapter 10 – Human Resource
Management
4. Team Development
• Outputs
– Performance Improvements
• Individual skills
• Team Behavior
• Identify more efficient methods of work
– Input for performance appraisals
Chapter 10 – Human Resource
Management
5. Other things for HRM
– Conflict
• Inevitable consequence of organizational interactions
• Can be beneficial
• Resolved by identifying the causes and problem solving by
people that are involved & their immediate manager
• Nature of project
• Limited power of the project manager
• Necessity for obtaining resources from functional managers
– Conflict Sources (in order of frequency)
• 1)Schedules, 2)Project Priorities, 3)Resources,4)Technical
opinions, 5)Administrative Procedures,6)Cost,7)Personality
Chapter 10 – Human Resource
Management
5. Other things for HRM
• Conflict Avoiding
– Informing the team
– Clearly assigning tasks without ambiguity
– Challenging and interesting work assignments
• Leadership Skills
– Directive, Facilitating, Coaching, Supportive
• Projectized Organization
– Conflict between PM and Functional Managers
– Dual Allegiance of team members
– Complex prioritization of resources
– Loss of developed procedures on project dissolution
Chapter 11 – Project
Communications Management
1. Project Communications Management
– Processes to ensure timely and proper generation,
collection, dissemination and disposition of project
information
– General communications management
• Communications Planning – determining informational needs,
who needs what and when; 90% of PM’s time is spent on
communicating
• Information Distribution – making information available
• Performance Reporting – collecting and disseminating
project information
• Administrative Closure – formalize project/phase completion
(continued)
Chapter 11 – Project
Communications Management
1. Project Communications Management
– Communication Methods
• Pick the form of communication that is best for the
situation
– Formal Written – complex problems, all plans,
communicating over long distances
– Formal Verbal – presentations, speeches
– Informal Written – memos, e-mail, notes
– Informal Verbal – meetings, conversations
– Communication Blockers
• Noise, Distance, Improper en-coding, “bad idea”, Hostility,
Language, Culture
Chapter 11 – Project
Communications Management
2. Communications Planning
– Determining information requirements of stakeholders
– Tightly linked with organizational planning
– There are 5 directions of communication
•
•
•
•
•
Top down
Bottom up
The peer
Internal
External
– Complex messages need oral, written and non verbal
methods
– Least effective form of communication for complex
situations is verbal and formal
Chapter 11 – Project
Communications Management
2. Communications Planning
• Inputs
– Communication requirements
• Internal and External communication needs (media)
– Communication Technology – used to transfer
information
• Immediacy of need for information
• Availability of technology
• Expected project staffing
– Constraints
• factors that limit project team’s options
– Assumptions
Chapter 11 – Project
Communications Management
2. Communications Planning
• Tools & Techniques
– Stakeholder analysis
• informational needs should be analyzed to develop methodology
suited for the project; eliminate unnecessary information or
technologies
– Communications model
feedback
Send process
idea
encode
Transit proce.
Receive proce.
Info.Transit
receive
decode Unders.
noise
Illustration of Communication Model
Chapter 11 – Project
Communications Management
2. Communications Planning
• Outputs
– Communication Management Plan
• Collection and filing structure to detail the gathering and
storage of information; updating and dissemination
• Distribution structure – who gets info in certain format;
compatible with project organization chart
• Description of information included – format, level of detail,
conventions
• Production schedules of each type of communication
• Methods for accessing information
• Method for updating and refining communications plan
Chapter 11 – Project
Communications Management
3. Information Distribution
– making information available in a timely manner by
implementing the communications plan;
– responding to requests for information by
stakeholders
• Inputs
– Work Results
– Communication Management Plan
– Project Plan
Chapter 11 – Project
Communications Management
3. Information Distribution
• Tools & Techniques
– Communication Skills
• used to exchange information. Sender is responsible for
clarity; receiver is responsible for receipt and understanding
– Information retrieval systems
• filing systems, software
– Information distribution systems
• meetings, correspondence, networked databases,
video/audio conferencing
• Outputs
– Project Records
• maintained in an organized fashion
Chapter 11 – Project
Communications Management
4. Performance Reporting
– Collecting and disseminating performance indicators
to provide stakeholders information how resources
are achieving project objectives
•
•
•
•
•
•
Status reporting
Progress reporting
Forecasting
Variance Report (actual results vs. planned)
Earned Value
Project scope, schedule, cost and quality, risk and
procurement
Chapter 11 – Project
Communications Management
4. Performance Reporting
• Inputs
– Project Plan
– Work Results – deliverables completed, %
completed, costs incurred
– Other Project records
Chapter 11 – Project
Communications Management
4. Performance Reporting
• Tools & Techniques
–
–
–
–
Performance review meetings(to assess status)
Variance Analysis (comparing actual results to planned)
Trend Analysis (to determine future performance)
Earned Value Analysis
• integrates scope, cost and schedule measures
• calculate 3 keys:
– Budgeted Cost of Work (BCWS)
– Actual Cost of Work Performed (ACWP)
– Earned Value (Budgeted Cost of Work Performed – BCWP)
» Cost Variance (CV) = BCWP – ACWP
» Schedule Variance (SV) = BCWP – BCWS
» Cost Performance Index (CPI) = BCWP/ACWP
– Information Distribution Tools & Techniques
Chapter 11 – Project
Communications Management
4. Performance Reporting
• Outputs
– Performance Reports – organize and
summarize information gathered and present
results
• Bar charts, Gantt charts, S-curves, etc.
– Change Requests – handled as part of
change control
Chapter 11 – Project
Communications Management
5. Administrative Closure
– Projects/phases after achieving results or
terminated require closure
– Verifying and documenting project results to
formalize acceptance
– Collection of project records, analysis of
effectiveness, reflect final specifications and
archiving of material
Chapter 11 – Project
Communications Management
5. Administrative Closure
• Inputs
– Performance Measurement Documentation
• includes planning docs;
• all information that records and analyzes
performance
– Documentation of product and project
– Other project records
Chapter 11 – Project
Communications Management
5. Administrative Closure
• Tools & Techniques
– Performance Reporting tools & techniques
• Outputs
– Product Archives
• complete index of all records, database updates
– Formal Acceptance
• signoffs from client or sponsor
– Lessons Learned
Chapter 12 – Project Procurement
Management
1. Project Procurement Management
– Processes required to acquire goods and services from outside
the organization
– Processes including Procurement Planning, Solicitation Planning,
Source Selection, Contract Administration and Contract Close
Out
– Discussed from the perspective of the buyer
• Terms and conditions of the contract is a key input to many
processes
• Buyer is the customer, thus a key stakeholder
• Seller’s project management team must be concerned with all
processes of project management, not just their knowledge area
– Most questions are from the buyer’s perspective
Chapter 12 – Project Procurement
Management
2. Procurement Planning
– Identify project needs that can best be met by
acquiring resources
– Consideration whether to procure, how to,
how much, when to purchase
– Subcontractor decisions may provide flexibility
• Internal procurement does not involve formal
solicitation and contract
Chapter 12 – Project Procurement
Management
2. Procurement Planning
• Inputs
– Scope Statement – boundary for needs and strategies
– Product Description – broad technical issues, not to be confused
with a statement of work
– Procurement Resources – formal contracting group (RFP)
– Market Conditions – supply and demand, what services are
available
– Other Planning Outputs – preliminary cost and schedule, quality
management plans, cash flow, WBS, risks, staffing
– Constraints – factors that limit buying options
– Assumptions
Chapter 12 – Project Procurement
Management
2. Procurement Planning
• Tools & Techniques
– Make or Buy analysis – determine if the service can
be provided from within
• Include direct and indirect costs
• Factor ongoing need for items vs. 1-time usage
– Expert Judgment – assess input
– Contract type selection
• Fixed Price (lump sum) – incentives for meeting targets
• Cost Reimbursable Contracts – Time and Materials basis
• Unit Price – preset amount per unit of service
Chapter 12 – Project Procurement
Management
2. Procurement Planning
• Outputs from Procurement Planning
– Procurement Management Plan – describes how procurement
process will be managed. Including:
•
•
•
•
•
•
Type of contract
Independent estimates needed?
Autonomy of project team
Standardized documents
Multiple provider management?
Incorporate with other project aspects (scheduling and performance
reporting)
– Statement of Work (SOW) – describes the procurement in detail
– clear, concise description of services
• Can also be a Statement of Requirements for problem-solving
activities
Chapter 12 – Project Procurement
Management
3. Solicitation Planning
– To seek to obtain with enquiry, quotation, offer and
counteroffer
– Preparing documents needed for procurement
• Inputs
– Procurement Management Plan
– Statement of Work
– Other Planning Outputs
• Tools & Techniques
– Standard Forms and Procedures for buying & bidding
• Contract, bid documents standard descriptions of
procurement items
– Expert Judgment
Chapter 12 – Project Procurement
Management
Standard Procedures for Buying
enquiry
quotation
offer
counteroffer
accept
Standard Procedures for Bidding
Form a work
group for bid
Prepare bid
documents
Invitation for
Negotiation
Evaluate and
Choose
Invitation for
tendering
Discussion
of bids
Examine the
tenderers
Collect tendering
files and deposit
Chapter 12 – Project Procurement
Management
3. Solicitation Planning
• Outputs
– Procurement Documents – used to solicit proposals from
prospective sellers
• Bids, Request for Proposal, Request for Quotation, Contractor Initial
Response, etc.
• Structure to receive complete and accurate responses
– Description of desired form of response and any required
contractual provisions (e.g. non-disclosure statements)
– Flexible to allow seller suggestions
– Evaluation Criteria – rate proposals; objective or subjective
•
•
•
•
Price, Understanding of need by seller
Overall/Life Cycle cost (purchase plus operating cost)
Technical Capability, Management Approach
Financial Capacity
– Statement of Work Updates
Chapter 12 – Project Procurement
Management
4. Solicitation
– Obtaining information(bids and proposals) from
prospective sellers
• Inputs
– Procurement Documents
– Qualified Seller Lists – preferred vendors
• Tools & Techniques
– Bidder Conferences – mutual understanding meetings
– Advertising – primarily with Government projects
• Outputs
– Proposals – seller prepared documents describing willingness
and ability to provide the service
Chapter 12 – Project Procurement
Management
5. Source Selection
– Apply evaluation criteria (seldom straight-forward)
• Price (lowest price may not always result in lowest project
cost)
• Technical (approach) vs. commercial (price)
• Multiple sourcing may be needed for same service
– Select the suppliers or contractors
• Inputs
– Proposals
– Evaluation Criteria
– Organizational Policies
Chapter 12 – Project Procurement
Management
5. Source Selection
• Tools & Techniques
– Contract Negotiation – clarification and mutual agreement on
structure and requirements of contract prior to signature
• Responsibilities and authorities
• Applicable terms and law
• Financing and Price
• Technical and business management
– Weighting – quantifying data to minimize personal prejudice of
source selection
• Assign numerical weight to evaluation criteria
• Rating sellers
• Multiply weight by rating and totaling overall score
– Screening System – establish minimum performance criteria
– Independent Estimates – “should cost” estimates
Chapter 12 – Project Procurement
Management
5. Source Selection
• Outputs from Source Selection
– Contract – mutually binding agreement obligates
seller provide goods and services and buyer to make
payment.
– It may be called, among other names, a contract, an
agreement, a subcontract, a purchase order, or a
memorandum of understanding
– That establish:
• Legal relationship
• Legal review is most often necessary
Chapter 12 – Project Procurement
Management
6. Contract Administration
– Ensuring that the seller’s performance meets
contractual requirements
• Project Team must be aware of legal affaires of all actions
taken
• Apply project management processes to contractual
relationships and integrate outputs within the project
–
–
–
–
–
Project Plan Execution (authorize work)
Performance Reporting (monitor cost, schedule)
Quality Control (verify contractor’s output)
Change Control
Financial Management
Chapter 12 – Project Procurement
Management
6. Contract Administration
• Inputs to Contract Administration
– Contract, centralized vs. decentralized contracting
– Work Results – seller’s deliverables, quality
standards, actual costs
– Change Requests – modify contract, or description of
product/service
• May result in disputes, claims, appeals
– Seller Invoices
• The seller must submit invoices from time to time to request
payment for work performed.
• Invoicing requirements, including necessary supporting
documentation, are usually defined in the contract.
Chapter 12 – Project Procurement
Management
6. Contract Administration
• Tools & Techniques
– Contract Change Control System – defines how a
contract may be modified
• Includes paperwork, tracking system, dispute resolution
procedures and approval levels
– Performance Reporting
• provides management with information about how effectively
the seller is achieving the contractual objectives.
– Payment System – Accounts Payable
• Payments to the seller are usually handled by the accounts
payable system of the performing organization or the owner.
• The system must include appropriate reviews and approvals
by the project management team.
Chapter 12 – Project Procurement
Management
6. Contract Administration
• Outputs
• Correspondence
– Contract terms and conditions of written documentation of
certain aspects of buyer/seller communications.
• Contract changes
– Changes (approved and unapproved) are fed back through the
appropriate project planning and project procurement processes,
and the project plan or other relevant documentation is updated
as appropriate.
• Payment requests or payments
– “Payment requests” for when using an external payment system,
“payments.” for when using own internal system.
Chapter 12 – Project Procurement
Management
7. Contract Close Out
– Similar to administrative closure; involves product
verification and administrative paperwork
– The contract terms and conditions may prescribe
specific procedures for contract close-out.
• Early termination is a special case
• Inputs
– Contract Documentation
• the contract itself along with all supporting schedules,
requested and approved contract changes, any sellerdeveloped technical documentation, seller performance
reports, financial documents such as invoices and payment
records, and the results of any contract-related inspections.
Chapter 12 – Project Procurement
Management
7. Contract Close Out
• Tools & Techniques
– Procurement Audits – structured review of entire
procurement process; identify successes and failures
that warrant transfer to other procurement items
• All documentation must be preserved and filed
• Outputs
– Contract File – complete index of records
– Formal Acceptance and Closure
• contract administration responsibility to provide a formal
notice that contract has been completed
• Requirements for formal acceptance and closure are usually
defined in the contract.
Chapter 12 – Project Procurement
Management
8. Other things related to Procurement
– What forms a contract
•
•
•
•
An offer, counteroffer,
An acceptance
Consideration - something of value,V=F/C
Legal Capacity – separate legal parties, competent
parties
• Legal Purpose – can not perform illegal goods or
services
Chapter 12 – Project Procurement
Management
• 8. Other things related to Procurement
– Project Manager’s role for procurement
• Risk identification and evaluation
• Work within the procurement process
– Contract Type Selection – reasonable risk between
the buyer and seller and greatest initiative for seller’s
efficient and economic performance
• Scope – well defined?
• Amount or frequency of changes expected after start date
• Amount of effort and expertise the buyer can devote to
manage the seller
• Industry standards
Chapter 12 – Project Procurement
Management
8. Other things related to Procurement
– Cost Reimbursable (CR) contracts; seller’s
cost are reimbursed; buyer bears highest risk.
• CPFF – cost plus fixed fee, buyer pays all costs –
fee (profit) established(fixed)
• CPPC – cost plus percentage of costs; bad for
buyers (seller not motivated to control costs)
• CPIF – cost plus Incentive Fee; seller costs + fee +
bonus for meeting/exceeding target (incentive
clause)
Chapter 12 – Project Procurement
Management
8. Other things related to Procurement
– Cost based on Time and Materials; priced on per hour
basis, elements of fixed price contract and cost
reimbursable contracts – buyer has medium risk
– Fixed Price (lump sum, or firm fixed price) - most
common (1 price for all work), risk of costs is upon
seller
• FPIF – Fixed Price Incentive Fee
• FPEPA – Fixed Price Economic Price Adjustment – long
duration projects
– Incentives – help bring seller’s objectives in line with
buyer’s
Chapter 12 – Project Procurement
Management
• 8. Other things related to Procurement
– Incentive Fee and Final Price Calculations
• Must Have:
–
–
–
–
–
Target Cost
Target Fee
Target Price
Sharing Ratio (buyer/seller)
Actual Cost
• Fee = (Target Cost – Actual Cost) x Seller Ratio (%) (incentive fee)
• Total Fee = Fee + Target Fee
• Final Price = Actual Cost + Total Fee
Chapter 12 – Project Procurement
Management
• 8. Other things related to Procurement
– Solicitation
• Bidder’s Conference
– Benefit both buyer and seller
– Can be used for watching out the Collusion
• Negotiation Objectives
– Obtain a fair and reasonable price
– Development a good relationship with seller
» Project manager must be involved
– Main Terms to negotiate
» Responsibilities, Authority, Applicable Law
» Technical and Business Management approaches
» Contract Financing, Price
Chapter 12 – Project Procurement
Management
8. Other things related to Procurement
• assure seller’s performance meets contractual
requirements
• Project Managers must understand the contract and manage
its completion
• Sometimes contract is in conflict with Scope of Work
• Only the contracting officer (CO) can change contract
language
– It is often a source of conflict
– Need to deal with a different company’s set of
procedures
– It is not as easy to “see” problems
– Greater reliance on reports to determine if a problem
exists
– Greater reliance on relationships between buyer and
seller’s project managers
Supplement – Professional
Responsibility
1. Understand Project Management Professional
Code of Conduct
– Ethics
– Legal Issues
– Cultural Sensitivity
– Managing conflicts of interest
Supplement – Professional
Responsibility
2. Integrity(honesty) and Professionalism
– Understand the legal requirements surrounding the
practice of projects
– Know ethical standards that should govern the
behavior of project managers
– Comprehend the values of the community and the
various project stakeholders
– Practice proper judgment in the pursuit of successful
project work
– Compliance with all organizational rules and policies
• Upon a reasonable and clear factual basis report violations
• Responsibility to disclose circumstances that could be
construed as a conflict of interest or appearance of
impropriety
Supplement – Professional
Responsibility
2. Integrity and Professionalism
– Provide accurate and truthful representation to the
public
– Maintain and satisfy the scope and objectives of
professional services
– Maintain the confidentiality of sensitive information
– Ensure a conflict of interest does not compromise
legitimate interests of client/customer or interfere with
professional judgment
– Refrain from accepting gifts, inappropriate payments,
compensation for personal gain unless in conformity
with applicable laws or customs
Supplement – Professional
Responsibility
3. Contribute to advancing the project
management profession
– Overall understanding of project management
principles
– Understand the community and media surrounding
projects
– Knowledge of research strategies available and
proper communication techniques
– Learn to communicate and transfer knowledge
effectively as a coach and mentor and to use
available research strategies
– Respect and recognize intellectual property
Supplement – Professional
Responsibility
4. Enhance Individual Competence
– Understand the project manager’s strengths and
weaknesses and learning style – become aware of
instructional processes and tools
– Know the useful competencies for project managers
and possible training
– Be able to perform self-assessment and
competencies development plan
– Ability to apply lessons learned
Supplement – Professional
Responsibility
5. Balance Stakeholder’s Objectives
– Understand the various competing
stakeholders’ interests and needs
– Comprehend the conflict resolution
techniques useful in handling differing
objectives
– Be able to resolve conflicts in a fair manner
– Exercise negotiation skills based on proper
information
Supplement – Professional
Responsibility
6. Interact with team and stakeholders in a
professional and cooperative manner
– Understand cultural diversity, norms and
stakeholders’ communication styles
– Show flexibility towards diversity, tolerance
and self control
– Becoming empathetic to differences
Thank you for your
patient and your work