PMP Slides Nucleus Read

Project Management Framework: Definition of Project
Definition of Project
1. Temporary in nature with a well defined beginning and end
known before you start doing the project (i.e. has limited life), and
2. Creates a unique product, service or result (i.e. each project by

definition is unique and done only once in life time)
Develop a website to advertize our product
Provide one time training to improve the efficiency of our sales force
Help new customers to use our product
Recording attendance online at office
Copyri ght: Nucleus Group

Organizational Building Blocks (P5)
Project • A specific work with a beginning and an end. Done only once.
Program • A set of closely related projects (Loss of one would impact others)
• Combination of projects mostly unrelated and some related to each

Portfolio other (Loss of one has little impact on others)
Process • Eternal activity (In theory). Repetitive
Product • A combination of projects and processes

Project Management: Why Initiate projects?
3 Key Reasons to Initiate Projects
1. Taking advantage of business/Market opportunities
2. Legal requirements etc
3. As a result of completion of projects, teams gain valuable experience

which could be useful for next projects (Called as “lessons learned”)
To initiate a project you need a sponsor (someone who can provide project funding)

Project Management: Key Document- Charter
A Project Charter is
The most important document to manage a project.
The license to manage a project (Just like how driving license is required for driving)
Project Title and Number

Start Date & Closing Date
Description Projec t Code : TD X Co nst ru ctio n - Da te of re ce ipt of proble m:
10 thMa y, 2 01 2
Project Manager and authority level Tec hn ical pu blica tio ns
Projec t Ti tle : Roo t C au se Ana lysis fo r TDX Cus tome r Q ua lity Aud it NC s
O bj ec tiv e: Co nd uc t DI VE pr oje ct to ide nt fi y r oo t c au se an d imp lemen t c or re ctio n a n d

co rr ec tive ac tion s f or all the n on -co nf or man ces ide nt ified b y th e cus tome r a nd t he re by
in cre as e c ust omer sa tisf act ion ..
Business Case- Why a project is initiated? Ba ck ground:

TDX p ub lica tion s s yste m re qu es ted a qu o te f or th e mig ra tio n p ro jec t o f a ll its co nst ru ctio n
sit es. In th is r eg ar d t he cu sto mer au dit ed th e e xist ing pr oc ess es fo r a war din g th e p ro jec t
a nd ra ise d N on co nfo rmitie s t o ad dr ess by mate ria ls t ea m.
Resources assigned Impa ct : Achie vin g t he pr oje ct ob jec tive s will re sult in the cu sto mer aw ar din g t he migr at ion
p ro ject an d imp ro ve th e e xist ing pr oc ess d elive rie s t o c ust omer e xpe cta tio n.
Stakeholders, Their Requirements Probl em s ta te ment : 8 Majo r an d 4 Mino r no n con fo rman ce s id en tifie d in th e cu sto me r
Q ua lity a ud it.
DI VE st eps Mil es tones D el ive ra ble s
De fi ne Probl em – Id en tify pr ob le m 1 6th may , 2 01 2 Pr o e

j ct ch ar ter
Sta te me nt & co nv er t a s a pr oje ct
Product description/deliverables Inve s tiga te Proc es s –Id en tify

sip oc , p ro ces s flo w ma p &p ro ba b e
r oo t ca us es
l 1 6th may , 2 01 2 SI POC , Pr oce ss flow map
Ac tio n p lan wit h c or re ctio n,

Ve ri fy Solution – Co nfir m ro ot c or re ctive a ctio ns an d
ca us e a nd id en tify cor re ctio n, 2 5th may , 2 01 2
co rr ec tive ac tion s s olu tio ns for No n
c on fo rmitie s
Ensure Improv eme nt – De velo p D IVE p pt pa cka ge wit h
Project objectives so lut ion s to e limin at e r eo ccu rr e nce

o f th e ro ot cau se s
Cus tomer
3 0th may , 2 01 2
TDX
a ct ion pla n for cu sto mer
r ev iew
Approval requirements Projec t Te am: Kr ish na mu rt hy K, Pr ave e n Ma ni, Sair am P, Nag ar aj

D , Sr iniva s AVN , Ba iju G .
Support Te am: R aja she ka r N , Ch idr u pa
High level risks

Project sponsor Copyri ght: Nucleus Group
Role of PMO (Project Management Office)
A PMO is an organization entity/Department and not a person’s designation or role
A PMO in general would have the following roles
I. Provide policies, methodologies and templates to manage projects

II. Provide support and guidance to others in the organization on how to manage
projects, train others in PM or PM software and assist with specific PM tools
III. Provide project managers for different projects and take responsibility for the
projects
Type –I and II are more common than type-III (AT&T and some other Telecom companies)
Sometimes combinations exist (PMI suggests it is better to have one role)

Project Constraints (Six constraints called “Triple constraint”)
Constraints are
1. Time
2. Cost Iron Triangle
3. Risk
4. Scope
5. Quality
6. Resources
1. Law of constraints: If you change one constraint- you will have to change at-least
one of the other constraints
2. There could be other specific factors (Customer satisfaction etc)
3. Constraints help evaluate competing demands (help us see the trade offs to make)
a) Top Management directly or indirectly sets the priority for each constraint
b) PM uses this prioritization to plan the project and evaluate impact of changes
c) PM is responsible for analyzing the changes requested to the project and
identifying its impact on all constraints through change control (we will see this
later)
Sponsor (Of a project)
Sponsor
1. Outside the project team
2. Inside the organization
3. Provides funding to the team
4. Sometimes sponsor is customer (NOT always)
Customer
Sponsor
PM
E.G. The person you will have to talk to in your company, to increase allocated budget by
50% is the sponsor
Organizational Structures
Type of Organization Comments
Most people (> 60%) grouped by specialty (marketing,
Functional manufacturing, accounting, HR etc). Very few people are on
projects at any point in time.
Most people (>60%) are organized by projects (e.g. Dam
Projectized construction, TCS, Infosys etc)
Combination of Functional and Projectized. Everyone belongs to a
Matrix department and most people are on projects at any point in time.
In a strong matrix, power rests with the project manager while in a weak matrix power
rests with the functional manager. In a balanced matrix, both are equally powerful.
Project manager’s role in a weak matrix could be
Expediter: Acting as a staff assistant and communications coordinator. He cannot
personally make or enforce decisions. He reports to functional manager.
Coordinator: Similar to expeditor, except he has some power to make decisions and
reports to higher level manager
The project manager will have a part time role in both weak matrix and functional
organizations
A “tight matrix” refers to locating the entire project team in the same room “ War
location”. It has NOTHING to do withCopyriMatrix Organization
ght: Nucleus Group structure.
Organizational Structures: How it Impacts Projects
Advantages Disadvantages
Easier management of specialists, Easy People place more importance to functions
coordination of members, group learning and projects suffer
Clearly defined career paths No career path in project management
Only one supervisor PM has no authority
Efficient projects Lack of professionalization in disciplines
Loyalty to projects No “Home” (i.e. Home department)
Effective communication Less efficient use of resources
Visible project objective Extra project administration
Better PM control on resources More than one boss
Better support from functions More difficult resource allocation
In PMBOK, by default ASSUME we are in a Balanced Matrix set-up

Life cycles in PMI world
There are three different life cycles

Project management life cycle: The project management life cycle is made up of the 47
unique processes grouped by 5 process groups and describes project management
activities. This is usually common across industries.
Project life cycle: The Project lifecycle is a grouping of a number of sequential phases
which make up the project from the beginning to end. They are usually industry
specific, or can be based on company methodology. Project life cycle is also called as the
department’s procedure to run the projects
Product life cycle: The product lifecycle is also industry specific and sequential. Also there
can be many different project lifecycles within a product lifecycle. Conception of product
to withdrawal. This does not change as much with industry as project life cycle does.
An example: Product life cycle of a Desktop.

1) Project life cycle-1 (or project-1): Manufacturing the Desktops.
2) Project life cycle-2 (or project-2): Deploy 50,000 Desktops in a bank.
3) Project life cycle-3 (or project-3): Hardware and software upgrades to the Desktops.
4) Project life cycle-4 (or project-4): Replacement of the Desktops with iPADS.

Life cycles Hierarchy
Design
Version-1
Develop
Life cycle of car
Upgrade: Version-2

Project Management Process Groups
I P
Ini tiation Pl a nning
Business changes
C
Cl osi ng
M&C E
Moni tor &
Executi ng
Control
Design Develop Deploy
Large projects have several phases and each phase has all the above five processes.
Breaking down projects into phases and working is called as life cycle approach. It helps to control the
project by providing a flow and structure to Copyri
work ght: Nucleus Group
(People understand when to do work etc).
Project Management Process Groups
Monitor & Control

Operations controls
Control of Changes
Validation and Verification
Status updates
Planning
Analysis
Design
Initiation Prototyping Closure
Requirements Documentation
Pre-analysis Archival
Scope Resource Release
Execution
Integration
Testing, Deployment
Training

Overview
A process is a routine work which happens

repetitively. It consists of
1. Series of Activities (or tasks) connected with
each other
2. Inputs (What is needed for the process to go
through)
3. Outputs (What comes out of the process)
4. Tools & Techniques (A procedure or a
method to do a process)
In PMBOK a set of related processes are combined into a group

and is called process group. We work with both activities (easy to
understand), process groups and processes.

Overview of Processes/Process Activities/Process Groups
Process Groups (5) √
Processes (47)
Process Activities (80) √

Overview or Process Groups and Knowledge Areas
Process Groups (5) Knowledge Areas (10)

Integration Management
Initiation Stakeholder Management
Scope Management
Planning Time Management
Cost Management
Execution
Quality Management
HR Management
Monitoring and
Controlling Communication Management
Risk Management
Closing Procurement Management
47 Total processes across all the process groups and knowledge areas

Introduction to PM activities
Monitoring and
Initiating Planning Executing Closing
Control
Select PM Decide how to plan Execute PM plan Action to control project Confirm work done to specs
Study Ent Env Factors Finalize requirements Finish product scope Measure perf baselines Complete contract closure
Identify Org process assets Scope statement Recommend corr/prev actions Measure as per plan Get formal approval
Divide into phases Identify procurement needs Implement corr/prev actions Find variances and if important Final performance reporting
Define Business case Select Team/Designers Common understanding Influence factors for change Index and archive
Document business need WBS/WBS dictionary Implement work authorization system Request changes Update lessons learned
Define project objectives Activity List Continuous improvement Do integrated change control Hand off final product
Develop project charter Network Diagram Follow process Recommend corr/prev actions Release resources
Key Stakeholders Estimate resources Quality assurance Approve corr/prev actions
Stakeholder Management Cost and Time Quality audits Inform stakeholders
Critical Path Final Team Manage configuration
Schedule Manage People Create forecasts
Budget Progress meetings Get interim acceptance
Identify Quality standards Team building Perform quality control
Process improvement plan Rewards and recognition Report on performance
Roles and responsibilities Use issue log Risk audits
Communications requirement Manage conflict resolution Manage Reserves
Risk analysis Send and receive Info Administer contracts
Iterations Hold meetings
Prepare procurement docs Select sellers
Finalize “how to execute plan”
Develop final PM plan and baselines
Obtain formal approval

Hold kickoff meeting
Quick overview of the Five process groups
1. Initiation
2. Planning
3. Execution
4. Monitoring and controlling
5. Closing

Initiating Process Group
The initiating process group formally starts a new project/phase by officially

authorizing the project and project manager with the information necessary to begin
the project.
Once a project is selected, it is chartered and therefore authorized
Project Manager
He is assigned early during a project and is hence involved in project initiation
Most high level planning is done during the Initiation process

Planning process group
1. Planning involves walking through the project and getting organized before it is
actually done
2. If work cannot be planned, it cannot be done
3. Time spent on planning must be appropriate to the project needs (Not all projects
require same level of effort for planning)
4. Everyone needs to be involved during planning process (This increases the

ownership among the team members)

Executing Process Group
The purpose of executing process is to complete work defined in the project management plan
and to meet the objectives set out in the charter
Focus on managing people, following processes and managing information flow
Meetings are most important part of executing. Number of meetings can be reduced by better
planning.
The meetings are way too important to discuss status of a project. These must be used to
review risks and upcoming contingency plans.
Planning
1) Tasks
2) Roles (Who will do what)
3) Inputs
4) Outputs
5) Formats
6) Locations
7) Shared, Centrally located Project
Management Plan Copyri ght: Nucleus Group
Monitoring and controlling process group
1. Measuring the performance of project to PM plan and approving change

requests.
2. Recommended corrective/preventive actions and defect repair
3. This group runs in parallel to Executing group (and NOT after its completion). We
choose to categorize some activities to be belonging to this group- does not mean
they happen after execution.
4. Usually customers make decisions to purchase based on metrics and these are
measured in this group.

Closing process group
1. Project is not completed even if all the activities are completed. It gets completed
in the closing process group.
2. Completion of product scope is not completion of project. Closing involves

administrative closure, documentation of lessons learned, formal release of
resources
3. Celebration and final performance reporting are important elements of closing a

project.

Overview
Monitoring &
Initiation Planning Executing Closing
Controlling
Integration Management Monitor & control
project work
Direct and manage
Develop charter Develop PM Plan Perform integrated Close project/phase
project execution
change control
Collect
Requirements Verify scope
Define Scope Control Scope
Create WBS
Define activities
Distribute
Identify Plan Information Report
Stakeholders Communications Manage stakeholder Performance
expectation

1. The main role of a project manager is

to perform integration management.
Integration management is the act of
putting all the pieces of the project
into a single unit.
2. Integration involves balancing all the processes in knowledge areas of

scope, time, cost, quality, HR, communications, risk and procurement
management with each other.
3. PM is responsible for the integration. Team members must focus on

completing the work packages and sponsor must protect the project from
undue influences.
4. Sponsor is required to sign the charter and provide the final approval for
project management plan. Project manager is responsible for getting these
approvals. Copyri ght: Nucleus Group

Integration Management: Roles of a PM

Project Selection Methods
Economic models (Financial Models), Quantitative methods

1. Present Value (PV)
2. Net present value (NPV)
3. Internal rate of return (IRR)
4. Economic Value Added (EVA)
5. Return on Investment (ROI)
6. Payback period
7. Benefit-cost ratio
8. Marginal Revenue
9. Opportunity Cost

Project Selection: Motivation Exercise
Year-1 Year-2 Year-3 Total
Project-1 (Profits $) 100 200 300 600
Project-2 (Profits $) 300 200 100 600
Assume the project is ONLY for 3 years (Nothing after that)

Which is a better project and Why?

PV (Present value) and NPV (Net present value)
PV = FV/ (1+r)n, “FV” stands for Future Value, “r” is rate of interest (Decimal form), “n” is number of years
If rate is 10% then 100$ next year is worth only 91$ today
NPV is the PV value of all future profits. Higher NPV is better
Exercise-1: If project A gets 10,000$ in year 1 and 20,000$ in year 2. What is its PV.
Assume the interest cost is 10%.
Exercise-2: For project B, you have to spend 2,000$ at the end of one year and 4,000$
at the end of year 2. The revenue at the end of year 1 is 10,000$ and revenue at end
of year 2 is 20,000$. What is the NPV? (r = 10%)
Exercise-1: r = 0.1 (10%) Exercise-2: r = 0.1 (10%)

Year1- Rev = 10,000 => PV = 10,000/(1+0.1) = 9,100 Year1- Profit = 10,000-2,000 = 8,000
Year2-Rev= 20,000=> PV = 20,000/(1+0.1)2 = 16,500 => NPV = 8,000/(1+0.1) = 7,300
PV of project A = 9,100+16,500 = 25,600 Year2- Profit = 20,000-4,000 = 16,000
=> NPV = 16,000/(1+0.1)2 = 13,200
NPV of project B = 7,300+13,200 = 20,500
IRR (Internal rate of return)
IRR is the equivalent interest rate of the future cash flows. Higher IRR is better
(exceptions)
Exercise-1: Project A requires you spend 10,000$ today but will result in a total
money of 12,000$ at the end of one year. What is IRR for project A?
Exercise-2: For project B, you have to spend 12,000$ at the end of one year and
4,000$ at the end of year 2. The revenue at end of year 2 is 20,000$. What is the IRR?
Exercise-1: Exercise-2:
10,000*(1+r) = 12,000 12,000*(1+r)+4,000 = 20,000
=> r = 0.2 = 20% ⇒1+r = 16,000/12,000 = 1.33
⇒r = 33%

Payback period method
Number of time periods it takes to recover initial money invested in the project
Exercise-1: Project A requires you spend 3,000$ and will yield 1,000$ each year
starting at the end of year-1. What is the payback period
Benefit cost ratio

Benefit cost ratio present value of total revenue with present value of total costs
BCR = PV of revenue/ PV of Costs
Exercise-2: For project B, you have to spend 10,000$ now and 10,000$ at the end of
one year. You will receive 5,000 at the end of one year and 20,000 at the end of
second year. What is BCR? r = 10%
Cost = 3,000. PV of revenues = (5,000/1.1)+(20,000/1.12) = 21,000
Benefit for n years = 1,000*n PV of costs = 10,000+(10,000/1.1) = 19,100
3,000 = 1,000*n => n = 3 BCR = 21,000/19,100 = 1.1
(BCR > 1 is good project)
Economic value added (EVA)
Additional value generated after covering for the financing cost (Like interest cost etc)
This is one of the best methods to determine the value of an internal project.
Exercise-1: Project A requires you to spend 10,000$ today. It will generate 13,000$ at
the end of one year. You have an option to invest in a partner company which will
give you 20% returns. What is the economic value of undertaking project A?
Exercise-1:
Revenue generated = 13,000
Cash to invest = 10,000
FV @ 20% = 10,000 * 1.2 = 12,000
EV of project A = 13,000-12,000 = 1,000 (10%)

Return on Investment (ROI)
Returns generated compared to investments made
Exercise-1: Project A requires an investment of 100,000$ and will result in a total

money of 150,000$ in one year. What is ROI.
Exercise-1:
Returns generated = 150,000-100,000 = 50,000
ROI = 100% * (50,000/100,000) = 50%

Marginal Revenue
Choose the project which will generate highest marginal benefits (Marginal revenue
is the revenue generated for the last unit of output)
Exercise-1: Playject, a project simulation software provides 200 features in a year

with a cost of 10,000$. It will generate a revenue of 25,000$ in a year. To create 201st
feature the total cost will be 10,200$ and will result in a total revenue of 25,150$.
Should we implement 201st feature?
Exercise-1:
Marginal revenue = 150-200 = -50$.
Hence must NOT pursue.

Opportunity cost
Opportunity cost
Opportunity given up by choosing one project over another (It is value of lost opportunities). Remember
the key is the money lost (and no comparison to what is gained).
Minimize opportunity cost.
Sales Department Customer-1 (Flexible): Will buy 50 units
each at a cost of 5$. He is in a position to
Make 100 wait and can buy later if needed
widgets/month
EVERY month Customer-2 (Rigid): Will ONLY buy 100
units each at a cost of 2$ (or none). The
Cost = 0 need is urgent and cannot wait
Which customer would you choose?
Exercise-1: Project A requires you to spend 100$ today and will complete after a year with
profit of 50. Project B requires you to spend 50$ and will complete after year one with a
profit of 35. What is the opportunity cost of project A.
Exercise-1 Solution:
You will lose project B with profit of 35
=> Opportunity cost of ACopyri
= 35ght: Nucleus Group
Sunk cost and Sunk cost fallacy
Sunk cost
Money already expended and hence lost. This should not make an impact for any
future decisions and should be ignored for future decisions. Making a mistake here
and considering past for making future decisions is called “Sunk Cost Fallacy”.
Exercise-1: You have a project to replace all the CRT monitors in your office with LCD
monitors. There are 100 monitors and you have already replaced 50 of them, each at
a cost of 100 $. A new technology based monitor (OLED) is available in the market.
This monitor costs only 50 $ and has better quality than LCD. What should you
pursue? LCD or OLED? (For reasons of compatibility there must be only one kind of
monitors in office. Also remember there is no Resale value for these kind of
equipment)
Exercise-1:
Total cost of LCD = 100*100 = 10,000 $
Money to spend now = 100*50 = 5,000 $
Money with OLED = 50*100=5,000 $
OLED is better
Depreciation
Assets lose value over time which is called depreciation

1. Straight line depreciation (Equal value is lost EACH year of usage)
2. Accelerated depreciation (More value is lost in the beginning of usage)
a) Double declining balance (Double the rate of straight line depreciation)
b) Sum of the years digits (Based on formula for sum of years)
Exercise-1: Project A requires you to buy an equipment with 1000$ which is useful for
10 years. What is the straight line depreciation in first year.
Exercise-2: Project A requires you to buy an equipment with 1000$ which is useful for
5 years. What is the sum of years depreciation for first year.
Depreciation = 1000/10 Digits are 5, 4, 3, 2, 1
= 100$ Sum of digits = 5+4+3+2+1 = 15
First year depreciation = (5/15)*1000
Second year depreciation = (4/15)*1000

Depreciation (Continued)
Exercise-3: You are working as a project manager for Novartis and have to buy a large
biological reactor for making insulin injections. The same identical reactor is for sale both in
China and Germany. The cost of reactor from China is 96 million while from Germany it is
100 million. Government requires you do straight line depreciation with china imported
equipment but allows double declining depreciation with Germany. Where would you buy.
Assume useful life of 3 years and interest rate of 10%.
(Corporate tax rate = 33%, Depreciation rules are set by government, On any investment on
R&D, Manufacturing equipment etc you can claim Tax rebate on depreciated value)
China case: Germany case:

1st year depreciation: 32 million 1st year depreciation: 66 million
2nd year depreciation: 32 million 2nd year depreciation: 34 million
3rd year depreciation: 32 million 3rd year depreciation: 0 million
Tax saving: Tax saving:

Tax benefit from
1st year case: 10/1.1 1st year case: 22/1.1
Germany is more than
2nd year case: 10/1.12 2nd year case: 11/1.12
cost difference and hence
3rd year case: 10/1.13 3rd year case: 0/1.13
is a good option.
Total benefit = 25 million Total benefit = 30 million
Statement of work (Procurement/contract statement of work)
Created by the
sponsor/customer and
describes the needs, product
scope and how project fits
their strategic needs

Enterprise environmental factors
Existing systems and company “culture”. Even the best project managers can’t control everything that
affects their projects. The way your company is set up, the way people are managed, the processes
your team needs to follow to do their jobs... they all can have a big impact on how you manage your
project.. A few examples
1. Organizational culture & structure, Infrastructure,

2. Government rules, guidelines, regulations or industry standards,
3. Marketplace conditions,
4. Stakeholder risk tolerances,
5. Project management information systems (PMIS) and management software (like SAP),
6. Existing human resources factors like skills, knowledge, disciplines,
7. Personnel administration like hiring, performance review guidelines, training,
8. Published commercial information or databases for estimations, risk data
9. Company work authorization system

Organizational process assets
Software (Non management software like OS, word processing applications

etc), documents, historical information, guidelines, templates, Intellectual Property, lessons
learned etc

Management Plans
There is a strategy for managing the project and the processes in each knowledge
area. One has to consider how to plan the project based on the needs, how to
manage and control the project and formally document them. This is what is
accomplished with the help of various management plans.
Creating management plans is an integral and key part of PM’s job.
a) How many management plans exist?

b) How many knowledge areas exist in PMP?

Project management plan
PM Plan is an integral function- integrating management plans of all knowledge areas

and includes baseline for the project
The baseline includes

1. Scope baseline (WBS + WBS Dictionary + Scope Statement)
2. Schedule baseline (The Project Schedule)
3. Cost baseline (The Project Budget)
Baselines once fixed should be difficult to change and changes must be asked for in
the monitoring & controlling process group (Even if the change is obviously beneficial
for the project, you want to follow a protocol).
a) What would happen if you allow baselines to change easily?

b) How do you make it difficult to change baselines?
Deviations from baselines are always due to inadequate risk identification

Requirements and change management plan
Requirements management plan describes how requirements will be

identified, managed and controlled
Controlling a project to the baselines and the rest of the project management plan is
so important that the PM needs to think twice in advance about where there might
be changes and what to do to limit the negative effects of changes
Changes are much more costly than if work was included from the beginning

Change control system
Change control system is part of organization assets and includes standard
forms, reports, processes, procedures and software to track and control changes
Configuration management plan

Configuration management plan will address how to manage the version of
scope, schedule and other components of the project management plan changing. It
is also useful to address how to manage and track the version of product features etc.
Examples are document sharing systems, distributed code sharing systems with
check-in and check-out etc.
PMIS
CMS
Change
Control
Configuration management
Configuration management system contains organization’s standard configuration
management tools, processes and procedures. It will include the change control
system and is part of the PMIS
Process improvement plan

As part of project planning the PM identifies existing processes to use on the system
and may also create his own. These efforts improve efficiency of work completion by
team members.
Example: Project team has to fill the time sheet each day on time spent for various
tasks. The PM decides to invest in purchasing a software which automates the time
sheet filling each day, thereby saving time for all the team members to spend more
productively.

Project documents and project management plan approval
Project documents are the documents used to manage a project and are not part of
project management plan. e.g. SOW, Charter, contracts etc.
Project management plan approval

Project management plan is a formal document used to manage the execution of the
project and must receive formal approval by the management.
Before you can complete the “develop project management plan” process and
project execution starts a kickoff meeting should be held. It is like sounding bell
before a war starts.

Monitor and control project work
It is a control function (process) done from initiation to closing of the project. This
results in change requests and updates to PM plan and project documents.
This is different from the Monitoring and controlling process group.
Monitoring and controlling project involves measuring against the project

management plan

Work authorization system
It helps PM to authorize start of work packages and is part of enterprise

environmental factors.
It makes sure work is properly sequenced and starts only when authorized.
Remember, the focus is on activity sequencing and not people sequencing.

Sequencing of people is only a consequence and not primary goal.

Corrective Action
Any action to bring expected future project performance in line with the project
management plan. It is not about rectifying something which went wrong.
This requires the existence of a performance measurement baseline to compare with.
A = 10 Days B = 15 Days C = 25 Days
10 Days 20 Days

Integrated change control
During monitoring and controlling processes, changes may be requested that affect
any part of the project. These can be accepted or rejected in the integrated change
control process. This looks at the impact of change on all knowledge areas like
quality, risk, time, cost, HR etc
Changes are usually controlled by the change control board which comprises of
PM, customers, experts, sponsors etc

Procedure to make a change (Or when something unexpected happens)
1. Evaluate the impact (First step)

2. Create options
3. Get the change request approved internally
4. Get customer buy-in (Last step)
ONLY then make a change
Do not take any actions in haste (as you have a large team which may
face severe impact if the decision is incorrect).
All decisions to be implemented ONLY after due thought and getting

buy-in from both internal and external stakeholders.

Overview (Stakeholder Management)
Monitoring &
Controlling
Identify Plan Stakeholder Manage Stakeholder Control Stakeholder

Stakeholders Management Management Management

Importance of Stakeholder Management
1. The purpose of project stakeholder

management is to identify all people or
organizations affected by a project.
2. In addition this will help to analyze stakeholder

expectations, and to effectively engage
stakeholders

Dealing with changes
1. Projects often cause changes in organizations, and

some people may lose their jobs when a project is
completed. Project managers might be viewed as
enemies if the project resulted in job losses for some
stakeholders
2. By contrast, they could be viewed as allies if they lead a
project that helps increase profits, produce new
jobs, or increase pay for certain stakeholders
3. In any case, project work involve people politics and
project managers must learn to
identify, understand, and work with a variety of
stakeholders.

How projects go wrong
1. Changing the way work is done can send a shock wave

through an organization, leaving many people afraid
and even thinking about ways to stop or sabotage a
project (if it negatively effects them).
2. Donald White, founder and program manager at
Defense Systems Leaders in
Washington, D.C., described situations that can lead to
project sabotage:
– Buy-in blues (Implementing without getting buy-in)
– Short-term profits (Stakeholders looking for short term
comfort)
– Overachieving (Trying to implement more than
necessary)
– Lack of respect (Things do not work anyway…)
Processes of Stakeholder Management
1. Identifying stakeholders: Identifying everyone involved in the

project or affected by it, and determining the best ways to
manage relationships with them.
2. Planning stakeholder management: Determining strategies to
effectively engage stakeholders
3. Managing stakeholder engagement: Communicating and
working with project stakeholders to satisfy their needs and
expectations, resolving issues, and fostering engagement in
project decisions and activities
4. Controlling stakeholder engagement: Monitoring stakeholder
relationships and adjusting plans and strategies for engaging
stakeholders as needed

Processes of Stakeholder Management

Stakeholder Identification
1. Internal project stakeholders generally include the

project sponsor, project team, support staff, and
internal customers for the project. Other internal
stakeholders include top management, other functional
managers, and other project managers because
organizations have limited resources
2. External project stakeholders include the project’s
customers (if they are external to the
organization), competitors, suppliers, and other
external groups that are potentially involved in the
project or affected by it, such as government officials
and concerned citizens
Provided as handout
Stakeholder Register
• A stakeholder register includes basic information on

stakeholders:
– Identification information: The stakeholders’
names, positions, locations, roles in the project, and contact
information
– Assessment information: The stakeholders’ major requirements
and expectations, potential influences, and phases of the project
in which stakeholders have the most interest
– Stakeholder classification: Is the stakeholder internal or external
to the organization? Is the stakeholder a supporter of the project
or resistant to it?

Stakeholder Register: Example

Stakeholder Classification
1. After identifying key project

stakeholders, you can use different
classification models to determine an
approach for managing stakeholder
relationships
2. A power/interest grid can be used to group
stakeholders based on their level of authority
(power) and their level of concern (interest)
for project outcomes

Power Interest Grid

Stakeholder analysis - matrix
1.List the stakeholders
2.Estimate attitude
Mark degree of confidence in estimate
3.Estimate Influence
Mark degree of confidence in estimate
4.Discuss and record actions needed;

•To affirm attitude or influence
•To improve attitude
•To improve (or negate) influence
•Indicate importance
E- Estimate
•Individual or special notes
C- Confident
•Strategy for engagement
Stakeholder Engagement Levels
• Unaware: Unaware of the project and its

potential impacts on them
• Resistant: Aware of the project yet resistant to
change
• Neutral: Aware of the project yet neither
supportive nor resistant
• Supportive: Aware of the project and supportive
of change
• Leading: Aware of the project and championing

How to work with stakeholders
1. Instead of just saying “no” when your project sponsor asks for
something unreasonable, it is better to explain what is wrong with
the request and then present a realistic way to solve the problem
at hand
2. For example, Christa Ferguson, an independent program manager
in San Francisco, described how she handled a request from a
project sponsor to deliver a new tablet device in two months when
she knew she would need more time. Based on her
experience, she knew the RFQ for the effort alone would take
almost a month. Christa quickly researched the facts to propose a
realistic delivery schedule.
3. The project sponsor reset expectations once he learned what it
took to produce the tablets

Plan Stakeholder Management
1. After identifying and analyzing

stakeholders, project teams should develop a
plan for management them
2. The stakeholder management plan can
include:
– Current and desired engagement levels
– Interrelationships between stakeholders
– Communication requirements
– Potential management strategies for each
stakeholders
– Methods for updating the stakeholder management
plan Copyri ght: Nucleus Group
Plan Stakeholder Management
1. Because a stakeholder management plan

often includes sensitive information, it should
not be part of the official project documents,
which are normally available for all
stakeholders to review.
2. In many cases, only project managers and a
few other team members should prepare the
stakeholder management plan.
3. Parts of the stakeholder management plan
are not written down, and if they are,
distribution is strictly limited.
Plan Stakeholder Management: Sample Analysis

Managing Stakeholder Engagement
1. Project success is often measured in terms of

customer/sponsor satisfaction
2. Project sponsors often rank scope, time, and
cost goals in order of importance and provide
guidelines on how to balance the triple
constraint
3. This ranking can be shown in an expectations
management matrix to help clarify
expectations

Expectations Management Matrix

Issue Logs
1. Understanding the stakeholders’

expectations can help in managing issues
2. Issues should be documented in an issue
log, a tool used to document, monitor, and
track issues that need resolution
3. Unresolved issues can be a major source of
conflict and result in stakeholder
expectations not being met
4. Issue logs can address other knowledge areas
as well

Issue Logs: Sample

Stakeholder Management Best Practices
1. Project managers are often faced with

challenges, especially in managing stakeholders
2. Sometimes they simply cannot meet requests from
important stakeholders
3. Suggestions for handling these situations include
the following:
– Be clear from the start
– Explain the consequences
– Have a contingency plan
– Avoid surprises
– Take a stand

Control Stakeholder Engagement
1. You cannot control stakeholders, but you can

control their level of engagement
2. Engagement involves a dialogue in which
people seek understanding and solutions to
issues of mutual concern
3. e.g. Many managers are familiar with various
techniques for engaging team members. It is
important to set the proper tone at the start
of a project

Control Stakeholder Engagement: Example of engaging
1. If a manager does nothing but lecture on the first

day of meeting or criticizes the first person who
offers a comment, workers will quickly decide that
their best strategy is to keep quiet and maybe just
follow the orders without thinking.
2. On the other hand, if the manager uses a lot of
activities to get all participants to speak or use
technology to participate, they will expect to be
active participants in future meetings.

Ways to control engagement
1. Key stakeholders should be invited to actively participate

in a kick-off meeting rather than merely attending it
2. The project manager should emphasize that a dialogue is
expected at the meeting, including texts or whatever
means of communication the stakeholders prefer. The
project manager should also meet with important
stakeholders before the kick-off meeting
3. The project schedule should include activities and
deliverables related to stakeholder engagement, such as
surveys, reviews, demonstrations, and sign-offs.
4. In the “Information Distribution” procedure which is part of
controlling stakeholders, the manager distributes
information to the stakeholders as per the plan.
Control Stakeholder Management: Information distribution
1. Project Managers have to distribute information to
various stakeholders all along the project.
2. This helps in setting the right expectations and also
presents information about the project in time.
3. The information distributed could include
performance information, reports, memos etc.

Levels of engagement
Funding agency Management Beneficiary

Overview
Monitoring &
Controlling
Monitor & control
project work
Direct and manage
Develop charter Develop PM Plan Perform integrated Close project/phase
project execution
change control
Plan Scope
Management Validate Scope
Collect
Requirements Control Scope
Define Scope
Scope Management
Create WBS
Distribute
Identify Plan Information Report
Stakeholders Communications Manage stakeholder Performance
expectation

Scope Management
1. Scope management is the process of

a) Defining what work is required
b) Making sure all of that work and
c) ONLY that work is done
2. “Define scope” is a process which is concerned with what is a part of project and what
is not a part of project.
3. You must plan in advance how you will determine the scope, manage it and control it
4. Scope must be clear and formally approved before work starts
5. Requirements are gathered from all stakeholders and not just the person who
assigned the project
6. WBS must be used as this can help find additional scope
7. Gold plating (Doing extra) is not allowed (Why do gold plating?). Related to step-5.
8. All scope changes must be through integrated change control

Product Scope Vs Project Scope
Product scope refers to the outcome; the specifics of the product or service that the
project is expected to deliver.
Project scope refers everything that has to happen to get the product created and
delivered. It also refers to the things that can't happen, to get the product delivered
(i.e. scope "exclusions")
Project Scope focuses on the Project Management aspect for delivering the
product/service. The Project Management aspect comprises the budget, the
schedule, the quality. On the other hand, product scope focuses on the end
product, for example, cost to own, services/benefits that this product will offer to the
end user.
Scope management will involve both project scope and product scope
Product Scope (Aircraft) Project Scope (Aircraft)
1) Price of Aircraft 1) Development cost
2) Cost of Aircraft 2) Development Schedule
3) Capacity of Aircraft 3) Engine in-source or out-
4) Benefits of Aircraft to source
consumer
Collection of requirements
1. Interviewing: Talking to stakeholders
2. Focus groups: A grouping of SMEs or Experts
3. Facilitated workshops: Potential customers guided by an Expert
4. Brainstorming: Team members sitting and giving out lots of ideas
5. Delphi technique: A way to anonymously generate consensus
6. Mind maps: A nice and hierarchical way to show data
7. Affinity diagrams: A way to categorize data and information
8. Questionnaires and surveys
9. Observation
10. Prototypes
Group decision making

Dictatorial, majority, plurality and consensus
Majority: At least 50% must support
Plurality: Largest block (May not be majority) will decide.

Collection of requirements: QFD
Quality Function Deployment (QFD) is a structured approach to defining customer needs or
requirements and translating them into specific product / service features ( CTQs) .
1. Relates multiple requirements to features.
2. Identifies important requirements (from customer) and important features.
3. Helps in making trade-offs.
Design of a TV Remote
Material of remote
Shape of remote
Color of remote
Size of buttons
Want easy to hold x
Want to easy to find x
Want it light weight
x
Want big buttons x
Resolving competing requirements
Some issues are very complex and require management intervention. Broad guidelines
exist however which prefer this order
1. Business case for starting the project (Most important)

2. Project charter
3. Project scope statement
4. Project constraints (Least important)
For example, a company XYZ decides to develop mobile applications and want to learn
new technology related to mobile applications. As requirements are being gathered, a
requirement was found which will increase the cost of project marginally but will
provide a lot of learning which may be used on future projects. Should you take it?

Requirements Traceability Matrix
1. Requirements traceability matrix helps track the requirements over the life of the
project (Initiation to closure) to ensure they are accomplished
Requirement Test Run Notification of

Requirement Source SRS # Module Affected Test Case (s) Comments
Number Results Requirement

Product analysis and project scope statement
1. Product analysis helps analyze the objectives and description of the

product stated by the customer and turn into tangible deliverables FOR
the PROJECT.
2. Project scope statement is the output of “Define Scope Process”
3. The project scope statement along with the WBS and WBS dictionary
comprise the scope baseline which is part of project management plan

WBS (work Breakdown Structure)
WBS breaks the project into smaller and more manageable tasks
The rules to keep in mind while making WBS

1. Must be done with help of the team
2. First level is to be done before further levels are done
3. Each level of WBS is a smaller piece of the level above
4. Entire project is included in the upper levels. Some levels are deeper than others
5. WBS includes only deliverables that are absolutely needed
6. Deliverables not in the WBS are not part of the project
Work packages are reached when they include deliverables that

1. Can be realistically and confidently estimated in terms of cost and time, logical units
2. Can be completed quickly (80 hours for a 1 year project - roughly)
3. Can be completed without interruption
4. May be outsourced or contracted out
Use easy to identify numbering system: Helps in easy communication

What are the benefits of WBS?
1. Helps understand the scope
2. Communicate costs
3. Communicate responsibilities (Kind of competencies needed)

WBS Dictionary
1. It is the output of create WBS process

2. It helps the project by putting boundaries on what is included in the work package
3. It is the analogue of a Help file used in many software applications
WBS Dictionary consists of

1. A number identifier
2. Related control account (Control center Information)
3. A statement of the work to be done
4. Who is responsible
5. Any schedule mile stones
6. Interdependencies

Validate Scope (Verify Scope)
1. Involves meeting the customer or sponsor to gain formal acceptance of the

deliverables during monitoring and controlling phase
2. This can be done at the end of each project phase
3. Quality control and Validate scope are similar in that both involve checking for the
correctness of work. The difference is the focus on effort and who is doing the
checking.
4. In QC, the QC department checks to see if the quality requirements specified for
the deliverables are met, In validate scope it is the customer who checks before
accepting the deliverables.
5. User Acceptance Testing (UAT) is an example of “Validate Scope”

Control Scope
1. Control scope involves measuring project and product scope performance and
managing scope baseline changes and preventing scope creep (changes made
without the formal change approval process).
2. Need to measure scope performance against the baseline to see magnitude of any
variances. Next see if any updates to scope baselines or other parts of project
management plan are needed

Overview
Monitoring &
Controlling
Plan Schedule
Management
Define Activities
Sequence Activities
Estimate Activity Control Schedule

Resources
Estimate Activity
Durations
Time Management
Develop Schedule

Time Management
1. Remember that unrealistic schedule is a project manager’s fault and not that of
senior management (This assumes that the PM is the one who created the
schedule)
2. It is PM’s job to see if the needed end date can be met and create options to make
it happen, all BEFORE project execution even starts
3. PM software can be of extreme help with scheduling, scenario analysis and

performance tracking but it cannot tell how to manage a project

Process: Define Activities
The process involves taking the work package in WBS and breaking down further
to reach activity level (also called tasks which are usually done by one person for a
few days). In order to do this you need the scope baseline and the team so that
activities can be defined more accurately and make estimates better.
Two methods of defining activities

Rolling Wave Planning: Plan at higher level and then wait until project work begins
to start next level of planning (contrast with progressive elaboration where you
plan next phase after the work ends & not when work begins)
Execution Execution
• When in hurry • Working on new tasks
• Work is known • Learning is involved
Planning • Not familiar with work
Planning
Execution
Rolling wave Progressive Elaboration

Terminology: Milestones
a) Milestones are significant events within the project schedule.

b) A milestone is also a zero duration task.
Start the
project
Documenting Implementing Implemented Handing off

Requirements Solution Solution Product
Complete
Project

Sequence Activities
Take the activities and milestones and start to sequence them into how work is performed.
This will create a network diagram as shown below.

Network diagramming techniques
Uses of network diagrams

1. Justify time estimate for the project
2. Aid in effectively planning, organizing and controlling the project
3. Show interdependencies of all activities, resource allocation
4. Show workflow so the team will know what activities need to happen in a sequence
5. Identify opportunities to compress schedule
6. Show project progress (for example, use Green color for boxes completed, Red for
active boxes and white for yet to start boxes)

Network diagramming techniques
Precedence diagramming method (Activity on Node)- Nodes are used to represent
activities and arrows show activity dependencies
Four types of relationships
• Finish to Start: An activity must finish before the successor can start
• e.g. Quality Check done after part manufacturing fully done
• Start to Start: An activity must start before the successor can start
• e.g. IT testing protocol design can start only when design starts F S S
• Leveling concrete can start as soon as pouring foundation starts.
F S
• Finish to Finish: An activity must finish before the successor can finish
• e.g. Coding must be completed to complete code testing F
• Electrical testing can be fully completed only when all wiring work is done.
• Start to Finish: An activity must start before the successor can finish S
• e.g. Next shift supervisor must start, for current supervisor to complete his work
F
GERT (Graphic Evaluation Reporting Technique)
This allows loops within a network diagram (e.g. R&D Industry trial & error)
Dependencies
Mandatory Dependency: Inherent to the nature of work (Foundation after excavation)
Discretionary Dependency: Can be changed (Light bulbs after ceiling fan during interior)
Leads and Lags
Lead may be added to start an activity before the preceding activity and lag is
inserted waiting time between activities. Lead is negative lag and lag is –ve lead.
Lead Activity-A Lag
Estimation Techniques
One point estimate
1. Can force people to do padding
2. Hides important information about variability of the task (which has a direct impact on risk) etc
Analogous Estimating
1. Uses expert judgment and historical information to predict the future
2. The planned hotel to construct looks similar to the hotel built five years ago, which took 2
years to build. We plan on using similar resources and technology, hence should take 2 years.
Parametric Estimating
1. Calculates projected times based on historical records from previous projects and other
information.
2. Last project had 2000 lines of code and took 2 months. The current project to be done by
same team would have about 4000 lines of code and will take about 4 months.
3. Regression analysis (or scatter diagram) tells if two variables are related
Heuristics
1. It’s a rule of thumb.
2. Constructing a residential house : Each floor takes about 6 months
Three point estimate (PERT, Project Evaluation and Reporting Technique)
1. Expected duration = (P+4M+O)/6, Weighted average with most weightage to Most likely case.
P = Pessimistic (Worst case), M = Most likely, O = Optimistic (Best case)
2. SD (Standard Deviation) = (P-O)/6

3. V (Variance) = SD2, Copyri ght: Nucleus Group
4. For Project level estimations: Only add Expected duration or variances (V). Do not add SD.
3 point estimate example
A B C
P: 12 P: 9 P: 14
M: 9 M: 6 M: 6
O: 6 O: 3 O: 4
D = (12+4*9+6)/6 = 9 = (9+4*6+3)/6 = 6 = (14+4*6+4)/6 = 7

SD = (12-6)/6 = 1 = (9-3)/6 = 1 = (14-4)/6 = 1.67
V 1^2 = 1 1^2 = 1 1.67^2 = 2.77
Project Duration = 9+6+7 = 22

Project Variance = 1+1+2.77 = 4.77
Project SD = sqrt (4.77) = 2.18
Project can be done in 22Copyri ght: Nucleus
+/- 2.18 daysGroup
Reserve analysis (Covered in cost chapter & risk chapter again)
Project must have reserves to accommodate for risks that remain after the completion of
risk management activities. You deal with certain risks on a one-one basis, but for all other
remaining risks, you allocate some lump some money (Called as reserves).
Two types of reserves for risks- Contingency reserves and Management reserves
Contingency reserves- For risks which remain after plan risk response process
Management reserves- For unknown risks (Usually less than 10% of contingency cost)
Contingency reserves are under the control of project manager while management
reserves are under the control of top management.

Schedule Network Analysis (we will cover this twice)
Some techniques for this are
1. Critical path method
2. Schedule compression
3. Resource leveling
4. Critical chain method
1. Critical Path Method

Critical path is the path of longest duration in the network diagram and determines the
shortest time to complete the project
Near critical path is a path close in duration to critical path. The closer it is to critical
path, the more risk project has

Float or slack
Total Float/Total Slack: Time an activity can be delayed without delaying the project end
date or an intermediary milestone
Free Float/Free Slack: Time an activity can be delayed without delaying the early start date
of its successor
Project Float: Project float is the amount of time a project can be delayed without delaying
the externally imposed project completion date required by the customer or management.
Activities on critical path have zero float.
Float = LS-ES or LF-EF
Find ES and EF in the forward pass.

Find LS and LF during the backward pass

Schedule Network Analysis
Some techniques for this are

1. Critical path method
2. Schedule compression
3. Resource leveling
4. Critical chain method
Critical path is the path of longest duration in the network diagram and determines the
shortest time to complete the project
Near critical path is a path close in duration to critical path. The closer it is to critical path,
the more risk project has

Float or slack
Total Float/Total Slack: Time an activity can be delayed without delaying the project end
date or an intermediary milestone
Free Float/Free Slack: Time an activity can be delayed without delaying the early start date
of its successor
Project Float: Project float is the amount of time a project can be delayed without delaying
the externally imposed project completion date required by the customer or management.
Activities on critical path have zero float.
Float = LS-ES or LF-EF
Find ES and EF in the forward pass.

Find LS and LF during the backward pass

Schedule Compression
10
5 2
8
10 8
6
5 2
6
8 6
X
5 2
12
8 6
5 2
6 Copyri ght: Nucleus Group
Network Analysis Techniques
2. Schedule Compression
Fast tracking- Doing critical path activities in parallel that were originally in series.
Increases risk and needs more communication. This involve a time vs. risk tradeoff.
(Remember nothing comes for FREE)
Crashing- Making cost and schedule tradeoffs to determine how to compress the
schedule. Always involves increased cost. This involve a time vs. cost tradeoff.
3. Resource Leveling
Resource leveling: Produce a resource limited schedule. The schedule from this is almost
always longer than the project schedule.
4. Critical Chain Method

Critical Chain method: It takes both activity and resource dependency directly into
account. Buffers are added to the activities at few locations and these buffers are
managed. This is a buffer management system.
WHAT IS THE CRITICAL CHAIN OF A PROJECT?
Critical Chain is the longest chain of

resource AND task dependencies in a project
Day 0:
X, 10d X, 10d X, 10d X, 10d
T1 T2 T3 T4
X, 10d
Critical Chain
T5
Y, 10d Y, 10d
T6 T7

WHAT IS THE CRITICAL CHAIN OF A PROJECT?
Critical Chain is the longest chain of

resource AND task dependencies in a project
Day 0:
X, 10d X, 10d X, 10d X, 10d 25d
T1 T2 T3 T4 PB
X, 10d
T5
Y, 10d Y, 10d 10d

T6 T7 FB

SAMPLE TREND CHART (Critical chain buffer
% Buffer Consumed management)
-10 0 10
% Chain Complete
Direction of wire graph tells us the trend

Mile stone charts Bar charts (Gantt Charts)
Detailed Task List

Start and End of each task
Dependencies
Percentage Done
Only Milestones
Nothing Else

When to use which chart
1. Network diagram and not Gantt: To show interdependencies between activities
2. Milestone and not Gantt: To report to senior management
3. When to use Gantt/Bar and not Network diagram: To track progress and to report to
team

Overview
Monitoring &
Controlling
Cost Management
Plan Cost
Control Costs
Management
Estimate Costs
Determine budget

Cost Management
For many projects activities are used to create cost estimates. On some large projects it
may be more practical to estimate and control at a higher level called control account (or
cost center).
Control accounts are placed at selected management points of the Work Breakdown
Structure (WBS) to monitor cost and schedule performance of significant elements of
work.
Cost management plan is created during project management plan creation and includes
1. Specifications on how estimates should be stated (In $, or millions, or Crores etc)
2. Level of accuracy needed for estimates (Want 10% accuracy of 20% accuracy)
3. Reporting formats to be used (Want bar charts or pie charts etc)
4. Rules for measuring cost performance (Is 5% above budget, bad or very bad?). How
do we determine that the project is in Red, Green or Yellow status will be agreed
5. Whether costs will include both direct and indirect costs
6. Control thresholds (More than 15% cost increase will trigger alert to CEO)

Process: Estimate costs
The estimate costs process is where the estimates for each activity are made
1. Must be based on WBS
2. Must be done by person doing the work and historical estimates can be used to improve
accuracy
3. PM must not accept constraints from management but must analyze needs of the project
and come up with own estimate and reconcile any differences
4. PM must meet agreed upon estimates
5. A cost base line should be made and not changed till plan changes
6. Corrective action is to be taken whenever cost problems occur

Types of costs
Types of costs
Fixed costs: Rent paid for the Office space (Does not change)
Variable costs: Electricity paid (Changes with working hours)
Direct costs: Salaries of employees working on a project

Indirect costs: Cost of AC, water and other amenities
A fixed cost or variable cost will be either direct cost or indirect cost

Cost Estimation
Analogous Estimation
Advantages
1. Quick
2. Less Costly
3. Tasks need not be identified
4. Causes overall project costs to be capped
Disadvantages
1. Least accurate
2. Difficult to use for projects with uncertainty
3. Risks management politicking (About what is the definition of “Similar”)
Bottom Up Estimation
Advantages
1. Most accurate
2. Gains buy-in from team
3. Provides basis for monitoring and control
Disadvantages
1. Time intensive
2. Encourages padding

More on estimation
What helps in estimate creation for a project

1. PM software (or an excel sheet)
2. Resource cost rates (Average salary can be multiplied by team size)
3. Risk reserve analysis (Amount of reserves to add, standard is 10%)
4. Cost of quality (Money to add for quality standard maintenance)
Estimates made during early project phase are less accurate than the ones which
are made later
Estimating Accuracy
Range of estimates
ROM (Rough order of magnitude): - 50% to 100%
Budget estimate: -10 to 25%
Definite estimate: +/- 10%

Forecasting: A few points to keep in mind for cost estimations
1. Learning Curve: Over time the cost per unit (or cost
of similar work) will drop because repetition
increases efficiency. This is a correction for time
factor.
2. Law of Diminishing Returns: As more people are

added the output increases, but in lesser proportion
compared to the increase in number of people. This
is a correction for people scale-up factor.
Example: A task may take 16 days with a 15 member team.
Increasing the team to 30 will not reduce the time to 8 (Will be more).

Determine budget
Total cost of project needs to be computed so that the organization can set aside this
money and this is called budget.
Technique: Cost aggregation

For a given time period, all activities to be done are noted. Activity costs are rolled into
work package costs and work package costs are rolled into control account (cost center)
costs and control account costs into project costs.
Progress reporting (of a project)

In reality, progress happens on a continual basis (every second you do some work and
hence there is progress) but sometimes It is not practical to report the project progress
continuously like this. For example, consider payments to vendors based on project
progress (Cannot pay on a second by second basis). To deal with such situations, we
develop methods to discretize the project progress (from continuous to discrete pieces).
At a work package level use one of following

50/50 rule
20/80 rule
0/100 rule Copyri ght: Nucleus Group
Progress reporting (Assume all activities on critical path are of same duration)
50/50 Rule
Activities completed: 1+1+1+0.5+0.5 = 4, Project completed: (4/8)*100 = 50%
20/80 Rule
Activities completed: 1+1+1+0.2+0.2 = 3.4, Project completed: (3.4/8)*100 = 42.5%
0/100 Rule
Milestone Rule

Activities completed: 1+1+1+0+0 = 3, Project completed: (3/8)*100 = 37.5%
Earned value analysis
Measures scope, time, project performance

Integrates cost, time, scope
Can be used to forecast future performance and project completion date
PV – Planned value (Value of planned work)

EV – Earned value (Value of completed work)
AC – Actual cost (Actual cost incurred till date)
BAC – Budget at completion (Initial Budget)
EAC – Estimate at completion (Revised Budget)
ETC – Estimate to complete (From the day of estimate, money to spend to complete)
VAC – Variance at completion (Difference between Initial budget and revised budget)
PV, EV, AC
Start Today End

Cost variance (CV) = EV-AC BAC
Schedule variance (SV) = EV-PV EAC
CPI = EV/AC (Cost Performance Index) ETC
SPI = EV/PV (Schedule Performance Index)
TCPI (To complete cost performance Index, Future Index)
It is the ratio of work remaining to budget remaining for the project. TCPI is the calculated
projection of cost performance that a project must achieve on the remainder of the
project work to reach a specified end result.
If TCPI is one (1.0), then the remaining project work must be executed at the same
cost performance level as the completed project work. If TCPI is less than one
(<1.0), then the remaining project work can be executed at a lower cost
performance level than the project completed work. If TCPI is greater than one (>
1.0), then the remaining project work must be executed at a better cost
performance level than the project completed work till date.
BAC = $115,000
CPI = EV/AC = $55,000/$75,000 = 0.733
EV = $55,000
AC = $75,000.
New budget approved is $125,000. Calculate TCPI
TCPI = (BAC - EV) ÷ (EAC - AC) = (115,000-55,000)/(125,000-75,000) = 1.2
TCPI allows you to calculate the amount of cost performance improvement that must be
made on the remaining work to reach a set goal.
TCPI (To complete cost performance Index)
TCPI is like “Asking Rate/Required run rate” in a cricket match, CPI is like “run rate”
CPI = 0.1 CPI = 0.99

TCPI = 1.001 TCPI = 100
Is this possible? Is this possible?

Why/Why not? Why/Why not?
999 days
Early Stage Project Late Stage Project

Overview
Monitoring &
Controlling
Defi ne Acti vities
Sequence Acti vities
Esti ma te Acti vity Control Schedule

Resources
Esti ma te Acti vity
Dura tions
Develop Schedule
Esti ma te Costs
Control Costs
Determine budget
Perform Quality Perform Quality

Pl a n Quality
Assura nce Control
Acqui re Project
Tea m Quality Management
Develop HR Plan Develop Project Team
Manage
Copyri ght:Project
NucleusTeam
Group
Quality management
Lack of attention results in more rework and defects and costs time and money
What is quality?
Degree to which project fulfills requirements
Implies you need to have all the stated and unstated requirements and
project scope statement
Quality management
Includes creating and following policies and procedures to ensure that a project
meets the defined needs it was intended to meet from the customer’s
perspective. Quality plan includes the procedures, ways of making plots etc.
Responsibility for Quality
1. Senior management is responsible for organizational quality
2. PM has ultimate responsibility for quality of product of project
3. Each team member is responsible for self inspection

Quality Characteristics
1. Grade vs. Quality

a) Grade: meets spec requirements
Grade talks about the Characteristics and features of a product high grade of car is one that has
lots of features and benefits. Grade talks about the fancifulness of the product
a) Quality: Satisfies Requirements
2. Prevention vs. Inspection
3. Customer Satisfaction
a) Keep customer informed
b) Stick to Requirements
Quality Planning Tools

1. Standards
2. Benchmarking (past analysis)
3. Benefit/Cost Analysis (BCI)
4. Flowchart (also used in QC)
5. Design of Experiments (what input parameters make +ve influence on outputs)
6. Cost of Quality (costs of conformance & non-conformance)
7. Fishbone Diagram (also used in QC)

Quality Theorists
1. Juran: Developed the 80/20 principle (80% of problems contributed by 20% causes)
2. Edward Deming: TQM and Deming cycle (Do small increments before making large changes)
3. Philip Crosby: Prevention over inspection (Better to prevent errors than inspect later)
Marginal analysis Quality Techniques
Benefits or revenues to improving quality are equal to cost of achieving this quality.
This tells when to stop trying to improve quality.
5
3
Cost ($)
2 Benefits
1 Costs
0
1 2 3 4 5 6 7 8 9
Quality (Increasing)
Kaizen or continuous improvement

• Making small and incremental improvements in quality over a long period of time
Total Quality Management (TQM)
Total quality management or TQM is an integrative philosophy of management for

continuously improving the quality of products and processes.
TQM functions on the premise that the quality of products and processes is
the responsibility of everyone who is involved with the creation or consumption of the
products or services offered by an organization.

Plan quality vs Perform QA vs Perform QC
Plan quality Perform QA Perform QC

Done during planning Done during execution Done throughout project
Find existing standards Use measurements from QC Measure quality
Create additional project Perform continuous Identify quality improvements

specific standards improvement
Determine work to be done to Determine if project activities Validate deliverables
meet standards comply with project and
project policies
Determine how to measure to Find good practices Complete checklists
meet standards
Balance needs of quality with Share good practices in org Update lessons learned
time, cost, risk etc
Create Quality mgmt plan as Submit change requests
part of PM plan
About what needs to be done About how it is to be done About the final result being
what was actually planned

Plan quality: Techniques
1. Bench marking: Comparing actual results to those of best practices (of the industry,
strategic targets, competitors etc) to generate ideas for improvement and provide
the basis for measuring performance.
2. Cost –benefit analysis (Marginal Analysis): Analyzing benefits gained with cost to
see if quality improvement is worth the effort.
3. Design of experiments: A statistical technique to help understand which factors will

improve the quality of the organization/process so that we can focus on these
important factors. In the design of experiments, the experimenter is often
interested in the effect of some inputs on improving some desired output
parameters.

Sigma limits (Indicative of quality standards)
+/- 1 Sigma is 68.26% Industry neutral technique to compare

+/- 2 Sigma is 95.46% 1. Different industries (IT vs Biotech etc)
+/- 3 Sigma is 99.73% 2. Different functions (Sales Vs Operations)
+/- 6 Sigma is 99.99985% 3. Different departments (HR vs Programming)
High value of Sigma indicates higher standards and lesser mistakes
A pharmaceutical company follow 3-sigma policy. They produce 100,000 tablets a

month. How many defective tablets would you find?
Defective = (100-99.73)*100,000/100 = 270 tablets a month

Basic Statistics (Indicators of Quality Standards)
Important statistical terms
1. Mean (Average)
2. Median (Middle number if arranged ascending order)
3. Range (Highest – Lowest value)
4. Standard Deviation (Spread in the data about the average value)
For a set of numbers {1, 3, 4, 5, 6}, calculate the Mean, Median, Range and
standard Deviation
Mean = (1+3+4+5+6)/5 = 3.8

Median = 4
Range = 6-1 = 5
Standard Deviation (SD) = (1−3.8) + (3−3.8) + (4 −3.8) + (5−3.8) + (6 −3.8) =1.7
2 2 2 2 2
x x
x x x x x x Average x x Average
x x
SD is low SD is High
Understanding Quality with Standard Deviation
x x
x x x x x x Average x x Average
x x
SD is low SD is High
High standard deviation indicates lack of predictability in the outcome of the process and
is an undesirable property in a process
State Govt – A: Has a power cut policy: 2 hours anytime during the day
State Govt – B: Has a power cut policy: 2 hours from 9AM to 11AM fixed

The 7 Tools of quality
1. Fish bone (Cause and effect or Ishikawa Diagram) – Root cause analysis
2. Flow chart – To understand where errors might creep in
3. Histogram – To understand the number and type of problems
4. Pareto chart- Prioritize potential causes of the problem to be solved
5. Check Sheets – Organize data and facts about defects and errors
6. Scatter diagram – To see if there are any variables dependent on each other
7. Control chart – To control a process

Tools of quality
30 100 Customer Requirements
90
25 80
70
20
60 Crea te Design Document
15 50
40
10 30
20
5 Get customer Approval
10
0 0
Impl ement
Ha nd off

Control charts
Used to monitor things like project performance figures such as cost and schedule
variance. It is also useful for monitoring the quality of technical process parameters.
Some examples: How long does it take to answer a customers query in a BPO. How long
does it take for us to fix a bug reported by a customer. etc
Upper and lower control limits, Specification Limits, Mean (average)
Out of control
1. A data point falls out of upper or lower control limit
2. There are non-random data points like rule of 7
Rule of 7
7 data points grouped on one side of mean (even though within control limits)
If a process is out of
control, you stop the process.
Investigate the root cause and
fix it before going forward.

Statistical Sampling (For QC)
There are two broad categories of sampling

1. Attribute sampling – Discrete choices: You sample some number of items and
you classify each item as either having some attribute, like being defective, or
not. You will have some standard for what a defective item is -- like
broken, scratched, non-functional, etc.
2. Continuous/Variable sampling – Continuous measurable variables: When your
data points are measurements on a numerical scale you have variables data --
like weight, diameter etc
1) A Pharma company makes many tablets. If you pick tablets and see whether it is
square or oval in shape it is attribute sampling.
2) If you measure the weight or diameter of the tablet it will be continuous sampling.

Cost of Quality
Cost of Conformance Cost of Nonconformance

Prevention and Failure Costs
Appraisal Costs
Planning Internal Scrap
Training (pre customer) Rework
Auditing Expediting
Controlling External Warranty
(post customer) Service
Recalls

Cost of Quality
Total Cost

Overview
Monitoring &
Controlling
Defi ne Acti vities
Sequence Acti vities
Esti ma te Acti vity Control Schedule

Resources
Esti ma te Acti vity
Dura tions
Develop Schedule
Esti ma te Costs
Control Costs
Determine budget
Perform Quality Perform Quality

Pl a n Quality
Assura nce Control
Acqui re Project
Tea m
Pl a n HR Develop Project Team
Ma na gement
HR Management
Manage
Copyri ght:Project
NucleusTeam
Group
HR Functions
PM R2: Highly experienced

R1: Less experience and Total members fixed.
not well trained R1 and R2 same salary band
Can exchange R1 with R2

What do we do?
1. Improving the team member’s competencies is the responsibility of project manager

2. HR management is primarily done in executing process group
3. The project manager’s HR activities are formal and require documentation
4. Projects are planned by the team and coordinated by the project manager
5. Team building activities are formally planned in advance and are a required part of
project management
6. The project manager must trace team member performance
7. HR can be divided into administrative and behavioral management topics
Appraisals
In PMBOK Terminology
Project Appraisal = Team member appraisal
Team member appraisals are VERY critical

Roles and Responsibilities of
1. Sponsor
2. Team
3. Stakeholders
4. Functional Manager
5. Project Manager

Role of sponsor
1. Is a stakeholder (Usually outside the team and internal to organization, sometimes is a

customer)
2. Provides funding
3. Gives PM authority outlined in the charter
4. Helps organize work into appropriate projects
5. Sets priorities between projects
6. Provides the project team with time to plan
7. May review WBS
8. Supplies list of risks
9. Provides expert judgment
10. Approves the final project management plan

Role of Team
1. Identify and involve stakeholders

2. Identify requirements
3. Identify constraints and assumptions
4. Create WBS
5. Decompose work packages
6. Identify dependencies between activities
7. Provide cost and time estimates
8. Implement and verify work package
9. Participate in risk management process
10. Enforce ground rules
11. Attend project team meetings
12. Conduct process improvement
13. Implement Quality Systems
etc…….
The team has to do ___________________

Role of stakeholders
1. May be involved in creation of

project charter and project scope
statement
2. Project management plan

development
3. Verifying scope verification
4. Identifying constraints
5. Identifying requirements
6. Risk management
Role of Functional manager
1. Assign specific individuals to team and negotiate with project manager regarding
resource
2. Let project manager know of other projects that may impact the project
3. provide subject matter expertise
4. Approve the final schedule during schedule development
5. Recommend changes to project
6. Improve staff utilization

Role & Responsibility of project manager
1. Responsible for managing the project to meet project objectives

2. May help with making charter
3. Coordinator of interactions between project and key stakeholders
4. Leads and directs the project planning efforts
5. Understands and enforces professional and social responsibility
6. Determines and delivers required levels of quality
7. Is accountable for project success or failure
RESPONSIBILITY DEFINITION
Creating a team directory Lists all project team members and other
stakeholders
Negotiating with resource managers for best Functional managers and other project teams have
resources resources; dealing with politics
Creating project job (position) descriptions for Written outlines of job competencies,
team members and other stakeholders responsibilities, authority, physical environment and
other characteristics involved in performing a job
Understanding team/stakeholder training needs Competencies to be developed as part of the project
and making sure they get it
Creating staffing management plan Formal plan for team, management, other
stakeholders, how they will be involved in project
and what roles they will perform
Problem Solving Process
Problems: Solving Process:

– Cost 1. Define cause of problem
– Time 2. Analyze problem
3. Identify solutions
– Human Resources
4. Implement a decision
– Conflicting objectives between
5. Review decision and
stakeholders
confirm it solved problem.
Else problem may recur
later.

Roles and Responsibilities segregation: RACI Chart
R Who is Responsible Person who is assigned to do the work
A Who is Accountable Person who makes the final decision and is the Ultimate owner
C Who is Consulted A person who must be consulted before a decision or action is taken
I Who is Informed A person who must be informed after a decision or action is taken
Example of a RACI chart

Project Project Procurement Business Technical Applications
WBS Code Description
Sponsor Manager Manager Analyst Specialist Development
P01.02.01 Security Governance C A I I C R

P01.02.03 Functional Requirements A I I I R C
P01.02.06 Business Acceptance Criteria A C C R I I
P01.02.08 Procurement Analysis C A R C I I
• RACI chart is independent of member names.

(Use of roles is to accommodate team members leaving or joining)
• RACI chart has only one accountable for each work package, but can have multiple members who are
Responsible, Consulted or Informed. Copyri ght: Nucleus Group
• There must be at-least one “R” for each work package.
Develop HR Plan
Organization (al) Breakdown Structure (OBS) is

an intermediate level of the Work Breakdown
Structure (WBS) in which organizational
relationships are identified and used as the
framework for assigning work responsibilities.
It is the org chart for the project
RBS is a standardized list of personnel

resources related by function and arranged in
a hierarchical structure.
Central Pool31
Cost: 30m$
Budget: 30m$
Designers6 Developers20 Testers5

Cost: 15m$ Cost: 10m$ Cost: 5m$
Budget: 15m$ Budget: 10m$ Budget: 5m$
Architects2 Framework Builders4 Java Developers12 Database Developers8

Cost: 5m$ Cost: 10m$ Cost: 6m$ Cost: 4m$
Budget: 5m$ Budget: 10m$ Budget: 6m$ Budget: 4m$
Plan HR Management- Create a HR Plan
HR Plan includes
1. Roles and responsibilities
2. Project organizational charts
3. Staffing management plan
Rewards and recognitions is a part of staffing management plan
To create a rewards and recognition system ask how will you motivate and reward not just
the team but every individual member

Resource histogram
Shows the number of resources used per time period and where there is a spike in the
need for resources

Acquire project team
This occurs during execution process
Halo Effect
Tendency to rate high or low on all factors due to impression of a high or low rating on
some specific factor.
Refers to the tendency to promote someone to become a project manager due to their
technical competence and not project management abilities

Team building Stages and Techniques
Stages of team formation (Tuckman Model)

1. Forming
2. Storming
3. Norming
4. Performing
5. Adjourning
Examples of team building activities

1. Taking classes together
2. Milestone parties
3. Holiday and birthday celebrations
4. Outside of work trips
5. Creating WBS
6. Project planning with everyone involved
7. Community games/sports
Collocation (Project War room)

Arrange all team members of the project in same place so that communication enhances
and impact of conflict decreases
Powers of project manager
1. Formal-Legitimate based on position. Anyone who is a PM will have these powers.

2. Reward-Ability to give rewards (Promotion recommendations, bonus, pay hike etc)
3. Penalty-Ability to punish (Recommend for not getting promoted)
4. Expert- comes from being a technical or PM expert (Either technically good or good
people person)
5. Referent- comes from other person liking your personality (Nice person)
Expert and reward are the best forms of power

Penalty is the worst

Management and leadership styles
There is no one right way or wrong way to manage

Better to use multiple styles of management during the project
1. Directing- Telling what needs to be done

2. Facilitating – Co-ordinate inputs of others
3. Coaching – Instructing others
4. Supporting – Provide assistance to others
5. Autocratic- Manager retains power and decision making authority
6. Consultative-Invite ideas from others
7. Consultative-autocratic- Consult others, but decide by self
8. Consensus-Make decisions based on group agreement
9. Delegating-Teach and let a sub-ordinate work
10. Bureaucratic- emphasize procedures and historical ways
11. Charismatic-create a powerful self image to draw people to you
12. Democratic/participative- Terms dictated by majority in general
13. Laissez-faire – Hands off style, provides little or no direction and gives freedom
14. Analytical- Leadership driven by data, facts and numbers
15. Influencing-Change others thinking by advice or training or by example

Conflict management
Conflict is inevitable because

a) Nature of the projects addressing needs across multiple stakeholders
b) Limited power of project manager
c) Necessity to obtain resources form functional managers
Conflict presents opportunity for improvement
Top reasons for conflict (In decreasing order of importance)

1. Schedules (Most important)
2. Project priorities
3. Resources
4. Technical opinions
5. Administrative procedures
6. Cost
7. Personality (Least important)
Conflict is best resolved by those in the conflict

Conflict Management
1. Confronting- Find out the root cause and address it
2. Compromising-Get to middle path agreement. Compromise sends a message of

tolerance, understanding, and sympathy for both parties leaving integrity and dignity
intact.
3. Withdrawal-Give up. Anyway you will not listen to me, I will do what you tell me
4. Smoothing-Smoothing can be described as the process of playing down differences

that exist between individuals or groups while emphasizing common interests.
5. Collaborating-I will listen to you now, but next time you will have to listen to me
6. Forcing-I am the PM, you have to listen to what I tell you

HR Concepts
CONCEPT DEFINITION
Arbitration Hearing and resolution of a dispute by neutral third party
Perquisites Special rewards to select employees

(perks)
Fringe Standard benefits such as education, insurance, profit sharing
Benefits
Management Theories
Expectancy Employees remaining productive as they are rewarded for

Theory accomplishments, such rewards being expected as a result of work
efforts. This is about setting expectations based on effort and fulfilling
expectations of employees.
Motivation Theory
Mc Gregor’s theory
X Type- People need to be watched every time.
Y Type- People are willing to work without supervision
Every person is of one type (only) and each type can be equally successful.
Maslow Theory
(Theory of Hierarchy)

Motivation Theory
Ouchi’s Theory - Z
Create employee loyalty for life time through job (Japanese theory)
Management and workers need to involve and trust each other
Ouchi, Theory Z focuses on increasing employee loyalty to the company by providing a

job for life with a strong focus on the well-being of the employee, both on and off the job.
According to Ouchi, Theory Z management tends to promote stable employment, high
productivity, and high employee morale and satisfaction.
David Mc Clelland Theory (For Managers)
Managers are motivated by

1. Desire to do good job.
2. Desire to gain authority and influence on others.
3. Desired to be liked and held in popular regard.

Motivation Theory
Contingency Theory
Contingency theory puts forth that the effectiveness of a leader is dependent on the
characteristics of that leader, the situation they find themselves in, and the group in
which they are a part. There is no one ideal leader, so your management style and your
methods to motivate your team should be appropriate to the situation that is at hand.
This is a more situational approach to motivating people.

Motivation Theory
Herzberg’s theory
Hygiene factors – working conditions, salary, personal life, relationships at work, security
status.
Motivating factors- Responsibility, Self-actualization, professional growth, recognition
Poor hygiene factors may destroy motivation but improving them in most circumstances
will not improve motivation

Overview
Monitoring &
Controlling
Pl a n Communications Ma na ge Control
Ma na gement Communications Communications
Communications Management
Ri sk Pl an
Ma na gement
Identify Risks
Moni tor & Control
Qua l itative Risk Ri sks
Ana l ysis
Qua ntitative Risk
a na lysis
Pl a n Risk Responses
Conduct Admi nister

Pl a n Procurements Cl ose Procurements
Procurements Procurements

Communications Management
1. Communications can be informal & formal, written and verbal but it is always
proactive and thorough in a PMP world.
2. An effective manager spends about 90% of his time in communications and roughly
about 50% of that time is spent in communicating with the project team.
3. Project managers need to create status reports, communications management plan
etc. In addition, best project managers ask stakeholders what they need
communicated to them and frequently revisit communications at team meetings to
limit communications problems in a pro-active way.

Communications Management: Working with stakeholders
1. Identify all stakeholders

2. Determine all their requirements
3. Determine their expectations
4. Determine their interests
5. Determine their level of influence
6. Plan how to communicate with them
7. Communicate with them
8. Manage their expectations and influence all throughout the project (Reports)

Communications Management: Power Interest Grid
Can be used to group stakeholders by qualifications like authority level, impact or

influence or requirements

Communications Management: Salience Model
Classification tools such as power/interest grids and salience models can be used
to group stakeholders by qualifications like authority level, impact or influence or
requirements
Power: Is the ability project stakeholders has to influence the outcome of an

organization, deliverables, or a project
Legitimacy: Is the authority, level of involvement project stakeholders have on a project.
Urgency: Is the time expected by project stakeholders for responses to their expectations.
Communications Management: Stakeholder Register
All the information about stakeholders is compiled in the stakeholder register, an

output of the identify stakeholder process. The other major output of stakeholders is a
strategy to manage them. See below an illustration of stakeholder register (Where
multiple team members make the register).
Stakeholder Name Sponsor

Stakeholder Position Project Sponsor
Influence on success (1-5, 5 is highest) 4
Influence on failure (1-5, 5 is highest) 2
Command in organization (1-5, 5 is highest) 4
Quality expectations High
Conservative and risk
Risk Psychology averse
Motivatation towards project Self Initiated

Communications Management: Ways of communicating
1. Active Listening – Receiver takes steps to ensure sender is understood by checking

with speaker if what he/she understood is right.
2. Effective Listening- Listen to words of speaker and the meaning of the words.
3. Feedback (For speaker)– Speaker must monitor verbal and non verbal cues to see
whether the listener fully comprehends the message.
4. Non Verbal – Takes place through body language like posture, facial
expression, hand motion etc
5. Para lingual – It is vocal but not verbal like pitch, volume etc. Non verbal and
paralingual communication is about 65% of communication.
6. Communications blockers – Anything that disrupts the communications channels.
Technical blockers-weak signal, Noisy surroundings. Cultural blockers -
Hostility, Language, Culture etc.
7. Communication blockers could create delays, but would definitely create conflicts.
Communications Management: Methods of communicating
Method Examples When Used

To convey information
Informal Written E-mail, memos etc
about the project
Used for critical and
Contracts, legal documents
Formal Written important documents like
etc
project management plan
For quick information
Informal Verbal Meetings, discussions etc
dissemination
Used for PR events,
Formal Verbal Presentations, lectures etc company announcements,
sales etc
Formality is associated with legality.

Communications Management: Models
Communications models are framed around three aspects

1. Sender
2. Message
3. Receiver
Message is encoded by sender and decoded by receiver. Receiver’s

education, experience, language, culture etc affect the way receiver decodes the
message and called as noise factors.
The different means of communications are called communications technology.

e.g. Fax, Telephone, Web conference etc

Communications Management: Categories of communicating
Category Characteristics Examples

Interactive Two way information flow Open house discussions
Push Information sent in one way Marketing e-mails, SMS etc

Pull Information taken by one side Website content, videos etc

Communications Channels
Communications channels are communicated by the formula

N*(N-1)/2,
Where N = Number of people
You have 10 word documents. You have to merge

them into one document. Can you copy information
from all the 10 documents and paste them into
another one at the same time?
1 2 1-2
1-3
1-4
2-3
3 4 2-4
3-4

Managing stakeholder expectations
Active management of stakeholder expectations makes them feel their concerns and
needs are at least considered even if they are not agreed to.
Type of report Purpose

Status report Where the project stands now regarding performance
measurement baseline
Progress report What has been accomplished
Trend report Plot project results over time
Forecasting report Predict future performance
Variance report Compares actual results to baselines
Earned value report PV, EV, AC etc
Lessons learned Reports on performance can be used as lessons
documentation learned for future projects

Status Report: What has been accomplished till date: Financially
Not about who is doing what activity or their status.

This is about the work done and money spent, variances etc

Progress Report: Where the project stands now in terms of deliverables

Trend Report: Project results over time

Variance Report: Compare actual results (cost, time etc) to baselines

Overview
Monitoring &
Controlling
Di stri bute
Identify Pl a n Information
Report Performance
sta keholders Communications Ma na ge Stakeholder
Expecta tion
Ri sk Pl an
Ma na gement
Identify Risks
Moni tor & Control
Qua l itative Risk Ri sks
Ana l ysis
Qua ntitative Risk
a na lysis
Pl a n Risk Responses
Risk Management
Conduct Admi nister

Pl a n Procurements Cl ose Procurements
Procurements Procurements
Copyri ght: Nucleus Group Procurement Management

Risk Management
The term risk is specific to the following two aspects

1. It is related to an uncertain event
2. It may affect the project both in a good way or bad way
Although risk processes are done in a sequence they are done often during the
course of project, starting in initiation all the way to the end of the project

Risk Management
Through risk management, the project changes from being in control of the
project manager to the project manager being in control of the project.
Process of risk management will help prevent many problems on projects and
make others less likely. This reduction in uncertainty means saving in terms of cost
and time
Uncertainty is the lack of knowledge about an event that reduces confidence in

conclusions drawn from the data
Risk Factors- Looking at risk, one must determine

1. The probability it will occur
2. Range of possible outcomes
3. Expected timing in project life cycle
4. Anticipated frequency of risk events from the source
Risk aversion- Someone who does not want to take risks (For equal choices)
Casino-1: A casino offers 5,000$ to every entrant who walks in.
Casino-2: A coin is flipped, if its heads 10,000$ is given and if tails nothing
Choosing Casino-1, indicates risk aversion, Casino-2 choice indicates risk seeking behavior
“Utility theory” allows one to calculate the riskght:
Copyri taking ability
Nucleus Groupof a person/group using a questionnaire
Plan Risk Management
Plan risk management answers the question of how much time to be spent on risk
management based on the needs of the project. Who will be involved and how
you will go about performing risk management
Outputs: Risk Management plan

1. Methodology
2. Roles and responsibilities
3. Budgeting
4. Timing
5. Risk categories
6. Definitions of probability and Impact
7. Stakeholder tolerances
8. Reporting formats
9. Tracking

Risk Identification Techniques
1. Brainstorming
2. Delphi
3. Interviewing
4. Root cause analysis
5. SWOT (Strengths, Weakness,

Opportunities & Threats)
6. Checklist analysis
7. Assumption analysis
8. Diagramming techniques (Quality

management)
Risk Identification (Relationship, Influence Diagram)
It is better that everyone is involved with risk identification

Identify risks: Storing the risks in a database
Risk register is the place where most risk information is kept. It is updated as the
risk related procedures are carried out

Various ways of risk categorization
Risks can be categorized as
1. External- Regulatory, Government, Market changes etc
2. Internal-Time, cost, poor planning etc
3. Technical-Changes in technology (Landline Vs Mobile)
4. Unforeseeable- Usually less than 10%
Risks generated by
1. Customer
2. Lack of PM Effort
3. Lack of knowledge of project management
4. Suppliers
5. Resistance to change
6. Cultural differences
Source of risks (Counterpart and similar to the above classification)

1. Schedule- Hardware arrived early
2. Cost-extra cost
3. Quality-low quality, incoming QA
4. Scope-Unclear scope
5. Resources-Churn
6. Customer satisfaction-Unhappy customer
Risk classification
Risks can be classified as

1. Business risk-can be positive or negative
2. Pure risk-always a loss (Fire, theft etc)

Qualitative risk analysis
This involves creating a short list of the previously identified risks and is a subjective
technique. To perform this you need
1. Probability of each risk occurring, using a standard scale
2. Impact of each risk occurring using a standard scale
3. It is CRITICAL to give a standard risk rating matrix along with this information. This is
considered a separate and distinct activity
R1
R6
R2 R3
R4
R5

Outputs of perform qualitative risk analysis
1. Risk register updates
2. Risk ranking for the period compared to other projects
3. List of prioritized risks and their probability and impact ratings
4. Risks grouped by categories
5. List of risks requiring additional analysis and response
6. Watch list
7. Trends

Quantitative risk analysis
Involves numerical analysis of the probability and impact. The purpose is to

1. Determine which risk events warrant a response
2. Determine overall project risk
3. Determine the quantified probability of meeting project objectives
4. Identify risks requiring most attention
5. Create realistic cost, schedule or scope targets
Note that quantitative risk analysis is a more objective evaluation but also requires more
time and cost to evaluate
Risk assessment = Quantitative risk analysis
Expected monetary value of a Risk (EMV) = P x I

Exercise
Go from one city to another. What airline to
take and expected monetary value of decision On time 90%
Fare 1150$
Airline A
Late 4,000$
On time 70%
Airline B
Fare 300$
Late 4,000$
Airline A: (10%*4000)+(90%*0)+1150 = 1550$

Airline B: (30%*4000)+(70%*0)+300 = 1500$
Quantitative risk analysis: Output
Risk register updates

1. Prioritized list of quantified risks
2. Amount of contingency time and cost reserves needed
3. Possible realistic and achievable completion dates and project costs with confidence
levels
4. Quantified probability of meeting project objectives
5. Trends in quantitative risk analysis

Reserve Analysis
PMI recommends at least 10%

OR
Based on EMV:
Total of Probability * Risk Cost for all risks
Remember risk can be negative or positive

Plan risk response (Positive or negative risks)
Decrease/Increase the Risk Register Do something to make sure

Probability or impact of risks they happen or they do not
Updated risk
Residual Risks
Register/Watch List
Risk Happens Risk did not Happen
Do not have a
Have a Plan Work around
Plan
Not in risk register
Secondary Risks
Contingency Plan
[New risks]
Fall back plan if

Contingency plan fails Copyri ght: Nucleus Group
Risk response strategies
Risk (Negative) Response Strategy
Eliminate threat by eliminating cause (Use a different technology). e.g.
Avoid Instead of flying plan due to fear or brake failure, use a train service.
These are usually dramatic.
Reduce the probability of impact of a threat by making it a smaller risk
and removing it from the top list (e.g. Build in redundancy etc). e.g. To
Mitigate
reduce chance of brake failure in a flight, incorporate triple brake
system.
Make another party responsible for risk by purchasing insurance, bonds,
Transfer
warranties etc. e.g. Life insurance or fire loss insurance etc.
Risk (Opportunities) Response Strategy

Customer after a contract asks to deliver the project 5% faster and
Exploit willing to pay 50% extra. Decide to take team members from other
projects and assign to this project to ensure that you deliver 5% faster.
Customer after a contract asks to deliver the project 5% faster and
Enhance willing to pay 50% extra. Decide to announce a team bonus of 1% if the
work is done 5% faster
Allocate ownership of the opportunity to a third party that is best able
Share to achieve the opportunity. e.g. Oil field bidding of drilling companies
with refinery companies.
Acceptance is common to both the strategies
Important points to remember in Risk from Exam point of view
1. Document non critical risks in a watch list and revisit them periodically
(What is a watch list?)
1. You can choose a combination of risk response strategies
2. During the execution of project you frequently watch out the list of risks to see if any
has increased in importance
3. The most important item to discuss in team meetings is risk

Notes of Monte carlo simulation
1. Done with a computer

2. Evaluates overall risk of the project
3. Provides probability of completing a project on a specific day with specific cost
4. Probability of any activity being on a critical path
5. Takes into account path convergence
6. Translates uncertainties into impacts to total project
7. Can be used to assess cost and schedule impacts

Actions involved in monitoring and controlling risks
1. Look for occurrence of risk triggers

2. Monitor residual risks
3. Identify new risks and then analyze and plan for them
4. Evaluate the effectiveness of the risk management plan
5. Develop new risk responses
6. Collect and communicate risk status
7. Communicate with stakeholders about risks
8. Determine if assumptions are still valid
9. Ensure proper risk management procedures are followed
10. Update risk management and response plans
11. Create a database of risk data that may be used through the organization

Work involved in monitoring and controlling risks
Workarounds: Recommendations for corrective action on a project may include

workarounds. Whereas contingency responses are developed in advance, workarounds
are unplanned responses to deal with unanticipated risk events
Risk reassessments: Team needs to periodically review risk management plan and risk
register and adjust them as required
Risk Audits: Have a team verify that all risk related procedures like identification, planning
and responses are being done
Reserve analysis: Checking to see how much reserve remains and how much might be
needed
Outputs of monitor and control risks

1. Risk register updates
2. Change requests
3. Project management plan updates
4. Project document updates
5. Organizational process assets updates
Overview
Monitoring &
Controlling
Plan
Distribute Manage Stakeholder
Communications
Information Expectation
Risk Plan
Management
Identify Risks
Monitor & Control
Qualitative Risk Risks
Analysis
Quantitative Risk
analysis
Plan Risk
Responses
Plan Procurement Conduct Administer

Close Procurements
Management Procurements Procurements
Copyri ght: Nucleus Group Procurement Management

Procurement management
Procurement is a formal process for organization to obtain goods and services
Common procurement documents
1. Request for proposal (RFP)- Will trigger a detailed proposal on how work will be
finished, previous projects, a few sample work profiles etc.
2. Invitation for Bid (IFB)- Will trigger a Bid (total price to do the complete work).
3. Request for quotation (RFQ) – Will trigger a quote (price quote item, hour or other unit of
measure- partial details).
Seller selection
Organizations use different means to select sellers and these methods are dictated by law or
internal policies. If there are competing submissions the buyer might ask for presentations
from the sellers to help select a seller.
Procurement management notes
Procurement process does not end when the contract is entered into. Once the
contract is signed, the procurement must be administered and this involves
making sure all the requirements of the contract, even ones that seem
unimportant are met.
Seller can be sometimes internal to an organization but for PMP Exam, assume
seller is an external party. For all PMP questions assume that you are the BUYER.
Procurement related notes

1. Contracts require formality (Formal => Legal)
2. All products and project management requirements for the procurement work should be
specifically stated in the contract
3. If it is not in contract, it can only be done if a formal change to contract is issued
4. If it is in contract, then both parties must agree for it formally change
5. Changes must be submitted and approved in writing
6. Contracts are legally binding and seller has no choice but to perform as agreed in
contract
7. Contracts must help diminish project risk (else, one organization can do everything)
8. Most governments back all contracts Copyrithat fall within
ght: Nucleus Group their jurisdictions
Role of project manager for procurement
There is a procurement manager (Usually a supply chain or legal expert) for

managing contracts, then what is the role of a project manager?
1. First it is the project manager’s project and he is ultimately responsible for it.
2. Secondly project manager is the best person to understand the risks in the
project and hence can help in choosing the best contract.
Project Manager informs Purchasing Manager to

--------------Procure 250 laptops with 3GHz and 300 GB hard disk within 2 months
Scenario-1) Purchasing manager goes on vacation and forgets

Scenario-2) Vendor informs purchasing manager that laptop with 3GHz and 275 GB
hard disk comes with 50% discount

Types of contracting
A procurement organization can be organized in two main ways.
In a centralized contracting environment there is one procurement department

and a procurement manager manages procurements on many projects (Similar to
functional structure).
In a decentralized environment, a procurement manager is assigned to one

project full-time and reports directly to the project manager (Similar to projectized
structure).

Types of contracting – Pros and cons
Type of
organization
There is higher levels of expertise
Attention of a procurement manager
due to functionalized nature, scale
divided across multiple projects
advantage due to bulk ordering
Department will provide with Difficult for the project manage to
Centralized continuous training, support etc get help when needed
Standardized practices help with Project manager not in control of the
efficiency and understanding process
Individuals have a clear career path
There is no “home department” for
Project manager has easier access
the procurement manager after the
to contracting expertise
project
Difficult to maintain high level of
Procurement manager is more
De-centralized contracting expertise within
loyal to the project
company
There may be very little
standardization, high duplication and
Copyri ght: Nucleus Group inefficiencies in the process
Inputs to procurement process
1. Enterprise environmental factors

2. Organizational process assets
3. Procurement manager assigned
4. Scope baseline
5. Risk register
6. Any procurement already in place

on the project
7. Identification of resources not
available within organization
8. Project schedule
9. Initial cost estimates for work to be
procured
10. Cost baseline for the project

Activities of a plan procurement process
1. Performing make or buy analysis

2. Creating a procurement management plan
3. Creating a procurement statement of work
4. Selecting a contract type
5. Determining the source selection criteria
Make or buy analysis (To Decide whether to outsource or do work inside the company)
One of the main reasons to buy (outsource) is to decrease risk to project’s constraints. It is
better to outsource when it will decrease risk to the project’s constraints (cost, time etc).
However, It is better to make inside, even if it reduces risk to constraints, when

1. You have an idle plant or workforce
2. You want to retain control
3. The work involves proprietary information or procedures

Procurement statement of work
The procurement statement of work must be as clear complete and concise as

possible and must describe all the work and activities the seller is required to
complete
Types of procurement statements of work
1. Performance: This type conveys what the final product should be able to
accomplish, rather than how it should be built or what its design characteristics
should be (e.g. I want a racing car that can reach 100miles/hour in 20 seconds).
2. Functional: Conveys the end purpose or result, rather than specific procedure
(e.g. The car must be able to hold two cup holders and a small refrigerator. Not
worried about the location of refrigerator).
3. Design: Conveys what precisely needs to be done, e.g. Building construction
The choice of type procurement statement of work depends on the nature of work
and the type of industry
Performance and functional are typically used for IT (Information Technology), IS

(Information Systems), High-tech, R&D and innovation projects. Design is normally
used in construction and equipmentCopyri
purchasing.
ght: Nucleus Group
Statement of work
Created by the
sponsor/customer and
describes the needs, product
scope and how project fits
their strategic needs

Types of contract
There are three broad categories of contracts and these are

1. Fixed price (FP) – Work, price and time is fixed before the work starts
2. Time and materials (T&M) – Pay based on hours and materials consumed
3. Cost reimbursable (CR) – Pay based on cost incurred and some allowances
The contract type to select will be based on following considerations

1. What is being purchased (Goods or services)
2. The completeness of the scope of work
3. Level of effort and expertise the buyer can devote to managing seller
4. Whether buyer wants to offer the seller incentives
5. The marketplace or economy
6. Industry standards of the type of contract used

Types of contract
1. Fixed Price Incentive Fee

• Profits can be adjusted based on the seller specified performance criteria such as
getting the work done faster, cheaper or better. This can be positive or negative
incentive.
• Contract is 100,000$ every year but for every month completed earlier there is a 5000$
bonus. For every month delayed there is a 5000$ penalty
2. Fixed Price Award Fee
• Buyer pays fixed price plus an award based on performance. Similar to FPIF except that
the award is determined ahead and apportioned based on performance. The award is
always positive.
• Contract is 100,000$ every year but for every month completed earlier there is a 5000$
bonus.
3. Fixed Price Economic Price adjustment
• If there are concerns about future economic conditions for contracts that cover several
periods then the buyer might choose a fixed price contract with economic price
adjustment
• Contract price is 100,000$ each year but it will increase by the annual inflation rate
every January.
Types of contract
4. Purchase Order (PO)

• Simplest type of fixed contract and is a unilateral agreement. They become contracts if
the seller supplies against this agreement
Time and materials

• The buyer pays on a per hour or per item basis and is frequently used for service efforts
in which the level of effort cannot be defined at the time the contract is awarded
• Contract is 100$ per hour plus expenses or materials at cost

Types of contract
Cost Reimbursable
• When exact scope of work is uncertain and therefore costs cannot be estimated
accurately enough to effectively use a fixed price contract we use cost reimbursable.
• This allows the buyer to pay seller allowable incurred costs (based on bills submitted
which are audited) to the extent prescribed in contract based on the type of cost
contract.
1. Cost contract
• Seller receives no fee (e.g. NGO organization)
• Contract = cost
2. Cost plus fee or cost plus percentage of costs

• Buyer to pay all costs plus a percentage or a fee.
• This will prevent sellers from being motivated to control costs.
• Contract = cost + 10% fee
3. Cost plus fixed fee

• Buyer to pay all costs plus a fixed fee
• Better at motivating the seller to control costs to some degree
• Contract = cost + 25,000$
Types of contract
4. Cost plus incentive fee

• Pay actual costs plus a fee based on degree to which objectives are achieved
5. Cost plus award fee

• Buyer pays all costs and a base fee plus an award amount based on performance
• Similar to CPIF contract except the incentive is a potential award rather than potential
award or penalty
Contract Type Priorities (highest-lowest) Buyer perspective

CPFF Cost, Time, Performance
CPAF Cost, Time, Performance
CPIF Time, Performance, Cost
T&M Performance, Time, Cost
FPIF Time, Performance, Cost
FP Performance, Time, Cost

Comparison of different contracts
Contract Type Advantages Disadvantages
If the seller under-prices the work, they
Less work for buyer to manage
may try to make profits on change orders
Seller has incentive to control Seller may not complete the work if they
costs begin to lose money
Fixed Companies have experience Requires more to write procurement
with this type of contract statement of work
Can be more expensive than CR if
Buyer knows total price before
procurement statement of work is
work begins
incomplete and more work is added
Quick to create Profit to seller for every hour billed
Time and Contract duration is brief Seller has no incentive to control costs
Materials Good when you are hiring
Appropriate for only small projects
bodies to augment staff
Allows for simpler statement or
Requires auditing seller’s invoices
work
Cost Less work to define the scope CR requires more work for the buyer to
Reimbursable than for FP manage
Seller has only moderate incentive to
Generally lower cost
Copyrithan FP Group
ght: Nucleus control costs
Types of contract
There are three broad categories of contracts and these are

1. Fixed price (FP) – Work and price is fixed
2. Time and materials (T&M) – Pay based on hours and materials consumed
3. Cost reimbursable (CR) – Pay based on cost incurred and some allowances
The contract type to select will be based on following considerations

1. What is being purchased (Goods or services)
2. The completeness of the scope of work
3. Level of effort and expertise the buyer can devote to managing seller
4. Whether buyer wants to offer the seller incentives
5. The marketplace or economy
6. Industry standards of the type of contract used
Seller
Buyer
Risk
CPCC CPFF CPIF (or T&M) FPI FP

Contract terms
Contract terms to remember

1. Cost- cost of Actual Work (For example, cost of construction by builder)
2. Profit – It is the Fee to be paid (Professional Fee to be paid to do work)
3. Price- Price is cost + Fee (Total money you pay the vendor)
4. Target Price – The price to use for performance measurement
5. Sharing ratio – Describes how cost overruns or cost savings will be shared with
buyer (e.g. 80/20). The first number is what buyer keeps and second number is
what seller keeps
6. Ceiling Price – Highest price buyer will pay
7. Point of total assumption – Only for fixed price incentive fee contracts.
Represents the amount after which seller bears all the loss of a cost overrun.

Exercise
Cost plus incentive fee calculation
Cost is estimated at 210,000$ and the fee at 25,000$. The project is over and the
buyer/seller have agreed that the costs were in fact 200,000$. Because the sellers
costs came in lower than estimated costs the seller shares the savings – 80% to
buyer and 20% to seller. Compute final price and fee
Target cost 210,000

Target Fee 25,000
Target price 235,000
Sharing ratio 80/20
Actual cost 200,000
Final fee 210,000-200,000 = 10,000
10,000 x 20% = 2,000
25,000 + 2,000 = 27,000 fee
Final price Final price 200,000+27,000
=227,000
Additional Exercise -2, Day -4 (Page 284)
Point of total assumption is the cost of contract after which seller bears the COMPLETE
risk of an over-run
@ 1,125,000
Additional over target = 125,000

Extra cost to contractor = 25,000
Money to pay = 1,000,000+100,000 (Fee)+100,000(Extra cost burden) =

1,200,000 [Ceiling price]

Source selection criteria
1. Number of years in business or financial stability (More is better)

2. Understanding of need (If vendor understands it is better)
3. Price of life cycle cost (Lower life cycle cost is good)
4. Technical ability (Higher ability is good)
5. Quality of past performance (Good performance is better)
6. Ability to complete work on time (Would prefer someone who can complete
work on time)
7. Project management ability (Ability to send periodic updates, reports etc is
good)

Type of agreement
Teaming agreement
1. Sellers joining hands (To form Teams or Alliances) to win the contract. e.g. oil
field bidding, government contracts etc.
2. Examples include joint consortiums, joint ventures etc.

Some Procurement Terms and Terminologies
1. Bonds – Payments that must be purchased. e.g. payment bond will protect the buyer from
claims of nonpayment by the seller
2. Force majeure – Situation by the act of god like natural calamities
3. Liquidated damages – Estimated damages for specific defaults estimated in advance
4. Retainage – Money withheld from payment and paid back some time after work is
completed.
5. Material breach – Breach so large that it may not be possible to complete the work under
contract
6. Time is of the essence – Means delivery dates are strictly binding and not sticking to time
will be a material breach
7. Letter of Intent – A letter indicating an intent to sign a contract and to start off preparation
in anticipation of contract. Contract signing may take time as it involves signatures and due
approvals etc (Could be enforceable or not depending on the agreement made in LOI).
8. Stop Order – An order issued to stop the work immediately (Presumably wrong work)
9. Default Letter- Letter indicating that a protocol was not followed and defaulted.
Liquidated damage: If the prototype is not developed in 6 months, contractor X agrees to pay a
penalty of US $ 3.0 million. (Alternate: The prototype has to be developed in 6 months- Here
the damage is not known ahead of time- Has to be determined after a legal battle).
Material breach and Time is of essence helps buyer to get higher compensation in times of
dispute, but also increase the cost of contract
Noncompetitive procurement process
1. Single source: Directly deal with preferred seller without procurement
process. You may have worked with them before.
2. Sole source: There is only one source, e.g. patented product
Conducting procurements
Advertizing
Qualified seller’s list
Bidder conferences
Seller proposal
Weighting system
Independent estimates
Screening system
Objectives of a negotiation
1. Obtain a fair and reasonable price
2. Develop good relationship with seller
Items to negotiate include scope, schedule

Copyri ght: and price
Nucleus Group
More on procurement
Claims administration
A claim is the assertion that the buyer did something that has hurt the seller and
the seller is asking for compensation
Termination
A contract can be terminated before it is completed. Contract usually has
provisions for termination
Closure
A contract can be closed either by
1. Completing the work in contract
2. Terminating the contract
Examples of claims
1. Buyer providing LOI, but not providing a contract
2. Taking the vendor’s IP and supplying to another vendor etc

Professional and Social
Responsibility

Categories in the code of ethics and professional conduct
Professional and social responsibility is broken down into the following categories in the
code of ethics and professional conduct:
1. Responsibility
2. Respect
3. Fairness
4. Honesty
It is unethical to manage a project if you are not trained in project management

It is unethical to provide a project schedule that you do not believe to be accurate
It is unethical to waste company resources because you have not properly planned project
It is unethical to manage a project without charter or WBS

Responsibility
• Make decisions based on the best interest of the company rather than your best interest.
• Only accept assignments that you are qualified to complete. Intimate the stakeholders of
any gaps or stretch objectives. Always fulfill commitments you take up.
• Take ownership of any mistakes or errors and inform the concerned stakeholders at the
earliest possible if such events are discovered.
• Always make decisions based on best interest of society, environment and public safety.
Never ignore a safety problem if you know and deal with them with extreme urgency.
• Protect proprietary/confidential information and respect any IP rights of the company.
• Make it a point to learn and uphold the law, company policies and any relevant
regulations.
• Report any unethical activates to relevant stakeholders at the earliest even if you are not
a part of this like fraud, cheating, bribery, corruption, theft etc. Inform PMI if it relates to
PMI code of conduct and to injured party, if otherwise.
Sample Question-1]
If you discover project is suffering because you have not created a project management
plan. If you tell management about it you may lose your job. What will you do?
a) Tell the management
b) Fix the plan and show it
c) Do not tell
d) Do work as usual Copyri ght: Nucleus Group
Respect
• Have high regard for self and others as well.
• It is good to value and encourage diverse perspectives.
• Learn about other’s norms, customs (education, marriage and social) and respect them.
• Do not use your position or power to benefit personally at their expense.
• Listen and understand other’s point of view even if you do not agree.
• Approach those with whom we have a conflict or disagreement directly and immediately
rather than through intermediaries or at a later time.
• Engage in good faith negotiations and respect the property/rights of others.
• Conduct professionally (even when it is not reciprocated).

Fairness
• Make decisions without any partiality or bias and in a objective manner. Have no
prejudice, favoritism or self-interest.
• Constantly engage in examining if we are impartial and objective in out dealings.
• Look for conflicts of interest and disclose them if found.
• Demonstrate transparency in decision-making process and refrain from accepting any
inappropriate gifts (Based on corporate policy, local customs and ethical standards).
• Provide equal access to information and data to all those who are authorized.
• Ensure equal chances are given to all the qualified candidates.
• Do not discriminate based on race, creed, region, religion, gender, age etc.
• Do not take bribes to do work or use your position for personal gain.
Sample Question-2]
You are responsible for a new construction project. Your Brother in law is bidding for the
project. What should you do?
a) Tell the management about it
b) Follow the process like everybody else with no partiality
c) Ask your BIL to not bid
d) Resign from this project

Honesty
• Act in a truthful manner in all communications and conduct.
• Seek to understand the truth and allow others to present the truth without castigating.
• Provide correct, complete and timely information and data.
• Always make commitments in good faith.
• Do not engage in behavior that deceives others (e.g. misrepresentation, misleading,
withholding information etc).
• Create an environment where others can tell the truth.

Professional and Social Responsibilities
• Ensure individual integrity and professional conduct by adhering to legal, ethical and
social norms.
• Contribute to project management knowledge by building capabilities of colleagues,
sharing lessons learned, researching etc within the appropriate communities.
• Enhance individual competencies by learning, applying professional knowledge to
improve the quality of services and work.
• Interact with team members and other stakeholders in a professional and co-operative
manner and a collaborative project management environment.

Miscellaneous Topics
Global Literacies: Knowledge about the global norms and international patterns. Some one
who is aware and behaves like a global citizen.
Egalitarian Society: A society which favors social equality where there are no classes or
work segregation and there is a equal distribution of power.
Ethnocentrism: Belief in the superiority of one’s own ethnic group.
Communications: 65% is non verbal, 10% is by words.
Monochronic work: Focusing on single objectives at a time (Doing one task at a time).
Polychronic work: Working on multiple tasks at the same time (Multi-tasking).

General comments
If the exam presents an easy way out be careful
PMI expects the professionals to stay engaged and further the profession. Any time PM
has an opportunity to share lessons learned, mentoring, teaching there is a good chance
it is the right answer
You may encounter situation that poses a situation where the project would benefit but
society would suffer. The project manager should avoid all such situations. If the
situation is not untenable then the project manager should disclose the situation and as
a last resort resign the project.

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Project Management Framework: Definition of Project

2. Creates a unique product, service or result (i.e. each project by

Develop a website to advertize our product

Help new customers to use our product

Recording attendance online at office

Copyri ght: Nucleus Group

• Combination of projects mostly unrelated and some related to each

Process • Eternal activity (In theory). Repetitive

Product • A combination of projects and processes

Copyri ght: Nucleus Group

3 Key Reasons to Initiate Projects

1. Taking advantage of business/Market opportunities

2. Legal requirements etc

3. As a result of completion of projects, teams gain valuable experience

Copyri ght: Nucleus Group

The most important document to manage a project.

Project Title and Number

Project Manager and authority level Tec hn ical pu blica tio ns

O bj ec tiv e: Co nd uc t DI VE pr oje ct to ide nt fi y r oo t c au se an d imp lemen t c or re ctio n a n d

Business Case- Why a project is initiated? Ba ck ground:

DI VE st eps Mil es tones D el ive ra ble s

De fi ne Probl em – Id en tify pr ob le m 1 6th may , 2 01 2 Pr o e

Product description/deliverables Inve s tiga te Proc es s –Id en tify

Ac tio n p lan wit h c or re ctio n,

Project objectives so lut ion s to e limin at e r eo ccu rr e nce

Approval requirements Projec t Te am: Kr ish na mu rt hy K, Pr ave e n Ma ni, Sair am P, Nag ar aj

Support Te am: R aja she ka r N , Ch idr u pa

High level risks

A PMO is an organization entity/Department and not a person’s designation or role

A PMO in general would have the following roles

I. Provide policies, methodologies and templates to manage projects

Copyri ght: Nucleus Group

In PMBOK, by default ASSUME we are in a Balanced Matrix set-up

There are three different life cycles

An example: Product life cycle of a Desktop.

Copyri ght: Nucleus Group

Copyri ght: Nucleus Group

Monitor & Control

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A process is a routine work which happens

In PMBOK a set of related processes are combined into a group

Copyri ght: Nucleus Group

Process Groups (5) √

Process Activities (80) √

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Process Groups (5) Knowledge Areas (10)

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Obtain formal approval

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The initiating process group formally starts a new project/phase by officially

Once a project is selected, it is chartered and therefore authorized

Most high level planning is done during the Initiation process

Copyri ght: Nucleus Group

2. If work cannot be planned, it cannot be done

4. Everyone needs to be involved during planning process (This increases the

Copyri ght: Nucleus Group

Focus on managing people, following processes and managing information flow

1. Measuring the performance of project to PM plan and approving change

2. Recommended corrective/preventive actions and defect repair

Copyri ght: Nucleus Group

2. Completion of product scope is not completion of project. Closing involves

3. Celebration and final performance reporting are important elements of closing a

Copyri ght: Nucleus Group

Define Scope Control Scope