CAPM Ebook 2018

The PMI Registered Education Provider logo
is a registered mark of the

Project Management Institute, Inc.
CAPM® Certification Training

Lesson 01: Introduction
This course is based on the Project Management Institute, A Guide to the Project
Management of Body of Knowledge (PMBOK® Guide) – Sixth Edition.
PMP, PMI, and PMBOK are registered marks of the Project Management Institute, Inc.
Objectives
Define PMP® Certification, CAPM® and PMI®
Identify the application requirements for the CAPM® examination
List the guidelines to fill up CAPM® application
Describe CAPM® exam outline and syllabus

What Are PMI and CAPM Certification
The following are important terms and concepts related to your certification:
• PMI: Project Management Institute

• CAPM: Certified Associate in Project Management
• PMP: Project Management Professional
• CCR: Continuing Certification Requirements
• PDU: Professional Development Unit
• PMBOK® Guide: A Guide to the Project Management Body of Knowledge
• PMBOK® Guide is a textbook for the PMP exam
• REP: Registered Education Provider
Figure 3-2. The PMI Talent Triangle®
• PMI is an organization; CAPM is a credential

• PMI conducts and supervises the PMP examinations
• Your CAPM credential is valid for 5 years after which you must retake the exam
• 23 PDUs are required every five years to maintain your CAPM certification
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017. Page 57
Application Requirements for CAPM Certification Exam
Category College/University PM Training Hours Leading and

Education Directing Project Tasks
One Secondary Diploma (high school N/A 1,500 hours

diploma, associate’s degree or the
Two global equivalent) 23 Contact Hours N/A
• Application can be submitted online at www.pmi.org

• PMI membership is USD $129 to join (plus USD $10 application fee)
• Renewal fee is USD $129
• Exam costs are $300 for non-members and $225 for members.
• Once the exam fee is paid, PMI sends an Authorization Letter to take the exam at an authorized testing center
• Examination must be taken within a year of receiving the Authorization Letter
• Note: Some applications are randomly selected for "audit"
• For more details, refer to the CAPM handbook on www.pmi.org
Guidelines to Complete the CAPM Application
Here are a few guidelines that will help you fill up your application:
• Become a PMI member before submitting the PMP application
• Enter your name and contact details accurately
• In the "project experience" field, enter just enough information to meet the eligibility criteria and reference
PMI terms
• State the work done in brief — focus specifically on the work that you have done
• Contact all the "Primary Contacts" mentioned in your application before submitting it, and make sure they
will be prepared to validate the experience if required during the audit
• If you are not sure, ask an existing PMP certified professional to review it before submitting
If your application gets picked for audit:

• Follow instructions received on email, collect evidence, and submit
About the CAPM Exam
The following are the exam details:
• Total duration of the exam is 3 hours.
• Total number of questions: 150. Out of these, 15 questions are considered pre-test questions used for
future tests. Only 135 questions are scored.
• All questions are "multiple choice questions" with only one correct answer.
• You get 1 point for every right answer. There is no penalty for wrong answers.
• PMI grades students on each of the five process groups and assigns a grading of "Below Target,"
“Target," “Above Target” and “Needs Improvement" in each of the five process groups.
• The result (pass or fail) is determined by a combination of these grades. How many grades or number
of points one has to score to pass the PMP certification exam is not made public by PMI.
!
For more details, please refer to the “CAPM Examination Content Outline” on PMI website.
CAPM Exam Content Outline
Topic Name Percentage of Questions
Introduction to Project Management 6
Project Environment 6
Role of the Project Manager 7
Project Integration Management 9
Project Scope Management 9
Project Schedule Management 9
Project Cost Management 8
Project Quality Management 7
Project Resource Management 8
Project Communication Management 10
Project Risk Management 8
Project Procurement Management 4
Project Stakeholder Management 9

CAPM Exam Syllabus
There are five process groups, ten knowledge areas, and forty-nine processes in the new PMBOK® Guide – Sixth Edition.
The knowledge areas are:

The process groups are:
• Project Integration Management
• Initiating
• Project Scope Management
• Planning
• Project Schedule Management
• Executing
• Project Cost Management
• Monitoring and Controlling
• Project Quality Management
• Closing
• Project Resource Management
• Project Communications Management
• Project Risk Management
• Project Procurement Management
• Project Stakeholder Management
There are 49 project management processes. For instance, "Develop Schedule," one of the processes, is a part of the
"Planning" process group and "Project Schedule Management" knowledge area.
What’s New in PMBOK® Guide – Sixth Edition?
Three new processes have been added to the PMBOK® Guide – Sixth Edition:
• Manage Project Knowledge

• Control Resources
• Implement Risk Responses
One process has been removed:
• Close Procurements
About This Tutorial
There are a total of 14 lessons in the CAPM certification course.
Introduction and Overview 1
9 Project Quality Management

Introduction to Project Management 2
10 Project Resource Management

Project Environment 3
11 Project Communications Management

Role of the Project Manager 4
12 Project Risk Management

Project Integration Management 5
13 Project Procurement Management

Project Scope Management 6
14 Project Stakeholder Management

Project Schedule Management 7
Project Cost Management 8

Key Takeaways
PMI is an organization; CAPM is a credential
PMI conducts and supervises the CAPM examinations
Your CAPM credential is valid for 5 years after which you must retake
the exam
The exam duration of CAPM is 3 hours.
There are 150 questions on the exam. 15 questions are considered

pre-test questions used for future tests. Only 135 questions are
scored.
The Exam is based on the Project Management Body of Knowledge

(PMBOK® Guide) Sixth Edition

Lesson 02: Introduction to Project Management
Objectives
Define project and project management
Describe how project management benefits project delivery
Explain the five project management process groups and the

processes within each group
Distinguish between Portfolio, Program, Projects and operational

management
Differentiate between project life cycle and product life cycle
Recognize the importance of tailoring for different projects

What Is a Project?
Project Management Institute Definition
• Project Management Institute (PMI): A project is a temporary endeavor undertaken to create a unique product,
service, or result.
• Projects are:
o Performed by people
o Constrained by limited resources
o Are done once and finished
o Planned, executed, and controlled
o Temporary in nature
• Projects and operations differ primarily in that operations are ongoing and repetitive, while projects are
temporary and unique endeavors.
• Projects can contain repetitive elements, but the elements do not change the unique characteristics of the
project.
• Projects end when they either meet their objectives or are terminated because they cannot meet their
objectives.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Page 4
What Is a Project: Examples
• Developing a new charger for cell phones

• Expanding the service offering at a consulting firm
• Merging two organizations
• Implementing a new accounting system and the corresponding process changes
• Renovating corporate office space
• Developing research around a particular political issue
• Performing a study on the environmental impact of a new bridge in a rural area
• Building a new parking garage
• Creating a new watch for children to be on time to class
Each of these is a temporary endeavor undertaken to create a unique product, service, or result.
Project Characteristics
Projects are performed once and done

• Definite beginning and end
• Projects can have varied durations ranging from very short (<1 month) to very long (>5 years)
• Projects are completed when:
o The defined objectives are met
o The goals/objectives cannot be met within budget, time, with the available resources, or chosen
technology
o Funding is exhausted
o The need to perform the project has changed or been eliminated (competition, regulation, legal,
compliance)
o Legal or contractual issues result in project closure
Project Drivers
Why do we do projects? What drives the need for projects?
Address increasingly complex

Projects drive change Enable business value business and technical
challenges
• Transforming business from • New market opportunities • Technology changes

one state to another • Response to competition • Global markets
• Strategic shifts • Global marketplace • Legal and regulatory issues
• Organizational growth • Decreasing profit margins • Other environmental factors
• Mergers and acquisition
Definition of Project Management
PMI® Definition:
Project Management is the application of knowledge, skills, tools, and techniques to project activities to meet
project requirements.
• Accomplished through the appropriate application and integration of the project management processes
and knowledge areas
• Enables organizations to execute projects effectively and efficiently
Common Definition:
Project management is the art of creating the illusion that any outcome is the result of a series of
predetermined, deliberate acts when, in fact, it was dumb luck.
Definition of Project Management (Contd.)
Project Management is formalized approach to manage a unique product, service or result.
Management methodology defined by Project Management Institute
Follows Spans industries Process applies across Tailored to meet specific

• 5 Process Groups • Standard industries project and
documentation • Oil and Gas organizational needs.
• 10 Knowledge Areas
• 49 Processes • Standard process and • Petrochemical
approaches • Construction
• Information Technology
• Software Development
• Telecom
Value of Project Management
• Project Management contributes to organizational success

• Project is completed:
o Within the allotted time
o Within the budgeted cost
o At the proper performance or specification level
o With acceptance by the customer, sponsor, or user
o With minimally agreed upon scope changes
o Without disturbing the main work flow of the organization
o Without changing the corporate culture
• Unique efforts require innovative thinking and advanced planning
• While similar efforts may have taken place in the past, situational, environmental, legal, regulatory, and
technical changes require a unique approach
The Role of a Project Manager
Project manager has the single most important position on a project and has the overall responsibility for its
success. This position comes with tremendous responsibility, accountability, ownership, and authority.
A project manager:
• Has full responsibility and accountability for the project
• Applies lessons learned from recent projects
• Defines project roles and responsibilities
• Leads the project planning activities
• Performs project tracking and communicates project status
• Adopts project management best practices
• Manages to project priorities
• Performs risk and issue management
• Drives decision making
• Promotes client involvement
• Encourages and supports escalations
• Enforces effective change control
• Mentors project members
The Role of a Project Manager (Contd.)
PMP v6 emphasizes Agile and Adaptive practices and minimizes the role of the PM as a
controller. The PM is responsible for monitoring and managing, particularly around Risks,
Stakeholders, and Communications.
Project Management Process
Project management processes demonstrate the project life cycle. There are 5 Process Groups within the
PMBOK® Guide. Each contains processes that support the goals of the process groups to successfully plan,
execute, and manage a well-run project.
• I Initiating
• P Planning
• E Executing
• C Monitoring & Controlling
• C Closing
Project Management Process
Process Groups
Monitoring and
Initiating Process Planning Process Executing Closing Process
Controlling
Group Group Process Group Group
Process Group
• Establishes the • Establishes the • Integrates and • Regularly • Formalizes
vision of what the total scope of the coordinates monitoring and acceptance of the
project will project. people and other measuring product, service or
accomplish and • Defines and resources to carry progress in order result, and brings
defines and refines objectives, out the project to identify the project or a
authorizes the and plans the plan and deliver variances from the project phase to
project or a project course of action the agreed to plan so an orderly end.
phase. required to attain scope of the appropriate
the objectives and project. corrective actions
scope for which can be taken when
the project was necessary.
undertaken.
Definition of a Process
A process is a set of activities designed to accomplish a specific objective. It takes defined inputs and turns them
into defined outputs. A process may include roles, responsibilities, tools, and management controls required to
deliver the outputs.
Project Flow
The Project life cycle flow shows the order of events

that occur during a project’s duration.
During the project, data is collected and analyzed to

assist in project decision making.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 27
Project Flow: Key Terms
The following are the key PMI® terms related to project data and information.
Work Performance Data

• The raw observations and measurements identified during project activities.
Work Performance Information
• Data collected from various controlling processes analyzed in context.
Work Performance Reports
• The physical or electronic representation of work performance information such as status

reports, electronic dashboards, and recommendations.
Project Management Processes
Project Management Institute provides formalized project management process:
A Guide to Project Management Body of Knowledge (PMBOK® Guide) consists of 5 process and 10 knowledge
areas.
• Planning is a priority as:
• Plans permeate every activity
• Plans can be executed when developed in advance
• Planning ensures that process is well thought out
• Planning makes sure that project participants know their roles and responsibilities
• Eliminates confusion, rework, redundancy and conflict
• Ensures that “greater good” drives project decisions
• Plans are done at the level of detail sufficient to determine strategy, approach, and potential risks
• Planning establishes how quality and success are measured – “When are we done”
• Planning provides strategies for handling risks when realized
Project Process
Project Phases: A series of phases that a project

passes through from its start to its completion.
Phase Gate: A review at the end of a phase in

which a decision is made to continue to the next
phase.
Process Group: A logical grouping of project

management inputs, tools and techniques, and
outputs.
Knowledge Area: An identified area of project

management defined by its knowledge
requirements and described in terms of its processes
and practices.
Process Group Interactions
Process Groups have overlapping activities that occur throughout the project life cycle.
The output of one process acts as an input to another process or a deliverable of the project.
Figure 1-5. Example of Process Groups Interactions Within a

Project or Phase
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, Page 555
Process Group Interactions
Sequential Projects
Sequential project process runs through the life cycle multiple times. Each closing phase is a phase gate to
the next iteration.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, Figure 2-11, page 43
Project Life Cycles
The phases of a life cycle represent discrete units of work to be completed on the project.
There are various classifications of project life cycles.
Sequential and Overlapping Phases Predictive Life Cycles (or Plan-Driven)
• In sequential phases, the subsequent phase • Scope, cost, and time are determined in advance
starts only after the previous phase has been or as early as possible.
• The project is executed in a series of sequential or
completed.
overlapping phases.
• In overlapping phases, two or more phases may
• These are suitable for large projects where most
run in parallel for some time.
requirements are known at the beginning of the
project.
• Each phase focuses on different activities and may
require different skill sets.
Project Life Cycles (Contd.)
The phases of a life cycle represent discrete units of work to be completed on the project.
There are various classifications of project life cycles.
Iterative and Incremental Life Cycles Adaptive (or Agile) Life Cycles
• The high-level objective may be defined up- • These are also incremental and iterative, but the
front, but the details are defined in each iterations are very rapid (2 to 4 weeks).
iteration. • They are generally preferred when dealing with a
• Product is developed through a series of such rapidly changing environment.
cycles.
• In iterative and incremental life cycles, project
phases intentionally repeat themselves.
Agile Mindset
• The PMBOK® Guide – Sixth Edition places a much higher emphasis on Agile project
management techniques.
• Agile techniques apply best to projects involving high degrees of new design,
problem solving and not-done-before work.
• These projects have high degrees of uncertainty and require more collaboration to
solve problems and create solutions.
• Examples of roles involved in high uncertainty work include engineers, product

designers, doctors, and lawyers. These projects have high rates of change, complexity
and risk. This makes it difficult to define the bulk of requirements upfront and control
changes through a change request process.
• Agile techniques emphasize exploring feasibility in short cycles, often called

iterations or sprints, and quick adaption based on evaluation and feedback.
Project Framework
PMP Exam Tip
The PMP® Exam is not just on the framework, but on the application of the knowledge contained in the
framework.
• Scenario questions describe a situation that can be answered knowing the next process step
• Framework questions are based on current and next steps
• Input/output questions ask for the details around a process
Detailed coverage of each individual process will follow in this course, segmented by the ten Knowledge
Areas.
Project Management Process Map
Project Project Project Project
Project Scope Project Schedule Project Cost Project Quality Project Resource Project Risk
Knowledge Areas Integration Communications Procurement Stakeholder
Management Management Management Management Management Management
Management Management Management Management
Initiating 4.1 Develop 13.1 Identify

Project Charter Stakeholders
Planning 4.2 Develop 5.1 Plan Scope 5.2 6.1 Plan Schedule 7.1 Plan Cost 8.1 Plan Quality 9.1 Plan Resource 10.1 Plan 11.1 Plan Risk 12.1 Plan 13.2 Plan
Project Collect Management Management Management Management Communications Management Procurement Stakeholder
Management Requirements 5.3 6.2 Define 7.2 Estimate 9.2 Estimate Management 11.2 Identify Risks Management Engagement
Plan Define Scope Activities Costs Activity Resources 11.3 Perform
5.4 Create WBS 6.3 Sequence 7.3 Determine Qualitative Risk
Activities Budget Analysis
6.4 Estimate 11.4 Perform
Activity Durations Quantitative Risk
6.5 Develop Analysis
Schedule 11.5 Plan Risk
Response
Project
Management Executing 4.3 Direct and 8.2 Manage 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Process Groups Manage Project Quality Resources Communications Risk Response Procurements Stakeholder
Work 4.4 9.4 Develop Team Engagement
Manage Project 9.5 Manage Team
Knowledge
Monitoring and 4.5 Monitor and 5.5 Validate Scope 6.6 Control 7.4 Control Costs 8.3 Control Quality 9.6 Control 10.3 Monitor 11.7 Monitor Risks 12.3 Control 13.4 Monitor
Controlling Control Project 5.6 Control Scope Schedule Resource Communications Procurements Stakeholder
Work 4.6 Engagements
Perform
Integrated
Change Control
Closing 4.7 Close Project
or Phase
Study the table to identify processes under project management and the knowledge area they belong to.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Page 25.
PMI® Numbers: the “10,” the “5,” and the “49”
10

5
Response
Project
Knowledge
49
Perform
Integrated
Change Control
or Phase
Only Integration Is in All 5 Process Groups


Response
Project
Knowledge
Perform
Integrated
Change Control
or Phase
2 Processes in Initiating Process Groups


Response
Project
Knowledge
Perform
Integrated
Change Control
or Phase
PMI’s Process Framework
Inputs, Outputs, and Tools
• All project management work can be described by one of the 49 processes.

• A process is defined by inputs, tools and techniques, and outputs.
• Every exam question will tie back to a process, knowledge area, or process group or to Professional and
Social Responsibility.
A process is characterized by three elements:
Inputs Process Outputs
Tools
To better structure ITTOs, the PMBOK® Guide structures them into groupings such as Data Gathering,
Interpersonal and Team Skills, Data Analysis, and so on.
Common Inputs
Inputs and Outputs have some similarities
Enterprise Environmental Factors
• Anything that affects your project—examples include the culture, the organization, the PM’s power, risk
tolerance, and the market.
• Used heavily in Initiating, Planning, and Monitoring & Controlling process groups (27 occurrences)
Organizational Process Assets
• Anything that helps projects and planning—examples include previous plans, documents,
analytical data, policies, and systems.
• Used heavily in all process groups (37 out of 49 occurrences)
Project Management Plan
• Primary project document that directs execution, control, and closure—Discussed in the next
segment.
• Used in all Executing, Monitoring and Controlling, and Closing process groups (19 occurrences)
Work Performance
• The raw observations and measurements identified during activities performed to carry out the project work.
• Used in Monitoring and Controlling process group (7 occurrences)
Project Terms
Terms you should know…
• Process • Enterprise Environmental Factors

• Input • Project Management Plan
• Output • Process Group
• Tools / Techniques • Initiating
• Knowledge Area • Planning
• Expert Judgment • Executing
• Change Requests • Monitoring & Controlling
• Organizational Process Assets • Closing
• Work Performance Information
Reading a Process Diagram
Inputs from the same

Knowledge Area
Inputs from other
Knowledge Areas
Process Group
color scheme
Initiating Process
Output to Group
other
Knowledge Planning Process
Areas Group
Output to the Executing Process
same Knowledge Group
Area Monitoring and
Controlling Process
Group
Closing Process
Group
Legend
Tools and Techniques
Initiating Process Group
Initiating Process Group defines a new project or phase by establishing its vision and outcomes.
The project is officially authorized when the project charter is approved by the sponsor.
Inputs Actions taken

• Perform project assessment with key stakeholders using
available and historical data to see the feasibility of new
• Project statement of work products or services, considering assumptions and
constraints.
• Agreements • Identify key deliverables to achieve the project goals.
• Perform stakeholder analysis to align expectations and gain
• Business case
support for the project.
• Enterprise environmental factors • Identify high-level risks using current and past data to
propose implementation strategy.
• Organizational process assets • Participate in project charter development to ensure
• Procurement documents stakeholders’ agreement.
• Obtain project charter approval to gain authority and
commitment.
• Perform benefit analysis to align organizational strategy
and business value
• Facilitate stakeholder communication about the elements
of project charter
The inputs and activities of initiating process group are important from the exam perspective.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017 Page 561
Project Initiation
Influence vs. Cost
The ability of the stakeholders to influence the final

characteristics of the project product(s) and final
cost of the project is highest at the start, and
progressively lowers as the project continues.
A key contributor to this phenomenon is the fact

that the cost of changes and error correction
generally increases as the project continues.
Planning Process Group
Planning Process Group establishes the total scope of effort, objectives, and course of action required to
attain the objectives.
• Project charter • Refine requirements and convert them into a scope

statement and work breakdown structure
• Requirements given by the customer • Get stakeholder approval and buy-in
• Stakeholder register • Develop the baseline scope, cost, and schedule
• Select project team and determine its roles and
• Stakeholder management strategy responsibilities
• Organizational process assets • Determine project’s quality standards and plan
• Prepare a framework for risk management,
• Enterprise environmental factors identification, analysis, and response planning
• Teaming agreements • Determine what needs to be purchased
• Determine how to execute and control the project
• Resource calendars • Document the project management plan
• Handle updates on the plan arising out of change
requests
Project Planning
Project planning serves six primary functions:
• Translating needs into manageable tasks
• Defining required resources
• Organizing and coordinating the Project Team work
• Identifying and evaluating potential risks
• Establishing processes, practices, and procedures for project execution
• Defining the measure(s) of project success
Repeating the initiation processes at the start of each project phase helps keep the project focused on the
need for which it was undertaken. This provides a decision gate at each project phase to help ensure the
project is halted if the need no longer exists or if the project is not likely to satisfy the need.
Executing Process Group
Executing Process Group completes the work defined in the project management plan to satisfy the project
specifications.
• Project management plan • Manage stakeholder engagements

• Quality metrics • Finalize procurement arrangements and contracts
• Change log • Organize team building activities and training for
• Enterprise environmental factors the team members
• Organizational process assets • Implement quality assurance activities
• Seller proposals • Implement approved changes, corrective actions,
preventive actions, and defect repair
• Approved change requests
• Implement the approved actions and maximize the
• Quality control measurements
opportunity
• Make-or-buy decisions
• Produce project reports
• Source selection criteria
• Maintain stakeholder relationships
• Work performance report
• Work performance information
Monitoring and Controlling Process Group
Monitoring and Controlling Process Group tracks, reviews, and regulates the progress and performance of
the project; identifies and initiates the changes to the plan when required.
• Measure project performance against the baseline

• Deliverables
• Determine variances and take appropriate action
• Work performance data • Recommend changes, corrective, and preventive
action
• Change requests
• Facilitate conflict resolution
• Organizational process assets • Ensure that risk management activities are per the
risk management plan and the risk responses
• Project management plan and
implemented
documents • Review the issue log
• Issue resolution
• Selected sellers
• Enable continuous improvement throughout the
project
• Monitor sellers
Closing Process Group
Closing Process Group finalizes the activities across all Project Management Process Groups to formally
complete the project, phase, or contractual obligations.
• Project plan and documents • Confirm that all project requirements are met
• Accepted project deliverables • Obtain formal signoff from customer
• Procurement documentation • Hand over project deliverables to operations team
• Organizational process assets • Make payment to all parties and update cost
records
• Enterprise environmental factors
• Complete contract closure
• Update lessons learned database
• Archive project documents
• Measure customer satisfaction
Portfolios, Programs, Projects
Portfolios, Programs, and Projects operate together to deliver benefits to the business
Program management is the centralized, coordinated management of a program to

achieve the program’s strategic objectives and benefits. It involves aligning multiple
projects to achieve the program goals and allows for optimized or integrated cost,
schedule, and effort.
Projects in a program have a common deliverable or capability. Projects with a loose

association are called a portfolio of projects.
A portfolio may consist of other portfolios, projects, and programs. The components
may or may not be interdependent.
Program Management
The definition of *Program Management is as follows:
The application of knowledge, skills, tools, and techniques to a program to meet the program
requirements and in order to obtain benefits and control not available by managing projects individually.
A program is defined as a group of related projects, subprograms, and program activities managed in a
coordinated way to obtain benefits not available from managing them individually.
*Definition taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management
Institute, Inc., 2017. Page 14
Features of Program Management
• For a group of projects to be classified as a program, there must be some value added in managing them
together as a program.
• A project need not belong to a program; a program will always have projects.
• A program is designed to deliver some strategic benefits to the organization; the benefits could be tangible
(for example, growing the operating margin) or intangible (for example, improving the morale of the team).
• A project manager focuses on fulfilling the requirements of a project, whereas a program manager focuses
on delivery of benefits to the organization.
Portfolio
The definition of *Portfolio is as follows:
A collection of projects, programs, sub-portfolios, and operations managed as a group to achieve strategic
objectives.[5]
• Projects and programs of a portfolio may not be necessarily interdependent or directly related.
• A portfolio can be based on the business objectives.
“Japanese Projects” can be a portfolio where an IT company puts all its projects from Japan to give more focus
and attention to its Japanese projects, and grow its Japanese business. Similar projects can be managed as a
program within this portfolio; all banking projects will be managed as a “banking program.”
*Definition taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project
Management Institute, Inc., 2017. Page 15
Portfolio Management
The definition of *Portfolio Management is as follows:
Portfolio management refers to the centralized management of one or more portfolios to achieve strategic
objectives.[6]
Portfolio management includes identifying, prioritizing, authorizing, managing, and controlling projects,
programs, and other related work to achieve strategic business objectives.
Relationship between Portfolios, Programs, and Projects
Represents a Portfolio
portion of an
organization’s
overall strategy Sub-portfolios Programs Projects
Strategic goals are

cascaded down to
lower level Programs Projects Sub-programs Projects Other work
components
A portfolio may
contain programs,
projects, and also Projects Other work
Projects Other work
other work
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Fig. 1-3, Page 12.
Quiz
1 Which of the following is not a characteristic of a project?
Repeats every week
Temporary
Definite beginning and end
Interrelated activities
Quiz
1 Which of the following is not a characteristic of a project?
Repeats every week
Temporary
The correct answer is: A
Characteristic of a project is based on the project definition. Except for choice a, everything else is part
of the project definition itself.
Quiz
2 Identify the least important stakeholder from the given options.
The project manager who is responsible for building the project
A project team member who will work on the project
Customer who will use the end product or service
Competitor whose organization will be affected by the new product release

Quiz
2 Identify the least important stakeholder from the given options.
The project manager who is responsible for building the project
A project team member who will work on the project
Customer who will use the end product or service
Competitor whose organization will be affected by the new product release
The correct answer is: D

Stakeholders are persons or organizations that are actively involved in the project or who may be positively or
negatively affected by the performance or completion of the project. Competitor is the least important
stakeholder.
Quiz
3 What is not included in the definition of a process?
It responds to a trigger.
It requires an input.
It produces an output of value.
It is timely.
Quiz
3 What is not included in the definition of a process?
It responds to a trigger.
It requires an input.
It produces an output of value.
It is timely.

Processes require inputs and produce outputs and respond to triggers, however, a process does not need to be
timely and can take any length of time that is appropriate.
Quiz
4 What does ITTO stand for?
Information, Tools, Techniques, Outputs
Inputs, Timing, Tasks, Outputs
Inputs, Tools, Techniques, Outputs
Information, Tools, Tasks, Outcomes

Quiz
4 What does ITTO stand for?
Information, Tools, Techniques, Outputs
Inputs, Timing, Tasks, Outputs
Inputs, Tools, Techniques, Outputs
Information, Tools, Tasks, Outcomes
The correct answer is: C

ITTO stands for Inputs, Tools, Techniques and Outputs.
Quiz
5 A project manager is validating the scope. Which Process Group is the project manager working in?
Planning
Monitoring and Controlling
Initiating
Closing
Quiz
5 A project manager is validating the scope. Which Process Group is the project manager working in?
Planning
Initiating
Closing
The correct answer is: B
Monitoring and Controlling (see PMBOK® Guide section 3.6). During project closure the project
manager reviews the acceptance documentation from scope validation to ensure that all project
requirements are completed.
Quiz
6 Which of the following is an output of the Initiating Process Group?
Project charter
Organizational process assets
Enterprise environmental factors
Procurement documents
Quiz
6 Which of the following is an output of the Initiating Process Group?
Project charter
Enterprise environmental factors
Procurement documents
Project charter is the output of the Initiating Process Group. All other options are inputs to the
Initiating Process Group.
Quiz
7 Who is in control of the project during the Planning Processes?
Project manager
Functional manager
Team members
Stakeholders
Quiz
7 Who is in control of the project during the Planning Processes?
Project manager
Functional manager
Team members
Stakeholders
The project manager is in control of the project throughout the project life cycle.
Quiz
8 The high level project schedule constraints have been determined. Which Process Group is the
project in?
Planning
Closing
Initiating
Quiz
8 The high level project schedule constraints have been determined. Which Process Group is the
project in?
Planning
Closing
Initiating
The high level constraints of schedule and budget are determined during the Initiating Process
Group. The detailed planning is done during the Planning Process Group.
Quiz
9 Which of the following is not true about project life cycle?
Cost of changes increases as the project approaches completion
Stakeholder influences are greatest towards the end of the project
Risk and uncertainty are greatest at the start of the project
Cost and staffing levels are low at the start, peak as the work is carried out, and drop rapidly as the
project draws to a close
Quiz
9 Which of the following is not true about project life cycle?
Cost of changes increases as the project approaches completion
Stakeholder influences are greatest towards the end of the project
Risk and uncertainty are greatest at the start of the project
Cost and staffing levels are low at the start, peak as the work is carried out, and drop rapidly as the
project draws to a close
Stakeholder influences are greatest towards the beginning of the project.

Quiz
10 Which of the following Process Groups should be included in all the projects?
Initiating, Planning, Executing, Monitoring and Controlling, Closing
Planning, Executing, Monitoring and Controlling
Initiating, Planning, and Executing

Quiz
10 Which of the following Process Groups should be included in all the projects?
Initiating, Planning, Executing, Monitoring and Controlling, Closing
Planning, Executing, Monitoring and Controlling
Initiating, Planning, and Executing
In every project, all five Process Groups must be included but the level of attention given to
each Process Group will be governed by the project manager depending on the project size and
complexity.
Quiz
11 How many Process Groups, Knowledge Areas, and Processes are covered in the PMBOK® Guide?
5, 10, 47
5, 10, 49
The PMBOK® Guide is flexible and does not have a specific number of groups, knowledge areas, or processes.
4, 9, 48
Quiz
11 How many Process Groups, Knowledge Areas, and Processes are covered in the PMBOK® Guide?
5, 10, 47
5, 10, 49
The PMBOK® Guide is flexible and does not have a specific number of groups, knowledge areas, or
processes.
4, 9, 48
The PMBOK® Guide v6 now has 49 processes, which reflects addition of three new processes
(Manage Project Knowledge, Control Resources, Implement Risk Responses) and removal of one
process (Close Procurements).
Quiz
12 In which Process Group is the majority of a project’s costs incurred?
Initiating
Planning
Execution
Closure
Quiz
12 In which Process Group is the majority of a project’s costs incurred?
Initiating
Planning
Execution
Closure

Execution is where the project teams deliver the work specified in the Initiation phase and
planned in the Planning phase. Execution is when the project resources are onboarded and the
majority of the project costs are incurred.
Key Takeaways
Project management is the application of knowledge, skills, and
tools and techniques applied to project activities to meet the
project requirements.
Project manager has to integrate various project aspects, like the

people, stakeholders, risks, communication, and procurements
with the project constraints (time, scope, cost, and quality).
Projects differ from operations in that they are temporary and not
repetitive in nature.
Programs encapsulate multiple projects to achieve objectives not

possible by managing projects individually.
Portfolios are strategically aligned efforts combining programs,

projects, and operational efforts in the pursuit of organizational
objectives.
Key Takeaways
Project lifecycle follows 5 process groups: Initiating, Planning,

Executing, Monitoring and Controlling, and Closing.
Project lifecycle can be iterative in nature going through the 5

process groups multiple times.
PMI provides 10 Knowledge Areas, 5 Process Groups, and 49

processes.

Lesson 03: Project Environment
Objectives
Identify the factors and assets that may impact the outcome of a
project
Describe different organization structures
Recognize the roles of project management office
Describe stakeholders and their value to project efforts
Distinguish between Portfolio, Program, and Projects

Why Do Projects Fail?
Research has identified the following top reasons for project failures.
1. Requirements are ambiguous, misunderstood, or incorrect

2. Controlling cost and schedule
3. Scope creep
4. Sponsor not actively involved in the project strategy and direction
5. Project plan is non-existent, out of date, incomplete, or poorly constructed
6. Frequent changes of assigned PM
7. Project Teams (external and in-house resources) whose responsibilities and relationships are not clearly
defined in writing
8. No clear definition of the benefits and the deliverables that will produce them
9. Poor or no change control
10. Inappropriate or insufficient skills
Enabling Project Success
• Projects succeed based on a number of factors and the PMI has developed the Project Management Body of
Knowledge (PMBOK® Guide) to provide guidance on effective project management practices that enable
project success.
• In addition to the project management processes, the organizational structure of the company will affect
project success.
• To ensure that projects are supported, organization’s can establish a Project Management Office (PMO). The
PMO provides support to the project managers and coordinates the delivery of Portfolios, Programs and
Projects.
Organization Structure
The different organization structures, based on the level of authority vested in the project manager, are as
follows:
Functional Organization Projectized Organization

An organizational structure in which staff is grouped by The organization’s resources mostly work on projects
areas of specialization and the project manager has
limited authority to assign work and apply resources (e.g., The project manager has primary control over the
marketing, accounting, engineering, etc.) resources
Each employee reports to a functional manager
Matrix Organization
An organizational structure in which the project manager shares responsibility
with the functional managers for assigning priorities and for directing the work
of persons assigned to the project
The resources report into the functions, but may also work on projects. There
may be weak matrix, strong matrix, and balanced matrix organizations
depending on the level of authority granted to project managers.
The term ‘tight matrix’ refers to a ‘co-located’ team, that is, a team that has been placed in the same
location in order to enhance performance.
Functional Organization
Characteristics of a functional organization are as follows:
• Resources are grouped by functions or

departments. Executive Level
• Functions have definite roles and are headed by a
manager.
Function Function Function Function
• All the resources report directly to their functional Head Head Head Head
management.
• Project manager’s role is not explicitly defined. Project Project Project
Resource
Resources from within the function play the role of Resource Resource Resource
project manager.
• Functional organizations provide an opportunity Project
Resource Resource Resource
for specialization. Resource
• Project resources are “negotiated” and “borrowed”

from functional areas for the duration of the
project needs.
Projectized Organization
Characteristics of a projectized organization are as follows:
• Resources are aligned to projects.

Executive Level
• Project managers have primary authority over
the project resources.
• Project execution becomes easier because of Project Project Project Project
Manager 1 Manager 2 Manager 3 Manager 4
the dedicated project resources.
• Roles of the resources cease once the project is
Project
completed and resources return to functional Resource
pool.
• Scope for functional specialization is limited. Project
Resource
Matrix Organization
Characteristics of a matrix organization are as follows:
• Resources report to functional managers and

Executive Level
are aligned to project managers.
• The authority of the project manager is the
Function Function Function Project
weakest in a weak matrix and is strongest in a
Head Head Head management
strong matrix.
• It provides for optimal utilization of resources Project Project Project Project
and functional specialization. Resource Resource Resource Resource
• Dual reporting structure increases the

communication cost and management Resource Resource Resource Resource
challenges.
Advantages and Disadvantages of Organizational Structures
Types of
Advantages Disadvantages
Organization
• Clearly defined career paths; greater • Departmental work gets higher

specialization and skill development priority than project work
Functional • More flexible work force • No career path in project
• Less confusion because of the management
reporting structure (one manager)
• Less efficient use of resources

• Better communication within projects • No defined roles when the project is
Projectized • More loyalty toward project goals completed
• Limited and diffuse skill development
• Higher potential for conflict

• Better coordination
Matrix • Maximum utilization of resources
• Greater communication complexity
and overhead
Project Life Cycle vs. Product Life Cycle
Project life cycle lasts from the initiation of a project until the closure, while product life cycle encompasses
the operational and maintenance phases.
• A typical product life cycle starts with the conception of the product and goes on until its withdrawal
from the market or when it becomes obsolete.
• Product life cycle is long; it can require or spawn many projects over its life.
• A project life cycle depends upon the control needs of the performing organization or the organization’s
preference, which is defined in the project execution methodology.
Project Life Cycle vs. Product Life Cycle (Contd.)
The Apple iPod is an example of a product. Over the course of its product life there were many projects that
enhanced its functionalities and added features. These projects and their life cycles were determined by the
control needs of Apple, which typically emphasize time to market priorities and high quality. The iPod as a
product exhibited its own life cycle of “Conception – Introduction – Maturity – Decline” and now withdrawal as
new products will replace it.
The ability to differentiate between product and project life cycle may be useful while answering the exam.
Project Life Cycle vs. Project Management Process
Given below are the differences between project life cycle and project management process:
Project Life Cycle Project Management Process
• Project life cycle addresses the question, • Project management process addresses the
“What to do to get the work done?” question, “What to do to manage the
• Project life cycle varies by industry. project?”
• Project management processes are likely to
be the same across industries.
In the software industry, project life cycle includes understanding requirement in the requirement analysis
phase, implementing requirement in the design phase, writing code and implementing the functionality in the
coding phase, debugging of code in the testing phase, installation of the software at customer location, and
providing support in the operations and support phase.
In the develop schedule process, one needs to develop the project schedule, irrespective of the industry or
domain one is working in.
Project Management Office
A Project Management Office (PMO) is an organizational structure that standardizes project-related governance
processes and facilitates the sharing of resources, methodologies, tools, and techniques.
The roles of PMO are as follows:
Primary Roles Other Roles
PMO may also help in the following areas:

PMO usually has one or a combination of the
following primary roles: • Managing interdependencies between projects
• It provides the policies, methodologies, and • Selecting, managing, and deploying shared or
tools and templates for managing projects dedicated project resources
within the organization
• Terminating projects
• It provides support and training in the
organization on how to manage projects • Organizing “lessons learned” sessions
• It provides project managers for ongoing • Maintaining the project management

projects in the organization knowledge base for an organization
• It ensures compliance (governance) with all • Supporting projects through knowledge

policies, procedures, methodologies, and tools repositories, training, and mentoring
and templates within the organization
Relationship between Portfolios, Programs, and Projects
The PMO manages the relationships between Portfolios, Programs and Projects. The relationships can be
seen in the hierarchy below.
Represents a Portfolio
portion of an
organization’s
overall strategy Sub-portfolios Programs Projects
Strategic goals are

cascaded down to
lower level Programs Projects Sub-programs Projects Other work
components
A portfolio may
contain programs,
projects, and also Projects Other work
Projects Other work
other work
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Fig. 1-3, Page 12.
Quiz
A project manager is working on a project to construct a new bridge. The resources report to the
functional manager and are mainly occupied with operational work. The project manager has no
1.
authority to properly assign resources. What type of organizational structure is the project manager
in?
Functional
Projectized
Strong Matrix
Weak Matrix
Quiz
A project manager is working on a project to construct a new bridge. The resources report to the
functional manager and are mainly occupied with operational work. The project manager has no
1.
authority to properly assign resources. What type of organizational structure is the project manager
in?
Functional
Projectized
Strong Matrix
Weak Matrix
In a functional organization, team members are more concerned with their daily functional activities
than with the project activities.
Quiz
2. Which of the following is not a characteristic of a project?
Repeats every week
Temporary
Quiz
2. Which of the following is not a characteristic of a project?
Repeats every week
Temporary
Characteristic of a project is based on the project definition. Except for choice a, everything else is part
of the project definition itself.
Quiz
As a project manager, you have started a new project. Several stakeholders raise concerns about the
3. quality of the new project management software provided by the PMO and the way project
changes would be logged. As a project manager what should you do?
Provide training material on the new project management software.
Inform the project management office about the stakeholders’ concerns.
Conduct an informal training session.
Assure the stakeholders that you will keep them engaged in the project and that the new software
will in no way negatively impact them.
Quiz
As a project manager, you have started a new project. Several stakeholders raise concerns about the
3. quality of the new project management software provided by the PMO and the way project
changes would be logged. As a project manager what should you do?
Provide training material on the new project management software.
Inform the project management office about the stakeholders’ concerns.
Conduct an informal training session.
Assure the stakeholders that you will keep them engaged in the project and that the new software
will in no way negatively impact them.

Although all the options look correct, informing the PMO is the best choice. The PMO controls the project
management procedures and tools. PMI would like to believe that a mature organization would have a
dedicated PMO and deferring to the PMO for this would be the right option.
Quiz
4. Who does the project team report to in a projectized organization?
No one
Project manager
Functional manager
CEO
Quiz
4. Who does the project team report to in a projectized organization?
No one
Project manager
Functional manager
CEO
In a projectized organization, project team reports to the project manager.

Quiz
5. How is a project life cycle different from product life cycle?
A project life cycle has no methodology
A project life cycle depends on the control needs of the performing organization
A project life cycle can contain many product life cycles
A project life cycle only includes specific project management activities

Quiz
5. How is a project life cycle different from product life cycle?
A project life cycle has no methodology
A project life cycle depends on the control needs of the performing organization
A project life cycle can contain many product life cycles
A project life cycle only includes specific project management activities
A project life cycle depends on the control needs of the performing organization. Choice C is just the opposite, i.e.,
a product life cycle can include many projects through its life cycle, not the other way around.
Key Takeaways
Projects fail for a variety of reasons. In order to increase project
delivery success it is important to understand the different
organizational structures that exist.
Functional, projectized, and matrix are the three types of

organization structures, based on the level of authority given to
the project manager.
PMO provides the policies, methodologies, and tools and

templates for managing projects within the organization.
The PMO also manages the work performed by Portfolios,

Programs and Projects. Portfolios can contain Programs and
Projects. Programs contain projects.
Project life cycle is determined by the controlling needs of the

performing organization while project management processes
are common across most industries and organizations

Lesson 04: Role of the Project Manager
Objectives
Define the role of a Project Manager
Identify the major elements included in the PMI triangle
Identify a project manager’s sphere of influence
Describe stakeholders and their value to project efforts
Identify the professional and social obligations of Project

Managers
Explain how to ensure individual integrity
Identify ways to contribute to project management knowledge

base
Explain how to enhance professional competence
List the ways to promote stakeholder collaboration

The Role of a Project Manager
Project manager has the single most important position on a project and has the overall responsibility for its
success. This position comes with tremendous responsibility, accountability, ownership, and authority.
A project manager:
• Has full responsibility and accountability for the project
• Applies lessons learned from recent projects
• Defines project roles and responsibilities
• Leads the project planning activities
• Performs project tracking and communicates project status
• Adopts project management best practices
• Manages to project priorities
• Performs risk and issue management
• Drives decision making
• Promotes client involvement
• Encourages and supports escalations
• Enforces effective change control
• Mentors project members
The Role of a Project Manager (Contd.)
PMP v6 emphasizes Agile and Adaptive practices and minimizes the role of the PM as a
controller. The PM is responsible for monitoring and managing, particularly around Risks,
Stakeholders, and Communications.
Project Management Skills
PMI Talent Triangle (2015)
PM should have a balance of skills
Technical skills
• PMBOK ® Guide
Strategic and Business Management

• Business acumen
• Basic management
• Vision
• Strategic alignment
Leadership
• Motivate and guide teams
• Soft Skills
• Communications
• Facilitation
• Conflict Resolution
• Emotional Intelligence Figure 3-2. The PMI Talent Triangle®
• Critical Thinking Project Management Institute, A Guide to the Project Management Body of Knowledge,
(PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017. Page 57
Stakeholder
The definition of *Stakeholder is as follows:
An individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a
decision, activity, or outcome of a project.[7]
The project team, project manager, project sponsor, PMO office, customer, etc. are the stakeholders of the
project.
A project sponsor is the one who gives a go ahead for a project and provides the necessary resources to
execute the project.
Stakeholder Management
A key responsibility of a project manager is to manage stakeholders. Project manager has to take up specific
activities for stakeholder management.
Identifying stakeholders at the beginning is essential. A stakeholder, who is identified

Identifying internal and
toward the end of the project, may come up with a new requirement at that stage, and
external stakeholders
incorporating it can be risky.
Determining stakeholder Stakeholder requirements need to be clearly identified. It is the job of the project
requirements manager to get them right by doing a proper stakeholder requirement analysis.
Determining stakeholder Unstated stakeholders’ expectations need to be clarified to see if it needs to be a project
expectations requirement.
Communicating with The project manager, as part of stakeholder analysis, should focus on communicating
stakeholders with them regularly to keep stakeholders involved in the project.
Understand the practices of stakeholder management to answer scenario based questions.
Promoting Stakeholder Collaboration
Project managers should encourage stakeholder collaboration so that stakeholders are aware of the true
benefits of the project and help in whatever way they can to make it successful.
The project managers should perform the following activities to promote

stakeholder collaboration:
• Resolve competing interests

• Take charge and deal with conflicting scenarios
• Respect cultural differences that occur when projects span geographies
• Always keep stakeholders informed about the true status of their projects
Code of Ethics
The PMI® has established a set of guidelines for Code of Ethics and Professional Conduct for certified PMP
professionals to follow. It describes the expectations that the project managers should have of themselves
and of their fellow practitioners in the global project management community.
Project managers hold a great deal of responsibility over:
• The projects they undertake

• The solutions provided
• The management of costs
• The impact on the performing organization
• Any impacted environments or groups
• Dollars spent
• Vendors/contractors hired
Understand the professional and social obligations of project managers.

The Values that Support the Code of Ethics
• PMI has identified four core values across the global project management community that are most important to
project managers.
o Responsibility
o Respect
o Fairness
o Honesty
• Each section of the Code of Ethics and Professional Conduct includes both Aspirational Standards and Mandatory
Standards.
• The aspirational standards describe the conduct that the Project Managers strive to uphold as practitioners.
• Although adherence to the aspirational standards is not easily measured, it is expected that Project Management
Professionals adhere to them. These are not optional.
• The mandatory standards establish firm requirements, and in some cases, limit or prohibit practitioner behavior.
Practitioners who do not conduct themselves in accordance with these standards will be subject to disciplinary
procedures before PMI’s Ethics Review Committee.
Responsibility: Aspirational Standards
Practitioners of Project Management are held to the highest standards and acknowledge their responsibility
to take ownership for the decisions that they make or fail to make, the actions that they take or fail to take,
and the resulting consequences.
Aspirational standards include:

• Making decisions and taking actions based on the best interests of the:
o Society
o Public Safety
o Environment
• Accepting only those assignments that are consistent with their
background, experience, skills, and qualifications
• Fulfilling the commitments undertaken – “Do what we say we will do”
Source: PMI Code of Ethics and Professional Conduct

Responsibility: Aspirational Standards (Contd.)

• Owning and correcting errors or omissions promptly
o Errors are communicated immediately to the appropriate body
o Accountability is accepted along with any resulting consequences
• Ensuring any and all proprietary and/or confidential information is protected
• Upholding ethical code and holding each other accountable to it

Responsibility: Mandatory Standards
Mandatory standards include:

• Be informed of all regulations and legal requirements
• Uphold the policies, rules, regulations and laws that govern their work,
professional and volunteer activities
• Report unethical or illegal conduct to appropriate management, and if
necessary, to those affected by the conduct

Responsibility: Ethics Complaints
Part of the responsibility of project managers includes reporting violations of the PMI
Code of Ethics and Professional Conduct by other project managers.
Ethics complaints must adhere to the following PMI standards:

• Bring violations of this Code to the attention of the appropriate body for
resolution
• File ethics complaints when they are substantiated by facts
• Pursue disciplinary action against an individual who retaliates against a person
raising ethical concerns

Respect: Aspirational Standards
Project Managers show respect by having high regard for themselves, others, and the resources
entrusted to them. Resources entrusted to project managers may include people, money,
reputation, the safety of others, and natural or environmental resources.

• Being informed about the norms and customs of others and avoid engaging in
behaviors they might be considered disrespectful
• Listening to others’ points of view and seeking to understand them
• Approaching directly those persons with whom you have a conflict or
disagreement
• Conducting themselves in a professional manner, even when it is not
reciprocated

Respect: Mandatory Standards
Mandatory standards include:

• Negotiating in good faith
• Not exercising the power of their expertise or position to
influence the decisions or actions of others in order to benefit
personally at their expense
• Not acting in an abusive manner toward others
• Respecting the property rights of others

Fairness: Aspirational Standards
Project Managers must ensure Fairness as a core value while making decisions and must act impartially
and objectively. Project manger’s conduct must be free from competing self interest, prejudice, and
favoritism.

• Demonstrating transparency in decision-making process
• Constantly re-examining personal impartiality and objectivity, taking corrective
action as appropriate
• Providing equal access to information to those authorized to have that
information
• Providing equal opportunities to qualified candidates

Fairness: Mandatory Standards
• Proactively and fully disclosing any real or potential conflict of interest to

appropriate stakeholders
• When real or potential conflict of interest is realized, refraining from engaging
in the decision making process or otherwise attempting to influence outcomes
• If there is real or potential conflict of interest, participating only when:
o Full disclosure is made to the affected stakeholders
o Approval on complete mitigation plan is received
o Consent of stakeholders to proceed is obtained

Honesty: Aspirational Standards
Project managers must uphold Honesty as a core value to understand the truth and act in a truthful
manner both in communications and conduct.

• Earnestly seeking to understand the truth
• Being truthful in communications and conduct
• Providing accurate information in a timely manner
• Making commitments and promises, implied or explicit, in good faith
• Striving to create an environment in which others feel safe to tell the truth

Honesty: Mandatory Standards
• Not engaging in, or condoning, behavior that is designed to deceive others,

including, but not limited to:
o Making misleading or false statements
o Stating half-truths
o Providing information out of context
o Withholding information that, if known, would render your statements as
misleading or incomplete
• Not engaging in dishonest behavior with the intention of personal gain or at the
expense of another

Ensuring Individual Integrity
Project managers need to ensure their own individual integrity while managing a project.
This means:
• Always reporting the truth regardless of negative consequences
• When conflict occurs, dealing with it directly
• Treating everyone with respect
• Avoiding discrimination
• Following all rules and regulations governing the project
• Reporting any unethical or dishonest behavior
• Not factoring personal gains into a decision in any way
• Always doing the right thing and following the right process

Ensuring Individual Integrity (Contd.)
Project managers need to ensure their own individual integrity while managing a project.
This means:
• Never divulging company information to unauthorized parties

• Respecting intellectual property rights
• Following the Project Management Institute’s (PMI) Code of Ethics
and Professional Conduct. This can be found on the PMI website.
Understand the individual integrity required in project managers to answer questions that test
professional and ethical responsibility.
Business Scenario: Problem Statement
• You are the project manager for a global infrastructure project. The project is being delivered in
another country, and you travel frequently to assist with receiving the necessary approvals and
permits for construction. Your Project Sponsor is confident in your team’s ability to finish the
project under budget and ahead of schedule. To encourage you and your team, an early
completion incentive has been linked to the project.
• After using parametric estimates in the planning process and developing a well-documented
basis of estimates, you are confident that you can deliver the project within its budget and on
schedule. Although its not clear if you can deliver the project sooner than scheduled.
• After an on-site meeting with local officials about the status of the project, one of the officials
pulls you aside to have a conversation. He tells you that he can get an important government
approval immediately which will ensure that the next phase of the project is completed ahead of
schedule. However, he asks you to pay him $250 in US currency as an “administration fee.” What
should you do as the project manager?
Business Scenario: Solution
You deny the request to pay $250 to the official.
You want to keep your project on a positive path to ensure success. Further, your project team
would like to earn an incentive for their hard work. However, paying the official money would be
considered a bribe.
Therefore, the next step for you, as the project manager, is to meet with the sponsor and report
the offer made by the official.
Contributing to the Project Management Knowledge Base
Project managers can contribute to the project management knowledge base in

the following ways:
• Share the best practices learned during your project with other project managers in
your organization
• Mentor junior team members on project management related topics
• Write a white paper or blog on project management or participate in project
management discussion groups
• Actively participate in analyzing past project data, and compile project management
related metrics to be used within the organization
• Participate in volunteer activities with PMI
Enhancing Professional Competence
Project managers should do the following to enhance their professional competence:
• Analyze their strengths and weaknesses

• Look for a senior project manager to mentor them on areas where they are not
very competent
• Actively look for ways to apply their project management knowledge on projects
• Read project management books for new ideas or techniques
• Listen to or participate in webinars and online learning efforts
• Join a local chapter of PMI and participate with other project managers
• Discuss the challenges faced on their projects, with other project managers
• You wrapped up a project 3 months ago that produced spare parts for one of your customers.
You successfully gained final acceptance and signoff by the customer on the deliverable.
• Managing the project went well because your parts consistently met the quality metrics,
fitness for use tests, and passed all control charts. There was no indication of issues with
quality and grade that would prompt a need for change.
• A fellow project manager in the company is preparing for a similar project with a different
customer, and they want to meet with you to glean insight on what to expect.
• During your meeting, you discover an error in the results communicated in the deliverable
that may potentially turn into a safety issue in the future which could affect thousands of
customers. Although the risks involved with these newly discovered safety issues are very
small, they could have a serious impact. How should you handle this?
You should first get in touch with your old Project Sponsor and management to communicate your
findings both verbally and in writing (formally). Then you and/or the sponsor should communicate
your findings to the customer.
According to PMI’s Code of Ethics and Professional Conduct, you must “uphold the policies, rules,
regulations, and laws that govern your work, professional and volunteer activities.”
• The ACME Technology Company prides itself on providing excellent customer service and delivering
high-quality technology implementations. This brand strategy has served the company well because
they maintain a strong customer loyalty record. The area that hurts them, at times, is the fact that
some of their system implementations take longer than forecast.
• Jim is a project manager at the company, and he is leading a desktop upgrade for one of their repeat
customers. The project is nearing its completion date, and it is time to check the correctness of the
computer build out. During the evaluation, it is brought to Jim’s attention that the desktop system’s
speed is not fast enough for the company’s core financial software to function as designed. A team
member suggests they increase the system’s speed by 10% with additional RAM as a courtesy to the
customer since they have excess parts from another project, and it will not cost the company any
additional dollars. In addition, there were issues on the last project worked for this customer, and this
would be a great way to make up for the past problems. What should Jim do?
• The additional speed would make a huge difference and allow ACME to meet their defined
quality metrics and fitness for use requirements. The fact that the software will not be able to
perform on the system to meet established requirements would be a failure point for the
project.
• Jim should document both the issues and the recommendations to present to the project
sponsor. Identifying the performance concerns is required as he has now been made aware of
the issue.
Study the business scenarios to get familiar with questions that test professional and ethical
responsibility.
Key Takeaways
The Project Management Institute’s Code of Ethics and
Professional Conduct should always be followed by the project
managers during a project.
Project managers can contribute to the project management

knowledge base by actively analyzing past project data and
compiling project management related metrics to be used within
the organization.
The project managers should analyze their strengths and

weaknesses, and look for a senior professional to mentor them
on areas where they need to improve.
The project managers should always keep stakeholders informed

about the true status of their projects to promote stakeholder
collaboration.
If a project manager becomes aware of any unethical practices

and has factual evidence, the conduct should be reported to the
appropriate governance body.

Lesson 05: Project Integration Management
Objectives
Define Project Integration Management
Identify the key role of the project manager, project team, and
project sponsor
Explain various project selection methods
Describe the Project Integration Management processes
Identify key terminologies used in Project Integration

Management
Project Integration Management
The Project Integration Management includes:
Processes and Activities to identify, define, combine, unify, and coordinate the various processes and project
management activities
Project Integration Management is high-level work that requires the project manager to manage
interdependencies among the other Knowledge Areas. It deals with:
• Resource allocation
• Balancing complex demands
• Examining alternatives
• Tailoring processes to work within organization and project needs
• Managing the interdependencies among Project Management Knowledge Areas
Integration management ensures continuity across multiple knowledge areas.
Project Integration Management
Projects are iterative in nature with links among processes requiring integration to:
• Ensure deliverables and due dates are achieved

• Provide a plan for managing the project
• Ensure proper knowledge is used/available to the effort when needed
• Manage performance of effort
• Constrain change to project
• Integrate decision-making across knowledge and process groups
• Identify and collect work performance
• Monitor and control work performance
• Implement risk strategies across efforts when indicated by events or performance
• Manage communications and engagements
• Effectively manage phase transitions
Role of Project Manager, Team, and Sponsor
Given below are the key roles of the project manager, project team, and the project sponsor:
The key role of a project manager is to integrate various activities of the project.
Project Manager
The key role of a project team is to concentrate on completing the project activities.
Project Team
The key role of a project sponsor is to protect the project team from unnecessary
changes and loss of resources.
Project Sponsor
Project Selection Methods
An organization can undertake a project as a contract or driven by business needs. There should be a formal
process for selecting projects to ensure that the limited corporate resources are optimized.
The two broad project selection methods are as follows:
Benefit measurement methods Constrained optimization methods
These methods ascertain the costs and benefits These methods rely on mathematical modeling
of undertaking the project. techniques to determine the selection of the best
projects to achieve certain business objectives.
Examples:
• Murder board Examples:
• Peer review • Linear programming
• Scoring models • Goal Programming
• Economic models • Integer Programming
• Benefit compared to cost
Understand the characteristics of various project selection methods to answer scenario based questions.
Project Selection Methods (Contd.)
What type of project selection technique is peer review?
Peer review is a benefit measurement method.

Present Value (PV)
Present Value (PV) is the current value of a future cash flow. The amount of money received today is worth more
than the same amount in the future. A discount factor has to be applied to reflect future cash flows in present
values.
A sum of $250 being paid right now will be more valuable than $250 being paid 3 years from now.
PV analysis is important to ensure that an organization maximizes its profit, particularly when value will be
delivered a long time in the future.
!
Farther the timing of the cash flow (future value), lower is the present value.
Net Present Value (NPV)
Net Present Value (NPV) is the difference between value of the total benefits (income or revenue) and the costs
over a period of time. Present values of different items combined gives the NPV.
Project X will take 2 years to complete and has an NPV of $35,000. Project Y will take 5 years to
complete and has an NPV of $95,000. Which project would you select?
Project Y, because it has a higher NPV

Note: The project with the higher NPV is better
Problems where a project has to be selected over other projects on the basis of its net present value
can be expected in the exam.
Internal Rate of Return (IRR)
Internal Rate of Return (IRR) is the rate of discounting (used to reduce future cash flows to their present
value) at which the present value of costs match the present value of benefits. In other words, it is the rate
of return internal to the project.
Project A has an IRR of 25% and project B has an IRR of 15%. which project would you choose?
Project A, because it has a higher IRR
!
The project with the higher IRR is better.
Payback Period
Payback Period is the number of time periods it takes to recover the investment from the project before profits
start accumulating.
Project A has a payback period of 5 months and project B has a payback period of 12 months.
Which project would you select?
Project A, because it has a lesser payback period
!
The project with the lesser payback period is better.
Benefit Cost Ratio (BCR)
Benefit Cost Ratio (BCR) compares the present value of benefits to the present value of costs. A benefit cost ratio
of more than 1 means that the benefits are greater than the costs.
Which project would you select if the BCR of Project A is 2.5 and BCR of Project B is 1.5?
Project A, as it has higher BCR
!
Accept a project with a BCR greater than 1. The project with the higher BCR is better.
Return on Investment (ROI)
Return on Investment (RoI) is the rate of return on the project normalized by the initial investment. It
indicates the profitability of the project.
If a project involves an initial investment of $100,000 and generates an average return of

$20,000 per year, ROI is 20,000/100,000 or 20%.
!
Higher the ROI, the more profitable the project is.
Opportunity Cost
Opportunity cost is the cost related to the next best choice available after choosing from among several mutually
exclusive choices. It is therefore the opportunity given up by selecting one project over another.
What is the opportunity cost of selecting Project B if Project A has an NPV of $55,000 and Project
B has an NPV of $85,000?
Opportunity cost is $55,000. This is the NPV of Project A.
Problems where a project has to be selected over other projects on the basis of net present value and
opportunity cost can be expected in the exam.
Project Integration Management Knowledge Areas


Response
Project ManTemenl
Process Groups Executing 4.3 Direct and 8.2 Manage 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Manage Project Quality Resources Communications Risk Response Procurements Stakeholder
Knowledge
Perform
Integrated
Change Control
or Phase
Table 1-4. Project Management Process Group and Knowledge Area Mapping
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK ® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 25
Develop Project Charter
Develop Project Charter is a process of developing a document that formally authorizes the existence of a
project and provides the project manager with the authority to apply organizational resources to the project
activities.[1] It belongs to the Initiating Process Group.
PROJECT INTEGRATION MANAGEMENT

Benefit Management
Plan
Business case
Agreements Develop Project Charter Project charter

Assumption Log
Enterprise
environmental factors Interpersonal
Expert judgment Data Gathering
and Team Skills Legend
Organizational process
assets Input
Meetings Output
Tools & Techniques
Initiating Process
Figure 4-2. Develop Project Charter: Inputs, Tools & Techniques, and Outputs
This process if the first opportunity for Project Manager to understand the vision and goals of the
project as agreed to by the sponsor and stakeholders.
• Describes project purpose, vision, and initial scope

• Formally authorizes project and project manager
• Contains
• Business problem to be solved
• Measurable project objectives/requirements
• Project boundaries and key deliverables
• Risks
• Critical success factors
• Stakeholder list and roles/responsibilities
• Constraints and assumptions
• Project exit criteria
• Approved by project sponsor
Initial Scope Statement
Defining the initial scope statement is the first step in the Project Management Process
• What problem or opportunity is to be addressed?

• What are the project goals and objectives?
• What are the project work activities to be performed
• What will success look like?
• How will success be measured?
• What risks or obstacles may affect the outcome?
• What roles and responsibilities will be assigned in the effort?
• What constraints, assumptions, and unanswered questions are impacting the vision?
• What is the cost/benefit and/or Return on Investment (ROI) analysis?
• How is Internal Rate of Return (IRR) estimated?
• What are the project resource requirements and constraints - time, budget, HR, physical assets, etc.?
Develop Project Management Plan
Develop Project Management Plan is the process of defining, preparing, integrating, and coordinating all subsidiary
plans and integrating them into a comprehensive project management plan.[2]
• Project management plan is a detailed document that describes how the project would be executed, monitored
and controlled, and closed.
• Project management plan contains all the subsidiary plans and their baseline values. Performance measurement
baseline of project’s time is the total of project baseline time and the agreed time variance.
• Subsidiary plans can be separate documents, particularly on very large projects.
If the initial agreed time for a project is 180 days, it is the project baseline time value. If the agreed
variance is 10%, the project should be executed in maximum 180+180*10% = 180+18 = 198 days.
Contents of Develop Project Management Plan
Regardless of how the plan is organized, it should contain a section referencing or covering:
• Project Charter • Procurement Management Plan

• Project management approach or strategy • Stakeholder Engagement Plan
• Scope Management Plan • Change Management Plan
• Requirements Management Plan • Configuration Management Plan
• Schedule Management Plan • Scope Baseline
• Cost Management Plan • Schedule Baseline
• Quality Management Plan • Cost Baseline
• Resource Management Plan • Performance Measurement Baseline
• Communications Management Plan • Project Life cycle Description
• Risk Management Plan • Development Approach
Develop Project Management Plan: Process Flow
The various inputs, outputs, and tools and techniques of developing the project plan are given below.

Project Charter
Outputs from other Develop Project Project

processes Management Plan management plan
Enterprise environmental
factors
Interpersonal
Expert judgment Data Gathering
Organizational process assets and Team Skills Legend
Input
Meetings Output
Tools & Techniques
Planning Process
Figure 4-4. Develop Project Management Plan: Inputs, Tools & Techniques, and Outputs
Key Terms
The following key terms are essential to understand project management processes:
*Work Authorization System

A subsystem of the overall project management system, that is, a collection of formal
documented procedures that defines how project work will be authorized [3]
*Corrective Action
An intentional activity that realigns the performance of the project work with the project
management plan
*Preventive Action
An intentional activity that ensures the future performance of the project work is aligned with
the project management plan [3]
*Definitions taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 703, 714.
Key Terms (Contd.)
The following key terms are essential to understand project management processes:
*Change Control System

A set of procedures that describes how modifications to the project deliverables and
documentation are managed and controlled
*Configuration Management System

A set of procedures used to apply technical and administrative direction and surveillance to
identify and document the functional and physical characteristics of a product, service or
result, or component
*Definitions taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 700,701.
Direct and Manage Project Work
Direct and Manage Project Work is the process of leading and performing the work defined in the project
management plan to achieve the project objectives. It belongs to the Executing Process Group.
Deliverables
Work performance
data
Project Documents
Direct and Manage Issue log
Approved Change Project Work
Requests
Change requests
factors Project
management plan
Organizational process updates
assets Project document
Project Management updates
Legend Expert judgment Meetings
Information Systems
Input Organizational
Output process assets
Tools & Techniques
updates
Executing Process Figure 4-6. Direct and Manage Project Work: Inputs, Tools & Techniques, and Outputs
Direct and Manage Project Work (Contd.)
During Direct and Manage, the Project Manager focuses on:
• Project Team development and coordination

o Ensure appropriate training, reference material, availability of experts
o Coordinate efforts within team
o Resolve conflicts and issues with internal/external groups or contractors
o 5 minute meetings
• Interfacing with all stakeholders
o Following Communication plan
o Following Stakeholder Engagement plan
o Reporting metrics
o Reporting progress
o Additional reporting requirements as defined in the Communication plan
• Project Plan Monitoring (actual vs. planned)

o Gathering actual completion dates
o Determining task completion status
• Overall quality management
o Quality in all deliverables
o Compliance with process
• Risk management
o Identifying risks
o Implementing mitigation strategies
o Communicating risks
• Scope and product change management
o Implement the process
o Look for unauthorized changes
o Ensure scheduled changes are incorporated and completed
• Facilitating project meetings and performance reviews (communications management)

o Follow Communication plan
o Execute Stakeholder Engagement Management Plan
o Document inputs from meetings and communications with stakeholders and team members
• Documenting progress and work performance
• Updating project records, reports (communications management), and deliverables management
Execution
During Execution, Project Leadership is a critical success factor.
The PM must lead the Project Team and stakeholders with respect to the project.
• Essential prerequisite for project success is the PM’s ability to lead the Project Team in what can be an
unstructured environment.
• Provide leadership throughout each phase of the project to motivate team members, ensure consistent
interpretation of the requirements, keep the project on schedule and within budget, and make sure all milestones
(e.g., deliverables submissions) are met.
Leadership roles and skills:

• Planning
• Organizing
• Coordinating
• Motivating (team building)
• Controlling
• Directing
Manage Project Knowledge
Manage Project Knowledge is the process of using existing knowledge to create new knowledge to achieve
project objectives and to contribute to the organizational knowledge base for future efforts.

Project Management
Plan Lessons Learned
Register
Project Documents
Manage Project Project Management

Deliverables Knowledge Plan Updates
Enterprise
environmental factors Organizational
Process Assets
Organizational process Update
assets
Knowledge
Expert judgment
Management Legend
Input
Information Interpersonal and Team Output
Management Skills Tools & Techniques
Executing Process
Figure 4-8. Manage Project Knowledge: Inputs, Tools & Techniques, and Outputs
Manage Project Knowledge
Project knowledge is broken into explicit and tacit knowledge and is intended to increase organizational success
factors as well as achieve project objectives.
• Explicit knowledge is information that can be easily documented and communicated

• Tacit knowledge is personal and difficult to communicate (expertise, experience, insights, etc.)
• Both types of knowledge are required for Project Knowledge
• Ensure that tacit and explicit knowledge are used before, during, and after project development
• Knowledge Management is more than lessons learned, change requests, and risks
Monitor and Control Project Work
Monitor and Control Project Work is the process of tracking, reviewing, and regulating the progress to meet
the performance objective(s) defined in the project management plan. It belongs to the Monitoring and
Controlling Process Group.

Project Management
Plan
Work performance
Project Documents reports
Monitor and Control Change requests

Work Performance Project Work
Information
Project management
plan updates
Agreements
Project document
Enterprise updates
environmental factors Expert judgment Data Analysis
Organizational process Legend

assets Decision Making Meetings Input
Output
Tools & Techniques
Monitoring &
Figure 4-10. Monitor and Control Project Work: Inputs, Tools & Techniques, and Outputs Controlling Process
Monitor and Control Project Work (Contd.)
During Monitor and Control Project Work, the Project Manager focuses on:
• Evaluating work performance
• Developing Variance analysis
o Monitor metrics and evaluate and report on variance
o Evaluate for impact and correct if necessary
o Evaluate trending work performance and project status and look for indicators in project variables
• Earned value management
o Overlap with Control and Monitoring process
o Collect information to develop analysis model
o Communicate results of model throughout the team
o Make decisions to improve performance, burn-rate, or both
o Evaluate staffing decisions for performance

Monitor and Control Project Work: Challenges
Project Mangers must manage both cost and

Earned Value
schedule EV
• “Poor cost variance combined with good
schedule variance does not mean Schedule Variance
Cost Variance
everything is alright.” – Humphreys 2002 CV = EV – AC SV = EV – PV
• Spend more and make up time (SV

decrease)
• Spend less and lose time (CV decrease)
Actual Value Planned Value

AC PV
Monitor and Control : Lesson Learned
The monitor and control project work is an opportunity to adjust and adapt the work to ensure project
success. It is also an opportunity to learn new approaches and techniques that other projects can benefit
from. This process:
• Generates real-time Lessons Learned for current and future efforts

• Defines additional approaches for future efforts
• May result in schedule modifications
o Corrective / Preventative Actions
o Fast-track schedule
o Schedule Optimization
o Implementation of mitigation plans
Perform Integrated Change Control
Perform Integrated Change Control is the process of reviewing all change requests; approving and managing changes
to the project deliverables, project documents, and the project management plan; and communicating the decisions.
It belongs to the Monitoring and Controlling Process Group.
Project Management PROJECT INTEGRATION MANAGEMENT

Plan
Project Documents
Approved change
Work Performance Perform Integrated requests
reports Change Control
Project management
Change request plan updates
Enterprise Project document

environmental factors updates
Organizational process Expert judgment Data Analysis
assets
Change Control tools Decision Making
Legend
Input
Output Meetings
Tools & Techniques
Monitoring & Controlling
Process Figure 4-12. Perform Integrated Change Control: Inputs, Tools & Techniques, and Outputs
Change Management Process
The process of change management is as follows:
Receive a request or Propose/review

Evaluate the Identify and Determine impact
determine that a with change
impact of analyze to cost, schedule,
change has occurred
change alternatives and resources control board
or is necessary
Ability of a project manager to manage change will be tested in the exam.

Integrated Change Control
Projects seldom run according to plan.
• The only constant is change

• Identify that a change needs to occur or has occurred
• Influence the factors that circumvent change control
• Review and approve changes
• Manage approved changes
o Monitor when and how changes occur
o Analyze risk impact
o Socialize and seek change approval (Change Control Board (CCB), Sponsor, Stakeholders)
o Schedule change
o Release only approved changes
o Update project documents (schedule, cost, risk, quality plan, change log)
You are the project manager of a new corporate initiative that is focused on revising and reclassifying
the staffing positions in its Design Division. The project plan has been developed. Initially, there were
some challenges as the teams adjusted to the new staffing positions. However, you have worked with
the teams to provide insight on their roles and responsibilities and everything is now progressing
smoothly. The past five project team review meetings have shown that you are on schedule and 5%
under budget.
Now, you are preparing a project status report for your upcoming meeting with the Project Sponsor.
You are positive and excited at your project status despite the rocky start. Unfortunately, the meeting
with the Project Sponsor does not go as planned. You are informed by the Sponsor that the deadline
for the project needs to be moved up by 30 days and the budget will remain the same. The Sponsor
has asked you to submit a plan of action on how you would accomplish this new deadline. What
should you do?
You need to schedule a team meeting to discuss your strategy and plan for implementing the change.
After reviewing your change management plan, your team should first look at the remaining work to
be completed to assess what it would take to complete the activities. This relates to the triple
constraint of scope, budget, and schedule and other measurable constraints such as quality metrics,
risk reassessment, and resources. Then, the team will be able to brainstorm and analyze how to adjust
the calendar accordingly, see if there are opportunities to reduce scope, work overtime, and still meet
the budgetary constraint.
After approaching the problem using the triple constraint and change management process, you will
be able to create a new viable plan of action so that you will both meet the new deadline and not
compromise on the integrity of the deliverable. Using the triple constraint and change control process
is a great framework for assessing change and making decisions around change.
Close Project or Phase
Close Project or Phase is the process of finalizing all activities for the project, phase, or contract. It
belongs to the Closing Process Group.
Project Charter PROJECT INTEGRATION MANAGEMENT
Project Management
Plan Project Document
Updates
Project Documents Close Project or Phase
Final product,
service, or result
Accepted Deliverables transition
Final Report
Business Documents
Expert judgment Data Analysis Organizational
Agreements Process Asset
Meetings updates
Procurement
Documentation
Legend
Organizational Figure 4-14. Close Project or Phase: Inputs, Tools & Techniques, and Outputs
Process Assets Input
Output
Tools & Techniques
Closing Process
The ABC Fencing Line of Business (LOB) has been progressing for the past two years and it is now
ending. The new LOB is finally ready for its ‘Go live’ date and will become a new service option for
the company. In the last week of work on the project schedule, only 10 of the 50 project team
members involved in the life of the project are needed to complete the remaining tasks that will take
it live.
You have already been assigned your next project, which starts in 4 weeks, and you are starting to
transition into your new responsibilities. What should you be concerned about as you try to close
your project?
With both yourself and many of the team members leaving the project, you need to ensure that
everyone contributes to the Lessons Learned process before they leave.
Some team members could be apprehensive about contributing because they do not see the value or
benefit in this process and feel you could have done it on your own. In that case, you need to explain
that lessons learned and historical information are valuable because they give insight and a potential
starting point for new projects.
You should inform the team that this is also part of the updates to Organization Process Assets, which
is necessary to close the project formally.
Quiz
With respect to change, which of the following is the most important for a project
1.
manager to focus on?
Undertake the change
Track and record the change
Prevent uncontrolled change
Inform project sponsor of the change

Quiz
1. With respect to change, which of the following is the most important for a project
manager to focus on?
Undertake the change
Track and record the change
Prevent uncontrolled change
Inform project sponsor of the change
It is the responsibility of the project manager to proactively manage the project. This includes
preventing unnecessary changes. The changes are actually undertaken by the project team.
Quiz
In the middle of a project, you are informed that the resources promised at the
2. beginning of the project are no longer available. As a project manager, what would you
do?
Raise a concern that you can no longer execute this project
Evaluate the impact of not having the promised resources
Move forward without the promised resources
Identify other resources that can be provided to you in lieu of the earlier promised resources
Quiz
In the middle of a project, you are informed that the resources promised at the
2. beginning of the project are no longer available. As a project manager, what would you
do?
Raise a concern that you can no longer execute this project
Evaluate the impact of not having the promised resources
Move forward without the promised resources
Identify other resources that can be provided to you in lieu of the earlier promised resources
Although all the responses here seem feasible, the first thing to do is to evaluate the impact of not
having the promised resources.
Quiz
A customer is known for requesting numerous changes to projects. You have been
3. assigned as the project manager for this customer’s new project. What would you do in
the beginning of the project to manage this customer?
Check who the customer’s manager is and inform him/her about the customer’s past record
Involve the customer as early in the project as possible
Be firm and say no to the customer a few times
Send the customer a copy of your company change control procedure

Quiz
A customer is known for requesting numerous changes to projects. You have been
3. assigned as the project manager for this customer’s new project. What would you do
in the beginning of the project to manage this customer?
Check who the customer’s manager is and inform him/her about the customer’s past record
Involve the customer as early in the project as possible
Be firm and say no to the customer a few times
Send the customer a copy of your company change control procedure
In real life, you might consider doing all the options listed, but the best way to handle such a scenario
is to involve the customer as early in the project as possible.
Quiz
4. Who performs project integration?
Project Sponsor
Project Manager
Project Team
Customer
Quiz
4. Who performs project integration?
Project Sponsor
Project Manager
Project Team
Customer
The project manager’s primary role is to integrate the various activities and processes in the project to
help fulfill the project’s requirements.
Quiz
As a project manager, what would you do if you received a change request that does
5.
not impact the project schedule?
Go ahead and do the change
Evaluate the impact on the other project constraints
Get in touch with the change control board
Ask your boss’s permission

Quiz
As a project manager, what would you do if you received a change request that does
5.
not impact the project schedule?
Go ahead and do the change
Evaluate the impact on the other project constraints
Get in touch with the change control board
Ask your boss’s permission

Whenever there is a change request, you should look at the impact on all of the project constraints, not
just the schedule.
Quiz
You have been assigned as the project manager of a project that is halfway through
execution. You meet the customer and inform him that project is within the baselines,
6. but the customer informs you that he is not happy with the performance of the project.
What should you do first?
Meet with the project team to understand the customer’s concerns
Meet with the project sponsor and discuss the customer’s concerns
Inform the customer that the project team has met the stated expectations
Show the customer the performance of similar other projects

Quiz
You have been assigned as the project manager of a project that is halfway through
execution. You meet the customer and inform him that project is within the baselines,
6. but the customer informs you that he is not happy with the performance of the project.
What should you do first?
Meet with the project team to understand the customer’s concerns
Meet with the project sponsor and discuss the customer’s concerns
Inform the customer that the project team has met the stated expectations
Show the customer the performance of similar other projects
As the customer is directly informing you that he is not happy, the best option is to meet the project
team and discuss the customer’s concerns before doing anything else.
Quiz
You are managing a software development project, and one of the developers tells you
that he added a new feature that he heard the sponsor talking about in a hallway
7. conversation. The developer did the work after hours and it does add a lot of value to
the solution. How should you manage this?
Thank the developer for his hard work and communicate this as a ‘win’ in your next status report.
Document this as a Change Request and follow the Change Control process to ensure it is
documented and approved.
As there were no costs incurred from the work and no schedule impact, you do not need to do
anything.
Tell the developer to immediately back the change out as it was not approved and explain that any
scope changes must be reviewed and approved before implementation.
Quiz
You are managing a software development project, and one of the developers tells you
that he added a new feature that he heard the sponsor talking about in a hallway
7. conversation. The developer did the work after hours and it does add a lot of value to
the solution. How should you manage this?
Thank the developer for his hard work and communicate this as a ‘win’ in your next status report.
Document this as a Change Request and follow the Change Control process to ensure it is
documented and approved.
As there were no costs incurred from the work and no schedule impact, you do not need to do
anything.
Tell the developer to immediately back the change out as it was not approved and explain that any
scope changes must be reviewed and approved before implementation.

Although the developer did the work after hours and it appears to address the needs of the sponsor, it should
be documented as a change. This feature will need to be tested and there is risk that it might affect other parts
of the system. It’s also possible that the sponsor’s requirement was not fully understood if it was talked about in
a hallway conversation.
Quiz
8. What makes Project Integration Management unique among the other ten knowledge areas?
It is the only knowledge area with processes in each of the project process groups (Initiating,
Planning, Execution and Monitoring and Controlling).
Integration Management is the only knowledge area where no resources are assigned as it is a
coordination function that is the responsibility of the project manager.
Integration Management is the only knowledge area that can be completed in the Planning phase.
When closing integration planning, it is not necessary to have sign-off as it only delivers subsidiary
plans.
Quiz
8. What makes Project Integration Management unique among the other ten knowledge areas?
It is the only knowledge area with processes in each of the project process groups (Initiating,
Planning, Execution and Monitoring and Controlling).
Integration Management is the only knowledge area where no resources are assigned as it is a
coordination function that is the responsibility of the project manager.
Integration Management is the only knowledge area that can be completed in the Planning phase.
When closing integration planning, it is not necessary to have sign-off as it only delivers subsidiary
plans.

Project integration manage has processes within each project process group and ensures that the
entire project is planned, executed and managed effectively.
Key Takeaways
Project Integration Management involves unification, consolidation,

articulation, and integrative actions that are crucial for successfully
completing the project.
Integrating the project activities is the key role of a project manager;
the project team focuses on completing the project activities, and
the project sponsor protects the team against unsolicited changes.
Benefit measurement methods ascertain the costs and benefits of
undertaking the project, while constrained optimization methods
rely on mathematical modeling to select the best projects that
achieve business objectives.
Various Project Integration Management processes are Develop
Project Charter, Develop Project Management Plan, Direct and
Manage Project Work, Manage Project Work, Monitor and Control
Project Work, Perform Integrated Change Control, and Close Project
or Phase.

Lesson 06: Project Scope Management
Objectives
Define Project Scope Management
Differentiate between project scope and product scope
Identify the key terms used in Project Scope Management
Explain work breakdown structure
Describe the Project Scope Management processes

What Is Project Scope Management?
The definition of Project Scope Management is as follows:
Project Scope Management includes the processes required to ensure that a project includes all
the work required, and only the work required, to complete the project successfully.
Managing the project scope is primarily concerned with defining and controlling what should be
included in the project.
*Definitions taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management
Institute, Inc., 2017, Page 129
Project Scope Management Activities
The key activities of Project Scope Management are as follows:
0 0 0
1 2 3
Ensure Constant Monitoring Avoid Scope Creep Prevent Gold Plating
Ensure all the project work is being Define project boundaries and Restrict the project work only to
completed avoid unnecessary addition of the defined activities and avoid
scope doing more work than required
for the project
Product Scope vs. Project Scope
Project Scope Management deals with managing both the product scope as well as the project scope.
The difference between project scope and product scope is as follows:
*Product Scope *Project Scope
Product scope refers to the features and Project scope refers to the work performed to deliver a
functions that characterize a product, service, or product, service, or result with the specified features
result. and functions. Project Scope is often inclusive of
Product Scope.
Example: In the banking sector, services like
savings accounts and mutual funds are called Example: To deliver a product, requirement and design
products. documents have to be produced. This is a part of
project scope and not product scope.
*Definitions taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project
Management Institute, Inc., 2017, Page 131
Definition of Work Breakdown Structure (WBS)
A deliverable-oriented, functional decomposition of the project scope of work into hierarchically grouped
work elements
Work Breakdown Structure (WBS) reflects the scope baseline of the entire project.
Deliverables not incorporated in WBS will not be a part of the project.
• WBS is prepared with the team’s buy-in.

• During decomposition, each level should be complete; it should include all the work in
the project before decomposing further.
• Decomposition should be done until the lowest work unit cannot be logically subdivided
further (and/or it can be estimated with reasonable accuracy).
• WBS is a deliverable-oriented decomposition and should contain only deliverables and
not activities.
• WBS is part of Project Scope Baseline along with Project Scope Statement and WBS
Dictionary.
Concept-based questions on work breakdown structure can be expected in the exam.

Work Breakdown Structure (WBS)
• A WBS defines the total project work.

• If a deliverable is not in the WBS, it is not in the project.
• Each descending level of a WBS represents an increasingly detailed definition of
the project work to be performed.
• The WBS is the foundation for project task definition, resource and performance
planning, cost estimating, budget control, progress tracking, and status
reporting.
Definition of WBS (Contd.)
Work packages are considered decomposed at their lowest level when decomposing
them offers no further value or when the work packages can be realistically estimated
and they have a meaningful conclusion.
• For a completely decomposed project, each work package should:

o Have a single purpose
o Be decomposed until it does not make sense to decompose further
o Be estimable with a high degree of accuracy
o Contain clearly understood deliverable(s) or work product(s)
Key Terms
Work Breakdown Structure

A hierarchical decomposition of the total scope of work to be carried out by the project team to
accomplish the project objectives and create the required deliverables
WBS Dictionary
A document that provides detailed deliverable, activity, and schedule information about each
component in the Work Breakdown Structure
Project Scope Statement
The project scope statement is the description of the project scope, major deliverables,
assumptions, and constraints. It describes the project’s deliverables in detail.
Control Account
A management control point where scope, budget, actual cost, and schedule are integrated and
compared to earned value for performance measurement
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 161, 702
WBS: Example
Given below is the WBS of a core banking software development project:
New Core Banking Software

Development
Requirements Design and

Code Test Go Live
Documentation Architecture
WP WP
Model Installer
3.1 4.1
WP WP Warranty
Prototype
3.2 4.2 sheet
Project Scope Management Processes
Knowledge Areas Project Integration Project Scope Project Schedule Project Cost Project Quality Project Resource Project Project Risk Project Project
Management Management Management Management Management Management Communications Management Procurement Stakeholder
Management Management Management
Initiating 4.1 Develop Project 13.1 Identify

Charter Stakeholders
Planning 4.2 Develop Project 5.1 Plan Scope 6.1 Plan Schedule 7.1 Plan Cost 8.1 Plan Quality 9.1 Plan Resource 10.1 Plan 11.1 Plan Risk 12.1 Plan 13.2 Plan
Management Plan 5.2 Collect Management Management Management Management Communications Management Procurement Stakeholder
Requirements 6.2 Define Activities 7.2 Estimate Costs 9.2 Estimate Activity Management 11.2 Identify Risks Management Engagement
5.3 Define Scope 6.3 Sequence 7.3 Determine Resources 11.3 Perform
5.4 Create WBS Activities Budget Qualitative Risk
6.4 Estimate Activity Analysis
Durations 11.4 Perform
6.5 Develop Quantitative Risk
Schedule Analysis
11.5 Plan Risk
Response
Project Executing 4.3 Direct and Manage 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Management Project Work Resources Communications Risk Response Procurements Stakeholder
Process 4.4 Manage Project 9.4 Develop Team Engagement
Groups Knowledge 9.5 Manage Team
Monitoring 4.5 Monitor and Control 5.5 Validate Scope 6.6 Control 7.4 Control Costs 8.3 Control Quality 9.6 Control 10.3 Monitor 11.7 Monitor Risks 12.3 Control 13.4 Monitor
and Project Work 5.6 Control Scope Schedule Resource Communications Procurements Stakeholder
Controlling 4.6 Perform Integrated Engagements
Change Control
Closing 4.7 Close Project or

Phase
Plan Scope Management
“Plan Scope Management is the process of creating a scope management plan that documents how the
project scope will be defined, validated, and controlled.” It belongs to the Planning Process Group.
PROJECT SCOPE
MANAGEMENT
Project Charter
Scope
Project management
Management Plan Scope plan
Plan Management Requirements
Enterprise management
environmental factors
plan
Organizational Expert Data Legend
Meetings
process assets judgment Analysis Input
Output
Tools &
Figure 5-2. Plan Scope Management: Inputs, Tools & Techniques, and Outputs Planning
Techniques
Process
Understand the inputs and tools and techniques of scope management to answer concept-based questions.
Collect Requirements
“Collect Requirements is the process of determining, documenting, and managing stakeholder’s needs
and requirements to meet objectives.” It belongs to the Planning Process Group.
Project Charter
Project Management Plan PROJECT SCOPE MANAGEMENT

Requirements
Project Documents documentation
Business Documents Requirements
Traceability Matrix
Agreements
Expert Judgment Decision Making
Enterprise Environmental
Factors Data Gathering Context Diagram Legend
Input
Organizational Process Data Output
Data Analysis
Assets Representation Tools & Techniques
Interpersonal and Planning Process
Prototype
Team Skills
Figure 5-4. Collect Requirements: Inputs, Tools & Techniques, and Outputs9
• Gina is a project manager with Bluedot Software Development and Web Design Company.
• A large, global customer contracts the company to design software that would allow them to
capture service requests from thousands of potential clients, track existing client projects, and
facilitate communication between them and their clients.
• Gina has never led a project of this size, but has successfully completed a similar project on a
smaller scale. Therefore, Gina feels confident about her abilities to lead the project and will utilize
historical information from her previous project to plan for this initiative.
• During the planning process, Gina and her team conduct interviews and surveys and facilitate
workshops to collect the necessary requirements needed to complete the project scope of work.
They use these requirements to design and build the software system.
• Unfortunately, during the final user acceptance testing of the software, which is required for
customer sign-off, Gina’s project team discovers the software design will not support the
performance requirements when the system is under the load of several hundred users. What
happens now?
• This is a major blow to Gina and her team. They had captured the customer requirements
accurately but had not anticipated how to support the non-functional requirements for load
and performance of the system.
• With this being a software design issue, the team has to rewrite the core architecture of the
software, which requires all components of the systems to be retested before customer sign-
off.
• Because of the team’s inability to adequately define the requirements without cutting corners,
the rework impacts Gina’s project in several ways:
o Increased cost
o High risk of customer dissatisfaction
o Missed schedule deadlines
o Low morale of project team members
• The project needs to assess the impact and likely requires a Change Request for schedule and
budget impacts.
Group Creativity Techniques
Requirements gathering has several techniques to ensure a solid understanding of the functionality of the
project.
Group creativity techniques are used to channel a group’s combined brainpower to solve a problem, identify
requirements or risks, or make a decision.
Nominal Group Technique Affinity Diagram

It enhances brainstorming with a It allows large number of ideas to
voting process used to rank the most be classified into groups for
useful ideas for further brainstorming review and analysis.
or prioritization.
1 2 3 4 5
Brainstorming Idea or Mind Mapping Multi-criteria Decision Analysis

It is used to generate and collect It consolidates ideas created It is a technique that uses a decision matrix to
multiple ideas related to project and through individual brainstorming provide a systematic analytical approach for
product requirements. It is not an sessions into a single map to reflect establishing criteria, such as risk levels,
evaluation technique but an ideation commonality and differences in uncertainty, and valuation, to evaluate and
process. understanding and to generate rank ideas.
new ideas.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 142-144
Group Decision-making Techniques
Group decision-making techniques are used to arrive at decisions when a number of people are involved in
the decision-making process.
Some of the techniques used are as follows:
1 2 3 4
Unanimity Majority Plurality Autocratic

It is a decision that is reached It is a decision that is It is a decision that is Decisions are made by an
whereby everyone agrees on a reached with support from reached whereby the individual on behalf of the
single course of action. This more than 50% of the largest block in a group group.
can be achieved using Delphi members of the group. decides, even if a majority
method. is
not achieved.
Requirement Traceability Matrix
A sample requirements traceability matrix is given below:
Requirement Design Coding System Testing Acceptance

Number Testing
3.1.1.1 (Multi-user RBACprocessing.cpp

SDD Section 3.1 Tests 111-120 Tests 51-55
access) SchemaCreation.sql
…
…
…
…
Requirements Traceability is a technique used to verify that the work packages of a WBS are delivered
and tested. Typically, this is supported through tooling like Microsoft Team Foundation Server or
similar products.
Define Scope
“Define Scope is the process of developing a detailed description of the project and product.” It belongs
to the Planning Process Group.
Project Charter
PROJECT SCOPE MANAGEMENT
Project
Project Management Plan scope
statement
Define Scope
Project Documents
Enterprise Environmental Project

Factors Expert Judgment Data Analysis Decision Making documents
updates
Organizational Process Interpersonal and
Assets Product Analysis
Team Skills
Legend
Input
Output Figure 5-8. Define Scope: Inputs, Tools & Techniques, and Outputs
Tools & Techniques
Planning Process
Create WBS
“Create WBS is the process of subdividing project deliverables and project work into smaller, more
manageable components.” It belongs to the Planning Process Group.

Scope baseline
Project Documents Create WBS
Project documents
Factors
updates
Organizational Process Expert judgment Decomposition
Assets
Legend
Figure 5-10. Create WBS: Inputs, Tools & Techniques, and Outputs
Input
Output
Tools & Techniques
Planning Process
Validate Scope
“Validate Scope is the process of formalizing acceptance of the completed project deliverables.” It
belongs to the Monitoring and Controlling Process Group.
PROJECT SCOPE
MANAGEMENT
Accepted deliverables
Project Documents
Work Performance
Information
Verified Deliverables Validate Scope
Change Requests
Work performance data
Inspection Decision Making Project documents
updates
Legend
Input
Figure 5-15. Validate Scope: Inputs, Tools & Techniques, and Outputs
Output
Tools & Techniques
Control Scope
“Control Scope is the process of monitoring the status of the project and product scope and managing
changes to the scope baseline.” It belongs to the Monitoring and Controlling Process Group.
Project management plan

Work performance
information
Project Documents
Change requests
Work performance data Control Scope Project management plan

updates
Project documents updates
assets
Data analysis
Legend
Input
Output
Tools & Techniques Figure 5-17. Control Scope: Inputs, Tools & Techniques, and Outputs
Understand the creation of WBS to answer concept-based questions.
Important Outputs
Given below are important outputs from Project Scope Management:
Work Performance Information
The performance data collected from controlling processes, analysed in comparison with project
management plan components, project documents and other work performance information. Work
performance data becomes work performance information after the tools and techniques of a process
have been applied.
Accepted Deliverables
These are deliverables that have been verified and are ready for validation against the project scope at
which point they are accepted.
Change Requests
When validating project scope, new requirements might be discovered, for example, adding an email
notification when a password is changed. These requirements should be documented as change
requests.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Glossary, Page 698
Data–Information–Knowledge–Wisdom
The PMI emphasizes managing project knowledge as an important technique throughout all processes. Existing
knowledge and new knowledge are represented as Project Performance Data, which acts as an input to a
process and, in turn, produces an output of Project Performance Information.
Data-Information-Knowledge-Wisdom (DIKW) is the heart of

knowledge management. Effective sharing of knowledge
requires the development and maintenance of data.
Some facts related to DIKW are:

• Data is a set of discrete facts
• Information requires applying meaning or relevance to the
set of facts
• Brian, the project manager in a strong-matrix organization, has been leading projects for his
company for 10 years.
• The company has made a decision to streamline their operations and create policies and
procedures to cultivate a culture that is more centered on driving customer excellence. This shift
in mindset is slowly being adapted by company leaders and staff members.
• Brian’s current project is 25% complete, ahead of schedule, and currently under budget.
• Every two weeks, Brian schedules meeting with key stakeholders to review the project reports and
metrics.
• During the last stakeholder meeting, Brian was asked by one of the key stakeholders to add a new
feature to the scope of work in the form of a formal change request.
• This stakeholder has just returned from an industry conference where he gained insight on some
advanced technology that would increase the company’s competitive position and result in a large
increase in market share. How should Brian handle this change request?
• As this was a formal request by a key stakeholder, Brian should follow the agreed upon
Change Request process.
• This would include analyzing the costs and benefits of the proposed request and providing
alternatives to minimize the impact to cost and schedule.
• Once this analysis is complete, Brian can present his findings to the Sponsor and
Stakeholders for their decision.
Quiz
1 In which Project Management Process Group is the project scope defined?
Planning
Initiating
Executing

Quiz
1. In which Project Management Process Group is the project scope defined?
Planning
Initiating
Executing

There are only six processes in scope management. Four are in Planning Process Group and two
are in Monitoring and Controlling Process Group. Project scope is defined in Planning Process
Group.
Quiz
2. During a project meeting, one of the team members suggests a new feature that
customers may like. The project manager says no to this feature, indicating the project
should focus on only what is required to complete the project. This is an example
of_______________.
Scope Management
Change Management
Project Management
Quality Management
Quiz
2. During a project meeting, one of the team members suggests a new feature that
customers may like. The project manager says no to this feature, indicating the project
should focus on only what is required to complete the project. This is an example
of_______________.
Scope Management
Change Management
Project Management
Quality Management
Scope management is about doing only the work needed for the project.
Quiz
3. What is the most important thing that a project manager should ensure during the
Validate Scope process?
Accuracy
Timeliness
Acceptance
Completeness
Quiz
3. What is the most important thing that a project manager should ensure during the
Validate Scope process?
Accuracy
Timeliness
Acceptance
Completeness
Scope validation involves formal acceptance of the work deliverables.

Quiz
4. The WBS for your project has been prepared and distributed to the project team members.
When execution begins, which document will provide the detailed descriptions of the WBS
elements?
Scope Statement
WBS dictionary
Project Statement of Work

Quiz
4. The WBS for your project has been prepared and distributed to the project team members.
When execution begins, which document will provide the detailed descriptions of the WBS
elements?
Scope Statement
WBS dictionary
Project Statement of Work
The WBS dictionary provides detailed descriptions about the deliverables listed in the WBS.
Quiz
5. Which of the following is not true regarding subdividing the work in the WBS?
Subdivide until it has a meaningful conclusion
Subdivide until it can be done by a single person
Subdivide until it cannot be logically subdivided further
Subdivide until it can be realistically estimated

Quiz
5. Which of the following is not true regarding subdividing the work in the WBS?
Subdivide until it has a meaningful conclusion
Subdivide until it can be done by a single person
Subdivide until it cannot be logically subdivided further
Subdivide until it can be realistically estimated
WBS need not be decomposed until it can be done by a single person.

Quiz
6. Validate scope is the process of formalizing acceptance of the completed project

deliverables. When should this process be done?
During quality control
During the planning processes
At the end of each phase of the project
At the end of the project

Quiz
6. Validate scope is the process of formalizing acceptance of the completed project

deliverables. When should this process be done?
During quality control
During the planning processes
At the end of each phase of the project
At the end of the project
Validate scope is a monitoring and controlling process which can be performed throughout the
project. At the end of each phase of the project, you would perform validate scope to achieve
the formal acceptance of the completed project deliverables.
Quiz
7. Which are the effective forms of Requirements Gathering documents?
Use Cases
User Stories
Product Backlog Items
All of the above

Quiz
7. Which are the effective forms of Requirements Gathering documents?
Use Cases
User Stories
Product Backlog Items
All of the above
Use Cases, User Stories, and Product Backlog Items (PBIs) are all valid forms of requirements.
User Stories and PBIs are agile forms of requirements documentation.
Quiz
8. Javed is a project manager for a custom-manufacturing company that has recently completed
the testing of a new Bluetooth-enabled digital thermometer. The Quality Assurance team has
signed off stating that the product meets requirements and specifications. At which state are
the deliverables?
Verified
Accepted
Inspected
Validated
Quiz
8. Javed is a project manager for a custom-manufacturing company that has recently completed
the testing of a new Bluetooth-enabled digital thermometer. The Quality Assurance team has
signed off stating that the product meets requirements and specifications. At which state are
the deliverables?
Verified
Accepted
Inspected
Validated
The project deliverables are “verified” and ready for the Scope Validation process, where they
will be inspected, validated, and accepted if the users feel they meet requirements and
specifications.
Key Takeaways
Project Scope Management includes the processes required to
ensure that a project includes all and only the work essential to
complete the project successfully.
Product scope refers to the features and functions that characterize

a product, service, or result, while project scope refers to the work
that must be performed to deliver a product, service, or result with
the specified features and functions.
WBS breaks the project scope into smaller and more manageable
pieces called work packages
WBS dictionary contains the explanation of the terms used in WBS.
The six Project Scope Management processes are Plan Scope,

Collect Requirements, Define Scope, Create WBS, Validate Scope,
and Control Scope.

Lesson 07: Project Schedule Management
Objectives
Define Project Schedule Management
Explain project schedule, Gantt charts, and network

diagrams
Identify the key terms used in Project Schedule

Management
Describe the Project Schedule Management processes
Explain various schedule network analysis techniques

Project Schedule Management
The definition of *Project Schedule Management is as follows:
Project Schedule Management includes processes required to manage timely completion of the
project.
Project Scheduling provides a detailed plan that represents how and when the project will deliver the
products, services, and results defined in the project scope. It serves as a tool for communication,
managing stakeholders’ expectations, and as a basis for performance reporting.
!
Schedule management plan defines how schedule contingencies will be reported and assessed.
Institute, Inc., 2017, Page 173
Project Schedule Management Activities
The key activities of Project Schedule Management are as follows:
Identifying
A list of activities to be included in the project will be identified.
Activities
Estimating Time
and Resources Time and resources for each of the identified activities will be estimated.
Sequencing
Activities All the activities will be sequenced as per the dependencies.
Project Schedule
Project schedule assigns a duration to the project activities,

and the activities are sequenced in a logical order.
• Project schedule defines the start and end dates of the
project and its activities.
• Each task is assigned a resource, duration, and, when
appropriate, a predecessor task.
• Scheduling software is used to develop the project
schedule. Microsoft Project is the most popular tool used
for project schedule development.
!
A project management plan is not a project schedule. It is more comprehensive and contains various
project related plans such as risk management plan, cost management plan, etc. It may also include a
schedule.
Gantt Chart
Gantt chart is a type of bar chart that displays the start and end dates for project activities and the overall project
schedule. They can also show logical task relationships and indicate the task completion percentage.
Summary elements of
the work breakdown
structure
E.g., Activity B and Activity
Number of activities C. Activity C can start only
under summary when Activity B is
elements completed
Create tasks and work with the Gantt chart. Each task has a duration, and the Gantt chart facilitates a
graphical representation of the overall project schedule, with path to completion.
Gantt Chart: Relationships
Project activities are related to each other. The relationships among project activities can be classified as follows:
Finish to Start Finish to Finish

An activity must finish before the An activity must finish before the
next activity can start. next activity can finish.
Activity A Activity B
Activity A Activity B
Start to Start Start to Finish

An activity must start before the An activity must start before the
next activity can start. next activity can finish.
Activity A Activity B Activity A Activity B
!
Charts are generally laid out with finish-start and then time/resource adjusted by changing the
relationship of tasks (start-start, finish-finish, start-finish)
Gantt Chart Relationships: Examples
Finish to Start
An activity that cannot be started until its predecessor is completed. For example, the foundation for a building cannot
be poured until it has been excavated.
Finish to Finish
An activity must finish before the next activity can finish. For example, an old system must be retired before a new
system can go into production.
Start to Start
An activity must start before the next activity can start. For example, the project request must be submitted before work
can start on the project charter.
Start to Finish
An activity must start before the next activity can finish. For example, billing for a service must be started until the
service task can be finished.
Gantt Chart: Dependencies
Dependency suggests that the project activities are interdependent. Dependencies can be classified as follows:
Classification 1
Mandatory These dependencies are inherent in the nature of the work and cannot be passed by.
Dependencies Example: The foundation of a civil structure must be laid before working on pillars and slabs.
Discretionary These dependencies are based on the preference of the team and can be changed if required.
Dependencies Example: Painting activities can be started only after all the electrical and plumbing work is done.
Classification 2
External These dependencies involve an external entity that may impact the project.
Dependencies Example: Approval by a government authority for the structural design of a building.
Internal These dependencies are within the control of project team.

Dependencies Example: Commencement of the slab work depends on the availability of ready-mix concrete.
Network Diagram
Network diagram is used to plot the activity dependencies. Project activities are represented in the form of a
network. Network diagrams can be drawn in one of the following two ways:
Precedence Diagramming Model (PDM) or Arrow Diagramming Model (ADM) or Activity

Activity on Node (AON) on Arrow (AOA)
In precedence diagramming model: In arrow diagramming model:
• Boxes represent activities • Arrows are used to represent activities
• Arrows indicate dependencies • Direction of the arrows indicates the
• Relationships can be of four types: relationships and sequences
o Finish to Start • Only Finish to Start relationships can be
o Start to Start shown
o Finish to Finish • Dummy activities may be required to show a
o Start to Finish dependency
There may be questions in the PMP exam based on the Network diagram. So create and work with diagram
network diagrams to ensure that you understand the value. This will make answering questions based on
Network diagram easier.
Network Diagram: Example
Given below is an Activity on Node diagram:
A B
Start E Finish
C D
!
Hammock activities are used to show a comprehensive summary activity, which can be used for
control and reporting purposes.
Key Terms
Given below are the key terms used in Project Schedule Management:
Leads and Lags

A successor activity is said to have a lead when it can start before the predecessor.
Example: Activity B can start 2 days before the completion of activity A.
A successor activity is said to have a lag when it needs to be delayed with respect to the predecessor.
Example: Activity B can start 2 days AFTER activity A is completed.
*Rolling Wave Planning
Rolling wave planning is an iterative planning technique in which the work to be accomplished in the near term is
planned in detail while the work in the future is planned at a higher level. It is a form of progressive elaboration.
Analogous Estimating
This estimating is based on data from previous projects (or activities). For example, if the last 5 similar projects took 6
months, this one will also take 6 months.
*Definition taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc.,
2017, Page 698
Key Terms
Given below are the key terms used in Project Schedule Management:
Parametric Estimating
This uses a mathematical model to calculate projected times for an activity based on historical records from the
previous projects and other information.
*Effort
Effort is the total amount of work required to complete the activity.
*Duration
Duration is the calendar (elapsed) time required to complete an activity.

Example: An activity requires 10 people to work for 5 days; total effort is 50 person days, and duration is 5 days.
*Decomposition
Decomposition is the technique of breaking a task into smaller pieces.
Note: Decomposition should continue until there is no further value from decomposing the task further or until it can
be estimated accurately.
*Definitions taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute,
Inc., 2017, Page 698
Project Schedule Management Processes

Requirements 6.2 Define 7.2 Estimate Costs 9.2 Estimate Management 11.2 Identify Risks Management Engagement
5.3 Define Scope Activities 7.3 Determine Activity Resources 11.3 Perform
5.4 Create WBS 6.3 Sequence Budget Qualitative Risk
Activities Analysis
6.4 Estimate 11.4 Perorm
Response
Project
Management
Process Executing 4.3 Direct and 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Groups Manage Project Resources Communications Risk Response Procurments Stakeholder
Work 9.4 Develop Team Engagement
4.4 Manage Project 9.5 Manage Team
Knowledge
Work Engagements
4.6 Perform
Integrated Change
Control
Closing 4.7 Close Poject or

Phase
Plan Schedule Management
“Plan Schedule Management is the process of establishing the policies, procedures, and
documentation for planning, developing, managing, executing, and controlling the project
schedule.” It belongs to the Planning Process Group.
Project management
plan PROJECT SCHEDULE MANAGEMENT
Project charter
Plan Schedule Schedule
Management management plan
Enterprise
Legend
Expert Input
Meetings Data analysis
judgment Output
Organizational
Tools & Techniques
process assets Planning Process
Figure 6-3. Plan Schedule Management: Inputs, Tools & Techniques, and Outputs
Define Activities
“Define Activities is the process of identifying and documenting the specific actions to be
performed to produce the project deliverables.” It belongs to the Planning Process Group.
PROJECT SCHEDULE Activity list

MANAGEMENT
Project Management Activity attributes

Plan
Enterprise Define Activities Milestone list

Organizational process Change Requests
assets
Expert Judgment Decomposition Project Management
Legend Plan Updates
Input Rolling wave
Output Meetings
Tools & Techniques
planning
Planning Process
Figure 6-5. Define Activities: Inputs, Tools & Techniques, and Outputs
Sequence Activities
“Sequence Activities is the process of identifying and documenting relationships among the
project activities.” It belongs to the Planning Process Group.
Project Management PROJECT SCHEDULE MANAGEMENT

Plan
Project schedule
Project Documents network diagrams
Sequence Activities
Enterprise Project documents
Environmental Factors updates
Organizational
Process Assets Precedence Dependency
Diagramming Determination and Leads and lags
Method (PDM) Integration
Legend Project
Input Management
Output
Tools & Techniques
Information
Planning Process Systems
Figure 6-7. Sequence Activities: Inputs, Tools & Techniques, and Outputs
Estimate Activity Durations
“Estimate Activity Durations is the process of estimating the number of work periods needed to complete
individual activities with estimated resources. The key benefit of this process is that it provides the amount
of time each activity will take to complete, which is a major input into the Develop Schedule process.” It
belongs to the Planning Process Group.
PROJECT SCHEDULE MANAGEMENT
Project Management
Plan Duration estimates
Project Documents
Estimate Activity
Enterprise environmental Durations Basis of estimates
factors
Organizational process Project documents
assets updates
Analogous Parametric
Expert judgment
Estimating estimating
Three-point Bottom-up
Legend Data Analysis
estimating estimating
Input
Output
Decision Making Meetings
Tools & Techniques
Planning Process
Figure 6-12. Estimate Activity Durations: Inputs, Tools & Techniques, and Outputs
Jan, the EVP of the manufacturing division, has commissioned Jack to lead a project initiative in her
area of responsibility because of his attention to detail. Jack is working with his team to estimate
activity durations so they can map out the schedule for the project. After a successful decomposition
process of the scope statement of work, Jack is confident in his team’s ability to capture the true
work effort that needs to be estimated and scheduled.
In reviewing the activities to be estimated, Jack realizes that a large number of the activities could
benefit from some historical data and the use of mathematical parameters. This minimizes his
estimating risk for 60% of the activities. For the remaining activities, the team is able to research past
practices and industry standards to come up with a range of estimates based on optimistic,
pessimistic, and realistic durations. What approach are Jack and his team likely to take to determine
their estimates?
Jack and his team have decided to use parametric estimation technique for a large number of
activities and have decided to use three-point estimate for the remaining activities. This is also
known as PERT.
Develop Schedule
“Develop Schedule is the process of analyzing activity sequences, durations, resource requirements, and
schedule constraints to create the project schedule model.” It belongs to the Planning Process Group.
PROJECT SCHEDULE MANAGEMENT

Project Management Schedule Baseline
Plan
Project Documents Project Schedule
Agreements Schedule Data

Develop Schedule
Enterprise Project Calendars

Environmental Factors
Organizational process Schedule network Resource
Optimization Change Requests
assets analysis
Project Management
Leads and Lags Project Management
Information System
Legend Plan updates
Input Critical path method Data Analysis
Project documents
Output
Schedule Agile Release updates
Tools & Techniques
Compression Planning
Planning Process
Figure 6-14. Develop Schedule: Inputs, Tools & Techniques, and Outputs
Schedule Network Analysis
Along with the time estimate, it is necessary to know if the required resources are available at a given time.
Schedule network analysis technique generates project schedule. Various schedule network techniques are as
follows:
Critical Path Method It determines a critical path on a project schedule.
Critical chain method is determined based on the resources required to execute

Critical Chain project tasks. It reflects delays that occur due to task switching, Parkinson’s Law
Method (work grows to fill the available time), and lack of prioritization.
What-If Scenario It varies a certain parameter and observes the impact on the schedule.
Analysis
Resource Optimization
Techniques They arrive at the optimal utilization of the resources used on a project.
Program Evaluation and Review Technique (PERT)
Program Evaluation and Review Technique (PERT) uses three-point estimates for an activity.
• Pessimistic (P) estimate refers to the duration an activity would take in the worst case scenario.
• Most likely (M) estimate refers to the duration an activity would take in a realistic scenario.
• Optimistic (O) estimate represents the duration an activity would take in the best case scenario.
Given below are the key formulae used in PERT:
To calculate the expected duration of the estimate, based on the three (μ) = (P+4M+O)/6
estimates
To calculate the standard deviation of an activity (σ) = (P-O)/6
To calculate the variance of the activity σ^2
Concept-based questions on PERT can be expected in the exam.

PERT: Example
The values of expected deviation and standard deviation can be applied to derive useful information about the
likely range for values.
Given: O = 20; P = 70; M = 30

Now, μ = (70 + 30 * 4 + 20)/6 = 35
And σ = (70 – 20)/6 = 8 (approx.)
Using the normal curve:

Likelihood of actual time lying between:
1 σ, i.e., 27 and 43 is 68.2%
2 σ, i.e., 19 and 51 is 95.4%
3 σ, i.e., 11 and 59 is 99.7%
Six Sigma:
Six Sigma is reaching a level of confidence where 3.4 times out of a
million would fall outside the stated range.
!
PERT allows you to plan based on the intended level of confidence in the outcome and determine
buffers accordingly.
Critical Path Method
Critical path is the longest duration path through a network diagram, which determines the shortest time to complete
the project. Float, also called slack, is calculated in a network diagram.
The three types of float are as follows:
*Total Float (Slack) *Free Float (Slack) Independent Float (Slack)
The amount of time that a The amount of time that a The amount of time an activity
schedule activity can be delayed schedule activity can be delayed can be delayed if all the
or extended from its early start without delaying the early start immediate predecessors finish at
date without delaying the project date of any successor or their latest finish dates and all
finish date or violating a violating a schedule constraint[7] the immediate successors are to
schedule constraint[7] be started on the earliest start
dates.
!
The slack of activities on the critical path is zero (0) as the activities on critical path cannot be delayed.
*Definitions taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc.,
2017, Page 210
Calculation of Float
Steps to calculate float are as follows:
Follow the forward pass

Identify the critical path Calculate late finish and late
to find early start and
of the network start using backward pass
early finish for each
method
activity
Total Float = Late Start – Early Start or Late Finish – Early Finish
Before the start of exam, please make a note of the total float formula.
Calculation of Float (Contd.)
In forward pass, travel through the network starting with

time zero and calculate the time required for each activity
Forward
until the last activity of the project. The starting time of ES EF Pass
each activity is known as early start (ES) and the end time
is known as early finish (EF). Float
Backward
Pass
In backward pass, travel through the network from project

LS LF
end date and calculate the time required for each activity.
The end date is called the late finish (LF) and start date is
called the late start (LS).
Critical Path: Example
Given below is the calculation of a critical path:
3 6 6 14
Start Activity 2 Activity 4
Float = 0 Float = 0
0 3 3 6 6 14 14 18
Activity 1 Activity 5
Float = 0 Float = 0
0 3 14 18
3 7
Activity 3
Float = 7
Activity Duration End
10 14
Activity 1 3
Activity 2 3 Start, 1, 2, 4, 5, End is the
Paths Duration
longer (critical) path
Activity 3 4
Start, 1, 2, 4, 5, End 18
Activity 4 8
Start, 1, 3, 5, End 11
Activity 5 4
Schedule Compression
Schedule compression is done to see if the desired completion date can be met and what will have to
change to meet that date. The two techniques of schedule compression are as follows:
Fast Tracking Crashing

Linear activities are checked if they can happen This involves increasing resources on critical
in parallel, thereby reducing the project cycle path activities while making cost and schedule
time tradeoffs. You must determine how to obtain
the greatest amount of schedule compression
for the least incremental cost while maintaining
project scope.
Concept-based questions on schedule compression can be expected in the exam.

Schedule Compression: Example
The table summarizes the project activity details. Which activity would you crash to reduce the project
time by 1 day?
Activity Original Crash Time Original Cost Crash Cost Extra Cost Crash Cost
Duration (in Duration (in Savings in Dollars per Day
Days) Days)
A 10 8 2 10,000 12,000 2,000 1,000
B 14 10 4 14,000 24,000 10,000 2,500
C 5 4 1 15,000 17,000 2,000 2,000
D 9 7 2 12,000 18,000 6,000 3,000
Activity A, as it has the minimum crash cost per day.

Impact of Schedule Compression
Impact of schedule compression on projects are as follows:
Schedule Compression
General Impact to the Project
Technique
• Adds risks
Fast track
• Increases management time for the project manager
• Adds costs
Crash
• Increases management time for the project manager
• Saves time and cost

Reduce scope
• Increases customer dissatisfaction
• Saves cost and resources

Cut quality
• Increases risks
Resource reallocation • Does not add cost or increase risks

Other Scheduling Techniques
The techniques used in project scheduling:
In this method, the following questions are asked to produce a realistic schedule:
What-If Scenario What if a particular scenario changed on the project? Would that produce a shorter
Analysis schedule?
In this method, a computer modeling program is used to simulate the outcomes of a

Monte Carlo Analysis
project by making use of input values selected at random from probability
distributions.
Resource In this technique, a resource-limited schedule is produced. Resource optimization results

Optimization in more stable number of resources used in the project by resource leveling their effort.
Technique
Critical chain method is determined based on the resources required to execute

Critical Chain Method project tasks. It reflects delays that occur due to task switching, Parkinson’s Law
(work grows to fill the available time), and lack of prioritization.
Control Schedule
“Control Schedule is the process of monitoring the status of project activities to update project progress and
manage changes to the schedule baseline to achieve the plan.” It is part of the Monitoring and Controlling
Process Group.
PROJECT SCHEDULE MANAGEMENT Work performance

information
Project Management
Schedule forecasts
Plan
Control Schedule
Project Documents Change Requests
Work Performance Data analysis Critical Path Project Management

Data Method Plan updates
Organizational Project documents
process assets Project Management Resource updates
Information System Optimization
Legend
Input
Output Leads and Lags Schedule
Tools & Techniques Compression
Monitoring &
Controlling Process
Figure 6-22. Control Schedule: Inputs, Tools & Techniques, and Outputs
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 222.
In one of Janice’s project team meetings, her team is reporting the status of their assigned activities
defined on the project schedule. About halfway through the meeting, a problem with the schedule is
discovered as several activities are behind schedule.
After all the activities for this phase of the project are reported, the overall schedule is determined to be
progressing at about 75% of what had been planned. Janice has to figure out how she can get the
schedule back on track. How can Janice go about solving this schedule problem?
To aid in the decision making process, Janice needs to schedule a follow-up meeting with her team to
evaluate the impact of this delay to the triple constraint. The delivery of the scope, budget, and
schedule, along with quality expectations, resource availability, and risks, has to be evaluated so that
she can present a strategy for correcting the project’s schedule delay to the Project Sponsor.
Due to the team’s assessment, Janice can make the decision to add additional resources to the
scheduled activities on the critical path. Before crashing the critical path, the team can identify a series
of sequenced activities that can be re-arranged and completed in parallel to free up more resources
that can be re-allocated to the critical path activities. By utilizing these schedule compression
techniques, Janice was able to increase the project’s productivity rate to 95%.
Quiz
Your customer wants your project to be completed 10 days earlier than planned. You believe
1 that you can meet the target by overlapping the project activities. What is the approach that
you plan to use?
Concurrent Engineering
Crashing
Resource Leveling
Fast Tracking
Quiz
Your customer wants your project to be completed 10 days earlier than planned. You believe
1 that you can meet the target by overlapping the project activities. What is the approach that
you plan to use?
Concurrent Engineering
Crashing
Resource Leveling
Fast Tracking
Overlapping of activities implies taking activities that would otherwise be executed sequentially and
executing them by introducing parallelism. This is referred to as fast tracking.
Quiz
You are managing a project to build a multi-storey complex in your city. You are waiting for
2 the clearance to start construction of the building. A dependency that originates outside of
the project is called _______________.
External Dependency
Mandatory Dependency
Discretionary dependency
Internal Dependency
Quiz
You are managing a project to build a multi-storey complex in your city. You are waiting for
2 the clearance to start construction of the building. A dependency that originates outside of
the project is called _______________.
External Dependency
Mandatory Dependency
Discretionary dependency
Internal Dependency
This is an example of an external dependency that involves relationships between the project and non-
project activities that are outside the control of a project manager.
Quiz
Which of the following is the best action to take to complete a project one week ahead of
3 schedule?
Inform customer that critical path does not allow early completion
Motivate the team to work hard and check the status next month
Meet the team and look for options for crashing or fast tracking the critical path
Consult project sponsor

Quiz
Which of the following is the best action to take to complete a project one week ahead of
3 schedule?
Inform customer that critical path does not allow early completion
Motivate the team to work hard and check the status next month
Meet the team and look for options for crashing or fast tracking the critical path
Consult project sponsor

You should first seek to understand what the best course of action is. Also, when it comes to schedule
compression, crashing and fast tracking are the two main options. The project sponsor would approve the
actions after your team develops them.
Quiz
A project team is working on the network diagram of a project and wants to determine the
4 float of a project activity. Which of the following is the correct formula?
Late Finish-Early finish (LF-EF)
Late Finish-Early finish (LF-EF) or Late Start-Early Start (LS-ES)
Late Start-Early Start (LS-ES)
Late Finish-Late Start (LF-LS)

Quiz
A project team is working on the network diagram of a project and wants to determine the
4 float of a project activity. Which of the following is the correct formula?
Late Finish-Early finish (LF-EF)
Late Finish-Early finish (LF-EF) or Late Start-Early Start (LS-ES)
Late Start-Early Start (LS-ES)
Late Finish-Late Start (LF-LS)
Float is calculated by subtracting either the Early Finish (EF) from the Late Finish (LF) or the Early Start
(ES) from the Late Start (LS). Float for an activity = LS-ES or LF-EF.
Quiz
The project manager, along with his team, has defined the dependencies among the
activities and estimated their durations and the resources required to work on them. He is
5 now in the process of creating the project schedule. All of the following tools and techniques
will assist him in creating the project schedule, except ____________.
Resource leveling
Schedule compression
Critical chain method
Reserve analysis
Quiz
The project manager, along with his team, has defined the dependencies among the
activities and estimated their durations and the resources required to work on them. He is
5 now in the process of creating the project schedule. All of the following tools and techniques
will assist him in creating the project schedule, except ____________.
Resource leveling
Schedule compression
Critical chain method
Reserve analysis
All of the above stated options, except D, are tools and techniques for the “develop schedule process.”
Reserve analysis is a tool and technique for “estimate activity durations.”
Quiz
6 A summary activity that represents a group of related activities is called ________.
Hanger
Hammock
Float
Milestone
Quiz
6 A summary activity that represents a group of related activities is called ________.
Hanger
Hammock
Float
Milestone
Hammock is a summary activity that represents a group of related activities.

Quiz
7 A sequence of tasks within a project schedule that has zero slack is called ________.
Critical Chain
Critical Path
Zero Slack Track
Network Dependency Diagram

Quiz
7 A sequence of tasks within a project schedule that has zero slack is called ________.
Critical Chain
Critical Path
Zero Slack Track
Network Dependency Diagram
The Critical Path in a project has zero slack, and any delays on tasks on the critical path will delay the
end date of the project.
Quiz
Keri is developing a project schedule. She includes a task to order a computer server with
8 complex configurations, which takes 7 days to ship after the order is placed. How should she
represent this in her Gannt chart?
She only needs one task for ordering and receiving the part of 7 days.
She should create a task for ordering the part. The task should reflect the time to create the complex
order and a milestone to receive the part, with a Start to Finish dependency and a 3 day lag.
She should create a task for ordering the part and another task of seven days to receive it.
This task is too detailed for inclusion in a project schedule based on the principle of decomposition.
Quiz
8 Keri is developing a project schedule. She includes a task to order a computer server with
complex configurations, which takes 7 days to ship after the order is placed. How should she
represent this in her Gannt chart?
She only needs one task for ordering and receiving the part of 7 days.
She should create a task for ordering the part. The task should reflect the time to create the complex order
and a milestone to receive the part, with a Start to Finish dependency and a 3 day lag.
She should create a task for ordering the part and another task of seven days to receive it.
This task is too detailed for inclusion in a project schedule based on the principle of decomposition.

The best answer is to create one task and a milestone. The actual effort is creating the server order, which
should be created as a task and assigned to a resource. Receiving the server is a milestone, and it should
reflect the 7 day shipping duration from the point the task order is complete.
Key Takeaways
Project Schedule Management includes the processes required to

manage the timely completion of the project.
A project schedule defines the start and end dates of the project and
the project activities. These activities are assigned a duration and
sequenced in a logical order.
Gantt charts and network diagrams are used to identify project
activities and determine the relationships and dependencies between
them.
Gantt chart displays the start and end dates of project activities, the
overall project schedule, and the logical task relationships, while
network diagram is used to plot the activity dependencies.
Plan Schedule Management, Define Activities, Sequence Activities,
Estimate Activity Durations, Develop Schedule, and Control Schedule
are the six processes under Project Schedule Management.
Schedule network analysis technique generates project schedule
based on the estimates of time and resource requirements.

Lesson 08: Project Cost Management
Objectives
Define Project Cost Management
Differentiate between cost estimation and cost budgeting
Explain control accounts
Describe the Project Cost Management processes
Apply earned value management technique to track project

performance
Identify key terminologies used in Project Cost Management

Project Cost Management
The definition of *Project Cost Management is as follows:
Project Cost Management includes the processes involved in estimating, budgeting, financing,
funding, managing, and controlling costs so that project can be completed within the approved
budgets.
*Definition taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute,
Inc., 2017, Page 231
Cost Management Plan
• The Cost Management Plan is concerned with the costs of the resources needed
to complete project activities.
• It provides details on how to plan, manage, and control the project cost in
relation to the cost baseline and manage the cost variances.
• The project cost management plan is a subsidiary of the project management
plan.
• The techniques involved in estimating the cost of each project activity is similar
to the ones used in estimating project time.
• Expert judgment, analogous estimating, bottom-up estimating, and reserve
analysis are some of the techniques used in cost management.
Control Account
In larger projects, costs are managed at a higher level rather than at an individual activity level. Under control
account technique, related activities are grouped and their costs are managed as one unit.
Another Deliverable in
Deliverable in WBS
WBS
The scope of a project is decomposed

Control Account
through a Work Breakdown Structure
(WBS). The lowest level deliverable in the
Work Work Work
WBS is called a work package. Package Package Package
Activity Activity Activity

Project Cost Management Processes
Initiating 4.1 Develop Project Charter 13.1 Identify

Stakeholders
Schedule Analysis
11.5 Plan Risk
Response
Proje
ct
Man
age Executing 4.3 Direct and Manage 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
ment Project Work Resources Communications Risk Response Procurements Stakeholder
Proc 4.4 Manage Project 9.4 Develop Team Engagement
ess Knowledge 9.5 Manage Team
Grou
ps
Monitoring and 4.5 Monitor and Control 5.5 Validate Scope 6.6 Control 7.4 Control Costs 8.3 Control Quality 9.6 Control 10.3 Monitor 11.7 Monitor Risks 12.3 Control 13.4 Monitor
Controlling Project Work 5.6 Control Scope Schedulel Resource Communications Procurements Stakeholder
4.6 Perform Integrated Engagements
Change Control
Closing 4.7 Close Poject or Phase
Plan Cost Management
“Plan Cost Management is the process of defining how the project costs will be estimated,
budgeted, managed, monitored, and controlled.” It is part of the Planning Process Group.
PROJECT COST
MANAGEMENT
Project Charter
Project Management
Plan
Plan Cost Management Cost management
Enterprise plan
environmental
factors
Legend
Organizational
Input
process assets Expert judgment Data Analysis Meetings Output
Tools & Techniques
Planning Process
Figure 7-2. Plan Cost Management: Inputs, Tools & Techniques, and Outputs
Estimate Costs
“Estimate Costs is the process of developing an approximation of the cost of resources needed to complete
project work.” It belongs to the Planning Process Group.
Project Management
PROJECT COST MANAGEMENT
Plan
Cost estimates
Project Documents
Basis of
Estimate Cost
Enterprise environmental estimates
factors
Project document
Organizational Parametric Three-point updates
Expert judgment
process assets estimating estimating
Legend
Analogous Project management Input
estimating information system Output
Tools & Techniques
Planning Process
Bottom-up Decision
Data analysis
estimating Making
Figure 7-4. Estimate Costs: Inputs, Tools & Techniques, and Outputs
Determine Budget
“Determine Budget is the process of aggregating the estimated costs of individual activities or work
packages to establish an authorized cost baseline.” It is part of the Planning Process Group.
The cost baseline includes all authorized budgets but excludes management reserves.
Project Management
Plan
PROJECT COST MANAGEMENT
Project Documents Cost baseline
Business Documents
Determine Budget Project funding
Agreements requirements
Factors Project document
Organizational process Expert Judgment Cost Aggregation Data Analysis updates
assets
Legend
Historical Funding Limit Input
Financing
Information Review reconciliation Output
Figure 7-6. Determine Budget: Inputs, Tools & Techniques, and Outputs Tools & Techniques
Planning Process
An understanding of how to determine a project budget is important for the PMP exam.
Control Costs
“Control Costs is the process of monitoring the status of the project to update the project costs and managing
changes to the cost baseline.” It belongs to the Monitoring and Controlling Process Group.
Project management
plan Work performance
PROJECT COST MANAGEMENT information
Project Documents
Cost forecasts
Project Funding
Requirements Change requests
Control Costs
Work Performance Data Project document
updates
Organizational Process Expert To-Complete
Assets Data analysis Performance Index Project management
judgment Project (TCPI) plan updates
Legend management
Input information
Output system
Tools & Techniques Figure 7-10. Control Costs: Inputs, Tools & Techniques, and Outputs
Planning Process
Business scenario based questions on project cost control can be expected in the exam.
Difference Between Planned Value and Earned Value
• Earned value is the total of budget allocated to each of the activities that
have been completed at that point of time.
• We can compare the earned value (budget allocated for a specific period
of time) to the planned value (the total of all work planned) to determine
if the project is on track.
• If the planned value of a project is $340, then the total of all the work packages planned for the
project is $340.
Earned Value Management
Earned Value Management (EVM) is a method to measure project performance against the project baselines.
It results from an earned value analysis and indicates potential deviation of the project from the cost and/or
schedule baselines.
The various terms used in earned value are as follows:
Acronym Term Explanation

PV Planned Value Authorized budget assigned to scheduled work
EV Earned Value Work performed in terms of budget authorized for that work
AC Actual Cost Actual cost incurred in work performed
BAC Budget at Completion Budgeted amount for the total work
EAC Estimate at Completion Expected total cost for the project
ETC Estimate to Complete Expected cost to finish all the remaining project work
VAC Variance at Completion Projected budget surplus or deficit at the end of the project
Questions based on earned value management can be expected in the exam.

Earned Value Formulae
The following table gives the formulae used in EVM and their interpretations:
Term Formula Interpretation
Cost Variance (CV) EV – AC Negative is over budget; positive is under budget
Schedule Variance (SV) EV – PV Negative is behind schedule; positive is ahead of schedule
Cost Performance Index (CPI) EV / AC Worth of work got out of every $1 spent
Schedule Performance Index (SPI) EV / PV Percentage progress made against the planned rate
BAC / CPI
Work performed at current CPI
AC + (BAC – EV)
Rest of the project at budgeted rate
Estimate at Completion (EAC) AC + [(BAC – EV)/(CPI
Factoring in both CPI and SPI
* SPI)]
Reevaluated based on forecast value for ETC
AC + ETC
Amount that the project would cost from the current date to
Estimate to complete (ETC) EAC – AC
the end of the project
Amount the project would exceed or fall short of the planned
Variance at Completion BAC – EAC budget by the end of the project (over budget or under
budget)
To-Complete Performance Index (BAC – EV)/(BAC – AC) For managing to budget
(TCPI) (BAC – EV)/(EAC – AC) For managing to a specified value (EAC)
• Cynthia is a subject matter expert and Director of the Store Renovation Department. Because of
her expertise and experience in managing store remodels for the corporation, she and her team
are the ‘go to’ people for many project managers.
• Donnell is the Project Manager for one of the stores in the southeast region. Because of the age
of the store, it has been classified as a Tier 1 Remodel, meaning it requires more work and a
higher budget allocation.
• Donnell has a budget of $850K to complete the entire schedule that has been defined for the
project.
• At the 30% mark of work completed on the project, Donnell’s team has spent $310K.
• What does this tell Donnell about the status of his project? What should he do?
• Donnell’s project is 30% complete, and has a total budget of $850K. The earned value at this
point is $255K; however, the actual costs of the project is $310K. The Cost Performance Index
(CPI), EV/AC, is at .82. This means that the project is spending only 82 cents of every dollar
productively.
• Donnell is concerned especially as the project has not yet made it to the halfway mark. His
previous Tier 1 remodels had a better CPI at this point in the project.
• The project has faced some unexpected events (unknown unknowns), which the team had
neither planned for nor anticipated based on past performance. The money allocated in the
management reserve is able to cover most of the expenses, but not all.
• After evaluating the root cause of these risk factors, Donnell is able to link the problems to the
age of the store and the fact that none of the previous stores completed in the remodel initiative
were as old.
• Donnell is asked to reassess the risk and collaborate with their structural engineer to re-evaluate
the remaining activities so he can determine a revised budget and an estimate of what is needed
to complete remaining activities based on new information.
Earned Value Management: Example 1
A software development project has four phases. Each phase takes a month to complete and is
estimated to cost $10,000 per phase. The phases are planned to be completed one after the other. Given
the project status at the end of three months, calculate the CV, SV, CPI, and SPI.
Project Phases Month 1 Month 2 Month 3 Month 4 Status at the End of Month 3
Requirement Definition S---------F Complete, spent $10,000
Architecture & Design S-------PF ---F Complete, spent $12,000
Development & Unit Testing S----PF 50% done, spent $9,000
System Testing & Go Live Not yet started
Legend
S – Start time F – Finish time PF – Partly finished
Calculation of project cost related attributes are as follows:
Term Calculation Value Interpretation of the Answer

$10,000+$10,000+ By third month, $30,000 worth of work should
Planned Value (PV) $30,000
$10,000 have been completed.
$10,000+$10,000+
Earned Value (EV) $25,000 The accomplished work is worth $25,000.
$5,000
$10,000+$12,000+
Actual Cost (AC) $31,000 The amount actually spent is $31,000.
$9,000
Cost Variance (CV) $25,000-$31,000 -$6,000 The project is over budget by $6,000.
Schedule Variance (SV) $25,000-$30,000 -$5,000 The project is behind schedule.
Cost Performance Index

$25,000/$31,000 0.80 $0.80 worth is got out of every dollar spent.
(CPI)
Schedule Performance Index The project is progressing at 83% of the originally

$25,000/$30,000 0.83
(SPI) planned rate.
John is managing a three month project to enhance a financial system. He is working on his EVM
analysis to report to management on status of project. Calculate the following based on the
information given below:
Q1. John is comparing his actuals to the Earned Value of his project. He has finished the first month of
his project schedule, and the earned value for his project is $65,000. The actuals from the financial
system are $57,850. What is the CPI for his project?
CPI is calculated as EV/AC. CPI = $65,000/$57,850 = 1.12

Q2. Based on the CPI and a Budget at Completion (BAC) of $200,000, what is the Estimate at
Completion (EAC)?
EAC is calculated as BAC/CPI. EAC = $200,000/1.12 = $178,571

Q3. John’s management is interested in understanding how much more money is required for the
project to be completed. What is the Estimate To Complete (ETC)?
ETC is calculated as EAC - AC. ETC = $178,571 – $57,850 = $120,721

Q4. John also needs to understand how his project is tracking against its schedule. After the first
month of work effort, his Planned Value (PV) was $60,000. What is the SPI for his project?
SPI is calculated as EV/PV. From our previous calculations, EV was $65,000.

SPI = $65,000/$60,000 = 1.08
Q5. John wants to see if the positive SPI of the project will offset the CPI. He decides to rerun his EAC
calculations. How can he incorporate both CPI and SPI?
EAC can also be calculated as AC + [(BAC – EV)/(CPI * SPI)]. Based on our previous answers we can
determine: $57,850 + ($200,000 - $65,000)/(1.12 * 1.08) = $169,438.69
Key Terms
Given below are the key terms related to the cost concept:
Law of diminishing returns
The more you put into something, the less you get out of it
For example: doubling the number of resources working on a project will not necessarily halve the time
Working Capital
The amount of money the company has to invest on the project and the day-to-day company operations
Funding limit reconciliation
The process of comparing the planned expenditure in a given period with the available funding for that period
Key Terms
Given below are the key terms related to the cost concept:
Depreciation
Large assets purchased by the company lose value over time. The two forms of depreciation are straight
line depreciation and accelerated depreciation.
Straight line depreciation
The same amount of depreciation is provided for every year for the asset.
For example, a car with a price tag of $10,000 and a useful life of 10 years is depreciated by
$1,000 every year.
Accelerated depreciation
The asset depreciates faster than the straight line depreciation.
For example, a car with a price tag of $10,000 depreciates $3,000 the first year, $1,500 the
second year, $1,000 the third year, and so on.
Quiz
1. If Earned Value (EV) is $550, Actual Cost (AC) is $650, and Planned Value (PV) is $600,
what is the Cost Variance (CV)?
-100
+50
-50
+100
Quiz
1. If Earned Value (EV) is $550, Actual Cost (AC) is $650, and Planned Value (PV) is $600,
what is the Cost Variance (CV)?
-100
+50
-50
+100

Apply the formula CV = EV – AC to get the answer. Note that although PV is provided, it is not
used in solving this problem.
Quiz
2. You, as a project manager, are in the process of midway review at the end of the first year of a
$50K project. The earned value analysis shows that the PV is $25K, the EV is $20K, and the AC
is $15K. What can be determined from these figures?
The project is behind schedule and over budget
The project is ahead of schedule and under budget
The project is ahead of schedule and over budget
The project is behind schedule and under budget

Quiz
2. You, as a project manager, are in the process of midway review at the end of the first year of a
$50K project. The earned value analysis shows that the PV is $25K, the EV is $20K, and the AC
is $15K. What can be determined from these figures?
The project is behind schedule and over budget
The project is ahead of schedule and under budget
The project is ahead of schedule and over budget
The project is behind schedule and under budget
SV = (EV-PV)=$20K-$25K= -$5K. CV = (EV-AC)=$20K-$15K = $5K. Looking at the data, it is

evident that the project is behind schedule and is also under budget.
Quiz
3. What does a Cost Performance Index (CPI) of 0.73 mean?
The project would cost 73% more than originally planned
The project would cost 73% less than originally planned
The project is only getting $0.73 for every $1 spent

Quiz
3. What does a Cost Performance Index (CPI) of 0.73 mean?
The project would cost 73% less than originally planned
The project is only getting $0.73 for every $1 spent
CPI = EV/AC, therefore if the CPI is 0.73, it means that the EV is less than the AC.
Quiz
4. What does a Schedule Performance Index (SPI) of 0.67 mean?
You are ahead of schedule by 33%
You are behind schedule by 67%
You are progressing at only 67% of the rate originally planned

Quiz
4. What does a Schedule Performance Index (SPI) of 0.67 mean?
You are ahead of schedule by 33%
You are behind schedule by 67%
Since the SPI (SPI = EV/PV) measures all project work, the critical path must also be analyzed to
determine whether the project will finish ahead or behind schedule.
Quiz
5. As a project manager, when you present your initial cost estimate to the project
sponsor for approval, you are asked to cut the cost of the project by 10%. What would
you do?
Replace the originally planned resources with lesser skilled resources at lower rates
Cut specific project activities and obtain the sponsor’s approval
Strongly say no to the sponsor and walk away from the project
Ask all the team members to reduce the cost of their activities by 10%
Quiz
5. As a project manager, when you present your initial cost estimate to the project
sponsor for approval, you are asked to cut the cost of the project by 10%. What would
you do?
Replace the originally planned resources with lesser skilled resources at lower rates
Cut specific project activities and obtain the sponsor’s approval
Strongly say no to the sponsor and walk away from the project
Ask all the team members to reduce the cost of their activities by 10%

A project manager is responsible for managing cost overruns. If you have estimated cost in a
certain way and it’s required to be reduced, you should determine the impact of any cost
reduction actions. Replacing the originally planned resources with lesser skilled resources is also
an option, but the risks associated with this action should be carefully investigated.
Quiz
6. Which of the following is not a tool or technique used in the process of determining
budget?
Cost aggregation
Reserve analysis
Resource calendars
Quiz
6. Which of the following is not a tool or technique used in the process of determining
budget?
Cost aggregation
Reserve analysis
Resource calendars
All the above tools and techniques, except resource calendars, are used to determine budget
process. Resource calendars are an input to this process.
Quiz
7. What is not a valid technique to estimate costs?
Three point estimating
Earned value management
Parametric estimating
Analogous estimating
Quiz
7. What is not a valid technique to estimate costs?
Three point estimating
Earned value management
Parametric estimating
Analogous estimating
Earned Value Management is a technique used to Control Costs.

Quiz
8. Peter is a project manager of a large commercial construction project. The cost of

concrete has risen substantially as the forecasted economic growth of the region has
increased demand. Peter is concerned his project will be over-budget. What should he
do?
Submit a change request for more budget to cover any potential shortfall
Review the contingency reserve
As this is a result of an external variable, it should not be included in the project budget
Substitute concrete for a cheaper material like wood or plastic

Quiz
8. Peter is a project manager of a large commercial construction project. The cost of

concrete has risen substantially as the forecasted economic growth of the region has
increased demand. Peter is concerned his project will be over-budget. What should he
do?
Submit a change request for more budget to cover any potential shortfall
Review the contingency reserve
As this is a result of an external variable, it should not be included in the project budget
Substitute concrete for a cheaper material like wood or plastic
As the increase in concrete costs are a result of forecasted economic growth, this was likely
identified as a risk, and an associated contingency was determined. Peter can use these funds
now that the risk has materialized.
Key Takeaways
Project cost management includes the processes involved in
estimating, budgeting, and controlling costs so that the project
can be completed within the approved budget.
Cost management plan contains details on how to plan, manage,

and control the project cost in relation to the cost baseline and
manage the cost variances.
Cost estimate is an educated guess of how much an activity or a

project will cost. Budget considers the cost estimate and
accordingly sets aside funds for the completion of the project.
Under control account technique, related activities are clubbed

and their costs are managed as one unit.
The four Project Cost Management processes are Plan Cost

Management, Estimate Costs, Determine Budget, and Control
Costs.
Earned Value Management technique indicates potential

deviation of the project from the cost and/or schedule baselines.

Lesson 09: Project Quality Management
Objectives
Define quality and quality management
Differentiate between quality planning, quality assurance, and

quality control
Explain cost of quality and its categories
Describe the Project Quality Management processes
Explain the seven basic tools of quality
Explain Six Sigma

Quality
In a project, meeting the quality expectation is the responsibility of not only the project manager but everyone
involved.
The definition of *Quality is as follows:
Quality is the degree to which a set of inherent characteristics fulfills requirements (ISO 9000).
A project is said to meet quality expectations when all the project requirements agreed in the beginning of
the project are met and the resulting product is usable.
2017, Page 274
Quality-related Terms
The following terms are related to the concept of quality:
Customer
Satisfaction Conformance to requirements and fitness for use
Grade Classification based on technical characteristics
Precision Granularity of measurement; how fine the outcome can be measured
Accuracy Correctness; being close to the desired value

Optimal Level of Quality
Achieving quality involves cost. Increased efforts and costs can increase the quality of output, but a ceiling on
investment on quality has to be fixed.
• The investment on quality is determined by identifying the

optimal level of quality of a project.
• Optimal level of quality is achieved when the incremental Optimal
level
cost of achieving the quality is equal to the incremental
revenue from such improvements.
The sales of a toy manufacturer is at an all-time low because of poor quality. To improve the quality,
investments are made on identifying demand, sharing samples, and collecting feedback. Following this,
parents are enticed to buy the product. However, the additional investment may increase the cost of the
toy, making it prohibitive for the parents to buy. Optimal level of quality is reached at a point where the
toy manufacturer gets the maximum number of buyers for the toys manufactured.
Quality Management
Quality management includes creating and following policies and procedures that meet the project’s defined
quality needs. This is to ensure that the specified approach to quality is implemented on the project. The
three key activities of quality management are as follows:
Quality Planning Quality-related activities of the project are planned
Quality Assurance Quality assurance is carried out to ensure that a process is followed as
per the quality management plan
Quality Control Periodic checks are conducted to ensure quality improvements

Quality Planning vs. Quality Assurance vs. Quality Control
Basis of
Scope Activities Focus Area
Comparison
Determines a plan for quality, Involves preparation of the quality Focuses on information on
defining the standards, templates, management plan the level of quality and the
Quality policies, and procedures methods of achieving it
Planning
Determines if the project is Involves conducting regular process Focuses on processes and
complying with the organizational audits to identify deviations from not products
Quality (as well as project) policies and the quality plan and undertake
Assurance procedures corrective and preventive actions
Measures specific project results Focuses on product and data

(product) against standards Involves inspecting and verifying the
Quality project’s product, defect repair, and
Control measuring whether the quality
indicators are improving
Quality Planning vs. Quality Assurance vs. Quality Control
A project was planned to be completed within plus or minus 10 percent of the budget. Three
months ago, the project was over budget by 20 percent. The most recent measurement done one
day ago shows budget overrun by 15 percent.
Since there is an improvement of 5 percent, it is quite likely that over the next 3 months the cost
would reduce and the project could get completed within the planned limit. If the cost increases
further, corrective and preventive actions have to be taken to bring the project within the agreed
limits. This is quality control.
Quality Management Concepts
The concepts used in quality management are as follows:
Total Quality Management

Kaizen (change for better)
(TQM)
A philosophy that looks for small
An integrated management
and continuous improvements in
philosophy around quality and
a process
continuous improvement
Kanban
Deming Cycle
(Plan – Do – Check – Act) A pull-based inventory
management system based on the
A framework for process principle of just-in-time (JIT)
control and improvement
Cost of Quality
“Cost of quality includes all costs incurred over the life of the product by investment in preventing
nonconformance to requirements, appraising the product or service for conformance to requirements, and
failing to meet requirements (rework).” Cost of quality can be categorized as follows:
Cost of Conformance Cost of Nonconformance
It is the money spent during the project to avoid It is the money spent during and after the project
failures. This can be divided as follows: because of failures. This can be divided as follows:
• Prevention Costs: Costs to prevent errors and • Internal Failure Costs: Costs that occur before the
produce quality products product is released
Example: training, documentation, equipment, Example: rework, scrap
time to do it right • External Failure Costs: Costs incurred after the
• Appraisal Costs: Costs to assess the quality product is released to the customer
Example: testing, destructive testing loss, and Example: liabilities, warranty, and lost business
inspections
Figure 8-5. Cost of Quality
Concept-based questions on cost of quality can be expected in the exam.
Project Quality Management Processes
Knowledge Areas Project Project Scope Project Schedule Project Cost Project Quality Projecct Project Project Risk Project Project
Integration Management Management Management Management Resource Communications Management Procurement Stakeholder
Management Management Management Management Management

Planning 4.2 Develop 5.1 Plan Scope 6.1 Plan 7.1 Plan Cost 8.1 Plan Quality 9.1 Plan 10.1 Plan 11.1 Plan Risk 12.1 Plan 13.2 Plan
Project 5.2 Collect Schedule Management Management Resource Communications Management Procurement Stakeholder
Management Requirements Management 7.2 Estimate Management Management 11.2 Identify Management Engagement
Plan 5.3 Define Scope 6.2 Define Costs 9.2 Estimate Risks
5.4 Create WBS Activities 7.3 Determine Activity 11.3 Perform
6.3 Sequence Budget Resources Qualitative Risk
Activities Analysis
Activity Quantitative
Durations Risk Analysis
6.5 Develop 11.5 Plan Risk
Schedule Response
Project
Management
Process Executing 4.3 Direct and 8.2 Manage 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Groups Manage Project Quality Resources Communications Risk Response Procurements Stakeholder
Work 9.4 Develop Engagement
4.4 Manage Team
Project 9.5 Manage
Knowledge Team
Monitoring 4.5 Monitor and 5.5 Validate 6.6 Control 7.4 Control Costs 8.3 Control 9.6 Control 10.3 Monitor 11.7 Monitor 12.3 Control 13.4 Monitor
and Control Project Scope Schedule Quality Resource Communications Risks Procurements Stakeholder
Controlling Work 5.6 Control Engagements
4.6 Perform Scope
Integrated
Change Control

or Phase
Plan Quality Management
“Plan Quality Management is the process of identifying quality requirements and/or standards for the project and
its deliverables, and documenting how the project will demonstrate compliance with relevant quality
requirements.” It is part of the Planning Process Group.
Project Charter PROJECT QUALITY MANAGEMENT

Quality Management
Plan
Project Documents
Enterprise Environmental Quality Metrics
Factors
Organizational process Expert Judgment Data Gathering Data Analysis
assets Project Management Plan
Legend Test and Inspection Updates
Decision Making Data Representation
Planning
Input
Output Project Document
Meetings
Tools & Techniques Updates
Planning Process Figure 8-3. Plan Quality Management: Inputs, Tools & Techniques, and Outputs
An understanding of planning quality management may be useful while answering the exam.
Manage Quality
“Manage Quality is the process of translating the quality management plan into executable quality activities that
incorporate the organization’s quality policies into the project.” It is part of the Executing Process Group.
PROJECT QUALITY MANAGEMENT

Quality Reports
Project Documents Manage Quality Test and Evaluation Documents
assets Data Gathering Data Analysis Change Requests
Legend Decision Making Data Representation

Input
Output Updates
Audits Design For X
Tools & Techniques
Executing Process Quality Improvement Project Document Updates
Problem Solving
Methods
Figure 8-7. Manage Quality: Inputs, Tools & Techniques, and Outputs
Understanding characteristics of quality assurance tools and techniques may be useful while answering
the exam.
Control Quality
“Control Quality is the process of monitoring and recording results of executing the quality activities to assess
performance and recommend necessary changes.” It is part of the Monitoring and Controlling Process Group.
factors
PROJECT QUALITY MANAGEMENT Quality control
measurements
Deliverables
Verified deliverables
Work performance data Quality metrics Quality checklists
Work performance
Project management information
plan
Control Quality Change requests
Approved change
requests
Project documents updates
Organizational process Quality control Project document updates

assets measurements
Legend
Data gathering Data analysis Inspection Input
Output
Testing/product Tools & Techniques
Data representation Meetings Monitoring and Controlling
evaluations
Figure 8-10. Control Quality: Inputs, Tools & Techniques, and Outputs
You are a project manager with Ace Engineering Inc. Four months ago, you wrapped up a project
that produced an ignition switch for an automotive company’s ignition switch redesign. Managing
the project went well because your parts consistently met your quality metrics and fitness for use
tests and passed all control charts. There was no indication of issues with quality and grade that
would prompt a need for change.
During a post-production quality audit, one of your company’s test engineers discovers that a key
chain with many keys could pull the key out of the ignition, causing a car to stall as it is driving. This
could potentially cause serious injury as air bags would not deploy in an accident. Several hundred
thousand cars have been sold with the ignition switch manufactured by the automotive company.
What should you do?
Although you are no longer working on the project, you and your company are still responsible for
the outcome of the project to the stakeholders. Therefore, first meet with the sponsor of the project
so that the customer can be informed.
In an attempt to minimize nonconformance costs and its impact, a recall of all parts needs to be
executed. The team needs to be reassembled to evaluate the failed test and find out the root cause of
the failure and its effect by using the fishbone diagram. This will help the team determine how to
move forward in terms of corrective action.
Seven Basic Quality Tools
Control Charts Check Sheets
Cause and Effect Diagram Seven Basic

Scatter Diagram
Quality Tools
Flowcharting Pareto Diagram
Histogram
Control Charts
Control charts help to determine if a process is within acceptable limit.
• They are useful to monitor project performance in terms of cost

or schedule variance.
• Upper and lower control limits have to be set and the actual
schedule variation over time has to be plotted.
• If the values are within the control limits, the project is on track.
• If the schedule variance goes out of these limits, project is out of
control and investigations and corrective actions need to be
done.
Cause and Effect Diagram
Cause and effect diagram is also called the fishbone or

Ishikawa diagram.
• It is used in both quality planning and control.
• It is used to organize thoughts or ideas and to
identify the root cause of a problem.
• To draw a fishbone diagram, first identify the reasons
at a broad level and then try to find specific reasons
under each category.
Practice cause and effect diagram for various business scenarios. This will be useful while answering
questions based on cause and effect diagram.
Flowcharting
Flowcharts are graphical representations that show how a process or system flows from beginning to end and
how the elements interrelate.
• They represent the process and help analyze where the problems occur.
• They are used to identify redundancies and bottlenecks.
Input Output
Supplier Process Customer
Requirements and Requirements and

feedback loop feedback loop
Histogram
Histogram is a vertical bar chart showing the

frequency of occurrence of a particular
variable.
The height of each column represents the

relative frequency of the variable.
Pareto Diagram
Pareto diagrams are vertical bar charts that identify a

few critical issues from the uncritical many.
• It is based on the 80/20 rule. Eighty percent of the
problems are caused by 20 percent reasons.
• It helps focus attention on the most critical issues.
• It prioritizes potential causes of the problem.
Check Sheets
Check sheets, also known as tally sheets, are checklists used for collecting data.
• It ensures that the relevant data or steps of a process are captured and executed.
• It is also useful during inspections.
Defect Frequency of Issues (Tally)

Description
Process 1 Process 2 Process 3 Process 4 Total
Defect 1 |||| | ||| |||| 13
Defect 2 || ||| || |||| 11
Defect 3 || ||| || || 9
Defect 4 ||| || |||| ||| 12
Total 11 9 11 14 45
Scatter Diagram
Scatter diagram tracks two variables to see if they are

correlated or have no relationship.
If the two variables are related, scatter diagrams are used

to observe the changes in one variable due to a change in
the other.
Six Sigma
The concept of Six Sigma is used to produce near-perfect

products and services consistently.
• If large volume of data is plotted, the graph takes the
form of a bell curve, and such distribution is called
normal distribution.
• The line corresponding to the top of the bell curve is the
median of the data sample.
• Standard deviation or Sigma is used to measure how far
the data is from the mean.
• One standard deviation from the mean covers 68% data.
• At Six Sigma, the distribution covers 99.99966% of the
data.
Six Sigma: Example
A tire manufacturing company produces 100,000 units per day. Random samples of these units are
verified to ensure they are defect-free.
Thickness of the tires is a parameter to measure defects. A tire with thickness more or less than 10 mm
is considered to be defective. If the thicknesses of all the 100,000 tires are plotted on a graph, normal
distribution or bell curve is obtained.
One standard deviation from the mean covers 68% of the data, i.e., 68,000 tires lie within one standard
deviation of the mean. If the company operates at Six Sigma level, there would be only three defects
out of a million tires manufactured as 99.999966% of the data would be covered.
Quiz
1. Which of the following tools and techniques is most likely used in quality assurance?
Fishbone diagram
Flowchart
Inspection
Process analysis
Quiz
1. Which of the following tools and techniques is most likely used in quality assurance?
Fishbone diagram
Flowchart
Inspection
Process analysis

Inspection is a quality control tool. Flowchart and Fishbone diagrams are part of the seven basic quality
tools used for planning and control. Process analysis is used in quality assurance, which focuses on the
process rather than the product.
Quiz
Management wants to ensure that a project is following defined quality standards.

2.
Which of the following should be used?
Risk management plan
Statement of work
Quality audit
Quiz
Management wants to ensure that a project is following defined quality standards.

2.
Which of the following should be used?
Risk management plan
Statement of work
Quality audit
A quality audit periodically reviews quality management activities and assures that the project
deliverables meet the expected quality standards.
Quiz
As a project manager, which would you give the highest priority: quality, cost, or
3.
schedule?
It would depend on the prevailing circumstances of the project.
Quality is most important; cost and schedule come later.
Cost is most important; everything else comes later.
Completing the project on schedule is most important.

Quiz
As a project manager, which would you give the highest priority: quality, cost, or
3.
schedule?
It would depend on the prevailing circumstances of the project.
Quality is most important; cost and schedule come later.
Cost is most important; everything else comes later.
Completing the project on schedule is most important.

Since quality, cost, and schedule are part of the project constraints, they are equally important. However,
depending on the specific circumstances of the project, one may take precedence over the others.
Quiz
A project manager is encountering numerous problems on his project. He wants to

4. identify the root causes of the problems so that he can focus on them. Which of the
following tools should he use?
Fishbone diagram
Control chart
Pareto diagram
Histogram
Quiz
A project manager is encountering numerous problems on his project. He wants to

4 identify the root causes of the problems so that he can focus on them. Which of the
following tools should he use?
Fishbone diagram
Control chart
Pareto diagram
Histogram
Fishbone diagram specifically helps in understanding the root cause of problems.

Quiz
As a project manager, you are ensuring that quality standards are followed for your
5.
project. In which process are the quality standards identified?
Perform Quality Assurance

Quiz
As a project manager, you are ensuring that quality standards are followed for your
5.
project. In which process are the quality standards identified?
Perform Quality Assurance
Plan Quality Management defines what quality standards should be chosen for the project and how to
satisfy them.
Quiz
6. Which of the following is an example of cost of conformance?
Quality training
Cost of rework
Warranty cost
Scrap
Quiz
6. Which of the following is an example of cost of conformance?
Quality training
Cost of rework
Warranty cost
Scrap
Quality training helps increase productivity and reduce the probability of errors occurring, i.e., helps in
prevention. Hence, it can be classified as the cost of conformance.
Quiz
If the mean of a normal distribution is 100, what percentage of data falls within one
7.
standard deviation of the mean?
83 to 117
66 to 134
75 to 125
80 to 120
Quiz
• If the mean of a normal distribution is 100, what percentage of data falls within one
7.
standard deviation of the mean?
83 to 117
66 to 134
75 to 125
80 to 120
One standard deviation of the mean covers 68% data, or 34% on either side of the mean.
Quiz
8. Approved Change Requests are an input to which Quality process?
Manage Quality
Control Quality
Change Request
Quiz
8. Approved Change Requests are an input to which Quality process?
Manage Quality
Control Quality
Change Request
Approved change requests are an output of Perform Integrated Change Control and input to the
Control Quality process.
Key Takeaways
A project is said to meet quality expectations when all the project
requirements agreed in the beginning of the project are met and
the resulting product is usable.
Quality management includes creating and following policies and

procedures that meet the project’s defined quality needs.
Quality Planning defines the standards, templates, policies, and

procedures; Quality Assurance determines if the project is
complying with the policies and procedures; and Quality Control
measures specific project results against standards.
Plan Quality Management, Manage Quality, and Control Quality are

the three Project Quality Management processes.
Seven basic quality tools are used to plan and achieve the desired
levels of quality.
At Six Sigma level, there would be only three defects out of a

million units manufactured.

Lesson 10: Project Resource Management
Objectives
Define Project Resource Management
Differentiate between functional manager and project manager
Describe the Project Resource Management processes
Identify the stages of team formation, powers of project

manager, and conflict management techniques
Explain organization theories and leadership styles

Project Resource Management
The definition of *Project Resource Management is as follows:
Project resource management includes the processes to identify, acquire, and manage the
resources needed for the successful completion of the project.
• Project team is composed of people with assigned roles and responsibilities for completing the project.
• Physical resources are any tools, equipment, or property necessary for the project.
• Team resources include people (employees and contractors) working together to manage the
project effort.
Inc., 2017, Page 307
Functional Manager vs. Project Manager
The differences between functional and project managers are as follows:
Functional Manager Project Manager
• Functional manager handles a business • Project managers are accountable and

function; Example: HR, Engineering, etc. responsible for a project and its quality.
• Functional managers are subject matter • Project managers are not technical experts.
experts. • Organization’s structure defines the degree of
• Organization structure and the authority of a project manager.
organization’s products define the roles and • Project managers need to negotiate with the
responsibilities of a functional manager. functional managers to procure project
• Functional manager is the owner of resources.
resources and assigns specific individuals to • Project managers are responsible for product
the project team. quality and credit the team with project success.
If a company initiates a project of securing the ISO 9001:2008 certification, the project will require team
members from different departments. The project manager has to request the functional managers to
assign team members from their teams. Resources are released back to their functions once the project is
completed.
Project Resource Management Processes

Schedule Analysis
11.5 Plan Risk
Response
Project Executing 4.3 Direct and 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Management Manage Project Work Resources Communications Risk Response Procurements Stakeholder
Process Groups 4.4 Manage Project 9.4 Develop Team Engagement
Knowledge 9.5 Manage Team
Monitoring 4.5 Monitor and 5.5 Validate Scope 6.6 Control 7.4 Control Costs 8.3 Control Quality 9.6 Control 10.3 Monitor 11.7 Monitor Risks 12.3 Control 13.4 Monitor
and Control Project Work 5.6 Control Scope Schedule Resource Communications Procurements Stakeholder
Controlling 4.6 Perform Engagements
Integrated Change
Control

Phase
Plan Resource Management
“Plan Resource Management is the process defining how to estimate, acquire, manage, and use team
and physical resources.” This process is part of the Planning Process Group.
Project Charter PROJECT RESOURCE MANAGEMENT

Resource Management
Plan
Project Documents Plan Resource Management
Team Charter
factors Project Document
Updates
assets Expert Judgment Data Representation
Legend Organizational theory Meetings

Input
Output Figure 9-2. Plan Resource Management: Inputs, Tools & Techniques, and Outputs
Tools & Techniques
Planning Process
Organization Charts and Role Descriptions
A Project manager has to ensure that an organizational chart is prepared for every project to identify the
roles and reporting relationships.
Project
Manager
Administrative
Assistant
Financial Domain Technical Team

Analyst Expert Lead
Development Team Quality Team Lead

Lead
Responsibility Assignment Matrix
Responsibility Assignment Matrix (RAM) is used to define

project responsibilities among the project team.
Activity John Kris Sally Ting
Project Plan A R R R
RACI charts are a form of RAM. RACI stands for:
Configuration C A R R
• Responsible Management
• Accountable Test Plan C R A R
• Consulted Design C I R A
Team Budget C A R R
• Informed
Customer A C R I
Liaison
For every project deliverable, RACI charts identify who is Team Building R R A C
responsible, accountable, consulted, and needs to be informed. Activity A R R R
There can only be one Accountable (A) in each row of a RACI.

Resource Histogram
Resource histograms are used to represent the resources required through the life of a project.
Staff Hours
Required
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013 2014 2015 2016
Time
• For long term projects, staffing requirements can vary over different project phases.
• Based on these estimates, a project manager can develop the resource hiring strategy.
Estimate Activity Resources
“Estimate Activity Resources is the process of estimating team resources and the type and quantities of
materials, equipment, and supplies necessary to perform project work.” This process belongs to the Planning
Process Group.
PROJECT RESOURCE MANAGEMENT

Resource Requirements
Estimate Activity Resources
Basis of Estimates
Project Documents
Resource Breakdown
Structure
Enterprise environmental Expert Judgment Data Analysis
factors Project Document
Project Management updates
Bottom-up estimating
Organizational process Information System
assets
Analogous Estimating Meetings
Legend Parametric Estimating

Input
Output
Tools & Techniques Figure 9-5. Estimate Activity Resources: Inputs, Tools & Techniques, and Outputs
Planning Process
Acquire Resources
“Acquire Resources is the process of obtaining team members, facilities, equipment, materials, supplies, and other
resources necessary to complete the project work.” This process belongs to the Executing Process Group.
Physical Resource
Project management plan Assignments
PROJECT RESOURCE MANAGEMENT
Project Team
Project Documents Assignments
Acquire Resources
Resource Calendars
factors
Change Requests
Organizational process Interpersonal and Team
Decision Making
assets skills Project Management
Pre-Assignment Virtual Teams Plan Updates
Legend Project Documents
Input Figure 9-8. Acquire Resources: Inputs, Tools & Techniques, and Outputs updates
Output
Tools & Techniques Enterprise
Executing Process Environmental Factors
Updates
Organizational Process
Assets Updates
Develop Team
“Develop Team is the process of improving competencies, team member interaction, and overall team
environment to enhance project performance.” This process belongs to the Executing Process Group.
Project management plan Team Performance

PROJECT RESOURCE MANAGEMENT Assessments
Project Documents Change Requests

Develop Team
Project Management
Enterprise environmental Plan Updates
factors Recognition and
Colocation
Reward
Project Documents
Virtual Teams Training updates
Communications Individual and Team
Enterprise
Technology Assessments
Environmental Factors
Legend Interpersonal and Updates
Meetings
Input Team Skills
Output Organizational Process
Tools & Techniques Figure 9-10. Develop Team: Inputs, Tools & Techniques, and Outputs Assets Updates
Executing Process
Questions that test a project manager's role in developing a project team can be expected in the exam.
Manage Team
“Manage Team is the process of tracking team member performance, providing feedback, resolving issues, and
managing team changes to optimize project performance.” This process belongs to the Executing Process Group.
Project management
plan PROJECT RESOURCE MANAGEMENT
Change requests
Project documents
Work performance updates
reports
Project document updates
Team performance
assessments Manage Team Organizational process asset
Enterprise updates
environmental Enterprise environmental factors
factors Project management Interpersonal and team updates
information system skills
Organizational
Legend
process assets
Input
Output
Figure 9-12. Manage Team: Inputs, Tools & Techniques, and Outputs
Tools & Techniques
Executing Process
Questions that test a project manager's skill in managing a project team can be expected in the exam.
Control Resources
“Control resources is the process of ensuring that the physical resources assigned and allocated to the
project are available as planned. “

Work
Performance
Project Documents
PROJECT RESOURCE MANAGEMENT Information
Change Requests
Work Performance Data Control Resources
Project Management
Plan Updates
Agreements Data Analysis Problem Solving
Project Documents
Interpersonal and Team Project Management updates
Skills Information System
assets
Legend
Input
Output The key benefit of this process is ensuring that the assigned resources are available to the
Tools & Techniques
Monitoring and
project at the right and in the right place.
Controlling Process
Team Dynamics
Dr. Bruce Tuckman’s (1965) Stages of team formation are as follows:
Forming Storming Norming Performing Adjourning
The team is
The team may
The team formally Trust develops The team starts disseminated
have
comes together. within the team. delivering results. after project
disagreements.
completion.
Conflict Management
Conflict is an inevitable consequence of organizational interactions. If conflicts are managed well, they can
create opportunities for improvement.
Scarce Resources
Scheduling Priorities
Personal Work Styles

The sources of conflict are as follows:
Expertise and Experience Levels
Communication Issues
The best way to resolve conflict is to discuss and clarify with the parties involved in it.
Business scenario based questions on conflict management can be expected in the exam.
Conflict Management (Contd.)
A project manager needs to be actively involved in the project processes to minimize and avoid conflicts.
The following are some measures that a project manager can take to avoid conflicts:
• Provide all details of the project and keep the team informed of the exact project status.
• Assign the work such that there are no overlapping tasks.
• Motivate the team and ensure everyone gets to work on interesting and challenging assignments.
Conflict Resolution Techniques
The five conflict resolution techniques are as follows:
Withdraw or Avoid Compromise or Reconcile Smooth or Accommodate
A certain degree of satisfaction Areas of agreement are

Resolution to the conflict is
is brought to all the parties emphasized to reduce the
deferred to a later time.
involved. conflict.
Collaborate or Problem
Force or Direct
Solve
Directions are given by a person

All the parties are asked to
in authority to resolve the
jointly look for a resolution.
conflict.
Business scenario based problems where a resolution technique has to be selected can be expected
in the exam.
• Tanya is the project manager for a manufacturing project in a highly regulated industry.
• With the varying environment factors that govern the practices of the company, the room for error
is very small. Tanya’s project can have some major impact on several areas within the company.
• To strengthen the team’s ability to deliver the project adequately without any infractions, the top
players in those areas are selected to join Tanya’s project team. This decision proves to be helpful.
• A conflict arises between a stakeholder and one of the team members regarding how a task can be
completed without violating government regulations.
• Tanya has to meet with the team member and stakeholder to defuse the situation and resolve the
conflict. What is the most effective approach?
• Tanya should get all parties to focus on the end goal and persuade them to reach a consensus
to meet their commitment.
• After redirecting their energy to the customer’s needs and their points of agreement, Tanya
should convince both sides to pull together and collaborate with one another to pick an
approach that presents a win-win scenario.
Powers of the Project Manager
A project manager is vested with certain powers to facilitate project work from the team members.
Legitimate or Formal • Formally assigns the tasks to the team members
Reward • Can reward and recognize the team members based on their performance
Penalty • Can penalize the team members for poor performance
Expert • Can command authority by the virtue of their expertise in the domain
Referent • Can be considered as a reference of higher authority to get the work done
Reward and expert are usually the best forms of authority to use. Penalty should be resorted to only as a last option.
• Robert is leading a major project initiative for his company. This project is very intense and critical
to the business. It will require all hands on deck.
• Robert is task-driven and takes a no-nonsense approach. As a result, some project team members
are afraid of him. They view Robert as someone who could damage their career, bonus potential,
and work opportunities.
• Because of this mentality, Robert’s next team meeting is unproductive, and there is debate around
who is responsible for the activities. How should Robert handle this?
• The fact that there are project team members who view Robert’s power as an example of
penalty power is a sign that the team is in need of some team building exercises.
• Team building will help the team get to know each another more and develop trust in each
other.
• Then, Robert needs to evaluate his HR Management plan to see if he has a RACI chart for his
project to help define who is responsible for what activities. This will aid in minimizing
confusion within the project team.
Organizational Theories
A project manager needs to know what motivates the team members to design a reward and recognition
plan.
The three popular motivation theories are as follows:
McGregor’s Theory of X and Y
McGregor’s theory indicates that there are two categories of managers, and this classification is based on
what the managers think of their team members.
• Theory X: Managers who fall under this category believe that their team members need continuous
monitoring. Further, they believe that though the team members are capable, they avoid work
whenever possible.
• Theory Y: Managers under this category believe that their team members can work without
supervision as they look forward to achieve something.
Organizational Theories (Contd.)
plan.
Maslow’s Hierarchy of Needs
According to Maslow’s Hierarchy of Needs, people’s needs change as they grow in their
career. Maslow’s hierarchy of needs are as follows:
• Physiological: breathing, food, water, sex, sleep, etc.
• Safety: safety of body, employment, resources, morality, family, health, property,
etc.
• Social: friendship, family, intimacy, etc.
• Esteem: self-esteem, confidence, achievement, respect, etc.
• Self-actualization: morality, creativity, spontaneity, problem solving, lack of
prejudice, acceptance of facts, etc.
Organizational Theories (Contd.)
plan.
Herzberg’s Theory
Herzberg’s theory classifies factors as follows:

• Hygiene factors: Mandatory factors to motivate the team
o Example: personal safety, fair compensation, working conditions, etc.
• Motivating agents: Additional factors that motivate people
o Example: recognition, higher responsibility, etc.
Leadership Styles
A project manager needs to establish a leadership style that matches the needs of the team.
The three popular leadership styles are as follows:
Autocratic or Authoritarian Participative or Democratic Delegative or Laissez faire

Leadership Leadership Leadership
Leader gives clear direction Leader offers guidance and Leader offers no guidance
and expects compliance. encourages team and lets the team be on
participation. their own.
McKinsey’s 7-S Framework
McKinsey’s 7-S framework recommends organizations to be aligned to seven elements to accomplish projects
successfully.
The seven elements are categorized as follows:
Hard Elements Soft Elements
Hard elements will already be a part of the Soft elements are generally the leadership traits that
organizations working on projects. a project manager needs to demonstrate.
The three hard elements are: The four soft elements are:
1. Strategy 1. Shared values
2. Structure 2. Skills
3. Systems 3. Style
4. Staff
Quiz
1. Which conflict resolution technique is best for a long lasting solution?
Smoothing
Forcing
Problem solving
Withdrawal
Quiz
1. Which conflict resolution technique is best for a long lasting solution?
Smoothing
Forcing
Problem solving
Withdrawal

Problem solving is the best way to resolve conflict because it has the greatest probability to
reach a permanent solution. All other methods may, at the best, lead to a temporary solution.
Quiz
2. As a project manager, you are deciding the inputs that you need to use on your
project. Which process uses an issue log as one of the inputs?
Manage Project Team
Manage Communications
Manage Stakeholder Engagement

Quiz
2. As a project manager, you are deciding the inputs that you need to use on your
project. Which process uses an issue log as one of the inputs?
Manage Project Team
The Manage Project Team process uses an issue log to manage and close all team member
related issues.
Quiz
3. Which type of power would a project manager have if others believe he or she is
highly knowledgeable in the technical area?
Reward
Coercive
Referent
Expert
Quiz
3. Which type of power would a project manager have if others believe he or she is
highly knowledgeable in the technical area?
Reward
Coercive
Referent
Expert
Expert is the power that comes with expert knowledge in a specific knowledge area.
Quiz
4. You have been assigned as the project manager of an existing project involving 50 company
employees and 10 sub-contractors. You want to know who is assigned to do what. Where
should you look for this information?
Responsibility assignment matrix
Project organization chart
Pareto chart
Resource histogram
Quiz
4. You have been assigned as the project manager of an existing project involving 50 company
employees and 10 sub-contractors. You want to know who is assigned to do what. Where
should you look for this information?
Responsibility assignment matrix
Project organization chart
Pareto chart
Resource histogram
Responsibility assignment matrix lists the resources against the work assigned to them.
Quiz
5. While assessing the performance of your team members, you find that some of them
are not strong enough to handle the tasks assigned. What will you do in this situation?
Communicate the improvement needs and establish a performance review and monitoring
schedule.
Assign double the work and tell them to report the progress at the beginning and end of the day.
Return the team members to the functional department and warn the functional head.
Wait for them to fail so that you can prove your point and in the meantime start hiring additional
resources.
Quiz
5. While assessing the performance of your team members, you find that some of them
are not strong enough to handle the tasks assigned. What will you do in this situation?
Communicate the improvement needs and establish a performance review and monitoring
schedule.
Assign double the work and tell them to report the progress at the beginning and end of the day.
Return the team members to the functional department and warn the functional head.
Wait for them to fail so that you can prove your point and in the meantime start hiring additional
resources.

It is the most appropriate answer in terms of the performance management life cycle. You need
to first communicate the needs (plan), and then ensure that these are being met (review and
monitoring).
Quiz
6. Your software project is in the critical system testing stage when two of the senior members of the
team come to you with a conflict on usage of the simulation software during testing. One senior
member claims that the other person keeps the software engaged nearly all of the working hours
of the project preventing the former from completing test cases. While both need to use the
software, you are able to get them to agree to adjust their working schedules so that they no
longer overlap. You are using which of the following techniques for conflict resolution?
Forcing
Smoothing
Compromising
Collaborating
Quiz
6. Your software project is in the critical system testing stage when two of the senior members of the
team come to you with a conflict on usage of the simulation software during testing. One senior
member claims that the other person keeps the software engaged nearly all of the working hours
of the project preventing the former from completing test cases. While both need to use the
software, you are able to get them to agree to adjust their working schedules so that they no
longer overlap. You are using which of the following techniques for conflict resolution?
Forcing
Smoothing
Compromising
Collaborating
Both team members have to adjust their working schedules to accommodate the limited
availability of the simulation software. This would be a compromise for both of them.
Quiz
7. You are managing a project in Canada during winter. It gets dark by 5PM, and you find most of the
staff leaving early to get to their cars. You are concerned that this will impact productivity. When you
inquire, they tell you that the car park is not monitored, and they don’t feel safe going to their cars
after dark. What Maslow hierarchy are they representing?
Physiological
Safety
Social
Esteem
Quiz
7. You are managing a project in Canada during winter. It gets dark by 5PM, and you find most of the
staff leaving early to get to their cars. You are concerned that this will impact productivity. When you
inquire, they tell you that the car park is not monitored, and they don’t feel safe going to their cars
after dark. What Maslow hierarchy are they representing?
Physiological
Safety
Social
Esteem

The team members are concerned for their safety, which is one of the fundamental needs of the
Maslow hierarchy. As the project manager, you should consider having security provide escorts
for team members to their cars after dark.
Quiz
8. What would NOT be considered a hygiene factor according to Herzberg?
Personal safety
Fair compensation
Working conditions
Recognition
Quiz
8. What would NOT be considered a hygiene factor according to Herzberg?
Personal safety
Fair compensation
Fair compensation
Recognition

Recognition would be considered a motivating factor according to Herzberg.
Key Takeaways
Project resource management includes the processes that
organize, manage, and lead the project team.
A functional manager is in charge of a business function and owns
the resources; a project manager is responsible for an
organization’s projects.
Plan Resource Management, Estimate Activity Resources, Acquire

Resources, Develop Team, Manage Team, and Control Resource are
the six Project Resource Management processes.
Forming, storming, norming, performing, and adjourning are the

five stages of team formation.
Reward and expert are usually the best forms of authority that a
project manager can use. Penalty should be resorted to as a last
option.
Organization theories help a project manager to identify what
motivates the team members and accordingly design a reward
plan.
A project manager should adopt a leadership style based on the

team.

Lesson 11: Project Communications Management
Objectives
Define communication and Project Communications Management
Identify the different communication methods, technology, and

channels
Explain the elements of a basic communication model
Describe the Project Communications Management processes

Communication
The definition of communication is as follows:
Communication is a two-way process of transferring information from one entity to another.
• Project Managers
Project • Management
• Other Stakeholders
A project manager spends around 90 percent of time ensuring proper project communication.
Communication Methods
Communication can be either written or verbal.

Further, it can be formal or informal. • Project
Written management
• In formal communication, certain rules should Emails
plan •
be followed. • Project charter • Notes

• Long-distance
• Informal communication takes a casual
communication
approach.
• Combination of the two forms results in the
following four communication methods: • Presentations • Conversations
Verbal
o Formal written
o Formal verbal
o Informal written Formal Informal
o Informal verbal
Questions that require choosing a communication method for a given situation can be expected in
the exam.
Communication Technology
Communication technology refers to the various media used for communication. Commonly used
technologies for communication are as follows:
Telephone Fax Emails Messaging Software Meetings
Skype™ Facebook Twitter Blogger

Communication Channels
Given that communication takes place between four members of a team, there
are six unique channels of communication.
If a team comprises ten stakeholders, how many channels of communication

would exist?
Use the formula: Number of Communication Channels = n * (n – 1)/2

In the formula, ‘n’ is equal to the number of stakeholders.
In this case, n = 10.
By substituting ‘n’ in the formula, the total number of communication channels that exist in a team of
10 stakeholders is 45.
!
When a large number of communication channels exist, it may get chaotic if communication is not
structured.
Basic Communication Model
The process of communication involves several steps. Given below is a simple communication model:
Noise
Message
Encode Decode
Sender Medium Receiver
Decode Encode
Feedback Message
Noise
A Japanese tourist calls a hotel in Dubai to book a room. The tourist speaking Japanese is the encoding of
the message. Telephone serves as the medium. However, decoding is problematic as the receptionist
does not understand Japanese. The same would be true if the receptionist speaks Arabic. However,
communication can be streamlined if they communicate in a language comprehensible to both of them.
Basic Communication Model (Contd.)
Analyzing the communication model helps in identifying the communication problems.

• Encoding is the process of translating thoughts or ideas into a language that is understood by others.
• Decoding is the process of translating the message back into meaningful thoughts or ideas.
• Message is the output of encoding.
• Feedback message is the output of encoding.
• Medium is a communication method to convey the message.
• Noise is anything that interferes with the transmission and understanding of the message. Examples include
distance and unfamiliar technology.
Project Communications Management
The definition of *Project Communications Management is as follows:
“Project Communications Management includes the processes necessary to ensure that the
information needs of the project and its stakeholders are met through development of artifacts and
implementation of activities designed to achieve effective information exchange.”
Project manager needs to ensure that the stakeholders get timely access to the required information.
*Definition taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 359
Project Communications Management Processes
Knowledge Areas Project Integration Project Scope Project Schedule Project Cost Project Quality Projecct Resource Project Project Risk Project Project Stakeholder
Management Management Management Management Management Management Communications Management Procurement Management
Management Management

Durations 11.4 Perorm
Schedule Analysis
11.5 Plan Risk
Response
Project
Management
Process Executing 4.3 Direct and 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Groups Manage Project Resources Communications Risk Response Procurments Stakeholder
Knowledge
Controlling Control Project 5.6 Control Scope Schedulel Resource Communications Procurements Stakeholder
Work Engagements
4.6 Perform
Integrated Change
Control
Closing 4.7 Close Poject or

Phase
Plan Communications Management
“Plan Communications Management is the process of developing an appropriate approach and plan for project
communications based on the information needs of each stakeholder or group, available organizational assets, and the
needs of the project.” This belongs to the Planning Process Group.
Project Charter PROJECT COMMUNICATIONS MANAGEMENT
Project Management
Plan Communications
management plan
Project documents Plan Communications
Management Project Management
Plan updates
assets
Project documents
Enterprise updates
environmental factors Communication Communication
Expert Judgment Requirements Analysis Technology
Communication Legend
Communication Interpersonal and
Models Methods Team Skills Input
Output
Data Representation Meetings Tools & Techniques
Planning Process
Figure 10-2. Plan Communications Management: Inputs, Tools & Techniques, and Outputs
Understand the communication management process to answer concept-based questions in exam.
• Communication is 90% of a Project Manager’s job; communicating status is a critical part of

ensuring project success.
• Your company is a key supplier for a major airline company; most projects are one to three years
long.
• A large, 18-month design and manufacturing project is about halfway complete when the original
project manager leaves for another position, and you are asked to step in as the new project
manager.
• The project includes work performed by sub-contractors, and they have some key deliverables
coming up. You need to understand the status of these deliverables.
• How should you prepare yourself for the project manager role, especially as it relates to
communication requirements?
• The project manager should start with the full project management plan. This document serves as
a guide for the team and all stakeholders by setting expectations of what the team plans to do to
execute the defined tasks to support the scope of work.
• PMP also includes the three baselines; the project manager can use them as a guide to measure
the current status of the project.
• As it specifically relates to communication, the communication plan would provide details on
what needs to be distributed, and why, how, when, and to whom it would be disseminated. It
would also specify the roles and responsibilities for communication.
“Manage Communications is the process of ensuring timely and appropriate collection, creation, distribution,
storage, retrieval, management, monitoring, and the ultimate disposition of project information.” It belongs to the
Executing Process Group.
PROJECT COMMUNICATIONS MANAGEMENT

Project Management
Plan
Project
Project Documents Communications
Work Performance Project Management

Reports Manage Communications
Plan updates
assets Project Documents
Communication Communication Communication update
Enterprise technology Methods Skills
environmental factors Organizational
Project Management Interpersonal and
Project Reporting process assets
Information System Team Skills
updates
Legend
Input Meetings
Output
Tools & Techniques
Executing Process
Figure 10-5. Manage Communications: Inputs, Tools & Techniques, and Outputs
Monitor Communications
“Monitor Communications is the process of ensuring the information needs of the project and its stakeholders are
met.” It is part of the Monitoring and Controlling Process Group.
PROJECT COMMUNICATIONS MANAGEMENT

Project management Work performance
plan information
Project Documents
Change requests
Work performance
data Monitor Communications Project management
Enterprise plan updates
environmental
factors Project Information Project documents
Expert judgment Data Analysis
Management System updates
assets Interpersonal and
Meetings
Legend Team Skills
Input
Output
Tools & Techniques Figure 10-7. Monitor Communications: Inputs, Tools & Techniques, and Outputs
• Regina is managing a four-year international project and she is a year and a half into the project.
• Her project team includes team members from three different countries. Because of the distance
between team members, many of them have never worked together on a project before.
Therefore, Regina has to work hard to map out suitable communication methods in her plan to
reach everyone.
• As the team nears the halfway mark on the project, Regina notices an influx in her issue log and a
decrease in her team’s productivity and engagement during project team meetings.
• What are some things Regina can do to motivate her team?
• The issue log can be used to communicate issues on the project, like areas of confusion,
disagreement, concern, etc. Therefore, Regina will be able to take the information and analyze
the causes of the problems. She will be able to determine the root causes and the corrective
actions needed to resolve the issue.
• In her investigation, she should link the areas of confusion to her lack of consideration of noise
factors that prevented clear communication during web meetings and her lack of attention to
cultural differences.
• Regina should also incorporate cultural awareness activities in her meetings going forward to
increase respect for one another, minimize future communication barriers, and increase the
team’s cohesiveness.
Quiz
As a project manager, you have a problem with a team member’s performance. Which
1.
is the best way of communicating this problem to the team member?
Informal verbal
Formal verbal
Formal written
Informal written
Quiz
As a project manager, you have a problem with a team member’s performance. Which
1.
is the best way of communicating this problem to the team member?
Informal verbal
Formal verbal
Formal written
Informal written
Informal verbal communication is a good option. If this does not solve the problem, it should be
followed up with formal written communication.
Quiz
You are managing a project with project teams in different geographical locations. There are
approximately 25 team members plus a team lead at 3 different locations. Additionally, there
2. are 3 members from a supporting group that are working part-time on the project. How
many communication channels are possible in your project?
496
992
424
32
Quiz
You are managing a project with project teams in different geographical locations. There are
approximately 25 team members plus a team lead at 3 different locations. Additionally, there
2. are 3 members from a supporting group that are working part-time on the project. How
many communication channels are possible in your project?
496
992
424
32

This is directly based on the formula n*( n-1 )/2 . If n is the number of stakeholders in the project, the
total possible communication channels = n*( n-1 )/2. The project has 25 team members, 3 team leads, 3
support team members, and the project manager. That makes 32 people and 496 possible
communication channels. Refer to PMBOK® Guide – Sixth Edition Project Communications Management,
Communication Channels, Glossary.
Quiz
You have a project team spread across 5 different countries. As a project manager,
3. what is the best communication method that you should follow for communicating
important project announcements?
Informal written
Informal verbal
Formal written
Formal verbal
Quiz
You have a project team spread across 5 different countries. As a project manager, what
3. is the best communication method that you should follow for communicating
important project announcements?
Informal written
Informal verbal
Formal written
Formal verbal
Communication is a big issue if team members are geographically distributed, and it is always a
good practice to use formal written communication in such cases.
Quiz
Project information may be distributed using a variety of methods, including hard copy
4. document distribution, shared access to networked electronic databases, fax, electronic mail,
voice mail, video conferencing, and electronic tools. These are known as ___________.
Project controls
Project reporting system
Project distribution system
Information management system

Quiz
Project information may be distributed using a variety of methods, including hard copy
4. document distribution, shared access to networked electronic databases, fax, electronic mail,
voice mail, video conferencing, and electronic tools. These are known as ___________.
Project controls
Project reporting system
Project distribution system
Information management system
All the methods mentioned are commonly known as information management system.
Quiz
As part of a joint venture, a project manager working with another company needs to share
some confidential information related to intellectual property rights. He wants to know the
5.
person responsible for authorizing the release of confidential information. Which project
document should he refer?
Organizational Breakdown Structure
Project Charter
Communication Management Plan
Stakeholder Management Plan

Quiz
As part of a joint venture, a project manager working with another company needs to share
some confidential information related to intellectual property rights. He wants to know the
5. person responsible for authorizing the release of confidential information. Which project
document should he refer?
Organizational Breakdown Structure
Project Charter
Communication Management Plan
Stakeholder Management Plan
A communication management plan will capture the details of the person responsible for
authorizing the release of the confidential information on the project.
Quiz
A project manager of an information technology project is discussing a complex

algorithm with a new team member. After a long and thorough verbal discussion, the
project manager asks the person if he has understood the algorithm and can put it in
6. the document. The team member implies that he has understood. However, when the
project manager goes through the document, he realizes that the member hasn’t
understood what was actually said, thus resulting in an inefficient use of time and
effort. Who is responsible for this loss of time, and how could this be avoided?
Project manager; he should not have given the complex assignment to a new team member.
Team Member; he should have not implied that he had understood but should have cleared his
doubts immediately.
Project Manager; he should have helped the team member in preparing and reviewing the document.
Project manager; it is his responsibility to ensure that his message is clear and concise and confirm
that the team member truly understands the message.
Quiz
A project manager of an information technology project is discussing a complex algorithm

with a new team member. After a long and thorough verbal discussion, the project manager
asks the person if he has understood the algorithm and can put it in the document. The team
6. member implies that he has understood. However, when the project manager goes through
the document, he realizes that the member hasn’t understood what was actually said, thus
resulting in an inefficient use of time and effort. Who is responsible for this loss of time, and
how could this be avoided?
Project manager; he should not have given the complex assignment to a new team member.
Team Member; he should have not implied that he had understood but should have cleared his
doubts immediately.
Project Manager; he should have helped the team member in preparing and reviewing the
document.
Project manager; it is his responsibility to ensure that his message is clear and concise and confirm
that the team member truly understands the message.

In the communication model, it is the sender's responsibility to make the message clear, complete, and
concise so that the recipient can receive it. The sender must also confirm that the recipient truly
understands the message. Therefore, the responsibility lies with the project manager.
Quiz
Xavier is a project manager of a large learning management system implementation. He

recently held a meeting with the project’s key stakeholders. One of the Senior Directors from
Sales complained that there were never any status updates for the project. Xavier has spent
7. considerable time on weekly project status reports to ensure they were accurate and well
formatted. He has printed hard copies of the reports and placed them on stakeholders’ desks.
What should Xavier do?
Immediately send an email to all stakeholders explaining the status report process and include
copies of all status reports.
Follow-up with the Senior Director and confirm whether a printed status reports best meets his
communication needs. Update the Communication Plan if there are any changes.
Transition to an email distribution of the status reports.
At this point, Xavier does not need to do anything,. Not all stakeholders will be fully engaged in the
project, and it is not his job to ensure that they read the status reports.
Quiz
Xavier is a project manager of a large learning management system implementation.

He recently held a meeting with the project’s key stakeholders. One of the Senior
Directors from Sales complained that there were never any status updates for the
7. project. Xavier has spent considerable time on weekly project status reports to ensure
they were accurate and well formatted. He has printed hard copies of the reports and
placed them on stakeholders’ desks. What should Xavier do?
Immediately send an email to all stakeholders explaining the status report process and include
copies of all status reports.
Follow-up with the Senior Director and confirm whether a printed status reports best meets his
communication needs. Update the Communication Plan if there are any changes.
Transition to an email distribution of the status reports.
At this point, Xavier does not need to do anything,. Not all stakeholders will be fully engaged in the
project, and it is not his job to ensure that they read the status reports

Checking with the Director on his preferred communication channel is an important component of the
Communication Management Plan. As a Sales Director, it is possible that the stakeholder might not be
in the office consistently to benefit from hard copies of the reports. Any changes should be updated in
the Communication Management Plan.
Quiz
Sally spends part of each Friday afternoon informally connecting with all project team members to
8. ensure that they are aware of the priorities and status of the project. What process is Sally
performing?
Team management
Quality Control
Quiz
Sally spends part of each Friday afternoon informally connecting with all project team members
8. to ensure that they are aware of the priorities and status of the project. What process is Sally
performing?
Team management
Quality Control
Sally is monitoring the effect of her communications using interpersonal and team skills.
Key Takeaways
-
Communication is a two way process of transferring information
from one entity to another.
The four commonly used communication methods are formal

written, formal verbal, informal written, and informal verbal.
The total number of unique channels of communication can be

calculated using the formula n * (n – 1)/2.
By analyzing the basic communication model, problems in project

communication can be identified.
Project manager is responsible for timely availability of

information to all the stakeholders.
The three Project Communications Management processes are

Plan Communications Management, Manage Communications,
and Monitor Communications.

Lesson 12: Project Risk Management
Objectives
Define risk
Describe the key terms related to risk
Learn how to calculate risk
Identify different categories of risk
Describe Project Risk Management processes

Risk
The definition of *Risk is as follows:
“Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more of a
project’s objectives.”
You are managing a gas pipeline expansion project in Canada. The project funds are allocated in US dollars
even though most of the expenses are in Canadian dollars. Exchange fluctuations are a risk to the project
budget. Shortly after the project starts, the Canadian dollar depreciates significantly, which contributes to
a budget surplus. This is an example of a positive risk.
If a major storm delays construction of a commercial office tower, the project timelines may be delayed.
This is an example of negative risk.
Positive Risk Responses
Positive Risks have positive effects associated with them and are often called Opportunities. There are four response
types for Positive Risks.
The enhance strategy is used to increase the probability or impact of an opportunity.

Example: A construction project that involves building six apartment complexes in different parts of the country is
underway. One of the teams is using a new construction design tool that has increased efficiency by 20%. The
project manager enhances this result by having the other construction teams use the same tool.
Enhance
Sharing involves transferring ownership of an opportunity to a third party so that it shares some of the benefit if the
opportunity occurs.
Example: Your company is bidding for a large engineering project for a hydroelectric dam. As the team reviews the
scope of the project, it sees an opportunity to increase its success if it partners with a company that has experience
with advanced hydroelectric technology. The positive benefits of this risk are shared with the other company.
Share
The exploit strategy can be used for high-priority opportunities, where the organization wants to ensure that the
opportunity is realized.
Example: A large software development project has three teams working on different components within the
architecture. If one of the teams completes work sooner than scheduled, the project manager can exploit this
Exploit opportunity by allocating work from the other two teams to it.
Accepting an opportunity acknowledges its existence, but no proactive action is taken.

Example: A project constructing an overpass in a large city will have a pool of experienced construction workers to
draw upon. As the project scope is constrained to the construction of this overpass and there is little opportunity to
Accept enhance, share, or exploit the positive effects of this risk, the project manager accepts the risk.
Negative Risk Responses
Negative Risks have negative effects associated with them and are often called Threats. There are four
responses types for Negative Risks.
Risk avoidance is when the project teams act to eliminate the threat or protect the project from its impact.
Example: A project is building a new offshore drilling rig in the Gulf of Mexico. The risk of a hurricane during
setup would impact schedule and budget. The project manager avoids this risk by setting up the rig outside of
hurricane season.
Avoid
Transfer involves shifting ownership of a threat to a third party to manage the risk and to bear the impact if the
risk occurs.
Example: A large commercial office building is under construction. The work location has many flammable
materials and there is a risk of fire that could damage/destroy the structure, causing significant budget/schedule
impact. The project manager budgets for fire insurance during the construction phase until fire prevention
Transfer equipment is installed.
In risk mitigation, action is taken to reduce the probability of occurrence or impact.

Example: A software development project is transitioning from the Java to .Net programming language. The risk
that the developers will not be as familiar with .Net could lead to project schedule delays. The project manager
mitigates this risk by providing training to the developers and hiring a .Net developer as a contractor.
Mitigate
Risk acceptance acknowledges the existence of a threat, but no proactive action is taken.
A project manager is concerned that his team does not have access to a printer at their work location. This will
require the team to walk down the hall whenever they need a printout. The project manager decides to accept
this risk as it has a low impact on his project.
Accept
Key Terms
• Negative risks are known as threats and positive risks are known as opportunities.
• A risk that can only have a negative consequence is called pure risk.
• A risk that can have a positive or negative consequence is called business risk.
Given below are other risk-related terms:
Risk averse
One who does not take risks.
Risk tolerance
The level of risk that can be tolerated.
Risk threshold
Amount of risk that is acceptable.
Remember, after a risk occurs, it is no longer “an uncertain event or condition”; it becomes an issue.
Issues should be resolved immediately or have a workaround identified.
Calculation of Risk
Risks can be managed only if they are measured quantitatively.

• Risk is measured by assigning a monetary value to it.
• Risk is calculated by multiplying probability and impact of risk.
Formula:
Risk Exposure = Risk Probability * Risk Impact
Where risk probability is the likelihood that a risk event could happen and risk impact is the effect
on the project objectives if a risk event happens
Calculation of Risk: Example
Calculate the expected monetary value for the given work packages.
Work Package Probability Impact
X 25% -$10,000
Y 40% -$2,000
Z 10% +$20,000
Work Package Probability Impact Expected Monetary Value (EMV)
X 25% -$10,000 -$2,500
Y 40% -$2,000 -$800
Z 10% +$20,000 +$2,000
TOTAL EMV -$1,300

Risk Categorization
Risks can be classified in various ways. One classification of risk is as follows:
External Risks • Arise out of external factors, for example, regulatory or governmental policies,
subcontractors, suppliers, environment, etc.
Internal Risks • Arise within the project, for example, funding, resources, prioritization, etc.
• Arise out of the technology being used, for example, requirements, technology, quality, etc.
Technical Risks
Project Management • Arise out of project management activities, for example, estimating, planning,
Risks schedule, communication, etc.
Risks can also be classified on the basis of their origin: scope risks, resource risks, schedule risks, cost
risks, and quality risks.
Decision Tree
A decision tree is used to analyze risk and its impact on decisions in the face of uncertainties.
If you need to buy a car, which one would you buy? Which option has a risk over a period of 5 years?
Failure : Probability=10%
Impact= $15,000
Initial cost of buying the new car = $20,000
Pass : Probability=90%
Impact= $0
Decision: Which car would you buy? A new
one or a used one.
Failure : Probability=70%
Impact= $10,000
Initial cost of buying the old car= $15,000
Pass : Probability=30%
Impact= $0
Risk Exposure = Probability * Impact

Risk associated with the new car is $20,000 + ($15,000 * 10%) + ($000*90%) = $21,500
Risk associated with the old car is $15,000 + ($10,000*70%) + ($000*30%) = $22,000
Risk Reserve
Project cost should include both the known and unknown risks. The various risk reserves are calculated in the
order given below:
Management
Reserve
Cost
Baseline
Contingency
Reserve
Project
Control
Account
Work
Packages
Activities
Work
Small, Set of Reserve for Project cost Reserve for
Lowest level packages
assigned control known for unknown
of WBS clubbed to
project tasks accounts uncertainties budgeting uncertainties
manage cost
Project Risk Management
The definition of *Project Risk Management is as follows:
Project Risk Management includes the processes of conducting risk management planning, identification,
analysis, response planning, response implementation, and monitoring risk on a project.[2]
The key objective of risk management is to:
• Increase the probability and impact of positive events
• Decrease the probability and impact of negative events
Inc., 2017, Page 395
• Cynthia is a subject matter expert and the Director of New Store Construction in Small Markets.
As she has expertise and experience in managing complex store construction for the corporation,
she has been appointed as the manager of a new, large, and complex construction project
involving a gas station.
• None of the previous construction projects included a gas station and convenience store
component. Since this is a new initiative and a way for the company to diversify its business, this
project is critical to the business, very visible to senior management, and can be a career maker or
breaker.
• The senior management team is anxious to see the project brought to life, but the company lacks
a strong risk management process. The company would like Cynthia to prepare a risk response
plan and submit it prior to the project’s first milestone in 3 weeks. What should Cynthia do?
• As the company lacks a risk management structure and has handled risk poorly in the past, Cynthia
should first search internally for risk experts. Internal experts would be knowledgeable of risks that
exist within the business as it deals with construction.
• She should then identify subject matter experts external to the organization who are
knowledgeable about risk management as it relates to convenience stores with a gas station
component.
• Another viable resource would be the historical documents around risk from previously completed
projects, which will also point out other stakeholders and/or SMEs who can contribute to the risk
response planning process.
• After the key players are in place, Cynthia can work with them to go through the identification and
prioritization process of risk that leads up to the development of their plan.
Project Risk Management Processes
Highlighted here are the Project Risk Management processes:

Stakeholders
Schedule Analysis
Project Management Process Groups
11.5 Plan Risk

Response
Executing 4.3 Direct and Manage 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Project Work Resources Communications Risk Response Procurements Stakeholder
4.4 Manage Project 9.4 Develop Team Engagement
Controlling Project Work 5.6 Control Scope Schedulel Resource Communications Procurements Stakeholder
Change Control
Closing 4.7 Close Poject or Phase
Plan Risk Management
“Plan Risk Management is the process of defining how to conduct risk management activities for a project. The
key benefit of this process is it ensures that the degree, type, and visibility of risk management are
proportionate to both risks and the importance of the project to the organization and other stakeholders.” It is
part of the Planning Process Group.
Project Charter PROJECT RISK MANAGEMENT
Project management
plan
Project Documents Plan Risk Management Risk Management Plan
Enterprise
environmental factors Legend
Organizational process Input
assets Expert Judgment Data Analysis Output
Tools & Techniques
Meetings Planning Process
Figure 11-2. Plan Risk Management: Inputs, Tools & Techniques, and Outputs
Definition of Impact Scale
The table given below shows the impact on scope, cost, time, and quality.
Project Very Low Low Moderate High Very High

Objective 0.05 0.1 0.2 0.4 0.8
Scope Barely Minor areas Some important Unacceptable Entire scope

noticeable affected areas affected change in scope rendered useless
change
Cost Insignificant <10% cost 10-20% cost 20-40% cost >40% cost
cost increase increase increase increase increase
Time Insignificant <5% change to 5-10% change to 10-20% schedule >20% schedule
change schedule schedule change change
Quality Barely Few parameters Needs sponsor Major quality Need to scrap
noticeable affected approval compromise the project
degradation
Identify Risks
“Identify Risks is the process of identifying individual project risks as well as sources of overall project risk and
documenting their characteristics.” It belongs to the Planning Process Group.
Project management plan PROJECT RISK MANAGEMENT
Project Documents
Identify Risks Risk Register
Agreements
Risk Report
Procurement Interpersonal and Team
Expert Judgment
Documentation Skills Project Document
updates
Factors Data Gathering Prompt Lists
Legend
Organizational Process Input
Assets Data Analysis Meetings Output
Tools & Techniques
Planning Process
Figure 11-6. Identify Risks: Inputs, Tools & Techniques, and Outputs
Perform Qualitative Risk Analysis
“Perform Qualitative Risk Analysis is the process of prioritizing individual project risks for further analysis or action
by assessing their probability of occurrence and impact as well as other characteristics.” This process belongs to
the Planning Process Group.
PROJECT RISK MANAGEMENT
Project Documents
Perform Qualitative Risk Project Documents
Analysis updates
factors
Expert Judgment Data Gathering Data Analysis Legend
assets Input
Interpersonal and Data Output
Team Skills Risk Categorization Representation Tools & Techniques
Planning Process
Meetings
Figure 11-8. Perform Qualitative Risk Analysis: Inputs, Tools & Techniques, and Outputs
Concept based questions on qualitative risk analysis can be expected in the exam.
Probability and Impact Matrix: Example
A probability and impact matrix tabulates the probability and impact scales for the opportunities and threats on the
project.
Probability Threats Opportunities
0.9 0.05 0.09 0.18 0.36 0.72 0.72 0.36 0.18 0.09 0.05
High
0.7 0.04 0.07 0.14 0.28 0.56 0.56 0.28 0.14 0.07 0.04
Medium 0.5 0.03 0.05 0.10 0.20 0.40 0.40 0.20 0.10 0.05 0.03
0.3 0.02 0.03 0.06 0.12 0.24 0.24 0.12 0.06 0.03 0.02
Low
0.1 0.01 0.01 0.02 0.04 0.08 0.08 0.04 0.02 0.01 0.01
Impact 0.05 0.10 0.20 0.40 0.80 0.80 0.40 0.20 0.10 0.05
Low Medium High

Once the probability and impact matrix is filled, a risk threshold can be defined, and a risk becomes a
candidate for active management.
Perform Quantitative Risk Analysis
“Perform Quantitative Risk Analysis is the process of numerically analyzing the combined effect of
individual project risks and other sources of uncertainty on overall project objectives.” This is part of the
Planning Process Group.

Project Management
Plan
Project Documents Perform Quantitative Risk Project documents

Analysis updates
Enterprise Interpersonal and

Expert Judgment Legend
environmental factors Team Skills
Input
Representations of Output
Organizational process Data Gathering
Uncertainty Tools & Techniques
assets Planning Process
Data Analysis
Figure 11-11. Perform Quantitative Risk Analysis: Inputs, Tools & Techniques, and Outputs
Concept based questions on quantitative risk analysis can be expected in the exam.
Plan Risk Responses
“Plan Risk Responses is the process of developing options, selecting strategies, and agreeing on actions to address
overall project risk exposure, as well as to treat individual project risks.”
It is part of the Planning Process Group.
Project Management
PROJECT RISK MANAGEMENT Change
Plan
Requests
Project Documents Plan Risk Responses Project

management
plan update
Enterprise Strategies for overall
environmental Expert Judgment Strategies for Threats
project risk Project
factors documents
updates
Strategies for
Organizational Data Gathering Data Analysis
Opportunities Legend
process Assets
Input
Interpersonal and Contingent Response Output
Decision Making
Team Skills Strategies Tools & Techniques
Planning Process
Figure 11-16. Plan Risk Responses: Inputs, Tools & Techniques, and Outputs
Residual risks are those that remain after the risk responses were implemented.
Secondary risks arise out of implementing risk responses.
Implement Risk Response
“Implement Risk Response is the process of implementing agreed-upon risk response plans. The key benefit of this
process is it ensures that agreed-upon risk responses are executed as planned in order to address overall project
risk exposure, minimize individual project threats, and maximize overall project opportunities.” It is part of the
Executing Process Group.
Project management Project Document Updates

plan
Project Documents Implement Risk Response Change Requests
Organizational Process Legend

Assets Interpersonal and Project Management Input
Expert Judgment
Team skills Information System
Output
Tools & Techniques
Executing Process
Figure 11-18. Implement Risk Responses: Inputs, Tools & Techniques, and Outputs
Monitor Risks
“Monitor Risks is the process of monitoring the implementation of agreed-upon risk response plans, tracking
identified risks, identifying and analyzing new risks, and evaluating risk response effectiveness.” It is part of the
Monitoring and Controlling Process Group.
Project Management Work Performance

PROJECT RISK MANAGEMENT Information
Plan
Project Documents Monitor Risks Change Requests
Work performance
data Project Management Plan
Updates
Work performance
reports Project Documents
Data Analysis Audits Meetings update
Legend
Input
Output Assets updates
Figure 11-20. Monitor Risks: Inputs, Tools & Techniques, and Outputs
Tools & Techniques
Process
Quiz
1. Purchasing insurance coverage for your project equipment is an example of ________

risk response.
Transfer
Mitigation
Acceptance
Avoidance
Quiz
1. Purchasing insurance coverage for your project equipment is an example of ________

risk response.
Transfer
Mitigation
Acceptance
Avoidance

This is an example of transfer as the financial risk is transferred to the insurance company.
Quiz
2. What action should a project manager first take when an unidentified risk event
occurs?
Inform the customer of the possible consequences
Inform the senior management of the possible consequences
Redo the risk identification process to prepare for other ‘known-unknowns’
Create a work-around
Quiz
2. What action should a project manager first take when an unidentified risk event
occurs?
Inform the customer of the possible consequences
Inform the senior management of the possible consequences
Redo the risk identification process to prepare for other ‘known-unknowns’
Create a work-around
The right project management practice is to create a work-around as a response to the event.
Quiz
3. You are a project manager at a financial firm that has multinational dealings. You feel the
financial meltdown in one of the client countries could affect your project adversely, so you
want to hedge your risks. Although the probability of occurrence of the event is low, you are
advised to play it safe. In terms of risk attitude, your organization could best be described
as?
Risk Seeker
Risk Averse
Risk Neutral
Risk Mitigator
Quiz
3. You are a project manager at a financial firm that has multinational dealings. You feel the
financial meltdown in one of the client countries could affect your project adversely, so you
want to hedge your risks. Although the probability of occurrence of the event is low, you are
advised to play it safe. In terms of risk attitude, your organization could best be described
as?
Risk Seeker
Risk Averse
Risk Neutral
Risk Mitigator
Someone who doesn't want to take risks is called risk averse, and the attitude of the
organization seems to be the same.
Quiz
4. Decision tree analysis can be described as a __________.
Quantitative risk analysis and modeling technique
Subset of the EMV technique
Subset of the Earned Value Management (EVM) technique
Risk response strategy

Quiz
4. Decision tree analysis can be described as a __________.
Quantitative risk analysis and modeling technique
Subset of the EMV technique
Subset of the Earned Value Management (EVM) technique
Risk response strategy
Decision tree analysis is a quantitative risk analysis technique that involves a diagram describing
different decisions under consideration and the impact on the project of choosing one over the
other.
Quiz
5. How early can comprehensive risk analysis be done on a project?
During project initiation
After scope decomposition
During scope validation
After the project management plan has been baselined

Quiz
5. How early can comprehensive risk analysis be done on a project?
During project initiation
After scope decomposition
During scope validation
After the project management plan has been baselined

A comprehensive risk analysis can be done only after the entire scope has been defined in the
Work Breakdown Structure (WBS).
Quiz
6. A project manager is managing a pilot project of a short duration and has started the risk
management planning process. He has identified new risks and prioritized them based on
the probability and impact matrix. The project manager now proceeds to plan responses for
the risks without analyzing the risks numerically. According to you, this decision of project
manager is:
Incorrect, as it is important to numerically analyze each risk so that it can be responded properly
Correct, as quantitative risk analysis is a waste of time and not required if risks are already assessed
qualitatively
Incorrect, as quantitative risk analysis is important to calculate EMV for each risk and then later
move to risk response planning
Correct, as this is a short project and project manager might skip quantitative risk analysis if he feels
it is not assisting in the risk management process
Quiz
6. A project manager is managing a pilot project of a short duration and has started the risk
management planning process. He has identified new risks and prioritized them based on
the probability and impact matrix. The project manager now proceeds to plan responses for
the risks without analyzing the risks numerically. According to you, this decision of project
manager is:
Incorrect, as it is important to numerically analyze each risk so that it can be responded properly
Correct, as quantitative risk analysis is a waste of time and not required if risks are already assessed
qualitatively
Incorrect, as quantitative risk analysis is important to calculate EMV for each risk and then later
move to risk response planning
Correct, as this is a short project and project manager might skip quantitative risk analysis if he feels
it is not assisting in the risk management process
The amount of rigor in the analysis is dependent upon the duration and complexity of the
project. For a project with a short duration, it may not be necessary to perform numeric
(quantitative) risk analysis.
Quiz
7. Which of the following is not a response type for positive risks?
Exploit
Enhance
Accept
Leverage
Quiz
7. Which of the following is not a response type for positive risks?
Exploit
Enhance
Accept
Leverage

Leverage is not one of the positive risk responses identified by PMBOK. Exploit, Enhance,
Accept, and Share are the four positive risk responses.
Quiz
8. John is managing a project. He conducted a risk assessment workshop with project

stakeholders and identified several risks. He is concerned about the amount of time it will
take for quantitative and qualitative risk analysis and to develop a risk response plan. What
should John do?
As the risks were identified by project stakeholders, John needs to ensure that each risk follows the
risk management processes.
John should use his expert judgement to decide which risks warrant more complete risk analysis and
response.
John should create a Probability and Impact matrix that determines risk thresholds for quantitative and
qualitative risk assessments. He should apply this to his Risk Register and use that to determine which
risks need analysis and risk responses.
John should refer this decision to the project stakeholders who can determine which risks merit
response.
Quiz
8. John is managing a project. He conducted a risk assessment workshop with project

stakeholders and identified several risks. He is concerned about the amount of time it will
take for quantitative and qualitative risk analysis and to develop a risk response plan. What
should John do?
As the risks were identified by project stakeholders, John needs to ensure that each risk follows the
risk management processes.
John should use his expert judgement to decide which risks warrant more complete risk analysis and
response.
John should create a Probability and Impact matrix that determines risk thresholds for quantitative and
qualitative risk assessments. He should apply this to his Risk Register and use that to determine which
risks need analysis and risk responses.
John should refer this decision to the project stakeholders who can determine which risks merit
response.
The Probability and Impact matrix is an important tool for project managers to determine which
risks warrant deeper analysis and response plans. The PMO at John’s company might already
have a matrix that he can leverage.
Key Takeaways
Risk is an uncertain event or condition that has a positive or
negative effect on a project’s objectives.
Risk is calculated by multiplying probability and impact of risk

(Risk Weighting = Probability * Impact).
Risk can be classified in various ways. Under one category, risks

are classified as external, internal, technical, and project
management. On the basis of origin, risks can be classified as
scope, resource, schedule, cost, and quality risks.
A decision tree is used to analyze risk and its impact on decisions

in the face of uncertainties.
The seven Project Risk Management processes are Plan Risk

Management, Identify Risks, Perform Qualitative Risk Analysis,
Perform Quantitative Risk Analysis, Plan Risk Responses,
Implement Risk Responses, and Monitor Risks.

Lesson 13: Project Procurement Management
Objectives
Define contract
Differentiate between centralized and decentralized contracting
Explain the different types of contract
Identify the key terms used in Procurement Management
Describe the Project Procurement Management processes

Contracts
The definition of a *Contract is as follows:
A contract represents a mutually binding agreement that obligates the seller to provide the specified
products, services, or results and obligates the buyer to provide the monetary or other valuable
consideration in return. A contract can also be called an agreement, understanding, undertaking, or a
purchase order.
The two parties involved in a contract are the buyer and the seller. A seller provides the goods and services
and the buyer buys these for a compensation.
Characteristics of Contract
The characteristics of a contract are as follows:
A contract must be formal and in written form.
A contract must have legal remedies.
Changes to contracts must also be subject to the same checks as the contract itself.
A contract is created and managed by contract managers, also called the procurement
managers.
Centralized vs. Decentralized Contracting
In centralized contracting, a single contract manager handles multiple projects, whereas in decentralized
contracting, a contract manager is assigned to a project full time and reports to the project manager.
The advantages and disadvantages of the two methods are as follows:
Method Advantages Disadvantages

Centralized • Difficult to get contracting help as the
• Increased expertise in contracting
Contracting contractors may be involved in multiple
• Standardized company practices
projects
• More focus and control on the
• Duplication of expertise
Decentralized project
• Less standardization of contracting
Contracting • Easier access to contracting
practices from one project to another
experience
If British Petroleum is starting a project of setting up a new refinery plant in Nigeria, they can procure key
machinery through centralized purchasing department and later have a full-time contract manager to
procure smaller equipment, locally.
Types of Contract
Contracts can be of three types. They are as follows:
Cost Reimbursable (CR) or Time and Material (T and M)

or Unit Price Fixed Price (FP) or Lump Sum
Cost Plus
The seller is paid based on Time and material (T and M) or Fixed price contracts (or lump sum
the actuals. Cost plus, say, unit price contracts are generally contracts) are generally signed
incentive or fixed fee will be paid used for smaller projects, wherein when the scope of work is very
in addition to the actuals. customer pays per item, hour, or clear.
day.
Cost-based contracts can be Fixed price contracts can be
classified as: classified as:
• Cost Plus Fee (CPF) or Cost Plus • Fixed Price Incentive Fee (FPIF)
Fixed Fee (CPFF)
• Fixed Price – Economic Price
• Cost Plus Percentage of Costs Adjusted (FP – EPA)
(CPPC)
• Firm Fixed Price (FFP)
• Cost Plus Incentive Fee (CPIF)
• Cost Plus Award Fee (CPAF)
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 471-472
• Scott is the Project Manager for a global project, which is very demanding and critical to his
company. His Project Sponsor is confident in his team’s ability to finish the project under budget and
ahead of schedule.
• To manage the huge demand, Scott has to make a decision to procure additional resources.
• The additional resources would be responsible for activities requiring specific skills, which his project
team lacks.
• The customer has an incentive clause in the project’s agreement that yields a bonus for early
completion. Scott has a vision for the work the additional resources will complete, but there is also
an opportunity to expand their scope of work, especially if he runs into scheduling problems that
will require him to crash the critical path.
• What contract should Scott establish to procure the additional resources?
• Although Scott wants to complete his project early so that the team can receive the bonus for
early completion, he has to pick a contract that is less risky and based on the scope of work.
• Out of the available contracts, the best choice for Scott is the Time and Material Contract, which
gives him more flexibility.
• Fixed Fee contracts require a well-defined scope of work, and Time and Material is the only
option that accommodates open-ended work arrangements.
Types of Contract: Advantages and Disadvantages
The advantages and disadvantages of different types of contracts are as follows:
Type of Contract Advantages Disadvantages
• Requires auditing all the seller invoices and

• Less costly than fixed price because
Cost thus increases buyer efforts
seller does not have to account for
Reimbursement • Seller has less incentive to control cost and
the risk
thus these contracts are inefficient, i.e., riskier
• Simple to draft
for the buyer or the project manager
• More efficient as the seller has strong • Seller may underquote initially and later try to
incentive to control cost make high margins on change requests
Fixed Price • Requires less effort by buyer to • Not having a proper Statement of Work (SOW )
manage contracts as cost risk is with can result in seller not providing some of the
the seller deliverables
• Easy to create
• Seller has no incentive to control costs
Time and • Good for resource augmentation
• Requires monitoring of daily output
Material assignments, where cost risk is shared
• Can’t be used in big projects
by buyer and seller
Key Terms
The following are the key terms used in Procurement Management:
Request for Information
Request for Information (RFI) is used to get potential sellers’ information to see their capability.
Request for Proposal
Request for Proposal (RFP) is used to get proposals from prospective sellers.
Request for Quotation
Request for Quotation (RFQ) is used to get quotation from prospective sellers for standard products or services.
Request for Bid
Request for Bid (RFB) is used by the buyer to get bids from the shortlisted sellers.
Purchase Order
Purchase Order (PO) is the simplest type of commercial contract. PO is generally issued for small purchases.
Key Terms (Contd.)
Statement of Work
Statement of Work (SOW) defines the scope of the deliverables according to the contract.
Quotation
A Quotation is the submission of response by the vendor to a request from the buyer.
Non-disclosure Agreement
Non-disclosure Agreement (NDA) is signed between two parties to maintain the confidentiality of the information of
each other. They abide by the agreement and don’t disclose the information with any of the competitors.
Letter of Intent
Letter of Intent (LOI) is issued by the buyer to indicate that he is interested to carry on work with the seller.
Terms and Conditions

A procurement agreement includes certain Terms and Conditions (T and C) and may incorporate other items that the
buyer specifies regarding what the seller should perform or provide.
Key Terms (Contd.)
Force majeure
It is a clause in contracts that frees both business parties from obligation in case of unavoidable events or an event
described by the legal term as act of God (flood, hurricane, earthquake, and so on).
Doctrine of waiver
Doctrine of waiver is a voluntary act by a person or a party that surrenders a legal right.
Privity of contracts
The doctrine of Privity implies that the contract cannot confer rights or obligations to any party other than those
directly involved in the contract.
Dispute resolution
It is about taking action or finding a resolution in case of disputes..
Termination for convenience of buyer
This involves termination of the contract by the buyer under any circumstances.
Project Procurement Management
The definition of *Project Procurement Management is as follows:
Project procurement management includes the processes necessary to purchase or acquire products,
services, or results needed from outside the project team.
Project Procurement Management helps in determining the type of contract to be issued and guides in
managing the contracts with the sellers.
2017, Page 459
Project Procurement Management Processes
Knowledge Areas Project Integration Project Scope Project Schedule Project Cost Project Quality Project Resource Project Project Risk Project Project Stakeholder
Management Management Management Management Management Management Communications Management Procurement Management
Management Management

Requirements 6.2 Define Activities 7.2 Estimate Costs 9.2 Estimate Management 11.2 Identify Risks Management Engagement
5.3 Define Scope 6.3 Sequence 7.3 Determine Activity Resources 11.3 Perform
6.4 Estimate Analysis
Activity Durations 11.4 Perform
Schedule Analysis
11.5 Plan Risk
Response
Project
Management
Executing 4.3 Direct and 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Process Groups
Manage Project Resources Communications Risk Response Procurements Stakeholder
Knowledge
Work Engagements
4.6 Perform
Integrated Change
Control

Phase
Plan Procurement Management
“Plan Procurement Management is the process of documenting project procurement decisions, specifying the
procurement approach, and identifying potential sellers.” It belongs to the Planning Process Group.
Project Charter PROJECT PROCUREMENT MANAGEMENT Procurement

Management Plan
Business Documents
Procurement Strategy
Plan Procurement
Project Management Management
Plan Bid Documents
Project Documents Procurement Statement

of Work
Expert Judgment Data Gathering
Enterprise
Environmental Factors Source Selection Source Selection Criteria
Data Analysis
Analysis
Make-or-buy Decisions
Assets Meetings
Independent Cost
Legend Estimates
Input Figure 12-2. Plan Procurement Management: Inputs, Tools & Techniques, and Outputs
Output Change Requests
Tools & Techniques
Planning Process Project Document
Updates
Assets
Conduct Procurements
“Conduct procurements is the process of obtaining seller responses, selecting a seller, and awarding a
contract.” It belongs to the executing process group.
PROJECT PROCUREMENT MANAGEMENT Selected sellers

Project management
plan
Agreements
Project documents
Change Requests
Procurement Conduct Procurements
documentation Project Management
Plan Updates
Seller proposals
Project documents
updates
Enterprise environmental Expert Judgment Advertising Bidder Conferences
factors Organizational process
assets
Organizational process Data Analysis Interpersonal and
updates
assets Team Skills
Figure 12-4. Conduct Procurements: Inputs, Tools & Techniques, and Outputs
Legend
Input Bidder conferences are scheduled reviews for interested suppliers to ask
Output Bidder Conferences
questions and receive information on a Request for Proposal, Quotation, or
Tools & Techniques
Information. They ensure that all bidders receive the same information at
Executing Process
the same time
Control Procurements
“Control Procurements is the process of managing procurement relationships, monitoring contract performance,
and making changes and corrections to contracts as appropriate.”[3] It belongs to the Monitoring and Controlling
Process Group.
Project Management Closed Procurements

Plan
PROJECT PROCUREMENT MANAGEMENT Work Performance
Project Documents
Information
Agreements Procurement
Documentation Updates
Control Procurements
Procurement
Documentation Change Requests
Approved Change
Project Management
Requests
Plan Updates
Expert judgment Claims administration Data analysis
Work Performance Data Project document
Updates
Enterprise Inspection Audits
Environmental Factors Organizational Process
Assets Updates
Organizational Process Figure 12-6. Control Procurements: Inputs, Tools & Techniques, and Outputs
Assets Legend
Input
Output
Tools & Techniques
Process
Quiz
1. What is the primary objective of negotiation?
Find a win-win proposition for both parties
Get the best deal
Define the exact responsibilities of each party
Clarify the contract scope

Quiz
1. What is the primary objective of negotiation?
Find a win-win proposition for both parties
Get the best deal
Define the exact responsibilities of each party
Clarify the contract scope

Negotiation should result in a positive feeling for both parties so that their commitment toward the
contract is assured.
Quiz
You are in the process of selecting a seller from the shortlisted ones and awarding a
contract. The process involves receiving bids or proposals and applying the defined
2. selection criteria to select the seller who is qualified to perform the work. Which of the
following is not an input to this process?
Procurement documentation
Make-or-buy decisions
Bidder conferences
Source selection criteria

Quiz
You are in the process of selecting a seller from the shortlisted ones and awarding a
contract. The process involves receiving bids or proposals and applying the defined
2. selection criteria to select the seller who is qualified to perform the work. Which of
the following is not an input to this process?
Procurement documentation
Make-or-buy decisions
Bidder conferences
Source selection criteria
This is Conduct Procurements process. The inputs to this process are the project management plan,
procurement documents, source selection criteria, seller proposals, project documents, make-or-buy
decisions, and organizational process assets. Bidder conferences is the tool for this process.
Quiz
You have been asked to assist the contract manager in drafting the contract for a large
3. project with limited scope clarity. Which type of contract would you suggest so that your
organization does not incur any financial losses?
Time and material
Fixed price
Cost plus fixed fee
Cost plus incentive fee

Quiz
You have been asked to assist the contract manager in drafting the contract for a
3. large project with limited scope clarity. Which type of contract would you suggest so
that your organization does not incur any financial losses?
Time and material
Fixed price
Cost plus fixed fee
Cost plus incentive fee
In a cost plus fixed fee project, the seller can exercise control over the cost rather than getting locked
into a rate or a price. In a project with limited scope clarity, incentives are hard to define and agree.
Quiz
A Cost Plus Incentive Fee (CPIF) contract has an estimated cost of $150K with a
predetermined fee of $15K and a share ratio of buyer to seller equal to 70/30. The
4. actual cost of the project is $120K. How much savings did the seller make in total, and
out of total savings, how much did he make due to the incentive?
$30K, $9K
$55K, $30K
$32K, $27K
$15K, $3K
Quiz
A Cost Plus Incentive Fee (CPIF) contract has an estimated cost of $150K with a
predetermined fee of $15K and a share ratio of buyer to seller equal to 70/30. The actual
4. cost of the project is $120K. How much savings did the seller make in total, and out of total
savings, how much did he make due to the incentive?
$30K, $9K
$55K, $30K
$32K, $27K
$15K, $3K
The estimated cost of project is $150K, and the actual cost of project is $120K. This implies a net saving
of $30K. The sharing ratio is 30% for the seller which is $9K. The total value of the amount received by
the seller is $120K+$9K+15K = $144K (actual cost + incentive + fixed fee).
Quiz
As a project manager of a construction project, you are inviting requests for proposal from
eligible vendors. On going through the list, you find the name of your friend and ex-
5. colleague from university. He was a methodical, sharp student and excelled in his subjects.
What should you do next?
Give him the contract as you are quite sure he would do a good job
Give him some inputs on how your organization awards the contract to improve his chances
Steer yourself away from the bidding process and inform your sponsor
Keep silent and continue with the procurement process

Quiz
As a project manager of a construction project, you are inviting requests for proposal from
eligible vendors. On going through the list, you find the name of your friend and ex-
5. colleague from university. He was a methodical, sharp student and excelled in his subjects.
What should you do next?
Give him the contract as you are quite sure he would do a good job
Give him some inputs on how your organization awards the contract to improve his chances
Steer yourself away from the bidding process and inform your sponsor
Keep silent and continue with the procurement process
This situation presents a potential conflict of interest. The best option for the project manager is to
discuss it with his project sponsor and then disassociate himself from the process.
Quiz
6. Which of the following is not an advantage of a fixed price contract?
Less work for buyer to manage
Seller has a strong incentive to control costs
Buyer knows the total price at project start
Final cost may be more than that specified in a cost reimbursable contract because
contractors have to inflate the price to cover their risk
Quiz
6. Which of the following is not an advantage of a fixed price contract?
Less work for buyer to manage
Seller has a strong incentive to control costs
Buyer knows the total price at project start
Final cost may be more than that specified in a cost reimbursable contract because
contractors have to inflate the price to cover their risk
Inflating the price to cover risks will only result in increasing the price for the buyers. This is definitely
not an advantage.
Quiz
As a project manager you arrange to have another company provide debris removal services for a
construction project. The owner of a small debris removal company is ready to perform the service
7. for half the costs of several companies that bid on the service. You agree to use his services, and he
offers his handshake as a contract saying that’s how he has been operating for more than 40 years.
What should you do?
Given the significant savings and the fact that the owner of the company has been in business for 40
years, a handshake is enough to start doing business with the company.
Before you shake his hand, you clarify the specifics of the work that will be performed and upon
agreement, you can complete the contract with a handshake.
You explain that you require a written contract that can be reviewed and signed by both parties and
that provides clear descriptions of the services that will be rendered, the payment received for the
services, and legal remedies in the event of disagreements.
Check with your legal team to determine if you can accept a handshake as a formal contract.
Quiz
As a project manager you arrange to have another company provide debris removal services for a
7 construction project. The owner of a small debris removal company is ready to perform the
service for half the costs of several companies that bid on the service. You agree to use his
. services, and he offers his handshake as a contract saying that’s how he has been operating for
more than 40 years. What should you do?
Given the significant savings and the fact that the owner of the company has been in business for
40 years, a handshake is enough to start doing business with the company.
Before you shake his hand, you clarify the specifics of the work that will be performed and upon
agreement you can complete the contract with a handshake.
You explain that you require a written contract that can be reviewed and signed by both parties
and that provides clear descriptions of the services that will be rendered, the payment received for
the services, and legal remedies in the event of disagreements.
Check with your legal team to determine if you can accept a handshake as a formal contract.
As the project manager you need to ensure that all contracts are written and legally binding.
Quiz
You are managing a large construction project and are concerned about the risk of completing
the framing for a project which requires the purchase of a lot of supplies. You decide to outsource
8. this to a company that specializes in framing. Which type of contract would be best for this
service?
Fixed Price
Fixed Price plus early completion incentive
Time and Material
Time and Material with a cap

Quiz
You are managing a large construction project and are concerned about the risk of
completing the framing for a project which requires the purchase of a lot of supplies. You
8.
decide to outsource this to a company that specializes in framing. Which type of contract
would be best for this service?
Fixed Price
Fixed Price plus early completion incentive
Time and Material
Time and Material with a cap
As the framing work requires a lot of supplies, you do not want to pay for any additional mark-ups on
the materials used. Time and Material with a cap or ceiling would be the best contract for this work.
Key Takeaways
A contract is a mutually binding agreement that obligates the seller
to provide the specified products, services, or results and obligates
the buyer to provide the monetary or other valuable consideration
in return.
In centralized contracting, a single contract manager handles

multiple projects, whereas in decentralized contracting, a contract
manager is assigned to a project full time and reports to the project
manager.
The three types of contacts are Cost Reimbursable (CR) or Cost Plus,
Time and Material (T and M) or Unit Price, and Fixed Price (FP) or
Lump Sum.
Project Procurement Management includes the processes necessary

to purchase or acquire products, services, or results needed from
outside the project team.
There are three Project Procurement Management processes. They

are Plan Procurement Management, Conduct Procurements, and
Control Procurements.

Lesson 14: Project Stakeholder Management
Objectives
Define stakeholders
Identify different stakeholders on a project
Describe stakeholder classification models and stakeholder

engagement assessment matrix
List the skills needed to manage stakeholders
Describe the Project Stakeholder Management processes

Stakeholders
The definition of a *Stakeholder is as follows:
An individual, group, or organization who may affect, be affected by, or perceive itself to be
affected by a decision, activity, or outcome of a project, program, or portfolio.
A stakeholder can have a positive or negative impact. Therefore, it is necessary to engage and involve the
stakeholders in the project to ensure project success.
Inc., 2017, Page 723
Stakeholders: Example
Different examples of stakeholders are as follows:
• Project managers
• Project team members
• Senior management
• Sponsors
• Customers
• End users
• Vendors
• People affected by project’s output
• Competitors
• Social groups
• Government and political leadership
Classification Models for Stakeholder Analysis
Stakeholders have power and influence over the project, and the best way to manage each stakeholder is
to calibrate a proper classification.
High
The power, interest, influence, and impact that
Keep Manage
stakeholders have on projects can be mapped them satisfied them closely
through power/interest, power/influence, or
influence/impact grids, and Salience model. Power
Monitor them Keep them

A Salience model describes the classes of informed
stakeholders based on their power, urgency, and
legitimacy.
Low Interest High
Figure 13-4. Example Power/Interest Grid with Stakeholders
Practice creating power grid for business scenarios. This will help in understanding the level of engagement a
project manager needs to maintain with various stakeholders.
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, Page 396 and 397
Stakeholder Engagement Assessment Matrix
Stakeholder engagement assessment matrix helps in visualizing the current and desired states of a
stakeholder’s involvement in a project.
Unaware Stakeholder is not aware of the project and its impact.
Resistant Stakeholder is aware of the impact and is resistant to change.
Neutral Stakeholder is aware of the project, but is neither supportive nor has resistance.
Supportive Stakeholder is aware of the project and is supportive of change.
Leading Stakeholder is aware of the project and is actively engaged to ensure project’s success.
Stakeholder Engagement Assessment Matrix (Contd.)
The table given here shows a sample stakeholder engagement assessment matrix:
Stakeholder Unaware Resistant Neutral Supportive Leading
Stakeholder 1 C D
Stakeholder 2 C D
Stakeholder 3 C D
Stakeholder 4 C D
Stakeholder 5 D, C
Figure 13-6. Stakeholder Engagement Assessment Matrix
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 521, 522
Stakeholder Management Skills
Project managers need to demonstrate the following traits while managing stakeholders:
Interpersonal Skills Managerial Skills
The project manager must possess the The project manager has to use the following
following interpersonal skills to manage managerial skills to accomplish the project
stakeholder: objectives:
• Building trust • Facilitate consensus
• Resolving conflict • Influence people
• Active listening • Negotiate agreements
• Overcoming resistance to change • Modify organizational behavior
Project Stakeholder Management Processes

Stakeholders
Schedule Analysis
Project Management Process Groups
11.5 Plan Risk

Response
Executing 4.3 Direct and Manage 8.2 Manage Quality 9.3 Acquire 10.2 Manage 11.6 Implement 12.2 Conduct 13.3 Manage
Project Work Resources Communications Risk Response Procurements Stakeholder
4.4 Manage Project 9.4 Develop Team Engagement
Controlling Project Work 5.6 Control Scope Schedule Resource Communications Procurements Stakeholder
Change Control
Closing 4.7 Close Project or Phase
Identify Stakeholders
“Identify Stakeholders is the process of identifying project stakeholders regularly and analyzing and
documenting relevant information regarding their interests, involvement, interdependencies, influence, and
potential impact on project success.” It belongs to the Initiating Process Group.
Project charter
PROJECT STAKEHOLDER MANAGEMENT

Stakeholder register
Business documents
Project management Change requests

plan Identify Stakeholders
Project documents Project management plan

updates
Agreements
Expert judgment Data gathering Data analysis Project documents
updates
Enterprise
environmental
factors Data representation Meetings Legend
Input
Organizational process Output
assets Figure 13-2. Identify Stakeholders: Inputs, Tools & Techniques, and Outputs
Tools & Techniques
Initiating Process
Plan Stakeholder Engagement
“Plan Stakeholder Engagement is the process of developing approaches to involve project
stakeholders based on their needs, expectations, interests, and potential impact on the project.” It
belongs to the Planning Process Group.
Project charter
Project documents
Plan Stakeholder Stakeholder

Agreements Engagement engagement plan
factors Expert judgment Data analysis Data representation Legend
Input
Output
Organizational process Tools & Techniques
assets Data gathering Decision making Meetings Planning Process
Figure 13-4. Plan Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs
“Manage Stakeholder Engagement is the process of communicating and working with stakeholders to meet their needs
or expectations, address issues as they occur, and foster appropriate stakeholder engagement in project activities
throughout the project life cycle. It belongs to the Executing Process Group.”

Change requests
Project documents Project management plan

Manage Stakeholder
updates
Engagement
factors Project documents
updates
Organizational process Communication Interpersonal and
Expert judgment
assets skills team skills
Legend Ground rules Meetings

Input
Output
Tools & Techniques Figure 13-7. Manage Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs
Executing Process
Study the process of managing stakeholder engagement to answer concept based questions.
Monitor Stakeholder Engagement
“Monitor Stakeholder Engagement is the process of monitoring project stakeholder relationships and tailoring
strategies for engaging stakeholders through modification of engagement strategies and plans.” It belongs to
the Monitoring and Controlling Process Group.
Project management
Work performance
plan PROJECT STAKEHOLDER MANAGEMENT information
Project documents
Change requests
Monitor Stakeholder
Engagement
Enterprise environmental Project management plan

factors updates
Data analysis Decision making Data representation
Organization process
Assets Project documents
Interpersonal and update
Communication skills Meetings
Legend team skills
Input
Output
Tools & Techniques Figure 13-9. Monitor Stakeholder Engagement: Inputs, Tools & Techniques, and Outputs
Quiz
1. The power/interest grid is a tool that helps to:
Assign more authority to the interested stakeholders
Assess the correct type and level of engagement desired with different stakeholders
Identify as many stakeholders as possible
Identify ways to make the project more interesting

Quiz
1. The power/interest grid is a tool that helps to:
Assign more authority to the interested stakeholders
Assess the correct type and level of engagement desired with different stakeholders
Identify as many stakeholders as possible
Identify ways to make the project more interesting

The power/interest grid is a tool to determine the most appropriate type of engagement with a
stakeholder based on an assessment of their degree of influence and their interest in the project.
Quiz
2. Which of the following is the best/preferred level during the stakeholder engagement?
Unaware
Resist
Neutral
Support
Quiz
2. Which of the following is the best/preferred level during the stakeholder engagement?
Unaware
Resist
Neutral
Support
Support is the best level of engagement.

Quiz
3. A project has been in execution for many months, and you have been regularly sending
updates to all stakeholders per the communications management plan. Suddenly, at a
phase-gate review, one of the stakeholders complains that she has not been informed
about the changes in the project. What is the best thing for you to do?
Send her the copies of past correspondence to prove that she has been informed
Escalate the issue to the stakeholder’s manager
Review the stakeholder and communications management plans
Ignore this comment and continue working on the plan

Quiz
3. A project has been in execution for many months, and you have been regularly sending
updates to all stakeholders per the communications management plan. Suddenly, at a
phase-gate review, one of the stakeholders complains that she has not been informed
about the changes in the project. What is the best thing for you to do?
Send her the copies of past correspondence to prove that she has been informed
Escalate the issue to the stakeholder’s manager
Review the stakeholder and communications management plans
Ignore this comment and continue working on the plan
It seems like either the mode of communication was not appropriate or the stakeholder might
not have understood those communications about the project. So, the best thing to do is to
review these plans and see if any changes are needed.
Quiz
4. A project manager has recently been assigned to a long running project and wants to know
the key influencers on the project and their level of involvement. The best document to get
this kind of information is:
Stakeholder management plan
Project staffing plan

Quiz
4. A project manager has recently been assigned to a long running project and wants to know
the key influencers on the project and their level of involvement. The best document to get
this kind of information is:
Stakeholder management plan
Project staffing plan
The stakeholder register lists the stakeholders on a project and their involvement with the
project.
Quiz
5. What is the best way to manage stakeholders who are extremely supportive and have
a high level of interest in the project but do not have a large influence on the project?
Ignore
Keep them informed
Use them as champions
Manage them closely

Quiz
5. What is the best way to manage stakeholders who are extremely supportive and have
a high level of interest in the project but do not have a large influence on the project?
Ignore
Keep them informed
Use them as champions
Manage them closely

The low power, high interest stakeholders need to be kept informed, but they cannot necessarily
become champions due to their low degree of influence in the organization.
Quiz
6. Which of the following is NOT an input to the Monitor Stakeholder Engagements process?
Issue log
Change requests
Quiz
6. Which of the following is NOT an input to the Monitor Stakeholder Engagements process?
Issue log
Change requests
Change requests are the output of the Monitor Stakeholder Engagements process.
Quiz
7. Which of the following techniques can be used by the project manager while
identifying stakeholders for a project?
Stakeholder Selection Matrix
Expert Judgment
Communication Skills
Interpersonal Skills
Quiz
7. Which of the following techniques can be used by the project manager while
identifying stakeholders for a project?
Stakeholder Selection Matrix
Expert Judgment
Communication Skills
Interpersonal Skills

Expert Judgment is a technique for identifying stakeholders. The Stakeholder Selection Matrix is
not a recognized PMBOK® term, and Communication Skills and Interpersonal Skills are
techniques used to Monitor Stakeholder engagement.
Quiz
8. Henry is a long-time employee of a large organization. He is a subject matter expert in the

Accounts Payable function and is a passionate supporter of the new financial system that is
being implemented. Henry is respected in his department even though he is an individual
contributor without a lot of formal authority. How would you classify Henry on a
Power/Influence Grid?
High Power, High Interest
High Power, Low Interest
Low Power, High Interest
Low Power, Low Interest

Quiz
8. Henry is a long-time employee of a large organization. He is a subject matter expert in the

Accounts Payable function and is a passionate supporter of the new financial system that is
being implemented. Henry is respected in his department even though he is an individual
contributor without a lot of formal authority. How would you classify Henry on a
Power/Influence Grid?
High Power, High Interest
High Power, Low Interest
Low Power, High Interest
Low Power, Low Interest
As an individual contributor, Henry would have low power but high interest in the success of the
project.
Key Takeaways
Stakeholder is an individual, group, or organization who may
affect, be affected by, or perceive itself to be affected by a
decision, activity, or outcome of a project.
The different stakeholder classification models are

power/interest, power/influence, or influence/impact grids and
Salience model.
Stakeholder engagement assessment matrix helps in visualizing

the current and desired states of a stakeholder’s involvement in a
project.
Project managers need to demonstrate certain interpersonal and

managerial skills to manage the stakeholders and accomplish the
project objectives successfully.
The four Project Stakeholder Management processes are Identify

Stakeholders, Plan Stakeholder Management, Manage
Stakeholder Engagement, and Monitor Stakeholder Engagement.
This concludes
“Project Stakeholder
Management.”
Thank You

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CAPM® Certification Training

Define PMP® Certification, CAPM® and PMI®

Identify the application requirements for the CAPM® examination

List the guidelines to fill up CAPM® application

Describe CAPM® exam outline and syllabus

• PMI: Project Management Institute

• PMI is an organization; CAPM is a credential

Category College/University PM Training Hours Leading and

One Secondary Diploma (high school N/A 1,500 hours

• Application can be submitted online at www.pmi.org

If your application gets picked for audit:

Introduction to Project Management 6

Role of the Project Manager 7

Project Integration Management 9

Project Scope Management 9

Project Schedule Management 9

Project Cost Management 8

Project Quality Management 7

Project Resource Management 8

Project Communication Management 10

Project Risk Management 8

Project Procurement Management 4

Project Stakeholder Management 9

The knowledge areas are:

• Manage Project Knowledge

One process has been removed:

Introduction and Overview 1

9 Project Quality Management

10 Project Resource Management

11 Project Communications Management

12 Project Risk Management

13 Project Procurement Management

14 Project Stakeholder Management

Project Cost Management 8

PMI is an organization; CAPM is a credential

PMI conducts and supervises the CAPM examinations

The exam duration of CAPM is 3 hours.

There are 150 questions on the exam. 15 questions are considered

The Exam is based on the Project Management Body of Knowledge

CAPM® Certification Training

Define project and project management

Describe how project management benefits project delivery

Explain the five project management process groups and the

Distinguish between Portfolio, Program, Projects and operational

Differentiate between project life cycle and product life cycle

Recognize the importance of tailoring for different projects

• Developing a new charger for cell phones

Projects are performed once and done

Address increasingly complex

• Transforming business from • New market opportunities • Technology changes

Project Management is formalized approach to manage a unique product, service or result.

Management methodology defined by Project Management Institute

Follows Spans industries Process applies across Tailored to meet specific

• Project Management contributes to organizational success

The Project life cycle flow shows the order of events

During the project, data is collected and analyzed to

Work Performance Data

• All project management work can be described by one of the 49 processes.