Project Management Fundamentals

PROJECT MANAGEMENT
FUNDAMENTALS
SEVIC PMC, Ltd.

2nd floor,
Wuraola House, 82 Allen Avenue, Lagos
01 8197750, 08057483240, 07041983860 2010 1
Overview of the Class
Key Objectives
– To learn the Principles of Project Management
– To learn the interrelationships of the Key Processes of Project

Management.
– To learn how to apply the fundamentals of Project Management to achieve

success
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What is a project?
A project is a “temporary endeavor to create a unique product, service, or

result.” Projects have ….
 A Purpose ( a set of outcomes,  A schedule driven by

goals and deliverables) resource availability
 A set of interrelated activities  Budget constraints
 A start date and a desired end  Schedule constraints
date
 Technical constraints
 A desired total cost
 Inter-functional coordination
 Fairly unique products and work
 Team effort
patterns, usually work that has
never been done before  Transient team members

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What is a project?
What are the attributes that characterize a project?
• Uniqueness
– Projects are unique since the product or service involves doing
something that has not been done before. It will never again be done
exactly the same way, by the same people and within the same
environment.
• Purpose
– A project’s purpose is based on well-defined end results
– They can be divided into smaller tasks in order to achieve the overall
project goal
• Life Cycle
– A project’s life cycle includes initiating, planning, executing,
monitoring/controlling and closing
– A project’s life cycle indicates that projects are temporary with a definite
beginning and a definite end.
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What is a project?
• Interdependencies
– Various tasks interact with one another
– Various tasks interact with the parent organization
• Examples of projects
– Introducing a new product
– Building and installing a new equipment
– Constructing a bridge or a building
– Running a political campaign
– Organizing a trade show

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What is the Difference Between a Project and

Daily Operations?
Project Work and Operations Work Are Different
Operations Work Project Work

Repeating process One of a kind, temporary process
No clear beginning or ending Clear beginning and ending
Same output created each time Output is created only once
Everyone in work group performs Requires multi-disciplined team
similar functions
• Not Projects!!
– Running a retail business
– Operating a manufacturing facility
– Supervising a work group

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What is Project Management?
Project Management is … “application of knowledge, skills, tools and
techniques to project activities to achieve project requirements.”
• Project Management has two major aspects:

The art – leading the people on the project
The science – defining and coordinating the work to be done
• Requires a keen knowledge of human behavior and the ability to
skillfully apply appropriate interpersonal skills
• Accomplished through the application and integration of the project
management processes of Initiating, Planning, Executing,
Monitoring/Controlling and Closing
• Knowledge, understanding and skillful application come only after a
significant amount of education and on-job-experience
• Almost all projects fail because companies are not using even the
most basic tools and techniques of project management.
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Stakeholders:
• Individuals and Organizations

• Actively Involved in Project
• Interests Affected by Project

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The Role of the Project Manager
Your Responsibilities as Project Manager
– The project:
• meet schedule, cost and quality targets
• Run the project efficiently
• Act as an arbiter of differing and competing objectives within the team
– The organization:
• Provide a tangible return on investment
• Viewed as an ‘agent of the organization & management
• Adhere to organizational policies, & act within limits of authority
• Make decisions that are in the best interest of the organization
• Proactively provide honest estimating, timely reporting of status,
accurate forecasting
• Provide appropriate opportunities for management to intercede as
needed in guiding the course of the project.

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Your Responsibilities as Project Manager
– The team:
• Varies from project to project
• Ensure that the team is properly informed throughout the project
• Provide constructive feedback when needed
• Give positive and appropriate recognition for performance
• Provide growth and development opportunities for team members
when possible
– Yourself:
• If project management is your chosen profession, take charge of your
self development. Develop the ability to examine your performance
and look for opportunities for improvement.

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Skills Requirements of the Project Manager
– Project Management Process Skills:
• Knowledge and skills related to the mechanics of project management
• Knowledge and application of project management tools, techniques
and process technology
• Example: know how to prepare a comprehensive customer requirements
document, construct a WBS
– Interpersonal and Behavioral Skills:
• Skilled in dealing with people
• Professional conduct, style and approach
• Example: influencing, delegating, coaching and mentoring
– Technology Management Skills:
• Sufficient knowledge and skill in the primary embedded technology of
the project
• Ability to guide and coordinate the application of technologies
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Skills Requirements of the Project Manager
– Desired Personal Traits (Four most critical)
• Thinks like a generalist: must always think in terms of the ‘big
picture’ Pay attention and care about everything and
everybody.
• High Tolerance for Ambiguity: develop processes for finding
truth and narrowing down inputs without getting frustrated
• High Tolerance for Uncertainty: condition yourself to making
decisions that are only acceptable not perfect.
• Honesty and Integrity: be known as doing what you say you
will do! Have a reputation as someone who will follow
principles, even in the face of adversity or temptation.

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Eight Success Tips
– Care about everything, dwell on nothing
– Don’t wait to be told to do something
– Develop a keen understanding of human nature
– Learn the who, when, and how of relying on others
– Consider the technology, people and business when making
decisions
– Learn how to make decisions with ambiguous, imperfect, or
incomplete information
– Never stop developing your social skills
– Appreciate the value of being politically savvy

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What is the Project Management Institute (PMI)?

 Articles of Incorporation (1969) stated its focus was “to promote a unifying
influence in the advancement of the field of project management with
emphasis of the tools and methods for planning, scheduling, and control of
project oriented tasks.”
 Pioneer in the field of project management
 Defines and publishes the Project Management Body of Knowledge
(PMBOK)
 Focuses on the needs of project management professionals worldwide
 Membership includes more than 248,000 professionals representing 128
countries.
 PMI professionals come from virtually every major industry including,
aerospace, automotive, business management, construction, engineering,
financial services, information technology, pharmaceuticals, healthcare, and
telecommunications.
 Visit www.pmi.org for more information
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PMI Certification
 Purpose:
 Demonstrates the appropriate education and/or professional
experience;
 Agree to abide by a professional code of conduct;
 Commit to maintaining their active credential through satisfying
continuing certification requirements
 Benefit:
 Evidence of a proven level of education, knowledge, and experience in
project management

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PMI Certification Types and Requirements

Certified Associate in Project Management (CAPM®)
 High school diploma or equivalent
 1500 hours of work on a project team OR 23 hours of formal project
management education
Project Management Professional (PMP®)
 Baccalaureate or global equivalent degree
 With a high school diploma or equivalent, then 7,500 hours in a
position of responsibility leading and directing specific tasks and 60
months of project management experience
 With a baccalaureate or global equivalent degree, then 4,500 hours
leading and directing specific tasks and 36 months of project
management experience
 35 hours of formal project management education

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PMI Project Management Knowledge Areas
and Process Groups
PMI Process
Groups
Time Mgmt
Scope Cost Mgmt Initiating Planning

Mgmt
Monitoring/
Executing
Integration Quality Controlling
Mgmt PM Mgmt
Knowledge
Areas
Closing
Human
Procurement Resource
Mgmt Mgmt
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What is a program?
• “A Program is a group of projects managed in a coordinated way to

obtain benefits and control not available from managing them
individually.”
• “..Program management is the centralized, coordinated

management of a group of projects to achieve the program’s
strategic objectives and benefits.”
- Project Management Institute

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Application Areas Knowledge, Standards, and
Regulations
“Categories of projects that have common elements significant in such

projects, but are not needed or present in all projects”
 Defined in terms of
 Functional departments and supporting
disciplines
 Technical elements
 Management specializations
 Industry groups
 Has a set of accepted standards and practices

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Project Scope Management

Purpose Processes
• To ensure that the project includes all the • Collect Requirement: creating a project
work required and only the work required to scope management plan that documents how
complete the project successfully. Scope the project scope will be defined, verified, and
management defines and controls what is and controlled, and how the Work Breakdown
is not included in the project. Structure will be created and defined.
• Define Scope : developing a project scope
statement as the basis for future project
decisions.
• Create Work Breakdown Structure:
subdividing the major project deliverables and
project work into smaller more manageable
components.
• Verify Scope : formalizing acceptance of the
completed project deliverables.
• Control Scope : controlling changes to the
project scope.

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Collect Requirements, Define Scope
Answers at a detailed level, the important project question….
What ?
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Definition of scope/deliverable
Scope: The sum and the boundaries of the deliverables which

includes products, services, plans and processes (including
qualitative and quantitative details, features and functions) to
be provided through a project (project scope/work) or as a
result of a project (product scope/work)
Deliverable: Any measurable, tangible, verifiable outcome,
result or item that must be designed, produced, or procured to
complete a project or a part of a project. There are four types
of deliverables: final, interim, organizational and project
management deliverables.

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The Scope Statement & the WBS
The Scope Statement forms the basis for agreement between
the project team and the customer and the foundation for
project planning.
The Work Breakdown Structure (WBS) is the basis for project

estimating, control and assignments. WBS is the core of the
Planning process. It represents the complexity of the entire
project in a detailed way. Using the WBS as a basis for
planning and estimating is bottom-up planning technique.
Bottom-up estimating techniques create the most accurate
estimates and produce plans that allow for close project
control.

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Work Breakdown Structure

• Tool for identifying project work
• Hierarchical, logical structuring of project work
• Comprehensive methodology
• Communication tool

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Scope Management Plan
The Scope Management Plan details how the scope is

recorded, verified, authorized, baselined and
managed through change. It is a subsidiary
component of the final project plan.
The Scope Management Plan may be a simple textual

presentation of the relevant processes. This plan
or process may be reused from project to project.

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Steps to Define Project Scope
 Review the existing documentation

 Create missing or incomplete information / document list
 Conduct interviews and/or workshops to obtain missing
information
 Clarify any implied information regarding
commitments, schedules and deliverables
 Continue to incorporate detail into the
Project Management Plan
 Gain agreement

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Controlling Project Scope
 Develop and implement a scope change control system.

 Evaluate change requests.
 Identify and document corrective actions to bring expected future
performance in line with planned performance.
 Ensure formal agreements are reached and new specifications detailed
when project scope is expanded.
 Revise cost, schedule, or quality baselines to reflect changes, if
necessary.
 Use performance measurement techniques to monitor changes.
 Document lessons learned.

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Project Time Management
Purpose • Define Activities : identifying the specific

• To accomplish timely completion of the project schedule activities that need to be performed to
by including all required processes. It starts produce the various project deliverables.
from the data generated in scope • Sequence Activities: identifying and
management. documenting dependencies among schedule
activities.
• Estimate Activity Resources : estimating the
types and quantities of resources required to
perform each schedule activity.
Selected Techniques • Estimate Activity Durations : estimating the
•Network Diagram number of work periods that will be needed to
complete individual schedule activities.
•Critical Path • Develop Schedule : analyzing activity
•Resource Estimating sequences, durations, resource requirements
and schedule constraints to create the project
schedule
• Control Schedule : controlling changes to the
project schedule.

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Activity
 An element of project work that requires an action to

produce a deliverable.
 Typically has an expected duration.
 Usually consumes costs and resources.
Examples of activities:
 Revise user manual
 Dig footers
 Reserve conference room

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Guidelines for Determining Activity Duration – General
• Planning should occur to the level of detail necessary to

facilitate the definition, estimating, and management of the
work.
• Work should be sufficiently broken down and detailed so

that near-term activity durations generally do not exceed
the frequency of the formal project update/review cycle,
without justification.
• Activities further out on the horizon may initially be less

detailed and have correspondingly longer durations, as
necessary (e.g., “Work Packages”).
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Guidelines for Determining Activity Duration – Specific
• The scope of the activity must be clearly understood and

“visualized”. Know what “done” looks like.
• The level of work associated with the activity must be
reasonably quantifiable.
• Fewer resources (e.g., 1 or 2), as opposed to more resources
(e.g., 3 or more), are able to complete the activity.
• The level of detail must facilitate the communication of
assignments and the gathering of updates.
• High-risk activities need to be defined in greater detail (and
scheduled as early as possible).
• Activities that are poorly understood need to be scheduled in
greater detail (paradoxically) than work that is well
understood and/or routine.
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Rules for Estimating
 Estimated in labour (effort) hours, material Naira, and other direct

costs
 Estimates assume "average" skill level
 Determine if multiple resources required on any task - assume
single resource per task
 8/80 Rule (1 day / 2 weeks)

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Activity Dependencies
What is an Activity Dependency?
An activity dependency is a logical relationship that exists between two project
activities. The relationship indicates whether the start of an activity is
contingent upon an event or input from outside the activity. Activity
dependencies shape the sequence among project activities.
An architect has designed a residence and has a vision for the room layouts. However
he won’t be able to assess the functionality of the design until the builders have framed
in the structure with walls, windows and a roof. Once the structure is in place, he will be
able to reassess the plans to determine if modifications are necessary.

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Activity Dependencies
Types of Activity Dependencies
There are three common types:
Mandatory
Discretionary
External

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Precedence Relationships
What is a Precedence Relationship?

A precedence relationship is the logical relationship between two
activities that describes the sequence in which the activities
should be carried out. Precedence indicates which of two
activities should come first (predecessor activity) and which
should come later (successor activity). Precedence relationships
are always assigned to activities based on the dependencies of
each activity.

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Task
A B C
Predecessor Successor

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A B Finish-Start Used the majority of the time
A
Start-Start
B
A
Finish-Finish
B
A
Start-Finish
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(Four Basic Types)
1. Finish to Start - Task #1 must finish before Task #2 can start

Construct Construct
Foundation (A) framework (B)
(Predecessor) (Successor)
The foundation for the house must be finished before the framing can start.
The total time for these two activities is the sum of A + B
2. Start to Start - Task #1 must start before Task #2 can start
Prepare building design (A)
(Predecessor)
Design electrical layout (B)

(Successor)
The building design must start before the electrical layout design can
start. The total time for activities A & B will vary, depending on when
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Finish-to-Start (FS) Example
A B B can’t start until

10 days A is finished
4 days
A (10 days) B (4 days)
14 days

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Start-to-Start (SS) Example

A B can’t start
10 days until A starts
SS B
4 days
A (10 days)
B (4 days)
10 days (Best Case)
A (10 days)
B (4 days)
14 days (Worst Case)

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3. Finish to Finish - Task #1 must finish before Task #2 can finish

Complete Construction (A)
(Predecessor)
Inspect building (B)

(Successor)
Construction must be finished before the building inspection can be finished. The
total time to complete both activities is based on when B begins
4. Start to Finish - The start of Task #1 drives the finish of Task #2

(Predecessor)
Perform electrical inspections
The electrical inspections must start before you can finish dry
(Successor) walling. The total time for activities A & B can vary widely,
Finish Dry walling depending on the relative duration of each activity. Rarely used

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Lag
A lag is a delay in the start of a successor activity. Some relationships

require a lag before a subsequent activity can begin. Lags are determined
by an external or mandatory dependency and may affect activities with any
of the four precedence relationships.
Example:
•Permit application takes six weeks to process
•The adhesive must dry until it is tacky before the laminate can be installed
In the first example, the activity must follows the submission of the permit
application is delayed by six weeks due to an external dependency of the
application processing time. In the second example, the installation of the
laminate is delayed by the amount of time the adhesive takes to dry. This is a
lag due to a mandatory dependency, because the delay is inherent in the
work.

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Estimate Activity Resources
 Determine what resources are necessary to complete each

activity.
 Determine what quantity of resources is necessary to
complete each activity.
 Generate possible alternatives for unavailable resources.
 Analyze the scope statement.
 Consider organizational policies that could affect resource
acquisition and usage.
 Identify and use expert judgment resources.
 Analyze the resources already available.

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Estimate Activity Durations
 Involve the work package owners.

 Consult historical information.
 Determine which work unit you will use.
 Consider resource requirements and capabilities
 Determine the appropriate estimation method to use.
 Modify the constraints and assumptions from the other planning
processes.
 Verify the accuracy of your estimates.
 Consider the need for reserve time.
 Include the list of assumptions made in the creation of estimates.
 Include a range of variance for each estimate.

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Creating a Network Diagram
 Post-it ™ method most accessible for team members
 Use Start and Finish milestones S F
 Place tasks in order of work sequence from left to right
 Draw arrows between tasks to designate relationships
 Look out for loops and danglers

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Network Diagram

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Standard Diagramming Notations
ES EF
LS DU LF

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Forward & Backward Pass
Forward Pass
ES EF Early Start
Early Finish
Name
Duration Backward Pass
Late Start
LS LF Late Finish
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CPM Network Diagram with Float
ES 4.2.3 EF ES 4.2.4 EF ES 4.2.5 EF

25 29 29 37 37 50
Activity Activity Activity
C D E
LS DU LF LS DU LF LS DU LF
36 4 40 40 8 48 48 13 61
TF=11 TF=11 TF=11

FF=0 FF=0 FF=11
ES 4.2.1 EF ES 4.2.2 EF ES 4.2.8 EF
0 10 10 25 61 66
A B H
0 10 10 10 15 25 61 5 66
TF=0 TF=0 TF=0

FF=0 FF=0 FF=0
ES 4.2.6 EF ES 4.2.7 EF
25 41 49 61
Activity FS 8 Activity
F G
LS DU LF LS DU LF
25 16 41 49 12 61
TF=0 TF=0
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Identify the Critical Path
 Conduct a forward pass to determine early start (ES) and

early finish (EF) times for each activity.
 Perform a backward pass to determine late start (LS) and late
finish (LF) times for each activity.
 Calculate float.
 Identify the critical path as the path with the longest total
duration and zero float.

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Critical Path
E F
4 5
A B C D G
1 2 2 2 4
Question: How many paths through this network?

Question: Now which is the longest path through the network?
Answer: Path AEFG is 14 days
Path ABCDG is 11 days
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Calculating the Critical Path
ES 4.2.3 EF ES 4.2.4 EF ES 4.2.5 EF

25 29 29 37 37 50
C D E
36 4 40 40 8 48 48 13 61
TF=11 TF=11 TF=11

FF=0 FF=0 FF=11
ES 4.2.1 EF ES 4.2.2 EF ES 4.2.8 EF
0 10 10 25 61 66
A B H
0 10 10 10 15 25 61 5 66
TF=0 TF=0 TF=0

FF=0 FF=0 FF=0
ES 4.2.6 EF ES 4.2.7 EF
25 41 49 61
Activity FS 8 Activity
F G
LS DU LF LS DU LF
25 16 41 49 12 61
TF=0 TF=0
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Network Diagram with Activity Duration
Estimates
ES EF
2.3.3.4
53 61
Pour
Concrete
FS 16
LS DU LF
8
TF=
FF=
ES 2.3.3.1 EF ES 2.3.3.2 EF ES 2.3.3.3 EF ES EF
2.3.3.7
0 20 20 45 45 53 77 81
Remove Excavate Build Remove
Old Sidewalk Lawn Forms Forms
LS DU LF LS DU LF LS DU LF LS DU LF
20 25 8 4
TF= TF= TF= TF=

FF= FF= FF= ES EF ES EF FF=
2.3.3.5 2.3.3.6
53 59 59 67
Replace Lay
Topsoil Sod
LS DU LF LS DU LF
6 8
TF= TF=
FF= FF=
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Network Diagram with Forward Pass
ES EF
2.3.3.4
53 61
Pour
Concrete
FS 16
LS DU LF
8
TF=
FF=
2.3.3.7
0 20 20 45 45 53 77 81
20 25 8 4
TF= TF= TF= TF=

2.3.3.5 2.3.3.6
53 59 59 67
Replace Lay
Topsoil Sod
LS DU LF LS DU LF
6 8
TF= TF=
FF= FF=
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Network Diagram with Backward Pass
ES EF
2.3.3.4
53 61
Pour
Concrete
FS 16
LS DU LF
53 8 61
TF=
FF=
2.3.3.7
0 20 20 53 45 53 77 81
0 20 20 20 25 45 45 8 53 77 4 81
TF= TF= TF= TF=

2.3.3.5 2.3.3.6
53 59 59 67
Replace Lay
Topsoil Sod
LS DU LF LS DU LF
63 6 69 69 8 77
TF= TF=
FF= FF=
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Completed Network Diagram
ES EF
2.3.3.4
53 61
Pour
Concrete
FS 16
LS DU LF
53 8 61
TF=0
FF=0
2.3.3.7
0 20 20 45 45 53 77 81
0 20 20 20 25 45 45 8 53 77 4 81
TF=0 TF=0 TF=0 TF=0

FF=0 FF=0 FF=0 ES EF ES EF FF=0
2.3.3.5 2.3.3.6
53 59 59 67
Replace Lay
Topsoil Sod
LS DU LF LS DU LF
63 6 69 69 8 77
TF=10 TF=10
FF=0 FF=10
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Compressing the Critical Path
Schedule Compression is the shortening of the project schedule without affecting the
project scope. Setbacks or revised deadlines can cause production crunches, in which
there is little time to do a lot of work. When this crunches occur, product quality is often
one of the first causalities. Schedule compression alleviates bottlenecks without
sacrificing the project scope
 Split tasks and change dependencies
 Reduce lag time
 Enhance team productivity
 Add resources

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Compressing the Critical Path

 Fast Tracking: the process of compressing total project
duration by performing some activities concurrently that
were originally scheduled sequentially.
 Usually no added costs are incurred. However,

fast--tracking can result in increased risk and
fast
rework
 Crashing: A schedule compression method that

analyses cost and schedule tradeoffs to determine how
to obtain the greatest amount of schedule compression
for the least incremental cost.
 Typically involves allocating more resources to

activities on the critical path on an effort to
shorten their duration and thereby increases
project costs.

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Critical Path Activity
B C D
(6) (6) (6)
A G
(13) (5)
E F
(10) (20)

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Controlling the Project Schedule
 Develop and implement a schedule change control system.

 Use performance measurement techniques to monitor changes and
compare actual schedule performance to planned performance.
 Analyze the results of your performance measurements.
 Identify and document corrective actions taken to bring expected future
project schedule performance in line with planned performance.
necessary.

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Project Cost Management
Purpose
Estimate Cost : developing an
To develop and control the cost of resources approximation of the cost of resources
needed to complete project activities. needed to complete project activities.
Determine Budget : aggregating the
estimated cost of individual activities or
work packages to establish a cost
baseline.
Control Costs : influencing the factors that
create cost variances and controlling
changes to the project budget.

Fundamentals PM-PMF
Estimate Project Costs

 Involve the work package owners.
 Gather relevant input information that may help you prepare
the estimates.
 Determine which estimating technique to use.
 Look for alternative costing options.
 Determine the units of measure that will be used.
 Consider possible risks that could impact cost.
 Ensure all cost estimates are assigned to the appropriate
account according to the chart of accounts.
 Make sure your cost estimates include key elements.
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Cost Budgeting/Cost Assignment Methods
Method Description
0/100 percent
No credit is given to work until it is completed.
rule
50/50 percent Fifty percent credit is given when the activity begins and fifty
rule percent credit is given when the work is completed.
Percentage Completion percentages are estimated and assessed at specific

complete rule reporting intervals.
Weighted The total work package value is divided up and assigned to

milestones milestone intervals within the work package.

Fundamentals PM-PMF
Establish a Cost Baseline

A cost baseline is a time phased budget that will monitor and measure
cost performance throughout the project life cycle. It is developed by
adding the estimated costs of project components by periods
 Gather inputs you will need to establish the baseline.

 Determine when activities will take place using the project schedule.
 Using one of the four methods of assigning costs, allocate funds for each
activity or work package for the time period in which they will occur.
 Consider adding contingency amount to accommodate the risk of incurring
extra expenses.
 Total the costs for each time period.
 Plot the costs for each time period.
 Publish and distribute the cost baseline to the appropriate stakeholders.

Fundamentals PM-PMF
32
Controlling Project Costs
 Develop and implement a cost change control system.
 Use performance measurement techniques to monitor changes and
compare actual cost performance to planned performance.
 Analyze the results of your performance measurements.
 Identify and document corrective actions to take to bring expected future
project cost performance in line with planned performance.
necessary.
 Use performance measurement techniques.

Fundamentals PM-PMF
Introduction to Earned Value
What is “Earned Value”?

A management technique that:
 Relates technical performance to associated cost and
schedule
 Measures actual work progress
 States the value of work completed in Naira
What is “Earned Value Management (EVM)”?
EVM is the use of an integrated management system that
coordinates work scope, schedule, and cost objectives
and employs earned value methods for program planning
and control

Fundamentals PM-PMF
33
Introduction to Earned Value
To put it another way:
PROJECT
MANAGEMENT TRADITIONAL METHOD EARNED VALUE
SYSTEM (Units) (Units)
Schedule: Days/Weeks/Months/Years Naira
Actual Costs: Naira Naira
Amount of Work Units / Widgets / etc.

Naira
Accomplished: (Sq Ft, Lines of Code)

Fundamentals PM-PMF
Our Question…
Time “Now” N200K

200K
Spend Plan
N125K
Actual
100K Costs
N N100K
0K
Time
Fundamentals PM-PMF
34
Our Question…What conclusions can you make?

200K
Spend Plan
125K
N125K
Actual N -25K Variance ???
100K Costs
N N100K
This variance shows we have
spent N25 more than we had
planned…but how much work
did we get done?
0
Time
Fundamentals PM-PMF
How We Earn Value
For example...
Assume a task is budgeted to cost N100K
20 40 60 80 100
If you (physically) complete 20% of the work, you earn...
N20K
Fundamentals PM-PMF
35
How We Earn Value
For example...
Assume a task is budgeted to cost N100K
20 40 60 80 100
If you (physically) complete 80% of the work, you earn...

N80K
Fundamentals PM-PMF
Our Original Schedule...
N50K
Task 1
N50K
Task 2
N50K
Task 3
N50K
Task 4
Time
Fundamentals PM-PMF
36
Our Original Schedule…with work accomplished
Assume these three tasks are done

N50K
N50K
N50K
N50K
And this task is 20% complete
The Earned Value is... N160K
Time
Fundamentals PM-PMF
Back to Our Original Question...

200K
N160K
160K Spend Plan
Earned Value
N125K
Actual
100K Costs
N N100K
While we HAVE spent more
money than planned, we have
also EARNED more VALUE by
accomplishing N160K worth of
work...and we only spent N125K!
0
Time
Fundamentals PM-PMF
37

200K
N160K
160K Spend Plan
Earned Value + 35 Cost Variance
N125K
Actual
100K Costs
N N100K
While we HAVE spent more
money than planned, we have
also EARNED more VALUE by
accomplishing N160K worth of
work...and we only spent N125K!
0
Time
Fundamentals PM-PMF

200
N160
160 Spend Plan
Earned Value
N125
Actual
100 Costs
N N100K
At this point in time, we had
planned to earn only N100 in
value…but actually have earned
N160. This shows we’re even
farther ahead of schedule!
0
Time
Fundamentals PM-PMF
38
200K
N160K
160K Spend Plan
Earned Value
N125K + N60 Schedule Variance
Actual
100K Costs
N N100K
At this point in time, we had
planned to earn only N100K in
value…but actually have earned
N160K. This shows we’re even
farther ahead of schedule!
0
Time
Fundamentals PM-PMF
Variance
Variance is any technical performance, schedule, or cost

deviation from a specific plan.
Sources of Variance:
• Estimating errors
• Technical problems (Design, Software, Test…)
• Management problems (Personnel skills, Labor
availability, Organizational issues)
• Economics / Market Fluctuations
• Acts of nature
• Subcontractors
Fundamentals PM-PMF
39
Variance Analysis
Variance Analysis
Comparing project results to planned for specific tasks or project
elements
Trend Analysis
Examine results over time to see if performance is improving
Uses graphical tools such as scatter charts

Fundamentals PM-PMF
Terminology
Budgeted at Completion
Time “Now” (BAC) N200K
200
N160K
160 Spend Plan
Planned Value PV
N125K
100
N N100K
0
Time
Fundamentals PM-PMF
40
Terminology
Budgeted at Completion
Earned Value Time “Now” (BAC) N200K
200K
Earned Value EV)
N160K Spend Plan
160K Planned Value PV
N125K Actual Costs
Actual Cost AC
100K
N N100K
0
Time
Fundamentals PM-PMF
Estimate at Completion #3
Terminology (EAC) #2
Time “Now” #1
200K N200K
Earned Value
EV N160K Spend Plan
160K Planned Value
PV
N125K
Actual Costs
Actual Cost (AC)
100K
N N100K
0
Time
Fundamentals PM-PMF
41
Terminology
PV = Planned Value:
“The cost (value) of the work that SHOULD have been done.”
EV = Earned Value:
“You completed some work; this is how much it SHOULD have cost.”
AC = Actual Cost :
“You completed some work; this is how much it DID cost.”
Schedule Variance = EV - PV
Cost Variance = EV - AC

Fundamentals PM-PMF
Reporting Project Performance
 Analyze work results against planned performance.

 Hold performance reviews.
 Consult your project plan’s subsidiary plans for guidelines and
procedures.
 Determine the type of report needed for the information being
reported.
 Prepare professional performance reports.
 Balance the cost, time, and logistics of preparing performance
reports against the benefits gained.
 Measure and monitor performance consistently throughout
the project.

Fundamentals PM-PMF
42
Benefits of Earned Value Management
What are the benefits of Earned Value Management?

• Emphasizes disciplined planning
• Integrates performance, cost and schedule elements
• Is a management tool that provides cost and schedule metrics
• Enables trend analysis to predict performance
• Informs Industry decision makers

Fundamentals PM-PMF
Project Quality Management

Purpose
To define the concept of quality as it • Plan Quality : identifying which quality
applies to the project at hand and to standards are relevant to the project and
carry out activities of planning, quality determining how to satisfy them.
assurance and control necessary to • Perform Quality Assurance: applying
make sure that the standards of the planned, systematic quality activities
quality are met. to ensure that the project employs all
processes needed to meet requirements.
• Perform Quality Control: monitoring
specific project results to determine
whether they comply with relevant quality
standards and identifying ways to
eliminate causes of unsatisfactory
performance.

Fundamentals PM-PMF
43
Quality
Total Quality Management (TQM)

Standards and regulations
ISO 9000 Series
Standards example

Fundamentals PM-PMF
Cost of Quality
Type of Cost Description
The up-front costs of programs or processes needed to meet

Prevention
customer requirements, or to design in quality.
The costs associated with evaluating whether the programs or

Appraisal
processes meet requirements.
The costs associated with making the product or service

Failure acceptable to the customer after it fails internal testing and
before it's delivered to the customer

Fundamentals PM-PMF
44
Cause-and-Effect Diagram
Machine Method Material
Non-standard Incompatible Poor specs

Software File formats
Poor training
Mac or PC Late
No stylebook Storyboards
Rejected
Inexperience Low morale Images
Wrong specs
Overworked Noise
Measurement Personnel Environment

Fundamentals PM-PMF
Process Flowchart
Pressurization test
X-ray the weld to

detect micro-fractures
C
Fractures Yes
detected Grind out the old weld
?
Prepare the weld
No surface
Connect pressure unit
to open end of pipe
Apply the new weld
Pressurization test
A
Pressurization test
No Leaks Time Yes

B detected? elapsed? Test complete

Fundamentals PM-PMF
45
Benchmarking
 Which products or services to offer and which features should

be included?
 What processes are other groups using to achieve customer
satisfaction?
 What metrics or goals are used to measure the processes or
products that achieve customer satisfaction?

Fundamentals PM-PMF
Create a Quality Management Plan
 Review the organization’s quality policy.

 Review the product description to identify
customer/stakeholder quality.
 Determine cost of quality trade-offs.
 Ensure your quality management plan:
 Describes the resource required to implement quality
management.
 Includes quality management roles and responsibilities.
 Is as detailed and formal as required, based on the project
needs.

Fundamentals PM-PMF
46
Performing Quality Assurance
 Ensure that qualified auditors conduct quality audits.

 Use one or more quality assurance tools and techniques to
determine the causes of project quality problems.
 Identify and implement the appropriate actions to take to
increase the efficiency and effectiveness of the project team’s
work results to improve quality.

Fundamentals PM-PMF
Performing Quality Control
 Conduct inspections to detect quality errors as work results are produced.

 Use Pareto diagrams to focus corrective actions on the problems having
the greatest overall effect on quality performance.
 Use control charts to analyze and communicate the variability of a process
or project activity over time.
 Identify ways to eliminate causes of unsatisfactory results to minimize
rework.
 Initiate process adjustments.
 Continue to monitor, measure, and adjust quality throughout the project
life cycle.

Fundamentals PM-PMF
47
Project Human Resource Management
• Develop Human Resource Plan: identifying
Purpose and documenting project roles, responsibilities
To identify and document project roles and and reporting relationships as well as creating
responsibilities, obtain human resources, the staffing management plan.
resolve issues and coordinate changes to • Acquire Project Team: obtaining the human
enhance project performance. resources needed to complete the project.
• Develop Project Team: improving the
competencies and interactions of team
Selected Techniques members to enhance project performance.
•Organizational Structuring • Manage Project Team: tracking team
•Problem Solving member performance, providing feedback,
•Conflict Resolution resolving issues and coordinating changes to
enhance project performance.
Human Resources

Fundamentals PM-PMF
Organizational Structure Types
Functional
Projectized
Matrix
Composite

Fundamentals PM-PMF
48
Functional Organization Chart
CEO
Program Human
Marketing Procurement Engineering Manufacturing
Manager Resources
Mechanical
Assembly
Engineering
Electrical
Quality
Engineering

Fundamentals PM-PMF
Projectized Organization Chart
CEO
Program VP VP VP VP
Manager Administration Marketing Manufacturing Engineering
Marketing
IM & T
Project
Manager 1 Procurement
Engineering
Manufacturing
Marketing
IM & T
Project
Procurement
Manager 2
Engineering
SEVIC PMC, LTD. Project Management
Manufacturing 98
Fundamentals PM-PMF
49
Matrix Organization Chart
CEO
Program Human
Marketing Procurement Engineering Manufacturing
Manager Resources
Project
1/2 1/2 4 6
Manager 1
Project
2 1/2 1 1 1
Manager 2

Fundamentals PM-PMF
Acquire Project Team
 Form good relationships with functional managers.

 Know when you need your resources.
 Negotiate for critical resources.
 Look for synergy and diversity among team members.
 Search for competent suppliers where necessary.
 Ensure roles and responsibilities are clearly understood by
the team.
 Publish an organization chart for all stakeholders.

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50
Guidelines for Team Processes
• Decision-Making
– Always include the right stakeholders
– Seek input
– Engage stakeholders early
• Problem-Solving
– Employ the “Hierarchy of Agreements”
– Don’t let problems fester
• Communications
– Emphasize informal communications
– Keep frustrations inside the team
– Take every opportunity to promote the program
SEVIC PMC, LTD. Project Management Human Resources 101

Fundamentals PM-PMF
Guidelines for Team Processes (cont.)

• Conflict Resolution
– Don’t let conflict fester
– Find a mediator if you still can’t get to
resolution
• Meetings
– No meeting without objectives
– No meeting without agenda
– Meeting roles are understood
– Stick to the agenda or agree to
deviate
– Fair play, openness and honesty
– Drive to specific actions and
accountabilities
– Show up on-time and stay in the room
SEVIC PMC, LTD. Project Management Human Resources 102

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51
Guidelines for Team Processes (cont.)
• Acceptable Team Behavior
– Open and honest communication
– Team player
– Proactive about issue resolution
– Respectful of others
– Set example for others
– Provide leadership in making timely decisions and gaining agreement
– Be an innovator and provide recommendation to resolve
– Share knowledge and leverage appropriate team member experiences
– Mentor client and fellow consulting colleagues
– Maintain a positive attitude
Human Resources
Fundamentals PM-PMF
Problem Solving Approach

Agree to what the
problem(s) is/are
Agree to
work together Agree to why the
problem exists
PROBLEM
Agree to Agree that all the

“deliverables” options have
surfaced
Agree on
who will ACTION SOLUTION
do what
Agree to the
Agree on the relative value
of the options
timing
DECISION
Agree on how
Agree to live with to decide
and support the
decisions of Agree to the
the group
fallback decision-
making process

Human Resources
Fundamentals PM-PMF
52
Project Human Resource Management
Sources of Power
Formal
Reward Expert Knowledge
Legitimate
Penalty Referent Based
Sources of Conflict for Project Managers: (in order)

Schedule
Priorities
Staff
Technical
Administrative
Cost
Personality Human Resources

Fundamentals PM-PMF
Motivational Theories
Frederick Herzberg’s two-factor theory of motivation
1. hygiene factors
2. motivational factors
Abraham Maslow’s hierarchy of needs

1. physiological,
2. safety,
3. love/belongingness,
4. self-esteem,
5. and self-actualization
Victor Vroom Expectancy Theory

Douglas McGregor’s Theory X and Theory Y
Stacey Adams Theory of Equity
Human Resources
Fundamentals PM-PMF
53
Pareto principle
• Vilfredo Pareto, Italian economist

• 80/20 rule
– 80% of your time will be spent on 20% of the tasks
– 20% of your people will cause 80% of your
problems
– Distinguish between the 20% that will produce
results and the 80% that won’t

Fundamentals PM-PMF
Conflict Management Approaches

Item Description
Identifying the underlying problem and working out
Confrontation solutions in a way that allows all parties to work through
their disagreements.
Finding a middle ground that satisfies all parties to some
Compromise
degree.
De-emphasizes differences between points of view and
Smoothing
focuses on commonalities.
Requires others to yield to the point of view of one side or
Forcing
another.
Avoiding or retreating from the conflict or potential conflict
Withdrawal and allowing the involved parties to work out the conflict on
their own.

Fundamentals PM-PMF
54
Conflict Resolution
• Conflict Resolution
– Problem Solving / Confrontation - Objective approach; solve
it!
– Compromising - Bargaining acceptable to both parties
– Smoothing - Appeasing just to avoid conflict
– Withdrawal - Giving up
– Forcing - Use power; win/lose
SEVIC PMC, LTD. Project Management Human Resources

109
Fundamentals PM-PMF
Project Communications Management
Purpose Processes
To manage and control timely generation, • Identify Stakeholders: determining which people
collection, distribution, storage and ultimate and organizations are impacted by the project.
disposition of project information. Stakeholders may be sponsors, the performing
organization customers, and even the public
• Plan Communications : determining the information
and communication needs of all the project
Selected Techniques stakeholders.
• Stakeholder Communication • Distribute Information : making needed information
available to project stakeholders in a timely manner.
• Manage Stakeholders Expectations: managing
communications to satisfy all of the requirements of,
and resolve issues with stakeholders.
• Report Performance : collecting and distributing
performance information including status reporting,
progress measurement and forecasting.

PMF
55
Guidelines for Project Communications
• Establish clear, consistent formal reporting and

communication requirements for team members
• Know all your external stakeholders and their
information needs
• Communicate to the right people at the right time
about the right issues
• Not too much, not too little, not too soon, not too late
• Leverage informal communications

Fundamentals PM-PMF
Create a Communications Management Plan
 Determine the communication needs of project stakeholders.

 Analyze the value to the project of providing the information.
 Evaluate any constraints and assumptions.
 Determine the appropriate communications technologies to use for
communicating project information.
 Ensure the communications management plan details “who gets what
information when and in what format.”
 Integrate the communications management plan into the overall project
plan.
 Distribute the communications management plan to project stakeholders.

Fundamentals PM-PMF
56
Communication
Conduct formal “launch” meeting

Everyone must have a clear understanding of
roles & responsibilities - theirs and others
Look for opportunity to build a “team”
Build relationships with all constituents - staff,
functional, technical, contractors, etc
Set expectations

Fundamentals PM-PMF
Adding Team Members
Plan to accommodate the later arrivals

They deserve and need same information
May be less formal than initial project orientation
session
Plan for this event - reduce
and minimize disruptions

Fundamentals PM-PMF
57
Communications to Stakeholders
• The Project Manager must

decide the following regarding
communications:
• What
• When
• To Whom
• Formal vs. Informal
• Raising vs. lowering anxiety
Stakeholders are those who can most affect success or

who will be most affected by the changes

Fundamentals PM-PMF
Distributing Project Information
 Create and distribute planned requests for project information in

accordance with the communications management plan.
 Use effective communication skills to exchange information.
 Use an information retrieval system to provide stakeholders access to
project information.
 Select the appropriate information distribution method for distributing
project information.
 Monitor the communications system for feedback to ensure messages are
getting through as planned.
 Analyze effects on project execution and control when unexpected
information requests surface.

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58
What Team Members Want from Project
Communication
 An explanation – what, why, who says, what they can expect

 What will happen, when, who, what you need them to do
 Confidence that the team will be successful
 Evidence that the right people are involved and the right
issues are addressed

Fundamentals PM-PMF
Project Risk Management
Purpose
Plan Risk Management : deciding how to approach, plan, and
• To identify, analyze, execute the risk management activities of a project.
quantify and respond to
Identify Risks : determining which risks might affect the project
risks on a project.
and documenting their characteristics.
Perform Qualitative Risk Analysis: prioritizing risks for
Selected Techniques subsequent further analysis or action by assessing and
combining their probability of occurrence and impact.
• Risk Identification
Perform Quantitative Risk Analysis: numerically analyzing
• Risk Analysis the effect on overall project objectives of identified risks.
• Risk Assessment Plan Risk Responses: developing options and actions to
• Risk Handling enhance opportunities and to reduce threats to project
objectives.
• Risk Monitoring
Monitor and Control Risk: tracking identified risks, monitoring
residual risks, identifying new risks, executing risk response
plans, and evaluating their effectiveness throughout the
project lifecycle.

Fundamentals PM-PMF
59
What are Risks?
Risks Are:
 Events that can disrupt a project
 Uncertainties, liabilities or vulnerabilities that may

cause the project to deviate from defined plan
 Manageable

Fundamentals PM-PMF
What are Risks?
 If you are certain that an event will occur, it is not a risk; it is a

certainty. This type of event is not handled by risk management. Because
you are sure that it will occur, no probability is involved. No probability, no
risk.

Fundamentals PM-PMF
60
Levels of Uncertainty
Type Description
Items that you are aware of and that will affect you, but
Known
you have no control over.
Items that will affect you, although you are not able to
Known-unknown
predict how or how much they will affect you.
Unknown-
Items beyond your ability to foresee.
unknown

Fundamentals PM-PMF
Risk Tolerance
Classification Description
Not likely to take a risk that is considered a high

Risk-averter
risk.
Prefers an uncertain outcome and may be willing

Risk-seeker
to pay a penalty to take a high risk.
Tolerance to risk is proportional to the amount of

Risk-neutral
money at stake.

Fundamentals PM-PMF
61
Risk Management
 Risk analysis & management process answers the following questions :

What are the risks?
What is the probability of loss that results from them
How much are the losses likely to cost?
What might the losses be if the worst happens?
What are the alternatives?
How can the losses be reduced or eliminated?
Will the alternatives produce other risks?

Fundamentals PM-PMF
Risk Management Cycle

Risk Management
Integral to Program
Planning and
Execution
Determine Objectives Risks

and Stakeholders Plan Identified by
Product
Team and Area
Experts
Implement Selected Initiate

Alternative and Track Monitor Risks
Impact
Identify Risks
Implement Risk
Handling
Communicate Risk Analysis

Analyze Risks Defines Many Risk
Intersections
Select and Plan

Balanced Program Risk Handling
Requirements Approach
Evaluate Risk Assess Risks Risk Assessment

Handling Strategies Defines Bounds to
Performance,
Prepare Alternatives for Schedule and Cost
Handling Risk

Fundamentals PM-PMF
62
Risks Categories
 Technical Risks:
Quality & performance goals generally related to the technology used on the project
Technology suitability, reliability, and the quality/performance standards
Technology availability and complexity issues
 Project Management Risks:
Poor allocation of the project’s resources
Inadequate project mgmt structure– proper planning processes to define critical deliverables for
each project phase
Inadequate planning resources, resource inexperience, poor use of mgmt principles
Cost & schedule risk due to the aforementioned project mgmt risks

Fundamentals PM-PMF
Risks Categories
 Organizational Risks:
Supportability risks
Lack of prioritization of projects
Inadequacy or interrupted funding
Inadequacy or interrupted resource assignments
Conflicts with other competing projects
Policies that do not support efficient management
Policies & agendas that impede the project from accomplishing its objectives

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63
Risks Categories
 External Risks:
Shifting legal or regulatory requirements
Supplier and contractor risks and contract issues with same
Force majeure risk, economic collapse, work stoppages, (strikes)
Programmatic or supportability risks caused by external parties
Deliverables from teams external to you

Fundamentals PM-PMF
Risk Areas, Probabilities, and Consequences

Risk Areas provide a way of consolidating the affect of multiple risk drivers.
Business Risk Risks related to the decision to pursue the opportunity and the project management discipline
during execution, both across and at all levels of the project, such as time and resource
allocation, quality and thoroughness of project plans, and "crisp" execution.
Opportunity Risk Risks related to the organization's ability to: capitalize on change; bring about change; maintain
consistent objectives for cost, scope, timeline; and prioritize and coordinate impact of other
projects.
Technical Risks related to the ability to develop a technical solution; may be impacted by the use of
Performance complex/new technology, unrealistic performance goals, changes in technology used and/or
Risk lack of adherence to standards.
Cost Performance Risk related to the ability to maintain consistent cost objectives and achieve the planned
Risk profitability/ROI of the project.
Schedule Risk related to the ability to maintain consistent milestone objectives and meet the planned
Performance project schedule.
Risk
Client / Operations Risks related to the quality of the delivered product meeting expectations around functionality,
Risk performance, reliability, etc.
Support Risk Risks related to ability to provide the required service expectations around availability,
maintainability, reliability, etc.

Fundamentals PM-PMF
64
Create a Risk Management Plan
 Determine how you will organize your project’s risk management team.
 Conduct risk planning meetings to develop the risk management plan.
 Establish a budget for risk management.
 Consult your organization’s risk management policy for compliance.
 Use a risk management plan template, if available.
 Describe the approaches, tools, and data sources that may be used to
perform risk management activities for the project.
 Determine the schedule for performing risk management activities.
 Determine how your team will document risk response efforts.
 Determine how lessons learned will be documented.
 Include organizational and stakeholders risk thresholds.

Fundamentals PM-PMF
Identifying Risks
 Don’t assume that you have identical risks

on projects that look alike. The team should
take some time to identify the risks specific to
the current project so that any new risks can
be identified and managed.
The project manager should take nothing for

granted and should always identify risks for
the project at the outset.

Fundamentals PM-PMF
65
Project Risks and Triggers

Fundamentals PM-PMF
Identify Project Risks and Triggers
 Review outputs from other planning processes.

 Use one or more risk identification techniques to identify risks and their
possible triggers.
 Use a consistent method to identify project risks and triggers.
 Think outside the box.
 Apply the method to identify project risks and triggers consistently.
 Consult relevant historical information.
 Group identified risks into categories.
 Determine triggers for each identified risk.

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66
Perform Qualitative Risk Analysis
 Examine the list of identified risks.
 Analyze the data available for each risk to assign a data precision ranking
score.
 Determine the organization's risk threshold for this project.
 Analyze the assumptions identified during risk identification as potential
risks.
 Analyze the probability and impact of each identified risk using well-
defined probability and impact scales.
 Determine the risk factor scores of each risk using a probability/impact risk
rating matrix.
 Prioritize the risks according to the risk management plan.
 Identify risks that require additional analysis.
 Determine the overall risk ranking for the project.
 Determine all changes to the risk register.
Fundamentals PM-PMF
Risk Assessment
– Risk Assessment
• Prioritize and Aggregate Risk Events in Appropriate Risk Areas
• Assess Compound Risk Resulting from Risk Event and Risk Area
Interaction
• Update Assessments
• Identify Candidate Risk Handling Options
• Document Results
HIGH – Unacceptable. Major
Probability and
disruption likely. Different
Consequence Scales approach required. Priority
Management attention
5 required.
Probability
4
MEDIUM – Some disruption.
3 Different approach may be
required. Additional
2 management attention may be
needed.
1
1 2 3 4 5 LOW – Minimum impact.

Consequence Mini mum oversight needed to
ensure risk remains low.

Fundamentals PM-PMF
67
Project Risk Management:
Qualitative Analysis
HI
G
H May require attention Attention Critical
I
M
PA
C
T
L
O Not significant May require attention
W
LOW HIGH
PROBABILITY OF OCCURRENCE

Fundamentals PM-PMF
Perform Quantitative Risk Analysis
 Consult historical information.

 Use the appropriate interviewing technique and obtain
probability distributions.
 Depict the distributions in a PDF.
 Perform a sensitivity analysis.
 Use decision tree analysis technique.
 Conduct a project simulation.
 Prioritize the quantified risks.

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68
Develop Contingency Plans
• Contingency Plans
– Detailed contingency planning will minimize the
impact and/or probability of risk
– Develop contingency plans if the probability

and/or impact for a scenario is unacceptably
high
– Contingency plans should be detailed enough

so they can be effectively implemented if
necessary
137
Negative Risk Strategies
Strategy Description
Involves changing the project plan to prevent a

Risk
potentially detrimental risk condition or event
avoidance
from happening.
Risk Shifts the impact of a risk event and ownership

transference of the risk response to a third party.
Attempts to reduce the probability or impact of

Risk mitigation
a potential risk event to an acceptable level.

Fundamentals PM-PMF
69
Positive Risk Strategies
Strategy Description
Risk Often used when a project team wants to make

exploitation sure that a positive risk is fully realized.
Entails partnering up with another party in an effort

to give
Risk sharing
your team the best chance of seizing the
opportunity.
Risk Attempts to increase the probability that an

enhancement opportunity will occur.

Fundamentals PM-PMF
Develop a Risk Response Plan

 Examine each identified risk to determine its causes and how it might
affect project objectives.
 Brainstorm possible response strategies for each risk.
 Choose the response strategy that is most likely to be effective for each
identified risk.
 Develop specific actions for implementing the chosen strategy.
 Identify backup strategies for risks with high risk factor scores.
 Determine the amount of contingency reserves necessary to deal with
accepted risks.
 Determine how much of a contingency reserve you should set aside for
unknown risks.
 Consult the risk management plan for the description of the content and
format of the risk response plan.
 Incorporate the risk response plan into the overall project plan.
 Examine trends in analysis results that may guide response strategies.

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70
Project Risk Management:
Risk Response Planning
Risk Transfer
HI (Contingency Plan) Risk Transfer
G Reduces negative impact
H and
I •Warranties Risk Reduction
M • Bonding
PA • Insurance
C Risk Reduction
T Risk Acceptance (Mitigation plan)
L • Not just ignoring
O the risk Reduces probability
W • Backup power supply
• Reserve funds, • Modeling & simulation
extend schedule
LOW HIGH
PROBABILITY OF OCCURRENCE

Fundamentals PM-PMF
Risk Handling
• Risk Avoidance – Involves a change in the concept, requirements,
specifications, and/or practices that reduce risk to an acceptable level.
• Risk Control – Process of achieving the desired outcomes by methods of
continual application of management techniques to the risk items or areas.
• Risk Assumption – An acknowledgment of the existence of a particular risk
situation and a conscious decision to accept the associated level of risk,
without engaging in any special efforts to control it.
– Risk Protection – Reduce the consequence of risk by building in
redundancy
– Risk Contingency – Retain part of the budget and schedule in reserve to
minimize the impact of risk
• Risk Mitigation – Monitoring and managing the risk in a manner that reduces
the likelihood of its occurrence or minimizes the risk’s effect on the program.
This option may add to the cost of a program
• Risk Transfer – Reallocate risk during the engagement execution from one
part of the solution to another, thereby reducing the overall solution risk, or re-
distributing risks between the client and the engagement program or within the
engagement team members.

Fundamentals PM-PMF
71
Monitoring and Controlling Project Risk
 Consult the risk response plan to identify risks and triggers.

 Monitor the environment for any new risks.
 Monitor the effectiveness of the risk response, contingency,
and fallback plans.
 Deal with unforeseen risks by systematically planning a
reasoned response.
 Update project documentation as changes are indicated.
 Manage the contingency reserve.

Fundamentals PM-PMF
Value of Risk Management
 Minimizes impact of unplanned incidents on project
 Enhances probability of successful project implementation
 Creates sense of control for client
 Results in timely and effective resolution

Fundamentals PM-PMF
72
Project Procurement Management
Purpose • Plan Procurements: a company analysis procurement or
To identify which project needs can be outsourcing needs.
best met by buying services or • Conduct Procurements: soliciting responses from the sellers,
products outside the project selecting a seller, and awarding the contract.
organization. It also encompasses • Administer Procurements : managing the contract and
issues of how, what, how much, relationship between the buyer and seller, reviewing and
when, from whom, and where to documenting how a seller is performing or has performed to
procure. establish required corrective actions and provide a basis for
future relationships with the seller; managing contract-related
changes & when appropriate managing the contractual
relationship with the outside buyer of the project.
• Close Procurements: completing and settling each contract,
including the resolution of any open items, and closing each
contract applicable to the project or a project phase.

Procurement
Fundamentals PM-PMF
Make-or-Buy Analysis
Question Consideration
How will the
For instance, if current personnel must be retrained for services
options affect
requiring a new skill set, it may be less expensive to outsource
project cost, time,
those services.
or quality?
Will this service be If the organization will continue to need a specific skill set--even
an ongoing need for future, unrelated projects--it may be a worthwhile investment to
for the company? train current personnel to perform that service.
Do the project's
time constraints
While it may make financial sense to develop an in-house solution,
accommodate the
there may not be enough time to train personnel and/or implement
learning curve
the necessary policies and equipment to produce that solution.
inherent to newly
trained personnel?
PMF
73
Contracts
Contract Type Description
Seller agrees to perform the work at the negotiated

Fixed-price
contract value. Also known as a lump-sum contract.
Seller receives a refund of the expenses incurred while

Cost-
providing a service or producing a product, plus a fee
reimbursable
representing seller profit.
Buyer pays to the seller a pre-negotiated hourly rate and

Time and
full reimbursement for materials used to complete the
Material (T&M)
contract.
Fundamentals PM-PMF
Solicitation Methods
Solicitation Methods:
– Competitive
• Sealed Bid
– Obtain quotes via Invitation for Bid (IFB)
– Award usually based upon low price
• Proposal
– Request for Quote (RFQ) – For known products
– Request for Proposal (RFP) – Uncertain product
– Oral Presentations
• Two-step Sealed Bid:
– Combination of technical proposal and sealed bid
– Non-competitive
• Purchase Orders (Unilateral)
• Sole Source Selection
Procurement

Fundamentals PM-PMF
74
Types of Contract Specifications
Types of Contract Specifications:

– Design specifications:
• Physical characteristics such as size, speed, color
• Risk is on the buyer
– Functional specifications:
• Operational characteristics that describe end use
• “The product must be capable of…”
• Risk is shifted to the vendor/contractor
– Performance specifications:
• Operational and measurable capabilities that product must meet
• “The product must be capable of…”
• Risk is shifted to the vendor/contractor
Procurement

Fundamentals PM-PMF
Prepare a Statement of Work (SOW)
 Review the product description to ensure that you fully understand the
scope of the work being procured.
 Consult technical experts to clearly and concisely define specifications.
 Use a standard form or template, if available.
 Present the information in a logical sequence.
 Use consistent terminology and level of detail throughout the SOW.
 Determine whether any collateral services will be required of the seller.
 Determine the acceptable criteria for the product or service.
 Make sure your SOW includes all key elements.
 Have a knowledgeable third party review the SOW for completeness and
correctness.

Fundamentals PM-PMF
75
Prepare a Procurement Document
 Examine the procurement need and determine which procurement

document to use.
 Use standard procurement forms or templates if available.
 Develop a strong set of evaluation criteria based on the real needs of your
project.
 Leave yourself some room to select from a range of capabilities and
experience.
 Determine how you want the prospective sellers to respond.
 Examine the relevant SOW and modify if necessary.
 Ensure the procurement document is structured to facilitate consistent,
comparable responses from sellers.
 Include other relevant information.

Fundamentals PM-PMF
Requesting Seller Responses
 Gather and review all of your procurement documents.

 Obtain or develop a qualified sellers list.
 Determine how and to whom you will request seller
responses.
 Hold a bidders conference to allow prospective sellers to ask
questions and acquire information.

Fundamentals PM-PMF
76
Contract Change Requests
Change Description
These are the non-substantive and most common changes
Administrative
to the way the contract is administered.
This is a substantive change to the contract requirements
Contract
such as a new deadline or a change to the product
modification
requirements.
Supplemental This is an additional agreement related to the contract but
agreement negotiated separately
These are changes that the seller may have caused
Constructive
through action or inaction.
A contract may be terminated due to seller default or for

Termination of customer convenience. Defaults are typically due to non-
contract performance such as late deliveries, poor quality, or non-
performance of some or all project requirements.

Fundamentals PM-PMF
Administering a Contract
 Index and store all contract correspondence for ease of retrieval.

 Develop and implement an effective contract change control system.
 Evaluate the risk of each contract change request.
 Document all contract changes and incorporate any effects of the changes
into the project plan.
 Develop and implement an effective performance reporting system.
 Set performance milestones to monitor project progress.
 Address performance reporting specifications imposed on the seller in the
contract.
 Conduct site visits to determine how the seller’s work is progressing.
 Submit approved invoices for payment.

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77
Project Integration Management
Purpose
• Develop Project Plan: integrating and
To integrate and coordinate all project plans into coordinating all project plans to create a
one coherent and consistent document. consistent, coherent document.
• Execute Project Plan: carrying out the project
plan by performing the activities included
Selected Techniques therein.
• Integrated Change Control: coordinating
changes across the entire project.
• The integrative PM process include
– Develop Project Charter
– Develop Preliminary Project Scope
Document
– Develop Project Management Plan
– Direct & Manage Project Execution
– Monitor & control Project Work
– Integrated Change Control
– Close Project

Fundamentals PM-PMF
Putting it all together
Human
Resources
Time Scope Integration
Communication
Procurement
Cost Quality
Risk Adapted from

Winning in Business
with Enterprise
Project Management
Integrating the nine project management knowledge areas

Fundamentals PM-PMF
78
Baseline the Plan
• Plan is baselined once formal agreement obtained
• A “snapshot” of the plan at a moment in time
• Reflects commitment the current plan represents
• Allows measurement of progress against commitment
• May baseline a portion (phase) or entire plan
• Term commonly applied to project plan also
encompasses the entire Management Plan
• Project Manager owns the baseline

PMF
Procurement Audit
 Did the supplier complete the work as specified?

 Were all terms and conditions of the contract met?
 Were the quality, cost, and timeliness of the supplier’s work
acceptable?
 Was the supplier able to accommodate requested changes?
 How well did the supplier’s staff work with yours?
 Was their ample and effective communication?
 What lessons were learned from this contract?

Fundamentals PM-PMF
79
Closing a Contract
 Ensure the supplier has provided all required products or services.

 Ensure any buyer-furnished property or information was returned.
 Settle any outstanding contract issues.
 Conduct a procurement audit to evaluate the supplier’s
performance.
 Address any outstanding invoices and payments.
 Archive complete contract file with the project archives.
 Provide the seller with formal written notice that the contract has
been completed.

Fundamentals PM-PMF
Closing the Project
 Gather and organize performance measurement

documentation.
 Release project resources.
 Update records.
 Analyze project success and effectiveness.
 Prepare a final project report.
 Obtain project approval from customer.
 Archive indexed project records.
 Celebrate the success of the project.

Fundamentals PM-PMF
80
Benefits of Project Management
 Greater control of an organizations resources assigned to a project through
resource planning, scheduling, and risk and issue management.
 More accurate and reliable information is available which can be used as a basis
for decision-making as a result of structured approach to project analysis
 Reinforced responsibility and accountability through the usage of written status
reporting and focus on results
 Increased chances for project success through using project management.
Research clearly indicates that projects managed with project management tools
and techniques have a much better chance of success
 Provides greater understanding of all facets of the project
 Encourages higher-quality, more detailed estimates
 Gives project managers the ability to defend their project in the event of potential
budget cuts
 Creates opportunities for communicating progress and issues
 Can revise schedule and cost estimates based upon performance to date
 Manage the project proactively, not just respond to “putting out fires”
 Increase the likelihood of a project completing successfully

Fundamentals PM-PMF
81

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PROJECT MANAGEMENT

SEVIC PMC, Ltd.

Overview of the Class

– To learn the interrelationships of the Key Processes of Project

– To learn how to apply the fundamentals of Project Management to achieve

SEVIC PMC, LTD. Project Management 2

A project is a “temporary endeavor to create a unique product, service, or

 A Purpose ( a set of outcomes,  A schedule driven by

SEVIC PMC, LTD. Project Management 3

SEVIC PMC, LTD. Project Management 5

What is the Difference Between a Project and

Operations Work Project Work

SEVIC PMC, LTD. Project Management 6

• Project Management has two major aspects:

• Individuals and Organizations

SEVIC PMC, LTD. Project Management 8

SEVIC PMC, LTD. Project Management 9

The Role of the Project Manager

SEVIC PMC, LTD. Project Management 10

The Role of the Project Manager

SEVIC PMC, LTD. Project Management 12

SEVIC PMC, LTD. Project Management 13

What is the Project Management Institute (PMI)?

SEVIC PMC, LTD. Project Management

SEVIC PMC, LTD. Project Management 15

PMI Certification Types and Requirements

SEVIC PMC, LTD. Project Management 16

Scope Cost Mgmt Initiating Planning

Risk Mgmt Communications SEVIC PMC, LTD. Project Management

• “A Program is a group of projects managed in a coordinated way to

• “..Program management is the centralized, coordinated

SEVIC PMC, LTD. Project Management 18

“Categories of projects that have common elements significant in such

SEVIC PMC, LTD. Project Management 19

Project Scope Management

SEVIC PMC, LTD. Project Management 20

Answers at a detailed level, the important project question….

Scope: The sum and the boundaries of the deliverables which

SEVIC PMC, LTD. Project Management 22

The Work Breakdown Structure (WBS) is the basis for project

SEVIC PMC, LTD. Project Management 23

Work Breakdown Structure

SEVIC PMC, LTD. Project Management 24

The Scope Management Plan details how the scope is

The Scope Management Plan may be a simple textual

SEVIC PMC, LTD. Project Management 25

Steps to Define Project Scope

 Review the existing documentation

SEVIC PMC, LTD. Project Management 26

 Develop and implement a scope change control system.

SEVIC PMC, LTD. Project Management 27

Project Time Management

Purpose • Define Activities : identifying the specific

SEVIC PMC, LTD. Project Management 28

 An element of project work that requires an action to

SEVIC PMC, LTD. Project Management 29

Guidelines for Determining Activity Duration – General

• Planning should occur to the level of detail necessary to

• Work should be sufficiently broken down and detailed so

• Activities further out on the horizon may initially be less

• The scope of the activity must be clearly understood and

Rules for Estimating

 Estimated in labour (effort) hours, material Naira, and other direct